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Speaker 1: Tonight, why more countries are pushing retirement dates out even later,

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Speaker 1: and what it signals potentially for your financial future. You're

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Speaker 1: listening to Simply Money, presented by all Worth Financial on

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Speaker 1: Bob Sponseller along with Brian James. So you built a

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Speaker 1: nest egg, maybe refinance your home, maxed out those retirement accounts.

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Speaker 1: But what about timing. It used to be work forty years,

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Speaker 1: get the gold Watch, retire around sixty five. Now others

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Speaker 1: around the world are working later. Maybe it's worth asking

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Speaker 1: should you work later too, Brian, I'm restraining myself right

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Speaker 1: off the bat on a couple of these things. But

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Speaker 1: let's get into this topic. We're talking about what others

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Speaker 1: around the world are doing governments and countries around the

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Speaker 1: whole issue of retirement dates.

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Speaker 2: And so I think the one thing that a lot

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Speaker 2: of places didn't really account for, a lot of countries

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Speaker 2: didn't account for, and especially this one, is longevity. Right,

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Speaker 2: So how long are people going to live? When these

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Speaker 2: programs and things were set up way back when they

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Speaker 2: were based off of a shorter life expectancies, and that

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Speaker 2: started coming back around to bite the different pension systems.

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Speaker 2: We see it here, right, One of the reasons that

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Speaker 2: companies have spent the last thirty forty years getting rid

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Speaker 2: of pensions and dumping it into four h one K

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Speaker 2: type arrangements is to get out from under the burden

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Speaker 2: of needing to pay for somebody for thirty forty years

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Speaker 2: after the last time they sat at their desk and

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Speaker 2: actually perform some kind of service for that company. So

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Speaker 2: what's happening around the world. So France, Germany, Canada, Japan,

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Speaker 2: everybody is increasing the official retirement age or modifying their

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Speaker 2: pension systems to reflect that reality longer lifespans. Specifically, France

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Speaker 2: raised its age from sixty two to sixty four. You

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Speaker 2: might remember that there were protests and things kind of

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Speaker 2: exploded over there when that happened, and in so Denmark too.

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Speaker 2: The Denmark is now moving their state pension age from

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Speaker 2: sixty seven to seventy by twenty forty. China is shifting

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Speaker 2: their retirement ages as well, men from sixty to sixty three.

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Speaker 2: This is interesting becuse they have a difference there. I'm

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Speaker 2: up to fifty eight and that's gonna be phased in

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Speaker 2: starting January twenty twenty five. The United States has a

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Speaker 2: has had a history of this too. We have moved

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Speaker 2: ages on social security and things like that and during

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Speaker 2: my career, but it's been a very very long time.

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Speaker 2: I don't remember when that was, but it was in

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Speaker 2: the late nineties when I first started, they moved the

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Speaker 2: ages forward. So we haven't been as proactive with it.

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Speaker 2: But the same demographic trans exist here well.

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Speaker 1: In the World Economic Forum has something called the Organization

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Speaker 1: for Economic Cooperation and Development, and I guess that's a

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Speaker 1: long winded way of saying they get a bunch of

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Speaker 1: people in a room from all over the world and

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Speaker 1: try to plan out the economy for all of us,

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Speaker 1: and they predict by the mid twenty sixties, average effective

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Speaker 1: retirement ages will climb by about two years worldwide. Brian,

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Speaker 1: I don't need a think tank to come up with

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Speaker 1: why this is happening. Let's face it, people are living

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Speaker 1: longer and globally, folks are having fewer children. So when

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Speaker 1: you have a pay as you go pension system like

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Speaker 1: social security and you have people living longer and being healthier,

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Speaker 1: the math's not gonna work. So adjustments are going to

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Speaker 1: have to be made. What am I missing here?

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Speaker 3: Nothing? I mean that that is the problem.

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Speaker 2: You hit it right there on the head, The math

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Speaker 2: won't math is really the as the kids say these days,

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Speaker 2: and I think what makes social Security our own homegrown

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Speaker 2: pension plan a little more, a little more susceptible to

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Speaker 2: this is the fact that, you know, we talk about

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Speaker 2: this all the time. The reason that that people have

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Speaker 2: a debate over when am I going to turn my

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Speaker 2: social securities pigot on? Everybody wants to max it out

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Speaker 2: for obvious reasons. How can I maximize my Social Security?

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Speaker 2: And the reason we look at that is because every

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Speaker 2: year you don't turn it on. Let's say you've hit

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Speaker 2: age sixty two. Now you're in the window you can

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Speaker 2: you can take it as early as sixty two and

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Speaker 2: get the lowest check you'll ever see, or you can

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Speaker 2: wait till seventy and take the biggest check you have

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Speaker 2: you'll ever see. That's not that question is not as

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Speaker 2: obvious as it seems, by the way, But the math

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Speaker 2: there basically says every year you ignore it, it will

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Speaker 2: go up by eight percent. That is not a number

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Speaker 2: that is indexed to inflation. It does not change. It

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Speaker 2: has been in concrete. Eight percent increases every single year

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Speaker 2: you don't sign up for it. And that was set

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Speaker 2: in concrete in the forties and fifties, back when we

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Speaker 2: were just in a different environment and longevity wasn't a problem.

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Speaker 3: But now we've got people.

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Speaker 2: Back then, the life expectancy might have been fifteen to

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Speaker 2: twenty years past retirement. Therefore, that eight percent didn't really

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Speaker 2: come home to roost. But remember how compounding works. We

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Speaker 2: love eight percent compounding when it comes to our four

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Speaker 2: to one case. When it comes to our public pension,

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Speaker 2: which we all have to pay taxes for. Now we

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Speaker 2: have to account for an extra ten to fifteen, even

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Speaker 2: twenty years on top because people can be retired and

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Speaker 2: on Social Security literally for forty years, so we have

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Speaker 2: every year we have more coming out of the system

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Speaker 2: than is flowing in, which is why the expectation of

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Speaker 2: Social Security will quote unquote the trust fund will run out.

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Speaker 2: I hate that headline, but that's what they say. Trust

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Speaker 2: fund will run out in the early twenty thirtiest. It

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Speaker 2: doesn't mean it's going to go to zero, and be

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Speaker 2: super clear about that. What it means is that we

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Speaker 2: won't have a surplus anymore. If we will simply be

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Speaker 2: functioning off of what goes into the system, off of

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Speaker 2: your and my pay stubs, out of that fight a

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Speaker 2: section on the top half, and so that that's something

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Speaker 2: we have to worry about. But at the same time,

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Speaker 2: there's no change can be made to it's not gonna

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Speaker 2: be fixed without some kind of sacrifice by somebody. We're

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Speaker 2: either going to pay more taxes now or we're going

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Speaker 2: to reduce our benefits. Are more likely a combination of both,

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Speaker 2: and there are thousands of ways that that could come

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Speaker 2: to bebop.

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Speaker 1: Yeah, And going back to some of these numbers, some

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Speaker 1: of the data and again this World Economic Forum study,

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Speaker 1: they're saying that workers per retiree are projected to fall

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Speaker 1: from about four to just over two by twenty fifty.

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Speaker 1: So that's half the number of workers economically supporting the

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Speaker 1: pension you know, whatever you want to call it, social

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Speaker 1: security or whatever name they have for in other countries.

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Speaker 1: We're going to have half as many workers supporting that

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Speaker 1: pension system as we do today by twenty fifty. That's

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Speaker 1: a significant change. In the United States, the average labor

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Speaker 1: force exit age is already creeping up about four and

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Speaker 1: ten workers now expect to work past the age of

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Speaker 1: sixty five. That's a dramatic rise from just one and

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Speaker 1: ten just thirty years ago and nearly two and ten

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Speaker 1: Americans over age sixty five are still employed today, nearly

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Speaker 1: double from three decades ago. You're listening to Simply Money

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Speaker 1: presented by Allwood Financial on Bob Sponseller along with Brian James. Brian,

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Speaker 1: let's get into some of the challenges here with these

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Speaker 1: policy gaps, and we've talked about this before. The United

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Speaker 1: States is just you know, in my opinion, just kicking

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Speaker 1: the can down the road in the need to address

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Speaker 1: this so we don't have this overnight drop of twenty

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Speaker 1: to thirty percent of Social Security benefits in twenty thirty

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Speaker 1: three or twenty thirty five or whenever we go on

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Speaker 1: this fully pay as you go system. Let's get into

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Speaker 1: some of the challenges and things we should actually be

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Speaker 1: doing to get ourselves in a position to make sure

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Speaker 1: we don't have a negative impact on our retirement irrespective

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Speaker 1: of whatever the government does or doesn't do.

