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As you journey through life, you should be laying a financial foundation, one strong enough to provide security and a fulfilling, worry-free retirement.
How do you do it? Step by step.
When you’re in your 20s, you’re getting your sea legs, adapting to adulthood, learning financial responsibility and putting some money aside.
When you hit your 30s, it’s time to get serious by developing a healthy retirement plan and emergency savings.
In your 40s you hit your peak earnings years and should understand investing and start to imagine what retirement life will be like.
Every decade of your financial life builds on the one before and culminates, hopefully, in bulletproof savings and enough income to make life after work stress-free and fun.
That’s what this week’s “Money!” podcast is about. We’re going to talk about essential money moves you should be making for every decade of your life, from your 20s to your 70s and beyond.
As usual, my co-host will be financial journalist Miranda Marquit. Listening in and sometimes contributing is producer and novice investor Aaron Freeman.
Sit back, relax and listen to this week’s “Money!” podcast:
Contents
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Show notes
Want more information? Check out these resources: This may interest you : The government owns a piece of your traditional 401(k) or IRA.
About me
I founded Money Talks News in 1991. I’m a CPA, and I have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
Computer-generated show transcript
Money Moves You Must Make in Every Decade of Your Life To see also : What Are High-Net-Worth Individuals? | Investment.
Stacy Johnson: [00:00:00] Hey guys, and welcome to the money podcast. Let me ask you something. What if I could handy the 20 year old you a map, a map that led directly to getting rich? Wouldn’t that be awesome? Well, while there’s no map leading you to riches, there are steps you could take. As you go through life. They’re going to offer you the best odds of financial security and a dream retirement.
And that’s exactly what we’re going to talk about today. We’re going to talk about money moves you need to make in every decade of your life. I’m your host, Stacy Johnson. I’m here with cohost Miranda Markowitz say hi Miranda. Hello. So we also have producer novice investor, Aaron Freeman with us say hi, Aaron.
Ready to make some money move Stacy. All right then. And today we also have a special guest Hilary Steinman, my young sister in law. Who’s here to represent. The younger generation say hi Hillary.
Hilary Steinman: [00:00:49] Hey, everyone excited to learn from those older than me.
Stacy Johnson: [00:00:54] Certainly everyone. Isn’t it. Hillary, we’re going to discover later in just a minute, but before we dig into today’s topic, you may hear the names of stocks or investments on this podcast.
If you do, though, that doesn’t mean they’re recommendations. You never invest based solely on our advice because it may not relate to your situation no matter what you hear here. Get your own advice, make your own decisions. Okay, guys. Great. Let’s get back to the topic at hand money moves. We need to make and every generation.
So let’s establish what we have here. We have, there’s four of us here. Um, Hillary is going to be the youngest. How old are you Hillary?
Hilary Steinman: [00:01:29] I’m 30 years
Stacy Johnson: [00:01:30] old, 30 years old just turned 30. So you’re going to, we’re going to go over some money moves you should have made in your twenties and money moves. You might be making a year 30, so you could tell us whether you think these are a good idea, whether you’ve already done them or whether you think they’re stupid nonsense and you don’t care.
We also have a couple of 40 somethings that would be Erin and Miranda. Now, Aaron, you are 47. Yes. Yes. And Miranda you’re 42.
Miranda Marquit: [00:01:56] I’m 41 41.
Stacy Johnson: [00:01:58] Okay. And then,
Miranda Marquit: [00:01:59] yeah, you, uh, you’ve insulted a lady by. Acting like she’s older.
Stacy Johnson: [00:02:04] Oh, I’m sorry. It’s I didn’t know. You were a lady. I thought you were veranda. Okay, fine. So wait, well that’s good though.
We’ve got, we’ve got one, you know, a little, little 47 approaching 50. I don’t want to be insulting there, but one news just barely 41 is just barely 30. And then there’s me. Who’s older than dirt. 65 years old. So I can remember what it was like, what I did in the fifth and when I was in my fifties and when I was in my sixties.
Although, I don’t really recall a lot of what’s going on around me lately. I’m getting a little senile, but I look like I’m 30. Now you look like a hippie is what you look like. We’re not on YouTube. So you guys can’t see, but Aaron looks like a hippie. Aaron, I
Hilary Steinman: [00:02:42] am shocked. I thought you were much younger than that.
Stacy Johnson: [00:02:45] I feel 55 and you’ve actually, you’ve actually seen him. So you, so you’re telling the truth. He does look younger than he is.
Hilary Steinman: [00:02:52] Yes, absolutely. I would have Aaron. I would’ve guessed. You were like
Stacy Johnson: [00:02:56] 36. Awesome. Thank you. If there’s one thing I hate, it’s a man. That’s better looking than me, so let’s change that subject.
Okay. Let’s talk about money moves. You need to make in your twenties. Now, Hillary, I’m going to throw some stuff out here and you guys are also welcome to do that as well, but, uh, I’m going to, I’ve got a few, I’ve written a few articles on this stuff. So I’m going to throw some stuff out here that I wrote about things that 20 people in their twenties should be doing with their money.
Now I want you to tell me whether you did this. Whether you, or whether you haven’t done it and thought you should have, I wouldn’t just think it’s a dumb idea. No, 20 year old is going to do it. Okay. Now the first thing I’ve got on my list is starting a retirement account. Did you do that in your twenties?
Hilary Steinman: [00:03:36] I did. I did start a 401k. Um, I think at my second job, my first job, I remember I was not making as much money, so I held back. Um, but then my second job, I did set up a 401k.
Stacy Johnson: [00:03:49] So how old were you and you said it before.
