Looking Ahead for 2023

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In 2023, there is a lot to look forward to, which is what we want to cover in this article today. We do want to alert you to our podcast for this blog post, which you can find here. With that said, we’ll have the following on our podcast and in our blog in the coming weeks/months:

1. Secure Act 2.0

The original Secure Act was passed in 2020, and it changed a lot of rules, such as when you must begin taking your required minimum distributions (RMDs). Just as we started to get comfortable with the original Secure Act, Congress passed the Secure Act 2.0 on December 29, 2022.

RMDs are changing in a significant manner, and the age is changing from 72 to 73 or 75, depending on a few factors, which we’ll discuss more in the future.

A few other things have changed:

  • RMD penalties have gone down
  • Catch-up contributions have changed
  • Much more

The Secure Act 2.0 is something like a 4,000-page document, so this is a future episode that you will certainly want to watch if you’re nearing retirement or hitting 72 and want to know more about your RMDs.

Note: RMDs are required for any of the tax-deferred accounts that you have. Essentially, the IRS allowed you not to pay taxes on these accounts, but they want you to begin withdrawing from them so that you do pay taxes on them.

2. Who Needs a Trust?

In this future episode, we’ll be sitting down with Andres from Trusts & Will. We had Andres on our show in the past, and we’re going to sit down with him again to discuss trusts. Our clients who work with us receive free estate planning because we want everyone to have:

  • Trust
  • Will
  • Power of attorney
  • Healthcare power of attorney
  • HIPAA

We’ve had a lot of questions about the need for a trust this past year, and Andres will explain:

  • Who needs a trust
  • Types of trusts

Andres will walk us through all of these concepts so that you can decide whether a trust is a good option for you. 

3. Social Security Strategies

Social Security should be on the minds of anyone who is thinking about retirement, and a few strategies we plan to cover are:

  • What is the best age to take Social Security? This was one of our most popular YouTube videos, with nearly 300,000 views. We will revisit this in greater detail and with some of the changes that have happened since.
  • An interview with Heather, a consultant that we’ve hired who knows the ins and outs of Social Security. She was on our podcast in the past, and she wants to talk to you about new strategies you should be thinking about for your Social Security.
  • IRMAA contributions are your Medicare surcharges, and these go hand in hand with Social Security. We will explain what IRMAA is, how this premium on your Medicare works and how these figures have changed, too.

4. Tax Planning Updates for 2023

In 2023, a lot of the contribution and tax planning numbers have changed. This episode will lay everything out for you so that you can understand how much you can contribute to:

  • Traditional retirement accounts
  • Roth retirement accounts
  • 401(k) contributions
  • New rules for employers who want to contribute to Roth accounts
  • Roth conversions

We are likely to have a multi-level conversation around tax planning updates in 2023. This episode will also discuss taxes in great detail so that you have a firm understanding of your projected obligations in 2023.

5. Quarterly Update with Andrew Opdyke

Andrew is on our show often because he has invaluable information that can help you secure your retirement. He will be with us to share a quarterly update, where he will discuss:

  • The economy
  • Future of investments
  • Market in 2023
  • Inflation and recession risks

Andrew works for First Trust Economics and is an Economist. As one of the best forecasting companies in the United States, Andrew has insights into the road ahead for the economy that very few people can provide.

In fact, he is such an asset to our show and clients that we plan to have him on every quarter when possible.

He’ll be on around April 1st.

We hope that this roadmap will provide you with some insight into what we have in store for you in 2023.

Click here to watch our FREE course: 4 Steps To Secure Your Retirement.

January 23, 2023 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 January 23, 2023 

CLICK HERE TO WATCH THE UPDATE

This Week’s Podcast – Secure Act 2.0 – How Your Retirement Plan is Affected

Are you curious about how your retirement plan is affected by the Secure Act 2.0? The Secure Act 2.0 was just passed at the end of the calendar year 2022 with some major updates on it.

The Secure Act 2.0 has changed things around when to take your Required Minimum Distributions from now moving forward.

CLICK HERE TO LISTEN TO THE PODCAST

 

CLICK HERE TO WATCH ON YOUTUBE

This Week’s Blog – Secure Act 2.0 – How Your Retirement Plan is Affected

The Secure Act 2.0 impacts your retirement planning, and it has some major updates to it, including required minimum distributions (RMDs). Since the Act was just passed at the end of 2022 and is now in effect, it’s important that we discuss these key changes with you.

CLICK HERE TO READ THE BLOG

**Special Online Presentation explaining Structure Notes:

You are invited to a Zoom meeting. 

When: Jan 30, 2023, 12:00 PM Eastern Time

Register in advance for this meeting:

CLICK HERE TO REGISTER

After registering, you will receive a confirmation email containing information about joining the meeting.

Secure Act 2.0 – How Your Retirement Plan is Affected

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The Secure Act 2.0 impacts your retirement planning, and it has some major updates to it, including required minimum distributions (RMDs). Since the Act was just passed at the end of 2022 and is now in effect, it’s important that we discuss these key changes with you.

Secure Act 2.0 and Changes to Your Required Minimum Distribution

When you funnel money into your traditional IRA, 401(k), 403(b) or 457, you defer your taxes and make an “agreement” with the IRS. The agreement is sort of a handshake-type deal that allows you to defer your taxes on the basis that you will, at a certain age, be required to take a certain percentage out of your tax-deferred account, called an RMD.