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Speaker 3: Yeah, so this is something to be paying attention to.

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Speaker 2: So we are weird a situation now we just get

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Speaker 2: here's some of the reasons, right, It's not just the longevity,

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Speaker 2: it's also you know, what a stuff costs nowadays. So

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Speaker 2: for example, if we look at homeowners age sixty five

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Speaker 2: to seventy nine. Way back in nineteen eighty nine, only

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Speaker 2: about twenty four percent of people still had a mortgage

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Speaker 2: at that age. In twenty twenty two, the last time

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Speaker 2: the study happened that I'm looking at, that percentage went

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Speaker 2: to forty one percent. So of course people are a

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Speaker 2: longevity is one thing. Living longer is one thing, but

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Speaker 2: another thing entirely is what does it cost to live?

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Speaker 2: So people who obviously we would all like to have

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Speaker 2: a paid off house and that kind of thing, but

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Speaker 2: to get there, it just takes longer because houses cost more.

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Speaker 2: Interest rates are higher now, and so that that is

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Speaker 2: something that this hangs around a lot longer. So I

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Speaker 2: think the real goal here to deal with this is,

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Speaker 2: first off, figure out where you are.

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Speaker 3: What does it cost you to be you right now

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Speaker 3: on a monthly basis.

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Speaker 2: This is huge most people worry about, well, so scary

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Speaker 2: is going to go away and all these scary things.

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Speaker 3: That's fine, What does it mean to you? What do

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Speaker 3: you know where you are right now?

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Speaker 2: And can you calculate the actual financial impact that that's

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Speaker 2: going to have. And I've found that very educational for

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Speaker 2: people to go through that process. And it's not to

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Speaker 2: say that it's always a happy result, but it's usually

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Speaker 2: not nearly as scary as what they think because they've

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Speaker 2: simply never done the math.

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Speaker 1: Yeah, and you have to factor in, you know, and

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Speaker 1: we've talked about this, I think earlier this week. Some

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Speaker 1: people just rationalize not doing the planning and the savings, saying, well,

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Speaker 1: there's no way I'm going to live to be ninety

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Speaker 1: two or ninety four, and my spouse isn't going to either,

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Speaker 1: you know, because Uncle Joe or Grandpaul Fred died when

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Speaker 1: they were seventy seven, and I'm going to plan on

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Speaker 1: doing the same. And that's not reality in my opinion.

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Speaker 1: That's a rationalization in a lot of cases. So you've

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Speaker 1: got to factor in increase longevity, which can be a

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Speaker 1: good thing if your retirement plan is well funded and

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Speaker 1: you stay healthy. And then the other thing that we

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Speaker 1: always stress test our retirement plans for is the worst

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Speaker 1: case scenario, what happens if social Security benefit it's dropped

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Speaker 1: twenty or twenty five percent, you know, ten years from now.

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Speaker 1: Let's make sure that plan is viable and sustainable in

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Speaker 1: the event that government benefits i e. Social Security drop

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Speaker 1: a little bit. So you got to have a plan.

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Speaker 1: You got to look at different contingencies and make sure

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Speaker 1: each family out there is comfortable and feel secure with

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Speaker 1: what they've got to with with what they have in place.

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Speaker 1: You can't just sit back and assume that the government

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Speaker 1: is going to take care of all this, because in

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Speaker 1: most cases they can't and they won't.

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Speaker 2: Yeah, so let's talk about that, because you've used the

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Speaker 2: term kick the can, and I've said that in my

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Speaker 2: office to people just about every meeting, as we were talking

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Speaker 2: about questions of well, what are we going to do

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Speaker 2: with this? If this changes? Yes, can the government fix it?

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Speaker 2: Of course, government can do whatever it wants. Is the

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Speaker 2: government going to be willing to That's the problem because,

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Speaker 2: like I said before, there's there's no way to fix

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Speaker 2: this without some kind of sacrifice being involved. So the

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Speaker 2: person who's gonna every change that comes through legally has

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Speaker 2: a person attached to it. Somebody drives the bill, somebody

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Speaker 2: will permanently have their name attached to an attempt to

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Speaker 2: either lower benefits on retirees or raise taxes on workers.

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Speaker 2: Both of those are obviously a sacrifice. So if I'm

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Speaker 2: a politician and I would like a chance at being reelected.

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Speaker 2: It is really, really, really super scary right now for

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Speaker 2: me to go out there and be that guy that says, hey,

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Speaker 2: you need to sacrifice. American people have not been great

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Speaker 2: at that over years. Maybe you go back to World

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Speaker 2: War Two and when the last time we were really

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Speaker 2: able to come together and make sacrifices for the better

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Speaker 2: of the whole. Ever since then, it's been a full

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Speaker 2: steam ahead. Let's make as much money as we can.

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Speaker 2: And I got yours, and that's kind of where I

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Speaker 2: got mine. That's kind of where we are right now.

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Speaker 2: And you know, so I didn't think about this. We're

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Speaker 2: not the only country associated with this. What happened in France,

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Speaker 2: So President Macrone raised the national retirement age there from

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Speaker 2: sixty two to sixty four. And this is this is

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Speaker 2: in twenty twenty three. Millions of people took to the streets.

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Speaker 3: This was the yellow.

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Speaker 2: Jackets, Transportation shut down, trash piled up all over in Paris.

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Speaker 3: It was just chaos.

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Speaker 2: It wasn't that they were upset more about working two years,

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Speaker 2: two more years. They were just upset that the decision

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Speaker 2: was made without a parliamentary vote. So, in other words,

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Speaker 2: France had the same problem. Nobody pushed a bill forward

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Speaker 2: or whatever they call it in France to do this.

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Speaker 2: The President basically just said, you know what, this is

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Speaker 2: broken and it's not going to get fixed unless we

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Speaker 2: just tear the bandd off and do it. And that's

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Speaker 2: what he did, which triggered a lot of social unrest.

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Speaker 3: Though, so and that was over age sixty four.

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Speaker 2: Here, we have already pushed that four retirement agents and

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Speaker 2: states to sixty seven, although you can sign up for

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Speaker 2: so security a little bit earlier than that. But anyway,

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Speaker 2: I would anticipate a lot of pushback when this happens,

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Speaker 2: even if it's good for us in the long run.

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Speaker 1: Yeah, what we don't want to get into is we

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Speaker 1: do not want to get into the situation here in

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Speaker 1: the United States where the Social security benefits system gets

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Speaker 1: changed in an emergency order, you know, via executive order.

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Speaker 1: To your point about France, I mean, we Congress has

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Speaker 1: to do their job, and the sooner they do it

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Speaker 1: do it the better. Yeah. So, all right, here's the

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Speaker 1: all Worth advice. Longevity is an opportunity if your financial

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Speaker 1: house is in order, Working longer can be a strategic

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Speaker 1: asset too, not a burden. The key here is to

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Speaker 1: have a plan in place and monitor it on an

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Speaker 1: ongoing basis. Speaking of longevity, we're going to break down

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Speaker 1: some of the nuances of long term care insurance that

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Speaker 1: even savvy investors often miss. You're listening to Simply Money,

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Speaker 1: presented by all Worth Financial on fifty five KRC, the

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Speaker 1: talk station. You're listening to Simply Money presented by all

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Speaker 1: Worth Financial on Bob Spon Seller along with Brian James.

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Speaker 1: If you can't listen to Simply Money every night, subscribe

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Speaker 1: and get our daily podcast. You can listen the following

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Speaker 1: morning during your commute or at the gym or whatever

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Speaker 1: else you do in the evenings where you might want

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Speaker 1: a little bit of financial advice, just search Simply Money

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Speaker 1: on the iHeart app or wherever you find your podcasts.

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Speaker 1: Straight Ahead at six forty three it's our ever a

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Speaker 1: popular Ask the Advisor segment where nuanced advice meets real

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Speaker 1: life well health decisions. We talk a lot about risk

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Speaker 1: and retirement market risk, inflation, risk taxes, but there's one

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Speaker 1: that often flies under the radar, the cost of needing

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Speaker 1: long term care. And just because you might have looked

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Speaker 1: into insurance in the past, or might even have a

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Speaker 1: policy that's fifteen twenty years old. That doesn't mean you

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Speaker 1: understand what you're really getting or what you actually own today.

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Speaker 1: Let's jump into this topic, Brian, because it is coming

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Speaker 1: up more and more and more. I don't know about you,

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Speaker 1: but I'm I'm running into this often now with folks

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Speaker 1: in their mid to late eighties and in their children.

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Speaker 1: It's an important topic to cover.

