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Speaker 1: Tonight, how to find some clarity amidst the headline news

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Speaker 1: and sometimes outright media noise. In other words, what truly

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Speaker 1: drives your financial plan? You're listening to Simply Money, presented

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Speaker 1: by all Worth Financial on Bob Sponseller along with Brian James. Well,

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Speaker 1: let's face it, watching the news lately can feel absolutely exhausting,

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Speaker 1: but it's during termulent stretches, like you know what we're

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Speaker 1: going through right now. Let's face it, We're in a

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Speaker 1: we're in a war with Iran and a lot of

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Speaker 1: moving parts, you know, geopolitically around the world.

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Speaker 2: We need to.

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Speaker 1: Distinguish, we always need to distinguish between the forces that

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Speaker 1: are outside of our control and the decisions that still

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Speaker 1: and always remain within our control. And that level of

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Speaker 1: clarity and planning, well, that's what restores perspective, eliminates emotional

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Speaker 1: decision making, and keeps your plans solid for the long term. Brian,

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Speaker 1: let's get into first of all, what are the things

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Speaker 1: we need to remember we cannot control and therefore should

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Speaker 1: not stay up at nights stressing about.

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Speaker 3: Yeah, and I think this is an important place to

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Speaker 3: start because we all, we all want to control everything.

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Speaker 3: I want to get a reaction. I want to do

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Speaker 3: a so that B happens. We want that cause and effect.

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Speaker 3: And the challenging thing about and to me, the fascinating

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Speaker 3: thing about financial planning is it is despite the ever

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Speaker 3: presence of numbers, this is way more of an art

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Speaker 3: than a science because we're really dealing with human behavior

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Speaker 3: and the panicking nature of herds of people and so forth.

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Speaker 3: That's really what this is about. So what we cannot

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Speaker 3: control at the global markets, that reflects the just the

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Speaker 3: collective behavior of just the every person on the face

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Speaker 3: of the earth and what they think and how they

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Speaker 3: respond to economic data, corporate earnings, central bank policy, geopolitical

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Speaker 3: developments that we see in the headlines all the time.

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Speaker 3: All of these things, trade disputes, political uncertainty. All this

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Speaker 3: stuff makes people worry and it makes people think that

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Speaker 3: what they assumed up until now has now changed, and

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Speaker 3: that reflects what they buy and sell, not only the

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Speaker 3: grocery store, but in their investment accounts. And that means

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Speaker 3: markets can move with little warning. Now throw in the

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Speaker 3: periodic election year, which we're in a midterm year right now,

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Speaker 3: of course, those can introduce additional layers of unpredictability. It's

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Speaker 3: not all about how many widgets can X y Z

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Speaker 3: companies sell. It's what are the rules going to be,

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Speaker 3: who's going to change what the playing field looks like?

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Speaker 3: And then how do we look beyond beyond the immediate

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Speaker 3: future in terms of that. So, you know, another thing

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Speaker 3: we can't control, Bob, that's interest rates and inflation. These

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Speaker 3: are all cyclical things, go that everything occurs related to

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Speaker 3: each other. We make one change over here and that

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Speaker 3: ripples through and another change happens over there, sometimes expectedly,

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Speaker 3: sometimes not. And so central banks will move their policy

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Speaker 3: in response to growth trends, labor markets, price stability concerns.

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Speaker 3: That's their job. They're supposed to pay attention to those things.

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Speaker 3: Here in the United States we call that the reserve.

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Speaker 3: It is their job to determine whether to step on

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Speaker 3: the gas and whether to tap the brakes. And it's

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Speaker 3: that that is not related to whether the Jones family

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Speaker 3: wants to retire this year, you know, And they just

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Speaker 3: don't make decisions that are convenient for us necessarily, so,

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Speaker 3: but we have to live in that world. We don't

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Speaker 3: have a choice, you know. In fact, today you know,

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Speaker 3: speaking of interest rates, Federal Reserve left interest rates alone

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Speaker 3: to the shock of no one. So we're currently between

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Speaker 3: three and a half three point seventy five percent, just

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Speaker 3: not in a situation right now where we can reliably

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Speaker 3: continue to lower interest rates without the concern of slowing

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Speaker 3: things of the economy reacting in a negative way, or

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Speaker 3: a reigniting the inflation fireworks.

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Speaker 1: Yeah, Brian, you just listed a whole list of reasons

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Speaker 1: to be uncertain, be nervous, be wondering what in the

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Speaker 1: world's going on. And we don't want to make light

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Speaker 1: of this at all. I mean it for people that

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Speaker 1: have a job all day or just focus on other

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Speaker 1: things that we focus on, which is money and economics

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Speaker 1: in the stock market, it is unsettling because, I mean,

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Speaker 1: let's face it, right now, there's a lot of moving

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Speaker 1: parts happening all at the same time. And you know,

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Speaker 1: with respect to the Federal Reserve, it's anybody's guests when

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Speaker 1: we're gonna get the next interest rate cut, because we're

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Speaker 1: gonna have a new Federal Reserve chairman, at least scheduled

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Speaker 1: to have one in May, and even that's up for debate,

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Speaker 1: you know, based on some of the haggling and things

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Speaker 1: going on in Washington right now, so there's a lot

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Speaker 1: of moving parts and uncertainty.

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Speaker 2: Markets hate uncertainty.

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Speaker 1: The media loves uncertainty because the media tends to market

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Speaker 1: fear and that's what gets eyeballs and listeners and watchers. Meanwhile, again,

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Speaker 1: as we talked about yesterday, if you look at the

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Speaker 1: performance of the broad stock market and even the bond market,

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Speaker 1: it's been pretty flat since you know, September October of

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Speaker 1: last year, really not a whole lot of movement. I checked,

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Speaker 1: you know, even the ten year bond yield earlier today

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Speaker 1: and it's just hovered between around four and four to

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Speaker 1: quarter percent for about six months, no major movement, So

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Speaker 1: you know, it remains to be seen. Obviously, what happens

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Speaker 1: with the whole situation in Iran. You know, I don't

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Speaker 1: think you know, we're we're bringing any breaking news to

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Speaker 1: the table here. This whole Straits of Hermus situation. That's

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Speaker 1: that's the game right now. How quickly can we get

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Speaker 1: oil and gas moving through there. But in the meantime,

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Speaker 1: markets have remained relatively calm because earnings have been good,

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Speaker 1: fed policy has been stable. It's kind of steady as

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Speaker 1: you go right now. And that's what you know when

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Speaker 1: people come in and talk about this and actually, look,

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Speaker 1: you know, in recent meetings we've had with clients, Brian,

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Speaker 1: I think some people are very surprised to look at

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Speaker 1: how their portfolio hasn't moved much up or down in

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Speaker 1: twenty twenty six so far in spite of all this uncertainty.

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Speaker 1: So let's get into some other things that we can't

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Speaker 1: control that we need to remind people about. And then

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Speaker 1: let's get in more importantly to the things that we

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Speaker 1: can and should be controlling well.

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Speaker 3: And one of the big things we can't control, right,

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Speaker 3: we just got We just got done talking about all

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Speaker 3: the scary headlines that you're you're just they're gonna the

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Speaker 3: things that get shoved in your face as soon as

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Speaker 3: you turn your phone on every morning. We all should

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Speaker 3: do less of that anyway, But that that's all out there,

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Speaker 3: and we deal with that stuff on a daily basis.

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Speaker 3: That's macro stuff, and it affects everybody. The other things

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Speaker 3: that happen that you can't control your own life. And

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Speaker 3: what I like to say in my meetings with my

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Speaker 3: clients is sometimes God thinks he's funny and he's gonna

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Speaker 3: throw your curveball. With regard to you know, perhaps it's

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Speaker 3: a healthcare situation, or perhaps it's a job situation. You know,

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Speaker 3: the company needs to save money, There are layoffs, all

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Speaker 3: those kinds of things. Businesses sell earlier or later, depending

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Speaker 3: on what the environment is like. That can affect all

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Speaker 3: the jobs underneath that business. Family responsibilities can expand unexpectedly.

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Speaker 3: You know, there are new babies on the on the way.

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Speaker 3: There are divorces of either ourselves or our children that

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Speaker 3: we need to account for. Our parents need help. All

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Speaker 3: those kinds of things that, again I classify under God's

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Speaker 3: sense of humor. We can't control those kinds of things.

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Speaker 3: What we can control, though, is how we react to it.

