- And good evening, you've got More Than Money, you've got Gene Dickison, your host, your personal financial advisor, live for you - live to tape, but live for you for the next half an hour.

I am at your service offering you all of my...780 years of experience at your service.

Happy to be doing so.

If you have any financial concerns whatsoever, I think More Than Money is exactly the show you should be enjoying this evening.

If you have questions about investments or retirement, income taxes.

401Ks, Roth IRAs, estate planning.

how to make gifts, what are the gift limitations?

Are there any gift limitations?

Starting a business.

Liquidating a business, maybe running a business for its maximum value?

All of these things are appropriate, but surprisingly, most of your questions are far more interesting than any of those.

Far more interesting than any dry financial topic because you're at the very heart of our show.

We encourage you, we implore you to send us your concerns, your questions, what's impacting your financial life?

Send those to us and we will answer every single one right back directly to you.

We can't promise that every single question appears on air.

We simply don't have enough time.

We simply have far more questions than that, which is a glorious problem to have.

But we do promise that someone from my team, from the More Than Money team will answer every single question back to you.

So Gene@askMTM.com works very, very well, Gene@askMTM.com.

Send those to me.

As you view this show, we are now several weeks into spring.

We're enjoying the opportunity, maybe you take a break, maybe you take a just a walk and get that warm breeze in your face and it clears your mind and it feels so much like you're coming back to life.

That's the spring renewal that we count on, and it happens every single time right after winter.

So keeping in mind that these things have an ebb and flow, life has an ebb and flow, your investments have an ebb and flow.

Perhaps even your retirement has an ebb and flow.

We're here to serve you in any way that we are able.

So let's turn our attention to our financial correspondent.

Let's see, Megan, hopefully you're enjoying spring so far.

- I am.

I'm loving it.

It's getting warmer.

It's the best.

- I know you like working out outside.

That's got to be a great deal of fun now versus a few weeks ago where it was 20 degrees below, it felt.

- Yes, I don't enjoy working out with a coat on, but yesterday I did go for a bike ride actually, and I had no coat.

It was great.

- So we hope everybody enjoys their spring as much as you and I do.

Let's start with hopefully serving someone in our audience this evening.

What's our first question?

So our first e-mail tonight is someone we've actually already helped.

It's a little note of thanks to start the show.

It says I talked with your insurance partner, and after reviewing our situation and the various premium reducing options offered by Genworth, he suggested keeping every benefit in place but remove the 5% compounding on the maximum daily benefit, currently $321, future.

The next day, I spoke with Genworth at length twice and they agreed to that option and offered a premium reduction from $5,690 to $2,911.

I jumped on it.

Does it increase our financial exposure down the road?

Yes.

But how many more years do we have?

And we can afford to, we can afford it to self-insure a bit anyway.

Many thanks to you and Mike.

I really appreciate it.

- Well, you're very welcome.

What this emailer highlights is that we have in our More Than Money sphere, our More Than Money universe, lots of wonderful partners.

Any financial adviser who would lay claim to knowing everything that is necessary to know as a financial adviser is either a fool or a charlatan.

That is simply not possible.

So in our More Than Money world, we have a number of partners.

Mike happens to be one of those who helps our clients with long term care issues, life insurance issues, disability income issues, lots of different, what, risk management issues that can be incredibly challenging and very, very confusing.

We have others, of course, in Social Security arenas and reverse mortgage arenas, legal estate planning arenas, but specifically the issue here with the question that has hopefully, or actually in reality been resolved adequately is that long term care insurance contracts, particularly the ones that have been around for a while, have had a pattern in recent years of increasing their premiums and in some cases at dramatic rates, 40, 50, 60% increases in a given year.

So folks who have done exceptionally detailed planning for their lives, protecting themselves and their families, feeling quite confident that they have made good choices, dealing with insurance companies that have fine reputations, find themselves as they have matured... Perhaps they got their program when they were in their mid sixties, now they find themselves 15 years later or so getting, let's be clear, closer and closer to the probability they might need long term care coverage, might need to make a claim for long term care benefits, the premiums are being escalated to the point where they find themselves often having to choose whether to keep the coverage or forfeit all the money they've paid in and end up with no coverage whatsoever.

So there are hopefully options to be evaluated in this particular case.

There were indeed.

The insurance company allowed this individual to reduce one of the pieces of the benefits.

In this case, it was the cost of living adjustment.

It had already taken the daily benefit that they would pay to over $300 a day, nearly $10,000, I think it ended up being exactly $10,000 per month as a benefit.

And by removing that cost of living adjustment, it reduces the going forward exposure for the insurance company.

