Money Wisdom for All Ages

Our 2 Cents – Episode #173

Money Wisdom for All Ages

Welcome back to this week’s episode of Our 2 Cents with Steve and Gabriel Lewit. In this episode, the hosts share saving tactics useful for all ages and how inheritance does not have to be a difficult discussion. Listen in now using a link below!

1. Chicago Bears Update:
   • With the debut of the new Quarterback, there is renewed hope for this upcoming season.
   • The new Bears stadium causes uproar with mixed reviews and its use of taxpayer money.
2. Saving Strategies at Every Age:
   • In your 20s, develop a habit of saving in tax-free accounts and consider more aggressive investments.
   • In your 30s, navigate career growth and family planning through managing current expenses and financial goals.
   • In your 40s/50s, plan for the future while hitting your peak earning potential by hiring a financial planner.
   • In your 60s, ensure a peaceful retirement by being mindful of your spending.
3. Inheritance Conversations:
   • Learn how an open approach to discussing inheritance can lead to clarity and harmony among family members.

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Podcast Transcript

Announcer: You are listening to Our 2 Cents with the team from SGL Financial, building wealth for life. Steve Lewit is the President of SGL Financial and Gabriel Lewit is the CEO. They’re here to discuss all the latest and financial news, trends, strategies and more.

Gabriel Lewit: Welcome back to the show. It’s Gabriel and Steve here on a sunny May 1st day.

Steve Lewit: A magnificent day.

Gabriel Lewit: A beautiful day. I think spring is finally here. We are staring at all the people walking on the walking paths outside the office windows.

Steve Lewit: Lots of them today.

Gabriel Lewit: We’ve got bikers, walkers, golfers.

Steve Lewit: We got birds.

Gabriel Lewit: You got birds.

Steve Lewit: Tweeting.

Gabriel Lewit: I think spring is here.

Steve Lewit: Yep, it is.

Gabriel Lewit: Well, we hope you’re doing great as well. We hope you had a nice weekend. We hope that you are ready to… We took a week off as apologies here. We ran out of time last week.

Steve Lewit: It was of a-

Gabriel Lewit: To get to the show.

Steve Lewit: It was a crazy week, wasn’t it?

Gabriel Lewit: It was, it was.

So, we’re excited to be back live here with you today.

Steve Lewit: We don’t like missing the show.

Gabriel Lewit: We don’t. We don’t. And we know many of you enjoy tuning in throughout the weeks. So today we’re going to talk about a range of things, but first, this is serious.

Steve Lewit: Very serious. I have no idea where this is going, folks.

Gabriel Lewit: First and foremost, the Chicago Bears drafted the number one quarterback in the 2024 NFL draft, named Caleb Williams. The future is now.

Steve Lewit: Well, the future is 50% success on first round drafted quarterbacks.

Gabriel Lewit: I’ll take it.

Steve Lewit: I’m a Debbie Downer. I’m sorry.

Gabriel Lewit: If you don’t know this about me, some of you might, some of you may not. I am a die-hard Bears fan.

Steve Lewit: Die hard.

Gabriel Lewit: It has been a brutal last decade watching the Bears.

Steve Lewit: Brutal.

Gabriel Lewit: They haven’t been fun to watch. I mean, you had, oh my gosh, just a rotating carousel of quarterbacks, coaches.

Steve Lewit: Well, they haven’t had a good quarter. They haven’t had a good quarterback in how many years?

Gabriel Lewit: I mean, you could arguably say Jay Cutler was pretty good back in the day.

Steve Lewit: He was okay.

Gabriel Lewit: He was the better of, I mean, I think he held so many passing records and then before that it was Sid Luckman.

Steve Lewit: Sid Luckman is the last great quarterback. The TV sets weren’t even invented when he was around.

Gabriel Lewit: Katie, Katie, can you see how old is Sid Luckman or when did Sid Luckman play? Hold on second.

Steve Lewit: He’s gone. It’s not how old is he? It’s how old was he?

Gabriel Lewit: Hold on one second. We’ll get…

Steve Lewit: Sid Luckman.

Gabriel Lewit: Hold on. I think we’re searching it up here, if we can get it on the screen. He was born in 1916. He played for the Bears, let’s see, 1939 through, no…

Steve Lewit: 47, that’s 80 years ago.

Gabriel Lewit: It was a long time ago.

Steve Lewit: That was even before I was born, and I’m ancient.

Gabriel Lewit: So, that’s a long time.

Steve Lewit: It is a long time.

Gabriel Lewit: I think the Bears are overdue.

