What to Do With Old Retirement Plan?

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 it’s time to get busy
managing your financial life I’m Jill Schlesinger this is Jill on money Marc
tell our CEO running the show the newly branded CFP but you can’t say see if can
I say it yet or not am I allowed to say that you’re a CFP professional yet or
not all right technically he’s not technically he passed the exam which is
amazing but we’re not the CFP Board has very interesting rules about the way you
can use what they call the mark but anyway that’s mark he’s running the show
and he’s now passed the CFP exam and he’s amazing
there we go you are listening to this program because you want to take the
mystery out of your financial life we are starting the show broadcasting live
from the Capital One studios Capital One what’s in your wallet and I figure mark
this may be the last show when people are really paying attention to what’s
going on in their financial eyes do you think we’re gonna lose them or is there
a sweet spot in between Thanksgiving and Christmas
maybe so essentially we have this show and maybe one more where we’re gonna do
some urine planning with our old pal Michael Goodman and presuming that we
capture your attention for those you might be better off in your financial
life if you have a question all you have to do is send us an email ask Jill at
Jill Ann money.com ask Jill at Jill on money.com that is
our email address you can always go to the website jewel on money.com and there
we’ve got a little contact button it’s in the upper right hand corner so easy
now here’s a very simple way to get your holiday shopping done mark here comes
the Shane lose plug I probably need some music for
this I’m not sure what the Q the Q the music would is which is the shameless
plug how about just behind my book the dumb thing smart people do with their
money thirteen ways to write your financial wrongs what a good present for
the holidays people get the new year started off on the right foot
alright that’s enough of that we start the show with a caller and today we are
going to Mali in the Bay Area hi Molly hi thanks for having me I wrote in about
one question and then I actually decided I may have a different question to ask
alright sure which one TAS you go do both girl let’s go oh nice awesome okay
so my first one is about 401k rollovers I always thought that you should just
you know I recently got a new job and so now I have to deal with my old 401k and
for my previous job and roll it over somewhere and I just assumed that I
should roll it over to my new one I was just wondering what your thoughts are
all right that should I roll it over to my current job or something else where
is the current jobs 401k what investment management firm has it Adela T target
mm-hmm how much money we talking about Molly in
my old one yeah maybe twenty thousand you know what if it’s fidelity it’s a
pretty cheap option and so that’s completely a reasonable choice and if
you just want to kind of keep it clean and consolidate accounts make it easy
for yourself there’s no problem using the fidelity the new 401 K through
fidelity and it might even just be easier in general so I don’t think that
that’s a problem how long have you been at your new job okay so there’s not much
money in there yet so yeah I think that that’s completely perfect that’s one way
to kind of keep things simple I don’t see any problem with that okay cool yeah
that makes sense thanks for answering that question
alright what’s the next extra quad what’s my extra credit oh yeah bonus
question I now work for a public company I’ve never worked for public company
before and there’s an employee stock buying program where we get like 15% off
stocks we can it’s a little bit complicated but you get a 15% you get a
15% discount to the market price and then you have to hold it for a certain
period of time and it seems like a great deal right every six months you can buy
in and so you have to allocate a percentage of your post-tax salary to up
to I think 15% and they hold that and it accumulates for six months and then they
buy the stock afterwards mm-hmm and it’s the lowest price that
the stock was during six months and you get 15% off that okay well a couple of
things that we would want to sort of generally consider number one how much
money do you have in your emergency reserve fund have you got six to twelve
months of your expenses socked away i I’m getting close to that okay close
just goodness a new job I have you know more cash flow so I’m accumulating more
savings okay so I think that before we start buying stock what I would say is
make sure you’ve got that emergency reserve fund do you have debt that is
outstanding meaning credit card auto or student loan no okay so what percentage
are you putting into your 401k right now mmm I put 8 percent of my income and
then it’s matched like so it’s as if I’m putting in 10 or 11 percent I think okay
here’s my here is my bonus question response you ready when I think that
hold off on doing the stock get yourself that emergency reserve fund beefed up
and then how well did you say you were did you say you are how old are you 27
you’re so young and ah to be young well I don’t ‘mark I don’t want my
twenty-something brain but I wouldn’t mind my 20-something body okay so what I
would say is get that emergency reserve fund and then how about if you since
your cash flow is good once you get the emergency reserve fund bump up your 401k
put 15% away basically double what you’re doing right now I really want you
to max out how much you earning right now basis 70 and with bonuses and stuff
would be about 80 great okay perfect get media get to 15% if you have to do it in
steps get the emergency reserve fund beefed up then go from 8 to 12% and then
go from 12 to 15% and once you have that let me know because then I actually
would want to see whether you have other needs like are you thinking about like
hey I really would like to buy a house I don’t want you to buy the stock unless
you basically are like oh I don’t know what else to do with all this money I
have okay now as we go into the break a few things that you can think about I
already plugged the book on the way in but I’ll be plugging it the rest of the
show because I do think it’s a good book for the holiday season but if you want
to do something with maybe a little bit less of a commitment financially or
monetarily why not go to our website it’s called Jill on money.com and there
you can sign up for our free weekly newsletter okay you can also buy the
book there you can also subscribe to our podcast it is coincidentally named Jill
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want to check it out okay when we return more of your questions we’ll be right
back back to Jalan money where Jill
Schlesinger helps you take the mystery out of your finances your back it’s Jill
on money and you know it’s pre-thanksgiving madness so there’s
something to keep in mind I should note that a lot of people are coming in under
this deadline we have the Medicare open enrollment which is going on until
December 7th when does the Affordable Care Act enrollment close mark I think
it’s soon and I bring this up because I did get a message from a friend of mine
who finds out this is sort of Shady she finds out that the company that hired
her changed the rules on who gets health insurance and they’ve changed it as of
now and maybe they announced it I guess they had to announce it in time for
people to scramble anyway December 15th I say I’m not as not as dumb as I
thought anyway so she went on shopping for the Affordable Care Act
she went for coverage and she looked at all the plans she called an insurance
agent mark do you know how much money for a family of five the coverage that
she was asking for have a guess per year so he thinks 16 grand the best price she
got was 21 grand the highest price was 24 grand I mean this is God we have got
to fix this system you can’t have let in oil so you can’t really have like three
