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Well, it works rather smoothly.

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And of course, the the questions are the key.

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It goes very, very quickly.

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Let's give you a demo.

Let's go right to Megan and and find out what our first question is.

What makes a good evening?

Good evening Jean.

Our first question tonight says my wife and I are debt free and wished to provide money for college for our two grandchildren, ages five and 18.

We will obviously need to supercharge the account for our 18 year old.

But we're wondering, do we need to set up an account?

If so, where would we do that?

And or do we need to send the money to their parents monthly instead?

Thank you for your guidance and may God bless your work.

Well, goodness, thank you so very much.

You're very, very kind and God bless you.

Okay.

Helping out grandchildren, fantastic grandchildren are indeed very, very special.

I now have that experience under my belt.

Well.

Ongoing experience.

That's fantastic.

If you are simply interested in making gifts to the family, the parents, the kids, that's all you need to write a check.

It's as simple as that.

Do you need to set up an account?

The answer is no.

Might you want to set up an account?

The answer is it depends.

Kind of.

I'll use Pennsylvania as an example.

Our home, our world headquarters is here in Pennsylvania.

Pennsylvania gives a contribution to a certain type of educational account.

A tax deduction on the Pennsylvania return.

Many states do that.

Many do not.

So make sure you're checking with your tax professional before you get too far down the path.

So if, for example, you were giving $10,000 a year for each of these grandchildren, if you were to establish a 529 plan, an educational plan, and were to contribute that $10,000 for each 20,000 in total in Pennsylvania, that would result in you saving about $600 a year on your taxes.

Not a small number.

Most of you are already thinking, wait a second, you're just talking about the state.

What about federal?

There is no federal deduction.

You don't reduce your federal taxes, even a dollar by using a 529.

The federal government, in their mind, gives you the advantage by allowing the money to grow tax free.

So if it's used for all the qualified educational expenses and the list is extensive, starting with preschool and going right on through professional development, once you've gotten your degree and you're doing CE thereafter.

So the the opportunity to use funds that have been contributed to a 529, in tremendously broad ways, tremendously advantageous ways from.

Yep.

Going right on academics right on through college or or goodness apprenticeship programs, HVAC, electrical.

Plumbing.

Carpentry.

That's where the real money is these days.

So if you're thinking your your child may not end up going to college, they may go that route.

God bless them.

We certainly need the help.

But bottom line is lots of advantages.

And if all of those funds that you've contributed and all their earnings are used in those ways, tax free, thanks free.

Pretty cool, pretty cool idea and lots of other goodness kind of ancillary benefits to the 529.

If a 529 isn't used completely for education, it can subsequently, in many cases, be used to fund a young person's Roth IRA.

So say you put the money away.

They get through school.

They haven't used it all.

You may end up contributing that to a Roth IRA and starting a 2223 year old off with a tremendous advantage, tremendous head start on their retirement funds because those funds will be compounding for them goodness, for decades and decades and decades.

And as a result, gosh, you may not only help your grandchild become educated in some way, shape or form, or qualified for their profession, you may also end up making them a retirement millionaire.

And if you're using the Roth IRA properly ends up being a retirement millionaire tax free.

So pretty cool stuff.

Now, vast disparity here in ages five and 18.

Goodness, the 18 year old likely is going to need the money almost instantly.

Everything I've just said still applies.

You can drop the money through the 529, get the tax deduction if your state offers that, and then send it off for the college.

If your 18 year old grandchild is applying for financial aid by you setting up your own plan grandparents, it does not appear on the financial aid application.

It won't reduce the financial aid that's appropriate or available to the 18 year old.

The five year old whole different idea.

It's it's money that will hopefully compound over many, many, many years.

But keep in mind 529 plans can also be used for preschool, private school, parochial school.

There's lots of pre-college opportunities there.

So if you find the five year old has opportunities that might better be served by using that money more immediately, the same idea applies.

It goes in, stays for a bit, goes right back out, and pays for current expenses.

Lots of opportunity here.

Make sure you're sitting with a financial advisor that's trusted, experienced, and can lay out all the options for you and make sure that you're also working with a financial advisor that has direct access to tax planning advice under one roof, so that when you're talking to the advisor, you're also getting the tax piece of this, because that may be as important in this case as the investment side is for for you personally and for for your grandchildren.

