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Speaker 1: Tonight some key money moves to make before December thirty first.

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Speaker 1: You're listening to Simply Money, presented by all Worth Financial

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Speaker 1: on Bob Sponseller along with Brian James. Well, the end

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Speaker 1: of the year always seems to sneak up on us.

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Speaker 1: One minute, it's pumpkin carving season. The next year untangling

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Speaker 1: string lights for Christmas and wondering where the time went

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Speaker 1: before December thirty first comes and goes. We've got a

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Speaker 1: few deliberate financial moves that we can all make to

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Speaker 1: help trim our tax bill, strengthen our financial plan and

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Speaker 1: really put us in a good place and give us

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Speaker 1: a head start on twenty twenty six. Brian, this is

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Speaker 1: going to be kind of like a rapid fire segment

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Speaker 1: tonight because we've got ten tips here heading into the

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Speaker 1: end of the year.

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Speaker 2: Kick us off with step number one.

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Speaker 3: End of the year checklist.

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Speaker 4: Ideally we're thinking about these things a little earlier than now.

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Speaker 4: We've got about a month and a half left and

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Speaker 4: you know, certainly having those that Low's started putting up

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Speaker 4: Christmas decorations around Labor Day, so end of the years

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Speaker 4: sneaking up, as we're always reminded. Number one maximize those

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Speaker 4: retirement savings. Look at how much you've contributed to your

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Speaker 4: workplace retirement plan. This is your four oh one K,

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Speaker 4: four or three B or maybe a four to fifty

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Speaker 4: seven if you're in a public entity.

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Speaker 3: There's other flavors as well.

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Speaker 4: But if there's still room to increase that contribution room,

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Speaker 4: meaning you haven't hit that limit and it doesn't affect

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Speaker 4: your cash flow and your bills. Got to make sure

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Speaker 4: you keep the ship afloat as well. But this is

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Speaker 4: one of the simplest ways to reduce your taxable income

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Speaker 4: while still building that long term wealth. You get to

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Speaker 4: get out of jail free on iras, you can file,

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Speaker 4: you can all the way until tax filing day.

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Speaker 3: You can make a contribution for a prior year, so

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Speaker 3: that's April.

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Speaker 4: But doing it now makes one last thing you got

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Speaker 4: to do, and you get those dollars invested sooner and

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Speaker 4: you'll feel better having done it now. While you're looking

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Speaker 4: at this too, let's say you change jobs. This is

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Speaker 4: something a lot of people don't know that There are limits,

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Speaker 4: of course, to what can go into a four oh

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Speaker 4: one K if you had two four oh one k's

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Speaker 4: during the year, because you move from one employer to another, Well,

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Speaker 4: that limit stays the same both of your accounts, both

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Speaker 4: your four to one K contributions have to stay underneath it,

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Speaker 4: and there's no way for your new employer to know

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Speaker 4: what you put in your old employer's plan. That is

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Speaker 4: your responsibility to make sure you don't go over that accidentally.

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Speaker 4: It's pretty hard to go over that limit in one

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Speaker 4: four oh one K because the custody and the bookkeeper

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Speaker 4: will stop you from making those contributions.

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Speaker 3: But if you had two, you can end up.

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Speaker 4: With a nasty gram from the IRS that you put

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Speaker 4: too much money, and so be careful you don't.

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Speaker 3: Miss on that. What's another one I think think about

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Speaker 3: about two.

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Speaker 1: Item number two, take care of your required minimum distributions

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Speaker 1: before the deadline, which by the way is December thirty first,

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Speaker 1: in order to avoid costly penalties if you're required to

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Speaker 1: take those distributions from iras or workplace plans from which

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Speaker 1: you've separated from service. And we find this I won't

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Speaker 1: say often, but occasionally people have those old four to

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Speaker 1: oh one K plans lying around and you know they've

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Speaker 1: reached age seventy three seventy five and they've completely forgotten

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Speaker 1: to take their arms, and believe me, if you're not

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Speaker 1: paying attention, the irs definitely is and you'll get a

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Speaker 1: hefty penalty if you don't take care of that. If

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Speaker 1: you don't need the income from your r and ds,

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Speaker 1: consider making a qualified charitable distribution directly from your IRA

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Speaker 1: to a qualified charity. The amount donated will not count

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Speaker 1: towards your taxable income, and that really creates a win

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Speaker 1: win for your generosity and for your tax efficiency.

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Speaker 5: What do we have next, Brian?

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Speaker 3: Speaking of charities? Right, So, what Bob just talked about is.

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Speaker 4: For people who are seventy and a half an older

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Speaker 4: with iras and they have to they have the ability

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Speaker 4: to do those qualified charitable distributions.

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Speaker 3: But those aren't the only people who might be charitable.

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Speaker 4: So if you are charitably inclined and not that age,

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Speaker 4: then you can be gifting appreciated securities instead of cash.

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Speaker 4: If you are sitting on a pile of stocks and

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Speaker 4: bonds and things that are sitting at gains and you've

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Speaker 4: always felt like I shouldn't touch these, that's a bad

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Speaker 4: idea because that's going to trigger capital gains. And then

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Speaker 4: you turn around and write a check to a church

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Speaker 4: or some other charity. You're doing it wrong. Give them

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Speaker 4: those long held investments that you've convinced yourself you can't

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Speaker 4: touch because the taxes hand them over in kind. You're

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Speaker 4: literally just giving them the shares of P and G

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Speaker 4: or Microsoft or whatever stock you own. You're not selling them.

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Speaker 4: The charity will sell them, and they are a tax

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Speaker 4: free entity. Provided they're a real five oh one C

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Speaker 4: three charity. They don't pay taxes either, So that's a

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Speaker 4: way that you can avoid your own capital gains taxes

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Speaker 4: and not hit your own checking account for those charitable

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Speaker 4: charitable contributions. Also, bunch them together with the hired standard deductions.

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Speaker 4: A lot of households aren't itemizing any year, which means

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Speaker 4: this is why we're not keeping receipts anymore for that

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Speaker 4: bag of laundry that we just gave to goodwill, because

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Speaker 4: itemization just doesn't do it anymore with a much higher

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Speaker 4: standard deduction we got in twenty seventeen. So one approach

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Speaker 4: is to if you know you're going to be giving

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Speaker 4: a lot of money to one charity, you can bunch

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Speaker 4: all of that into one tax year. A really efficient

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Speaker 4: way to do this is through a donor advised fund

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Speaker 4: which allows you to make several years worth of donations

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Speaker 4: in one year for that year's tax deduction, but you

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Speaker 4: also are not giving it.

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Speaker 3: Direct to the charity.

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Speaker 4: That donor advice fund acts as a middleman and it

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Speaker 4: keeps the charity from assuming that you're always going to

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Speaker 4: be giving them five years worth of contributions every single year.

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Speaker 4: Donor advice funds are a really really powerful tool for

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Speaker 4: that type of thing.

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Speaker 5: All right.

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Speaker 1: Next, let's talk about reviewing capital gains and losses. Tax

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Speaker 1: loss harvesting is huge, and it can help offset gains

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Speaker 1: elsewhere and even reduce a small portion of your ordinary income.

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Speaker 1: Just be mindful of the wash sale rule, which prohibits

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Speaker 1: repurchasing what's referred to as a quote substantially identical unquote

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Speaker 1: investment within thirty days. That's kind of how the wash

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Speaker 1: sale rule works. Gain harvesting can also be valuable if

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Speaker 1: you're in a lower tax bracket this year. Realizing gains

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Speaker 1: intentionally now can reset your cost basis at a higher

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Speaker 1: level for the future. All right, Brian, let's get into

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Speaker 1: hsays and FSAs. These health savings accounts an often overlooked

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Speaker 1: tool that really really generates some huge tax benefits.

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Speaker 4: HSA FSA Health savings accounts and flexible spending accounts two

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Speaker 4: very different things that are to support the same spending goal.

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Speaker 4: So a health savings account HSA, that's one of the

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Speaker 4: most tax advantage tools available. Your contributions are deductible when

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Speaker 4: you put them in the growth if you invest it right.

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Speaker 4: That's usually a second step. A lot of employers just

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Speaker 4: have something that looks like a bank account and people

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Speaker 4: think they don't have any options.

