Latest / Suze Orman's Women & Money (And Everyone Smart Enough To Listen) / Classic Suze School: A Different Way To Think About Your Future

Transcript

Classic Suze School: A Different Way To Think About Your Future · Suze Orman's Women & Money (And Everyone Smart Enough To Listen)

• 0:08
  Robert: October 8th, 2026. Welcome to the Women in Money podcast
• 0:12
  Robert: as well as everyone smart enough to listen. Hi there, Robert,
• 0:15
  Robert: the producer here. And for today's classic Suze School, we'll
• 0:19
  Robert: go back for a refresher on a different way to
• 0:22
  Robert: think about saving and planning for your retirement. Make sure
• 0:27
  Robert: you have your favorite writing implement and your Suze notebook
• 0:31
  Robert: at the ready.
• 0:33
  Robert: We will be back with a brand new Ask KT
• 0:35
  Robert: and Suze Anything episode for you this coming Sunday, but
• 0:39
  Robert: for now, here's Suze.
• 0:45
  Suze: When it comes to planning for your retirement, most of
• 0:50
  Suze: you think that the only way you can save for
• 0:55
  Suze: retirement is in a retirement account.
• 1:00
  Suze: And usually you think, oh my God, I need to
• 1:02
  Suze: do it in a 401k if you work for a
• 1:05
  Suze: profit corporation, or a 403B if you work for a nonprofit,
• 1:10
  Suze: or a TSP, a thrift savings plan if you work
• 1:12
  Suze: for the government or the armed forces.
• 1:16
  Suze: If you don't have a retirement account at work for
• 1:19
  Suze: whatever reason, or you don't work for an employer, then
• 1:22
  Suze: you think, oh, the only way I can do it
• 1:25
  Suze: is with a Roth IRA or a traditional IRA, but
• 1:29
  Suze: you can only put so much money per year, and
• 1:33
  Suze: many of you tend to think that there is absolutely
• 1:36
  Suze: no other way for you to save for retirement.
• 1:41
  Suze: But do you know that the majority of people out
• 1:44
  Suze: there that accumulate massive amounts of wealth?
• 1:50
  Suze: They have their money not just in a retirement account
• 1:53
  Suze: if they even have it in a retirement account, but
• 1:57
  Suze: they invest in a regular investment account at usually a
• 2:03
  Suze: brokerage firm, and that is how they accumulate massive amounts
• 2:08
  Suze: of money as well.
• 2:10
  Suze: For me personally, yes, I have some money in an
• 2:15
  Suze: IRA and some that I converted to a Roth IRA
• 2:19
  Suze: a long time ago, and I used to have a
• 2:22
  Suze: pension plan where I would put money into this, knowing
• 2:26
  Suze: that when I got older, which I am now, I
• 2:29
  Suze: could take it out, but I would be taxed on
• 2:31
  Suze: it as ordinary income. I started to think, Suze Orman...
• 2:37
  Suze: why would you do that? You are far better off
• 2:41
  Suze: not putting money away and taking a tax write-off right
• 2:45
  Suze: now like in a pension plan, and simply taking that
• 2:49
  Suze: money and investing it in an investment account.
• 2:54
  Suze: So I want you to understand my way of thinking
• 2:59
  Suze: and why you might decide, that an investment account may
• 3:05
  Suze: be where truthfully the majority of your retirement money goes
• 3:10
  Suze: versus a traditional 401k, 403b, or a TSP after the
• 3:18
  Suze: point of the match.
• 3:21
  Suze: Now... With that said, there is just one caveat to this,
• 3:27
  Suze: as you already know and you have known forever now.
• 3:32
  Suze: There is no better investment or retirement account that you
• 3:36
  Suze: can have than a Roth IRA, a backdoor Roth, if
• 3:42
  Suze: you can do one, or a Roth 401k, 403B, or TSP.
• 3:48
  Suze: If you can invest that way, that should be your
• 3:53
  Suze: number one priority.
• 3:56
  Suze: For this podcast here, I'm talking about pre-tax, traditional 401ks
• 4:05
  Suze: or 403Bs or TSPs, especially after the point of the match, right?
• 4:13
  Suze: And a match for those of you who don't know
• 4:16
  Suze: is where you put a dollar into your retirement account.
• 4:20
  Suze: And your company matches it, and puts maybe 50 cents
• 4:24
  Suze: or so for every $1 you put in, up to
• 4:27
  Suze: usually 6% of your base pay.
