April 18, 2022 Weekly Update

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We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.

Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for April 18, 2022 

CLICK HERE TO WATCH THE UPDATE

This Weeks Podcast –Roderick Spann – 5 Medicare Mistakes to Avoid–

Are you aware of the things you can opt-in or not when it comes to your Medicare plan? It is important that you get enrolled in Medicare 3 months before turning 65 to avoid any delays caused by the existing backlog.

CLICK HERE TO LISTEN TO THE PODCAST

 

CLICK HERE TO WATCH ON YOUTUBE

This Weeks Blog –5 Medicare Mistakes to Avoid–

Medicare is crucial when trying to secure your retirement because private health insurance is very expensive. And if you’re in retirement without any form of insurance, you’re one medical emergency away from depleting your funds.

CLICK HERE TO READ THE BLOG

It’s our favorite time of the year!! 

Please join us in shredding your confidential documents on Friday, April 29th, 2022.

We will be enjoying Danny’s BBQ and shredding documents at our office (4101 Lake Boone Trail, Suite 111) from 11am until 1:30pm.

Please RSVP by Monday, April 18th via email to Morgan at morgan@POMwealth.net or by calling the office at 919.787.8866. 

We hope to see you there!!

5 Medicare Mistakes to Avoid

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Medicare is crucial when trying to secure your retirement because private health insurance is very expensive. And if you’re in retirement without any form of insurance, you’re one medical emergency away from depleting your funds.

We had the pleasure of speaking to Roderick Spann of Senior Advisors and discussed five Medicare mistakes to avoid so that you can enjoy a worry-free retirement.

5 Most Common Medicare Mistakes to Avoid

1. Not Enrolling in Part B Under the Right Circumstances

Medicare has what is considered an “initial” enrollment period. This enrollment period revolves around a person’s 65th birthday. The period is valid during the following time periods:

  • Three months before turning 65
  • The month of turning 65
  • Three months after turning 65

Generally, a person will enroll in the three months before they turn 65 so that Medicare begins on the first of the month that they turn 65.

If you have an employer with over 20 employees, you can remain on their group plan and not go on Medicare Part B. However, if your employer has fewer than 20 employees or you’re no longer employed, you need to enroll in Part B.

It’s crucial to enroll in Part B because it is the medical insurance portion of Medicare. Essentially, Part B covers any medical care outside of the hospital. Part A only covers your in-hospital care.

Part B covers your:

  • Outpatient surgery
  • Doctors
  • X-rays
  • CAT scans
  • Etc.

Ideally, if you need to enroll in Medicare, do it at the beginning of the initial three-month period. Delays can lead to penalties, and you never know what may go wrong during the initial enrollment that must be rectified.

2. Ignoring Medicare Part D

Medicare has a lot of parts. For example, let’s say that you get sick, visit the doctor and are prescribed medication. Parts A and B of Medicare will not cover prescriptions. Instead, you’ll need to have Part D, which offers you drug coverage.

Part D prescription plans are all very different, and there are 25 – 30 of these plans available. Many people choose a plan recommended by a friend or coworker, but this is a bad idea because you may need specific coverage not offered in the plan.

Plans have different:

  • Co-pays
  • Premiums
  • Etc.

If you’re not analyzing your prescription drug coverage when choosing a plan, you can spend thousands of dollars more than necessary. For example, plans have preferred pharmacies that offer the best prices and coverage. If you don’t go to this pharmacy because it’s too far away, you may spend thousands of dollars more per year than you would on a different plan.

Analyzing your prescription drug coverage is crucial when opting into Part D.

3. Not Understanding Medicare Advantage vs. Medigap Coverage

Unfortunately, navigating Medicare is complex. Just when you think you have all the coverage you’ll possibly need, you’re presented with options for Medicare Advantage or Medigap coverage.

And these plans are worth considering because they offer additional coverage.

Before going into these coverages, let’s backtrack and discuss original Medicare.

Original Medicare

Original Medicare is your Part A and B coverage. Under these plans, just 80% of medically necessary services are covered. You’re responsible for an unlimited 20% of coverage.

So, what can you do?

Enroll in a Medicare Supplement or Medigap plan. These two plans do exactly what they sound like: fill the gap in original Medicare. However, Medicare Advantage is Different.

Understanding Medicare Advantage

Medicare Advantage works differently from Medigap and Medicare Supplement plans. You’ll move from original Medicare to private insurance under Medicare Advantage. The main difference here is:

  • Plan costs
  • Choice of doctors

Original Medicare allows you to go to 99% of hospitals and 90% of providers. Advantage plans are like HMOs, where you must go to specific doctors and hospitals. These plans are regional based.

4. You Have Retiree Coverage or Employer Plans and Don’t Think You Need Medicare

Retiree coverage may not be the most cost-effective or robust as you need. Some plans have $0 premiums, and that’s something you’ll want to stay on. However, we’re seeing many retiree plans that have monthly premiums, making them less effective than Medicare Advantage or even an Original Medicare plan.

You must sit down and analyze:

  • What your plan covers
  • Coverage and cost versus Medicare

Again, you need to analyze every portion of your current coverage to determine whether Medicare is a good option for you.

5. Selecting a Plan Based on a Friend or Family Member’s Advice

Friends and family may not have the best insight into the right plan for you. A plan may be optimal for you and horrible for your neighbor. Unfortunately, Medicare is not a one-size-fits-all solution.

You should speak to someone in the area who is a specialist and can help you sift through the plans and options that you have available through Medicare.

It’s important to have a thorough understanding of your:

  • Medical needs
  • Medicare options

This way, you can then weigh the pros and cons of supplement or Medigap plans or even the different parts of Medicare.

If you’re 64 and turning 65 soon, planning for Medicare with an expert would take an hour of your time and can be extremely beneficial for your healthcare needs. A few of the questions that are asked are:

  • Are you employed?
  • Do you plan to retire at 65?
  • Does your current insurance cover just you or others?

Once you answer all the questions, you’re presented with plans and options that will best fit your unique needs. Experts can even help and assist you with the actual enrollment process, so you know how to navigate Medicare from start to finish.

Did you spot the recurring theme with all these plans? You need to know the coverage you really need and to understand what’s available through Medicare that can help you maximize your coverage.

Roderick is a professional Medicare Agent, so if you need help with Medicare or have questions, reach out to him at (908) 481-5678 or send him an email.

If you need help with securing your retirement, schedule an introduction call with us today.

Bonds Versus Bond Alternatives

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If you’ve been learning or actively engaged in trying to secure your retirement, you know that investments are a wise choice. And a portfolio of 60/40 is what most people learn about. Today, we’re going to be discussing the 60/40 portfolio, what it means and a lot about bonds and bond alternatives.

What is a 60/40 Portfolio?

The 60/40 portfolio is one that many people hear about when starting their retirement planning. What does it mean?

  • 60% of your investments in equities
  • 40% of your investments in bonds

Bonds carry very little risk in traditional markets. You can take on the risk of stocks and still have 40% of your money in bonds that offer low returns.

And from the outside, the breakdown is good for investors because bonds have low risks.

However, due to the current economic state we’re in, bonds are riskier. Bond alternatives are available, which can help you further diversify your portfolio and possibly eliminate your traditional bond holdings.

Example of a 60/40 Portfolio

A 60/40 portfolio is easy to visualize if you have $1 million in investments.

  • $600,000 in stocks, mutual funds, etc.
  • $400,000 in bonds

If you have a portfolio like this, market volatility can’t wipe out your entire portfolio. However, we’re estimating that for the next decade, bonds will be volatile due to the low interest rates we’ve had since 2008.

Bonds and the Index to Examine

When you talk about the stock market, you think of the S&P 500, Dow Jones or NASDAQ as a gauge for how well the market has done or is doing. With bonds, you can’t look at the same indexes. Instead, you’ll want to judge the performance of bonds based on:

  • Aggregate bond index (AGG)

The AGG index has a very diverse building of bonds, and when you take snapshots of the index year-to-date (January – April 2022), it’s down 6% to 6.5%. If you’ve been told that bonds are a safe bet and then you see that the AGG index is down dramatically in the first four months of the year, it’s evident that there’s an issue going on.

Normally, bonds perform better when the market is performing poorly, but in this case, the markets are down just 3% this year.

For 10 years, interest rates were low, and now with the Fed raising interest rates to control inflation, the bond market is going to struggle for quite a while.

