This Nurse Retired at 66 With the Help of Her Daughter-Ep 15
We all experience setbacks in life but this nurse has a secret weapon up her sleeve. With the help of her daughter Courtney, this nurse was able to rise to recover from these major financial setbacks but was able to position herself for retirement over the course of eleven years. Courtney helped her mother recover and live her best life in retirement, house paid off in all. So who is this Courtney? Courtney Richardson is the founder of The Ivy Investor, the resource for women seeking to navigate the maze of the investment world.
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TRANSCRIPT:
Naseema McElroy (08:40): So, today on Nurses on Fire, we have Courtney of The Ivy Investor joining us. What's up Courtney? So, alright Courtney, tell the good people a little bit about yourself and then we'll dive into how you helped your mom retire at 66?
Courtney Richardson(09:01): I guess I have to start like when it all started. So I was graduating, my graduation from college, I was a philosophy major and I felt like I was going to go to law school like the whole time. And then as I'm graduating I was really tired. I had like school fatigue, so I was like, ah, you know, I'll just work for a little bit and then I'll go back to law school, you know, start to process and apply. And so my job prospects were looking a little slim and then I put my resume on monster and I got a hit from American Express financial advisors, which is now Ameriprise.
Courtney Richardson(09:33): So they were like, Hey, do you want to be a financial advisor? And I was like, Oh, let me look at all my other options. You know what? I have none. So I'm going to be a financial advisor. That's what I'm wanting to do. That's why. So my dad actually had paid for my financial licenses. My Series 7 I think was like $500 because they made you pay for it yourself. It was like they had two options. Either you had track number one, where track one was where they would pay you to study, and then you had track two where they wouldn't pay you to study. You pay for everything out of pocket, but you got a signing bonus if you worked out. So I was like, well, I'm going
to do the signing bonus because the quicker that you got basically what they call the license, which is a Series 7, Series 66 life, accident, and health, the higher your signing bonus was. So I took the Series 7, which is the stockbrokers license with no stockbroker experience. I was not a finance major. I just kind of made it work, took that, pass it on the first time, which is awesome because the failure rate is really, really high, especially for people of color. So I took the next exam, 66 passed that, but don't you know, I failed my life, accident and health exam, the easiest exam of them. I failed it. So I had to wait 30 days to take it again. So I basically like missed my first tier for the signing bonus. I was so salty, I was like, Ugh. But either way worked out, ended up not working out at that job because I was like funny one trying to make a hundred when we call dials a day, who am I calling?
Courtney Richardson(11:01): Who thinks I'm authoritative in the financial space? Not anyone with sense and they shouldn't. So what are we going to do? So I ended up working at Walmart for a second. So that's where I got my first stock. I ended up when it wasn't really Walmart, it's Sam's club, but I got Walmart stock because Sam's club is owned by Walmart. And then I ended up working in banking and then I was able to transition to Merrill Lynch. So I became a 401k specialist and then I went into high net worth advising and wealth management, became assistant vice president at 26. Couple of years later the stock market crashed and then I decided to go to law school. I did oil and gas for a couple of years. Then I got into taxes. I got my LLM in taxation from temple and then from there, I ended up going into do real estate tax law.
Courtney Richardson(11:46): So that's pretty much like my story. Oh gosh, I forgot the Ivy Investors. So the Ivy investor came in 2014, ended up doing that because I was feeling very stifled as a, I guess associate at a really big law firm and I felt like I wasn't. So I had two things. I needed a creative outlet, but then also I had all of my friends calling me. Courtney, I'm about to leave my job, Courtney. I'm about to have a kid. Courtney, I'm trying to get a mortgage. My credit is messed up. Like they, I was getting called about all the financial things and I was like, Claire, I cannot be on the phone with you all day if I need to bill at my job. This is not what we can do. But you know, I said, and then what I noticed on top of that is I spent so much time getting people up to speed on the basics.
Courtney Richardson(12:31): I was like, no, no, no, no. I said, let me do this. I'm going to give you the basics and a blog post so you can get up to speed and then we'll talk about your specific situation. So that works really well. So that started in 2014 and here we are five years later. So I've kind of been doing what Tara Jackson cause the dual entrepreneurs. I've been doing that for five years. It's been, you know, a heck of a ride. So, but it's a just a great experience.
Naseema McElroy (12:53): Yeah, I love it. And I love how you're like, listen, I can't be spending all my time trying to help you. Like, that's exactly how I started Financially Intentional and was like, listen, I want to help you but I don't like to repeat myself so I'm going to put this stuff on blogs or whatever medium you need. And we just gonna work that out. So there was a point in time though, your mom came to you and your mom is a nurse. What kind of nurse is your mom? [Courtney Says "Dialysis."] Okay, cool. [Courtney Says "She did acute and she did chronic."] Okay, so your mom came to you and she was like, I want to retire at 65 and what was she working with?