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Speaker 3: You do.

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Speaker 4: You're allowed to move those dollars if they don't offer

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Speaker 4: you investment. You know, there should be options that look

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Speaker 4: like you're four h one K mutual funds and those

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Speaker 4: kinds of things.

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Speaker 3: If they don't offer that in that account, you can move.

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Speaker 4: That to some other providers such as a fidelity and

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Speaker 4: there's others out there as well. But anyway, so assuming

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Speaker 4: you've got it invested, then that growth is tax deferred,

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Speaker 4: and if you're withdrawing for qualified medical expenses, that's tax

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Speaker 4: free too. Now here's the trick though, since you can

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Speaker 4: because you might look at this and say, well, why

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Speaker 4: am I going to invest money? I'm going to pull

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Speaker 4: right back out for medical expenses. No, no, no, you're not.

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Speaker 4: If you really want to take advantage of this, then

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Speaker 4: make sure you're you're set up in a way where

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Speaker 4: you can leave those dollars in there, leave them invested

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Speaker 4: just like any other investment. If you can cash flow

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Speaker 4: your actual medical expenses, just pay them out of your

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Speaker 4: normal cash flow, hang on to the receipts, stack them

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Speaker 4: all up for decades, and you in the future you

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Speaker 4: can use those receipts to take out a very sizeable

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Speaker 4: tax free distribution off of money that has been growing

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Speaker 4: for a couple decades. That's how you really take advantage

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Speaker 4: of a health savings account. Now you might have a

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Speaker 4: flexible spending account that's a little different. Check your plans,

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Speaker 4: rules and your balance.

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Speaker 3: Here's the big one. Most FSAs are user to lose it.

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Speaker 4: You got six weeks to go buy fifteen pairs of

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Speaker 4: glasses or whatever you're going to do, But those dollars

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Speaker 4: are not probably not going to be available to you

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Speaker 4: after year end. So get those appointments, scheduled, refill prescriptions.

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Speaker 4: Talk to your dentist. Maybe you can prepay the next

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Speaker 4: whatever you're going to do for next year. Get the

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Speaker 4: new glasses frames, all that kind of stuff. If you

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Speaker 4: have an FSA, don't forget to spend it.

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Speaker 5: You're listening to simply Money.

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Speaker 1: It's about all Worth Financial IMBOB sponsorer along with Brian James,

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Speaker 1: and we're continuing to work through some year end tax

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Speaker 1: planning tips. Here's another one that's very important. Check your

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Speaker 1: withholding in your estimated taxes. If you had variable income

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Speaker 1: this year thank bonuses, commissions, stock sales or business related income.

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Speaker 1: Make sure you've paid enough in taxes to avoid under

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Speaker 1: withholding penalties, but not too much that you're giving the

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Speaker 1: government an interest free loan. And what this usually involves

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Speaker 1: is just a quick check in with your tax professional

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Speaker 1: or CPA just to confirm whether you've met the IRS

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Speaker 1: safe harbor for withholdings or estimated taxes. And if you

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Speaker 1: need to make an estimated payment before year end, make

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Speaker 1: sure that gets done so you can avoid some penalties.

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Speaker 1: And kind of tying into that whole thing, review your

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Speaker 1: equity compensation for the year. You know, we deal with

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Speaker 1: a lot of people that have incentive stock options that

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Speaker 1: got exercise this year. Run a projection for alternative minimum

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Speaker 1: tax before exercising those options to avoid some surprises. The

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Speaker 1: same thing with restricted stock units. I mean those things

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Speaker 1: generate taxable income when they vest, and then you know

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Speaker 1: decide whether to sell the shares when they vest to

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Speaker 1: diversify and set aside those funds for taxes, or hold

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Speaker 1: them as part hold the stock as part of your

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Speaker 1: long term allocation of that particular company. If you had

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Speaker 1: a large vest this year, strategies like charitable giving, gifting

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Speaker 1: to a donor advice fund, or tax loss harvesting can

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Speaker 1: really help balance the impact of that equity based compensation

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Speaker 1: and taxable income.

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Speaker 3: Hey Bob, all right, yep, yeah, I want to go

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Speaker 3: back real quick.

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Speaker 4: You made a comment about making an estimated payment before

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Speaker 4: the year end if you need to do that, and

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Speaker 4: that's of course a great, great, great thing to look at.

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Speaker 4: I want to make sure everybody knows that you can

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Speaker 4: do that electronically.

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Speaker 3: There is a site out there.

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Speaker 4: I don't know why that the IRS doesn't push it,

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Speaker 4: but they have a website for Electronic Funds Transfer.

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Speaker 3: And it is e f T P S dot go ov.

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Speaker 4: Electronics Funds Transfer PS dot go ov and you can

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Speaker 4: link that to your bank account, you set up your

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Speaker 4: own profile, and it will keep track of those payments

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Speaker 4: you made. I think a lot of people are hesitant

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Speaker 4: to make estimated payments because it's a pain in the butt.

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Speaker 4: I gotta deal with paper, because the only way I

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Speaker 4: can do that is with this little slip that came

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Speaker 4: out of my turbo tax output. You don't have to

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Speaker 4: use that, you don't have to mail it in. You

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Speaker 4: can go electronically. That's what I do, and then I've

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Speaker 4: got a record. All I gotta do is log in

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Speaker 4: at tax time and I can say, here's the money

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Speaker 4: I paid for estimated.

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Speaker 3: Taxes, so I know that that's done.

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Speaker 4: Otherwise I'd have to maintain my little copy of my

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Speaker 4: check and I'm just not good.

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Speaker 1: And finally, well, Brian, I think it's great that you

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Speaker 1: brought up that up for another reason, and that's just

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Speaker 1: keeping your money secure.

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Speaker 3: And here's what I mean.

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Speaker 1: This time of year, I never like to mail checks

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Speaker 1: of any size, you know, in the regular US postal service,

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Speaker 1: because that's stuff they tend to get lost and in

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Speaker 1: rare cases they get stolen. So, you know, setting up

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Speaker 1: a secure, encrypted way to pay the irs, it's more

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Speaker 1: convenient and it makes sure that your money remains safe. Great,

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Speaker 1: good for you for bringing that option up. I'm going

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Speaker 1: to look into that myself. Talk about what we need

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Speaker 1: to be doing tax wise before the end of the year.

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Speaker 1: If you're a business owner.

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Speaker 4: Yeah, so you've got key opportunities there. If you are

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Speaker 4: a business owner, then there's a lot of extra bells

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Speaker 4: and whistles and levers and buttons.

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Speaker 3: You can pull.

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Speaker 4: But so set up at fund that retirement plan. A

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Speaker 4: SOLO four oh one K or a sepi RA can

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Speaker 4: deliver really meaningful deductions, but those have to be established

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Speaker 4: by year end and often even sooner. So if that's

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Speaker 4: something that rings a bell you've been meaning to do

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Speaker 4: it all year, get on the horn of your accountant.

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Speaker 4: Time the income and the expense is the right way.

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Speaker 4: Make sure those deductions if you can accelerate them now,

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Speaker 4: pay for stuff that you're going to use in January.

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Speaker 3: Go ahead and do it. If you need the deduction,

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Speaker 3: and it's time.

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Speaker 4: To tidy up the books and make sure payroll filings

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Speaker 4: are current so that you don't have a miserable Q

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Speaker 4: one running a business and preparing for taxes. Your CPA

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Speaker 4: will thank you. Another one is take a look at

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Speaker 4: family gifts. Education funding. Annual exclusion gifts are a real

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Speaker 4: tax efficient way to transfer wealth to your children or

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Speaker 4: your grandchildren without affecting your lifetime exemption. There are creative

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Speaker 4: ways to get that money out of your state without

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Speaker 4: paying any taxes at all, and you can benefit them

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Speaker 4: now while while you can still see them enjoy it too.

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Speaker 4: And last, and not least, just tie up these loose ends.

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Speaker 4: Make sure your retirement accounts have beneficiaries attached to them,

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Speaker 4: make sure your insurance policies all have up to date beneficiaries,

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Speaker 4: and health savings accounts. All that stuff overrides your will,

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Speaker 4: so make sure the beneficiaries that can be clearly named

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Speaker 4: on financial accounts are named.