What are Bond Alternatives in 2022?

Bonds are having issues, and if you have them as a strategy to secure your retirement, it’s time to consider bond alternatives. A bond alternative needs to do a few things:

  • Offer a safe investment versus the market
  • Provide you with an income

Over the past few years, annuities have shown their strength and ability to offer a safe alternative to bonds.

Why?

First, a fixed annuity cannot lose in a year. In the worst case, you earn nothing in the year. You can never lose money, so from the risk perspective, annuities offer a low-risk alternative to stocks.

In our own experience, we’ve seen that annuities earn in the 3% to 6% range each year over the last decade.

While an annuity may not earn you 3% to 6% every year, it also won’t lose money. You can depend on the income of the annuity since it will never lose money.

Structuring an Annuity into Your Portfolio

You can choose a 60/40 portfolio if you like, but you also must understand that every family is different. There’s no right or wrong structure for your portfolio, and that’s the beauty of annuities.

We always start off with a retirement financial plan to:

  • View where you are today
  • View where you’ll be when it’s time for retirement

A retirement financial plan considers everything:

  • All income sources
  • Expenses

Annuities provide a safe, reliable, and non-reliable source of income. Plus, if you’re like most investors, you still have a growth bucket with your money tied up in the markets. If you’re not touching the investments, they’ll grow untouched for a long time while you rely on annuities to generate income.

Bonds aren’t a horrible choice for investors.

You can and should buy bonds when they’re stable, but with the Fed stating that they’re going to be raising rates multiple times in 2022 and 2023, it’s time to look at your portfolio as a bond holder.

The rising rates will have a negative impact on bonds.

In the meantime, we recommend a fixed annuity as a bond alternative because they offer a decent rate of return, cannot lose money, and provide a source of income that you can tap into at any time.

If you liked this article and would love to hear more from us, please sign up for our podcast.

And if you want to learn more about bond alternatives and fixed annuities or simply want us to run a retirement financial plan for you, schedule an introduction call today.

Overseas Real Estate Investing: What You Need to Know

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Overseas real estate investing is one of the methods of retirement planning that people worldwide are starting to follow. Today, we sat down with Evie Brooks, a professional who specializes in real estate in Panama.

Evie is a real estate investment educator and trainer.

In fact, she was an advanced trainer for “Rich Dad Poor Dad” before transitioning into a Panama real estate expert on properties for:

  • Vacation homes
  • Organic agriculture

And all her investments are 100% hands-off, so you can secure your retirement with your money instead of working even harder.

Why Panama is Such a Great Place to Invest

Before we went any further, we wanted to ask Evie one question that was on our minds – and is probably on your mind right now. Why is Panama a good place to invest?

After researching many different countries, Panama was Evie’s main choice because:

  • Since 2008, the GDP growth averaged over 6% and rose to over 11%.
  • The Panama Canal is crucial to worldwide trade, and these trade routes will continue helping the country spur growth.
  • Copper mines were discovered, and they started being mined before COVID. It’s expected that in the next 40 years, these mines will generate more revenue than the Panama Canal.

Panama has a booming opportunity, and with this growth, more people are going to be buying automobiles, homes, and other goods.

Healthcare in Panama

Panama is working on medical tourism, too. The country’s robust healthcare and dental care sector offers top-tier care at prices far more affordable than in the United States. There are two John Hopkin’s affiliated hospitals in Panama, so you know the healthcare is good.

For the same services, you pay 20% to 25% of what you would in the US in Panama.

You can also pay for international health insurance plans if you do travel a lot and want to go to Panama and other countries.

So, healthcare is just another reason that people are investing in Panama. Soaring prices around the world are helping drive this new form of tourism in Panama, making it an excellent choice for investors who want to get in on the “boom.”

How to Begin Investing in Panama

Panama offers an abundance of investment opportunities, including:

  • Long-term rental properties
  • Short-term rental properties
  • Pre-construction opportunities
  • Government-subsidized programs

When speaking about government-subsidized programs, many people don’t know what this means. Here’s an example: Panama’s government is building 150,000 small homes for locals. Up-and-coming residents can enter these homes with rates of 2% or less and just $500 down. 

The government is subsidizing developers to build these properties to help younger generations get into their homes.

Evie tells us that for $50,000 to $65,000, you can invest in these government programs and get an 11% return on your investment. And the investment is only held for two years. You receive payments twice a year on these properties.

Additionally, there are other projects with 20% to 30% returns.

Evie helps investors learn how to invest in Panama in as easy of a way as possible. Her company can even help you get your visa to enter the country.

How Do You Know If Investing in Panama is for You?

We know that investing in real estate takes a certain level of trust. There’s a good chance that you don’t know much about Panama’s market unless you live there. However, that doesn’t mean that you should miss out on the potential opportunities that investors have in the country. 

A few ways to get comfortable with investing in Panama are:

  • Work with a company like Evie’s, which offers private tours
  • Go to the country yourself

Most of Evie’s clients are expats, people considering moving to Panama, or clients who want to diversify their portfolios.

Since COVID, many people are starting to diversify their portfolios, and investing in Panama is one option that many people are adding to their investment portfolios. Figuring out how to invest in Panama is complex.

Evie’s company has deals with developers through her program, which means that anyone who works through her company gets outrageous investment deals. 

Panama also has the US dollar, so that’s also comforting for a lot of investors to know.

Relocating to Panama as Part of Your Strategy to Secure Your Retirement

Retirement planning can take many turns, and one of those turns is relocation. The United States is expensive, and as we’ve seen with just healthcare, relocating to a place like Panama may be in your best interest.

Evie states that most residents of Panama can live on a shoestring budget, and you can do this, too.

From homes for $175,000 to beach homes worth millions of dollars, Panama offers everything. Many people live very nicely on $2,000 to $2,500 per month. When comparing prices to the US and Canada, you’ll pay three to five times less in most cases.

And as part of your retirement planning, you can invest in many of the properties that others are buying when they move to the country.

If you want to learn more about Evie Brooks and her business, we encourage you to visit her official website or My Panama Vacation Realty.

Final Thoughts

Investing in Panama, or any foreign real estate, may be a good option for your investment portfolio. Accumulating assets, especially if they’re income-generating rentals, will allow you to diversify your investment portfolio and benefit from Panama’s high GDP growth rate.

Click here to subscribe to our podcast, where we talk about retirement planning each week.

3 Questions for Investing Retirement Money in 2022

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Investing in 2022 is scary because of one word that we’re all hearing: inflation. Today, we’ve had the pleasure of discussing how to secure your retirement through smart investments. One topic that we’ve seen come up a lot is investing retirement money.

But we want to go a bit deeper than just one question to help you better understand retirement and investing.

3 Questions for Investing Retirement Money in 2022

1. How Will Inflation Affect My Retirement?

In 2021 and 2022, we’ve seen some very high inflation years. We’re seeing 7% and 8% inflation, and when stimulus packages from the coronavirus hit, it led to the printing of a lot of money. When more money enters the economy, inflation spikes.

What we’re experiencing right now is a result of this additional money flooding the market.

When you’re dealing with retirement planning, you’re thinking long-term – often 30 years. Of course, planning out your retirement should account for inflation, but we can’t assume that inflation levels will stay at 8% because it’s far too high.

In fact, any plan that you run is unlikely to withstand 30 years of compounded inflation at 8%, meaning you wouldn’t have any money left. Honestly, inflation doesn’t bother me as much as it does other people right now because:

  • Over the last 10 – 12 years, inflation has been very low at 1% to 1.5%
  • Looking at historical data over the last 100 years, inflation is 3.2%

So, when you look at everything, we see that inflation was:

  • 11.3% in 1979
  • 13.5% in 1980
  • 10.3% in 1981

In between many periods, we see 5%, 8% and 9% inflation. However, in 2009, we hit a period of deflation where we had –4% inflation. While living in the moment of higher inflation, it’s very difficult to understand averages because we’re seeing sticker shock everywhere we go.

But based on the law of averages and what we’ve seen in the past, inflation should come back down.

A retirement financial plan that is actively managed will account for inflation and take steps to help combat it if it’s a long-term problem. However, while inflation may remain for the next few years, it will eventually fall back down.

2. Should I Be Investing When the Market is Uncertain?

People are concerned with investing right now. As financial advisors, we know that there are times, like when the pandemic hit, that we should be invested. However, the answer to this question isn’t easy.