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Speaker 2: Yeah, and especially earlier in retirement. This doesn't mean you

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Speaker 2: should rush out and by long term caricter because we're

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Speaker 2: talking about it, but there are a lot of topics

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Speaker 2: out there that sometimes we just need to plan a

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Speaker 2: seed and make sure that the basics are there and

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Speaker 2: we start thinking about it so that when the time

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Speaker 2: actually comes, it won't be the first time you've started

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Speaker 2: learning about these kinds of things.

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Speaker 3: So and really speaking to.

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Speaker 2: Those of you who might be in that kind of

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Speaker 2: weird middle zone where you too much money to qualify

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Speaker 2: for Medicaid, which is the that's the uh that's in

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Speaker 2: the headlines a lot lately. That's what we provide for

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Speaker 2: people who don't have a lot of resources to cover

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Speaker 2: their healthcare, but at the same time also not wealthy

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Speaker 2: enough to self ensure, meaning you've just got enough to

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Speaker 2: pay for whatever comes down the pike. And so that

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Speaker 2: is where that that middle zone there, that's where long

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Speaker 2: term care insurance can make some sense. But there's some

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Speaker 2: things that people often miss. That's what we want to

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Speaker 2: talk about today. First off, it's not just nursing homes.

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Speaker 2: We instantly think as soon as I'm thinking long term care,

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Speaker 2: that's a nursing home. Well that's yes, that's of course

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Speaker 2: part of it. But a lot of policies actually cover

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Speaker 2: in home care. As matter of fact, the insurance companies

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Speaker 2: prefer it because in the long.

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Speaker 3: Run it's cheaper.

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Speaker 2: People are happier and healthier when they're in their own environment,

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Speaker 2: and so you know, sending a nurse or somebody there

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Speaker 2: to kind of help them through the day can be

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Speaker 2: a lot a lot better for everybody all around. Also,

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Speaker 2: assisted living, moving into a facility that you're still pretty

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Speaker 2: much independent, but at the same time there's medical staff

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Speaker 2: on on on site. There even adult daycare somewhere you

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Speaker 2: would go once a day and come home at night.

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Speaker 2: So if your goal is to stay in your home longer,

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Speaker 2: long term care insurance can cover those things if you

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Speaker 2: pick the right policy.

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Speaker 1: All right, I want to jump in with a couple

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Speaker 1: of things here. You talked about folks that are in

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Speaker 1: that middle zone, and Brian, you know, this is the

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Speaker 1: unfortunate situation that I find, you know, in doing retirement

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Speaker 1: planning for well over thirty years. Now. You've got the

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Speaker 1: folks that you know they're in danger or running out

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Speaker 1: of money, and they're they're the ones that are in

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Speaker 1: danger of having to need to qualify for Medicaid. And

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Speaker 1: then you've got the folks that have way more than

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Speaker 1: enough money to self ensure. They're not worried about this

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Speaker 1: cost because if they need long term care coverage, their

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Speaker 1: lifestyle economically really isn't going to change in terms of

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Speaker 1: how much money is spent, you know, every month. It's

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Speaker 1: those folks in the middle, and that's where things get

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Speaker 1: challenging because if folks are just trying to get enough

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Speaker 1: money saved to retire, and their retirement income need or

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Speaker 1: want is about half of what it would be if

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Speaker 1: one of the two spouses goes on any kind of

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Speaker 1: long term care situation. That's the challenge because you can

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Speaker 1: make people borderline insurance poor by having them buy long

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Speaker 1: term care insurance. And there's the conundrum what happens if

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Speaker 1: you don't get it, you know, in the worst case

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Speaker 1: scenario happens. That's where it's really critical to sit out

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Speaker 1: and look at the pros and cons of even doing

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Speaker 1: insurance the other thing, you know, And I'm finding this.

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Speaker 1: I have found this for the last ten fifteen years,

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Speaker 1: where I've had clients actually use this stuff or need

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Speaker 1: some type of care. I mean the claims. The claims

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Speaker 1: data bears this a well over eighty percent of all

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Speaker 1: claims for long term care coverage or for in home care.

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Speaker 1: People want to stay in their home, and understandably so,

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Speaker 1: so remember that when you're looking at this stuff, everybody

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Speaker 1: wants to stay in their home if possible. It's about

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Speaker 1: getting the right type of assistance at the right price

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Speaker 1: to make sure sure staying in your home is economically

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Speaker 1: feasible and most importantly, keeping people safe in that process

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Speaker 1: and not burning out or overburdening loved ones. So we've

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Speaker 1: got some assistance coming in.

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Speaker 2: Yeah, So let's talk about some of the things that

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Speaker 2: do trip people up when we're looking at what our

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Speaker 2: solutions might be for this. So, first off, Medicare does

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Speaker 2: not cover it. There's Medicaid, which is which will cover,

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Speaker 2: because that assumes you really don't have enough resources to

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Speaker 2: support yourself. That's what Medicaid is for the dagen. Medicare

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Speaker 2: does not cover it. So I want to say that

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Speaker 2: a couple of times. Medicare does not cover long term care.

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Speaker 2: So it might cover like a rehab stay. It'll give

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Speaker 2: you thirty days after some kind of major medical procedure,

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Speaker 2: but that is limited and it is temporary, so you

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Speaker 2: can't rely on the government for that.

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Speaker 3: Premiums do go up even after you buy.

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Speaker 2: You know, I think back to thirty years ago when

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Speaker 2: I believe it was General Electric was the last or

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Speaker 2: maybe it John Handt.

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Speaker 3: It don't matter, It doesn't matter anymore.

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Speaker 2: But anyway, somebody was so proud of the fact that

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Speaker 2: they had never ever ever raised their premiums. That was

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Speaker 2: in the history of the company, and that was their

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Speaker 2: big market tag level. Then all of a sudden they

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Speaker 2: realized that they too had misspriced the risk and weren't

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Speaker 2: able to cover the things that they had taken on.

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Speaker 1: So these General Worth policies, yeah, these gen Worth policies.

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Speaker 1: And this is no slam on General Electric. I mean,

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Speaker 1: they I think wisely vested themselves be again and need it.

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Speaker 3: So nobody remembers that gen Worth's General Electric.

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Speaker 1: But Brian, I'm having people every two to four years

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Speaker 1: or getting these letters in the mail saying, hey, if

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Speaker 1: you want to keep what you have, great, but the

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Speaker 1: premiums are going up fifteen to twenty percent. I mean,

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Speaker 1: this is happening, and I know a lot of our

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Speaker 1: listeners out there have experienced this happening. It's real. And

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Speaker 1: because twenty five thirty years ago, when these policies first

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Speaker 1: came out, there was not a lot of underwriting history

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Speaker 1: on these things, and they were too inexpensively priced based

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Speaker 1: on the claims data. So you know, it's dollars in

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Speaker 1: dollars out from an insurance company standpoint, they got to

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Speaker 1: make a little bit of profit. But if they pay

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Speaker 1: way more out in claims than they're taking in in premiums,

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Speaker 1: they obviously go out of business and then nobody gets

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Speaker 1: there there benefits. So that's a real situation that has

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Speaker 1: been happening to people. I didn't mean to interrupt, No.

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Speaker 3: It's okay.

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Speaker 2: So, and this is something to look at. Now, if

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Speaker 2: you wait, you might not qualify. So early sixties, even

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Speaker 2: late fifties, that's the good window there. There are policies

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Speaker 2: out there that will let you share benefits with a spouse,

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Speaker 2: you can pay with hell savings accounts, and there's also

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Speaker 2: something called a hybrid policy that will offer a death

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Speaker 2: benefit too.

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Speaker 3: So lots of moving parts to look at.

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Speaker 1: There. Here's the all Worth advice. Long term care insurance

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Speaker 1: is more complicated, but it's also more flexible than most

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Speaker 1: people realize. Understand the fine print. Now get out in

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Speaker 1: front of this so that you're not caught off guard

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Speaker 1: later next Why the next few years could present a

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Speaker 1: once in a generation opportunity to keep more of what

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Speaker 1: you've worked hard and earned. You're listening to Simply Money

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Speaker 1: presented by all Worth Financial on fifty five KRC the

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Speaker 1: talk station. You're listening to Simply Money presented by all

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Speaker 1: Worth Financial. I'm Bob sponsorer along with Brian James. Markets

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Speaker 1: fluctuate and tax laws evolve. Investors are navigating a financial

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Speaker 1: environment that demands more foresight and examination than ever For

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Speaker 1: those with significant wealth. These shifts don't just impact annual

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Speaker 1: tax filings. They carry long term implications for investment outcomes,

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Speaker 1: retirement readiness, and legacy planning. Brian, let's get into some

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Speaker 1: of the complexities here. What's going on and what should

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Speaker 1: we be thinking about as we juggle all these balls

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Speaker 1: in the air about tax efficiency, investment returns and making

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Speaker 1: sure we don't run out of money in retirement.

