Should I Pay Down the Mortgage?

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 is still the dog days of August and we hope that you are enjoying maybe a little time off that would be great we are broadcasting live from the Capital One studios and we are very delighted to have you with us so here we are in August and a lot of you looking at schools maybe you’re looking at starting your high school kid maybe it’s your new middle school or even starting out the first day of school is so much going on right and this is a perfect time for you to be thinking about how to talk to your kids about money and I would like to once again give a shout out to the folks at the Consumer Financial Protection Bureau who a long time ago I think maybe three or four years ago where they were very interested in creating a dialogue with families about money and there is a part of the website that’s called money as you grow so if you just type in money as you grow CFPB you will find this it’s also somewhere buried at that consumerfinance.gov website but money as you grow is a way that breaks down how to talk to your kids about money at different ages it is really the brainchild of Beth kobliner she’s been a guest on this program really fantastic and you know she was the one who said to me so many of your money habits get formed really early and so these conversations that you have with your children don’t think that it’s a one-and-done thing you got to keep having them and you’ve got to keep bringing up other aspects that are relevant to them that that will really move them and stick with them so check that out all right okay now I happen to know because I have a little preview mark told me that our first caller of the program is interested in buying a home and I was going back and looking at some info and there was like a pretty rotten existing home sales report for June but it was there was one bright spot and that was the increase in first-time homebuyers share of the market it’s now up to 35% so all those Millennials who they thought would never buy homes they’re buying homes it’s just that they’re buying them later whether they’re saddled with their student loans or that they’re hooking up with their honey’s a little bit later there they’ve been a little bit slower but it is picking up so let’s start this show with a call from Mariana from the Bay Area we’re gonna talk about buying a home thank you thank you for taking my call of course so my question is I would like to buy a house sharing the East Bay but of course the prices are skyrocketing yeah and I have $25,000 set aside but I wanna utilize for my for my goal how far ahead do we think that this house purchase is going to take place are we talking about like in the next year two years five years what are you thinking about um a mean between two to three years but I would like it to be before five years okay got it and how much money have you already set aside is this all the money you have to do this purchase yes so it’s very complicated tell me about how much money you make are you married to you single more about your real life so I’m single but I’m currently evening with my partner and he’s the father of my child I’m 30 years old she is just the same age and we both make about 100k a year and he would be buying this with you like you’re both in this together yes okay and so far is this the first twenty five thousand bucks that you’ve set aside to make this home purchase yeah and is this a joint account that you guys have or is this yours and he’s got something else this is mine and he has something else okay he also have about the same amount or does he have more I think he has a little bit less oh I don’t like that you’re supposed to get someone richer than you are don’t you know that by now come on how did you do how did you let your love your heart really get in the way of all of this okay tell me about your retirement plans do you do you have a 401 K at work I do and I recently joined it I wasn’t really thinking about that until my my coworkers started talking to me about it so I decided to

put to open it because given the opportunity for my employer and I’m currently putting about 20% great that’s great fantastic all right and is he also doing retirement he yes so here is the this is a very strange time horizon because if you said oh my god I’m gonna do it in a year then I would say you got to keep it in cash how much would you guess would be the cost of a home that you would want to purchase well I seen prices and they range between half a million to 600 to 700 all right so let’s say 600 that’s in the middle right so 5 to 700 so we say 600 so ideally I presume that you guys would like to get at least 10% down right yes okay so you’re pretty close I mean if you’ve got if you’ve got 25 and let’s say he’s got 15 or something and you got 40 already that may be your two year time horizon is right on track so look if it’s two years then what I would say is this I don’t think you should invest it because I think it would be a terrible shame if the moment you invested that even if you like you say oh wow let’s say that you guys had 40 grand together and then all the sudden it’s 50 grand and then the stock market slides and you invest it and all the sudden what do you have you say oh my my 50 or 60 guess what it’s back to 40 and a house comes up and then you can’t buy it and then you’re gonna be mad although you have potential for greater growth by investing it unless you really have 5-10 years I don’t think you want to take the risk of investing because you know you want to buy this house now that doesn’t mean you should let it sit in a you know earning a quarter of a percentage point you should look around you should see if you can get better interest at online banks you know there’s there’s you can go to deposit accounts dot-com you can find where there’s better higher earning in accounts but I think that if you really want to take a swing at a two to three year time horizon I just I feel nervous that if the worst case scenario came to pass and you go from up to sixty and you’ve got your down payment and then all the sudden the stock market slides and then you got to start build rebuild I think you’re gonna be really upset so I think you’re gonna have to play it safe and forego the upside how does that feel when I say for going the upside you okay with that I’m totally okay with it alright then be boring and get on the boring train beyond the boring train for me I will be your I will be your conductor on the boring chain and let all the people people are gonna say to you no no no you should invest but just remember every investment decision has risk and reward and if you’re only investing for the reward and not looking at the risk you can have a very nasty surprise so I say keep doing what you’re doing save that money go buy the house tell him to kick it into gear you’re not putting more down on the house than he is so let’s go all right I demand it for you okay all right thank you good luck take care okay we will return with more of your questions in just a second during the break go to the website Jill on money.com and there you can buy my book the dumb things smart people do with their money thirteen ways to write your financial wrongs yes I do have a chapter about buying versus renting 401ks IRAs refinancing she covers it all back to Jill on money with Jill Schlesinger you are back it’s Jill on money maybe it has something to do with the time of year but we got a few different real estate questions and we just finished up with our first question of the program about buying a home with Mariana in the Bay Area we’re going to talk a little bit about the idea of whether or not it makes sense to make extra payments on a mortgage now what’s fascinating is mortgage rates are going back down and have gone back down and I think this is starting to get people a little bit unnerved in some respects like hey should I refinance again should I pay down my mortgage do I pay it off that is really dependent on what’s going on in your life but don’t forget when

