Color of Money Live

May 02, 2013

Join Washington Post nationally syndicated personal finance columnist Michelle Singletary for an online discussion on Thursday, May 2 at noon ET.

Michelle's guest will be Stan Hinden. His book "How to Retire Happy: The 12 Most Important Decisions You Must Make Before You Retire" was April's Color of Money Book Club pick.

Be sure to send your personal finance and retirement questions in early or read the archives later.

-- Keep prom in perspective

-- Michelle's Mailbag: Don't lend money that you want back

--Retirement planning doesn't have to be rocket science - April's Color of Money Book Club pick

-- Preying on pensions - Today's e-newsletter

I so glad you could join me today and it's a good day because a dear friend and former colleague, Stan Hinden is joining me as my guest. He's written a terrific book, "How to Retire Happy" and is here to take your questions. He knows a lot about retirement. So ask away.

I've been trying to ramp up my savings (I'm 54) but life keeps tripping me up and I'm scared about the future and having enough to fund retirement. My parents struggled financially their entire lives and I have nightmares about ending up a bag lady...right now I have $250,000 in a 401(k) and $10,000 in an emergency fund and I know I need a lot more. How can I stay positive and not give in to fear?


Retirement planning doesn't have to be rocket science

I understand your fears because we all have them from time to time. But I would say that you have made a very good start on savings. And I would suggest that you keep a tight rein on expenses during the next 10 years as you approach retirement age. And, if need be, and your health is good, retirement will probably offer you opportunities to continue to earn money.

I would also suggest you find out "your number." Figure out how much you need to retire to live the retirment you want. You may have enough already especially if you drag debt into your retirement. Go to and try out the Ballpark Estimator to see if you are on track for your retirement.

My husband, a regional pilot, must retire on his 65th birthday next year. I will be 63 when he "retires". We do not have enough saved so he will keep working, probably flight instructing at his company or Flight Safety. Our income will be cut in half, from $120,000 to $60,000. If I decide to take social security, I think I get half of his. When should I start collecting? Also, since his income will be cut, when should he start collecting? If I wait until he's 70, I will be 68. If we can afford to wait, does it matter if I start collecting at 68 or 70? I want to collect the most income possible. If he dies before 70, what will I get when I start collecting? Half of his maximum? Also, I've heard that I can start collecting at 62, then repay it when I'm 70 to get more per year from 70 on. How does this work?


Retirement planning doesn't have to be rocket science

As you can see, Social Security offers many options and they can all be somewhat complicated. I would suggest that you use one of the Social Security calculators available on either the Social Security web site or the AARP web site to try out various scenarios.

Michelle, my husband and I have been paying significantly more than required on our mortgage and will be paying it off in the next few months. Hooray for us! But our big question is what to do next... we need to find a financial advisor and don't quite know how to go about it. Suggestions?

I get so many sad financial stories, I'm happy to address one where someone is going to be DEBT FREE soon.

Good for you.

I would see an adviser. And start looking for one by asking around for recommendations. Ask co-workers, friends, family members. You can also try finding one by going to or

I have been very aggressively paying off my student loans since finishing graduate school three years ago. I've reached the point where all I have left is a federal loan with about $1,000 at a 5.75% interest rate. I recently received my annual bonus and work, and was planning to pay off the loan (my only debt) and invest the remainder in a mutual fund (I have solid emergency and life happens savings). However, I recently checked my credit score on credit karma, and the two items negatively impacting my score were a low number of accounts and a low average life-span of accounts. If I pay off all of the loan now, will this lower the number and/or average life of my accounts and negatively impact my credit score? I really want to get rid of my student loan debt for good, but I'm also thinking of purchasing an apartment in the next few years, so my credit score has real monetary value as well.

Oh my dear the best thing you can do for your peace of mind and your credit is to pay off that loan. Now.

Not being in debt is good for your credit score. Besides you've already gotten good points for paying the loan off on time.

Your score won't be dinged by getting rid of this debt.


Hi, Michelle. My insurance company, like most, pays for a mammogram once a year. I was 2 days early this year and got stuck with a bill for several hundred dollars! Everyone says, you know that means every 366 days or longer. Well,I didn't, but you 'd better believe I do now. I feel like an idiot and I really need that money. I hope this helps others from making a similar mistake.

