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Speaker 1: Tonight the smartest money moves to make in January. You're

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Speaker 1: listening to Simply Money, because i'd buy all Worth Financial

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Speaker 1: on Bob Sponseller along with Brian James. That's the first

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Speaker 1: Monday of twenty twenty six. And if you're like most people,

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Speaker 1: you probably kicked off the year with a couple of resolutions.

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Speaker 1: Maybe it's get in shape or cut back on screen time.

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Speaker 1: But if you're sitting on a few million dollars or

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Speaker 1: more in net worth, there are much smarter moves to

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Speaker 1: make right now, and those involve your finances. Brian, let's

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Speaker 1: get into a couple moves that people should be considering,

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Speaker 1: you know here in the new year.

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Speaker 2: Yeah, well this is this first one here we've talked

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Speaker 2: about before. This is a typical annual tax planning types

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Speaker 2: of things. But now we're gonna look at the timing

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Speaker 2: a little more closely here. So move number one, harvest

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Speaker 2: those capital gains and reset your cost basis.

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Speaker 3: So December is usually when.

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Speaker 2: People talk about tax loss harvesting, and the reason for

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Speaker 2: that is because by this time of year, we usually

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Speaker 2: have a pretty clear picture on what are or as

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Speaker 2: clear as it's going to be, what our tax situation

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Speaker 2: is going to look like when it comes time to

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Speaker 2: do taxes here the next few months. But in January,

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Speaker 2: well that's when savvy investors start to harvest gains. You

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Speaker 2: can sell some appreciated assets, realize those long term gains,

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Speaker 2: and immediately buy them back to reset your cost bases

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Speaker 2: as long as you're careful. Now, what we mean by

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Speaker 2: that is something called a wash sale. If you're going

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Speaker 2: to harvest gains there, then you can go ahead and

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Speaker 2: do that, and that will not create a wash sale.

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Speaker 2: So I want to avoid confusion here among anybody. But

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Speaker 2: at the same time, if you on the other end

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Speaker 2: of this, if you are going to sell out of

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Speaker 2: some assets and buy them back in, you know a

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Speaker 2: lot of people might want to harvest a loss there.

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Speaker 2: You have to stay out of that security for the

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Speaker 2: net for thirty days and or the IRS will will

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Speaker 2: deem that sale as not to have occurred for tax purposes.

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Speaker 2: So just be carefully. You understand the wash sale rules.

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Speaker 2: But this can be especially smart if you had some

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Speaker 2: lower income last year, or maybe you're early in retirement

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Speaker 2: and you're managing your bracket level, so that gain could

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Speaker 2: be taxed at fifteen percent ory believe it or not

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Speaker 2: even zero percent. Right, there is a certain level of

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Speaker 2: income for married filance, for single or married taxpayers where

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Speaker 2: you may not pay any capital gains at all. Now,

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Speaker 2: remember here's the confusing part. That is not only an

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Speaker 2: income bracket. That capital gain that you would be generating

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Speaker 2: is itself part of the calculation. So you really have

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Speaker 2: to have some pretty low income years to generate zero

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Speaker 2: percent capital gain type situation. But it's not as hard

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Speaker 2: as you might think. There are rules out there that

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Speaker 2: put that in place. What's another move were gonna be

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Speaker 2: thinking about, Bob Well.

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Speaker 1: Move number two, and I think it kind of dovetails

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Speaker 1: with what you just talked about, and that's revisit your

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Speaker 1: direct index indexing strategy. And we're talking now about taxable

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Speaker 1: accounts where we're taking full advantage of these direct indexing

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Speaker 1: or tax soce harvesting strategies with individual positions. And if

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Speaker 1: you started using a strategy like that in twenty twenty five,

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Speaker 1: and a lot of people probably we did, now's the

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Speaker 1: time to clean that up. You know, back to Brian's

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Speaker 1: prior point December, if you did some things, you know,

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Speaker 1: to do some tax planning going into the end of

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Speaker 1: the year. December likely left you with some temporary uninvested

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Speaker 1: positions from watch sales. January is when you want to

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Speaker 1: re establish your full market exposure, stay fully invested, but

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Speaker 1: tweak you know, the customization for the coming year. It

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Speaker 1: means you don't have to go right back into the

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Speaker 1: same sector or even the same stock that you sold

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Speaker 1: in twenty twenty five. Now's a good opportunity, as part

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Speaker 1: of your direct indexing strategy to maybe tilt towards some

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Speaker 1: other asset classes, things like small camp value, small camp growth,

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Speaker 1: maybe some dividend strategies, some things that maybe diversify the portfolio.

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Speaker 1: Do it on a tax efficient basis and get that

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Speaker 1: portfolio position so that we're not so concentrated in big

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Speaker 1: cap tech stocks you know in twenty twenty six, and

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Speaker 1: get you into some other asset classes and strategies, but

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Speaker 1: do it on a tax efficient basis. Brian, talk about

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Speaker 1: charitable giving move number three that we want to cover,

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Speaker 1: and you've done a great job of covering this throughout

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Speaker 1: the third and fourth quarter of twenty twenty five, talking

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Speaker 1: about taking full advantage of that standard deduction, but you know,

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Speaker 1: by maybe lumping some charitable giving into two tax years

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Speaker 1: instead of one. It's a great idea. You've covered it. Well,

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Speaker 1: let's touch on what we mean here in twenty twenty

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Speaker 1: six so that we don't forget about what maybe some

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Speaker 1: folks planned to do or started to do in twenty

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Speaker 1: twenty five.

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Speaker 2: Well, tis the season, Bob, to be thinking about this anyway,

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Speaker 2: where you know, it's the holidays. We're in a giving mood,

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Speaker 2: so let's make sure we understand the tax benefits we

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Speaker 2: can get if we handle things correctly. So front loading

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Speaker 2: you're giving that in January can have some huge advantages.

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Speaker 2: If you fund a donor advice fund now you can

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Speaker 2: get the deduction for this year and then give your

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Speaker 2: twelve months of potential tax free growth on that money,

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Speaker 2: and which can give you that much more to benefit

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Speaker 2: from from that charity. And remember you're taking that deduction.

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Speaker 2: What you're doing is you're lumping several years worth of

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Speaker 2: donations all into one year. So, for example, if you

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Speaker 2: know you're gonna give your church, let's say ten thousand

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Speaker 2: dollars or your charity or whoever you have in mind,

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Speaker 2: ten thousand dollars a year for the next five years,

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Speaker 2: well that's fifty thousand dollars. None of that is large

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Speaker 2: enough to get you a tax deduction because you probably

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Speaker 2: will not be clearing the standard deduction anyway. But if

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Speaker 2: you lump it all into one year and use a

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Speaker 2: donor advised fund, you can take fifty thousand dollars in

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Speaker 2: one year. So the ideal time to do this would

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Speaker 2: be when you know it's going to be a big

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Speaker 2: tax year anyway, and then you can turn around and

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Speaker 2: dole it out from the donor advice fund. It's no

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Speaker 2: longer your money and you can't get it back, but

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Speaker 2: you still control to some extent how it's distributed and when.

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Speaker 2: More importantly, to that ultimate charity. But they don't know

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Speaker 2: the difference. They just know that you're giving the same

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Speaker 2: amount that you gave all along, but you will have

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Speaker 2: lump it all into one.

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Speaker 3: Year to have gotten a better tax advantage for yourself.

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Speaker 2: So this will give you a calmer, more deliberate giving plan.

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Speaker 2: No more last minute scrambles in December. If you know,

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Speaker 2: if you do this year at the beginning of the year,

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Speaker 2: and if you have a strong income year, maybe you

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Speaker 2: sold a business in twenty five, well, this is one

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Speaker 2: of the best tools you can use to offset some

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Speaker 2: of that tax hit that you're about to take.