The IRS wants you to begin paying taxes on the funds that you deferred, and you will only pay money when the money has been distributed to you.

However, it’s important to note that:

  • You’re not required to spend the money
  • You can reinvest the money once you have paid taxes on it

We’re going to review the changes in the age that you need to start taking these distributions. The IRS has made this a bit complicated with the rules and regulations in place, but we’re going to make it as simple as possible for you.

Note: None of this is for your Roth 401(k) or IRA, which are not tax-deferred. Instead, these changes are only for accounts that you have where you’ve been able to defer your taxes.

Changes Today vs. Before the Secure Act 2.0

Before the current changes, the age that you were required to take your RMD was 70 ½. Why the half is included, we don’t know, but in the year that you turn 70 ½, you needed to take these RMDs from your tax-deferred accounts.

Every year forward, you would need to take a distribution from these accounts.

However, as of December 29, 2022, the age for RMDs has changed thanks to the Secure Act 2.0. The new rules for RMDs are:

  • Born in 1950 or earlier, you should have already been taking your RMDs and nothing has changed for you.
  • Reached age 72 in 2022. You should have taken your RMD or had the option to defer it until April 1, 2023. (More on this below).
  • Born 1951 – 1959, you need to begin taking your RMDs at the year you reach age 73.
  • Born 1959 and after, you need to begin taking your RMDs at age 75.

Deferring RMDs Using the Required Beginning Date

The IRS allows you to use your required beginning date to your advantage. According to current IRS rules, you can do the following just one:

  • Start taking your RMDs when you hit the specified age
  • Begin taking your RMDs on April 1 of the following year

For example, let’s assume that you turned 72 in 2022. In this case, you could have:

  • Taken your RMD before December 31, 2022
  • Taken your first RMD on April 1, 2023

If you defer the payment, you will not have to pay taxes on these funds for 2022. However, in 2023, if you deferred the payment, you will be taking your:

  • 2022 payment
  • 2023 payment

In 2023, you would have two distributions, which you’ll need to pay taxes on. Most people who have high incomes and are working in 2022 would want to consider deferring payment so that they don’t hit a higher tax bracket and have to pay a larger tax percentage.

Otherwise, it often doesn’t make sense to defer your first RMD payment.

With all of this said, you can only defer your first payment and will be required to take an RMD for every subsequent year that passes.

Examples of RMDs After the Secure Act 2.0

Jane Born in 1950

Jane turned 72 in 2022, meaning that she is required to take an RMD in 2022 or on April 1, 2023. If Jane does defer until April 1, she will need to take another RMD by December 31, 2023.

Tom Born in 1951

Tom will need to start taking his RMDs for 2024 when he turns 73. He can also defer this RMD until April 1, 2025.

Sandy Born in 1960

Sandy is 63 right now in 2023, and she is not close to the RMD age yet. However, she is under the Secure Act 2.0 and will need to take her RMD in 2035 when she hits 75. She can also defer her first RMD until April 1, 2036.

Note: You need to take your RMD no matter the time of year you were born. If you were born on December 30, you still need to take your distribution.

What Happens If You Miss Your RMD for the Year?

The IRS says that if you miss your RMD, there can be a penalty. We’ve seen people take their RMD late and make their tax payments, waiving this penalty in the past. However, you never know if the IRS will become less lenient and stop waiving these penalties.

If you turn 72 in 2022 and don’t take your RMD until after April 1, you need to:

  • Speak to us
  • Speak to an accountant

You can’t run from the IRS, so it’s better to rectify the matter now if you missed your RMD.

Secure Act 2.0 Only Matters If You’re Not in Your RMD

If you don’t fall within the new age brackets and are already taking your RMDs, the new Secure Act will not impact you at all.

RMD Logistics and Taking Your RMD

RMDs are based on your 1231 account values, and this figure is reported to the IRS. Instead of working through complicated calculations, call your advisor or the institution that is holding your money and ask them.

They will have the calculation done for you and be able to tell you how much you’re required to take out of your account(s).

In terms of how to take out your money, some clients will:

  • Take their RMD and then divide it by 12 to have a monthly payment
  • Withhold federal and state taxes
  • Take a lump sum, quarterly distribution, bi-annual distribution, etc.

You’ll need to sit down and determine the best way to take your distribution for you.

If you have any confusion about the Secure Act 2.0, we ask that you schedule a call with us, and we’ll be more than happy to answer any of the questions that you have.

Want a little more guidance on ways to secure your retirement?

Click here to view books that we’ve written on taking control of your retirement and how to secure it.

January 17, 2023 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 January 17, 2023

CLICK HERE TO WATCH THE UPDATE

This Weeks Podcast – Navigating The Decision to Retire Now or Work Longer

Are you torn between retiring now or continuing to work? Working longer or retiring now isn’t just about money; there are many elements you should be thinking about.

Many factors might lead you to retire early or want to continue working even after you’ve reached retirement age. What, then, are these elements you should consider when navigating that decision?