Steve Lewit: They are overdue. It’s always iffy, but it’s exciting. This kid has a lot of talent, I am told.

Gabriel Lewit: Here’s the thing. It is not just that we have, I think, only four players. I’ll nerd out a little bit on you. Four or five players left from the old general manager’s regime. The entire team’s been turned over. We’ve got three crazy wide receivers that are good, crazy good. We’ve got a brand new number one generational talent at QB. My bets on the… I’m going to say it.

Steve Lewit: Do we have a running back?

Gabriel Lewit: I’m going to say it, Super Bowl.

Steve Lewit: Wait, wait, wait. Do we have a running back?

Gabriel Lewit: We do.

Steve Lewit: Who is that?

Gabriel Lewit: They just got a new one, Deandre Swift, I think. Anywhos, anywhos, I’m excited.

Steve Lewit: Super Bowl.

Gabriel Lewit: Now, alongside with that, there’s been news about the Bears.

Steve Lewit: Should we chant?

Gabriel Lewit: No. We don’t want to jinx it. There’s also been new news about the Bears’ stadium of interest, I think, to many of local Chicago residents

Steve Lewit: Political hot potato.

Gabriel Lewit: Or Chicago area residents. So of course, they knocked down my favorite place to go. As a team outing, we used to do annual team trips to the Arlington Heights racetrack. They knocked that down, of course, because the Bears were thinking about building a stadium there. They are-

Steve Lewit: I actually thought that was a done deal.

Gabriel Lewit: Some people still think it’s a negotiating ploy with all of this stuff with downtown, but apparently, they unveiled new plans to build a downtown stadium-

Steve Lewit: With a roof.

Gabriel Lewit: Of course, with a roof, because they want to maybe hold the Super Bowl here. But the cost for this is projected to be-

Steve Lewit: $2 billion?

Gabriel Lewit: $5.7 billion.

Steve Lewit: Billion?

Gabriel Lewit: Billion with a B.

Steve Lewit: With a B.

Gabriel Lewit: Now, here’s the problem. They want many of us Chicago area-

Steve Lewit: But we need to pay for it.

Gabriel Lewit: Taxpayers to pay for it.

Steve Lewit: For sure.

Gabriel Lewit: Or in particular, Chicago residents to pay for it. I don’t know if they would tax all of Cook County or just the city of Chicago. I’m not sure there, but here’s the problem. The interest level for taxpayers funding a multi-billion dollar stadium to make multi-billion dollar owners even more multis of billions-

Steve Lewit: Not high, not high.

Gabriel Lewit: … is not very popular.

Steve Lewit: In tax friendly Chicago.

Gabriel Lewit: So, there’s going to be also some discussions here. What would happen, I mean, if this was paid for by taxpayers? Well, the story is that it wouldn’t increase taxes, except for it wouldn’t directly increase taxes except for it would divert tax dollars from many billions of other projects into the stadium. Then, maybe taxes are raised for those other projects. So nobody really believes that it’s not going to raise taxes if it ends up being taxpayer funded.

Steve Lewit: But on the other hand, it would be a resurgence of drawing people into the city, which is badly needed.

Gabriel Lewit: Maybe for eight games a year, maybe whatever other concerts and things that they hold there. That’s the argument.

So remains to be seen, but we just thought we would update you on that saga. As it continues, and as we get more news, we will share it with you.

Steve Lewit: We will.

Gabriel Lewit: Now, I’m just excited. I can’t wait for Bear season to get here. That’s all I want.

Steve Lewit: Can we talk about the New York Knickerbockers who blew a game last night?

Gabriel Lewit: Nobody cares. Unfortunately, I hate to say it here in Chicago area, probably your Knick fans are few and far between.

Steve Lewit: Actually, you’re probably right.

Gabriel Lewit: I’m curious if you’re a Knicks fan and you’re listening-

Steve Lewit: New York Knicks or Giants.

Gabriel Lewit: Email us your info@sglfinancial.com. We’ll get Steve some support.

Steve Lewit: Greatest city in the world. How can you not-

Gabriel Lewit: Second to Chicago.

Steve Lewit: Actually, Chicago’s like I call it New York City on Zoloft.

Gabriel Lewit: Sure. It’s definitely a lot more mellow.

Steve Lewit: But it’s a great town.

Gabriel Lewit: All right, so with that information in tow, let’s start our show for real, right? The financial part of it at least.

So we’re going to talk to you a little bit about different types of saving strategies for folks at different ages. Now, this is a follow-along here with our last show where we talked about the amount needed to comfortably save for retirement. There’s widely different opinions of exactly how much that is.