• 4:32
  Suze: So I just want to tell you why I think
• 4:36
  Suze: this way and for you to write down the eight greats,
• 4:42
  Suze: I call them the eight great reasons why in a
• 4:47
  Suze: 401k that is pre-taxed after the point of the match,
• 4:51
  Suze: and when I say 401k, I'm referring to all the
• 4:54
  Suze: others as well, OK, just so you know why,
• 4:58
  Suze: investing in a 401k after the point of the match,
• 5:05
  Suze: may not be as great as a regular investment account
• 5:10
  Suze: if you have the discipline to every single month put
• 5:14
  Suze: money away.
• 5:17
  Suze: So, are you ready for this one, a different way
• 5:21
  Suze: for you to think about your future.
• 5:24
  Suze: I want you on a piece of paper to write
• 5:29
  Suze: down two columns right now. Get out your paper and
• 5:33
  Suze: do this.
• 5:35
  Suze: And I want you onto the left side to write
• 5:39
  Suze: pre-tax 401k.
• 5:42
  Suze: On the right side, I want you to write an
• 5:46
  Suze: investment account. Have you done that? Good.
• 5:50
  Suze: The very first difference between the 401k pre-tax and an
• 5:57
  Suze: investment account is that it's true.
• 6:01
  Suze: In a 401k that's pre-tax, you do get a taxable
• 6:07
  Suze: income write-off.
• 6:10
  Suze: In the investment account, since you're doing it with after-tax money,
• 6:16
  Suze: there is no write off whatsoever. That's a kind of
• 6:22
  Suze: an advantage for many of you maybe in your heads
• 6:25
  Suze: for the 401k.
• 6:28
  Suze: The second reason, however, is that within a 401k, you
• 6:34
  Suze: have limited investment options. Usually you have mutual funds that
• 6:41
  Suze: you can invest in, possibly your employer's stock, but that's
• 6:47
  Suze: usually it, and it is possible that that account may
• 6:52
  Suze: also come with high fees, just depends on your company.
• 6:59
  Suze: In an investment account, you can invest in absolutely anything
• 7:05
  Suze: you want, and in most cases do it absolutely with
• 7:10
  Suze: no fees whatsoever.
• 7:13
  Suze: You could invest in treasuries, you could invest in certificates
• 7:17
  Suze: of deposits, you could invest in individual stocks, mutual funds,
• 7:22
  Suze: you could do anything that you wanted.
• 7:26
  Suze: So that is two.
• 7:29
  Suze: Therefore, an investment account wins there.
• 7:33
  Suze: Number three, it is true.
• 7:37
  Suze: That when you invest in a 401k, your money is
• 7:43
  Suze: tax deferred, so you get a tax write-off for it
• 7:49
  Suze: when you invest while it's in there, you do not
• 7:54
  Suze: pay any taxes on it, no matter whether you sell, buy,
• 7:57
  Suze: whatever it is tax deferred until you go to take
• 8:02
  Suze: it out. However, in an investment account.
• 8:07
  Suze: The truth of the matter is when you make investments,
• 8:12
  Suze: let's just say you buy individual stocks, you buy exchange
• 8:18
  Suze: traded fund or index funds, maybe the same funds that
• 8:22
  Suze: you would have invested in within your 401k.
• 8:28
  Suze: While the money is in those, you don't pay any
• 8:32
  Suze: taxes on it, so in its own way it's tax deferred.
• 8:36
  Suze: There are many of you out there that have purchased,
• 8:41
  Suze: and maybe you do it monthly, whatever, the Standard and
• 8:44
  Suze: Poor's 500 index fund and or the Vanguard Total Stock
• 8:48
  Suze: Market Fund, whatever it may be, or the ETFs.
• 8:52
  Suze: You don't buy it and sell it and trade it
• 8:55
  Suze: while the money is in there.
• 8:58
  Suze: Essentially it is tax deferred because you don't pay taxes
• 9:03
  Suze: on it unless you sell it and again the majority
• 9:06
  Suze: of you buy something and truthfully you hardly ever sell it.
• 9:12
  Suze: Now while it is true that if you are getting
• 9:15
  Suze: dividends on your exchange traded funds and or stocks, you
• 9:22
  Suze: will pay
• 9:24
  Suze: taxes on that, but that might not be that much money.
• 9:30
  Suze: So that is a difference there. In this case, advantage
• 9:34
  Suze: to the 401k, but just by a little bit.
• 9:39
  Suze: Number four, in your 401k, if you invest in things
• 9:45
  Suze: and they go all the way down, maybe something has
• 9:48
  Suze: happened and you don't want to be invested in it
• 9:51
  Suze: anymore and you have lost money on it.
• 9:55
  Suze: When you go to sell, because remember you don't lose
• 9:58
  Suze: or make money till you actually sell, you need to
• 10:02
  Suze: understand in a 401k or really any retirement account for
• 10:07
  Suze: that matter, there are no tax write-offs for losses whatsoever
• 10:14
  Suze: in an investment account, if you buy something.