CLICK HERE TO LISTEN TO THE PODCAST

 

CLICK HERE TO WATCH ON YOUTUBE

This Weeks Blog – Navigating The Decision to Retire Now or Work Longer

Are you thinking about retirement and your goals, but you’re stuck on the decision to retire now or work longer? Many people are in the same situation as you. Understanding the process of retiring now or waiting is something that you need to take seriously.

We take our clients through this very process during their retirement planning so that they know when retirement is right for them.

CLICK HERE TO READ THE BLOG

Navigating The Decision to Retire Now or Work Longer

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Are you thinking about retirement and your goals, but you’re stuck on the decision to retire now or work longer? Many people are in the same situation as you. Understanding the process of retiring now or waiting is something that you need to take seriously.

We take our clients through this very process during their retirement planning so that they know when retirement is right for them.

Our Process of Helping Clients Understand Decision to Retire Now or Work Longer

Financial readiness, such as your ability to retire now, is something that you need to understand first. Financial readiness entails understanding how much you’ve accumulated up to this point in retirement, such as your:

  • 401(K)
  • IRA
  • Savings
  • Taxable accounts

Are these accounts enough to help pay for your lifestyle for the next 20 – 30 years? Of course, this figure will be very different from one person to the next because everyone’s spending is very different.

Understanding Your Retirement Budget

Your retirement budget is something that you must be very cautious about. For example, it’s difficult to save up $1 million, but it’s very easy to spend it if you have uncontrolled spending. You want to consider your:

Needs

  • Utility bills
  • Car payments
  • Mortgage
  • Food

Wants

  • Traveling
  • Buying a second home

Legacy

  • Gifting 
  • Leaving money to grandkids
  • Paying for your grandkid’s college

Learning your needs, wants and legacy will help you understand whether you’ve saved enough money for retirement. You may be able to enter into semi-retirement or full retirement based on these figures, but you also need to think about your health.

Health in Retirement

Health is something that is a pure luxury in life. A good example of this is one of our clients who was 61 with severe anxiety, stress and heart issues. The client wanted to know if he had the option to retire, and he certainly did have this option based on his savings for retirement throughout the years.

It was very beneficial for him to decide to retire now to alleviate the anxiety and stress he was feeling.

After weighing all of the pros and cons, he retired and still loves it. 

However, it’s important to remember that you can also choose to:

  1. Retire fully
  2. Leave the stressful job for a part-time one

We have many clients come to us who are still very healthy and love their jobs. Often, people come to us at 70 and are still in great health and want to stay in their careers. You may be one of these individuals, and you can still choose to continue with your job or go part-time.

In these cases, where the person is in great health and loves working, we take it one year at a time to revisit this question.

Evaluating Personal Goals and Interests

Reaching retirement is the main goal people have, but they never actually know what they want to do when they’ve “made it.” We encourage you to determine what you want to do in retirement so that you can plan out what finances you need to meet to reach these goals.

If you can retire and want to, what will you do next? Sometimes, people find that retirement is too boring for them and that they want to return to work. Returning to work isn’t an issue, but if you have plans to reach for retirement and have a better idea of your goals, it can help provide you with clarity while working towards retirement.

Age

Age often plays a role in people’s retirement because it will dictate different benefits for you. The following are a few major points that we would like to mention, but this list is not exhaustive by any means.

  • 59.5 is when you can take money from an IRA without a 10% penalty.
  • 62 is when you can take Social Security at a reduced rate.
  • 65 is when you get Medicare and healthcare coverage.
  • 66 – 67 (depending on when you were born), or Full retirement age (FRA), is when you can receive the full amount from your Social Security.
  • 70 is when you can get the maximum from Social Security.
  • 72 (73 soon) is when you need to take required minimum distributions from your IRA.

If you want to retire before 65, you will have to obtain your own health insurance, which can be thousands of dollars a month if you have a spouse.

Family Dynamics

What are your family dynamics? If you’re the sole person earning an income, retiring may not be possible for you yet. However, if you retire and your spouse is still working, you may have enough money to retire while your spouse is working.

If you have kids or elders who are dependent on you, then you will need to take this into account when thinking about retirement.

It’s a fine balance when considering your obligations to family and learning to retire.

Health Insurance and Costs

Healthcare is expensive, and it’s something that everyone must consider when trying to decide when to retire. You likely work for a company that subsidizes your healthcare benefits, and most companies will stop these benefits when you retire.

You have a few options here:

  • COBRA, or the option to pay for healthcare benefits that you received from your employer without the subsidies involved.
  • Health saving accounts, which will help bridge you to 65 when you’re able to get Medicare.

If you retire at 62, there will be a 3-year period where you need to cover healthcare costs on your own.

Long-term care is something to consider, too.

There are a lot of “what-ifs” that you need to consider, such as providing for long-term care. Insurance is available here to cover these costs.

A few what-ifs are:

  • Do you need to continue with life insurance?
  • Do you need to pay for long-term care?
  • Do you need to have part-time, in-house care?

Transferring the risk to insurance companies is something that is possible. You can also reallocate some of the funds that you’ve saved to put them into long-term care needs.

We covered a lot of topics that you need to consider, but there is also more to consider. If you begin going through these points, it will help you better prepare for retirement. You can schedule a complimentary call with us by clicking here.

However, we also have a lot of great, free courses that you can use to better understand your retirement options.