young kids and say oh I’m gonna go for crappy health insurance coverage
you just can’t anyway completely screws up their whole outlook for their
financial lives and unfortunately I had to give this advice I mean you can’t put
as much money into your retirement plan you’ve got to pay for this health
insurance of course my other message was get out there and hustle
since she and her husband are both self-employed or get a job that has
insurance it just shows you that that insurance is so valuable and you only
realize it when you don’t have it all right let’s go take a call or next up
we’ve got Kristen she’s calling from Portland Oregon tell me what I can do
for you Kristen sure thank you so I am calling because I
currently live in a condo and my HOA fees recently increased pretty
substantially they are now about 650 a month which seems really high especially
because we also have to pay for all of our special assessments and things like
that mm-hmm and this is especially meaningful to me
because I’m doing some career planning as well so I know my career is pretty
long I’m in the front half of it and I’m pretty happy working a corporate job but
as I look at the back half of my career I’m trying to take a less stressful
potentially nonprofit role which will come with a lower salary so I want to go
into that in a really good place from a cash flow perspective and I really want
to be debt-free going into that and so as I think about that and the fact of my
HOA fees aren’t paying down any debt or building equity it starts to feel like a
pretty high share of my take home that goes towards housing right and also my
current mortgage it’s completely paid off so I’m dead how old are you I’m 30
how could you have it I can’t believe it that’s amazing so alright your condo
you’re 30 are you married or single I’m married okay do you guys own this
jointly or is this in your name it’s in my name I had a feeling someone who’s 30
years old who’s like very directed how much is the condo worth would you guess
it’s worth about 450 okay so the homeowners association stuff it’s going
up it’s a little bit of a drag kids are no kids no kids and undetermined if
we’re going to do it in the future okay so let’s say that you wanted to blow out
of the condo and because you know I know homeowners associations it’s like coal
it’s also like you know the it also has like this level of like annoyance factor
and there’s an ease but there’s also with that an annoyance and they dictate
some stuff what if you were to buy a single-family detached home could you
find something for four or fifty or would you be spending more than that no
so if we were to buy a single-family detached home I think we’d have to pick
up if we sold the condo we’d end up with the mortgage of about three to five
hundred thousand well wait a minute how much you have to spend yeah it’s been a
million bucks or something probably close to 800 okay all right so you know
I get you earn okay how much do you guys earn together oh let me just have one
other question how old’s your husband he’s in his 30s as well okay early
thirty and does he own any real estate himself no real estate and also he
doesn’t have any that either oh you married well perfect together
about how much do you earn we earn probably between 350 and four okay and
when you say you know I’m willing to kind of plug away and be in my corporate
job what does that look like in terms of a time horizon for you hold me ten years
okay so you hate that I get that I actually like it oh good so I don’t I
don’t have any problem with that but I’m trying to do like long-term career
planning I understand and I imagine with 350 or 400 grand in earnings you’re both
putting money into retirement accounts yeah we’re both maxing out our 401ks and
then contributing after-tax as well okay great how much money do you guys have in
let’s let’s call it you know total retirement savings for the two of you
I’d say close to 500 that’s awesome you guys are doing great
non retirement savings probably 200 okay great
do you think that both you and your husband would be taking a step back are
you really saying I’m the one I’m gonna work real hard I’m gonna really move it
to non at land maybe earn half as much do you
think he wouldn’t want to do a similar kind of career definitely you guys I
love this this is the total this is fire this is financial independence retire
early you’re not retiring early I know but it’s about all of the options that
are available to you so great and it like fires me up to see a new generation
like this it really does so do you think that if you if you did not have kids and
you said that’s a question mark right now is the space that you have in this
condo something that you’re happy with yeah it’s totally adequate so I do
understand that there’s like this additional thing where there’s some
preference wrapped up into it hmm so it’s totally adequate okay in your
heart of hearts do you feel like you want to move I mean because I want to
say that because I I mean 650 a month is a drag but you know what you’re gonna
have taxes and upkeep and up keeping a house in a real single-family detached
house is a drag also and there are certain things that you have to just
suck up when it’s your house that the condo association fees are doing for you
I guess what I’m trying to kind of uncover here is do you really want a
house because if you do you can afford it and you should do it and if you don’t
then stop fretting about these fees because you’re probably gonna spend way
more than that on the house okay okay that’s helpful so just look at it
as an idea of preference and if we want to move to it yeah and we should be fine
either way yeah and you know what having I think having a 30-year fixed-rate
mortgage getting that mortgage you you’d be able to use that mortgage interest
deduction I know it’s capped but you know you’re underneath the mortgage
limit amount and I think that you’re gonna be in just fine shape either way
don’t be in such a rush to pay down a mortgage it’s good debt to have but if
you really do feel like hey I want to have better options sooner clearly the
condo because you’re not gonna have to eat up those extra expenses you’ll just
you’ll start to rack up the money a lot fast
in your non retirement assets if you have the condo rather than the house so
right so if that’s really the our long-term game plan then I absolutely
think you’re in you’re in great shape but if you’re like I hate this condo and
I hate my neighbors and I want my own yard and that’s important to me then go
buy us all right I love it you like that fantastic
go annual and and you’ll let me know how things go if you buy a house send us a
picture okay we will get back to your calls in just a second during the break
why don’t you do this want to follow us on social Twitter Instagram Facebook
YouTube the handle is at Jill on money and you know you probably want to go
into my facebook page and wish me a happy birthday it’s coming up all right
Jill on money we’ll be right back welcome back to jail on money where Jill
Schlesinger takes the mystery out of your finances your back it’s Jill on
money what’s going on in your financial life need some help need a little boost
we’d love to hear from you send us an email ask Jill at Jill on money.com okay
I love when we get comments about the shows that we produce and on our sister
podcast Jill on money we had a great episode with Chris Gill abaut who wrote
a book called 100 side hustles and Robert followed up and said the subject
matter really hits home with me years back I think the side hustle terminology
was actually moonlighting oh yeah for example people would leave their
nine-to-five corporate jobs and go directly to work at some small business
or retail shop in the evenings a couple days a week or during the holidays in my
case the side hustle came kind of naturally growing up in the 60s and 70s
in the Houston area I was a percussion player drummer and played many shows and