Hilary Steinman: [00:03:51] I must’ve been maybe 24, 23, 24. That’s pretty
Stacy Johnson: [00:03:56] good. Yeah. Knowing, knowing you, I don’t know you super well, but I don’t know you pretty well.
I think you’re relative responsible person. So I’m not surprised to hear you open a 401k at the age of 24. W would you agree that a lot of your peers and contemporaries did not do that at that early of an
Hilary Steinman: [00:04:10] age? I think it depends on the industry. I would say a good array of people who had full-time salary jobs or that’s a corporate benefit, probably set up a 401k.
Um, if maybe people who are. Um, freelancing or maybe not in a corporate job where they have that added benefit or corporate match. I don’t think a lot of people I knew had done that on their own volition where it wasn’t set up for them or there wasn’t, um, a resource available to do it pretty easily.
Stacy Johnson: [00:04:45] Yeah. I don’t think, I don’t believe I set up a 401k in my, in my twenties. Or anytime in your retirement plan. Now I had a pension plan when I first got out of college. Um, so I did, but I don’t think I really put it into, into volunteer retirement, but again, that’s so long ago though, they just invented fire.
There was a lot of excitement about wheels. It was, it was, um, w what about writing down your goals? Did you do that?
Hilary Steinman: [00:05:11] Um, no, not at all. I don’t think I’ve done that now. I probably should though. No vision board. Oh, I definitely did a vision board, but you know, that’s more like I really want to go on. Is that really a thing?
Oh yeah. People create vision boards for all types of things.
Stacy Johnson: [00:05:28] It’s kind of like a goal. Have you done
Miranda Marquit: [00:05:30] that? So, yeah, so I actually, yeah, well, so I don’t, I don’t do a vision board. I don’t actually like the goal thing, but I do, what’s called a life map, which, uh, has a center because I, as, as we know, I’ve talked about so much on this podcast.
I like to align my spending my direction, how I direct my financial resources. I like to align that with my values and, you know, um, And so I start with like a life map and I start with in the middle of like, you know, while I want to live with passion and purpose, what are the things that helped me do that?
And how do I arrange my financial life? Uh, so that my financial resources are going toward these things, if that makes sense. So I don’t sit down and list out goals, but yeah, I have like a life map. It’s a little different than a vision board, but it’s, and I revisit it every now and then, because you know, things are going to change like, uh, where I am.
Now as a 41 year old is so different from where I was, um, in my mid twenties and in my mid thirties when I was getting a divorce and moving across the country. And so, I mean, so being able to tweak that and being able to support is hugely important.
Stacy Johnson: [00:06:35] Yeah. And I think a lot of people have goals that maybe they don’t write them down.
I remember being in my twenties that I, in fact, I think I mentioned this to, in our last podcast, I had a goal to retire when I was 30. I was going to make a fortune in real estate and retire at the age of 30 dumb ass goal. Yeah. But I, but it was a goal and you’ll point out and a point I’m making too, is that having any kind of a goal is important, even if you change it, you know, I mean, it doesn’t matter.
You’re allowed to change your goals. No, one’s going to beat you with a stick. So, you know, but, but having a goal is, is a fastest way of achieving something. They had a goal
Aaron Freeman: [00:07:05] of spending money. That’s why I stopped doing the 401k, my twenties.
Miranda Marquit: [00:07:09] Winning right there. And you, and you achieved that goal, did you not
Stacy Johnson: [00:07:15] right.
Miranda Marquit: [00:07:18] You had the goal to spend that money? Um, I do want to just quick do a quick thing. Uh, Hillary mentioned something about, uh, freelancers and not. Uh, being able to start a 401k. Um, I did actually, when I was 23, 24 in that kind of range, I actually started a Roth IRA. So I did an IRA. So, um, if you are, if you don’t have access to a retirement account from a corporate type job, uh, or something like that, If you’re working part time, if you’re freelancing or if you’re, if you’re work, just doesn’t offer you that option.
Uh, open up an individual retirement account, open up an IRA, um, because, uh, you can start saving and with a Roth, if it’s your first job, there’s a very good chance that you qualify too. Go to a Roth, your taxes are going to be lower now. And then you can get that money later without paying taxes on your withdrawal.
Stacy Johnson: [00:08:06] Like you were very responsible and your twenties. I don’t know that I was, I had goals. I wanted to get rich and stuff, but I’m just imagining there’s not a lot of 20 year olds listening to this. They’re going like, oh yeah, yeah. I’ve got my budget in place. I’ve got my goals, establish my retirement account done, you know?
But, but maybe I’m wrong. I mean, know, it seems to me like your twenties are a time when you’re kind of irresponsible. You’re just getting out, you know, becoming an adult, being out on your own and spending too much money on alcohol and dating and whatnot, you know? I don’t know. But you guys sound very responsible.
Miranda Marquit: [00:08:37] Yeah. I was Mormon, married and had a baby pets. It irresponsible. This is what happens when you’re Mormon, married and have a baby that’s
Stacy Johnson: [00:08:48] responsible. We use the exact same.
Hilary Steinman: [00:08:52] Yeah. I’m a little different than, um, that situation when I was 24. But, uh, but I will say I did have a friend tell me about Roth IRA.
And I had no idea what that was. I had no idea what he was talking about. I mean, I think he even said I have an IRA. I was like, Like IRA glass, like what is an eye? What is that? And he didn’t, and I know he didn’t have, um, uh, like a full-time salary job at the time. And that was the only way I knew about it.
So it is interesting. I think even at that age, when you’re in your twenties and how much you don’t know and how you really are just spending money on whatever freedoms you now have as an adult. Um, uh, that was something that, you know, you just hear about things through friends or other people. So I wish I had known about some more things
Stacy Johnson: [00:09:38] like that.