Things can change from one week to the next, where investing in the market is good or bad.

Starting in 2022, we saw a lot of volatility. Fast-forward to recent weeks, and we’re amid Ukraine and Russia at war. That has thrown a bit of turbulence into the market.

Market volatility is good and bad.

If the market falls, it may be a great time to invest heavily. Right now, we’re about 70% cash because we needed to take a step out of the market. We still have 30% of funds in the market. If there is no demand or too much supply, you should consider exiting the market.

A few key points:

  • If you’re like us, you believe there are times to be invested and times to be on the sidelines
  • If you don’t care whether your account drops 30% to 40%, stay in the market

You should be invested in market volatility, but you need to be ready to pull money out and sit on cash, too.

3. Are Bonds a Good Investment Right Now?

Bonds are in a rough spot right now. If you read the news headlines on bonds, we’re in a bear market where bonds have struggled for a few years. How do we handle this? In traditional markets, you invest in:

  • Bonds
  • Stocks

Interest rates are going up, and bonds also take a hit when this happens. Between February 2021 to 2022, the benchmark index for bonds fell 5% to 5.5%.

Are bonds a good investment right now?

There’s a small place for them, but we don’t want to get locked into a bond for a long period of time because conditions for bonds simply aren’t favorable at this time. You may find a few short-term options to fill the gap, though.

In fact, we do suggest some bond alternatives to our clients.

But we want you to realize that in the investment world, there are:

  1. Risks
  2. Liquidity
  3. Safety

Unfortunately, you cannot have all three. There are no investments that are risk-free and 100% safe. Instead, the best we can do is to limit risks, increase safety and have some form of liquidity.

Often, alternatives offer some form of safety and low risk, but you’ll give up some liquidity.

In fact, in one of our upcoming podcasts, we’re going to go deep into bond alternatives. The topic is vast, and it’s one that we want to cover in detail for you.

Click here to access our complimentary video titled: 4 Steps to Secure Your Retirement.

What’s The Difference Between a Mutual Fund and an ETF?

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When you look at your investment portfolio, you may find a few things: mutual funds, exchange traded fund (ETFs) and quite a few others. If you’re deeply involved in retirement planning, you probably know the difference between a mutual fund vs. an ETF.

However, many people don’t know the key differences between these two, nor do they worry about it – especially if these accounts make good returns.

We’re going to walk you through the concept of a mutual fund and an ETF, how they differ and when each is beneficial.

ETF vs. Mutual Fund: Understanding the Basics

ETFs and mutual funds are different, and they each have different structures. Before we go into the main differences, it’s crucial to define mutual fund and ETF.

What is a Mutual Fund?

A mutual fund is a way to diversify an investment portfolio. For example, there was a time when people trying to secure their retirement would invest in IBM, Google, energy stocks and so on, but they were required to purchase each stock separately.

Mutual funds have a purpose, such as mimicking the S&P 500, specific sectors and so on.

The purpose is what makes up the entire fund. As an investor, if you want to mimic the S&P 500 and invest in a mutual fund to do this, you can be confident that the fund will include a mix of all stocks in the index. Additionally, you don’t have to manage each stock individually.

One mutual fund can include 50 to 1,000 individual stocks to make investing more efficient because the diversification is already done for you.

Think of a mutual fund as a company that has a stockbroker who works behind the scenes to manage diversification.

When you own mutual funds, the one thing to know is that when you sell a share in a mutual fund, it’s not done until the end of the day. So, you may put in a sell order at 9 am, but the sale doesn’t happen until 4 pm when the markets close.

If the market goes or up or down during this time, you’ll be impacted as a result.

What is an ETF?

An ETF is similar in nature to a mutual fund, and while they’re vastly popular, they only came about in 1992. Due to their efficiency, ETFs are an excellent option. When selling an ETF, the structure allows you to sell in the same way as an individual stock.

You can sell an ETF at any time of the day.

So, if you’re invested in a technology ETF, you benefit from the entire industry without the risk exposure of investing in just one stock. The price movement of the ETF is live, so you can sell at any time to recognize the real-time price.

Buying and Selling Mutual Funds vs. ETFs

We looked at the buying and selling of mutual funds and ETFs, but let’s look at a clear example of the two because it can be quite confusing. Let’s run through a scenario of buying and selling a mutual fund first:

  • It’s 10 am in the morning and the mutual fund is $100
  • You put in a buy or sell for the mutual fund
  • The buy or sale doesn’t go through until the market closes at 4 pm
  • At 4 pm, the mutual fund is valued at $80 a share

If you were buying in the above scenario, you would benefit from the lower share price at the close of the market. Sellers would see share value fall by 20%, losing out on significant profits.

ETFs offer the benefit of immediate sales. Here’s an example:

  • It’s 12:30 pm and shares are up 25% on the day.
  • You put in a sell order.
  • The sale is immediate, and you sell at the high of the day.

Since ETFs are sold just like a stock, you can react to current market conditions, which is beneficial. You can also purchase ETFs in the same way.

Over time, there has been the evolution of ETFs turning into actively managed funds.

What is Active Management?

If we go back to our section on mutual funds, you’ll remember that mutual funds have a manager that works to keep a portfolio diverse. For example, let’s assume that the company’s technology mutual fund includes Apple because it’s one of the leading tech companies in the world.

If Apple stock started falling drastically on poor financials and key leadership leaving the company, active managers would sell the shares in Apple and adjust to market conditions.

Through active management, stocks enter and exit the fund to pad investors against losses and keep the fund profitable.

Actively managed ETFs work in this same way, yet you can sell the ETF immediately, too. The trading and efficiency of the ETF allow you to sell off the share while benefitting from active management.

Fees and Costs

Mutual funds are set up as a company, so you’ll find that they have fees and costs that are often more expensive than an ETF counterpart. You’re paying for the company’s financial experts to manage the fund in the best way possible to maximize returns.

However, fees and costs are often higher for the mutual fund because the company has a lot of overhead.

ETFs are more efficient, so the cost of maintenance is typically a little lower than a mutual fund. Brokerage fees are often not an issue if you invest in ETFs, but they can become expensive if you regularly invest small amounts of capital. Making larger investments less frequently may be the better option in this case.

However, the total fees for an ETF are often significantly less than a mutual fund.

Wrapping Up

We’re not saying that ETFs or mutual funds are better, but we use ETFs almost exclusively because they cost less and give you more control over your investments. We’re not saying that there aren’t great mutual funds out there, but they’re just not our preferred option.

ETFs offer the flexibility to sell or buy at any time while the market is open, and this is a freedom that mutual funds simply don’t offer.

Click here to access our 3 Keys to Secure Your Retirement class.

Assisted Living Alternatives

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Continuous care retirement communities (CCRC) are a very popular option for many people considering long-term care. However, today we want to discuss an alternative option that may be better for you.

We recently had the chance to sit down with Marcia Miller of Spill the Beans Institute to discuss assisted living alternatives that are something everyone hitting retirement age should at least know about.

Who is Marcia Miller?

Marcia is the owner and operator of Serenity Adult Family Care Home. She runs a private care home center, and she got the idea after caring for a family member for six or seven years. After starting her journey, it was a real revelation for her.

Private Side of Care Homes vs. CCRCs

When caring for her aunt, she learned quickly what to expect from large communities and private home communities. Large communities have drawbacks, such as not having a bath daily.

CCRCs lack the individual care and attention many people want from their loved ones.

However, when you choose private home centers like Serenity, your loved one:

  • Receives individualized care
  • Saves money
  • One-on-one care

Instead of living in large complexes, these smaller facilities require that the owner lives with the clients. In this case, you receive extreme care that isn’t possible with traditional assisted living centers.

From a standard of care standpoint, these care homes allow for the same high standards as a large care facility with very close care and attention rarely seen outside of a family member caring for a loved one.

Spill the Beans Institute helps caregivers help others go beyond retirement planning questions to teach people how to become a caregiver while providing financial security for themselves.

With this structure, caregivers can:

  • Earn an income
  • Hire a nurse or caregiver
  • Bring in one or two friends for the loved one

Caregiving burdens are relieved with the addition of income and the financial stability to care for loved ones. Of course, people can become a part of these small communities and have the intimate care that people often only offer to their loved ones.

If a person is hospice eligible, they can age in place at their home.

In situations that require round-the-clock nursing care, they may transition to a nursing home that can offer the intensive care the person needs.