So having that under one roof will be very beneficial.

Keep in mind many, many advisors, financial advisors, to be blunt, they're really investment advisors don't can't are not permitted to offer that tax planning tax counsel.

So they will be in essence making you do double duty meeting with them and then going off to meet with the tax advisor, your tax advisor.

Goodness, who has time to do double duty when it's hard enough to find out time to do single duty.

Heavy duty duty, duty.

Nah.

That's wrong.

Speaking of wrong, it would be wrong of me to continue on and on and on without turning back to Meghan and saying, Meg's, where do we go next?

Sounds good.

Our next question.

These people have a couple different options.

They want to know which is the best.

They said.

We have recently discovered your show on PBS.

We find your advice current and on topic.

Our question concerns our ability to put on an addition to our home.

The house, which is paid for is only 1360ft², which offers us limited, limited entertainment space.

We are both 70 years old, with an income before taxes of $83,293 annually.

Our combined IRA is $1,900,000, which we have yet to tap waiting until the mandatory age.

Cash on hand is 130,000.

In CDs we have no bills other than utilities.

How much would we be able to spend on the addition?

Should we take the cash out of the IRAs, take a mortgage, or pay for it out of our savings?

To date, we don't know how much the cost will be, but we appreciate your guidance.

Thanks.

Well, you're very kind and I appreciate your question.

This is a very interesting question, and it is posed to us as financial advisors far more often than you might expect.

Not always in exactly these numbers, of course, but the concept, the concept is we're in a house.

It's not ideal.

We could make it ideal.

We could sell, leave a home that we really love and go someplace else.

Perhaps.

But if it's possible to.

There's a popular phrase called aging in place.

These folks are young, 70.

So 30 more years of age.

H and the triple H club happy, healthy hundred.

They are young and they've got a tremendous life ahead of them in retirement that they wish to enjoy.

Quality of life.

And in this case, it is obvious that entertainment in their home is an important piece of that puzzle.

Now 1360ft², as many of you have already figured out, is pretty modest.

It's a pretty modest space.

I have a deep appreciation for modest spaces, the home I grew up in, the home that my mom and dad and my five brothers and sisters and my grandmother shared was just over 100ft², one bathroom.

Bottom line is, yeah, it's a little tight for two people.

Is it okay?

Sure, absolutely.

For entertainment, for quality of life, for enjoyment?

No.

Absolutely not.

Now I'm going to use very simple numbers.

If they were to double their space, another 13, 1400 square feet, they may be looking at as much as $300,000.

So it's not a small number.

Could it be done?

Less expensive.

Maybe they do something more modest, of course, but at least that gives us a starting point to start evaluating numbers, possibilities, and what can or cannot be done.

We don't know what the current value of their home is.

I'm going to pick a number out of thin air and say it's $300,000, just literally out of thin air.

Any more.

Buying a one bedroom, one bath condo is probably 300,000, so it's probably more than that.

But let's use that as an example.

You've got a number of opportunities here.

Certainly you can pay cash if the if the expense is 2 or 300,000, could you take the money from your IRAs, pay the tax sadly, and some of the CD money and pay cash to answer.

Of course you could.

Of course you could.

Is that the best financial opportunity?

The answer is likely no.

And here's why.

If we have 1,000,009 in our investments and we're currently earning a reasonable rate of return, reasonable.

Not extravagant.

Not not not negligible, reasonable eight 9% return.

And if we can borrow money at less than that return.

If we can borrow money at.

I'm picking a number again 5.5%.

And let's say we're earning 8.5% on a $300,000 investment.

That three percentage point differential three doesn't sound like much until you apply the percentage to the amount of dollars, $300,000, that's $9,000 a year.

That's a lot of money.

So if you were to borrow the money, keep the money invested in the IRA, pull the dollars out on a monthly basis as needed to pay the mortgage, you would actually turn a profit by borrowing the money.

Interesting idea.

In the fancy terms of finance, it's called arbitrage.

Borrowing at one rate, investing at a much higher rate.

That's a possibility that you should look at very, very carefully.

And it keeps your capital, your IRA capital intact, your savings CD savings intact as well.

And if it makes you, in essence, $9,000 a year, that might even cover your real estate taxes.

Probably not.

But it might even cover your real estate taxes.