I was picking, of course, just a little bit on Suze Orman because she was saying $20 million. A new study came out saying maybe one and a half-ish million, somewhere in that range. But it’s all over the map. But I guess more importantly is I think everybody agrees you need to save for retirement.

Steve Lewit: I’m guessing you today.

Gabriel Lewit: You hesitated for a second.

Steve Lewit: Well, I was thinking that does everybody, like young people today, some of them don’t even care about retirement.

Gabriel Lewit: I would say the vast majority of people would agree that saving for retirement’s support.

Steve Lewit: I’m giving a lot of yeses this morning.

Gabriel Lewit: Yes, you do that.

Steve Lewit: Yes.

Gabriel Lewit: So, the question would be where and how do you save and what changes at different ages or stages of your life? Or how do you save, what options you have?

Steve Lewit: I just had a phone call prior to our podcast here with a gentleman who just retired a year ago, and you know what he said? He said to me, “Steve, I don’t know how to explain this to you, but I’m so used to saving and putting money into the bank, and now I’m taking money out to support myself, and I’m really having a hard time with that.”

So saving gets ingrained in us, and as you said, at different ages, we save differently, but then we go into retirement and we can’t save at all, and we’re actually depleting our savings, which is why retirement is so hard for many people.

Gabriel Lewit: Well, I’d be curious to see what he was doing for saving and if he can get out of that habit. But let’s say you’re right out of college. You’ve got your very first paycheck in hand, you’re ready to go.

Steve Lewit: Where can I spend it?

Gabriel Lewit: You’re ready to go spend, but you read or listened to Steve and Gabe podcasts here, Our 2 Cents, saying, “Oh, wait, you should save some of this.”

Steve Lewit: Well, actually-

Gabriel Lewit: Where do you save when you’re 20 years older, let’s say, 20s and actually maybe early 30s?

Steve Lewit: The human service department at the company looked at you and said, “You got to put money in your 401k.”

Gabriel Lewit: Typically, you’re going to get 401ks. You’re going to have company match amounts. But I would argue if you’re younger, most importantly, when you’re younger, you typically aren’t making as much money, unfortunately, is a great time to put money in your Roth IRA. That doesn’t mean when you’re older it may also be a good time to do a Roth IRA or Roth.

However, especially when you’re young, this opportunity is huge, huge, huge, huge. All you parents, all you grandparents with young kids starting their careers, tell them, please, put their money in Roth IRAs because they’re going to have this opportunity to grow hundreds and hundreds of thousands of dollars, 100% tax-free, when they get later to life in retirement.

Steve Lewit: For the rest of their lives.

Gabriel Lewit: And now, just to give a little bit more context as well, the types of investments you should put in your Roth IRA, in our opinion, if you’re young, 20s, early 30s, be as aggressive as possible.

Steve Lewit: That means in the stock market.

Gabriel Lewit: Stock market, even NASDAQ, growth funds, S&P. Don’t put any bonds in there really, unless you’re ultra conservative. But even then, if it’s for retirement, you have a 30-year time horizon. When you’re young, be aggressive. Put that money in the Roth IRA and fast-forward 30 years, millions of dollars in tax-free money.

Steve Lewit: It’s a matter of getting into a habit of saving. And that’s why 401ks are so important because they do get you to save. But to your point, putting your money in a Roth, you pay a little more taxes today. But over the long term, especially, we’ve got a $34 trillion deficit and a $720 billion interest on the debt, especially today when you expect taxes are going to go up in the future.

Gabriel Lewit: And the point is, if you’re younger, your tax rate’s probably so low anyways that even though you’re paying the taxes now, it’s such a small tax your future self when you’re earning more money or pulling out more money in retirement will thank you, because you won’t be paying any taxes at that point.

Steve Lewit: What do you say to a young worker, Gabriel, who graduated from college maybe 5, 7, 10 years ago, got some salary increases, but life is so expensive. It’s like they’re pinching pennies just to get through. They’re renting apartments and so-

Gabriel Lewit: Well, that’s always the hard part. That’s the hard part. So I would say a first target goal is get into some habit of saving anything, a certain percentage, and try to max out your Roth, even if that’s all you can do, $7,000 in 2024, max that puppy out, and then if that’s all you got, then go spend the rest.

Steve Lewit: And even if you can max it out.

Gabriel Lewit: Or maybe half a-

Steve Lewit: Or half of it.

Gabriel Lewit: If all you can do is a half Roth, max out 3,500.

Steve Lewit: Do something. Don’t do nothing.

Gabriel Lewit: And then as your income increases, make that your goal to max out your Roth, and then obviously your company match amounts. If you get company match amounts, that would be your focus in 20s, even 30s, until your income starts to increase to more sizable levels.

