Despite a lifetime of good financial decisions, Sara can’t stop worrying about money.
Scott: Let's talk with Sara. Sara, you're with Hanson McClain.
Sara: Oh, hello.
Scott: Hi, Sara.
Sara: You guys are a real kick. You're a real kick. I love your show. I love listening to you.
Scott: Thank you. Thank you.
Sara: You make me laugh, and I'm one of those ones you just talked about. I'm 76 years old, and I'm frightened to death. I was poor when I was a kid and now, I have saved sufficiently, or... No, no. I’ve kept working. I'm 76. I just keep working part-time. And I'm delaying gratification, I've thought about moving to another state to save money, but my family is here. I'm alone, I have to support myself now. I want to live near my grandchildren but California is expensive.
Pat: How long have you lived in the same house, how many years?
Sara: I've been here 21 years, and it's a condo, it's a townhouse.
Scott: Okay. And what kind of work do you do?
Sara: I'm a marriage family therapist. But I work for the military and I go to different bases and work with the children of the deployed soldiers and sailors.
Pat: Wow. So let me ask a couple of questions. How much do you earn approximately on this job?
Sara: Well, depending on how long I work, now, this year, probably about $60,000.
Pat: Did you say $60,000?
Sara: Uh-huh, about that.
Pat: And you get Social Security benefits which probably...
Sara: I get Social Security and I get a retirement from the State of California, and that runs...I get about $3,300 a month total on those two.
Scott: Got it. Social Security and pension is about $3,300 a month. Well, that's a nice base to have.
Pat: Yeah, yeah, yeah. Okay.
Sara: Uh-huh. And so I keep working but I'm also 76 and I don't know how much longer I can work. I'm planning to...
Pat: And what's the value of your home?
Sara: Okay. I figure $150,000, the townhouse.
Pat: Okay. And do you owe anything on it?
Pat: What other assets do you have, money in the bank, or retirement plans, or anything like that?
Sara: Okay. I've got $400,000 saved, and let's see, $125,000 is sitting in the bank doing nothing. I've got $200,000 in bonds, and I've got $75,000 in a company. They have some sort of thing and it pays 2.2% probably, I don't know.
Pat: Okay. It's called a GIC or Guaranteed Interest Contract, something like that.
Sara: That's it. That's it.
Scott: Is this all in a 401(k) account?
Sara: Let's see.
Scott: Through work, you've retired from the state, it's with the state?
Sara: $250,000 is the bond, 401(k) and a SEP IRA.
Pat: All right.
Scott: And you're taking distributions now, too, right?
Sara: I have to take distributions.
Scott: Yeah, because you're 76.
Pat: So what's your question for us?
Sara: Okay. What do I do?
Scott: Because it sounds to me like you're doing a great...I'm thinking, I'm like, "You've got a job that's an intellectual job, engaging, you're adding value to people's lives..."
Pat: They're letting you work part-time.
Scott: You've got a home that's paid for, you've got pension and social security.
Pat: And you're worried.
Sara: Yes. Because I need...
Pat: All right. So here's what...
Sara: I need to invest this.
Pat: Well, I don't know if you should change much. The only thing in your portfolio that would concern me is possibly those bonds and it would just be the length of the bonds.
Scott: Yeah, just make sure they're not too long.
Pat: They're not too long, the maturities aren't too long. You would be considered in the top 10%...
Scott: ...of retirees.
Pat: ...of retirees.
Scott: Whether you believe it or not, that's reality.
Pat: Yeah. And you should not move to a different place to...you should stay where you're at.
Scott: Are you having trouble working now? Are you like spent, burn out, or...?
Sara: No, no. I'm tired but I've got a lot of energy. I mean, yeah, I've got a lot of energy but I just get tired. It's a little tiring working with children all day long when you're 76. But I'd probably get tired at 25.
Pat: So you're worried about running out of money? Is that what you're worried about?
Pat: Oh, Sara, you should not worry about money. And the reason you actually have money is kind of what we talked about earlier is because you worry about it, right?
Pat: You show me someone that doesn't worry about money somewhat, and I'll show you someone that probably doesn't have any.
Sara: Oh, okay.
Pat: So, it's a normal thing to worry about money, it's a normal thing to worry about running out of money. And it's just like with all these other...with the patients you work with, most of the behavior is normal. It's when they actually start acting on these normal behaviors in an abnormal manner, correct?
Scott: Aren't you talking to a therapist, Pat? There's normal behaviors.
Pat: Well, I spent a lot of time. I spent a tremendous amount of time talking to therapists. Some of my best friends are paid therapists.
Sara: So the $200,000 in the bonds, just make sure they're not too long but should I take them out of bonds and put them into the stock market?
Sara: The stock market's going to crash.
Pat: No. So what you would look at is...you said you had the $75,000 in this Guaranteed Interest Contract. Is that in the same plan that GIC is, the bond?
Sara: No. No. One's with my company. One's with my company, that $75,000. And then the $200,000 I put with some investment man.
Pat: Scott, here's what I think she should do and I don't know if the plan will allow it, I would call...
Scott: See if you could move more money into the GIC.
Pat: See if you could move more money into the GIC. I would call the plan, you have the $75,000, and I would say, "Can I roll an IRA..."
Scott: Or a SEP IRA.
Pat: "...or a SEP IRA, my $200,000, into your plan and invest it in that Guaranteed Interest Contract?" And if they say yes...
Scott: Then go for it.
Pat: ...I would do it tomorrow. If you were sitting in my office and you were a client, I would say...
Scott: "Let's take advantage of it."
Pat: "Take your money and take advantage of these GICs," because that is a great way to return. I wouldn't expect it to continue to pay that much much longer but it's a great place for it right now.
Scott: You've got lots of options, Sara. Don't worry and don't...
Sara: All right. So if I can't work tomorrow, if something happens, I'm not going to get...
Pat: Call us.
Sara: May I call you back?
Pat and Scott: You, absolutely...
Scott: Please do. We'd love to help.