The Josh Scandlen Podcast: Recent Episodes
Josh Scandlen
Helping YOU Understand Personal Finance! Let's take the complexity out of your financial planning, shall we? Ever heard of Keep It Simple, Stupid? KISS? That's what we're going to be doing here on The Josh Scandlen Podcast. Unfortunately, we'll probably tick off a lot of professionals because many of them like making the simple, complex. It helps them while confusing you. Not good. Complexity is the enemy of successful financial planning.
So, if simplifying your financial life is what you want, you've come to the right place.
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I am a fan of M1 Finance. In fact, I have my own account there where I invest in the Vanguard ETFs.
I am an affiliate too. Meaning if you open an account...I get PAID. HUGE BUCKS! So, if you are going to open an account why not do so through this link? M1Finance affiliate: https://mbsy.co/BnjJ6 In fact, if YOU set up your own account and suggest M1 to others who open an account you can also make money. How much? I really don't know. But man, oh man, if people would just use low cost providers like M1 and the many others out there instead of paying huge fees, retirement would be that much closer for them.
================================ Get the PDF version of my Tax Bomb book for free follow this link. https://mailchi.mp/7e528cd3cfb3/taxbomb
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Find the video version here. https://youtu.be/CkhbQ_cG1I0
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It breaks my heart that so many adults are convincing children that they're going to die in a climate apocalypse. It's no wonder why folks such as AOC say they're not going to bring kids into the world because of this scare-mongering. Yet, scare-mongering is all it is. It's not true. And the adults if they had any sense of dignity should be ashamed of themselves.
Unfortunately, when there is so much money at stake, shame takes a back-seat. It's all about dollars, and how some people can get more and more.
Using kids, and animals, as propaganda is certainly not new behavior to those trying to frighten people. "What about the children" is the cry that is heard time and again when one engages in a behavior someone else doesn't like. But the climate alarmists seem to have a lock on the technique. And seeing Greta Thunberg at the UN chastise us with her "How Dare You" speech saddened me deeply.
She is being used. Used as a tool by her parents. By the media. By the left. By wealthy corporate types. By Arnold Schwarzenegger, Leonard DiCaprio etc. By anyone and everyone who are trying to capitalize on the money that can be found in climate alarmism.
So, when I saw this video by Michelle Stirling, over at the Friends of Science Youtube channel, https://www.youtube.com/watch?v=P1xBFIP6ZpI&t=202s, it really spoke to me. "Don't Worry, Be Happy, Greta!" says Michelle. You're a teenager for Heaven's sake!
I've been following Friends of Science for a bit now and greatly enjoy their content and Michelle's delivery. If you're of French language she does some of the videos in French too. Pretty cool.
It was a HUGE pleasure for me to interview her today. I think you'll enjoy this discussion immensely. You'll get mad too, don't get me wrong. The greens have been taken over by fascists, no two ways around it. And when I say fascist I mean it in the true sense of the word, Big Government and Big Business colluding. I'm not sure about Big Labor, other than government unions, however being along for the ride.
It doesn't matter though. The moneyed interested are keen on making more and advocating "green" living is the way they think they can do it, all at our expense, of course.
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https://heritagewealthplanning.com/
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https://heritagewealthplanning.com/when-to-do-roth-conversions-part-1/
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https://heritagewealthplanning.com/
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https://heritagewealthplanning.com/vanguard-dividend-growth-vs-vanguard-wellington-fund-vs-sp-500/
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https://heritagewealthplanning.com/
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https://www.schwab.com/public/schwab/investing/accounts_products/investment/annuities/income_annuity/fixed_income_annuity_calculator
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Get the PDF version of my Tax Bomb book for free follow this link. https://mailchi.mp/7e528cd3cfb3/taxbomb
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https://pubs.spe.org/en/jpt/jpt-article-detail/?art=6064
https://www.forbes.com/sites/arielcohen/2018/12/21/americas-oil-and-gas-reserves-double-with-massive-new-permian-discovery/#78dcc1432c91
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https://heritagewealthplanning.com/be-careful-of-the-bond-trap/
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https://www.goodreads.com/work/quotes/251085-the-ball-and-the-cross
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://adbl.co/2MsUkPT
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
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My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
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GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
You Can RETIRE on SOCIAL SECURITY:
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The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It:
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
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https://www.marketwatch.com/story/the-future-of-retirement-isnt-doomed-but-retirees-may-still-need-some-serious-help-2019-07-23?mod=mw_theo_homepage
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://adbl.co/2MsUkPT
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
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My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
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Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
You Can RETIRE on SOCIAL SECURITY:
https://amzn.to/31xKFuN
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It:
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
PODCAST:
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Creating your own Youtube Channel? USE TUBEBUDDY!
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https://heritagewealthplanning.com/be-prepared-for-low-growth-deflation/
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://adbl.co/2MsUkPT
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Get your own Trusty Calculator:
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Want to support what I'm doing for $10 a month? Join my SubscribeStar page.
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My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
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My Amazon Product page:
https://www.amazon.com/shop/heritagewealthplanning
Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
You Can RETIRE on SOCIAL SECURITY:
https://amzn.to/31xKFuN
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It:
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
Creating your own Youtube Channel? USE TUBEBUDDY!
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https://mises.org/library/repudiating-national-debt
https://www.lewrockwell.com/2013/10/murray-n-rothbard/repudiate-the-national-debt-3/
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https://heritagewealthplanning.com/blog/
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(Best to worst)
Fixed Income
Real Estate
Stocks
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https://www.cnbc.com/2019/08/21/negative-yielding-debt-poses-major-risks-for-investors.html?__source=iosappshare%7Ccom.apple.UIKit.activity.CopyToPasteboard
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://adbl.co/2MsUkPT
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Want to support what I'm doing for $10 a month? Join my SubscribeStar page.
https://www.subscribestar.com/joshscandlen
My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
Don't forget to SUBSCRIBE by clicking here: https://www.youtube.com/channel/UCSEzy4i9xrKPoaU9z0_XbmA?sub_confirmation=1
My Amazon Product page:
https://www.amazon.com/shop/heritagewealthplanning
Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
You Can RETIRE on SOCIAL SECURITY:
https://amzn.to/31xKFuN
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It:
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
Creating your own Youtube Channel? USE TUBEBUDDY!
https://www.tubebuddy.com/HeritageWealthPlanning
LET'S SOCIALIZE!
Linkedin: https://www.linkedin.com/in/joshscandlen/
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https://www.advisorperspectives.com/articles/2019/08/19/the-u-s-treasury-bull-market-has-barely-started-1
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The Feds Track Record Is Not Enviable.
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https://www.usatoday.com/story/money/2019/08/09/social-security-wrong-estimates/1953816001/
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================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://adbl.co/2MsUkPT
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Want to support what I'm doing for $10 a month? Join my SubscribeStar page.
https://www.subscribestar.com/joshscandlen
My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
Don't forget to SUBSCRIBE by clicking here: https://www.youtube.com/channel/UCSEzy4i9xrKPoaU9z0_XbmA?sub_confirmation=1
My Amazon Product page:
https://www.amazon.com/shop/heritagewealthplanning
Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
You Can RETIRE on SOCIAL SECURITY:
https://amzn.to/31xKFuN
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It:
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
Creating your own Youtube Channel? USE TUBEBUDDY!
https://www.tubebuddy.com/HeritageWealthPlanning
LET'S SOCIALIZE!
Linkedin: https://www.linkedin.com/in/joshscandlen/
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
https://www.marketwatch.com/story/new-solutions-are-desperately-needed-to-prepare-millions-of-americans-for-retirement-2019-04-04
https://www.nirsonline.org/wp-content/uploads/2018/09/FINAL-Report-.pdf#page=9
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https://engaging-data.com/will-money-last-retire-early/#comment-13928
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60% of people age 90 and up are VERY satisfied in retirement...36% are moderately satisfied.
80-89 years are nearly the same. 70-79 are nearly the same too.
Can all these people be broke and eating catfood and STILL satisfied in retirement?
Does this make ANY sense?
Of course not!
https://content.gallup.com/origin/gallupinc/GallupSpaces/Production/Cms/POLL/kxwvltoe0keuu3bjlvn0qg.png
https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-retirement.htm
http://hrsparticipants.isr.umich.edu/sitedocs/databook/inc/pdf/HRS-Aging-in-the-21St-Century.pdf
https://www.ebri.org/docs/default-source/ebri-notes/ebri_notes_04_apr16.pdf?sfvrsn=cbcb292f_0
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https://medium.com/@opher.ganel/why-prepaying-your-mortgage-is-almost-always-a-terrible-idea-88fa87977d77
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A Youtube subscriber sent this article to me about why they went solar.
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https://amzn.to/2ZBQUQS
https://amzn.to/2HLBvUb
https://amzn.to/2MLMqBc
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Get this book...NOW! https://amzn.to/2Zf7K8N
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https://militarypay.defense.gov/Benefits/Survivor-Benefit-Program/Overview/
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://adbl.co/2MsUkPT
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Want to support what I'm doing for $10 a month? Join my SubscribeStar page.
https://www.subscribestar.com/joshscandlen
My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
Don't forget to SUBSCRIBE by clicking here: https://www.youtube.com/channel/UCSEzy4i9xrKPoaU9z0_XbmA?sub_confirmation=1
My Amazon Product page:
https://www.amazon.com/shop/heritagewealthplanning
Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
You Can RETIRE on SOCIAL SECURITY:
https://amzn.to/31xKFuN
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It:
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
Creating your own Youtube Channel? USE TUBEBUDDY!
https://www.tubebuddy.com/HeritageWealthPlanning
LET'S SOCIALIZE!
Linkedin: https://www.linkedin.com/in/joshscandlen/
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God forgives....ALL! Just gotta ask.
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The story of why I love Chimichangas!
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https://www.econlib.org/library/Enc/PublicChoice.html
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I'm a big fan of Fritz Gilbert's TheRetirementManifesto.com website. Just a TON of great information there that YOU can use to help with your own financial planning.
So, it's a true pleasure to chat with ole Fritz about his own transition to retirement in this episode. Thanks for listening!
https://www.theretirementmanifesto.com/
https://www.amazon.com/s?k=scandlen&ref=nb_sb_noss
https://adbl.co/2MsUkPT
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To see the video go here: https://youtu.be/D-9t-tNsAfM
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================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Want to support what I'm doing for $10 a month? Join my SubscribeStar page.
https://www.subscribestar.com/joshscandlen
My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
Don't forget to SUBSCRIBE by clicking here: https://www.youtube.com/channel/UCSEzy4i9xrKPoaU9z0_XbmA?sub_confirmation=1
My Amazon Product page:
https://www.amazon.com/shop/heritagewealthplanning
Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
You Can RETIRE on SOCIAL SECURITY
https://amzn.to/31xKFuN
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
LET'S SOCIALIZE!
Linkedin: https://www.linkedin.com/in/joshscandlen/
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
hmmmm...if only someone woulda said this would happen! BWHAHAHA
https://www.nytimes.com/2019/08/04/business/economy/mortgage-interest-deduction-tax.html
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Want to support what I'm doing for $10 a month? Join my SubscribeStar page.
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My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
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The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
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Strategic Money Planning: 8 Easy Ways To Put Your House In Order
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State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
You Can RETIRE on SOCIAL SECURITY
https://amzn.to/31xKFuN
GET ALL MY LATEST BLOGPOSTS:
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http://longevity.stanford.edu/2019/07/08/viability-of-the-spend-safely-in-retirement-strategy/http://longevity.stanford.edu/2019/07/08/viability-of-the-spend-safely-in-retirement-strategy/
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
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https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Want to support what I'm doing for $10 a month? Join my SubscribeStar page.
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My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
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The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
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Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
You Can RETIRE on SOCIAL SECURITY
https://amzn.to/31xKFuN
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
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heritagewealthplanning.com
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https://heritagewealthplanning.com/wellington-fund-at-the-start-of-the-great-depression/
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Want to support what I'm doing for $10 a month? Join my SubscribeStar page.
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GET MY BOOKS:
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The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
You Can RETIRE on SOCIAL SECURITY
https://amzn.to/31xKFuN
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
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https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
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https://www.advisorperspectives.com/articles/2019/08/08/small-value-stocks-are-cheap?channel=Alternative%20Investments&bt_ee=FKlSPXrTFbwzaNjm9t3LlmOZj1zAPx%2Fj0VbfzBD8XtlvMiAEnx6%2BD3y3kxbYtr1d&bt_ts=1565604074017
https://investor.vanguard.com/etf/profile/VTV
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
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https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
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My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
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The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
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Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
You Can RETIRE on SOCIAL SECURITY
https://amzn.to/31xKFuN
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
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Get it NOW!
https://amzn.to/2MVzKah
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Want to support what I'm doing for $10 a month? Join my SubscribeStar page.
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My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
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Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
You Can RETIRE on SOCIAL SECURITY
https://amzn.to/31xKFuN
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
LET'S SOCIALIZE!
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https://amzn.to/2KM6Hmy
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Want to support what I'm doing for $10 a month? Join my SubscribeStar page.
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My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
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https://www.amazon.com/shop/heritagewealthplanning
Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
You Can RETIRE on SOCIAL SECURITY
https://amzn.to/31xKFuN
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
LET'S SOCIALIZE!
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https://www.census.gov/content/dam/Census/library/working-papers/2017/demo/SEHSD-WP2017-39.pdf
https://www.ssa.gov/policy/docs/chartbooks/fast_facts/2018/fast_facts18.pdf
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Want to support what I'm doing for $10 a month? Join my SubscribeStar page.
https://www.subscribestar.com/joshscandlen
My 4th book, YOU CAN RETIRE ON SOCIAL SECURITY!, is out NOW. BUY IT HERE!!! https://amzn.to/31xKFuN
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
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My Amazon Product page:
https://www.amazon.com/shop/heritagewealthplanning
Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
You Can RETIRE on SOCIAL SECURITY
https://amzn.to/31xKFuN
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com/blog/
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
LET'S SOCIALIZE!
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https://uk.reuters.com/article/us-china-coal-climate/china-coal-mine-approvals-surge-despite-climate-pledges-idUKKCN1UW0EM
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
https://www.forbes.com/sites/leonlabrecque/2019/08/06/have-an-ira-or-401k-the-new-secure-act-will-change-your-estate-planning/#b80699456a38
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
https://reason.com/2019/08/11/illinois-is-the-canary-in-the-pension-coal-mine-says-adam-schuster/
https://www.nbcchicago.com/news/local/city-of-harvey-threatens-massive-layoff-after-judgment-479224263.html
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https://heritagewealthplanning.com/how-the-4-rule-shortchanges-retirees/
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https://www.nbcnews.com/news/world/swedes-are-switching-planes-trains-here-s-why-n1027666
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https://www.chicagotribune.com/news/breaking/ct-chicago-weekend-gun-violence-shootings-20190805-rjdbnceupnat7me4z3yjsvfe5y-story.html
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http://scottgrannis.blogspot.com/2019/06/at-least-households-are-in-good-shape.html
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Even MOORE Vindication on Alternative Energy (Pun Intended)
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https://www.theamericanconservative.com/dreher/second-thoughts-on-pot/
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http://retirementoptimizer.com/
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https://finance.yahoo.com/quote/VFINX?p=VFINX
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https://heritagewealthplanning.com/
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https://squaredawayblog.bc.edu/squared-away/husbands-ignore-future-widows-needs/
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https://taxfoundation.org/county-property-tax-paid-2019/
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================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
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Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
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My Amazon Product page:
https://www.amazon.com/shop/heritagewealthplanning
Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
LET'S SOCIALIZE!
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https://www.bloomberg.com/news/articles/2019-08-06/here-s-some-stats-for-optimists-after-the-shock-u-s-stock-slump
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Was this video worth a buck or two? Donate a cup of coffee here: https://bit.ly/2WmP7O4
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Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
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Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
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https://economics21.org/eight-revealing-numbers-social-security-2100-act
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https://www.cnbc.com/2019/08/08/retiring-overseas-how-medicare-may-or-may-not-fit-into-your-plans.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail
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https://www.msn.com/en-us/money/news/7-money-moves-everyone-must-make-after-retiring/ar-AAFq38r
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Read Wade's stuff at the following links:
https://retirementresearcher.com/
Wade's book on Reverse Mortgages: https://amzn.to/2GYfoZZ
Wade's book on Retirement Spending: https://amzn.to/2GULg1G
Stanford Center of Longevity: Spend Safely in Retirement Strategy... http://longevity.stanford.edu/2019/07/08/viability-of-the-spend-safely-in-retirement-strategy/
Optimizing Retirement Income...http://longevity.stanford.edu/2017/11/29/optimizing-retirement-income-by-integrating-retirement-plans-iras-and-home-equity-a-framework-for-evaluating-retirement-income-decisions/
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
I needed to make sure you got the gist of my discussion with Stephanie Scarborough on estate planning.
So, I'm condensing the podcast Interview I did with her a few days back.
PLEASE, for the love of all that is good in the world, LISTEN TO AT LEAST THIS ONE!
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
https://saragrillo.com/
Get this book...NOW: https://amzn.to/31piEFE
This one too! https://amzn.to/2YE1yHm
Visit...www.horsesmouth.com
Nick Murray Newsletter... https://www.nickmurraynewsletters.com/
Tax Stuff: http://www.keeblerandassociates.com/about
Estate planning book: https://amzn.to/2MPxmS7
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https://www.scarboroughlaw.com/
https://www.youtube.com/user/scarbos22
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https://spectator.us/marianne-williamson-right-antidepressants/
https://www.amazon.com/gp/offer-listing/B01K176438
https://www.amazon.com/Our-Right-Drugs-Case-Market/dp/0815603339
https://fee.org/resources/i-pencil/
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Reverse Mortgages CAN play a role in a successful retirement, even when looking at the fees that are associated with them.
I show you how in this video.
By the way, I'm interviewing Wade Pfau this week. So, if you have specific questions you want me to relay to him about reverse mortgages put them in the comments section.
Thanks!
https://www.advisorperspectives.com/articles/2019/04/15/what-the-critics-get-wrong-about-reverse-mortgages
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Retirement planning....does it getting any more exciting??? Of course not!
But here's the problem with almost ALL retirement planning I've seen, expenses are secondary, income is primary.
That is exactly the opposite of how this should be. Expenses drive EVERYTHING!
In this video, I share two EBRI reports from one of the best researchers out there, Jack Van Derhei. The reports are actually very optimistic...IF you take the time to read them.
However, these report still leave much to be desired when they simply gloss over the fundamental aspect of retirement planning, expenses.
Don't do that in your own planning. Put expenses FRONT AND CENTER.
https://www.ebri.org/docs/default-source/ebri-notes/ebri_notes_06_june-12.pdf?sfvrsn=268f292f_0
https://www.ebri.org/docs/default-source/ebri-notes/ebri_notes_06_june-14_shrtflls-hsas.pdf?sfvrsn=6b27362f_0
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https://www.ssrn.com/abstract=3361263
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https://www.barrons.com/articles/morningstar-ratings-mutual-funds-51562603104
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================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
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Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
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The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
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State by State Tax Guide For Retirees:
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http://heritagewealthplanning.com/category/podcasts/
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================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
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Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
Don't forget to SUBSCRIBE by clicking here: https://www.youtube.com/channel/UCSEzy4i9xrKPoaU9z0_XbmA?sub_confirmation=1
My Amazon Product page:
https://www.amazon.com/shop/heritagewealthplanning
Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
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https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-banking-and-credit.htm
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https://www.usatoday.com/story/money/personalfinance/retirement/2019/07/29/why-feeling-confident-about-your-retirement-savings-may-be-dangerous/39818185/
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https://www.multpl.com/s-p-500-pe-ratio
https://www.yardeni.com/pub/yriearningsforecast.pdf
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https://pjmedia.com/faith/i-kissed-dating-goodbye-author-says-hes-no-longer-a-christian-get-ready-for-a-flood-of-christian-defections/
https://pjmedia.com/columnist/paula-bolyard/
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Real Estate prices going back to 1870
https://www.dallasfed.org/~/media/documents/institute/wpapers/2014/0208.pdf
https://www.census.gov/hhes/www/housing/census/histcensushsg.html
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https://retirementresearcher.com/blog/
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https://heritagewealthplanning.com/its-the-inflation-stupid/
https://medium.com/@justusjp/sequence-of-returns-risk-decomposing-real-returns-into-nominal-returns-and-inflation-to-find-the-86a5921f546d
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https://jamanetwork.com/journals/jama/fullarticle/2673970
https://www.aappublications.org/news/2018/03/06/multipleantigen030618?fbclid=IwAR1JVSrS1Sy2xwfjMwHnBAC2oYmx-DMHZ0hWE74_UpY4ZP75o6wQpAxqhuY
https://www.amgreatness.com/2019/07/29/boston-university-and-the-societal-engineers/
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And here's why they're wrong!
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https://www.wsj.com/articles/when-stress-at-work-creates-drama-at-home-11563183015
https://www.bbc.com/worklife/article/20190719-why-is-burnout-rising-in-the-land-of-work-life-balance
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I'm not like the Secure Act when it comes to non-spousal beneficiaries. Not at all. Even if RMDs are delayed a few years.
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Could this be true?
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In the old days it made sense to keep the TSP, as the fees were so low. Those days are gone, now.
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Taking listener questions.
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http://maximizeyourmedicare.com/
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https://heritagewealthplanning.com/blog/
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https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3413063
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https://www.gofundme.com/f/help-a-centenarian-keep-her-home
https://nj1015.com/106-year-old-about-lose-home-since-1943-over-nj-property-taxes/
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https://www.ftportfolios.com/Commentary/EconomicResearch/2019/5/13/trade-war-hysterics
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https://www.bloomberg.com/opinion/articles/2019-05-15/wage-stagnation-was-mostly-a-myth
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https://www.fool.com/retirement/2019/07/19/this-event-may-lift-social-securitys-2020-cola.aspx
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https://fee.org/articles/the-miracle-of-industrialization/
The writings of Rose Wilder Lane are a MUST for any freedom-lover!
https://amzn.to/2YlH594
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https://www.advisorperspectives.com/articles/2019/01/07/does-the-bucket-approach-destroy-wealth
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https://www.americanfunds.com/advisor/pdf/shareholder/mfgebrx-004_icag.pdf
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https://www.amgreatness.com/2019/07/12/music-in-the-80s-sucked/
https://pjmedia.com/eddriscoll/did-music-in-the-80s-suck/
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Kathy has $100k in her 401k, no debt and makes $18k a year. Can she retire?
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Using the Wellesley initially. But I plan on using Wellington and the SP 500 index among others.
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Trying a new concept. We'll see how it works
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It was a long-time coming!
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The US Dollar is THE global reserve. This is not debatable. The issue is how long will it stay that way?
An economist argues it could quickly fade its dominance if we follow the China model of the 1400s and turn inward.
I disagree with his conclusions. But I find the article informative nonetheless.
https://www.aier.org/article/us-dollar-supremacy-could-quickly-fade
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Andrew Biggs, who I cite in my NEW BOOK "You Can RETIRE On Social Security", just destroys the doomsayers! Simply awesome!
https://www.msn.com/en-us/money/markets/opinion-fears-of-a-retirement-crisis-are-overblown/ar-AAEt2Mo
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Available on Amazon
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Available on Amazon.
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Available on Amazon.
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Available on Amazon.
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Available on Amazon.
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Available on Amazon!
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Available on Amazon.
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Available on Amazon.
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Available on Amazon.
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Available on Amazon.
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Available on Amazon!
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Soon to be available on Amazon!
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Soon to be available on Amazon!
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Soon to be available on Amazon!
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Soon to be available on Amazon!
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Soon to be available on Amazon!
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New Book Will Be Available Shortly on Amazon!
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It's going be AWFUL hard to beat the state of Wyoming when it comes to taxes for retirees.
No state income tax.
LOOOOOWWWWW property tax.
And LOOWWWWW Sales tax too.
Also a freedom loving state.
Really not much more to say on this. Almost perfect from a tax perspective.
Now, from my understanding it's downright windy in this great state. But if you can handle the wind and some cold, Wyoming might just be your place.
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UGH! Wisconsin is NOT GOOD for retirees.
Income tax for retirees ranks the 4th highest in the country, first of all. The Tax Foundation puts the state at 11% for its total tax burden. Yikes!
They have some exemptions but your income needs to be VERY low to qualify. At least Social Security is not taxed though. That's a win indeed. But once you break $15k in taxable income as a Married Couple you're in the high 5% bracket.
Sales tax is very low. So that's a win. It's offset by a HUGE property tax rate though of 1.77%. Given that the average house in Wisconsin in on the high end that high property tax rate costs a lot of money.
Interesting is that Wisconsin taxes capital gains at its ordinary income rates. So, that's just another tax on top of the Feds capital gains rate.
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West Virginia Taxes retirees on income to the same extent as the Federal Government does. But, and this is big, in West Virginia taxpayers over 65 can exclude $8,000 of retirement income from their taxable income.
Thus a married couple filing jointly over 6 has $26,600 in standard deductions from the Feds PLUS another $16k from the state. That's good.
In fact, if you have $25,000 of Social Security income and $25,000 of IRA distributions you will pay all of $250 or so in state tax.
Sales tax is moderately low as well. Even better is that the state does not tax prescription drugs and groceries.
Lastly, are the property taxes in West Virginia. Property tax in West Virginia is among the lowest in the nation not only from a percentage but given the lower home values too.
Once again, I disagree with the Kiplinger's assessment. West Virginia is actually quite favorable for taxes in retirement.
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A few years ago, Bill Gates Sr. and others put a ballot initiative for voters to approve a state income tax. It was voted down, by a rather large percentage, and so Washington remains one of the 7 US states with no income tax.
They make it up with one of the highest sales taxes in the union though, clocking in at over 9%. But groceries and prescription drugs are exempt. Which is a very good thing.
Property taxes are right in the middle for overall burden.
So all in all, Washington is definitely on the tax friendly side.
But be advised Washington does have a pretty significant estate tax.
I'll do other videos on that. So be on the lookout.
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Wow, Virginia is VERY favorable to its retirees, just don't own an expensive car as they charge nearly 5% a year on assessed value for property tax(depending on the county you live).
But lots of great income exemptions on retirement income. Qualifying couples can exclude up to $24,000 of retirement income, so long as their total AGI doesn't exceed $75k.
Now remember the difference between taxable income and gross income. AGI of $75k means you can't have taxable income more than $48,400 if you're married filing jointly and over the age of 65.
Now, with that said, even if you break that $75k AGI threshold, you still can get an exemption but you will lose the entirety once you hit $87k.
Social Security is tax exempt as well. So, you can have a lot of income essentially tax free.
In fact, I ran a calculation of $50k in Social Security income and $50k in IRA distributions. Total tax for that $100k gross income? $770. That's it.
Sales tax is quite favorable too. Virginia falls in the top 10 in terms of the lowest sales tax in the nation. Food is taxed but only 2.5% or so. So not too bad
Lastly property tax rate is quite low at .84%. Now, Virginia does have fairly expensive property so the overall dollar amount that goes to Richmond is rather high. But that primarily is from Northern Virginia where the property values are sky high.
All in all Virginia is VERY favorable for for retirees in terms of taxation.
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Vermont ranks low in terms of tax friendliness for retirees by Kiplingers. In fact, it ranks among the 10 worst.
But, once again, I don't get it.
Yes, Social Security is taxed, but only to the extent its taxed at the Federal level. If you've been following my Youtube channel at all you'd know that Social Security is favorably taxed by the Feds.
So, while Vermont includes some Social Security in its tax calculation it's not nearly as bad as Kiplingers would make you think.
In fact, I ran a calculation for a Vermont retired couple who had $50k in Social Security and $50k in IRA distributions. This couple paid all of $2k to the state in tax. That's not too bad, actually.
On top of that Vermont has a moderately low sales tax, coming in at the 36th highest in the nation.
Finally, Vermont does have an extraordinarily high property tax coming in at the 5th highest in the nation from a percentage basis and the actual dollar amount homeowners pay.
For retirees with income less than $99k there is exemptions though.
However, property tax will be a retirees biggest expense, without question.
So, all in all, low sales tax, moderate income tax and high property tax puts Vermont in the middle of the US in terms of taxation, in my opinion.
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Look out! Utah is not very favorable at all to retirees, from an income tax perspective. In fact, Kiplingers ranks it in the bottom quintile for least favorable taxed states for retirees.
First off, ALL of Social Security is included in taxable income. Yes, there is a retirement tax credit of $900 but it begins to get phased out if your AGI is over $32k for married couples. (Remember AGI is BEFORE you take standard deductions so AGI of $32k is not much income at all.)
It goes without saying that if Social Security is fully taxed than all other forms of income will be fully taxed as well.
Property taxes are low, at .65%. So that's good. Not much of a homestead exemption though. You can't have more than $32k of income to qualify. Whether this is gross or taxable income I do not know however.
Lastly, sales tax is moderately low, coming in at 29 for all 50 states. Food is taxed in Utah too.
A couple things to keep in mind, UTAH hammers you on income tax. However, as I've stated time and again, income tax planning is something you CAN do to prepare.
I know it's a broken record, but maximizing Social Security and Roth IRAs are what you need to be looking at NOW to reduce your income tax burden in the future.
However, other aspects that are out of your control, sales and property taxes, are actually quite reasonable if not outright low in Utah.
I'd rather be in a low property and sales tax state with a high income tax than the other way around. Thus in my mind Utah comes in favorably, even though Kiplingers disagrees.
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Texas is such a great state. Southern, Mexican, Cajun, German culture all thrown into one place. Plus the diversity in landscape.
Arid in South Texas. Green rolling hills in the east. Deserts, beaches, mountains. Can it get any better? Absolutely fantastic.
Just to set the record straight, there "ain't no saguaros in texas" https://www.youtube.com/watch?v=mg5VwtODOJQ. You need to go to AZ to see those.
But taxes in Texas are not nearly as favorable as one would think. Yes, no income tax. That's awesome.
But property and sales taxes are high.
I remember when we lived in South Texas getting hammered by property tax. We had come from Virginia where property taxes were low.
All of sudden having these huge property taxes was a shock to the system for sure.
Texas definitely offsets it with its NO income tax. But then you throw a high sales tax in the mix and you realize Texas is not nearly the panacea many make it out to be from a tax perspective.
Ideally, you'd want to retire to a place that is low in sales and property tax, even if they had an income tax. You can do a lot of proactive planning to minimize the income tax. But there is little you can do from a property and sales tax perspective.
Still Texas is better than most. You can get the wonderful culture thrown in for free too! Hard to beat.
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Tennessee is one of the few states with no income tax. So, right there alone the good folks in Tennessee are going to be taxed very favorably when it comes to retirement.
However, sales in Tennessee is the second highest in the nation, clocking in at 9.46% on average when you factor in local sales tax.
But, a high sales tax is the only sore spot for retirees in Tennessee because property taxes are also among the lowest in the country at .75%.
Factor in Tennessee's lower median home value with the low property tax rate and you have a winning scenario for retired home owners.
Overall, Tennessee comes in very favorably for retirees.
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South Dakota has no income tax. Thus ANY income is not taxed.
South Dakota also has a moderately low sales tax too, clocking in at around 6.40%.
Property taxes are on the high end, around 1.21%. Not extraordinarily high but in the top 20 nationwide.
However, South Dakota median property isn't overly expensive so the actual dollars residents pay in property tax are in the bottom half of the country.
All in all, no income tax, low sales tax, middling property tax, South Dakota is very favorable for retirees.
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South Carolina is quite favorable to retirees.
Property tax rate is among the lowest in the nation. But sales tax is relatively high.
However, income tax is VERY favorable for retirees. A $30k exemption on retirement income for married couples. Plus Social Security is not taxed.
So, a married couple with $100k will pay little to NO income tax in South Carolina.
Low income tax, low property tax and a moderately high sales tax, makes South Carolina VERY favorable for retirees.
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Had some pushback to the video I did yesterday on taking Social Security at 70. Mostly it revolved about people's misunderstanding of life expectancy.
Folks, if you get yoru life expectancy wrong you could be making a HUGE mistake when it comes to filing for Social Security. And that mistake could cost you hundreds of thousands!
https://www.pensjonsforum.net/images/nyheter/Mortality_assumptions_and_longevity_risk.pdf
https://personal.vanguard.com/us/insights/retirement/plan-for-a-long-retirement-tool
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Pennsylvania is very good to its retirees in terms of the taxes they pay.
In fact, ALL retirement income is excluded from taxation!
So, just say you have $40k in Social Security and $60k in IRA, pension and 401k distributions. You will pay 0 in tax. That is a big, fat Goose Egg, my friends.
Now, you may think PA has a high sales tax. And you'd be wrong. The state plus local sales tax rate puts PA in the bottom third of all the US for sales tax.
Lastly, the property tax rate is pretty high at around 1.50%. There is not much of a homestead exemption either. But the median property value in Pennsylvania is not extraordinarily high either. So, while you pay a high percentage, relative to the rest of the US, the total dollar you pay is closer to the middle of the average US state
From an income tax perspective alone, PA is very favorable for retirees. Moderately low sales tax add to the allure. The property tax is a bit high but nothing that should drive you away from the great Commonwealth of PA.
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Whoa! Rhode Island has really done a good job at reducing the burden on their retirees. You may not even realize this because some of the primary websites that analyze state taxes on retirees miss the boat (I am looking at YOU Kiplinger's and Smart Asset!!!)
I ran a simulation for a retired couple in Rhode Island with $50k in Social Security income and $50k in 401k or pension income... they'd pay all of $2k in taxes.
That's not too bad, my friends. Why so low? Because Rhode Island has a new benefit that allows retirees with income under to exempt $15k per person from qualified plan distributions.
BE ADVISED IRAs ARE NOT INCLUDED!!!
And if income is below $100k Rhode Island doesn't tax Social Security either.
This is all good.
Sales tax is in the middle of the pack when TOTAL sales tax are included, state and locality.
Property taxes are high with little exemptions, clocking in at over 1.50%.
But give credit to the new Democratic governor for getting these tax bills through that are definitely favorable to retirees.
http://www.tax.ri.gov/notice/Pub.%202017-01%20--%20Guide%20to%20tax%20break%20on%20pension%20income%20--%2010-03-17.pdf
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Medicare For All will save us all!!! BWHAHAHAHA...
Come on, folks. Original Medicare as it is today leaves HUGE gaps. and I mean HUGE.
What you may be asking?
Long Term Care
Copays
Coinsurance
Vision
Hearing
Teeth
Prescription Drugs
Overseas Travel
But hey, Medicare is in GREAT shape financially. So to add hundreds more millions of people to the rolls, illegals or not, won't matter.
Oh wait...That's not correct. Medicare is in far worse shape than Social Security
hmmmm....
https://www.kiplinger.com/slideshow/retirement/T039-S001-7-things-medicare-doesn-t-cover/index.html
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Read the blog post here:
https://heritagewealthplanning.com/the-434886-social-security-mistake/
https://www.kiplinger.com/article/retirement/T051-C000-S004-delaying-social-security-boosts-the-value-of-colas.html
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Ohio doesn't tax Social Security benefits. And they provide a tax credit of up to $250 against your taxes if your adjusted gross income is below $100k. Remember a credit is a simple dollar for dollar reduction in taxes. So credits are a good thing.
Ohio's sales tax puts them in the top 20 of the country. While not oppressive the sales cost is over 7%.
The property tax is among the highest in the nation. But given the value of homes in Ohio is lower than the national average the actual dollar amount Ohioans pay in property tax is lower than half of the US states.
By and large, Ohio falls smack dab in the middle of overall tax burden for retirees.
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Oklahoma is very favorable tax-wise for retirees. For some reason Kiplinger's has the Sooner state as not very tax friendly. I don't get it.
Oklahoma doesn't tax Social Security first of all. On top of that, Oklahoma allows a $10k exemption of income, per person, from various retirement accounts. And Military retirement recipients can exclude 75% of their benefits from taxes too.
So, if you have large Social Security, military pension and some retirement income, you won't pay much in terms of income tax.
Sales tax is quite high in Oklahoma, ranked #6 highest in the nation when you include both state and locality sales tax.
However, property taxes are among the lowest in the nation. In fact, when you factor the actual dollars that the state collects in property tax, Oklahoma is the second lowest property tax in the country.
All in all, lots of income exemptions, incredibly low property tax can offset the high sales tax to make Oklahoma quite favorable for retirees.
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North Dakota is not a "tax free" state. It also taxes some Social Security benefits as well as all IRA, 401k etc distributions plus pension income.
Yet, the amount of income tax you'll pay to the state is minimal because the brackets are very low. If you're married you'll pay all of 1.1% on Gross Income up to $90k. Of that amount, that which is from Social Security will be taxed even more favorably, similar to how the Feds tax it.
So essentially, you're going to pay a couple hundred bucks in income taxes in North Dakota unless you're making huge income.
Sales tax is middling. When state and local sales tax is accounted for, North Dakota is smack in the middle of the nation for taxable burden.
Property tax is in the middle of all states too, at 1%. Given the median value of homes in North Dakota is $155k, the actual dollar amount you pay in tax will be on the lower end.
All in all, you'll pay some tax in retirement to live in North Dakota, but it won't be oppressive.
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Oregon has NO sales tax! Let's state that again, Oregon has NO SALES TAX! That's huge my friends.
Now, income tax is a whole different story though. But not having a sales tax is a big deal. Don't minimize that.
While income tax rates are very high, 9% on Taxable Income over $17k for Married Filing Jointly, Oregon does not tax Social Security income.
Thus to reduce your taxable income, you really need to maximize your Social Security benefits. THere is a retirement pension exclusion but you really need to have little income to qualify. I've attached the link below. Look at page 101.
Property taxes are about the norm in the US and while there is a small homestead exemption, most won't qualify.
Now Oregon does have an estate tax which is rather restrictive too. I'll get into that on future videos.
So, all in all, moderate property tax, NO sales tax, and while a high income tax but one that can be addressed with proper planning, Oregon is actually quite favorable to retirees.
https://www.oregon.gov/DOR/forms/FormsPubs/publication-or-17_101-431_2017.pdf
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North Carolina has a flat tax of 5.49% and basically everything is subject to taxation, except for Social Security.
If you are retiring to North Carolina you should be doing some proactive tax planning indeed. Roth IRAs and Social Security maximization strategies should be your first order to business.
State and local sales tax puts North Carolina smack dab in the middle of the rest of the nation. Not low, but not high either. Groceries are not taxed by the state but can be by the localities.
Property taxes are pretty low. Only the 30th highest property tax in terms of percentage but because median house value is pretty low the actual dollar amount citizens pay in property tax put the state in the top 10 for lowest burden.
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New Mexico is one of the few states where you can easily pay more in tax to the state than the Feds. In fact, it's not even close.
New Mexico taxes ALL retirement income, to include Social Security.
They do offer a small exemption of $8,000 if you meet certain LOW income thresholds.
So, for simplicity, if you are planning on retiring to New Mexico, just assume ALL of your income will be taxed. The rates aren't low, either.
Gross income of $50k puts you in the 4.9% bracket.
New Mexico also has the 15th highest sales tax in the nation when factoring in state and localities.
But property taxes are among the lowest in the nation.
So, high income tax, moderately high sales tax, but low property tax.
I like the low property tax. That's for sure. Property tax planning can minimize to some degree your income tax too.
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In New York, if the bulk of your income comes from Social Security, pensions and IRA(401k etc.) distributions, your income tax will not be huge.
New York does not tax Social Security or public pensions, to include military pensions. And they have a $20k exemption on qualified plan distributions as well. You only have to be 59.5 to qualify for these exemptions too, which is nice.
So, it's not hard to see a couple with gross income of say $80k not paying much in income tax to the state of New York.
However, it's the sales and property tax that get you.
Sales tax looks small when you just look at the state sales tax. It's only 4%, which puts NY in the bottom ten of all states for sales tax.
That's not the full picture though. Add in localities and you're more than double the state rate, up to almost 9%. That nearly 9% rate puts New York in the top 10 highest sales tax states in the country.
Property taxes are a major hurdle too. The 1.40% puts them in the top 15 most heavily taxes state. However, because property values are higher than average, when actual dollars are paid, New York is the 4th highest ranking state in terms of property tax.
There are a couple exemptions some could qualify that are decent actually. However, these exemptions are income based and your income needs to be quite low to qualify for the first exemption.
The second, as long as your income is less than $90k or so, you'll have a decent chance of getting an exemption on some of your property tax.
Still, even with these exemptions, the property tax is a monster. Not two ways around it.
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Nevada has no state income tax. You probably knew that already. But did you know the state's property tax is quite low too?
Clocking in at .75%, among the bottom third lowest in the US. No income tax and low property tax makes Nevada already a winner in my eyes.
Secondly, the median property value in Nevada is less than $200k, so we're talking a low tax rate on a lower-valued home. That's a double winner.
So, they must kill you on sales tax, right?
Well, Nevada isn't cheap on sales tax. But if you look beyond just the state tax number and actually add the county and local tax burden Nevada is not even in the top 10 highest sales tax states. It is in the top 20, mind you, but given it's low property tax and no income tax, that's a trade-off one could easily make.
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This is from not 1, not 2, but 3 count 'em THREE, PhDs! You aren't going to argue with science are you???
https://www.forbes.com/sites/peterubel/2018/10/03/medical-bankruptcy-its-much-less-common-than-elizabeth-warren-tells-you/#2b84d69c1fb2
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5865642/
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For the last 15 years we've been lead to believe that Medical Bankruptcies were so common you were only ONE SNEEZE away from declaring it yourself!
Sadly, like a lot of "studies" today, it was all a fraud. (See the Eisenhower farewell address as to the reasons why this is.)
Yet, here we are, in the beginning of the political season discussing what to do with all these people going bankrupt because of medical expenses.