Steve Lewit: So now we’re 35, 45, and guess what? We have little kiddies running around.

Gabriel Lewit: You got little kiddies.

Steve Lewit: And I don’t mean little kitty cats, I mean the kiddies.

Gabriel Lewit: You got a little more money to spend, a little more money coming in. You’re married, you-

Steve Lewit: Got to buy a house.

Gabriel Lewit: You got dual incomes.

Steve Lewit: What do you do now?

Gabriel Lewit: So, saving for retirement then, not a lot different than when you’re younger, except I think if you’re 30, 40, you still have 20, 25-year time horizons. Aggressive is good.

Steve Lewit: A long time.

Gabriel Lewit: You’ve got maybe the Roth, depends on your income. So this is where you would run an income analysis to determine is pre-tax going to save me more long-term than paying the taxes now? If you’re in a 37%… Someone told me the other day, I was talking to a client a little older. I said, “Tell me about your kids.” We were doing some estate planning and what brackets are they in?

She said, “Well, one of my kids made a million dollars last year.” I was like, “No kidding.” She was very proud of her kid for a million dollar year. She said, “There’s only one problem. She’s not saving much.” I was like, “Kids.”

But anywhos, if you’re making a million dollars, your tax bracket or tax rate would be much higher, this is my point here, and so you might want to choose the pre-tax option. So you start to really assess pre-tax or Roth, what’s going to be better for me? You also might have extra money. This is very common, especially if you’re a high-income earner, to start putting more in into maybe a life insurance policy that’s designed both to protect your young family with a death benefit, but also to build up a huge amount of tax-free income when you’re later on in retirement as well, dual purpose.

Steve Lewit: So that would be a deal where you take the match from your company, whether it’s Roth or pre-tax, because that’s a 100%. Let’s say you get a 5% max, it’s free money. So it’s like a 100% return on your money instantly. You take the balance and you buy the specially designed life insurance policy that has multiple purposes, income in the future, tax-free money you can use down the road, and God forbid if there’s a death, it does support your spouse.

Gabriel Lewit: So that’s a great choice. If you’re still flush on cash, you could do what we call tax diversification. It’s great to start to add money into what’s called a non-qualified account. So you’ve got money in your 401k, you’ve got some money in Roth. Those are retirement accounts. You can’t access them before 59 and a half.

Perhaps you want to retire at 57 or 56, so you can start sucking money away in just a brokerage account, either individual or joint with your spouse. That money has capital gains tax treatment. You still have a long time horizon. You’d be more aggressive with it. But the point is you can tap into it any point in time. So that gives you tax diversification, which is great.

You could also, again, if you’ve got extra disposable money, you could be a bit more speculative, if you’re not saving for any more special goals like homes or college or anything like that.

Steve Lewit: In that case, you would split your funds up, you would put a certain amount of funds in. We need an expansion on the house in three years. So you would take those funds and isolate them and still be very aggressive because time is on your side. The more time you have, the more aggressive you can be in the stock market. You have time to recover.

Gabriel Lewit: Now, let’s fast-forward next decade-

Steve Lewit: 50.

Gabriel Lewit: Late 40s, early 50s, I think the first thing that comes to mind here is, if you haven’t yet, this is the time to start having a plan. Obviously, we like having plans even from, I won’t say day one, when you’re a baby, you don’t need a financial plan, but maybe day 21 or year 21.

Steve Lewit: Well, there’s a time where the kids are getting a little older. You start thinking about like I did Gabriel. You’re not thinking about it yet because you have young kids. But you start thinking about, jeez, someday they’re not going to be here. My expenses are going to change. They’re going to be off on their own.

Me and my spouse, we could do anything we want, and that’s when retirement, that word really starts to surface somewhere in the 45s, 55s. When you start realizing that your life is going to change drastically.

Gabriel Lewit: And I think the first thing to gauge here is how much more do you even need to save? Are you on track? Are you behind? Are you ahead?

Steve Lewit: Well, you got to get to 20 million.

Gabriel Lewit: If you’re only at 2 million, when you’re at 50, you’re a little behind.

Steve Lewit: If you’re a Suze Orman follower, you got a ways to go.

Gabriel Lewit: You got to really double down. So I would say that’s the first step in your 50s, your late 40s. Assess how close you are to being on track, and it gives you enough time if you’re behind to double down, start saving more. It gives you enough time if you’re ahead to maybe reduce how much you’re saving so you can spend and enjoy more Vacations, more of your discretionary money with kids and family before they head off to college. So it’s a really transitionary period that I think is really important.