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Speaker 2: Right.

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Speaker 3: So oftentimes I'll have meetings that are triggered by our

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Speaker 3: phone calls that are triggered by some headline. And it's

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Speaker 3: happening a lot lately. The headlines are scary out there.

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Speaker 3: The market is not. It really hasn't moved a whole

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Speaker 3: lot at all. We're down a little bit, but we're

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Speaker 3: still near an all time high on all the major indices.

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Speaker 3: But people are assuming that there must be some kind

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Speaker 3: of negative reaction in their portfolio. So they'll call phonel

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Speaker 3: Ring and I'll pick up and they'll say, I read this,

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Speaker 3: so this blah blah blah, this happened over the straight

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Speaker 3: of hormones or whatever's going on, and then they'll say, Okay,

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Speaker 3: how we look and what's going on. And most portfolios,

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Speaker 3: if they're properly allocated, might be down a percent, maybe

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Speaker 3: a little more. S and P five hundreds now down

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Speaker 3: about two percent something like that, But there just has

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Speaker 3: not been this major reaction. The reaction is happening between

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Speaker 3: our ears. So that doesn't mean we don't know what's

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Speaker 3: coming tomorrow. So I'm not saying that none of this matters.

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Speaker 3: It is very very impactful and not whitewashing anything that's

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Speaker 3: going on, but it has yet to trickle through to

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Speaker 3: our investments, which should be long term anyway. Right, So

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Speaker 3: it's okay that things are moving up and down. There

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Speaker 3: is ample examples over time of crazy headlines and how

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Speaker 3: the market wobbles a little bit and then eventually gathers

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Speaker 3: itself together and we realize that it is still possible

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Speaker 3: to make money in our current economic environment. So let's

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Speaker 3: focus on some other things that we can control. More mechanical.

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Speaker 3: This would be your distribution strategy, really important as your

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Speaker 3: approaching retirement, to make sure that you understand the different

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Speaker 3: tax treatments of your various accounts. There is after tax money.

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Speaker 3: There is roth money, which is different from after tax money.

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Speaker 3: That's tax tax free and after tax are two different things.

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Speaker 3: There's also pre tax dollars, which many people listening probably

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Speaker 3: have a giant pile of that. It's important to understand

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Speaker 3: the various impacts of those different tax trements so that

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Speaker 3: you know which account to draw on in which situation.

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Speaker 3: This is just it's really situational baseball, right, what's the

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Speaker 3: situation and therefore what should I do which will be

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Speaker 3: different now from what it is next year. What are

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Speaker 3: your thoughts? What are some of the things you talked

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Speaker 3: about your clients that you feel like we can control

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Speaker 3: and therefore we should be paying more attention to.

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Speaker 1: Well, one of the big ones, Brian, and we talk

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Speaker 1: about this with clients all the time. One of the

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Speaker 1: first things we ask folks when they come in is, hey,

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Speaker 1: what's on your mind? You know walking in the door

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Speaker 1: today that we want to that you want to make

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Speaker 1: sure we talk about and we always tee up on

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Speaker 1: the table for discussion. Any lump sum kind of expenditures

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Speaker 1: that are coming up, maybe a big family vacation, a

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Speaker 1: new car purchase, a home improvement project, something like that,

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Speaker 1: where chunks of money are going to be involved, and

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Speaker 1: the sooner you could communicate that proactively to your financial advisor. Well,

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Speaker 1: he or she should be aligning your asset allocation and

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Speaker 1: your tax strategy, you know, dovetailing both of those to

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Speaker 1: account for the timing on when money is going to

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Speaker 1: be needed. You know, you hear me say this all

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Speaker 1: the time, Brian. What a lot of what financial planning

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Speaker 1: is is telling our money what it needs to do

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Speaker 1: for us and when. And the only way as an

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Speaker 1: advisor we can really get out in front of that

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Speaker 1: is to have a good dial log of communication, proactive

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Speaker 1: communication happening. So I would say another big one here is,

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Speaker 1: you know, communicate your spending patterns. Don't be afraid to

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Speaker 1: talk about that with your advisor. You know, sometimes I

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Speaker 1: have a few clients that they're almost ashamed to shoot

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Speaker 1: me an email and say, hey, I went ahead and

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Speaker 1: bought this or that, and I need fifteen thousand dollars

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Speaker 1: or twenty five thousand dollars. And I always go back

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Speaker 1: to them and I say that's great. I wish you

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Speaker 1: would have told me that was coming, you know, three

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Speaker 1: four months ago, so we could kind of get that

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Speaker 1: money out of harm's way in advance.

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Speaker 2: In the event that.

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Speaker 1: We have some geopolitical or other you know, economic situations

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Speaker 1: going on, like what's happening right now, they could produce

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Speaker 1: some volatility.

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Speaker 2: So it all comes.

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Speaker 1: Down to you know, communicating with your advisor and hopefully

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Speaker 1: having an advisor, they can dovetail your asset allocation, your

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Speaker 1: withdrawal strategy, and your tax strategy. That's really what true

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Speaker 1: financial planning is all about.

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Speaker 3: Yeah, Yeah, and I think these are important things. All

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Speaker 3: you're talking about is the puzzle pieces. Understand what the

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Speaker 3: various puzzle pieces look like and figure out how they

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Speaker 3: fit together. And that's going to be different for everybody.

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Speaker 3: Financial planning is not a series of ten steps that

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Speaker 3: everybody should go do. If that was the case, we

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Speaker 3: could all function off of TikTok videos and get all

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Speaker 3: our financial plans done. It is not a one size

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Speaker 3: fits all. Everybody has different situations. Really, the big one, Bob,

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Speaker 3: big thing I've noticed that everybody kind of fits into

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Speaker 3: two categories. Right at the highest level, where'd your money

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Speaker 3: come from. If you worked for a fortune five hundred company,

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Speaker 3: as many many many people do, or some company that

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Speaker 3: supports a fortune five hundred company, you work for another employer,

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Speaker 3: you probably have a four oh one kay. That means

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Speaker 3: most of your money. You may have a significant amount

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Speaker 3: of wealth, it's tied up in pre tax or wroth assets.

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Speaker 3: Is that brings a whole set of topics to my mind.

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Speaker 3: I'm going to focus on with that person. Other people

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Speaker 3: own their own business, or perhaps they inherited money. They've

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Speaker 3: got money that is not sheltered because they sold that

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Speaker 3: business or inherited a pile of dollars that there are

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Speaker 3: different but still beneficial tax planning steps that need to

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Speaker 3: be taken. Those are two extremely different conversations solely based

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Speaker 3: on where the money comes from. And again that's why

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Speaker 3: I love this career we get to be in. It's

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Speaker 3: a different puzzle every day, literally every meeting, and it

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Speaker 3: makes sure you understand what your puzzle pieces look like,

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Speaker 3: where they came from, and how they can fit together.

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Speaker 3: And there's usually more than one way that they do.

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Speaker 1: Here's the all Worth advice. You obviously can't control the

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Speaker 1: entire world, but with a solid financial plan, you can

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Speaker 1: stay confident and prepared no matter what noise is out

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Speaker 1: there impacting the world. Coming up next, what to look

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Speaker 1: for in your tax return that could actually be a

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Speaker 1: roadmap to paying fewer taxes in the future. You're listening

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Speaker 1: to Simply Money presented by all Worth 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 pot Just search

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Speaker 1: Simply Money on the iHeart app or wherever you find

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Speaker 1: your podcasts. Straight ahead questions about how your income is taxed,

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Speaker 1: when to sell those winning investments, and what all of

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Speaker 1: that could mean for your long term financial plan. How

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Speaker 1: many of you filed your taxes and immediately just moved

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Speaker 1: on refund big check either way done, the box is checked,

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Speaker 1: you don't want to think about it anymore. But your

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Speaker 1: tax return isn't just paperwork. It's a financial X ray

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Speaker 1: if you treat it properly, and if you're not reviewing

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Speaker 1: that x ray, you could be missing major planning opportunities,

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Speaker 1: especially once your wealth really starts to grow, Brian, what

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Speaker 1: do we mean by using your tax return as a

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Speaker 1: financial X ray?

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Speaker 3: So to me, I think you kind of just hit

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Speaker 3: the nail on the head there getting your tax return done.

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Speaker 3: That's not done. That just means you fulfilled your obligation

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Speaker 3: to the irs and they're going to leave you alone.