you think about a mortgage there’s two aspects of it is you know one is yes it feels good to be relieved of your debt but there’s another aspect of it which is you have the ability to hang on to your money right once you pay down that mortgage you don’t have the money anymore so we often will field this question that’s why I wanted Nick from the Bay Area to bring us to date to see whether or not my previous advice still tends to hold so here’s our next caller hi Jill how you doing today great what’s up so I wanted to see and just got a small raise and was curious whether it’d be better off putting a little extra towards the principal payment on my mortgage or putting it towards retirement okay I love I love paying down debt but figured I’d ask the question all right any other debt that’s out there any student loans any car or any credit card anything else thankfully no all right that’s great tell me about yourself how old are you 37 okay are you married single partnered okay married and right now the house is worth approximately how much we’ll call it eight hundred fifty thousand okay now tell me the mortgage amount that is outstanding is how much three ninety-eight what is the interest rate on that mortgage three point six to five so cheap man oh my god um do both of you work as one of you Doolittle home stuff what’s going on both work okay how much is your combined income about 215 and what will the increase in your salary be take you to is that with the increase or before the increase it was about three bucks an hour at this point do you have kids or no kids no kids okay and plan to have kids anything else like sort of on the horizon that I should know about before we make this decision no nothing crazy we’ve definitely talked about kids but it’s not something immediate future Nick I want to explain something to you you can’t just talk about it you have to do something else too if you want to have kids of course all right make sure you understand that so are you both using retirement plans so I currently made a job change a year ago and I don’t have an employer 401k to participate in but my wife has ever since she’s been employed and then I honestly participated in the one in my previous jobs so I’m so yes she’s she’s participating and I’m kind of accounting for it out of my paycheck every week okay and are you using another retirement plan are you using a an IRA perhaps yes I’ve got money going into an IRA I’m gonna max that out this year but then I’ve also got money going into like a general brokerage account bolster that how much do you put into that general investment account so if you’re gonna the IRA fifty five hundred the general investment account how much are you putting it I do it about two hundred a week okay so about eight hundred a month and with this raise what could you bump that to what we could is it it does this end up being a couple hundred bucks a month I don’t know how many hours yeah yeah yeah it’d be about you know between 100 and 200 bucks I could probably do something with and is your wife maxing out her retirement plan she is we you know since I started listening to the program it kind of gave us a good kick in the butt on things to ask ourselves so fantastic she’s currently doing that okay great so here’s the issue a hundred or two hundred bucks a month should I pay off a three point six two five percent mortgage or should I add it to my general investment account and potentially make more than that so you’ve already self disclosed that you’re a wimp and I love that that you like to pay down debt right that’s a good thing let’s presume let’s say that you’re after tax that this mortgage costs you about three percent on an annualized basis okay and let’s also presume that the general investment account what would you say would be a great like if you could be if you could go to sleep at night and say I’m gonna try to earn this much on this account over the next 10 or 20 years because how much longer is left on this mortgage it would mature in 2046 2046 okay so let’s say 30 years how much do you think you’d like to try to earn over 30 years in the general investment account oh that’s a great question hey thanks you know I think any anywhere north of five five to five and nine percent would be great right so let’s even say six percent let’s say that you got six percent in your general investment account and let’s even knock it down to after-tax because you’re

gonna have to pay some capital gains but let’s say that we said okay four and a half percent after-tax right so then I’m comparing a chance to make four and a half maybe five or six percent I’m gonna call it four to six percent after-tax because who knows let’s call it four to five you can make four to five percent after-tax for thirty years or you can guarantee that you’re gonna earn three percent over the next twenty five thirty years so the math is better putting money into your general investment account so but that does not actually account for like the delicious feeling that you have of paying down debt so I know that how much money is in the general investment account right now roughly two hundred cash okay and how much is in your old retirement account your current IRA and your wife’s retirement account so retirement assets total or how much so in the general investments I’ve got we’ll call it a hundred K in the rollover IRA I’ve also got 38 K and a Roth IRA and the general brokerage is about 68 okay all right and then the wife the wife has close to 80 K and her 401 here’s what I would say you know that great feeling you have about paying off the house I want you to become more enticed by the great feeling that having a pile of money can provide you and yeah right okay so here’s the way to maybe rationalize it because if you’re if you’re a smart guy and you sound like a smart guy you might say okay wait a minute four and a half percent versus three percent you know it might add up to a bunch of money over the next thirty years but I take risk to get the four and a half percent and there’s no risk to get the three percent so that’s that is one argument but then I will put back to you the risk you have is that you are now paying down alone and you’ve lost the liquidity you don’t have the money so if you were to have stopped talking about kids and finally do something about it you might like to have a hundred two hundred thousand dollars sitting in liquid assets not a paid down mortgage because it’s a lot harder to figure out how to extract money from your house later once you’ve paid that down so I think you’re young you guys probably have lots of different twists and turns and your careers and your lives I think that the access to liquidity should be more important to you than the good vibe of paying down your mortgage and that and yes and I do think it will happen to be a better it should be at least a better long-term vehicle in terms of how – you know compare assets over time right so like that to me is the best way to think about it if you desperate and you really really have to pay down a three point six two five percent mortgage you say to yourself but wait once I do that I lose the money and if I put it in this general in brokerage account I’ll have that money and if you choose you don’t have to pay this till the year 2046 maybe you have kids and the kids are great and you don’t need the money and maybe in 15 years you say oh now I just want to pay this down okay that’s fine but you don’t have enough liquidity at this moment to be in a position to choose that okay we’ll get back to more of your questions in just a minute during the break here’s something you can do why don’t you subscribe to our podcast it’s called Jill on money you can get it on Apple stitcher radio comm Google Play anywhere else you find your favorite podcasts let us know what you think and if you do like it leave a review thanks all right we’ll be right back do I invest here should I put my money there Jill Schlesinger can help you back to Jill on money your back it’s Jill on money if you’ve got a financial question we love to hear from you so all you have to do is email us ask Jill at Jill on money.com or if you go to our website Jill on money.com you can click the beautiful contact us button marc has done a phenomenal job of the website Marc we must post a picture with me holding your child I demand that I think I even want them on the website I’m not sure but I’m pretty sure I do okay let’s get through some emails I know you guys have been very patient in waiting for these responses so I appreciate that we’ve been a little bit crunched in the second quarter they built up so we’re trying to get through them dad Jerry writes about an article that I had written for Tribune about financial plan