gigs around town when it came time to get serious and make a real living he
puts it in quotes as my parents would lecture me I ended up getting an
accounting degree and my CPA Wow and then went to work for a major CPA firm
and finally one of the super major oil and gas companies I retired four years
ago after 32 years during my business career I wanted to continue playing
music and I’d been playing seriously since early elementary school it would
just be very difficult to walk away from it so I love this I continued accepting
music jobs but was careful not to let them interfere with my accounting and
CPA work it really did work I can’t tell you how many times I had to go directly
to the music venue a Country Club a hotel a theater from my corporate work
change into my tux and get ready to play the gig by 7:00 p.m. it was all worth it
not only financially but now that I’m retired from the
corporate world I can continue playing music to make a little golf money and
enjoy hanging out with all my musician friends but wait I had another side
hustle being an accountant CPA I mostly specialized in tax compliance and
planning so of course I accepted a few individual clients over the years I was
busy during tax prep season doing most of the work on Saturdays and Sundays
again never interfering with my corporate work music and accounting is a
great combination of professions what did I do with the extra shekels I earn
from my side hustles and moonlighting mainly it was earmarked for savings and
investment in getting my son through college in law school without any debt
thanks for all the great work you and Mark do and the financial information
you provide Robert from Houston I love that that is so awesome it’s so funny
because I agree I think that there is a there’s something about having like a
separate part of your life that kind of has nothing to do with your real job
your nine-to-five job I just think it’s so I don’t know it’s like it makes you
happier in your job in some respects it’s something of your own it’s
something that you can control I think that that’s I think it’s like key it
really is so it doesn’t mean you have to be an entrepreneur it doesn’t mean you
have to do a ton of other stuff that’s gonna make you crazy it’s just for fun
sometimes and a little extra money it’s pretty good not bad okay this is a note
from Linda Oh her husband passed away in June and she said she filed for his
Social Security it’s now the fall it’s still nothing huh we both took our
Social Security at age 62 I should be receiving his Social Security she said
that she went to the office she called can you direct me to a lawyer
yeah what do you think about this one mark I don’t know if you need a lawyer I
think your bike have to go plant yourself in the office and you could do
it with a friend don’t do it by yourself just because it sounds like you’re
really a twit your wits end you know we don’t make great decisions when we’re at
our wits end I really think you have to go in Christine works for UPS as a
trailer mechanic recently divorced 53 no kids no home that she owns
she says the retirement options have changed we’re now gonna have to wait
until we’re 65 so no more 30 years and out the option I’m faced with is to take
retirement at age 55 at a 4.8% hit until 65 I qualify for health insurance then
you get your own pension okay she’s having a hard time I don’t know if
you need a financial advisor I think that what you really I don’t understand
why you wouldn’t just keep working that’s that’s the question um I think
that there is something about working later with a tax that’s I don’t know
this is a really tough one and I think what you need is probably an accountant
who can help you and pay by the hour to help make this decision or a fee-only
financial adviser to help you with this question so I would go to Napa NAPFA org
that is where I would turn to try to find someone in your area or a CPA
probably could also do this or any kind of tax preparer could probably help you
out okay here’s a question from someone whose name I cannot possibly pronounce
so I’m just gonna say anonymous my wife and I plan to retire soon I shall retire
at the end of the year at 62 and a half I’ll retire a month later at age 64 we
have pensions and we are qualified for Social Security which we plan on
initiating when we retire why can’t you wait we’d rather you wait until your
full retirement age I know this okay so let me just say they’ve got six hundred
grand in retirement accounts they have asked
they’re healthy we always lived within our means they do have a home equity
loan she and then he says iCloud coded that if we start collecting Social
Security immediately our break-even point would be around seventy nine if we
decided to wait until our retirement age okay
here’s my big suggestion to you my suggestion is do not take your Social
Security until you are each at your full retirement ages don’t do it and my I
think that you really should be pulling out money you need from whatever you
need hopefully it’s already been taxed you know if you have some money that is
in a non retirement account but I think you should wait until you are at full
retirement age to pull your Social Security and in terms of your portfolio
40% stocks 30% bonds 30% cash probably too heavy in cash by the way but it
wouldn’t be terrible it’s not terrible to leave it there but there’s probably a
little cash heavy for me especially for a retirement account wait until you
claim pretty please please you’re listening to Jill on money if you’ve got
a financial question of any sort send us an email ask Jill at Jill on money comm
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 I would love to hear from you all you
have to do send us an email ask Jill at Jill on money.com so I write a column
for the Tribune Company which I now think is called trunk maybe it you see
me in your local newspaper sometimes I get a lot of emails about them so okay
so I’ve been writing and talking a lot we’ve been talking a lot about college
and college financing so here is a note from Tom who says your article spoke to
me I’m right in the rough spot between earning too much to get financial aid a
little over $200,000 per year but not enough to comfortably pay for college
out of current income beyond this my income was much lower during my two
daughters growing up years hmm so despite frugal living it was not
feasible to set aside the kind of money I would need suffice to say our home
equity line of credit has not gone under used when developing phenomenon you
should be aware of is that few of my younger daughters friends currently
seniors in high school have said that their parents plan to have them take on
all of the student loans they can regardless of need in the belief that in
the current cultural moment it is a near certainty that those loans will be
eventually forgiven or wiped out without consequences huh I must confess this
approach crossed my mind as well it almost feels like free College is
already here de facto if this catches on it will of course become a
self-fulfilling prophecy as the amounts of student debt will accelerate even
more than has already been the case I can only imagine the economic
consequences I wonder if you’ve heard of others taking this approach well I
haven’t heard of that I I mean I know of cases like that Tom but here’s my fear
about any of these projections it could be that some college debt is wiped out
but it could be the same thing it could be based on income so wouldn’t that be a
shame if you took on debt and it was based on income and it wasn’t actually
relieved and wouldn’t that be a shame if you bet on something that never came to
fruition only to saddle yourself or your kids with debt so I’d be careful Matt
says I should write a follow-up article about parents influencing kids to avoid
out of state high cost for basic undergraduate degrees Matt goes on and
says many of our friends lost control of educating or influencing their kids to