Look folks, I get it. you don't want to be involved in politics. Politics is hollywood for ugly people, they used to say.
But guess what, politics is involved in EVERYTHING you do. So, probably best to recognize that and then try to minimize the damage to your psyche by investigating the various proclamations the politicians and media scream at you.
Once you realize a lot of this is simply fraudulent, you can actually relax.
https://bit.ly/2xcm0yO
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Bankruptcies have little to do with medical expenses but EVERYTHING to do with this one issue....
wanna guess what it is???
https://www.washingtonpost.com/blogs/post-partisan/wp/2018/03/26/the-truth-about-medical-bankruptcies/?noredirect=on&utm_term=.882a908dcf3a
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If you're from Northern New England, you are very aware that New Hampshire has no sales tax. In fact, I bet if you live in that part of the US, you've actually made a trek or ten to shop in NH just to avoid paying sales tax.
(When I was growing up in Maine, we'd always stop at the Portsmouth state liquor store before returning to Maine, so my folks could get their booze and other items tax free. Funny the things that stick in your mind when you're a young kid.)
On top of having no sales tax, New Hampshire also has no income tax either. It goes without saying then that there are no taxes on Social Security, IRA distributions, pensions etc.
However, New Hampshire does saddle its residents with high property tax. The third highest in the nation as a matter of fact, at 1.99%. That property tax is a sticking point for many residents, indeed.
There is not much of an exemption to speak of either. So if you're on a fixed income and own a home, New Hampshire may not seem as tax friendly as it is thought to be. Property values in New Hampshire aren't cheap either.
This is why I prefer states with a low property and sales tax even if it means they have an income tax. You can work around the income tax with proper planning. Property tax? Not so much.
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New Jersey property taxes are the highest in the nation. On the median house value of $313k you pay a whopping $7500 in taxes. That's just hard to comprehend for an average retiree.
Seniors, at a certain lower income, can qualify for some reimbursement, but how one does that is so convoluted it's not possible to put describe it here.
But, property taxes aside, New Jersey is not anywhere near as bad on taxes for a retiree as one might have thought. Not only are Social Security and military pensions not taxable but folks over 65 can exclude huge amounts of retirement income from taxes too.
As long as your income doesn't exceed $100k, married can exclude up to $100k in the tax year 2020. IF that law which only passed in 2016 stays on the books with the new Governor in office.
So, in New Jersey if your income is $50k in retirement distributions and $25k in Social Security, you will pay NO tax in 2020. Even today, you only pay a couple hundred dollars.
Sales tax in New Jersey is reasonable as well, clocking in at right at 6% statewide. This ranks New Jersey only the 30th highest in the nation in sales tax burden.
So, with average to low sales tax, huge retirement income exemptions, we simply can't say New Jersey is high tax anymore,, other than the gigantic property taxes.
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Wow! Nebraska is NOT at all favorable to retirees from a tax perspective. In fact, of all the states I've covered so far, Nebraska may be the worst. I need to revisit Connecticut before I state that unequivocally. But man, oh man, I had higher hopes for Nebraska than being in the running for worst states for retirees, that's for sure.
How bad is it? You ask? Let's count the ways!
- Income taxes. First, Nebraska has a HUGE income tax rate of 6.84% for folks with taxable income over $60k, if you're married. Single? it's $30k,
Now, this is TAXABLE INCOME, so you'd need to add your Standard Deductions or any other deductions you have to the taxable income amount to get your GROSS INCOME. For instance, a married couple needs to have more than $86,600 in Gross Income before they are in the 6.84% tax bracket. But still, $86,600 of income doesn't make you Warren Buffet by any stretch of the imagination.
- Taxes on Social Security and retirement income - in Nebraska if you have GROSS INCOME over $58k(married) you're going to pay tax on your Social Security benefits.
All other income is taxed at ordinary income rates too. Only exception is some insane military pension configuration. Good luck figuring that out!
- Property tax - Among the highest in the nation from a percentage basis AND, even though the median property is only $133k, still among the highest in the nation from total dollars paid too!
Think about it like this: Massachusetts has a median property value 3x that of Nebraska. But the taxes in MA in actual dollar amount is only about 50% higher. That just shows you how high the Nebraska property percentage rate is.
Oh, you're holding out for a homestead exemption are you? Yeah, good luck with that. If you're married with gross income over $33k, you don't qualify for the full exemption. If you're income is $50 (married) you don't get anything. Nice. Of course, if your home is worth more than $95 or 200% of the average for your county, you don't get anything either.
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Sales tax - 6.89% state and local average sales tax. Which puts Nebraska smack down in the middle of the US. Not high, but not low and factoring their other taxes, one would think they'd have a lower sales tax burden.
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Inheritance tax - I will do another playlist set on states estate and inheritance tax, but I do need to point out here that Nebraska does have an inheritance tax.
Pass assets to your kids at your death, they pay 1% on the value they receive, after a $40k exemption. However, pass assets to your nephew/niece/uncle/aunt hey pay a 13% inheritance tax after a $15k exemption!
Pass assets to anyone else they pay a 18% inheritance tax after all of a $10k exemption.
Moral of the story: don't die in Nebraska!
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Amar Shah, is a friend of mine from back in our USAA days. He just started his own firm Client First Capital and you can find him at www.clientfirstcap.com.
What I love about Amar's approach is that he is truly focused on the entirety of Wealth Management for his clients. And even better you see how much he actually charges on the front page of his website!!! YAY!
None of this where you need to go the SEC IAPD's website and look up the ADV part 2. It pains me to even type that sentence. You know what you're getting with Amar.
Is it worth the fee? Only YOU can decide that. But Amar is the wave of the future, at least I hope, for financial planning. Where he is saying I'm only going to take a select few clients, charge them a reasonable fee, and work with them essentially forever.
I LOVE this approach to financial planning. It is this new wave of planning that will save our industry because the way it's going now isn't solvent. Too many people chasing too few clients. The way to change is to open up the number of clients who actually value the service. And the way to do that is with TRUE FINANCIAL PLANNING! Not just asset management.
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https://www.zerohedge.com/news/2019-06-24/austrian-economics-no-longer-unheard-music
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Huge opportunity for a smart politician (who could I be referring to?) to exploit this and then OWN the issue for generations.
Gotta think outside the box, folks!
https://www.dailysignal.com/2019/06/18/why-a-bigger-social-security-program-would-make-us-worse-off/
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Answering a question about Roth 401ks.
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Kiplinger's rates Montana as not tax friendly for retirees. I don't agree with this.
Yes the state does tax Social Security. But it has NO sales tax. And it also has very low property tax rate.
I'd much rather have low to no sales and property tax with a high income tax than the other way around.
If you do smart planning and maximize your Social Security benefits you can minimize your income taxes significantly.
In fact, I ran two scenarios in Montana one with $50k Social Security income and $25k retirement income. The second scenario was the opposite.
The tax difference is amazing. You pay $1000s more in tax, per year, to not only the Feds but to state of Montana when you have lower Social Security and higher retirement income.
So, if you plan right, you can have little income tax, NO sales tax in Montana and very low property tax too.
If your income is low enough you can even get a $1000 credit against your property taxes as well.
How do you get your gross income low? Roth IRAs and Social Security planning.
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Missouri is one of the few states that taxes some of your Social Security benefits. You do need to have gross income of $85k for single taxpayers and $100k for Married Filing Jointly before your benefits are taxed.
However, ALL of your retirement income is taxed, IRAs, 401ks,, 403bs, TSPs and 457s. Now some pension income has some exemptions but you really need to have low income to qualify. Military pensions are tax-free, be advised.
So, in Missouri, just assume all of your retirement income is taxed. And once you break $9k of TAXABLE INCOME your tax rate is 6%.
State sales tax of 4.225% seems low. But when you factor in local taxes, the sales in Missouri almost double what the state tax rate is. In fact, the total sales tax in Missouri puts them in the top 15 for highest in the nation.
Lastly, property taxes are 1.02% of assessed value. Unless your income is very low there is no homestead exemption either.
So, by and large, Missouri isn't a tax Heaven or a tax Hell. It's smack in the middle of the US for overall tax rates for retirees.
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Mississippi is VERY favorable for retirees when it comes to taxes.
In fact, it's going to incredibly hard to beat the great state of Mississippi in terms of the taxes retirees pay.
Let's start with income tax. Yes, Mississippi has an income tax. And so many people will overlook the state for retirement. BIG MISTAKE!
Mississippi exempts ALL retirement income from tax, not only Social Security but IRA, 401ks, 403bs, TSP and pensions. Are all exempt from taxation!
That is amazing. Think about it, you have $50k in Social Security and $50k in pension/IRA distributions. You pay ZERO tax. That's right, NOTHING.
Again, just shows you have to look beyond the top line tax rate.
"Oh, but Josh, they have a high state sales tax of 7%, which is the 2nd highest in the nation," you say.
Nope. You need to look beyond that top line rate too. Because in Mississippi only two localities have an additional tax. So, all in all, Mississippi is only the 21st highest sales tax state in the union.
Lastly, retirees have a large $75k homestead exemption for their property tax. The median value in Mississippi is all of $104k so someone with a median home value will pay property tax on only $29k. And then the tax rate is .64%.
Take the totality of income, sales and property, on top of adding low property values and like I said, it's going to be hard to beat Mississippi when it comes to taxes for retirees.
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Minnesota is tough on taxes for retirees. No other way around it.
High tax on income. High tax on property. High tax on sales too.
Factor in all three and you're in a very unfriendly state tax-wise.
Now, again, if you are going to retire in Minnesota, it makes sense to be engaging in proactive tax planning. The source of your income stream is HUGE.
$50k in say IRA distributions plus $25k in Social Security = a tax nearly $3k
Switch those two numbers though and you have basically NO income tax!
Critically important to understand the tax code and what income is taxed.
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Once again you have to look beyond the top line numbers to factor how Michigan taxes retirees.
No tax on Social Security income. A large standard deduction of $20k per person who is over the age of 67.
So, say you have $40k in Social Security and $40k in IRA distributions, you pay 0 income tax to the state, even though it appears they are a "high tax" state.
Property tax RATE is high, but actual dollar amount of property tax will be quite low comparatively speaking because the housing values in Michigan are relatively low.
Sales tax is a flat 6%. From the state side of things that seems high. But there is NO OTHER sales tax added. No county or local sales tax.
What does that mean? Your sales tax in Michigan is pretty low.
All in all, a retiree with less than $100k income is going to do just fine in Michigan, at least in terms of taxation. The cold is a different thing altogether!
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From a tax perspective, California, by and large, is not as punitive as one may think, especially for retirees.
The state does NOT tax Social Security income. They have no estate or inheritance tax. And believe it or not, income tax rates are not considerable for average taxpayers.
Yes, the wealthy, those making over $1mm will get hammered. But for the vast, vast majority of taxpayers CA tax rates are reasonably.
Property taxes on a percentage basis of assessed value are actually low. The problem is that the median home value in CA is over 400k. So, while the percentage of value is low the actual dollar amount is quite high.
Where CA really gets you though is in sales tax. Sales tax are HUGE in the Golden State. No getting around that.
And if you smoke or drive a car that uses an internal combustion engine you pay through the nose.
One thing you need to consider though is that CA DOES charge its own premature distribution penalty of 2.5% on IRAs, Qualified Retirement Plans and annuities.
I haven't heard ANY state doing this. Just be careful if you're domiciled in CA and are going to use retirement funds to start a business!
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Alabama has the 2nd lowest property tax in the United States. Which is a huge win for the residents there.
But citizens of Alabama pay among the highest sales taxes in the nation too. However, if you just looked at the state sales tax, you may think you wouldn't pay much in Alabama.
But you'd be wrong. As the localities can put their own sales tax. And they do, more than double the state sales tax actually.
Lastly, when it comes to income tax Alabama is very favorable for retirees. Social Security is exempt. As are all government pensions AND, and this is huge, qualified private pensions.
What is a qualified private pension? Well, here is what the state says. "Payments from a Defined Benefit Retirement Plan in accordance with IRC 414(j)."
And here is a 29 page list of various companies who have NOTIFIED the state that their pension is qualified. https://revenue.alabama.gov/wp-content/uploads/2017/07/DEFINED.BEN_.pdf
AL says that this list is by no way exhaustive.
So, I would imagine it'd be safe to assume your private pension is free of taxes in the great state of Alabama.
What is NOT free of state tax though?
You got it! 401ks and IRAs.
So think long and hard before you roll your pension plan over to an IRA. As IRAs are fully taxed as ordinary income.
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Retiring in Massachusetts? You need to be doing some serious tax planning before you hang up your boots.
If you do, you can actually have a rather favorable, all-around, tax situation. If you do nothing though, you're going to be in a world of hurt.
First off, Massachusetts does not tax any Social Security income. That right there should give you a HUGE incentive to maximize your Social Security benefits.
MA also doesn't tax state and local government pensions. It appears they do tax Federal pensions though.
All other income is fully taxed as ordinary income. IRA distributions, 401k distributions, private pensions, annuities, etc. And these are taxed at a flat rate over 5.1%.
But it gets worse. They not only tax your income at 5.1% but they tax you on your Federal AGI. Not your taxable income!!! If you don't know the difference you haven't been watching my videos... :)
Let me give you a simple example how this works. You have $100k in Fed AGI. You must then pay 5.1% to Massachusetts, or around $5k.
However, say you also have $50k of deductions, mortgage interest, charitable contributions, property tax etc. Thus your tax to MA is actually a 10% rate, $5k on only $50k of TAXABLE INCOME! That's huge.
However, if say you had $50k from Social Security and $50k from IRA distributions you'd only pay tax on that $50k because Social Security is not taxed.
Thus, MAXIMIZE YOUR SOCIAL SECURITY!!! I have tons of videos on how to do this exact thing,
Now, one might think Massachusetts has a high sales tax. After all they rank the 13th highest in the nation in state sales tax. BUT, in overall sales tax they are ranked 35th because localities don't have their own separate tax.
That's why you need to look at more than the top line rates.
Property tax has got to be high right? Well, not so much.
In terms of total percentage, Massachusetts property tax is the 18th highest at 1.15%. Overall property tax paid is quite high as Massachusetts property values are very high relative to most states.
However, if you have income less than $85k and are over 65 , with a property valued less than 700k you can qualify for a $1k credit on your property tax bill.
For some, that will be a 25% credit against property taxes! That's a big deal.
So, all in all, you've got to do your homework before writing off Massachusetts as a high tax state.
Now, the pain point in Massachusetts is their estate tax. That is brutal. But we'll dive into that in a separate video.
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Maryland is another of these states where you need to look beyond the top line tax rates and actually dive into what your locality can add to your burden.
For instance, Maryland income tax is 5.75%. Which may or may not be reasonable depending on your perspective. Yet when you through local taxes into the mix, the overall burden is over 10%!
Sales tax though is an 'all-in" 6% with localities adding NOTHING to that tax. So, what looks to be an expensive state sales tax is actually rather cheap when you factor what localities can add.
Property taxes are high from an overall dollars paid due to Maryland being a high cost of living state.
But from a pure percentage perspective Maryland is towards the middle in overall property tax rate.
So, all in all, Maryland is not nearly as burdensome as some might believe.
Social Security benefits are not taxed. And there is a SIGNIFICANT tax exclusion from pensions and qualified plan distributions. $29k per taxpayer is excluded from taxation on those plans.
A HUUUUUGGGGGEEEE caveat though. IRAs do not get that exclusion! Crazy as that may seem, it's the tax code in MD.
I simply can not see the reason ANYONE who resides in Maryland should roll their 401k/TSP/403B plan to an IRA given the tax structure in MD.
You're talking nearly $60k extra tax free income by leaving your money in your employer sponsored plan. That's REAL money, my friends.
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Louisiana is very favorable tax-wise for retirees.
State and local income tax burden is among the lowest in the nation. With lots of exemptions added to the mix too and even some of your IRA distributions are free from taxation as well.
Property tax is all of .51% and with median housing values only $143k you're just not going to pay much in property tax in LA.
However, the sales tax they get you. 10% all in sales tax! That's literally the highest in the nation.
But you can easily pay that tax with the money you save on low property and income taxes indeed!
Oak RIdge BOys "leaving Lousiana" https://www.youtube.com/watch?v=zbl7tSluOrU
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The great state of Maine is VERY favorable from a tax perspective for most retirees.
Unfortunately, unless you dive into the numbers many people will not realize this. They'll see the state and local tax rate of 10.2% and go running for the hills!
But as we show you in the video, very few Mainah's are going to pay anywhere near that kind of income tax rate. In fact, the vast majority of retirees in Maine won't pay ANY income tax at all.
From a sales tax perspective, Maine is pretty good as well. Not quite as good as their friendly neighbor to the south, New Hampshire. But their 5.5% 'all in" sales tax rate puts Maine in the top 10 of sales tax minimization of all the US.
It's their property tax where they can get you. 1.23% on assessed value. This rate puts Mainers in the top 10 for most UNFAVORABLE property tax.
But, as I've said many times, of the 3 primary sources of taxation, sales, property and income, having 2 out of 3 being favorable is quite a good place to be.
And thus, Maine is a good place for retirees indeed.
If you are interested in reading material about the state of Maine, other than just Stephen King or Thoreau, do yourself a favor and get some Kenneth Roberts books. Best historical fiction of his times.
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Delaware is VERY favorable for retirees in terms of the tax they pay.
No sales tax at all. Property taxes among the lowest in the nation and a decent-sized exemption of $12,500 per taxpayer over the age of 60 on retirement income. And Social Security is exempt too.
Delaware may actually be one of the most favorable states for retirees to live in.
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Indiana is in the LOWEST tax favorable quintile of all the United States. Can you believe that? Indiana is actually 2 quintiles behind...Illinois! Crazy...I know it.
Pulaski County adds 3.3% tax on top of the tax the state assesses as well. Which means you really need to look at the county you're going to live in to get a better gauge of your total income tax in Indiana.
The state of Indiana doesn't tax much, only 3.3%. But man, oh man, the county can hammer you. Bigly!
Not much in terms of exemptions either. IRAs, 401ks and out of state pensions all fully taxed.
Homestead exemptions is beyond my ability to comprehend here. So, if you live in Indiana DEFINITELY go to your county office and make sure you're getting all the exemptions you are entitled!
Maybe even ask a local realtor if they know how to figure out the exemptions you may get in your county.
Cars sales tax is based on MSRP! It is NOT based on your purchase price. Crazy.
It appears there is no local sales tax though. Only the state and that is actually much more favorable in its entirety.
Overall, Indiana is not favorable in taxation. Not in the least. So, just keep that in mind as your figure out where you want to retire.
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Iowa is not a tax friendly state for retirees. Not in the worst quintile, but in the 2nd worst quintile.
Pretty high income tax with moderate income. Big marriage penalty too. 7.6% is the effective tax rate to married filing jointly. That's a big tax, my friends.
But at least there are some exemptions for IRA and other retirement plan distributions about $12k if you're married filing jointly.
High property tax though. And there is no real homestead exemption for seniors either.
There is a large inheritance tax too! Lineal family members receive inheritance tax free. All others...taxed. And the tax is not small either.
Iowa has a rather low sales tax though, when you factor in the state AND the localities.
Basically, income tax is pretty high. High property tax. Sales tax is moderately low. There is an inheritance tax too. Just keep that in mind as you plan your estate.
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Whoa! Kansas is NOT a tax haven for retirees no matter how how you cut.
From taxing Social Security to all private pensions, high property tax rates and top 10 in the nation for sales tax rates, Kansas leaves a lot to be desired from the tax perspective.
Here is one thing that jumped out at me regarding Kansas tax that you need to be aware of.
Your Social Security is taxed based on your AGI...NOT your taxable income. Why is that important? Well simple.
Let's say you're a politician in Kansas. You can say "We don't tax your Social Security until your AGI is above $75k." That sounds reasonable, no?
But that also means if you have taxable income above $49k you will pay tax on your Social Security benefits.
Same exact scenario. But the code discussed AGI as opposed to taxable income as a way to minimize the initial affect a citizen will have when they hear how the taxes work.
Yet, it doesn't stop there. In other areas, Kansas DOES say explicitly they will tax you if your TAXABLE INCOME is above a certain threshold, as opposed to AGI.
Trust me, these folks knew what they were doing when they were concocting the tax code. Semantics? Yes. But if you don't understand the semantics of the tax code in whatever state you live, you could be in for a rude awakening.
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Believe it or not, from a pure income tax perspective, it's going to be hard to beat Illinois. Yes, I did just say that.
Illinois is VERY favorably in taxing income. In fact, the state does not tax ANY retirement income. So, if you're income consists of $50k in IRA Distributions, $25k in Social Security and $25k in pension, you hav 0 income tax.
Now, don't get me wrong. Illinois does get you in other perspectives. Sales tax and property tax are not low. In fact, those two areas are among the highest in the Union.
Unfortunately, of the 3 taxes, Income, Sales and Property, I'd rather have your income tax the higher of the three. You can manipulate your income so much easier than your sales and property tax.
So, while Illinois is favorable for income tax, it would be hard to recommend moving there for a soon-to-be retiree.
But with that said, it's not nearly as bad, tax-wise, than what may be commonly thought. At least not for those whose income mainly comes from retirement accounts.
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Idaho does their taxes the EXACT way I prefer, low property and sales tax and a bit higher on the income side.
Obviously, low for all three is ideal, but the state has got to get its money from somewhere.
Idaho is VERY favorable on property taxes. Now, if you just look at the state tax rate on sales tax you may be disenchanted. Don't do that!
You've got to look at the tax rate for state AND the localities! In this case, Idaho is extremely favorable.
Income tax is a bit high. Not extraordinarily high. But higher than I'd prefer. However, income tax can be manipulated with some basic financial planning.
So, Idaho, great french fries and a very favorable tax code as well.
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Wow! Hawaii taxes for retirees are VERY favorable. From sales, property and income taxes, you're going to have a tough time arguing with what Hawaii is doing.
I am actually stunned! Because you hear so much that Hawaii is a high cost state, and that is true. Real estate there is through the roof.
But once your mortgage is paid off, a lot of the other areas in which you get hit hard in your working career are minimized in the great state of Hawaii. At least from a tax perspective.
Their property tax rate is literally the lowest in the country. Now, don't get me wrong, the actual dollar amount you pay in property tax won't be the lowest in the country, due to the high property values, but even the dollar amount isn't a huge burden.
If you follow my Youtube channel, you'll know that of the three main taxes retirees pay, Income, Sales and Property, it's the property tax I adhere to pay most attention to, followed by the sales, and lastly the income.
You can do a lot of work on the front end to minimize your income tax. But sales tax and property tax are perpetual. You are stuck with them.
So, you want to do what you can to find a low property tax and low sales tax state.
Hawaii fits the bill, indeed.
Who knew???
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Military pensions and maybe some of your Social Security are exempt from taxes in Connecticut but other than those two things, EVERYTHING else is.
Too bad too because it wasn't that long ago when Connecticut had no income tax. My how quickly things changed for the residents of that great state.
However, Connecticut's sales tax burden looks much worse than it actually is, once you factor the local sales taxes. In fact, while the state is ranked quite high in overall state sale tax burden, once factor in local sales taxes, CT comes in rather low relative to the rest of the US.
Property tax burden as a percentage of assessed value and in terms of total dollars collected is in the top ten of highest taxed states. And there is not much of a homestead exemption or property tax credit for seniors either.
All in all, Connecticut is painful for retirees. High income taxes, high property taxes, lower sales tax with very minimal deductions or exemptions to take advantage of.
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Colorado is quite reasonable for retirees when it comes to the taxes they pay.
I was somewhat surprised by this given what I thought was the political shift to the left in CO due to the amount of transients moving in from California.
From a property tax perspective the tax rate is VERY low. If you've been following my channel you know that my preference for retirees is a LOW property tax even if you're in a state with a high income tax.
The reason for this is that the tax you pay on income can be easily manipulated, to your benefit. But your property is your property. You can't move your home.
So, given Colorado's favorable tax on property, this is a good thing.
Secondly, they have significant deductions and exemptions for income tax for retirees as well.
I ran a calculation for a couple born in 1953 with $25k Social Security and $25k IRA distributions and they pay all of $98 in income tax. That, my friends, is not too shabby.
Where CO really gets you is the sales tax. Not from the state perspective though. You've got to understand this. If you just look at the state sales tax you may be inclined to think sales taxes are low in CO.
You'd be wrong. It's the county that gets you. So, before you relocate to CO, make sure you understand the COUNTY sales tax.
All in all, CO is quite favorable towards retirees.
https://taxfoundation.org/state/colorado/
https://smartasset.com/retirement/colorado-retirement-taxes
https://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php?map=&state_id=6&state=Colorado
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Whoa, Arkansas is not friendly at all when it comes to income taxes. Social Security is not taxed, which is good, but once your total income (Gross income essentially) breaks $75k you're going to be a 6.9% bracket.
On top of the high bracket too, taxpayers only get $6k in total retirement account exemptions. As of 2018, military pensions are not taxed either.
Property taxes are among the lowest in the nation though.
However, sales tax is the 3rd highest in the US.
So, of the three tax buckets, income, property and sales, Arkansas fares poorly in two.
With proper planning, of course, you can minimize your income taxes. And while you're stuck with high sales tax, having a low property tax is probably one of the smartest moves you can make in retirement.
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Wow, Alaska is VERY favorable from a tax perspective for retirees!
NO sales tax. NO income tax. First $150k of ASSESSED value of your home exempted for folks over 65 and widow(er)s over 60.
Gas tax is very low.
Property taxes aren't low, but they're not extraordinary like in Texas or New Hampshire.
So, other than having to deal with the cold, you'd be hard pressed to beat Alaska from a tax perspective.
Now the question is: How much does it cost to heat one's home?? Something tells me, heat pumps and Solar panels, thermal or PV, are not going to be sufficient!
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Arizona is NOT as tax-friendly towards retirees as one might think.
Arizona, the home of Barry Goldwater, the Goldwater Institute, the birthplace of real school vouchers etc, is, well was, in many ways about as close as one could come to a libertarian dream state. But not so much anymore.
By and large, AZ is still favorable, indeed. Lots to be optimistic about in their tax code. But it is getting more and more complex. And complexity is the enemy of solid financial planning.
From a sales tax perspective you may be inclined to think Arizona isn't that bad. After all, it's only the 28th highest sale tax state in the nation. But throw in local sales tax and Arizona ranks #11 in total sales tax rates.
Income tax is better as Arizona does not tax Social Security benefits. , Most retirement income is fully taxed with a small exemption for government and military pensions.
However, unless you are married with over $100k TAXABLE income you're only going to be in the 3% or so bracket. $25k of Social Security and $50k of retirement income will have a tax bill of less than $1k. Of course, proper planning can make even this small tax be minimized.
Lastly, property taxes in Arizona are quite low, in the bottom third of the entire nation at only a .70% tax rate.
So, while Arizona isn't as favorable as it probably should be, it's still a rather favorable state for retirees.
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North Carolina has a flat tax of 5.49% and basically everything is subject to taxation, except for Social Security.
If you are retiring to North Carolina you should be doing some proactive tax planning indeed. Roth IRAs and Social Security maximization strategies should be your first order to business.
State and local sales tax puts North Carolina smack dab in the middle of the rest of the nation. Not low, but not high either. Groceries are not taxed by the state but can be by the localities.
Property taxes are pretty low. Only the 30th highest property tax in terms of percentage but because median house value is pretty low te actual dollar amount citizens pay in property tax put the state in the top 10 for lowest burden.
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Tax Loss Harvesting should NOT just be done in December. It should be done throughout the year. But to do tax loss harvesting you need to have investments which actually you can tax loss harvest.
Bonds don't grow. Have I ever said that? Oh, a million times!
But what if you own bonds in your taxable accounts and stocks in your tax deferred accounts?
You're making FUNDAMENTAL investing mistakes beyond just tax loss harvesting which I explain in this video.
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There is ample evidence that retirees are not only NOT going to run out of money but they are also NOT spending enough during their retirement.
We can attribute this frugality to many things but hopefully it's based on a reasoned assessment and not some perceived fear that doesn't exist.
Remember, you can't take it with you. So, if you've got it and don't want to spend it on yourself, you'll be amazed the joy you have in giving it away.
https://www.onefpa.org/journal/Pages/NOV17-Are-Your-Clients-Not-Spending-Enough-in-Retirement.aspx
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
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Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
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The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
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If they get this wrong, RUN out of their office! If you are nice and want to give them a second chance ask them HOW they get to their response.
https://www.onefpa.org/business-success/Documents/2018%20Trends%20in%20Investing%20Survey%20Report%20-%20FIN.pdf
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Was this video worth a buck or two? Donate a cup of coffee here: https://bit.ly/2WmP7O4
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Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
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Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
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If I'm an advertiser, I need to make one critical decision, reach a HUGE audience or reach a focused audience. If I want a HUGE audience, the ONLY way to do that is through advertising on Broadcast TV live sports events.
However, if I want a NICHE audience, man, oh man, there is a wonderful world of options out there for you, nowadays. Why you would waste your money advertising on scripted-broadcast TV, such as say Modern Family or some other show? That simply boggles the mind.
https://thebiglead.com/2019/06/12/a-party-like-its-1969-the-remarkable-resilience-of-live-sports-on-broadcast-tv/
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Understand the difference between a life insurance NEED and a life insurance WANT before you talk to an agent. They'll try to convince you a want is actually a need. Don't fall for it.
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Read the Bloomberg article here: https://www.bloomberg.com/news/articles/2019-06-13/world-s-retirees-risk-running-out-of-money-a-decade-before-death
And the World Economic Forum article here: https://weforum.ent.box.com/s/w6cth9cdasx1k7g1vjnsqxttkv34t2su
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Visit Devin's Youtube channel at https://www.youtube.com/channel/UCy8uDv16fjTy51bz0iS8T-Q
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Craig Israelsen, PhD. of the 7Twelveportfolio.com joins us to talk a little bit of investing but a lot more about LIFE! Such a great discussion.
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When is the next recession coming? SOON, right?
https://www.frbsf.org/economic-research/publications/economic-letter/2016/february/will-economic-recovery-die-of-old-age/
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Get my books on Audible here:
https://www.audible.com/pd/B07ND3K5Y5/?source_code=AUDFPWS0223189MWT-BK-ACX0-141746&ref=acx_bty_BK_ACX0_141746_rh_us
https://www.audible.com/pd/B07ND4H9K9/?source_code=AUDFPWS0223189MWT-BK-ACX0-141987&ref=acx_bty_BK_ACX0_141987_rh_us
Was this video worth a buck or two? Donate a cup of coffee here: https://bit.ly/2WmP7O4
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Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
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Anything you buy there Amazon pays me a commission. Much appreciated!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
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My dad, while not a great businessman, was very prescient when it came to real estate opportunities. Ironically, if you listen to some punk rock, you can also get some real estate investing tips.
I share with you this strategy that you can use to hopefully make a decent mint in your own investing ventures.
Now do I do this? Nope. Why? Too much work!
https://www.youtube.com/watch?v=MV7UMVaB5FY&list=RDMMMV7UMVaB5FY&start_radio=1
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https://personal.vanguard.com/pdf/vpabroc.pdf
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It's almost as if Jesus knew who His followers would be..
the beaten down, the outcast, the survivors, the sinners.
Weird, no? I thought Jesus only wanted "perfect people" in his flock.
God loves you, my friends. Not for what you do. But for what you are! Always remember that...
https://www.firstthings.com/article/2019/06/back-row-america
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I traveled down to Pinellas County in Florida to join Dustin TIbbits at the Jazz Wealth Studio to do a LIVE video. We took a bunch of questions and fun was had by all.
Hope you find this informative.
You can subscribe to Dustin's Youtube channel at Jazz Wealth.
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What is it with the negative nellies running rampant from the financial industry? It's weird, actually. So, let's hear some MORE of what they say and then...OBLITERATE IT
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https://www.agefriendly.com/blog/articles/massmutual-social-security-pulse-check
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A famous politician once said "Don't let any crisis go to waste". Could that be why everyone is pushing the narrative of this "retirement income crisis"?
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You can find Jack at www.mysafebridge.com
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Here's the link if you want to read the article/transcript from this interview.
https://www.horsesmouth.com/article.aspx?a=95392
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Brodie Gay, from Unison.com, joins us to tell us how you can access some cash in your home without taking on debt. This has a lot of appeal to me, actually. Listen to find out why.
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================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
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Anything you buy there Amazon pays me a commission. Much appreciated!
If you received value from this video and/or channel, and want to say thanks, feel free to send a donation via Paypal. I'm not too proud to ask! https://bit.ly/2Gq1QsE
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
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http://heritagewealthplanning.com/category/podcasts/
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Time for a new CPA. Guy didn't even ask what her expenses were!!!
How can you say ANYTHING about someone's ability to retire without knowing the most important thing regarding retirement???
Time to hang up the pencil, sir!
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
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Anything you buy there Amazon pays me a commission. Much appreciated!
If you received value from this video and/or channel, and want to say thanks, feel free to send a donation via Paypal. I'm not too proud to ask! https://bit.ly/2Gq1QsE
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
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In this series of videos we're going to tackle what someone can do when they have $1 million in an IRA.
We'll start with Karen and Ken, Married Filing Jointly. WE'll have them take Social Security at 66, 70 and 62 and look at their taxes due, their income, expenditures and their ending net worth.
Then we'll see what things look like when they start Roth conversions.
Finally, we'll make Karen a single taxpayer right out the gate and see what that looks like.
So, buckle up, it's gonna be a wild ride!
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
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Strategic Money Planning: 8 Easy Ways To Put Your House In Order
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MRI went down without a hitch...but does bring up some other stuff to talk about.
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This is the GRAND Conclusion of our 6 part case study on Karen and Ken.
We lay it all out on the infamous white board and use the PVC pipe to point out the BEST strategy for Karen and Ken regarding when to take Social Security and whether they should convert assets to Roth IRAs.
If you haven't watched the previous 5 videos they are all in the playlist.
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
Danielle Roberts owns the Boomer Benefits Youtube channel, Facebook page...and , course, actual business.
She reached out to me a few weeks ago so I could share some thoughts with her audience that you don't need MILLIONS to retire.
Unfortunately, the reach of Suze Orman and others is wide and deep and so many, many people are grinding away, at their crappy, old jobs, for fear of running out of money.
So, they never liberate themselves. Sad....just sad.
Here's all of Danielle's contact info.
To read our blog post on 50 Ingenius Ways to Earn Extra Money in Retirement, click here: https://boomerbenefits.com/50-ways-to...
Boomer Benefits provides free claims support for life for all of our Medigap and Medicare Advantage policyholders so that you are never alone in dealing with Medicare.
We are licensed in 47 states and we are a top-producing, award winning agency with over 2000 5-star reviews from Medicare beneficiaries just like you.
New to Medicare? Attend our FREE Medicare 101 Webinar:
https://boomerbenefits.com/webinars
Get our FREE 6-Day Medicare Video Email course with bonus Medicare cost worksheet: http://boomerbenefits.link/mini-course
To learn about Medicare and Employer Coverage:
https://boomerbenefits.com/new-to-med...
Join our 190,000 Fans on Facebook:
http://www.facebook.com/BoomerBenefits
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Subscribe for NEW YouTube Videos! Be sure to hit the bell to be notified whenever we publish them:
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================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
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Anything you buy there Amazon pays me a commission. Much appreciated!
If you received value from this video and/or channel, and want to say thanks, feel free to send a donation via Paypal. I'm not too proud to ask! https://bit.ly/2Gq1QsE
Contact me: Josh@heritagewealthplanning.com
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The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
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PODCAST:
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http://heritagewealthplanning.com/category/podcasts/
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Medicare...ahhhh harder than rocket science. Medicare makes Social Security planning seem like you're on the beach watching the kids play.
But thankfully, there are people who know a thing or two about Medicare.
Danielle Roberts is one. And in this video we interview her about all things Medicare.
================================
Get the PDF version of my Tax Bomb book for free follow this link.
https://mailchi.mp/7e528cd3cfb3/taxbomb
Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
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Anything you buy there Amazon pays me a commission. Much appreciated!
If you received value from this video and/or channel, and want to say thanks, feel free to send a donation via Paypal. I'm not too proud to ask! https://bit.ly/2Gq1QsE
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
State by State Tax Guide For Retirees:
https://amzn.to/2A1TmkH
GET ALL MY LATEST BLOGPOSTS:
https://heritagewealthplanning.com
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
http://heritagewealthplanning.com/category/podcasts/
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In this episode I chat with Mark J. Kohler, CPA, JD. You're going to get a lot out of this episode, especially if you are interested in all things taxes and small business.
Get Mark's books here. https://amzn.to/2HXmEa6 Remember if you buy through my link you are supporting the podcast. I am grateful to you.
You can subscribe to Mark's Youtube channel here too https://www.youtube.com/user/MarkJKohler
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
Medicare does NOT cover long term care costs. Did you know that?
Probably not.
I bet you did know, though, that you're going to spend a TON of money on health care in retirement. Fidelity for instance says you're going to spend $275,000 in costs on health care and that's BEFORE you even visit a long term care facility.
And I can see it now... We hardly have enough in my retirement account to put food on the table, and now Fidelity and a lot of other firms are saying we're going to need nearly $300k to pay for health casts in retirement??!! What are we going to do???
The answer is...stop worrying about this. Do you know you're going to need over $500k in retirement in order to put food on the table?
Did you know you'll need another $500k in your retirement to pay for housing costs, and that's before you factor in if you have a mortgage or not???
OMG, OMG! We're all doomed!!!
STOP the insanity! We're not all doomed.
How these researchers like Fidelity get their numbers is basic stuff. They calculate the costs of "Free" health care via Medicare and compound that number over the number of years you will be in retirement.
Believe it or not, FREE Medicare has Premiums for Part B and D. Those premiums START at almost $200 a month, per beneficiary and go up as income levels increase.
Then there are co-pays, co-insurance, deductibles etc.
You may have a Medigap or Medicare Advantage plan which also could have premiums too.
Those expenses adjusted for inflation over say a 25 year time frame are where Fidelity gets that dastardly number of $275k or whatever it is in the year they publish the study.
Don't worry though, Fidelity has solutions for you to deal with that huge cost. Simply invest more money with them! Works like a charm.
Frighten people to save more and hopefully those same people in the course of their savings will use their funds in which they get fees. Amazing piece of salemsanship.
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
Should you borrow from your 401k to finance a vehicle?
In this video we model scenarios as to when it makes sense.
First thing to understand is how a 401k loan actually works. You can borrow up to 50% of your balance or $50k, whichever is less.
So if you have $10k in your 401k, you can borrow $5k. If you have $50k in your 401k, you can borrow $25k. If you have $150k in your 401k you can borrow???
That's right, $50k. Good job!
So, let's say you have $50k in your 401k and are looking to buy a vehicle for $25k. You can borrow the $25k from your 401k or you can finance it through the dealership.
$25k borrowed from your 401k at 5% interest means you're monthly payment will be $470.
Thus this decision really comes down to what the interest rate is your dealer or bank is offering.
Watch the video and I show you some examples.
Hope this helps!
=================================
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Texas is such a great state. Southern, Mexican, Cajun, German culture all thrown into one place. Plus the diversity in landscape.
Arid in South Texas. Green rolling hills in the east. Deserts, beaches, mountains. Can it get any better? Absolutely fantastic.
Just to set the record straight, there "ain't no saguaros in texas" https://www.youtube.com/watch?v=mg5VwtODOJQ. You need to go to AZ to see those.
But taxes in Texas are not nearly as favorable as one would think. Yes, no income tax. That's awesome.
But property and sales taxes are high.
I remember when we lived in South Texas getting hammered by property tax. We had come from Virginia where property taxes were low.
All of sudden having these huge property taxes was a shock to the system for sure.
Texas definitely offsets it with its NO income tax. But then you throw a high sales tax in the mix and you realize Texas is not nearly the panacea many make it out to be from a tax perspective.
Ideally, you'd want to retire to a place that is low in sales and property tax, even if they had an income tax. You can do a lot of proactive planning to minimize the income tax. But there is little you can do from a property and sales tax perspective.
Still Texas is better than most. You can get the wonderful culture thrown in for free too! Hard to beat.
=================================
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Tennessee is one of the few states with no income tax. So, right there alone the good folks in Tennessee are going to be taxed very favorably when it comes to retirement.
However, sales in Tennessee is the second highest in the nation, clocking in at 9.46% on average when you factor in local sales tax.
But, a high sales tax is the only sore spot for retirees in Tennessee because property taxes are also among the lowest in the country at .75%.
Factor in Tennessee's lower median home value with the low property tax rate and you have a winning scenario for retired home owners.
Overall, Tennessee comes in very favorably for retirees.
=================================
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Pennsylvania is very good to its retirees in terms of the taxes they pay.
In fact, ALL retirement income is excluded from taxation!
So, just say you have $40k in Social Security and $60k in IRA, pension and 401k distributions. You will pay 0 in tax. That is a big, fat Goose Egg, my friends.
Now, you may think PA has a high sales tax. And you'd be wrong. The state plus local sales tax rate puts PA in the bottom third of all the US for sales tax.
Lastly, the property tax rate is pretty high at around 1.50%. There is not much of a homestead exemption either. But the median property value in Pennsylvania is not extraordinarily high either. So, while you pay a high percentage, relative to the rest of the US, the total dollar you pay is closer to the middle of the average US state
From an income tax perspective alone, PA is very favorable for retirees. Moderately low sales tax add to the allure. The property tax is a bit high but nothing that should drive you away from the great Commonwealth of PA.
=================================
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Georgia taxes for retirees are among the lowest in the nation. In fact, Georgia ranks in my top 8 for most friendliest towards retirees!