Start with our 4 Steps To Secure Your Retirement Video Course or 3 Keys to Secure Your Retirement Master Class. 

January 9, 2023 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 January 9, 2023 

CLICK HERE TO WATCH THE UPDATE

This Weeks Podcast – 10 Tax Tips For The Beginning 2023

Do you want to keep your tax planning smooth as you set goals for this year? As you think about getting ready for the tax season and setting goals for 2023, we know you want to make your life a bit simpler.

We discuss things like tax-free sources of income, Roth conversions, tax withholding, Required Minimum Distributions, and much more.

CLICK HERE TO LISTEN TO THE PODCAST

 

CLICK HERE TO WATCH ON YOUTUBE

This Weeks Blog – 10 Tax Tips For The Beginning 2023

With 2023 here, one thing that you want to consider when retirement planning is taxes. You never want to spend more money on taxes than necessary, and that’s why we’re starting this year off by walking you through tax tips.

CLICK HERE TO READ THE BLOG

10 Tax Tips for The Beginning of 2023

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With 2023 here, one thing that you want to consider when retirement planning is taxes. You never want to spend more money on taxes than necessary, and that’s why we’re starting this year off by walking you through tax tips. 

10 Tax Tips to Start 2023 Off Great

1. Take Advantage of Tax-free Income

Tax-free income is ideal, and you likely have:

You may have to pay taxes on all of these sources of income. However, you may have tax-free income that you can begin to take:

  • Roth IRA distribution (not the ideal source of income to start off retirement)
  • Savings 

Using savings for your source of income this year can help you with Roth conversions, avoiding capital gains or Social Security payments, too.

If you consider where your income is coming from, it will allow you to at least leverage tax-free income to your advantage this coming year.

2. Consider Traditional to Roth IRA Conversions

Converting a traditional IRA account to a Roth account may be in your best interest. First, you can allow your money to grow tax-free. Second, if someone inherits these accounts, they benefit from the tax-free account, too.

You will need to pay taxes during the conversion, and this hits on point 1, too.

If you can use tax-free income during the year of your conversion, you may be able to stay in a lower tax bracket and save money on taxes.

3. Review Your Tax Withholding

If you’re early in retirement, you might find yourself:

  • Under-withheld
  • Overpaid 

In both cases, it’s better to be right on the mark with your taxes. If you overpay, there’s no penalty, but you also can’t grow this money if it’s in the government’s hands. We can review these withholdings with you to ensure that you’re not paying too much or too little to the government.

4. Track Medical Expense Deductions

Medical expenses may or may not be deductible, but you need to have these expenses outlined in either case. You can deduct some of these expenses, and your accountant will need this information to know if itemizing and medical expenses can reduce your tax burden.

5. Take Advantage of Charitable Contribution Deductions

If you don’t itemize your taxes, you may still be able to leverage charitable contributions. You may be able to use:

  • Qualified charitable distributions, which will take money from your IRA directly and gives it to charity without the money ever hitting your bank account.
  • Donor-advised funds. You can stack your contributions over a multi-year period into a single year to reduce your taxes if you use one of these funds.

Anyone who is charity inclined can take advantage of their charitable contributions to reduce their taxes.

6. Don’t Forget About Quarterly Payments

Quarterly payments are foreign to a lot of people who are just transitioning to retirement. You may have gains throughout the year that are realized, and the government can assess a penalty because they expect to be paid on this gain as it happens.

For example, if you sell a stock or a house, you may need to make a quarterly payment.

Sitting down with your accountant or tax advisor can help you better understand if you need to make quarterly payments or not.

7. Don’t Forget About State Taxes

State taxes must be considered, too. It’s easy to focus on your federal taxes and forget that the state wants their money, too. If you do live in a state that collects income tax, keep this in the back of your mind throughout the year.

8. Consider Part-time Work

When you’re planning for retirement, you may or may not consider part-time work. A lot of our clients become consultants and others will take on a part-time job to stay busy, cover medical insurance or just generate some additional income.

Working part-time may also open the doors for other things, such as:

  • Eligibility to contribute to retirement plans
  • Taking advantage of benefits
  • Traveling more during retirement

9. Don’t Forget About Required Minimum Distributions

Folks who are 72 or older will need to take their required minimum distributions (RMDs). You can take a monthly payment or a full payment upfront, too. In all cases, you need to make sure that you’re meeting the RMD thresholds every year.

If you’re just turning 72, we highly recommend giving us a call at (919) 787-8866 to discuss RMDs and to better understand how much you need to take out of these accounts each year.

10. Keep Track of Your Tax Documents

You’ll begin receiving mail in February that you need to compile together and give to your accountant. If you don’t keep track of these documents, you’ll need to scour for them rapidly, which is never fun.

A few of the documents that you’ll receive include:

  • 1099s from investment accounts
  • 1099s from Social Security
  • W-2s

Organizing all of these documents is a great way to start the year, whether you’re working with a CPA or doing taxes yourself. It’s good practice to have a system in place to manage all of your taxes, receipts and similar documents throughout the year.

Being fully prepared when going to your CPA will make taxes a lot less stressful in 2023.

We hope that these tax tips will help you go into the year with confidence, knowing that you have everything in order to meet your tax obligations but never pay more than necessary.

If you have any questions, please feel free to schedule a call with us today.