Well, you did pretty well. You started a 401k at the age of 24, you know, actually as we leave the twenties, cause we have a lot of decades to go. So we’re going to leave the twenties and go onto the thirties. Couple of, couple of points, a lot of these things that we’re going to talk about here, it can be done in any decade.
Um, so they don’t necessarily, you know, they’re not. Super important to one decade or another, but, and so they all will translate from one decade or most will translate from one decade to another. But the one thing as we leave the twenties that I would like to emphasize though, is starting saving, you know, because small and soon is better than late and later.
Does the earlier you start saving the better off you’ll be. And if you could do that in your twenties, that’s awesome. That’s that would be my one piece of advice for people in their twenties. I can only provide one agree, Hillary.
Hilary Steinman: [00:10:21] Yes, absolutely. Um, I say I started saving really early and I was able to buy my own car when I was 25.
And that was like the biggest achievement I ever had. I think when I was that age, You
Stacy Johnson: [00:10:33] know what you sound like a person who’s not very fun, but I actually did a party with you before, and you’re perfectly fun person, but you sound like kind of a nerd.
Hilary Steinman: [00:10:41] Well, you know, Uh, it comes and goes,
Stacy Johnson: [00:10:46] okay, let’s move into our thirties where Hillary is just on the cusp of now here’s some tips I have for the thirties increasing your emergency fund, which you should have established in your twenties.
I had mentioned that, um, having a budget, tracking your spending, which is basically the same thing, paying off debt, um, considering starting a college fund, obviously, especially if you have children, re-evaluating your career trajectory. And upgrading your insurance coverage. Again, if you have children, you probably want life insurance, but w what do you think of these as, as goals or as a money moves to making your thirties, Hillary, have you have an emergency fund?
Hilary Steinman: [00:11:25] I do have an emergency fund. Um, I, I actually, um, I think, uh, like th now it’s, it’s interesting. Cause the way I save now is a lot different. I’m thinking a lot about those feature items. Like I want to have children someday. I want to make sure I’m prepared for all that comes with that, all this additional expenses.
So I have, um, I actually have two different savings accounts and one is sort of reserved for bigger. Bigger goals, bigger ideas, like potential house purchase, other things. And then I have another one that’s just more general savings. And if I had an emergency, I could tell
Stacy Johnson: [00:12:04] now, do you utterly have a budget?
Hilary Steinman: [00:12:06] We don’t have it budget. We probably should do that. I don’t know. I think we’ve kind of figured it out as we have gone up what. You know, each month we’re very into it. We both have, um, apps on our phones for all of our credit cards and finances. So I feel like I’m, like he said, I’m very nerdy. So if I spend something I’m always like, okay, how much should I spend this week versus last week, I can just scroll down and check and kind of see where I am.
Um, but no, I don’t have, I haven’t actually done a formal budget. I do have friends. So they actually keep track of that, like on a spreadsheet and everything.
Stacy Johnson: [00:12:43] Yeah. W and you know, it is easier to stay on top of your money now with apps. Uh, and in fact, you know, budgets, we’ve talked about this before in the podcast budgets, uh, used to literally be a pencil and a spreadsheet when I started doing this 30 years ago.
And now she was hooking up your bank account to some app and it’s automatically tracking all your spending for you. Uh, you could tell it what your budget categories are in five minutes. And it’ll tell you whether you’re over or under every month. I mean, it’s just really easy to do now, but it does seem like we talk about, but it’s a lot, not that many people really do them.
I, I, I don’t have a budget. I do track my, uh, net worth every month. And I know Miranda, you, you have a, not necessarily a budget put you’re aligning your expenses with your goals. Um, so you it’s kind of a
Miranda Marquit: [00:13:26] budget. Yeah. Yeah. So I have, I call it a spending plan because I’m smoke it out later, but. Yeah. So I have a spending plan, basically.
I just go through and say, okay, where do I want my financial resources to go? And it’s all automated. So it’s like, you know, it’s like, obviously like the insurance bill automated, the rent automated, all of that stuff is automated. Goes down, goes down, goes down. Uh, X amount of dollars goes to the travel fund.
Every month. X amount of dollars goes into the 5 29, although, uh, My son just graduated high school. So I probably gonna stop putting the money to the 5 29 now, because now it’s time to start taking the money out of the 5 29. Yeah. But, uh, but you know, X amount of dollars goes to these different things. And so the way I see it as is it’s, that’s automatically taken care of.
So whatever’s left. I can just spend till it’s gone and it doesn’t matter what budget category it’s in, because my money is automatically going to the things that I’ve prioritized.
Stacy Johnson: [00:14:18] That’s cool. You know, there’s something else that wasn’t in my list though. Tell me what you guys think of this. I think when you, especially as you get to your mid thirties, you really need to start thinking about your career, you know?
Um, what do you, what is it that you’re going to end up doing? Cause I know in your twenties, at least I did, uh, I went to a couple of different jobs. And when you get to your thirties, you need to start settling down, deciding what your career is going to be, and actually making light decisions to not to sound like it doesn’t matter.
But I mean, deciding whether you have children deciding where to live. I mean like, like Hillary, you live in San Francisco, in New York, um, and, and, um, Miranda, you live in Idaho and I would assume the cost of living is much less than Idaho than it is in San Francisco or New York. And this is going to impact the amount of money you’re going to have to save.
And ultimately how you retire. It could. So making decisions like this, where are you going to live? How you’re going to live, how many kids are going to have, these are all things that are going to impact and your career, you know, you’re going to be self-employed or you going to climb some corporate ladder, or are you going to enjoy that corporate ladder?
