Ep. 295 – What Issues in Retirement Should I Consider at The Start of the Year

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In this Episode of the Secure Your Retirement Podcast, Radon Stancil and Murs Tariq discuss how to approach the start of 2025 with clarity and purpose. They introduce a detailed checklist to help you organize and plan various aspects of your life, including cash flow management, estate planning updates, tax considerations, and more. This isn’t just about setting New Year financial goals or resolutions; it’s about preparing comprehensively to ensure smoother transitions and better decision-making throughout the year. They also share practical steps for managing both personal and financial priorities effectively.

Listen in to learn about actionable steps you can take now to set yourself up for success in 2025. From evaluating long-term care insurance options to reviewing retirement planning strategies, this episode is packed with valuable insights. Don’t miss the opportunity to access their checklist, which will guide you through every category you should be thinking about as the new year begins.

In this episode, find out:

·      How to evaluate cash flow management and align your goals for the year.

·      The importance of reviewing estate planning updates to ensure everything is up-to-date.

·      Why assessing your investment risk is crucial as you plan for retirement.

·      Key tax strategies like Roth IRA conversion benefits and contribution limits.

·      Tips on when to consider long-term care insurance review and its advantages.

Tweetable Quotes:

·      “The more we’re prepared, the smoother things usually go.” – Radon Stancil

·      “Understanding what’s coming in and what’s going out is the foundation of good financial health.” – Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Radon Stancil:

Welcome to the Secure Your Retirement podcast! It’s amazing to say this, but this podcast is coming out on December 30th. It is the last podcast of 2024, and it has been a really, really good year. We’ve gotten a lot of feedback on the podcast—really letting us know the appreciation is there for the fact that we do our best to educate more than trying to talk about specific products or strategies.

Although we did a couple of episodes that way this year, we thought it would be a good way to close out this year and prepare for 2025. Since it will be here this week, let’s talk about some things we need to think about as we get ready to enter 2025. A lot of people spend some time at the beginning of the year reflecting, looking forward, and saying, “What can we work on? What are some things we need to think about?”

This episode is really a checklist—a checklist of items you might want to have. In fact, we have this checklist, and we’re happy to share it with you. If you think, “Hey, I’d love to see this checklist to help get my brain together,” we’ll tell you how to get it at the end of this episode. So listen to the end, and we’ll get this over to you.

It’s broken down into a few different areas, and we’re going to take turns going back and forth. This will probably be more of a conversation. Let’s start by talking about personal things.

Radon Stancil:

Think about things that are not necessarily money-related, although they could overlap. The first thing we like to do—and we do this ourselves—is look back and say, “What are some things we did really well the prior year?”

For us now, we’re looking back and saying, “What did we do really well in 2024?” You can do this whether you have a business, are still working, or are retired. Ask yourself, “What did I do in 2024 that I’m really proud of? What made me feel good?”

We encourage you to write these things down. You might think, “I’ll never forget this,” but three years later, you might not remember 2024 at all. Documenting this is an important exercise. For me, it’s so important that my personal goal is to journal and write these things down to help me reflect on what I’ve done well, what I need to work on, and what I’m looking forward to in the future.

Take some time to reflect on the past year. Then, think about what you’d like to accomplish in 2025. These could be personal things or milestone events, like a family vacation to a specific location, a home project, or supporting a charity. If you’re still working, maybe there are goals you’d like to achieve before retirement.

It could also be about learning something new or celebrating family milestones, like a grandchild graduating from college. Write these things down so you’re planning your year out and putting everything in place to ensure you don’t miss anything.

One thing we like to do with our team is recognize milestones. For example, we celebrate employees’ work anniversaries with a special lunch or something nice. You could think about doing something similar for your family members. These don’t have to be big gestures, but writing them down and planning ahead makes them happen.

Additionally, as you think about the year, consider how variable scenarios might affect your plans. This could bleed into financial planning. For example, if you’re planning a big project like a kitchen remodel or house upgrade, talk to your financial advisor. Planning in advance ensures that everything is done efficiently, avoiding last-minute surprises.

Now let’s talk about cash flow. It’s always important to revisit this throughout the year, especially at the beginning. Many people start the year with resolutions, and while we’ve all heard about resolutions, it’s key to make them attainable. Like we mentioned earlier, write them down.

Radon Stancil:

Cash flow is essentially understanding what’s coming in and what’s going out. Compare this year to last year. Are there changes to your income? Did you get a raise, switch jobs, or experience a decrease in income? If so, you may need to adjust your expenses or savings.

My wife and I recently reviewed our subscriptions. These days, with so many streaming services and subscriptions, costs can add up. We found a couple we weren’t using and decided to cancel them for next year. Simple budget cleanup items like this can make your cash flow more efficient.

