Episode #7: RMDs
Thursday, August 16 2018
“RETIRE WITH INTEGRITY” PODCAST
The Principle:
RMDs are an inevitable part of life, but what are they? Find out, and learn to properly incorporate them into your overall retirement plan.
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Honest Takes:
00:20 – Use Your RMDs To Rebalance Your Portfolio.
- Morningstar’s Christine Benz believes you can use your RMDs to rebalance your investments. She suggests pulling your RMDs from riskier parts of your portfolio where you want to make adjustments. Specifically, Benz argues the growth component of equities in your portfolio is a good place to trim. The idea she’s getting at is the importance of having a withdrawal strategy. You need to think where you’re going to withdraw from, and plan ahead. Especially as it pertains to taxes, it’s important to think how your withdrawals will affect your portfolio allocation and what you’ll be paying Uncle Sam.
4:50 – What’s The Penalty For Not Taking RMDs?
- The government requires you to start withdrawing from your qualified retirement accounts at age 70 and 1/2. These withdrawals are called Required Minimum Distributions (RMDs). The government wants to get their cut, so they will tax you if you don’t take your RMDs. The penalty for not taking your RMDs is rather stiff, so it’s important to begin planning for them ahead of time. Think through how your accounts are invested. The types of investments you own will determine how you pay taxes on your withdrawals.
6:24 – What If You Don’t Need The Income?
- If you don’t need the money, consider a Qualified Charitable Distribution (QCD). That satisfies your RMD for the year and helps you to strategize your tax structure. If you give to a charitable organization, Uncle Sam won’t tax your distribution. This enables you to save in taxes owed to the IRS.
More To Learn:
- 00:56 – Is Summer Too Soon To Plan?
- 2:50 – Volatility Is Crucial.
Today’s Truth:
Other Virtues:
The host: Brian Bowen – Contact
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Episode #6: Planning Around Tax Reform
Thursday, August 2 2018
“RETIRE WITH INTEGRITY” PODCAST
The Principle:
Tax reform will almost certainly affect your retirement. Find out how to plan accordingly around recent tax legislation out of Washington.
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Honest Takes:
00:15 – Tax Reform Takeaways: You Might Need To Adjust Your Withholdings.
- You might’ve found yourself in a new tax bracket. If so, you need to adjust the amount of your income that is being withheld by Uncle Sam for federal income tax. Especially if you’re in a lower tax bracket, this number might have also decreased.
2:05 – Tax Reform Takeaways: Invest In A Roth.
- If you don’t have a Roth investing account, it’s worth looking into opening one. A traditional IRA or 401(k) enables you to invest tax-deferred. This means any gains you incur on your initial investment will be taxed. With a Roth account, the government taxes your initial capital, but then allows you to keep all of your gains tax-free. In order to help explain this concept, think of it like a harvest. You’re given the option of paying a tax on your seed (I.e. Roth IRA) or your harvest (traditional retirement accounts). As your seed tends to multiply, it’s better to pay the tax on that initial seed. This is especially important given we don’t know whether tax rates might rise again in the future. We’re currently in a period of historically low tax rates. Roth accounts allow you to pay taxes at a fixed rate rather than a variable rate in the future. This isn’t to say traditional accounts don’t have a place in your retirement. We’re simply trying to help you plan effectively for the future.
5:00 – Tax Reform Takeaways: Your Heirs Could Foot The Bill.
- A gentleman came in to see us who had about a million dollars in a variable annuity. He’s in an incredibly high tax bracket which means his kids will probably be in a high tax bracket as well. This particular account did not come with a Step-Up in basis. (Side note: A Step-Up in basis is a tool that basically helps to minimize the tax burden on your assets as you pass them along to your heirs.) Without it, this gentleman’s heirs were about to be left with an immense tax bill from the government. It’s important to know how your investments are taxed.
Today’s Truth:
Other Virtues:
The host: Brian Bowen – Contact
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Episode #5: Estate Planning Basics
Thursday, July 26 2018
“RETIRE WITH INTEGRITY” PODCAST
The Principle:
Estate planning is a tricky process. Brian helps us navigate its rules and nuances while examining the social and emotional components of leaving a legacy.
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Honest Takes:
00:15 – Estate Planning Is Psychological.
- From time to time, advising sessions turn into counseling sessions. After all, if you’re a married couple, you need to think through to whom you’d like to leave your estate. That’s not necessarily a clear cut process. Perhaps your children have special needs that would require the help of a financial guardian or caretaker. Maybe your kids are downright irresponsible, or maybe you’re in a second marriage and would like to leave money to your stepchildren as well as your biological children. Your advisor can help you to logically process those decisions.
2:08 – How Are You Leaving Your Money?
- Quite simply, do you have a will or a trust in place that will determine how your assets will pass on to your heirs, beneficiaries, etc…when you die? It’s important to think through a tax efficient estate plan that will properly pass on without the government or attorneys getting involved. The last thing you want is for your estate to get caught up in probate court. Estate planning helps you to make sure everything you’ve worked for is going to go to the people you care about.
5:39 – Work With A Trusted Professional.
- Estate planning contains both a legal and financial component. Whether it’s someone local in your community or someone who works a little farther away, work with a professional you trust to do the job correctly. It’s worth the extra distance if you think the advisor in the next town over is more trustworthy. Furthermore, the nuances of leaving a legacy are tricky. It’s really a “don’t try this at home” type of task. Build a relationship with someone who will encourage you to make wise financial decisions.
More To Learn:
- 1:10 – Can Your Heirs Handle The Money?
- 3:27 – An Estate Planning Mess.
- 8:05. Power Of Attorney.
- 3:48 – Good Intentions.
Today’s Truth:
Other Virtues:
The host: Brian Bowen – Contact
Subscribe To The “Retire With Integrity” Podcast:
