Your Money, Your Wealth

Asking yourself these important questions before retiring helps rule out any unwanted surprises. Joe Anderson, CFP® and Alan Clopine, CPA dig into the email bag to answer your questions. Original publish date January 21, 2017 (hour 1). Note that content may be outdated as rules and regulations have changed. 2:48 “When you use debt properly, it can actually be pretty effective.” 9:32 “Here are 18 questions to ask yourself before you retire…let’s start with the first one: what does being retired mean to you?” 13:02 “Absolutely make sure you communicate what your retirement vision looks like to your spouse.” 16:58 “What would you like to add to your life and eliminate from your life?” 20:19 “How do you feel about downsizing? A lot of our equity and net worth is pent up in our home.” 25:06 “Should I recharacterize my Traditional IRA contributions to a Roth IRA?” 26:12 “Virtually anyone that’s working and has earned income can do a regular IRA contribution as long as you’re under 70 ½, however here are a couple stipulations…” 27:31 “If you’re single and your income is in between $118,000 and $133,000 you can do a partial Roth contribution.” 28:48 “You can do a Roth conversion regardless of your income level and age, and you don’t have to be working.” 30:33 “Recharacterization means you’re undoing your contribution that you made.” 31:36 “Control is everything when it comes to your money in retirement, because in retirement you actually do have more control over how much you pay in taxes [according to] which accounts you take money out of, and each account may be taxed differently.”

Joe Anderson, CFP® and Alan Clopine, CPA discuss why the father of the 401(k) regrets creating it. Plus, the worst mistakes you can make with your IRA and 401(k). Original publish date January 14, 2017 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 01:46 “[For today’s topics,] I’ve got ten important considerations for 401(k) rollovers, and Ed Slott’s three fatal IRA (individual retirement account) errors.” 02:59 “Ted Benna, in case you don’t know, is known as the father of the 401(k) and we was a benefits consultant with Johnson companies, and he was among one of the first to come up with the notion that American workers should set aside their own pay pre-tax for retirement.” 04:02 “He and other early proponents dislike what the 401(k) has spawned. The tool was never meant to serve as the main means by which workers save for retirement, but that’s precisely what it’s become – it’s increasing the financial risk for workers along the way.” 08:25 “The other thing he doesn’t like about the 401(k) is he says ‘I helped open the door for Wall Street to make even more money than they were already making. That is the one thing I do regret.’” 11:36 “A majority of retirees rolled over their 401(k) to an IRA at retirement.” 14:29 “Let’s say you go back to an old company, you could roll all of your 401(k) into that new 401(k), that avoids the required distribution until you’re retired.” 20:03 “When you think of an appropriate globally-diversified portfolio with a rebalancing strategy, a rebalancing strategy simply means that whatever asset class you have that’s done really well – you shave some of those profits off…and buy an asset class that hasn’t done as well – you’re constantly selling higher and buying lower by discipline...you take the emotion out of it.” 22:57 “The true value-add of an advisor is to take a look at what the strategy is, what their plan is and coming up with the tax alpha if you will, because if you can reduce the overall tax liability of the income that you’re trying to produce, that’s more money – it’s a rate of return. If you look at rebalancing when markets go up and down or sideways to keep that risk parameter based on your goals – that’s huge.” 29:24 “Here’s another one (mistake) that’s irreversible. This is when you have a non-spouse rollover…let’s say you inherit an IRA from your father or mother and you roll it over into your own IRA…you may not realize this but it’s a prohibited transaction. That’s treated as a full distribution.”