Retirement Planning Considerations to Begin in 2023

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The new year is the perfect time to set your retirement planning goals. If you are nearing retirement or just entered it, there are a lot of considerations going into 2023 that you need to inform yourself about.

10 Retirement Planning Considerations to Start 2023 Off Right

1. Review Your Financial Goals

Your financial goals may change from year to year, or they may stay the same. In either case, it never hurts to review your financial goals and touch base with your financial advisor. In our practice, we like to meet with our clients in the first part of the year to discuss their finances.

A few things to consider here are:

  • How did everything go with your cash flow?
  • Do you need to make any cash flow adjustments?
  • Do you have any big projects to reconsider this year, such as a major vacation or kitchen remodel? Major items can include a new car or any major expense that you foresee this coming year.
  • Are you entering retirement this year and losing some income?
  • Are you starting to transition into consulting or entering a higher-paying position?

It’s important to go over all of these points with your advisor as soon as possible to ensure that changes are reflected in your retirement plan.

2. Assess Your Current Financial Situation

What is your current financial situation? This includes your:

  • IRA
  • 401(k)
  • Cash in the bank
  • House
  • Investments

You need to be aware of what these accounts are and what your overall net worth is at the start of the year. Additionally, you’ll need to tally up all of your debts and financial obligations that you may have.

If you assess your current situation, you can then plan for the future.

3. Tweak Your Spending Plan

Everyone should have a spending plan in place. You’ll need to tweak this plan at the start of the year, but to tweak it properly, you need to know what you’re paying each month. Many tools can help you track your spending, such as Mint.

You can even determine your expenditures by assigning a credit card to yourself and your spouse.

At the end of the month, you can tally up the cards and anything you can’t charge, such as a mortgage payment, to have a better overall idea of how much you’re spending each month.

Some clients will go as far as itemizing their expenses so that they know exactly where their money is going each month. If you can confidently meet these expenses without worry, you may not need to go to this length of expense categorization.

4. Review Your Insurance Coverage

Everyone seems to set and forget their insurance. However, every year or two is a good time to sit down and review your insurance. You should look at your:

  • Auto insurance
  • Homeowner’s insurance
  • Life insurance
  • Liability insurance
  • Long-term care insurance

You just want to be sure that you’re getting as much as you can for your premiums. Make sure to ensure that you have enough coverage for your auto, car and other items. If the insurance is no longer meeting your needs, you may need to change insurers or plans.

5. Consider Retirement Savings

Retirement savings is also good to review, even if you’re retired and not actively saving right now. Anyone who has any sort of retirement income can start to save more for their retirement.

You can be retired and still contribute to a 401(K) or IRA.

Anyone close to retirement may want to consider the “catch-up” contributions that they can make to their retirement accounts. For example, if you’re 50 or over, you can put more into your plans in 2023.

You might also want to investigate your retirement savings to convert from a traditional 401(k) or IRA into a Roth account for tax-free growth.

6. Create a Debt Repayment Plan

Debt is an expense, and it’s something that can cost you a lot of money over time. You may have credit card debt with 15% interest that costs you money every month or a car payment.

How do you plan to get out of this debt?

Many people want to retire without:

  • Credit card payments
  • Car payments
  • Mortgage payments

Develop a plan, tweak your budget, and start paying off your debt. The general rule of thumb is to pay off debts with the highest interest first, such as your high-interest rate credit cards. You may even want to consolidate debt to lower interest rates.

7. Review Your Investment Portfolio 

Reassessing your view of portfolio risk is something you need to consider often. We do this automatically for our clients because it allows us to safeguard their investments. For example, in 2022, we saw that the bond market wasn’t performing well and started seeking bond alternatives.

You need to review your portfolio for these types of discrepancies.

Annual investment portfolio reviews are necessary because risk exposure is different for everyone. You may be fine losing 25% of your retirement, but many people will want to have a much lower risk. 

8. Review Your Estate Plan

It’s easy to get caught up in the hustle and bustle of life. When everything is going well and you’re focused on meeting your retirement goals, it’s all too easy to forget about your estate plan.

However, you should have a:

  • Will/trust
  • Living will
  • Power of attorney

You should have these documents in 2023 because they will make it much easier for your family when you pass on or if you’re incapacitated.

9. Review Your Credit Report

Even if you don’t own a credit card or use one any longer, it’s important to do a quick review of your credit report. A lot of people are shocked to find that they’re victims of identity theft and fraud.

A quick credit check will allow you to find discrepancies in your report and take action to rectify them.

10. Take Advantage of Tax Saving Opportunities

Can you be more efficient with your taxes? If you take a proactive approach to your taxes, you’ll have a lower tax bill at the end of the year. You can take advantage of:

  • Charitable contributions
  • Retirement plans

Working with a tax planner can help you devise a solid tax plan going into 2023. If you wait too long to focus on tax planning, it will be too late to put some of the methods of tax savings in place.

If you want to secure your retirement or have questions about things that you should be doing in 2023, feel free to schedule a free call with us today.

January 3, 2023 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 January 3, 2023 

CLICK HERE TO WATCH THE UPDATE

This Weeks Podcast – Retirement Planning Considerations to Begin in 2023

Welcome to our very first episode of the year! Regardless of what the stock market will look like in 2023, you should consider some things in your retirement plan to still be in a good place.