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Speaker 3: It's on you now to understand what it meant. Was

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Speaker 3: it good, was it bad? Or the ways you can improve?

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Speaker 3: My favorite part of Everybody's ten forty and I maybe, okay,

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Speaker 3: maybe I'm not cool. I wouldn't argue that point, but

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Speaker 3: the very first page. Most of the time, when people

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Speaker 3: bring in their tax returns TurboTax or if an accountant's

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Speaker 3: doing it or whatever, there is usually a summary. And

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Speaker 3: if you've worked with the same organization for a few years,

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Speaker 3: they'll say, here's your last three or four years worth

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Speaker 3: of ten forty data. And it's the thing nobody looks

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Speaker 3: at it right because by the time you have this

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Speaker 3: in your hand, you no longer care. You're just glad

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Speaker 3: that your taxes are done, and nobody opens these things

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Speaker 3: ever again. But the very first page will show you

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Speaker 3: here's what was in twenty two, twenty three, twenty four

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Speaker 3: to twenty five and you can look across that and

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Speaker 3: see what the differences are. And I think that's very

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Speaker 3: important for people to just understand and take a look

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Speaker 3: at where's my income coming from. What are the changes

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Speaker 3: that caused whatever the outcome was, whether it was good

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Speaker 3: I got a bigger refund and that's not necessarily always

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Speaker 3: good by the way, or I got a bigger tax bill.

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Speaker 3: Why did that happen? Am I missing opportunities? This is

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Speaker 3: all also where you can spot things you might have

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Speaker 3: been curious about. So if you're in the right age

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Speaker 3: or the right situation, then there's that new deduction from

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Speaker 3: the One Big Beautiful Bill Act. You'll be able to

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Speaker 3: see that. You should see a you know, if nothing

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Speaker 3: else on these summaries, take a look at what your

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Speaker 3: blended actual tax rate is, your true tax rate. Everybody

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Speaker 3: thinks the margin, right, If I'm in the twenty four

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Speaker 3: percent bracket, I pay twenty four percent on every nickel

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Speaker 3: of my income. That is completely untrue. It's marginal. The

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Speaker 3: first few thousand dollars is tax free to everybody, including

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Speaker 3: Warren Buffett. Understand what your blended tax rate is, then

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Speaker 3: you can know exactly how painful tax is to you.

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Speaker 3: I see a lot of cases where people will come

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Speaker 3: in and they're assuming they're paying I ask it. It's

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Speaker 3: a fun question ask, specially this time of year. What

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Speaker 3: do you think you're paying in taxes? Oh, my gosh,

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Speaker 3: I we're in the thirty percent. We pay thirty percent.

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Speaker 3: So if I need one hundred thousand dollars worth of income,

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Speaker 3: that means it has to be one hundred and thirty

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Speaker 3: five thousand dollars gross. That's not the case. Nobody's in

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Speaker 3: a thirty percent bracket.

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Speaker 2: There are.

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Speaker 3: The marginal brackets are a fall below that. So most

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Speaker 3: of the time, and very often people will assume thirty

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Speaker 3: percent because that's what they've thought for thirty years, and

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Speaker 3: then we look at their blended rate and it's like

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Speaker 3: seven percent. That's not an exaggeration. For people who are retired,

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Speaker 3: don't have much streams of income going on, they're not

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Speaker 3: paying anywhere near what they think they are. We are

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Speaker 3: just conditioned to believe that the IRS is taking massive

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Speaker 3: chunks of our income. And I'm not saying that's not happening,

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Speaker 3: but I am saying that a lot of people assume

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Speaker 3: they're paying a lot more than they are. So take

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Speaker 3: a look at that return, figure out where the numbers

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Speaker 3: come from, and figure out how they impact that bottom line.

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Speaker 1: Yeah, Brian, I think what you're really talking about here

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Speaker 1: is looking for opportunities to identify what we'll call inefficient

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Speaker 1: income sources. So, you know, on the tax return, we'll

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Speaker 1: see income that's tax at ordinary income rates.

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Speaker 2: We'll see you know, income.

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Speaker 1: That came in at capital gain rates, maybe raw IRA

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Speaker 1: distributions with no rate, dividend income, interest income, all that,

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Speaker 1: and we're looking for ways to create a more efficient

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Speaker 1: retirement income stream for people. And oftentimes that means having

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Speaker 1: a nice dialogue, a proactive dialogue between the fiduciary financial

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Speaker 1: advisor and the CPA. And Brian, I have an example

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Speaker 1: of this just from yesterday. You know the CP that

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Speaker 1: I've worked with for years, she does a wonderful job.

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Speaker 1: She proactively communicates with me, and I get an email

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Speaker 1: from her yesterday and she said, Hey, for client X,

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Speaker 1: please make sure you withhold the requirementimum distributions at this

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Speaker 1: rate for federal, in this rate for state for twenty

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Speaker 1: twenty six.

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Speaker 2: Wonderful. She also sent over the tax return and then

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Speaker 2: that allows me to.

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Speaker 1: Put the whole thing up on the rack and look

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Speaker 1: for these opportunities like we're talking about. And I never

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Speaker 1: make any major changes without going back to her and

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Speaker 1: kind of getting permission, you know, in advance of doing it.

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Speaker 1: But this running dialogue should happen throughout the year between

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Speaker 1: the financial advisor and whoever return prepares that tax return,

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Speaker 1: and I'll go I'll be as bold as to say

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Speaker 1: this if that dialogue is not happening. You know, if

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Speaker 1: you take your twenty twenty five tax return to your

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Speaker 1: financial advisor for your quarterly, semi annual or annual review

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Speaker 1: this year and say, hey, I'd like for you to

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Speaker 1: look at this here it is look for opportunities where

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Speaker 1: we can be more tax efficient. If you get a

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Speaker 1: deer in the headlights look or response that says, well,

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Speaker 1: that's really your CPA's job, I'll say it right now,

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Speaker 1: I think you're probably not with the right advisor because

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Speaker 1: there are so many opportunities uncovered here with proactive tax

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Speaker 1: planning and coordination between the financial advisor and the CPA.

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Speaker 1: That's a critical part of real, true comprehensive financial planning.

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Speaker 2: In twenty twenty.

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Speaker 3: Six, I couldn't agree more. And that's something I recognized

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Speaker 3: just in terms of keeping up with my chosen career.

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Speaker 3: Here how do I stay impactful? And you know, about

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Speaker 3: five or six years ago, it became quite obvious to

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Speaker 3: me that I need to be a better tax planner,

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Speaker 3: not tax preparer. That's not my thing. I don't really

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Speaker 3: enjoy that part. But I love taking the output and

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Speaker 3: picking it all apart for somebody and figuring out, well,

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Speaker 3: here's why this happened. Are we okay with that? If not,

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Speaker 3: then here's what we can do about it, and helping

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Speaker 3: them understand what the sacrifice is between, you know, whatever

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Speaker 3: sacrifice they need to make and whatever benefit I'm gaining

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Speaker 3: from it. And I wouldn't just because you hear the

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Speaker 3: word tax, don't assume that your CPA or your tax

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Speaker 3: prepare is going to be able to or interested in

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Speaker 3: taking the time to do the tax planning. Tax planning

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Speaker 3: is very different from tax prep Tax planning is what

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Speaker 3: you do in all the months other than when they

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Speaker 3: are completing tax returns, which is usually the first quarter

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Speaker 3: of the year for the April deadline, and then of

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Speaker 3: course the third quarter for the October deadline. For those

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Speaker 3: on extension, it's the second quarter and fourth quarter where

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Speaker 3: you can really do some tax planning if your tax

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Speaker 3: preparer tax person is interested in doing those things. If not,

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Speaker 3: a skilled financial advisor can help you understand these other

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Speaker 3: puzzle pieces and work hand in hand with your tax

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Speaker 3: prep person who that person might even welcome the idea

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Speaker 3: that somebody is going to help doing the heavy lifting

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Speaker 3: they get the tax return done. The financial advisor can

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Speaker 3: help understand the puzzle pieces.

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Speaker 1: Here's the all with advice. Your tax return isn't just

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Speaker 1: a piece of history. It's literally a blueprint if you

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Speaker 1: use it properly for smarter decisions as the years move

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Speaker 1: on into the future. Coming up next, navigating career decisions

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Speaker 1: as a couple, especially when one spouse earns significantly more

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Speaker 1: than the other. You're listening to Simply Money, presented by

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Speaker 1: all Worth Financial on fifty five KRC, the talk station.