Courtney Richardson(13:31): So a couple of things. Like she really didn't kind of start this whole retirement thing. So she was bankrupt. So I was living in Pittsburgh, which is from Philly is like maybe five hours, maybe four and a half hours away, 300 miles. So I was in Pittsburgh and she was just like having a really rough go of it. So she was in bankruptcy and we're like, okay. She felt overwhelmed by it. She had a chapter 13 which is you basically have to repay your creditors and to a trustee. And they distribute whatever the case may be. And then you also have to keep up with your regular bills. In her case, it was pretty much on board. It was just overwhelming for her, just as a general thought. And I think at that time, you know, she was also laid off. She was laid off at the time she was working as a director of a personal care unit that was closed. So that's kind of like the setup. So she didn't wanna start talking about retirement because we had like an immediate fire to put out, which is basically how is she gonna make her all her bankruptcy payments and do what she needs to do while, you know, basically be on unemployment. And I think she was suffering from a couple of different things like you know, some depression about like our situation.
Naseema McElroy (14:38): So let's rewind a little bit. What year did this happen and what was going on that besides the lay off, like what else financially was going on with her to cause her to go bankrupt?
Courtney Richardson(14:50): She filed for bankruptcy in 2002. So actually what started the whole thing1999 I think. I want to say I was my first year of college, my parents divorced and you know, as a result of the divorce decrees that they basically split the debt 50-50 but granted, funny story, my mom is a saver. My dad's a spender. So, all of the credit card debt didn't have anything to do with her. It was all my dad's. But you know, part of the divorce decree was it, they split it 50-50 so I think, you know, she was suffering from some kind of frustration, depression about that situation. Not necessarily the dissolution of marriage. I think they were separated since '94 so it wasn't necessarily the dissolution of the marriage, but it was kind of like all this stuff that comes with it.
Courtney Richardson(15:33): So she got the house and the kind of the trade off was you keep the house but you gotta pay half of these bills. So that was a trade off. So that was kind of what led her into bankruptcy. And so she basically filed for bankruptcy. The house was going into foreclosure. So in order to save the house. She filed for bankruptcy.
Naseema McElroy (15:53): Okay. That makes total total sense. All right, so basically the immediate fire that you guys were trying to put out was her job situation number one; number two trying to get her through this bankruptcy because now she had to figure out how she was going to have to pay this stuff back.
ourtney Richardson(16:10): Correct. So this is like three years into bankruptcy we start having like making sure problems. So I think she was laid off maybe March. I think she went out on like disability 'cause it was stressful. She was like, it got to the point and she was the only, they can kind of cutting back the unit. But even still, you still have patients that are there that scare and it's like kind of like, it's kind of like the middle point between independent living where they have facility and nursing care facilities. So you're like living in a dorm. So it was kind of like they had some, they're like sitting independent, but they do need their meds. You do need to make sure that they're eating properly and kind of doing things that they need to do to maintain kind of their status as they are as elderly. So that was kind of overwhelming for her. Like it got to the point where I think a couple of nights, because it was just her, I think she had an LPN and a CNA.
Courtney Richardson(16:57): I think that's what the team was. So there was a couple of times she had actually had to spend the night at the facility. So it was just a lot for her. So she kind of went out on disability and the next thing she knew they closed the unit. So I give you kind of, that was what was going on in 2005 and I was like, you know what, me being in Philly and Pittsburgh is not really helping you know her. So I moved back to Philadelphia and then I said, okay, well what is our situation here? You know, how can I help you get back on the right foot? So that's kind of the background of 2005. That's what started everything.
Naseema McElroy (17:27): And where did this idea of making sure that she retired at originally 65 come from?
Courtney Richardson(17:34): So she kind of like, at first it was like, how am I going to ever retire? And then I don't even know what shifted for her. Like I actually probably should ask her like, what's shifted for you? Cause I don't know, she just kinda got like, she gets really stubborn. She's like, I'm going to do X. And you're like, sometimes you're like, you have no business on X. You know as a parent you're like a door and you're like, I don't know, just do that. But she said, you know, I'm going to retire at 65. I need to retire at 65 and she's 55 at this point. So to put you in perspective, she was 10 years out from 65. So I think she basically said it herself. I can only see myself working another 10 years. I think that's what she said in her head.
Naseema McElroy (18:11): And I think that's pretty funny. Pretty ironic I should say. Because like the whole idea behind FIRE, right? We're starting kind of from where you're at. And she was basically starting from zero with his bankruptcy to retiring in 10 years. So can you walk me through how you guys were able to achieve that?
Courtney Richardson(18:32): So the first thing I think I kind of alluded to is that we had to assess where she was like we had to figure out like what exactly was going on. So I really do remember these numbers. So it was 860 that she paid to the bankruptcy trustee. She paid $1,200 to the mortgage company. So basically right off top $2,000 was going out of the household before anything else was done. So I had to figure out, okay, so we at least know that $2,000 is going to, has to be taken care of. But also there is, she had a very small 401k at her employer, so apparently she wasn't contributing, but her employer was contributing on her behalf. So she had a very small, it's like about $10,000 but there's a rule that if you're 55 and no longer working at that employer, you don't get hit with the penalty.
Naseema McElroy (19:19): Wow. That's a gem. I never heard that.