It would be good to begin the year at the right place financially and in your retirement planning strategy. You also want to understand where you stand, whether you’re already in retirement or getting closer to retirement.

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This Weeks Blog – Retirement Planning Considerations to Begin in 2023

We list ten items we think you should be considering, reviewing, and taking a look at as you set your 2023 goals. Learn why assessing your current financial situation will be your first step toward setting better goals for 2023.  

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December 27, 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 December 27, 2022 

CLICK HERE TO WATCH THE UPDATE

This Weeks Podcast – Looking Back – Taxes – Retirement Planning – Annuities

In this episode of the Secure Your Retirement podcast, we will cover three main topics we’ve covered throughout the year. We discuss the episodes focusing on tax planning, retirement planning, and annuities. Listen in to learn why you should ensure your financial advisor and CPA are connected and working together as a team.

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This Weeks Blog – Looking Back – Taxes – Retirement Planning – Annuities

In our last podcast of 2022, we wanted to look back at the past year and help you find some of the great resources that we provided. We’re going to use this post to wrap up the year and help recap all the great topics that we’ve covered and what you need to know going into 2023.

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Looking Back – Taxes – Retirement Planning – Annuities

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In our last podcast of 2022, we wanted to look back at the past year and help you find some of the great resources that we provided. We’re going to use this post to wrap up the year and help recap all the great topics that we’ve covered and what you need to know going into 2023.

What are the Best Resources for Taxes?

We’ve done a lot of podcasts and we have a full list of them here for you. However, a few of the podcasts that we would like to direct your attention to are:

  • Episode 185 – An interview with Steven Jarvis, CPA about the end-of-year tax strategies for 2022. Steven’s concepts are all about all-year tax planning, what to plan for the end of the year, RMDs, Roth conversions, QCDs and so much more. These strategies apply year-to-year with just a few number changes,
  • Episode 163 – Another one with Steven Jarvis about mid-year tax strategies that you can deploy. The concepts are very similar to episode 185, but one thing we do cover in greater detail is Roth conversions.
  • Episode 184 – Tax planning should be a part of your retirement plan. In this episode, we tie together retirement and tax planning. We discuss Social Security, taxes, retirement accounts and the benefit of Roth conversions.
  • Episode 158 – In this episode, we discuss tax planning versus tax preparation. We use this episode to discuss the key differences between planning and preparation, reducing taxes on social security and more.
  • Episode 161 – An episode that revolves around RMDs and QCDs. This is an episode that we recommend anyone 70 ½ or 72 really take a look at. You need to understand the requirements and rules of RMDs and QCDs to avoid potential penalties. 

For taxes, these are the episodes that we recommend that you listen to for a better understanding of taxation, requirements and maybe even ways that you can save money in 2023.

However, we also talked a lot about retirement planning this year, and it’s something that we also wanted to provide a guide on finding for you.

What are the Best Resources for Retirement Planning?

Planning for retirement is something people need to begin doing much earlier than they realize. However, the following episodes are ones that we believe are powerful and filled with a lot of great information:

  • Episode 182 – An episode titled “3 Questions to Ask Yourself About Retirement.” In this episode, we cover “what do we want to do in retirement?”, “do you need professional help with retirement?” and much more.
  • Episode 180 – Inflation and the federal reserve are two things that are nearly impossible to avoid in the news, online and at the store. In this episode, we answer questions about inflation, what the federal reserve is doing and how to navigate inflation. We talk about active management and how to navigate these situations before and during retirement.
  • Episode 177 – A major topic of discussion that is growing is the topic of IRMAA surcharges and how they impact your Medicare premiums. We explain how IRMAA works, the different tiers to be concerned about and more about these surcharges. We will be updating this in 2023 and will have a great insert for anyone who wants one (just call us for more information).
  • Episode 157 – Retirement bucket strategies are something of major importance to us because they help protect your retirement from massive fluctuations.  We discuss multiple buckets that make investing simple and include your cash bucket, income and safety bucket and growth bucket. Using these buckets, it’s possible to secure your retirement with less risk.
  • Episode 146 – An episode that talks about a risk-adjusted portfolio. We discussed your view of how much money you need to lose to lose sleep. We go through asset allocation, individual risk adjustment, safe growth and more in this episode.

When it comes to retirement planning, we truly believe that these are the best podcasts that we’ve had in 2022. However, we do have one more section of resources that we would like to cover:

Annuity Resources

Annuities are something that we talked a lot about this year, and we want to point you to some of our best episodes on this topic:

  • Episode 153 – Bonds and bond alternatives are something that we’ve seen change a lot in recent years. The old 60% equity and 40% bonds portfolio worked for decades. However, bonds have changed in recent years thanks to inflation and rising interest rates. Bonds have not allowed us to protect portfolios in 2022, so this episode dives into many bond alternatives that work well to offset the risk of the equity market.
  • Episode 187 – An episode where we discuss fixed annuities and why they’re at their best rate in 15+ years. We discuss why inflation works to boost fixed annuities and how the right annuity can provide a lifetime of income to you that is very similar to a pension.

We’re excited for you to review these resources and feel confident about your retirement going into 2023. Of course, we have a lot of great episodes planned for this coming year that we know you’ll absolutely love.