make the right decision to control the cost why go out of state to spend over
$250,000 a year I’m sorry to spend two hundred fifty thousand dollars total for
a degree when you can get an in-state diploma for under 80 grand then they
don’t have to cry about trying to have the government write off their debt as
they drive away in their BMWs a follow-up article don’t bite BMW tons of
maintenance and I think you’ll be sorry it’s tough I get it you know I think
that there are again more and more the more questions that come in around
college the more I am absolutely convinced that having the conversation
is really the important part having that conversation is really critical Debbie
writes hey thank you for this morning’s reminder to complete the new FAFSA form
I forgot it last year I missed the opportunity to apply for grants and
scholarship for my son who’s enrolled at UMass Boston I appreciate your advice
and tips warm regards Debbie Debbie I’m so glad you got that I love that I like
to just make it timely timely timely okay here’s a question that is from Sohn
I wanted your opinion on whether it’s a good time to purchase a home or not my
wife and I were able to save up 20% for a $650,000 home now that being said
we’ve got 20 grand in car loans and miscellaneous credit card debt ah should
we pay off our debt or keep as is do you think we should invest our liquid cash
into our first home we make about 250 grand a year how could you make 250
grand dear and have credit card debt here’s what I think you should do first
things first pay off the credit card debt that’s number one number two you
need to have an emergency reserve fund so that emergency reserve fund means
that you’re gonna have somewhere in the neighborhood of six to twelve months of
living expenses in the bank safe or money market then you need to really
figure out whether it’s time for you guys to buy a home or not it may not be
I mean if you’ve got all that money that’s in cash you know it seems to me
that you want to be credit card de fruit debt-free probably auto loan debt free
and then really determined is it’s something you need to do your rent is
twenty-five hundred bucks a month is that home gonna cost you a lot more are
you sure you want to stay there I need some more information but run the
numbers mark we still have the New York Times rent versus buy calculator on the
Jill on Money website don’t we so why don’t you do that go to the Jill on
money.com website and there you know we have a nice beautiful resource section
click on resources and you can then look at the buy versus rent calculator it’s
great easy well how much time how much time how
much time under whine it’s okay I can do it Kathleen says we want to remortgage
to a lower interest rate get money for remodeling a mortgage broker what should
we do hey you know what you can interview some
mortgage brokers you can look online just be very careful why maybe don’t
even don’t shorten your term maybe you want to keep the term just as it is to
give yourself a little bit of breathing room job
in case something bad happens that’s something that’s can be helpful
don’t don’t box yourself in you are listening to Jill on money go to that
website Jill on money comm and you can sign up for a free weekly newsletter
isn’t that fun it’s freaky free CLE free and weekly all right we’ll be right back you’re back it’s Jill on money and we
are broadcasting live from the Capital One studios Capital One what’s in your
wallet if you’ve got a financial question just shoot us an email ask Jill
at Jill on money.com okay Nelson writes when I retired I
instructed my pension fund to set aside $300 a month of my pension for my spouse
so sometimes that’s a joint in half I don’t know what percentage that is but
it’s a it’s a way to create a pension benefit for you and a spouse okay my
wife and I decided we wanted to stop this and have that money either absorbed
back into my pension or transferred to a savings account we’re told it has been
locked in yeah that is true you’ve made a permanent pension election and you
cannot change it sorry no there’s no recourse you’re done sorry
about it dee says I’ve learned so much from you Jill you’re my financial role
model oh yeah yeah so such a I feel the weight of that on my shoulders I’d like
your opinion on investing in a Vanguard investment grade corporate bond fund I
maxed out my retirement accounts 403 B and Roth in Vanguard target date
accounts and have a one year emergency fund in an online savings account
earning two point two percent interest I’ve got another forty thousand dollars
in the Vanguard total stock market index another 25 grand I won’t need for at
least five years and I’m considering investing this in a vanguard bond fund I
don’t know which one is bonds investing a good choice for me um okay 62 years
old you know what I think that bond funds can be great
I think that as always you are already in the vanguard universe
so there is a vanguard intermediate-term bond index there’s also a vanguard total
bond market index probably has a little bit more risk than the intermediate term
and I think that if you don’t really need the money it’s fine to just sort of
put it out there let it be in terms of your and I’m what you’re gonna need this
for it’s probably just supplemental
retirement just know that this is a taxable bond fund so you will need that
as information because whatever you invest in whatever comes out you’re
gonna be taxed on that okay all right hey we got a whole nother hour to go so
stay tuned it’s Jill on money during the break hop on to our website Jill on
money.com bookmark it and then when you ever you have a question you can just go
to the website and hit the contact button all right we’ll we’ll have one
more whole hour so stay tuned 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 alrighty it’s our number two and I have a lot of excitement around
this guest because you know as usual I met her in the CBS this morning
greenroom tackled her thought she did an amazing job on the air but it was such a
tiny amount of time I said how’d you like to come into a studio with me and
record an interview for a longer form her name is Belinda Luscombe she wrote a
book called marriage ology and it’s so great it’s sort of like really falls
into our wheelhouse here at the show because she does talk about lots of
different things about successful relationships she does tell a quite
personal story about her own marriage and and a financial Fiasco but the more
important issue here is that there are some tips that she provides that I think
are very good for all of us especially as we go into the holiday season the one
that I brought back to my relationship that we have been using a ton since I
ever met Belinda in the first place is to say something very simple thank you
that little moment of appreciation really does matter okay here is our
interview with Belinda Luscombe so how did you get on this track how did you
start covering family relationships like tell us a little bit about yourself
first of all we are suckers for a great accent so we tend to just have anyone on
who has an accent I’m from the great city of Sydney Australia so that’s an
Australian accent you’re hearing not a New Zealand accent not a South African
acts under stood not a Scottish accent which I’ve also been asked about and I
my husband won a fellowship to study at Columbia University he’s an architect
and I just sort of started to try and find jobs and eventually locked into a
job at Time magazine writing about celebrities mostly I think they
that I was rude enough that I would not be put her foot off by having to talk to
famous people and and then I thought I do not want to do this anymore for a
living and so I sort of segue into writing about humans of another sort but
the ones that are closer to us you get off the starlit beat I do or the star
beat it occurred to me that famous people you know they’ve practiced what
they want to say and I miss talking to real people and I find them really