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

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Speaker 1: Financial on Bob Sponseller along with Brian James, joined tonight

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Speaker 1: by Julie Bauki or Infamous Julie on the Job and Julie,

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Speaker 1: you want to talk about treating your career as a

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Speaker 1: family business.

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Speaker 2: I love this topic.

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Speaker 4: You know, one of the things that I think has

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Speaker 4: really changed over the last five plus years is that

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Speaker 4: because of technology, there really never is depending on the

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Speaker 4: job you're in, but there really never is an end

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Speaker 4: of your workday because you can be contacted at any time.

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Speaker 4: Oh and whether or not you respond. There's something about

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Speaker 4: getting that black mess, it's getting that text. And so

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Speaker 4: before technology really ruled our lives, including our work lives,

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Speaker 4: you had the ability. Maybe you'd come home and I

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Speaker 4: remember my dad had blueprints out, you know, at nighttime

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Speaker 4: after dinner, was working. But it was it was you

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Speaker 4: really had. That was a choice. And we're in a

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Speaker 4: world now where it feels like twenty four to seven.

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Speaker 4: And so the impact on your family, the impact on

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Speaker 4: everything else in your life, that ripple effect can get

434
00:21:31,960 --> 00:21:34,520
Speaker 4: out of control and you can get out of whack

435
00:21:34,760 --> 00:21:38,240
Speaker 4: to the point that not only are you damaging your health,

436
00:21:38,280 --> 00:21:40,720
Speaker 4: which you're also damaging those key relationships.

437
00:21:41,160 --> 00:21:43,960
Speaker 3: Hey, Julie, that actually hits pretty close to home for me.

438
00:21:44,040 --> 00:21:46,159
Speaker 3: About a couple of decades ago, I did have my

439
00:21:46,240 --> 00:21:49,880
Speaker 3: own financial planning practice, basically running it out of the house,

440
00:21:49,920 --> 00:21:52,439
Speaker 3: and you just described me. I was a worse husband

441
00:21:52,520 --> 00:21:54,840
Speaker 3: and a worse father for that experience because I could

442
00:21:54,880 --> 00:21:56,960
Speaker 3: not turn it off. I could not come out of

443
00:21:57,000 --> 00:21:58,800
Speaker 3: the office because I always felt like there was something,

444
00:21:59,000 --> 00:22:00,800
Speaker 3: you know, anything can blow off. I could lose this

445
00:22:00,840 --> 00:22:02,720
Speaker 3: one client at that moment, and then that was that

446
00:22:02,720 --> 00:22:05,959
Speaker 3: that stuff would ruin dinner. So, if you're somebody who

447
00:22:06,040 --> 00:22:08,879
Speaker 3: finds themselves in that situation, how have you helped people

448
00:22:09,480 --> 00:22:11,720
Speaker 3: avoid making that decision in the first place because it's

449
00:22:11,760 --> 00:22:13,640
Speaker 3: not the right fit. Or if that's where they were,

450
00:22:13,960 --> 00:22:15,080
Speaker 3: how do you help them get out of it?

451
00:22:15,760 --> 00:22:18,480
Speaker 4: You know, so often I've sat across some men, and

452
00:22:18,520 --> 00:22:23,080
Speaker 4: it's usually men who either they lose their job, they're retiring,

453
00:22:23,280 --> 00:22:26,800
Speaker 4: and they have they're hanging on to their job because

454
00:22:26,800 --> 00:22:29,760
Speaker 4: they have no relationship with their kids or their spouse.

455
00:22:30,560 --> 00:22:33,159
Speaker 4: Because when we put all of our best energy and

456
00:22:33,200 --> 00:22:37,600
Speaker 4: focus into work, then we are sending a clear signal

457
00:22:38,080 --> 00:22:40,879
Speaker 4: to the other portions of our lives, of our life

458
00:22:40,960 --> 00:22:44,200
Speaker 4: that that work is what matters. And then it's really

459
00:22:44,280 --> 00:22:48,120
Speaker 4: unrealistic to say, okay, well I'm retired now, now, okay,

460
00:22:48,240 --> 00:22:51,239
Speaker 4: now everybody loved me. Doesn't work that way, And so

461
00:22:51,280 --> 00:22:53,359
Speaker 4: I think what I will say to people is, depending

462
00:22:53,400 --> 00:22:56,480
Speaker 4: on how old you are, let's look ahead a period

463
00:22:56,480 --> 00:22:59,400
Speaker 4: of time that makes sense for you. Is it five years?

464
00:22:59,640 --> 00:23:03,080
Speaker 4: Is it ten years that you know the kids are

465
00:23:03,080 --> 00:23:04,399
Speaker 4: going to be out of the house, and all of

466
00:23:04,400 --> 00:23:07,320
Speaker 4: a sudden you're home with a spouse or a partner

467
00:23:08,119 --> 00:23:11,320
Speaker 4: and you don't know each other. The kids are gone,

468
00:23:11,400 --> 00:23:13,440
Speaker 4: they went away to college, they moved on, they come

469
00:23:13,480 --> 00:23:15,520
Speaker 4: back home, you don't have anything to talk to them about.

470
00:23:15,520 --> 00:23:17,880
Speaker 4: So I always say, you have to take yourself out

471
00:23:17,920 --> 00:23:21,320
Speaker 4: of the moment and look ahead five, ten years, whatever

472
00:23:21,359 --> 00:23:23,560
Speaker 4: makes sense, and say what do I want my life

473
00:23:23,640 --> 00:23:27,280
Speaker 4: to look like them? And then step back and say

474
00:23:27,320 --> 00:23:30,760
Speaker 4: what am I doing now to make sure that to

475
00:23:30,800 --> 00:23:33,719
Speaker 4: make sure that I'm building towards that. And you know,

476
00:23:34,040 --> 00:23:36,959
Speaker 4: it's of course it's generational. I look at my parents,

477
00:23:37,000 --> 00:23:40,600
Speaker 4: you know, greatest generation, and it was very clear lines

478
00:23:40,640 --> 00:23:44,120
Speaker 4: at work and home, and my mom was at home,

479
00:23:44,200 --> 00:23:46,960
Speaker 4: my dad was working. But there was a price to

480
00:23:47,000 --> 00:23:51,640
Speaker 4: pay for that after he retired in terms of relationships.

481
00:23:51,680 --> 00:23:53,960
Speaker 4: But now we've got gen z on the other end.

482
00:23:54,119 --> 00:23:56,000
Speaker 4: You know, I want to be a good partner, a

483
00:23:56,040 --> 00:23:59,520
Speaker 4: good spouse, a good community member. And so the newer

484
00:23:59,560 --> 00:24:04,080
Speaker 4: generation are really are really embracing that idea that life

485
00:24:04,200 --> 00:24:08,040
Speaker 4: is not all about work and I'm not going to

486
00:24:08,119 --> 00:24:10,320
Speaker 4: wait until I'm sixty some years old to start doing

487
00:24:10,400 --> 00:24:13,800
Speaker 4: other things, and so they're really starting to lean into that,

488
00:24:13,840 --> 00:24:17,520
Speaker 4: which is quite confounding to the older generations who still

489
00:24:17,520 --> 00:24:18,840
Speaker 4: in some ways operate that way.

490
00:24:20,400 --> 00:24:22,920
Speaker 1: Hey, Julie, speaking of the folks that are in their

491
00:24:22,920 --> 00:24:27,040
Speaker 1: twenties and thirties starting to have families and have growing careers,

492
00:24:27,080 --> 00:24:29,160
Speaker 1: I mean, you know, you want to talk about parents

493
00:24:29,200 --> 00:24:32,360
Speaker 1: that are burning the candle literally at both ends. I mean,

494
00:24:32,520 --> 00:24:34,720
Speaker 1: we're in a day and age now where most of

495
00:24:34,760 --> 00:24:39,680
Speaker 1: the time both spouses are working, we're sharing caregiving responsibilities,

496
00:24:39,720 --> 00:24:42,920
Speaker 1: we're managing careers, we're managing the growth and raising.

497
00:24:42,640 --> 00:24:43,280
Speaker 2: Of our kids.