It reduces the going forward benefits, perhaps, for the insured as well.

But as you heard it was, they were able to drop the annual premiums by over $2,700 a year.

A year!

The savings are dramatic.

Over the next ten years, if the pattern stays the same, they'll save over $27,000 in premium.

Now reality is, sadly the long term care insurance providers will likely continue to raise their premiums.

So does this mean that all of this money ends up back in the insured's pocket?

The answer, sadly, is likely no.

But what it does mean is that they've purchased a much longer period of time at which they can afford to pay these premiums.

So while they may have had a year or two more and then would have stopped at six or 7,000 a year, when they're down to 2,900, they have a ramp up over what hopefully will be ten or 15 years, hopefully much longer.

Hopefully, they don't get increases at all.

They live the entirety of their lives, never needing a dollar of long term care benefit.

That's what we pray for.

Just as with your homeowner's insurance, you pray that you make your premium payments and your house never burns.

People never regret, "Gosh, I paid in for a homeowner's insurance, "my house never burned.

I never got to collect."

We don't want it to burn.

We don't want you to lose your health either, either.

But having that protection, having that risk mitigation, incredibly important.

Long term care comes in lots of flavors, lots and lots of flavors.

So if you would like a similar result, whether you have a similar question or you're starting fresh, make sure you reach out to us with your e-mails, Gene@askMTM.com, and we'll get you good counsel.

Speaking of good counsel, Megs, let's see what we can counsel for our next questioner.

- Our first question for the night says, we have a will, but I'm not sure it's what is beneficial for our children, as I would like for them to avoid paying any taxes on it.

Our 401(k) combined is one million plus and we have four children in our will to be divided equally, but I'm not sure if they will avoid taxes.

I heard if you put it in a living trust, there's no taxes.

Is that true?

Thank you for your help.

- Yes, lots of people have heard this.

Living trust avoids taxation.

No, it doesn't.

And in this case, it's doubly incorrect, if that's possible.

Individual writes that they have $1 million in their 401(k).

401(k) cannot go into a living trust directly, just as an IRA would not go directly into a living trust.

And as a result, in order to get that million dollars into a living trust and theoretically attack the tax problem, they would have to sell out of the assets of the 401(k), pay income taxes on $1 million and put what was left in.

I guarantee you - that may be a bit strong.

I strongly suspect, 98% plus, that the income taxes they would pay would be far more painful, far greater in dollar amount than the estate taxes their children would pay on a quarter of a million dollars each that will come out.

So the individual is very clear.

I don't want my children to pay taxes.

I'm sad to report to you that not only will your children pay taxes, they're going to pay two kinds.

They're going to pay inheritance taxes.

No ifs, ands or buts.

They're going to pay income taxes, unless you decide to take that money out before your passing and pay the income tax first.

Now some would say that's crazy talk.

It may not be crazy talk.

I don't know what your tax bracket is.

I don't know what your age is.

if your tax bracket's very low and your age is quite young - I'm picking 75 as a number - and this is money you don't need, you can pull that money out over a number of years, hopefully in a low tax bracket, and end up with the bulk of, if not all of that money outside the 401(k) before you pass.

That's one option.

A better option, my opinion, is dependent on your health.

If your health is good, particularly if the health of you and your spouse is good, you can use the cash flow from the 401(k) distributions, RMDs or otherwise, to fund a life insurance contract of $1 million that could be placed not in a living trust, but in an irrevocable life insurance trust.

And then your children will have $1 million to be split four ways, income tax free, and estate tax free.

So you can accomplish the end result that you're looking for, just not the way you suggest, and for all of you out there who have heard the urban legend that the living trust is the answer to all estate planning concerns, saves on taxes, saves on probate, saves on this and saves on that, be very, very aware.

In most cases, that's not true, in most cases, certainly from an inheritance tax situation not true.

Can it avoid probate?

In all likelihood, but in this gentleman's case, for example, there is no probate to avoid.

$1 million in a 401(k) will pass to the beneficiaries named.

It will not go through his will, It will not go through probate.

It's already accomplished what the living trust could accomplish without any cost whatsoever.

So a fascinating question.

Brief question, lots of layers to it.

Hopefully, we've made it clear.

If you have additional questions, of course, reach back out to Gene@askMTM.com.

Megan, fascinating, fascinating indeed.

We have such interesting, interesting audience members, what is next?

- Our next question says, I saw more than money on PBS and I have a similar situation to a gentleman that you previously helped.

My wife passed away in March, March 28th 2021 after almost 60 years of marriage.

After hearing your advice, I decided to remove my wife's name from our deed too.

I guess this would be done at the registrar's office.