interesting and I also wanted to be helpful I wanted to do journalism that
that would make people’s lives better and one of the things I do is review
books as a family writer I get probably two books a week about how to have happy
children we probably get at time three or four books a week how to be happy in
yourself and you get like one book a year on marriage and I was like that’s
there’s a gap in the market hmm that I could step into not just the you know
the book selling market but just the knowledge market because it seems to me
that the the relationship that you choose the one that you have with this
this person it will be one of the longest relationships that you have you
have nothing you have no biological imperative to be with them we used to be
if you want to have kids you had to get married if you want to have sex you had
to get married if you wanted to if a woman you wanted to have a financially
secure future you had to get married none of those things are true anymore
marriage is completely optional now so what has this relationship become how
has it changed how do we manage it now and it seemed like we weren’t looking at
the data on this and so you did go deep into day two which I love because I’m
such a nerd so I like that you go back and you say let’s let’s look at some of
this so tell us a little bit about some of the surprising things that you found
as you are covering the beat and researching the book I think this one of
the most surprising things I found was how just very small changes can be
transformative and they’re sort of like stuff that almost sounds like common
sense but somebody has actually researched them one of the interesting
studies was if you say thank you to your spouse I love that it makes such an
enormous difference now on the one hand that’s just good manners on the other
hand there your spouse like you do things for
they do things for you we should have to be thanking each other all the time but
to choose to say thank you it has an enormous effect and I think it’s for two
reasons one the person is hearing the thank you
realizes that or believes that they are not being taken for granted it is nice
to be thanked nobody hates being thanked nobody nobody ever goes why did you say
that and when you say if you say thank you people feel better about themselves
and that’s a great thing to do as a spouse and the other one is when you say
thank you for someone to someone especially if you are looking for things
to say thank you for you yourself realize that this person does stuff
right that’s a value I value you I value you right that’s one of the sort of
transformative things I learned you know we have some research that shows us that
a lot of Millennials now when they’re dating they actually say I don’t want to
you know hook up with somebody who’s got student loan debt or I need to have
someone who is financially secure and I think that’s so different from when I
was growing up like you didn’t really think about that they’re very attuned to
money I think that’s true also what you’ve said what you have seen in the
last 10 20 even 30 40 years is that people who are wealthy and or
comfortable get married much more often than people who aren’t it tends to be
much more an activity that’s practiced by people who have college degrees and I
sort of set on their path and then they get married as some kind of you know
well this is the next sort of step and much less among people whose futures
have been made more difficult by the sort of hollowing out of a manufacturing
industry and we also know that people fight about money quite a bit it’s
usually what I found after interviewing a bunch of people it’s about that family
of origin that a lot of your money habits are formed when you’re young so
if you grew up with a pretty onerous dad who like kicked your butt and always
just made you feel horrible about money years later you say I’m never gonna do
that to my kids so I’m gonna give them everything and you become an enabler and
if that’s in conflict with the way that your spouse has been brought up that’s a
tough one to overcome so what advice do you have for people who find themselves
and quibbling about money well I I think the first one is the one that you very
very smartly point out which is to understand that when you came into your
marriage you already had a relationship and you couldn’t get rid of that
relationship and that was your relationship with money
the studies tend to show that money fights they’re the most vicious and
they’re the ones that get worse over time like people usually sort of
compromise about stuff and I think it’s you have to understand that money is
also something that makes people very alarmed if you if you are like not
getting in the amount of sex you want you know that’s boring and not fun and
joyless I guess but it’s not like you’re gonna lose your house or you know it
doesn’t feel so existential and money is a place where we go for safety and when
it’s threatened that’s why they now talk about financial infidelity which is
where your spouse or partner takes your money and does sort of deceptive things
with them because they have betrayed your trust in this a very profound way
so I think spouses have to understand that they have a relationship with money
even if they don’t they have brought that relationship from their family of
origin even if your family didn’t talk about money which mine family didn’t
really you have this kind of attitude towards it and that your spouses are not
going to be the same so you need to sit down and talk about it not only is
marriage like a sacrament if you’re gonna do it religiously it is a
financial partnership like that is how the government is treating you I that to
me means you really have to disclose everything full transparency no doubt no
absolutely full transparency even if you have terrible horrible debt the debt is
now your debt as a couple we’ll get back to marriage ology author Belinda
Luscombe in just a minute hey during the break why don’t you head
on over to the website Jill on money.com and there you can check out all the
great stuff that we do all week long the stuff we write other things we record TV
segments resources go right now Jill on money comm 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 all right it’s our
number two hey Marc did I forgot did I forget to say that I am in the special
studio policy genius studio all right I’ll do it again we’re broadcasting live
from the policy genius Studios policy genius is the easy way to compare and
buy insurance go to policy genius comm you know we got to get that CEO back in
here Jennifer Fitzgerald I liked her okay we are not talking about insurance
we are talking about marriage relationships and we have an expert with
us here in studio Belinda Luscombe she’s the author of a book called marriage
ology she’s also the editor-at-large at time you know I think this is a
fascinating topic that we delve into because I understand from some of my
millennial cohorts here at work that they’re very interested in the amount of
debt that people bring into a relationship and many of them are
hardcore they they basically say I’m not paying down the debt of my partner even
if I get married if I really make it you know tie that knot I’m not doing it so I
put that question to Belinda Luscombe we have many people who
will call up and say I’m getting married but that’s my wife’s debt
that’s her student loans do you think that’s a red flag yes I think it’s a red
flag I think people have to understand what that’s what you do when you get
married you’re both getting in the same boat and whatever current where the
current takes you you you both have to row and I think with debt and it is it
is one of the biggest problems financial problems that people argue about but it
can be overcome you sort of judge kind of a great project that you could both
take on where you say okay we’re gonna do this and this and this to you know
overcome this debt okay so let’s talk about your own little rounding error so Belinda you had a $70,000 Oh