If you do have any questions about retirement planning or any of the topics above, we would be more than happy to talk to you about them.Click here to schedule a call with us.

December 19, 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 December 19, 2022 

CLICK HERE TO WATCH THE UPDATE

This Weeks Podcast – MAGI Versus AGI – What is the Difference?

Do you know the difference between Adjusted Gross Income and Modified Adjusted Gross Income? Are you aware of how they affect your tax bracket and Medicare charges?

Understanding the difference between AGI and MAGI and having conversations about them with your financial advisor will help you manage your taxes and IRMAA efficiently.

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This Weeks Blog -MAGI Versus AGI – What is the Difference?

Adjusted gross income (AGI) and modified adjusted gross income (MAGI) are two important parts of a tax return, but many people don’t understand the key differences between the two. Our recent podcast covers the difference between MAGI and AGI because it’s crucial to IRMAA.

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MAGI Versus AGI – What is the Difference?

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Adjusted gross income (AGI) and modified adjusted gross income (MAGI) are two important parts of a tax return, but many people don’t understand the key differences between the two. Our recent podcast covers the difference between MAGI and AGI because it’s crucial to IRMAA.

IRMAA, if you missed it, is a surcharge for your Medicare and something that is tied to your MAGI.

A higher income means a higher surcharge, and if you’ve worked hard to secure your retirement, paying more than you need to for your Part B and D benefits may not be in your budget.

Let’s assume that when you look at your 2023 benefits, the government will look at your 2021 income. Part B premiums would be $164 in 2023 if you did not exceed $97,000 single or $194,000 filing jointly in 2021.

Premiums can go up to:

  • $395 for Part B per person
  • $76 for Part D per person

Of course, you’ll need to make a significant amount of money to reach the figures above. These figures are the maximum premium you’ll have to pay per person, but there are tiered premiums for each income bracket over a certain MAGI.

Want to learn more about IRMAA surcharges? Read our blog post on this very topic. 

What is an AGI?

Adjusted gross income starts with your gross income from all sources:

  • Income
  • Rentals
  • Part of your Social Security
  • 401(k) distributions
  • Pensions 

When you add all these figures up, you’ll have your gross income. Your adjusted gross income will take this sum and then adjust it based on numerous adjustments.

So, let’s assume that you have $100,000 in gross income. You would then start deducting adjustments, such as:

  • Charitable contributions
  • Education expenses
  • HSA contributions
  • Self-employed health insurance
  • Alimony
  • Tuition fees

All these adjustments will be calculated and deducted from the $100,000. Let’s assume that you have $20,000 in adjustments. Then we would simply perform the following calculation: $100,000 – $20,000 = $80,000.

Your AGI would be $80,000, but we need to then calculate your modified AGI to learn what you’ll pay in premiums for Medicare.

AGI dictates what tax bracket you are in.

What is MAGI?

MAGI adds certain things back to your AGI. For example, let’s assume that your AGI is $80,000. You’ll then add things back, such as:

  • Student loan interest
  • Educator expenses
  • Passive losses or income
  • IRA contributions
  • Foreign earned income exclusions
  • Loss of rental income

So, you may add these figures up and come to $10,000. Based on this example, your MAGI would then be $80,000 + $10,000 = $90,000.

However, if you have a basic and simple retirement, it’s not uncommon for your AGI and MAGI to be the same. 

Planning is very important to help keep these IRMMA surcharges down.

Let’s look at an example:

  • Single person
  • You can earn up to $97,000 and pay $164.90 for Part B premiums
  • You earn $97,001, and now you’ll pay a surcharge of $65 for Part B and $12.20 for Part D per month

Planning ahead of time to stay below the $97,001 threshold will save you $77.20 a month as a single person. Couples have a threshold rise. For example, you can earn $194,000 as a couple and not pay any additional premiums.

The next premium tier for couples is $246,000. If you hit this level, your Part B surcharge rises from $64 to $164 on Part B, on top of your normal premiums. 

Of course, there are some exceptions and ways to find a reprieve on these expenses, but most people will need to engage in looking forward tax planning to avoid these IRMAA surcharges. You can sit down with your tax planner or financial planner and really hammer out these numbers to see if you can reduce your Medicare surcharges.

However, these surcharges were based on your MAGI two years ago, so it’s not something you can go back and correct for 2023 at this point in time.

Managing your money properly to keep your AGI and MAGI low is crucial to keeping your costs low. We will be covering 2023 IRMAA figures shortly after the New Year to provide some insight into what costs you can expect to incur in the coming year.Click here for access to our free course: 3 Keys to Secure Your Retirement Master Class.

December 12, 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 December 12, 2022 

CLICK HERE TO WATCH THE UPDATE

This Weeks Podcast – Andrew Opedyke – The Economic Update For 2022

Looking for an update for what’s been happening during 2022 and what’s going to happen in 2023? How about inflation and recession? Will we see a recession in 2023? What has the Federal government been doing? When interest rates rise, does the economy absorb it?

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This Weeks Blog -How is the Economy Doing Right Now?

Going into December of 2022, we can say that the year has been boring, to say the least. Inflation is high, the stock market has been on a rollercoaster ride, and portfolios aren’t experiencing the massive gains that they have had in the past decade.