• 10:18
  Suze: And you have a loss in it, you can sell
• 10:22
  Suze: it and take that off your taxable income up to
• 10:26
  Suze: $3000 per year or if you have something in your
• 10:32
  Suze: investment account that you've made a lot of money on
• 10:36
  Suze: and maybe you wanna offset those gains with losses, you
• 10:40
  Suze: can do so in an investment account.
• 10:46
  Suze: So really, that's an advantage for an investment account.
• 10:52
  Suze: Five. When you have money in a 401k, there is
• 10:57
  Suze: a penalty to withdraw that money in most cases before
• 11:04
  Suze: the age of 59.5, and it's usually a 10% federal
• 11:11
  Suze: tax penalty and whatever the penalty will be for the
• 11:15
  Suze: state that you live in as well.
• 11:18
  Suze: So, the pre-taxed retirement accounts also come with a lot
• 11:25
  Suze: of restrictions on them.
• 11:29
  Suze: In an investment account, it is your money.
• 11:33
  Suze: You can take it out whenever you want, you can
• 11:36
  Suze: access it, you can do anything you want with it,
• 11:40
  Suze: no limitations whatsoever, so the investment account wins in this scenario.
• 11:48
  Suze: Number six, the money that you have in a 401k.
• 11:55
  Suze: When you go to take it out, you will pay
• 11:59
  Suze: ordinary income tax on it. And you may not think
• 12:06
  Suze: that you will be in a high income tax bracket
• 12:09
  Suze: at retirement.
• 12:12
  Suze: I think given the extraordinary debt that the United States
• 12:18
  Suze: is carrying. We are coming to the crossroads of having
• 12:25
  Suze: to do something about it. And whether that is reducing
• 12:31
  Suze: the budget, which we should absolutely be reducing, but I
• 12:35
  Suze: don't think that is going to take care of the problem.
• 12:38
  Suze: One of the only solutions really will be to raise
• 12:42
  Suze: income tax brackets.
• 12:44
  Suze: I have said this forever. I will continue to say it,
• 12:48
  Suze: so don't count on being in a lower income tax
• 12:51
  Suze: bracket when you retire.
• 12:56
  Suze: In an investment account, when you do go to take
• 13:00
  Suze: money out, and if it's been in there for over
• 13:03
  Suze: one year in whatever it is that you're selling, that
• 13:07
  Suze: you may have a gain in where you've made money,
• 13:11
  Suze: you will be taxed as capital gains tax on that.
• 13:17
  Suze: That can be a very, very big difference. So, again,
• 13:23
  Suze: the investment account wins here as well.
• 13:28
  Suze: Number seven, if you die, and it's not an if
• 13:33
  Suze: it's a when, any money that is in your 401k plans,
• 13:39
  Suze: when it goes to your beneficiaries and they go to
• 13:43
  Suze: take it out, they will be taxed on it as
• 13:46
  Suze: ordinary income as well. And while you might not be
• 13:51
  Suze: in as high of an income tax bracket.
• 13:55
  Suze: Maybe your children will be in a higher income tax
• 13:59
  Suze: bracket because why now they're working, maybe they've been very successful,
• 14:05
  Suze: so what kind of burden are you passing down to
• 14:08
  Suze: them where one, they won't get what they see in
• 14:12
  Suze: the account and two,
• 14:15
  Suze: how many podcasts have I done on the new inheritance
• 14:19
  Suze: laws when you get a pre-tax retirement account that has
• 14:25
  Suze: to be wiped clean within 10 years, I mean, it
• 14:28
  Suze: is a mess as to how you figure out all
• 14:33
  Suze: of that.
• 14:34
  Suze: With an investment account, there are no rules like that.
• 14:40
  Suze: When you die you leave it to your beneficiaries hopefully
• 14:45
  Suze: through a revocable living trust everybody so there are no
• 14:49
  Suze: probate fees. However, they will all get a step up
• 14:54
  Suze: in cost basis as to whatever is in that account
• 15:00
  Suze: at that time.
• 15:03
  Suze: So, if you happen to invest, let's just say $50,000
• 15:08
  Suze: in an investment account.
• 15:11
  Suze: And now it has grown to be worth a million dollars.
• 15:15
  Suze: Let's just say that's true.
• 15:18
  Suze: You die, your beneficiaries get it. Their cost basis on
• 15:23
  Suze: that now is $1 million. If they turn around and
• 15:27
  Suze: they sell it, they don't pay one penny of income tax.
• 15:33
  Suze: Going back for a second to the 401k, you invest $50,000.
• 15:40
  Suze: It's now worth $1 million.
• 15:44
  Suze: You die, your beneficiaries get it. They will have to
• 15:48
  Suze: pay ordinary income tax on that million dollars. They may
• 15:54
  Suze: have 10 years to withdraw it.
