Finally, a retirement podcast in a language YOU can understand. Your host, Gregg Gonzalez, CFP® is a Dave Ramsey Smartvestor Pro with the heart of a teacher. Listen as Gregg shares financial & retirement tips that are sure to keep you tuned in every episode. Check out podcast website http://RetirementMadeEasyPodcast.com for FREE resources.
6 Client Success Stories from 2022
It can be hard to look back at 2022 and see anything positive, right? Inflation is the highest it’s been in 40 years. The stock market had a volatile year and many people’s investments are down. But the market conditions allowed us to do some positive things we normally couldn’t. In this episode of Retirement Made Easy, I share 6 ways that we helped clients find some wins in 2022.
You will want to hear this episode if you are interested in... [1:23] LPL Financial 2023 Market Outlook [2:34] Get a FREE 30-minute coaching call [3:14] Win #1: Tax-loss harvesting [4:50] Win #2: Roth conversions [8:10] Win #3: High interest rates [12:30] Win #4: Social security’s cost-of-living adjustment [14:36] Win #5: Updating beneficiaries [18:11] Win #6: Unexpected Roth conversions Win #1: Tax loss harvesting I had a lot of questions from listeners and clients about tax loss harvesting. If you sell a stock, mutual fund, ETF, etc., and book the loss, you can deduct up to $3,000 per year of a capital loss on your tax return. Anything above $3,000 gets carried over to future tax years.
But you have to be careful of the “Wash Sale Rule.” If you take the loss, you have to wait 30 days to buy back that particular security. The rule wipes out your ability to deduct that capital loss if you buy back that same security.
Win #2: Roth conversions Many people also took advantage of Roth conversions. If you have pre-tax 401k money or an IRA, you can pay the taxes on a portion of the account and switch it to a Roth IRA. Why do that when the stock market is down? You’re paying taxes on something worth less. So let's say a stock was worth $10 but because of the market, its value dropped to $8. So when you move it to the Roth IRA, you can take advantage of the market bounceback tax-free. Some people wait to do Roth conversions until the end of the year—listen to find out why!
Win #3: High interest rates How we measure inflation is far different than it was in the 80s. The calculations are completely different. That’s why we can’t compare the inflation of today to the 80s. If we used the same calculation, the inflation in 2022 would have been in the ‘teens.
So where’s the opportunity? Series I savings bonds were over 9% last year. Money market rates, savings accounts, CDs, etc. were paying as much as 5.5%. Everyone sought to take advantage of cash alternatives while interest rates were high.
Win #4: Social security’s cost-of-living adjustment Social security’s cost of living adjustment, effective January 2023, was 8.7%. It was a nice pay raise. I worked with a couple where the husband is 68 and had already claimed his social security.
They didn't have income problems, so we decided to turn off his social security benefit in 2022. Because you’re past your full retirement age, you can stop your benefit and get deferral credits, (up to 8% per year).
So his benefits are growing at 8% per year until he’s 70. Secondly, He’ll also get the 8.7% bump in 2023. In one year, he’ll get a 16.7% boost to his social security benefit. It was a huge win for him and his wife.
Win #5: Updating beneficiaries I was able to help someone update their outdated IRAs so that her deceased husband was no longer the beneficiary of her IRAs. Instead, we changed it so that her children would inherit the IRAs, without probate getting involved.
We also assigned beneficiaries to her bank accounts so that if something happened to her, it would pass to her son and daughter outside of probate. We made sure her home was titled to pass to her children. Lastly, she had savings bonds that we discovered had matured, so we cashed them out so she could invest the money.