for kids were graduating college so Jerry Rice says look I think when leaving school the bottom line is colleges very rarely help kids get a job I have three kids all professionals not one college ass we go state Drexel Queens College help that kids get a job my youngest is a registered dietitian he’s home not working not only did he get a BS from Queens in order to sit for the certification test you have to complete an internship internships can cost 10 to 18 grand and that’s if you’re lucky enough to get one my son did not get one in the first year so it worked on graduate classes but during the internship by the way you’re not allowed to work anyway so he’s hoping that anyway it would be nice if the interest on student loans was lower but since my son does not have a job as a certified registered dietitian I’m paying the loans how do you have so many loans if you went to Queens College mark how much does Queens College cost if you live in New York I don’t know I’m just wondering anyway other two kids are working in their fields CPA and advertising took a few years to get going here all the time about the market doing well I see nothing but empty stores and kids looking for work so again planning is great but you don’t have to have money coming you need to have money coming in schools should do a better job helping kids when they graduate okay I got you message received and the kids themselves got a hustle right I mean you cannot possibly expect that anyone is gonna work harder for you then you will work for yourself so I think that’s another piece of this right okay Lisa writes I’m a fan of the show and I’ve learned so much from you I love hearing you take calls from listeners and asking all the pertinent questions and coming up with a plan I wish to be one of those lucky listeners I’m 60 years old I’ve been divorced for seven years man she got divorced when she was 53 hmm anyway she was financially illiterate regarding investing in retirement until a couple of years ago when I realized I needed to wake up learn and take control of my financial future whoo-hoo I have a decision that I wasn’t expecting to have to make for another few years I’d love your thoughts on it as part of my divorce I received a Quadro split from my husband’s pension a Quadro everyone else listening is a qualified domestic relations order it happens when you get divorced it’s how they split up assets retirement assets okay I didn’t work while raising my three kids so I only had a tiny pension from a former employer I’ve now been working for about ten years I have another small pension that I will get from my current employer I hope to continue into my position until 68 or 70 if at all possible because my ex-husband was laid off from his employer last year he decided to commence his pension early in 2019 his plan requires that the alternative payee that’s me commence at the same time now I must decide whether to take a lump sum or the monthly annuity retro actively to 22 to February 2019 I have reviewed this with a fee-only financial advisor he ran the numbers for me the outcome is better with a lump sum assuming a four to five percent return over my portfolio over the years but as he said some people just prefer the certainty of an annuity I’ve gone back and forth in my head for weeks now I’m leaning towards the lump sum because it does look better on paper but I’m generally insecure so I haven’t been able to reach a decision yet luckily I have a couple of months still to decide I need I know you Knight might need more information than this I’d be happy to gather and provide it to you I’d appreciate your thoughts thank you for the wonderful podcast Lisa ok the outcome is better with a lump sum assuming a 4 to 5 percent return uh how much better that that’s what I would go I would go back to the fee only financial planner and say well you know am i comparing this like well if I had if I got 4% or and and Mace you know 5% would be a stretch let’s just say I got 4 or 5% what would I be getting what’s the the the return that I would be getting by taking the annuity payment I don’t mind the certainty of the annuity payment myself I’m just wondering what the differential is cuz if the differential is not too big I would take the certainty for someone like you because it’s nice to have cash flow and you never know what’s gonna happen in the future so you’re 60 and you want to work for 8 you know 10 more years that’s great but maybe you would want to have the the ability to have a consistent income I need a little more information so ask the guy to provide you with that information okay uh time ok got dick writes I’ve got a I’ve got I’m a retired