Finding Private Care Houses

A person’s diagnosis will determine whether a private care home is the right choice for them. For example, these facilities are not an ideal option for people who are:

  • Combative
  • Requiring intense care

Unfortunately, it’s difficult to find these private care homes. You’ll need to dig deep into local databases to find these facilities. Marcia offers a nonprofit database to help people find private care facilities in Florida.

However, many states have their own care homes that allow you to receive the strong, intimate care you deserve without needing to go into a CCRC.

If you want to learn more about retirement or are concerned about how long-term-care will impact your retirement, contact us to discuss your options with you.

Click here to schedule an introduction call with us today.

5 Retirement Planning Questions

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Even when you’re a week away from retirement, there’s a good chance that you’ll have a lot of questions left. Retirement planning is evolving, and if you want to secure your retirement and sleep well at night, you need to have answers to a few crucial questions.

We’re going to outline retirement planning questions that we receive most often from our clients.

In fact, we’ve compiled a list of five questions that everyone hoping to retire can answer.

5 Retirement Planning Questions and Answers to Secure Your Retirement

1. How Much Should I Have Saved?

How much money is enough for your retirement? This is a difficult question to answer because every family and lifestyle is different. We’ve seen families have millions of dollars in their retirement accounts and struggle through retirement.

Adversely, we’ve seen families with just a few hundred thousand in their retirement accounts have a fantastic retirement.

The total retirement portfolio amount is relative to a family’s lifestyle.

There is also a school of thought that for retirement, you should:

  • Save 25 times your highest-paid salary

Instead, we like working through the numbers for ourselves. If a person has a pension, rental income or other debts or income that factor into the equation, they may need significantly less or more than this figure.

The question of saving enough is understanding how much you plan to spend in retirement. If you want to go on lavish vacations, you’ll need to have more in retirement than the person that’s paid off their home and wants to live a quiet life.

2. When is the Best Time to Take Social Security?

Our number one YouTube video with over 100,000 views focuses on whether a person should take Social Security at 62 or 65. In fact, you can watch this video right on YouTube here.  

Many people are taught to retire at 70 because that’s when you’ll receive the most money from Social Security.

And that’s true.

If you live until you’re 90 or 95, take Social Security at 70. However, what if you lived to 72? You would have been if you had taken Social Security at 62, right?

The answer comes down to this:

  • If you retire early, do you need to take money out of your retirement account to cover Social Security if you don’t take it? For example, do you need to take out an extra $2,000 from your accounts per month to hold off on taking Social Security? If so, you’ll likely benefit from taking Social Security early.
  • If you don’t need the money from Social Security right now, wait until you’re 70 because it will maximize your benefits.

Unfortunately, there’s no one-size-fits-all answer here. 

3. Should I Rethink My Risk Exposure in My Retirement Accounts?

When we have troubling times in the market, many people question their risk exposure. If the market fluctuates, you need to think about your risk exposure. In fact, you should always think about risk exposure to safeguard your retirement.

The way we handle risk is by:

  • Taking your retirement total
  • Understand risks
  • Learning when you get uncomfortable when there are losses
  • Creating a portfolio around being uncomfortable

If you have $1 million, it is crucial to know that if you lose 20%, you’re losing $200,000. Many people will feel uncomfortable at a 10% loss with this retirement amount, but if you have $10 million, you’re likely less scared to lose 10% of your money.

In short, you always need to consider your risk before and during retirement to ensure that you can have a comfortable retirement.

4. Is an Annuity a Good Option for Retirement?

Annuities often have the most questions about when knowing where to put their money. Unfortunately, annuities are very complex, but we do have quite a few articles on annuities that we’ve linked below for you:

Simply put, there are three reasons why you may want to look at an annuity as a good option for your retirement:

  1. You want to build an income that will last a lifetime.
  2. You don’t want to go into bonds and are looking for a safe alternative.
  3. You want to invest in the market and want tax deferral.

For most people, the first two options are the main reasons to have an annuity. Bonds aren’t doing well right now, so an annuity is an excellent option to consider.

5. How Will Taxes Affect My Retirement?

Taxes are always on people’s minds. From a tax perspective, retirement accounts often have their own rules on taxation. For example:

  • 401(k) / IRA are pre-tax
  • Roth accounts are tax-free
  • Brokerage accounts are taxed on gains or losses throughout the year

Each of these retirement buckets has different taxation rules. Then you have Social Security, maybe pension income and so on that may be taxed. People who take Social Security and are still earning an income really need to think about their taxation because they will need to pay taxes on these accounts.

When you’re 72, you’ll need to take the required minimum distributions.

Tax-deferred accounts require you to take required minimum distributions, which will impact your taxes.

Roth conversions are a very powerful option that does apply to some retirees. The idea is to pull money from an IRA and put it in a Roth account, which is tax-free. Since taxes are likely to go up, tax planning is crucial to help you reduce your taxes in the future.

We can even walk you through a retirement-focused financial plan where we answer all these questions and help you fully understand what it means to retire in your situation. If you’re interested in talking to us, we have a 15-minute, complimentary session where we can discuss these details with you.

We have also linked a free course of ours below to help you get started on the right path to retirement.

Click here for our FREE course on how to secure your retirement in 4 easy steps.

Investment Portfolio Strategy

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Risk is a major concern for people nearing and in retirement. When you’re younger, you can withstand higher risk, and you have time for the economy to correct itself even after a significant downturn.

For example, when the market crashed in 2008, many people lost money and had their retirement plans upended.

If you were 70 at the time and had most of your investments in stocks, especially riskier stocks, you didn’t have the same luxury of a 30-year-old who is still:

  • Working to bring in income
  • Actively able to wait out the crash

When you secure your retirement, your investment portfolio allotment should change to be less risky. As we have seen after 2008, there is a trajectory where people are very cautious with their investments after a significant loss, but now, people tend to enjoy more risk.

The fear of the market crashing is well behind us, so risks tend to increase in an investment portfolio.

Risks should be adjusted on your own basis. We promote a risk adjustment portfolio because it helps you sleep well at night and secure your retirement the way you want.

What is a Risk-Adjusted Portfolio?

A risk-adjusted portfolio, for most people, will mean that they want an adjustment to their asset allocation. For example, asset allocation may include buying smaller pieces of the market, such as:

  • Small-cap funds
  • Mid-cap funds
  • Large-cap funds
  • Commodities
  • Tech stocks
  • Pharmaceutical stocks
  • Bonds
  • Treasuries
  • Etc.

If you’re 70 years old, you’ll probably mitigate risks by putting more money into bonds because they’re a safer investment option. Many people create a 60/40 portfolio, where 60% is in equities and 40% is in bonds and safer investments.

Unfortunately, this allocation method may still be too risky for some retirees.

A good example is if you had 60% in the S&P 500 index and 40% in the AGG index (basically a bond index). As you saw in 2020, the S&P fell over 30% and even further in 2008, 60% of your money can lose 50% of its value overnight.

When it comes to returns, there are two things to consider:

  1. Year-to-date returns, which are how much the stock or portfolio netted you in the last year or a specific year.
  2. Max drawdown is where a portfolio goes up, peaks, and goes down. Peak and bottoms aren’t the best ways to look at investing, so we like to look at yearly changes because markets fluctuate, and max drawdown can be very emotional to see.

Since 2001, the max drawdown on a 60/40 portfolio is 36.7%. If you look at this from a retirement standpoint, how would you sleep at night knowing you lost nearly $370,000 or the $1 million you saved for retirement?

Most people would lose sleep over this figure.

Investment planning helps you lower the max drawdown. However, every investor has their own way they want to invest. Traditionally, you’ll find two main trains of thought when investing:

Our approach is slightly different, and it has worked well for our clients.

Risk Adjusted Portfolio by Supply and Demand

The supply-and-demand concept is simple: when things are in demand, let’s be a part of it, and if it’s not in demand, let’s not be involved. What does this mean in the world of investing?

If stocks are doing exceptionally well, we can go all-in on them with 100% of assets.

When risks get higher, we might go all into bonds or move most of a portfolio into bonds. On the other hand, if things get bad, it may mean putting 100% of our money into cash and holding it until other investments start recuperating and going back up.

Supply and demand allow us to make smarter investments, make money and fight back against risks, too.

A recent example of this happened in March of 2020:

  • The pandemic hits, not many people have been through one, and the market falls 34%.
  • A risk-adjusted portfolio helps protect against that.
  • Our risk-adjusted portfolio fell just 9%, while non-risk adjustments led to 34% losses.