oversight yes do tell so you know I’ve worked for this company for a long time
Time magazine and for a while it was Time Warner and you get these things
called stock options that mature and of course I’m not paying attention to this
I’m paying attention to Robert De Niro or I’m paying attention to the news and
I think at one point I got to the screen because some of people talk about it
where you have to exercise your trade to turn other options into stock options
into stock and I’m I had my mouse I remember this so clearly hovering over
it and then there was some I think I even clicked it they’re like do you want
this to there was some question about what you do with the stock you want
money or how do you want to pay for it was a stupid thing I can access should
we withhold tax yeah I don’t know the answer that question so I’m not gonna do
it and then and then I just got distracted and every camera someone came
around and then I went back but I’ve really got to do that and then I went to
do it and they’re like no those options have gone expired they exploited us a
worth from $70,000 to zero although I was talking some friends about together
I wasn’t they were trying to make me feel though it’s only after tax ok tax
and you have to do there’s only 40,000 felt so I like your description of it
yes where it’s like I was trying to figure out how I felt it it’s like I
think you could you could get the feeling if you ask a friend if you lie
on the ground and you ask a friend to climb a little stepladder and drop a
bowling ball on your stomach that would be kind of about how we feminine this is
kind of wish I really wish someone else had done that and that hadn’t happened
and this and there’s nothing you can do I was one of those people like oh well
you can just fix it afterwards you know this is like certain post no sir that’s
that was a hard lesson a hard hat and we do were not wealthy at the time okay so
full disclosure to the hubby that’s the question yes I mean yes so no well I was
like cool boy and and and I you know my parents were comfortable his parents
were not so you know he has a thing around money his his his money attitude
is different to mine and so I’m like sitting there sort of drumming my thing
what do you do I mean it he didn’t know about them we don’t talk about stock
options clearly I mean I could have got away that he would never have known but
you would have carried that burden yeah deception generally is bad I think all
right let me give you another rapid-fire so you’d say full disclosure that’s it
that’s it okay and everything with the money any other money related
observations you have for love and money I think there’s a sort of open question
about whether or not you need a bunch of some people do well with the budget some
people don’t there are lots of I thought very interesting discussions about you
know the practicality of it which I’m sure you talked about do you have a
joint do you have a joint with some side money do you have keep separate accounts
and people do that differently and for good reasons but I think whatever works
for you talk about it you know what’s funny thing that we get a lot is that
people will call in and they’ll say I’m risk-averse and my wife’s a big risk
taker that’s a problem yeah and what I will often say to people is that may be
a place where you say hey you know what I’m gonna bring in a third party here
I’m gonna bring somebody in here and say like based on your joint goals and what
you really say you want to accomplish you should have this kind of like your
your joint assets look like this now if wife wants to go out and go pile money
into Bitcoin and roll the dice no sweat but that money is assumed to be zero
mm-hmm we never count on it and if you want to have some money that’s really
really safe that’s fine but that we put a plan together right where we can
satisfy both of you a really great idea right and the other place where we see a
big schism is around education right so we have I was just talking to a woman
last night I was down in Philadelphia I was doing an event she said you know
what I went to public schools it was fine for me and my husband grew up like
mainline Philadelphia only wants private schools who’s right am i right
there’s no right what can you afford she said we really can’t afford to do
private high school and private university I said okay well there’s only
so many dollars it’s causing friction and they can’t get over that’s where I
feel like okay let’s sit down and budget if you want to send the kid to private
school I went to private school my husband went to private school
you understand the kids protocol didn’t run the numbers I didn’t send my kids to
private school I sent the the perfectly adequate New
York City they were public perfectly adequate and they’re fine and guess
where are they in college now and where it’s free it’s free as you can see I’m
frugal I like that I can’t see that but I’m hearing that yes but where we have
that difference in my marriage and I read about this in the book is that I
buy all my clothes from thrift stores and every single thing I’m wearing right
now with the possible exception of foundation garments is second-hand ok
and my husband and so I don’t I don’t like to spend a lot of money on clothes
I love clothes but I don’t like to my husband is the kind of guy who will walk
into a kind of fancy designer pick a coat that costs like four figures and
walk out not break us know he’s like that Burberry trench coat is beautiful
and then he will by the way wear that every day for ten years and look sharp
as a number-two pencil and I’m like this I was like I don’t really like that top
I bought and take it back and buy another one so we have a completely
different attitude and I have to take a deep breath in when he buys a you know a
big-ticket item like that and think how can we afford that and then think oh
well he’s not gonna buy anything else now for like a year or you know several
years so it’s actually gonna work out you know it’s interesting because I
think that how you fight is a very good predictor of how that relationship is
going to last and the experts agree with you oh thank god yes you know it’s funny
it’s hard to have an emotionally engaged relationship and not fight so give us
some ground rules for fighting well when they say don’t go to bed angry
I think that’s garbage go to bed angry feel free to go to bed angry have the
fight in the morning why would you fight tired that’s that’s ridiculous it
brilliant I love that so go to bed angry or sleep it off man don’t fight hungry
don’t fight under other you know stressful situations when you have a
fight and give some expect to it like say okay we’re gonna
say I’m gonna pick a good time to have this discussion I’m gonna make sure that
it’s a serious discussion I’m gonna you know the the experts say say to somebody
I care I want to talk about something so you’re not you know you’re not just
coming out of the blue when they’re already doing something and suddenly on
attacking them and when you when you have a problem don’t say oh you always
or you never if you can avoid those two phrases those are toxic toxic cuz you’re
you’re attacking the person not the problem so it’s if you can and of course
we’re all kind of you know doing our best our bodies are already kind of
churning to say I have a have a problem with this or I really don’t like it when
you do this okay we’ll have more with Belinda Luscombe in just a minute right
now during our break you may want to hop on to Jill on money.com and you can
listen to past shows and if you’ve missed any part of this one we’ll have
it a little bit later in the weekend we’ll have it up for you okay it’s Jill
on money we’ll be right back 401ks IRAs refinancing she covers it all
back to Jill on money with Jill Schlesinger you’re back it’s Jill on
money and we are so lucky because we’ve got a great guest her name is belinda
Luscombe she wrote a book called marriage ology she’s also the editor at