Because you can’t start making those decisions when you’re in your fifties. So you need to start making them when in your thirties, in my opinion, what do you guys think? Oh,
Miranda Marquit: [00:15:25] well, I mean, I made all of those decisions so early in my twenties that I’m 41 and my son just graduated high school. Cool. So, I mean, I, but I think you make a good point in that, you know, it’s a good idea to be evaluating where you’re at, what you’re going to do.
I mean, I’ve had to reinvent myself, um, you know, when I had the divorce and all of that kind of stuff, um, you do have to be a little bit flexible and ready to reinvent yourself and kind of shore yourself up. Uh, and of course I’ve just been freelancing since. Uh, you know, I haven’t, I haven’t had a real job since, you know, 2003.
So like I have had a real job since 2003. So, uh, so it’s, so I think it really just kinda depends on where you’re at, but yes, by the time you’re 30. Well, if you don’t ever want a real job again, then I guess you decide. That you’re going to freelance or you’re, you’re going to do some consulting or however you’re going to do it.
Yeah. Okay, cool. Make money and doge coin be a doge coin millionaire. That’s fine.
Stacy Johnson: [00:16:18] That’s all you ever needed to do here. You’re a doge coin master, you know, what do you want to know what you’re supposed to do in your forties guys? I’m dying to find out, but gosh, darn it. We have to have a commercial break first.
We’ll be right back. Okay. We are back. So now let’s talk about what to do in your forties. Here’s some money moves ahead, max. Your retirement plans. Prioritize retirement over college. In other words, if you have kids make sure that you’re saving for your retirement before you save for their college fund, uh, finding extra money to invest and talking about the end of life, thinking about it in other words, having a will.
So, okay. Let’s talk to our forties people. Have you maxed your retirement plans? Miranda and
Miranda Marquit: [00:16:59] Aaron. So I’ve, you know, since I have, since I have, well, not anymore, I make too much for a Roth IRA for several years now, but I have been maxing out the IRA. I finally it’s. My, my accountant has been after me to do this for years because I do have a business so I can know.
Open us up, uh, you know, so a SEP IRA. And so you get, you get to have a higher, you can contribute more to ACEP than you can to a traditional or Roth IRA. So I finally did that last year and my, you know, when I was 40, I finally opened up a set-up so well done me. Um, but, uh, but I had been maxing out the IRA for a long time, but because I had started doing it and maxing it out so early, it’s still done very well.
And, um, it’s doing great for me. And I do also want to put in my plug for my absolute favorite account of all time, the health savings account. Um, it doesn’t work for everybody, but if you have relatively low upfront healthcare costs, uh, and you can afford, um, you know, Ford higher deductibles on your insurance.
The health savings account is great because that is truly tax-free money. It is the only tax free account out there. And maxing that out has got me, uh, enough that I am not worried about healthcare expenses later on in life in retirement, because I’m building that up and I will use that money for health care expenses and then use the money from my IRAs.
For a day-to-day living expenses. So I think, yeah, but yeah, like figuring that stuff out in your forties is hugely important and, um, I’m glad that I’m doing it now in my early forties.
Stacy Johnson: [00:18:33] And by the way, well, first let me ask Aaron, I’ll come back to this in a second. Aaron, are you maxing out your retirement accounts?
Retirement plans? Well,
Aaron Freeman: [00:18:41] trying to, obviously I did not, as I’ve said many times before, I did not do that in my twenties and thirties, but I did focus on career. Uh, even though it was spending like crazy and now in my forties with the third wife, there you go. And she didn’t do it either. She didn’t really pay attention to her retirement in her twenties and thirties.
Uh, but combined we are, are full steam ahead. And basically how we’ve gotten out of that is, uh, low, low, low, low spending. Uh, we, we basically almost don’t spend anything. I think the most we spend as is on food and drinks and entertainment going out like that. But other than that, There’s there’s no buying new cars.
There’s no buying clothes. There’s no, it’s just really low. And we, so we’re debt free. And instead we invested in homes and things like that. Now sense of talking to you and Miranda, I’ve dabbled a little bit in the stocks.
Stacy Johnson: [00:19:35] Now, what about you, Hillary? Do you max out your retirement accounts?
Hilary Steinman: [00:19:39] Um, I actually don’t think I’ve, I’ve maxed out my company’s match on my 401k.
So that’s something I’ve always done, but I know my husband, he, he does the full max. I think I’ve just always been a little more cautious. I think. Because I’m younger and actually wanted to ask you all too, because I know, I think it’s your forties or maybe it’s your fifties, but, um, part of the reason I’ve maybe held off of that, it’s just be, as I have some other bigger expenses that are going to come up in this decade of my life, but yeah.
I think you hit your peak earning in your forties and fifties too. And I, and I wasn’t sure about that in terms of some of those decisions you make. Um, and if you’re able to, um, you know, take that a bigger investment in your retirement because you have more money to do those things. Yes.
Stacy Johnson: [00:20:34] I think that’s absolutely true.
In fact, this is a good segue back to what Miranda was talking about. You know, I put away I have a solo 401k. And I put $50,000 in it every year. So when you get older and as you just alluded to Hillary, when you get more money, you know, you can start putting aside more stuff in retirement. Also, it’s something that you’re trying to do to reduce your tax liability too.
Um, so I put away literally $50,000 a year. In a 401k plan and I, and th there’s there’s ways to save even more, uh, which I won’t bother going into here because it gets into the weeds a little much, but I wouldn’t have expected you Hillary to be putting aside the max, but I would expect you and everyone listening to put aside as much as it takes to get free money from your employer and that term in terms of a match.