Georgia is even more tax-friendly than its neighbor to the north, Tennessee even though Tennessee has no income tax. Weird right?
And this is a perfect example of the need to look beyond just the states with no income tax as a place to retire that is tax-friendly.
For example, in GA, if you are married and have income up to $130k, there is NO TAX!
While it's sales tax is the 20th highest in the US, the state does not tax food. Individual municipalities can though. so do your research on which county taxes food.
But, think about it, what is one largest consumption products? You got it, groceries. So, in GA, you can get by with a minimal tax on groceries, if any at all.
Property taxes average just under 1%. Which puts Georgia in the middle of all 50 states. But because the median house value is quite low, the actual dollar amount in property tax is low relative to a lot of other states in the US.
It needs to be understood that each county can allow its own homestead exemption for property taxes on top of what the state allow. I did not know this and neglected to file my own homestead exemption which cost me $3500. https://youtu.be/2V3kwpTh0cs
Once your over 65 years old, you can claim a double exemption from state property taxes as well if your income other than Social Security and pension income is less than $10k That could prove to be pretty significant.
Think about it, in GA if you're over 65, you pay 0 income tax and 0 property tax, within certain thresholds of course You only pay sales tax on non-food items.
Finally, you will pay hefty fee to register your vehicle for the first time. Trust me, it can easily go into the $1000s. But after that, your vehicle tax is well below $100 a yer.
So, all in all, GA is quite favorable from a tax perspective. Nice climate, nice tax structure, it's a great place to live.
=================================
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While Florida has no state income tax, residents there still pay taxes in other ways. But the overall burden is low relative to most other states.
Property taxes are about 1% of assessed value. But don't let that percentage number seem high. The median value of a home in FL is all of around $150k.
So while other states, say California, has a lower property tax rate, the median home values there are 3 times as large as in FL. Thus, in CA even with a lower rate, their residents pay more in taxes.
Sales tax in Florida is probably the largest of the tax burdens a resident pays.
All in all, NO income tax, low property tax and a moderately high sales tax, PLUS the sun, not a bad place to be.
Keep n mind though, homeowners insurance is always a challenge in FL. So, get a quote BEFORE you buy a house!!!
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If you want the best football channel on the internet, FlemloRaps is for you. Find his channel here. https://www.youtube.com/channel/UCazhpToa5Z07lgnUL6fYdEw
But more than just football, Flemlo talks about all sorts of things in each video, life lessons in particularly.
Just an amazing channel and human being. Listen to his story and get motivated to get out of your crappy old job to do what you love with this one life you have.
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
Listening to the Meb Faber Podcast while mowing my lawn this afternoon and he mentioned this website called FeeX.com.
FeeX is a site you can go and for FREE type in your fund holdings, even link your account if you’re so inclined. Their algorithm will then analyze your funds PLUS a list of comparable funds that are a whole lot cheaper. It’s crazy! And it’s awesome!
For instance, I typed in USMIX, which is USAA’s Extended Market Index. Out came a bunch of other funds, exactly like it, but cost significantly less.
Then FeeX calculated what the other funds would save me over time in total fees. Folks, we are not talking about pennies here. We’re talking tens of thousands of dollars.
Fees matter, my friends. And if you own high fee funds you’ve got to understand the headwind you’re dealing with when it comes to performance. The more fees, the less your fund will be able to compete. Just no other way around it.
Of course, this does not mean higher cost funds CAN’T outperform lower cost funds. It’s just going to be hard to do it.
Think about it like this. Let’s say we each expect the market to return 10%. My fund costs 2% your fund costs .50%. Because my fund costs 4x your fund, I have to return 1.50% more than you, year after year, just to equal you.
How can I do that without taking on much more risk? I can’t. So, the higher cost funds will underperform or take on more risk to outperform. And just cause one takes on more risk doesn’t necessarily mean out performance either.
So, give FeeX a try at www.feex.com.
And, if you are interested in investment-related podcasts, you’ll have a tough time beating Meb Fabers podcast which can be found at www.mebfaber.com.
=================================
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If you are planning on retiring in Maryland, do NOT rollover your employer sponsored retirement plan, 401k, 403B, 401a, 457, and TSP unless you want to pay more in tax.
And when I say more in tax, I mean much, much more.
Maryland tax law allows you to exclude $29,900 from your employer sponsored plan once you are over 65 years old, per taxpayer. Which means a married couple could exclude nearly $60k from taxable income.
Maryland also excludes your entire Social Security income from taxes too. So if you plan right you could have around $100k income, or more, TAX FREE in the state of Maryland.
Yet if you make the common mistake by rolling over your employer plans to iras you are going to pay a lot more tax. Not good!
The easiest thing retirees can do to live comfortably in retirement is to control their expenses. One of the largest expenses is taxes. So, reduce your taxes and you have less income needs to pay the bills.
How do you reduce taxes? Well, in Maryland, it's not to have taxable income by rolling over your employer plan to an IRA.
I've linked to the state document which discusses the Maryland Pension Exclusion. Now, this does not say explicitly the Thrift Savings Plan is exempt. But given it is an Employer sponsored retirement plan, i.e, a qualified retirement plan, I feel rather safe saying the TSP falls under the Maryland Pension Exclusion rules.
These rules do explicitly state that IRAs do NOT qualify though. Could not be any clearer.
IRA = bad in Maryland for tax.
http://taxes.marylandtaxes.gov/Individual_Taxes/Individual_Tax_Types/Income_Tax/Filing_Information/If_You_Are_a_Senior_Citizen/Maryland_Pension_Exclusion.shtml
http://taxes.marylandtaxes.gov/Individual_Taxes/Individual_Tax_Types/Income_Tax/Filing_Information/If_You_Are_a_Senior_Citizen/Pension_Exclusion_Worksheet.pdf
http://forms.marylandtaxes.gov/current_forms/Resident_booklet.pdf
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I'm about to share with you the simplest strategy you'll ever hear on how to reduce your retirement expenses. Are you sure you can handle this? Well here it is...
MOVE! Yup, I said it. Move! If you're in a high expense county move to a lower expense county. If you're in a high expense state move to a lower expense state.
Mind you, I said this is the simplest thing you can do to reduce your retirement costs, but I did not say it was the easiest thing. Moving is a hassle, no two ways around that.
But think about it. If you are living in San Francisco and are just squeaking by on $100k a year, that $100k would go a LONG way in Gadsden, AL.
Gadsden, AL is about halfway between Birmingham and Chattanooga. Just a most gorgeous part of the country. An easy drive to the beaches of Orange Beach and the mountains of North Alabama.
Best of all, you won't worry so much about running out of money!
If your money situation has you down, there is a simple solution.
MOVE! And watch you quality of life improve significantly.
https://www.bea.gov/newsreleases/regional/rpp/2018/rpp0518.htm
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In 2009, senior officials at the Social Security Administration were made aware of grossly underpaying widows who were entitled to much larger benefits.
They did nothing.
So, the "whistleblower", for lack of a better term, contacted the one person with a large enough megaphone and deep understanding of Social Security to tell him about this absolute disgrace, Larry Kotlikoff.
In 2015, Larry wrote a scorching article for PBS about this issue.
The Social Security Administration did nothing.
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I read a lot of investing articles. Some are quite good. Meb Faber’s research over at Cambria Funds comes to mind. His podcast is fantastic as well.
But a lot of investment blogs are not very good. Some are just horrific and you wonder how their compliance managers let such tripe be published.
Others, though, at first glance, seem to be well thought out until you start to read deeper and realize the author is regurgitating many of the arguments from yesteryear, which have since be debunked.
However, some articles do have a few golden nuggets thrown in with a couple cringe-worthy statements. These are the articles the reader can take away good information IF and only if, he or she can differentiate the bad from the good.
I walk you through a couple articles just like this today that were sitting, for over a year, in my “stack of stuff.”
I have a large plastic crate of articles, books, magazines etc. Every time I walk by the tote, I get frustrated, knowing that there is a lot of great stuff in there I must find the time to read. When I finally get to digging through this library of sorts, I’m amazed at the treasure trove of information I find. And so I sit down and read. And read some more.
Now that I have a Youtube Channel, a Podcast and THIS blog, I can’t wait to share what I’ve learned.
This is one of those times. I hope you find it informative.
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Everything you have heard about retirement planning is WRONG!
This white paper from United Income, using data from CDC, BLS, University of Michigan, and many other areas, is a must read.
Retirees are living longer, are healthier and wealthier than ever before.
But here's the critical thing is that retirees on average spend 2% less each year in retirement than the year before.
From the article: The average retiree cuts their spending by about 2 percent every year throughout their retirement. The biggest drop over time is spending on lifestyle expenses, like travel, apparel and entertainment; but, essential spending on transportation and housing falls too, as retirees pay off their mortgages and rely more on friends and family for getting around town as they age. Healthcare is one of the only expenses that tends to increase through retirement, although it tends to increase incrementally for nearly all retirees.
Now, what are we typically told? We aren't' saving enough. Why? Because we use retirement projections that assume spending is going to increase each and every year in retirement.
Yet, the numbers are becoming more and more clear that retirees actually REDUCE their spending!
If you are spending less each year than you were told, how would that change your current retirement planning?
Maybe you wouldn't worry so much.
Now, here's the problem. As people live longer in retirement, they are watching more and more TV. This is leading them to be more pessimistic about their current situation and the world they live in. TV, and news in general, is focused on sensationalism. "If it bleeds, it leads".
This is not good. Cut the cord. Turn off the stupid box. And enjoy your health and wealth in retirement.
https://www.foxbusiness.com/features/living-longer-healthier-and-wealthier-lives
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In the last episode we talked about how retirees today are wealthier and healthier but unfortunately those significant improvements is leading to bad behavior.
Retirees are watching HUGE amounts more TV than ever. And because TV is so sensationalized, read "if it bleeds it leads", many retirees are being affected by their news consumption. They are not as happy, and are more worried about things out of their control AND which will not ever affect them.
It's sad actually. The liklihood of you being shot in the streets is so remote it's not even worth discussing. The same goes for being the victim of a terrorist attack.
Could these things happen? Of course, but to focus your energy on these most unlikely events is energy lost. Don't do it!
In this episode, though, I focus on the amazing aspect of where people actually retire.
One would think most retirees are moving to warmer states with low crime and low taxes right?
Actually, that is not true. In fact, only 1% of retirees actually move INTER-state. If retirees move at all, it's within the same county! Absolutely amazing when you think about it.
In fact, this goes even further to confirm this video I did about people being happier if they have a strong sense of community. https://www.youtube.com/watch?v=VVoDBGeAV2A&t=136s
Where are you going to have the strongest sense of community? Well, the community you're in, now. Thus if you have roots laid down, you're probably going to stay right where you are...taxes, weather, crime rates, are secondary considerations.
We've been told there is this mass exodus from cold, high tax states. The numbers simply don't bear that out.
New York and PA are in the top 5 of ALL states with retirees as a percentage of their population. Texas, Florida and CA are the other states in the top 5.
Now, one might ask, maybe people moved BEFORE they retired and are going to settle in where they moved?
Well, only 2% of US households even move INTER state each year!
Incredible isn't it.
Lastly, this paper confirms what many of us financial planners have been stressing for years; you are likely to spend LESS in retirement than you've been trained to believe. In fact, this paper says you'll probably spend 2% less EACH year.
Again, incredible. And goes against all conventional wisdom when it comes to retirement planning.
https://unitedincome.com/documents/papers/UnitedIncomeStateOfRetirees.pdf
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The Secret to happiness in retirement is...
Well, if you've been following my channel at all you 'll know what it is.
The secret to retirement happiness is not having a mortgage. And in this video I'll reference a Washington Post article which serves to confirm this assertion once again.
Now, the Washington Post article doesn't come out and explicitly state that not having a mortgage is the secret to happiness. In fact, they cite many factors to determine who is actually happy and why.
Some of the factors are quite interesting actually: Strong sense of community, homogeneous population who have been in the community over 5 years, attend church, lesser commute, population being less dense.
But what struck me was that in happy communities 13% fewer households spent over 30% of their income on their housing. Hmmm wonder what that implies?
You got it! Cheaper cost of living in rural communities means lower mortgages which means more likely to be paid off come retirement which means less percentage of income goes to housing costs.
Just confirming even more what I said in this video: https://youtu.be/AFPk4WpMuKc
So, if you want to be happy in retirement do these things:
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pay off your mortgage
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live in a smaller town with people like you who don't move often
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lessen your commute
4, go to church
- get to know your neighbors
Crazy right???
I mean who would ever think people would be happier if they have more elbow room, with great neighbors who are like them, with less debt worries?
Now, think about what this could mean for the future, if and it's a big IF I grant you...If we could get battery storage capacity out of the 19th century technology.
Think if your neighborhood could generate its own electricity, a micro-grid of sorts, to be used solely in your community. Want to talk about a strong sense of community and neighborliness. Hard to imagine anything better than each neighbor taking part in the local electricity production and consumption.
Of course, electricity isn't enough to power your home. Still going to need natural gas, which I doubt will ever be run on a micro-grid level.
However, bringing electricity to the local level would be a huge benefit for communities across the US.
I'd argue it would even increase a sense of community and happiness.
But remains to be seen if micro-grid electricity production can be done. I'm pessimistic but hope I am wrong.
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What do you do if you filed for Social Security benefits too early?
In this video I will share with you three things you can do to improve your Social Security benefit, even if you already filed.
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Stop your benefit and pay back what you received. Now you can only do this in the same year you filed, be advised. Before the 2015 changes you could repay all your benefits, interest free, even if you took those benefits years prior. Those days are over now.
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Stop your benefits to begin receiving the increases each year you delay taking them up until age 70,
Say you are 64 and started your benefits at 62. Because you took your benefits before your Full Retirement Age of 66, your Social Security payment was reduced by 25% of your Primary Insurance Amount (PIA).
However, if you stop your benefits now, you can still receive increases of 8% each year until you decide to start the benefits up again. No big deal.
Of course, if you do this, you'll need to ask where the income will come to replace the Social Security benefit you no longer receive. Just keep that in mind.
3. My favorite strategy is to stop your benefits AND go back to work.
This strategy could double your winnings because the extra year of work may replace a lower earning year in your Averaged Indexed Monthly Earnings (AIME)calculation.
Remember your AIME is based on your top 35 years of earnings. Let's say you have a couple years in your AIME when you were making 20k as a dishwasher.
Well if you now you get a job selling cellphones or whatever and make 90k in commissions, not only have you lopped that 20k year off your AIME but you've replaced it with 90k!
On top of that because you're no longer receiving benefits you're taking advantage of the 8% a year increase on your total benefits.
A win/win/win scenario here, if you ask me.
Moral of the story: If you took benefits too early, don't fret. There are ways you can "fix" what you've done and be better off for it.
https://money.usnews.com/money/retirement/social-security/articles/2018-02-09/what-to-do-if-you-filed-for-social-security-too-early
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The "best" mutual funds are all the rage. Just do a search on Google and there are nearly 15,000 searches a month for the terms "best mutual funds" and "top mutual funds".
Everyone, it seems, wants to invest in the best. It's such an alluring idea, it even rhymes. "Invest In The Best".
Type "worst mutual funds" though and you only get 40 searches a month. Interesting, no?
So, what happened when you invested in the Best Performing Mutual Fund Of the Decade? Not just the year's best, mind you, the entire decade's best fund?
You were down 75% 5 short years later.
Even today, after 2 solid years up, 45% in 2016 and nearly 10% last year a $100k initial investment would only be worth $37k today. And you will never get back to your starting point.
Remember my friends, a 50% drop means you need 100% on the upside just to break even! Not likely to happen very quickly, if at all.
Which is why you need to "cut your losses". Rule number 1 in investing...ride your winners and cut your losses.
Learn that one rule and you'l be so far ahead of your peers it won't even be funny.
https://finance.yahoo.com/quote/USAGX/performance?p=USAGX
https://www.cbsnews.com/news/why-you-should-avoid-the-decades-top-fund/
https://www.fool.com/investing/general/2015/05/20/usagx-is-this-fund-for-you.aspx
https://www.businesswire.com/news/home/20100125005170/en/USAA-Precious-Metals-Minerals-Fund-Ranks-Top-Performing
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Tax-efficient investing is what Vanguard is known for. They just sent out a summary of their "model portfolios" and highlights the gross and after tax returns of each. Which I love. And you should too. You can find it here. https://advisors.vanguard.com/web/cf/vanguard-models/?INCMPGN=IN:BR:XX:FAS:XX:20180514:ALL:XX:LINK:MODPORT:TAX:EFFICENCY
Their 100% equity portfolio lost 6% of its returns to taxes over the last 5 years. Gross returns were 10.63%. After tax returns were 10.01%. (After tax returns use the highest possible federal rate at the time of distribution but does NOT include state tax.)
Their 100% fixed income portfolio though gave away 50% of its returns to taxes. Before tax it averaged around 2%, after tax, 1%.
That, my friends, is a big deal!
In this episode you're going to learn how to avoid all that.
3 accounts. $100k in each, a Traditional IRA, a Roth IRA and a Taxable account. You are a 50/50 investor, that is 50% stocks and 50% bonds.
Where you hold your stocks and bonds in which account can make a HUGE difference in your ability to create wealth.
I'll show you exactly what to do in this video.
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Almost every investor owns a mutual fund. But how many of those investors actually know what it is they own?
In this video I am going to breakdown the most important aspects you need to look at when you're considering mutual fund investing.(By the way, the same things are applicable to Exchange Traded Funds as well.
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expenses
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portfolio turnover
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30 day SEC yield
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Tax adjusted returns
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historical taxable distributions
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tenure of fund manager
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portfolio holdings
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unrealized capital gains
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size of fund
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Morningstar Rating
Yes, there are many areas to consider. But once you watch how I do this, you can go to Morningstar.com yourself and analyze your own funds and ETFs.
Remember, my friends, the only return that matters is your NET return, i.e.your return after tax and fees. NOTHING ELSE MATTERS!
The problem though is that trading fees are NOT measured anywhere in the SEC literature you can request on the fund you're looking at.
So, you can not be too sure exactly what your fees are.
However a fund with low turnover will more often than not have lower portfolio costs AND less taxable distributions too. Which should make the fund a stellar performer among its peers.
So, look for low turnover, low fees, low historical tax adjustments, a long running portfolio manager, a high Morningstar rating, etc.
Here is my article on trading costs. http://heritagewealthplanning.com/mutual-fund-expenses/
Here is the Morningstar link I was using in this vidoe. http://www.morningstar.com/funds/XNAS/VASGX/quote.html
Don't forget to visit my website at www.heritagewealthplanning.com and sign up for my podcast, The Josh Scandlen Podcast.
https://amzn.to/2wKGi50
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Many professional money managers will provide a benchmark to their clients as a way to measure their performance.
This is certainly better than the old days when an investor had no clue as how well his/her money manager was doing.
The problem with this new approach though is that the benchmark is basically meaningless.
How is the benchmark determined, first of all? By the folks you are paying to manage your money? doesn't that seem a bit disingenuous at the outset?
Think about it like this. I'm a professional football coach. The owner wants to know how I did last year. Thankfully, I get to pick the benchmark to compare my performance. So, what do you think I'll use? The Cleveland Browns of course!
The investment world is not that far removed from this type of performance comparison. THEY choose the benchmark.
Yeah, it will be more legit than my football analogy above. But still, how do they get their benchmark? Is the benchmark something I can invest in directly?
I've seen benchmarks as precise as 8.62% in small cap value stocks. 11.58% in International developed stocks etc. How do they get their percentage of asset classes within the benchmark? What relevance is it to me that their benchmark is that precise?
Even if they "beat" their benchmark, what exactly does that tell me? Well, nothing actually because the benchmark is a theoretical abstraction not based in reality whatsoever.
A better solution is to use something that does exist, something I could actually invest in if I so desired. And that is why I love the Vanguard Lifecycle funds for a true benchmark.
The example I use in this video is the Vanguard LifeCycle Growth Fund. This fund charges all of .14% expense ratio. It has a ticker too, meaning I can invest directory in it. It also is as simple as can be, only 4 holdings. Total Stock Index. Total International Index, Total Bond Index, Total International Bond Index.
The performance numbers are there for all to see, as clear as day.
If you are an aggressive investor, did your investment manager beat this fund, NET OF FEES? If so, and if he/she does it consistently, year over year, you're probably in a good place.
If not, well, you have some choices to make.
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As of today, (5/13/2018) ANYONE who joins the US Military will do so under the new retirement plan, the "Blended Retirement System".
As someone who served 3+ years on active duty in the infantry and another 4 in the National Guard, I am fond of the new rules.
After all, the VAST majority of servicemen and women do NOT stay the full 20 years and receive NO benefits at all upon separating from service. (Yes, they get the VA Loan and college benefits but no medical or retirement benefits.)
The new system will reward service personnel for completing their first tour or two without having to commit to remaining the service for another decade and a half or so. This is good.
Also, as an incentive to keep senior personnel who've served 12 years, think NCO's, they will receive a Continuation Bonus when they sign on for another 4 years.
These NCO's are the backbone of our fighting force and we need for them to continue to serve. They are irreplaceable.
So, giving them bonuses as an incentive to re-up is good for them, and for our country.
Yeah, there will be a reduced pension for those who stay in for 20 yrs or more. But that COULD be more than made up by 5% match on the TSP.
That's a trade-off I'd take in a heartbeat.
On a secondary topic, I discuss pensioners in their decision to take the Survivor Benefit Plan (SBP) or not.
The SBP is nothing more than a premium payment the retiree makes to allow for his/her surviving spouse to receive 55% of the retiree's benefit at death.
The premium isn't cheap. So, it's imperative the retiree consider ALL options before signing on OR rejecting the offer.
Some folks will opt to not take the SBP and instead buy a life insurance policy. This MAY work. But if it doesn't you could be leaving your surviving spouse in a world of hurt if you die.
Proceed. With. Caution here folks. Understand the ins and outs of ALL options.
http://militarypay.defense.gov/BlendedRetirement/
https://www.usaa.com/inet/pages/insurance_life_military_benefits?akredirect=true
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In this video, I share with you examples of misleading data from the "investment gurus" which serve only to separate you from your hard-earned investment dollars.
I also point out WHY these investment guru's use faulty data...because they get rich off investing YOUR money. Yet, what happens to you when the market falls?? Do you get reimbursed? Yeah, not quite.
Remember, my friends, investment management, where one tries to outperform the market is a zero sum game. Throw in the quite high fees and it's a game you can't win.
Oh, don't get me wrong, someone wins, the investment managers! But not you. Don't fall for it. Your wealth is at stake.
https://www.reuters.com/article/us-usa-election-hedgefunds/u-s-hedge-fund-managers-pour-money-into-2016-race-and-trump-is-a-factor-idUSKCN0WC19G
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Living Trusts play an important role in estate and financial planning, when enacted properly.
The problem, of course, comes when a document hasn't been updated to reflect the change in family dynamics, tax law or legal circumstance.
First and foremost, your trust must actually be funded, i.e., there must assets it actually controls.
Assuming the trust is actually funded, the most important part of the trust is the identification of trustee and successor trustee.
These are the people who actually control the trust day to day management. What you want to happen with your trust is contingent on these people.
Typically, the trustee will be the grantor of property to the trust. Usually, that will be you. You grant property to the trust AND you are trustee.
You control the trust. You can change it. Cancel it. Do whatever you want. Any income generated in the trust, flow to your 1040 to be taxed. In actuality, you still own the property. In fact, the value of the asset in your trust will be included in your estate at your death.
Where the trust can be beneficial will be if you, again the grantor and initial trustee, become incapacitated or die. Then the person you named as Successor Trustee will step into the role to manage your trust. And this is why your choice of Successor Trustee is SO critical.
Is your Successor Trustee still capable and willing? Does he or she understand the ramifications and the potential effort required to manage your trust according to your wishes?
Remember, a living trust, i.e., a revocable trust, becomes irrevocable at your death. Thus, only a court order can change the way you have chosen for your trust to be managed AND who the people are who are appointed to manage the trust.
Have things changed since you set it up? Maybe the Successor Trustee has become addicted to gambling, for instance.. Do you still want him then to manage your trust?
So, let me ask you. Do you have a Living Trust?
Yes?
When was it drawn up?
Have things changed since then?
Is it funded?
Who is the Successor Trustee?
What powers have you granted that person?
Finally, do you really even need it?
You really should be able to answer all these things. If you can not, I recommend you seek competent counsel.
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A Durable Power of Attorney is one of the MOST important aspects of estate planning. And yet, it seems to be the one area that is least understood.
What a Durable Power of Attorney does is allow someone to act on your financial affairs, as if they were you, even after you've been declared incapacitated. A "Durable" Power literally means is survives incapacity.
A "General" Power stops at incapacity.
It's CRUCIAL to understand the difference! If your Power of Attorney is not durable, it will cease to operate at incapacity, the time it's needed the most, typically.
Read my book on this exact issue, chapter 8, you can read for FREE if you have Kindle Unlimited.
https://www.amazon.com/Strategic-Money-Planning-Sustainable-Wealth-ebook/dp/B07C9SQDCT/ref=sr_1_1?ie=UTF8&qid=1526048812&sr=8-1&keywords=josh+scandlen
What does YOUR estate documents say? Who is the exectuor? WHo is the attorney-in-fact?
We'll go over some other documents later. But if you have a Living Trust, who is/are the successor trustees?
Is your Trust even funded?
Have you updated your docs for the huge change in tax law over the last 10 years?
No? Don't know? Don't have anything?
What are you waiting for, my friends. Get on this...NOW!
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If you were born before January 2, 1954 you are the LAST cohort to ever be able to file a Restricted Application.
This means you could literally receive tens of thousands of dollars more in Social Security benefits than someone born January 2, 1954 or later.
When President Obama signed the Bipartisan Budget Act of 2015, many "loopholes" of Social Security were eliminated.
Mainly the ability to file a restricted application and receive Spousal benefits all the while allowing your own benefit to increase with Delayed Earnings Credits.
Here's the language directly from the Social Security Administration: The loophole allowed some married individuals to start receiving spousal benefits at full retirement age, while letting their own retirement benefit grow by delaying it.
Those days are over now..unless you were born before January 2, 1954. You can STILL apply for your Spousal benefits once you hit Full Retirement Age (66) and allow your benefits to increase each and every year until you reach 70.
In this video, I use our fictitious couple, Bob and Jane, to show you EXACTLY how this works,
Folks, if you qualify for this "loophole" you'd be crazy not to consider how you could benefit.
Talk to the Social Security Administration...Now. Or talk to a professional advisor. Or better yet, talk to both!
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Retirement Planning is really about how to maximize your dollars. When you're on a fixed income you do not have the luxury to waste money.
In this episode I show you an easy way to save $30 a month, or more with just some basic energy efficiencies.
Change your light bulbs to LED lights. Insulate your attic. Caulk around the light fixtures. Get double-paned windows. Use your propane grill to cook in the hot summer afternoons. If you can, air dry your clothes.
You don't need to be a "greenie" per se to save money on your electric bill. Just some basic adjustments. None of which require a huge amount of money to implement.
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When it comes to maximizing your Social Security benefit you have to make sure you're using the proper life expectancy numbers.
The numbers you hear in the media about the life expectancy for the average Americans are for new born, bouncing babies. They are not for you!
Your life expectancy will be much higher. In fact, if you don't smoke, eat right and have a college degree your life expectancy will be well above what the Social Security tables show.
https://www.ssa.gov/oact/STATS/table4c6.html
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Is the market high, low, does it matter???
In this video I show you some of the JP Morgan research they put out every year for free. The link is below.
This paper and Vanguard's are really the only two research papers I look look to with high anticipation.
Basically what I'm looking for in JP Morgan's stuff is where we are with valuations.
The 4 most current analytical tools for current valuations are, Price To Earnings ratio, Current Dividend Yield, Price to Book and 10 year Treasury Yield.
With those 4 numbers you can get a pretty good idea of your return over the next 5 years because valuations are most important. Nothing is more important from a future performance perspective than CURRENT valuations, other than an unforeseen event, of course.
Right now, the market is trading at roughly a 16.5 PE, with a 2.20% dividend yield a price to book around 3 and the 10 year is at 2.90%
Nothing of these numbers scream OVERVALUATION which many prognosticators continue to say.
Can we take a plunge? Sure. But what would cause that? A huge decline in earnings, maybe. Unless that happens though, it's really an unforeseen event that would cause any kind of decline.
You can invest banking on unforeseen events. So, the way I look at it, there is nothing to change.
Just keep paying down debt. Stay diversified and enjoy the ride.
https://am.jpmorgan.com/gi/getdoc/1383539161308
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Every year the stock market, as represented by the S&P 500, has significant drops in value. In fact, the JP Morgan research I cite in this video shows the market drops in value on average 14.2% a year.
Unfortunately, many investment prognosticators fail to take this fact into consideration when they discuss investments... Looking at you Dave Ramsey!
They simply cite the average returns over time and thus make assumptions based on those averages. But you should NOT do that!
We are human beings and thus live in the moment. You can cite all your the averages you want but if I look at my account in the middle of August 2011 and I'm down 19% from its high, the averages become meaningless. Today is my only concern.
If you've studied or even heard of Benoit Mandelbroit's discussion of fractals, you will see how fractals can be seen in basic investment analysis.
We tend to look at the 'stock market' from the bird's eye view. The market averages 10.5% a year. But if we break out our Google Images tool and look deeper we will see that on any given year there is a 25% chance the market will lose value.
Finally, if take a microscope and look even deeper, we can see that WITHIN any given year, the market actually drops on average 14.2% of the time!
Yet, we don't hear about these short term losses much do we? We simply look at the long term averages and extrapolate info from those averages to use in our day to day thought process. That is not the way to invest, unless you know going in the market is a doggone volatile place.
If you know the market is volatile from the outset and are prepared to deal with that, the day to day iterations are meaningless to you. But if you only think you're going to gain 10.5% on average and suddenly, over a 45 day period, you're down 19%, well what are you going to do then???
To a successful investor you MUST stay the course. But that means you must have a healthy ability to deal with daily market fluctuations. Ideally, you simply invest in a diversified portfolio and pay no mind to it again except for once a year when it comes time to re-balance.
If you want to check your accounts regularly, just remember, you're in for a rocky ride. Much more so than what you've been lead to believe from the industry commentary.
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Interest and dividend income are other areas of the tax code that punishes the ignorant.
You have income on lines 8a, 8b, 9a and 9b? Why? Is there a strategic reason for earning this income in order to pay tax?
If so, that's fine. Maybe you need the cash to help pay the bills, pay tuition, take a vacation, etc.
However if you're receiving this income because of how your investments are designed without any strategic intent, I suggest you consider a different plan of action
Let's start by looking at what types of income you have.
If you have interest income, from bonds and/or CDs, this income is taxed at ordinary income rates. Worse yet, there is NOTHING you can do about it other than paying the tax on it...as ordinary income.
Consider moving ANY holding you have that yields ordinary income(OI), into your Traditional IRA in order to defer those OI taxes as long as you possibly can.
Remember your IRA is taxed as Ordinary Income anyway. So, having an IRA taxed at those rates PLUS having investment income taxed at the same means your paying too much in tax.
If you have municipal bond income, i.e., 'tax exempt interest' consider scrapping those and instead moving into corporate and/or government bonds inside your IRA.
Because municipals are tax free they offer a much lower interest rate than corporate and government bonds. So, for simplicity, say a municipal bonds yields 2.5% a corporate bond will pay more because it's income is taxed.
A corporate bond with similar maturity date may pay 4%. This means it takes $320,000 in assets to yield $8,000 in income for the municipal bond but only $227,272 for the corporate bond AFTER taxes for someone in the 12% bracket!
That is a significant difference in the allocation amount to corporate bonds over tax free bonds to receive the same after tax income.
We don't municipal bonds, unless we're in the higher tax brackets, those above 22%.
We don't want ANY bonds in our taxable account either. We want bonds in our Traditional IRA.
Secondly, we want dividend paying stocks, the investments that give us income on lines 9a and 9b, in our ROTH IRA. DIvidends we don't need only cause higher taxes. Avoid that. Move your income-oriented stocks to your Roth.
Lastly, we want your most aggressive holdings, ideally the ones with little to no dividends or capital gains in your taxable accounts.
The unrealized appreciation on these investments cause you NO tax.
Because these holdings are aggressive they should pay no dividends whatsoever.
Lastly when it does come time to sell a position in order to generate cash, you can work the tax code to do it in the most tax-favored way possible. You can't do with other income you receive from your investments.
Finally, at death, the growth of these aggressive accounts transfer TAX FREE to your heirs because of the step up basis rules. IRA accounts don't have that benefit.
Roth IRA accounts don't have a step up in basis but they are tax free anyway, which is just as good.
At the end of the day, it's up to YOU to understand the tax code to take advantage of it to your benefit.
If your advisor isn't helping you with this, well, hate to sound brutal but seek a new advisor!
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In the previous episode (https://youtu.be/S34U7tDqr4w) we discussed how Dave Ramsey made the HUGE mistake in mixing average market returns with volatility.
It is true the market has returned over 10% a year since 1926. However, the mistake Dave makes is assuming that means one can take a distribution of anything less than 10% and NEVER TOUCH PRINCIPAL.
This is a horrendous mistake to make. And for those who follow that advice they could easily find themselves out of money before they are out of time.
In this episode I bring back the Vanguard report that shows the volatility of the market going back nearly 100 years. What Vanguard shows us is that while the average return has been a bit over 10% only 6% has the market actually given us a return in ANY given year of between 8 and 12%!
This means the VAST, VAST majority of times the market gives us numbers way above, or way below, average.
What this means is you simply can not use an average rate of return to provide a withdrawal rate percentage for your retirement distribution anywhere near what Dave states.
Need proof?
I bring on a "sequence of return risk" chart that compares two retirees, each has the EXACT same average return, of 10.36, from 1989-2008.
The problem comes from WHEN they received those returns. From 1989-2008 the retiree did great. Had millions left in the portfolio after taking out over a million as income.
Just flipping the sequence of returns though, from 1-20 to 20-1 and EVERYTHING changes.
Retiree B ran out of money in year 18.
No fault of his own, other than the bad luck of retiring in 2008 when the markets fell.
That's an anamoly, you say? Same thing would happen if he retired in 2000, 2001, 2002. Or how about 1973, 1974? Just bad luck. Which you can not control, no matter your investment prowess.
Bad markets in the beginning of retirement can doom you.
You need a plan of action which I discuss in the video.
2 years of cash. 3-5(7) of bonds, anything you won't need after 5-7 yrs put in stocks and never touch them until you can take gains to replenish your bonds and cash.
For more info like this visit www.heritagewealthplanning.com
facebook.com/heritagewealthplanning
And The Josh Scandlen Podcast.
https://advisors.vanguard.com/iwe/pdf/FAIVAMR.pdf
https://pension-consultants.com/what-do-i-do-now-part-2/
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Dave Ramsey is asked a question "Is a million dollars enough to retire on?" Here's the link for that episode...https://youtu.be/B3Jt6jb46XQ
Unfortunately, his answer is HORRIBLE! Absolutely HORRIBLE!
He asks the caller, "can you live on $70,000 a year?" Because the market returns 10%, or something like that, and if you're only pulling out 7% you're actually ADDING to your principal, is his insinuation.
NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!!!!!!
I can not state this loudly enough NOOOOOOOOOOOOOOOOOOOOOOOO!
This is stunning and absolutely horrible advice. There is something called "Sequence of Return Risk" and if you don't understand it, you could be doomed.
As I wrote in the comments section of his video:
If you are pulling out 7% a year on a million. That's $70k.
Now let's say it's 2000 and the markets dropped 9%. Your account value dropped to $910,000. $70k on that is...7.6%. After taking out the 70k you're portfolio is $840.
The markets dropped 11% in 2001. So your 840k is now worth...$747k. You take your 70k off that which is 9.4%. Now you're down to $677k.
The markets dropped 22% in 2002. Your $677 is not down to $528k. $70k off $528k is 13.2%, leaving your total portfolio at $458k. Less than HALF of what it was just three short years ago.
You are doomed. Will NEVER recover.
In 2003, markets were up 28%. So now you're $458 grows to 595k but then you take $70k out again. Now you're down to $525k. 2004, markets went up 11%. Your $525k grew to 577k and again you take 70k out and you're back down to 507k.
2005 markets were up 5%. Your 507k grew to 532k and after your 70k withdrawal you're down to $462k.
2006 markets were up 16%. bringing your account to 536k. You take your 70k out and you're back down to 466.
2007 markets up 6%. Your $466k grows to $494k but after your $70k distribution you are down to 424k.
And then 2008 hits. Markets down 37%. you're down to 267k. you pull 70k out and you're account value is all of 197k.
All within 8 years time your portfolio is worth 1/5 of what it was.
Oh don't forget, I'm not even including the taxes you are going to pay on those 70k distributions. If it's IRA or 401k money every, single penny is taxed at ordinary income.
if you're married, those distributions will most likely put you in the 22% bracket. And if you're single those distributions will put you in the 24% bracket. Thus you're going to lose another 20-25% just in taxes alone!
I've seen this exact scenario happen. Do NOT let it be you!
Here are the links to the Vanguard average returns study and the Pension consultants article on sequence of return risk.
https://advisors.vanguard.com/iwe/pdf/FAIVAMR.pdf
https://pension-consultants.com/what-do-i-do-now-part-2/
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The new tax law that we're all living under now (2018) presents wonderful ways for YOU to reduce your taxes now...and in the future.
But like all things, only those with the knowledge of the bill will benefit. Is it any wonder why corporations and other entities spend so much money lobbying Congress for just a line item? No, because they are knowledgeable of what they need to pay less. And they'll spend tooth and nail to try to enact that provision.
But just because you don't have a multi-million dollar lobbying firm representing your interest doesn't mean you can't take advantage of what the law allows.
So, in the next few videos we're going to dive into this.
First, we're going to talk about capital gains.
If your TAXABLE INCOME puts you in the 10 or 12% tax bracket, you will pay 0 on any capital gains you have so long as you remain in the 10-12% bracket!.
This holds HUGE potential benefits, my friends. But only if you know what to look for
In this video, I'll show you exactly what you need to know
Look at line 13 of your tax return, your 1040. That will show how much in capital gains you had. If you have gains here and those gains put you into the 22% bracket, you've effectively lost your ability to pay no tax.
Are there other things you can do to reduce your income to allow to remain in the 10-12% bracket?
Look at line 14 of Schedule D on your tax return. Is there a number there? That is capital loss carryforwards, which are previous losses you had that can offset future capital gains.
Do you have an appreciated stock in a non-IRA account that you can sell in order to use those capital loss carryforwards.
Being proactive can reduce, potentially significantly, your tax today and in the future.
For more information like this go to my blog at www.heritagewealthplanning.com
And my podcast on Itunes at The Josh Scandlen Podcast.
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
Linked below is a good article you should read, especially if you’re considering hiring a financial advisor. But I don’t think it actually goes far enough in examining the fees for service financial advisors charge.
Some firms/advisors charge low fees and offer “comprehensive financial planning”. Other firms charge higher fees and also offer “comprehensive financial planning.”
Which should YOU go with? Well, if both firms are offering the same advice, it would make sense to go with the lower cost, right? Well, is the lower cost firm actually offering “comprehensive financial planning?”
That’d be like a mechanic saying he’s going to maintain your vehicle for you for a fee, but what he really only does is oil change and rotate the tires.
A different mechanic though also says he will maintain your vehicle for you but he does true full service, belts, brakes, alignments, spark plugs, filters, engine maintenance, truly the whole thing…but, of course, he charges a MUCH higher fee.
However if you are ignorant about vehicles and just hear the term “full maintenance” which mechanic are you likely to employ?
It’s the exact same scenario in the financial advisory realm. And yet, like if you hire the cheaper mechanic you won’t know what true services you didn’t receive until the car breaks down in the middle of the Mojave desert.
In financial planning, you will realize the services you neglected to receive at the worst possible time; Death of a loved one, and the beneficiary designations were not changed from 25 years earlier, a debilitating illness where you have no way to act the afflicted’s behalf, when your retirement plan begins to skid off track and it looks like you’re going to have drastically cut back or run out of money, when the taxes you pay increased substantially because your RMDs have jumped and now your Medicare premiums go up double, even triple…etc.
https://www.linkedin.com/pulse/fees-matter-know-them-before-you-invest-rick-kahler-msfp-cfp-/
http://heritagewealthplanning.com/podcast-episode-24-episode-24-financial-planning-or-investment-management/
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Dividends historically have accounted for nearly 40% of a portfolio value's growth.
Even with the low dividend yields today, dividends still play a HUGE role in growing the net worth for investors.
In this video I show you exactly how dividends improved the performance of the Vanguard S&P 500 fund (VFINX) by 50% from 2003 until March 2018.
I compare the PRICE ONLY performance of the VFINX to the price + dividend performance.
Price only performance increased an initial $100k investment to $297k. Yet, dividend reinvestment increased that $100k to $406k at then end of those 15 years time.
Don't forget this is in a low dividend yield environment too. In fact, after 2008 many of the higher dividend paying companies, banks come to mind, STOPPED even paying dividends.
Yet, the numbers speak for themselves; Dividends added 50% more growth than just price.
The interesting thing is that if you look at index annuities, they don't use dividends in their returns their investors get! Add on the hefty fees and it's next to impossible for an investor to get anywhere near a market like return. Just can't happen.
No dividends PLUS high fees = VAST under performance. Which is why I recommend staying away from these types of "investments".
If you want "safety" there are better alternatives.
If you want "growth" there are better alternatives.
If you want a combination of some safety and some growth there are better alternatives. In future video's I'll discuss the alternatives.