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How is the Economy Doing Right Now?

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Going into December of 2022, we can say that the year has been boring, to say the least. Inflation is high, the stock market has been on a rollercoaster ride, and portfolios aren’t experiencing the massive gains that they have had in the past decade.

Starting the year, the Fed brushed inflation aside and said that they weren’t going to do a lot to tame it. However, they then changed their course, as Andrew Opdyke explained to us in our most recent podcast.

Geopolitical events are the reason for many of the inflation issues that are ongoing.

Ukraine and Russia’s war has led to higher gas prices, and these higher prices have led to an increase in transportation costs, causing food prices to soar. The Fed has raised interest rates numerous times this year to try and cull these rising prices.

Fuel is crucial to:

  • Transportation
  • Production
  • Etc.

Add into this economic update a midterm election, and there’s a lot going on this year, which we want to cover in this economic update.

Fed Will Continue to Drive the Market in 2023

The Federal Reserve is going to be the major driver of the economy in 2023 and 2024, with economists watching what the Fed is going to do closely. A recent CPI report did show inflation easing slightly, and this is a good sign, although Andrew explains one data point isn’t enough to be confident about inflation dropping.

Some of the key points in the report were medical-related, but we do not see prices drop for consumers.

Instead, calculations were adjusted that showed prices falling for medical items, although it doesn’t do much for the average person. Andrew suggests seeing what happens in the next few months and likes to strip away food and fuel costs.

Housing will be a major factor in 2023.

Between 2020 and 2021, housing remained flat, but as we saw in 2022, prices skyrocketed and seemed to have plateaued. Andrew suggests that inflation going from 8% – 5% will be easy, but going from 5% to 2% inflation will likely take 18 – 24 months.

The good news is that the Fed can slow rate hikes down if inflation is slowing down.

Will We See a Recession?

A recession is one of the leading concerns for consumers, and many questions if we’ve already reached a recession. In the first half of 2022, we did have two quarters in a row of slowing, which is the textbook definition of a recession.

However, there is only one group in the world that can officially call it a recession, and that is the National Bureau of Economic Research (NBER). 

The NBER looks at multiple factors when pinpointing a recession, including:

  • Employment
  • Consumer spending
  • Income
  • Production

When you look at the numbers of employment and production increasing at the beginning of the year and strong spending, it’s unlikely that we did hit a recession in 2022.

Raising interest rates is a tool for the Fed to use to fend off a recession, but it takes a long time to see the results of these changes.

Higher interest rates can slow investment, and these slowdowns can have a major impact on the economy. Andrew believes that the Fed is increasing rates at a modest pace and in the middle of 2023, he expected:

  • Unemployment rates to rise, but not like in 2008 or 2009
  • Growth slow for 2 – 3 quarters at a slow rate

Andrew suggests that the slowdown will be like 2000 – 2001 and then back to sustained growth. However, if geopolitical shifts occur, such as China invading Taiwan, then there’s a risk of a longer, more intense recession.

Layoffs Facing Major Tech Companies

Meta has announced massive layoffs in recent days and a few tech companies are also laying off workers. We asked Andrew about these layoffs and if he thinks that they were a result of over-hiring in 2020 – 2021 or if they’re something to be concerned about.

Andrew states:

  • People being home during the pandemic led to higher engagement with Meta, and now that people are engaging less, this is leading to layoffs.
  • Amazon hired to meet the delivery needs of consumers, but with people going back to stores, they need to lay off people.

A slowdown in some areas is leading to an increase in other areas. Companies that have had a difficult time hiring are likely to have an uptick in employees, so the layoffs may not mean as much as people think in terms of an economic slowdown.

Risk of China and Taiwan War

Ukraine and Russia certainly impacted economic recovery and have led to the rise in fuel and food prices, but they make up a very small number of imports and exports. A China and Taiwan war would have a much bigger impact on the global economy.

Taiwan is a major manufacturing hub and a war with Taiwan would lead to a lot of economic turbulence.

Taiwan is relied upon for semiconductors, which are needed for electronics worldwide. Andrew expects a major response from the world’s economy if a war does occur. The world relies heavily on semiconductors, and a China/Taiwan war would have a much higher economic impact.

End of Year Best Guess: S&P 500

If you’re trying to secure your retirement and are in the middle of retirement planning, a major question for the final month of 2022 and going into 2023 is: what is expected to happen in the stock market?

We can only guess about the future of the market, but Andrew believes that we’ll see:

  • Inflation remains a major concern
  • Volatility will remain

However, when the Fed is done raising rates and can cut rates, he expects 2023 to be a wild ride.

In two years and five years, there’s a very good chance that the economy will rise and the stock market will be higher. 

With all of this in mind, 2023 will be less wild than 2022. A lot of the negativity and fear will likely ease going forward. We’re closer to inflation falling, and a lot of investments are being made to prevent negative growth in the future.

For example, over $20 billion is being invested in making semiconductors in the US, and while this takes time, it will certainly be a major economic driver in the coming years. Additionally, the investment will ease the country’s reliance on Taiwan, further reducing the risk of geopolitical issues impacting the US economy as much as it could today.If you want to discuss your retirement plan and help find a way to keep making returns, click here to schedule a call with us.