Podcast Episode 201: Mailbag – Savings, Supporting Adults Children, and Interest Rates

Today’s Wisdom:

Today we open up the mailbag to answer your questions on topics ranging from savings strategies, supporting adult children after college, taking advantage of low interest rates to pay down existing debt, and more.

Want to save time? Click the timestamps below to jump ahead to specific spots in the episode.

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What You’ll Learn:

Working with clients for many years, we understand that each individual has their own challenges and their individual concerns when it comes to financial planning.

We do our best to tackle as many important topics as we can on the podcast, but hearing from our listeners is always a great way to find out what’s on your mind right now. That’s why we love to open up the mailbag on the show and get to as many of your questions as possible, and that’s what we’ll do on this episode of the Money Wisdom podcast.

All told, we’ll get to five different financial planning topics on the show so let’s run down the list, which you can always hear in full detail by listening to Joel on the podcast.

First, do you need between 15-20x your annual salary in savings to be able to retire comfortably? That’s the general rule that you’ll often hear, and it’s a good starting point. It will help you get an idea of where you should be with your savings, but you can’t get an accurate answer without building an income plan and knowing what expenses you plan to have in retirement. Like many of the financial rules that are out there, this one acts as a guard rail to make sure you’re staying on a safe track.  

The next question we had came from a family that is considering deeding the mother’s house to a kid(s) to prevent it from taken later on to pay for nursing home care. Before you deed a house over to your children, there are some things that need to be considered. You’ll want to make sure the look-back period has been met, which someone who specializes in this arena can help you with. But you’ll also want to keep in mind that once it’s deeded to you, it’s an asset that someone can try to take from you in a lawsuit because it is now in your name. That could leave the parent without a place to live. The best thing to do is start with seeing an elder care attorney, who can help you run through a checklist.

The next question we received comes from a listener that isn’t trying to sort out life insurance benefits between a spouse and an ex-spouse. Ultimately, this will all be determined by the insurance contract and the owner of the policy. Whoever was named as the beneficiary to that policy will be the person who receives the payout. That’s why it’s always important to make sure beneficiaries are updated on a consistent basis.  

The fourth question we have today deals with debt. With interest rates so low, someone asked us whether it would be a good idea to refinance and take some equity out of their home in order to pay down other debts. They way this person is thinking about this is correct. If you can borrow money at a low rate right now and pay down debt with higher interest rates, that will benefit you. It also makes it easier when you consolidate debt and pay it all in one spot.

The fifth and final topic we dive into today is how to handle supporting adult kids after college that haven’t quite landed on their feet financially. This is a very tough thing to deal with, but Joel feels it’s usually best to make them figure it out on their own. At some point you have to give them a deadline to find a job or get their own place or whatever the issue might be, and force them to face their challenges head on. Most children will never reach their full potential if they always have a safety net to fall back on.

That covers it for this episode of the podcast but we welcome any questions you might have. Send them in through the website or set up a time to come in and meet with us.

Let’s get started with the show. You can listen to it by using the audio player above and click on the timestamps to skip to a specific topic of conversation.

[0:13] – Mailbag Question on Savings

[2:26] – Mailbag Question on deeding a house

[3:30] – Mailbag Question on Life Insurance beneficiaries

[4:38] – Mailbag Question on Interest Rates

[5:37] – Mailbag Question on supporting kids after college

Thanks for listening to this episode. We’ll be back again next week for another show.

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Final Thoughts:

“When there is a safety net in an unhealthy way, I don’t think the kids are ever going to realize their potential. I think they need to get out there and have a tough time and maybe live in a not-so-great apartment with a couple roommates. And take whatever job is available. I think, sometimes, you need to force them to do that and I realize that is hard to do.”

– Joel Johnson

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