Win #6: Unexpected Roth conversions I was reviewing a new client’s 2021 tax return and got a sense of what their income would look like for 2022. I determined they could do a Roth conversion of $14,000—and pay no income tax—or withdraw $14,000 and take a distribu
Retirement Replay: IRA Mistakes that Will Cost You, Ep #133
The beginning of a new year is a great time to review what you should and shouldn’t be doing. That’s why in this special retirement replay edition of the Retirement Made Easy podcast, we’re revisiting episode #110: The Great 8 IRA Mistakes that WILL Cost You Money. This episode covers 8 things you should be mindful of as we dive into 2023:
If you’re a non-working spouse, take advantage of the spousal IRA option that’s available to you (you and your spouse can each contribute up to $7,000 per year. Did you know that you don’t have to take required minimum distributions (RMDs) from Roth IRAs? If you don’t need the money, don’t take the withdrawal and pay unnecessary taxes! Don’t roll over an IRA or 401k that has company stock in it or you’ll have to pay capital gains on the stock (net unrealized appreciation). Talk to a financial advisor first! Make sure you designate a beneficiary on your IRAs, or your estate will move into probate court when you die (leading to an unnecessary for your family to endure). Don’t list a trust as the beneficiary of an IRA. the receiver only has 10 years to empty it and pay taxes. Secondly, trusts are taxed at a high rate ($13,450 and higher is taxed at 37%). If you’re under 59 and ½, make sure you do Roth conversions properly so you’re not paying Uncle Sam a 10% early withdrawal penalty. Make sure you’re not contributing to a Roth IRA or traditional IRA if you’re above the income cap, or you’ll be paying a steep 6% penalty each year the excess remains in the account(s). Whenever possible, don’t do an indirect rollover. If the money from an IRA is sent to you and you don’t put it in another IRA within 60 days, you’ll have to not only pay taxes on the money but also pay a 10% penalty. Ouch. If you avoid some of these costly mistakes (and follow some of the advice) you should be well on your way to saving for retirement and avoid getting hit with unnecessary taxes and penalties. Listen to the whole episode for more details!
Resources & People Mentioned 3 Steps to Retirement Planning Connect With Gregg Gonzalez Email at: Gregg@RetireSTL.com Podcast: https://RetirementMadeEasyPodcast.com Website: https://StLouisFinancialAdvisor.com Follow Gregg on LinkedIn Follow Gregg on Facebook Follow Gregg on YouTube
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9 Ways the SECURE Act 2.0 Will Impact Retirees, Ep #132
I’ve been talking about this bill for well over six months and it finally passed in December of 2022 as part of a $1.7 trillion-dollar package. So in this episode of Retirement Made Easy, I’ll cover the nine core provisions that are changing and what it means for everyone. There are some changes that I’ve been campaigning for and there are others that just don’t make sense. Many of the provisions don’t start until 2024 or 2025 to give administrators some time to get systems in place. Learn how it will impact you by listening!
You will want to hear this episode if you are interested in... [3:21] Get FREE resources at RetirementMadeEasyPodcast.com [6:40] Change #1: The required minimum distribution age is changing [10:29] Change #2 Required minimum distributions for Roth 401ks are ending [12:28] Change #3: Catch-up contributions are increasing [17:13] Change #4: Implementing a database for accessing old retirement accounts [19:12] Change #5: Automatic enrollment in employer retirement accounts [20:07] Change #6: Implementing emergency funds in Roth 401ks [21:46] Change #7: Employers can match student loan payments [24:34] Change #8: 529 plans can be rolled into Roth IRAs after 15 years [26:58] Change #9: Domestic abuse survivors can take penalty-free withdrawals The required minimum distribution age is changing The original SECURE Act changed the age you’re required to take required minimum distributions (RMDs) from 70.5 to 72. Now, the SECURE Act 2.0 is changing the age of a RMD from 72 to 73, starting in 2022. In 2033, the new age will be 75. Why? Because they’re extending the life expectancy tables because people are living longer.
Previously, if you forgot to take your RMD, you were penalized 50% of the RMD and you still had to withdraw the money and pay taxes on it. The penalty is now being reduced to 25% (and as low as 10% if corrected in a timely fashion).
SIDE NOTE: I work closely with tax advisors. The IRS doesn’t do a good job of auditing and enforcing the penalties on RMDs. Many people get out of paying that penalty.