• 15:57
  Suze: But that would be $100,000 a year approximately. They're going
• 16:02
  Suze: to pay ordinary income tax and have to pay it
• 16:06
  Suze: on a lot of money. Hands down, the investment account
• 16:12
  Suze: wins over a 401k plan in this scenario.
• 16:18
  Suze: Eight. Two things here. I'm gonna combine two into one.
• 16:25
  Suze: There are required minimum distributions on a pre-tax 401k.
• 16:35
  Suze: Which means once you turn the age of 73 currently.
• 16:40
  Suze: You are required to take out specific sums of money
• 16:45
  Suze: from your retirement accounts even if you do not need them.
• 16:50
  Suze: When you have a Roth retirement account, just so you know,
• 16:53
  Suze: there are no required minimum distributions, so you don't have
• 16:58
  Suze: to worry about that.
• 17:00
  Suze: In an investment account, you do not have to take
• 17:03
  Suze: out required minimum distributions. Also, with number eight, cause I'm
• 17:09
  Suze: combining these two together.
• 17:12
  Suze: If you leave your place of employment, what do you
• 17:17
  Suze: do with the money that is in your 401k?
• 17:22
  Suze: You can either just have to leave it there, or
• 17:24
  Suze: you have to do an IRA rollover with it. There
• 17:27
  Suze: are things you have to do with it.
• 17:30
  Suze: In an investment account, if you leave your place of employment,
• 17:36
  Suze: it has nothing to do with the money that is
• 17:39
  Suze: in your account.
• 17:42
  Suze: So these are eight great comparisons for you to just
• 17:48
  Suze: think about when it comes to traditional 401k money after
• 17:54
  Suze: the point of the match. And by the way, for
• 17:59
  Suze: those of you who maybe were keeping score.
• 18:03
  Suze: As to which one had the most advantages, it was six
• 18:08
  Suze: wins for the investment account, one win for the 401k,
• 18:14
  Suze: and one where they both tied.
• 18:20
  Suze: Now, who should not be doing this strategy? Well, obviously,
• 18:25
  Suze: for those of you who are investing in Roth retirement accounts,
• 18:28
  Suze: just keep doing that. After you've maxed out, you might
• 18:32
  Suze: wanna do an investment account.
• 18:35
  Suze: But if you're somebody that only can save money because
• 18:40
  Suze: they withdraw money directly from your paycheck before you ever
• 18:44
  Suze: see it, otherwise you spend it and you are not
• 18:48
  Suze: disciplined to invest and save money on your own, forget
• 18:53
  Suze: about this. Or if investing on your own confuses you
• 18:58
  Suze: and you just want to invest in a few mutual
• 19:00
  Suze: funds maybe or the mutual funds because maybe there's a
• 19:03
  Suze: lot of them.
• 19:04
  Suze: That your employer offers, all right, you can do that.
• 19:11
  Suze: However, for those of you, who are disciplined.
• 19:17
  Suze: Who really are investing up to the point of the
• 19:21
  Suze: match in your 401ks, or even after your Roth IRAs.
• 19:28
  Suze: It's something that you just might want to think about.
• 19:35
  Suze: I will always tell you that you should always invest
• 19:39
  Suze: up to the point of the match in any retirement account.
• 19:44
  Suze: Bar none.
• 19:46
  Suze: I will always tell you to choose a Roth retirement
• 19:49
  Suze: account at work versus a traditional retirement account at work.
• 19:55
  Suze: And if you choose a Roth 401k, you are absolutely
• 20:02
  Suze: to invest up to the max in that, get as
• 20:05
  Suze: much money in that as you can before you do
• 20:09
  Suze: an investment account.
• 20:11
  Suze: However, if for whatever reason you are not doing a
• 20:16
  Suze: Roth retirement account, and you keep choosing to do a
• 20:21
  Suze: pre-tax 401k, if you continue to put money in after
• 20:27
  Suze: the point of the match, you really need to listen
• 20:33
  Suze: to this podcast over and over again.
• 20:39
  Suze: Did I just make your entire head swim? Very possibly.
• 20:45
  Suze: These are the things that I want you to just
• 20:48
  Suze: start to think about.
• 20:50
  Suze: It's these little changes that you can make to how
• 20:55
  Suze: you are doing things.
• 20:58
  Suze: That can make an entire world of difference to your
• 21:02
  Suze: true bottom line when you get older.
• 21:08
  Suze: All right, there's really only one thing that I want
• 21:11
  Suze: you to remember when it comes to your money, and
• 21:14
  Suze: it is this people first. Take care of yourselves, people.
• 21:19
  Suze: You yourself need to be first. People first, then money,
• 21:25
  Suze: then things. Now you stay safe and you stay unstoppable.