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Speaker 5: Here's the all Worth advice.

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Speaker 1: Taking action now ensures your money is working as efficiencly

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Speaker 1: as possible.

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Speaker 2: For the goals that matter most to you.

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Speaker 1: Coming up next, we'll explain why chasing an upcoming seasonal

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Speaker 1: trend might land your portfolio on the naughty list. Plus

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Speaker 1: the end of an era for the most famous investor

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Speaker 1: there is. You're listening to Simply Money presented by all

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Speaker 1: Worth Financial on fifty five KRC the talk station. 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 straight ahead of six

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Speaker 1: forty three RMD surprises, stock options, tax traps, and what

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Speaker 1: to do with an inherited home. All of that coming

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Speaker 1: up in our Ask the Advisor segment. Well, our show

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Speaker 1: producer was out and about and the other day and

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Speaker 1: was asked this question, what is the Santa Claus Rally.

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Speaker 1: Let's answer that one for you, Brian. What is the

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Speaker 1: Santa clause Rally?

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Speaker 4: Well, the Santa Claus Rally, that's what's about to start happening.

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Speaker 4: It's the stretch from the trading day after Christmas through

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Speaker 4: the first two trading days of January when the Dow

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Speaker 4: Jones has historically risen seventy seventy seven percent of the time.

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Speaker 4: The whole idea here is that slower trading, holiday optimism,

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Speaker 4: year end bonuses, institutional managers wrapping up for the year

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Speaker 4: all might contribute slower trading. Basically, that means that there

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Speaker 4: aren't as many trades being made because a lot of

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Speaker 4: people are on vacation. There's just less activity, and that

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Speaker 4: it tends to push the market up a little bit

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Speaker 4: and there's not as much a dissent in the market

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Speaker 4: as if.

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Speaker 3: You will, because there's fewer people participating. It doesn't last

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Speaker 3: very long.

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Speaker 4: But so now we've got people trying to expand it

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Speaker 4: to mid November or even just declaring that it's already here,

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Speaker 4: same way as we just drag the holiday decorations out

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Speaker 4: in the hardware stores around, you know, back in September,

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Speaker 4: just because the market had a good few good weeks

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Speaker 4: and it's cold outside. We're just declaring this is the

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Speaker 4: Santa Claus rally. That's not really investing, that's just calendar

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Speaker 4: cherry picking, right, Bob.

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Speaker 2: Yeah, for sure.

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Speaker 1: I mean Wall Street, And let's face it, the media

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Speaker 1: they love this kind of seasonal chatter because it keeps

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Speaker 1: people watching and trading and clicking. But it's really, you know,

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Speaker 1: when it comes down to it, it's just entertainment. It's,

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Speaker 1: for lack of a better term, it's just market astrology.

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Speaker 2: Let's be honest.

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Speaker 1: If there really was a consistent exploitable rally every December,

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Speaker 1: it wouldn't exist anymore because smart market participants would get

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Speaker 1: out ahead of it and it would already be priced

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Speaker 1: into the market. So, you know, just avoid what all

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Speaker 1: these talking heads get on there and do. People are

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Speaker 1: going to talk their book either hoping the market goes

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Speaker 1: up or down.

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Speaker 2: It's just the way things tend to work all right.

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Speaker 1: On another topic, Warren Buffett just made a quiet announcement

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Speaker 1: that marks the end of an era. After decades, he

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Speaker 1: is stepping away from writing his legendary annual Berkshire Hathaway

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Speaker 1: shareholder letter and he will no longer partake in the

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Speaker 1: annual shareholder meetings. Brian, have you ever been to one

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Speaker 1: of those shareholder meetings? I have not, but I've heard.

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Speaker 1: I've talked a couple people that have actually been in

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Speaker 1: those meetings and they were just fantastic. It's it really

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Speaker 1: is the end of an era where you know, mister

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Speaker 1: Buffett would just sit down and talk about you know,

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Speaker 1: their company and the economy and everything. It's kind of

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Speaker 1: sad to see this happening, but life marches on.

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Speaker 4: Yeah, one of the greatest brains in investing history is

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Speaker 4: starting to step back. And the man's ninety five years old,

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Speaker 4: so of course I think he's earned the right to.

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Speaker 3: Call his shot at this point.

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Speaker 4: But no, I have not ever attended one of those,

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Speaker 4: but I do read that letter when it comes out.

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Speaker 4: Is it always has good insights there, and so it's

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Speaker 4: gonna be interesting to see who will step in to

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Speaker 4: fill that void because we've always had Uncle Warren to

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Speaker 4: look to just to think, just to check in and

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Speaker 4: see what he thinks, you know, when we're thinking about

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Speaker 4: our investments. So interestingly, yeah, obviously one of the one

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Speaker 4: of the richest people on the face of the earth,

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Speaker 4: and gave it away at least once, the bulk of it,

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Speaker 4: and then built it all back up again.

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Speaker 3: So he's going to continue to do that.

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Speaker 4: He's going to continue to give away billions to charity

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Speaker 4: until there's nothing left, and he's also assigning his own

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Speaker 4: children that responsibility to continue to distribute it. And alongside that,

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Speaker 4: he announced a donation of about one point three billion

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Speaker 4: dollars worth of his own company, Berkshire Hathaway, to four

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Speaker 4: different family foundations. And so even after that gift, he's

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Speaker 4: still got about one hundred and ninety six thousand Class

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Speaker 4: A shares of Berkshire. These are the big ones, right,

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Speaker 4: These are the ones where you look at people look

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Speaker 4: at and they go, wow, that's I got to pay

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Speaker 4: that much for one share.

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Speaker 3: Well, that's why the Class B exists.

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Speaker 4: Well there's almost one company that has retail and institutional

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Speaker 4: shares of itself.

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Speaker 3: But anyway, his.

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Speaker 4: Ownership represents about one hundred and forty seven billion dollars

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Speaker 4: worth of Berkshire hash away. So the next question is

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Speaker 4: when's he going to dis that money out. What's he

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Speaker 4: had to say about that, Bob.

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Speaker 1: Well, he says he would like to hang on to

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Speaker 1: a significant amount of that stock until Berkshire shareholders developed

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Speaker 1: the comfort level with incoming CEO, Greg Abel. I think

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Speaker 1: that they they've done a pretty good transition here bringing

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Speaker 1: mister Abel on board. So mister Buffett said he doesn't

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Speaker 1: think the level of confidence is going to take that long.

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Speaker 1: I think shareholders of you know, Berkshire agree. But uh yeah,

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Speaker 1: he's not going to unload one hundred It would be

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Speaker 1: hard to unload one hundred and forty seven billion dollars responsibly,

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Speaker 1: you know, in very short order, but it'll be it'll

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Speaker 1: be fun to watch how mister Buffett and his family

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Speaker 1: benefits society through those you know.

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Speaker 2: Large gains over the years.

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Speaker 1: He ended his letter his Thanksgiving letter this year by

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Speaker 1: giving thanks to all shareholders, even the ones he didn't like,

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Speaker 1: and he said quote, I wish all who read this

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Speaker 1: a very happy Thanksgiving, Yes, even the because it's never

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Speaker 1: too late to change. How about that for a way

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Speaker 1: to sign off to the general public.

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Speaker 3: There, Brian, when I am ninety five, I'm gonna be

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Speaker 3: warned of it all right.

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Speaker 1: Every Sunday you will find our all Worth Advice in

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Speaker 1: the Cincinnati Inquire And here's a preview, Brian. Here's a

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Speaker 1: question for you. DS from Oakley says, my wife was

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Speaker 1: just offered a severance package to leave her corporate job.

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Speaker 1: How do we know if she should take it?

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Speaker 4: Well, hopefully this is one of the reasons that we

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Speaker 4: would want a financial plan in place before we get

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Speaker 4: this kind of a curve ball here, because this can

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Speaker 4: be very jarring for somebody who hasn't taken the time

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Speaker 4: to build a financial plan, probably doesn't really have a

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Speaker 4: great idea of where they are. They could be perfectly fine,

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Speaker 4: but they don't know because we haven't done that math.

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Speaker 4: So when these things drop out of the sky and

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Speaker 4: I got to think about a huge decision, a huge

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Speaker 4: life changing decision, I don't really know what my baseline is.