498
00:24:43,840 --> 00:24:47,000
Speaker 1: Talk about some coaching that you've given to young families

499
00:24:47,040 --> 00:24:49,119
Speaker 1: on the things that you should probably sit down and

500
00:24:49,200 --> 00:24:51,480
Speaker 1: talk about. I mean, you mentioned a five to ten

501
00:24:51,600 --> 00:24:54,520
Speaker 1: year timeframe. I think a lot of folks in their

502
00:24:54,560 --> 00:24:57,480
Speaker 1: twenties and thirties can't think past the next six.

503
00:24:57,280 --> 00:24:59,359
Speaker 2: Months to a year and a half, much the less

504
00:24:59,400 --> 00:24:59,960
Speaker 2: ten years.

505
00:25:01,040 --> 00:25:03,760
Speaker 1: How do you coach people to just make sure that

506
00:25:03,840 --> 00:25:06,440
Speaker 1: you're on the same page in any given time as

507
00:25:06,440 --> 00:25:10,119
Speaker 1: a family so that some of this regret doesn't creep in.

508
00:25:10,520 --> 00:25:12,560
Speaker 2: You know, as you mentioned twenty or thirty years down

509
00:25:12,560 --> 00:25:13,080
Speaker 2: the road.

510
00:25:13,280 --> 00:25:15,240
Speaker 4: I would say even I'm sure you guys advise this

511
00:25:15,400 --> 00:25:17,840
Speaker 4: as well. Even before you get married or partner up

512
00:25:17,880 --> 00:25:20,440
Speaker 4: with someone, you have to make sure that sit down

513
00:25:20,440 --> 00:25:23,720
Speaker 4: with a financial planner, figure out what are your goals

514
00:25:23,720 --> 00:25:26,399
Speaker 4: as a couple and what's your money personality. So if

515
00:25:26,400 --> 00:25:29,280
Speaker 4: there's somebody who's like a scrimper and a favor and

516
00:25:29,400 --> 00:25:33,240
Speaker 4: somebody who's just spending like crazy, that's not cute anymore

517
00:25:33,240 --> 00:25:35,320
Speaker 4: as you get married, and so making sure you're on

518
00:25:35,320 --> 00:25:38,720
Speaker 4: the same page when you look at what is what's

519
00:25:38,760 --> 00:25:42,840
Speaker 4: our priority today? Knowing that when you are in those

520
00:25:42,880 --> 00:25:46,120
Speaker 4: peak earning years, I always say, look, I tell people, look,

521
00:25:46,560 --> 00:25:49,040
Speaker 4: it's always about looking ahead to that next page. So

522
00:25:49,080 --> 00:25:50,840
Speaker 4: if you say we don't have kids, who are not

523
00:25:50,880 --> 00:25:52,600
Speaker 4: going to have kids, you're going to be able to

524
00:25:52,600 --> 00:25:54,480
Speaker 4: save more and you may be able to have more

525
00:25:54,560 --> 00:25:58,440
Speaker 4: career choices early. But if you are putting all of

526
00:25:58,480 --> 00:26:01,560
Speaker 4: your money all you're available resources, if you're spending it

527
00:26:01,600 --> 00:26:04,840
Speaker 4: as fast as you get it for whatever reason, you're

528
00:26:04,880 --> 00:26:07,080
Speaker 4: going to be so sorry by the time you get

529
00:26:07,080 --> 00:26:10,159
Speaker 4: in your fifties and you're exhausted. So you have to

530
00:26:10,280 --> 00:26:14,800
Speaker 4: make it a part of your conversation what is right now.

531
00:26:14,880 --> 00:26:18,400
Speaker 4: We might say, Okay, we just had a baby, Juniors

532
00:26:18,400 --> 00:26:20,440
Speaker 4: at home. One of us is going to stay home

533
00:26:20,480 --> 00:26:23,560
Speaker 4: with Junior for two years. Okay, so what can we

534
00:26:23,600 --> 00:26:26,960
Speaker 4: do to cut back so that we are still saving?

535
00:26:27,080 --> 00:26:29,280
Speaker 4: What can we do to make sure that at every

536
00:26:29,280 --> 00:26:31,480
Speaker 4: step of the wave where it can feel a little

537
00:26:31,480 --> 00:26:33,720
Speaker 4: bit like whack a mole, but that's what life is,

538
00:26:34,200 --> 00:26:38,320
Speaker 4: and so it's what's so hard is people in their

539
00:26:38,320 --> 00:26:42,280
Speaker 4: twenties have no idea what their thirties, forty fifties and

540
00:26:42,320 --> 00:26:44,959
Speaker 4: even sixties are going to bring career wise, and so

541
00:26:45,040 --> 00:26:48,800
Speaker 4: you and financially and you always have to be talking

542
00:26:48,840 --> 00:26:50,560
Speaker 4: to each other. My son and daughter in law are

543
00:26:50,560 --> 00:26:53,080
Speaker 4: amazing at this, really talking to each other and saying

544
00:26:53,320 --> 00:26:56,480
Speaker 4: where what matters to us most right now because that

545
00:26:56,560 --> 00:26:58,639
Speaker 4: might change in a year or two. And then you

546
00:26:58,680 --> 00:27:00,840
Speaker 4: make your financial and courageous accordingly.

547
00:27:01,480 --> 00:27:03,399
Speaker 2: All right, Yeah, that's good stuff.

548
00:27:03,440 --> 00:27:07,480
Speaker 1: And like you said, everybody's goals are different, and it's

549
00:27:07,560 --> 00:27:09,560
Speaker 1: like a lot of things Brian and I talk about

550
00:27:09,600 --> 00:27:13,600
Speaker 1: on every topic on this show, and it's just proactive communication.

551
00:27:14,119 --> 00:27:16,800
Speaker 1: Get in a room, spend the time together, share how

552
00:27:16,880 --> 00:27:20,000
Speaker 1: everybody's thinking and feeling. And yes, the finances are a

553
00:27:20,040 --> 00:27:24,800
Speaker 1: big part of this, but proactive communication is so important, Julie,

554
00:27:24,840 --> 00:27:27,959
Speaker 1: do you find that people that regularly sit down and

555
00:27:28,080 --> 00:27:31,679
Speaker 1: have these important discussions really do head off some of

556
00:27:31,720 --> 00:27:34,639
Speaker 1: these bigger issues that could really derail a family and

557
00:27:34,680 --> 00:27:35,720
Speaker 1: a marriage down the road.

558
00:27:36,000 --> 00:27:38,240
Speaker 4: Yeah. I remember talking to this one guy and he

559
00:27:39,119 --> 00:27:41,240
Speaker 4: had a really big job. He was probably in his

560
00:27:41,800 --> 00:27:43,920
Speaker 4: mid to late thirties, had a really big job, lots

561
00:27:43,960 --> 00:27:48,879
Speaker 4: of money, absolutely miserable, absolutely miserable, and I just said, Okay,

562
00:27:48,960 --> 00:27:50,760
Speaker 4: this is great, You're making good money. How can you

563
00:27:50,800 --> 00:27:52,680
Speaker 4: start to bank some of that money? But then look

564
00:27:52,720 --> 00:27:55,160
Speaker 4: ahead and say, I can't do this for the next

565
00:27:55,240 --> 00:27:57,760
Speaker 4: three to five years. So let's set a goal to

566
00:27:57,800 --> 00:28:01,040
Speaker 4: say that I'm going to change jobs in twelve to

567
00:28:01,040 --> 00:28:03,880
Speaker 4: eighteen twenty four months, and so what will that mean

568
00:28:04,040 --> 00:28:06,840
Speaker 4: for our finance? It is because I want to give

569
00:28:06,880 --> 00:28:09,720
Speaker 4: myself room to take a job that maybe pays less

570
00:28:09,880 --> 00:28:11,679
Speaker 4: or I'm going to have a better quality of life.

571
00:28:11,760 --> 00:28:13,560
Speaker 4: My bank account may not be as big, but I

572
00:28:13,560 --> 00:28:15,560
Speaker 4: can make that up because I'm only in my thirties.

573
00:28:15,680 --> 00:28:18,040
Speaker 4: So it's really about playing both a short game analog game.

574
00:28:18,800 --> 00:28:21,840
Speaker 1: Now that's great, A lot of important topics to discuss

575
00:28:21,880 --> 00:28:24,679
Speaker 1: and a lot of great advice tonight from our career

576
00:28:24,760 --> 00:28:28,080
Speaker 1: expert Julie Balki. You're listening to Simply Money was thated

577
00:28:28,119 --> 00:28:30,119
Speaker 1: by all Worth Financial on fifty five KRC.

578
00:28:30,560 --> 00:28:31,800
Speaker 2: The talk station.

