Your Money, Your Wealth

Our guest is Michelle Balconi, who co-authored the children’s book Let’s Chat About Economics! with economist Dr. Arthur Laffer. Joe and Big Al debunk retirement myths, discuss 8 things most Americans don’t know about retirement, and answer emails on Roth IRAs, 401(k)s, and investing. Also: Joe is retiring to Togo to manage the fortune of an email scammer, and the fellas muse on Anthony Weiner's use of Snapchat.

Six small business retirement plans from easy to complicated, including the SEP IRA, SIMPLE IRA, Solo 401(k) and defined benefit plan. And, how to calculate your "power percentage" for retirement readiness (here's a hint, it involves adding up savings and old debt payments and dividing that into your income.) Plus, Joe and Big Al explain how buying expensive cologne online relates to behavioral finance.

8 IRA mistakes to avoid, the most expensive purchase you'll ever make, the best state tax breaks for retirement and how to prioritize where you save, to maximize what you save. Plus, Joe and Al answer questions on advisor credentials, the 60 day rollover rule, and which is safer, T-bills or fixed indexed annuities?

Larry Swedroe from Buckingham Strategic Wealth talks about factor-based investing for a widely diversified portfolio, and the difference between alpha, beta and smart beta. Seven tax planning tips for millionaires and those who want to be millionaires. Joe and Big Al talk about Social Security and the often-overlooked family benefits. And, the fellas answer emails on SEPP, 72(t), IRAs, 8606’s, 1040’s and other mysterious numbers and acronyms.

The value of a financial advisor (aka “Advisor’s Alpha”) and a discussion of target date funds with Don Bennyhoff from Vanguard, estate planning and the difference between a will and a trust, and Joe and Big Al answer emails on Roth conversions, taxation on day-trading stocks, tax write-offs on retirement contributions, and why some great companies have low stock prices. Plus, the fellas discuss a recent survey where millennials said they’d rather disclose a sexually transmitted disease to a potential partner than to reveal their debt. Original publish date February 11, 2017.  Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 01:00 - Young Americans Would Rather Disclose Their STDs Than Their Debt 12:11 - The Importance Of An Estate Plan: Estate Planners 11 Tips for the New Year 26:47 - Should I Convert to Roth as Quickly As Possible or Over Time? 32:41 - Interview with Vanguard Senior Investment Strategist Don Bennyhoff on Target Date Funds and Advisor's Alpha 48:00 - How will my profits and loss from day trading be taxed at the end of the year? 50:46 - Can I still deduct a maximum amount of taxes on a traditional IRA if I contribute to a 401(k) plan? 55:51 - What is the best way to leave retirement accounts to children and minimize our RMD tax implications? 1:00:43 - Why do some companies have a lower stock price than other, less profitable companies?

In this engaging discussion, Andrew Fiebert, host of the Listen Money Matters podcast and expert in financial independence, shares his insights on early retirement and strategic real estate investing. He reveals essential retirement rules for those over 50, emphasizing the importance of proactive planning. The conversation also covers practical advice on capital gains tax from property sales, the nuances of purchasing a family home, and successful investment strategies, making it a must-listen for anyone aiming to secure their financial future.

Kiplinger’s Retirement Report editor Rachel Sheedy tells Joe Anderson, CFP® and Big Al Clopine, CPA how to inherit a retirement account without paying a boatload of taxes all at once. Family, Inc. author Doug McCormick talks about how to use sound business principles to make the most of your family’s money, and the fellas answer emails about retirement contribution limits, taxation on stock dividends and splits, and the voodoo of overfunding life insurance. They also discuss Social Security and Medicare changes in 2017, and the do’s - and dont’s - of saving for retirement. 00:00 - Intro 01:00 - 2016 Market Recap 07:39 - The Stretch IRA Explained, with Rachel Sheedy from Kiplinger 23:51 - 5 Ways to Become an Extreme Saver 30:20 - 2017 Social Security Changes 36:03 - Family, Inc. With Doug McCormick 47:16 - Answers to Money Questions 48:03 - I am currently contributing a company sponsored 401(k) plan. Can I also contribute to a Roth IRA? 50:52 - Are stock dividends and stock splits taxed? 56:06 - I've heard I can use life insurance like a Roth. How do I do this? And is it a good idea?