It’s also a time where you may start to de-risk a little bit of your portfolio. You don’t want to do too much. You still got time before retirement. Growth is on your side. Time is on your side. But you may not want to be uber aggressive knowing you’re going to retire in seven to 10 years possibly.

Steve Lewit: It’s not the time to buy a target date fund or something like that, which I’m not a fan of anyway. But it’s certainly you’re too young at 45 or 55 to be, I think, to be investing that way, unless you’re really, really conservative.

Gabriel Lewit: Well, a lot of people do those by default, so we would always recommend more of a custom allocation based on your overall plan, but also maybe not a time… Sometimes, here’s one thing I would say, if you’re behind, some people make a decision, well, I’m going to get extra risky here to try to catch up with my investments. I’m going to become super aggressive in my 50s. I got to make up for lost time. I would caution that because that can backfire.

Steve Lewit: It often does. It’s called the market going down.

Gabriel Lewit: So, in some cases, the logic, I get it. It makes sense on the surface, but if you have a bad string of luck there, you might end up even in worse shape for retirement if you [inaudible 00:18:48].

Steve Lewit: Yeah, it makes sense, but it doesn’t make sense. It’s one of those reasoning kind of things. You say, “Well, I got to catch up, so I got to be more aggressive.” And if that works out for you, it does. But if it doesn’t work out for you, you got a big problem. So it’s feast or famine.

Gabriel Lewit: Exactly. All right. Let’s do maybe just quickly, two last rounds of decades here. Let’s say right as you get into 60s, mid-60s, early 60s, you’re on the cusp of retirement. Steve, I know this is right in your wheelhouse, or Dad, as you will.

Steve Lewit: Thank you.

Gabriel Lewit: What would you do with your money?

Steve Lewit: I’m still your dad.

Gabriel Lewit: You are.

Steve Lewit: I am still.

Gabriel Lewit: What would you do with your money? Well, you don’t really need to save if you’re retiring or do you, is the question?

Steve Lewit: Well, I don’t know. That’s where you need to do a plan. Just to back up a little bit, I was thinking if you’re 45, 50, 55, that’s the time. Also, I think to really consider hiring a financial advisor. While you’re earning money and putting money in your 401k and you’re just throwing it in the market and hoping it grows. That’s very easy decision making, even if you’re putting a lot of time into your portfolio.

But once you start to think about retirement, then you need a plan of some kind to get you where you want to go. I think just managing it on your own might work out, but focusing just on the stock market as a way of getting into retirement is a limitation from my point of view.

Gabriel Lewit: Well, I had thrown a little bit of a curve ball with you-

Steve Lewit: You did?

Gabriel Lewit: At you with the question, are you still saving when you get to retirement?

Steve Lewit: That’s why I didn’t answer it.

Gabriel Lewit: You swung and missed. It’s a good curve.

Steve Lewit: I diverted into a backstory. So should you save at 60? Well, why should you?

Gabriel Lewit: Well, that’s why I said it’s a trick question, so I’ll answer it for you. Don’t worry.

Steve Lewit: Thank you.

Gabriel Lewit: Well, you kind of do say, but it’s a little different, so you start to earmark future goals. I want to have a million dollars for my kids when I pass away. You start thinking in terms of where your money’s going to go. I need 500, 600,000 set aside for long-term care in the future unless I buy insurance.

So while you already have money that’s going to continue to grow over time, you save more so by earmarking at this stage. You’re not bringing in new money, so you’re not physically socking away, more contributions into your accounts-

Steve Lewit: Once you’re retired.

Gabriel Lewit: Once you’re retired, but you’ve got to be cognizant of what you spend and you can save essentially by not spending the money and continue to let that money compound and grow. What are you saving towards? You’re saving for future goals. I want to pay for my grandkids’ college. I want to, again, leave a million dollars. I want to make sure I have enough for long-term care. So, it’s a shift in how you save by not spending.

Steve Lewit: And I would call that shift a matter of looking at how efficiently am I using my money? In other words, I need income. How efficiently am I getting my income? Am I using a million dollars to generate my income when I could maybe use 700,000? Then you save 300,000 that you can do somewhere else. How efficient are my investments? Am I taking too much risk in not getting enough return?

That’s when you start really to look, there’s not much you can do about taxes when you’re earning salary in the year. I mean, there’s different deductions you can take, but there’s not much you can do. But once you enter retirement, taxes become a big deal, which buckets you get, how you move money into the tax-free bucket, how you start planning for 10, 15, 20 years, how you build funds for long-term care.

