Stretch When You Can with Wayne and Lisa Firebaugh Fireproof Your Money

The Great Wealth Transfer is coming and what you do with your share of the $68.4 trillion that will be passed on to the next generation could determine your financial future. Find out what it  means to your retirement if you learn how to stretch your money while you still can.
Stretch when you can or conversely, stretch before you can’t. Stretching applies to more than just exercise, it helps build wealth too. There is something called the Great Wealth Transfer going on, where 45 million households will leave $68.4 trillion to the next generation over the next 25 years. Your share of this money may be the foundation for your own financial future. The generations after the Baby Boomers have had to deal with a number of factors that other generations haven’t had to experience. The average graduate in 2018 came out with $35,000 in student debt and a 10-year $400 monthly payment. Many of those people admitted to wishing they chose a less expensive education. When you inherit a retirement account from someone other than your spouse, you have an opportunity on your hands. The first choice is to take the money out, but your second choice is to make the money stretch a little further. If you take the money out, you are going to pay any income taxes that are due, but since it was someone else’s retirement account, you will not pay any penalty no matter how old you are. Stretching the money out is the option of opportunity. Under the tax code, when you inherit a retirement account, there is a minimum amount you have to take out each year called the Required Minimum Distribution (RMD). The RMD is based on your minimum life expectancy. Let’s say you inherit a $50,000 regular IRA, the kind on which you have to pay taxes when you take money out. There are two variables you have to take into account: the age in which you inherit it and the rate of return you could earn if you leave the money in the account. If the rate of return is 6% and you only withdraw the tax-code minimum, you would be able to withdraw over $237,000 over the course of your life expectancy. The choice you face is either $50,000 now or $237,000 over time, but there is some legislation coming down the pipe that may change the math. The SECURE act that is moving through Congress essentially enhances your ability to stretch the money out and would require you to withdraw all the inherited money over a 10-year period. It will ultimately depend on all the things you can do with that money. Every time you look at a financial situation, you have to look at your own personal situation. You may have a health crisis or debts to pay down that would make taking the money up front make more sense. The big opportunity right now is to build your financial plan without assuming you’re going to inherit money because you can’t plan for it. You should also do a beneficiary designation and decide who gets to do the stretch when you die. Imagine your legacy and your parent’s or grandparent’s legacy if it’s not optimized when they die.  
To explore working with Wayne Firebaugh to fireproof your money, please call 855-WAYNE KNOWS or check out at fireproofyourmoney.com.