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Speaker 1: What about Brian, just well, just to belabor that point

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Speaker 1: a little bit, or you know, talk about a point

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Speaker 1: that you made. You talked about having twelve months worth

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Speaker 1: of potential tax free growth on that money. We're talking

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Speaker 1: about the growth on the money once it gets into

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Speaker 1: that donor Advice fund, because once it's in there, you

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Speaker 1: know it's a charitable fund, there are no taxes being

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Speaker 1: paid on the growth. So to Brian's point, if you

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Speaker 1: can get out in front of this and be strategic

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Speaker 1: early in the year, you know, let's face it, we've

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Speaker 1: had a real we had a real healthy stock market

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Speaker 1: year in twenty twenty five. You know, now's the time

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Speaker 1: where you can avoid those capital gains taxes on what

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Speaker 1: you want to give away. Get the tax deduction, now,

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Speaker 1: get it in that donor advice fund, get it diverse.

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Speaker 1: Even if you're not gonna part ways with the money

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Speaker 1: right now, you still have control over it. You know,

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Speaker 1: that's correct me if I'm wrong, Brian, that's what you're

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Speaker 1: talking about here with giving yourself twelve tax free months

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Speaker 1: of potential tax free growth once it's in the donor

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Speaker 1: Advice fund, right.

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Speaker 2: Right, because, but but because when you when you're using

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Speaker 2: a donor advice fund, right, you're the whole intent of

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Speaker 2: a donor advice fund is to stretch out the ultimate

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Speaker 2: distribution of these assets to the charity, but lump into

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Speaker 2: one year the contribution to the fund in the first place.

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Speaker 2: So uh, since we know there's time involved, right, there's

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Speaker 2: going to be time involved in in stretching out those

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Speaker 2: those ultimate distributions. Then that money has to sit somewhere,

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Speaker 2: and that gives you the ability to invent even if

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Speaker 2: you want to be conservative, you might keep it in

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Speaker 2: a money Marketer CDs at four or five percent. Well,

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Speaker 2: that is going to result in that much more money

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Speaker 2: available to go to that charity, which may which may

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Speaker 2: reduce you that that could eliminate the need for you

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Speaker 2: to to reconsider this, you know, any sooner, because those

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Speaker 2: funds will again create more to create future contributions from

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Speaker 2: you to those charities. Ultimately, what about cash, Bob, What

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Speaker 2: if we got idle cash? What would you do there?

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Speaker 1: Well, people people have money in idle cash for a

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Speaker 1: number of reasons. Maybe you sold a business, maybe you

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Speaker 1: inherited some money. Some people, you know, just neglect to

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Speaker 1: monitor the maturity of their treasuries or their CDs, or

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Speaker 1: they've neglected money market accounts that maybe you know, have

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Speaker 1: gone down in terms of yield. You gotta you gotta

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Speaker 1: especially and now in today's day and age, you got

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Speaker 1: to manage your cash just like any other stock or

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Speaker 1: bond portfolios. So you know, take a look at your

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Speaker 1: overall financial plan, what are your goals, what are your

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Speaker 1: needs and wants from your cash assets, and make sure

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Speaker 1: you get those assets deployed strategically. Here in twenty twenty six,

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Speaker 1: both from a yield standpoint and from a tax efficiency standpoint,

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Speaker 1: now's a good time to evaluate, you know, maybe whether

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Speaker 1: a laddered municipal bond portfolio might make some sense to

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Speaker 1: add some tax alpha to that. Spread out the maturity

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Speaker 1: of those money market treasuries and CDs. Don't just buy

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Speaker 1: and let the bank renew a five year CD at

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Speaker 1: very low rates. You might be passing up on some

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Speaker 1: opportunity here down the road. So make sure you sit

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Speaker 1: down and manage your cash money sitting idly in the bank.

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Speaker 1: Another thing, Brian, is start your tax planning early. And

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Speaker 1: we emphasize this all the time. Talk about what we

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Speaker 1: mean there by tax planning early, I mean nobody wants

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Speaker 1: to nobody wants to talk about taxes, you know, coming

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Speaker 1: right out of the holidays. But this is the opportune

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Speaker 1: time to develop an actual tax strategy.

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Speaker 3: Yeah.

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Speaker 2: Well, if your CPA is hearing from you normally for

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Speaker 2: the first time in a given year in October, well

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Speaker 2: then you're already a little bit behind. So January is

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Speaker 2: really when you want to get an idea at least

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Speaker 2: run some kind of a projection, because now you can

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Speaker 2: start to get a handle around the rules that may

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Speaker 2: have changed. There was a enormous amount of little things

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Speaker 2: from the one big beautiful bill that are kicking in

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Speaker 2: over time. So I would recommend sitting down with your

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Speaker 2: CPA to make sure that you understand what those new

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Speaker 2: rules are going to be for this year here in

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Speaker 2: twenty twenty six, and see if you should have be

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Speaker 2: making adjustments now to take advantage of those things or

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Speaker 2: to protect yourself from them. The sooner you do that,

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Speaker 2: the more time you're going to have to move the

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Speaker 2: puzzle pieces around to be sure that you're that you

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Speaker 2: minimize the impact of those things or maximize the opportunities

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Speaker 2: as they exist. This will affect you know, things like

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Speaker 2: roth conversions, big gifts, you might want to make, timing

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Speaker 2: distributions from a business or if you're going to sell

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Speaker 2: a business, those kinds of things. The big thing here, Bob,

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Speaker 2: is flexibility. That means you got twelve months, you have

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Speaker 2: the full If you do these types of analysis now,

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Speaker 2: you'll have a full year here to make any decisions

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Speaker 2: and move these things around. But if you wait too long,

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Speaker 2: you know, you might be stuck towards the end of

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Speaker 2: the year trying to do things that just can't be done.

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Speaker 1: All right, well, speaking of maintaining flexibility, now is a

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Speaker 1: great time to start your estate planning. If you're somebody

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Speaker 1: that has some plans to do some gifting or maybe

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Speaker 1: some more nuanced or intricate estate planning strategies, sit down

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Speaker 1: and book a meeting with your financial advisor and your

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Speaker 1: estate planning attorney now, and we're talking about gifting strategies.

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Speaker 1: Trust you know, all this stuff takes time to get

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Speaker 1: set up, and you want to run some numbers and

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Speaker 1: be out in front of what you're actually going to

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Speaker 1: strategically be doing, especially when it gets into gifting. Don't

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Speaker 1: wait until the fourth quarter of twenty twenty six, where

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Speaker 1: every estate planning attorney is slammed and you just got

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Speaker 1: to get in line and hope they can get to

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Speaker 1: you before the end of the year. That's not a

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Speaker 1: knock on attorneys at all. It's just, you know reality.

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Speaker 1: People only have a limited number of hours. So get

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Speaker 1: out in front of this early in the year, because

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Speaker 1: people tend to think about their estate planning strategies late

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Speaker 1: in the year. And just a reminder it takes time

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Speaker 1: to do this stuff correctly. Here's the all Worth advice.

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Speaker 1: Start your year not just with resolutions, but with real

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Speaker 1: financial action. January can be your most strategic money month

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Speaker 1: if you get out in front of this. Now coming

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Speaker 1: up next, why some taxpayers will see bigger refunds and

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Speaker 1: why that's not necessarily a good thing, Plus why some

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Speaker 1: are earning less than their investments are actually making. You're

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Speaker 1: listening to Simply Money presented by Allworth Financial on fifty

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Speaker 1: five KRC, the talk station. You're listening to Simply Money

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Speaker 1: presented by all Worth Financial on Bob Sponseller along with

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Speaker 1: Brian James. If you can't listen to Simply Money live

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Speaker 1: every night, subscribe and get our daily podcasts. You can

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Speaker 1: listen the following morning, during your commute or at the gym.

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Speaker 1: And if you think your friends or family could use

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Speaker 1: some financial advice, tell them about us as well. Just

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Speaker 1: search simply Money on the iHeart app or wherever you

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Speaker 1: find your podcast. Straight Ahead. Too many retirement accounts, new

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Speaker 1: Secure Act rules, and a long neglected health savings account.

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Speaker 1: We're going to break all that down and more what

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Speaker 1: smart investors should be doing in each of those cases.

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Speaker 1: The IRS has announced delays in how it's handling certain

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Speaker 1: tax season tasks. But here's the surprising part. Some people

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Speaker 1: are going to end up with bigger refunds because of it.

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Speaker 1: What's going on here, Brian Well.