But for now, just watch this video and allow me to show you EXACTLY how dividends are just so important to your financial well-being.
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In this episode, we dive even further into the BLS and other research on retirement income.
The Pension Rights Center says the average Social Security benefit per beneficiary is $1,360. While the average asset distribution was $1,542 per household.
They claim less than 30% of retired households have pensions and less than 7% have VA benefits. And the average earned income in retirement is $25,000.
The BLS provides this table:
Age of Household Median Income Mean Income
Households Aged 55-64 $62,802 $89,986
Households Aged 65-74: $47,432 $68,905
Households Aged 75 and Older: $30,635 $45,989
Notice the difference between median and mean. IT's HUGE! We want to look at the median when we can as opposed to the mean, i.e., average
In the video, we're going to dissect the income sources AND, as always, the tax consequence of having income from various sources.
Again, using the Tax Foundation handy-dandy calculator, you'll see very quickly that depending on how where your income is from has a drastic affect on the tax you pay.
So, for those who do not want to watch the video, the crib note recommendation: Delay Taking Social Security Until You Are 70!
https://www.newretirement.com/retirement/average-retirement-income-2017/
https://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm
https://taxfoundation.org/2018-tax-reform-calculator/
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It's time to dispel a myth that plagues retirement planning: Health Care will NOT be your biggest expense.
Your largest expense in retirement, by far, is the cost of your housing. And it's not even close.
In fact, looking at numbers from the Bureau of Labor Statistics, link is below), it's not until you reach the age of 75 and beyond that health care costs become your 2nd largest expenditure. And even then it's a far distant second than from what you will spend on housing.
And even then, food, transportation and "other" expenditures are all within striking distance of health care.
But housing remains above and beyond the most expensive item a retiree faces, accounting for 36.5% of a retiree over 75 expenditures. Health care comes in a distant second at 15.6.
I am not sure why the financial industry keeps harping on the rising costs of health care in retirement while paying absolutely no attention to the cost of housing.
Think about it like this. Fidelity says you need $280.000 to cover the cost of your health care in retirement. Well, the next logical question to ask is "If I need $280k for health care and housing is 3 times larger an expense, should I thus need $840k for housing???"
Yes, we've all seen, or heard stories, of retirees going broke due to health care costs. I've had clients had to shell out thousands a month for assisted living and then nursing home care.
Those are the exceptions though. Most people simple are not going to spend that kind of money on nursing home costs, be it because they couldn't afford it, or they didn't need it.
But EVERYONE needs a roof over their head. And EVERYONE will have to pay for it, somehow.
The number one piece of advice I can give to soon-to-be retirees is to pay for your future housing NOW, while you have an income from work. Pay off your mortgage...NOW!
Don't rely on retirement savings to do that for you. That is a huge risk you want to avoid.
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In Part Two of our tutorial on how to maximize Social Security we discuss:
When should you apply for benefits?
Well, comes down to three things mainly: your health/life expectancy, your CURRENT income needs and your survivor needs.
Delaying when you file not only increases your benefit when you ultimately do file, but you get increasingly more benefits each year due to Cost O Living Adjustments.
So, at 70 your benefit will be 1900 more, per month, than if you took an early benefit at 62.
At age 80 the spread will grow to $2500 a month. At 90 the the difference has grow to $3000 a month!
So, don't just get caught up in the differences of monthly benefits now, you need to look at how those differences change over time. And it's just remarkable.
How to increase my benefits?
Number one thing you can do is to log into SSA.gov and verify your AIME is correct. If there are missing data in there, you need to contact Social Security to get it changed.
Second thing is to improve your earnings record. What we mean by that is your benefit amount is based on your top 35 years of earnings.
So if you had some years you made little or no money, every year you work where you make decent money will be added to your overall working record, either eliminating the years you made nothing or increase your total earnings record.
Those increases will only add to your overall Social Security benefit.
Coordinate spousal benefits:
The "File and Suspend" strategy is dead now. However, if you were born before Jan. 2 1954 you can still file a restricted application in which you draw your spousal benefits AND allow your own benefits to grow with the Delayed Earnings Credits. Your spouse MUST be receiving his benefits for this to work, however
Born after 2 Jan 1954, well not much you can do at this stage. However, we do discuss a couple strategies in the video. Most likely you should BOTH wait until your 70 to draw. Or have the lower earning spouse draw early while the higher earning spouse waits.
Finally, MINIMIZE TAXATION ON BENEFITS! The more Social Security benefits, the less tax. It's that simple!
Take advantage of the Golden Years of Tax Planning, the ages between 62 and 70. Move traditional IRAs to Roth at this time.
Lots of strategies...IF you plan accordingly!
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1. Make sure your earnings record has been recorded correctly.
2. If you have zero in your earnings record, every year you work will increase benefits.
3. Coordinate your benefits with your spouse.
4. MINIMIZE taxes!
5. Take advantage of your TWO Standard Deductions
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The Tax Foundation has a most wonderful calculator you can use to gauge your tax, now and in the future.
Now this calculator was set up to show you the benefits of the Tax Cut and Jobs Act (TCJA). And there are many, many benefits to that new law.
However, if you dive a bit deeper you can see how different sources of income can really hammer you tax-wise in retirement.
Watch as I walk you step by step to see how much more you'll pay in taxes if you take Social Security early and have large Required Minimum Distributions.
You won't want to miss this.
In fact, I suggest you start NOW planning for your future tax burden. The earlier you start planning the less painful it will be in the future.
https://taxfoundation.org/2018-tax-reform-calculator/
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Medicare Premiums can easily double for widows if they're not careful.
In this video I show you how the tax code discriminates against widows who, with their spouses, saved money in IRAs.
Now, when the first spouse dies, the surviving spouse is going to hammered by the tax code AND could easily pay double for Medicare.
This would seem to be an issue many people would want to focus on, right? Well, no. For some reason, the taxation to surviving spouses escapes most peoples and advisors radar. I don't know why, but if there is anything that God has put me on earth to do is to explain how widows will pay more in tax, at at time they can least afford it.
Don't let this be you!!!
Strategize now with your tax person, your advisor, with your computer software...anything and everything that will help you see the light.
Your surviving spouse will PAY if you don't do something!
https://www.kitces.com/blog/bipartisan-budget-act-2018-irmaa-medicare-premium-surcharges-tuition-and-fees-deduction/
https://www.kff.org/medicare/issue-brief/medicares-income-related-premiums-under-current-law-and-proposed-changes/
https://www.kiplinger.com/article/retirement/T039-C000-S004-medicare-surcharges-have-costly-effects.html
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
Vanguard produces some of the best content on financial planning, investment and retirement topics out there.
While their literature is wonderful, I do not recommend Vanguard for personal financial planning though. This is because Vanguard still is way too focused on simple asset allocation and portfolio advice as opposed to real, full-fledged financial planning.
In fact, I would not recommend any large company for YOUR unique financial planning simply because of the boilerplate nature of these firms planning recommendations.
If you want REAL financial planning you really need to go to a REAL financial planning shop, like that can be found through NAPFA https://www.napfa.org/, XY Planning Network www.xyplanningnetwork.com or Garrett Planning Network, garrettplanningnetwork.com.
In this just published piece, there are three main things I want to focus on that should help you with your own planning.
- Vanguard's model, based on 10s of thousands of projections, show a future 50/50 global portfolio providing 4% REAL returns over the next 10-20 years.
(Real returns mean NET of inflation)
Thus if you are banking on traditional returns of the US markets, say 10% a year for stocks, you should rethink that as way optimistic.
In fact, with valuations today being high on both the stock and bond side, it would be safer to assume what Vanguard's models show.
- Most people are NOT going to spend significant amount of time in nursing homes!
I can't tell you how many people say to me their number one retirement worry is being destitute because of health care costs. It simply is not a reasonable concern.
I am not saying throw caution to the wind, but Vanguard cites a study that only 7% of men and 14% of women stay in nursing homes more than 3 years.
- Lastly, if you are a 65 year old married couple there is a very good chance one of you will live until you're beyond 90 years old.
You do need to plan for longevity, indeed. Which is why Social Security planning is so important, and tax planning as well.
See a few of my videos on these topics below:
https://youtu.be/ab-x2Nn_Uhw
https://youtu.be/azafbEGUitI
As always visit my website at www.heritagewealthplanning.com/blog for more info, my blog posts and podcasts.
Thanks!
https://advisors.vanguard.com/VGApp/iip/site/advisor/research/article/ArticleTemplate.xhtml?iigbundle=IWE_InvResFrmwrkForDecsnMkgInRetmnt⊂=27675&st=S&EXCMPGN=EX:EM:FAS:010117:ADVISOR:DIGEST:EMAIL:ET:2017
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Investment fees are one of the two biggest detriments to successful investing. I discuss this in detail when it comes to using Monte Carlo analysis to determine one's ability to retire in my podcast here: http://heritagewealthplanning.com/podcast-episode-8-why-your-monte-carlo-analysis-is-crap/
In this video though I show you how a portfolio with an all-in fee of .18% has a 95.7% retirement success. Whereas the exact same portfolio with a 1.50% fee has a 74.4% success.
Everything is the same. I use the calculator at www.firecalc.com if you want to run your own numbers.
The lower cost portfolio not only had a 28% higher success than more expensive one but its average account balance after 30 yrs was over $1 million.
The higher fee portfolio average account balance after 30 yrs was less than $500k.
So, if an advisor were running a monte carlo analysis based on this portfolio and NOT taking into consideration investment fees that advisor would provide a very misleading end-result.
Now, the one drawback of Firecalc.com is it does not take TAXES into consideration. So you'll have to do your homework on that. Taxes are a big deal and should not be overlooked.
However, for what it's worth FIrecalc.com offers the best financial planning calculator on the web when it comes to retirement projections.
You can change your scenario a bunch of different ways. Too many ways to get into here.
I can not recommend this tool enough.
As always if you have questions, thoughts or concerns, please let me know.
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
Everyone wants to achieve retirement happiness right?. Yet, it never ceases to amaze me that when it comes to the discussion about retirement people overlook the most important issue; whether or not there is a mortgage.
Why do I say this is the most important issue? Well, simply look at this study https://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm from the Bureau of Labor Statistics (BLS): “Housing was the greatest expense in average dollar amount and as a share of the household budget for older households. ” (Older households being over the age of 55).
Housing is a Retirees Main Expense:
Let me reiterate; HOUSING EXPENSE is the greatest expense for households with people over the age of 55!
In fact if you dive into the numbers, nothing even remotely comes close.
Looking at the study you will see that housing expense accounts for 1/3 or more of ALL expenditures, which is double the next biggest expenditure.
People always say health care will be the biggest expense for retirees. I’ve heard this a million times, if I’ve heard it once. Yes, health care expenses do INCREASE the most, almost doubling in expenditures from the ages of 55-64 to above 75. But even after that increase, those over 75 spend only 15.6% of their income on health care whereas they are spending 36.5% on housing.
Increasing Debt Levels:
Unfortunately, the BLS study also points out “the proportion of families with heads age 55 or older with housing debt increased steadily from 24 percent in 1992 to 42 percent in 2010.”
More than ironic, comes this study from TowersWatson which shows that retirees happiness is declining, rather significantly actually. https://www.towerswatson.com/en/insights/newsletters/americas/insider/2012/annuities-and-retirement-happiness
Towers Watson points out that retirees who have income annuities are happier than retirees who don’t. I won’t get into that discussion here. However, I will point out that I believe it is not a coincidence that as retirees carry more mortgage debt into retirement they are not quite as happy.
TowersWatson makes the case that annuitizing (turning assets into a monthly cash flow) can help retirees feel more comfortable. I completely agree. But that overlooks the issue of why retirees aren’t comfortable to begin with. I argue it’s because more retirees have mortgages!
How To Achieve Retirement Happiness:
According to the BLS, there has been an increase of roughly 65% of households over 55 years of age that have mortgages over the past 20 years or so. Again, the TowersWatson study shows that retirees level of satisfaction is dropping since the 90’s. Coincidence? Heck no!
It’s not rocket science here, my friends. You have debt, you have more worry. Crazy talk right?
Yet, my industry is consumed with things like investment returns, which is important but, in my not-so-humble opinion, we’re missing the forest for the trees; Mortgage Debt dwarfs EVERYTHING! Focus on this first and the rest will take care of itself.
So, what do YOU do, dear reader? Simple, if you want to be happier in retirement, have no mortgage. I argue having no mortgage is the number one thing you can do for retirement happiness.
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What is the number 1 concern for people thinking about retirement?
Turns out they are mostly worried about running out of money. Can't blame them actually. Who wants to go back to the workforce after 5 years of retirement?
Shoot, would you even be able to go back to where you left? Probably not. So, a career as a Walmart greet waits you...
Well, not so fast!
Lots of studies have come out over the last 15 years or so that shows as people get older in retirement they actually spend less each and every year. And, yes, this does include health care expenses too.
Weird huh? I mean why haven't more people been saying this stuff. Come on, you're not that ignorant are you? The investment industry has a huge incentive to get you to save, save, save in order to charge you fees for that savings!
I'm not saying don't save. Indeed, I think you should, up to the point that it makes sense to stop. And that is where consumption comes in. How much will you actually need in retirement?
Please do not use the 80% of current income rule of thumb. There is no validity to that whatsoever. Is it applicable for some? Sure. But so isn't using 120% or 40% of current income. Yet, we don't use those numbers.
The interesting thing is most Americans don't spend nearly what they are told they will in retirement. There are reasons for this, actually. As they get older they lose desire to do some of the things they did when they were younger.
Look at me. I'm 47 right now. The last thing in the world I want to do is go out on New Years Eve. But, man oh man, 20 years ago???
In this video, I share with you the article that started the whole "Reality Retirement Planning" discussion. A financial planner in WI, Ty Bernicke found that his older retirees were spending much less than his younger retirees. He wondered if there was something to that
Lo and behold, there was! He researched the Bureau of Labor Statistics and their Consumer Expenditure Survey and found that as people get older they spend less...a lot less.
Again, will that happen for everyone? No. Will it happen for you? I have no clue. But the numbers are the numbers and what BLS reports is that people do spend less as they age.
Now this may be attributed to them running out of money and thus being forced into lesser spending. Maybe But in Ty's practice and mine as well, that hasn't been the case.
The retirees I've dealt with in my 20+ yrs simply are more frugal in retirement. No other way around it. SO, because of that they seem to add to their portfolios each year, even when accounting for Required Distributions.
A guy over at Fool.com wrote an article in 2016 and updated in 2017 about his experience in living on $3700 a month income.
When you factor in Social Security with a PIA of =$1800 for one worker and his spouse taking half that benefit, you're getting $2700 a month in Social Security Income, which means you only need your portfolio to generate $10k a year.
$10k/.04 (using the 4% rule) means we need a portfolio of around $300k to be conservative to make it.
Have you ever heard that? I bet not.
Now, the one thing I will tell folks is that if you go into retirement DEBT-FREE you will be in a better place, regardless of anything else
Try to do that one thing and you're going to be in a pretty good place.
https://www.forbes.com/sites/forbesfinancecouncil/2017/11/21/a-solution-for-the-top-concern-in-retirement-planning-running-out-of-money/#5f163912a7bb
https://www.fool.com/retirement/general/2016/01/25/heres-what-the-average-retired-americans-budget-lo.aspx
https://www.i-orp.com/help/RealityRetirementPlanning.pdf
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Revocable Living Trusts do NOT shield one from estate tax, be it an heir or the grantor of the trust.
Your heirs actually don’t pay estate tax, anyway. YOUR estate pays the tax.
A Revocable Living Trust (RLT) is included in YOUR estate. Thus if your estate is large enough, your RLT will be subject to estate tax, indeed.
It’s an irrevocable trust that is not included in your estate. And will not be subject to tax to your heirs. Income received in the trust will be subject to tax, either to the estate or the heirs. But that’s a topic for another discussion.
Estate tax is not an issue for the VAST majority of tax payers when it comes the Federal Estate tax. However if you live in a place like MA, your exemption is only $1mm! And that includes everything you own, your home, investments, even life insurance.
The tax your heirs are going to pay is if they inherit an IRA, 401k, 403B. They will pay Ordinary Income tax on the distributions they take from those accounts.
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My answer to a Quora.com question.
Well there are pros and cons of both.
Vanguard is the lowest fee for their investment platform. No getting around that. And now they offer “financial planning advice” to go along with it.
HOWEVER, having worked at Vanguard and another large financial planning firm, I wonder the true nature of their advice. Is it TRULY specific to YOUR needs, or is it boilerplate, off the shelf advice focusing primarily on investments.
At my previous firm we could NOT talk about the benefits of Roth Conversions, Social Security maximization, asset LOCATION to name a few things.
Big firms are so scared for their reputations they are VERY hesitant to allow any kind of individual planning discussion. I know. I was there. Which is why I left.
Thus financial planning consisted of simple risk tolerance discussions and asset allocation advice. That was it.
Ameriprise, to their credit, does focus on the FULL plan. You’ll walk out of your meeting with a full financial plan tailored to you. And you’ll pay for it, which is a good thing.
But, be advised, Ameriprise does have an incentive to sell you their products, which they may receive commissions on. As long as you know that going in, I’d use Ameriprise. Just don’t buy anything right then. Wait till you get a chance to think about their offerings.
Yeah, some may say Ameriprise has a conflict of interest, in that they only get paid on what they sell. This is true, actually, which is why Ameriprise advisors can not be listed as Fee-Only advisors and belong to Associations like NAPFA.
But….doesn’t Vanguard ALSO have that conflict? I mean will you be able to use Vanguard financial planning services if you don’t have your money there?
I’ve always found it odd that Vanguard escapes the “conflict of interest” charge, that others put on everyone else.
Just call Vanguard, say you want them to do a plan for you but you don’t want to invest your money there. See what happens…
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I had NO clue that distributions from Roth IRAs are used on your FAFSA and can affect your ability for need-based aid.
But they do! Let me repeat that. ..Distributions from Roth IRAs are used in your FAFSA as a way to determine how much your Expected Family Contribution (EFC) is.
Thus, if you have a Roth and thought you could pull from it, tax free, well you'd be right... BUT, that doesn't mean this is a good idea. Not if you think you can get need based aid.
In fact, when I was researching the benefits of the Roth for my book, 21 Reasons You NEED A Roth IRA http://heritagewealthplanning.com/books/, I was thinking the Roth would be a wonderful account to use for college funding.
Well it CAN be but you've got to tread carefully here. The Fafsa form is about 2 years behind. Thus, here it is 2018 and we have to show our 2016 tax forms to the colleges my daughter is thinking of attending.
So, what we did in 2016 is what matters, even though it's not 2018.
So, if you took distributions from your Roth THIS YEAR, 2018, in order to pay for your kid's freshman year, those distributions would show up on the FAFSA you fill out when your kid is a Junior and hoping to get aid.
Remember the two year lag. You want to look as poor as possible in the Junior Year of high school before, PLUS the next 3 years too.
Hopefully that will allow you to get financial aid.
Now when your kid enrolls in school as a junior, well, at that point start taking distributions from your Roth because what you do in that year financially won't be considered. The 2 year lag.
Lots of things to consider, indeed. College isn't cheap either. So, make sure you plan this out. You really don't want your graduating child to start the workforce saddled with 6 figures in debt.
That's not a good start.
https://www.kiplinger.com/article/college/T042-C001-S001-how-roth-iras-affect-financial-aid-eligibility.html
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Mutual Funds: everyone owns them. And nowadays, it's SO easy to analyze them. You can just go to a place like finance.yahoo.com or morningstar.com and get an unlimited amount of info, at your fingertips, for free!
The internet has been fantastic for the democratization of the investment world, bringing information to the masses, not unlike William Tyndale translating Bibles.
However, there is one area of mutual funds that no matter the research you do, you will still be in the dark; the actual trading costs a mutual fund incurs.
Try going to the SEC website and look up trading costs for the fund of your choice. You'll find nothing.
Try going to Morningstar. Nope, not there either.
Call the fund company maybe? Sorry. They don't have that information.
So, you may be inclined to think that because the information can't be found, it's not that important.
Well, you'd be wrong to make that assumption.
In this video, and the accompanying article from my blog, https://joshscandlen.com/expensive-mutual-funds-really/, I use research a couple academics conducted that claim trading costs add another level of fees to investors equal to the actual expense ratio of a fund!
Think about that. You have a 1% mutual fund expense ratio, but add in trading costs and your total expenses are 2%!
Now, that may not seem a big deal to you. But think about it like this. Let's just say your fund returns 10% before fees.
Well if fees are 2% total, to include trading, costs, your net return is 8%. This means you've lost 20% of your gross returns to fees!
Don't forget, fees don't go away when the markets go down. So, if your fund grossed -10% return, well after fees your NET return would be -12%. Again, it cost you 20% more on the downside and 20% LESS on the up.
Yet, we have no way to measure what Fund A costs vs. Fund B. And that's not good.
So, in the video, I show you how to make an attempt to understand the total costs of your fund. It's not scientific, but it's the best we can do at this point.
We start by examining "Turnover". Now, you may be think a high turnover equals high expense relative to a lower turnover fund. Unfortunately, that may not be the case.
The professors examined a $500 million small-cap fund with 50% turnover vs. a $100 million large cap fund with 100% turnover.
The small cap fund had more trading costs.
However, turnover is a starting point in your analysis. It just isn't as clear as we'd like it to be.
Looking at Vanguard's SP 500 Index fund. It has a turnover of 3% and an expense ratio of .14%.
It is a HUGE fund, $84 billion of assets. So, when it trades, it's not cheap. BUT at least you know it doesn't trade much and has low expenses to match.
But if you have a fund with a huge asset base, high expenses, and high turnover.... well that fund is probably going to cost you.
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Morningstar is a great company and has done great things for bringing investment research to the masses.
In this video I show you why you SHOULD invest in their 5 star funds.
But, BE ADVISED, this doesn't mean you change your portfolio each year to invest in their 5 star funds. You simply find a highly rated fund from them and stick to it.
The reason for this is that Morningstar's highly rated funds have outpeformed. Not by much mind you, but they have outpeformed.
Morningstar uses risk-adjusted returns, analyzes different share classes and takes survivorship bias into consideration too.
End result?
Better performance, with lower volatility and expenses.
That's good enough for me!
https://joshscandlen.com/morningstar-5-star-funds/
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In this "Josh Rant" I discuss the controversial topic: Annuities.
Not sure why the controversy surrounds this one product, but just type "annuity" into any search engine and you'll get a plethora of commentary about the good and bad of annuities.
Here's my problem with this whole concept though; Annuities are an inanimate object! They are neither good NOR bad. They have no power to cause harm or charity
An annuity, like any other inanimate product, just exists. It's people engaging in the product that can do harm, not the product itself. People can misuse annuities, as they can misuse firearms, matches, automobiles, etc.
But for a large proportion of the population to simply write off annuities by saying silly things like "I Hate Annuities!" I just don't get it.
Every automobile accident involves an automobile. Would we take anyone seriously if someone were to say "I hate automobiles"?
Of course not. That is not logical.
So, in this "rant" I'm not trying to convince of an annuity. I'm simply saying you should open your eyes to them...IF they can serve a purpose.
Yes, there are risks.
Yes, they can be sold to unsuspecting widows by nefarious characters. Tell me a product which isn't though.
However, when it comes to income annuities, there is no other product that can GUARANTEE a monthly income stream that you can't outlive.
Does that mean you should rush in an buy an annuity?
NO! Research, research, research. Seek a second opinion.
Remember, many annuities have significant surrender charges. A lot of income annuities are also irrevocable. That means that once you sign the dotted line, you'll have a few weeks to reconsider but after that, you're stuck.
Make sure you know what you're getting into. And if need be, seek an alternative viewpoint.
But don't write any one product off outright, your financial well-being is too important for that kind of silliness.
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What's the most important thing for your retirement???
Think about it, if you need. The #1 thing in your retirement is what?
DId you say, Investment Portfolio? WRONG!!!
Social Security Income??? Wrong!!!
The number one thing for your retirement is your expenses, how much will it cost for you to live.?
Why this is not the main focus for financial planners I simply can not say. However, once we get a gauge of the true expenses you will have we can do MUCH better planning.
This older white paper shows, once again, that expenses actually DECREASE once retirement sets upon us.
Counter to conventional wisdom I know. And even better, as some are wont to do, these expenditures decrease for nearly everyone, no matter their wealth or income levels.
That changes everything, no?
https://pdfs.semanticscholar.org/204f/24a83f7942a78cf2ffe8d71790416bb95879.pdf
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It's actually becoming recognized retirees consume, i.e., SPEND, LESS in retirement. Why is that though?
Here are my thoughts.
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President Eisenhower's Farewell speech should be known for more than just the Military Industrial Complex term. It was so much more noteworthy than just that.
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Folks, we need a fix for Social Security. No two ways around that. For those of you on the left, the Republicans do not want to dismantle Social Security. So stop trying to scare people.
For those of you on the right, there are going to be more taxes paid into the system. Saying otherwise is a pipe dream.
So, let's start around those premises.
Secondly, remember the VAST majority of Americans rely on Social Security for a significant portion of their retirement income.
Those same Americans also vote in larger proportions than do other cohorts.
So, politically it only makes sense to get a fix.
In this video, I show you teh signing ceremony from the Reagan, O'Neil and Baker Bipartisan Social Security Reform Act of 1983.
Perfect? Nope. Did it work? Yup.
And it can be done again too.
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Fidelity Freedom Funds made DRASTIC changes to their approach in 2014.
Consequently, they've improved performance numbers significantly.
Is this a reason you should now reconsider their funds though?
In this video we discuss the changes Fidelity made to their management approach to their Freedom Funds and why they made the changes to begin with.
Turns out Fidelity has been underperforming for years and assets were flying out the door.
So, to stem the outflow FIdelity made their Freedom MUCH more aggressive. Now their Freedom 2020 Fund is 50% more aggressive than their average peer.
The results since they made the change have paid off, as their performance has improved quite a bit. But this should come as no surprise.
Increased exposure to stocks, when the stock market is booming, equals greater performance. No getting around that.
However, Fidelity continues to bleed assets out of its Freedom Funds. They have not been able to stem the flow even while their numbers have improved.
They still have BILLIONS UPON BILLIONS of dollars in these funds though.
My concern is what happens when the next bear comes around?
Well, the ten day period of this year (2018) at the end of January and into February gave us a look.
In those ten days, the Fidelity Freedom 2020 Fund was down 6%!
Remember a lot of people invest in the earlier years target/freedom/lifecycle/lifestrategy funds because they assume these funds have less risk.
Yet, Fidelity 2020 fund has 60% stocks! That's not less risk by any stretch and can be witnessed by a 6% decline in a ten day period we just saw.
Now being more aggressive is not a good or bad thing. In fact, one can easily make the case being 60% stocks for someone who is going to retire in 2 years and expects to live for another 30 years is actually a smart move.
But, But, BUT, does that investor realize that the fund he is investing in is that aggressive? I suspect not.
And that's what you need to know. Understand your investments!
For more financial planning related information such as this, please subscribe and go to www.joshscandlen.com.
Thanks!
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Retirement Income Planning is critical for soon-to-be and current retirees.
Because it is so important you MUST get as specific as you can for YOUR situation.
This means not relying on rules of thumb. Or financial planning concepts that are somewhat dated. Or generalizations of the tax code.
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Estate planning may seem a complex topic.
In some ways, it truly is. However, if you are married, especially if you have children, you need to make sure you have the following estate planning tools in order and up-to-date:
1.guardianship
-
durable power of attorney
-
beneficiary designations
In this video, we talk about why you need these three items.
First, what happens to your minor kids if you and your spouse are killed? Do you know?
Well, unless you have stated explicitly in your Will, the law determines who becomes guardian of your kids.
Will it be your mother who lives 2000 miles away and is dating a man you aren't fond of?
Maybe your parents are deceased. Will it be a brother who you know has a gambling problem but few other people know about?
The judge who will decide guardianship only has one task and that is to try to keep your children together in the safest home possible.
The courts don't have time to deeply investigate every, single circumstance that could affect your kids. There are a million other cases they have to clear, many with kids who have NO family at all in which to live with.
So, unless you state in your legal documents, what you want to happen to your children, the judge will do it for you, with as minimal effort as the courts need to put in.
Next, the bulk of most people's liquid assets are in retirement accounts. A retirement account is an INDIVIDUALLY-OWNED account, meaning there are no joint-owned retirement accounts.
So, say your wife has been working while you stayed home to raise the kids. She has accumulated a rather large 401k.
But unfortunately, one day on the way from work, she's in a nasty car accident and is hospitalized for an extended period of time.
After her short-term disability stops there is NO money coming in. So, you need to tap into her 401k in order to get cash out to pay the bills.
How do you do that?
Her 401k is in her name only. So, when you call the provider they are going to need to speak with her unless you have legal documentation that they APPROVE of allowing you to act on her behalf.
This legal document is called a DURABLE Power of Attorney. It is a Power of Attorney that survives incapacity.
If you don't have a legal document allowing you access to your wife's accounts, no financial institution is going to give you access, regardless of if you're the spouse and named as beneficiary.
Doesn't matter. You have NO legal right to her money.
So, in your Will, you'll want to get a Durable Power of Attorney. (As always - seek legal guidance by a PROFESSIONAL ESTATE ATTORNEY, as every situation is different. And you need to make sure you have legal advice based on YOUR needs, not just some boilerplate information. If you need recommendations for estate planning attorneys, just let me know)
Lastly, if you died today, who gets your life insurance, your IRAs, your 401ks, etc.? Do you know?
Is a spouse from a previous marriage still named as beneficiary?
Maybe you named your older sister before you got married but haven't updated it to your now wife?
Maybe, in a hurry, or due to ignorance, you just named your "estate" as beneficiary?
Maybe there is NO beneficiary's named?
Tons of cases where a deceased forgot to update his/her beneficiary designation and thus the account transferred to an unsuspecting ex who chose not to share with the current spouse.
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Long Term Capital Gains are taxed favorably relative to interest income, which is taxed at ordinary income rates.
But did you know that Capital Gains are NOT indexed to inflation?
I bet you didn't!
In this video I use an article from the Tax Foundation https://taxfoundation.org/inflation-adjusting-capital-gains/ to show you the incredible penalty we pay in taxes because of not adjusting for inflation.
For example, say you bought a stock for $100 ten years ago. After 2.26% inflation and 4.25% real growth that $100 would grow to $187 today.
You have a "gain" in this case of $87. If you sold that stock, you'd pay long term capital gains tax of 15% on that $87 gain.
The tax would be $13, leaving you with $174.
Yet the problem is that 25% of that 'growth' is due to nothing more than inflation. It's a fake gain!
You earned nothing.
Imagine if you could buy a calculator for $100 ten years ago. But now, because of inflation, that same calculator costs $125.
So, from nothing more than the cost of living increasing, i.e., the value of the dollar decreasing, it costs more dollars today to buy that calculator than it did.
But with the current tax law you actually pay capital gains tax on that fake $25 "gain"!
If the capital gains tax was adjusted for inflation like the tax brackets are, you'd only pay tax on the REAL GAIN which in this case would have been $62.
Your tax then would have been only $9, which is 29% lower than the way the tax code is currently concocted.
Thus, the 29% tax penalty because capital gains are not indexed for inflation.
Remind you of anything?
YES! Social Security tax brackets are NOT indexed for inflation either.
Anytime taxes are not indexed for inflation more and more people get gobbled into paying more in tax.
And that, my friends, is BAD tax policy!
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Social Security benefits are subject to income tax. There is a 'provision' in the tax code from a bill Ronald Reagan signed in 1983 making a portion of Social Security benefits subject to taxation for the first time.
In 1993 Bill Clinton signed another bill making even more benefits subject to taxation.
However, where it gets painful to most taxpayers, is that NEITHER of these bills were indexed for inflation!
This means more and more taxpayers are paying tax on Social Security simply because inflation is making them appear wealthier than they are.
In the 1983 bill you had to have over $32,000 of income before your any of your Social Security benefits were taxed.
Guess what? In 2018, literally 35 years later, you still need to have over $32,000 of income before your Social Security benefits are taxed.
In fact, if Social Security taxation were indexed to inflation you'd need $102,000 in today's dollars to have your benefit subject to tax.
https://www.ssa.gov/OACT/ProgData/retirebenefit1.html
That is how the lack of indexing is bringing more and more people to pay tax on their Social Security benefits. It's a stealth tax on the middle and lower middle classes if there ever was one.
On top of that, a little known provision in the 1983 bil subjected TAX-EXEMPT interest to be included in determining if a portion of your Social Security was taxed.
Yes, Tax-Exempt interest is free from INCOME tax. But it certainly is NOT free from taxation of your Social Security.
Did you know that?
So, if you are living off Social Security and tax-exempt interest, there is a good chance you're still paying income taxes!
If you are thinking about retirement, you need to understand how Social Security is taxed and prepare accordingly. Taxes eat away at your retirement income.
There are strategies to implement, NOW, to avoid paying more taxes than you need, which we talk about in other videos on the Heritage Wealth Planning channel.
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Retirement calculators you find on the internet can be a great tool for getting a general idea of your retirement readiness.
But do not be fooled into thinking that the numbers they crunch and spit out are truly representative of your situation.
In this video, we use a highly-ranked retirement calculator that Google links to.
I was actually surprised to see this calculator ranked so highly actually but it intrigued me. So, I figured I'd better check it out.
What I found was a decent tool that can provide a general sense of your retirement well-being.
But there is a significant problem when it comes to estimating your Social Security benefit. So, much so in fact, that I devoted an entire video to explain.
First though you've got to have a basic understanding of how your Social Security benefit is derived.
The Social Security Administration takes the top 35 years of your working career. Based on your income over those 35 years, it provides an Average Indexed Monthly Earnings (AIME) amount.
They index your yearly earnings for inflation, add those 35 years of earnings, and then divide by 420. This is your AIME.
Your benefit is based on what the AIME is.
And here is my problem with this retirement calculator particularly, but most retirement calculators generally. They assume the earnings you make today reflect what your AIME is! And this may or may not be anywhere near the truth.
What if this year you made $125,000, but in previous years you only made $50,000?
Well, using this calculator would estimate your Social Security benefit as if you made that inflation-adjusted equivalent to that $125,000 each and every year for the last 35 years!
This would provide a huge overestimate of your Social Security benefit. If you were to use this analysis to evaluate your readiness for retirement, you'd be way overshooting your income.
This could be devastating actually towards your future.
Thus, while I appreciate the efforts and again for a starting point calculators like this are adequate. https://www.calcxml.com/calculators/retirement-calculator?skn=#detailedResultsTop
When it comes to YOUR specific situation though, no way you should rely on this, or any other retirement calculator you can find online.
The first thing you need to do is go to SSA.gov and sign up to get YOUR specific statement.
Check your AIME and make sure it looks right. If there is a mistake in there, you need to fix it, ASAP.
When it comes to your retirement EVERYTHING is contingent on this one number, what your AIME is. https://www.ssa.gov/oact/ProgData/retirebenefit1.html
Do not overlook that!
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Understanding your Social Security benefits can be quite confusing.
There are so many acronyms and what if scenario's it's hard to get a clear understanding. And so many people simply let the Social Security Administration tell them what their benefit will be and leave it at that.
That's a mistake though. What if the SSA got it wrong? We are talking about a HUGE Federal be bureaucracy here. Mistakes happen all the time.
Secondly, if an error did occur it will affect your for literally the rest of your life and potentially your surviving spouse as well.
So, it's important to make sure the SSA has your information correct in order to give you your proper retirement benefit.
But where to start?
This is what this video series on Social Security will answer for you
First thing you need to do is go to the SSA.gov website and sign up to review your benefits. https://www.ssa.gov/site/signin/en/
Remember, a few years back the Social Security Administration stopped sending annual benefit statements in the mail under you reached the age of 60.
Many people now have NO clue what their benefit is because they don't log into the SSA website to check.
Don't let that be you.
You need to view your record because we need to make sure your earnings history is accurately reflected.
Your earnings record gets adjusted for inflation and used to come up with your Average Monthly Earnings Index...your AIME.
Everything you receive in Social Security benefits is a result of your AIME. So, it's MOST IMPORTANT to make sure this number is accurately reflecting your past earnings history.
If you made $100k in 2006 but the SSA is only showing you with $40k earnings, you need to get that fixed. You paid tax on that $100k after all!
So, let's assume everything on your statement is good to go. Now what the SSA does take your top 35 years of earnings and adjust for inflation. Then they add all those years up and divide by 420.
That number is your AIME.
For instance, say your inflation-adjusted earnings were $40k each year for 35 years. The SSA takes $40,000 and adds it 35 times. The total is $1,400,000.
Then they divide $1,400,000 by 420. 420 is the number of months in 35 years.
That equals $3.333, which is your AIME.
Now your AIME is NOT your actual benefit.
Social Security has 3 'bend' points that they use for your AIME to determine your benefit.
The first $895 of your AIME is times by .90 to give you $805.50.
The next $4500 of your AIME is times by .32. In this case though you only have $2438 above the $895 threshold. So, take $2438 times by .32 and you get $780.16
Add $780.16 and $805.50 to get your benefit amount, also known as your Primary Insurance Amount(PIA), which is $1585.66
Your PIA is the amount you will receive if your retire at your Full Retirement Age (FRA).
Fun right??? AIME? PIA? FRA? Don't worry we've only just begun. In future videos we'll have even more acronyms for you.
But not to worry.
If you can remember just one thing from this video, just know your AIME. It's the number that everything is based on.
Check your statement and make sure the information in it is correct.
Stay tuned for more videos on Social Security planning.
The next one we'll discuss exactly what you
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My friends, if you think addiction only happens to bums drinking Olde English 40s from a paper bag while living under a bridge, this episode will open your eyes.
Addiction, and the results, happen to families of all shapes, sizes, races, religions, affluence etc.
It's not going away either. In fact, we're LOSING the battle. Big time.
Maybe, just maybe, it's time to revisit the insanity that is the "War on Drugs" and try a new approach to save those who are enslaved by the scourge of drugs.
What we've been doing for the last 30 years is not working.
Here I interview a dear friend of the family, who we'll call Mindy because she needs to stay anonymous given her background dealing with Mexican drug cartels and also due to her stature in her affluent society.
This is scary stuff, my friends. And it's real. It's happening today. Right under your nose.
What do you do if it affects you???
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
Oh man, this is going to be awesome! I interview Nicole Sauce about her Living Free in Tennessee Self Sufficiency workshop coming up in April!
Also, if you are into the freshest coffee on the market, go to Nicole's website at Hollerroast.com and you get $2 off a lb (offer ends March 31 2019) by using Heritage Wealth Planning coupon code!
https://livingfreeintennessee.com/spring-workshop-2019/?fbclid=IwAR2JjW8BD5WPWMDUlrt26QGxs-88RTuFg4ggLNZAeCPykhd3nnGkLHurUnE#tab-id-2
https://hollerroast.com/
https://youtu.be/YzQL92Z2IxY
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Social Security Spousal Benefits care confusing. In this video, we examine how Social Security Spousal benefits work and when you should apply for them.
First, spouses will receive the greater of their own Social Security benefit or 50% of their spouses, whichever is more.
However, did you know some divorcees can also receive spousal benefits on their ex??? Click here for this video:
We introduce our fictitious couple, Bob and Jane. For simplicity, we have Jane not working, for an income, and Bob working full time.
We show what Bob's AIME is, as well as his PIA. And then we show what Jane's benefit will be based on Bob's PIA. (See why it's so important to understand how AIME works? Bob's AIME affects not just his benefit but also Janes!)
Here is the video on understanding AIME. https://youtu.be/hRuiUbXD6Rs
The max spousal benefit Jane can receive is 50% of Bob's PIA. Remember, it's 50% of his PIA, nothing else matters to Jane in regard to her spousal benefit.
However, if Jane takes her spousal benefit early, before her Full Retirement Age (FRA), she will have her spousal benefit reduced. In this case, we have Jane retiring at 64 thus her benefit will be 41% of Bob's PIA.
So, Jane starts with a maximum of 50% of Bob's PIA and depending on when she claims, that 50% benefit can be reduced.
But remember, Jane's spousal benefit can NEVER be more than 50% of Bob's PIA! So, it makes absolutely no sense at all for Jane to wait beyond her FRA to claim her Spousal benefit. She gets no benefit in delaying her spousal benefit beyond FRA.
You MUST remember that folks. If you are the spouse and someone says you can get earnings credits for delaying taking your spousal benefits beyond your FRA, please run, don't walk, away from whoever is telling you this!
(On a side note, for those of you born before Jan. 2, 1954, you are the last cohort that can file a restricted application and I have a video on that here.
What that means is you can file for your spousal benefits and allow your own benefit to increase with delayed earnings credits. Again watch my video to learn more. Born Jan. 2 1954 or later? Sorry, this no longer applies for you.)
It's critical to account for your Spousal Benefit in your retirement plan. If you are not, you are overtaxing your investment portfolio in your analysis which may lead you to make an error in your decision making.
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Maybe the best financial planning I've ever conducted is working with ex-spouses in planning for their retirement.
I can't tell you how many ex's do not understand the benefits they are entitled to off their ex-spouses record.
And once they are made aware of this opportunity, it's like a dark curtain is lifted and a whole world of new opportunities opens in front of them.
For instance, I had a client who lived in Pennsylvania. She had been married many years to a high-income doctor. But, as is this case with 50% of marriages, they divorced.
My client wanted out of the relationship as quickly as possible and turned out, in hindsight, she didn't hold out for as much as she probably should have.
And now, as retirement approached, she was worried how she was going to pay for everything. She was especially worried about if she had a long term care need and would have to have her daughter care for her.