firefighter I’ve got a great pension hmm no Bev you deserve it at age 79 I’ve got a small portfolio 22 grand I want to find someone knowledgeable to tell me I’m doing a good job or what were you thinking I realize it’ll cost something I don’t need someone to manage my portfolio just to let me know if I’m going in the right direction where do I find someone who will help me you don’t need someone to help you send us your send us your portfolio Richard how about that give me a screenshot of the portfolio and we’ll let you know and the price is much better free ok quite quick question from glen i’ve heard you suggest a couple times recently to turn on auto rebalancing how do I do that is it a feature of Vanguard fidelity Schwab yeah it usually is they’ll allow you to automatically if you put a pearl Etsy you put in an allocation 50 stock 50 bond you can say four times a year automatically make sure I’m 50/50 you know you might get out of whack because the stock market goes crazy or the stock market tanks so you can turn those features on and they are usually very very much available at the big places okay not at Vanguard so at Vanguard mark says you have to do it yourself and mostly they’re actually I should say that they are mostly available with retirement plans but you know if you don’t want to do if you want to do auto rebalancing the other thing you can do is use a Robo advisor they’ll auto rebalance for you I want to try that out okay you’re listening to Jill on money now when you go to the break why don’t you go to the website Jill on money comm and you can bookmark it you read all the articles that we write and you can check out our resource section which we’re always trying to beef up so if you’ve found a great resource for your financial life send it to us we’ll edit our resource section okay Jill on money we’ll be right back 401ks IRAs refinancing she covers it all back to Jill on money with Jill Schlesinger your back it’s Jill on money if you’ve got a financial question we’d love to hear from you the email address is ask Jill at Jill on money.com this is from Linda she’s turning 72 and she says she’s been financially independent since her 20s she’s got no debt paid off the mortgage some money in an IRA and thrift savings income from Social Security and a pension I consider myself neither rich nor poor but I am concerned about where my money is invested and how to make it last through my remaining years with enough to spend on small pleasures I always depended on an advice from the quote financial guy who represented the company that my employer chose to handle my IRA or TSA now I need but better or maybe more customized advice then you’re doing fine so question how do I find a good financial planner for my situation is there some particular reading material you would recommend for someone like me I enjoy your presentations on CBS television your honesty and matter-of-fact style what’s a giant matter-of-fact okay Linda first thing you can do is go to our resource section at Jalan money.com and click on the the the questions you need to ask before you engage a financial adviser now the next thing you could do is from there we have a link to the naphtha web site naphtha is the National Association of personal financial advisor this is a financial advisors and the reason why I really like this particular organization is that it does allow you to essentially find someone who is a fee-only advisor and so when you go through again it’s the Jill on money comm click on the resource tab and at the the article title is need an advisor here’s 13 questions to ask so you can go down and look at this and we have lots of different things and there it is the National Association of personal financial advisors you can click on that link so check it out and that way I think you’ll be able to hopefully find someone who can help you out okay next Ron is two years from retirement anything I can do to reduce the financial planners fees can I manage the funds myself yes you can he’s getting charged one and a half percent it’d be nice if I didn’t have to pay those fees and would and and add the one and a half percent to my bottom line yeah Ron you can self-manage in fact just talking about that article I I just cited on our website one of the things

that I asked in the question is do I need to hire someone to help me out with my money you know what you can do this you absolutely can do it or maybe you want to use a robo or an online platform instead of doing it just yourself check it out again this is a I think it’s a great if you got to have the right discipline to do this but boy it is a great way to save some money for yourself okay Suzanne right I read your column today as usual but my question wasn’t covered I’m sorry I have small savings in a 401k it’s worth $32,000 it seems to be losing money every day I wondered if I should take all of it out and put it into my credit union where it will earn interest Suzanne I send me what this portfolio is and I wonder if it’s all in stocks or I wonder if it’s now come back since this isn’t an old email and I wonder if you have a different question now that the markets roared back Jeannette writes she’s almost 80 I worry about my savings being invested in the stock market might only be a few years till they need to move to assisted living my allocation is 350 grand in the stock market dish and 150 grand in an IRA 200 grand in an individual account two hundred thousand dollars in cash and Oh which I own outright estimated value 240 grand income net per month 4 grand I have a long-term care policy no debt I’m single with no dependents well let me tell you this the 150 that’s in the IRA you can certainly move that around the stock market you know because I don’t want you to have any big huge tax losses our gains now the the 200,000 in an individual account I would be very interested to learn see if you move the hundred and fifty grand into just you know bonds or income producing stuff then you’d have 150 in fixed income 200 in cash 200 in stocks so essentially 350 safe 200 at risk I’d have to look at what’s in that individual account to give you better advice about that but I don’t think that if you’re going to need start needing some of this money you probably are gonna want to pull back the allocation a little bit less risk but it does sound like you’re in pretty darn good shape so let’s get that going here’s another question about a choosing a financial advisor this is a guy who got burned and he says here are the rules that I tell others to ask must be an SCC registered investment advisor not FINRA FINRA means nothing so I don’t know I don’t even know if SCC registered investment advisor means anything but you should do it independent of a financial institution fee only not fee based fee based means that they’re going to take 12 B 1 sales commissions I will not accept any MA any well all right so it doesn’t it if you’re gonna use a fee I think you can use a fee based it just means that like you have to know what they’re taking if it’s fee based they shouldn’t be taking Commission’s fee based should mean that they are essentially not taking that commission I’m gonna get more questions about this because I see that that article generated a lot of excitement this is Jill on money it’s the program that takes the mystery out of your financial life I’m trying to help you out gang we want you to get some control over your financial life one of the ways you can do that is to our website Jalan money.com and go ahead and watch some of my past performances on CBS network try that tell me what you think of my hair just kidding don’t tell me that I have a mother Jilla and money we’ll be right back it’s Jill on money we are broadcasting live from the Capital One studios and before we finish up the hour let’s do an email or two Michael 63 does not have a 401k he’s got a savings account with $125,000 in it he plans to retire in three years at age 66 he will receive a pension of $2,800 a month house is paid for no credit cards what can I put some money into to get some interest for a few years I’m married my wife is undisciplined dollars in it thanks Mike Mike I don’t know if you really want a lot of risk with this you just don’t have a ton of money if anything maybe the her 401k I would be use that as more of your longer term investing for the hundred twenty-five maybe I would just go to deposit accounts com see if you can get into some higher yielding money market or perhaps a seed CD something like that I