Courtney Richardson(19:21): So because I was working at a 401k service, I knew that rule. I said, okay, well I was like, at least we know that we can use that money. So I used that money to basically kind of tide her over and basically give her some breathing room with a bankruptcy in the house. So we were able to kind of deal with that. Now she did have money coming in from unemployment, but it wasn't her full salary. So between all of those things, it was a godson that we were able to make that work. So we did. So he was able to, to what I was growing up, she worked in dialysis, so she was able to transition back to dialysis.
Courtney Richardson(19:54): So from what I remember, I think she was in geriatric care for maybe about 15 and 20 years. And then she was able to go back into dialysis was, which I knew my mom to be because they, back in the day they used to have beepers. I remember as a child saying mommy, the beeper's going off. So she was on call. So that's how they let you know. They didn't have a cell phone back in the day. You really got beeped, you got beeped. So I share that with you. She went into the nursing home kind of realm because her big thing was that she wanted a little bit more regular schedule so you could do like, so she was a 7 to 3 nurse. So that worked out really, really well for her as I was growing up, so 7 to 3. Now of course, it's not 7 to 3 you know that, but you know she did the best that she could.
Courtney Richardson(20:38): So that being said is that when she went into dialysis it was kind of like, alright, I'm going to have to hustle this out. So she did. So 2005 was like the turning point year. [Naseema Says "How long was she unemployed?"] I want to say she, I think in maybe like April to October. I know she started in October, started her new job in October, so maybe about six months, about six months. So we made that $10,000 work for about six months. But mind you $2000 of it was going straight to the trustee. So we were able to basically kind of fill in the gaps with what she had in her 401k. She really didn't have any savings, but we were also able to use her unemployment to kind of also help along. And that's what we did to make it work until she was actually getting a full paycheck again.
Naseema McElroy (21:23): Okay. So then the next step after, you got her through that tough period.
Courtney Richardson(21:28): So like I said, we assessed where she was. I was like, all right, I at least know what you have to come out. And then I said, well, and then when she kind of said like as a joke, like, okay, I really want to I, it was, I don't even say it was a joke 'cause out of desperation, she's like, I cannot work for anything more than 10 years. I just don't envision this happening. So I said, okay, well what can we do to get you there? And it wasn't really, I can't say that it was like the best engineer plan 'cause I was kinda like, all right, mind you, I've only been a financial advisor at this time for like two years and I never really had that many clients and no one ever came to me with like their life falling apart.
Courtney Richardson(22:01): It was kinda like, Hey, I wanna, you know, we like roll over my IRA or hey I need you to tell me what kind of life insurance I need. Not like, Hey my life's falling apart. I need you to fix this. So like my mom was like, my test, I don't want to say test, that's not fair. But like she was like my test subject. Like I was like, all right, we'll make this work. So once we figured out, once I was able to get her working again, I said, all right, well what, how much are you getting from social security? So that's your, that was her like a direct amount that she knew she was getting every month. And then I said, okay, well what do we need to do to kind of fill in this gap? But in the interim, our biggest, our big bear was to take care of the bankruptcy.
Courtney Richardson(22:37): We had to get her debt free first because again, like, and, but I also said once she got more money coming in, I was able to pay the bankruptcy on a regular basis and anything extra I was starting to put in her 401k. So her bankruptcy was paid off. She actually paid her bankruptcy off four years early, which was in 2006. So bankruptcy, these are usually about five years or more. So she paid hers off in 4. So once we did that, we said, okay, our next big kind of nut is the house. So as we were kind of dealing with the house now, now she's contributing to her 401k. She's paying down the house. She ended up paying the house off seven years early because we really made the house a priority. But we also made a priority of her retirement.
Courtney Richardson(23:21): Now, my mom's a gem in this way because she's not a spender. So it was, like I said, in my parents' relationship, my dad was just spending, my mom's a saver. So life got very easy because she's not a person I hadn't helped manage her spending that was already taken care of. She was very self-regulated there, but she didn't invest. She didn't know how to invest and, but she understood that she's like, well, I'm just going to give it to you. So the way, once we started working her through the plan, so we made the house the priority and then as I would say we were dealing with the house, we were putting a certain amount away. I think we were at least putting away the math. I'm not really sure on the percentages until after 2012 so we had about six years that we were able to kind of really start putting money away for her retirement while we were still dealing with the house.
Courtney Richardson(24:07): Because a lot of people feel like, Oh, I can't walk and chew gum. I can't save and invest. I mean I'm seeing I can't pay off debt and invest and I'm like, no, you have to. Time is not on your side. You're going to have to do both. So you make your investment payments like a bill, like make your investments bills. Like that's something you have to pay. And that's exactly how we did it. So of course it's easy because its your 401k that's coming directly out of your account. But then also, you know, nurses make good money. She was also doing overtime as a dialysis nurse, so she was doing really well. But one of the major things about her 401k is that we also had to manage for her tax liability and the 401k coming out pre tax helped in that way.