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Speaker 2: Who's likely to see a higher refund? Well, people with

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Speaker 2: multiple deductions, credits, if you added a child, paid for education,

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Speaker 2: if there's maybe there's a big charitable donation, or if

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Speaker 2: you took advantages of some tax breaks like the clean

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Speaker 2: vehicle credit or energy efficient home upgrades, all those things

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Speaker 2: can boost your refund. So if you've considered those projects,

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Speaker 2: make sure you're taking that into account that can help

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Speaker 2: pay for help them pay for themselves. If you over

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Speaker 2: withheld from your paycheck, if you didn't, maybe you didn't

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Speaker 2: adjust that withholding after a job change or after a raise,

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Speaker 2: or you might want to be making sure if you

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Speaker 2: if you've switched from ROTH to traditional four to one

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Speaker 2: K contributions, make sure you're withholding is still in line

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Speaker 2: to keep you where you need to be. But you

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Speaker 2: could have sent too much to the irs this year,

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Speaker 2: so that overpayment, of course comes back to you as

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Speaker 2: a refund. For business owners, real estate investors, maybe your

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Speaker 2: income dropped this year, you took some losses, your taxable

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Speaker 2: income could have dropped. That might result in a larger refund,

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Speaker 2: especially if you continue to pay quarterly estimates estimates assuming

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Speaker 2: that your income was the same as last year.

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Speaker 1: Yeah, it feels like this entire show might end up

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Speaker 1: being the importance of working with a good CPA and

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Speaker 1: a fiduciary financial advisor. Brian to me, this comes down

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Speaker 1: to proactive communication and a lot of times people just

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Speaker 1: don't take the time to communicate with their tax professional.

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Speaker 1: Here's what I mean. If you're somebody where to your point,

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Speaker 1: some of these credits happened last year and aren't gonna

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Speaker 1: happen this year, or vice versa. Or you do own

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Speaker 1: a business and your income fluctuates quite a bit. You

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Speaker 1: got to communicate that stuff to the person that does

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Speaker 1: your taxes, especially if you're filing quarterly estimates, because you

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Speaker 1: don't run a run into a situation where you got

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Speaker 1: to write a huge check at the end of the

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Speaker 1: year or next April, or you know what we're talking

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Speaker 1: about tonight, getting a huge check back next April. I mean,

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Speaker 1: let's face it, would you give a bank twenty thousand

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Speaker 1: dollars of your own money to hold for twelve months

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Speaker 1: and then give it back to you with no interest

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Speaker 1: next April. Probably not. I mean, we see people calling us,

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Speaker 1: emailing us all the time. You know, they're going and

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Speaker 1: shopping for different savings accounts rates. I mean they're quibbling

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Speaker 1: over you know, ten basis points on a savings account

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Speaker 1: interest rate. But yet they think nothing of having their

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Speaker 1: money tied up with the irs for an entire year

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Speaker 1: earning nothing, you know, zero.

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Speaker 2: So people who get excited about that, hey, I got

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Speaker 2: a big refund coming in the coming in April, Well

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Speaker 2: that's great, except you're leaving some opportunity on the table.

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Speaker 1: Here. You're listening to simply Money presented by all Worth

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Speaker 1: Financial on Bob Sponseller along with Brian James. Here's something

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Speaker 1: that might surprise you. Even if you're invested in a

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Speaker 1: solid mutual fund or ETF, a real well performing fund,

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Speaker 1: there is a very good chance you're not actually earning

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Speaker 1: the returns that are reported by that fund every year.

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Speaker 1: It's called the behavior gap. Brian, get into this. This,

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Speaker 1: This is really important. We see this often as well.

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Speaker 2: So, yeah, this stat is coming from morning Star. New

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Speaker 2: research shows that investors, on average are earning less than

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Speaker 2: the funds that they invest in, Which that sounds kind

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Speaker 2: of strange, right, If I own a fund, I get

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Speaker 2: whatever it returns, don't I. Well, over the past ten years,

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Speaker 2: here's the numbers behind it. The average investor earned about

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Speaker 2: six point three percent a year, But of the funds

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Speaker 2: that morning Star looked at in this study, those were

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Speaker 2: averaging about seven point three percent. So some people are going, well,

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Speaker 2: that's the must be fees. They're giving that back in fees.

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Speaker 3: No they're not.

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Speaker 2: That's not the point. Where did that missing one percent go?

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Speaker 2: It was lost in timing. People tend to jump into

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Speaker 2: these funds after they've had a good run. I just

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Speaker 2: had a conversation yesterday with somebody who was looking at

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Speaker 2: their retire and plan and asked me to look at

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Speaker 2: and he said, yeah, you know what, don't worry about it.

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Speaker 2: I'm just going to take a look at what happened

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Speaker 2: last year, two years ago, and then I'll just pick

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Speaker 2: those funds. And they said, wait a minute, Bengals went

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Speaker 2: to the super Bowl in twenty twenty one.

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Speaker 3: Does that mean they were going to win twenty two

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Speaker 3: and twenty three.

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Speaker 1: Please don't talk about the Bengals. I'm still I'm still

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Speaker 1: trying to pull myself out of the depression state. But no,

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Speaker 1: you know, finish your point.

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Speaker 3: Yeah, so, so again, morning star. I looked at both.

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Speaker 3: This isn't just you know, a handful of funds.

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Speaker 2: He looked at both mutual funds and exchange traded funds

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Speaker 2: because ETFs are even easier to jump in and out

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Speaker 2: of index funds. These low cost, passively managed funds did

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Speaker 2: a little bit better, but even then, the average investor

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Speaker 2: still underperforms the fund. That it has to do with behavior,

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Speaker 2: you know, stalling on making that decision. Maybe, maybe, maybe

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Speaker 2: if somebody thought about this earlier this year in April

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Speaker 2: and thought about how the market's kind of bumpy, I

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Speaker 2: don't want to invest, and decided to wait until June

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Speaker 2: while money.

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Speaker 3: Was left on the table.

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Speaker 2: So when we look at the returns that mutual funds

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Speaker 2: have had or any investment, frankly, you were looking at

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Speaker 2: an agnostic year over year type of return scenario, not

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Speaker 2: when did somebody out there get the guts to go

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Speaker 2: ahead and invest and not read the headlines anymore. So

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Speaker 2: those numbers on that piece of paper you're looking at

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Speaker 2: have nothing to do with the human element of all

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Speaker 2: these different things.

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Speaker 1: The flip side of this, Brian, and we talk about

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Speaker 1: this often on this show, is some people, not all,

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Speaker 1: but some people use their growth mutual funds like your

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Speaker 1: savings account. Here's what I mean. If people know they're gonna,

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Speaker 1: you know, remodel their bathroom, or buy a car, or

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Speaker 1: take a cruise or something like that, or an expensive vacation,

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Speaker 1: they just they want to pull the money out of

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Speaker 1: that high growth fund, you know, whenever the bill is

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Speaker 1: due for that particular you know spending, you know event

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Speaker 1: that's going to happen. Talk to your advisor, you know,

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Speaker 1: ahead of time, because you know it it makes sense

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Speaker 1: to get that money out of harm's way, get it

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Speaker 1: out of the market with enough time to prevent some

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Speaker 1: type of uh, you know, market correction or just a

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Speaker 1: temporary drop due to a news event something like that. Again,

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Speaker 1: it comes down to communication with your advisor to try

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Speaker 1: to you know, we're not trying to date day trade

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Speaker 1: this stuff or get in an extensive market timing. But

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Speaker 1: there is some common sense involved here. I mean, if

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Speaker 1: you're the market's at an all time high and you

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Speaker 1: know you're going to be doing something over the next

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Speaker 1: two to three months, it might make sense to take

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Speaker 1: a little money off the table. Here's the all Worth advice.

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Speaker 1: Even great funds can't protect you from poor timing. The

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Speaker 1: best way to grow wealth isn't chasing returns. It's avoiding

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Speaker 1: the costly mistakes they can keep you from earning what

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Speaker 1: your investments are already providing to you. Coming up next,

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Speaker 1: assisted living, nursing homes or staying home. What's the right

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Speaker 1: move for your parents or for you? These are tough,

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Speaker 1: costly decisions will help you plan before the situation becomes urgent.

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Speaker 1: Coming up next, you're listening to Simply Money presented by

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Speaker 1: all Worth Financial on fifty five KR see the talk station.

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Speaker 1: You're listening to Simply Money presented about all Worth Financial.