would try that out okay uh okay Carol is 64 years old she watches me on CBS 3 in Philadelphia loves the good advice anyway she wants to know someone in the Philadelphia area for financial planning hmm I don’t think about that mark do we know anyone in Philadelphia I’ll find somebody let me find someone for you we’ll let you know okay John has a required minimum distribution question age 72 I’m still employed and contributing to my 401k that’s great he recently retired has to take his first required minimum distribution this year does a withdrawal now qualify as an RM d or must I wait until June yeah you have to wait till you’re fully retired for it to count as an RM D and I would wait I would wait as long as I could write till the end of the calendar year so I wouldn’t rush that there’s no reason you should you want to kind of delay delay delay mark I’m plowing through how am i doing not bad almost done with this big thing here okay anyway we will be back with a whole second hour during the break you can go to jail on money.com or maybe you’re sending your kids off to college or you’re thinking about high school kids who are looking at colleges checkout money – mentor.com money – mentor.com this is a great resource for people who are applying for college and helps them get financial aid so check it out all right Jill add money we’ll 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 welcome welcome it is our number two here in the dog days of summer in August Phil on money we are broadcasting live from the policy genius studios policy genius is the easy way to compare and buy insurance go to policy genius comm last couple of weeks we’ve been using the second hour the program to catch up on emails so hopefully you will indulge me and I will read with great inflection to keep you interested in the program mark this is what you should be reading these yeah remember when are you gonna stew some work yeah we’re gonna get marks son to get let’s get him the let’s send him to a sort of crawl walk talk we’ll see I’d like that get his voice on here okay Maryana writes enjoyed your article on the benefits of Roth 401k contributions for future planning people tend to address immediate tax needs and not focus on the future and then she says you know keep talking she wants to talk about the backdoor Roth which we do so thank you for that and we will continue to do that here’s a question from Darcy I’m divorced got two kids age 18 and 19 I’m about to turn 50 I went through I used an allocation tool from TD Ameritrade z– website I should mention TD Ameritrade more often also they’re good to rebalance my IRA and I’ve been too heavy on stock funds one reason I don’t really understand bond funds I don’t know if I should have one and check the box on a bond fund I need a mix of bond funds look you’re 50 years old Darcy and if you want to learn something about bond funds I’m happy to talk to you about that and explains you how bonds work but the general idea about using bonds bonds are IOUs you lend money to a company you can lend money to the government you can lend money to a municipality and the deal is you lend the money to the company and they pay you interest at a certain stated interest rate and bond yields are fixed that coupon that they pay that is fixed but the value of the bond can go up and down based on the general direction of the bond market so I can’t go into an entire bond explainer hey mark was it did we have the bond guy I remember him Jason Justin something the bond king we could send her let’s send her a link to that episode so she can learn a little

bit about bonds I think she’d like that that’d be good okay William or known as Bill just read my book the smart the dumb thing smart people do with their money and I am struggling with some retirement issues married I turned 65 this summer my wife is turning 65 next year I’ve got three annuity or lump sum distribution options from prior employers and he’s got different opportunities one is so one is it lump sum and then the other is do I take a joint and survivor benefit meaning that you take a certain amount of money which I and then you die then a hundred percent that exact same benefit goes to your wife here is the thing I don’t know anything else about your retirement picture I would need more information so what I will say to you is this if you’d like to talk to us I would love to be able to help you out but I can’t do this without a lot more information so bill please please please follow up and we can chat if not you should seek the advice of a fee-only planner who can help you make these choices because they are not easy to make again without running through a lot of other financial information okay Suzanne wants to know health insurance savings account tax benefit okay so I don’t know if you mean what you can put in there’s all sorts of rules on the HSAs hold on do I have my HS I have it oh thank God for my hard copies here okay I’m 2019 let’s just see if Suzanne I don’t know if you’re married or let’s say that you’re single for the heck of it so remember health savings accounts here’s what you have to do you have to be enrolled in a high deductible health plan to contribute you cannot have other health insurance that’s not a high deductible health plan you cannot be enrolled in Medicare or TRICARE you cannot have received care from the Veterans Administration within the last three months you cannot be eligible to be claimed as a dependent on someone else’s tax returns okay now if you are your your minimum deductible in 2019 it would be $1,350 your HSA contribution limit for yourself if you’re under the age of 55 3500 if you’re over the age of 55 4500 and these numbers do get increased by about usually about 50 bucks or a hundred bucks per year just depending on the rate of inflation so and if you if I miss that if I’m missing something in what you’re asking follow up with me I would love to have it down in HSA segments and guests maybe we should have that I said I’m interested Stan writes love your show and love your book I’m a fan I’m wondering what is your take on the money market mutual fund money market all my holdings are basically with various products infidelity I can see them from one place so that’s good I like that I like ease $90,000 emergency fund is in a traditional savings account but I’ve been debating whether or not to move it into fidelity thing is fidelity it’s a money more a mutual fund the rate is competitive with my savings I’m not sure I should be trusted trusting with the money as I am with the traditional savings Stan I think it’s fine let me just say one thing if you are going to have to maintain a savings account of some sort what I would suggest is you just keep enough in that account to get all the free benefits a lot of people still need savings accounts because maybe they’ve got their retirement checks go in there or Social Security checks so I don’t see any downside it’s you know there’s money market accounts were at risk a little bit when we were in the financial crisis I don’t think that’s gonna happen so I feel fine Clara is say the subject is disparities for the most part my husband and I were brought up the same way but the few disparities that we operate on we are on the opposite ends of the totem pole as a wife what can I do and combat my husband’s in capable combat my husband’s inability to handle money the right way don’t let him touch it I don’t know that’s such a hard one and is he willing to be coached is he willing to go to a third party as an impartial third party that might be good I would be interested in that could you get him to sit down with a financial planner could you get him to sit down with an accountant or an attorney that might be helpful I would try that out