579
00:28:36,600 --> 00:28:39,000
Speaker 1: You're listening to Simply Money is ied buy all Worth

580
00:28:39,040 --> 00:28:41,760
Speaker 1: Financial on Bob Sponseller along with Brian James. Do you

581
00:28:41,840 --> 00:28:44,280
Speaker 1: have a financial question you'd like for us to answer?

582
00:28:44,720 --> 00:28:46,959
Speaker 1: There's a red button you can click while you're listening

583
00:28:47,000 --> 00:28:49,800
Speaker 1: to the show. If and only if you're listening to

584
00:28:49,840 --> 00:28:53,440
Speaker 1: the show on the Good Old iHeart app. Simply record

585
00:28:53,520 --> 00:28:56,920
Speaker 1: your question and it will come straight to us. Brian

586
00:28:57,240 --> 00:29:00,000
Speaker 1: Larry and Terras Park leads us off tonight. He says, Hey,

587
00:29:00,040 --> 00:29:03,719
Speaker 1: we've got a mix of income from investments, so rental

588
00:29:03,760 --> 00:29:07,160
Speaker 1: income and a little consulting income. How do you keep

589
00:29:07,200 --> 00:29:10,520
Speaker 1: all those streams of income from stacking on top of

590
00:29:10,520 --> 00:29:11,080
Speaker 1: one another?

591
00:29:11,160 --> 00:29:13,160
Speaker 2: From a tax standpoint.

592
00:29:13,800 --> 00:29:15,760
Speaker 3: Larry, I think what you're really asking is how do

593
00:29:15,800 --> 00:29:18,440
Speaker 3: we control when and how income shows up in the

594
00:29:18,480 --> 00:29:20,440
Speaker 3: tax returns so that we don't pilot all up into

595
00:29:20,440 --> 00:29:23,120
Speaker 3: that same bracket. So you've got multiple income streams, that

596
00:29:23,160 --> 00:29:26,680
Speaker 3: means the risk isn't just earning more it's earning it inefficiently.

597
00:29:26,720 --> 00:29:27,240
Speaker 2: How do we.

598
00:29:27,200 --> 00:29:29,040
Speaker 3: Optimize all these things? So here's a good way to

599
00:29:29,080 --> 00:29:31,600
Speaker 3: think about it, step by step. So first off, let's

600
00:29:31,600 --> 00:29:34,560
Speaker 3: start by classifying those income buckets. Not all income is

601
00:29:34,640 --> 00:29:37,080
Speaker 3: taxed the same. There are different flavors of income that

602
00:29:37,160 --> 00:29:39,800
Speaker 3: result in different taxations. So there's ordinary income, this is

603
00:29:39,880 --> 00:29:42,600
Speaker 3: kind of the worst kind in terms of taxes. This

604
00:29:42,640 --> 00:29:45,760
Speaker 3: is your consulting. You rental that income, interest off investments,

605
00:29:45,760 --> 00:29:47,320
Speaker 3: those kinds of things. That's the hot that's going to

606
00:29:47,400 --> 00:29:50,280
Speaker 3: generate the highest tax rates because those are marginal. The

607
00:29:50,280 --> 00:29:52,680
Speaker 3: more you make, the more you pay in taxes. Capital

608
00:29:52,720 --> 00:29:56,360
Speaker 3: gains and qualified dividends are another category. Those are lower,

609
00:29:56,560 --> 00:29:59,560
Speaker 3: a little bit bracket sensitive, but they're fixed. For example,

610
00:29:59,560 --> 00:30:01,640
Speaker 3: capital gets aren't going to be any more than twenty

611
00:30:01,680 --> 00:30:05,600
Speaker 3: percent mostly fifteen percent for everybody, as are qualified dividends.

612
00:30:06,120 --> 00:30:09,640
Speaker 3: Then you've got passive versus active flavors. Rental income could

613
00:30:09,640 --> 00:30:12,120
Speaker 3: be passive, but that consulting income is active. You're actually

614
00:30:12,200 --> 00:30:15,120
Speaker 3: doing the work versus just collecting a rent check. So

615
00:30:15,160 --> 00:30:16,880
Speaker 3: once you understand those kinds of things, see if you

616
00:30:16,920 --> 00:30:19,880
Speaker 3: can smooth out that timing so for your consulting work,

617
00:30:20,000 --> 00:30:22,320
Speaker 3: you can delay your invoicing just because you did the work.

618
00:30:22,360 --> 00:30:24,560
Speaker 3: If you're okay getting paid later or possibly even in

619
00:30:24,600 --> 00:30:27,400
Speaker 3: the next year or something like that, you and your

620
00:30:27,400 --> 00:30:29,400
Speaker 3: customers are okay doing that, then that might be an

621
00:30:29,400 --> 00:30:32,120
Speaker 3: acceptable thing to do. Consult your tax advisor to see

622
00:30:32,520 --> 00:30:35,680
Speaker 3: if this is okay. To do investments well, obviously you

623
00:30:35,720 --> 00:30:38,280
Speaker 3: control when stuff is sold, when capital gains are generated,

624
00:30:38,640 --> 00:30:41,840
Speaker 3: rental property. If you know how the you know some

625
00:30:41,920 --> 00:30:43,600
Speaker 3: repairs need to be made, you can do it this

626
00:30:43,680 --> 00:30:46,200
Speaker 3: year versus next year or something like that based on

627
00:30:46,240 --> 00:30:49,200
Speaker 3: what when you think those are going to be necessary.

628
00:30:50,240 --> 00:30:53,400
Speaker 3: You can also offset these with retirement contributions. If you've

629
00:30:53,400 --> 00:30:56,160
Speaker 3: got that consulting income, you can open a solo four

630
00:30:56,240 --> 00:30:59,240
Speaker 3: oh one k you are subject to if you're gonna

631
00:30:59,440 --> 00:31:01,360
Speaker 3: for a day job. If you've got four to one

632
00:31:01,400 --> 00:31:06,280
Speaker 3: k there as well, your employee contribution is subject to

633
00:31:06,280 --> 00:31:08,600
Speaker 3: the max that everybody is. Even if you have two plans,

634
00:31:08,600 --> 00:31:11,000
Speaker 3: it's still that same one minimum. However, there is an

635
00:31:11,000 --> 00:31:13,680
Speaker 3: employ your component to a solo four oh one K,

636
00:31:14,200 --> 00:31:16,280
Speaker 3: So that's something to look into for that piece where

637
00:31:16,320 --> 00:31:18,479
Speaker 3: you own your own business. Moving parts to that much

638
00:31:18,520 --> 00:31:21,440
Speaker 3: bigger conversation than we have time now because we have

639
00:31:21,480 --> 00:31:23,960
Speaker 3: a question from Paul, who's in fort right. I love

640
00:31:24,000 --> 00:31:26,400
Speaker 3: our people in our forts again on that wall defending

641
00:31:26,440 --> 00:31:28,560
Speaker 3: us from the hordes of Florence. I use that joke

642
00:31:28,600 --> 00:31:31,400
Speaker 3: way too often, but I still think it's funny. Paul says,

643
00:31:31,880 --> 00:31:34,200
Speaker 3: I've heard that some income is taxed differently than others.

644
00:31:34,240 --> 00:31:36,120
Speaker 3: How do you decide what kind of income you want

645
00:31:36,160 --> 00:31:37,960
Speaker 3: more of in retirement, Bob.

646
00:31:38,520 --> 00:31:41,200
Speaker 1: Well, Paul, great question. Important that you're bringing it up.

647
00:31:41,240 --> 00:31:44,240
Speaker 1: It's a critical part of your overall financial plan and

648
00:31:44,280 --> 00:31:48,000
Speaker 1: retirement income strategy. Ryan just touched on some of this

649
00:31:48,280 --> 00:31:51,520
Speaker 1: in the way he answered Larry's question. But you know,

650
00:31:52,040 --> 00:31:55,520
Speaker 1: simply put, yes, income is taxed differently. Anything coming out

651
00:31:55,520 --> 00:31:57,560
Speaker 1: of your four to one k or IRA, you know,

652
00:31:57,640 --> 00:32:00,520
Speaker 1: pre tax IRA contribute all one hundred percent of that

653
00:32:00,680 --> 00:32:04,320
Speaker 1: is taxes ordinary income. You move into the dividend world,

654
00:32:04,440 --> 00:32:07,520
Speaker 1: some dividends and now we're talking about taxable accounts. Some

655
00:32:07,560 --> 00:32:11,640
Speaker 1: are qualified dividends. Those are taxed differently than non qualified dividends.

