- And good evening.

You've got More Than Money.

You've got Gene Dickison, your host, your personal financial advisor.

An honor to serve you the next half an hour, spend with me, and I think when you come out of it, you'll have a couple of new ideas that might very well assist you getting from point A to point B on your financial life.

Not a bad thing at all.

And if, of course, you find yourself being even mildly entertained, that would simply be an added bonus.

Wouldn't that be lovely?

I don't know why that's an Irish accent, but the Irish, they're always happy, they're fantastic.

So that's why, I'm guessing, you'll figure it out.

Bottom line for us is that we're here to serve you.

It makes us the most relevant financial show on television because we take all of our cues from you.

You send us your emailed questions, they may have, gosh, details around retirement, around, hey, reducing your tax bill or how do you plan your estate, or what is Social Security going to do about X?

How do you handle Medicare?

It can be any or all of those things, or something completely different.

And by the way, the vast majority of the questions we get come under the heading of something completely different, which makes them fantastic.

Your lives are fascinating and you share a little slice of your life with us in order to give us the opportunity to serve you at a high level.

We get tons of emails, Gen@AskMTM.com is what you use.

We get tons of emails.

We answer every single one back to you.

Every single email is answered back, even the silly ones, even the hard ones.

Some of them are hard.

We got to do some research.

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And we use them all to answer your questions back to you at no charge.

No charge, this is not a, gosh, the ticker's running.

This is your chance to get yourself going in the right direction.

So hopefully, you'll take advantage and you'll continue to help us be the most relevant.

And that's our secret sauce.

I mentioned in a recent show that on occasion, I get bits and pieces, I get tons of information, of course, I'm always doing research on the financial world, but I get things that that just come across the desk and you go, "What?"

And this is my most recent "What?"

Car manufacturers have begun charging folks who have purchased their cars with certain accessories a monthly fee.

Now I'm pretty comfortable with the idea that if you have one of those emergency services like OnStar or something like that, I'm guessing that's similar to Siri or Alexa, and there's a monthly fee for that.

I kind of understand that.

I guess, I'm not a big fan, but I guess that makes sense.

But how about charging if you have a remote starter?

Charging you a monthly fee, like eight bucks, to have a remote starter?

How about charging our monthly fee for having heated seats?

I have to admit, saw that one, scratched my head, drew blood.

Thought, "This is a crazy world we live in."

But I guess that's not a surprise to most of you.

It's a crazy world we live in.

Megan, let's add some rationality to this crazy world.

Let's give somebody answers that they can actually use.

Let's start with our first question.

- I think that was the first time I've ever been relieved I don't have heated seats, because I'm always very jealous of people that have them, but not anymore.

Our first question says, "I'm lucky enough to have a pension from my employer.

"When I retire, I have the option of either a lump sum, "cash value, or a basic annuity.

"I have found it difficult to determine which is best for me.

"I'm wondering, can you help me with this decision?

"My investigation has shown that they provide equal "outcomes based on conservative estimates for market "performance over my retirement years.

"Is this decision strictly based on my appetite for risk "during my retirement?

Thank you for your help."

- Very good.

Your qualification at the end kind of starts us down the discussion path because this individual, as many people are, particularly folks who are teachers, are faced with, "I have a lump sum or I have a monthly pension, "which one should I take?"

And at the end, this gentleman says, "Is it just simply my appetite for risk?"

It's partially that, but that's not where it starts.

We'll circle back to that in a moment.

This gentleman has done enough financial analysis to compare the two, looking at the lump sum on one hand, the monthly pension on the other, and in his analysis, using what he believes to be reasonable conservative assumptions, they're about equal.

That makes perfect sense.

That makes perfect sense.

Pensions, the monthly pension amount, are calculated based on pretty reasonable assumptions.

Pretty conservative interest rates.

Pretty reasonable assumptions about life expectancy.

So the idea that you would look at both sides and come up with "it's about the same" is logical.

It absolutely makes sense.

That's the reason why you don't start there, and you don't start with your risk tolerance either.

You start with two other factors.

Number one, cash flow.

Do you require the cash flow from your pension to make sure your monthly bills are paid, you're happy, you're healthy?

Let me say that again, really important, is this income, this monthly income, maximized?

Forget the lump sum, we're talking about the pension.

The monthly pension.

Is it required so that I can pay my monthly bills, I'm happy, I'm healthy?

If the answer is yes, we are done here.

You take the pension.

It's just that simple.

If, on the other hand, your response is, "Well, gosh, "no, they're not required," then you absolutely take the lump sum.

I'll explain in just a moment.

So very, very simple test that we run.

What is your expected income without the pension?

What are your expected expenses?

Must you have the pension in order to meet your expenses?