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Speaker 4: So I would suggest getting a financial plan together.

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Speaker 3: Run those numbers.

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Speaker 4: Run the numbers you and I would think this is

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Speaker 4: very important too. Run the numbers. Is if the severance

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Speaker 4: packages doesn't exist first and run yourself out to whatever

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Speaker 4: whatever you have in mind for a retirement age, and

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Speaker 4: then now do it again. Take that take into account.

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Speaker 4: All right, this job is going to end here? Can

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Speaker 4: I get away with retirement?

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Speaker 5: Now?

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Speaker 4: We don't know how old DS and his spouse are.

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Speaker 4: Uh so, maybe they're in the retirement window anyway and

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Speaker 4: could be could potentially benefit from that. But run the

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Speaker 4: numbers again with the severance package in and retiring a

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Speaker 4: little sooner. If you can do it financially, then focus

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Speaker 4: on the bigger question, which is what am I going

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Speaker 4: to do with all of that free time? If you

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Speaker 4: can't do it well, then you're going to probably want

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Speaker 4: to start thinking about what that next move is going

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Speaker 4: to be to create some more income.

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Speaker 1: Yeah, and that leads us to a great question you

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Speaker 1: might have asked yourself, should I quit, retire or go

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Speaker 1: part time next? Some decision making tools for when you're

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Speaker 1: financially ready but maybe not professionally ready to pull the

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Speaker 1: ripcord and leave your job. 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 because I know

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Speaker 1: by all Worth Financial. I'm Bob sponsorer along with Brian James,

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Speaker 1: joined tonight by our career expert Julie Balki. Julie on

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00:20:13,960 --> 00:20:16,560
Speaker 1: the job Julie, first of all, thanks for making time

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00:20:16,600 --> 00:20:19,840
Speaker 1: for us tonight, and we've got an interesting topic to

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00:20:19,880 --> 00:20:22,960
Speaker 1: cover with you. You know, some open ended question here

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00:20:23,000 --> 00:20:24,479
Speaker 1: here for you just to start.

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Speaker 3: And I know you deal with a.

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Speaker 1: Lot of people that are going through this question. You know,

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00:20:30,160 --> 00:20:33,000
Speaker 1: should I retire altogether, meaning just quit and hang it

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00:20:33,119 --> 00:20:36,960
Speaker 1: up and retire or go part time? And how what

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Speaker 1: goes into making those kinds of decisions. So we're interested

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Speaker 1: in your thoughts on that, Julie, as you navigate these

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00:20:43,760 --> 00:20:47,960
Speaker 1: complex questions with your clients all the time in your practice.

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Speaker 6: Of course. Thing the analogy I always like to use

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00:20:51,240 --> 00:20:53,000
Speaker 6: when it comes to this is, you know how we

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00:20:53,040 --> 00:20:56,800
Speaker 6: all use Google maps or ways, So when you think

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00:20:56,800 --> 00:20:59,320
Speaker 6: about when you're trying to get when you want to

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00:20:59,320 --> 00:21:02,760
Speaker 6: get where you're trying to go with those with those apps,

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00:21:02,880 --> 00:21:05,760
Speaker 6: you put a destination in you know exactly where you're

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00:21:05,760 --> 00:21:08,600
Speaker 6: trying to go. The problem with so I like to

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00:21:08,680 --> 00:21:12,680
Speaker 6: use that analogy to say, to really be successful getting someplace,

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00:21:13,200 --> 00:21:15,520
Speaker 6: you've got to have some general idea of where you're

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00:21:15,560 --> 00:21:17,720
Speaker 6: trying to go. So the first question I would ask

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Speaker 6: someone is if you're financially ready. If that's not an issue,

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Speaker 6: how do you feel about the work you do right now?

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Speaker 6: If you say I absolutely hate it and I can't

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00:21:27,720 --> 00:21:30,520
Speaker 6: wait to get out, then I think I can you

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00:21:30,520 --> 00:21:33,480
Speaker 6: throw the baby and the bathwater out and start with

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00:21:33,520 --> 00:21:35,239
Speaker 6: a fresh sheet of paper and say, Okay, I'm going

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00:21:35,280 --> 00:21:38,200
Speaker 6: to create something for the next stage of my life.

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Speaker 6: The next option would be like, Okay, I like parts

470
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Speaker 6: of it. There's parts of what I'd love to keep doing.

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00:21:43,880 --> 00:21:46,359
Speaker 6: And in that case, I recommend you talk to your

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00:21:46,440 --> 00:21:49,320
Speaker 6: leaders about is there a way that you could go

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00:21:49,440 --> 00:21:54,040
Speaker 6: part time maybe just doing the things that you're uniquely

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00:21:54,160 --> 00:21:57,400
Speaker 6: qualified and skilled at doing. Just make sure you don't

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00:21:57,400 --> 00:22:00,920
Speaker 6: accept part time pay for full time work. So what

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00:22:01,240 --> 00:22:03,480
Speaker 6: what pieces of what I do now can I carve

477
00:22:03,520 --> 00:22:08,320
Speaker 6: out in order to make that transition from forty plus

478
00:22:08,320 --> 00:22:12,440
Speaker 6: hours a week zero hours a week much smoother. And

479
00:22:12,480 --> 00:22:15,240
Speaker 6: then there are times when we can't. We say, you

480
00:22:15,240 --> 00:22:17,560
Speaker 6: know what, I want to keep doing what I'm doing now,

481
00:22:18,119 --> 00:22:19,639
Speaker 6: but I only want to do it for another year

482
00:22:19,800 --> 00:22:22,000
Speaker 6: or so. And so in that case, what can you

483
00:22:22,080 --> 00:22:25,200
Speaker 6: start doing to start filling up that other life bucket,

484
00:22:25,280 --> 00:22:29,960
Speaker 6: let's call it. So getting clear on what your situation

485
00:22:30,320 --> 00:22:33,480
Speaker 6: is today and what your possibilities are. You might work

486
00:22:33,520 --> 00:22:35,639
Speaker 6: for a company that says, naw, we need you a

487
00:22:35,680 --> 00:22:38,000
Speaker 6: full time or not at all. Okay, well that's going

488
00:22:38,080 --> 00:22:41,040
Speaker 6: to tell you what you need to do, and you

489
00:22:41,200 --> 00:22:43,440
Speaker 6: at that point it's like, Okay, now I need to

490
00:22:43,480 --> 00:22:46,920
Speaker 6: start planning for the day when the retirement party. They've

491
00:22:46,960 --> 00:22:49,680
Speaker 6: taken the streamers and balloons down and now it's time

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00:22:49,680 --> 00:22:53,359
Speaker 6: for me to go do something else. It is a

493
00:22:53,840 --> 00:23:02,080
Speaker 6: wildly underestimated, under talked about stressful process to surely retirement.

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00:23:02,640 --> 00:23:04,040
Speaker 3: So okay, well let's talk about that.

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00:23:04,080 --> 00:23:06,720
Speaker 4: So yeah, yeah, it is very stressful, and you get

496
00:23:06,760 --> 00:23:07,600
Speaker 4: to hear a lot of stories.

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00:23:07,600 --> 00:23:08,520
Speaker 3: So but Bob and I have.

498
00:23:08,480 --> 00:23:11,160
Speaker 4: Our own war stories from the financial side, right, So

499
00:23:11,200 --> 00:23:12,879
Speaker 4: how do we make the numbers work from all this?

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00:23:13,160 --> 00:23:13,840
Speaker 2: What are some of.

501
00:23:13,760 --> 00:23:16,800
Speaker 4: The stories that you hear? But you're more on the

502
00:23:16,920 --> 00:23:19,840
Speaker 4: day to day career side. So so let's say you

503
00:23:19,960 --> 00:23:22,679
Speaker 4: sense that somebody is they're really kind of ready to go,

504
00:23:22,760 --> 00:23:24,679
Speaker 4: but maybe there's not a little bit. What if somebody

505
00:23:24,680 --> 00:23:27,159
Speaker 4: pulls the trigger a little bit too soon? What are

506
00:23:27,200 --> 00:23:29,160
Speaker 4: the biggest regrets you tend to hear from people who

507
00:23:29,160 --> 00:23:30,160
Speaker 4: may be hung it up too early.