time and we’re talking about obviously relationships and I guess I didn’t
realize this until I became a certified financial planner and started seeing
clients and when they say Oh people fight about money more than anything
else in a relationship I never believed it however I did see it if you want to
be making yourselves nuts you’ll say oh I don’t I never want to
fight that’s crazy you have to fight this is your partner you’re gonna fight
but how do you fight fair how do you fight smart and how can you fight in a
more productive way not a destructive way that is what we talk about in this
segment with Belinda Luscombe when I think about having a fight and you say
feeling attacked personally as I am always like worst case scenario
especially because you know I’ve had a couple of really rotten failed
relationships so sometimes when I hear something that feels like attacking I
don’t feel like oh it’s a fight I feel like okay here it is the beginning of
the end I’ve been here before and I know I go to the worst possible place you’ve
got to fight and I use this analogy and not everybody loves it but you know
there’s two types of fighting there’s the Sultan Altima fighting championship
fighting where you really are in the ring to get that person down and it’s
did some kind of a deathmatch and then there’s the sort of fighting you sound
sort of the WWE you where it’s like well actually what we’re doing is we’re
stomping around a bit and we’re continuing a story mmm where we’re
making an interesting chapter in a story and that when those fighters fight they
actually do go at it but they make sure that their partner is safe they don’t
want them to step out of that ring hurt mm-hmm you know and so you’ve got it
when you fight make sure that the person feels safe it would just be a bit not
not just because you’re a nice person but because it will be a better more
constructive fight and you’re more like play to get what you want and I think
that the other key thing is and you’re not always gonna you’re not always gonna
reach a solution and you are gonna do some lousy stuff and so you have to get
really good at apologizing I love the apology I love saying thank you and I
love apologizing I say this to mark all the time because sometimes I’ll say but
let’s just say I’m sorry why he give me that like he doesn’t do this I’m just
saying that sometimes when I have an interaction with somebody and I just say
I’m sorry or like you know what that’s not gonna happen
I mean we are taught to say sorry from when we have very very small children
we’re taught the form we’re taught when to do it and we suck at it so bad for
our entire lives it’s like why can’t we master it and there’s two words that I
think if people could just put them out of their mind when they’re gonna say I’m
sorry never say I’m sorry if because you’re calling into question the
person’s grievance right so I’m sorry if I offended you is absolutely not an
apology right I already explained that you offended me there’s no if they’re
right are you questioning how about I’m sorry if you felt that way yeah I’m
sorry I’m gonna put your head through a window he’s just an it’s like red rag to
a bull and raging infuriating do not do that just keep your mouth shut because
then something’s wrong with you I’m sorry that something is wrong with you
and you’re like that’s not what’s going on here and the other one if you can
avoid us to say I’m sorry but like oh sorry I’m sorry I didn’t close the door
but I you know you don’t do things saying like no just you’ve just
completely undone any good work you were hoping to do just say figure out what X
is what it’s the thing you did wrong and then apologize for it and then walk the
hell away or shut up because it’s cost you nothing it’s a completely free thing
to do and and you have made the best move of stopping in its tracks the
resentment that could be building up or the unhappiness it’s funny that the
lessons and backed up by research really do go back to just be a human being
well I think that’s what marriage really is it’s this great or a long-term
partnership of any kind it’s this great experiment in howdy
become more human and how do you become a better version of you you know that’s
by loving someone else it’s only in or like that sort of very close
relationship with someone that we can really do this fine-tuning it’s like
okay you can learn to play the cello and you can get really good but it’s not
until you’ve been playing it for years and years and years that you get to be
like yo your mind that you know all the tricks that you can get the real you
know the total nuances of what in researching the book do you think is a
myth around marriage ology like what are some of the myths that we just got to
throw out well you’re not gonna find your soul mate ya gonna just do not even
you’re not looking you’re not looking for a soul mate you know if you if you
it’d be like you know I’m looking for the one person who will complete me
that’s that’s just garbage you’re not looking for that and you’re not going to
find that and the person that you choose that you think is that is not gonna be
that you have to become one and they will hopefully become yours that’s
something that you grow into so I think that’s a huge myth and sold you know
because romantic love is a beautiful and wonderful thing and you know is probably
like the rocket boosters that get marriages into orbit right you need it
but it’s it’s not going to be like that forever and there will be moments of it
and and you know some people do kind of keep that alive but mostly what you’re
what you’re finding is you’re absolutely your best friend somebody that you can
trust and somebody that you will learn from so that was one big myth that
somehow marriage would complete is why I think some of the dating apps are so
funny because I was like we’re gonna find you
this perfect match and like oh brother good luck with that I think it’s good to
choose wisely don’t you somebody who’s rude who you
wouldn’t like if you weren’t in love with them but I don’t think you’re ever
gonna find like your other jigsaw piece you know I don’t think you’re like a
jigsaw piece with a bit missing and then they’re gonna complete you if I may
therapies everyone for a minute you complete yourself first start there
you’ll see if you’re I find someone else but even if you don’t complete you so
first you know go on the journey of completion right right you know I think
we need to be a little bit more realistic about what we expect from
marriage and it will be great it will be found
stick it is a wonderful thing to attempt and to do and you do have a companion
but you’re not gonna be in like ecstatic love it’s like you know I say in the
book that marriage is like baked beans it’s shelf-stable you know you it’s
there it’s reliable you can get it out and what we expect is souffle which is
this delightful thing ie souffle doesn’t last no and it’s a you know
yeah and it’s a lot of work you would not want to be in that I can’t think
about anybody else he’s the most fantastic thing in my life right by the
way you never may want to be in that time now the whole time you’re not in
your right mind in that state we never get anything done right she certainly
wouldn’t manage your money well no it beats blowing it all on you know and
it’s like candy and bonbons okay we want to thank Belinda Luscombe for joining us
what a wonderful guest her book is marriage ology you should go get it
right now go get it go get it right now and when we return we’re gonna get back
to your questions it’s Jill on money and if you’ve got a question just send us an
email ask Jill at Jill on money comm we’ll be right back follow Jill on Twitter and Instagram for
more personal finance content just use the handle at Jill on money now back to
the show you’re back it’s Jill on money you’d say I’ve jerry-rigged this studio
to create a stand-up desk for myself basically I’ve got a sit down horrible