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Speaker 3: Well that's what it's all about, isn't it. Above Just

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Speaker 3: not letting the bucket run dry.

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Speaker 2: So yeah, lots of moving parts people have to think

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Speaker 2: about that they didn't used to because you're a high earner.

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Speaker 2: There's just more moving parts to all this. You often hit,

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Speaker 2: you hit your deductions and your credit limits faster. And

436
00:20:53,760 --> 00:20:56,280
Speaker 2: the capital gains income tax management. The capital gain is

437
00:20:56,320 --> 00:20:58,240
Speaker 2: one of the biggest drivers of tax exposure. If I

438
00:20:58,280 --> 00:21:00,200
Speaker 2: own if I bought something for tan and I sold

439
00:21:00,240 --> 00:21:02,159
Speaker 2: it for twenty, that means I made ten bucks to

440
00:21:02,200 --> 00:21:04,159
Speaker 2: share on it or whatever that is. That means the

441
00:21:04,200 --> 00:21:05,679
Speaker 2: I r S gets a chunk of it too, in

442
00:21:05,720 --> 00:21:06,800
Speaker 2: the form of capital gains.

443
00:21:07,040 --> 00:21:07,600
Speaker 3: And a lot of.

444
00:21:07,560 --> 00:21:09,960
Speaker 2: Cases, if I'm a you know, if I'm a high earner,

445
00:21:10,000 --> 00:21:11,719
Speaker 2: then I may be in a situation where I've now

446
00:21:11,760 --> 00:21:14,199
Speaker 2: got a concentrated stock position. This is where we know

447
00:21:14,280 --> 00:21:16,760
Speaker 2: locally it's a lot of Procter and Gamble people and

448
00:21:16,840 --> 00:21:18,800
Speaker 2: Kroger people who have been there you know, spend twenty

449
00:21:18,800 --> 00:21:21,600
Speaker 2: thirty years at those large fortune five hundred companies. A

450
00:21:21,640 --> 00:21:24,560
Speaker 2: lot of the compensation is made up of stock grants

451
00:21:24,760 --> 00:21:25,680
Speaker 2: and or options.

452
00:21:25,840 --> 00:21:27,320
Speaker 3: That means ended with the giant pile of it.

453
00:21:27,480 --> 00:21:29,720
Speaker 2: And there's risk in that we don't have to look

454
00:21:29,720 --> 00:21:31,800
Speaker 2: too far and that there's nothing wrong with Proctor, Gamble,

455
00:21:31,880 --> 00:21:34,280
Speaker 2: Kroger and all that, But there are plenty of Life

456
00:21:34,320 --> 00:21:37,280
Speaker 2: is littered with lots of companies with terrifying stories about

457
00:21:37,280 --> 00:21:39,320
Speaker 2: how they evaporated, even if it's in the short term.

458
00:21:39,440 --> 00:21:41,240
Speaker 2: I was just having a conversation with somebody last week

459
00:21:41,240 --> 00:21:44,720
Speaker 2: who's in this exact situation. Procter and Gamble is, you know,

460
00:21:44,800 --> 00:21:47,480
Speaker 2: goes through these waves of laying off people in that

461
00:21:47,560 --> 00:21:49,280
Speaker 2: kind of thing. So everybody has to start thinking about

462
00:21:49,280 --> 00:21:52,200
Speaker 2: what they want to do and what winds up happening.

463
00:21:52,280 --> 00:21:55,000
Speaker 2: Is they all remember the Dirk Yager years from the

464
00:21:55,040 --> 00:21:58,439
Speaker 2: early two thousand when Dirk Yager was installed as the CEO.

465
00:21:58,560 --> 00:22:00,680
Speaker 2: He came up with his Millennium two thousand plan or

466
00:22:00,720 --> 00:22:03,320
Speaker 2: whatever it was, and the market insta hated it and

467
00:22:03,440 --> 00:22:05,520
Speaker 2: took away about fifty percent of the value of Procter

468
00:22:05,600 --> 00:22:08,679
Speaker 2: and Gamble in a matter of about six weeks, and

469
00:22:08,800 --> 00:22:10,840
Speaker 2: that can happen. You know, if you make the stock

470
00:22:10,880 --> 00:22:12,520
Speaker 2: market mad, the hert is going to stampede and take

471
00:22:12,520 --> 00:22:15,359
Speaker 2: your retirement with it. Procter and Gambled itself obviously, is

472
00:22:15,400 --> 00:22:18,240
Speaker 2: in fine condition today and it came back roaring and

473
00:22:18,280 --> 00:22:20,200
Speaker 2: better than ever. But if you were somebody who wanted

474
00:22:20,200 --> 00:22:22,600
Speaker 2: to retire from P ANDNG in two thousand and one,

475
00:22:22,640 --> 00:22:25,439
Speaker 2: two thousand and two when that happened, that probably changed

476
00:22:25,440 --> 00:22:27,800
Speaker 2: your life because you had so much tied up. And

477
00:22:27,840 --> 00:22:29,520
Speaker 2: again that has nothing to do with P ANDNG being

478
00:22:29,560 --> 00:22:31,879
Speaker 2: a bad company, but the market can smack anything around

479
00:22:32,080 --> 00:22:33,760
Speaker 2: in the relatively short term.

480
00:22:34,119 --> 00:22:37,119
Speaker 1: Yeah, And that's the unfortunate thing. And we're not calling

481
00:22:37,160 --> 00:22:40,640
Speaker 1: a doomsday scenario for Procter and Gamble, a great company,

482
00:22:40,640 --> 00:22:44,040
Speaker 1: well run company. But the unfortunate thing, Brian, is these

483
00:22:44,119 --> 00:22:46,800
Speaker 1: kind of what i'll call black Swan type of events.

484
00:22:46,840 --> 00:22:49,960
Speaker 1: They usually only happen about twenty every twenty to twenty

485
00:22:49,960 --> 00:22:55,200
Speaker 1: five years. And the generation that experienced that is way past,

486
00:22:55,440 --> 00:22:58,120
Speaker 1: you know, gone and retired, and the folks that are

487
00:22:58,160 --> 00:23:01,920
Speaker 1: retiring today don't remember that those days twenty to twenty

488
00:23:01,960 --> 00:23:05,480
Speaker 1: five years ago. And history doesn't always repeat itself, but

489
00:23:05,560 --> 00:23:08,520
Speaker 1: it often rhymes. And that's where you got to stay.

490
00:23:08,680 --> 00:23:10,480
Speaker 1: You know, you got to remember, too much of any

491
00:23:10,480 --> 00:23:13,400
Speaker 1: one thing can blow up on you, no matter how

492
00:23:13,440 --> 00:23:16,439
Speaker 1: well managed or how well intentioned people are, and that

493
00:23:16,480 --> 00:23:18,760
Speaker 1: get you know, there's ways to get around this. As

494
00:23:18,800 --> 00:23:21,840
Speaker 1: far as this over concentration thing, you can stage it

495
00:23:21,880 --> 00:23:25,119
Speaker 1: in over time. You can put collar strategies in place,

496
00:23:25,600 --> 00:23:28,000
Speaker 1: you can direct index. There's a lot of things you

497
00:23:28,040 --> 00:23:33,119
Speaker 1: can do to you know, responsibly and tax efficiently, unwind

498
00:23:33,280 --> 00:23:38,359
Speaker 1: a concentrated a concentrated position in anyone's stock. And to

499
00:23:38,400 --> 00:23:41,480
Speaker 1: say nothing of some of the charitable you know, opportunities

500
00:23:41,480 --> 00:23:44,760
Speaker 1: out there with donor advise funds, charitable remainder trust. There's

501
00:23:44,800 --> 00:23:47,359
Speaker 1: a lot of things you can do out there. Let's

502
00:23:47,359 --> 00:23:50,840
Speaker 1: get into a state in gift tax exemption planning. I mean,

503
00:23:50,880 --> 00:23:53,120
Speaker 1: I know, with the the new bill that just got

504
00:23:53,119 --> 00:23:55,200
Speaker 1: passed that took a lot of uncertainty out of there

505
00:23:55,240 --> 00:23:58,840
Speaker 1: as far as you know, making permanent the large unified

506
00:23:58,920 --> 00:24:03,320
Speaker 1: credit now be up to almost fifteen million dollars per person.

507
00:24:03,880 --> 00:24:06,320
Speaker 1: But there are some things that you got to plan around,

508
00:24:06,400 --> 00:24:08,480
Speaker 1: you know, in that regard to right Brian.