Courtney Richardson(24:48): So we were getting a two first, so we were in the current time we were dealing with her tax situation. We were reducing her tax burden, but then on top of that we were also saving for the future and then she was getting her company match on top of that. [Naseema Says "Oh, did you guys have a number in mind when you were thinking about her retiring at 66?"] No, girl. Looking back we just had like, of course I didn't know anything. I mean I knew stuff but I didn't know like, Oh we should have a goal number. You know, I should know what her expenses are, I should know kind of what this looks like, what we expect to have as a shortfall and kind of work on the shortfall. I had no idea. It kind of ended up working out very well. I mean, now that I kind of do this work and I talk about this on a regular basis. Now, I'm like, okay, so she was somewhere between her expense number and kind of like her income times 10 or whatever the calculation is.
Courtney Richardson(25:38): Like when we actually rolled it out, she was like right in the middle of that. Basically what we were able to do in her savings 401k. So that was her shortfall. So she had a decent social security coming in. But then she also had the 401k but I didn't calculate a number. We would just like put as much away as we can, you know, we'll just have to figure it out as it works out. And it ended up working out. But we also had a great market, you know, remember from '09, so we were, I was putting money in as the market was falling because I was doing, people call it, I mean it's technically called out dollar cost averaging, putting in the same amount, if not more. Because as we were able, like I said in 2012 I ended up, we ended up trying to max out her account because that's what our goal was, to get her as close to retirement as we could is to max out the 401k.
Naseema McElroy (26:24): So the ultimate date that she retired was in 2012?
Courtney Richardson(26:27): No. So she retired in 2016, turned 66. So we had four years of actually maxing out her account. So 2013, I kind of messed up a little bit. So when you have your 401k, your employer's only gonna contribute as you match, like they never have a problem here or something else. So I didn't actually, so I got her to max out in '13 and I don't even remember where '13 was. It might have been like '13 or '14. So I was able to get her to max out there, but we maxed out, I think it's November and then, so basically we lost a month of match. So I said, Oh, I gotta do this again. Now mind you. And on top of that, she's entitled to a catch up provision. So the catch up provision, because she's over the age of 50, she was entitled to contribute even more over the, what we call the max for the 401k.
Courtney Richardson(27:16): So we were able to do that, but I wasn't actually working properly in '13. Like I told you, she was my test subject. So I was like, Oh, okay, I messed that up. So let's do it again at '14. So at '14, we were able to get her catch up in on her catch up provision and her full max out in her 401k. And we did that for '14, '15 and well part of '16 as much as we could in '16.
Naseema McElroy (27:38): So I just want to go back and highlight two very important points that you made. Number one, when you are contributing to your retirement account, once you stop contributing, you lose the match. So if you max out your retirement account early, you're missing out on months of matching because they're only gonna match you up to whatever that max was every month. So I know a lot of people are like, I want to get the benefits upfront of investing. So they want to max out as early as possible. Well, that's okay as long as you at least contribute like just the rest of the year, make those minimum payments to make sure that you just get that match. So those, you know, that are out there that love to do that, 'cause we're still trying to get people to invest 10% but for those people who are thinking about frontloading their retirement savings, you will miss out on a match if you're not distributing throughout the year. And then also there's hope for people who are a little bit older because your contributions are increased because you do have a catch up period and that goes up as the contribution limits go up every year.
Courtney Richardson(28:49): Right. So I think for, so now there was beacon in 2019, 401k, 403B, 457, TSP. I feel like the alphabet soup of retirement plans is $19,000 for maxing out if you're under 50 and then you have the additional $6,000 which is up from $5,500 that's if you're over the age of 50. So you can really put a decent amount away. So you're basically putting away, so I think it's what, $25,000 that you can get away. So that works out really well for people who are like, Oh, I still have a lot to do. I have a lot to catch up. So also, but amazing thing also with a lot of nurses, depending on what retirement plan that you have, if you have a 403, some 403Bs allow for another type of catch up provision, which is like a 15-year. Like you've been working for the same employer, the same employer for 15 years. They allow you to, I believe, contribute an additional $15,000 which is over five years. So it's additional $3000 per year. And you don't have to be the age of 50, you just have to hit 15 years for the same employer. So if you were working with the same hospital system, that counts.
Courtney Richardson(30:01): But it also depends if your 403B allows it. It is allowable under the tax code, but it may not be a feature of your particular plan. [Naseema Says "So that's $15,000 total."] Right. So additional, so you're able to contribute, you know, you're $19,000 if you're under the age of 50 but now you can contribute another $3,000 if you've worked for this company or this I guess, system for 15 years. So even if you're not over the age 50 there's additional money that you can put in.
Naseema McElroy (30:29): I understand it's because this is more game than I did not know about. So you can contribute an extra $3,000 every year if you've been with your company for a long time period up to $15,000, right?
Courtney Richardson(30:44): Correct. That's completely correct. But it's only in 403B. So, it's not a feature of 401k. It's not a feature of TSPs and I'm pretty sure the 457s which are municipal plans, they have a couple of carve-outs also. I also tell people if you have kind of these 403Bs or 457s, reach out to your benefits person and make them explain to you all the features of your plan, but then also read it for yourself too because there's some things that are kind of like, like you were talking about game, there's some game actually in your plan document that you're going to have to read. And I know it's not a lot of fun. It's about reading those documents as interesting as watching paint dry. But I tell you, some of them nuggets in those plans, you're going to say, you know what, I [inaudble] paint dry because it's that much of a game changer.