With so many retirement planning strategies and the plethora of information on the internet, it can be hard for some to prioritize where to start when it comes to planning for their retirement. Joe Anderson, CFP® and Alan Clopine, CPA share eight proven ways to boost your retirement income. Original publish date January 28, 2017 (hour 2). Note that content may be outdated as rules and regulations have changed. 02:02 “After age 70 ½, you cannot do an IRA contribution but you can do a Roth IRA contribution.” 04:49 “Why do we not want to solely focus on dividend paying stocks? There’s a lot of risk involved.” 07:52 “If you are in a high dividend strategy and you don’t necessarily need the income, you may want to readjust and be more sophisticated in your strategy.” 10:18 “Delay your retirement by a few years…sometimes we run analyses for people if they retire at 65 versus 68 and it’s incredibly different because what happens in a lot of cases is people are in relatively high earning years so they’re putting maximum amounts in their 401(k) and getting maximum matches from their employers.” 12:17 “When you add the Social Security to components, sometimes working just a few more years could add ten years to your portfolio.” 12:35 “See whether a reverse mortgage makes sense for you…we did a webinar on home equity and that was one of the things we talked about.” 17:59 “Can I claim a loss from my Roth IRA? I have a Roth IRA open for over 10 years now. I have contributed about $15K, but I lost around 80% of it due to some stocks that I invested in. Can I claim this 80% lost in my tax return? I know that I can claim up to $3,000/year for capital losses in regular investment, but can I claim my losses in the Roth IRA when I withdraw the money, or sell the stock(s)?” *Question from Investopedia Advisor Insights 18:35 “Once any dollar goes into a Roth IRA or regular IRA, the capital gains rules don’t apply anymore, so you don’t get to claim the gains or losses.” 20:26 “It’s difficult to get money into a Roth IRA because a) there are contribution limitations…b) if you convert money, that’s unlimited but realize that you’re paying tax as you convert those dollars.” 29:35 “Should I retire early to take care of my parents? Within the next six months, I plan to quit working so that I can relocate and take care of my parents. I will be 50 years old at that time. I have no debt, am not married, and have no children. All of my living expenses will be paid for by my parents as compensation for taking care of them. In addition, I have a $700,000 nest egg. Many friends and colleagues are telling me I am ridiculous to retire so early. I don't agree. What is your opinion?” *Question from Investopedia Advisor Insights 31:44 “Well, how bad of shape are mom and dad? Are they going to live another twenty years or two years? If they’re going to live another twenty years, then sure, go for it.” 32:53 “This may not be forever; you can always go back to work.”  

How do you get motivated to save for retirement? Joe Anderson, CFP® and Alan Clopine, CPA share smart saving tips for retirement then shed light on why you shouldn’t depend solely on your pension for future income. They close the hour with seven reasons why you should say yes to a Roth IRA. Original publish date January 28, 2017 (hour 1). Note that content may be outdated as rules and regulations have changed. 02:06 “I want to go over in this segment a few ways to motivate yourself to save more for retirement, and I think this is something that’s true for all of us – whether you’ve saved little, none, or a whole lot.” 04:48 “No matter where you’re at – whether you’re in your thirties or in your sixties, you want to be saving as much as you can because retirement is going to happen.” 07:46 “If I save $10,000 after tax (let’s say I have a Roth component in my 401(k) plan), I forgo the $2500 savings today and then it grows to $100,000 and then [when] I pull out the $100,000 I don’t pay any tax at all. Let’s assume we’re in that same 25% tax bracket – that’s a $25,000 savings. So I forgo the $2500 to save $25,000 down the road, versus a $2500 tax deduction today and then down the road paying $25,000 in tax.” 09:25 “If you have the discipline to save that tax savings and you’re in a higher tax bracket, by all means, go for the pre-tax and get that deduction… take that $2500 and save it - put it in a Roth IRA as a contribution; that would be the best [case scenario]…people forget about this because they just spend it.” 16:17 “A lot of companies, as ours, we do have a 401(k) and a match, but it’s not the same amount as a pension plan.” 17:05 “If you do have a pension, private or public – that doesn’t necessarily mean you should just coast.” 19:28 “The most obvious benefit of a Roth IRA is it can provide you with tax-free income in retirement.” 22:56 “A couple of things when it comes to RMDs (required minimum distributions) – you don’t necessarily have to sell the investment. You’re taxed on it, but you don’t need to sell it if it’s in an IRA. You can transfer shares out and put it into a brokerage account.” 27:36 “If you don’t have a Roth, we would encourage you to at least open one up because then that starts your five-year clock.” 28:06 “A Roth IRA can be a great compliment to other retirement accounts. A lot of people don’t realize the power of this.” 32:22 “Roth IRAs are great for estate planning as well because your kids get them tax-free as well.”  