It was very important to her to have Long Term Care Insurance policy. But it was out of her reach given her limited retirement income.
So, here comes ole Josh. And I simply asked her, "were you married more than 10 years?"
"Yes," she replies.
"Do you plan on getting remarried anytime soon?"
"Nope."
"Were you making much money when you were married?"
She chuckled at this. "Hardly! I was taking care of the kids. So I had NO INCOME!"
Light goes off over my head. She needs to march down to the Social Security Administration office and see if she can qualify for a spousal benefit on her Ex-hub's record.
"But what if he says no?" She asks me.
"Doesn't matter, because he will NEVER KNOW! Has NOTHING to do with him."
Long story short, she qualifies for an additional $300-$400 a month or so on his record.
That was almost the EXACT cost of her Long Term Care Insurance policy too.
So, it was a win/win for her.
She felt a bit more vindicated in not holding out for more assets from her divorced husband. And she was able to get more income to cover an insurance policy she wanted.
Will this happen all the time? Of course not.
Does it happen enough, though, that it's worth pursuing?
Absolutely!
It's YOUR money too!
Oh, by the way, did you know if you're a widow you will likely pay MORE in taxes even though you have LESS income? Yup. Watch this video: https://youtu.be/ab-x2Nn_Uhw
Oh, it doesn't stop there. How about paying more in Medicare B and D premiums too? Yup. https://www.youtube.com/watch?v=i2zqvKUXbZk
Oh, how about Social Security taxes too? Yup! https://www.youtube.com/watch?v=azafbEGUitI
https://blog.ssa.gov/ex-spouse-benefits-and-you/
https://www.ssa.gov/OP_Home/handbook/handbook.15/handbook-1510.html
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Survivor benefits are MUCH different than Spousal benefits and it's up to YOU to understand the difference.
In this video, we bring back Jane and Bob except this time Bob has died. What is Jane's benefit?
Well it depends on when Bob filed for his benefit.
If Bob filed BEFORE his FRA Jane's benefit will be 82.5% of Bob's PIA, or the amount Bob was receiving when Jane died.
Of course, if Jane was receiving more in benefits than Bob, than Jane will receive nothing from Bob's benefit. That benefit is gone.
If Bob delayed taking his benefit and earned Delayed Earnings Credits (DEC) of 8% a year, then Jane will receive whatever Bob was receiving at his death.
In this case, Bob could have nearly $3700 a month in Social Security benefits if he waited until 70 before filing.
That will be the benefit Jane would receive upon his death.
So, there is some serious planning that needs to be done here to maximize benefits.
If Bob is concerned with leaving Jane a decent retirement benefit upon his death, he should delay taking Social Security until he is 70. This would be a wonderful insurance policy for Jane, as she can live on that nearly $3700 a month for the rest of her life.
However, say Jane is most likely to pre-decease Bob. Should she wait until 70 to file for her benefit?
NO! Because when Jane dies, her benefit is lost. Bob will receive no benefit whatosever from Jane. If Jane dies before receiving any benefit, Bob receives nothing.
So, for a lower-earning spouse, who is not in good shape, it makes sense to file for Social Security benefit as soon as possible in order to make sure you receive something.
For a healthier recipient, it would be ideal to defer taking benefits to earn Delayed Earnings Credits.
If the higher earner is in not in good health, it ALSO makes sense for that person to defer taking as late as possible in order to leave a large benefit to the surviving spouse.
Clear as mud, right???
Don't forget these benefits also apply to divorcees, with some caveats.
So, again, understand all the nuances before making any decisions on when to claim your benefits.
https://joshscandlen.com/social-security-spousal-benefits-vs-survivor-benefits/
https://joshscandlen.com/survivor-benefits-what-is-your-benefit-when-your-spouse-filed-early/
https://www.ssa.gov/planners/survivors/ifyou.html
https://www.ssa.gov/history/reports/gs18h.html
https://socialsecurityintelligence.com/social-security-survivor-benefits-and-death/
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In part 2 of my video series on Index Annuities, we tackle the guaranteed income options a specific annuity provides.
I'll just cut to the chase, this doesn't impress me. In the least.
Why?
Because in this case, while they offer a 7.2% annual increase in the income base for the first 10 yeas, your income does not adjust with inflation after that!
What pays $10,800 in year 10 will pay $10,800 in year 30 PLUS you have no money left over to leave to your heirs.
You have got to understand the difference between the Account Value, what us professionals call your "walk-away money", and your income benefit account.
They are TWO completely different things. And I don't believe many investors are aware of the significant difference between them.
Your income base is solely the amount you can draw on each year for the rest of your life. You can NOT get a lump sum from this amount.
Your "walk-away money" is the amount the insurance company will cut a check to you for.
To determine your income amount off your income base, you need to know your age too and if you're going to have a Single-Life income stream or a joint and survivor life income stream.
In the example this insurance company provides, a 69 year old, SINGLE life recipient will receive 5.4% a year off her income base account, thus the $10,800 previously referenced.
However, because she is taking well more out of the account than the annuity is growing, she has exhausted the cash value by year 11.
Now, she will continue to receive the $10,800 annually, but she has NO money left in the account!
Is that made clear to the potential purchasers of these products? I don't think it is.
And it should be.
Look, I'm not saying you should NEVER buy one of these things.
I'm just saying you need to understand what you're getting into.
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I have a financial planner friend who came across a client being solicited to roll a TSP(Thrift Savings Account) into an index annuity.
My friends radar went up and suggested I do a video on Index Annuities, which I'm happy to do here in this video.
Now, be advised, I am a 100% fee-only, fiduciary advisor. This means I sell NO products. Thus I sell no annuities. Some may think I'm biased AGAINST these products because a lot of fee-only, fiduciary advisors, are opposed to all annuities. That is not me.
Annuities have a place in a clients toolkit for sure. In fact, there is becoming a cottage industry of academics extolling the benefits of INCOME annuities for most retirees. I'll do a video on that in a future episode.
However, in this case, after analyzing the brochure for index annuities, I simply do not see the value here, especially when it comes to rolling over ones TSP to it.
In this video, I analyze the growth potential of an index annuity using the brochure the insurance company provides. (In part two of this series, I will analyze the income potential of the same annuity.)
It seems to me from a growth perspective, the index annuity leaves a LOT to be desired.
The argument in favor of the annuity is that there is NO downside. You are guaranteed to never lose money.
Unfortunately, with that guarantee, you are not coming anywhere near making the upside of the market either.
In fact, in the example from the brochure, a client putting $100k into this annuity in 1997 would have been MUCH better off by simply purchasing a 20 Treasury bond!
The 20 year Treasury is 100% guaranteed for principal, not by an insurance company mind you, but actually by the Feds themselves.
Annuities are only as safe as the claims-paying ability of the insurance company. So, there is significant more risk in an annuity than a Government bond.
Now, hindsight is ALWAYS 20-20, so there was no way to know that in 1997 the 20 Treasury bond would have outperformed the index annuity, with less risk.
However, we can use hindsight for future guidance.
And given that, at least from a growth perspective, I don't see this annuity offering much value at all.
Click here for my analysis on the income side of this annuity.
https://joshscandlen.com/thrift-savings-plan/
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Life Insurance is a big deal. It's an even bigger deal if you thought you had a life-long policy but suddenly find out that your policy has lapsed. Now what do you do???
In this video, I'm going to show you exactly what you need to do ensure your life insurance policy doesn't expire before you do.
I can not tell you how many clients I've had in my 20+ years who thought they had Whole Life Insurance. But in actuality they have Universal Life.
The difference between these two life insurance types are significant.
With Whole Life Insurance, you pay the agreed upon premium, on time, and the policy will literally be there for your "Whole Life". There is no risk to you. Other than your ability to pay the premiums.
Now, because there is no risk to you, the amount of whole life insurance protection will generally be much less than a similarly priced Universal Life Insurance policy.
The reason for this difference is that the risk with Universal Life Insurance is on you, not the insurance company.
Less risk to the insurance company, the more they can offer. More risk to the insurance company, the less they can offer. It's really that simple.
With Universal Life Insurance the policy interest rates can, and do change, regularly. So, let's say you bought a Universal LIfe Insurance policy in the late 80s or early 90s, you were shown a crediting interest rate of 6% or 7% or something along those lines.
Fast forward 20 years and what are interest rates today? Half.
When you bought that policy the illustration shown to you presumed the interest rates your policy received would stay at 6% or 7% throughout the policy.
That hasn't happened.
In fact over the last 15 years or so, your policy has had SIGNIFICANT less interest credited to it, all the while the COST to insure you has grown each year.
As you get older, you're more likely to die, thus life insurance becomes more expensive. Yet, while the costs have gone up, the interest you've been making has gone down.
A life insurance policy with increasing costs and decreasing interest can not last! It will lapse.
Given the risk of lapsing policies to unsuspecting customers, one would think the insurance companies would go out of their way to help those owners understand that risk, right?
You'd be wrong.
What the insurance companies do is they send an annual statement. Unfortunately the annual statement just represents how your policy is doing TODAY. It says nothing about the future strength of the policy!
I had a 68 year old doctor client. He had a $1 million dollar Universal Life policy that had $88,000 cash value.
Just looking at his statement, he thought this policy was good to go and he stopped making ANY premiums.
I ran an INFORCE ILLUSTRATION though. The INFORCE ILLUSTRATION shows the FUTURE performance of the policy based on current interest rates and costs.
For my client, it was a rude-awakening. His policy was on track to lapse in 8 yrs, when he turned 77!
To say the least, he was not happy.
After the expletives cleared, I told him the options.
Reduce the death benefit. Add cash to the policy. Cancel the whole thing and pocket his $88,000 cash value.
He wanted the policy though. So canceling was not an option.
But he also didn't want to reduce the death benefit of that $1mill
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Bob and Jane come into my office to discuss when they should file for Social Security.
Three things I need to know to guide them:
-
What are their PIAs (don't know what PIA is? click here: https://youtu.be/EoMQSwVh0XE)
-
What their Income NEEDS will be.
Now this is SO much more important than simply taking a percentage of current income, like 80%. This is a rule of thumb that is highly used in the industry but is not specific enough to YOU. We need to understand truly what your expenses will be!
Everything, and I mean, EVERYTHING is contingent of an accurate accounting of your cash flow needs...in retirement.
What you spend today may have no relationship to what you spend in retirement. So, there is some guesswork involved but it's important to take the time to truly analyze and predict future expenditures.
- Value of your liquid net worth.
Liquid net worth includes your investment accounts and bank accounts. Any type of accounts that can be quickly converted to cash to be used to live on.
Once we identify these three things, we can come up with a pretty thorough idea of when is the best time for Jane and Bob to file for their Social Security benefits.
It will be important to understand the health of both too. After all, if Bob isn't long for this world, we probably will have different planning than if he most likely to live until he's 100.
In this video, I use a very simple Google Spreadsheet to analyze the options Jane and Bob have when it comes to optimizing Social Security.
You can easily recreate this for your own analysis as well.
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Widows pay a huge amount of taxes, especially when compared to what they paid when they were married.
Unfortunately, by the time one is a widow/widower there is little they can do to avoid the insane tax burden they face.
And yet, very few retirement planning blogs, magazines, Youtube videos, TV shows discuss this.
Certainly, the IRS doesn't, neither does Social Security.
So, a widow is in for a huge surprise come tax time when they are no longer Married Filing Jointly.
Watch as I go through a typical scenario I've seen time and again with clients.
It starts with the fact that widows will have LESS income coming in than when they were married, due to the simple fact, they will lose one of the two Social Security benefits they were receiving when married.
Yet, they also lose a standard deduction. Plus, less income is required for a single taxpayer to be in a higher tax bracket.
For example, taxable income of $40k for a married couple puts them at the low end of the 12% bracket.
That same income for a widow puts her at the low end of the 22% bracket!
Oh it gets worse.
Social Security is taxed more favorably for a married couple than a single taxpayer too.
So, it's a triple whammy for widows. Loss of 1 standard deduction, increase in tax brackets and increase in taxation on Social Security benefits.
Widows, then, pay substantially MORE in tax while earning substantially LESS income!
Don't believe me?
Just watch...and learn.
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Social Security taxation is one of my all-time pet peeves. Primarily this annoys me because by the time the taxes are felt, it's too late for the taxpayer to do anything about it.
At that point, it's just a matter of hoping they have enough resources to pay the tax-man and live comfortably.
In this video, I show you an article from Money magazine where in passing a tax pro mentioned how tax-exempt benefits are taxed when it comes to your Social Security.
Unfortunately, this mention was made in passing and I imagine most people would overlook it.
He said that tax-exempt interest is counted in your combined income to determine the amount of taxes you pay on Social Security.
But the writer of the article completely failed to discuss in any further detail, as is typical with business writers. They seem to over-look what should be obvious and thus fail to ask the fundamental question "You mean to tell me, my tax-exempt interest can make my Social Security subject to taxation?"
Doesn't that seem odd. That tax-exempt interest is part of the calculation for determining taxes on Social Security?
Of course it does! Tax-exempt is "Tax Exempt", after all. But it's not!
Why the financial media and other financial professionals don't understand this boggles my mind.
But it gets worse!
How Social Security is taxed is also contingent on if you're married or single.
A single person with $34k of Social Security benefits and $20k of other income, pays $1616 in Federal Income tax.
A married couple with $40k of Social Security and $20k of other income pays NOTHING in Federal Income tax. Yes, you heard that correct - NOTHING!
The single person had gross income of $54k and paid nearly $2k in taxes.
The married couple had gross income of $60 and paid nothing.
In fact for the married couple to pay the same amount of tax as that single person they'd need a whole lot more gross income.
But here's the problem; What are YOU doing about your future tax, now? Is your tax software helping you understand the tax trap that awaits? Your financial advisor? Your accountant?
I doubt it. What most tax planning does is account for where you are today, without giving much a thought to what your circumstances will be in the future.
Then, it's too late. When you're an 80 year old widow with a tax bill of $10k there isn't much you can do. You pay the tax man, or they come after you.
So, plan now!
Resources:
http://time.com/money/5207087/is-social-security-taxed/
https://youtu.be/ab-x2Nn_Uhw
https://youtu.be/ZxFqg6NJyYg
https://youtu.be/eaSEqYPuHKs
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https://amzn.to/2wKGi50
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Required Minimum Distributions (RMDs) are a TAX BOMB that many soon-to-be retirees are ignorant of.
You can't afford to be.
Your RMDs can be absolutely BRUTAL when it comes to your taxes.
RMDs can certainly put you into a higher tax bracket, thus you pay more to the IRS.
However, RMDs can also increase your Social Security taxation too.
And, yes AND, RMDs can increase your Medicare Part B and D premiums as well!
Oh, we're not talking small increases in premiums either. Doesn't take much income to have your Medicare premiums double..and more.
In this video, we bring back Bob and Jane, our favorite pre-retiree couple.
But now they are only 55 years old. Bob doesn't work. Jane has $400k in her 401k that she is going to stop contributing to.
She expects to get 6% annual rate of return. And will not take anything out of it until she is 70 years old.
Just watch what happens next.
You'll be shocked.
I need to recognize Don Pistulka for the spreadsheets he has created and made readily available for the whole world to use. Just a wonderful resource indeed. His website is here... http://pistulka.com/
Other important links:
https://www.ssa.gov/pubs/EN-05-10536.pdf
https://www.irs.gov/taxtopics/tc751
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
In part two of our Required Minimum Distribution video I show you the HUGE tax increase that Jane is facing with upon becoming a widow.
Not only do her income taxes (and brackets) increase dramatically but the tax on her Social Security does as well PLUS she now will pay more than double premiums on Medicare Part B and D.
It gets worse too folks.
The longer she lives, the larger her RMDs will be and the larger ALL three of those taxes will be as well.
The funny thing is that Jane actually is living on LESS income than when Bob was alive and yet is paying much more in tax!
Again, it's not just the tax rates and taxable income you need to be considering. It's the tax on your Social Security benefits PLUS the increase in Medicare premiums as well.
Unfortunately, now the only way Jane can avoid these increases in tax is to give her RMDs to charity. There is no other way.
Should have done tax planning in her 50s, which is what I call the "Golden Years of Tax Planning."
I'll post videos of some strategies on that topic soon.
So, SUBSCRIBE!
Once again thanks goes out to Don Pistulka at Pistulka.com for his wonderful spreadsheets!
Other important links:
https://www.ssa.gov/pubs/EN-05-10536.pdf
https://www.irs.gov/taxtopics/tc751
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Don't forget to SUBSCRIBE by clicking here: https://www.youtube.com/channel/UCSEzy4i9xrKPoaU9z0_XbmA?sub_confirmation=1
GET MY BOOK:
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
It's FREE if you're a Kindle Unlimited Subscriber!
https://amzn.to/2wKGi50
GET ALL MY LATEST BLOGPOSTS:
http://heritagewealthplanning.com/blog/
PODCAST:
https://itunes.apple.com/us/podcast/josh-scandlen-podcast/id1368065459?mt=2
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If you like electricity, you are going to be happy to watch this video and read the accompanying article about Domestic Produced Steel.
A HUGE Win for the US, for the state of Texas and for the many Americans who are going to be employed going forward.
We need, desperately need, steel manufacturing to be done in the United States. For a plethora of reasons.
But reason number one is simply due to the fact that without electricity our economy shuts down. And we're going back to the stoneage.
Our electrical grid relies on STEEL, believe it or not.
Yet, most of the steel we use in the US for our large power transformers is produced...IN CHINA!
Not good.
But with the Trump tariffs coming into effect, there is a moement now to create more domestically-produced steel here in the US.
Yeah, the prices of the steel will go up. Indeed.
But for economic security, that is a price we should be very happy to pay.
https://youtu.be/PkAbeKlNqi0
https://www.reuters.com/article/us-jsw-steel-texas/indias-jsw-steel-to-invest-500-million-in-u-s-operations-idUSKBN1H20KY
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The likelihood of you being killed in a terrorist attack by someone form another religion, by a gun-toting Trump supporter, or by ANY random event that happens while you're living your day-to-day life is almost ZERO!
Yes, these things do happen to some people. And that's horrible. But it's such a small occurrence it makes no sense to organize your life around these events which simply will not happen...to you.
There are other things that will get you though. What you put into your body, be it smack or even just high carb, low fat foods COULD lead to an early demise.
So focus on those things because that is where the "action", so to speak, is.
Thus focus on the things you CAN control, realize the things that are out of your control are not likely to do you harm and....ENJOY YOUR LIFE!
https://ourworldindata.org/causes-of-death
Gary Taubes "Why We Get Fat and What TO Do about It" https://amzn.to/2Em3FDH
Nina Teicholz "The Big Fat Surprise" https://amzn.to/2NjP0fc
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Medicare premiums are MEANS-TESTED! Let me state that again...Medicare premiums are MEANS-Tested!
What does that mean? Well, simple. You pay higher premiums the more income you have.
"Oh, that's only for rich people!" You might be thinking. Uh huh. Think again.
In this video I show you how a single taxpayer, let's say a widow, can have her Medicare Part B and D premiums increase by 100% with only a 20% increase in income.
Think it can't happen to you?
Well, your Medicare premiums are based on your Modified Adjusted Gross Income (MAGI).
MAGI is ALL the income you receive PLUS your tax-exempt interest.
MAGI is before you use your Standard Deductions or itemized deductions you may claim.
Remember, there is a huge difference between TAXABLE income and Gross Income.
And there is another difference between Gross Income and Modified Adjusted Gross Income too.
If you are ignorant of how this works, you can easily be paying Medicare Premiums well above what you anticipated when you first went into retirement.
Don't let this be you. Plan accordingly. In fact, start planning in your 50s so you can avoid leaving your surviving spouse a huge tax bill. Because by then it's too late to change tactics.
At that point, it's just pay the tax man and hope he or she will be okay.
https://www.ssa.gov/pubs/EN-05-10536.pdf
https://youtu.be/VvS_L4AjHhs
https://youtu.be/bbahmyGa31c
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https://joshscandlen.com/global-warming-crusade-literally-freezing-poor-people/
https://www.netl.doe.gov/energy-analyses/temp/Power%20System%20Reliability_Report_Published.pdf
https://wattsupwiththat.com/2018/03/29/doe-if-it-werent-for-coal-fired-electricity-plants-the-northeast-would-have-blacked-out-during-recent-bomb-cyclone/?blogsub=confirming#subscribe-blog
http://thehill.com/opinion/energy-environment/371145-cold-winters-are-testing-the-limits-of-us-energy-grid
http://energyskeptic.com/2015/power-transformers-that-take-up-to-2-years-to-build/
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Annuities: Love 'em or hate 'em, I am not going to debate that here. But one thing I am going to rail against is having them in Non-IRA accounts.
"Oh no! What's this guy saying???" I can hear my fellow financial planners utter in pure disbelief.
"Doesn't he know you don't get double tax deferral by having annuities in an IRA???"
My answer to this is simple. What happens when you want to move an annuity that is NOT in an IRA to another account?
THINK about this, folks! You have an annuity that is NOT in an IRA and decide you want to move it someplace else.
What are your options?
Well, let me share with you an example I've seen a million times if I've seen it once.
Guy puts $100k into a Variable Annuity in 2003. Now, it's 2018 and he looks at his year end statement and sees the annuity has grown to $180k.
Yet, his other account in which he invested $100k into a plain vanilla mutual fund has grown to $375k over the same time, and this is AFTER paying a 3.5% front end commission!
To say the least, he isn't happy.
So, he wants to move the annuity to his mutual fund that has more than doubled the annuity performance.
Guess what???
Unless he is willing to pay taxes on that $80k this year, he can not move the annuity to the mutual fund.
The only way to move an annuity to any type of non-annuity account is to pay tax on whatever gain he has...ordinary income tax too mind you. Not capital gains!
While the growth on the annuity doesn't seem like much compared to what he receive in the plain vanilla mutual fund account it's still sizeable enough that if he cashes it out, he will probably lose $20k in taxes in not more.
Thus after tax the annuity only gave him a $60k or so gain, after 15 years! We're talking a 3.2% rate of return... that's nothing to write home about.
Now he can do what's called a 1035 exchange into another annuity. That allows the gains to continue to be deferred. But the problem with 1035 exchanges is you can only move your annuity into another annuity. That's it.
You can't 1035 exchange into a mutual fund, a cd at the bank, your checking account, anything. Only annuity to annuity in order to keep the tax deferral.
Now, before we go any deeper we need to examine WHY the annuity underperformed as much as it did.
Thankfully the answer is quite simple: FEES!
Annuities have fees on top of fees.
I typed in "Variable Annuity Prospectus" in Google and the first answer that came up was the Transamerica annuity I examine in the video.
This charges Mortality and Expense fee of 1.00% or 1.35% depending on the bells and whistles you choose.
They also have a .30% for something I can't even explain. Plus the funds they use are going to have fees, typically around .90% to 1.1.0% or so.
Plus there is usually an annual account fee and who knows what else.
All these fees do in the aggregate is limit your growth.
If the market gives you a GROSS 7% and you're paying 3% a year fees, you're only going to net 4% a year.
There really is no other way to look at it.
Yes, the annuity provides a benefit that the mutual fund account does not.
But I examine
A. the cost of that benefit
B. the likelihood you'll end up using it.
No matter how you slice it, the annuity is loaded up
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Lots of studies show how dividend stocks out perform non-dividend stocks. I have actually shared many of these studies right here on this youtube channel.
The problem though is that outperformance due to the dividend or actually something else?
In this white paper from Meb Faber he shows how you can get Dividend-like performance WITHOUT the tax drag.
https://www.cambriainvestments.com/wp-content/uploads/2017/10/DTAX-10.23.17.pdf
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I get so fed up about hearing of this supposed "Retirement Crisis" when I see the numbers with my own eyes telling me it's not so.
Am I crazy??? So, to prove my sanity, once and for all, I decided to take the numbers from the Census Bureau, yes even though there are some issue with those, and then run a scenario on the Social Security Admin calculator.
I wanted to see what the Social Security benefit would be for someone who's HOUSEHOLD made the median income going back many, many years.
I mean, think about it like this. If my household was able to get by on $5k a month while working should my household be able to get by on less than that in retirement?
Of course! No one would argue that.
Okay, so if we run the Social Security numbers we see that even with stopping work at 62, my spouse and I have a replacement ratio of well over 50% from SOCIAL SECURITY ALONE relative to the income our household brought home while working.
With just a couple tweaks we can get a replacement ratio of 80% JUST ON SOCIAL SECURITY. And again, this is leaving the work force and never earning another dollar at the age of 62.
So, next time someone tells you there is a "Retirement Crisis" just tell him, "run your own numbers and get back to me." For some reason, there is a need to p**s in everyone else's pool when it comes to this stuff and make people scared and sad. I don't get get it.
DON'T FALL FOR IT!
Does Social Security need to be fixed? yup. Was Social Security meant to be your primary source of income in retirement? Nope.
Want to talk to me about things that ARE so today but werent' supposed to be? Do you REALLY want to go down that road?
All I care about is the reality at hand. All other things are great for the academic debate. But for me, and my family, I prefer reality. And reality is, there is NO retirement crisis.
Thus, enjoy life!
https://www.ssa.gov/planners/retire/AnypiaApplet.html
https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html
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In my recent research I've come to the conclusion the number one thing retirees can do to secure their retirement is NOT to carry a mortgage.
The data is starting to be overwhelmingly evident in my estimation. I'll share more and more as we go forward.
In this video though I use "Table 1702. Housing tenure and type of area: Annual expenditure means, shares, standard errors, and coefficients of variation, Consumer Expenditure Survey, 2015"
to "prove" how a mortgage hurts charitable giving, increasing one's networth and even one's sense of peace in their financial circumstance. (BE advised, you can't PROVE one's sense of peace, but given the numbers I share with you here, tell me the folks with a mortgage are not MORE stressed than the one's without a mortgage even though the one's without a mortgage have SIGNFICANTLY LESS income.)
It's actually amazing too that we've been soooo freaking trained to look at retirement planning as what percentage of pre-retirement income do we need, i.e., "Replacement income" when in fact that has nothing to do with anything.
The only thing that matters for retirees is the income they need! If the income they need is low, because say they have NO MORTGAGE, who cares what their income replacement ratio is!
Everything is contingent on income need. Solve that and you have solved the puzzle that seemingly escapes all the smartest people in the world.
https://www.bls.gov/cex/2015/combined/tenure.pdf
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I literally never thought I'd compare financial research with the "Climategate" scandal, and its "hide the decline" fraud, but I'm starting to get a feeling that what we've been told previously isn't all it's cracked up to be when it comes to the financial number crunchers.
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Man, if you love Data, you'll the Census Bureau website.
It's just a treasure trove of incredible info. In this video, I show you how much incredible data there is when it comes even home heating, mortgages etc.
Its crazy how much info is out there.
https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_17_5YR_B25088&prodType=table
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Mortgage numbers look good going into 2019. American's have 15 TRILLION of equity! 15 TRILLION. Not to consider all that equity when planning for retirement simply doesn't make sense to me.
Now, Americans ALSO have $10 Trillion of mortgage debt too. Would love for that debt number to be reduced.
but a couple prominent things jumped out a me on this article.
First, delinquencies are LOW! At 3%. This is very good. High delinquencies mean huge potential for housing values to fall. People can't pay their bills, they are either put out, or walk away. What does that do the value of that un-occupied home? Well, drops in price.
What does that then do the homes in the general vicinity? Same things. So, folks who are banking on equity now see it declining. Bad news for everyone in that scenario. Which is exactly what happened tin 2007-2010.
Second is that debt payment to disposable income is lower than it's been in 20 years. This is a VERY good thing as it shows that people have the CAPACITY to continue to pay their mortgage, meaning they'll be less likely to be delinquent.
https://www.magnifymoney.com/blog/mortgage/u-s-mortgage-market-statistics-2018/
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In this episode, we dive even further into the BLS and other research on retirement income.
The Pension Rights Center says the average Social Security benefit per beneficiary is $1,360. While the average asset distribution was $1,542 per household.
They claim less than 30% of retired households have pensions and less than 7% have VA benefits. And the average earned income in retirement is $25,000.
The BLS provides this table:
Age of Household Median Income Mean Income
Households Aged 55-64 $62,802 $89,986
Households Aged 65-74: $47,432 $68,905
Households Aged 75 and Older: $30,635 $45,989
Notice the difference between median and mean. IT's HUGE! We want to look at the median when we can as opposed to the mean, i.e., average
In the video, we're going to dissect the income sources AND, as always, the tax consequence of having income from various sources.
Again, using the Tax Foundation handy-dandy calculator, you'll see very quickly that depending on how where your income is from has a drastic affect on the tax you pay.
So, for those who do not want to watch the video, the crib note recommendation: Delay Taking Social Security Until You Are 70!
https://www.newretirement.com/retirement/average-retirement-income-2017/
https://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm
https://taxfoundation.org/2018-tax-reform-calculator/
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It's time to dispel a myth that plagues retirement planning: Health Care will NOT be your biggest expense. Your largest expense in retirement, by far, is the cost of your housing. And it's not even close. In fact, looking at numbers from the Bureau of Labor Statistics, link is below), it's not until you reach the age of 75 and beyond that health care costs become your 2nd largest expenditure. And even then it's a far distant second than from what you will spend on housing. And even then, food, transportation and "other" expenditures are all within striking distance of health care. But housing remains above and beyond the most expensive item a retiree faces, accounting for 36.5% of a retiree over 75 expenditures. Health care comes in a distant second at 15.6. I am not sure why the financial industry keeps harping on the rising costs of health care in retirement while paying absolutely no attention to the cost of housing. Think about it like this. Fidelity says you need $280.000 to cover the cost of your health care in retirement. Well, the next logical question to ask is "If I need $280k for health care and housing is 3 times larger an expense, should I thus need $840k for housing???" Yes, we've all seen, or heard stories, of retirees going broke due to health care costs. I've had clients had to shell out thousands a month for assisted living and then nursing home care. Those are the exceptions though. Most people simple are not going to spend that kind of money on nursing home costs, be it because they couldn't afford it, or they didn't need it. But EVERYONE needs a roof over their head. And EVERYONE will have to pay for it, somehow. The number one piece of advice I can give to soon-to-be retirees is to pay for your future housing NOW, while you have an income from work. Pay off your mortgage...NOW! Don't rely on retirement savings to do that for you. That is a huge risk you want to avoid.
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Interest and dividend income are other areas of the tax code that punishes the ignorant.
You have income on lines 8a, 8b, 9a and 9b? Why? Is there a strategic reason for earning this income in order to pay tax?
If so, that's fine. Maybe you need the cash to help pay the bills, pay tuition, take a vacation, etc.
However if you're receiving this income because of how your investments are designed without any strategic intent, I suggest you consider a different plan of action
Let's start by looking at what types of income you have.
If you have interest income, from bonds and/or CDs, this income is taxed at ordinary income rates. Worse yet, there is NOTHING you can do about it other than paying the tax on it...as ordinary income.
Consider moving ANY holding you have that yields ordinary income(OI), into your Traditional IRA in order to defer those OI taxes as long as you possibly can.
Remember your IRA is taxed as Ordinary Income anyway. So, having an IRA taxed at those rates PLUS having investment income taxed at the same means your paying too much in tax.
If you have municipal bond income, i.e., 'tax exempt interest' consider scrapping those and instead moving into corporate and/or government bonds inside your IRA.
Because municipals are tax free they offer a much lower interest rate than corporate and government bonds. So, for simplicity, say a municipal bonds yields 2.5% a corporate bond will pay more because it's income is taxed.
A corporate bond with similar maturity date may pay 4%. This means it takes $320,000 in assets to yield $8,000 in income for the municipal bond but only $227,272 for the corporate bond AFTER taxes for someone in the 12% bracket!
That is a significant difference in the allocation amount to corporate bonds over tax free bonds to receive the same after tax income.
We don't municipal bonds, unless we're in the higher tax brackets, those above 22%.
We don't want ANY bonds in our taxable account either. We want bonds in our Traditional IRA.
Secondly, we want dividend paying stocks, the investments that give us income on lines 9a and 9b, in our ROTH IRA. DIvidends we don't need only cause higher taxes. Avoid that. Move your income-oriented stocks to your Roth.
Lastly, we want your most aggressive holdings, ideally the ones with little to no dividends or capital gains in your taxable accounts.
The unrealized appreciation on these investments cause you NO tax.
Because these holdings are aggressive they should pay no dividends whatsoever.
Lastly when it does come time to sell a position in order to generate cash, you can work the tax code to do it in the most tax-favored way possible. You can't do with other income you receive from your investments.
Finally, at death, the growth of these aggressive accounts transfer TAX FREE to your heirs because of the step up basis rules. IRA accounts don't have that benefit.
Roth IRA accounts don't have a step up in basis but they are tax free anyway, which is just as good.
At the end of the day, it's up to YOU to understand the tax code to take advantage of it to your benefit.
If your advisor isn't helping you with this, well, hate to sound brutal but seek a new advisor!
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The new tax law that we're all living under now (2018) presents wonderful ways for YOU to reduce your taxes now...and in the future.
But like all things, only those with the knowledge of the bill will benefit. Is it any wonder why corporations and other entities spend so much money lobbying Congress for just a line item?
No, because they are knowledgeable of what they need to pay less. And they'll spend tooth and nail to try to enact that provision. But just because you don't have a multi-million dollar lobbying firm representing your interest doesn't mean you can't take advantage of what the law allows. So, in the next few videos we're going to dive into this.
First, we're going to talk about capital gains. If your TAXABLE INCOME puts you in the 10 or 12% tax bracket, you will pay 0 on any capital gains you have so long as you remain in the 10-12% bracket!. This holds HUGE potential benefits, my friends. But only if you know what to look for In this video, I'll show you exactly what you need to know
Look at line 13 of your tax return, your 1040. That will show how much in capital gains you had. If you have gains here and those gains put you into the 22% bracket, you've effectively lost your ability to pay no tax.
Are there other things you can do to reduce your income to allow to remain in the 10-12% bracket? Look at line 14 of Schedule D on your tax return. Is there a number there? That is capital loss carryforwards, which are previous losses you had that can offset future capital gains. Do you have an appreciated stock in a non-IRA account that you can sell in order to use those capital loss carryforwards.
Being proactive can reduce, potentially significantly, your tax today and in the future.
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Good article by Smartasset.com about average debt by age in the US.
But there is a HUGE issue you need to know before you refer to this study as gospel.
https://smartasset.com/credit-cards/the-average-debt-by-age
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the majority of retirees, if not the VAST MAJORITY, have significantly more wealth in their home than they do in financial assets.
Retirees in the lowest 3 quintiles of wealth all have more, significantly more, wealth in their homes than any other asset.
In fact, even folks in the 4th wealthiest quinitle, their financial assets just equal their home asset. It's only the richest quintile of retirees who have more financial assets than home equity assets.
Thus, to NOT consider using home equity makes no sense for most households. This does not mean run out there and sign away. But it's important to understand these products and how they can impact, to the positive, your retirement planning.
http://crr.bc.edu/wp-content/uploads/2017/02/IB_17-6.pdf
https://crr.bc.edu/
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Everything you have heard about retirement planning is WRONG!
This white paper from United Income, using data from CDC, BLS, University of Michigan, and many other areas, is a must read.
Retirees are living longer, are healthier and wealthier than ever before.
But here's the critical thing is that retirees on average spend 2% less each year in retirement than the year before.
From the article: The average retiree cuts their spending by about 2 percent every year throughout their retirement. The biggest drop over time is spending on lifestyle expenses, like travel, apparel and entertainment; but, essential spending on transportation and housing falls too, as retirees pay off their mortgages and rely more on friends and family for getting around town as they age. Healthcare is one of the only expenses that tends to increase through retirement, although it tends to increase incrementally for nearly all retirees.
Now, what are we typically told? We aren't' saving enough. Why? Because we use retirement projections that assume spending is going to increase each and every year in retirement.
Yet, the numbers are becoming more and more clear that retirees actually REDUCE their spending!
If you are spending less each year than you were told, how would that change your current retirement planning?
Maybe you wouldn't worry so much.
Now, here's the problem. As people live longer in retirement, they are watching more and more TV. This is leading them to be more pessimistic about their current situation and the world they live in. TV, and news in general, is focused on sensationalism. "If it bleeds, it leads".
This is not good. Cut the cord. Turn off the stupid box. And enjoy your health and wealth in retirement.
https://www.foxbusiness.com/features/living-longer-healthier-and-wealthier-lives
In the last episode we talked about how retirees today are wealthier and healthier but unfortunately those significant improvements is leading to bad behavior.
Retirees are watching HUGE amounts more TV than ever. And because TV is so sensationalized, read "if it bleeds it leads", many retirees are being affected by their news consumption. They are not as happy, and are more worried about things out of their control AND which will not ever affect them.
It's sad actually. The liklihood of you being shot in the streets is so remote it's not even worth discussing. The same goes for being the victim of a terrorist attack.
Could these things happen? Of course, but to focus your energy on these most unlikely events is energy lost. Don't do it!
In this episode, though, I focus on the amazing aspect of where people actually retire.
One would think most retirees are moving to warmer states with low crime and low taxes right?
Actually, that is not true. In fact, only 1% of retirees actually move INTER-state. If retirees move at all, it's within the same county! Absolutely amazing when you think about it.
In fact, this goes even further to confirm this video I did about people being happier if they have a strong sense of community. https://www.youtube.com/watch?v=VVoDBGeAV2A&t=136s
Where are you going to have the strongest sense of community? Well, the community you're in, now. Thus if you have roots laid down, you're probably going to stay right where you are...taxes, weather, crime rates, are secondary considerations.
We've been told there is this mass exodus from cold, high tax states. The numbers simply don't bear that
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In this podcast we'll be talking about a new concept when it comes to retirement planning; using your ENTIRE net worth as opposed to only your liquid net worth for retirement income.
We'll be looking at an article in the Journal for Financial Planning from 2017 that crunches numbers to show the increase in income a retiree can obtain when using their TOTAL net worth.
https://www.onefpa.org/journal/Pages/OCT17-Integrating-Home-Equity-and-Retirement-Savings-through-the-Rule-of-30.aspx
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Thinking of retiring at 55 but worried what will happen to your Social Security benefit?
Maybe dont' worry so much. I show you why in this video using the Social Security indexing updated for 2018.
You'll quickly see that working longer won't do much to increase your benefit.
https://www.ssa.gov/cgi-bin/awiFactors.cgi
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https://www.i-orp.com/help/RealityRetirementPlanning.pdf
https://firecalc.com/
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There are THREE financial planning concepts that ALL people, consumers and professionals, need to be aware.
Bill Bengen's seminal piece on the 4% rule is the starting point indeed.
His piece began the TEDIOUSLY slow process of moving planning from investment management solely to actually financial planning. Trust me, there is still a LONG WAY TO GO here but if not for Bengen's piece, I shudder to think where we'd be as an industry.
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Are CDs at the bank difficult to understand? No. Everyone knows how they work.
You drop $100k into the bank. The bank pays you 3% (or whatever) a year interest. In 5 years (or whatever) you come back when the CD matures and collect your $100k.
Pretty cut and dried, no?
Well, bonds work the EXACT SAME WAY. You loan a company, or government, $100k, they pay you 3.06% in interest for the entire life of the loan. When the bond matures you go back and collect your $100k...unless the issuer went bankrupt.
Thus, inherently, there is NO growth. So, if you need MORE income from your investments than the bond interest pays, you must dip into principal. And when you do that with bonds you inherently get less interest going forward.
Secondly, unlike a stock, you can't sell FRACTIONAL shares of a bond. You only sell the entirety of the bond. So, if you NEED access to your principal to meet your income needs a bond isn't going to work, because you simply can't tap into principal unless you sell the whole thing.
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Kim Wack from Project Rip Cord YouTube channel and Chapped Ass Cycling shares with us her experience on bringing a product to market from the infancy in her brain through production to actual inventory.
Kim's business is biking focused. She sells her own produced chamois cream that bicyclists need to stay comfortable when they're sitting on the seat for an enormous amount of time.
Interestingly enough, at least to me, when you type in a search for her main competitor, Kim's product DOES come up. That's a huge win for her. Especially given the term is searched many, many times a month.
The question though, for Kim and any budding entrepreneurs, is can she make hay while still working in her full time gig?
Now, Kim does have a couple other side hustles, so to speak. So, I imagine she's going to be just fine. But you should definitely subscribe to her Youtube channel to follow her progress.
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Latest episode of The Josh Scandlen Podcast
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Latest episode of The Josh Scandlen Podcast
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Latest episode of The Josh Scandlen Podcast
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Sales of Fixed Indexed Annuities (FIAs) are in the billions. So, obviously these products are resonating with some folks.
For them to resonate with you please understand these things.
- Fixed Index Annuities will most likely give you BOND-like performance, not stock-like performance.
If a sales guy is selling you on the concept of stock-like performance with no risk, please run, don't walk but RUN, away. In this video I show you research by Roger Ibbotson, who is in favor of these products, what he says FIAs will most likely do. Again, BOND-like, not stock like performance.
- If a naysayer on annuities is saying he doesnt' like them because the fees are so high, ask him how much he gets paid...in dollars, not percentages.
Weird how some compare 1 product against another by only showing the fees on the one but NOT the other.
- FIAs can provide you with guaranteed income with NO market loss. This is a fact for many of the products. If this is important to you, there is nothing wrong with that. But remember for those guarantees you will sacrifice upside performance. There simply is no two ways around that.
However, if that protection helps you achieve peace of mind, there is NOTHING wrong in the least with considering one of these products.
https://dta0yqvfnusiq.cloudfront.net/commo93759149/2018/02/Ibbotson-White-Paper-5a78d2dea0f40.pdf
http://money.com/money/5382994/fixed-indexed-annuities/
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Anything you buy there Amazon pays me a commission. Much appreciated!