509
00:24:08,280 --> 00:24:11,320
Speaker 2: You know, one of the most impactful provisions for these

510
00:24:11,400 --> 00:24:14,280
Speaker 2: high networth families. That is the preservation of the pretty

511
00:24:14,359 --> 00:24:17,320
Speaker 2: high historically speaking, the relatively high federal estate and gift

512
00:24:17,400 --> 00:24:20,399
Speaker 2: tax exemptions, those are going to increase to fifteen million

513
00:24:20,440 --> 00:24:22,359
Speaker 2: dollars per person. In other words, what I'm saying to

514
00:24:22,400 --> 00:24:25,720
Speaker 2: you out there, dear listener, is that don't worry about

515
00:24:25,720 --> 00:24:29,439
Speaker 2: a state taxes unless you yourself individually own more than

516
00:24:29,480 --> 00:24:31,280
Speaker 2: fifteen million dollars worth of assets.

517
00:24:31,800 --> 00:24:34,080
Speaker 3: I mean thirty million dollars for a for a.

518
00:24:34,000 --> 00:24:37,080
Speaker 2: Married couple, if titled properly. That's its own radio segment.

519
00:24:37,119 --> 00:24:40,040
Speaker 2: We'll leave that there for now. But state taxes are

520
00:24:40,040 --> 00:24:42,239
Speaker 2: not an issue. There was the threat that it might

521
00:24:42,240 --> 00:24:44,760
Speaker 2: come back where this all comes from. As President George

522
00:24:44,760 --> 00:24:48,000
Speaker 2: Bush the second a long time ago started the process

523
00:24:48,000 --> 00:24:50,240
Speaker 2: of increasing how much was being passed through, and I

524
00:24:50,640 --> 00:24:53,200
Speaker 2: believe it used to be six hundred thousand dollars. Anything

525
00:24:53,200 --> 00:24:55,320
Speaker 2: above that, which is not that hard of a level

526
00:24:55,359 --> 00:24:57,159
Speaker 2: to get to anymore, anything above that was deemed with

527
00:24:57,200 --> 00:24:59,880
Speaker 2: the state taxes. But now that number is fifteen million.

528
00:24:59,880 --> 00:25:02,120
Speaker 2: So state taxes are not a thing anymore. That could

529
00:25:02,160 --> 00:25:05,080
Speaker 2: have gone away, but those were extended and actually increased as.

530
00:25:04,960 --> 00:25:07,600
Speaker 3: A result of the big, beautiful bill and so forth,

531
00:25:07,640 --> 00:25:10,000
Speaker 3: so other things out there.

532
00:25:10,040 --> 00:25:12,600
Speaker 2: In your vocable life insurance trust, that's a way to

533
00:25:12,680 --> 00:25:15,600
Speaker 2: keep life insurance proceeds out of your estate. And you

534
00:25:15,600 --> 00:25:18,320
Speaker 2: can also apply valuation discounts if you've got a business

535
00:25:18,520 --> 00:25:19,480
Speaker 2: or real estate interest.

536
00:25:19,520 --> 00:25:20,439
Speaker 3: There are ways that the.

537
00:25:20,800 --> 00:25:23,840
Speaker 2: Tax laws will allow you to affect that valuation to

538
00:25:23,880 --> 00:25:26,159
Speaker 2: make a little more different than here's what it is.

539
00:25:26,440 --> 00:25:27,960
Speaker 2: If I could if I sold it on the open market,

540
00:25:28,000 --> 00:25:30,239
Speaker 2: it's worth this. But there are different things you can

541
00:25:30,240 --> 00:25:32,800
Speaker 2: take advantage of the tax code, if you'll understand all

542
00:25:32,840 --> 00:25:33,320
Speaker 2: that properly.

543
00:25:34,200 --> 00:25:35,800
Speaker 1: All right, those are some of the kind of what

544
00:25:35,960 --> 00:25:38,440
Speaker 1: off unique strategies out there. But I want to talk

545
00:25:38,480 --> 00:25:41,920
Speaker 1: about what most people should be doing, and Brian, what

546
00:25:41,960 --> 00:25:44,400
Speaker 1: we do every day, and we run into this situation

547
00:25:44,520 --> 00:25:47,320
Speaker 1: with almost everybody we work with, and that's doing just

548
00:25:47,480 --> 00:25:51,399
Speaker 1: good old proactive cash flow and tax planning. What do

549
00:25:51,480 --> 00:25:54,600
Speaker 1: I mean by that? During that window between when you

550
00:25:54,680 --> 00:25:59,480
Speaker 1: retire and when required minimum distributions kick in, examine whether,

551
00:25:59,680 --> 00:26:03,840
Speaker 1: if or when and how much rawth conversions makes sense

552
00:26:03,880 --> 00:26:06,639
Speaker 1: for you, factoring in how that's going to impact your

553
00:26:06,680 --> 00:26:10,880
Speaker 1: overall tax strategy. You dovetail that with your social security

554
00:26:10,920 --> 00:26:14,119
Speaker 1: claiming strategy. How to take some capital gains. There's a

555
00:26:14,119 --> 00:26:16,040
Speaker 1: lot of things you can do there if you do

556
00:26:16,119 --> 00:26:20,840
Speaker 1: some planning and get with a good CPA financial advisor, or,

557
00:26:20,880 --> 00:26:23,280
Speaker 1: in the best case scenario, a combination of both of

558
00:26:23,320 --> 00:26:26,480
Speaker 1: them working together. Here's the all Worth advice. A flexible

559
00:26:26,520 --> 00:26:30,080
Speaker 1: strategy that aligns with your goals and adapts to policy

560
00:26:30,200 --> 00:26:34,760
Speaker 1: changes can help reduce risk, boost after tax returns, and

561
00:26:34,880 --> 00:26:38,080
Speaker 1: preserve more of your wealth. Coming up next, we are

562
00:26:38,160 --> 00:26:42,320
Speaker 1: tackling the real questions that listeners are asking, maybe even

563
00:26:42,440 --> 00:26:45,520
Speaker 1: ones you've been wondering about yourself. You're listening to Simply

564
00:26:45,560 --> 00:26:48,360
Speaker 1: Money presented by all Worth Financial on fifty five KRC,

565
00:26:48,920 --> 00:26:56,520
Speaker 1: the talk station. You're listening to Simply Money presented by

566
00:26:56,560 --> 00:26:59,680
Speaker 1: all Worth Financial. I'm Bob Sponseller along with Brian James.

567
00:27:00,160 --> 00:27:02,040
Speaker 1: Do you have a financial question you'd like for us

568
00:27:02,080 --> 00:27:04,320
Speaker 1: to answer. There's a red button you can click while

569
00:27:04,320 --> 00:27:07,080
Speaker 1: you're listening to the show right there on the iHeart app.

570
00:27:07,119 --> 00:27:10,679
Speaker 1: Simply record your question and it will come straight to us.

571
00:27:10,680 --> 00:27:14,480
Speaker 1: Speaking of questions, Brian, let's hear from Brad and mount

572
00:27:14,520 --> 00:27:16,159
Speaker 1: look up in Mountains.

573
00:27:15,880 --> 00:27:20,680
Speaker 3: Please explain what the survivor penalty is? Yeah, Brad, great question.

574
00:27:20,760 --> 00:27:23,280
Speaker 2: So that's something that has come up that comes up

575
00:27:23,400 --> 00:27:26,520
Speaker 2: all the time we're talking about taxes and what happens

576
00:27:26,560 --> 00:27:28,560
Speaker 2: after you lose a spouse and all of a sudden

577
00:27:28,600 --> 00:27:31,119
Speaker 2: you have to switch from married. Let's set as out

578
00:27:31,160 --> 00:27:33,600
Speaker 2: all the emotional that goes of that. You also have

579
00:27:33,640 --> 00:27:37,080
Speaker 2: to insult injury switch from married filing jointly to single.

580
00:27:37,440 --> 00:27:39,119
Speaker 2: So the reason this is the thing is because the

581
00:27:39,119 --> 00:27:41,679
Speaker 2: income thresholds for the tax brackets are much lower for

582
00:27:41,800 --> 00:27:44,520
Speaker 2: single filers. Right when I hear the word lower and taxes,

583
00:27:44,560 --> 00:27:46,080
Speaker 2: I usually get a good feeling, but this is a

584
00:27:46,080 --> 00:27:46,480
Speaker 2: bad one.

585
00:27:46,600 --> 00:27:46,639
Speaker 3: Me.

586
00:27:46,760 --> 00:27:48,920
Speaker 2: What that means is that if you hit the thresholds

587
00:27:49,000 --> 00:27:51,719
Speaker 2: sooner because they're lower, that means your taxes go up quicker,

588
00:27:51,880 --> 00:27:54,360
Speaker 2: so the survivor can get pushed into a high tax bracket.