You have to get that money. But, uh, and everyone was clear on the prioritize retirement over college. You know, your kids can get loads for college. You can’t get loans for retirement. So when you’re in your forties, especially in your late forties, you’ve got kids that are starting to get into college.
Make sure you take care of your own retirement first, before you help your kids with their. Expenses at school, unless of course they’re okay with you living with them when you get older.
Miranda Marquit: [00:21:44] Well, and I think something to think about too, is a lot of things that somebody, a lot of people overlook as far as this financial planning, which is weird.
But as I think, am I the only person here that has children. Oh, do you have one arrow? Fantastic. Oh, okay. Fantastic. But one of the things I think people overlook when we’re talking about kids and everything like that is the importance of talking to your kids about money and the importance of talking to them about what they want in life and, and co and figuring this stuff out over time and, and giving them an opportunity to learn these things.
Because as a result of this situation, Um, you know, I have been setting aside money in a 5 29 for my son, but that money is going to go farther because my son, through our discussions and looking at things and comparing things and, you know, uh, well, if you’re going to do this prestigious for your school, then you’re going to have to do student loans on top of what we’ve got saved in the 5 29, all of these things.
And he was thinking about, well, what do I want in life? How do I want to make money? What do I want to do? And he has settled on, well, if I live in Idaho falls and I know how to weld, I can make good money and have a high savings rate and go to the community college and trade, spend a lot less money. And so.
He’s that’s what he’s doing. He’s he’s going to start, uh, hopefully this fall and a program at the community college to learn how to weld and when he has done with that, he will be coming out, make a cool 70 K a year living in a low cost of living place like Idaho falls and, uh, and thanks to recent laws and changes to 5 29 plans.
I will then be able to use $10,000. That’s going to be left in there to pay off my student
Stacy Johnson: [00:23:19] loans. Well, the gift for him for knowing what he wants to do and good for you for having the, the extra money in the 5 29,
Miranda Marquit: [00:23:27] being able to have those discussions and, and work on those things together. Um, I think are good too.
And then also thinking about, you know, how are you going to help your kids later on? Right. I mean, I, I moved house last summer to a bigger house where my son can live in a basement. He’s got his own apartment down there. Uh, two of his friends have moved in, so they’re going to be there helping out with rent.
Um, But like, it’s a way for him to get a little bit of help for me in a good start in life and being able to say, okay, well, how much am I going to help the kids? And remember everybody, um, wealthy people help their kids. I mean, we talk about, we talk about, we talk about, oh, kick them out at 18, they have to get a job they had to do blah, blah, blah, blah, blah.
Well, a lot of the time. Provide stresses. And you end up in situations where you don’t have an emergency fund. You don’t have the stuff. If you look at the way the wealthy handled their kids, the wealthy helped their kids to that next level, the wealthy give their kids stepping stones. So, um, so that’s something to think about.
Uh, if you, if you decide you want to have kids. And as you’re planning that all out.
Stacy Johnson: [00:24:27] Yeah. That’s what was saying before, you know what I mean? It sounds harsh, but you know, having a, having a child is expensive and it could, it could be for life, you know, it’s not this, you shouldn’t, you should do whatever makes you happy, but we, we sometimes tend to just fall into scenarios, like getting married.
I’ve been married three times. Let me tell you somebody getting divorced sets you back. I mean, emotionally and financially. And so, you know, you start getting a little more serious about making those kinds of decisions after you screw it up a couple of times also
Aaron Freeman: [00:24:55] get to the point where you realize your children are adults too.
My mine’s 25. And I did the same things that Miranda did and tried to focus his attention where he should be. And even right up until the time of college, he had zero idea of who he was and what he wanted to do. There’s nothing I can do about that. And so I, wasn’t going to just, you know, allow them to go to college and then decide he’s going to drop it and do something else and then drop it and then do something else.
And I was like, well, if you’re going to do that, you’re going to pay for it on your own because that’s adulthood. But there’s other ways you can support them. So like, I gave him my old car that I didn’t need anymore and things like that. So he could do where he wants. So there’s, there’s all kinds of paths that you can take as a parent.
Yeah. Good
Miranda Marquit: [00:25:35] point. That makes a lot of sense.
Stacy Johnson: [00:25:36] Oh, before let’s, uh, one quick question for everyone, um, who has a will on this call? The four of us. I do. I do.
Miranda Marquit: [00:25:46] I don’t, um, most mostly
Stacy Johnson: [00:25:49] because
Hilary Steinman: [00:25:50] I don’t, but it’s funny because actually through my work, um, we are, um, it just, uh, the, um, organization I worked for, we were actually talking with a like online will planning service to provide for.
Um, donors hurt my organization. And, uh, and I w they were asking, they were like, do you have a will? And you just got married. And I’m like, you know what I need to do that. Didn’t think about it.
Stacy Johnson: [00:26:17] I mean, most people, your age probably don’t have a will. And I don’t think that’s, I mean, everyone should have a will, especially since it takes 20 minutes to make one.
Uh, depending on how complicated your situation is, what your comp usually when you’re in your twenties or thirties, your situation, isn’t very complicated, but I’m not surprised. I mean, I don’t think I had a will when I was 30. In fact, I’m sure I didn’t, but I do have one now. Anyway, that’s something you should do in your forties.
So start thinking about. Yeah, or getting a will if you don’t have one. And I, you know, a long time ago when I started doing stories on this for TV, uh, it was like more than half people in the United States had not have a will. I don’t know what those statistics are now. Presumably they’re better because theirs is easier to get one online and everything now than it used to be.
Okay. Now let’s go into the fifties. Again, a lot of this stuff could go into any, any, uh, Decade, but the fifties, you want to have a strategy. If here’s, here’s a good thing to do in your fifties, and maybe even in your forties, if you’re not really good at investing, or even if you are talk to a pro, I actually had this not that long ago.