Paul Sullivan joins Joe Anderson, CFP® and Alan Clopine, CPA to discuss the biggest lessons from his book The Thin Green Line: The Money Secrets of the Super Wealthy on creating and maintaining wealth. Also in this hour: answers to financial questions. Original publish date January 14, 2017 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:38 “[With] the 60-day rollover, you can only do one per year for all of your IRAs (individual retirement accounts) so all of your IRAs are considered to be one account.” 04:18 “I don’t think this one is widely known, and when you have a 401(k) that has company stock and you roll it over into your IRA, you completely lose a strategy called net unrealized appreciation (NUA).” 08:07 Start of Interview with Paul Sullivan Joe: (08:30) “Tell us the genesis of the book. It’s the secrets of the ultra-wealthy – what did you learn and what are some of the things that we can give to our listeners?” Paul: (08:58) “The gist of the book is this: how we think about money matters more than anything else…” Joe: (10:15) “How did you come up with the title?” Paul: (10:20 “If you think about the S&P 500 or your favorite stock index over the past 50 years – it starts low, goes high but it’s not in a straight line, it’s a little bumpy along the way. That’s the thin green line; the people who are on top of it – they’re wealthy, whether they make a little money or a lot of money. Everybody else is rich and poor so you could be at the very tippy top making a ton of money each year but you’re really rich. The difference is freedom. The people who are wealthy are able to make all the decisions and choices that they want to make with their money. They’re in control, they control life. 10:57 “The people who are rich – you can think in the most simple context – is someone who is wildly over-leveraged. They may make $1 million a year but they have $5 million in debt obligations. Life is going to control them.” Joe: (11:51) “So wealthy is not necessarily a dollar figure in your bank account – it’s basically the control that you have within the wealth you’ve created.” Paul: (12:13) “It’s all about having those choices and knowing that when you make them you’re not endangering some of the essential things in your life.” Joe: (15:01) “Give us some tidbits about your own personal journey.” Paul: (15:54) “It’s been an interesting journey but it gives me perspective on [the fact that] it (wealth) can go away, how do you make sure it does go away and more importantly, how do I talk to my kids and my kids’ friends so they understand that a lot of this is decisions and being aware of the decisions you make; and just as important is your behaviors.” 17:27 “You can save money, you can spend money, you can give it away – but most importantly, you can think about it, and it’s how those four work together that I hope will allow people to make better decisions in their own lives.” 19:35 “The Château Margaux is something I like, but if I’m going to have it once a year, there are other decisions I’m going to have to make to offset the splurge for that amazing bottle of French wine.” Joe: (20:02) “Where can people find more information about you?” Paul: (20:04) “Go to my website: pauljsullivan.com or go to the New York Times website and type in my name.” 20:23 End of Interview with Paul Sullivan 25:00 “I have a beneficiary IRA that I doubled by investing in Apple Stock. I now have sold 90% of that stock because I felt it was too risky to have all my eggs in one basket. I would like to primarily live off of the interest and not touch the principal ($900K) of my IRA. How would you suggest I invest to accomplish that? How should I invest for the long term inside my IRA?” 26:07 “I would look at this as more of a total return; I would look at a globally diversified portfolio total return, not just income.” 29:11 “Should I diversify between different financial institutions? As a high net worth individual, should I diversify between financial institutions or should I just diversify within one organization such as Wells Fargo or Chase?” 30:55 “Well what if Chase or Wells Fargo goes out of business? You’re investing in a security versus a bank.” 33:56 “What tax rate will my mother have to pay on a cashed out IRA? I have a terminally ill mother who is 69 years old. She has a traditional IRA worth around $500K that she converted to an annuity at 4%. Her medical care requires increased cash flow to pay day-to-day bills. The company has agreed to cash out the full value of the IRA with 0 surrender fees. The company will not transfer the IRA to any other investment vehicle. If she takes the cash value, what are the tax implications? Her income last year was ~$30K and her effective combined federal and state tax rate was ~3%. Will she pay 3% on the $500K or the full federal and state rate of 41% (FED ~35 NC ~6)?” 34:55 “If you cash out an annuity, and the company is allowing you to do that without surrender, it can still stay out of an IRA.” 35:37 “When you have effective rates like 3%...when you add additional income, now you’re on the marginal rate concept which means whatever tax bracket you’re currently in…that’s actually the tax you’re going to pay on the additional income.” *Email questions from Investopedia Advisor Insights