I'm so sorry for you. I can feel your pain. And shame on that insurance company for not pointing that out to you.

Nonetheless thanks for the heads up to my readers and chat participants.

When Roth IRA's first came out, I was skeptical and stayed with my traditional IRA. Now that I'm 10 years from retirement, I'm wondering if that was a mistake. Would it be better to make the change to a Roth IRA now - or is it better to stay where I am?

My view is that a Roth IRA is better because it removes the annual chore of taking required minimum distributions--or withdrawals--from your regular IRAs. However, ideally you should be able to pay the taxes that will  be due when you cash in your regular IRA from a different pot of money.

Is there a special place to view the Live Chat?

So sorry. You can't "view" me. It's just a text chat.

Besides I'm having a very bad hair day anyway.

I would like to know if it is prudent to pay off all your debt before retiring? (Specifically the mortgage). I often hear pros and cons. What is your opinion?

I think the more debt-free you are in retiremetn the better. However, you don't want to be house rich and cash poor. And that means you clean out your savings to pay off your house but then you don't have any liquidity for the things you may need.

So I belive you do both. Build up savings, investments and pay off your house, cars, credit cards before you retire.

I'll be 66 next month and hope to retire this year. Should I put in for social security before I retire?

At 66, you are probably at your full retirement age which means you will get your full Social Security payment. If you wanted to continue to work until 70, you would earn an 8 percent a year delayed retirement credit--for a increase of 32 percent for the four years between 66 and 70. Thus you would not get any checks now but at 70, you would get a much higher benefit check.





Are 529 plan earnings exempt from state & federal taxes, or just state taxes? What if you have a 529 plan from a state other than the state you live in?

Good questions. Earnings are tax free for federal and typically for state too. 

Here's a great link to a website you should visit ( which can answer a lot of your questions.

I'm 100% committed to being debt free before my 30th birthday. I have about $6,000 in credit card debt with a 19% interest rate. I could take a loan from my TSP and have the payments made from payroll, so I'd 100% get it paid off with no excuses. It'll also help my credit rating, and let me cut up the cards for good. The interest rate would be 1.3%. I have a federal job that's very secure and I know I can live off off my salary minus the payments. I like the accountability of the loan payments. I know taking a loan from myself isn't the best policy, but I don't have good enough credit to get a lower interest rate elsewhere and the interest rate will extend my payments pretty significantly. I have 401(k) in retirement savings, and I'm in my late 20s. No kids, no car. Is this a terrible idea?

Typically, I'm not a fan of using any debt to pay off debt. But if you are pretty sure you aren't leaving that federal job, this plan could work for you. I also say that because you are so young and have time to make up for the money that won't be growing for you if had left it in your TSP.

But here's a BIG warning -- two -- actually.

1. You had better cut up those cards. Do it. Now. Actually do it whether you take out the loan or not. You can cut them up without closing the accounts. (Don't close the accounts until you pay all the cards off otherwise it will hurt your credit score). You have to stay true to not using the cards because I find many people clear the debt from the cards and then run up charges again.

2. Stay put in that job. If you leave the loan becomes due immediately. And if you don't pay you will get hit with a lot of penalities from the IRS.

Following 12 years at my last retail employer, I was let go at 66.  I attempted to be employed by other stores, to no avail. (their choices, I noted, were much younger). I have recently completed Yoga teacher Training and am endeavoring to START this career...until then I have a  meager savings ($50,00,) primarily a 401(k). I believe in magic, but would love your advice from a more pragmatic prospective :)

I admire your enterprise and determination to continue working. Obviously, you have chosen the necessary path. I hope that you have been able to qualify for unemployment insurance because that would help. And if necessary you can apply for Social Security. Meanwhile, you have my best wishes for success.

I have a 401, 457, a tiny Thrift Savings, and two IRAs. Is there any advantage in consolidating them ?

You might save on fees. And there is the administration of all the funds.

Talk to an adviser about the best way to handle the various funds.

What was your biggest or most importatnt lesson learned about preparing for retirement.