Naseema McElroy (31:33): Well girl, I need, I need some of that game because I have a 403B and a 457. So I know, I'm very fortunate in that sense and so I am going to look through that plan. And you know what's funny is that I used to think that it was like watching paint dry. And I tell you like every time I used to look in those books, it automatically turned into Arabic to me. Like I cannot read it. But like the other day I got my perspectives from my 403B, I was like, it's a miracle. Like I can read this now. Like I understand all the companies, I understand what it's saying. And so it wasn't the perspective for the 457 it wasn't that book for the 457 but I have that and I'm going to look through it and yeah, I'm going to look for those little gems, but I'm also gonna reach out to my plan administrator cause he's well bursts. But I need to know my stuff, too. So I think that that's very important is, I mean I'm still trying to get people to just go talk to the man so they can set their stuff up.
Naseema McElroy (32:28): So you know, I feel like I have to be the person that's going to be like, listen. And then on this page, this is where you're going to find this information. Can you talk about things, Courtney, that you found that are some little hidden gems in these plans?
Courtney Richardson(32:43): So some plans will allow you what's called a self-directed brokerage account, allows you to invest in this beyond what your menu of funds. So they allow you to invest in certain stocks, certain ETFs. It just depends on what your particular plan offers, but it basically allows you, I wouldn't say kind of completely unfettered access to the stock market, but you get a lot of different benefits available to you that you could invest in additionally, and a lot, what I do like with a lot of those plans is that you may find an ETF that gives you the same kind of result that you're looking for with mutual funds so for example, let me back up. So if you have the S and P 500 mutual fund and then you have a S and P 500 ETF. Etfs tend to be cheaper. That's like the rule, I guess kind of like that's usually like the example, but sometimes there's some kind of outliers with the mutual fund may be cheaper because you have a bigger plan, so it just depends. This is why you got to go read the documents and see what's going on. But in the event that your mutual fund is at, your S and P mutual fund is more expensive and you had the option of a self-directed brokerage account, then you could say, okay, well I'm going to go, I really want to be an S and P 500 fund. I'm going to go for the ETF where the fees are going to be lower and therefore more of my money is actually going into the investment.
Courtney Richardson(33:59): So that's kind of a gem that I love about the plan and this is something else that I like to share with people, but I caution them about it is a lot of the plans do have loan options. I don't love the loans, I just don't. But again, I think you should know what your options are. I had a couple of people that are saying, Courtney, you know, here's my really big problem. You know, I'm trying to get myself in a better situation financially, but I really can't afford, like I have really, really high interest rate credit debt, so they'll say like I have a Macy's card or I have a, you know, some kind of really expensive card that has like a 2020 4% rate. So they'll say Court, you know, can I take a 401k loan or can I take a loan out on my retirement?
Courtney Richardson(34:40): And I'm like, Oh, Oh I don't want you to, because what ends up happening when you're taking the loan is that you take, the rules are with a loan is that they take it out of your pre tax, what we call source. So your pre tax money's where it comes from first, now you're paying it back. But remember you're putting it back into the pre tax source. So when it comes out in retirement, you're going to get, let me clarify, you're paying it back after tax. So when it comes out in retirement, you're going to get taxed again, double tax and you're like, Ugh. So again, like we have to look at the long term, but there's a couple of situations where I've seen where if you're paying it, that your average credit card debt is 15% or maybe 18% but you can get a lower rate with your 401k, that's an option. It's really a, really bad option. It's like at the bottom of my totem poles, it is a last resort, but it is something because again, what I have noticed is that getting a loan and backspace if you want consolidation of your credit cards and you're basically saving about $400 a month 'cause I've had a couple of people where that that's really what the difference was. And I'm like, okay, maybe that is a better option because one you're able to improve your credit. Oh you're paying yourself back. Not really, but you're able to consolidate your and you are paying yourself back with some interest. It's usually prime plus whatever it is, which at this point is not much, but at least gives you a little bit more leeway that you can put more money towards your bowls. So it's kinda like six one hand, half dozen. The other, I need people to run through the numbers, but it is an option. I do like to share that. But with the 457 and a 403B I'm trying to, I'm pretty sure you can actually contribute to both. So and that's awesome. And that definitely changes the game for you as a person. 'Cause You're like, okay now I was putting away 19 and now I can double how much I'm putting away.
Naseema McElroy (36:29): Now it's 38 off top. Yeah.
Courtney Richardson(36:34): So and like I said, the 403 has a set of options and then I was telling you, I was like, okay, I remember 403B. So they have a catchup, 457s have a catch up deferral also. So they have a special, it's called a last three year catch up, which allows you to defer in the last three years before you reached your plan's normal retirement age to contribute more money. There's some kind of little wiggle rooms that you have in some of these other plans that to me are pretty much this, I don't want to say the disfavored but then they don't get as much love in the public space. There was like 401K and it's like no, no, no. Not everybody has a 401k and not all of these accounts actually act like a 401k. So understanding that if you have an account that's not a 401k, understanding that you really need to do some research to see what you have and what benefits you have. Because again, thinking that you have something that you don't will kind of hurt you in the long run and actually hurt how much you contribute or how much you think you can contribute.
