August 18, 2020

Ep. 374: How Are You Using the Income You Make?

40 minutes

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Today, Pete gives what he calls “mystic” advice to a listener’s question from the mailbag and Damian is called DAD (again)!

Don’t forget! HEY MONEY is your new secret weapon for advice in your personal finances.

No time to listen? BUMMER. Here’s some of what happened:

Show Notes:

Mailbag Question 1:

“I’ve been a longtime listener and reader of your content. My wife and I are 36 and we have a 6 year-old daughter. We’re pretty frugal, so this new COVID-19 world feels about normal to us. We live on $30K, so far I’ve saved 13 into a brokerage account. Health and Life insurance are solid. I also will receive a military retirement will kick in in 2022 at $25k per year. I’ve also saved about $8k so far into my daughter’s 529 Plan. She also has full access to my G.I. Bill that should cover her college expenses. Additionally, we’ve saved $93K in a Roth IRA and $250K in a Roth 401(k). Should I redirect my savings entirely to a taxable brokerage account to fund early retirement?“

Damian: I think he’s sitting in great shape: pension, great amount of money saved already. You can always get those contributions out of a Roth IRA. I don’t know if I would neglect that. Putting everything else into a taxable account is mere personal preference at this point.

Pete: Practical advice: absolutely do what he asking about doing. It really takes on legs when the pension kicks in in two years. This could be a real retire at 50 situation. Mystic advice: Are you feeling purposeful in your financial gifts? How much impact do you want to make with your wealth? Or do you want to?

Mailbag Question 2:

“I have a 529 account that I set up when our only child was in school. We failed to use all of the funds for her education. At this point, it is unlikely that she will pursue another advanced degree, is single, and has no children. I read that we can change the beneficiary on the amount to our child’s spouse (assuming she does marry), knowing the levels of student debt young people carry now. Is this a possibility down the road?“

Damian: You can change the beneficiary to a family member. The IRS’ definition of ‘family member’ is fairly broad, so yes. This is possible. All new this year, something in 2020, due to the SECURE Act.

Pete: She could arguably put it on her Tinder profile? Maybe?

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