Joe Anderson, CFP® and Alan Clopine, CPA interview Tom Anderson, author of The Value of Debt in Retirement, to discuss why debt isn't always a bad thing in retirement. The Value of Debt placed #2 on Forbes List of Personal Finance Books Financial Experts Say Will Change Your Life. Plus, Joe and Al answer more email questions on-air. Original publish date January 21, 2017 (hour 2). Note that content may be outdated as rules and regulations have changed. 0:58 “We’re answering email questions as well, and this is fitting for our next segment.” 1:03 “I have a large 401(k) plus a pension. I want to retire before the end of 2017. I will be 62 years old in September. Would it be wise to pay off my car loan so I don't have any debt when I retire? Should I withdraw from my 401(k) to do this?” 2:56 “Maybe this will work for you…I would look at my income over the next eight, nine months and try to budget extra payments so that by the tenth month I can have it all paid off with my salary.” 3:35 “A lot of people go into retirement thinking they have to have their mortgage paid off; that’s not necessarily true.” 6:28 Start of Interview with Tom Anderson Joe (7:11) “Tom, let’s talk first of all about the title [of your book], ‘The Value of Debt in Retirement’ – when you think of most financial pundits, that’s the opposite take of what you might hear when you approach retirement.” Tom (7:27) “That’s the general plan, is people are saying they need to rush in and get rid of all their debt before they retire – so we went with a more controversial title…we tried to put the math around it and explore that topic.” Joe (7:57) “Most individuals, as they approach retirement, don’t necessarily take a look at both sides of the balance sheet. They might focus on the debt side a little too much where they pay extra on their mortgage payments and they have very little liquid capital to provide any type of retirement income, and they might think that will be a safer route approaching retirement where in actuality that might be the opposite thing they should be doing.” Tom (8:25) “That’s exactly right…what happens is a lot of people find that they don’t have enough retirement savings…while many people feel they’ve under-saved for retirement, what they’re doing is they’re rushing in to pay off their debt, and they’re finding that they don’t have the liquidity or flexibility or the resources to put them on track for retirement.” 9:03 “Your listeners have to know that I don’t think all debt is good.” Joe (9:37) “Right, it’s figuring out what is good debt and what is bad debt. I think people just lump debt into one category and say ‘no, it’s all bad – I want to be debt-free’ and then all of a sudden when they get into retirement they may have a paid off house but they have very little liquid assets and don’t have the retirement income they need long-term.” Tom (10:09) “I would love for everybody to be able to pay off their house, but what happens is when you’re getting close to retirement, until you have enough money to pay off all of your house, I suggest why pay off any of it, because it’s a one-way liquidity trap.” 10:34 “What readers need to be thinking about is how to protect the liquidity and flexibility and make sure there are enough resources; [consider] working with an advisor…” Joe (10:55) “What are the right types of debt?” Tom (10:58) “Any debt that has a rate of return or a cost of it less than what you think you’re going to earn long-term in your portfolio…” Joe (11:47) “Are there certain ratios that you take a look at?” Tom (12:00) “When you retire, you basically have a pod of money that you’re trying to create an income stream from in retirement…there’s no clear math-compelling case that debt will add value. If you need to have between a 4% or 6% distribution rate – let’s say I have $1 million and I want to spend $50,000 a year, then I show that a 30% debt to asset ratio actually can add value. Those people have to take risk either through investing in risky assets or debt…some debt, the right kinds of debt, the right way, can actually reduce that risk.” 13:40 “It is a mathematical fact that debt can increase the rate of return in your portfolio. It is a mathematical fact that debt can reduce taxes; it is a mathematical fact that counterintuitively debt can reduce risk…it is a fact that this is not a guaranteed path and that you’re basically choosing between two different risks.” 18:36 End of Interview with Tom Anderson 19:34 “It’s not the end of the world to have a mortgage these days, particularly because interest rates are low, and this is what we call good debt because your home should continue to appreciate.” 24:54 “Which retirement account should we set up for our children?  We would like to set-up accounts for our three kids, who are young adults. We are not sure if it is smart to make them wait until they are 59 1/2 years old. Would you recommend we set up a Roth IRA or a low cost index fund?” 26:45 “With a Roth contribution, the kids can always pull the money out – I would have them put it in a Roth IRA.”