656
00:32:11,920 --> 00:32:15,200
Speaker 1: Then you've got your capital gain rates, which fluctuate based

657
00:32:15,200 --> 00:32:17,920
Speaker 1: on your overall income. And then you've got money that

658
00:32:17,960 --> 00:32:21,040
Speaker 1: can come out of raw iras, which if structured properly,

659
00:32:21,240 --> 00:32:24,240
Speaker 1: you don't have to pay any taxes on So yes,

660
00:32:24,360 --> 00:32:26,920
Speaker 1: it is this kind of mosaic. I love the way

661
00:32:26,960 --> 00:32:30,200
Speaker 1: Brian puts this. You know, when we retire, we move

662
00:32:30,280 --> 00:32:33,320
Speaker 1: from having a stream of income to piles of money,

663
00:32:33,800 --> 00:32:36,520
Speaker 1: and some of the you know, the art form of

664
00:32:37,080 --> 00:32:40,720
Speaker 1: designing a retirement income strategy is to take those piles

665
00:32:40,760 --> 00:32:44,600
Speaker 1: of money and to literally decide where's the best place

666
00:32:44,680 --> 00:32:47,200
Speaker 1: from which to take money, to keep us in the

667
00:32:47,280 --> 00:32:51,520
Speaker 1: lowest marginal tax bracket possible and still get the job

668
00:32:51,560 --> 00:32:54,880
Speaker 1: done in terms of, you know, meeting the monthly income

669
00:32:54,920 --> 00:32:57,200
Speaker 1: that you and your family have. So yet, it's something

670
00:32:57,240 --> 00:33:01,240
Speaker 1: you want to sit down with and strategize about, because,

671
00:33:01,280 --> 00:33:04,280
Speaker 1: as we've talked about before, you know, earlier in the show,

672
00:33:04,680 --> 00:33:09,080
Speaker 1: this is really you can create some wonderful opportunities if

673
00:33:09,080 --> 00:33:11,400
Speaker 1: you plan ahead, and you can leave a lot of

674
00:33:11,400 --> 00:33:14,080
Speaker 1: money on the table for the irs if you don't

675
00:33:14,080 --> 00:33:16,960
Speaker 1: plan ahead. All right, we've got time for one more tonight.

676
00:33:17,040 --> 00:33:20,520
Speaker 1: Let's go to Emily in Loveland. Emily says, I'm deciding

677
00:33:20,520 --> 00:33:23,760
Speaker 1: whether to sell a position in my portfolio with about

678
00:33:23,840 --> 00:33:26,680
Speaker 1: ninety thousand dollars in capital gains. Do I do that

679
00:33:26,760 --> 00:33:29,200
Speaker 1: all at once or spread it out over three years.

680
00:33:29,400 --> 00:33:31,000
Speaker 1: How do you compare those two options?

681
00:33:31,040 --> 00:33:33,680
Speaker 3: Brian, I know and Emily and Loveland. We went to

682
00:33:33,800 --> 00:33:36,640
Speaker 3: grade school together. So if this is you then go

683
00:33:36,760 --> 00:33:39,720
Speaker 3: wildcats of stating nations. Anyway, this is a great question.

684
00:33:39,800 --> 00:33:41,880
Speaker 3: I think that you know everybody needs to understand because

685
00:33:41,920 --> 00:33:44,520
Speaker 3: capital gains and ordinary income. Most people understand those are

686
00:33:44,520 --> 00:33:47,360
Speaker 3: two different types of tax treatments, but they do work together.

687
00:33:47,400 --> 00:33:50,320
Speaker 3: Believe it or not. Capital gains don't exist in a vacuum.

688
00:33:50,360 --> 00:33:52,880
Speaker 3: They get stacked on top of your other income. So

689
00:33:52,960 --> 00:33:56,200
Speaker 3: for example, for twenty twenty six, the capital gains bracket

690
00:33:56,200 --> 00:33:57,960
Speaker 3: is zero percent. Believe it or not, you might not

691
00:33:58,040 --> 00:34:00,960
Speaker 3: have to pay in a great situation ninety four thousand

692
00:34:00,960 --> 00:34:03,440
Speaker 3: dollars or less. For a married couple filing jointly, you

693
00:34:03,520 --> 00:34:06,160
Speaker 3: might pay zero percent in your capital gains fifteen percent

694
00:34:06,200 --> 00:34:08,759
Speaker 3: bracket runs up to almost six hundred thousand, and then

695
00:34:08,800 --> 00:34:12,080
Speaker 3: above that you're paying twenty percent plus net investment income tax,

696
00:34:12,080 --> 00:34:14,520
Speaker 3: which is a new flavor. So what you're looking at

697
00:34:14,520 --> 00:34:16,080
Speaker 3: here you can sell it all at once, which you'll

698
00:34:16,120 --> 00:34:17,560
Speaker 3: lock in all those gains and get rid of the

699
00:34:17,560 --> 00:34:19,839
Speaker 3: market risk, but you're also likely to push into those

700
00:34:19,880 --> 00:34:23,319
Speaker 3: higher capital gains brackets. That's why you're considering this. I

701
00:34:23,320 --> 00:34:25,879
Speaker 3: think if you spread it out over a few years,

702
00:34:25,920 --> 00:34:28,320
Speaker 3: when I you've got more precise control to try to

703
00:34:28,360 --> 00:34:31,160
Speaker 3: stay down within that fifteen percent bracket by keeping your

704
00:34:31,160 --> 00:34:34,120
Speaker 3: income in those brackets that I mentioned earlier, by just

705
00:34:34,160 --> 00:34:36,080
Speaker 3: selling a little bit now, a little bit next year,

706
00:34:36,280 --> 00:34:38,680
Speaker 3: maybe a little bit in a third year. So it's

707
00:34:38,760 --> 00:34:40,480
Speaker 3: different things you can look at in terms of it's

708
00:34:40,480 --> 00:34:42,520
Speaker 3: really the timing. The capital gains are going to be

709
00:34:42,560 --> 00:34:44,600
Speaker 3: what they are, but look at the timing. Can you

710
00:34:44,600 --> 00:34:46,399
Speaker 3: get away with not selling it all in one year?

711
00:34:47,040 --> 00:34:49,240
Speaker 1: Coming up next, Brian's going to take a few minutes

712
00:34:49,280 --> 00:34:54,480
Speaker 1: to compare two very effective charitable planning strategies. You're listening

713
00:34:54,480 --> 00:34:56,920
Speaker 1: to Simply Money, presented by all Worth Financial on fifty

714
00:34:56,920 --> 00:34:57,600
Speaker 1: five KRC.

715
00:34:58,160 --> 00:34:59,400
Speaker 2: The talk station.

716
00:35:03,280 --> 00:35:05,920
Speaker 1: You're listening to Simply Money is all Worth Financial Law

717
00:35:06,000 --> 00:35:11,320
Speaker 1: Bob sponsorller alone with Brian James Qualified charitable distributions versus

718
00:35:11,400 --> 00:35:14,920
Speaker 1: a donor advice fund. Professor James is going to compare

719
00:35:14,960 --> 00:35:19,399
Speaker 1: and contrast both strategies for us tonight. Brian hit it, Bob.

720
00:35:19,440 --> 00:35:21,640
Speaker 3: You know when you're trying to parallel park your car

721
00:35:21,760 --> 00:35:24,520
Speaker 3: and you realize you just didn't hold the wheel turned

722
00:35:24,560 --> 00:35:26,759
Speaker 3: hard enough, and you time to abandon ship and get

723
00:35:26,760 --> 00:35:28,000
Speaker 3: a do over and try again.

724
00:35:28,040 --> 00:35:30,400
Speaker 2: Well, that's only my wife does those kind of things, Brian.

725
00:35:31,160 --> 00:35:33,839
Speaker 3: I think you're deceiving yourself. But in any case, that's

726
00:35:33,840 --> 00:35:35,279
Speaker 3: what this is. This is a do over. I had

727
00:35:35,280 --> 00:35:37,400
Speaker 3: a meeting yesterday. We got there, but I didn't do

728
00:35:37,400 --> 00:35:40,600
Speaker 3: the greatest job of explaining to a client this question

729
00:35:40,719 --> 00:35:43,239
Speaker 3: of how do I make donor advice funds in qcds?