Required minimum distributions for Roth 401ks will no longer be required I’ve been campaigning for this change for years. Starting in 2024, you will no longer be required to take a mandatory distribution from Roth 401ks. Honestly, I’m not sure why someone would leave money in a Roth 401k, because if you roll it over to a Roth IRA, you don’t have to take RMDs. But if you leave it in the Roth 401k, once you turn 72 they make you take withdrawals every year. This change just makes sense. Now, these withdrawals are tax-free, but if you want your money to continue to grow, you can leave it in either account.
Catch-up contributions are increasing Starting in 2025, catch-up contributions to 401ks will go up. In 2023, for someone over 50, the catch-up contribution is $7,500. With the new provision, individuals 60–63 can contribute an additional contribution of $7,500 annually to their 401k, 403B, etc. But why stop at age 63?
To complicate it further, high-income earners (making over $140,000) can only contribute the additional money to a Roth 401k. Why? Because Congress is in debt. They want high-income earners to pay their taxes now. This is another way of punishing high-income earners.
Starting in 2024, the catch-up number will be indexed to inflation. So if there’s inflation, you can contribute extra per year. What other positive changes are happening? Keep listening.
529 plans can be rolled into Roth IRAs after 15 years The SECURE Act allowed 529 plans to pay for trade schools in addition to traditional colleges/school options. The act also allowed 529 plans to pay off up to $10,000 of student loan debt. But what if the 529 plan doesn’t get used? What if the child gets scholarships or goes into the military? With the new provision in the SECURE Act 2.0, after the money has been in a 529 plan for 15 years, it can be rolled over into a Roth IRA for the ch
Listener Questions: From Fiduciaries to Capital Gains Taxes
How is a fiduciary different? What can you expect to pay a CFP? How does capital gains tax work? Did contribution limits increase? In the first episode of 2023, I’m going to revisit some important listener questions from the last few months. They’re important things to remember as we enter tax planning season. Check it out!
You will want to hear this episode if you are interested in... [0:40] Listener Question #1: How is a fiduciary different? [2:29] Listener Question #2: What can you expect to pay a CFP? [5:01] Listener Question #3: Why won’t I work with Wells Fargo? [8:52] Listener Question #4: How does capital gains tax work? [13:38] Listener Question #5: Why do you need to find specialists? [17:50] Listener Question #6: Did contribution limits increase? How is a fiduciary different? A fiduciary is an advisor that is both legally and ethically bound to do things in your best interest. If an advisor isn’t a fiduciary, they operate under what’s called the “Suitability Standard.” What they recommend has to be suitable for you at that point in time.
Imagine you have high cholesterol and a Dr. recommends Lipitor (a brand-name drug), which costs you $300 a month. A fiduciary would recommend using a generic brand that would only cost you $9 a month. As a fiduciary, I think the generic drug is in your best interest. Lipitor IS suitable but costs you abundantly more per month.
So what can you expect to pay a CFP? Listen to hear what the average cost is per hour (and how to determine what is a good value).
How does capital gains tax work? One of the advantages of owning a residential rental property is that you can depreciate your property over 27 ½ years. What does that mean? It reduces the amount of rental income that’s taxable. When you sell the rental property, there is depreciation recapture which will impact your taxes.
I spoke with a couple who wanted to sell their rental properties. When you’ve lived in your home for two of the last five years, there is a capital gains exclusion of up to $500,000. Let’s say this couple lived in their home for 10 years. They bought the home at $200,000 and sold it for $700,000. That’s a $500,000 gain that they won’t have to pay taxes on. However, anything above that amount will be subject to capital gains tax.
Another listener was retiring at the end of 2022 and had gained $1 million in his company stock. He plans to have no taxable income in 2023, to hit the 0% tax bracket. He was told that if he’s anywhere under the 12% tax bracket, he wouldn’t have to pay capital gains. That’s NOT correct—he will still be taxed on a portion of those capital gains.
Why you need to find specialists Another listener, Beth, is concerned that her tax advisor (CPA) did tax prep and didn’t help her with tax planning. She also has a stockbroker with a large firm in St. Louis, who recommends buying and selling individual stocks and bonds. She asked him point-blank about her retirement plan and he changed the subject.