Naseema McElroy (37:28): Yup. And I want to touch back on one point that you made that was super duper important is that most of the times we don't understand that within our retirement plans we probably have a list of like 10 to 20 options that we're investing in and they're not the best options. And like you said, we can, if we have an option to invest basically almost in the open market and we can get lower fees or in the form of expense ratios if you're looking at it like that, we can make our money work better for us with the same kind of performance that these things are offering. Like by law, every 401k administrator has to have like an index fund, but it might not be the best expense ratio on there. And you could, like you said, ETFs are typically cheaper because they have less of a management component to it.
Naseema McElroy (38:19): And so if you can find that ETF on the open market, then you're saving us so much money. So I think that that's a gem and I didn't even know that. I'm learning so much, Courtney. Thank you so much. And then also just knowing those little intricacies that are specific for your plans. First of all, a lot of people that I work with don't even know that they have access to both the 403B and a 457 that they can be maximizing a $38,000 a year. And in California, we get tax out the union, like most nurses are in some kind of tax debt because we get paid a lot in comparison. But we also get paid a lot of taxes if we don't manage our income properly. So I'll just tell them, look honey, either you're going to pay yourself, are you going to pay the IRS. 10 times out of 10, I'm going to pay myself, you know, so, but we have to know what's out there and available. And that's what this podcast is for. Making sure that you know your options and there's a different path for everyone. And that's why I'm sharing all these different stories. So yup, Courtney was able to successfully retire her mom in 2016 at the age of 66 and again, just briefly walk through the steps of what you did.
Courtney Richardson(39:33): So we first assessed the problem, like remember she was coming from bankruptcy, so we had to figure out where she was in the bankruptcy, figure out kind of what her goals were. And like I said, it was kind of like a throw away statement like, I want to retire at 65 and it was like I just, and then it kind of followups, like I just can't envision myself working more than 10 years. So that was the first thing we assessed. And then we kind of set like a goal. So okay, my goal is to retire at 65 and I was like, and I looked at her social security statement. I was like, Claire, 65's not going to happen and you give me one more year. And she said, okay, I can give you one more year. And she did. So she, so that was the goal to retire at 66 so we put all of our focus on retiring her at 66. So basically it's working the plan.
Courtney Richardson(40:16): So we were basically, our whole point was one, we had to get rid of the bankruptcy, then we had to get her debt-free. And then from there we had like kill, you know, max out her retirement as much as we could. And she was able to do that because she had a nurse's salary. And you know, basically that was the great thing is she had no other debt. Like my mom went to community college, she has an associates in nursing, so she didn't need a BSN. And by the time she was pretty much grandfathered, but, but that was also her push out as in 2062 like, Oh, they're asking for BSN, I'm not doing this. And so again, you know, this is where she was. So she had no student loan debt. So we were just really focused on working on working the plan.
Courtney Richardson(40:55): But also we were checking it. So where are we? How close are we? Oh, but to your point, I do want to add to the self-directed brokerage account. When you, when you roll over your account and you have a self-directed brokerage account, you usually have to cash out of your positions. They roll over in kind. So that's what happened to my mom. So she did have a self-directed brokerage account, you know that I managed that was doing really, really well and I ended up having to get her out of debt. So I basically had a cash out of her position or I had a cash out of Apple and I got Apple at $90 a share. Man, I was just like, so again, but if you had a, what we call like another type of account can roll over in kind, but with these particular self-direction counts, they don't allow you.
Courtney Richardson(41:38): So basically you have to move into your cash account, which basically puts you back into the 401k and then from there you roll over. So yeah, I'm really super solid. Like, I still haven't gotten over it 'cause I got into Apple News and it was like $94 a share, but I got into Apple around Brexit. Everything went down when Britain was trying to leave. Well, they're still trying to leave the European Union because everybody was very uncertain about what that actually meant. But I was like, Oh, everything's on sale, let's go. Because I have, when I look at stocks, I'm always saying, all right, well what am I willing to pay for you? It's kind of like if I'm looking at the store, if I'm at Macy's, I'm like, okay, there's a leather jacket. Oh, that's full price at $300 I'm not paying $300 but I will pay in my head.
Courtney Richardson(42:17): I'm like, all right, I'll pay like $215, $210, maybe $200 if I'm lucky. So you already have in your mind what you're willing to pay. So an Apple, Apple, I think before Brexit happened, it was over a hundred dollars a share. I was like, I'm not paying that. But once it hit under a hundred dollars a share, I was like, I'm on it. Same thing with Amazon. I got on Amazon at $900 a share.
Naseema McElroy (42:37): Wow. What is it like 25 how much is it now? It's like something ridiculous.