Do they usually have a standard form for this, or do I just walk in and tell them what I want to do and go from there?

Also, will I be required to pay federal and/or Pennsylvania state income tax on half the value of the house if I make this change?

And will there be a transfer tax involved?

Thanks for your help, and keep MTM on the TV.

- Well, you're very kind.

You keep this on the TV.

If you watch, ratings go up.

PBS likes that.

We'll stay.

So thank you so much for your kind words.

And goodness, our condolences on your loss.

60 years.

What an amazing, amazing life.

That is fantastic.

I'm sure it's been a challenge.

I'm sure it continues to be a challenge.

You are in our prayers, without a doubt.

Removing your wife's name from the deed is not necessary.

It's not a requirement, but it's a very good idea.

It will make the lives of your beneficiaries when you pass much, much easier.

So can you go to the register of wills and deeds?

I assume that you can.

I would not recommend it.

I would recommend that you counsel with a trusted, experienced estate planning attorney, perhaps the one that helped you settle your wife's estate, perhaps the one that helped you design your wills and powers of attorney for you and your wife.

The transfer of a deed is, in my opinion, not a do it yourself process and done by a reputable legal counsel, very inexpensive.

So let the professionals do that for you and have that done with real confidence for just a couple of dollars.

There will no...

There will not be transfer taxes, he tried to say.

There will not be transfer taxes on this transaction and it will clean up the... the legal title.

Make it nice and clean for the next generation.

It will go from you and your wife just to you and then at your passing, with a death certificate, they will be able to retitle the property rather easily.

So again, our condolences on your loss.

We pray that you are doing well and you are confident in a reunion to come.

In a reunion to come.

Megan, interesting question, indeed.

What other interesting questions can we answer?

- Our next e-mail says, I've seen your show and I'm hoping you might be able to help me with my retirement planning.

I'm 64 years old and semi-retired much earlier than I planned because I lost my full time job three years ago due to age discrimination, and I haven't been able to find another full time job.

I have, however, found a part time job that I love and that has a good hourly rate.

It started out at ten hours a week, but they recently, after a year, raised me to 20 hours a week.

I started collecting Social Security at age 62.

I know everyone says to wait until full retirement age, but with no full time job I felt I had to.

I think I have enough in retirement savings, mostly dividend paying stocks, if I can wait a couple of years before I start taking money out.

But here's my big question How do you budget for big expenditures in retirement?

What if I need a car?

At some point I will.

Or I want to take a vacation or renovate my kitchen, which I need to do?

I'm not sure how to budget for those kinds of expenses or to figure out what I can afford.

If you need more information, I'll be happy to follow up.

Thank you.

- Well, goodness.

Not as difficult as it sounds.

Lots of folks have these concerns, and a lot of folks, I'm not really sure why, but lots of folks that we counsel seem to have the opinion or are under the misimpression that when you retire, all of a sudden major expenditures disappear.

That there are no longer cars to be purchased.

There's no longer home renovations to be done.

There's no longer travel to be accomplished.

That all of a sudden, I don't know, it's a Barcalounger and it's a six pack and it's a channel changer.

And what a dreadful existence.

So, no, of course not.

Folks who are retiring at 65, if it's a married couple, they have more than a 90% chance that one of them will be alive at 95.

So 30 years in retirement, are you going to buy a car somewhere along the line?

Of course you are.

Renovations, of course, etc.

So your question is perfectly appropriate.

And by the way, good for you.

You found a job that you love, that makes it great fun.

You get up in the morning, you're not dreading heading off.

You're doing something that's enjoyable.

Not unlike Eric behind the camera.

He loves what he does and just getting to hang out with Gene that kind of stuff.

It's just lovely.

Bottom line is, if you're enjoying it, it's really not work, but yet you're getting paid and apparently getting paid quite well.

So good for you.

Budgeting for major expenditures is most often done if we can smooth out the costs.

So I'm going to pick a number and say, a car, $25,000 out of your savings can be a very, very painful way to pay for a car.

However, taking the earnings from your savings and paying the car payments is, in many cases, a much more comfortable or at least accommodating process.

Same idea - hey, the house needs $35,000 of improvements.

Taking that as a loan, often a line of credit, line of credit against the equity in your home, allows you to spread those payments out over many, many years.

In general, borrowing money can be problematic.

But in these current era of high inflation numbers, high, historically high inflation numbers, if you borrow a dollar and you pay it back in a year, you're paying it back with 90 cent dollars.

Not a bad gig.

Pay it back two years from now, you're paying it back on 85 cent dollars, you're paying back money you've borrowed with very inexpensive dollars.

