It’s the first Monday of the month, which means it’s time to answer questions from the Afford Anything community.
Our first question comes from a caller in a tough spot:
Her mother-in-law is 66 years old. She’s divorced, holds no retirement savings, and will only receive a tiny Social Security check. Her health is worsening, and she’ll need to step away from work shortly.
The caller wants to help her mother-in-law … but how?
Our second question comes from Erin, a listener who’s moving to California and needs to buy a car. She’s new to the world of car-buying, and wants to know how she can get a great deal. What red flags should she watch out for?
Our third question comes from Hong, a 32-year-old mother of two who’s interested in early retirement.
She’s thinking about saving money in a 401k until she maximizes her employer match, then switching to a Traditional IRA, and then switching back to saving in her 401k. Should she pursue this strategy? How can she maximize her tax advantages?
Our fourth question comes from John, who wants to know what I’ve learned from building an online course. He’s contemplating creating one of his own.
Finally, I answer a question from Adalia, who wants to know if my online business and real estate business are structured as part of the same company, or operated as two separate entities. She asks if I can talk about how I made my business structuring decisions.
Enjoy!
Resources Mentioned
Question 1:
- Durable power of attorney
- Durable power of attorney for health care
- Living will
Articles on helping aging parents in retirement:
- When Aging Parents Need Financial Help – U.S. News
- Taking Care of Parents Also Means Taking Care of Finances – The New York Times
- A Startling Reality: Your Aging Parent Runs Out of Money – Forbes
Question 2:
- KBB.com
- Carfax Reports
- Book: The Secrets of Power Negotiating by Roger Dawson
Question 3:
- #62: Ask Paula – Q&A Featuring Special Guest Joe Saul-Sehy from Stacking Benjamins
- Note: Roth and Traditional IRAs have different income eligibility limits. See the rules for Traditional IRA deductions here, and rules for Roth IRA contributions here.
Question 4:
After-Show Closing:
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Kevin Bailey
Hi Paula,
Love your podcast and thank you for everything you do!
Listening to your most recent “Ask Paula” episode (the question about ideal way to max out retirement accounts), you went into detail about the different features of trad vs. Roth IRAs.
When diving deep into the complexities of a Roth IRA, it is important to note that earnings can be withdrawn tax free after age 59.5 AND having had a Roth IRA opened for at least 5 years. This is an important detail for someone approaching retirement age who does not have a Roth IRA opened yet.
(Source: IRS publication 590)
Thanks, again, for spreading your message of freedom and financial independence!
Karin
Another consideration when financial planning for an aging parent is to consider how to spend down their assets so that they qualify for Medicaid. This is especially important if they need or will need care, e.g., assisted living, nursing home, etc.
Also, if someone is receiving need-based assistance (SSI, housing assistance, Medicaid, food stamps, etc.) be careful about giving the person money directly, as it will count as income and will reduce the assistance they may qualify for. You may be able to pay someone’s bills directly or give them non-cash gifts (e.g., toothpaste, books, clothing, etc.).
Melissa
Hey Paula,
I build eLearning for corporations. I’d love to help you develop your learning materials. Give me a shout if you need help!
NPonFIRE
Hi Paula,
I love your podcast – thank you for all the wonderful information and encouragement you offer us listeners!
Thanks for answering the car purchase question – I have always also used on-line forums to compare car models I am considering buying. Hearing from owners about common maintenance problems or expensive repairs is so helpful so I was glad to hear I am not the only one who does this. I am writing a post on my new blog (nponfire.com – a blog for other Nurse Practitioners working toward FI) about car purchase and wondering if I can link to this podcast? Please let me know and thanks!