508
00:23:31,640 --> 00:23:35,520
Speaker 6: Yeah, the biggest regrets come from people who hung it

509
00:23:35,600 --> 00:23:40,040
Speaker 6: up too early because they've not jumped to something that

510
00:23:40,040 --> 00:23:43,320
Speaker 6: they're excited about. In other words, the dislike for what

511
00:23:43,440 --> 00:23:48,280
Speaker 6: they were doing over road their patients. So they might say,

512
00:23:48,320 --> 00:23:50,359
Speaker 6: you know what, I'm going to go be a volunteer

513
00:23:50,359 --> 00:23:53,560
Speaker 6: full time, or I'm going to go play golf until

514
00:23:53,600 --> 00:23:56,160
Speaker 6: I can't stand it anymore, or I'm going to go

515
00:23:56,320 --> 00:23:58,639
Speaker 6: do more, you know, spend more time on a hobby.

516
00:23:58,680 --> 00:24:01,439
Speaker 6: I actually at a client several years ago who was

517
00:24:01,480 --> 00:24:03,800
Speaker 6: on the road so much, and when he got to

518
00:24:03,800 --> 00:24:06,080
Speaker 6: the point that he could retire, he quit cold Turkey

519
00:24:06,720 --> 00:24:11,920
Speaker 6: and he went moved to Florida golf, pickleball, tennis, racketball.

520
00:24:12,840 --> 00:24:15,000
Speaker 6: He said so much of it that he hurt his shoulder.

521
00:24:15,640 --> 00:24:18,439
Speaker 6: And he's like, now, I said, I jumped from one

522
00:24:18,520 --> 00:24:20,240
Speaker 6: hundred and twenty percent at one thing to one hundred

523
00:24:20,240 --> 00:24:22,560
Speaker 6: and twenty percent at another. And he realized at that

524
00:24:22,640 --> 00:24:26,080
Speaker 6: point that that life of one hundred percent leisure, while

525
00:24:26,119 --> 00:24:30,199
Speaker 6: tantilizing in concept, was not only not good for his body,

526
00:24:30,520 --> 00:24:32,320
Speaker 6: but it also wasn't good for his mind and so

527
00:24:32,359 --> 00:24:36,480
Speaker 6: he went back to work doing some consulting, and so

528
00:24:36,520 --> 00:24:40,280
Speaker 6: it's it's you know, you have to know if your

529
00:24:40,400 --> 00:24:43,080
Speaker 6: identity is tied up in your job, then you are

530
00:24:43,080 --> 00:24:45,480
Speaker 6: going to have a harder part. You're going to have

531
00:24:45,520 --> 00:24:47,600
Speaker 6: a harder time of this, or if you don't have

532
00:24:47,920 --> 00:24:50,480
Speaker 6: anything that you're interested in. I've been talking about this

533
00:24:50,920 --> 00:24:56,399
Speaker 6: with people recently, and with men it's especially hard because

534
00:24:57,080 --> 00:25:00,440
Speaker 6: they generally don't have the friend and support at work

535
00:25:01,040 --> 00:25:04,000
Speaker 6: that women do. And so now you're sixty some years

536
00:25:04,040 --> 00:25:07,280
Speaker 6: old and you're trying to find people to do stuff

537
00:25:07,320 --> 00:25:10,199
Speaker 6: with and wives are saying, we don't really want to

538
00:25:10,200 --> 00:25:12,679
Speaker 6: be your one hundred percent entertainment.

539
00:25:12,880 --> 00:25:14,560
Speaker 3: And so how my.

540
00:25:14,480 --> 00:25:17,639
Speaker 4: Wife would never say that she loves every minute.

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Speaker 6: She just spit her coffee out right now she's looking.

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00:25:21,200 --> 00:25:26,040
Speaker 3: At this, But apparently you've met okay, real work.

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Speaker 6: Yeah, you have to get realistic about all the pieces

544
00:25:29,520 --> 00:25:32,920
Speaker 6: of your life. If things are really, really, really bad

545
00:25:32,960 --> 00:25:34,480
Speaker 6: and you feel like you're being pushed out, and then

546
00:25:34,480 --> 00:25:37,120
Speaker 6: it can be worth it to just stop pull turkey,

547
00:25:37,680 --> 00:25:41,360
Speaker 6: take up breast, and then rebuild something new. But if

548
00:25:41,400 --> 00:25:43,800
Speaker 6: you generally like what you do a portions of what

549
00:25:43,840 --> 00:25:47,240
Speaker 6: you do, the smarter play can be a slower exit,

550
00:25:47,680 --> 00:25:49,720
Speaker 6: or you get a chance to try some things on

551
00:25:49,760 --> 00:25:51,560
Speaker 6: the other end and to build on the other end

552
00:25:52,240 --> 00:25:54,720
Speaker 6: before before you go full time, because some of the

553
00:25:54,720 --> 00:25:56,800
Speaker 6: things you think you're going to enjoy doing in retirement

554
00:25:57,080 --> 00:25:59,800
Speaker 6: you won't, and you're going to discover some new things.

555
00:26:00,520 --> 00:26:03,560
Speaker 6: Once you allow yourself to be really open minded around

556
00:26:03,600 --> 00:26:07,080
Speaker 6: that that you do choose to pursue, it can be

557
00:26:07,200 --> 00:26:10,680
Speaker 6: a really wonderful time. But it's not an easy time

558
00:26:10,720 --> 00:26:14,080
Speaker 6: because you're also dealing with the mental piece, which is,

559
00:26:14,200 --> 00:26:17,399
Speaker 6: oh my gosh, this is that last portion of my life,

560
00:26:17,840 --> 00:26:21,879
Speaker 6: which is really quite you know, quite sobering, and so

561
00:26:21,920 --> 00:26:23,840
Speaker 6: you're dealing with a lot of that kind of stuff

562
00:26:23,880 --> 00:26:26,399
Speaker 6: as well, maybe some regret, maybe you know, all that

563
00:26:26,440 --> 00:26:30,399
Speaker 6: stuff that comes with a major transition. And so be realistic,

564
00:26:32,800 --> 00:26:36,120
Speaker 6: be realistic about who you are, what your support systems are,

565
00:26:36,160 --> 00:26:39,760
Speaker 6: which your hobbies and interests are, and you have to

566
00:26:39,800 --> 00:26:42,080
Speaker 6: get out there and be bold and vulnerable a little

567
00:26:42,080 --> 00:26:44,600
Speaker 6: bit and know that you're really, in a lot of

568
00:26:44,600 --> 00:26:47,800
Speaker 6: ways building a brand new stage of life, all.

569
00:26:47,760 --> 00:26:49,919
Speaker 1: Right, Julie, In the minute we got left here one

570
00:26:49,960 --> 00:26:52,439
Speaker 1: of the best ideas I've heard on this topic, and

571
00:26:52,520 --> 00:26:55,040
Speaker 1: I think the idea actually came from you in one

572
00:26:55,040 --> 00:26:57,439
Speaker 1: of the prior segments we've done with you. And that's

573
00:26:57,760 --> 00:27:00,119
Speaker 1: once you get to that point where you know you're

574
00:27:00,119 --> 00:27:02,080
Speaker 1: going to probably retire in a year or a year

575
00:27:02,080 --> 00:27:04,240
Speaker 1: and a half or what have you, that's the time

576
00:27:04,280 --> 00:27:07,879
Speaker 1: to maybe take that one or two week vacation and

577
00:27:08,000 --> 00:27:12,280
Speaker 1: actually trial run retirement. Now that takes some planning, right, Julie,

578
00:27:12,320 --> 00:27:16,040
Speaker 1: But pretend that you're retired on your vacation and actually

579
00:27:16,080 --> 00:27:18,080
Speaker 1: plan out what you think you're going to want to

580
00:27:18,119 --> 00:27:20,840
Speaker 1: do to make sure that that's really what you're going

581
00:27:20,920 --> 00:27:21,359
Speaker 1: to enjoy.

582
00:27:21,400 --> 00:27:22,720
Speaker 5: Am I on the right track there?