I think his specialty is the investments themselves, just like a tax preparer focuses on the tax return. You’re working with the wrong providers. You need to work with someone who specializes in tax planning and retirement planning. Who specializes in what you need help with? That’s who you need to seek out.
Did contribution limits increase for 2023? Tim is 63 years old and wants to max out his Roth IRA and 401k. He wants to know if the contribution limits increased for 2023. The answer is YES! Roth IRA limits increased to $7,500 for each spouse (for someone over 50). 401k contributions increased by $3,000. That means in 2023 if you’re over 50, you can contribute $30,000 annually. That’s a total of $37,500 you can save for retirement in 2023.
Resources & People Mentioned 3 Steps to Retirement Planning Connect With Gregg Gonzalez Email at: Gregg@RetireSTL.com Podcast: https://RetirementMadeEasyPodcast.com Website:
The 5 Most Downloaded Episodes of 2022
In this special final episode of 2022, I’m going to share clips from the top five most downloaded episodes of 2022. I cover everything from huge retirement mistakes that you should avoid to the types of accounts you want to use to save for retirement. These contain some of my best tips from the year. Don’t miss this special edition of the Retirement Made Easy podcast!
You will want to hear this episode if you are interested in... [0:29] Episode #118: 3 Types of Accounts You Want to Have to Save for Retirement [3:21] Episode #99: The Two Types of People Who Fail at Retirement [6:44] Episode #103: How to Avoid these HUGE Retirement Mistakes [8:09] Episode #107: 6 Reasons Why People are Scared to Retire in 2022 [11:37] Episode #108: Two Things You Should NEVER Do Episode #118: 3 Types of Accounts You Want to Have to Save for Retirement There are three accounts I believe you NEED to have to save for retirement to create a blended income stream:
Account Type #1: Roth IRA, 401k, 403B, or TSP Account Type #2: The traditional IRA, 401k, 403B, or TSP Account Type #3: A brokerage account/trust account/non-qualified account If you have a measuring cup with three different pots in front of you, you want to take a little bit from the Roth IRA, 401k, and another scoop from the brokerage account.
Having these three types of accounts gives you flexibility in retirement. We plan and calculate exactly what to withdraw from each type of account. You’ll only need to make changes if the tax law or your goals change.
Episode #99: The Two Types of People Who Fail at Retirement The first type of person that fails at retirement lacks a sense of purpose. This is someone who hasn’t planned for what they will do with their time. This type of person really struggles once the feeling of living in an infinite vacation subsides. They start to miss the sense of purpose they had when they were working. What can you do to combat this? Listen to hear my recommendations!
Episode #103: How to Avoid these HUGE Retirement Mistakes You can’t retire without a plan. I spoke with someone whose husband always told her that they’d be okay, without showing her the plan to prove it. It’s so important to have a plan. This woman is 57 with an 87-year-old mother. If she lives as long as her mother, it needs to last another 30 years—or longer.
Episode #107: The top 6 reasons why people are concerned about retirement in 2022 What concerns leave people afraid to retire? According to the Schroders 2022 US Retirement Survey, these are the top six reasons people are concerned about retiring:
The impact of inflation: People are scared of the impact inflation will have on their assets. 65% of people listed inflation as their top concern. The cost of healthcare: Sadly, we can expect that healthcare costs will always continue to rise. Medicare part B premiums continue to climb—so you have to plan. A major market downturn: This is what we’re currently experiencing in 2022. This will impact your retirement accounts. An unexpected health issue: As you get older, you’ll focus more on healthcare, so that you’re not stuck draining your savings on an unexpected health issue. Taxes reducing retirement savings: This is something a financial planner can easily help you plan so you don't give Uncle Sam more than you have to. Not being able to afford the lifestyle they want: Everyone wants to maintain the lifestyle they've become accustomed to. Some want to be able to do more when they retire. Have you noticed a trend? If you don’t carefully plan for your future, it’s a HUGE mistake. The people that make retirement planning a priority are the ones who will have the retirement they’ve dreamed of.