The current state of bonds is a prime example of when bonds don’t work. Inflation is leading to the potential of an interest rate increase, which will lead to lower bond returns. Negative bond returns occur when interest rates rise, and the Federal Reserve is planning to raise interest rates to slow inflation.

So, what does someone trying to find an alternative to bonds do if bonds are at a negative return?

Fixed annuities may be an option because they do offer safe growth. These annuities are an insurance option, and when the bond market falls, this is an option. However, returns are more conservative.

These annuities do have liquidity issues to consider.

For example, most annuities only allow you to take out 10% of your investments a year. You’ll have access to this money, but the limit does make it less inviting to invest in annuities.

We like to put some money into annuities while also diversifying into other options, such as the stock market. Diversifying allows you to access 100% of the liquidity of non-annuities while accessing 10% from the annuity per year.

Final Thoughts

Risk adjustment is a major part of smart investing, but there are multiple ways to adjust and tackle your risks. While we’ve covered a few ways in this post, you may have another risk adjustment method that you prefer.

The idea is to know the many options available to you so that you can adjust your risk in a way that makes the most sense to you.

Do you need help with retirement planning or with an investment portfolio strategy? We can help.

A good place to start is by taking out 4 Steps to Secure Your Retirement Video Course.

However, if you want to connect with us to review your investment portfolio and seek one-on-one investment advice, schedule an introduction call today.

What is Legacy Planning?

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Retirement planning is at the forefront of many people’s minds when they near retirement. You’ve worked diligently to save for retirement, and the big payoff is finally nearby. However, you may also want to start thinking about legacy planning.

We recently had a chance to sit down with Angelina Carleton to discuss designing your legacy plan.

Who is Angelina?

Angelina was a commercial real estate broker 10 years ago and worked with multimillionaires. She was working at an event where the topic was private prisons. As she looked around the room, she questioned whether these individuals realized that they were profiting off the misery of others.

As she went to her car, she asked herself if it was time to leave the commercial real estate sector and go into coaching.

What if she could convince all the financial representatives at the event to invest in something other than private prisons? Through her research, she couldn’t find a coach to help her create a legacy.

What was the solution?

Fill the gap. Angelina realized through her coaching that once people change, it impacts others around them, too. Angelina has helped others figure out their legacy plan and helped them reach this goal.

What is Legacy Planning for Angelina?

For many people, legacy planning means leaving money to their kids or grandchildren. People think of their homes, money, and other material things, but legacy planning is much more than that.

Angelina’s definition of legacy planning is a bit different than the definition you’ll find in the dictionary.

For Angelina, legacy means integrity and being true to yourself while being here. Of course, you can leave money to friends and family. However, people also want peace of mind in the legacy that they leave behind.

When coaching, she can help people get “unstuck.”

She wants to help people understand why they do what they do during their lifetime. When a person can get to know themselves beyond their careers, they can truly see what their theme is in life.

Unfortunately, many people don’t allow themselves to become who they really are until retirement.

A person may be a leader in the business world, but that doesn’t mean that they want to be in this position. Instead, through coaching, Angelina helps people open to who they really are at a younger age so that they can leave behind their own legacy.

A few questions to ask yourself are:

  • If you didn’t have to impress anyone, who could you be?
  • If you didn’t have to get it right, what could you create?
  • If you had nothing to prove, what would your legacy be?

For many people, they can’t answer these questions immediately. However, in one, two or four weeks, people have the answer because they allow it to marinate.

When you don’t have to fit a certain mold, you can create the true legacy that you leave behind. The legacy that goes beyond assets and talks about the way that you live your life, too.

Leaving Your Legacy Plan Behind

Angelina asks to tape all her sessions with clients, and if they approve, she gives them a big book of all the key points that were discussed during the coaching contract. These books can help you leave the legacy you want behind.

For example, let’s say that you run a family business and want to leave it to a successor.

When the successor goes into the head role, they may or may not be ready for this big role and responsibilities. They may not know the company’s:

  • Vision
  • Mission statement
  • Values
  • Guiding principles
  • Etc.

Aligning these values and principles is important because when these individuals come into an inheritance, whether it be money, a business, or others, it can help them create the legacy they want.

Who Should Be Designing Their Legacy?

Surprisingly, designing a legacy isn’t for everyone. Generally, people who have had coaching of some kind in the past excel in designing their legacies. Coaching is a broad term, but this can be people who have worked with:

  • Sports coaches
  • Business coaches
  • Personal trainers
  • Etc.

There needs to be a high level of trusting the process when working with a coach to really extract the maximum value possible.

Legacies aren’t for the lucky. They are only for those willing to perceive.

Angelina’s approach to legacy planning is a lot different than the normal financial legacy planning that we’re used to in our practice. Instead, this is an approach that looks at your life and what it means to truly be yourself.

Instead of an estate plan or financial legacy, this is the legacy of what it means to be you, including your values, guiding principles and beliefs.

For example, some of the clients Angelina is working with have started to try and save the planet and solve some of the problems in the world. This is the type of legacy planning that Angelina has to offer.

If you need help finding the true legacy you want to leave behind, you can go to Angelina’s website to see what she is all about. 

Click here to go to Angelina’s website.

There are many approaches you can take with legacy planning. If you need help with the financial side of legacy planning, we can help. Simply call us at (919) 787-8866 or click here to schedule an introduction call with us.

What’s the Best Diet for Digestive Health?

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Digestive health is crucial to maintaining your overall health. While we mainly focus on retirement planning and how to secure your retirement, today, we’re going to be talking to a digestive health expert.

If you maintain good digestive health, you’ll improve your overall health, too.

As someone who is already retired or planning to retire, it’s crucial that you focus on your overall health. And your digestive system plays such a key role in your health. Dr. Norm Robillard spoke to us on our podcast this week, and he has excellent insight into maintaining the best digestive health possible.

Who is Dr. Norm Robillard? How Did He Get Started in Digestive Health?

Dr. Robillard is 65 now, and as a worker in the biotech industry, he started getting chronic acid reflux 17 years ago. He started taking medicine to help calm his symptoms, but nothing really helped. Prior to this, he never started a diet until his son said, “Hey dad, let’s go on a low carbohydrate diet together.”

Before losing a pound, he started to feel significantly better.

Removing carbohydrates improved the acid reflux so much that he started to dig into the science behind carbs. As a microbiologist already, he developed a new theory on the underlying cause of acid reflux. Since Dr. Robillard has grown many of the intestinal microbes in the lab before, he knew that these microbes:

  1. Prefer carbohydrates as fuel
  2. Produce multiple forms of gases

Dr. Robillard’s hadn’t been working well since he was in his 40s. He believes that many of the carbs he ate were escaping digestion in the gut and fueling those microbes that produce gas. His theory was that these microbes led to pressure in the gut, causing acid reflux.

Ultimately, he left his career as a microbiologist and started the Digestive Health Institute.

Now, Dr. Robillard consults with patients that have:

  • Acid reflux
  • GERD
  • IBS
  • Other gastrointestinal issues

Dr. Robillard’s Fast Tract Diet

Diets seem to pop up every year, and people often gravitate to Paleo, Keto and other really popular diets. For many people, these diets work wonders and help them lose weight and reach their dietary goals.

However, the Fast Tract Diet focuses on your digestive health to help you overcome some of the unpleasant digestive-related issues that you may have, such as GERD, acid reflux or IBS.

The Fast Tract Diet is on its second clinical study to see how it helps 90 people overcome acid reflux. Dr. Robillard was truly the first case study into the diet, and he went on a low carbohydrate diet.

However, it wasn’t until writing his first book that a close friend asked him a very important question: is it all carbs that are bad, or are some carbs worse than others?

That led to research on which types of carbs are hard to digest and are fermentable by bacteria. A few carbohydrates that made the list include:

  • Fructose – well-studied and a large portion of the population cannot digest fructose
  • Lactose
  • Sugar alcohols
  • Fibers

But this turned into a difficult question of how to create a way to utilize this diet in the real world. The answer was using the glycemic index to create a diet to understand what sugars may be left in the digestive system to ferment.

Through his own equation, which adds sugar alcohol and fiber into the mix, he developed the Fast Tract Diet.

The new equation leads to a new measurement: fermented potential (FP).