Courtney Richardson(42:43): It probably is because it's just at this point these numbers don't like aren't supported by the market. Like the market is just kind of like pushing everything up. Well let's see. So I share that to say, you know I, at the time, Amazon was going back and forth around a thousand dollars so it dropped and I was like August, it was August of some years. I have to look at these statements. But we, I ended up getting in at like $900 cause in my head I was like, I'm not paying $1,000 for anybody's stock. The only thing I'm paying $1,000 per share would have been for like Berkshire Hathaway. That would be that. Like I'm not doing that. We're not, I don't care. You're not worth that to me. So that being said is that when Amazon dropped down, that's kind of what I put them on. But I asked him, did the purchase. So they've always been on my radar, but I forgot where we are. So, when we worked the plan and we reevaluate the plan, like you always were looking like, okay, how close are we? You know, what are we doing? And it wasn't, again, I didn't have a number. I was just like, all right, and you just wanna throw everything that we can at this goal and make it work.
Courtney Richardson(43:49): Let's make it do what to do. We were consistently evaluating, I was looking at her statements, you know, I was looking, she did have some mutual funds, but pretty much she was pretty much investing in the stock market because one, you know, I was investment advisor. That's what I did. But on top of that, there were just better options and better opportunities that I saw in the market. Now she did have, I think she, we did have a international fund that I really liked and I think that was pretty much it. That was the only thing that I saw in her actual account that I really liked. So we did that and we just made it work. I mean we celebrated when it happened, it was kind of very like unexciting. She was like, Oh yeah, tomorrow. She's like, can you write my letter?
Courtney Richardson(44:28): And I was like, all right, it was June, it was June of 2016 can you write my letter of resignation? I was like, sure. And then she went up per diem for like a month and she's like, I'm done. I don't want to do this.
Naseema McElroy (44:39): So when she retired at 66 in 2016, she had her house paid off. She had her social security. So basically, the highest bills, she did not have those. So she just had like those basic utilities, cell phone, cable, those kinds of bills and property taxes, those things like that. And she had her social security. With social security, basically covers most of that and she had her retirement. What has her draw down strategy looks like?
Courtney Richardson(45:16): So draw down strategy. The first year I think it was maybe like a little bit more that would like we did about 10% the first year and that was just kind of getting her like set up and comfortable if that makes sense. So we did that, but this year we haven't done any draws this year.
Naseema McElroy (45:33): Wow. So she's just riding off of her social security. And her retirement just sitting there stacking because the market is freaking ridiculous.
Courtney Richardson(45:41): Correct. So yeah, we're just hanging out in the market.
Naseema McElroy (45:44): So you're not just a hundred percent bonds because she's retired now.
Courtney Richardson(45:48): No. So she's 30% in the stock market. So she's like 30, 70 yeah. 37 years is the allocation. And the reason being is that I don't want her not to have any market exposure, but I also don't want, we are in the late market cycle, but you have to be very cognizant of kind of what's going on in the market It is about 30% you know, kind of the regular Amazon. We didn't get back in Apple, we got into Nike. Nike's done great since we got it.
Naseema McElroy (46:13): So you guys do single stocks on top of your, like your index funds or ETFs.
Courtney Richardson(46:20): We don't have any ETFs now. I rolled her over. We just started that 30% of individual stocks and then she's in cash for everything else. And just, you know, I mean we'll snap cash, let's just say cash equivalents. She's, we did a couple of short term bonds which weren't bad like, so each investment house has like basically what's called a bond inventory and she has her accounts at Merrill Lynch. So her account relatively, I think they have a pretty good bond selection. So we did a couple when the oil industry was doing really well, we did one with Statoil and it was like a nine-month bond. Think about what we have in there now, but it's just really kind of like cash flow was nothing really crazy. But she does have some, she does have market exposure.
Naseema McElroy (47:01): But those are through single stocks but you selectively pick those. And those are kind of stocks that she's like bought and held because those are good companies that she got on sale.
Courtney Richardson(47:11): Correct. And we also do like, I'm not a huge focus, like I'm not gonna chase a dividend. But, it's something that you should consider, and it's not necessarily something that I'm considering, so it's like, Oh, we have regular income, but if I ever wanted to turn on the dividend option, basically what we do is we reinvested it so we back up. So right now, we're reinvesting her dividends, so whenever she gets a dividend payment, she's not getting cash in her account is actually reinvesting in stock. But what that does for her, she doesn't need the funds as we already talked about. She doesn't need it. Why actually have the money go into a cash account? But at some point she may say, you know what, I want my dividends. So what we'll do is we'll turn the dividend reinvestment off and then that money would go to her cash account.