Douglas P. McCormick joins Joe Anderson, CFP® and Alan Clopine, CPA to discuss the framework and premise of his book Family, Inc.: Using Business Principles to Maximize Your Family's Wealth. Also in this hour: Social Security changes for 2017 + answers to financial questions. Original publish date January 7, 2017 (hour 2). Note that content may be outdated as rules and regulations have changed. 6:27 Start of Interview with Douglas P. McCormick Joe: (6:57) “Tell us a little bit about yourself and what made you write the book Family Inc.” Douglas: (7:12) “I’m an undergrad from West Point; I was an active duty army officer for five years and after that time decided a military career was not for me, so then I went back to business school at Harvard and graduated with a master’s degree in finance and worked on Wall Street for a couple of years. In spite of all that great experience, I never had what I considered to be a good foundation in personal finance. Today, I think financial literacy is one of the biggest problems in America and our traditional education system is not doing a good job of teaching these principles. 7:49 For me, the Family Inc. framework is an elegant way to help people think about all the competing choices that they have out there with their assets and finances.” Joe: (8:15) “There are billions of books out there on personal finance and we still have a financial literacy problem. Why is your book different?” Douglas: (8:23) “My objective is not to give you answers, but to teach people how to think so they can get their own answers. What is unique about Family, Inc. is that it provides people with a framework. The premise of the book is that all families could look at themselves as a business. Each family predominately has two big assets – they have their labor assets and they have their financial assets and the name of the game is to manage those assets, to do all the things you want to do in life and when it comes time to retire to have capital to support your consumption. 9:00 “I think the great thing about that framework is that businesses have been dealing with those kinds of decisions for many years…and when you look at the family that way it really allows you to borrow many of those tools and best practices that have been time-tested in business.” Al: (9:16) “Doug, give us a sample of what families ought to be looking for or looking to do.” Douglas: (9:22) “Let me give you some of the big mistakes. First of all, I think you can’t really talk about financial independence or financial security if you’re not thinking about how to maximize your labor potential…another thing the book does a good job on is helping people focus on the right time frame…to think about your performance not in terms of how you got paid this year but in terms of lifetime compensation – that’s a very important change in time horizon.” 10:26 “One of the things I really preach in the book is a family CFO’s job is much broader than simply how you manage your investments or how you budget – it’s things like managing your risk or training the next generation in the family to be good stewards of your capital and it’s things like investment and education and entrepreneurship.” Joe: (13:34) “How would you do that calculation to see what the appropriate asset mix is in regards to equities?” Douglas: (13:41) “Both Social Security and labor you can roughly calculate similarly which is you kind of make assumptions about either how long your working career is or how long you’re likely to live…then you project your future income with a growth rate and tax rate…and you essentially discount that back with some adjustment for inflation. First of all, on familyinc.com there are calculators for both your labor and Social Security. Second, I promise you the estimate you come up with will be wrong – it’s less about projecting a single number and more about thinking about that asset in the context of your overall plan because it’s going to be directionally right.” Joe: (15:51) “What advice would you give our service men and women?” Douglas: (15:56) “One of my primary objectives for doing the book is to support the military community and veteran community with a good framework to think about navigating transition. First of all, the big thing I’d say for the military community is you have to acknowledge that your circumstances are different from mainstream America, and so your plan must be different…it really starts with understanding those differences – the Family Inc. framework can also be applied to those circumstances.” 17:35 End of Interview with Douglas P. McCormick 18:40 “I am currently contributing to a company sponsored 401(k). I contribute 8% (annual salary $60K), which comes out to $4,800 for the year. Can I also set up and contribute to a Roth IRA? If so, what amount can I contribute?” 18:59 “The answer is absolutely yes. With a Roth IRA, you can contribute $5500 per year. If you’re 50 and older, you get a $1,000 catch-up so you can do $6,500. With the 401(k), it might have a Roth option in it. In that case, if you’re under 50 you can contribute $18,000 total.” 19:58 “If you fully fund a 401(k), you can fully fund a Roth IRA if you’re under the income limits.” 27:05 “Can I use life insurance like a Roth IRA? I make too much money to contribute to a Roth IRA. However, I would like to save more in a tax saving manner. I've heard I can use Life Insurance like a Roth. How do I do this? Is it a good idea?” 27:42 “Certain life insurance policies allow you to put more money into them than the actual life insurance premium so you start building up a cash surrender value. You can in many cases invest that how you see fit; it grows inside that insurance policy, there is no current taxation and then you get to a point where you retire and if it’s a big enough balance you can borrow against that and it’s tax-free.”