and maybe if you have a problem maybe we should do a conference call with him or get him on the air let’s try that I’m going crazy here I mean mark I’ve almost knocked all these out so you should be very happy with me okay you’re listening to Jill on money and we are digging out of our heaps and heaps of emails it’s not because we don’t love you we do and we are so grateful that you send us these questions it’s just that schedules and travel and booking guests always gets a little bit nutty okay now if you’d like to get in touch with us ask Jill at Jill on money.com when we return more of your questions 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 are back it’s Jill on money if you’ve got a financial question we’d love to hear from you ask Jill at Jill on money calm don’t forget throughout the week always use Jill on money.com or website that will allow you to find great stuff you can read columns that I’ve written a lot of the emails that I’m answering right now are from columns that I write for Tribune you can listen to previous shows you can subscribe to our podcast Jill on Money watch some TV segments and you can also of course get lots of resources we have lots of links for you sign up for the free weekly newsletter if your gonna get something for free you know I’m gonna make you pay for something else that would be the book you can buy our book the dumb things smart people do with their money thirteen ways to write your financial wrongs okay Linda writes that she doesn’t have a will because is an online will sufficient I’ve never been married I’ve got no children I know who I want to receive whatever I’ve left upon my demise I got one quote two grand that’s a lot of money I’m 64 I own a small small condo in Florida probably worth somewhere around thirty thousand dollars and thank you for any advice I mean yes of course you could do that in if you have any accounts and you know where they want to go you can maybe put you know there’s sometimes you can put a transfer on death assignment on an account generally speaking people know I’m very much interested in you going to see an estate attorney but you’re right if it’s very uncomplicated it’s probably not the worst thing in the world I will say this you you also have to make a determination about who would you name who is going to take care of any health care decisions on your behalf and a durable power of attorney so just make sure you know who you want to name as an executor and all these other pieces so hopefully that helps Linda okay Lou writes I’ve got an employee stock purchase plan I can purchase quarterly amounts of my company stock at a 15% discount from current from the current stock market price I’m allowed to sell it later there’s usually a holding period he thinks it’s three to six months should I do this am I taxed on the gain yes you’re taxed on the gain I believe yes you are I mean I don’t know I’m not a huge fan of this because I want to know first I want to know everything else that is going on in your life if this is just fun money no problem but if this is you’re doing this in lieu of doing something else that’s important in your financial life I’m less inclined to be a big fan of it so I need to know a little bit more information okay Jim listens to the show on wben in Buffalo which is awesome okay sadly my mother passed away in May she has assets that are to be split 50-50 between me and my sister I’m 68 years old I work full-time at SUNY Buffalo I plan to retire at age 70 I have $120,000 in a traditional IRA $100,000 in a Roth $10,000 in a money market another 280 let’s say 380 let’s say another 420 thousand dollars in retirement assets everything’s invested in mutual funds they performs well and I plan to max up my contribution to my Roth IRA I own my home free and clear gets his Social Security’s will be twenty five hundred bucks a month when he retires okay my

sister and I own mom’s house she had a life estate we’ve now planned to sell the house we each have 50% ownership I expect the sale to be about a hundred sixty thousand which means I would have $80,000 coming in this year it’s not taxable right yes that no it’s not taxable it should not be unless wait a second you owned your mother’s house yeah I don’t know if you have you might have a tax due on the sale if you and your sister owned the house and mom had a life estate so you want to check that mom also had a couple hundred thousand dollars in a fidelity account and some cash she’s owed some money in taxes my question and she oh and mom has a non-qualified annuity worth 150 grand wants to know should I take a lump sum payment now or on the fifth anniversary of mom’s death take distributions at any time or roll into a new annuity I would say 5 annual distributions that’s what I would do for that annuity and it’s not that big a deal I like a 5 year I I think the five year distribution could be good and on the other question is about retirement accounts and rollover accounts I think that I think they tell you what I think you might want to get some advice on all of these things because I mean mostly if you have retirement accounts from your mother you can treat it as a inherited IRA and there may be some there’s some different rules about that right but and if in in most cases I think it’s good to be looking at those and keeping them as tax deferred as long as you can but you will pay tax on them when the money comes out at your tax bracket at the time you take them out III guess that the other thing is that when you retire and you start taking your own minimum required distributions I wonder what your tax brackets gonna be I think you need a financial planner I do I’m not this is not for everybody but I do think that I think you may want to get some help on this there’s a lot of balls in the air and there there’s probably some tax planning to do so I think that’s what I would suggest you can go to naphtha NAPFA org or go to let’s make a plan org here is Murray who says you state that annuities have large fees deferred annuities do not have fees but have surrender charges which go away after a period of time well I believe fees are attached to variable annuities the distinction should be made if I’m incorrect let me know well you are incorrect because a deferred annuity can have fees also and a surrender period some not all have them so their deferred annuities that are their deferred variable annuities and even deferred income annuities if you have an immediate annuity chances are you don’t necessarily have the fees but they’re always fees built into all of these things so that’s what I would say oh this is a good question let’s see how much time do I have two minutes okay I’ve got a two minute question for you mark you ready for this Victor writes I have $5,000 in cash I’m 27 I have no debt I want to find ways to invest that money thanks for taking the time Victor do you have you have no debt you have an emergency reserve fund in other words do you have at least six months of your living expenses in a safe place is that if that’s the case if you do have an emergency reserve fund you’ve got five grand and you’re 27 I would love it if you could maybe put some of that money into a Roth IRA and you could invest it in you know a target date fund a cheap index fund maybe two index funds take you know four thousand and put it in a stock index fund a thousand and a bond index fund that might be about it I wouldn’t go much crazier than that but if you don’t have an emergency reserve fund something that’s safe and boring you really shouldn’t be investing this is part of my big three as I like to call them pay down debt established emergency reserve and maximize retirement it’s boring but it works and it’ll keep you out of trouble more to the point so that’s also