Yes, you take it.

No, you take the lump sum.

Now there's a corollary to taking the lump sum.

If you are not required, you don't need, you are not demanding this pension in order to pay your bills.

Taking the lump sum allows you to have control.

It allows you to have control over that block of money.

You mention investing very conservatively.

Maybe that's a good idea.

Maybe you decide to invest differently.

If you've got sufficient income so that your bills are paid, you're happy, you're healthy, and you wish, maybe you decide to be a little more aggressive?

Maybe you decide to take some early distributions to take some fun trips?

Maybe you decide to make some early distributions to create your home, re-renovate your home in such a way that you can be very happy there throughout your retirement?

Make the accommodations, the entire home more accommodating?

Maybe you make those decisions.

Maybe you choose to make investments in the types of issues that are not based in annuities.

You have all those options and, icing, a legacy.

If you take the monthly pension, and you are taken from us, your money is gone.

There are variations on a theme.

It might be gone immediately.

It might be gone in five years.

It might be gone a little later, but it's gone.

If you take the lump sum, you have control, and you have the ability to make sure that there is money left for people that you care about.

People that mean something very, very important to you.

So what are the two factors that you will look at in order to decide between lump sum or monthly pensions?

One, cash flow, and two, legacy.

What would you wish to leave behind, and does having that lump sum allow you to do it?

So interesting question.

Lots and lots of folks facing that exact same question.

I hope I helped give you a little bit of structure for all of you to be able to make a more confident decision.

Outstanding.

Megan, where to from here?

- Well, speaking of exact same question, this question starts eerily similar to one we answered on a past show, and I actually had to double check it's not the same.

But I think it's interesting that people are going through a very similar situation, but with different numbers.

This one says, "I am a retired federal employee.

"My wife and I currently meet our expenses with my pension "and withdrawals from my thrift savings plan savings.

"It contains a little over $900,000, which at the current "guaranteed interest rate, 2.98%, earns more than "our annual withdraws of 22,000.

"When we are both drawing Social Security in about seven "years at age 70, my pension and our Social Security "should meet our basic needs.

"Of course, when we hit 73 years of age, we'll need to "start taking RMDs from the TSP, as well.

"It has been suggested to me that I roll half of "my TSP account, $450,000, "into a five-year fixed annuity at 4.9%.

"That would provide the same income annually that I'm "currently withdrawing from the TSP, and the other half would "continue to grow in the TSP.

"After five years, I could roll the funds back into the TSP, "or reinvest it in another annuity depending on available interest rates.

"I'm not familiar with annuities and have always had "a vaguely negative opinion of them.

"Does this sound like a good idea to you?

"Thank you for your help."

- It did start exactly like a question that we answered on a previous show.

So I'm with you.

I was like, "Hmm..." And then it goes off on a different path, which is a very interesting path.

This individual and his wife are in a very wonderful position.

They can pay all their bills currently on just a little bit of income from their TSP, thrift...thrift savings plan, he tried to say, and pensions.

They're waiting until age 70, to take Social Security.

I think that's likely a very good idea.

Bottom line for the concept that he's looking at, of pulling half of his money out of the TSP and putting it into an annuity, versus leaving it at 2.98% is a pretty good idea.

Now, let's cut right to the chase with the big elephant in the room.

He has a vaguely negative feel about annuities.

I get that.

The reality is he should have a vaguely negative feel about annuity salespeople, salesmen and saleswomen.

Annuity sales people have not had a good reputation over the years.

They have often been viewed as every single person, their view, every single person in the world should have their annuity, and have all their money in annuities.

And that's simply steaming hoo-ha, that is inaccurate on 100 levels.

Why would they feel that way?

Well, most annuity sales people are only licensed in the insurance side of the financial world, so they have no viable alternatives where they can earn a living and still invest money.

So as my dad was fond of saying, if the only tool that you own is a hammer, everything looks like a nail.

So if the only tool you have is an annuity, and with annuity salesmen facing products that will tout commissions of six, eight, 12, 15% right up front, they are highly incentivized, sadly so, highly incentivized to turn to you when you're having a $450,000 rollover and say, "You should put it into my annuity," at even 10%, they will make a commission of $45,000 in about two hours.

Does that offend you?

It should.

It should.

Annuity salespeople?

Vaguely negative?

No, not vaguely.

Now, financial advisers who use annuities, very different world.

And many cases the annuities they are using do not offer ten, 12, 15% commissions, they may offer, in this particular type of case you're describing, 1%, perhaps 2%, and that's once-and-done.

Many financial advisers, if they're managing money over a five-year period, will end up charging about 1% per year.

So it would be a total of five.