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The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
https://amzn.to/2wKGi50
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https://amzn.to/2A1TmkH
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Bonus 1 - Roth’s Are Included in Estate Tax Calculations Roth IRAs are included in your estate for estate tax purposes. Yes, the vast majority of Americans will die without owing any federal estate tax. But if you are one of the couple thousand Americans who have an estate over $20 million at the time of this writing (2018), your Roth will be included.
Now, with that said, everything you own will be included; Your Traditional IRA, life insurance, home, etc. A Roth is not unique. But it’s important to know that while a Roth is income tax free it’s not estate tax free.
“Ahhh, that’s no big deal Josh, we don’t have anywhere near $20 million.” I get it. You may not be that wealthy. But do you live in MA? NY? MN? PA? OR? All of these states, and a host more, have state estate tax and/or inheritance tax.
Roth IRAs will be part of the calculation to determine how much your estate owes in taxes to your state when you pass on.
Massachusetts, for instance, taxes your estate if it is greater than $1million. Not hard to get to that threshold in MA with property values so high. Have a decent sized life insurance policy and a house? Guess what??? In MA, you have a taxable estate!
If you have a Roth, it will be taxed as part of that estate. Just be advised.
Bonus 2 - Roth’s Are Subject to Creditors of NON-SPOUSE Beneficiaries As of a 2014 Supreme Court ruling, ALL non-spouse inherited IRAs are subject to creditors.
So, if you die and leave your IRA to a child who decides to open up a pizza shop and the pizza shop fails, his creditors will seek reprieve in what was your IRA, Roth or Traditional.
You may want to consider other options to simply leaving your retirement accounts outright to a child or grandchild if you feel there is a risk of a lawsuit.
Say your children are surgeons using risky yet cutting-edge procedures. Their malpractice premiums are through the roof. Why is that? Because they get sued all the time!
Plaintiffs will look to every asset your child owns for payment, including the Roth you left him or her.
Bonus 3 - Roth’s Do Not Get a Step-Up in Basis This one is huge. And again, it not only applies to the Roth but to ALL tax-deferred accounts including annuities.
Let me explain what the Step-Up Basis means.
You buy a stock for $100 today. In ten years that stock is worth $1,000 and you get hit by that bus driver, again. When you die, the executor of your estate will capture the Date of Death (DOD) valuation of all your accounts on the day of your death.
In this case, this stock was worth $1,000 on your DOD.
The person you left the stock to could then sell it for $1,000 and pay no tax. That $900 gain escapes taxation. This is a huge benefit of the tax code that many taxpayers do not take advantage of.
Now, be advised, the step up in basis rules applies to any property you own outside a retirement/annuity account. A house, an investment property, a collectible item, anything you own that has grown in value above your initial cost will receive the step up in basis. To reiterate, this means your beneficiary’s basis is the value of that asset on the day you die.
It’s very easy to identify date of death valuations for investment accounts. Simply find out how many shares were owned and the price per share on your day of death. But what if the property is something that has no daily trade volume and price? In this case, your executor will want to engage an appraiser to determine the value. It’s very important to get appraisals done on all property where a value cannot easily be determin
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15 - How Your Teen Can Take Advantage of the Tax Code I cannot tell you how many times I’ve been asked this question: “Josh, my 16 year old son has a part time job this summer. Can he open a Roth?”
Yes, he can start a Roth and certainly should. A great strategy is to give him the money to open the account based on the income he made.
Incentivize your children to work by opening a Roth for them
For instance, say he made $5,000 washing dishes over the summer but he wants to spend some of that money. Can’t blame him. That’s why he worked, to get some spending money. A way to reward him without just handing him over cash is to say, “I’m proud of you getting this job, son. Look at all your peers just lounging around. For your efforts, I’m going to put the amount you made as income into a Roth IRA in your name.” And you then send a check for $5,000 to his Roth IRA provider.
Maybe that’s too much of a gift for him and doesn’t incentivize him to save any of his own money? Then simply match the money he puts into his Roth with your own contribution.
Match what your kid contributes to a Roth
Say he made $5,000 but only wants to put $2,500 in the Roth. Tell him you will match his contributions dollar for dollar up to his income limits. In this case, he gets $2,500 of his own money to spend as he likes, he contributes $2,500 to his Roth and you match it. Now he has $5,000 in his Roth and $2,500 to spend. Not a bad deal in the least.
By the way, there is absolutely nothing wrong with doing this from the IRS perspective. Your son made $5,000 as earned income. As long as no more than $5,000 goes into his Roth he’s good to go. Your $2,500 contribution is not a taxable event either. No gift tax to pay, no transfer tax, no income tax or anything. Easy as pie, nothing to report.
Hopefully, your son will continue to do this each year so by the time he graduates college he’ll have a nice sum of money saved up in his Roth.
Have Your Working Children File a Tax Return!
The standard deduction of $12k(for those under the age of 65) is much higher than most kids’ earnings. So, no tax is owed. But have him file a tax return anyway because his employer most likely withheld income tax from his paycheck. As long as his standard deduction is higher than his taxable income he will get the income tax that was withheld returned.
He will not get back this FICA taxes, mind you. But there are benefits to his reporting income even if it is only $5,000 each year from a Social Security/Medicare perspective. Every $1,375 your child earns is 1 quarter earned towards the 40 they need for full benefits when he retires. Yeah, this may not seem like much now but it could prove huge in the future. (I’ve done a ton of videos on this topic on my Youtube channel. www.youtube.com/heritagewealthplanning).
What if all he did was mow lawns and had no actual paycheck?
He can STILL open a Roth, as long as he reports his income on a 1099. You’re going to want to research this a bit to make sure he pays his FICA taxes. It’s really not that hard. Just a couple simple forms and VOILA! He can contribute to his Roth.
How about my daughter who babysits?
She will have the exact same scenario as the son who mows lawns.
I’m a dentist can I hire my kids to sit in the chair for a marketing picture?
Yes, you can… but, I do urge caution here. Is it truly earned income when your kids are just being used for a marketing piece? That’s a tough one. However, if you validate they are cleaning up ar
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Even Jeff Bezos Should Have a Roth 401k Another benefit of the Roth is one many overlook. This is the ability to fund a Roth 401k regardless of your income. High income earners, even millionaires, can fund a Roth 401k if their plan offers it.
I know many of you are reading this and saying “Josh, you’ve really lost it now. Why on earth would a high-income earner want to fund a Roth with after-tax money when she is in a high tax bracket?”
To which I say “Even after reading this far in this book you still doubt the power of the Roth?”
First, let me explain the basics of a 401k plan. There are three parts:
- Elective deferrals
- Employer contributions
- Profit sharing
Elective deferrals are the money you choose to forgo from your paycheck in order for it to go into your retirement account. You have one of two choices for where to put this money, the tax-deferred, i.e., the Traditional 401k or the tax free, the Roth 401k.
The money you contribute to the Traditional side reduces your taxable income in that year by the amount you deferred (see chapter 7). Whereas Roth contributions do not reduce your current income.
The second part of your 401k plan is the employer contributions. Employer contributions go entirely to the Traditional side even if you put your own money into the Roth side. You don’t pay any tax on the employer contributions until you make a withdrawal from the account.
Finally, your 401k consists of the profit sharing contribution your employer may offer. These contributions, if any are made, also go into the Traditional side of the ledger.
Some firms have significant profit-sharing contributions, many have nothing. So, don’t get too caught up on this. But if your firm does offer a decent profit sharing contribution on top of an employer match you may see the tax-deferred side grow quite large.
Given every penny of your employer contributions goes to the pre-tax side, I find this to be an incentive to put your own money into the Roth because of future tax hedging strategies.
If you have assets in the tax free (Roth) side and assets in the tax-deferred (Traditional) side, you have more flexibility in how to deal with future tax laws.
Situations change folks. The best way to deal with changing times is to be nimble and also not have all your eggs in one basket. Everyone knows diversification of investments makes sense, well, diversification of tax strategies does too.
Let’s say your salary is $100,000. But you elect to defer $15,000 of that salary into the Traditional 401k. Thus your taxable salary this year is $85,000.
When you reach the age of 70.5 you will be required to take a portion of that $15,000, and whatever growth you have, as taxable distributions. Again, you’re only deferring the tax until a later date, you haven’t eliminated it.
If, instead of deferring that $15,000, you funded your Roth 401k you’ll pay tax on the entire $100,000 salary you earned that year. But that $15,000 and whatever growth it earns will never be taxed again.
Is it worth it? Here’s a table to show you how much that extra $15,000 of income will cost you in taxes in the year you contribute to the Roth 401k.
Tax Bracket
Tax on $15,000
10%
$1,500
12%
$1,800
22%
$3,300
24%
$3,600
32%
$4,800
35%
$5,250
37%
$5,550
Table 29
As you can see, if you are in the 37% bracket you will need to decide if it is worth it to pay an extra $5,550 now to avoid any taxes in the future to yourself, your spouse and ultimately your kids and grandkids?
You kn
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If you live in one of the nine states in the US with no income tax you are free to skip this section. However, you may want to read on for a couple reasons:
- If they incorporate an income tax at some point in your state. (I’m looking at you Washington state!)
- You move to a state that has an income tax. For instance you move 50 miles south from Chattanooga to Georgia.
The rest of us will be faced with potentially paying income taxes on our IRA distributions. Now, be advised, many states have income deductions and exemptions for retirees that working stiffs don’t get. So, even if the state has an income tax, you still may not pay any.
Take Georgia for instance. If you’re over 64 years old, you pay NO tax on your Social Security income and you pay no tax on the first $65k of retirement income distributions, per person.
Essentially, even though there is a rather high state income tax, Georgia retirees can have a lot of income before they pay any state tax.
However, not all states are like that. Take Massachusetts where all IRA distributions are taxed at 5.15% as of this writing (July 2018).
Thus, if you’re a resident of Massachusetts and have a $50,000 IRA distribution, you’re going to pay $2,500 to the state and another $11,000 to the Feds if you are in the 22% bracket.
A $50,000 IRA distribution in Massachusetts nets you only $36,500!
Now if you had the Roth...well, well. That $50k distribution would net $50k spending money.
Some states are more favorable than Massachusetts. Some are less so. It’s up to you to figure that out. You actually might be surprised which states are tax favorable.
I have a video series on the state-by-state taxes for retirees plus my top eight states for retirees to live. Just go to www.youtube.com/heritagewealthplanning
Don’t just assume the states with no income tax are the most tax friendly. Believe it or not, Kentucky is ranked more tax-friendly than neighboring Tennessee for retirees even though Kentucky has a state income tax and Tennessee doesn’t.
Of course, if you have a Roth income tax won’t matter. Because a Roth is...
...you got it, tax free!
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When President Obama signed the “Affordable Care Act”, aka Obamacare, it came with a pretty significant tax bite called the Net Investment Income Tax (NIIT).
From the IRS:
“The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts.”
Now, you may be thinking, “I don’t have anywhere near that $250,000 in MAGI to worry about this tax. So, what’s the big deal?”
See where it says: “Taxpayers should be aware that these threshold amounts are not indexed for inflation”? (Emphasis mine).
Not indexed for inflation... Hmmmm..where have we heard that before? Oh yeah, the provisional income rules for the taxation of Social Security benefits as well as the Alternative Minimum Tax.
When the legislation to tax Social Security and then the Alternative Minimum Tax were first enacted very few people were affected, thus no outrage, as only “the rich” paid. Now almost everyone pays some tax on their Social Security benefits. (As of the 2017 tax bill fewer taxpayers are caught in the AMT web, thankfully.)
Pretty sneaky, eh? Oh, but it gets worse. How is Net Investment Income derived? Again, straight from the IRS website:
What are some common types of income
that are not Net Investment Income?
Wages, unemployment compensation; operating income from a nonpassive business, Social Security Benefits, alimony, tax-exempt interest, self-employment income, Alaska Permanent Fund Dividends (see Rev. Rul. 90-56, 1990-2 CB 102) and distributions from certain Qualified Plans (those described in sections 401(a), 403(a), 403(b), 408, 408A or 457(b)). (emphasis mine)
Here the IRS is telling us that distributions from retirement accounts are NOT subject to the NIIT, which is factually correct. What they don’t say is that distributions from retirement accounts are counted as income to determine if you need to pay the NIIT on your dividends, interest and capital gains. Some might even call this an error of omission. I certainly do.
Let me give you an example of how this works.
You are single. You have $180k income. You take a $50k IRA distribution. Your total income now is $230k. That $50k IRA distribution is not subject to NIIT. But if you have capital gains, interest and dividend income, those will be subject to the NIIT because that $50k IRA distribution put you above the $200k threshold!
Large distributions from your qualified accounts could add 3.8% to your tax rate on dividends, interest and capital gains. That is nearly a 25% tax increase!
Yeah, I get it. This tax won’t affect many people so it’s not a huge deal. Well, it’s not a big deal now but I assure you it will be because of inflation, just like taxes on Social Security.
So, what do you do to avoid this??? Take a guess…
Distributions from the Roth are not counted in your Adjusted Gross Income and thus will not ensnare you in NIIT trap.
Once again, YAY for the ROTH! Is there anything it can’t do?
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After John died, Judy lived rather frugally, as do most retirees. So, when she died she still had $200,000 in her IRA. She left 50% each to her two children, Jimmy and Jenny.
Jimmy is a married Radiologist making $500k a year. Jenny is a divorced gas station attendant making $35k a year and heavily in debt.
Jimmy has no cash flow needs so he rolls the $100,000 Judy left him into an inherited IRA. He still needs to take annual required minimum distributions. But while those distributions won’t be much initially because he is only 50 years old they will grow each year. Unfortunately for him, as long as he’s making the same income he’s going to lose 35%, or more, to federal income taxes.
Unlike Jimmy, Jenny is in desperate need of cash. Creditors are calling and she is late on rent. She takes a lump sum distribution of the entire $100,000 which put her gross income for the year at $135,000. Her total tax will be around $23,800 once she takes the distribution, which means she is going to lose nearly 25% of the amount she inherited! Ultimately, a third of John and Judy’s savings will be lost to taxes.
Tax-Free Inheritance or Taxable?
Regardless if you’re a high-income earner like Jimmy who doesn’t need the cash, or a low income earner like Jenny who desperately does, wouldn’t you rather receive the inheritance tax free so you could keep all of the proceeds?
If John and Judy had left their children Roth IRAs every single penny would have gone to them and none to the IRS. All that was required was for them to have done a bit of tax planning while they were alive.
Be advised, there is no getting around paying tax. Someone is going to pay some tax. But with proper planning, John and Judy may have been able to pay tax at 10% which would have allowed the kids to avoid avoid losing a third of their inheritance to tax. The question is what should you be doing now to minimize taxes to enhance your family’s wealth while sustaining your own income?
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It is my opinion that the Roth IRA is the most effective and underutilized method of transferring wealth to future generations.
Now, I can hear all the life insurance agents screaming, “Roth is NOT preferable to life insurance!” To my life insurance friends, in some ways I agree. There is no other method where one could create an instant estate as quickly as life insurance.
Only life insurance can create an instant estate
For instance, say you’re 45 years old, making good money and in good health. Your net worth consists of the equity in your home and $250k in retirement savings.
One day you get hit by a bus and die. Your spouse will inherit your equity in the home plus your $250k in retirement savings (assuming the house was jointly owned and he/she was beneficiary on the retirement account).
While that’s a decent amount of wealth, it isn’t generational wealth by any stretch. And, of course, at some point your spouse will be forced to pay taxes on the retirement account, thus reducing its value.
However, for pennies on the dollar you could buy a $2 million-dollar life insurance policy. But there’s a couple problems with this scenario.
The most obvious, of course, is that you had to die for that sizeable estate to be created. Maybe not a big deal if you’re in your late 80s and have major health issues but for a 45-year-old with kids, you probably want to avoid that.
The second issue is that you have to pay for the life insurance premiums until you die and who knows when that will be? So, your premium payments could continue for many, many years to come.
The vast majority of life insurance policies never actually pay out. Most people stop paying the premiums well before they die. But what if you commit to paying premiums in order to have a policy pay out at your death? Well, you still have to get underwritten for the policy. The older you are the more difficult to get approved and the more expensive the insurance will be.
When you’re young and in good health life insurance is easy to get and cheap too. But while a policy on a 45-year-old woman who is in good health will not be very expensive, is multi-generational wealth creation something that is of foremost importance to her if she is a divorced, working mother with children to raise, college costs to consider and her own retirement to save for?
I highly suspect not. So, while I do love life insurance and believe everyone should get a term policy when they’re young it is not superior to a Roth for multi-generational wealth planning.
Imagine if the Roth IRA existed in 1972. You were in sales, going door to door selling encyclopedias. Your efforts paid off when you stumbled onto a neighborhood with a large number of buyers who really liked the idea of having all that information at their fingertips. You had a great year in 1972. Your best ever, in fact. So, you decided to invest $5,000 of your after-tax commissions into this account called a Roth IRA.
Unfortunately, in the first two years after you made the investment, the markets fell 14% in 1973 and 26% in 1974. Your $5,000 fell to $3,186 by the start of 1975. You had discipline, though, and just let it sit there. “Easy come, easy go,” you said to yourself.
Then the magic of compounding interest began to work. Even with the massive crash of 1973 and 1974 you averaged 10% a year over the next three decades.
Since this account was a Roth IRA there were never any Required Minimum Distributions. And you never touched the money. Just let it grow.
Unfortunately, in 2006 you got hit by a bus and went to you
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Traditional IRA growth is stunted by tax
The Roth has no RMDs which means it can grow for as long as you and your spouse live. You cannot get the same growth potential in a Traditional IRA where you are mandated to take distributions each year.
Think about it like this. You and your spouse are both 68 years old. What is better to have, a $100,000 tax-deferred account or a $75,000 tax-free account?
The answer is the tax-free account. Seems counterintuitive doesn’t it? $75,000 is significantly less money than $100,000 after all. But the entirety of that $75,000 account is yours. And you never have to touch it unless you want.
That $100,000 has a huge lien on it called the IRS. Slowly at first, but in a few short years RMDs will increase until the account is nearly depleted.
One could argue that you could take the RMDs from the tax-deferred account and invest them in a side account. But you still paid tax on the RMDs as ordinary income. Secondly, if your side account has its own distributions you could pay tax there too. Even if you’re in the 10% or 12% brackets and don’t pay tax on capital gains or qualified dividends you still pay ordinary income tax on interest. That interest can also move you into a higher tax bracket, potentially causing your dividends and capital gains to be taxed too.
Because there are no RMD requirements the Roth can pass from one spouse to another without ever being touched. We’re talking potential for decades of tax-free growth.
When non-spouses inherit a Roth, they do have RMDs. But even those RMDs are tax free. The Roth simply can’t be topped when it comes to generational tax-free growth.
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If you are married filing jointly with taxable income of $77,400 or less, you are in the 12% tax bracket. However, add $1 more and you are in the 22% bracket. See how that works? $77,400 = 12% bracket. $77,401 = 22% bracket.
This is how marginal rates work: the more income you receive the higher the tax rate on that additional income will be. The tax you paid on your previous income doesn’t change though. You only pay higher taxes on the amount that puts you into the next bracket.
How Qualified Dividends and Long-Term Gains Are Taxed
Now, let’s say you have total income of $70,000 which consists of $60,000 of work income and $10,000 in the form of Qualified Dividend Income (QDI) and Long Term Capital Gains (LTCG). But you need $80,000 to maintain your lifestyle. So you take a $10,000 distribution from your IRA. That puts you in the 22% tax bracket.
The following April you go visit your tax guy to file your taxes. Your tax guy gives you what you initially thought to be a pleasant surprise. He says that you only have to pay 15% on the $10,000 you received as dividends and capital gains even though you are in the 22% tax bracket. This is good news, right?
Unfortunately, the reason you’re in the 22% bracket to begin with is the IRA distribution put you there. Now, you owe over $3,000 in taxes. This is bad.
You wise up and use a different strategy for the following year. You still need $80,000 to get by. You’re still only making $70,000 from work and dividends. To make up the difference this year you take a distribution from your Roth IRA, not your Traditional.
Now, when you go back to your tax guy you really do get a pleasant surprise: you pay $3,000 less in taxes! “Wait a second. How can this be?” You ask.
Your tax guy explains. “Your IRA distribution last year not only increased your marginal tax rate to 22% but it also made your dividends and capital gains taxable as well. That $10,000 IRA distribution cost you $1,500 in income tax plus $1,500 in taxes on your dividends and capital gains. A double-whammy if ever there was one!
“Because your Roth distribution is tax free you remain in the 12% bracket. Taxpayers who are in the 10% or 12% brackets do not pay tax on their qualified dividends or long term capital gains. So, not only do you not pay taxes on your Roth, you don’t pay taxes on your other investment income either!”
Isn’t the Roth beautiful?
Taxpayers in the 10% or 12% Brackets Pay ZERO on QDI and LTCG
Many people believe they are saving on taxes with their IRA because they are deferring the tax until later. This is true for some taxpayers, especially those currently in a high tax bracket. Deferring a high tax now until later when they may be in a lower bracket is smart planning.
But what about taxpayers in the 10%, 12% or 22% brackets? Are they actually saving taxes by deferring though? I don’t think so.
Some analysis, of course, would need to go into your specific situation but don’t simply fall for the fallacy that deferring income saves taxes. It most certainly may not. In fact, as the example above shows, it could actually lead you to pay more in tax, maybe even a lot more.
To close this chapter, please remember you want to reduce ordinary income taxed investments, like bonds and Traditional IRAs, and increase your tax favorable investments, such as Roth IRAs, qualified dividends and long-term capital gains. If you can get your income to be from Social Security, Roth distributions, qualified dividends and long-term capital gains, you are going to be in a very good place from a tax perspective.
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With a Roth you determine when you want to pay the taxes for what you put into the account. This is a benefit of the Roth that way too often gets overlooked.
Remember, anything contributed to a Roth is with after-tax money. If you choose the Roth, you pay tax now. If you choose the Traditional you pay tax later. It’s up to you when you want to pay the tax.
You can also convert all or a portion of your Traditional IRA/401k/403B/TSP to a Roth. A conversion is simply moving money from a tax-deferred account to a Roth. For instance, if you were to convert $50,000 from your Traditional IRA to a Roth, that $50,000 will be taxable as ordinary income (OI) in the year in which you did it. There is no escaping that. You will pay tax on that converted amount. But again, you choose when.
Let’s play out a scenario to see how this may work for you. Sarah and Dan just retired. As a marketing executive Sarah was making good money, $150,000 a year with a $50,000 annual bonus. Dan was also making a decent income as a sales consultant, $75,000 a year. Between them they had $275,000 a year in gross income.
Because their kids were no longer at home and the mortgage was paid off the only deductions they had were deferring as much income as possible to their 401k plans. Last year they were both able to defer the maximum of $22,000.
Those deferrals, plus their two standard deductions, reduced their gross income by $68,000 (see table below). Their taxable income then was $207,000, putting them right in the middle of the 24% bracket.
there is a HUGE difference between deferring income, 401k contributions, and negating taxable income, standard deductions. Deferring income simply means you don’t pay tax on that income now but you will at some point.
Ages 62-70 are the Golden Years of Tax Planning
Fast forward a few years and we see that both Sarah and Dan have just retired. Sarah is 62 and Dan 66. They are not taking Social Security yet just living off the savings they were able to squirrel away.
They have no mortgage and they figure they spend about $50,000 a year total, on everything, vacations, bills, helping the kids out occasionally, etc.
Should They Take Social Security Now?
They have accumulated $300k in their 401ks and rolled those accounts to IRAs. They also have $150k in savings accounts. They wonder if they should start taking Social Security.
NO! Absolutely not!
Given they have no income other than minimal interest they’re making on their bank account they are paying NO TAX. They will continue to pay NO TAX until they reach 70.5 when RMDs kick in. They should take advantage of their $0 tax and start moving money over to a Roth, now! Any income they receive up to $25,300 is TAX FREE! ($12,000 is the Standard Deduction in 2018 for Sarah and $13,300 for Dan).
When Your Tax Rates are Low, Convert to Roths!
Let’s say I am able to convince them to convert $50,000 this year. That $50,000 will be taxable as ordinary income. But with their $25,300 of standard deductions kicking in and the fact they have no other income their taxable income will be all of $24,700. They’ll pay only $2,583 in taxes this year.
$2,583 in tax today is a tiny price to pay for all the benefits of the Roth IRA. Heck, I’d even advocate they convert a full $100,000. With a $100,000 conversion their total tax will be $8,655. But that $100,000 plus any growth will NEVER SUBJECT TO TAXATION AGAIN!
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Let’s say you are the breadwinner and your spouse is a stay home mom or dad.
Due to all the contributions to your retirement plan at work your side of the balance sheet is growing significantly more than your spouse’s. You are concerned about “equalization of estates”. (Equalization of estates is an old estate planning term when there was more concern with estate tax. The estate tax issue is a non-starter for most nowadays but there is something to be said for both spouses having ownership in something.)
What you should do is plop down $5,500 in January in your Spouse's Roth IRA. Doesn’t matter if he or she isn’t “working” for an income. Only matters that you are.
Do this every year and you’ll be surprised at how quickly the account can grow. Have I mentioned that Roth’s grow TAX-FREE too???
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With a Roth there are NO required minimum distributions (RMDs). This means you can allow your Roth to grow for as long as you are breathing without ever having to take any money out.
A traditional IRA, 401k, 403B or TSP all require at age 70½ you begin taking a percentage out of the account in order to pay tax on it. What if you don’t need the money? Doesn’t matter. The IRS needs it more and they will get it starting when you turn 70 ½.
Let’s say you are 70 years old and have $100,000 in your traditional IRA. Your RMD will be $3,649.63.
How did I get that? Just take your account balance from the end of the previous year, find your age at the end of this year on the IRS table below and divide that corresponding number into your account balance.
Now, I can hear some saying “Josh, paying tax on $3,649.63 is no big deal. I’m in the 12% bracket so it will only cost me around $400 in taxes.”
I agree. The first few years of RMDs are so small you probably won’t even notice the tax hit. In fact, your account will probably grow more than your required distributions. How about when you get older though? At 82, say you still have $100,000 in your account, your RMD will have increased 60% to $5,847.95.
These RMDs begin to add up when it comes to the taxes you pay on your Social Security as well and, unbeknownst to most, your Medicare Part B and D premiums too!
How Medicare Premiums Double...or Worse!
Medicare premiums are means-tested which means the higher your income the more your premiums will be. We aren’t talking chump change here either, folks. A single taxpayer with a Modified Adjusted Gross Income (MAGI) of less than $85,000, pays $134 in monthly Medicare Part B premiums and $34 in Part D premiums But once that taxpayer goes above $107,000 in MAGI, her monthly premiums double from $168 to $335!
MAGI = All Income Before Deductions (excluding Roth)
The higher the MAGI, the larger the premium. The maximum premium for Medicare is $504.80 per beneficiary, which is an increase of nearly 400% from the lowest premium!
Higher RMDs = higher taxable income = much higher Medicare premiums.
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As we discussed in the previous chapter, if a married couple’s provisional income is less than $32k they pay no tax on their Social Security benefits. However, for a single taxpayer, if provisional income is greater than $34k then up to 85% of his/her Social Security benefit will be subject to tax.
Let’s say you are a single taxpayer and have a $30,000 distribution from a Traditional IRA in addition to your $30,000 of Social Security benefits. In this case your provisional income is $45,000. You will pay tax on your Social Security Benefits.
Remember: Provisional Income is half your Social Security benefit plus any other income you receive (Roth distributions excluded).
Now say that $30,000 IRA distribution came from a Roth. In this case your provisional income is only $15,000 because Roth IRAs are not included in the calculations. So, you pay NO TAX!
They each have $60,000 of income, $30,000 from Social Security and $30,000 from IRAs. Judy’s IRA income is from a Traditional but Jane’s is from a Roth.
By having a Traditional IRA, Judy has to pay $3,476 in tax. Jane pays nothing. Over the course of 10 years Judy will pay nearly $35,000 more in federal income tax than Jane. Since most state income taxes are based on taxable income calculated for a federal return, the figure may be even higher.
Just think about what you could do with an extra $3,476 each year. That could be the premiums for your Long Term Care Insurance policy or it could be your car payment, Medicare premiums, etc.
But Wait There’s More!
Ever since John died, Judy has wanted to take her daughter on a month-long cruise vacation. “No time like the present,” she said. So, she takes an IRA distribution of $50k to pay for the cruise. Much fun was had.
But smiles turn to frowns when Judy gets a call from her tax guy the following year. She owes almost $10,000 in federal income taxes! Nearly $7,000 more than the year before even though she only increased her gross income by $20,000.
Her income went up by $20k, a 33% increase. But her taxes went up nearly $7k, a 250% increase!
Judy is stunned to learn that by taking out $20,000 more from her IRA she raised her taxes by $6,146, which is an effective 32% rate.
I can hear you asking, “Wait a second! She’s in the 22% tax bracket. How is her effective tax on this distribution 32%? This seems fishy!”
Indeed, it IS fishy! But it is reality.
She is being taxed twice on the same income. Those IRA distributions are subject to income tax but it also made more of her Social Security benefits taxed as well. When Judy only had a $30,000 IRA distribution just $13,850 of her Social Security benefit was taxable.
But now with the $50,000 IRA distribution, her taxable Social Security benefit jumped to to $25,500. Her total total taxable income more than doubled from $30,550 last year to $63,500.
A 33% increase in gross income caused a 100% increase in taxable income. A better example of double taxation you won’t find.
How the Roth Saves the Day...Once Again
Now, let’s look at Jane. She also increased her income by $50,000 to take her daughter on that same 30-day cruise. But Jane has a Roth IRA, not a Traditional.
What happened to her taxes??? Nothing. She NETS $80,000 and she still pays no tax. Her provisional income is still under the threshold for her Social Security benefit to remain tax free. No tax on Social Security, no tax on Roth = no tax due.
I know there are disbelievers among you. So, follow the steps below to see exactly why Jane pays no tax.
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In 1983, and again in 1993, provisions were made to the tax code to allow for the taxation of Social Security benefits. If your income was above a certain provision some of your benefits were taxed. Thus the term “provisional income” came to describe how much of your Social Security benefits are taxed.
Oddly, go to SSA.gov and type “provisional income” into the search button and see what you come up with; Nothing.
Go to IRS.gov and type in “provisional income”. Again, nothing.
Now, don’t get me wrong, both of these sites have tons of information on how benefits are taxed.
Here’s the IRS for example:
- a quick way to find out if a taxpayer must pay taxes on their Social Security benefits: Add one-half of the Social Security income to all other income, including tax-exempt interest. Then compare that amount to the base amount for their filing status. If the total is more than the base amount, some of their benefits may be taxable.
- Base Amounts. The three base amounts are:
- $25,000 – if taxpayers are single, head of household, qualifying widow or widower with a dependent child or married filing separately and lived apart from their spouse for all of 2018
- $32,000 – if they are married filing jointly
- $0 – if they are married filing separately and lived with their spouse at any time during the year
Clear as mud, no?
This complexity is why the vast majority of Americans have no clue how their Social Security benefits are taxed, to include most financial advisors. This is unfortunate given how many Americans rely heavily on their Social Security in retirement.
Understanding Provisional Income
Kiplinger’s magazine is a good source for Social Security information. They write: “Your provisional income is your adjusted gross income, not counting Social Security benefits, plus nontaxable interest and half of your Social Security benefits”(emphasis mine).
To illustrate how this works let’s bring back John and Judy. We’ll say they have $100k of total income which consists of $45k in Social Security, $40k of pension and IRA distributions and $15k of tax-exempt municipal bond interest.
To calculate their provisional income, we simply add half of their Social Security benefits to their pension and IRA distributions.
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If you are a married filing jointly (MFJ) taxpayer you will not be one indefinitely. At some point, you or your spouse will be a single taxpayer and your tax situation will change dramatically.
Let’s go back to John and Judy. Their income is $100,000 which consists of John’s military pension and IRA distributions.
Now, let’s say John dies. Thankfully, he filed for a 55% Survivor Benefit Pension (SBP) when he separated from the military which allows Judy to receive a pension benefit of $30,250. However, that’s not enough for Judy to live on. She feels she needs a gross income of $75,000 to maintain her lifestyle. So, the rest of her income will come from IRA distributions. (In case you are wondering about Social Security, we’ll get into that later. That’s where it really gets fun!)
Anything jump out at you?
Judy has 33% less income yet pays 13% more in federal tax!
How can this be?
On the next page you will see the tax tables for a single taxpayer in 2018. Notice that a single taxpayer is in the 22% bracket when taxable income exceeds $38,700. A married couple must have income above $77,400 before they are in the 22% bracket. The married couple also gets two standard deductions whereas a single taxpayer only gets one.
Higher Tax Rate + Less Standard Deduction = MUCH MORE TAX
And there you have the Widow’s Tax Trap; Less income and more tax. Now, if Judy had Roth IRA distributions instead of Traditional IRA her tax bill would have only been $1,844!
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The single most important thing to understand about the U.S. tax code is the difference between gross income and taxable income.
Let’s introduce John and Judy. They have $100,000 in gross income. What do you think their tax bracket is?
Most people will see a married couple with $100,000 income and think they are in the 22% tax bracket. But that is incorrect.
Taxable Income vs. Gross Income
Your federal tax bracket is actually based on your taxable income not your gross income. Taxable income is the net amount you have after you take the various deductions and/or exemptions that are available.
So, let’s assume John and Judy do not itemize their taxes. The only deduction they have is the standard deduction.
Under the new tax bill, (TCJA 2017), tax payers under 65 years old can take $12,000 in standard deductions. Taxpayers 65 and older have a standard deduction of $13,300. Assuming John and Judy are both over 65, they would subtract $26,600 from their $100,000 of gross income. Their taxable income would then be $73,400, which puts them in the 12% bracket. They will pay $8,426 in federal income tax.
But what happens if they add $10,000 by taking a distribution from a Traditional IRA? Now their taxable income is $83,400 which puts them in the 22% tax bracket. Their tax is $10,227, an increase of around $1,800.
Put another way, that $10,000 distribution accounted for 9.1% of their total income yet 17.6% of their total tax bill.
Look at the table below and you can see how the $10,000 IRA distribution affected John and Judy’s taxes.
Most taxpayers understand that tax rates go up as income increases. What gets overlooked is that the actual percentage of that increase is huge. In John and Judy’s case, it was a 50% increase!
How? Because that $10,000 distribution cost them $1,801 in additional tax, meaning their effective tax rate on that distribution was 18.01%. If they have remained in the 12% bracket their tax would have been $1,200.
What would happen if that $10,000 IRA distribution came from a Roth though?
Roth distributions are tax free so that $10,000 will not be included in any taxable calculation. They have that extra $10,000 to spend. They just don’t pay tax on it.
Now, you might argue, “Yes, Josh, your numbers are sound but they received a deduction on the money going into the IRA to begin with. You would have to compare the tax they pay now to the savings they had before.”
This is correct. We certainly need to look at the tax savings of the IRA deduction against the tax free withdrawals of the Roth.
However, my experience is that many working taxpayers don’t have near the taxable income they think they do given varying tax deductions and credits: mortgage interest, credits for children, real estate tax, etc. In fact, let me ask you, do you know what the number on line 47 of your own 1040 is? That is your total tax. How much of that tax was reduced by your itemized deductions?
Unfortunately, most taxpayers actually retire into higher tax brackets because their Required Minimum Distributions put them there and they no longer have any itemized deductions, which is exactly what happened to John and Judy. At that point, there is not much they can do other than pay the tax. But keep on reading and you’ll see the many other overlooked benefits of the Roth.
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Do you know how Social Security benefits are taxed? State income taxes? How Medicare premiums are calculated? Ever heard of NIIT? What your RMDs (Required Minimum Distributions) will do to your tax bracket? How about other lump sum distributions? What kind of taxes will your surviving spouse pay? How about the taxes you pass on to your kids?
All of the above will be affected by distributions from your tax-deferred retirement accounts. In this book I’ll share with you example after example of how your tax-deferred accounts can greatly increase your overall taxes and even Medicare premiums. The numbers, once they’re laid out for you to see, simply cannot be refuted.
In this book, you will see how the Roth is the most powerful financial planning tool ever created to increase your family’s wealth. Unfortunately, most people do not understand the significant benefits of the Roth. They see it only as a pay-tax-now vs. pay-tax-later option. The typical analysis as to whether or not one should do a Roth goes something like this:
“I expect my tax bracket to be lower in the future, so it doesn’t make sense to do the Roth. Why pay a higher tax rate today to avoid paying tax at a lower rate tomorrow?”
Makes sense, right?
WRONG!
I’ve seen what happens to clients when IRA distributions account for a larger portion of their income in retirement. Taxes grow and Medicare premiums increase, leaving retirees with less net income even though they have more gross income! Widows, in particular, can find themselves in a very bad financial position with limited options. The Roth, when understood and used correctly, can eliminate much of these higher taxes and premium increases.
Now, in fairness, I’ll share four reasons how the Roth can’t help you any more than a tax-deferred account can. Not that these four reasons should dissuade you from going full-throttle with the Roth. But I feel it’s important to show how the Roth can improve one’s financial life and how it can not.
My hope is that after you read this you’ll have a much deeper appreciation of the how Roth IRA can enhance your family’s wealth--tax-free--for generations. And that you will take advantage of it.
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I, Pencil, simple though I appear to be, merit your wonder and awe, a claim I shall attempt to prove. In fact, if you can understand me—no, that’s too much to ask of anyone—if you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing. I have a profound lesson to teach.
And I can teach this lesson better than can an automobile or an airplane or a mechanical dishwasher because—well, because I am seemingly so simple. Simple? Yet, not a single person on the face of this earth knows how to make me.
For, if one is aware that these know-hows will naturally, yes, automatically, arrange themselves into creative and productive patterns in response to human necessity and demand— that is, in the absence of governmental or any other coercive master-minding—then one will possess an absolutely essential ingredient for freedom: a faith in free people. Freedom is impossible without this faith.
https://fee.org/resources/i-pencil/
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In this episode I answer a ton of questions Live on Youtube.
Here's just a small sampling:
I’ve been working at Taco Bell since July 11th, i am currently 16 saving for my first car. I have about 4,700$ saved up, should i file for tax returns?
*** To avoid family or friends disputes over money, do you have any suggestions as who could be an executor of our trust?
*** We noticed that over 50% of our networth is in Real Estate. Is this normal or should we try to diversify more?
Not sure if this is too personal but I would love to know what funds Josh Scandlen is personally invested in!
*** If you had to do it all again, starting in 2019 as a first time investor. What funds do you as a young(er) Josh Scandlen to have in his Roth IRA?
*** as a young person just getting started on life were do you save or invest first because as a older person trying to play catch up I have accounts here there an every where trying to cover all the angels ?
*** My question is am I paying too many fees for all these managers. How do I figure out what my real cost is?
*** - Is there a benefit cap on how much one can receive from SS?
*** have a family history of heart disease and my current health leads me to believe i will NOT live past 80 and might not make it past 70.. Should i take SS at 62 or not?
*** I was born in 1969, and my now husband was born in 1952. He started collecting social security this year at 66 - his full retirement age (about $2000/month). And we just got married last week. (don't know if the timing of getting married after he started collecting SS qualifies me to future survivor's benefits or not)
I have an inheritance from my mom, and I was wondering if it would make sense for my husband to pay back the social security he's already taken (I'd pay it), and pay him the $2K/month myself until he was 70. So that would cost $96,000 which I do have.
*** My husband plans to work until age 70 to maximize his benefits, but If he dies before he reaches 70, will my social security income increase? Will it only increase to what he would have gotten at age 66 or at the age of time of death? I have been researching this point everywhere and I can't find the answer.
*** Why do most financial advisors seem to think that it is better to transfer your retirement funds from a FERS Roth to a private Roth? The operating costs of the FERS plans are the cheapest around.
*** From a financial standpoint, when would be the best time to retire?
*** If you can withdraw contributions you made to your Roth IRA anytime, tax- and penalty-free at age 71, does that include a rollover contribution from a tax deferred pension-teacher retirement plan? If not, how does that work?
*** What factors should one consider when deciding between a Roth and Pre-Tax 401K?
*** What are some things a person at or near retirement should know to be prepared?
*** My company offers a 401k starting next month but doesn’t match anything. Is it worth it, or should I just save on my own?
================================
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First podcast episode of 2019! A great one to start the New Year too.
I had the privilege to interview Jane Brox, who wrote a most wonderful book called "Brilliant - The Evolution of Artificial Light"
If you are into history, especially narrative history, the kind where you feel you are actually THERE - back in time with the characters, this book is for you.
Just an incredible journey of light and how human beings have come to rely on it so.
I can not recommend this book enough.
Get it here: https://amzn.to/2SXTVEJ
Jane just published a new book: Silence: A Social History of One of the Least Understood Elements of Our Time.
Get this book here: https://amzn.to/2Md631N
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One of the most important lessons my mom taught me was that most IRS agents are reasonable. Thus, if you're in an audit, just do what they ask, don't be stupid and they'll be on their way soon enough.
Of course, my mom said, the best thing is to not get audited to begin with. Well how do you do that? Be reasonable on your tax returns.
For instance, don't claim a charitable deduction on the clothes you bought GoodWill by the purchase price of these clothes when at the retail store!
Don't try to write off as a business expense the times you took your kids to Disney.
That fishing rod you use to go fishing? Don't write that off unless you are truly in the fishing business!
Pretty simple stuff, eh? But you'd be surprised how many people get wrapped up on "not paying anything more to the IRS!"