And I’ve been doing this for 40 years. I had, I talked to a, a pro it actually didn’t cost me anything because it was a company that wanted to do business with money talks news, but nonetheless, it was a real financial, uh, review for most, from a CFP. And it was useful to me. I didn’t really change a whole lot, but even just knowing that I was doing the right thing, uh, you know, having objective eyes, looking at it was important and it made me feel better, made me feel more confident in my decisions.
So anyway, if you get into your fifties, especially if you’re not conversant with investing, talk to somebody who is. Um, and then let’s see what else supercharging your savings using catch-up provisions, which you guys are not eligible for, but I am with a 401k. You can contribute an extra $6,500 a year and with a traditional or Roth IRA, a thousand dollars extra a year.
So that’s something you do in your fifties. Um, thinking about debt, you know, the less you have the better, there’s more people retiring now, way more people retiring now with a mortgage than they used to. I think like 20% of Americans are retiring with a mortgage when it used to be five and they used to be much lower.
Um, but anyway, if you can, you want to eliminate debt? Why. And this, this actually applies to any decade because money you’re paying an interest is money you can’t use for yourself. So the less interest you pay, the better only exceptions are. If what you’re buying is going up in value by more than what you’re paying in interest.
But generally speaking, especially as you get in your fifties and sixties, you want to start getting rid of that debt. Um, you don’t want to get too cautious. Uh, this is something we tend to do as we get older. I, although I’m 65 and I’m not good, had not gotten too cautious yet, but, uh, some people are afraid of losing their life savings with good reason, obviously, because you’re going to need it.
You’re going to depend on it to live. Uh, but you do need to maintain some amount of, of your savings and risk assets like stocks. Otherwise you will not keep pace with inflation and your life will suck. Then also something else you need to do. And here’s something I need to do. I’m in my sixties, my wife’s only 42, but getting both spouses on board, I take care of all the money I should drop dead.
During this podcast. Sarah will have no idea what to do and that’s dumb. And when I was a stockbroker, I dealt primarily with older people and that, that happened a lot. The man would have a heart attack. The woman has no clue what to do. So whether you know it, and obviously it could be either way. It could be the woman with the in charge of the purse strings, but whatever, both spouses need to be on board because someone can happen to you.
The older you get, the more likely it becomes trapping life insurance D who has life insurance on this call. Anybody? I have life insurance. You do oh, from your employer? From my employer. Yeah. And you guys don’t Aaron A. Miranda. I don’t know. I’ve never had life insurance. You need life insurance when you’re, when the loss of a breadwinner would create financial catastrophe for the family.
And that’s obviously true more often true when you have little children, but when you get to your fifties or sixties, you no longer have those kids or there’s kids are out on their own. Anyway. Uh, as long as you can provide for your spouse, there’s going to be adequate income. You can consider dropping life insurance.
This is a complicated topic. So you could do a little reading on it, so he might not want to drop it. And there’s different types of coverage. So some were more likely to be dropped than others like term. Uh, but anyway, you might want to check to see if you can get rid of your life insurance. You also want to talk about long-term long-term care coverage or near fifties and sixties.
I don’t have it, but I’m married to a nurse practitioner and, but it gets, it gets really expensive too, though. So long-term care coverage is something you can consider. It’s something I considered and decided not to do because it’s just too darn expensive and not everybody needs it when they’re, you know, they get older and then also to practice living on less money.
Uh, cause when you get, you know, if, if you’re in that situation, when you get into your retirement years, you may want to. See what it’s like to live on a little less money, or at least try to figure out how much you are spending and what’s your what’s your retirement years are going to look like any, any other things you guys can add to that?
Hilary Steinman: [00:31:15] I actually have a question. Um, I mean, perhaps it’s for everybody or just Stacy, but you had mentioned about seeing a financial professional, just even as a sense, check in your fifties. And I know on the S um, talk we’ve referenced, uh, taxes and you know, how things can help your, your taxes and how much you pay based on decisions you make.
That’s an area that I think I’m very much, um, a novice. I don’t really understand. I, I hear this, especially from my parents or people older than me, like, oh, you should make this decision because it’ll really help how much you pay in taxes. And. I don’t think I’ve ever really thought about, like, I just think, oh, I have to pay this in taxes because this is how much, this is what turbo tax tells me I have to pay.
Is there a way, or like, is that just something you learn as you go about like, you know, tricks of the trade of like, oh, I could, you know, like this will decrease what I pay because of this benefit. Yeah.
Stacy Johnson: [00:32:15] There are things you can do to plan on your taxes. Well, one of them, Hillary, we were just talking about putting money into retirement plan.
That lowers your taxes. So whatever you put money in your 401k that’s money, you’re not taxed on. So that’s when what’s one tax planning thing. What Aira does Aaron has a rental real estate that also is we reduce your income tax liability. Unfortunately, there aren’t a ton of things you can do to lower your tax bill, but, okay.
Here’s the example, Hillary. I know that you, you piddle around and stock somewhat, right? You could have a stock that’s at a loss. You can sell that stock, take that loss, put it in something else immediately. Like I gave an example, Hillary, a couple of weeks ago, I bought a gold stock the beginning of the year.
Um, and I could sell that gold stock have a loss of about $3,000. I think it was down that much and then buy another gold stock. So I’m still in gold, but I just created a $3,000 deduction.
Hilary Steinman: [00:33:10] Oh, wow. Yeah, absolutely
Stacy Johnson: [00:33:12] called tax loss, harvesting. So there are little things you can do like that. There’s not a ton of things you can do when you just have a salary.