And in this case, you may end up paying 1-2% for the same five-year period.

It ends up being, what, 4/10 of 1%, very inexpensive.

And you don't pay that from your return.

If your return is 4.9, you get the entire 4.9.

So is it possible this is a good idea?

It absolutely is.

Single premium annuities that we're discussing here from very high-quality companies, companies that, financially speaking, are at the very top of the list, are very attractive now.

Forget five years, there are three-year annuities, guaranteed annuities, guaranteed principal guaranteed interest rate, paying over 5%.

And when you compare that to your current 2.98, the numbers speak for themselves.

So you're quite right.

Even taking half of your portfolio, putting that into a guaranteed 5% is going to give you more income than you're currently getting from the entire portfolio.

And that allows you to look at the balance, that 450 that's still there and say, "Hmm, what would "benefit me over the next three years or so, "in terms of investing here?

"Do I want to perhaps be a little more aggressive, "maybe take a small slice and put it in the stock market?

"Do I want to be more conservative, perhaps go to "FDIC insurance on CDs?"

Currently short-term CDs paying over 4%.

So there are lots of options.

But once you know that you've got half of your money working for you very efficiently through a financial adviser, please, please, please, not an annuity salesman, through a financial advisor.

Once you've got that base working for you, you're absolutely right.

There's unlimited options for investment of the other half.

And you're quite right, as well, at the end of three years, since it's all under the IRA, the TSP gets to stay under the IRA.

You have all the options still on your plate.

You can continue at whatever interest rate you choose.

You can roll that out, you can go back to fixed rates.

It's a good plan if, big if, make sure you're working with a trusted, experienced financial advisor, not the vaguely negative annuity salesman.

Excellent.

Excellent, indeed.

A little complicated, but excellent.

Megs, what's next?

- Our next email says, "Thanks for such an informative "and enjoyable show.

"My question is, I am turning 70 in a few months, "but I'm also still working full-time with no plan "to retire in the foreseeable future.

"I have two retirement 401Ks from previous jobs, "and one with my current job into which I am contributing "the maximum yearly amount.

"I'm wondering, is it possible or too late to roll "these over into a Roth IRA?

"Would that be advantageous, or should I just leave things "as they are, considering that I will have to be taking "allotments out soon?

Thanks for your advice.

- Hmm-mm-mmm... Well, you started with very complimentary words, that always get you on air.

No, I'm kidding!

Very nice to hear.

This is more complicated than it appears.

Gentleman has two former 401Ks, we don't have a clue how much money is in those 401Ks.

He has a current 401K.

We have no clue how much is in his current 401K.

We do know that he intends to continue to work for the foreseeable future.

Excellent.

I think that's fantastic.

I think retirement is highly overrated.

Now, having said that, what would be the determining factors about whether he rolls the prior two 401Ks into Roth IRAs, or not?

One, of course, will be taxes.

What is the tax bracket that he finds himself in?

If it's in a relatively low bracket, ten, 12, 15%, probably pretty attractive to roll into the Roth.

If it's a much higher bracket, it becomes less attractive.

Relatively small amounts of money in the prior 401Ks, a Roth conversion much more attractive, relatively larger, likely to push into a higher bracket, relatively unattractive.

There is an option that you did not ask about that is really important for you to consider.

It is likely, 98% likely, that your current 401K would accept rollovers from the previous two 401Ks.

So rather than, "I got these two accounts hanging out there, "and I got my current account currently putting money into," If you chose, you can likely, 98% sure, roll those two former 401Ks into your current plan.

Let's hope that you have a plan you really like.

Let's hope you have a plan that has very good investments and very low fees.

You can roll those into your current plan, and if you continue to work beyond your RMD age of 73, you don't have to take RMDs.

It eliminates RMDs on the old 401K plans.

It is a little-known loophole that a lot of folks are not familiar with.

A lot of folks are not interested in, because most folks, when you say, "I'm 70 and I want to continue working," they go, "Oh, that's sad.

"I got retired at 65 or 66, or 60, or whatever."

For a lot of us, it's exactly what we want.

And the IRS says that if you are in a 401K, you're currently working and making current contributions to a 401K, and you're still working?

You don't have to take RMDs.

So I think you have an interesting opportunity here, one that may fit you rather nicely to roll those into your current plan, avoid RMDs in the future.

While you're doing that, you are buying yourself the time to sit with a trusted, experienced either financial advisor or tax advisor, or both.

In the MTM world, More Than Money world, those both always are included in the conversation.

But sit with those folks, see what your tax impact would be rolling into the Roth.

And if it's acceptable, you're done.

If it's uncomfortable, then look very carefully at rolling all of your previous 401Ks into your current.