My most important lesson was that I should have taken the time, long before I retired, to learn about all the elements of retirement--such as Social Security, Medicare, Medigap insurance and pension payouts. These were areas in which I had to make important decisions and if I had known more, I would have made better decisions.

We've had a suprising windfall! It's a couple thousand. I'm debating what to do with it. Part of me wants to travel with it, somewhere we'd never be able to afford to go otherwise and have talked about many times before. The other part of me wants to pay down debt. We're on track to pay down the debt agressively already, but this would speed up the process and debt is debt. Split the difference maybe? I don't know if we'd be able to afford the desired travel that way.

Listen to your other self -- the smart self that is telling you to pay off the debt. Get free of it. Experience freedom.

The vacation place isn't going anywhere. So once you've gotten rid of the debt use the money you were paying on it to save up for the place you want to travel to, because once you get there you will have even greater peace and joy. I promise.


I have a serious dilemma I hope you can help me with. I am very fortunate to have a secure six figure job as a professional, but I think every day about leaving. My job is very stressful and demanding, my commute is long, I've had many personal struggles (deaths, infertility) to cope with as well, and ultimately I'm in a field that I don't like at all. I am fortunate, though, that in the past few years as my husband's business has taken off he now makes many multiples of what I do. Now quitting is a real option for me, but I can't seem to make the decision to leave. My husband is very supportive of the idea of me quitting, but I'm the one who can't let go - even as the idea of sucking away more of my life at this job kills me. I know I'm lucky to have this choice, but I can't talk to anyone I know about this because money (really, income disparity) is a sensitive issue. Thanks - you always have great advice.

I totally understand. You are scared. You are fearful.

How about a compromise for now?

 Can you take several weeks of vacation or a sabbatical? If so, take the time off and see how you like it. Test out the waters of being a one-income household. Of looking for other things to do with your time that you like.

And if you like it then let go.

I typically follow my gut. And I believe your gut is telling yo it's time to move forward.


I want to add, that I came back from bankruptcy (many years ago) and now have a credit score of 830. I took out a $10k line of credit, incase I need my savings dwindle; would it be better to use that (9.5% interest) before taking from my 401(k)?

I would say yes. Delay taking money out of your 401(k) as long as possible--proving of course that 9.5 percent interest is not going to wreck your family budget.

I understand where Stan is coming from, but I wouldn't use the debt.

See where you can cut or cut back to manage. If you have to take from your retirement look carefully at taking less because you've budgeted better.

If you are stressing about taking money from your retirement, how are you going to manage a loan payment.

Just saying.

Just a piece of humor. Last year I wrote in that my wife and I were solving our not enough saved for retirement by me quitting my job and doing volunteer work. My new financial adviser(old one retired) just informed me we have too much saved for retirement and needed to cut back. So taking my two daughters and wife to Europe for two weeks to cerebrate youngest becoming a Doctor of Physical Therapy (debt free) to spend money. He says we can afford it. Before I retired at 60 we needed to save another $500,000. Now we need to spend money. We also have no debts and I am loving the volunteering.

What a testimony.

Safe travels!

It amazes me how many of our friends moved to a larger house a few years before their kids left home. They took on a new 30 year mortgage and will be paying it off well into their 70's and 80's. What were they thinking? Didn't they realize the smaller house would be all they would need as they grew older and that they could use the money they are now spending on mortgage payments.

They were thinking what a lot of people think.

"I need more."

But who knows maybe they can afford it. You never know from the outside.


Twice in the last month, I've purchased clothing on sale, only to see the same items become more deeply discounted the following week. I wanted to remind people that almost all stores offer a "benefit of sale," meaning they will refund the difference between the price you paid and the new discounted price if you bring in your receipts (or call, for online purchases) within the accepted time period. On one shirt alone, I saved an additional $13 through benefit of sale. The time frame is usually within a week to two weeks of when you purchased the item.


Done this myself a few times.

Of course I don't shop much so I may be missing the deadlines because I'm not in the stores much.

And remember you never "save" when you spend.

I forgot to mention my husband and I have no debt to speak of. No mortgage, no credit card balance, etc. "43 and debt free" was our mantra 11 years ago and we did it!

Love it!