FP allows dieters to better understand how much of their food may become fermented. While some fermentation is good, too much is bad. Western diets are far less diverse than in other parts of the world, leading to a digestive system that doesn’t work as well.

Working With Your Diet to Fight Back Against Digestive Issues

The Fast Tract Diet is more of a program than a diet. Followers of the diet get access to an app that allows them to rapidly work through the program with an abundance of information at their fingertips.

  1. Work on diet and digestion. A focus on FP points is crucial to keeping fermented material under control.
  2. Focus on underlying causes of digestive issues. Don’t worry – the book covers all of these causes.
  3. Behavioral. Your behaviors can aid in your ability to digest your food properly. Meal spacing, intermittent fasting and timing of meals are all part of your behavior.

If you’re not allowing five hours between meals, your gut bacteria may be overfed, leading to more issues.

The Fast Tract Diet considers many factors that aren’t focused on with other diets.

For example, you may be eating rice, and it’s good for you, but how are you cooking it? Even when choosing rice, you need to choose rice that is:

  • Easier to digest

Jasmine rice, for example, digests quickly, but you want to keep it to half a cup of rice to stop blood sugar spikes from occurring.

Fast Tract Diet puts all of this information to the forefront so that there’s an easy diet to follow that will allow you to maintain a diet that doesn’t make you feel bloated or cause acid flare ups.

Supplements and Digestive Health

Supplements, especially some probiotics, can help you keep your gut healthier, too. There are digestive enzymes and probiotics that can help aid in your digestion. In addition, stool analysis can be very beneficial because you can see which enzymes are low and not allowing your digestive system to run optimally.

In this case, you can supplement with certain enzymes that can help with digestion.

Apple cider vinegar may be beneficial for some people, but it depends on the type of reflux. If you feel like you have a sore throat or lump in your throat, apple cider vinegar is not a good option for you.

Dr. Robillard covered an immense amount of material with us, and it can be difficult to follow everything precisely. If you want to find out more information on the diet, you can follow the link below to the Digestive Health Institute.

Resources

If you need help trying to find peace of mind in your retirement, we can help.Click here to read our newest book, called Secure Your Retirement.

Retirement Strategies

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Retirement requires unique strategies to help you live the lifestyle you want when you retire. Since every firm is set up differently, it’s crucial to understand the differences between retirement strategies and how these firms work to secure your retirement.

In this post, we’re going to shed some light on how we’re set up as a firm and how many others are, too.

However, we’re not here to sell you on one strategy or firm style versus another. Instead, we’re going to explain the options you have available to find a solution that works best for you.

How Most People Enter the World of Retirement Planning

Many people start really thinking about retiring and delve into the world of investing once their career picks up. For most people, they’ll follow a few steps:

  • Set up an investment account, put money into the account and watch the stock rise or fall
  • Start putting money into a 401(k) at work

As you start thinking more about your financial future, you’re likely going to want some help from a financial advisor. These are professionals that will help you invest your money in a way that best meets your retirement goals.

With that said, the firm’s approach and retirement strategies may be different from what you would expect.

Ideally, you’ll talk to 2, 3 or even 5 financial planners, and you’ll quickly start to notice that each recommends a different approach to meet your financial goals.

What are the approaches you’re likely going to come across?

Investment Advisor

An investment advisor is who you seek out when you’ve invested some money on your own, but you want some professional help managing your portfolio. These professionals will help you invest and grow your portfolio.

Unfortunately, these advisors won’t assist with:

  • Tax planning
  • Estate planning
  • Etc.

If your sole goal is to grow your money in the markets, an investment advisor offers exceptional services to help you achieve this goal.

Hands-off Financial Advisor / Plan Creator

If you have the mentality that you want to execute a plan on your own but need someone to help you develop the plan, there is an advisor that can help with that, too. These professionals will:

  • Create a financial plan
  • Allow you to execute the plan

These hands-off professionals offer you a one-time fee plan that will take all of your goals into account and devise a plan to meet these goals. Unfortunately, if your goals change in the future or something doesn’t go as expected, there’s no additional help provided due to the one-time fee.

One-stop Shop

A one-stop shop is what we’ve tried to transition into with our business, and it’s a more robust solution for our clients. When working with a one-stop-shop, you receive help with:

Using a holistic approach, these advisors will work with you to meet your retirement goals and your lifestyle goals.

When you’re working on your retirement strategy, you may want to:

  • Hire a professional who does everything for you
  • Work with someone on just investments
  • Execute a plan from a professional

Thankfully, the financial industry has professional advisors who can help you through each of these categories. Some clients want to be very hands-on with their retirement planning, while others want to understand the plan yet want someone to handle all the logistics.

Why a One-stop Shop or Comprehensive Service is What We Offer

Throughout the years, we’ve learned a lot about our clients. While everyone has their own preference on how to handle retirement, many people want someone who can help in the various areas of retirement, such as estate planning, tax planning and everything else.

In fact, we have built out our services to the current state, which looks something like this:

  1. Build a retirement-focused financial plan
  2. Create an income plan
  3. Build out an estate plan

We’ll even work with your CPA or other advisors to help ensure that we’re all on the same page and working to create the retirement you envision.

Truly, the financial plan we create is the foundation of our client’s success. Once we have this plan in place, we can begin looking at investments, taxes, estate plans and more.

When we create a retirement financial plan, we look at multiple parts:

  • Where you’re at today with your retirement
  • What your goals are for retirement
  • How many years out you are from retirement
  • How much have you accumulated?
  • How much will you continue to accumulate until retirement
  • Your lifestyle wants in retirement

Once we go through all these points, we have a much clearer picture of what your retirement can look like and how to reach this phase in life. We’ll then look at lifespan and delve into estate planning.

If you think there will be money left after retirement, you can then start deciding who to leave your money to when you’re gone.

However, we also answer questions on:

  • When it’s best to retire
  • If you retired today, what your finances would look like
  • Survivorship questions and so much more

Building out the foundation of your retirement plan allows us to see what happens if you need long-term care or a spouse dies. Or, if you purchase another house, how would it impact retirement?

Multiple Financial Professionals Under One Roof

When you work with a one-stop-shop or comprehensive financial planner, you’re opting to work with someone who can bring in other professionals to help you. We’re not accountants, but we have accountants that we work with who help our clients deal with:

  • Tax strategies
  • Tax planning
  • Retirement account conversions
  • Etc.

Since we put this system together, there are no additional charges for speaking to one of these professionals.

When choosing someone to help you with your retirement plan and strategy, it’s crucial to ensure that these professionals evolve and change over time. Economies and markets are changing, and if the person you trust with your retirement planning doesn’t evolve, your retirement will suffer.

If you need help trying to find peace of mind in your retirement, we can help.
Click here to read our newest book, called Secure Your Retirement.

New Tax Laws 2022

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A new year brings a variety of new tax laws to concern yourself with. For anyone working on their retirement planning or in retirement, it’s crucial to keep on top of the new tax laws in 2022 because they will impact your plans – even slightly.

Ordinary Income Tax Changes

Your ordinary income tax, or the taxes you’ve paid all your life, aren’t going to see many changes in 2022. We’re seeing a few tax brackets, including:

  • 10%
  • 12%
  • 22%
  • 24%
  • 32%
  • 35%
  • 37%

Earnings will determine which bracket(s) you fall into this year. While the percentages haven’t changed this year, the income ranges have changed. For example:

  • Income of (single: $10,275 or married: $20,550) or below – 10%
  • Income of (single: $10,276 – $41,775 or married: $20,551 – $83,550) – 12%
  • Income of (single: $41,776 – $89,075 or married: $83,551 – $178,150) – 22%
  • Income of (single: $89,076 – $170,050 or married: $178,151 – $340,100) – 24%
  • Income of (single: $170,051 – $215,950 or married: $340,101 – $431,900)– 32%
  • Income of (single: $215,951- $539,900 or married: $431,901- $647,850) – 35%
  • Income of (single: $539,900+ or married: $647,850+) – 37%

However, if you make $432,000 as a married couple, you would be in the 35% tax bracket. Due to being in the tiered tax system, you would pay into all the previous tax brackets. The first $20,550 is taxed on 10%, the amount of money from $20,551 to $83,550, you’ll pay 12% and so on.

So, you’re not paying a flat 35% in taxes. In fact, you’re only paying 35% on $99 if you made $432,000.