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Speaker 1: I'm Bob sponseller along with Brian James. It's one of

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Speaker 1: the hardest decisions a family has to make, and it

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Speaker 1: never feels like there's a perfect answer. Brian, I know

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Speaker 1: this is definitely more of an art than a science.

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Speaker 1: We're talking about senior living, whether to do assisted living,

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Speaker 1: nursing homes, in home care, or just trying to keep

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Speaker 1: mom and dad at home, and the truth is these

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Speaker 1: decisions are as emotional as they are financial. Let's start

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Speaker 1: by laying out what the options even are and what

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Speaker 1: the typical cost is for each of these options.

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Speaker 2: Now, this can be a little bit of alphabet soup.

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Speaker 2: You're looking at a lot of different words that are

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Speaker 2: gonna sound familiar, but they're all gonna run together. So

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Speaker 2: we'll start with the different flavors of the types of

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Speaker 2: care you can have. So first off is independent living.

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Speaker 2: This is more like senior apartments. No real care is

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Speaker 2: provided there, but it's kind of ready at hand. Something

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Speaker 2: is needed and you're in a community of people kind

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Speaker 2: of your own age and.

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Speaker 3: A lot of commonalities there.

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Speaker 2: That runs about three thousand dollars a month for just

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Speaker 2: that kind of bare minimum, with help nearby but not

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Speaker 2: necessarily right up in your face every day. That next

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Speaker 2: step up, though, Bob, is assisted living. This is going

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Speaker 2: to include help with meals, medication, and just daily tasks

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Speaker 2: of keeping the household in shape and taking care of

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Speaker 2: the things you need to that'll run anywhere from forty

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Speaker 2: five hundred to seven thousand dollars monthly.

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Speaker 3: And again you're.

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Speaker 2: Still kind of independent, but you've got somebody hanging around

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Speaker 2: that can help with those again, those daily routines. And

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Speaker 2: then where we get into the bigger ones is really

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Speaker 2: memory care. And a lot of people go through this.

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Speaker 2: It can be very challenging, of course, aside from the finances,

436
00:21:43,680 --> 00:21:48,719
Speaker 2: but so of course we're talking about Alzheimer's, dimension, dementia, Parkinson's,

437
00:21:48,720 --> 00:21:50,680
Speaker 2: those kinds of things. You're looking at six to ten

438
00:21:50,720 --> 00:21:53,800
Speaker 2: thousand dollars per month for that level of care. And

439
00:21:53,840 --> 00:21:55,520
Speaker 2: then one more step up from that when we've got

440
00:21:55,640 --> 00:21:58,119
Speaker 2: nursing home care. This is really really where we're getting to.

441
00:21:58,320 --> 00:22:01,159
Speaker 2: We've got a lot of medical issues and kind of

442
00:22:01,200 --> 00:22:04,160
Speaker 2: a really end of life type care. Full medical care

443
00:22:04,240 --> 00:22:06,800
Speaker 2: runs about nine to twelve thousand dollars a month.

444
00:22:06,880 --> 00:22:07,960
Speaker 3: For a situation like that.

445
00:22:08,040 --> 00:22:09,560
Speaker 2: But the thing I want to point out here, Bob,

446
00:22:09,640 --> 00:22:11,440
Speaker 2: is a lot of people will do a financial plan

447
00:22:11,480 --> 00:22:14,040
Speaker 2: for people who are young and healthy, maybe just retired sixties,

448
00:22:14,040 --> 00:22:16,520
Speaker 2: maybe early seventies, and they'll start to look at these

449
00:22:16,600 --> 00:22:18,280
Speaker 2: numbers and they'll say, Okay, I have got to be

450
00:22:18,280 --> 00:22:20,280
Speaker 2: able to take this plan that we just built and

451
00:22:20,359 --> 00:22:22,720
Speaker 2: layer on an extra ten thousand dollars a month for

452
00:22:22,840 --> 00:22:23,639
Speaker 2: one of these days.

453
00:22:23,720 --> 00:22:24,560
Speaker 3: That is not the case.

454
00:22:24,600 --> 00:22:26,399
Speaker 2: Remember when you're in one of these more elaborate, more

455
00:22:26,440 --> 00:22:29,320
Speaker 2: expensive type homes, You're not traveling anymore, you're not running

456
00:22:29,320 --> 00:22:31,359
Speaker 2: to the grocery store anymore. There's a lot of bills

457
00:22:31,359 --> 00:22:33,840
Speaker 2: that are being covered for you in that ten thousand

458
00:22:33,880 --> 00:22:36,040
Speaker 2: a month. So it might be more than you're actually

459
00:22:36,040 --> 00:22:38,520
Speaker 2: spending currently to run your lives, but it's not a

460
00:22:38,600 --> 00:22:41,320
Speaker 2: complete extra expense added on to the top. Be careful

461
00:22:41,359 --> 00:22:43,280
Speaker 2: not to go too far down that rabbit hole of

462
00:22:43,320 --> 00:22:45,080
Speaker 2: how scary it will be to go through this type

463
00:22:45,080 --> 00:22:47,320
Speaker 2: of thing. It's expensive, for sure, but it's not as

464
00:22:47,680 --> 00:22:49,680
Speaker 2: terrifying as it might seem.

465
00:22:50,160 --> 00:22:52,399
Speaker 1: Yeah, the flip side of that, Brian, and I'm living

466
00:22:52,440 --> 00:22:55,280
Speaker 1: through this right now with an actual client. I mean,

467
00:22:55,359 --> 00:22:58,120
Speaker 1: it is a little bit terrifying. And here's what I mean.

468
00:22:59,119 --> 00:23:03,840
Speaker 1: This person is recently widowed. She wants to stay in

469
00:23:03,840 --> 00:23:08,560
Speaker 1: her home, and she has multiple in home caregivers coming

470
00:23:08,600 --> 00:23:13,320
Speaker 1: in for a variety of reasons. So when you layer

471
00:23:13,400 --> 00:23:15,960
Speaker 1: on some of these in home care folks, depending on

472
00:23:16,000 --> 00:23:18,399
Speaker 1: what they provide, I mean, in this one case, and

473
00:23:18,440 --> 00:23:23,240
Speaker 1: I'm talking about one, this particular lady is spending upwards

474
00:23:23,240 --> 00:23:26,639
Speaker 1: of twenty thousand dollars a month to stay in her

475
00:23:26,680 --> 00:23:29,000
Speaker 1: home and have all these people come in and provide

476
00:23:29,040 --> 00:23:32,800
Speaker 1: all these services. So thankfully, you know, she's in a

477
00:23:32,880 --> 00:23:36,119
Speaker 1: situation where she can at least now afford all that.

478
00:23:36,440 --> 00:23:38,880
Speaker 1: But boy, that's a lot of money. And I guess

479
00:23:38,960 --> 00:23:42,639
Speaker 1: that leads to the point that really makes this difficult

480
00:23:42,960 --> 00:23:47,800
Speaker 1: is emotionally, everybody, Brian, everybody wants to stay in their

481
00:23:47,880 --> 00:23:51,520
Speaker 1: home as long as they can. And you got two

482
00:23:51,560 --> 00:23:53,600
Speaker 1: things you got to look at here, and I've done.

483
00:23:53,840 --> 00:23:56,480
Speaker 1: I'm in the middle of dealing this all, dealing with

484
00:23:56,560 --> 00:24:00,840
Speaker 1: this also with multiple families, there's communication needs that need,

485
00:24:01,000 --> 00:24:03,600
Speaker 1: you know, need to go on between the siblings and

486
00:24:03,640 --> 00:24:05,960
Speaker 1: the kids. Who's going to provide this kind of care

487
00:24:06,440 --> 00:24:09,600
Speaker 1: to enable mom or dad or both to stay at home.

488
00:24:10,080 --> 00:24:12,800
Speaker 1: And then financially, what does this all mean, Because again,

489
00:24:12,960 --> 00:24:15,080
Speaker 1: the default is I want to stay in my home.