So retirement changes the entire scenario. And to your point, saving is a matter of efficiency or spending less, but still maintaining your lifestyle and still having a good life.

Gabriel Lewit: I also have a couple. I agree a 100%. I’ve also got clients that even though they’re not bringing in a paycheck, they still like to, in their minds, they call it saving, but earmark money for things like my next new car, I want to have 60 grand saved up. So they carve out a little bit of their buckets, if you will, to be just for that new car. So there are ways of saving as you get older, but just a little bit of a different methodology.

Steve Lewit: I have clients saving for a boat. I have a client saving for an RV that they want to buy in three years. It’s a great way to plan your future and to finance your future.

Gabriel Lewit: Because what’s happening is you’re making more savings by compounding your money as it grows. So you could buy the boat now, but then you’ll have a lot less money later on because you didn’t let that money grow as much.

Steve Lewit: Or you could get there when you want to buy the boat and say, “I need 150 grand. Wow. Where am I going to get it from? What account should I take it out from?”

Gabriel Lewit: So, one’s planning more purposefully further ahead, and the other is just winging it, which a lot of people do.

Well, that’s what we wanted to talk about there, so hopefully that’s helpful, and if you’re older and you’ve got kids or grandkids, make sure they share this stuff. Again, there’s no school for 21 year olds to go and learn about money and investing. Unfortunately, I don’t know. They either have to be interested in it or they just find out about it later on.

Steve Lewit: There’s no school for anybody.

Gabriel Lewit: Well, there’s-

Steve Lewit: Even in college, they don’t teach you about this kind of stuff.

Gabriel Lewit: College, exactly. So if you’ve got questions on any of that, give us a call, 847-499-3330, or go to SGLfinancial.com, click contact us.

To continue on our show here, we wanted to talk just a little bit today about the importance of talking with family members about your estate plan.

Steve Lewit: This is a very hard subject.

Gabriel Lewit: There’s an interesting article that prompted this, and it was titled, Hash Out the Inheritance Now or Fight Your Family Later, a little bit of a bold headline. So, what’s the point here? A lot of people are either afraid or reticent or just feel uncomfortable talking about the fact that they’re going to pass away in the future.

Steve Lewit: Well, the old-time thinking is if my kids know how much I have, they’re going to try and do me in, slow arsenic or something like that.

Gabriel Lewit: I don’t know what kind of old time you’re living in but…

Steve Lewit: Well, I’m older than you are.

Gabriel Lewit: That’s terrible.

Steve Lewit: It is terrible. But people would say-

Gabriel Lewit: Of the reasons why people don’t bring it up, the fact that they might get poisoned wasn’t the top one I was thinking about. But I guess you got to know your spouse or your family members.

Steve Lewit: If you go into the next generation and say, “Well, do you tell your kids anything?” “No, I don’t tell them nothing. They don’t know anything.”

Gabriel Lewit: No, it’s very common. So what this article is-

Steve Lewit: Younger generations are much more open.

Gabriel Lewit: So, this article is interesting. It gives quite a few examples here. And first and foremost, it says $84 trillion is going to be transferred through estates big and small in the next 20 years. 84 trillion.

Steve Lewit: Huge, huge amount of money.

Gabriel Lewit: And this has also resulted in a lot of additional lawsuits over conflicts and family assets.

Steve Lewit: So back up there, Gabriel-

Gabriel Lewit: I will say one last thing. We have seen firsthand money that’s been inherited, that’s been contested, single-handedly erode and destroy otherwise strong family relationships.

Steve Lewit: So, you said what I was going to say-

Gabriel Lewit: And it’s sad to see. It’s very sad to see.

Steve Lewit: Now, I have nothing to say. I would put it a little differently. I’d say, here’s what parents say, “My kids will never do that. I trust my kids.”

Gabriel Lewit: “They’ll figure it out.”

Steve Lewit: “They’ll figure it out. They’ll never fight over money. Judy loves John, and John loves Jane, and they’re such good kids, they’ll split it up and they won’t fight.” Well, guess what?

Gabriel Lewit: Well, so here the study says that one third of Americans say they do not plan to have the inheritance talk with their family, which is, it doesn’t say what the other two thirds, if it was only a yes or no question, but maybe the other two thirds said, “I’m not sure.” But that sounds low to me actually.

Steve Lewit: Well, if you don’t want to have that conversation for a variety of reasons, I can understand that, then you better have a trust and not a will, because a trust the kids can’t fight over. The trust says everything. And once you pass away, the trust becomes an irrevocable trust and it can’t be contested.

But if you have a will and Johnny doesn’t like how much Judy got, because Johnny took care of you while you were passing away or while you were sick, that’s where all those lawsuits come from.