That could work out rather nicely, but the model is really fairly consistent.

If you have a home, you've got some equity, set up a line of credit with your bank so that you have that access to be able to borrow against for a certain need, pay it back over time, pay down that mortgage balance and yet still have your line of credit available for the next big project.

I think that's going to...

I think you'll find that that ends up working out really, really well for you.

And congratulations, good for you and semi-retirement.

One more comment, you made a comment about your Social Security and people say you should not take it early.

Our guideline for when you should take Social Security is very, very straightforward, fully endorsed by our Social Security partner, who assures us that the proper time to take your Social Security is when you need it.

And you needed it, so you took your Social Security at exactly the right time.

Megan, it's exactly the right time for another question.

OK, this one says, my husband is retiring from a Pennsylvania public school.

His pension is with the Pennsylvania State Employees Retirement System.

We need advice as to whether to withdraw the lump sum and invest it ourselves or not withdraw it and receive a higher monthly pension.

If withdrawing it is recommended, where should we invest this lump sum, stocks or bonds, etc, in order to not be too risky but earn some dividends?

Thank you for your information.

Questions about teachers retiring, as you might expect, are one of our specialities.

If you are a financial adviser in the Lehigh Valley, with as many educational institutions as we have, both primary, secondary higher educations, understanding how this program works is important, and the emailer has asked the question in precisely the correct way.

There is the option given to the retiring teacher to either leave their contributions in - in many cases, it's somewhere between a hundred and two hundred thousand dollars.

That's a pretty typical number that we have seen, sometimes a little lower.

Very few times much larger.

But the option is given that you can take a pension, remove your lump sum.

Or take the lump sum, leave the lump sum in and take a larger pension.

So the question becomes one of need.

It is a cash-flow question.

It is not an investment question.

It seems like it should be.

It truly isn't.

So if I were sitting with this couple, my question to them to start the conversation would be what's your monthly budget?

What income do you need so that your bills are paid and you're happy and you're healthy?

So if they give me a number, I'm going to pick numbers out of thin air, if they give me a number that says 4,000 dollars, my next question is, can we meet that 4,000 dollars of need with the lump sum taken out?

Translation - let's look at your Social Security, both Social Securities plus the pension without the lump sum.

And if we have reached our target of 4,000 or more, you should take the lump sum out and invest it in an IRA.

If, on the other hand, we get to adding all that up and we're short, our income, our guaranteed income is short of what we need so that we know that we're happy, we're healthy and our bills are paid, then you should leave the lump sum in.

Now there are pros and cons to both choices.

If you leave it in, it's 100% guaranteed, but only as long as both of you are with us.

So if sadly, a month after retiring, the two of you are lost to us in a common occurrence, that money, that lump sum, that 150, 175,000 dollars is gone, it is lost to your beneficiaries.

The flip of that, of course, is that if you both live to be 100, you're going to make a tremendous gain on that money that you've left in.

Of course, looking at it the opposite way, if after a short period of time, we've lost you, the lump sum that was taken out and put it into an IRA will go to your beneficiaries, will go to your family, will go to the people that you choose to have it, and that will add to your legacy for them.

If, on the other hand, of course, your expenses go higher than you expect, could that be eaten away?

The answer is, of course it could.

Very few, maybe any in this crazy world, absolute guarantees.

So we're playing the game of probabilities.

Hopefully he was a math instructor.

This will fit right in perfectly.

We're playing the game of probabilities.

What are the probabilities that you live a very long and healthy life and that a guaranteed income that you need will be there forever?

Or what are the probabilities that you can live on a budget that does not require a higher pension?

You can take that money out and build some flexibility into your program.

So what do you need to spend?

That's number one.

What's your health look like?

Be honest with what your longevity may or may not appear to be.

And number three, what are your goals for legacy?

Do you have goals there?

Is there any part of you that is inclined to leave a little something behind or a lot of something behind for either someone you care about or an organization that you're committed to?

If you can answer those three questions, then the question about lump sum or not becomes pretty easy.

Speaking of pretty easy, there's nothing that I enjoy more than sharing as much information as we can for you right here every week, so it's pretty easy for me to invite you to send us your questions about your personal situation.

Send those to me, Gene, just as you see on the screen, Gene@askMTM.com.

Rest assured, every single question is answered back to you directly, respecting your wishes and your privacy, we'll get all that great information to you.

And if you're comfortable with it on a future show, you may end up seeing your own question aired right here.

So before we leave, I want to thank all of you for spending part of your time with us.

It's an honor to serve you, of course, and on behalf of Megan and myself, we invite you to return again next week right here.

We have for you another edition of More Than Money.

Goodnight.