So, they'll move mountains to write off every last penny. Why???
Say you end up paying a couple hundred extra in tax, is that really, REALLY, that big a deal?
I don't see it.
Thus, when it comes to your taxes, be like my mom said, don't be stupid.
Here's the article from which I read about Taxpayers Behaving Badly. https://bit.ly/2BXyflW
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I can't tell you how excited I am to have Carrie Meyer on the podcast today. Carrie was a professor of mine when I was at George Mason in the early to mid 1990s.
By the wonders of the interwebz we've been able to stay in touch over these 20 plus years.
She had written a most wonderful book called "Days On The Family Farm" which is a literal daily diary from lady who was keeping the books of her family farm in Rockford, IL.
The diary takes us back in time to the first time getting a tractor, a vehicle, a gas engine, through WW1 into the Depression, etc. A daily time stamp of happenings during that time. It's amazing.
If you are into history, farming, energy use, economics, small business, you will love this book.
Here's the link. https://amzn.to/2rwEibj
Secondly, Carrie had just written a book called "Letters from the Boys: Wisconsin World War I Soldiers Write Home" which sounds like a fascinating book but one I have yet to read. Oh, it's certainly on my list!
You can find the link here. https://amzn.to/2QdU8Gg
In this podcast, Carrie tells us her story from being a farm girl to holding a PhD in Economics. Her time working for the Peace Corp in the Dominican Republic. Her interest in all things agriculture, gas engines, Latin America etc.
Such a great lady. Interesting as all get out. So, listen to the podcast and buy her books. You'll be glad you did!
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File this under a Josh Rants episode please. Thus, if you're looking for financial planning specific info, this video is probs not for you.
Because in this video I want to take a moment or 30, to talk about fear. And ponder why it is so prevalent in our modern culture.
A culture where we have abundance like the world has never seen. Where we have so much food we refuse it when presented to us. Where we can literally go a whole day, a week even, and never know what the weather is outside. Where the biggest worry we may have is if a cop saw us roll through a stop sign and pulls us over.
And yet, with ALL THIS, we seemingly live in more fear today than ever before.
We fear Muslim terrorists. We fear there are Nazi's under every bed. We fear a child predator will snatch our kid. We fear a criminal band is going to do a home invasion. We fear apocalyptic climate change. We fear a market meltdown and hyperinflation. We fear running out of money in retirement. We fear everything it seems.
But why? What is the evidence behind all this fear?
If you're a Christian, you really have no excuse being consumed by fear. After all, either Jesus rose from the dead or He didn't. If He did, and ALL Christians attest to this, then what the heck are you (we) so afraid of?
THink about it. Jesus predicts His own demise, AND His rebirth, and then makes it happen? Yeah, that's pretty much the team I want to be on, because His team has a better record even than the Harlem Globetrotters against the Washington Nationals.
Jesus beat death. And noone else, ever, has been able to do that. Think about it from Lazurus' perspective. He was dead, and was called back to life, after being dead. Do you think he was scared of anything ever again?
Read the play "Lazarus Laughed", the link is below. It's simply brilliant.
https://amzn.to/2roO7HT
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Jeremy Siegel grants his annual interview to Robert Huebscher over at Advisor Perspectives about his thoughts on the markets.
https://bit.ly/2DSRE8O
For those of you unaware, Siegal wrote the NUMBER ONE book on investing you will ever read. Here is the link for his 5th edition.
If you are interested in markets, I'm telling you THIS is the book for you. https://amzn.to/2ScKFeQ ================================= GET ALL MY LATEST BLOGPOSTS: https://heritagewealthplanning.com
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The Market Is Down…have you checked your Monte Carlo projections??? Last month you ran a retirement scenario that showed you had a 85% probability of success. Which left you feeling good because it showed you could retire at your anointed time. Yay for you!
Yesterday you ran the same exact scenario but your probability of success is now only 70% meaning your going to have to work at your crappy, old job for 2 more years. “Nooooooooo!!!!” You scream into the night in pure panic. “I CAN’T do it! I just can’t!” You hate your crappy, old job, after all, and you’re just there until you get to the point where your retirement projections show you’re ‘safe’ to retire.
Suddenly though, in a month’s time, all your hopes and dreams have been shattered. Just. Like. That.
Is it Trump? The Democrats winning the House? NYC banksters? Jeff Bezos? Who is to blame for your retirement plan being derailed? You’ve got to be able to blame someone, but whom???
And this, my friends, is why I despise retirement projections. Literally, for our fictional character above NOTHING HAS CHANGED! The only thing that has happened is that the market is down around 6% since last month. That’s it. Nothing else. Yet, when I run an analysis whereas before this person could retire at 55, now he can’t until 57 if he wants to keep his 85% probability of success.
All because what was initially say a $250k starting portfolio is now down to $235k. Thus, what was previously a 5% withdrawal rate of $12,500 a year is now a 5.32% withdrawal rate. And that, my friends, is NOT sustainable for more than 70 retirement scenarios out of 100. (Oh, just as a side note, we ARE including taxes here).
So, what to do? WHAT TO DO?
A. Worry not. Are you doing everything you can be doing so when you reach your desired retirement age you will be in tip-top shape? I.e., putting money away, paying down debt, keeping an eye on spending? If the answer is yes to all of the above, there literally is nothing more you can do, regardless if your probability of success is 5% or 95%.
Which leads me to: B. Remember CASH FLOW IS KING! What are your cash flow needs? Are you blindly throwing out a number based on some silly cliched financial planning rule? Say, “you need 80% of pre-retirement salary”. Why? Where are those numbers coming from?
In my case, I can absolutely guarantee you Charlotte and I will not need 80% of our pre-retirement salary. Why? Because we’re raising 4 kids. And trust me, that ain’t cheap… Just yesterday, I had to drive down to GA Tech to take my oldest to an emergency visit with her dentist because she face-planted off a scooter. You can see the video here.
Presumably, she, and my other kids, will become self-sufficient enough to pay their own bills. We certainly won’t be paying for basketball and tennis leagues, school pictures, making 4 lunches a day, etc.
In fact, we won’t be paying the same utility bills either. No reason for my wife and me to stay in our home that accommodates 6 when they kids have moved out. Heating bills for a smaller home will be quite a bit less, never mind the water usage.
Let’s say we spend $100k a year currently. Is $80k a year, again using the boilerplate 80% of pre-retirement salary, a good projection? NO!
Not only does common sense tell me it’s not but experience too. I’ve seen many, MANY retirees get by just fine on $5k a month. In fact, MOST retirees that I’ve ever worked with have been just fine on that amount of money each month. Not all, of course, but most.
Oh, and please don’t think I’ve only worked with people in fly-over country where the cost of living is cheap relative to the coastal areas. I’ve worked with many a retiree in NY, Boston and the DC area too. $5k a month won’t go as far for them, but they certainly aren’t needing $10k a month, by and large.
So, what’s the solution? Simple. Run your retirement projections once a year just to get a gauge of where you stand. And then don’t do it again until the following year.
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I'm telling you folks, if you're not paying attention to the capital gain distributions your mutual funds pay you could be in for a world of hurt.
Big distributions from many fund companies are coming your way. Even worse, yes WORSE, is that some funds distributions will consist of SHORT TERM CAPITAL GAINS too!
What can you do about this?
Well, stay tuned to find out!
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Lots of good stuff across the board from election day.
Maine, Colorado, Florida, Washington state even passed either good initiatives or defeated bad ones.
The march towards more liberalization on weed moves ahead. I am very happy to see this too. Unfortunately, the good folks in North Dakota weren’t quite ready to go all in. But even their ballot, which would have legalized entirely didn’t go down in too big a way not to be revisited.
My concern on legalization, of course, is the folks who say “legalize it and tax it.” Yeah, that has done wonders for the black market on cigarettes.
If you’re going to legalize you don’t do it for tax revenue. You do it for the peace and safety it creates. Never mind the freedom for people to engage in their choice of behaviors, as long as it doesn’t impact another’s ability to engage in his/her own choices.
Washington state defeated, once again, their silly carbon tax initiative. Again, the idea CO2 is EVIL boggles the mind.
But the Washington state law was even more silly in that CONSUMERS of fossil fuels, not just producers, would pay taxes at a huge clip.
Look, until you see major reductions in consumption you simply are not going to get around the fact that we need fossil fuels to live the lives we’re accustomed to.
Rooftop PV panels with wind turbines are not going to do it.
Of course, you could, and should if you’re worried about CO2, advocate for nuclear. But that will never happen by the “greens”. I don’t know why, actually.
But until they advocate for common sense electricity, which wouldn’t send us back into the 1800s I am very pleased when I see a “green” initiative defeated.
San Francisco and Mountain View, CA both passed tax increases on businesses. The economic illiteracy in both these places is incredible. Tax GROSS RECEIPTS??? Insane. Tax new employees??? Again, insane.
Good luck with that folks.
Lastly, I find it interesting that both CO and ME engaged in wonderful fiscal conservatism this election cycle, yet both elected liberal governors.
The take away there, in my opinion, is that if the Democrats were smart they’d nominate more centrist candidates.
Not holding my breath of course, as the leftwing of the Democratic party has taken over that party, a redux of the George McGovern days.
But only time will tell.
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Direct Primary Care (DPC) is a wonderful alternative to the current insanity of health care.
DPC offers a one-to-one relationship with your primary care provider (PCP) for a monthly fee. You get to know your PCP, he/she gets to know you.
Because a DPC provider doesn't accept insurance, there is no middle man. You pay that monthly fee and have access to your provider. It's literally that simple.
And, given that there are no insurance company's to satisfy, the fee you pay is significantly lower than what you'd think.
In this episode, I talk with Dr. Natalia Southerland out of Dallas, TX suburbs and she tells us her story of being raised in a WVA steeltown to becoming a physician who wanted nothing more than to help people like her family who couldn't afford to go and see a doc.
She shares her frustration with the limited availability she had to see her patients. In fact, she mentions she had 3,000 patients "assigned" to her. How many did she have a close relationship with? Well, doesn't take a degree in rocket science to figure that out.
She shares with us why she chose the DPC route and how that has opened up a path to offering quality care that focuses so much more than writing prescriptions but can actually diagnose her patients overall situation, their eating habits, sleeping, exercise, etc.
She also shares a story of how one of her patients literally had a heart attack in her office and how she personally drove that patient to the ER.
Pretty amazing. Her story is fantastic.
If you want to know more about Dr. Southerland please visit her website at https://www.brandnewmed.com.
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I can't begin to tell you how many times I receive an email where someone is concerned about their Social Security benefit being wrong.
They look at their statement and see that they'll receive say $2,000 at FRA but when they calculate the numbers themselves they don't come up with anything close to that.
Then they'll see Youtube videos and other blog posts saying "Your Social Security statement is WRONG!!!" And without understanding they'll simply believe what they see, hear or read.
This is not good because it leads people to stay in their crappy, old job for many more years than they should, solely due to ignorance.
So, let's look at how Social Security benefits are actually calculated. I've talked a million times to Sunday on the AIME (Averaged Indexed Monthly Earnings) numbers.
You take your top 35 years of earnings, INFLATE THEM as per Social Security's guidelines) add them up, and divide by 420. That is your AIME.
But your AIME is NOT your benefit amount. Your benefit amount is your PIA, which is a fraction of your AIME.
To figure your PIA you take your first $895 of AIME and times by .90.
You take the next amount, up to $5397 and times that by .32.
Any amount above $5397 times by .15 and that is your PIA, the amount you'll receive at your FULL RETIREMENT AGE.
So, let's say you're looking at your statement and see you only made $16k in 1984. You're like "Oh no. My benefit is going to be small because I wasn't make very much back then."
You'd be wrong! That $16k is the same as $50 in 2017. If you made nothing but the average wage, $50k in 2017 numbers, your benefit would be $1950 at your Full Retirement Age.
Not too shabby if I do say so myself. Especially if you have NO DEBT!
https://www.ssa.gov/oact/COLA/AWI.html https://en.wikipedia.org/wiki/Average_Indexed_Monthly_Earnings ================================= GET ALL MY LATEST BLOGPOSTS: https://heritagewealthplanning.com
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You think science isn't politicized? Think again, my friends.
In this episode I read from Ian Leslie's amazing article from 2016 "The Sugar Conspiracy" and you will see the politicization of "science" firsthand.
Scary thing, though, is that science is supposed to be based on evidence. But what happens when evidence is not allowed into the public realm?
Well, at least in terms of the food we eat, people die! And thus the purveyors of falsities need to be held accountable for why they are not allowing the public to hear divergent points of view.
Well, we know why. Power, prestige and money. That three headed monster will make people do many bad things in order to solidify their positions. Which is exactly what happened for 50 years in the nutrition science world.
We see the same in other aspects of "science" too, mind you. And similar to nutrition science we see the same disgusting misogyny as well.
How dare a woman challenge the orthodoxy??? That woman "is an animal unlike anything I’ve ever seen before.” Said Dr. David Katz of Yale about a woman whose research challenged prevailing thought.
Why is she an "animal" of the kind he's never seen before? He doesn't say. She just is apparently. Nice.
But it's not just nutrition 'science' that men are misogynistic towards women.
Climate 'science' is probably worse. Here are some of Michael Mann's acolytes saying very keen things of Judith Curry, the eminent scholar who challenges the idea of man-made global warming.
"Curry is as dishonest as they come. Shes an attention seeker, whoring her credentials for adulation from angry old white men.
Another Mann-boosting climate activist takes it a step further:
Curry, however, is a supposed scientist who has (perhaps) literally gotten into bed with slime like (Mark) Steyn."
Who is Judith Curry, you might ask. Well she literally wrote the book "Thermodynamics of Atmospheres and Oceans".
Yeah, slutting herself is something she probably didn't need to do to advance her academic street-cred.
But orthodoxy is an ugly beast, especially for those who benefit greatly from it.
Thus the lesson to be learned, trust nothing, challenge everything with a skeptics eye, ask for proof. Your life literally depends on it.
www.theguardian.com/society/2016/apr/07/the-sugar-conspiracy-robert-lustig-john-yudkin#comments en.wikipedia.org/wiki/John_Yudkin en.wikipedia.org/wiki/Ancel_Keys
www.steynonline.com/7661/the-craziness-of-the-climate-science-echo-chamber
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You think science isn't politicized? Think again, my friends.
In this episode I read from Ian Leslie's amazing article from 2016 "The Sugar Conspiracy" and you will see the politicization of "science" firsthand.
Scary thing, though, is that science is supposed to be based on evidence. But what happens when evidence is not allowed into the public realm?
Well, at least in terms of the food we eat, people die! And thus the purveyors of falsities need to be held accountable for why they are not allowing the public to hear divergent points of view.
Well, we know why. Power, prestige and money. That three headed monster will make people do many bad things in order to solidify their positions. Which is exactly what happened for 50 years in the nutrition science world.
We see the same in other aspects of "science" too, mind you. And similar to nutrition science we see the same disgusting misogyny as well.
How dare a woman challenge the orthodoxy??? That woman "is an animal unlike anything I’ve ever seen before.” Said Dr. David Katz of Yale about a woman whose research challenged prevailing thought.
Why is she an "animal" of the kind he's never seen before? He doesn't say. She just is apparently. Nice.
But it's not just nutrition 'science' that men are misogynistic towards women.
Climate 'science' is probably worse. Here are some of Michael Mann's acolytes saying very keen things of Judith Curry, the eminent scholar who challenges the idea of man-made global warming.
"Curry is as dishonest as they come. Shes an attention seeker, whoring her credentials for adulation from angry old white men.
Another Mann-boosting climate activist takes it a step further:
Curry, however, is a supposed scientist who has (perhaps) literally gotten into bed with slime like (Mark) Steyn."
Who is Judith Curry, you might ask. Well she literally wrote the book "Thermodynamics of Atmospheres and Oceans".
Yeah, slutting herself is something she probably didn't need to do to advance her academic street-cred.
But orthodoxy is an ugly beast, especially for those who benefit greatly from it.
Thus the lesson to be learned, trust nothing, challenge everything with a skeptics eye, ask for proof. Your life literally depends on it.
https://www.theguardian.com/society/2016/apr/07/the-sugar-conspiracy-robert-lustig-john-yudkin#comments https://en.wikipedia.org/wiki/John_Yudkin https://en.wikipedia.org/wiki/Ancel_Keys
https://www.steynonline.com/7661/the-craziness-of-the-climate-science-echo-chamber
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What arrived in the mail the other day? Nothing more than a piece from Fidelity investments advertising they now have funds that are LOWER cost than Vanguards... Wow...
To see the change in the industry from a few decades ago to now, is nothing short of incredible.
John Bogle, Vanguard's founder, was/is a pariah in the investment world. WHy? Because he shown a light on the sickening nature of investment managers getting rid off the back of their investors without adding ANY value.
For many a year, Bogle was demeaned. But the academics saw the light first and slowly, ever so slowly at first, the industry began to change.
Now, that Fidelity is competing with Vanguard on price shows you which side actually won.
However, there is still a lot to be wary about. Many an investment manager still charges well over 1%, even if the investments they use are low cost, such as Vanguards.
Don't fall for this, my friends. If your investment guy is flying around the country in a private jet or going off on his yacht that is YOUR money.
It's YOURS! And your investment manager is not adding value for your fee.
================================= GET ALL MY LATEST BLOGPOSTS: https://heritagewealthplanning.com
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Social Security and Medicare are NOT going broke, my friends.
This doesn't mean there aren't issues to contend with but please, for the love of all that is good, do not fall into the trap that you shouldn't use Social Security in your planning.
Now, with that said, I will not be shocked in the least if you pay more in taxes for your benefits, or even worse, more taxes ON your benefits.
In fact, buried well in the Trustees report that say they say "An increasing fraction of all earnings will be subject to the higher tax rate over time because the thresholds are not indexed. By 2092, an estimated 79 percent of workers would pay the higher rate."
Hmmmm....a tax that is NOT indexed for inflation. Ever heard that before?
Of course you have! Social Security taxation of benefits.
So, prepare accordingly.
https://www.ssa.gov/oact/trsum/
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I like the TSP. No, I LOVE the TSP! And you should too. However, when it comes to distributions from the TSP, you literally could not make it any more complex.
For this reason alone, it would be wise to roll your TSP over to an IRA upon separating from service, unless you really, and I mean REALLY, want to leave your heirs with a nightmare.
Now, when I say rollover to an IRA, I don't propose you put it into a high cost fund or annuity. You can get similarly cheap investments at Vanguard and other places as TSP. But with those firms come much more flexibility in distribution options.
https://heritagewealthplanning.com/rolling-over-your-thrift-savings-plantsp-dont-do-that/
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The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It https://amzn.to/2LHwQpt
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Medicare Annual Enrollment is upon us. That means it's your time to investigate new plans.
Do not allow inertia to take hold and assume your old plan is still competitive, especially in the Medicare Advantage arena. SHOP to see if better plans are available!
But how do you do that? Medicare.gov??? Good luck with that.
As Elaine Floyd talks about in this article Medicare.gov did not list plans that ARE available to her and were actually quite favorable plans too.
In fact, only by mistake did she go to medicare.com and saw plans available to her that Medicare.gov didn't have. Plans that have been available to her for years, that she missed. Thankfully a friend told her about a plan she used and thus Elaine made the decision to do some research on her own.
What a mess though! As she shares with us here.
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More Americans are worried about health care costs in retirement than about running out of money. How does that make any sense?
Nassim Nicholas Taleb in one of his books talks about more people thinks it's more likely that an earthquake in California will kill 3000 people than a natural disaster anywhere in the US will kill 3000.
The first is a subset of the second. The first can't exist without the second existing too! So, if you're worried about the first, you should be inherently more worried about the second.
Same thing here.
How can you be more worried about health care costs, which is a subset of retirement planning, than you are about running out of money?
Yet here we are. Why? Because we keep hearing how expensive health care is in retirement. We're all going to die!!!
We need health insurance and we need it now!!!
We've been told for years taht we're only one paycheck away from being homeless. That we could all go bankrupt in retirement. That we'll all eat catfood alone in our last few years.
Look I'm no fool. I know what's going on here. The media is leading the charge for a single payer system. They've been doing that since the late 80s when a Democrat Senator from CT won a surprising seat supposedly running on a health care platform.
And ever since, the media has taken it to heart that health care is THE way to advance socialism, if we just scare enough people..
But the problem is, it's all a lie. Can you run out of money from health costs? Absolutely.
Can you run out of money from being sued? Yep. Can you run out of money from a divorce? Yes sir.
Can you run out of money from a bad market? Uh huh. High cost of groceries? Indeed.
Property tax? You betcha!
The list goes on and on...and on.
But the next question would naturally be, "what's the likelihood of this happening?
And the answer will surprise you. Not much.
So turn off the media. Enjoy the life you've been blessed with.
In part two of our review of the Vanguard Health Care Costs in Retirement report, we discuss Long Term Care.
Long Term Care is WAY overblown in terms of the worry it causes so many people.
Vanguard says only 15% of retirees will spend over $250k, which is actually quite a bit higher than a REAL WORLD study from the EBRI.
However, Vanguard also says around 50% of retirees will not spend ANY money on long term care services. Nothing.
In fact, Vanguard even shows than 75% of retirees will spend less than $50k TOTAL.
So, given the likelihood that you aren't going to spend much, but could spend a LOT Long Term Care is the perfect risk to offset with insurance.
DO NOT wait until you're over 50 to get an insurance policy, as Dave Ramsey suggests.
GET IT NOW! Offset that risk.
And if you don't have Long Term Insurance. Don't sweat it. You're not likely to need to spend a huge amount of $ anyway.
https://pressroom.vanguard.com/nonindexed/Research-Planning-for-healthcare-costs-in-retirement_061918.pdf https://aspe.hhs.gov/system/files/pdf/106211/ElderLTCrb-rev.pdf
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Fakery abounds in our news media, I'm afraid to report.
Ben Rhodes, a big wig with the Obama Administration said about the news media in regard to their coverage of foreign affairs: "The average reporter we talk to is 27 years old, and their only reporting experience consists of being around political campaigns. That’s a sea change. They literally know nothing.”
Unfortunately, the media is also just as bad at pushing false narratives for domestic issues too.
In this episode, I read from an article which tore apart the "study" conducted by Elizabeth Warren and a Marxist physician, both from Harvard which was used as complete propaganda to scare people that health costs caused the majority of bankruptcies.
The study was click bait. The media fell for it, hook, line and sinker and then offered their own version of click bait to further the dialogue. They were so successful that nearly EVERYONE seems to think that bankruptcies are caused by medical expenses.
Yet, the study said no such thing. Sadly, the study authors KNOW IT TOO but they knew even better they'd have a willing media as accomplices to pushing their fraud.
Lo and behold, 12 years later, Warren is on the cusp of a presidential campaign. What's Himmelstein doing? He's a regular contributor for The Nation magazine. There are no capitalists or believers in private property at The Nation. In fact, he wrote in the Washington Post, just last year, that repealing Obamacare would KILL 43,000 people a year. Not hurt people, literally KILL them!
Yet, these two people are the source of the widely cited studies of medical bankruptcy which the media ran with NO consideration of the evidence of the claims.
It's as if they push an agenda.
Frightening actually.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3105661
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This episode is so much more than just talking about Medicare planning in Kansas. Jae Oh, from www.maximizeyourmedicare.com, discusses a wide, wide range of medicare planning issues here.
Yes, Kansas is front and center, but listen closely as we veer into planning ideas that you should be aware regardless of where you live.
It's a big deal folks. You simply don't have room to make mistakes.
As always you can find Jae at his Youtube channel https://www.youtube.com/user/MaximizeYourMedicare
Sign up for his podcast and newsletter as well go to www.maximizeyourmedicare.com
Don't forget to go to my own website at www.heritagewealthplanning.com
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Jae Oh is back to discuss Medicare Planning in Kentucky. But we go beyond that, big time, in this episode. Trust me, there'll be something for ALL to learn if you live in the great Commonwealth of Kentucky or not.
You can sign up for Jae's weekly newsletter at www.maximizeyourmedicare.com.
And go to his Youtube channel here https://www.youtube.com/user/MaximizeYourMedicare
As always, feel free to visit my website too at www.heritagewealthplanning.com
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
If you can qualify for Medicaid you definitely need to know the rules that govrern the dual eligibility program when it comes to Medicare and Medicaid partnership.
DId you know you may be eligible for hundreds of dollars of vouchers to buy the things you'd use daily, things like vitamins, dental floss, all kinds of stuff that you are currently spending your own money on?
Having a problem getting transportation to and from your doctors office? The Medicare and Medicaid partnership may have vouchers for you in this capacity too, where you can even use different providers!
Oh you don't qualify for Medicaid, so what's this podcast to you?
I guarantee you there are people in your church group, in your veterans affilation, in your community who qualify and are ignorant about the benefits of the Medicare and Medicaid Dual eligibility program.
Help them out by learning the system and how they can increase their lifestyle even by a tiny amount. When you're poor, EVERY bit helps!
Visit Jae's website here: www.maximizeyourmedicare.com and his youtube channel here: https://www.youtube.com/user/MaximizeYourMedicare
Visit my site at www.heritagewealthplanning.com
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The 4% rule does NOT take investment fees and taxes into consideration.
In this video I show exactly what happens when you add fees and taxes to the mix.
If you're paying for investment advice, you're going to want to revisit your retirement planning.
(In case you're wondering - YES I did just do a video similar to this two days ago. But I deleted it by accident! UGH. However, I wanted to do it again, as it's so important in the retirement planning discussion.)
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Medicare Disability can take up to 24 months after one is officially approved for disability. I had NO clue. This is crazy.
In the example, a man was getting lung cancer treatment on March 2012 and Brain treatment in November in the same year.
He was approved for disability in December 2013, nearly 2 years AFTER his lung surgery. But the rules say you can't receive Medicare disability until 2 years AFTER you were approved!
So, in this case, it will be December 2015 before he is actually receiving Medicare. What happens before then?
Long term disability??? NO! That only includes payments for missed wages, at a large reduction by the way.
Cobra??? Ummmm, that only covers you for 18 months after you separate from service. And COBRA isn't cheap either. Trust ME on that.
So, what happens? I do not know.
And would love to hear comments if anyone has gone through this. This can be devastating.
================================= GET ALL MY LATEST BLOGPOSTS: https://heritagewealthplanning.com
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the vide to others who may be interested in the content. So, give me a thumbs up, please!
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Contact me: Josh@heritagewealthplanning.com
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The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It https://amzn.to/2LHwQpt
Strategic Money Planning: 8 Easy Ways To Put Your House In Order https://amzn.to/2wKGi50
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Words can't do justice to the incredible story I share with you here, that happened to me.
Coincidence? Nah.
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The VAST majority of us will not itemize our tax returns so STOP focusing on what things you can deduct. The main one, of course, is the mortgage interest deduction.
It's just not going to happen for the vast majority of taxpayers. So, when someone says "you need a mortgage for the deduction", please, I'm begging you, RUN!!!
I show you exactly how this works in this episode.
https://fas.org/sgp/crs/misc/R43012.pdf
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https://academic.oup.com/rof/article-abstract/15/2/441/1593604
You need to understand why survivorship bias is and how it could affect you.
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Life insurance gets a BAD wrap. Financial planners can't stand it. Investment managers can't stand it. The general population, like Suze Orman et al, can't stand it.
With all these people who can't stand life insurance, how in the world does it still exist?
Because it's a GREAT product, when used correctly!
Life insurance is one of those products that when operating on full throttle should not be overlooked because the benefits are huge.
First and foremost are the obvious benefits: You can create a sizable, tax-free estate, with pennies on the dollar. There is NO other product available out there that has the same ability. Nothing.
Obviously, in this case, the insured needs to die before the estate is created and that stinks. But that's just one of the benefits of life insurance.
Cash value in life insurance grows TAX FREE. You have access to that cash POTENTIALLY tax free. (There are many pitfalls to consider before taking a loan against your policy, just be advised).
You can fund your insurance with an unlimited amount of cash. You can assign the policy to someone else too in order to get it out of your estate.
You can name a charitable entity the beneficiary.
The list of benefits of life insurance go on and on.
Yet, everyone says "I don't need/want/believe in life insurance. So don't talk to me about it!" And then they huff off back to the Boglehead blog telling the world to buy term and invest the rest.
But they are missing out on what could enhance their overall net worth, retirement plan and estate, if they just took the time to understand more about it.
Now, I don't blame the mass consumer for their hesitance to discuss life insurance. After all, agents are notorious for beating you down over and over just so you'll say yes to get them to leave you alone. Remember the life insurance agent from the movie Groundhog Day???
Secondly, a lot of consumers HAVE been abused by not only the sales practices of life insurance agents but the fact the products are underperforming and thus going to expire before the insured does. This ticks me off, immensely actually.
When was the last time your insurance agent or company sent you an IN FORCE ILLUSTRATION??? Oh, I'll answer that question. NEVER! Do you even know what an in-force illustration is? Nope. Well if you have a cash value life insurance policy, you should know this by heart. But you don't because the insurance industry simply can't help but shooting themselves in the foot by keeping an unsuspecting consumer base unaware of the buzzsaw they are going to run into.
And yet, assuredly, when people awake to the horrors of their underperforming policies and scream for help from the regulators the insurance companies will then and only then comply with what should be a standard business practice, that of informing their clients about what their clients have with them!!! :(
But, even with all this being true, life insurance offers wonderful opportunities for those who are aware of how to use it correctly and what to do in order to use it correctly.
In this episode I interview Rajiv Rebello, Founder of Colva Insurance Services https://colvaservices.com/
I had come across an article Rajiv did in the Nerd's Eye View blog that Michael Kitces runs. You can read the article here. https://bit.ly/2PWFPS2
It is, without question, the best article on properly using life insurance I've ever read and I learned a TON.
Turns out Rajiv is an actuary by trade. So, he knows how to crunch the numbers to make sure the policies that the consumer buy operate on full capacity, not just for the insurance company, but for the consumer as well.
In fact, once you read Rajiv's article and listen to this blog, I highly suspect you'll be interested in seeing how YOU can use life insurance in your financial planning as well.
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Jae Oh, CFP shares with us all you need to know about Medicare Planning in the Hoosier state.
So if this is something important to you, as it SHOULD be, you've come to the right place.
As always, subscribe to Jae's newsletter and podcast at www.maximizeyourmedicare.com.
And of course, go to my website at www.heritagewealthplanning.com as well.
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Jae Oh, CFP, is back to discuss Medicare Planning in the great state of Iowa.
Pleasantly surprised, I was, to learn about the options available to residents in Iowa.
As always, if you like Jae's stuff, subscribe to his podcast and his newsletter at www.maximizeyourmedicare.com.
Don't forget to go to my website at www.heritagewealthplanning.com or my Youtube channel at www.youtube.com/heritagewealthplanning
Thanks!
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Illinois could be a precursor of what's to time for state budgets across the country. This could have HUGE impacts on your health insurance, especially if you were relying on the state retirement plan to provide benefits.
So, even if you currently have retiree health benefits through your employer it behooves you to understand Medicare, Medigap and Medicare Advantage plans.
Facts are, while employers may not have the ability to reduce pensions because pensions were contractually agreed to, the same can't be said for health benefits.
It's up to YOU to understand your options.
Thankfully, Illinois isn't a crazy expensive state when it comes to Medigap and there are numerous Medicare Advantage plans available for you too.
So listen in to see what everyone's favorite health care expert, Jae Oh, has to say about planning in Illinois.
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Mitchell Chadrow, from the Listen Up Show, interviews me for his radio show. His show focuses on all things small business; being self-employed, business building, etc.
Definitely a lot of great content over there at: http://mitchellchadrow.com from his podcast to his blog and the webinars he hosts.
So, don't make yourself a stranger. Visit his site.
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Jae Oh, from maximizeyourmedicare.com, and I discuss Medicare options in Idaho.
Lots of changes coming down the pike for 2019 so you need to stay informed, my friends. Don't be caught off guard.
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Jae Oh, from maximizeyourmedicare.com, and I discuss Medicare options in Hawaii.
Lots of changes coming down the pike for 2019 so you need to stay informed, my friends. Don't be caught off guard.
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If Social Security is on your mind, THIS is your episode. Why? Because no one knows Social Security better than Elaine Floyd from Horsesmouth.com.
Elaine has been instrumental in my professional life as a financial advisor. The stuff I know I know from her.
In this episode, Elaine share's with us her personal story on Social Security planning, as a divorcee, widow and then her own benefit record. She also mentions how she increases her benefits each year with her continued working even after she turned 70.
You're going to learn a lot. So, listen closely and, rewind the tape, to listen again...and again.
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Are you interested in learning how to build an online presence, either for a business or a personal brand?
Well, this will be your episode indeed! I bring on Jessica Stansberry from: https://www.youtube.com/jessicastansberry and http://jessicastansberry.com/.
Jessica's Youtube tutorials are a must for anyone who is interested in building a presence online.
I came across Jessica by accident actually when I was trying to learn techniques for Facebook advertising. All the other folks were saying "don't do this, don't do that..." But I was like, "but I want to do it like that...just I need to know how!"
Here comes Jessica to show me EXACTLY what I need to know, which, again, was not what everyone else was saying. And lo and behold, her techniques have paid dividends for me.
So, follow Jessica on Youtube. If you're interested in learning more buy her course.
She will help you get started in building a business online. Who knows where that might lead.
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Jae Oh, CFP and I again discuss Medicare planning. This time we focus on the Peachtree state of Georgia.
Jae shares some insights into what you can expect for Medicare options here in Georgia. He uses a 65 year lady in Fulton County as a starting point.
Georgia, by the way, is one of the few states to have a 5 star Medicare Advantage plan too.
Lots of choices in Georgia and decently priced Medigap policies make Georgia a nice state for health coverage.
Remember, folks, there will be a LOT of changes for Medicare Advantage plans announced in October. Maybe some of the biggest changes you've ever seen.
So, if you are on a Medicare Advantage plan you've got to be paying attention.
Georgia, by the way, is one of the few states to have a 5 star Medicare Advantage plan too.
S
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Jae Oh, CFP from www.maximizeyourmedicare.com comes back on the Podcast to discuss how Medicare planning in Florida.
A very, VERY complicated state down there, my friends. Just be advised.
Jae will be giving a talk in Tampa on October, 9th. This will be a must-see event as the changes that are going to be implement for 2019 will be unveiled in October.
Bring your questions!
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Delaware comes in my top 5 states in terms of taxes for retirees.
How does it fare for Medicare?
Well listen in and find out with our residential expert Jae Oh, CFP from maximizeyourmedicare.com
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What you need to know about Medicare in Connecticut. Not cheap, but does have some benefits too. So, stay tuned to understand how those in the Nutmeg state can deal with Medicare.
As always go to Jae's website at www.maximizeyourmedicare.com to sign up for his newsletter.
Feel free to visit my site too at www.heritagewealthplanning.com
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To read the article, click here. https://www.financialsamurai.com/when-earning-one-million-a-year-is-not-enough/
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Whole life insurance is something that a lot of people do not quite understand. So, in this video we're going to dissect an inforce illustration to show you exactly how whole life works and what you need to consider.
I also break out my trusted Google Sheets to crunch some numbers too.
You're going to learn a lot about whole life insurance in this tutorial. So, come along for the ride!
See my entire lists of posts and videos at www.heritagewealthplanning.com
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You're thinking of retiring at 60. You wonder what the consequences will be on your Social Security benefits.
By special request from a subscriber I show you EXACTLY what will happen. I even show you some of my very own Social Security numbers. Don't tell anyone though!
The net result is that if you have a pension, say you are a firefighter, or a governmental employee, and can hang it up at 60. Should you continue to work for the next 6 years or so until your Full Retirement Age?
Well, in my example I show you how by doing so you could net an extra $500 a month at Full Retirement Age.
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The 5 biggest IRA mistakes you can make. Ready? Well here they are:
- No beneficiary designation
- Old beneficiary designation
- Wrong beneficiary in your beneficiary designation
- No Durable Power of Attorney
- Waiting too long to take distributions a. Too long in the calendar year b. Not withdrawing when your income is low
We'll go over ALL of these topics and why they are so bad in this video.
You can read more about beneficiary designations at my blog here... http://heritagewealthplanning.com/?s=beneficiary
And you can read about powers of attorney here.... http://heritagewealthplanning.com/?s=power+of+attorney
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Bringing back Jae Oh, CFP, from maximizeyourmedicare.com to discuss Medicare planning in the great state of Colorado.
In this episode Jae also informs us about what happens when one relocates from state to state.
Say you're thinking of moving to CO from California. Probably some things you need to know about the rules regarding your Medicare. Lots to understand and know about your choices here.
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California is the most populous state in the union. 1 out of 10 retirees resides there. So, think there aren't quite a bit of options for Medicare beneficiaries in terms of Supplemental policies and/or Medicare Advantage???
In this episode, our stand-alone expert, Jae Oh, CFP, discusses Medicare planning in the great state of California.
Jae can be reached at www.maximizeyourmedicare.com.
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
This might be one of the most exciting videos I've done to date. The reason for that is that I obliterate the doomsayers who say you need millions in order to retire.
I show you, point by point what that is just crazy talk and what the reality is.
In fact, in this episode I take Joe, a guy who has averaged $50k a year over his earnings career, indexed for inflation as the Social Security Administration does.
His wife, Jane, actually only worked around 20 years, having sacrificed her prime earnings years to stay home and raise the kids. But after the kids were in high school she went back to work making $40k a year.
Remember though she only has around 20 years or so of earnings that Social Security calculates for her benefits.
Yet, even then, I show you how they can retire at 66 with just $139,600 without even considering investment returns.
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In this episode I take some of the questions I receive from Quora.com and answer them
Question 1 - How should I decide whether a risky investment (large upside and downside) should be made in a Roth account or a taxable account?
Question 2 - If you are starting a new job, are there any reasons you would not rollover your old employer's 401k to the new one?
Question 3 - How are financial planners usually paid?
Question 4 - Who is liable for the taxes of a deceased individual if the estate doesn't have the funds?
Question 5 - What is a good age to raise the contribution percentage of a 401k?
Question 6 - Can you collect social security if you run an all cash business?
Question 7 - Is “Buy term and invest the rest” dead?
Question 8 - What’s the most underrated financial planning advice, which is highly effective?
Question 9 - Why do banks give you so much less return than you get with index funds?
Question 10 - What was your top learning from 2008 -2009?
And a few more.
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Jae Oh, CFP is back to discuss Medicare planning in Arkansas.
Arkansas is not as competitive as some of the larger states, like Arizona, but there are still a number of plans, Part C and Supplemental policies for you to choose from.
As always, go to Jae’s website at www.maximizeyourmedicare.com for Jae’s book and sign up for his weekly newsletter too.
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
Medicare Part C and Medicare Supplement policies are very competitive in the great state of Arizona.
Of course, with more choices there are also more considerations consumers need to think about.
This episode is a good place to start.
As always, go to Jae's website at www.maximizeyourmedicare.com for Jae's book and sign up for his weekly newsletter too.
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
EBRI Health Costs In Retirement Study Out of nowhere, comes a study from the Employee Benefits Research Institute that shows the ACTUAL out of pocket expenses retirees have from a conducting interviews of over 8,000 participants every two years since 1993.
What they find is the majority of these people had little to no out of pocket expenses. In fact, other than a tiny percentage of retirees most have very little expenses.
Why this study hasn’t received more attention is beyond me, well I am a natural cynic, so I think I know. The investment firms, and the insurance industry, doesn’t want you to breathe easy when it comes to your retirement money. Fear is a great motivator to get you to buy the stuff they sell.
Before you part with your hard-earned money though please look a bit at your situation. Are you a woman with longevity in your bloodline? That is the person most at risk for major out of pocket expenses.
You may want to consider some options to protect against those risks.
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
EBRI Health Costs In Retirement Study Out of nowhere, comes a study from the Employee Benefits Research Institute that shows the ACTUAL out of pocket expenses retirees have from a conducting interviews of over 8,000 participants every two years since 1993.
What they find is the majority of these people had little to no out of pocket expenses. In fact, other than a tiny percentage of retirees most have very little expenses.
Why this study hasn’t received more attention is beyond me, well I am a natural cynic, so I think I know. The investment firms, and the insurance industry, doesn’t want you to breathe easy when it comes to your retirement money. Fear is a great motivator to get you to buy the stuff they sell.
Before you part with your hard-earned money though please look a bit at your situation. Are you a woman with longevity in your bloodline? That is the person most at risk for major out of pocket expenses.
You may want to consider some options to protect against those risks.
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
Join Jae Oh and me as we discuss Alabama in our state-by-state analysis of the various Medicare options in each state.
Over the course of these episodes, we'll discuss Traditional Medicare, Traditional Medicare with Part D and Medigap, i.e., Medicare Supplements, and Medicare Part C, i.e., Medicare Advantage.
Jae Oh, CFP, is an expert contributor on www.mymedicareanswers.com, a website powered by Humana, one of the nation’s largest carriers of Medicare plans. Mr. Oh is the author of a top-rated, top-selling book on Medicare, titled Maximize Your Medicare (2018 Edition): Understanding Medicare, Protecting Your Health, and Minimizing Costs, available in print and ebook formats.
I highly encourage you go sign up for his newsletter at www.maximizeyourmedicare.com
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support
In this episode we interview Brad Breeding the Co-Founder and CEO of MyLifeSite.net. MyLifeSite.net is the premier website for ALL information about CCRCs.
Just a ton of free information for consumers, advisors, even communities, alike. Like the guide to the viability of CCRC's, which I highly encourage everyone to get. It's free folks!