desk with a terrible chair and I have now I know I left that for you do you
want that that’s me talking to Marc he’s got it’s like one of those weird
extension Bluetooth things I want it I don’t know anyway I’m talking to you
here live from the heartbeat of the universe Gotham New York City with very
very bad studios anyway love to hear from you got a financial question send
us an email ask Jill at Jill on money.com
Paul writes my wife and I are turning 62 next year we need around $50,000 to live
on but because we’re not old enough for Medicare probably cost another thousand
dollars a month for health care rounding up 65 thousand bucks a year to maintain
our current standard of living I’ve got a million dollars in a 401k six hundred
thousand in other investments two hundred thousand in cash zero debt we on
our house cars are new if we take social security at 62 we’ll combined have 30
grand dividends for the stock produce about $50,000 we own an investment
property brings in 15 grand figure taxes at 22% gives us 75 is it a reasonable
plan to call it quit and retire mark what do you think I’m gonna say to that
that is right I don’t like that plan I first of all I don’t know I hate when
you people take Social Security early I mean unless you’ve got gobs and gobs of
money Oh if you have no money and you really need
it this is right in between how about working to your full retirement age and
then you really be sweet I thought I don’t think I think actually you’re a
little bit on the bubble and I really I don’t know I I think you should work
longer I need more information like how much do you earn and could you possibly
go a little bit part-time I don’t know okay Dan writes what do you think of
annuities mark where is the klaxon I’m 63 and thinking of putting 40% of my
401k into one leaving 60% in stocks and bonds I will be
semi-retired at 66 that’s your warning stay away here comes
the annuity salesperson no no no dan dan please no I think annuities can be great
but it’s a very small percentage of people who should use them I certainly
don’t think it’s worth paying for a larded up fee ridden insurance product
when you have a 401k which is already tax deferred so no I don’t think this is
a good idea for you I really don’t doesn’t make sense
call us back I want or send us a note I want more details but I can almost
guarantee that that is not in your best interest almost maybe if there’s like
some slight chance I’m missing something skip wants to know should we pay off our
home our house loan or not $180,000 outstanding house valued at 350,000
I’ve got 28 years left I’m 60 my wife is 57 and retired I make $60,000
a year her pension is $2,000 a month and then there’s a payment of about eight
hundred bucks a month that goes away at 62 I want to retire at 62 my pension
will be $4,000 our portfolio is about 550 to 600 thousand dollars got some
money in a Roth fifty five thousand in I think she mean he means a health savings
account car loan health is good I don’t like
paying 750 bucks a month on the house of interest on the house
what’s the best thing to do here’s that what I think the best thing to do is
don’t pay off the house because I know that you don’t like it but I don’t like
you burning up all that liquidity so you’ve got a pension you got money
coming in you can pay the house off if like something goes really great or you
keep working a little bit longer that’s fine
but if you are in good health and you’ve got longevity and your families which
you say you do what I think is better off your doing is to not collect again
this is like please don’t collect Social Security at 60 – don’t retire early I
think working a little bit longer keep that mortgage don’t don’t soak up all
that gorgeous liquidity we need that liquidity especially in retirement Scott
writes I first heard you on Planet Money or the indicator podcast can’t remember
which and I your opinions on homeownership resonated with me I’m a
recent college grad who’s still trying to find out how I fit into this world
and the idea of homeownership sounds daunting and something I don’t
necessarily look forward to I was also worried how on earth I would ever build
my net worth without owning a home for without owning a home for possibly 15
more years when I heard you talking about how renting buys flexibility and
that as the 2008 financial crisis showed homeownership isn’t necessarily a
foolproof way of building your net worth I felt like you were talking right to me
I then bought your book this is exactly how it’s supposed to work people I’ve
never bought your book I read it over the summer I loved it it pushed me to
keep my identity safer and to switch my Roth IRA over to Vanguard from a family
friend who is earning a commission and charging quite a bit fee wise I’m
confident that I now understand what a diverse portfolio is and its importance
and I promise never to sell when the markets down I just wanted to say thank
you for spreading your knowledge thank you Scott from Bozeman Montana
that is like the nicest email I so appreciate it I’m glad that we can try
to perhaps just demystify some of these broader concepts so
that said if you want us to demystify things for you all you have to do is get
in touch with us ask Jill at Jill on money.com that is our email address or
if you go onto the website Jill on money.com you too
like mr. Montana can buy the book the book is right there click on it the dumb
thing smart people do with their money thirteen ways to write your financial
wrong so you can do it right now during the break all right we’ll be right back you’re back it’s Jill on money and
before we finish the program we’re gonna squeeze in another question or two if
you’ve got a question of course throughout the week don’t forget we’re
here Manning and we’ll Manning the email INBOX really Manning cuz I’m not
touching it Marcus Steve writes I listen to your radio show regularly and
appreciate your advice I’m a state government employee I will plan to
retire next year at age 59 I’ll have zero percent reduction in my
state pension because I’m retiring early I will need to pay for my own health
insurance my $35,000 a year pension may not cover both health insurance and
other living expenses so can you advise me on which buckets of other investments
I should use now and in what order to cover the gap here’s what my choice is
here’s what my buckets are US Treasury notes deferred comp which is all the
move all that money has moved to Vanguard Roth IRA other taxable Vanguard
stock bond and REITs three taxable stock mutual funds outside of Vanguard no debt
no spouse no kids current home 150 grand plan to sell it and move in with my cig
other in a home we purchase with all cash and we’ll share expenses okay so
you didn’t mention how much you have in each but in general when you’re thinking
about this you want to use the money that has already been taxed so the money
that is in the not the deferred comp but the taxable Vanguard the taxable stock
mutual funds those accounts are what we’re looking at draw
down now what you have to remember of course is once you sell some of these
some of the funds you’ll probably incur some tax liability so you may want to
wait to do it until you’re actually retired and then maybe your tax bracket
goes down so that’s how I would do it always be the taxable accounts then the
deferred comp I would I don’t know how much is in the Treasury notes I don’t
know if that’s your emergency reserve you know you want to have some money in
an emergency reserve fund so I wouldn’t go crazy with that on and leave that
Roth till the very end hopefully you never need it
that would be great okay thanks so much for writing and hey thank you so much
for listening it’s been a pleasure you can always send us emails with your
questions ask Jill at Jill on money.com and go over to the website jill on
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love chatting with you every week and don’t forget we have been broadcasting
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