Hear a clip from THE most downloaded episode of 2022 by listening to the whole episode!
Resources & People Mentioned 3 Steps to Retirement Planning Connect With Gregg Gonzalez Email at: Gregg@RetireSTL.com Podcast: https://Ret
The Tax Implications of Gift-Getting and Gift-Giving, Ep #129
How do you gift money to individuals without getting hit with having to pay taxes on the gift? How do you make withdrawals if you’re gifted a beneficiary IRA? What is the most tax-efficient way to carry out charitable giving? These are just a few of the questions that I’ll answer in this special end-of-the-year episode of the Retirement Made Easy podcast!
You will want to hear this episode if you are interested in... [1:26] Submit questions at RetirementMadeEasyPodcast.com [2:19] Why pension lump sums are declining [6:50] Gifting money to individual people [14:36] Example #1: The Mega Backdoor Roth [16:48] Example #2: Withdrawing from a beneficiary IRA [18:57] Example #3: Giving with donor-advised funds (DAF) Gifting money to individual people I’ve heard many people say they don’t want to gift someone money because they’ll have to pay taxes on it (or because the gift receiver will have to). That doesn’t have to be the case! If you wanted to give a friend or family member money, the annual individual limit is $16,000 for 2022.
So a married couple can each give $16,000 to one individual, totaling $32,000. You can certainly gift more, but $16,000 is the annual limit you can give one individual without filling out a gift tax form that gets filed with your taxes. Many people gift up to that amount so they can avoid paying taxes.
There’s also something called a lifetime gift exemption. That means you can gift someone a maximum lifetime amount of $12,060,000 to another person. The gift form helps you keep an account of what you’ve gifted someone over your lifetime. What can’t you gift? What happens if you loan someone money they don’t pay back? Listen to find out!
Withdrawing from a beneficiary IRA I worked with a couple where the wife inherited her mother’s IRA. Because it’s an inherited IRA, she has 10 years to take withdrawals from that IRA and pay the taxes on them. She thought that she’d just do Roth conversions and move the money into her own IRA. Unfortunately, we can’t do that. So what can we do?
We can put more of her earned income into her traditional and Roth 401k. The tax deduction she gets for contributing to her Roth IRA offsets the taxes she has to pay on the withdrawals from her inherited IRA. We wanted her to stay in the 12% tax bracket, so we very carefully balanced her income levels.
Giving with donor-advised funds (DAF) A charitable couple had inherited a lot of cash, stocks, real estate, etc. They wanted to find a way to continue their charitable giving without having to pay excess taxes. We recommended that this couple look at their appreciated stock. If they cashed out the stock that was up in value, they’d pay long-term capital gains, taxed at 20%. Instead of giving cash to charities, we recommended they take that money and use it to fund a donor-advised fund. How would that help them?
They’d see a tax deduction for charitable giving as well as call the shots on how that money was given over the next chunk of years. In that way, they’d also avoid paying the capital gains on the appreciated stock. If you’re already planning on charitable giving, I’m a huge fan of donor-advised funds. The money continues to grow and all of the tax-free growth can be gifted.
Resources & People Mentioned 3 Steps to Retirement Planning 1,000 salaried Ford workers retire after pension warning from automaker The gift tax form Connect With Gregg Gonzalez Email at: Gregg@RetireSTL.com Podcast: https://RetirementMadeEasyPodcast.com Website: https://StLouisFinancialAdvisor.com Follow Gregg on LinkedIn Follow Gregg on Facebook Follow Gregg on YouTube
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Retirement Planning in Words Everyone Can Understand
I’ve listened to the Retirement Made Easy podcast from day one and learn something new every single episode. Gregg breaks down complicated retirement topics and makes them understandable through the use of analogies and both client and personal stories. If you’re looking for a podcast—and financial advisor—that will help you prepare walk into retirement feeling confident, this is the podcast for you.
Easy and simple to follow along
Listener questions are best