And you know, there’s a lot more things that rich people can do that the rest of us can’t but there are a few things that you can do. To save on taxes. Interesting.
Hilary Steinman: [00:33:28] Yeah, I think it’s just as I, you know, you consider those, oh, like, should I buy a house or should I do this? Or, you know, those little things that you think about as you accumulate more wealth as you get older, um, you know, it’s, it’s, it’s like, oh, the, you know, the house will be really expensive.
And then I always hear people refrain. Oh. But you know, you have some property tax write offs and things like that. Like I’d never even knew that was. You know, an added benefit. So it’s, it’s definitely interesting as this come along in terms of just conversations I’ve had or advice people have given me who are older,
Stacy Johnson: [00:34:03] and I forgot that, uh, the, uh, tax advantages to owning a home too, although, you know, you’re still gonna, it’s gonna cost you more than you’re going to save in taxes, but there are 4% in taxes and you’re on a 40% tax bracket.
Then your, you know, your actual borrowing rate is only going to be what 6 cents was two to two and a half percent. So, you know, that can help too. I’m sorry about the, my canine over here, the consumer canine is barking a little bit, but we’re almost done. So let’s, let’s plow through, um, any, any last thoughts that anybody has on how to, you know, whether we’re doing all this stuff, right.
Other moves, we should be making
Miranda Marquit: [00:34:38] anything else. Yeah. So like when you’re talking about taxes and things like that, I think it’s important to, uh, to, when you think about, you know, your, um, the way you’re going to withdraw, right? When are you going to take social security? How does that impact, uh, impacts how you’re gonna withdraw things?
From, you know, which accounts are going to withdraw from first, right? Should we draw it out? This account, that’s going to be pay RMDs and then, you know, wait, wait to, you know, pull on the Roth until, you know, whatever. So seeing somebody who can kind of help you navigate that, I think is going to be huge because that that’s going to make a huge difference.
Hillary is talking about taxes. Well, once you start withdrawing money from those, some of those retirement accounts, if you don’t have a Roth, and if you don’t have an HSA that you’re withdrawing from for health expenses, You’re going to be paying taxes on that 401k money on that traditional Roth money I’m in traditional IRA money.
Like you’re going to be paying taxes on that. So figuring out how to do that and how that works with your social security and when to take social security. All of that works together.
Stacy Johnson: [00:35:38] You’re absolutely right. And by the way, I’m that exact person. I have no Roth, anything. So, and I, and you’re required to take money out, take money out when you’re 72, they changed the law.
It used to be 70 and a half. But anyway, so now it’s 72. I’m going to have to radically increase my income every year by making withdrawals from my retirement accounts. So these are things you do need to plan when you’re my age, not when you’re y’all’s age, but when you’re my age. And, uh, and I’ve. Kind of, well, I’m not going to say inadequate doing it, but I haven’t really spent a lot of time at it.
Haven’t even decided we’re going to retire yet. And I’m 65. I’d actually don’t think I am going to retire, but, uh, these are things you need to consider and do what I say and not what I do here in Miranda for the
Aaron Freeman: [00:36:19] HSA to be tax-free. Does I forgot is that money have to be spent. Uh, annually in that year or is it over time?
What it was, is
Miranda Marquit: [00:36:28] that okay, so the HSA rolls over so you can let it accumulate. And so basically what it is is you get a, uh, you get a tax deduction when. You take a, you take a tax deduction for the money that you contribute. Then it grows tax free over time. And the only, the only restriction put on it is you have to use the money for health care costs.
And so, as long as you’re using the money for qualified healthcare expenses, you don’t have to worry about paying taxes on it. So basically I’m using it as my retirement healthcare account. Right. So this is not a flexible spending account. This is not an FSA. This is a health savings account. So it all rolls over.
You can invest the money. So I actually invest my HSA. You can invest that money so that it grows. So it’s just part of my retirement portfolio. And, um, yeah. And then once you reach age 65, you can use it as a backup IRA. You do have to, to pay taxes once you start taking it out at age 65, but you can use it as a backup.
IRA. You can also
Stacy Johnson: [00:37:30] use it to pay your, your Medicare. Yes, yes.
Aaron Freeman: [00:37:34] Right? So it’s something to consider, like, especially in your fifties and sixties to start contributing to it because medical issues are
Stacy Johnson: [00:37:40] going to say immediately.
Miranda Marquit: [00:37:42] Yeah. Aaron, you don’t have that. I love having my now, like, mine’s like, it’s, it’s my, you know, second biggest investment account after, after my retirement account.
Stacy Johnson: [00:37:52] Yeah. Well, I’ve got about $35,000 in mine and I
Hilary Steinman: [00:37:56] use it. I use it even for con yeah. I even use it for like, you know, my contacts.
Miranda Marquit: [00:38:03] Yeah. And, and if you have, and if you have extra money, if you’re not spending all of that, like this year and your HSA, it’ll roll over to the next year and you can actually invest that.
I mean, I invest most of my HSA money.
Stacy Johnson: [00:38:16] No, I’d never done that. My just earning whatever that minimal interest rate is, but I’ve already got plenty of money in the stock market as it is now, before we go, I’m sorry to stop this conversation abruptly, but before we go, we have a few questions to answer. Um, you had, did you have a question Miranda that you got from one of our readers?
Which one was it? Uh,
Miranda Marquit: [00:38:33] Robert wants to know about extended warranties.
Stacy Johnson: [00:38:37] You want me to read the question? That’s yours? Did you buy an extended warranty? This is from Robert. Should you buy an extended warranty on a late model used car with low mileage that you buy from a reputable dealer?