589
00:27:54,440 --> 00:27:55,560
Speaker 3: You also lose.

590
00:27:55,320 --> 00:27:58,800
Speaker 2: The one standard deduction, and so that the standard deduction

591
00:27:58,840 --> 00:28:00,560
Speaker 2: in twenty twenty five is a round four teen six

592
00:28:00,640 --> 00:28:03,800
Speaker 2: versus twenty nine to two for joint filers over sixty five.

593
00:28:03,880 --> 00:28:04,560
Speaker 3: That's the problem.

594
00:28:04,800 --> 00:28:06,800
Speaker 2: Single person may get taxed a little more on their

595
00:28:06,840 --> 00:28:09,960
Speaker 2: Social Security IRMA kicks in a little sooner because of again,

596
00:28:10,000 --> 00:28:12,400
Speaker 2: because of the way all this math works, so again

597
00:28:13,080 --> 00:28:15,760
Speaker 2: This is really the way to avoid this. You can't

598
00:28:15,840 --> 00:28:17,639
Speaker 2: change the tax brackets, they are what they are, but

599
00:28:17,760 --> 00:28:19,119
Speaker 2: control what you can control.

600
00:28:19,160 --> 00:28:20,800
Speaker 3: This is where roth conversions come in.

601
00:28:21,400 --> 00:28:23,399
Speaker 2: If you have a significant pile of money and a

602
00:28:23,400 --> 00:28:26,600
Speaker 2: pre tax IRA, you might look at paying taxes on

603
00:28:26,640 --> 00:28:28,840
Speaker 2: then now pulling that taxation forward.

604
00:28:28,640 --> 00:28:30,720
Speaker 3: So that your rmds will be reduced.

605
00:28:31,200 --> 00:28:33,479
Speaker 2: You can also, if it's a concern of draining your

606
00:28:33,520 --> 00:28:35,879
Speaker 2: own estate and therefore taking it away from your kids

607
00:28:35,880 --> 00:28:38,600
Speaker 2: life insurance, might make some sense to create an estate

608
00:28:38,600 --> 00:28:41,200
Speaker 2: at your death to offset some of that. And Joe,

609
00:28:41,280 --> 00:28:43,240
Speaker 2: just make sure you this all starts with what we

610
00:28:43,320 --> 00:28:45,080
Speaker 2: always say, Bob. This all starts with knowing where you

611
00:28:45,160 --> 00:28:47,280
Speaker 2: are in the first place. So understand where your situation

612
00:28:47,360 --> 00:28:49,560
Speaker 2: is now, then you can look at what if Heaven

613
00:28:49,600 --> 00:28:51,640
Speaker 2: forbid I lose my spouse. Let's move on to Joe

614
00:28:51,680 --> 00:28:53,400
Speaker 2: and blue Ash, who has a question about, Hey, go

615
00:28:53,480 --> 00:28:54,520
Speaker 2: figure it roth conversion.

616
00:28:54,920 --> 00:28:58,320
Speaker 1: How do you balance roth conversions with staying under Medicare

617
00:28:58,400 --> 00:29:02,600
Speaker 1: premium cliffs? Great question, Joe. Let's talk about what these

618
00:29:02,600 --> 00:29:06,040
Speaker 1: Medicare premium cliffs are. There's something called IERMA, and I'm

619
00:29:06,080 --> 00:29:08,080
Speaker 1: not going to get into it's a big, long acronym,

620
00:29:08,120 --> 00:29:11,240
Speaker 1: but it basically means what Joe's asking about. If you

621
00:29:11,320 --> 00:29:14,480
Speaker 1: have too much earned income, you pay more in premium

622
00:29:14,560 --> 00:29:17,760
Speaker 1: on your Medicare. So what we do, what it sts

623
00:29:17,800 --> 00:29:21,800
Speaker 1: with is what we talk about all the time, developing

624
00:29:21,840 --> 00:29:26,440
Speaker 1: an income strategy and along with that a Wroth conversion strategy.

625
00:29:26,480 --> 00:29:29,120
Speaker 1: So when you layer in things like a potential Wroth

626
00:29:29,160 --> 00:29:33,240
Speaker 1: conversion along with maybe pension, social Security, other income you've

627
00:29:33,280 --> 00:29:35,800
Speaker 1: got coming in, we want to make sure we walk

628
00:29:35,960 --> 00:29:39,479
Speaker 1: right up to that line where you take advantage of

629
00:29:39,520 --> 00:29:43,280
Speaker 1: the great opportunities that Wroth conversions give you, but don't

630
00:29:43,320 --> 00:29:47,360
Speaker 1: cross over that line from an income standpoint and start

631
00:29:47,400 --> 00:29:51,360
Speaker 1: to irrevocably drive up your Medicare premiums. There's some great

632
00:29:51,400 --> 00:29:53,680
Speaker 1: there are some great tools out there that help us

633
00:29:53,720 --> 00:29:56,000
Speaker 1: do that. We sit down and do that with every client.

634
00:29:56,080 --> 00:29:58,080
Speaker 1: I know a lot of good CPAs are doing that

635
00:29:58,160 --> 00:30:01,240
Speaker 1: as well. But again it comes down to the difference

636
00:30:01,320 --> 00:30:05,280
Speaker 1: between tax preparation, which is what eighty to ninety percent

637
00:30:05,320 --> 00:30:07,560
Speaker 1: of people just do. They just mail in all their

638
00:30:07,560 --> 00:30:09,760
Speaker 1: stuff and wait for the answer to come back from

639
00:30:09,760 --> 00:30:15,080
Speaker 1: their CPA versus proactive tax planning where you sit down

640
00:30:15,120 --> 00:30:17,880
Speaker 1: and run some actual scenarios on. If I do this,

641
00:30:18,240 --> 00:30:21,360
Speaker 1: what happens over here and you balance it out and

642
00:30:21,400 --> 00:30:24,600
Speaker 1: you maximize your income strategy. All right, let's hear from

643
00:30:24,680 --> 00:30:25,960
Speaker 1: Laura and Villa Hills.

644
00:30:26,640 --> 00:30:29,520
Speaker 3: I've got a concentrated stock position from a former employer.

645
00:30:30,040 --> 00:30:32,320
Speaker 3: What's the best way to onwind that without triggering a

646
00:30:32,360 --> 00:30:33,200
Speaker 3: huge tax bill?

647
00:30:34,160 --> 00:30:36,800
Speaker 2: Well, congratulations, Laura, this is a good problem to have.

648
00:30:36,920 --> 00:30:38,880
Speaker 2: Concentrated stock means just that I got a lot of

649
00:30:38,880 --> 00:30:41,560
Speaker 2: my networth tied up in a stock that is mostly

650
00:30:41,640 --> 00:30:44,120
Speaker 2: because of an employment, or perhaps you own the company

651
00:30:44,800 --> 00:30:45,240
Speaker 2: or whatever.

652
00:30:45,280 --> 00:30:46,680
Speaker 3: But so then the risk there.

653
00:30:46,840 --> 00:30:49,200
Speaker 2: If it's a concentrated stock position, that usually implies that

654
00:30:49,240 --> 00:30:51,480
Speaker 2: the thing did pretty well, So congratulations, it must have

655
00:30:51,480 --> 00:30:54,040
Speaker 2: grown a lot. But that also means that there's usually

656
00:30:54,080 --> 00:30:58,040
Speaker 2: capital gains in the mix here, So that's usually the concern.

657
00:30:58,080 --> 00:31:00,720
Speaker 2: If it is a position that is not inside of

658
00:31:00,720 --> 00:31:02,680
Speaker 2: a retirement plan, not an IRA, not a four oh

659
00:31:02,720 --> 00:31:05,440
Speaker 2: one K, nothing like that, then it's exposed to capital

660
00:31:05,480 --> 00:31:08,920
Speaker 2: gains taxes, which actually are slightly more favorable than income taxes.

661
00:31:09,000 --> 00:31:11,000
Speaker 3: But taxes are still taxes. So what do we do

662
00:31:11,040 --> 00:31:11,520
Speaker 3: about that?

663
00:31:11,800 --> 00:31:14,840
Speaker 2: Well, the first thing I would look at is if

664
00:31:14,880 --> 00:31:16,760
Speaker 2: you are some of the easier things to handle. If

665
00:31:16,760 --> 00:31:19,400
Speaker 2: you are already charitably inclined, then you might look at

666
00:31:19,560 --> 00:31:21,320
Speaker 2: if you write checks to a church or you know,

667
00:31:21,440 --> 00:31:24,200
Speaker 2: some five oh one C three type organization every single year.