I got a letter from Experian saying I'd requested a free credit report, and to fulfill my request I needed to put all the information required to steal my identity--including copies of sensitive documents--in an envelope and mail it to them, to prove that the request was in fact made by me. I went to their web site and verified that the company does in fact require this. Are all the credit bureaus requiring this? Because if so, I'll have to do without checking my credit report annually. It makes no sense--for a fee, everybody else in the business world can check my credit without proof of residence and copies of a government ID--so it sounds like just a way for Experian to avoid fulfilling free credit report requests.

So the question is did you ask for the free credit report?

If so, they need to ask the information to prove it's you.

But if you didn't request the information, I would be worried.

You can go online an order your free credit reports at

However, sometimes people have trouble online and that is why you have to mail in the information.

Our family had been planning to take a trip this summer that will cost more than $1,500, but now I'm wavering. We are a one-income family at the moment, meeting our monthly bill obligations, but with only $2,000 in savings. Your voice was in my head saying, "this is not a wise decision" But it is the only time every year that I see my sister & the cousins get together.

Can I get more in your head?

I 'm concerned about you taking this trip. Doesn't look like you can afford it.

If you have any debt other than (mortgage and I'll allow a car note)  you cannot afford the trip.

If you have just $2,000 in saving a financial hiccup could wipe that out pretty quickly (like say a car repair).

Build you your saivngs a bit more. At least have one months of living expenses.

And this year, have the sister and cousins come see you if they can afford it.

Or there's always Skype.

Based on what I've seen from friends and family, only part of retiring happy is financial. I've seen people very well set up financially become miserable and depressed because they are bored and people who can barely make ends meet make the most out of every day. Of course, it would be best to do both! It seems like most retirement planners emphasize only the money aspect. Thanks Stan for covering the mental aspect right in the first chapter. I hope more people take that advice.

Thank you for the compliment. In a general sense, retirement is an opportunity for an individual to launch new endeavors and find new areas of interest. It can be a wonderful time if one has a positive attitude.

I've never done this before. Should I be able to hear this discussion online, or is it only communication via typing. If I may listen in, please tell me how. Thanks!

Well  welcome first timer. And it's okay to ask.

So this is only a text chat. No audio or video.

Maybe in the future.

I would formally appeal that with the insurance company. It will probably take an hour of your time to write a letter. If they end up covering it, thing of your hourly pay rate! The worst that will happen is they'll say no, which leaves you right where you are now.

Good point. If you haven't already, try it.

You could argue that the person making the appointement should have pointed out the date thing.

That did happen to me and my provider did tell me I needed to wait a few months before making an appointment.


Hi Michelle, I love your chats. I would like to refinance my home not to use it as a piggy bank, but to change my loan from 30 years to 15. Do you suggest using my current lender (a large bank) or going with a credit union? I have a high credit score if that matters. Thank you!!

Get quotes from both. See who has the better refinance options.

Dave Ramsey indicates that his credit score is ZERO because he *always* pays cash for everything. (I know not all of us can, but still, his credit score should be the highest one can get, ya know?). The credit score is only if you want more debt. Don't worry about it.

Yes and no.

Yes the credit score is all about qualifying for more debt.

But unfortunately credit matters in a lot of other areas too -- home insurance, car insurance, applying for an apt. or even getting or keeping a job.

I agree with Ramsey about being debt free but for the masses credit scores do matter.

Three years ago, I returned to work after having been laid off and unemployed for almost a year. I have paid off my debts (except for a mortgage) and my bank account balances are back above where they were when I was laid off. I feel like I can once again invest some money. In the past, I was always fairly conservative getting Bank CDs, but the interest rates are so low that the money is more accessible in my checking and savings accounts. I don't know that I trust the market, while I have a 401(k) plan at work, I have seen the balance go up and down over the years without seeing much forward progress. Is there a safe place to invest money that will pay off over the long run and still keep the money in a place that I can access it if/when needed?

Deciding where to invest one's savings these days is very difficult--in large part because interest rates are so low. However, it might be a good idea to review your 401(k) investments to make sure you have diversified your assets in a satisfactory manner.  Also, if your company matches a portion of  your savings, check to see whether you are taking full advantage of the match.

