Bill listened to our episode with Bill Bengen, father of the 4% rule, and he wants to know if there was a way for him to figure out how much money he should be keeping in cash.
Heather inherited an IRA but MUST empty it within ten years – but she doesn’t need it right now. What should she do??
Sheryl gets stock from her company, and she would usually sell it…but the stock value has decreased. And now, she isn’t sure what she should do.
Julie and her husband have access to an HSA for ONE MONTH. Can they max it out before they lose access to it?
In today’s episode, former financial planner Joe Saul-Sehy and I tackle these tough questions.
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Enjoy!
Bill asks (at 2:57 minutes): I listened to your episode about the 4% rule, found it very informative.
I have one question about something he said that you didn’t go into: he said that he’s only 15% invested in stocks right now.”
Is there a formula or a method used to determine how much to invest versus keeping cash?
Heather asks (at 9:22 minutes): I’m 45 years old and I just inherited a traditional IRA with approximately $30,000 in it.
I have to take the distributions over the next 10 years to empty the account and will owe taxes on it, even though I’m not retired and don’t really need the money.
However, I do appreciate the gesture and want to invest the money wisely.
What type of asset allocation would you recommend for an account that has to be emptied in 10 years? If I didn’t have to take distributions, I would probably put it all into an S&P 500 index fund.
Sheryl asks (at 22:02 minutes): Like many tech employees, I receive a large portion of my compensation in the form of restricted stock units. Also, like many tech companies, our tech company stock has decreased recently.
I was treating my RSUs as income and selling them immediately to either buy diversified stock or to pay for large household items. But with the recent plunge, my company has decreased a larger amount than the S&P 500.
I’ve been considering whether I should hold onto this stock to see if there would be any recovery.
For context, the amount that has vested is less than 5% of my investment portfolio, and so I could think of this as my speculative portion of investments, given I don’t have any other speculative type assets.
Does it ever make sense to hold on to RSUs in a portfolio? And are there any tax implications that I should be aware of?
Julie asks (at 44:36 minutes): My husband is starting a job with a new company that offers a high deductible health plan with an HSA.
We are really excited about the potential for an HSA. We’ve never had one before, but we know that it is a great F.I.R.E. vehicle and we really want to max it out.
We expect that after about a month of my husband having the HSA, my company is going through a change and will be offering new full coverage insurance.
I understand that we cannot have the HSA when I have access to other full coverage insurance.
If for that month before my new benefits take place, can we max out our HSA with my husband’s company? The plan would be to put all of my husband’s paychecks and max out to the $7,300 limit. We won’t be able to contribute to the HSA in the following months, because my husband and I will have coverage through my job.
Can I do this in a month span or do rules around the HSA apply to the entire calendar year?
We have so many changes going on that it’s a little bit confusing and we really, really want to maximize that HSA if we can for all of the tax advantages.
Resources Mentioned:
- #377: How I Discovered The 4 Percent Retirement Rule, with Bill Bengen – Afford Anything
- Retirement Calculators: Can I Retire Yet?
- HSA Talk: Your Spouse and Your Health Savings Account
- IRS Publication 969 – HSA Limits
- IRS Last Month Rule
- HSA Partial Year Eligibility
- IRS – HSA Eligibility
Thanks to our sponsors!
Grove.co
Grove makes shopping for natural products easy. Go to grove.co/affordanything to get a free gift set worth up to fifty dollars with your first order.
Policygenius
Go to policygenius.com for free quotes and comparisons. Policygenius could save you 50% or more on life insurance.
Wealthfront
Wealthfront is trusted with over $20 billion of assets, and you can bet a bonus $50 when you start investing with Wealthfront by going to wealthfront.com/paula.
Zapier
See for yourself why teams at Airtable, Dropbox, HubSpot, Zendesk, and thousands of other companies use Zapier every day to automate their businesses. Try Zapier for free today at Zapier.com/paula.