Naseema McElroy (47:49): And it's just as easy as clicking a button and just saying, you know what? I just wanted to go into my cash account versus being reinvested. [Courtney Agrees] That's perfect. I love it. I love that strategy. I love how set your mom is and it gives people hope, especially if they're older in life, that it is possible. She started from divorced, bankrupt with having to spend her for whatever little she had in her 401k just to get through a transition period of being unemployed to being retired in 11 years. So that's bomb. That's awesome. Like I'll give you kudos and the things, the point that I wanted to make is that you weren't like a super sophisticated investor. Like you basically use this as an opportunity to help you learn and understand the market at the same time. So I think that that's awesome. And it just, again, it's an example of just taking a little bit of intentionality, putting it a little bit of intentionality into something. You don't have to be a pro, but it's about taking action. Yes, you did have, so a little bit of fuel under your butt, you know, like you had to get this done for your mom, but at the same time, it's not like you could have been like, I need to research this, I need to, you know, but you took action. And it worked out. So kudos to you, Courtney. You're the bomb. I hope my daughter is like you, my daughters are like you in taking care of things.
Courtney Richardson(49:22): Yeah, you had, you have to take action and like, like you say, like I was learning as I went along. When the market crashed, I was in basically doing high net worth advising. So a lot of the stuff I was learning there, I was able to at least pivot for her like okay, what can we do here? So like I was doing in that space, mutual funds on steroids. Basically we call mutual funds on steroids. That's the way we explained it to people. But when you own the individual share of the mutual fund, but you don't own the individual stock, but if you're a person that can cause what we call embedded gains. So your gains that, they're basically phantom gains and they're not embedded gains or profitable, but they're basically phantom gains. So if, if there's a distribution earlier in the year and you didn't own the mutual fund, you still get hit for that.
Courtney Richardson(50:04): But if you have a lot of money in a mutual fund, you can't have that. So what we did for high net worth people is they would have a strategy that was similar to a mutual fund, but they would have XYZ stocks, maybe about 10 or 12 stocks that they had in their portfolio that was managed. It was basically set up as a manager. So the manager would tell you which stocks they were going to pick, but they owned the individual stocks. So when we had to do tax loss harvesting we could, so basically if I was holding ExxonMobil as part of the strategy, I would move, if you need to do some tax loss harvesting, what we would do is they would then move into a oil and gas ETF for about 31 days to avoid the wash sale rule. And then we will move them back into their position. So you basically take the loss for tax purposes and then put them back in a position to basically maintain. But we would keep them kind of similarly situated. So we're maintaining the integrity of their portfolio. But I was doing that for about two years before the market crashed.
Naseema McElroy (51:01): That's crazy. All these loopholes, when you have money, you're able to do so many different kinds of investing and making sure that your money is working for you. And that's why people stay wealthy. Thank you for exposing us to that world. I will be a part of it one day and I'll understand all that stuff you just said. But in the meantime, while we trying to build our wealth Courtney, how can people reach out to you and what's going on with you? What's up next for you?
Courtney Richardson(51:35): So you can reach me... I'm pretty much on Instagram like that's like my playground. So, The Ivy Investor on Instagram, so theivyinvestor on Instagram, on Facebook also and on Twitter. But I don't really tweet that much. But I also have coming up a cannabis class, I'm doing cannabis live class. I've been teaching cannabis for about two years. My audience was like, Hey, we want to invest in cannabis. And I was like, Hey, that's really interesting. I don't know anything about it. I'll get back to you, but I ended up becoming an expert. So I'm an expert in cannabis. I've been fortunately speaking all over the nation about cannabis investing, which is a great opportunity, but I'm going to do a live class 'cause people had been asking me about it. I have a class that's on my website now, but I call it, it's like a little bit on a sale size. I'm actually going to take it down because cannabis is such a fast moving industry is that something that I talked about in February. The game may have changed. I mean in February when I did kind of the, I think it's maybe it's April, I think April is the last class that I did, but even stills that things were differently. Chicago, Illinois had not legalized recreational marijuana yet. That's like a huge game changer because a lot of the United States, cannabis companies are actually really have a very large presence in Illinois. They had a recreational market. What is that going to do for them? So it's a lot of different moving parts. And then also they just, we really just legalized hemp, which is considered, it's part of part of the cannabis, it's a cousin of marijuana that we know that the high THC but it was just legalized in December. So we really haven't you walked through in the whole possibility of what hemp does. Like hemp makes rope. It makes paper. I mean I feel like, you know, you kind of talk about like hemp as the like, it's like the catchall but it really does like you...
Naseema McElroy (53:21): Right. When I think about hemp, I think about rope. Like that was the first thing, like rubbing all those hemp clothes and hemp socks and stuff like that. You know, we got hemp for everything out here, you know, California. Well, I'm looking forward to that class 'cause I know nothing about cannabis and so I need to be enlightened. So the class is gonna drop...?
Courtney Richardson(53:46): It is going to drop on Thursday, October 24th.
Naseema McElroy (53:55): Awesome. I'll be looking out for Courtney's class on cannabis. Make sure you connect with The Ivy Investor on all your social media platforms. I think that's cute. So you're a AKA and you have the Ivy in your symbol and you're going to be talking about cannabis that looks like Ivy. So that's pretty. I love all those connections. All right, Courtney, so it has been super awesome chatting with you. I've learned so much. I appreciate you done some incredible things for your personal finance, for your business, for your mom. And I know that you're out here helping so many people and for that, I am totally grateful for you being in this space because we need you, girl. All right, so I'm just going to close it out there.
Hey there I’m Naseema
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