730
00:35:43,400 --> 00:35:45,080
Speaker 3: First of all, what is a QCD? How do I

731
00:35:45,120 --> 00:35:46,920
Speaker 3: make this stuff work together and benefit from it? So

732
00:35:46,960 --> 00:35:48,360
Speaker 3: I'm going to back the car out. We're going to

733
00:35:48,440 --> 00:35:51,000
Speaker 3: do it again, John, and everybody's gonna benefit from me

734
00:35:51,080 --> 00:35:53,760
Speaker 3: not being on the ball yesterday. So let's talk about

735
00:35:54,239 --> 00:35:57,160
Speaker 3: we're talking about charitable contributions here, right, This stuff really

736
00:35:57,239 --> 00:35:59,239
Speaker 3: only this isn't magical stuff that's going to make runt

737
00:35:59,280 --> 00:36:01,239
Speaker 3: money rain from the irs if you simply check a

738
00:36:01,280 --> 00:36:03,480
Speaker 3: box in your tax return. Doesn't work that way. This

739
00:36:03,520 --> 00:36:06,719
Speaker 3: is targeted at people who already are charitably inclined and

740
00:36:06,800 --> 00:36:11,080
Speaker 3: already are giving, you know, decent sized sums to various charities.

741
00:36:11,160 --> 00:36:13,440
Speaker 3: Of course, five oh one, c three and so forth.

742
00:36:13,920 --> 00:36:15,719
Speaker 3: If you're doing this, make sure you're doing it the

743
00:36:15,800 --> 00:36:18,040
Speaker 3: right way. This is not about necessarily giving more away.

744
00:36:18,080 --> 00:36:19,799
Speaker 3: It's about doing it in a certain way so that

745
00:36:19,840 --> 00:36:22,799
Speaker 3: you get a benefit coming back your direction. Gone are

746
00:36:22,800 --> 00:36:25,480
Speaker 3: the days where we even keep our good will receipts anymore.

747
00:36:25,560 --> 00:36:27,920
Speaker 3: Because of the way the standard deduction works, most people

748
00:36:28,160 --> 00:36:31,160
Speaker 3: don't benefit tax wise from donating to a charity. That

749
00:36:31,160 --> 00:36:33,360
Speaker 3: doesn't mean don't do it, just means it's not filtering

750
00:36:33,360 --> 00:36:35,560
Speaker 3: three in your tax returns. But if you're giving away enough,

751
00:36:35,800 --> 00:36:37,920
Speaker 3: you can get a tax benefit. Let's make sure we're

752
00:36:37,920 --> 00:36:42,600
Speaker 3: maximizing that. So QCD Qualified Charitable Distribution, let's talk about

753
00:36:42,600 --> 00:36:44,759
Speaker 3: what that is. This is limited for people who are

754
00:36:44,800 --> 00:36:47,759
Speaker 3: over age seventy and a half. You can send your

755
00:36:47,800 --> 00:36:50,839
Speaker 3: money directly from your IRA to a qualified charity. This

756
00:36:50,920 --> 00:36:53,160
Speaker 3: is literally direct, meaning you're gonna you're gonna fill out

757
00:36:53,200 --> 00:36:54,680
Speaker 3: a form that has the name of the charity and

758
00:36:54,680 --> 00:36:56,680
Speaker 3: their address because you're not gonna see these dollars. They're

759
00:36:56,680 --> 00:36:58,640
Speaker 3: going to go straight to the charity. That's up to

760
00:36:58,640 --> 00:37:01,680
Speaker 3: one hundred thousand dollars per year year, and this was

761
00:37:01,719 --> 00:37:04,040
Speaker 3: originally targeting you know, some people might recognize that age

762
00:37:04,040 --> 00:37:06,520
Speaker 3: seventy and a half. That was the original required minimum

763
00:37:06,560 --> 00:37:09,520
Speaker 3: distribution age. That's what when qcds first came to be,

764
00:37:09,600 --> 00:37:12,279
Speaker 3: that's what they were targeted at. The RMD age has

765
00:37:12,280 --> 00:37:14,920
Speaker 3: increased to seventy three or seventy five now based on

766
00:37:14,960 --> 00:37:17,840
Speaker 3: when you were born. The QCD age has not changed,

767
00:37:17,880 --> 00:37:19,560
Speaker 3: so you can take advantage of this even if you're

768
00:37:19,560 --> 00:37:22,040
Speaker 3: not required to take money out of the IR. Now

769
00:37:22,160 --> 00:37:24,719
Speaker 3: here's the big thing, right, it's what we get it right,

770
00:37:24,760 --> 00:37:26,600
Speaker 3: I'm not going to pay income taxes on money that

771
00:37:26,640 --> 00:37:28,840
Speaker 3: I gave to a charity. Cool, that's great, whatever. I

772
00:37:28,880 --> 00:37:30,839
Speaker 3: know that I see that coming. But here's the key,

773
00:37:30,840 --> 00:37:32,799
Speaker 3: and this is a little tough to understand. The key

774
00:37:32,840 --> 00:37:35,800
Speaker 3: benefit is that money never shows up in your taxable

775
00:37:35,840 --> 00:37:39,040
Speaker 3: income at all, meaning not only are not paying taxes

776
00:37:39,040 --> 00:37:41,239
Speaker 3: on those specific dollars, they are not pushing you up

777
00:37:41,280 --> 00:37:43,440
Speaker 3: in the bracket. So the important thing here is that

778
00:37:43,440 --> 00:37:46,480
Speaker 3: can help satisfy your required minimum distribution if you're seventy

779
00:37:46,480 --> 00:37:49,200
Speaker 3: three or possibly seventy five. It can also keep your

780
00:37:49,239 --> 00:37:52,839
Speaker 3: taxes lower on Social Security, and it can keep those

781
00:37:52,880 --> 00:37:56,759
Speaker 3: lower Medicare premiums in place via IRMA because IRMA. Of course,

782
00:37:56,840 --> 00:37:59,280
Speaker 3: that's that's the math that the IRS does to decide

783
00:37:59,280 --> 00:38:01,680
Speaker 3: what your medicare premiums are going to be. That's how

784
00:38:01,760 --> 00:38:05,319
Speaker 3: qcds work. Now, donor advised fund a little different. This

785
00:38:05,400 --> 00:38:08,040
Speaker 3: is a donor advised fund is a charitable investment account.

786
00:38:08,040 --> 00:38:11,600
Speaker 3: You contribute the money or you'll even better appreciated assets

787
00:38:11,640 --> 00:38:13,799
Speaker 3: like stocks, and you can dodge those capital gains. Don't

788
00:38:13,800 --> 00:38:15,520
Speaker 3: sell it, put the share straight into the fund. You

789
00:38:15,520 --> 00:38:18,680
Speaker 3: get an immediate tax deduction that year. That's important. So

790
00:38:18,880 --> 00:38:21,600
Speaker 3: here's the difference between the two. A QCD can reduce

791
00:38:21,719 --> 00:38:25,320
Speaker 3: income by preventing that R and D from hitting your bracket.

792
00:38:25,560 --> 00:38:28,799
Speaker 3: A donor advice fund creates a deduction. Not the same thing,

793
00:38:29,040 --> 00:38:31,040
Speaker 3: but here's one. Somebody out there is putting the puzzle

794
00:38:31,040 --> 00:38:33,320
Speaker 3: pieces together and going cool. I'm gonna put my QCD

795
00:38:33,360 --> 00:38:35,160
Speaker 3: into a donor advice fund and have my cake and

796
00:38:35,200 --> 00:38:37,200
Speaker 3: eat it too and have more cake. That's the one

797
00:38:37,239 --> 00:38:40,560
Speaker 3: thing you cannot do with all these things. QCD distributions

798
00:38:40,840 --> 00:38:43,560
Speaker 3: cannot go into a donor advised fund. But these things

799
00:38:43,560 --> 00:38:46,120
Speaker 3: do fit together, and these are great tools to make

800
00:38:46,160 --> 00:38:48,839
Speaker 3: sure that you are maximizing your tax efficiency.

801
00:38:49,200 --> 00:38:51,880
Speaker 1: Great stuff, Brian, thanks for listening tonight. You've been listening

802
00:38:51,880 --> 00:38:54,120
Speaker 1: to simply money, present up by all Worth Financial on

803
00:38:54,200 --> 00:38:56,720
Speaker 1: fifty five KRC the talk station