You can determine your effective tax rate by calculating the sum of the money you pay in taxes divided by your adjusted gross income. For example, if you paid $100,000 in taxes on an adjusted gross income of $432,000, you would use the following equation to determine your effective tax rate: ($100,000/$432,000) * 100 = 23.15%.

If you have a Roth IRA, you can convert some money to remain in your tax bracket using a Roth conversion.

For example, let’s assume that:

  • You have an adjusted gross income of $85,000
  • You want to convert as much as possible and stay in your tax bracket of 22%

In this case, you can convert from $85,000 to $178,000 at the 22% tax bracket

If you need someone to walk you through these figures based on your exact income, we can help you with that. In fact, our software will outline all these scenarios for you to help you better understand what you can do with your money to save on taxes.

Click here to schedule a complimentary call with us.

Note: Tax cuts were put in place under the Tax Cuts and Jobs Act of 2017. These tax cuts are set to expire in 2026, but this can change if no changes are made by then. In 2026, this would mean that a person in the 12% tax bracket would be bumped up to a 15% tax bracket. A few other brackets will go up, too.

Standard Deduction Changes

The standard deduction has gone up in 2022, but it is a small increase. However, when trying to secure your retirement, every dollar counts. Changes to the standard deduction are:

  • Single person: Deductions are up from $12,550 to $12,950
  • Married person: Deductions are up from $25,100 to $25,900

While the increase is small, it is an excellent way to save a little more money. Standard deductions come directly off your income every year. Let’s assume that you make $50,000 as a single person. The standard deduction pushes your adjusted gross income to $37,000.

Itemized deductions may also be an option for you.

However, due to the higher standard deduction, it may not be in your best interest to itemize deductions anymore. You really need to sit down with a CPA who can look over your current income and tax situation to find the best strategy to keep your tax burden down.

401(k), 403(b), 457 Plan Changes

Are you doing salary deferral into one of these retirement plans? If so, there have been changes that allow you to put a little bit more money into these accounts. The maximum that you can put into these accounts has gone up $1,000 from $19,500 to $20,500.

On top of that, if you’re over age 50, you can make a catchup contribution.

If you’re over 50 this year, you can make automatic salary deductions of up to $20,500 and put up to $6,500 as a catchup this year. These catchups allow you to put $27,000 into these accounts in 2022.

SEP Plans for the Self-employed

A self-employed pension plan, or SEP plan, works like a 401(k) and IRA hybrid. You can contribute $61,000, up $3,000 from the year prior.

FSA and HSA

If you have an FSA or HSA, the contribution limits on these two also went up.

  • FSA – From $2,750 to $2,850
  • HSA – From $3,600 to $3,650

Capital Gains Changes in 2022

New tax laws for capital gains are also in place in 2022. For example, if you have a stock with a capital gain and sell it prior to one year, it’s a short-term capital gain that is considered regular income.

However, if you held the same stock for over 365 days, it’s a long-term capital gain.

In 2022, you can have a long-term capital gain of $83,000 without having to pay taxes on it. However, there are a few calculations that you need to know here:

  • You can go up to $517,000 with a 15% tax rate
  • $517,000+ has a 20% tax rate

It’s important to note that these factors do not count for a 401(k) or your normal retirement accounts.

Social Security Taxes

Social Security is taxed for some individuals, and this is a shock for many people. Social security is taxable if you are:

  • Married and have an income of $32,000 to $44,000 per year. Up to 50% of your social security income is taxable.
  • Married and making over $44,000 in annual income. Up to 85% of your social security income is taxable.

Keep in mind that the figures are different if you’re single. 

An example to go with these figures is to assume that you have $2,000 a month in social security and have a taxable income of $40,000. You’ll have to pay taxes on $1,000 of the $2,000 you have from Social Security in this scenario.

Medicare Part B Premium Rise

In 2021, if a person made $0 to $176,000, premiums for Medicare Part B were $148.50. However, in 2022, this premium is now $170.10. Since these are monthly premiums, this is a major difference.

If you make over $182,000, you will pay a higher premium based on a tiered rate.

While the premium increase may not seem earth-shattering, it is still worth considering.

Social Security Under Full Retirement Age

If you’re taking Social Security and are under the full retirement age, you can make $19,560 before being penalized at age 62. Retiring early and drawing Social Security while still having a part-time job can have penalties attached, which every retiree should know.

Roth IRA Contribution Changes

A Roth IRA allows you to contribute the following amounts per year if you earned the following:

  • $6,000 for anyone under 50
  • $7,000 total for anyone over 50

You can only contribute what you earn, up to the above amounts. Additionally, there’s a phase-out at $198,000 for married couples filing jointly in 2022. However, if you make $208,000, you cannot contribute to the Roth account.

Roth IRAs are an excellent account to consider because money can grow tax-free in these accounts.

While this is a lot to take in, it’s crucial that you talk to a CPA to discuss the options you have available to better understand recent tax changes.

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Economy Forecast for 2022

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In our most recent podcast, we were able to sit down with economist Andrew Opdyke to discuss what to expect in the economy in 2022. If you want to listen to the podcast, we encourage you to sign up here.

When you’re working to secure your retirement, the economy will have a major role in how your portfolio will perform.

The forecasts for 2022 are never set in stone, but they can help you get an understanding of what type of fluctuations your portfolio may see this year. However, before we dive into some of the questions we discussed with Andrew, let’s look at what transpired in 2021.

2021: Year in Review

For many people, 2021 was an interesting year because of everything that happened in 2020. At the end of 2020, vaccines came around, and many people viewed 2021 as a recovery year. But unfortunately, we’re still talking about COVID-19 to start this year.

Massive vaccinations have taken place, with signs that the latest wave of COVID-19 from the Omicron variant may lead to less hospitalization.

However, in 2021, we saw some differences in the market, such as:

  • Strong profit growth from S&P 500, small- and mid-cap
  • Emotions led to some volatility
  • Double-digit growth for many stocks

Overall, 2021 was a good year for retirement planning and the market because major companies still posted high profits.

Entering the 2022 Year

Heading into 2022, we’re expecting less of a change in volatility and business going forward. We expect that in 2022, the pace of growth will moderate as businesses want to see if they can get jobs back and continue growing.

With that said, the supply chain is a major concern.

Supply Chain

The world hasn’t seen a supply chain issue like we have had since the pandemic. At the beginning of the current wave of the virus, we’re also seeing supply chain issues that are leading to:

  • Rising inflation
  • Slower product delivery

Large numbers of truckers and other people involved in the supply chain are off work because they’re sick or recently tested positive for COVID. As a result, the supply chain has slowed to start off the year.

However, we see the supply chain recovering.

Shutdowns and shelter-in-place orders are unlikely in 2022, and we expect that this will allow people to continue going to work. We expect 300,000 to 350,000 jobs added per month. If we’re correct, the job figures in 2022 will pass the pre-COVID figures by the end of the year.

Ultimately, we’re still down 3 million jobs to start the year, but it’s widely expected that this figure will continue to drop as we move into the mid-year.

Demand remains very high now. The stimulus helped with this to some extent, so there may be some slowing here. Stimulus checks aren’t coming again, as far as we know, but demand remains incredibly high, which is good for business.

Inflation Predictions

Inflation may continue to rise to start the year. Supply chains are still running, albeit slightly slower due to the recent variant. 

The good news?

In mid-2022, it’s fully expected that inflation will begin to taper off and fall back to traditional ranges of 3% to 4%.

Politics and How It Plays In the 2022 Economy

Politics will always play a role in the national economy, and there are a few things we’re seeing right now that may impact the economy this year:

  • Massive infrastructure bill discrepancies
  • Child tax credit may not be in play

Also, 2022 is a mid-term election year. In November, there will be some disruption in the political sphere which may help or hurt agendas going forward. The infrastructure bill is still in the works, and there’s hope that it will pass in some form.

Adding in infrastructure right now will take a few years to really pick up the pace, even if the bill was to pass today.

Due to a lack of capacity, there’s no feasible way to see crews on the road next week building bridges if the bill passed today. These types of bills and their impact take a while to be put in place logically once they pass into law.

Build Back Better Bill

The Build Back Better bill, which has been tampered down, has a lot of corporate tax hikes associated with it. The closer we get to reelection, the less likely we will see this bill pass. Politicians don’t like to raise taxes during an election year, so it’s a bill that is likely not going to pass in 2022.