So that's certainly something that you want to look at carefully.

A third option that you would want to look at very carefully as well is a reverse mortgage.

A reverse mortgage is a mortgage acts just like a mortgage, except there are no required monthly payments.

The mortgage is paid off when you leave the home, either voluntarily.

We're going south and we're selling the house involuntarily, if you know what I mean.

Exactly.

So you are likely able to borrow about half of the ultimate value of the home.

So let's say the home is going to be worth 500,000.

When all is said and done, you could borrow 250, maybe kick in some of your savings, a little bit of money there to meet the 300,000.

Our example that we're using and have no monthly mortgage payments and many, many, many years from now 30 plus, when you have graduated to the next dimension and the home is sold, that mortgage is paid off.

And by the way, if you're worried about legacy, what if the mortgage grows?

The interest grows higher than the cost of the house, the value of the house, FHA, heck, mortgages, reverse mortgages are guaranteed by the FAA are restricted to only taking the value of the home.

So all of your other assets, your entire estate is insulated against the reverse mortgage.

So can we pay cash?

Probably.

Can we borrow on a traditional mortgage and fund the payments coming from our IRAs?

The answer is probably can we do a reverse mortgage?

Probably.

And can we do some combination of the above?

The answer is of course we can.

The key is sitting with an advisor.

It may be your tax advisor.

It may be your investment advisor.

It may be both to be able to look very carefully at your circumstances, your needs and your goals.

Because for me, borrowing and paying it on a monthly basis, like water off a duck's back, it's comfortable.

I've done it forever.

For some folks, just the idea of borrowing money causes tremendous anxiety and loss of peace of mind.

So you need to be very clear about what your requirements are.

Meet with a professional that can give you the options.

The pros and cons, real numbers, real numbers.

Not ones that as I have just made up numbers, but real numbers for you and determine how all that comes together and make the decision that's best for you.

Can we help somebody else make a decision that's best for them?

We definitely can.

Our next person is looking out for a young relative.

They say, I am a trustee of a new trust for a young relative who is 15 years old.

I expect the trust to be funded with approximately $80,000, separate from the trust.

My relative already has about $32,000 in 529 accounts.

The trust is to be turned over to them at age 21.

The trust proceeds will be invested in Vanguard index funds.

Wondering how can I strike a balance among considerations such as stocks versus bonds, reducing taxes and short term goals like saving for a house versus long term saving for retirement?

I plan to use trust funds to contribute to a Roth IRA once my relative has earned income.

I am not an investing novice.

I have managed my own portfolio for decades with good success.

I simply want to do the right things and set them up for as much success as possible.

I also have to balance the investment options of other relatives.

I don't want to step on any toes.

I want to teach my young relative good money habits without overstepping the parents authority.

So how do I juggle everybody's needs, including those with the parents and the beneficiary?

Thanks for your help.

Wow.

My first reaction.

Faced with all of these kind of competing requirements, would be to consider resigning and let somebody else take this on, but that's not really an option.

You don't want to do that.

So I'm going to I'm going to give you a piece of advice that I think is much more constructive and something that you haven't yet thought about, but but could be the key to you being successful as a trustee, your beneficiary being successful in in learning how to manage these funds and keeping peace in the family.

And that's stop talking.

Stop talking to the family.

Stop talking to the parents.

Stop talking.

The only person that, in my opinion, you should be talking to is the beneficiary.

The 15 year old boy.

Girl?

Don't know.

I'd say it's a young lady, 15 years old.

The trust document should give you very clear instructions about what you can do and what you can't do.

And assuming it's written very broadly, giving you great discretion, all the things that you're considering make perfect sense.

They make perfect sense.

That's rare.

It's very rare that a trust is set up that simply says to the trustee, do whatever you want.

In most cases, trusts are very detailed, very specific, particularly ones that have been drawn by an attorney, particularly an attorney that's experienced in these areas.

Many are not.

But for the ones who are, they take very careful pains, very professional pains to make sure the trust says exactly what it should, what you can do, what you can't do.

Now, you mentioned right away that you're going to use the Vanguard group of funds that I will issue you as, as a concern to me because as trustee, it is not your you are not carte blanche.

You're not allowed to simply make whatever decisions you wish to make.

You need to follow the trust and you have to operate as a fiduciary, someone who is acting in the best interest of the beneficiary.