583
00:27:23,480 --> 00:27:26,600
Speaker 6: Yeah? Absolutely, you've got to try things out. You've got

584
00:27:26,600 --> 00:27:29,320
Speaker 6: to get out of your head. You've got to say, look,

585
00:27:29,320 --> 00:27:33,480
Speaker 6: if my goal is to give back or contribute more

586
00:27:33,480 --> 00:27:36,400
Speaker 6: in my community, maybe you take time to figure out

587
00:27:36,440 --> 00:27:38,960
Speaker 6: what is it, What is the way you want to contribute.

588
00:27:39,240 --> 00:27:43,480
Speaker 6: Then start researching organizations that do that and figure out

589
00:27:43,520 --> 00:27:45,480
Speaker 6: what your role might be. And so you have to

590
00:27:45,480 --> 00:27:48,680
Speaker 6: take this on like a project and you're the project.

591
00:27:48,760 --> 00:27:52,080
Speaker 6: And that's the stuff. It's really really uncomfortable for us

592
00:27:52,119 --> 00:27:54,360
Speaker 6: because it causes us, it causes a bunch of other

593
00:27:54,440 --> 00:27:55,280
Speaker 6: stuff to surface.

594
00:27:55,600 --> 00:27:58,199
Speaker 5: But maybe we have to deal with Thanks for listening.

595
00:27:58,200 --> 00:28:00,480
Speaker 1: You've been listening to Simply Money presented by all Worth

596
00:28:00,480 --> 00:28:09,720
Speaker 1: Financial on fifty five KRC, the talk station. You're listening

597
00:28:09,800 --> 00:28:12,240
Speaker 1: to Simply Money presented by all Worth Financial. I'm Bob

598
00:28:12,320 --> 00:28:15,560
Speaker 1: Sponseller along with Brian James. Do you have a financial

599
00:28:15,640 --> 00:28:17,760
Speaker 1: question you'd like for us to answer. There's a red

600
00:28:17,800 --> 00:28:20,040
Speaker 1: button you can click while you're listening to the show

601
00:28:20,240 --> 00:28:23,879
Speaker 1: right on the iHeart app. Simply record your question and

602
00:28:23,960 --> 00:28:27,160
Speaker 1: it will come straight to us. All right, Brian, John

603
00:28:27,240 --> 00:28:31,119
Speaker 1: and Madeira says, our required minimum distributions are going to

604
00:28:31,200 --> 00:28:35,400
Speaker 1: be much larger than our actual spending needs. What strategies

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00:28:35,440 --> 00:28:38,680
Speaker 1: can help us avoid a huge tax bite?

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Speaker 4: We have very common question, John, Thanks for sending it

607
00:28:41,360 --> 00:28:43,280
Speaker 4: in and thanks for trusting us with to provide you

608
00:28:43,360 --> 00:28:44,040
Speaker 4: some feedback there.

609
00:28:44,040 --> 00:28:45,680
Speaker 3: Well, well, we don't know John's age.

610
00:28:46,080 --> 00:28:49,240
Speaker 4: He talks about RMD's requirementium distributions in the future tents,

611
00:28:49,280 --> 00:28:51,600
Speaker 4: so we're assuming he's not quite there yet. That's the case,

612
00:28:51,640 --> 00:28:54,120
Speaker 4: and he's got a couple alternatives. John, you can be

613
00:28:54,160 --> 00:28:56,880
Speaker 4: looking at roth conversions and the window for this is

614
00:28:57,280 --> 00:28:59,360
Speaker 4: the most ideal window for this is when you're in

615
00:28:59,400 --> 00:29:01,840
Speaker 4: the lowest brack you'll ever see. So perhaps you're retired,

616
00:29:02,080 --> 00:29:04,960
Speaker 4: maybe you haven't turned on social Security or pension benefits yet,

617
00:29:05,000 --> 00:29:09,160
Speaker 4: so there's no income generating tax taxation there, and obviously

618
00:29:09,160 --> 00:29:12,200
Speaker 4: you're not at requirementum distribution age, so those are That's

619
00:29:12,200 --> 00:29:14,600
Speaker 4: probably the lowest bracket that you've seen in decades, So

620
00:29:14,640 --> 00:29:17,440
Speaker 4: you might want to look at ROTH conversions here, or

621
00:29:17,680 --> 00:29:20,080
Speaker 4: even if maybe that's not on the table, or maybe

622
00:29:20,080 --> 00:29:21,680
Speaker 4: you got other things going on, another thing you can

623
00:29:21,720 --> 00:29:25,040
Speaker 4: do is just start accelerating withdrawals. Don't rule out the

624
00:29:25,080 --> 00:29:27,440
Speaker 4: IRA when you do need money for that vacation, the

625
00:29:27,480 --> 00:29:28,320
Speaker 4: next car or whatever.

626
00:29:28,560 --> 00:29:30,880
Speaker 3: Remember you're in the lowest bracket of your life.

627
00:29:30,960 --> 00:29:33,600
Speaker 4: If you take a chunk out, you can calculate what

628
00:29:33,640 --> 00:29:35,440
Speaker 4: the bracket will be and get an idea for how

629
00:29:35,480 --> 00:29:37,600
Speaker 4: you'll stay below whatever bracket.

630
00:29:37,280 --> 00:29:37,560
Speaker 3: You want to.

631
00:29:37,600 --> 00:29:40,280
Speaker 4: You want to avoid, but don't always avoid the IRA

632
00:29:40,400 --> 00:29:43,400
Speaker 4: because you know it's income taxable. Spread that out more

633
00:29:43,440 --> 00:29:46,320
Speaker 4: distributions over a longer period of time is going to

634
00:29:46,360 --> 00:29:48,960
Speaker 4: stretch it out into more tax years, therefore less taxes

635
00:29:49,000 --> 00:29:52,400
Speaker 4: percentage wise. So we will move on then to our

636
00:29:52,480 --> 00:29:55,360
Speaker 4: next question here, which comes from Jerry and Levin and

637
00:29:55,400 --> 00:29:58,240
Speaker 4: Jerry says he's the executor for his father's estate and

638
00:29:58,320 --> 00:30:01,240
Speaker 4: he's got business interests. Smoking ratulations, Jerry, that's going to

639
00:30:01,280 --> 00:30:02,720
Speaker 4: be a couple of curve balls for you to go

640
00:30:02,800 --> 00:30:05,200
Speaker 4: chase down. What steps does he need to take, Bob

641
00:30:05,240 --> 00:30:07,800
Speaker 4: to avoid some personal liability as he's selling this estate.

642
00:30:07,840 --> 00:30:08,600
Speaker 3: This is a tough one.

643
00:30:09,640 --> 00:30:12,600
Speaker 1: Well, it is a tough one, Jerry, And with you know,

644
00:30:12,920 --> 00:30:16,080
Speaker 1: with I take these questions literally and based on the

645
00:30:16,200 --> 00:30:19,360
Speaker 1: lack of information contained in the question. That's not your fault,

646
00:30:19,360 --> 00:30:22,200
Speaker 1: that's just the way you ask the question. Here's my advice.

647
00:30:23,080 --> 00:30:28,080
Speaker 1: Hit the pause button immediately, don't do anything, and go

648
00:30:28,240 --> 00:30:32,840
Speaker 1: network around a little bit and find a good qualified attorney,

649
00:30:32,960 --> 00:30:37,480
Speaker 1: someone that specializes in both business planning and estate planning.

650
00:30:37,600 --> 00:30:40,680
Speaker 1: They're out there. Just network around a little bit and

651
00:30:40,760 --> 00:30:44,320
Speaker 1: find one and don't take any action. Don't do anything

652
00:30:45,000 --> 00:30:49,080
Speaker 1: until you have consulted with a good attorney. Perhaps it's

653
00:30:49,120 --> 00:30:52,240
Speaker 1: your father's attorney, you know, who might be well skilled

654
00:30:52,240 --> 00:30:54,760
Speaker 1: in these things. And if that person has retired or

655
00:30:54,800 --> 00:30:58,160
Speaker 1: moved on or is no longer active, talk to your

656
00:30:58,400 --> 00:31:01,240
Speaker 1: your friends and colleagues and find a good attorney.

657
00:31:01,280 --> 00:31:05,040
Speaker 5: That's my best advice, because if.