668
00:31:24,680 --> 00:31:26,600
Speaker 2: Then first off, you may have lost your deduction on

669
00:31:26,640 --> 00:31:29,200
Speaker 2: that a few years ago twenty seventeen when the Tax

670
00:31:29,240 --> 00:31:32,760
Speaker 2: Cuts and Jobs Act increased the standard deduction and therefore

671
00:31:32,920 --> 00:31:36,160
Speaker 2: losing the deduction or just getting it for free basically.

672
00:31:36,360 --> 00:31:38,760
Speaker 2: So that's a case where you might donate some of

673
00:31:38,800 --> 00:31:40,880
Speaker 2: that stock, just donate the shares. If you do that

674
00:31:41,480 --> 00:31:44,880
Speaker 2: donation of appreciated shares, then you will you're passing the

675
00:31:44,920 --> 00:31:47,240
Speaker 2: gain on to an entity that doesn't pay taxes anyway.

676
00:31:47,520 --> 00:31:49,920
Speaker 2: You get the deduction for the full dollar amount whatever

677
00:31:49,920 --> 00:31:51,920
Speaker 2: it was worth a day you donated it. That five

678
00:31:52,000 --> 00:31:54,160
Speaker 2: oho one C three will turn around and immediately sell

679
00:31:54,200 --> 00:31:56,640
Speaker 2: it and you use it for whatever their purposes are.

680
00:31:56,760 --> 00:31:58,800
Speaker 2: They will not pay any capital gains. So, as a

681
00:31:58,800 --> 00:32:00,480
Speaker 2: matter of fact, I run across people all the time

682
00:32:00,520 --> 00:32:03,480
Speaker 2: that are writing checks to these organizations, which to me

683
00:32:03,680 --> 00:32:07,360
Speaker 2: is a waste of everybody's tax dollars because they could

684
00:32:07,400 --> 00:32:09,760
Speaker 2: simply give the shares its five zoe C three gets

685
00:32:09,760 --> 00:32:12,240
Speaker 2: the same amount of money and no sacrifice but really

686
00:32:12,240 --> 00:32:14,720
Speaker 2: by anybody. But if that's not what you have in mind,

687
00:32:14,760 --> 00:32:16,120
Speaker 2: then you're going to be looking at something called an

688
00:32:16,160 --> 00:32:18,920
Speaker 2: exchange fund or a swap fund. This is where if

689
00:32:18,960 --> 00:32:21,360
Speaker 2: I have a big pile of PNG, I can band

690
00:32:21,400 --> 00:32:23,400
Speaker 2: together with people who have a bunch of Kroger, or

691
00:32:23,440 --> 00:32:25,440
Speaker 2: a bunch of IBM, or a bunch of Apple and Video,

692
00:32:25,480 --> 00:32:28,400
Speaker 2: whatever it is. We all throw our shares into a pile,

693
00:32:28,480 --> 00:32:31,000
Speaker 2: and then we each take a proportionate share of the

694
00:32:31,040 --> 00:32:34,400
Speaker 2: resulting pile of stuff. This is not a sale, it's

695
00:32:34,400 --> 00:32:36,160
Speaker 2: not nearly as simply as I'm making it right now.

696
00:32:36,160 --> 00:32:38,400
Speaker 2: It's not a sale, so it doesn't trigger taxes, but

697
00:32:38,480 --> 00:32:40,440
Speaker 2: I do have Now I have a representation of a

698
00:32:40,480 --> 00:32:41,280
Speaker 2: lot of different companies.

699
00:32:41,320 --> 00:32:43,200
Speaker 3: It's a way to spread that risk out. So those

700
00:32:43,240 --> 00:32:44,040
Speaker 3: are two you're either.

701
00:32:43,960 --> 00:32:46,440
Speaker 2: Charitab being inclined, or you want to spread out of diversification,

702
00:32:46,480 --> 00:32:49,520
Speaker 2: and sometimes both of those can help. Bill and Mason

703
00:32:49,680 --> 00:32:52,400
Speaker 2: is retired and has got some questions about rmds.

704
00:32:53,080 --> 00:32:55,080
Speaker 3: My wife and I are retired, and we don't need

705
00:32:55,120 --> 00:32:57,720
Speaker 3: our r and vs to live on. What's the smartest

706
00:32:57,760 --> 00:32:59,360
Speaker 3: options for putting our money to work?

707
00:33:00,960 --> 00:33:04,120
Speaker 1: Well, Bill, I obviously don't know whether you're retired and

708
00:33:04,240 --> 00:33:06,840
Speaker 1: not yes yet at r M d age or whether

709
00:33:06,880 --> 00:33:09,160
Speaker 1: you're already at r M d AID. So the answer

710
00:33:09,240 --> 00:33:12,720
Speaker 1: is slightly different depending on what situation you're in. So

711
00:33:12,800 --> 00:33:16,320
Speaker 1: let's briefly cover both. If you're tired and not yet

712
00:33:16,440 --> 00:33:20,400
Speaker 1: at that RM D age, there's where the opportunity is

713
00:33:20,440 --> 00:33:22,680
Speaker 1: and a big one. You know, you just retired, your

714
00:33:22,680 --> 00:33:26,200
Speaker 1: income is lower, and you've got an opportunity to do

715
00:33:26,240 --> 00:33:29,120
Speaker 1: these WROTH conversions that we've been talking about. You know,

716
00:33:29,160 --> 00:33:31,600
Speaker 1: you sit down and sketch that out and try to

717
00:33:31,640 --> 00:33:34,200
Speaker 1: get as much money moved into wroth IRA's at the

718
00:33:34,280 --> 00:33:38,840
Speaker 1: lowest possible tax rate you can. Wonderful strategy there if

719
00:33:38,840 --> 00:33:40,920
Speaker 1: you're already at r M d age. And I run

720
00:33:40,920 --> 00:33:43,760
Speaker 1: into this a lot with folks that are in their

721
00:33:43,840 --> 00:33:46,960
Speaker 1: late seventies and are still writing checks to their church.

722
00:33:47,040 --> 00:33:50,840
Speaker 1: If you're charitably inclined, you tie to your church. You

723
00:33:50,880 --> 00:33:54,200
Speaker 1: give other money to other you know, ministries or other charities.

724
00:33:54,520 --> 00:33:57,680
Speaker 1: A lot of people are still making cash gifts where

725
00:33:57,720 --> 00:34:00,880
Speaker 1: they could be taking IRA money at age seventy and

726
00:34:00,960 --> 00:34:05,000
Speaker 1: a half and diverting that IRA money directly to charity.

727
00:34:05,400 --> 00:34:08,280
Speaker 1: And if you do that, the amount of that charitable

728
00:34:08,320 --> 00:34:10,880
Speaker 1: gift does not even hit your ten forty and is

729
00:34:10,920 --> 00:34:13,680
Speaker 1: not even counted as taxable income. You don't get a

730
00:34:13,719 --> 00:34:18,000
Speaker 1: deduction for that gift. But it's even better, the RMD

731
00:34:18,200 --> 00:34:21,919
Speaker 1: does not hit your tax returns taxable income. So that's

732
00:34:22,840 --> 00:34:25,879
Speaker 1: Those are two scenarios you can look at. And then

733
00:34:26,000 --> 00:34:28,799
Speaker 1: if worst case scenario, if you don't need the rm ds,

734
00:34:28,880 --> 00:34:30,920
Speaker 1: you've maxed out what you want to give to charity,

735
00:34:31,320 --> 00:34:34,279
Speaker 1: you just convert whatever is left in those rmds over

736
00:34:34,360 --> 00:34:37,560
Speaker 1: to a taxable investment account. Because you brought up keeping

737
00:34:37,600 --> 00:34:39,719
Speaker 1: that money, you know, working for you and putting it

738
00:34:39,760 --> 00:34:43,560
Speaker 1: to work. Put it in a taxable, tax efficient brokerage

739
00:34:43,560 --> 00:34:46,080
Speaker 1: fund and let it grow long term for your kids

740
00:34:46,080 --> 00:34:48,680
Speaker 1: and grand kids. Coming up next, why you could be

741
00:34:48,800 --> 00:34:52,839
Speaker 1: eating your retirement literally eating it one mimosa brunch at

742
00:34:52,880 --> 00:34:55,600
Speaker 1: a time. You're listening to Simply Money, presented by all

743
00:34:55,600 --> 00:35:04,600
Speaker 1: Worth Financial on fifty five KRC, the talk station. You're

744
00:35:04,640 --> 00:35:06,800
Speaker 1: listening to Simply Money because I by all with Financial,

745
00:35:06,840 --> 00:35:10,000
Speaker 1: umbop spon seller along with Brian James. So get this.