a side benefit of that okay mark from that big pile of emails you sent me guess how many I’ve left I have just one so you have to send me a couple more for the next segment all right you’re listening to the Jill on Money program and it is you know it’s that time of year taking those kids back to college going on some college tours go check out money – mentor.com you’ll get a trained college student for your high school or college student who will help make the process of applying for college and getting financial aid a lot easier so check it out money – mentor com this is Jill on money and we will be right back do I invest here should I put my money there Jill Schlesinger can help you back – Jill on money you are back it’s Jill on money and I got a great bunch of emails for this segment let’s start with Bill who I really think is in good shape he’s worried he says I’m worried about retiring I’m not sure if I’m okay so without reading you all of the numbers I did some math for you during the break cuz that’s kind of gal I am know what I mean okay so here’s what he’s got he’s got 1.3 million dollars in non retirement assets and 300,000 in retirement assets so let’s just so 1.3 is what I want you guys to remember he’s got a bunch of houses he’s got some income okay and he said at 60 he so it’s funny he said I’m nervous about not working I do enjoy it but I need to slow down so at age 67 he got $2,400 a month could get more at age 70 and his wife gets some money for Social Security I wanted to look at what would happen if he would retire at age 67 just to prove a point here and when I add up all his income oh by the way he makes 175 grand a year right now the one thing he doesn’t say is how much money he needs but I’m gonna just give it a guess you know if he makes 175 maybe he needs a hundred or a hundred hundred and twenty let’s say 120 thousand a year ten thousand dollars a month and when I add up all his income even if you were retired 67 his full retirement age he gets eighty five hundred dollars a month you know it’s taxable I get it he needs ten thousand dollars a month so he needs let’s just say he needs about $2,000 a month to bridge the gap at age 67 well did you hear me say about the 1.3 million dollars that’s in the portfolio even I’m just gonna even leave the I’m leaving the retirement account out of it just the the money that’s in the non retirement account 1.3 million dollars let’s just say he took 2% of that out a year he’s done he covers his needs all right so what the cool thing is is that Bill you shouldn’t be worried about retiring at age 67 maybe slowing down a little bit you got plenty of money the one thing that I would say is you you you mentioned that you’ve got a bunch of money in cash you got an IRA with Vanguard and then you say you got a small you got some money in stock bonds about I have more than a half a million dollars with a big investment firm that’s not advising you so I’d get that out of that firm and put it all together with Vanguard because there’s no reason that you should pay for this if you are not actually getting anything of value um I don’t want you to worry you seem like you’re in great shape if I’ve misread your situation I let me know but I think you’re okay all right it’s not exciting it’s a good one okay more questions oh this is someone I met at the world domination summit the beginning of the summer and this is someone who said I need some advice Kelly need some advice about life insurance I’ve spoken to two financial advisors they’re both trying to sell me different life insurance plans the kicker is they both are saying oh I don’t trust that other one markets herself as a financial girlfriend super friendly the other gets

top marks for being organized creating a detailed plan any recommendations about what you could do and recommend an advisor for me I’m looking for someone who I can meet virtually and understand the goals of soon being a digital nomad hey Kelly I would love to know more about you and I want to know what the different plans are that they are suggesting of course I can get you an advisor that’s easy for me to do but I’d love to know more about you and what your needs are and so if you could follow up this email with a little bit more information and tell me the difference between the two plans that are being recommended okay Scott writes my wife and I are hoping to retire in the next couple of years and we want to know do we have enough money saved they own their house new car it’s gonna be paid off you know within six months alright here’s what they have retirement accounts looked like one two three three hundred fifty grand money markets and cash forty six grand he’s gets a pension and maxing out the retirement account ah guess what’s missing here mark how much you need Scott how much money do you need what do you spend every year so darn it I need to know also he’s retired military’s got a pension sixty and a year and a VA pension of 14 grand a year so that’s good that’s cash flow right there baby seventy five seventy four thousand dollars a year if that can cover your needs if you if your pension and your va payout that’s seventy four thousand dollars a year can cover your basic needs then yeah you’re fine everything else is gravy but if you need a lot more than that we might have some work to do oh this is the worst email mark how could I end the segment with this you are such a bad person he’s making me ended on it all right Tim Tim subject is best for my son my son has been incarcerated for five years he’s got a 30-year sentence he’s 27 he has four thousand dollars in the bank what is the best way to invest the money so we will have some money built up when he is released I mean I guess that we’re investing for 27 years is there any reason he would need the money before them can you get I mean don’t you have a certain amount of money that can go into like an account if you’re in prison I think you can I guess that I would do is I would try to invest the money for the long term so you could you know maybe just put the money in a you know Vanguard of fidelity or one of those accounts TD Ameritrade any of those places and put it in a portfolio that is balanced / tilted towards growth that’s a first mark as opposed to the strange letters I get from inmates which come to CBS news all right you’re listening to Jill on money if you’ve got a financial question hop onto our website Jill on money.com try to find the answer there or just send us an e mail ask Jill at Jill on money.com 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 and this is the program that takes the mystery out of your financial idea here’s what happened the first few months of the year we got busy and we attacked all of the emails and we just it was so great and then by the end of the second quarter I was traveling a lot to do the book stuff and Mark had to have a baby and we got behind so if you’ve sent us an email and we haven’t gotten back to you yet I apologize we’re gonna use some of the next I don’t know couple months we’ll catch up the best we can so please be patient if you send us an email with your question ask Jill at Jill on money.com we will we’ll rock and roll we’re really gonna try to get through these by the way if you do want