658
00:31:04,720 --> 00:31:08,200
Speaker 1: You're involved in making decisions on behalf of the business

659
00:31:08,760 --> 00:31:12,440
Speaker 1: or operating the business in any way. After your father's passing,

660
00:31:12,520 --> 00:31:15,720
Speaker 1: you want to be real careful, you know, to protect yourself.

661
00:31:15,800 --> 00:31:19,240
Speaker 1: So get some good legal counsel here. I know it'll

662
00:31:19,280 --> 00:31:21,800
Speaker 1: cost a little bit of money to do that, but

663
00:31:22,840 --> 00:31:25,760
Speaker 1: my experience has been you know, a good attorney is

664
00:31:25,840 --> 00:31:28,840
Speaker 1: worth his or her weight in gold and can help

665
00:31:28,880 --> 00:31:31,680
Speaker 1: you avoid some possibly significant problems.

666
00:31:31,760 --> 00:31:33,480
Speaker 5: That's the best advice I could give.

667
00:31:33,920 --> 00:31:37,800
Speaker 1: All right, Kevin and Erlanger Brian he says, I've accumulated

668
00:31:37,840 --> 00:31:41,640
Speaker 1: stock options through work. What's the smartest way to exercise

669
00:31:41,760 --> 00:31:45,640
Speaker 1: them without triggering a massive tax bill all at once?

670
00:31:46,360 --> 00:31:50,160
Speaker 4: Okay, So this is another good one here, some complicated

671
00:31:50,160 --> 00:31:53,800
Speaker 4: features here to a very popular benefit plan that some

672
00:31:53,880 --> 00:31:56,880
Speaker 4: employers share with their employees. So your stock options are

673
00:31:56,880 --> 00:32:00,640
Speaker 4: gonna fall one of two categories. They're either ISOs incentives options,

674
00:32:00,720 --> 00:32:04,760
Speaker 4: or their nqsos non qualified stock options. Big differences between them.

675
00:32:04,960 --> 00:32:08,040
Speaker 4: If they happen to be of the incentive variety, then

676
00:32:08,080 --> 00:32:09,560
Speaker 4: you cane a little bit of a tax benefit there

677
00:32:09,560 --> 00:32:12,040
Speaker 4: if you hold those shares exercise and hold the shares

678
00:32:12,080 --> 00:32:15,880
Speaker 4: one year from the exercise in two years from the grant,

679
00:32:15,880 --> 00:32:18,440
Speaker 4: then you should qualify for long term capital gains tax,

680
00:32:18,440 --> 00:32:20,400
Speaker 4: which is the most favorable kind of tax. If we

681
00:32:20,440 --> 00:32:22,320
Speaker 4: got to pay it, that's the one we want. But

682
00:32:22,440 --> 00:32:24,840
Speaker 4: you want to watch out for alternative minimum tax. We

683
00:32:24,880 --> 00:32:28,080
Speaker 4: can do a whole fascinating, boring show on the alternative

684
00:32:28,080 --> 00:32:29,920
Speaker 4: minimum tax. We can't get into that here, but just

685
00:32:29,960 --> 00:32:32,440
Speaker 4: be aware that if it's an incentive stock options, that's

686
00:32:32,480 --> 00:32:34,240
Speaker 4: something you're going to want to be paying attention to.

687
00:32:34,600 --> 00:32:36,640
Speaker 4: On the other hand, if it's non qualified, those are

688
00:32:36,680 --> 00:32:39,800
Speaker 4: going to be taxed as income at exercise, so you're

689
00:32:39,840 --> 00:32:42,560
Speaker 4: going to pay ordinary income tax on the spread, which

690
00:32:42,600 --> 00:32:45,120
Speaker 4: is the difference between the market price whatever everybody would

691
00:32:45,120 --> 00:32:47,040
Speaker 4: pay for it on the open market, and whatever the

692
00:32:47,080 --> 00:32:49,080
Speaker 4: strike price was which you were given at time of

693
00:32:49,120 --> 00:32:52,800
Speaker 4: the grant, and then any further appreciation after you exercise this.

694
00:32:52,880 --> 00:32:55,800
Speaker 4: That's taxes capital gains when you sell. So if you

695
00:32:55,840 --> 00:32:57,520
Speaker 4: want to, if you want to avoid this, you can

696
00:32:57,520 --> 00:33:00,560
Speaker 4: spread it out over multiple years. Try to wag if

697
00:33:00,600 --> 00:33:02,560
Speaker 4: you can wait until you have a lower income year.

698
00:33:02,560 --> 00:33:04,400
Speaker 4: For example, let's say you're planning on retiring at the

699
00:33:04,480 --> 00:33:07,160
Speaker 4: end of this year. Awesome, don't exercise anything. Now, wait

700
00:33:07,240 --> 00:33:09,880
Speaker 4: until January. If you've got that ability through your employer.

701
00:33:10,520 --> 00:33:14,240
Speaker 4: And also there may be options for cashless exercises, which

702
00:33:14,280 --> 00:33:16,840
Speaker 4: basically means that you liquidate the whole thing. You don't

703
00:33:16,840 --> 00:33:19,040
Speaker 4: have to lay out any cash. They'll pull the purchase

704
00:33:19,160 --> 00:33:22,400
Speaker 4: value right out of the proceeds. And also, as always,

705
00:33:22,440 --> 00:33:25,400
Speaker 4: you can consider some charitable giving to offset taxes. If

706
00:33:25,440 --> 00:33:27,680
Speaker 4: you're already doing some of that anyway, then there may

707
00:33:27,680 --> 00:33:29,320
Speaker 4: be a way to combine these things. So get with

708
00:33:29,360 --> 00:33:31,560
Speaker 4: a fiduciary financial advisor and they'll help you put these

709
00:33:31,560 --> 00:33:36,280
Speaker 4: puzzle pieces together. Next question, This one comes from Mark

710
00:33:36,320 --> 00:33:39,240
Speaker 4: and Indian Hill, and Mark says they've saved steadily, but

711
00:33:39,280 --> 00:33:42,440
Speaker 4: they've mostly used mutual funds, and he's wondering if exchange

712
00:33:42,480 --> 00:33:45,360
Speaker 4: traded funds ETFs or direct indexing might be a better

713
00:33:45,400 --> 00:33:46,760
Speaker 4: option for them at this stage.

714
00:33:47,880 --> 00:33:50,600
Speaker 1: Well, Mark, I would say, all things being equal, of

715
00:33:50,680 --> 00:33:54,800
Speaker 1: course ETFs and direct indexing are more tax efficient than

716
00:33:54,840 --> 00:33:58,080
Speaker 1: having everything in mutual funds. But you know, first of all,

717
00:33:58,120 --> 00:34:02,320
Speaker 1: congratulations for saving Stafaly in building a nice portfolio of

718
00:34:02,400 --> 00:34:05,720
Speaker 1: mutual funds, because you know, I'm assuming you've done this

719
00:34:05,800 --> 00:34:08,520
Speaker 1: over years and decades and that that was the only

720
00:34:08,600 --> 00:34:11,520
Speaker 1: game in town. So you did you did right? You saved,

721
00:34:11,600 --> 00:34:16,000
Speaker 1: you accumulated. The industry has evolved over the years to

722
00:34:16,080 --> 00:34:20,239
Speaker 1: have these ETFs and direct indexing and tax loss harvesting strategies,

723
00:34:20,760 --> 00:34:23,359
Speaker 1: so it's good that you're aware that those are out there.

724
00:34:23,480 --> 00:34:27,439
Speaker 1: My advice would be, have a good fiduciary advisor sit down,

725
00:34:27,520 --> 00:34:31,520
Speaker 1: look at your portfolio, and there might be spots where

726
00:34:32,000 --> 00:34:34,680
Speaker 1: you can gradually move into some of these more tax

727
00:34:34,719 --> 00:34:39,040
Speaker 1: efficient strategies without causing you to just dump all your

728
00:34:39,120 --> 00:34:42,520
Speaker 1: mutual funds or most of them and pay a huge

729
00:34:42,560 --> 00:34:46,120
Speaker 1: capital gain tax bill in the process. So it's important

730
00:34:46,120 --> 00:34:49,279
Speaker 1: to look at the details, have a good advisor sit

731
00:34:49,400 --> 00:34:52,040
Speaker 1: down with you that could give you good fiduciary advice

732
00:34:52,120 --> 00:34:58,480
Speaker 1: and help you transition responsibly into some more tax efficient strategies.