Miranda Marquit: [00:38:50] So, yeah, so that’s an interesting one and it kind of depends like all things in life and personal finance.
It really kinda depends. Uh, look and see how much time is left on the original factory warranty, or if they have an extended like power, like a lot of, a lot of, uh, a lot of them have like an extended powertrain warranty that goes up to 100,000 miles. So if you’ve got a late model car, there’s a good chance.
But if you bought it from a reputable dealer, the warranty is still intact. And so you may not need an extended warranty. The other thing to think about is, okay, how much do you have in your emergency fund? Can you afford to pay for these repairs? Um, how much is the car actually going to be worth by the time that extended warranty kicks in and realize too, that if you get your extended warranty, a lot of the time, um, You’re not even going to be able to start using it for at least three years down the road.
So do you want to pay $2,000? Roll it into if you’re getting a loan on your late model used car, uh, do you want to roll it into your loan and pay interest on it? Uh, and not even be able to access it for three years? So those are things to think about in general. Um, So I’m not one for buying warranties because in general I can afford most of my deductibles and most of my repair costs.
And so it doesn’t make a lot of sense for me. Um, so really kind of think about it and, and kind of make that call. But for most people, an extended warranty just is not going to make a ton of sense, even on a late model car.
Stacy Johnson: [00:40:13] Yeah. They’re generally costs more than you’re going to get back from him, which is why, of course, they’re in business in the first place.
So hello, Stacy, I love your podcast. I was hoping you will talk about how you go about investigating a stock. How do you find out who’s investing in it and how to figure out the PE ratio? Thank you for the excellent information you provide us all. Well, Jessica, this is a whole podcast that we could do about.
But stocks, but let me give you a couple of things that I personally do. I noticed something that’s going on. In other words, I’ve noticed people were using Facebook. I noticed people were carrying around iPods, you know, blah, blah, blah. And that’s how that this is how I find this is how I get ideas. Then I do a lot of reading online and now it makes it really easy.
You don’t have to go to the store to buy magazines anymore. Cause everything you need is right there on the internet. Just go to sites like MarketWatch or CNBC. There’s so many of them. I mean, I have, um, Uh, subscriptions to a lot of expensive sites, like, like, um, Wall street journal, et cetera, et cetera.
But anyway, there’s plenty of information out there and there’s plenty of people talking about it. Yahoo finance is another good place to go. So there are plenty of people talking about this stuff. You can watch. TV shows, you can listen to podcast, obviously like this one, but try to get an idea. And usually now if you go get a stock.
Quote on CNBC or MarketWatch or any of these sites. It’ll tell you the PE ratio, the PE ratio, for those of you who don’t know is the price of a stock divided by its earnings per share. Sounds complicated. Isn’t it at all? Uh, if a company makes a dollar a share and the stocks at $10, it’s got a PE ratio of 10.
So the lower that PE ratio in general, the better, but it’s something you can use to compare one stock to another. So these are, again, we don’t have a lot of time for this. We are going to do a whole podcast just on stock-picking, but just keep at it, Jessica. And the more you do it, the more comfortable it will become to you.
But Mike read a lot. Okay. Now you got one last question really quick. This one is from Karen and Frank Johnson. No real, no relation. Um, with the red hot sellers market in Florida, should we sell now and rent and our new location in Charlotte, North Carolina. Which also has a hot sellers market and for how long, three to six months.
So we can be there to secure a house to buy. So what these guys are thinking is what I’ve been thinking too lately. And I thought about it before last time my house doubled in value was should you, should you sell in a hot market and then sit on the money, rent something, and then wait till prices, wait for prices.
Come down to buy. Now, these guys are also moving and it’s always a good idea to read for you if you have the option to do so, too. If you’re going to a brand new place, you’re not familiar with nothing wrong with renting and checking out the city before you make a huge commitment by a home, you are obviously going to have to move twice if you do that.
But in terms of trying to time the market, which is exactly what we’re talking about here, selling at the top, and then hoping prices go down and buying dangerous game. I don’t know where the top is going to be. I do believe that that will probably, that would probably be smart. I think it would work.
Because I think the market is overheated now. And I think the prices will come down at least somewhat in coming months or maybe a year, but I could be wrong. And then you’re in, it’s going to exacerbate your problem. If you sell your house now, and that one in North Carolina, it gets more expensive, then obviously you’d be better off buying right away.
So that’s, that’s a tough call to make. My, my general advice is not to try to time markets sell your sell. You’re in the hot market, Florida by the hot market, North Carolina, but make sure you know where you’re buying before you buy. So you don’t have to make a mistake. So renting first is not a bad idea.
I am afraid we’re out of time guys, but we are never out of topic. So dig a little deeper. You’re going to find links to lots more info in our show notes. And remember if your goal is to make more, to spend less to retire rich, your online home is money talks, news.com. And don’t forget to check out Miranda’s online home as well.
That’s MoneyTalksNews.com. And if you’ve got a question, comment or topic, you’d like to suggest, don’t just sit there. Tell us about it. You can email us at hello at money talks. news.com. That’s hello. At money talks, news.com. And one last thing, if you appreciate what we do, do something for us. Subscribe to this podcast takes you two seconds.
Really helps us to, if you like us, show us and subscribe. I want to say thanks so much to my wonderful sister-in-law Hillary Stein, Simon for being on our podcast today. And that’s about it. I’m Stacy Johnson and I’m Miranda
Miranda Marquit: [00:44:31] mark wit.
Hilary Steinman: [00:44:31] Now Marin. And then Stacy sister-in-law.
Stacy Johnson: [00:44:36] There you go. That’s the way to do it.
Thanks for hanging out with us guys. We’re going to see you right here next week. .
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