Brad and I discuss the history of CCRC's. The issues they face if they are a not-for profit. And, most importantly, the viability of CCRCs with an aging population. How do you price the fees accordingly to make sure you are well-capitalized to take on the risks inherent with long term care?
The first thing Brad recommends to anyone considering a CCRC is to see if they have an agreement with an actuarial company that provides analysis. If the CCRC does not, how exactly are they pricing future costs?
That is a critical, maybe the most critical, factor to consider when it comes to choosing a CCRC. Will they be there when you need them most?
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This is a podcast you NEED to listen to... Why? Because everyone, and I literally mean EVERYONE, will come into contact with Medicare at some point. And the more you know about Medicare, the better off you'll be.
Did you know that by only having Medicare Part A and B, you still have unlimited financial liability? There is no maximum out of pocket for you.
So, you need to get either a Medicare Advantage or a Medigap policy to go along with your Parts A and B.
What are these and what do they cover you ask? Great question. I have the same questions which is why I brought on Jae. Jae is the author of the book, "Maximize Your Medicare" and can be found at his website www.maximizeyourmedicare.com.
Highly recommend you sign up for his free newsletter there too.
Did you know that Medicare Advantage plans MUST include prescription drug coverage? I didn't.
Switch from Medigap to Medicare Advantage? No problem. The other way though? Maybe not.
Listen and learn my friends. Valuable.
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In this episode I bring on Mike Kelly from Money And Life TV Youtube channel. And also www.moneyandlifetv.com.
Mike is a tenured CPA who has a lot to say about the new tax law, the Tax Cut and Jobs Act (TCJA).
Unfortunately, because the tax code is so complex and this is the first major change to the tax code since 1986, there is a lot of confusion about it.
However, my friends, do not let confusion deter you from understanding as there is a lot of money at stake. It is up to you to know how YOU could be affected. You can start by watching Mike's episode on this here... https://youtu.be/eAkx_6kaOE8
Now, be advised, relying solely on your tax advisor or financial advisor may not be enough. Mike talks about the number of tax advisors retiring now due to the complexity of the new code. Change always causes commotion. But, again, this is YOUR money we're talking about so it's imperative YOU have some knowledge of how you can keep more of it!
This episode will help you.
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You've heard of The Villages in central Florida, no? Of course you have.
But what exactly is The Villages? In this episode we answer ALL those questions. From the temperature, to the landscape, to the community, the costs etc...
If The Villages is on your horizon as a place to retire, you're going to want to listen to this podcast.
You can visit Skip's Youtube page at https://www.youtube.com/user/thistrucksforyou. Don't forget to subscribe too once you're there!
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Social Security checks are less than retirees expect according to a study reported on by USA Today. (The link to the article is below).
I have a couple problems with the article first. To begin with it says "future retirees who were surveyed expect to receive $1,628 on average each month. But those surveyed who are already in retirement say they are only collecting $1,257.
"That's a big difference," Ambrozy says. "It's like taking a 25% pay cut."
There's absolutely nothing odd at all about what a future retiree EXPECTS from Social Security and what a current retiree RECEIVES.
Secondly, the article states that the average Social Security check is only $1,410 a month. The implication is that if that is the average check and future retirees are banking on $1,628 a month, there is a big disconnect there.
You need to ascertain WHO the average recipient is receiving that check and compare that person to WHO the future retiree is.
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I go over some of the objections about borrowing from your retirement accounts.
These are the big ones:
- Money you borrow will be out of the market and thus not growing
- Why pay off a mortgage or equity line debt when that interest is tax deductible?
- What if I leave my employer before the loan is paid off?
- I'm paying the loan back with after tax money, only to have it taxed later when I take it out.
Love to hear your comments as these are 4 main reasons I hear NOT to borrow against your 401k.
But while they all have SOME validiity, not to the extend that it seems EVERYONE is always saying "DON"T EVER BORROW AGAINST YOUR 401K,! ONLY FOOLS DO THAT!"
I disagree.
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They're going to get their money back as long as their income as less than the standard deduction. The standard deduction now is $12k so ANY income tax they had withheld will be returned to them!
Don't leave that money on the table!
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The TSP F Fund is the Thrift Savings Plan version of a corporate bond fund. However, if you dig a little bit you'll quickly see why this fund is NOT a corporate bond fund in the least.
Why do I say this? Look what happened in 2008. In 2008 everything, and I mean EVERYTHING got hammered. That is, everything for government bond funds. Government bonds did swimmingly in that year as everyone was fleeing from risk into assurance.
What did a typical corporate bond fund do in 2008? Well look at USAA's Income Fund, USAIX. It was down over 5%.
What did the TSP F Fund do? It was UP over 5%! The only way to do that was to have exposure to government bonds, such as GNMAs.
Does the F Fund have some corporate bonds in it too? Yup. That's why I actually changed my mind mid-episode as to the fund I'd choose for my fixed income holdings, the G Fund or the F.
The F has a broader range of fixed income products in its portfolio.
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I'm a huge fan of the Thrift Savings Plan offered to Federal Government employees, including military personnel.
A cheaper investment platform I do not know. The funds in the TSP average 3.3 basis points in expenses. That means for every $1000 you have invested in the TSP your cost is 33 cents.
That's incredible Think about it another way, if you pay 1% in investment expenses it's going to cost you $10 per $1000 per year.
Your investment manager must have some pretty good chops to overcome that starting point. And, in fact, he/she most likely won't.
In this episode I analyze the G fund in the TSP. The G Fund is the Government securities fund.
I show you why you shouldn't expect more than around 3% a year in rates of return over the next decade. Doesn't mean I think it's a bad fund, it just is the reality of the interest rate cycle.
Remember folks, bonds do not have capital appreciation. You get paid interest and interest only.
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The Roth IRA is the greatest financial planning tool ever invented for long term wealth accumulation. Life insurance comes in a close second but the problem with life insurance is someone has to die to benefit from it.
Rather not have that happen. So use the Roth everywhere you can. And it starts with your 401k.
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In this episode I review an older article (2005) from Keith Bender and Natalia Jivan called "What Makes Retirees Happy".
Now one might question why I'm using a nearly 20 year old article to discuss. Good question. The answer is because this was another seminal article, at least for me, as I began my career painting the picture of what makes retirees actually happy and content. And folks, it's not wealth. Not by any stretch.
Yes, wealth can help. But there becomes a negative utility in having more wealth. That is a fancy economics term meaning the MORE you have of something the less you value it.
What retirees value most? Oddly, well not really, it's in having the choice to retire as opposed to being forced to. Also, having a guaranteed flow of income from pensions and annuities, not just Social Security, combined with an asset that can grow to provide a potential higher standard of living.
Lastly, it's the ability to spend time with one's spouse.
Listen to learn more.
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Fantastic interview with a friend, and my business consultant, Nicole Sauce.
Nicole runs a coffee roasting shop in Middle Tennessee called Holler Roast Coffee. Which you can find here: https://hollerroast.com/
But there is SO much more to Nicole than simply making an incredible cup o' Joe.
Nicole was very active in the movement to provide options for people in their health care. In fact, she had a huge amount of success in that capacity. However, being on the road 3 weeks a month was going to drive her to an early grave.
So, she decided to move to middle Tennessee and live a more minimalist lifestyle, raising crops, selling coffee, but still conducting business consulting and website development.
Nicole actually was instrumental in helping me define my brand for my business and developing my website. And I can't recommend her and her business Spark Communication enough. https://sparkfreedom.org/about/ Find Nicole on her blog here: https://livingfreeintennessee.com/
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This is a very welcome interview for me in that Inga is probably my twin when it comes to financial planning. Basically, my advice to clients for now on is simply to say "what she said" because she is so spot on.
She has a book out on Amazon for younger readers, say in their 20s titled Mastering Money: A Simple Guide to Achieving Financial Success. It came out in December 2017 and has 52 5-star reviews, ALL verified purchases too.
That means people who are actually parting with their cash are commenting that they got way more value from the book than the $ they paid for it. Can you find a better testimonial? Nope.
Inga is a native of Moldova but came to the US as a teen and never looked back. That's Moldova's loss but certainly our gain as Inga's been kicking butts ever since.
A PhD in finance. Has her own financial planning firm. Is teaching college students as well. I mean, talk about legacy planning. I love it and you will too.
https://attainablewealthfp.com/
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In this episode I interview a long time family friend, Skip Ritchie. Skip's been a world traveler, going to varying countries to spread the Good News while assisting to the needs of the poor. A true man of Christ indeed.
Over the past few years, Skip has been going to Zimbabwe of all places which has interested me greatly. I've been a long time follower of the happenings in Zimbabwe, with the celebration of ending the colonial, apartheid rule, to the devastation caused by Mugabe and now to a new hope as Mugabe has left the scene.
It's important to understand that Zimbabwe/Rhodesia, was considered the "breadbasket" of ALL Africa in the middle part of this century.
Wonderful people. Lots of resources. The British technical know how. Yet, Mugabe ruined all that with his tyrannical reign. Heartbreaking is not a strong enough word.
But life goes on. And Zimbabwe may be on the threshold of something huge..with a bit of help from abroad, government reform and some good luck.
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I was in a debate of sorts with some fellow financial planners on a Facebook page. My "opponents" for lack of a better word were arguing that to engage in techniques that allows one to use Medicaid for health care was a legitimate pursuit, even if one is affluent.
To say I am shocked at this doesn't do justice to how I truly feel.
Let me explain what Medicaid is. Medicaid is health insurance for poor people. Medicare is for when you turn 65 and you get it regardless of income or assets.
Medicaid though is based on your asset levels. The goal was to assist those who are indigent with their health care.
Medicaid "planning" tries to get people who could otherwise afford to pay for their own care to hide assets in order to qualify for government aid.
Here's the problem with this. Medicaid is BROKE! There is no money.
Thus for every affluent person on it, means there is less for poor people who truly have no other options.
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In 2009, senior officials at the Social Security Administration were made aware of grossly underpaying widows who were entitled to much larger benefits.
They did nothing.
So, the "whistleblower", for lack of a better term, contacted the one person with a large enough megaphone and deep understanding of Social Security to tell him about this absolute disgrace, Larry Kotlikoff.
In 2015, Larry wrote a scorching article for PBS about this issue.
The Social Security Administration did nothing.
In February 2018, the report was released. And this is what they concluded:
"...we estimate SSA underpaid about $131.8 million to 9,224 beneficiaries who were age 70 and older. In addition, we estimate SSA will underpay an additional 1,899 beneficiaries who were under age 70 about $9.8 million, annually, beginning in the year they attain age 70."
What will the SSA do now??? Who knows but this means you need to understand your OWN Social Security benefit.
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In this episode I answer some of the financial planning questions I receive on Quora.
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Oh man oh man, this is fantastic!
Listening to the Meb Faber Podcast while mowing my lawn this afternoon and he mentioned this website called FeeX.com.
FeeX is a site you can go and for FREE type in your fund holdings, even link your account if you're so inclined. Their algorithm will then analyze your funds PLUS a list of comparable funds that are a whole lot cheaper. It's crazy! And it's awesome!
For instance, I typed in USMIX, which is USAA's Extended Market Index. Out came a bunch of other funds, exactly like it, but cost significantly less.
Then FeeX calculated what the other funds would save me over time in total fees. Folks, we are not talking about pennies here. We're talking tens of thousands of dollars.
Fees matter, my friends. And if you own high fee funds you've got to understand the headwind you're dealing with when it comes to performance. The more fees, the less your fund will be able to compete.
Just no other way around it
Give FeeX a try.
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Bryan Strike is one of those professionals many younger planners should mimic in how they conduct themselves in business.
He holds almost, if not all, of the most prestigious planning designations available; CPA, CFP, CFA, MsTX, PFS, MS and others.
But, even with this pedigree, Bryan is humble enough to realize that being a good financial planner is not about tooting your own horn, it's actually understand your clients. Nothing is more important
You want to the client to take action? You need to understand their concerns. That simple. The profession is littered with the smartest minds in around, just ask them and they'll tell you. But these people couldn't sell water to someone stranded in the desert because they lacked the confidence to ask questions. They forget the essential role of a financial planner, understand the client so you can get him/her to take action to better THEIR financial lives.
Bryan does this for his clients. And we all can learn from him.
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Karen Huppertz, the President of the International Dyslexia Association Georgia Chapter, is who we talk with today.
Just an amazing lady, with an amazing story of her kids' struggle with Dyslexia. Due to early identification AND intervention, dyslexia did not hold her kids back from having stellar educational achievement.
Thus, the lesson to be learned; the need for early identification in order to get the proper intervention.
My friends, I can not tell you the pain I feel for children who have dyslexia but do not know it. These children feel stupid, left out, inferior. And some will lash out accordingly. Others will slink back into the back of the room hoping to never been seen or heard from.
It's tragic. The International Dyslexia Association estimates "perhaps as many as 15–20% of the population as a whole—have some of the symptoms of dyslexia".
But there are treatments! In fact, with proper treatment, children can succeed in school. Thrive even!
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I read a lot of investing articles. Some are quite good. Meb Faber's research over at Cambria Funds comes to mind. His podcast is fantastic as well.
But a lot of investment blogs are not quite good. Some are just horrific and you wonder how their compliance managers let such tripe be published.
Others, though, at first glance seem to be well thought out until you start to read deeper and realize the author is regurgitating many of the arguments form yesteryear, which have since be debunked.
However, some articles do have some golden nuggets thrown in with a few cringe-worthy statements. These are the articles the reader can take away good information IF and only if, he or she can differentiate the bad from the good.
I walk you through a couple articles just like this today that was sitting, for over a year, in my "stack of stuff." I have a large plastic crate of articles, books, magazines etc. that require my attention but I seem to overlook other than once in a while.
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In this episode, we discuss an article on Fox Business News titled "Why are retirees living longer, healthier and wealthier lives?"
This article confirms that retirees spend LESS than they've been lead to believe in retirement.
Also, it goes on to state that the cognitive and physical limitations for current retirees are much lower than they were for retirees 50 years ago.
So, longer lives, less physical and cognitive impairment combined with a savings deficiency should indicate a "crisis", no? Well, no.
"Fellowes: The average retiree cuts their spending by about 2 percent every year throughout their retirement. The biggest drop over time is spending on lifestyle expenses, like travel, apparel and entertainment; but, essential spending on transportation and housing falls too, as retirees pay off their mortgages...Healthcare is one of the only expenses that tends to increase through retirement, although it tends to increase increase incrementally for nearly all retirees. "
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HUGE jump in US Treasury Bond interest rates over the pas 20 months or so.
Now, lots of people will conclude things about the investing market, how this increase affects them. And there is a lot to be said about how this affects your portfolio.
BUT, what gets overlooked during this times of increasing interest rates is the affect on the mortgage/real estate market as well.
Think about it like this: Couple want to buy a home. They have a monthly budget of $850 for that home. When interest rates were what they were in July 2016 they could have afforded a $250k home (just using the 10 year rate as our proxy for the interest rate they paid on their mortgage.)
Now, though, with the 10 year at 3.05%, that same $850 could only buy a $200k house!
So, what happens to the couple who bought a house in July 2016 for $250k fully leveraged, i.e., no equity, and need to sell it today?
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In this episode I talk about an article from TheHill.com which mentions, almost in passing, that the previous head of the Beverage Association is now going to head the Life Insurance lobbying group.
The next head of the group is certainly going to be the current CEO of Philip Morris.
So you might ask "How does one become head of a lobbying group and make $2.3mill a year? Do you need to be an expert in life insurance?"
Good question. Quick answer to the second question. NO! Just look who her predecessor was. One, Dick Kempthorne, a Senator, Governor and Secretary of the Interior under Bush. Life insurance expertise he had not.
But LOBBYING expertise he carried with great abundance.
Now, how did the new head of the insurance lobby get the gig? You got it! Politics. She was in the Bush administration as well before she went on to hawk the sugary drinks that are killing people.
Only in The Swamp does this make sense.
Song of the day - "Hersham Boys" by Sham 69
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It was my privilege to interview Liz Hand, CFP on today's episode.
Liz has a wonderful story to share about her background and how it lead her to be such a wonderful financial advisor(my words not hers).
Yeah, she's young. Yeah, she's a nice person. And I imagine she cracks jokes and even laughs quite a bit as well.
But don't let that exterior fool you. She brings a ton of financial planning skills to the table for the benefit of her clients.
But financial planning knowledge alone isn't enough, it's her ability to LISTEN and ask questions that connects with her clients.
Financial planning is SO much more than a spreadsheet, an investment statement or Heaven forbid, the returns you received last quarter.
True financial planning is going with your recently widowed client to the Social Security office so both you and your client have a full grasp of the options, and thus can be make a most informed choice. One that will last for the rest of your client's life. Liz did that.
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HUGE jump in US Treasury Bond interest rates over the pas 20 months or so.
In fact, as of today, 5/15/2018, the 10 Year is at its highest since 2011!
Now, lots of people will conclude things about how this increase affects their portfolios.
BUT, what gets overlooked during these times of increasing interest rates is the affect on the mortgage/real estate market.
Think about it like this: Couple want to buy a home. They have a monthly budget of $850 for that home. When interest rates were what they were in July 2016 they could have afforded a $250k home (just using the 10 year rate as our proxy for the interest rate they paid on their mortgage.)
Now, though, with the 10 year at 3.05%, that same $850 could only buy a $200k house!
So, what happens to the couple who bought a house in July 2016 for $250k fully leveraged, i.e., no equity, and need to sell it today?
Their potential buyer can't afford the price anymore. Thus the seller is stuck.
Moral? Watch the 10 Yr Bond!
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Curtis Stone is one of my hero's in so many ways.
First of all, he is a PROFITABLE, organic farmer. Secondly, he is 100% a capitalist and not ashamed at all of that. Thirdly, his story is incredible and needs to be shared.
Curtis was a musician, touring the world in a band when he was a younger man. As most, young men in bands, Curtis found himself partying, doing illicit activities and just hanging out with the wrong crowd.
But after a bunch of varying epiphanies, he cleaned himself out and bootstrapped his way to farming...without owning ANY land.
Oh, but even though he was clean, he still faced adversity and was nearly down and out in 2014. But he kept at it and now he is making money selling produce on 1/3 of an acre, managing a huge YouTube channel, writing a successful book and literally traveling the world bringing common sense business to farmers everywhere.
It's a great story and one I can't wait to share. I only wish I had another hour with him. Enjoy!
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Financial planning is SO much more than just simply how much money one has to invest. A true financial planner needs to understand a clients cash flow. In fact, I argue, cash flow is the single most important thing in financial planning. (After health, that is. Which is why you should listen to Episode 33 on how to get stronger and why it's so important. )
The easiest way to increase cash flow is to reduce expenses. I talk a lot about switching out incandescent light bulbs for LED ones and other easy "fixes" for decreasing electricity usage.
In this episode we go MUCH deeper and talk about how alternative energy can play a significant role in reducing your cash outflow by getting your home more efficient and creating your own electricity.
Shawn Mills lives with his wife and 2 daughters in an off-grid home in Tennessee. They use a variety of techniques to power their house. Solar PV, Solar Thermal, Wood, Propane etc. Listen as Shawn tells us how we can be energy independent.
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Annuities get a bad wrap from many. Annuities are the best thing since sliced bread for others.
With all this variation of opinions regarding annuities what should YOU think? Should you hate 'em? Should you love 'em?
In this episode, I explain how annuities can not be either good nor bad. They are inanimate. They have no virtue or evil inherent in them.
Can they be used for good? Yup. Can they be used for bad? Yup.
But it's important for YOU to understand them or at least seek a second opinion before you invest your hard-earned money into one.
I am not licensed anymore to sell any insurance, including annuities. I dropped my licenses when I started my own firm. So, do not worry you'll ever get an annuity sales pitch from me.
However, you shouldn't worry either that I will not tell you the benefits of annuities either. Just because I am not licensed to sell them anymore does not mean I would never suggest one to an appropriate investor.
I AM a Fiduciary after all.
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"I heard the other day, even in England, a man could not, without a permit, cut down his own tree with his own axe, make it into planks with his own saw, and use the planks to build a tool-shed in his own garden.
The basic principle of the new education is to be that dunces and idlers must not be made to feel inferior to intelligent and industrious pupils. That would be “undemocratic.” These differences between pupils – for they are obviously and nakedly individual differences – must be disguised. This can be done at various levels. At universities, examinations must be framed so that nearly all the students get good marks. Entrance examinations must be framed so that all, or nearly all, citizens can go to universities, whether they have any power (or wish) to profit by higher education or not. At schools, the children who are too stupid or lazy to learn languages and mathematics and elementary science can be set to doing things that children used to do in their spare time."
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In this episode, I take a deeper dive into yesterday's discussion about aging and the affect it can have on the mind and body.
In the classic book, "The Screwtape Letters", C.S. Lewis is a literal devil's advocate.
He writes about a mentor devil named Screwtape who is training a younger devil, Wormwood, on the way to steal souls from God and bring them to Hell.
It's a classic, fascinating book. Lewis says it was his hardest book to write because he had to think like the Devil and it dirtied him.
I read verbatim Chapter 28 in which Screwtape is telling his mentee, Wormwood, to protect his target, a man whose soul he is trying to steal, at all costs from a sudden death.
It is much easier to steal a soul when man is faced with a long, monotonous life. Either adversity or prosperity offers hope, for the Devil that is, in moving the target away from God and closer to Satan.
Prosperity, in fact, is superior for the tempter of Hell because "Prosperity knits a man to the World."
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Latest episode of Josh Scandlen Podcast
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Latest episode of Josh Scandlen Podcast
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Latest episode of Josh Scandlen Podcast
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Latest episode of Josh Scandlen Podcast
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Social Security claiming decisions would be soooo flippin' easy if we only knew when we were going to die.
But guess what? We don't. So, we have to make some basic assumptions of our life expectancy. Thankfully, the good folks at the Social Security Administration provide us a nice chart to use. https://www.ssa.gov/oact/STATS/table4c6.html
Unfortunately, most people don't look at that life table. They simply will hear "The new average life expectancy for Americans is 78.7 years".
The problem with this number is that it's not true...for you. It's true for a new born bouncing baby today. But not for anyone who is listening to this podcast or certainly someone who is considering taking Social Security!
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In this episode I break out an article I saved from the Journal of Indexes May/June 2011 edition. The article is written by Richard Ferri who wrote the book "The Power Of Passive Investing: More Wealth With Less Work" with a forward by John Bogle.
I had never heard of Richard previously but if Bogle is writing his forward well, this may be a guy who has something to say. And sure enough he does.
In his article he takes 3 different investors. One is a market timer, one simply buys and holds and the last is a buy and hold BUT with annual rebalancing.
All three have the EXACT same portfolio but just have different strategies on how to invest. Who do you think outperforms during the 2000-2010 time frame?
The third investor. That investor beat the market timer by 135% and the buy and hold investor by 38%.
But wait, I thought active managers are supposed to do better in down markets and you can't get much more down than that decade. Yet, it didn't happen.
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Very excited to interview Dustin Tibbitts of Jazz Wealth in this episode.
I came across Dustin by doing a Youtube search of advisors discussing borrowing from one's 401k. Dustin was the only one I could find who actually saying it was ok.
Which is why I love the work he's doing...he's an independent thinker and feels the industry has so much more to offer than just serving the affluent.
So, Dustin started doing daily Youtube videos and his popularity has taken off. He has thousands of subscribers which means his message is reaching a, probably, previously untouched audience.
Financial planning does not have to be stuffy, with Monopoly characters in top hats. It's REAL! It has REAL IMPACT on people! If done right, it can literally change lives for the better.
Dustin knows this. And he shares with us his story of how he came to start his firm, Jazz Wealth.
Follow him on youtube at https://www.youtube.com/jazzwealth or his website at jazzwealth.com
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In this episode I talk about how to use the higher standard deductions in conjunction with the favorable capital gain rates to reduce taxes.
If you are in the 10-12% tax brackets... AND REMAIN THERE, you pay no tax on your long term capital gains!
This could be a huge strategy for those who have appreciated positions they were hesitant to diversify because of the tax potential.
Remember, your taxable income is AFTER deductions.
If you're married and have $70k of gross income after standard deductions you have $46k of taxable income, putting on the low end of the 12% bracket.
In this case you can have around $30k of capital gains before you have to pay tax on them. Take advantage!
I also show you what to look at in your tax return to begin the evaluation of your potential gains in using the tax code.
1040 Lines 8, 9 and 13 Schedule B Schedule D line 14
Know the numbers on these pages!
Song of the day - Clutch - Escape From The Prison Planet
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The new tax bill, TCJA, is a HUGE opportunity for married couples to start planning, especially if you're over 65.
In this episode I discuss how using your increased in Standard Deductions and paying just a bit more tax today can save you HUGE taxes in the future.
Remember, a single taxpayer, i.e. a widow, only has half the Standard Deduction as a married couple. This may not seem a big deal, but it is. The single taxpayer will now be faced with higher taxable income, at a higher tax rate, as well as higher taxation on Social Security, PLUS, potential for huge premium increases on Medicare B and D.
Don't let this be you. Start slowly moving money over to a Roth IRA, at the minimum up to the maximum of your current tax bracket.
Married with taxable income of $50k means you have $27k before you hit the next bracket of 22%. Pay 12% tax on that $27k today to save huge amounts in the future.
Song of the day is Jake Hamilton and the Sounds - Wade In The Water
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In this episode, I tackle a pet peeve of mine, investment advisors holding themselves as providing "comprehensive financial planning" services.
Look, if you are an investment advisor, a CFA for instance, I have no problem with what you do; managing money for clients.
If you are a financial planner, a CFP for instance, I have no problem with what you do either, engaging in comprehensive financial planning for clients.
What I do have a problem with though is financial advisors holding themselves out as BOTH a financial planner AND an investment advisor.
Even worse, I have a problem with an "advisor" who says he's going to charge less than what a client is paying his current advisor but neglects to that person he is only going to provide half the services.
That, my friends, is a bait and switch and absolutely should not be tolerated.
Buyer beware when it comes to this stuff. If someone is offering you services for a significant discounted fee, you'd be prudent to wonder why.
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Scouring through Youtube videos from financial advisors and the comments that are generated makes me realize there is a HUGE market to teach financial literacy.
In this podcast, I go over a couple comments people put on a lady's video that didn't get addressed as they should have been. So I do so here.
Taxes are WAY overestimated Not understanding "sequence of return risk" Confusing interest income with total returns And more.
We end with Lynyrd Skynyrd's classic "Ballad of Curtis Loew"
Don't forget to go to heritagewealthplanning.com for all the updates!
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I've been a big proponent of dividends since I first read Jeremy Siegal's book Stocks For The Long Run when it was first published in 1994. Dividends have represented about 40% of total US stock returns historically.
So, how excited was I to find my own notes from October 2002 in the back of my autographed copy of John Bogle's "Common Sense On Mutual Funds", in which I stated my thesis that for the markets to grow there needed to be tax reform of dividends.
Back then a 5 year CD was paying 4.5%. Bonds had just had a 3 year run averaging over 10%. We were in the midst of one of the greatest sell-offs of all time and yet prices still weren't cheap and companies still weren't hugely profitable.
My argument was the double taxation of dividends was depressing share prices and that if Congress didn't change it was going to be hard to justify stock growth over 6-7%. (2% dividends, 4-5% earnings growth.)
Take a step back in time with me and listen to what I wrote back then.
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So many retirement planning presentations are premised by using previous U.S. market performance and extrapolating that into the future. Even Monte Carlo analysis is guilty of this.
Yes, the Monte Carlo has a random sequence of events. Meaning, 2008 could be followed by 1974 etc, and that potentially could be devastating to that unlucky person who retired into those back-to-back years.
But, that's just one scenario out of 10,000 using return numbers that were simply phenomenal in the history of the world. In fact, the world has never seen investments returns like that of the US over the last 100 years...ever.
So, to use that for future analysis seems to be quite a bit of cherry picking. Doesn't mean it won't happen but let's think about this.
How much different would your retirement projections look if we used an average investment return scenario over the last 100 years as opposed to the US? What would you do differently?
This is why I harp on paying down debt.
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Medicare is a HUGE financial planning topic. But look around at the CFPs that are out there. How many are writing or even discussing Medicare? The answer is very few, which is quite unfortunate.
So, today it is my pleasure to bring on a true professional in all things health care, longevity planning and Medicare, Rob Klein.
Rob's been focusing on Medicare and longevity planning for over 10 years. He's just a wealth of information that you NEED to hear.
There is simply no escape from the rules of Medicare, like it or not. You need to understand how you will be affected now, and certainly when you retire.
Don't get caught off guard with higher fees, premiums, taxes etc.
Rob shares with us some strategies on how to deal with the alphabet soup that is Medicare. Ignorance is not bliss. Empower yourself with the education that Rob provides on this podcast.
Rob can be contacted here: 888-323-2724
Song of they day - Aaron Lewis Massachusetts
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One of my biggest problems with retirement planning is that it's done backwards. The traditional method goes something like this..."Mrs. Smith, you have $400,000 in your portfolio, thus you can withdraw $16,000 a year and not worry about running out of money. Isn't that great!
To which Ms. Smith says "but, I need $50,000 a year."
The advisor then responds by suggesting other ways they could get to a closer amount of withdrawals from the portfolio.
All the while, it turns out Ms. Smith has significant waste in spending that, if she were to focus on, would reduce her income needs to $40,000 a year!
Remember this folks, it's the SPENDING that should drive your retirement planning. Not the income your portfolio can produce. The income you need is of utmost importance. So, we have to define what that is...and then find ways to reduce it.
In this podcast, I discuss 3 easy ways to reduce your spending. 1. Change to LED light bulbs 2. Insulate your house 3. reduce insurance cost
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In this episode, it is my pleasure to chat with Joe Hurley. Some of you probably know Joe Hurley from his amazing work in the 529 field.
Joe literally wrote the book on 529 plans. His is an amazing story actually of how he found something of interest, researched it, found very little on it and decided to write a book about it.
In the process of researching the book, Joe became the pre-eminent expert of 529 plans and then went on to start the SavingForCollege.com website.
Joe's book "The Best Way to Save for College: A Complete Guide to 529 Plans" is STILL a must read for anyone interested in learning the rules of college savings plans.
Yet, Joe decided to leave all that behind and go into farming, full time. Here is an accountant by trade and later a successful entrepreneur. Well-known in the advisory space, certainly making decent money, leaving it all behind to farm maple syrup and honey on a 70 acre farm in Rochester, NY.
Tell me that's a story you don't want to hear!
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In this episode, I'm going to take on my industry a bit. I absolutely despise when clients pay for investment advice, i.e., hire someone to "manage" their investments and yet they get nothing in return.
Maybe, at best, they'll get a "review" of their investments twice a year.
They'll get a different "advisor" each time too. The "advisor" will simply say, "you've done this. the benchmark has done that." And a lot of the time the client will simply say "ok" and move on. Yet, the client is paying BIG BUCKS for this kind of "advice", typically under-performing investments AND no financial guidance to go with it!
This makes me mad. If you are going to charge investment fees to manage money, then daggum, you better be offering more than simply putting your clients in a portfolio and re-balancing it once a year.
That is not investment advice. That is not investment management. And it is certainly not financial planning.
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Increasing your Social Security benefit is one of the easiest ways you can make sure you are squared away in retirement.
Not only does Social Security grow each year with inflation, guaranteed. but because it's taxed more favorably than other accounts having more Social Security will reduce your taxes too.
Plus, if you strategically plan your Social Security benefits you will also leave your surviving spouse in a much better place financially.
So, given all these benefits, why, oh why, do MOST people take it at 62?
For some, it's because they have no choice. They need the cash.
For others though, well, I believe it's ignorance. Hopefully, this podcast and the webinar that you can find on my website at www.heritagewealthplanning.com/blog will help people. Watch the webinar for step by step on how to maximize your Social Security benefits.
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In this episode I interview Tom Jordan. Tom is the guitarist and vocalist for a hard-rocking two-piece band 20 Watt Tombstone out of Wisconsin.
I was able to catch up with Tom after 20 Watt returned from a couple weeks on the road. It was a lot of fun chatting with Tom.
In this interview, you'll learn the history of the slide guitar sound which Tom says he uses almost exclusively.
You'll also learn the logistics a professional musician must go through in order to set up shows across the country...and how they get paid.
Finally, you'll learn why it's SO important to be different and have some fun when you're creating content.
So listen closely because you'll learn more in this episode than any class you took in high school, I assure you.
Also, don't hesitate to check out their tour schedule and if they're in your town, I encourage you to check 'em out. Just because they seem to be nice guys, doesn't mean they can't play hard music.
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John Bogle, founder of Vanguard, is one of the hero's in all the investment world. If it were not for him, investors would be losing well more than the billions they already are due to management fees and trading costs.
Bogle has claimed for many years that the investment business EXTRACTS wealth. And it does nothing to add value.
That's a very threatening statement, of course. But it's no longer controversial. And it's because of John Bogle we all know this now. Wasn't always like that. Bogle had many-an-arrow aimed at him. But he withstood and the world is a much better place for his persistence.
In this podcast I point out a few of the highlights from his interview. Should be informative for you.
Here is link to the video: https://youtu.be/ Bogles book you need to get: https://www.amazon.com/Common-Sense-Mutual-Funds-Anniversary/dp/0470138130/ref=sr_1_1?ie=UTF8&qid=1523988560&sr=8-1&keywords=common+sense+on+mutual+funds
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I can not even begin to tell you how excited I was to conduct this interview with Larry Kotlikoff, economics expert extraordinaire.
Larry is an economics professor at Boston University and is probably most famous for warning anyone who will listen that Social Security, Medicare and Medicaid are doomed in their current state. We can only continue to rob from the future to pay for today for so long. At some point, there will be a reckoning and when that happens, what then?
Larry's work has been an integral part of my life, both as a consumer AND as a professional financial planner.
Whenever I am asked "What's a good book to read on financial planning", my recommendation is Larry's book with Scott Burns', "Spend Till The End", bar none.
Here are some of the links we discussed:
www.theinformact.com www.modernwhig.org/ joinsam.org/ economicsecurityplanning.com/ kotlikoff.net/ seekingalpha.com/article/4162603-money-magic-finding-alpha-sidewalk
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I receive a lot of questions via Quora. Feel free to go to my blog at https://www.quora.com/profile/Josh-Scandlen/blogs or better yet just go to my website at http://heritagewealthplanning.com/blog/.
Here are some of the questions I answer on the podcast today.
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How many Certified Financial Planners (CFPs) also hold the Chartered Financial Analyst designation (CFA)?
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Do traditional to roth conversions count against your yearly roth contribution limit?
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Is it better to pay off your house with your savings before retirement?
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Is paying 0.50+ expense ratio on VMOT, GVAL, GMOM and SYLD ETFs worth it if investing horizon is 20+ years compare to broad market index ETFs with less than 0.20 expense ratio?
Any question you want me to answer?
Just send it in! I'll be happy to do so.
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Headlines drive traffic. Don't believe me? How many articles have you "liked" online without actually reading the article. We've all done that.
In fact, there is a rule of thumb that 5 times as many people read the headline as the actual copy.
So headline writing is critical.
In this episode I interviewed a headline maestro, Justin Blackman from www.prettyflycopy.com. Justin is an expert in putting words together to make your business stand out.
Unfortunately, the audio wasn't great. DAMN YOU CELL PHONES! Audio is critical in podcasting and video so I decided not to use it. Sorry about that, Justin.
Instead I give somewhat of a transcript from what we discussed.
Justin talks about the need to identify who you are trying to appeal to, among many other things which I share with you.
I think you'll find this episode very valuable, even if it's just me yapping.
Visit Justin's website at https://prettyflycopy.com. He provides a ton of valuable resources.
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In this episode we reveal what the secret to retirement happiness is... It's having NO MORTGAGE! Yes, I just revealed it to you. You can thank me later. But actually, there are studies on this stuff. The Bureau of Labor Statistics (BLS) shows that debt is increasing for retirees, big time. Housing costs account for over 1/3 of retirees expenditures and it's getting larger as people age.
Also the amount of people who carry mortgages well into retirement is increasing significantly too.
Ironically, TowerWatson did a study that showed at the same time the satisfaction of retirees is declining significantly.
Coincidence? I highly doubt it.
See my post/video on this topic here: http://heritagewealthplanning.com/1-thing-to-do-for-retirement-happiness/
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If you are using a simple Monte Carlo analysis to analyze your retirement projections, you could be setting yourself up for a HUGE disaster. Worst off, is that this disaster may occur when it's just too late to change anything!
Why is this? Because Monte Carlo analysis doesn't include investment fees or taxes.
As I stated repeatedly, investment fees and taxes are the biggest detriments to your portfolio strength.
So, consider using this FREE tool at Firecalc.com. While it won't give us insight into taxes you may pay, it most certainly can allow you to adjust your portfolio for the fees you pay.
In this example I show what a retirement portfolio with a .18% looks like as compared to a more typical portfolio with a fee of 1.50%.
It's not a pretty comparison. Not in the least.
Factor in taxes and it's going to get even uglier. When it comes to retirement planning, ugly is not your friend; we want the prom queen. The easiest way to dance with her? Reduce fees and taxes!
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In this episode, I share how a recently widowed friend of mine was told by a large investment firm that her money would last until she was 93 years old. She's 61 now.
How did they figure that? Well, they ran a Monte Carlo analysis of course! And if the Monte Carlos says you are good to go, well, who's going to argue with that?
I do! The three things that must be looked at when it comes to the Monte Carlo are: 1. Rates of returns the software is using 2. Investment fees 3. Taxes
I go into detail of all three in the podcast. But, if the software from which the Monte Carlo is based is saying cash will return you 3% and a conservative portfolio (20% stocks / 80% bonds) 6.2%; That is way overly optimistic of real world returns that we see today when the 10 yr Treasury bond is paying 2.80%.
Investment fees? Mutual fund fees? Those need to be considered as well as taxes on investments too!
If you are not looking at the NET, you could be in big trouble.
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Take the Retirement Readiness Quiz here: http://heritagewealthplanning.com/retirement-readiness-quiz/
The 3 questions you need to answer BEFORE you hang up your work boots:
- How much income will you need in retirement?
- How much is your Primary Insurance Amount?
- Subtract 2 from 1 and divide by .04. Is your liquid net worth larger than that number?
If so, you're probably going to be in good shape.
If not, you have some work to do. But no worries, you've taken a HUGE step towards preparing for a successful retirement.
Maybe there is some fat you can cut from your income needs. Maybe you can increase your Social Security benefit. Maybe you can work an extra year or two to get your liquid net worth up to where you need it to be.
Lots of things you can do to prepare.
Remember, this is just a STARTING POINT. Nothing is chiseled in stone. But the journey of a million miles starts with the first step. So, use this quiz to begin your journey.
And share it with others!
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AIME, PIA, FRA, DECs... WHAT THE????
Unfortunately, these are the acronyms used regularly in regards to YOUR Social Security benefits.
You really need to understand how these topics work together because many retirees rely heavily on Social Security. In fact, there are studies done that shows Social Security provides MOST of the income for retirees!
Given that, doesn't it make sense to understand the Social Security system and how works? Doesn't it also make sense to understand how the system can benefit you?
I believe it does.
So, in this episode we discuss: AIME - Averaged Indexed Monthly Earnings PIA - Primary Insurance Amount FRA - Full Retirement Age DECs - Delayed Earnings Credits
We also discuss what happens when you file early, but I am not aware of any acronym that identifies that. So, consider that a bonus!
As ways, go to my website at www.heritagewealthplanning.com to learn more.
Thanks!
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One of my pet peeves is how the financial planning industry had allowed itself to be consumed by the investment advisory industry. The two are not the same!
Financial planning is truly ALL encompassing, taxes, insurance, investments, college, debt, estate etc. are all part of the discussion.
What's investment advice though? Well, simple, INVESTMENTS!
Investments are part of financial planning but financial planning is so much more.
Yet, because most financial 'advisors' get paid on the investments they manage, it's easy to see how the two get mixed up.
I wish this weren't the case. I wish we truly had an industry where clients value what a financial advisor does, in terms of seeing the big picture as opposed to just managing investments.
But that industry is starting to spring up. Groups like XY Planning Network (which I'm a part of), Garret Planning Network, NAPFA are doing wonderful things to advance of the cause of true financial planning.
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Latest episode of Josh Scandlen Podcast
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In this episode we discuss Revocable Living Trusts, aka Inter-vivos Trusts or Living Trusts.
We discuss the pros and cons revolving around Living Trusts.
First thing to understand: 1. Revocable means it can be REVOKED! Thus you still own it, control it and pay tax on any income in it on your personal tax return. However, a Revocable Trust becomes IRREVOCABLE at death. Thus you better understand what your trust states because at your death it can only be changed by court order.
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Who is the Successor Trusttee? This is the most important person in your trust document. Who manages it when you are incapacitated or death???
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Is your trust actually FUNDED, i.e., hold an asset? If your trust doesn't actually own an asset it's not worth the paper it's written on. YOu need to make sure you actually put a property into your trust. Not difficult to do for financial assets, like a bank account, but for REAL assets, like your home, that's more problematic.
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Today is Thursday April 5th, 2008. Do you know what that means? That means it's 4 days past the deadline for me to have filed for my Fulton County, GA property homestead exemption. This means I paid $871 TOO MUCH in property taxes this year.
This means I've also been paying too much in taxes every year I've been here too. Thus that is nearly $3500 over the 5 years I've lived in Fulton County that I've paid too much.
Don't let this be you! Go to http://fultonassessor.org/exemptions/ and learn what YOU need to do to reduce YOUR tax burden.
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The very first episode of Josh Scandlen Podcast!
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The very first episode of Josh Scandlen Podcast!
Support this podcast: https://anchor.fm/josh-scandlen-podcast/support