733
00:34:57,800 --> 00:34:59,080
Speaker 5: You know, moving down the road.

734
00:34:59,560 --> 00:35:02,600
Speaker 1: Coming up next, I've got my two cents on how

735
00:35:02,760 --> 00:35:07,040
Speaker 1: maybe to evaluate what kind of financial advice you really

736
00:35:07,160 --> 00:35:10,480
Speaker 1: need based on your situation. You're listening to Simply Money

737
00:35:10,480 --> 00:35:13,600
Speaker 1: presented by all Worth Financial on fifty five KRC the

738
00:35:13,960 --> 00:35:20,839
Speaker 1: talk station. You're listening to Simply Money presented by all

739
00:35:20,840 --> 00:35:24,960
Speaker 1: Worth Financial. I'm Bob sponsorller along with Brian James. All Right,

740
00:35:25,000 --> 00:35:27,919
Speaker 1: we started off tonight's show by giving four or five

741
00:35:28,000 --> 00:35:32,239
Speaker 1: different examples of fairly well to do families that had

742
00:35:32,239 --> 00:35:34,920
Speaker 1: gotten some bad advice and kind of went to sleep

743
00:35:35,000 --> 00:35:39,359
Speaker 1: on not doing some important things. I want to bring

744
00:35:39,400 --> 00:35:42,560
Speaker 1: this back, Brian, to kind of real world how should

745
00:35:42,600 --> 00:35:46,800
Speaker 1: these people? How should these people be evaluating their situation

746
00:35:46,960 --> 00:35:49,439
Speaker 1: and what I'm talking about here? And I run into

747
00:35:49,440 --> 00:35:53,120
Speaker 1: this quite often a lot of times people don't need

748
00:35:53,360 --> 00:35:57,719
Speaker 1: or want a professional advisor to help them with everything.

749
00:35:58,239 --> 00:36:01,080
Speaker 1: They might already have a good estate plan, they might

750
00:36:01,120 --> 00:36:05,520
Speaker 1: be very comfortable self managing their portfolio, but there's some

751
00:36:05,600 --> 00:36:10,640
Speaker 1: of these things like tax efficiency or more complex estate

752
00:36:10,680 --> 00:36:14,600
Speaker 1: planning or distribution strategies that they haven't even thought of,

753
00:36:15,239 --> 00:36:18,160
Speaker 1: and it can really move the needle in their overall

754
00:36:19,520 --> 00:36:23,440
Speaker 1: financial plan from a tax standpoint and from a legacy

755
00:36:23,480 --> 00:36:27,400
Speaker 1: standpoint to their families and chosen charities. And so my

756
00:36:27,560 --> 00:36:31,920
Speaker 1: message tonight is be open to sitting down with somebody

757
00:36:32,000 --> 00:36:35,240
Speaker 1: and be a little self aware about what you haven't

758
00:36:35,320 --> 00:36:38,399
Speaker 1: covered or you might not know or might not want

759
00:36:38,440 --> 00:36:42,280
Speaker 1: to do, because oftentimes, Brian, we don't do every single

760
00:36:42,320 --> 00:36:46,160
Speaker 1: thing for clients, but there's one or two value added

761
00:36:47,000 --> 00:36:50,400
Speaker 1: things we can add to somebody's situation really move the

762
00:36:50,400 --> 00:36:54,440
Speaker 1: needle for them and they walk away feeling glad that

763
00:36:54,520 --> 00:36:58,520
Speaker 1: they worked with us or with another good fiduciary advisor.

764
00:36:58,840 --> 00:37:00,200
Speaker 5: That's my message tonight.

765
00:37:00,600 --> 00:37:04,120
Speaker 1: Have an open mind, you know, is you evaluate comprehensive

766
00:37:04,160 --> 00:37:05,880
Speaker 1: advice and comprehensive planning.

767
00:37:06,280 --> 00:37:07,600
Speaker 3: Yeah, And I would add to that.

768
00:37:07,640 --> 00:37:10,920
Speaker 4: I would add this that one of my favorite times

769
00:37:10,960 --> 00:37:13,520
Speaker 4: as an advisor is when I come across something where

770
00:37:13,560 --> 00:37:16,919
Speaker 4: I can educate somebody using an actual, real example, because

771
00:37:16,960 --> 00:37:19,040
Speaker 4: I think people are very comfortable knowing that they're not

772
00:37:19,160 --> 00:37:20,799
Speaker 4: alone in whatever weirdness they're facing.

773
00:37:20,960 --> 00:37:22,400
Speaker 3: Sometimes it can be good weirdness. Right.

774
00:37:23,160 --> 00:37:24,920
Speaker 4: Unfortunately, I've got a lot of money that provides a

775
00:37:24,920 --> 00:37:27,560
Speaker 4: lot of opportunities. What do other people do in my situation?

776
00:37:27,960 --> 00:37:31,080
Speaker 4: And sometimes it's terrifying stuff, you know, where maybe there's

777
00:37:31,080 --> 00:37:32,960
Speaker 4: a healthcare problem or something in the mix. And I

778
00:37:32,960 --> 00:37:35,360
Speaker 4: think the value that any advisor brings is the ability

779
00:37:35,400 --> 00:37:37,520
Speaker 4: to say, I've been through this before. Here's how other

780
00:37:37,560 --> 00:37:39,600
Speaker 4: people who look just like you have responded to it.

781
00:37:39,600 --> 00:37:42,200
Speaker 4: Here's the techniques they used, Here's the results that they

782
00:37:42,440 --> 00:37:44,239
Speaker 4: that they got out of it. Here's the pros and

783
00:37:44,280 --> 00:37:46,440
Speaker 4: cons of all the decision options. That they had, and

784
00:37:46,480 --> 00:37:49,200
Speaker 4: then everybody can move forward having made a confident decision.

785
00:37:49,640 --> 00:37:51,759
Speaker 4: But it helps an awful lot to have somebody who

786
00:37:51,840 --> 00:37:55,279
Speaker 4: is an independent bystander, an arms length away, who can

787
00:37:55,360 --> 00:37:57,840
Speaker 4: kind of guide you, sort of the docent in the museum,

788
00:37:57,880 --> 00:37:59,560
Speaker 4: if you will, of here's how things have worked for

789
00:37:59,600 --> 00:38:02,160
Speaker 4: other people historically, and here's how it can work for you.

790
00:38:03,160 --> 00:38:03,920
Speaker 5: Yeah, it doesn't.

791
00:38:04,000 --> 00:38:06,520
Speaker 1: It doesn't mean that you have to do what everyone

792
00:38:06,560 --> 00:38:09,239
Speaker 1: else does. But to your point, Brian, just knowing what

793
00:38:09,360 --> 00:38:12,759
Speaker 1: some of your options are and maybe hearing some real

794
00:38:12,800 --> 00:38:16,440
Speaker 1: life examples, three or four ways to possibly skin the cat.

795
00:38:16,800 --> 00:38:20,400
Speaker 1: Oftentimes you know, the bells and whistles go off in

796
00:38:20,440 --> 00:38:22,880
Speaker 1: people's brains and say, yeah, I never thought.

797
00:38:22,600 --> 00:38:25,680
Speaker 5: About it that way. I like that idea.

798
00:38:25,840 --> 00:38:29,960
Speaker 1: Let's let's explore how that might impact my plan. So yeah,

799
00:38:30,080 --> 00:38:32,960
Speaker 1: keep an open mind, keep an open mind to working

800
00:38:33,000 --> 00:38:37,600
Speaker 1: with advisors, but pick advisors properly so that they're actually

801
00:38:37,880 --> 00:38:42,360
Speaker 1: operating in a fiduciary role, operating in your best interest,

802
00:38:42,640 --> 00:38:45,760
Speaker 1: not theirs. Thanks for listening. You've been listening to Simply Money,

803
00:38:45,800 --> 00:38:49,000
Speaker 1: presented by all Worth Financial on fifty five KARC, the

804
00:38:49,320 --> 00:38:49,880
Speaker 1: talk station