490
00:24:15,119 --> 00:24:16,639
Speaker 1: I want to stay in my home. I want to

491
00:24:16,680 --> 00:24:20,960
Speaker 1: you know, be where I am. But it costs money, time, effort,

492
00:24:21,200 --> 00:24:23,640
Speaker 1: angst on the part of the family that you're having

493
00:24:23,680 --> 00:24:28,080
Speaker 1: come in to help you. And these communications and discussions

494
00:24:28,160 --> 00:24:31,199
Speaker 1: need to take place sooner rather than later so that

495
00:24:31,320 --> 00:24:35,280
Speaker 1: you don't disrupt multiple families on top of all the

496
00:24:35,359 --> 00:24:38,040
Speaker 1: money decisions. To make all this work, it could get

497
00:24:38,240 --> 00:24:39,600
Speaker 1: very very difficult.

498
00:24:39,800 --> 00:24:41,399
Speaker 2: So, yeah, we want to be paying attention to a

499
00:24:41,400 --> 00:24:44,080
Speaker 2: lot of these things, and it's it can be very

500
00:24:44,200 --> 00:24:46,560
Speaker 2: very stressful. So what should you be doing? Well, think

501
00:24:46,560 --> 00:24:49,080
Speaker 2: about your own future here, what do you want? And again,

502
00:24:49,119 --> 00:24:51,199
Speaker 2: this may help you think about what you're even if

503
00:24:51,240 --> 00:24:53,800
Speaker 2: you're doing this early and maybe you feel too early,

504
00:24:53,840 --> 00:24:55,800
Speaker 2: but you might be helping your parents and other relatives

505
00:24:55,960 --> 00:24:58,080
Speaker 2: simply by you thinking about it, you can have better

506
00:24:58,119 --> 00:25:00,840
Speaker 2: conversations with them. Is it important to you to age

507
00:25:00,880 --> 00:25:03,159
Speaker 2: at home? Could your house even handle that right?

508
00:25:03,240 --> 00:25:03,280
Speaker 1: Is?

509
00:25:03,400 --> 00:25:04,200
Speaker 3: Are there are a lot of steps?

510
00:25:04,200 --> 00:25:05,320
Speaker 2: Are there are a lot of things that are going

511
00:25:05,359 --> 00:25:07,040
Speaker 2: to make it tough for somebody who's a little bit

512
00:25:07,040 --> 00:25:10,280
Speaker 2: limited with mobility. Do you have long term care insurance

513
00:25:10,720 --> 00:25:13,080
Speaker 2: or have you looked into asset based policies that might

514
00:25:13,119 --> 00:25:15,399
Speaker 2: give you some flexibility. One of my all time favorite

515
00:25:15,440 --> 00:25:17,480
Speaker 2: things to do for people is if we've got a

516
00:25:17,520 --> 00:25:19,920
Speaker 2: life insurance policy, for example, that was purchased when the

517
00:25:20,000 --> 00:25:22,280
Speaker 2: kids were new, or maybe even before the kids were around,

518
00:25:22,320 --> 00:25:25,680
Speaker 2: and now those kids have kids, then sometimes those policies

519
00:25:25,680 --> 00:25:27,840
Speaker 2: can have cash values built up in them and we

520
00:25:27,920 --> 00:25:28,960
Speaker 2: really no longer.

521
00:25:28,680 --> 00:25:29,760
Speaker 3: Need the death benefits.

522
00:25:29,960 --> 00:25:31,439
Speaker 2: Well, one of the things that can be done. You can,

523
00:25:31,520 --> 00:25:33,040
Speaker 2: of course cash it out and run away and pay

524
00:25:33,080 --> 00:25:35,200
Speaker 2: taxes and all that. That's always a choice, but a

525
00:25:35,240 --> 00:25:36,959
Speaker 2: lot of times what you can do is convert that

526
00:25:37,000 --> 00:25:40,320
Speaker 2: into something that, yes, has a minimal death benefit, which

527
00:25:40,400 --> 00:25:43,680
Speaker 2: is kind of necessary to make this work, but instead

528
00:25:43,680 --> 00:25:46,640
Speaker 2: of focusing on that, it also provides primarily a long

529
00:25:46,760 --> 00:25:49,000
Speaker 2: term care benefit. So all you're doing in that case

530
00:25:49,080 --> 00:25:51,280
Speaker 2: is read a bunch of paperwork and some testing and

531
00:25:51,359 --> 00:25:54,440
Speaker 2: redeploying a pile of money from a need you don't have,

532
00:25:54,560 --> 00:25:56,800
Speaker 2: which is death benefit, to a need that you do,

533
00:25:56,880 --> 00:25:59,000
Speaker 2: which is now long term care. That's called a ten

534
00:25:59,080 --> 00:26:01,240
Speaker 2: thirty five exchange, a tax free type of a thing.

535
00:26:01,240 --> 00:26:03,920
Speaker 2: If you have that situation and you don't need death benefit,

536
00:26:03,920 --> 00:26:04,720
Speaker 2: you might consider that.

537
00:26:05,880 --> 00:26:08,360
Speaker 1: Brian. Another thing to consider, and I'd love to get

538
00:26:08,359 --> 00:26:10,920
Speaker 1: your perspective on this even if you don't disagree. If

539
00:26:10,920 --> 00:26:13,760
Speaker 1: you don't agree with me, a lot of times I've

540
00:26:13,840 --> 00:26:16,840
Speaker 1: had people that have had life insurance policies for years

541
00:26:16,920 --> 00:26:19,800
Speaker 1: with this built up cash value in it, and you know,

542
00:26:19,840 --> 00:26:24,040
Speaker 1: when you run the actual probability of dying, which is

543
00:26:24,240 --> 00:26:27,639
Speaker 1: last time I checked, was one hundred percent versus needing

544
00:26:27,720 --> 00:26:30,840
Speaker 1: long term care coverage, which is, you know, around fifty percent.

545
00:26:31,359 --> 00:26:34,040
Speaker 1: Sometimes you can afford, if you build your plan properly,

546
00:26:34,200 --> 00:26:37,600
Speaker 1: to just spend down some of your assets knowing that

547
00:26:37,680 --> 00:26:40,760
Speaker 1: the life insurance is going to come in and backfill

548
00:26:40,840 --> 00:26:44,560
Speaker 1: those assets that you spent down. That can end up

549
00:26:44,560 --> 00:26:47,000
Speaker 1: being a pretty good scenario because at least you know

550
00:26:47,160 --> 00:26:48,840
Speaker 1: you're going to get some bang for your buck out

551
00:26:48,880 --> 00:26:51,680
Speaker 1: of your insurance. What do you think about that idea?

552
00:26:51,840 --> 00:26:53,600
Speaker 2: I think that's really something to look into and make

553
00:26:53,600 --> 00:26:55,359
Speaker 2: sure you've got all these moving parts covered.

554
00:26:55,560 --> 00:26:57,120
Speaker 3: From a standpoint of it, it's.

555
00:26:56,920 --> 00:26:59,119
Speaker 2: Complicated, but if we think ahead then we can kind

556
00:26:59,160 --> 00:27:00,919
Speaker 2: of get we can control the future a little bit

557
00:27:00,920 --> 00:27:01,640
Speaker 2: as long as we plan.

558
00:27:02,520 --> 00:27:05,320
Speaker 1: Here's the all Worth advice. Planning for long term care

559
00:27:05,560 --> 00:27:09,200
Speaker 1: isn't just smart, It is a gift to your family.

560
00:27:09,280 --> 00:27:14,600
Speaker 1: You're saving them from crisis, conflict, and potentially years of stress.

561
00:27:15,400 --> 00:27:19,399
Speaker 1: Coming up next from Tangled iras to secure two point

562
00:27:19,480 --> 00:27:22,640
Speaker 1: zero confusion and even some hidden gems in your health

563
00:27:22,680 --> 00:27:26,640
Speaker 1: savings account. We'll tackle the questions you've been meaning to ask.

564
00:27:26,680 --> 00:27:29,320
Speaker 1: Coming up next. You're listening to Simply Money presented by

565
00:27:29,359 --> 00:27:32,720
Speaker 1: all Worth Financial on fifty five KRC, the talk station.