746
00:35:10,120 --> 00:35:14,520
Speaker 1: Brian MarketWatch recently published an article that got our attention.

747
00:35:14,680 --> 00:35:17,480
Speaker 1: If a couple spends one hundred dollars a day eating

748
00:35:17,520 --> 00:35:21,560
Speaker 1: out or just fifty dollars a person over the course

749
00:35:21,600 --> 00:35:24,960
Speaker 1: of forty years, which is you know, which is I

750
00:35:25,040 --> 00:35:28,640
Speaker 1: guess a long but not out of the question retirement shold.

751
00:35:28,760 --> 00:35:32,759
Speaker 1: Now they'll have spent nearly two million dollars just on

752
00:35:33,239 --> 00:35:36,879
Speaker 1: restaurant meals. Something to keep an eye on here. Two

753
00:35:36,960 --> 00:35:39,640
Speaker 1: million dollars is a lot of money, Brian, and that

754
00:35:39,680 --> 00:35:44,000
Speaker 1: can make or break the viability of one's retirement plan.

755
00:35:44,480 --> 00:35:46,600
Speaker 2: Yeah, and that that one hundred bucks a day eating out.

756
00:35:46,640 --> 00:35:48,200
Speaker 2: That used to sound like a lot. Remember when one

757
00:35:48,239 --> 00:35:50,720
Speaker 2: hundred dollars meal that meant you were celebrating somebody's birthday

758
00:35:50,760 --> 00:35:51,920
Speaker 2: or graduation or whatever.

759
00:35:51,960 --> 00:35:52,759
Speaker 3: It was a big deal.

760
00:35:53,000 --> 00:35:55,640
Speaker 2: But now you know, if I'm eating lunch and dinner

761
00:35:55,680 --> 00:35:58,279
Speaker 2: out there, and I'm a married couple, well then that's

762
00:35:58,320 --> 00:36:01,120
Speaker 2: fifty bucks apiece. That's twenty five apiece per meal. Well,

763
00:36:01,160 --> 00:36:03,799
Speaker 2: that's that's bunch of skyline, love my skyline. But that's

764
00:36:03,800 --> 00:36:07,319
Speaker 2: where that's about where they are now. And so again

765
00:36:07,480 --> 00:36:09,680
Speaker 2: that all sneaks up, and that's two million dollars, right,

766
00:36:09,719 --> 00:36:12,280
Speaker 2: this is the problem with the snowball and so forth.

767
00:36:12,400 --> 00:36:14,480
Speaker 3: That's before you factor in the tip.

768
00:36:14,280 --> 00:36:16,160
Speaker 2: If that's a thing, and maybe that extra glass of

769
00:36:16,200 --> 00:36:18,319
Speaker 2: wine and all that stuff, you know, where there's two

770
00:36:18,320 --> 00:36:20,160
Speaker 2: million dollars that that's a nest egg for a lot

771
00:36:20,239 --> 00:36:22,120
Speaker 2: of people. So again, one hundred bucks a day eating

772
00:36:22,200 --> 00:36:24,640
Speaker 2: out over forty years is going to add up a lot.

773
00:36:24,680 --> 00:36:26,719
Speaker 2: So you can apply this to a lot of different things,

774
00:36:26,719 --> 00:36:30,279
Speaker 2: but different expenses that maybe you can seem to be

775
00:36:30,400 --> 00:36:33,600
Speaker 2: fairly innocuous but end up sneaking up on us. So

776
00:36:33,840 --> 00:36:35,759
Speaker 2: if you've done the right things and you built up

777
00:36:35,760 --> 00:36:37,279
Speaker 2: a solid nestick, it's probably.

778
00:36:36,960 --> 00:36:40,080
Speaker 3: Not a major concern. It's more of an expensive hobby.

779
00:36:40,120 --> 00:36:43,480
Speaker 1: I think, Yeah, I think the key here, and we

780
00:36:43,520 --> 00:36:46,000
Speaker 1: can make fun of, you know, one hundred dollars skyline

781
00:36:46,040 --> 00:36:47,920
Speaker 1: bill and eating out and all that. But I think

782
00:36:47,960 --> 00:36:50,319
Speaker 1: the point we're trying to make here is is when

783
00:36:50,360 --> 00:36:53,799
Speaker 1: you examine your your retirement budget, what you're actually going

784
00:36:53,840 --> 00:36:57,440
Speaker 1: to spend or want to spend. And what I what

785
00:36:57,480 --> 00:36:59,719
Speaker 1: I always tell people Brian, is I don't need to

786
00:36:59,760 --> 00:37:02,120
Speaker 1: know how much you spend on a pack of gum

787
00:37:02,320 --> 00:37:05,399
Speaker 1: or something like that, but numbers that start to add

788
00:37:05,520 --> 00:37:08,640
Speaker 1: up to, you know, in the hundreds of dollars per month,

789
00:37:08,719 --> 00:37:11,799
Speaker 1: it's worth taking a look at, especially if you're on

790
00:37:11,840 --> 00:37:15,800
Speaker 1: the margins in the area being able to viably retire,

791
00:37:15,960 --> 00:37:18,560
Speaker 1: and say, hey, are there things that we can trim

792
00:37:18,640 --> 00:37:22,360
Speaker 1: back on just a little bit without ruining our life

793
00:37:22,400 --> 00:37:24,600
Speaker 1: and taking all the fun out of our life, as

794
00:37:24,640 --> 00:37:27,879
Speaker 1: opposed to just letting it rip, do whatever we want

795
00:37:28,000 --> 00:37:30,560
Speaker 1: and hoping it works out in the end. That's really

796
00:37:30,560 --> 00:37:32,080
Speaker 1: what we're talking about here, Brian.

797
00:37:32,719 --> 00:37:35,440
Speaker 3: Yeah, and again, this is not at all about stop doing.

798
00:37:35,480 --> 00:37:37,239
Speaker 2: You know. I always tell my clients everybody comes in

799
00:37:37,280 --> 00:37:39,600
Speaker 2: wanting to build a retirement plan, and most people who

800
00:37:39,600 --> 00:37:42,120
Speaker 2: have built something are relatively frugal people to begin with.

801
00:37:42,200 --> 00:37:44,120
Speaker 2: So they'll walk in and they'll say, we're gonna build

802
00:37:44,120 --> 00:37:46,520
Speaker 2: a vegetable garden in the backyard. We're gonna eat out

803
00:37:46,520 --> 00:37:47,880
Speaker 2: of that, and we're never gonna leave the house. And

804
00:37:47,920 --> 00:37:49,680
Speaker 2: I always say, no, you're not. If you were gonna

805
00:37:49,719 --> 00:37:51,760
Speaker 2: do that, you'd have done it already. That sounds awful,

806
00:37:52,040 --> 00:37:53,960
Speaker 2: and it sounds like a terrible retirement. I just keep

807
00:37:54,000 --> 00:37:56,399
Speaker 2: working if that's your plan, So let's not start there.

808
00:37:56,480 --> 00:37:58,680
Speaker 2: Let's figure out what you do now. If eating out

809
00:37:58,800 --> 00:38:01,040
Speaker 2: is a social thing, if that's an important thing, that's important.

810
00:38:01,040 --> 00:38:02,960
Speaker 2: Stuff is not, We're not on this planet to stare

811
00:38:03,000 --> 00:38:04,880
Speaker 2: at a growing pile of money. We are here to

812
00:38:04,960 --> 00:38:07,040
Speaker 2: enjoy each other's company and help out where we can,

813
00:38:07,120 --> 00:38:09,200
Speaker 2: and so on and so forth. So understand what your

814
00:38:09,200 --> 00:38:12,160
Speaker 2: life is like and then build your financial plan around that.

815
00:38:13,239 --> 00:38:15,799
Speaker 1: Yeah, if you really love eating out and you want

816
00:38:15,840 --> 00:38:18,560
Speaker 1: to keep doing that, great, Maybe just trim back from

817
00:38:18,600 --> 00:38:23,600
Speaker 1: having four paid movie subscriptions or streaming services to maybe two.

818
00:38:23,960 --> 00:38:26,120
Speaker 1: There's always a way to skin the cat. Here here's

819
00:38:26,160 --> 00:38:29,279
Speaker 1: the all Worth advice. You've saved well don't. You don't

820
00:38:29,320 --> 00:38:32,600
Speaker 1: need to skip the stake, just maybe skip the third course.

821
00:38:32,880 --> 00:38:35,600
Speaker 1: Thanks for listening. You've been listening to Simply Money, presented

822
00:38:35,640 --> 00:38:39,319
Speaker 1: by all Worth Financial on fifty five KRC, the talk

823
00:38:39,400 --> 00:38:39,640
Speaker 1: station