Gabriel Lewit: Well, here’s an example. This article had many stories. So, Steven here was a real estate broker, says he regrets… Not you differ Steven, not talking to his mother about her will. He says he’s still stewing about it nearly a decade after her death.

Let’s see, he says that his mother had told his three daughters, hold on a second. That doesn’t make sense. It says maybe he has sisters. I don’t know. I don’t know. Lay says his mother had told his three daughters that she wanted them to have the family diamond rings, but he didn’t put it in writing. She didn’t put it in writing, and the will left everything to her second husband.

Steve Lewit: Oh, ouch.

Gabriel Lewit: So, that wasn’t the intention.

Steve Lewit: Well, especially with things like rings and jewelry and paintings and all that stuff, you can determine ahead who gets what and just make a list of that.

Gabriel Lewit: I finally figured out what I was reading.

Steve Lewit: I think I know what you were reading, but I wasn’t going to bail you out, even though it has my name attached to it.

Gabriel Lewit: So sorry, so the guy here, Steven, he had daughters.

Steve Lewit: He had daughters and [inaudible 00:28:42].

Gabriel Lewit: His mom’s granddaughters. There we go.

Steve Lewit: His mom’s granddaughters. That’s correct.

Gabriel Lewit: His mom’s granddaughters.

Steve Lewit: She wanted them to have the diamond.

Gabriel Lewit: She wanted the granddaughters to have the rings, but it was basically not documented, and then the second husband got the ring instead. There we go.

Steve Lewit: And if you have a divided family, so we have, Gabriel, many clients who have second marriages or third, and they have two different families. And when one die, the money part of the money goes to the current family part and money goes to the current spouse. And it gets very, very complicated. If all of that isn’t written out carefully, then that’s where you get contention and that’s where you get losses.

Gabriel Lewit: And in this case, apparently, they just couldn’t find the will.

Steve Lewit: Well, that’s a problem.

Gabriel Lewit: They did not know where it was. And he was saying they should have pushed to ask mom where the will was stashed before she passed away. Because in this example here, they could not find the will and a will that cannot be found-

Steve Lewit: Is no will at all.

Gabriel Lewit: Does not exist.

Steve Lewit: She may not have had a will.

Gabriel Lewit: Nobody knows.

Steve Lewit: Nobody knows.

Gabriel Lewit: So, this is sometimes a challenging conversation. Other issues that are brought up here, can you count on if you have kids from other marriages, second marriages, all these things get factored in? As you mentioned, trust can sometimes help to eliminate this, but the point of the article is maybe just having a conversation.

Steve Lewit: Well, I think-

Gabriel Lewit: Getting organized, having that open, honest dialogue with your hopefully more mature elder children.

Steve Lewit: What’s the benefit of that?

Gabriel Lewit: Well, you get clarity.

Steve Lewit: Tell me more about clarity.

Gabriel Lewit: Clarity is things are clear things.

Steve Lewit: I meant clarity about what?

Gabriel Lewit: You hear it directly from the mom’s mouth or the dad’s mouth. I wasn’t going to say horses, but was in mom or dad’s mouth.

Steve Lewit: Well, you never know.

Gabriel Lewit: What they want, and then you find and locate the written documents, trust or will, preferably trust that actually show that. And then you know where it is, and then you keep tabs on it.

Steve Lewit: And you show that to your kids.

Gabriel Lewit: You show it to your kids. They know where it is. You know where it is. Everybody’s on the same page. Confusion is reduced, conflicts are reduced.

Steve Lewit: And part of that, Gabriel, I was thinking about clarity, is you get clarity, but your kids also might give you clarity about what they want and what they don’t want. You might think, oh, well, my kids really are going to want my house. And most of the time the kids want no part of your house.

Gabriel Lewit: Mom, I don’t want the cats.

Steve Lewit: I don’t want the cats. We don’t want any money. A lot of kids parents will say, “We want to leave you something.” And kids will say, “Just go out and spend it. We don’t need it. We don’t want it. Just go take care of yourself and enjoy it.”

Gabriel Lewit: Let’s talk for the last couple of minutes. When do you have this conversation when not to, well, one of the first times not to have this conversation is when you’ve just gotten sick or a really bad health scare, and now you’re rushing to put all this in place. It’s an undue stress environment, so you want to plan ahead.

Steve Lewit: And it scares the daylights out of the kids.

Gabriel Lewit: And that’s oftentimes what prompts people to have these conversations is they wait until, oh, wait, shoot. I actually am mortal. I better have this conversation quick, and I think being under duress and rushed and stressed and health scares or hospitals, these aren’t the times or places where you want to be arguing about money and finances when you want your family there and near you, supportive.