566
00:27:37,760 --> 00:27:40,320
Speaker 1: You're listening to Simply Money presented by all Worth Financial

567
00:27:40,320 --> 00:27:43,320
Speaker 1: on Bob Sponseller along with Brian James. Do you have

568
00:27:43,320 --> 00:27:45,800
Speaker 1: a financial question you'd like for us to answer? There

569
00:27:46,000 --> 00:27:48,680
Speaker 1: is a red button you can click if you're listening

570
00:27:48,720 --> 00:27:52,479
Speaker 1: to the show from the iHeart app. Simply record your

571
00:27:52,560 --> 00:27:55,680
Speaker 1: question and it will come straight to us. All right.

572
00:27:55,760 --> 00:27:59,000
Speaker 1: Karen in Hyde Park leads us off tonight Brian. She says,

573
00:27:59,040 --> 00:28:03,399
Speaker 1: we've heard about something called tax alpha, the idea that

574
00:28:03,480 --> 00:28:07,040
Speaker 1: good planning can add as much value as investment performance.

575
00:28:07,080 --> 00:28:09,080
Speaker 1: I don't know about that, but how do you measure

576
00:28:09,280 --> 00:28:12,480
Speaker 1: tax alpha? Talk about what that is and help Karen,

577
00:28:12,560 --> 00:28:15,160
Speaker 1: you know, understand the difference between that and just plane

578
00:28:15,200 --> 00:28:16,480
Speaker 1: on investment performance.

579
00:28:16,880 --> 00:28:18,600
Speaker 2: I actually like the way she phrase that. That makes

580
00:28:18,640 --> 00:28:19,959
Speaker 2: a lot of sense, and I think there's a lot,

581
00:28:20,040 --> 00:28:21,080
Speaker 2: there's a lot of benefit to this.

582
00:28:21,119 --> 00:28:22,720
Speaker 3: So what is tax alpha?

583
00:28:22,800 --> 00:28:26,440
Speaker 2: Tax alpha is the extra value you can get by

584
00:28:26,480 --> 00:28:29,639
Speaker 2: focusing on the tax efficiency of your investments rather than

585
00:28:29,680 --> 00:28:32,600
Speaker 2: simply looking at a pile of different investment options and

586
00:28:32,640 --> 00:28:35,200
Speaker 2: watching how they go up and down over the years. So, really,

587
00:28:35,280 --> 00:28:38,360
Speaker 2: what this means is what is my portfolio done after taxes?

588
00:28:39,200 --> 00:28:40,080
Speaker 3: So, for example, if.

589
00:28:40,080 --> 00:28:43,120
Speaker 2: I'm doing something and I'm somehow I've got some kind

590
00:28:43,160 --> 00:28:45,920
Speaker 2: of heavy trading strategy that is generating a lot of

591
00:28:45,960 --> 00:28:48,080
Speaker 2: short term gains, well those gains are going to be

592
00:28:48,080 --> 00:28:50,400
Speaker 2: taxed me as income. If I'm in a thirty percent bracket,

593
00:28:50,440 --> 00:28:52,840
Speaker 2: well then I'm given away a third of my return

594
00:28:53,120 --> 00:28:54,959
Speaker 2: in my short term trading program. That's why a lot

595
00:28:54,960 --> 00:28:57,840
Speaker 2: of people don't do this kind of thing because, or

596
00:28:57,840 --> 00:28:59,280
Speaker 2: at least if they're doing it, they're doing it in

597
00:28:59,280 --> 00:29:01,360
Speaker 2: an IRA maybe, So how should you?

598
00:29:01,400 --> 00:29:03,000
Speaker 3: How should you? How do you measure it?

599
00:29:03,000 --> 00:29:05,240
Speaker 2: Because the only way you can really know you can't

600
00:29:05,240 --> 00:29:08,400
Speaker 2: open a brochure and see what some investment strategies after

601
00:29:08,480 --> 00:29:12,080
Speaker 2: tax performances have been. Because taxes are an individual thing.

602
00:29:12,120 --> 00:29:14,520
Speaker 2: Everybody's in a different bracket with a different situation. So

603
00:29:14,600 --> 00:29:17,080
Speaker 2: the after tax performance is going to be different for everybody.

604
00:29:17,320 --> 00:29:19,640
Speaker 2: Best thing you can do there is established some kind

605
00:29:19,640 --> 00:29:22,440
Speaker 2: of a benchmark that matches what it does, and then

606
00:29:22,480 --> 00:29:25,040
Speaker 2: figure out what your own pre tax returns have been.

607
00:29:25,080 --> 00:29:27,720
Speaker 2: What did that portfolio earn before taxes? This is usually

608
00:29:27,720 --> 00:29:30,040
Speaker 2: pretty easy to get to. What did the benchmark earn

609
00:29:30,120 --> 00:29:32,920
Speaker 2: that's pre tax alpha, and then figure out your after

610
00:29:32,960 --> 00:29:35,080
Speaker 2: tax returns. This is where you'll have to look at

611
00:29:35,080 --> 00:29:37,440
Speaker 2: your You know, often you're looking at your schedule B,

612
00:29:37,520 --> 00:29:40,320
Speaker 2: your ten ninety nine B and looking for the capital

613
00:29:40,320 --> 00:29:42,920
Speaker 2: gains and losses that were generated if you had a

614
00:29:43,400 --> 00:29:45,720
Speaker 2: This isn't a perfect comparison care but if you had

615
00:29:46,040 --> 00:29:48,320
Speaker 2: this money and some kind of a portfolio prior to

616
00:29:48,440 --> 00:29:51,440
Speaker 2: moving to the tax alpha strategy, then what you can

617
00:29:51,480 --> 00:29:53,760
Speaker 2: do is look for more and there should be more

618
00:29:53,800 --> 00:29:58,120
Speaker 2: activity generating more losses in those kinds of things, and

619
00:29:58,200 --> 00:29:59,880
Speaker 2: so see if you can find a way to compare

620
00:30:00,080 --> 00:30:02,480
Speaker 2: those older returns with the newer ones. With that strategy

621
00:30:02,480 --> 00:30:04,320
Speaker 2: in place, now, granted you'd be talking about two different

622
00:30:04,320 --> 00:30:06,880
Speaker 2: market periods. It is not perfect by any stretch, but

623
00:30:06,960 --> 00:30:09,960
Speaker 2: you should be seeing more activity trickling through your tax

624
00:30:09,960 --> 00:30:12,760
Speaker 2: return in this sense of realizing gains that are offset,

625
00:30:12,800 --> 00:30:15,600
Speaker 2: therefore not being taxed, or giving you up to three

626
00:30:15,640 --> 00:30:18,200
Speaker 2: thousand dollars in a straight up deduction if there's any

627
00:30:18,520 --> 00:30:20,480
Speaker 2: losses over and above the gains that are generated.

628
00:30:20,520 --> 00:30:22,480
Speaker 3: So hope that helps. That's a slippery slope tax.

629
00:30:22,480 --> 00:30:24,200
Speaker 2: I'm a big believer in tax alpha, but it does

630
00:30:24,840 --> 00:30:27,040
Speaker 2: take some understanding, all right. So we're gonna move on

631
00:30:27,080 --> 00:30:29,600
Speaker 2: to Aaron and Kenwood. Aaron says they've got they feel

632
00:30:29,640 --> 00:30:31,520
Speaker 2: good about their net worth. They look great on paper,

633
00:30:31,760 --> 00:30:33,320
Speaker 2: but they feel like lots of it is ill liquid.

634
00:30:33,320 --> 00:30:36,160
Speaker 2: They've got a bunch of stuff everywhere, real estate, retirement accounts,

635
00:30:36,200 --> 00:30:37,280
Speaker 2: some stakes and businesses.

636
00:30:37,520 --> 00:30:39,680
Speaker 3: And he's wondering, how do you build up liquidity without

637
00:30:39,680 --> 00:30:40,600
Speaker 3: blowing up the plan?

638
00:30:40,720 --> 00:30:43,959
Speaker 1: Bob, Well, the words that's out to me in this

639
00:30:44,080 --> 00:30:46,720
Speaker 1: question is blowing up the plan. And here's what I mean, Aaron.