Maybe the package passes at $1.5 trillion or less, but if it does, there’s also a good chance of a party change on the House level as a result.

Markets That May Recover Due to a Current Lack of Manpower

In 2020 and 2021, earnings growth numbers were substantial in 2021.

Why?

The drop in earnings in 2020 put the benchmark low and kicked off tremendous growth in 2021. However, 2022 is likely to see growth fall out of the double digits for these companies and back into the 8% to 9% range.

Market growth rates are expected to fall back to typical levels.

Also, price-to-earnings for many companies is expected to really play a factor in stocks readjusting. Many companies saw these values increase on expectations that never materialized.

Of course, there’s also a price concern as inflation rises and perhaps demand falls, leading to better prices for consumers but lower earnings for corporations.

Earnings quality will matter a lot in the coming year.

Small- and medium-sized businesses may also start to come back if we can tame COVID and avoid another shutdown. While mega-caps did well in the past year, these smaller companies are set to come back a little stronger in 2022.

With that said, keep a few points in mind:

  • Markets are unlikely to grow at the same rate as they have over the last 2-3 years
  • Companies with solid profit margins will continue to do well
  • Small- and medium-sized companies may experience the most gains

Expectations of super growth need to be tamed because the high growth is unlikely to continue in 2022 because it really can’t.

Concerns and Expectations for the 2022 Year

Government and Federal concerns exist because the response on these levels will have a major impact on the markets. The response to inflation will be a major focal point because the government downplayed inflation, stating that it was just short-term.

However, we’re now seeing that inflation isn’t short-term and is still sticking around.

The Fed did start to change its tune at the end of 2021. If the Fed addresses inflation, it will help keep the economy high. Unfortunately, if the Fed doesn’t raise the interest rate and tackle inflation, it will lead to market volatility.

We certainly need to keep a close eye on what the Fed does to fight inflation.

If nothing is done to tame inflation, we expect it will significantly impact the markets going into the end of the year.

Surprises and Bright Points in 2021

One of the best points of 2021 was that we learned:

  • People adapt
  • Companies adapt

From an economic growth standpoint, we’re at a new growth high that hasn’t been seen since the 80s. We’re also producing more with 3.5 million fewer workers, so all of these are very bright spots for 2021.

The embracing of technologies and productivity tools will continue to help the market in the coming years.

Earnings growth was real in the past year, but now it’s time to move into 2022 and hopefully return to the fundamentals.

Hopefully, in 2022 we go back to the fundamentals where there are no questions of stimulus, supply chain issues and shutdowns. The last time we’ve seen the money in the system that led to growth was after WWII.

In fact, the funds pushed into the market led to the industrial revolution.

Now, with the influx of cash in the market and government dollars, we may be on the cusp of a new revolution in 2023 and beyond. It’s an exciting time to look at the year ahead and see what companies can make happen with all the money available and in high demand.

The markets may not grow like they did in 2021, but the possibilities in 2022 and 2023 are impressive and should provide long-term, sustainable growth.

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2022 Retirement Issues to Consider

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January is here, and while you may have quite a few goals ahead of you this year, one of them should be your retirement. Whether you’re retiring in 2022, 2026 or just retired, there are a lot of things to consider.

Everyone, depending on their situation, needs to think a little about their retirement.

We ask you to start right now by writing down your goals, such as:

  • Savings goal
  • Income goal
  • Family goal

Even if you’re retired, you should have a goal. Maybe 2022 is the year to see family members you haven’t seen in a long time. January is the time of year to set goals, and it is so emotional when you look back at your goals and notice that you’ve checked a few goals off your list.

However, we’re going to be diving into other retirement issues and what we recommend that you do to start the year off right.

Getting Your Cash Flow in Order

If you’re still saving, you’re on the accumulation side of cash flow. Right now, you should sit down and consider any extra cash you may have from:

  • Raises
  • Side hustles
  • Business opportunities
  • Work opportunities

Understanding your cash flow is crucial, and it’s important to know whether you can expect any additional or less income this year. Make notes on the income and expense side of cash flow.

You might have paid off a mortgage – which is huge – and that’s going to drastically change your cash flow.

Knowing how much cash you have available allows you to contribute more to your:

  • 401(k)
  • IRA
  • Roth IRA
  • Etc.

You might find that you can work towards maximizing out your 401(k) this year. If you have a spouse that doesn’t work, they can also contribute to an account in their name based on your income to reduce your tax burden further.

Anyone qualifying person with a Roth IRA can contribute to their account with tax-free growth.

Cash flow has a lot of moving parts, but it’s an area that you really want to focus on this year when planning for your retirement. 

Benefits

If you have certain benefits, you may want to begin thinking of ways to maximize certain accounts, such as your:

  • HSA
  • FSA

With an FSA, you need to use a certain amount of money or lose it this year. Take the time to ensure that you’re utilizing this money so that you don’t waste it.

Retirees – those lucky folks who are already enjoying life after work – you need to think about:

  • Required minimum distributions (RMDs). You will be required to begin taking these distributions at 72. You’ll suffer a significant penalty if you miss your RMDs.
  • Qualified charitable distribution (QCDs). You can use an RMD to donate to charity.

You need to take the start of the year to really look at your cash flow, all the money coming in and going out, and make a yearly plan on what steps you need to take this year for your retirement. 

Next, we’re going to be talking about another major consideration: assets.

Asset Overview

You need to have a thorough review of your assets at the start of the year, and you need to look at emergency funds, savings accounts and so on. For example, if you have a lot of money in the bank, you might want to think about putting some of this money into an account that can earn interest.

You might want to investigate opening a brokerage account, bonds, or something other than a savings account that earns you very little.

Next, you need to consider risk tolerance.

What is risk tolerance?

How much risk can afford to lose in the market? For example, if you have $100,000 and you lose 10%, are you okay with losing that money? If so, think about whether you had $1 million and lost $100,000 of that money.

In both cases, you’re down 10%.

It’s crucial to review your risk tolerance. Major events can change your perspective, too. A few major life changes that add or remove risk are:

  • Marriage
  • Paying off a house
  • Loss of a spouse
  • Etc.

Risk is always evolving, and you need to reallocate your assets as your risk goes up and down.

Additionally, we’re in a market where interest rates are very low. Mortgage rates are still under 3%, which is very beneficial. So, if you are interested in refinancing, now is the time to consider it because we may never see rates this low again.

Debt reduction is a major part of your wealth, so it’s crucial to consider:

  • Refinancing
  • Paying off credit cards
  • Tackling high-interest debt

Debt holds you back from reaching your financial and retirement goals, so work towards eliminating it in any way that you can.

Tax Issues and Concerns

Taxes are coming up, so it’s time to expect your 1099s, W2s and so on. Unfortunately, the government isn’t going to offer an extension this year – not yet. So, April 18 (it’s a little different this year) is the tax date.

A few of the things we would like you to do to jumpstart your tax planning are:

  • First, contribute to your IRA, which is allowed until your filing date.
  • Track your realized gains and determine whether you have losses that can offset these gains.
  • Consider your Roth conversions. These must be done by 12/31, so start thinking about that now.

You’ll also want to begin gathering all your documents, including any information on charitable donations, to have everything you need when you go to see your tax advisor.

Finally, we want to discuss a few legal issues and concerns.

Legal Considerations Going Into 2022

Annually, it’s crucial to review your estate plan and ensure that you have all of your most important documents in order. Primarily, there are two main documents that we’re going to talk about, but there are many that need to be considered.

The two big ones are your:

  • Power of Attorney
  • Medical Power of Attorney

If you’re married and have an IRA, your spouse cannot access the accounts without a Power of Attorney. Families that rely on IRAs to pay their bills will need to have a Power of Attorney because if it’s not present, there’s no way to legally access the money in the account.

You’ll also want to consider reviewing, creating, or updating your:

  • Will 
  • HIPPA forms
  • Etc.

It’s crucial to have all these documents updated if you have already created them. 

It’s easy to procrastinate when you have an estate plan because no one wants to think about their demise. But unfortunately, we’ve seen far too many people think they’ll live forever and something drastic upends their plans.

You can’t predict the future, but you can opt to put all your estate planning documents in place to ensure that all your wishes will be followed if you pass on or become incapacitated.

While there’s a lot to think about in 2022, it’s crucial to begin thinking about the points above now.

You’ve worked hard to get where you are in life, and a quick annual checkup of things will allow you to continue living the life that you built for yourself.

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