Steve Lewit: You’ll end up not talking about finances. The kids are going to say, “So dad, are you dying? How sick are you? Tell me about the medications they have you on.”

Gabriel Lewit: So earlier is better, planning ahead. Also don’t have it at Thanksgiving.

Steve Lewit: Oh, don’t do that.

Gabriel Lewit: Don’t bring it up at Thanksgiving.

Steve Lewit: No, no, no.

Gabriel Lewit: Birthday parties.

Steve Lewit: This is a great turkey. Let me talk to you about what happens after I die.

Gabriel Lewit: Don’t start the argument about wills, trusts, or politics at Thanksgiving. Those are the ones you want to stay away.

Steve Lewit: Make a meeting plan. You call your kid and say, “I want to talk to you about some important stuff that I need to share with you.” You make an appointment with them and make it like a business meeting, not over Thanksgiving or don’t pull your son and daughter aside at a birthday party and say, “Hey, look, I want to talk to you about when mom and I are gone.”

Gabriel Lewit: If your family members are not nearby, maybe the next time you visit them or purposefully fly out there to visit them to talk about this, especially if they’re not tech-savvy. Zooms and stuff like that aren’t easy to do with elderly parents that aren’t computer-literate.

Steve Lewit: I hate that word, elderly.

Gabriel Lewit: Elderly.

Steve Lewit: I just dislike-

Gabriel Lewit: Older? Olderly?

Steve Lewit: Elderly sounds so frail. They’re elderly people. It’s like, what is elderly?

Gabriel Lewit: If you say it in that tone.

Steve Lewit: Well, elderly is such a…

Gabriel Lewit: You’re a healthy person. See if you say anything in that tone.

Steve Lewit: It’s the wrong word. No, don’t call them elderly. They’re mature people.

Gabriel Lewit: Elderly. See, you can say anything, make it sound good.

Steve Lewit: No, mature, older, not elderly. When you say elderly-

Gabriel Lewit: Stately?

Steve Lewit: Yeah. When you say elderly, don’t you get a picture of a person like… Elderly is like…

Gabriel Lewit: We get it. We touched a nerve.

Steve Lewit: You sure did.

Gabriel Lewit: All right. The last thing I wanted to say about this, here’s some interesting-

Steve Lewit: So, am I elderly in your eyes?

Gabriel Lewit: Stately.

Steve Lewit: Stately. You bailed out of that good.

Gabriel Lewit: So, here’s one of the interesting side effects that came from these conversations is sometimes you realize-

Steve Lewit: Elderly.

Gabriel Lewit: Your kids, when you talk to them say, “I don’t need all that money.” Or maybe you find out that they want you to spend it. Or maybe what a lot of people are doing is realizing they can help their kids, even now while they’re living. It’s called giving while living, as opposed to just stashing up all your money until you pass away.

Steve Lewit: Watch your kids enjoy it.

Gabriel Lewit: Give it to your kids while they’re younger when they need it, not when they’re 60 with their own millions, and then they get your millions. Give them less of your millions when they’re struggling to put their kids into daycare and buy their house or whatever else is going on. Just an idea that’s gaining in popularity it seems these days.

Steve Lewit: I found that when people get elderly, they want to give more to the kids while they’re living.

Gabriel Lewit: Sometimes.

Steve Lewit: Sometimes.

Gabriel Lewit: Sometimes.

Steve Lewit: I hear that a lot more lately.

Gabriel Lewit: I do. Me too, me too. Well, that’s what we wanted to talk about on that. So we’re running up on our time here.

Steve Lewit: Well, I need to go for my nap.

Gabriel Lewit: It’s getting late in the day for Steve.

Steve Lewit: I’m falling asleep behind the microphone. I’m so elderly.

Gabriel Lewit: Oh my goodness. You’re funny. Well, we hope you enjoyed our show today. If you’ve got questions, of course, call us anytime, 847-499-3330. Go to sglfinancial.com, click contact us or email us info@sglfinancial.com. We, of course, really appreciate you being a listener of our show.

Steve Lewit: At any age.

Gabriel Lewit: At all ages.

Steve Lewit: At all ages.

Gabriel Lewit: And we can’t wait to talk to you on the next one.

Steve Lewit: Stay well, everybody.

Gabriel Lewit: Stay well. Bye now.

Steve Lewit: Bye.

Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL a call at 847-499-3330 or visit us on the web at sglfinancial.com and be sure to subscribe to join us on next week’s episode.

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