to buy the book you can just go to our website Jill on money.com and the book is called the dumb thing smart people do with their money thirteen ways to write your financial wrongs okay let us get to you here’s a note from Dell who is 60 it says we both are 60 saved money and our IRA 401k just under a million and a half bucks we hope to retire in a couple of years our plan is to upgrade our RV and truck sell our home and travel for as long as our health allows current RV way too old we plan to take a six-month trial trip six-month trial trip oh my god to make sure we like it if we do will sell our house if not we’ll sell the RV okay we’re hoping to get health insurance through the marketplace until Medicare kicks in we’ll have $100,000 in cash safe now we can use $100,000 to buy the RV and truck or finance them and use cash to live on until six until age 65 if we finance to start as soon as we sell our house we’d pay the RV loan if we pay cash will have to take enough out of the retirement funds are we wrong to take out an RV and truck loan no you got to definitely take out a loan absolutely take out a loan because otherwise you are you’re gonna be in trouble because you need that money okay so take out a loan get your bill do it build in a little flexibility and go from there okay Carl writes about four years ago my wife and I opened a small account with Vanguard in an energy sector fund the idea was to provide our grandkids with a little inheritance upon our demise we’re in our early 80s we figure we have 10 15 years 10 15 years man you are that is an optimistic dude I’m sort of thinking 85s a good target for me anyway in the years that we’ve held the fun it’s been stagnant at best at this writing it’s losing a few thousand dollars my question should I switch to an aggressive growth fund with this company I do the same with a different company or a more appropriate a vehicle listen if you’re investing for your grandkids I would say that the best idea is you’re at Vanguard take your loss and if you’ve got other gains somewhere else in your life then for sure use those gains Carl and then you know just wash it out but just put the money in an sp500 fund that’s it you’re at Vanguard or you they have an extended index on whatever index fund is open to you that’s what I would do okay all right here is a note from Andy who says I respectfully disagree with okay this is because I I did a housing segment on CBS this morning and I said listen if you don’t get a bite after three to four weeks you should drop the price so he says I respectfully disagree with your advice to drop prices after three to four weeks without any action the buyer has changed buyers who came here from other countries knew the game better than we did they will wait you out until you drop it they’re much more patient let’s say this has worked well for me and a few friends who’ve sold in the last couple years we stood by our price for several months it paid off I think Realtors need to rethink the listing pricing game I’m just my thoughts all right not my thought I don’t believe that I believe that if you want to first of all many people can’t afford to hold the property for that long but more importantly there’s a cost of holding that and what you could be doing with the money otherwise that’s opportunity costs so hmm anyway mark did you see this one about the the specific type of financial planner this person wants all right so this is someone from Rochester who does not want to work with anyone local would like to know of a specific type of financial planner in New York and okay Wendy no problem so you know what this is a crazy situation Wow complicated mark send her send her a couple of names of people in New York City who we know the one that you know and the other one on the Upper West Side yeah so send both of those names all right so let’s do that this is a very very it is just very complicated situation so when you have a complicated situation you you send her to people who really understand those things all right um one minute hope is 60 years old she wants to take Social Security early at 62 her husband will take his Social Security at 70 he’s 68 her Social Security 800 a month his will be 25 hundred a month we’ve held off taking his to gain that in that increase we have five years remaining on our mortgage I’ve heard other other options for us and taking up taking our Social

Security regarding taking half of mine are there other options for us to consider yeah hope there’s many other options that you should consider first of all I don’t see why I I guess that the question is are you gonna take yours at 62 and then when he files take half of his I think that’s what you’re planning on doing I’m going to go play with these numbers on the Social Security website see what the you know because they actually have improved this so I would check that out but there are a few other permutations to consider ssa.gov go look at it see what the different options are for you that might help okay it’s jill on money hey during the break why don’t you go subscribe to our sister podcast it’s called jill on money get it on Apple stitcher radio comm Google Play anywhere else you find your favorite podcast we’ll be right back you’re back it’s Jill on money and we are broadcasting live from the policy genius studios policy genius is the easy way to compare and buy insurance all you have to do is go to policy genius calm okay he this is a question from Linda who says that my husband submitted his pension paperwork in October of 2018 he retired in December of 2018 as of the beginning of June he’s still getting the runaround from his pension company how long is one expected to wait for the pension we’ve got to use our savings to live on theirs is there anything we should do tells me where the pension is through which I won’t name I would do a couple of things one is I would definitely try to be the squeaky wheel number two I would you know see you call a pension company but I would also call your employer for your husband’s former employer and if your husband is part of a union and that’s why he was entitled to this pension I’d get the Union involved immediately that that is what union reps do I think that that truly is like one of the best things they can do is like advocate for you especially throughout a bureaucratic process so give that a try and hopefully that will work goofin I don’t know I mean I don’t know if there’s some reason they’re gonna maybe they’re saying you you didn’t submit certain paperwork but find out and and get nasty a little bit a little bit okay Gregg 57 years old and he’s got three hundred ten grand for in an old 401 okay he works full time with another company’s got a mortgage balance of $179,000 should I take the money out of my 401k to pay off my mortgage balance no his fear is the markets gonna tank down the road okay if it does then you know what that’s not a reason that you want your you don’t want your money tied up and paying down the mortgage what I think you’re saying is you probably want to make the more the allocation of this retirement account less risky okay so how about that what about you just changing the risk in your retirement account and you should probably if the new plan is a good one I would just roll that for that three hundred ten thousand dollars over do not use that money to pay off the mortgage you will want the liquidity I promise okay thank you so much for listening been a great show by the way don’t forget any old time just go to jail on money.com you can sign up for the free weekly newsletter and you can buy my book the dumb thing smart people do with their money thirteen ways to write your financial wrongs I’ll talk to you next week thanks for listening