640
00:30:46,800 --> 00:30:51,560
Speaker 1: The plan needs to include a gradual transition of some

641
00:30:51,600 --> 00:30:55,280
Speaker 1: of these ill liquid assets and accounts into something that

642
00:30:55,360 --> 00:30:59,280
Speaker 1: can create liquid income. So I think the plan needs

643
00:30:59,320 --> 00:31:01,600
Speaker 1: to be re ex zamin And the big thing that

644
00:31:01,680 --> 00:31:03,760
Speaker 1: I tell folks all the time is you don't have

645
00:31:03,800 --> 00:31:09,200
Speaker 1: to make wholesale decisions and movements in one fell swoop,

646
00:31:09,320 --> 00:31:11,560
Speaker 1: you know, in one year, because if you do that,

647
00:31:11,560 --> 00:31:15,280
Speaker 1: that will blow up your tax return in the way

648
00:31:15,680 --> 00:31:19,640
Speaker 1: of unnecessary taxation. So I think you got to sit down,

649
00:31:19,760 --> 00:31:23,960
Speaker 1: especially as it relates to illiquid assets such as real

650
00:31:24,080 --> 00:31:28,000
Speaker 1: estate or a business. You know, there's a process, there's

651
00:31:28,080 --> 00:31:31,360
Speaker 1: a timeline that you got to develop that matches your

652
00:31:31,440 --> 00:31:36,240
Speaker 1: desire for liquidity with your personal desires in retirement and

653
00:31:36,320 --> 00:31:40,640
Speaker 1: craft a gradual strategy to transition your net worth into

654
00:31:40,680 --> 00:31:43,360
Speaker 1: something that's going to meet your needs, you know, when

655
00:31:43,400 --> 00:31:46,640
Speaker 1: you no longer want to work. Hope that helps, all right?

656
00:31:46,760 --> 00:31:49,800
Speaker 1: Ron and Mason says, we've got multiple iras and four

657
00:31:49,800 --> 00:31:54,120
Speaker 1: to one k's spread across different institutions. What's the cleanest

658
00:31:54,160 --> 00:32:00,000
Speaker 1: way to consolidate them without losing cost basis, data or protection. Fortunately,

659
00:32:00,160 --> 00:32:03,280
Speaker 1: this is a relatively easy one. Brian Ye softball for me.

660
00:32:03,360 --> 00:32:06,200
Speaker 2: So the way to handle the cost basis of an

661
00:32:06,240 --> 00:32:08,000
Speaker 2: IRA or a four oh one K is to it

662
00:32:08,040 --> 00:32:10,720
Speaker 2: ignore it entirely, because it doesn't mean anything at all,

663
00:32:11,440 --> 00:32:13,800
Speaker 2: you know. So, I mean, unless you're in a situation

664
00:32:13,880 --> 00:32:15,640
Speaker 2: where maybe you work for Procter and Gamble, if you're

665
00:32:15,680 --> 00:32:18,880
Speaker 2: looking at something called a net unrealized appreciation type of

666
00:32:18,880 --> 00:32:21,400
Speaker 2: a transaction. Yes, then then the cost basis will matter.

667
00:32:21,560 --> 00:32:24,200
Speaker 2: But most people simply have you know, mutual funds or

668
00:32:24,440 --> 00:32:27,200
Speaker 2: exchange traded funds in those types of retirement plans, and

669
00:32:27,320 --> 00:32:30,440
Speaker 2: so therefore the cost basis is irrelevant the tax treatment

670
00:32:30,440 --> 00:32:32,920
Speaker 2: of the account. If it's pre tax then that simply

671
00:32:32,960 --> 00:32:35,560
Speaker 2: means that are traditional IRA or four O one K.

672
00:32:35,640 --> 00:32:37,480
Speaker 2: That simply means that any nickel that comes out of

673
00:32:37,480 --> 00:32:39,000
Speaker 2: it is going to get taxed as income to you.

674
00:32:39,320 --> 00:32:41,400
Speaker 2: If it's WROTH, then it's not going to be taxed

675
00:32:41,400 --> 00:32:43,160
Speaker 2: at all, as long as you've met a couple simple

676
00:32:43,240 --> 00:32:45,520
Speaker 2: rules with regard to timing and some other things that

677
00:32:45,560 --> 00:32:48,360
Speaker 2: are relatively simple to get passed, so you can consolidate

678
00:32:48,400 --> 00:32:52,360
Speaker 2: all those into one account without really losing any information.

679
00:32:52,400 --> 00:32:54,640
Speaker 2: Not to mention, let's say you're not talking about an IRA.

680
00:32:54,760 --> 00:32:58,480
Speaker 2: Cost basis only is irrelevant in a taxable account. If

681
00:32:58,520 --> 00:33:02,280
Speaker 2: the custodian has that in it will transfer over from

682
00:33:02,360 --> 00:33:05,720
Speaker 2: one financial institution to another. Sometimes it takes a week

683
00:33:05,800 --> 00:33:07,600
Speaker 2: or two to get it all there, but they do

684
00:33:07,680 --> 00:33:09,760
Speaker 2: have to communicate that if they have it. If you

685
00:33:09,800 --> 00:33:12,960
Speaker 2: handed them a certificate thirty years ago that represented some stock,

686
00:33:13,120 --> 00:33:14,960
Speaker 2: then they don't know either what you paid for it.

687
00:33:15,240 --> 00:33:16,680
Speaker 3: So hope that helps.

688
00:33:16,680 --> 00:33:18,640
Speaker 2: One more question here, and we're going to move on

689
00:33:18,720 --> 00:33:22,840
Speaker 2: to Paul and Anderson. This is not a softball, Paul says.

690
00:33:23,080 --> 00:33:26,320
Speaker 2: His CPA mentioned the secure two point zero rules for

691
00:33:26,360 --> 00:33:29,080
Speaker 2: inherited iras, Bob, and he's asking, does the ten year

692
00:33:29,160 --> 00:33:32,040
Speaker 2: rule mean equal withdrawals or can you still manage the time?

693
00:33:32,040 --> 00:33:33,760
Speaker 2: I guess this one's not too bad, but could be

694
00:33:33,800 --> 00:33:34,920
Speaker 2: a bit of a rabbit hole, Bob.

695
00:33:35,440 --> 00:33:38,280
Speaker 1: Yeah, there's a couple of different rules to consider here, Paul,

696
00:33:38,320 --> 00:33:40,720
Speaker 1: and I'm going to assume we're talking about a non

697
00:33:40,800 --> 00:33:43,760
Speaker 1: spouse beneficiary. So the first thing to know is when

698
00:33:43,800 --> 00:33:47,600
Speaker 1: does the proverbial clock start running. That ten year clock

699
00:33:48,160 --> 00:33:51,880
Speaker 1: starts running the year following the death of the original

700
00:33:51,960 --> 00:33:54,440
Speaker 1: IRA owner. That's the first thing to keep in mind.

701
00:33:55,080 --> 00:33:58,880
Speaker 1: After that, it comes down to was the person that

702
00:33:59,040 --> 00:34:03,640
Speaker 1: passed away already in there require minimum distribution stage where

703
00:34:03,640 --> 00:34:08,319
Speaker 1: they're already taking annual rmds. If so, then you are

704
00:34:08,360 --> 00:34:12,600
Speaker 1: required to stay on that same schedule based on the

705
00:34:12,640 --> 00:34:16,399
Speaker 1: decedents you know, age and that whole formula. And then

706
00:34:16,440 --> 00:34:19,120
Speaker 1: in addition to that, the whole thing needs to be

707
00:34:19,239 --> 00:34:22,080
Speaker 1: you know, paid out completely in ten years. So what

708
00:34:22,239 --> 00:34:24,879
Speaker 1: that situation can end up looking like is you got

709
00:34:24,880 --> 00:34:26,799
Speaker 1: to take a little bit out every year, and then

710
00:34:26,840 --> 00:34:29,560
Speaker 1: if you do not manage it, you know, in year

711
00:34:29,640 --> 00:34:32,080
Speaker 1: ten you might get a bigger you know, lump sum

712
00:34:32,120 --> 00:34:34,319
Speaker 1: coming out and a bigger tax bill than you might

713
00:34:34,360 --> 00:34:38,760
Speaker 1: want to see. The other option is if the person

714
00:34:38,800 --> 00:34:42,799
Speaker 1: that passed away had not started annual rmds, well, then

715
00:34:42,840 --> 00:34:45,120
Speaker 1: you got a ton of flexibility as long as you

716
00:34:45,160 --> 00:34:47,399
Speaker 1: meet that ten year rule. You don't have to take

717
00:34:47,440 --> 00:34:49,759
Speaker 1: anything out until year ten if you don't want to,

718
00:34:49,840 --> 00:34:51,480
Speaker 1: But then in year ten you got to pull the

719
00:34:51,480 --> 00:34:54,359
Speaker 1: whole thing out. It's all taxable income. You owe all

720
00:34:54,400 --> 00:34:58,239
Speaker 1: the taxes. So depending on what your situation is, you know,

721
00:34:58,280 --> 00:35:00,000
Speaker 1: that's where you want to sit down with your advice

722
00:35:00,440 --> 00:35:03,520
Speaker 1: in your CPA and map out an income strategy to

723
00:35:03,560 --> 00:35:08,040
Speaker 1: make this withdrawal uh situation as tax efficient as possible.