Also, review your employee benefits. Did they change? Are you making more money that allows you to save more into retirement plans, or is your income decreasing? For example, contribution limits for IRAs, 401(k)s, and HSAs often change year-over-year. Make sure you’re aware of these changes.

If you’re saving for specific goals, like a vacation or a large purchase, write those down and plan for them. Similarly, if you’re charitably inclined, think about how much you’d like to give this year and whether strategies like donor-advised funds or qualified charitable distributions (if you’re of a certain age) make sense.

Next, let’s talk about assets and debts. Did you deplete any cash reserves this year for things like vacations or gifts? If so, consider replenishing those reserves. Talk to your advisor to avoid triggering taxable events if you’re selling assets to do so.

If you’re planning to buy or sell a business in 2025, consult an advisor before signing any agreements. There are strategies that can be implemented beforehand to make the process more beneficial.

It’s also a good time to review your investment strategy and risk exposure. For example, if the market performed well and your portfolio has grown, your allocation might be out of balance. Rebalancing ensures your investments align with your goals and risk tolerance.

Additionally, consider reviewing your debts. If you took out a mortgage during a time of high-interest rates, now might be a good time to explore refinancing options. Lastly, check your credit score. If you don’t already have a credit monitoring service, at least pull a credit report once a year to check for inaccuracies or fraud.

Radon Stancil:

Let’s move on to taxes. As tax season approaches, gather your documents, such as 1099s and W-2s, to prepare for filing. We’ll be releasing an episode soon with tips for streamlining your tax return process, so stay tuned for that.

Know your tax numbers for 2025. While tax rates haven’t changed, brackets have shifted slightly due to inflation. Contribution limits for retirement accounts also tend to adjust annually, so review those as well.

Another important tax strategy is Roth conversions. If your income decreased or you have extra deductions, converting funds from a pre-tax retirement account to a Roth IRA might make sense. Proper planning ensures you don’t miss opportunities.

Additionally, don’t forget about IRA contributions. If you missed contributing for 2024, you have until the tax filing deadline in April 2025 to make that contribution. This applies to IRA contributions, not conversions, which must be completed by December 31st.

If you have brokerage accounts that are not IRAs, such as taxable or non-qualified accounts, review your realized and unrealized capital gains. Are there opportunities for tax-loss harvesting? If you plan to liquidate funds for a large purchase, such as a car, home, or event, understand the potential tax implications and plan accordingly.

Lastly, review your withholdings. If you frequently owe taxes or receive a large refund, adjust your withholdings to better align with your actual tax liability. The goal for most people is to break even—not owing a lot or receiving a huge refund.

Radon Stancil:

Next, let’s touch on insurance. If you’re turning 65 in 2025, start planning for Medicare well in advance. Medicare can be complex, and working with a specialist, like our own Sean Soued, can make the process much smoother. If you’re retiring before age 65, you’ll also need to plan for health insurance coverage during the gap period before Medicare eligibility.

Long-term care insurance is another area to consider. Modern policies are often more attractive than older ones, and they can provide valuable coverage. We’ll be focusing on this topic during the first quarter of 2025.

Lastly, review your property and casualty insurance. With home values increasing, ensure your coverage is adequate and reflects your home’s current value. It’s crucial to stay on top of these details to avoid being underinsured.

Radon Stancil:

Finally, let’s talk about estate planning. This includes wills, trusts, power of attorney documents, and beneficiary designations. Review these documents annually to ensure they reflect your current intentions. Has there been a change in your family, such as a birth, death, or divorce? Are the people you’ve appointed still the right choices to handle your affairs?

If you’ve established a trust but haven’t funded it properly, make sure assets like your home are retitled into the trust’s name. Titling issues are a common oversight and can create complications later.

Check your beneficiary designations. This is especially important because beneficiary designations supersede what’s written in a will. Make sure they align with your estate plan.

Additionally, if you own a business, think about how changes in 2025 might impact your financial plan. Are you expecting higher income, selling the business, or planning for major expenses? Consider strategies to make these processes smoother and more efficient.

Radon Stancil:

As we head into 2025, it’s important to stay informed about potential changes in laws or policies. With new leadership in the White House, there could be updates to tax laws or other regulations. While it’s impossible to predict these changes, be prepared to adapt and adjust as needed.

We hope this checklist helps you start 2025 on the right foot. It’s not an exhaustive list, but it’s a great place to begin your planning.

We mentioned earlier that we have this checklist available for you. To get it, simply email us at info@pmwealth.net and request the “2025 What to Consider Checklist.” We’ll email it back to you. Alternatively, you can call our office at 919-787-8866 and request it over the phone.