Hi Michelle, I know you aren't a big fan of taking on debt to pay debt, but- say combined we owed about 10K in credit cards.. what are your thoughts on say getting a home equity line of credit, and if the interest rate is lower on that than the cards, paying the cards off, cutting them up, and then just paying back the loan on an accelerated rate?

Nope. Wouldn't do it.

If something happens you've taken unsecured debt and made it secured debt.

Just work hard -- cutting back, earning more if you can -- to painfully pay off the credit cards.

Often the pain of it all sticks with you and you don't go there again.

If you're 3 years out of grad school, chances are your score is more impacted by your short credit history than your low number of accounts, so just pay it off. The only debt I've ever had is 2 mortgages (consecutive, not simultaneous) and my score is over 800. Using a credit card and paying it off every month is a good way to raise your score. If you don't have the discipline to treat it like cash and pay it off every single month in full (no exceptions, no "Oh I'll pay it off next month when I get my bonus"), then forget it. Credit card debt is not worth a slight increase in your score.

Said as much but thanks for the backup.

I am 57 and read the article about Stan Hiden and just picked up his book. I am looking to retire at 65 and tracking towards that. I have been in telecom sales for 25 years and make a good living. Besides the obvious of having additional money, what is your advice where you can still work and have the flexibility of retirement?

Well, you can volunteer. That is always a worthwhile thing to do. You would have some flexibility on time, you probably would meet some interesting people and it would help you keep your business skills fresh. Win, win as they say.





Hi Michelle, love the chats! I recently received an inheritance and will be meeting with an investment advisor this afternoon to discuss options. I'm panicking a bit because my personal life is at a crossroad where some combination of marriage/kids/buying a house/moving to a new city/new job may (or may not) be happening over the next few years. On top of that, my dad recently passed away one week after retiring so I'm torn between saving for the future and enjoying the present. So I'm not sure what to say to the advisor when we meet about what my financial goals are. I would appreciate any thoughts that you have. Thank you!

I'm so sorry about your loss.

But it's good you are meeting with the planner. He or she can help you put all the things in perspective and sure help you develop a good plan.

However, I will say this. Don't make any big decisions just yet. Allow yourself to grieve. You want to be sure you aren't doing anything because you're too emotional.

I live simply and comfortably right now and want to ensure I can maintain this way of life after I retire. How can I be confident I've saved enough money to ensure that? Are there tools online to help? Or a formula often used to determine this? Other methods?

You can use one of the many online calculators that will help you determine how long your money will last under different economic scenarios. They also will tell you whether your income and expenses are in line with each other-- a very important guidepost to your future.

Earlier in the chat I mentioned one of the calculators.

Yes, I see people who spent their whole life not being able to wait to retire...and they spend their whole existence worried about not having enough money. Find purpose in your life. Stop worrying. You can do something about it (my thoughts on worrying: if I can do something about it - do something. If I can't - worrying won't change anything). To be honest, if I can't do what I want when I 'retire' (which, to me, means traveling a whole bunch) - then why retire? What will I do? Why not keep working (if even part time - then I could save more for my travels!). I know that not everyone can keep working, but there *are* plenty of things that people can do (even volunteer! give up your time for others - why don't more people do this?). I see people sitting at home because they are so worried about going out and doing something. and they aren't helping others - all that time is a gift...give it to someone/an organization that needs it.

You make some good points. I plan to retire from my current daily grind but I will never truly retire from doing what I love, which it helping people with their finances.

What are the top 3 decisions to make before retiring

First, are you ready to retire.

Second, can you afford to retire.

And three, what do you want to do after you retire, bearing in mind that retirement can last 20 or 25 years.


I loved the book, lots of info, with a common sense style that was easy to understand. Thank you!

I totally agree. There is such great stuff in the book.

Well, time is up. Thank you all for participating. And a huge thank you to Stan Hinden.

We didnt' have time to get to nearly as many questions as we wanted but please check out my mailbag on Monday. I'll post the answers to some of the questions left over.

Again, thank you for joining me today.


In This Chat
Michelle Singletary
Michelle Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Thursday and Sunday. Her award-winning column is also carried in more than 120 newspapers. In her spare time, Singletary is the director of a ministry she founded at her church, in which women and men volunteer to mentor others who are having financial challenges.

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