724
00:35:08,239 --> 00:35:10,400
Speaker 1: There are a lot of moving parts there, but if

725
00:35:10,440 --> 00:35:13,239
Speaker 1: you if you understand what you're dealing with, you know,

726
00:35:13,280 --> 00:35:16,319
Speaker 1: from the get go you can manage the situation, you know,

727
00:35:16,400 --> 00:35:19,520
Speaker 1: without a whole lot of complexity. Coming up next, I've

728
00:35:19,560 --> 00:35:22,759
Speaker 1: got my two cents and some additional thoughts on the

729
00:35:22,840 --> 00:35:25,560
Speaker 1: whole long term care planning discussion we had a little

730
00:35:25,600 --> 00:35:28,359
Speaker 1: bit earlier. You're listening to Simply Money presented by all

731
00:35:28,360 --> 00:35:36,200
Speaker 1: Worth Financial on fifty five KRC, the talk station. You're

732
00:35:36,239 --> 00:35:38,839
Speaker 1: listening to Simply Money presented by all Worth Financial. I'm

733
00:35:38,840 --> 00:35:42,319
Speaker 1: Bob Spondseller along with Brian James. Brian, I want to

734
00:35:42,400 --> 00:35:44,319
Speaker 1: I want to talk a little bit more, you know,

735
00:35:44,440 --> 00:35:47,879
Speaker 1: just piggybacking on our prior discussion about this whole long

736
00:35:48,000 --> 00:35:51,040
Speaker 1: term care planning process. And what I want to talk

737
00:35:51,040 --> 00:35:53,680
Speaker 1: about here is, you know, assuming we get to the

738
00:35:53,719 --> 00:35:58,759
Speaker 1: point where it is time to start looking at a

739
00:35:58,840 --> 00:36:02,640
Speaker 1: long term care facility, you know, moving into a facility,

740
00:36:03,239 --> 00:36:07,279
Speaker 1: you know, there's some important considerations to factor in and

741
00:36:07,560 --> 00:36:10,439
Speaker 1: some important questions to ask. And a couple of those

742
00:36:10,520 --> 00:36:13,200
Speaker 1: questions I think these are good ones. What's the staffed

743
00:36:13,200 --> 00:36:16,560
Speaker 1: to resident ratio at night? Because look, when if you

744
00:36:16,800 --> 00:36:19,560
Speaker 1: just schedule a tour and go in there, it's like

745
00:36:19,640 --> 00:36:21,959
Speaker 1: any other tour you go on, they're gonna they're gonna

746
00:36:22,000 --> 00:36:25,280
Speaker 1: put their best face on the whole situation. The thing's

747
00:36:25,320 --> 00:36:28,319
Speaker 1: fully staffed, it's been cleaned. It's all that you want

748
00:36:28,320 --> 00:36:30,320
Speaker 1: to talk about. You know, what are things look like?

749
00:36:30,400 --> 00:36:33,040
Speaker 1: At night, when when a lot of this care is

750
00:36:33,080 --> 00:36:36,759
Speaker 1: really needed, so staffed a resident ratio at night. And

751
00:36:36,800 --> 00:36:40,040
Speaker 1: then also what's the staff turnover rate? They should be

752
00:36:40,080 --> 00:36:43,360
Speaker 1: willing to share that kind of information with you, because

753
00:36:43,360 --> 00:36:46,399
Speaker 1: if the staff is moving in and out and it's

754
00:36:46,400 --> 00:36:49,759
Speaker 1: a constant turnover, I don't think that's good. I think

755
00:36:49,920 --> 00:36:52,439
Speaker 1: our loved one wants to know who they're dealing with

756
00:36:52,600 --> 00:36:55,680
Speaker 1: develop a relationship. They need to get to know what

757
00:36:55,719 --> 00:36:59,120
Speaker 1: the ins and outs of what the needs really are

758
00:36:59,680 --> 00:37:02,840
Speaker 1: for our loved one, so that if the staff's turning

759
00:37:02,880 --> 00:37:06,480
Speaker 1: over at a breakneck pace, that's not a really good thing.

760
00:37:06,560 --> 00:37:09,360
Speaker 1: And then I would also say, are they doing background

761
00:37:09,440 --> 00:37:12,600
Speaker 1: checks on all of their caregivers at the facility? I

762
00:37:12,600 --> 00:37:14,040
Speaker 1: know you want to jump in here as well.

763
00:37:14,640 --> 00:37:16,799
Speaker 2: Yeah, So I think that this is probably one of

764
00:37:16,800 --> 00:37:20,560
Speaker 2: the most important places where word of mouth feedback is

765
00:37:20,680 --> 00:37:23,000
Speaker 2: the most valuable. You know, the brochures are lovely, but

766
00:37:23,040 --> 00:37:25,840
Speaker 2: they're not gonna not be lovely, So look under every

767
00:37:25,880 --> 00:37:28,280
Speaker 2: stone for stories. I would be looking on social media

768
00:37:28,320 --> 00:37:30,360
Speaker 2: and just search for the you know, search for the

769
00:37:30,440 --> 00:37:32,680
Speaker 2: for the name of the facility, and bear in mind,

770
00:37:32,680 --> 00:37:34,640
Speaker 2: obviously you're gonna see stories. You know, people don't tend

771
00:37:34,640 --> 00:37:36,319
Speaker 2: People who are super happy don't tend to talk about

772
00:37:36,320 --> 00:37:38,560
Speaker 2: it very much versus people who are raging over something.

773
00:37:39,000 --> 00:37:40,239
Speaker 3: Then it could come up there.

774
00:37:40,239 --> 00:37:42,480
Speaker 2: But again, just look under every stone, find people who

775
00:37:42,520 --> 00:37:44,839
Speaker 2: live there. You might even you know, catch somebody who

776
00:37:45,080 --> 00:37:47,920
Speaker 2: perhaps looks younger walking out of the facility. Perhaps this

777
00:37:48,040 --> 00:37:50,120
Speaker 2: is the adult child of someone who lives there. Stop

778
00:37:50,160 --> 00:37:52,439
Speaker 2: them in the parking lot and just ask how it's gone.

779
00:37:52,960 --> 00:37:55,360
Speaker 2: You know, this is an extremely important one. So I

780
00:37:55,400 --> 00:37:57,200
Speaker 2: think you look under every stone for every piece of

781
00:37:57,200 --> 00:37:59,600
Speaker 2: information you can possibly get, or just.

782
00:37:59,680 --> 00:38:02,640
Speaker 1: Netl work around with your friends and folks. I mean,

783
00:38:02,760 --> 00:38:05,759
Speaker 1: everybody knows someone who has needed this kind of care.

784
00:38:05,920 --> 00:38:09,680
Speaker 1: Don't just rely on the internet and online reviews. Get

785
00:38:09,680 --> 00:38:12,320
Speaker 1: out there and talk to somebody, because the sad truth

786
00:38:12,400 --> 00:38:15,960
Speaker 1: is you can spend a fortune and still get poor

787
00:38:16,080 --> 00:38:20,840
Speaker 1: care if you have not vetted this situation carefully. Thanks

788
00:38:20,840 --> 00:38:23,320
Speaker 1: for listening tonight. You've been listening to Simply Money, presented

789
00:38:23,360 --> 00:38:26,439
Speaker 1: by all Worth Financial on fifty five KRC, the talk

790
00:38:26,520 --> 00:38:26,800
Speaker 1: station