So this young lady is entrusted.

Her money is entrusted to you to guide her in the very best way.

And there are some very good vanguard funds.

There are some very poor Vanguard funds and lots of things in the middle.

So if you are focused 100% already on the investment vehicle, you're focused on the wrong thing.

You need to be focused on what your trust is attempting to accomplish over the next six years.

It's a brief period of time.

It's a very brief period of time.

This young lady already has some money in 529, so her education at least, is starting to be what accommodated for paid for this $80,000 has the possibility of doing far more.

So sitting with your beneficiary and having conversations not about, hey, what do you think?

Know the trustee you're in charge, but giving her education.

These are the kinds of things I'm doing.

These are the kinds of decisions I'm facing.

These are the kinds of decisions I've made.

And here's why.

Give her the benefit of your counsel, as well as the impact of the funds itself.

80,000 is a very significant sum of money.

And you're absolutely right.

Maybe it's a Roth IRA, maybe it's a down payment on a home, maybe it's a starter car so that when college comes around, she's in good shape.

But bottom line is, as the trustee, your responsibility very clear only to your beneficiary.

Not through parents, not to anybody else in the family.

It's none of their business.

So cards close to the vest makes do we have one more that we might be able to help?

We do.

Our last question tonight says, I'm reading that the stock market should go up this year, but we'll have a ton of ups and downs.

I'm fine with the ups, but the downs worry me a lot.

I plan on retiring in March of 2027 when I turned 67.

Most of our savings is in my 401, and we're counting on that to last for our lifetimes.

We've been thinking about putting everything in the money market until I retire.

We won't make much, but we won't lose anything.

Any advice you have would be appreciated.

Thanks.

Well, you're very kind, and we're happy to help.

The the year prior, March of next year.

So roughly a year year prior to retirement.

And the year or two right after retirement are the critical time frames of a retirement leading into a retirement.

Simple numbers.

I have $1 million, and ever the next year, the stock market drops 20%.

Now I only have 800 on $1 million.

I can produce 40 or 50,000 a year.

On 800, I can only produce 30 or 35.

So the differentials can be dramatic.

I understand your your what?

Instinct to protect what you've already got by putting into something where you can't lose.

I understand that.

We'll come back to that in a moment.

The year or two after retirement is every bit as critical because the exact same thing can happen.

You can go to the day you retire million dollars, the stock market drops off.

You've already planned on taking dollars out to support your lifestyle.

So in the first year, you take out $40,000 and the market takes 200 off.

Now you're down to 760 and your retirement is going to be dreadful.

Bottom line is we've got to look very, very carefully at all the needs that you may have, particularly cash flow, so that we know exactly what you need to draw.

You may turn to an advisor and say, I don't need anything right away.

This gentleman is 67, maybe with other income, maybe other pensions, social security.

I don't need an income right away, but maybe he does.

And as a result, you've got to look very carefully at what kind of investments would provide for whatever this individual needs, income or growth, and yet reduce risk.

Money markets will certainly reduce risk if you don't mind earning 0.1% next to nothing.

There are tons of investments that are constructed in such a way that you have lots of protection against downside push, and yet the opportunity to make real money CDs are going to sex will make you three and a half.

Currently, if you're watching it at a different date, that number will change.

But protected ETFs, exchange traded funds dual directionally make money up or down.

Instruction notes might very well be an option for you.

Locked in income notes might be a good idea.

Annuities might be a good idea for you and depending on the dollar amounts, any combination of those.

So no, do not allow yourself to be stuck at zero for the next year or so.

Make sure that you're investing well.

And if you're not finding those kinds of investments inside your four one.

Remember, you can always move those monies to an IRA even before retiring and reinvest them the way that fits you best.

Speaking of fitting you best, I hope this entire show fit you best, but it's likely that you have questions that might be different than the ones that we answered this evening.

And if they're important to you, they're important to us.

Send those questions to us via email Jean at com.

We're happy to respond directly back to you.

And so many of you have requested our newsletter.

We've put a number of those out.

We're getting great responses.

Thank you for all of that.

But if you would like to receive our absolutely free letter as well, send that to the same address gene and ask MTV.com.

Folks, thank you so much for spending party evening with us means the world and with any luck at all, you learned enough that you want to return next week for our next edition of More Than Money.