And if you end up working until you're 75, 76, 77, 80, fantastic.

No RMDs until you stop working.

Pretty cool thing.

Hopefully, my answer to the next question equally as cool.

Megs?

- I hope so, too.

It's a yes-or-no question, and I think we kind of gave it away with the headline, but I will read it anyway.

It says, "Thank you for your great and informative "financial advice program.

"My question is probably an easy one.

"This year I will be 73, and have been retired "for seven years.

"I've been divorced for eight years and had to remortgage "my house loan in the settlement.

"I now owe 60,000 on a 30-year mortgage for a house "I bought in 1997 for 72,000.

"I receive a monthly pension of $3,800 net, "plus $400 a month from an IRA.

"I have been able to save 94,000.

"The result of working for the government for 46 years.

"Also, I live alone, I don't own much "and my car is 27 years old.

"I would like to get rid of this mortgage at $606 a month, "but honestly, I like having money in the bank "for any potential emergency.

"I'm wondering, should I pay this off or do something else?

"Also, as we all know, prices are rising quickly, "so thank you for your help."

- Well, a very kind words again, thank you.

I think Megan is absolutely correct.

I we may have tipped our hand here just a little bit with our headline, "Don't Pay Off That Mortgage!"

Sounds rather strident, but the reality is, don't pay off the mortgage.

You hinted in your email, maybe more than hinted, "I like having money in the bank," as well you should.

Money in the bank is a lovely thing.

And when we are 73 and things happen to our house or our car, 27 years old, or ourselves, having that cushion, oh, the peace of mind can be fabulous!

So while I understand wanting to get rid of your mortgage, I don't know what your interest rate is.

I get the impression, the feel that this was done a couple of years ago where hopefully, your interest rate is in the twos.

Right now, interest rates are in the sixes.

So people who are getting mortgages now look at you and go, "Why are you complaining?

"You are the luckiest guy we know," and I would agree with them.

You're very lucky, your house is square.

Yes, you have a mortgage.

Yes, it's a lot of years.

Can you pay ahead a little bit?

I'd be okay with that.

If your mortgage payment is, I'm picking the number $512, send them $550.

That'll make you feel a little bit better.

But do not drain your bank account.

If you would like to make a little extra income, make sure that your bank is paying you a healthy rate of interest.

Many banks do not.

So make sure that wherever your money is, it's earning you a healthy rate of interest.

I'll give you an example.

In some banks now, they're paying less than one half of 1%, which on your 94,000 is something less than $500 a year.

There are banks with short-term CDs that are paying 4.5% so if you took 50,000 of your bank savings, put it at 4.5%, for a very short period of time, 100% FDIC-insured, you would make over $2,000, in a year, off of something that now you're making less than 500.

And you'd still have $44,000 in the bank.

And you can do that to whatever extent your heart says, "I still have enough in the bank.

I feel good."

Now the car, the car, the car.

27 years old.

Gosh, you sound like me.

I've had two cars that I've driven over 300,000 miles.

That's pretty amazing.

But when you're old, you can do stuff like that.

But 27-year-old cars do not have the safety features you need.

They likely have repair issues coming up that are more than you are expecting.

But if you've got 27 years, my guess is you don't drive a great deal.

So I would strongly encourage you to consider, look at carefully, leasing.

Leasing a car, particularly if you're driving 10,000 miles a year or so, can be very effective... efficient, and effective, can be very cost-effective, because you always have a warranty.

If you get a three-year lease, your car will always be under warranty, you'll have no major bills.

In many cases, basic maintenance is included.

But even if it's not, basic maintenance is the least of your worries.

You'll always have the most up-to-date safety features, and that's really important, particularly as we get older.

And at the end of the lease, you turn it in, you get a new lease, you keep going.

And I absolutely understand that the monthly payments will rise, I get that.

But you also have little or none of your capital tied up in your car and you're constantly in a very, very safe vehicle.

So do not pay off your mortgage.

Keep the vast majority of your money in the bank, or in the alternative, choose an investment somewhere that pays you a really high, currently 4-5% interest guaranteed for a big block of it.

And then, consider, 27 years, say goodbye to that car and look at leasing a car that will be much more reliable and much safer.

I hope I helped.

I hope I helped everyone that we answered questions for this evening.

We are here to serve you, and we're honored to do so.

If you have questions that you would like us to explore, perhaps on air, but absolutely always back to you, send us your emails, Gene@AskMTM.com.

We answer every single question back to you.

And perhaps, just perhaps in a future show, you'll see your question explored, as well.

Folks, thanks for spending part of your evening with us.

We hope you found yourself educated, maybe entertained, and you'll be willing to return next week as we come back to the studio for another edition of More Than Money.

Goodnight.