Editor of Kiplinger’s Retirement Report, Rachel Sheedy joins Joe Anderson, CFP® and Alan Clopine, CPA to discuss inherited IRA (individual retirement account) rules & strategies for beneficiaries. Plus, how to become an extreme saver in 2017. Original publish date January 7, 2017 (hour 1). Note that content may be outdated as rules and regulations have changed. Important Points: 04:43 “Let me recap on 2016 – I have a year-end report here. We had a rocky start in the beginning of the year…the first month was the first January in the history of the stock market…” 07:46 “Almost half of the gains happened in just a few weeks - that’s why timing markets is so incredibly difficult. No one guessed this.” 08:37 “Be fully diversified and make sure that you have the right risks at the right times given your specific goals…to wrap up 2016, it was a wild ride – there were a heck of a lot of different things that happened but at the end of the year if you stayed true to your investment strategy, you probably ended up with a decent year.” 11:24 Start of Interview with Rachel Sheedy Joe: (11:57) “What are some things that you’re writing about that people should be aware of?” Rachel: (12:00) “There are definitely some key points that heirs really need to be aware of that can really maximize an inherited IRA…a big key is [looking at if there] are there different rules for spousal beneficiaries of an IRA versus non-spouse beneficiaries. Spousal beneficiaries have a lot of leeway – they can essentially take the account as their own. Non-spouse beneficiaries can’t do that. They’ve got more rules that they need to pay attention to.” 12:30 “One of the key things they need to know is that they need to re-title the account…they need to re-title it as an inherited IRA and make sure that their name and the decedent’s name are listed when they re-title it to make sure they know who is who – that’s step number one.” Joe: (13:06) “That’s right, it has to stay in the decedent’s name or it could really blow up on them.” Rachel: (13:10) “That’s definitely a move people should not make, they should not roll that inherited account over into their own if they’re a non-spouse beneficiary. They need to re-title it as an IRA.” Joe: (13:20) “When it comes to spouses, what would you talk about in regards to keeping it in the decedent’s name or rolling the decedent spouse into their own?” Rachel: (13:32) “One of the big things is whether the surviving spouse is younger than 59 ½. If they’re younger than 59 ½ and they need that money, if they keep that account as a beneficiary they can cap it without having to pay the early withdrawal penalty, and that’s true for any beneficiary that’s capping a traditional IRA.” Al: (16:47) “The rules are so complicated when it comes to IRAs…if you’re not the spouse then you have to start taking required minimum distributions and a lot of people don’t realize it even if you’re 20 years old you’ve got to start taking a required minimum distribution.” Rachel: (17:13) “Right, that’s a key point. If you want to be able to keep that IRA alive and be able to stretch it out for potentially decades, you need to start taking required distributions. You can also take out more if you wanted to, but if you take out that minimum amount you can keep that IRA going.” Al: (17:31) “That’s also true for Roth IRAs, because the account owner doesn’t have to take a required distribution but a non-spouse beneficiary does, although it’s tax-free." Rachel: (17:46) “Roth IRA heirs need to realize that they’ve got to take distributions even though the owner didn’t, but the distributions will be tax-free – they are taxable income if it’s a traditional IRA.” Joe: (18:00) “Rachel, this is great information. Where can our listeners get more information about you and read up on what you’re currently doing?” Rachel: (18:06) “Kiplinger.com is a great resource if you go to the retirement section our cover shows up there. You can search by different topics – IRAs, Social Security, etc.” 18:19 End of Interview with Rachel Sheedy 20:02 “These are mistakes that we see those people 55 years and older making, and mistake number one is underestimating longevity.” 24:05 “If you find it impossible to save, start at least small – just get the ball rolling.” 33:31 “Another thing that people don’t think about is the taxation of saving accounts because there are different places to save. You can save in your 401(k) or 403(b) if you have one, you can save in your trust account, savings account, you can save into a Roth IRA or a Roth provision in your 401(k) or 403(b).”

Joe Anderson, CFP® and Alan Clopine, CPA summarize the highs and lows of 2016 in YMYW podcast episode 92, then talk about how to automate and increase your retirement savings, how to create a retirement lifestyle game plan, and steps to take if you plan on moving in retirement.  Original publish date December 31, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 01:30 “This year, if you take away any lesson from this [past] year in 2016 when it comes to your investments…is that it’s very difficult for you to time the market.” 04:52 “That’s what investors need to do – they need to look at the long-term and not worry about the day-to-day, month-to-month, quarter-to-quarter because if you have the right investment allocation for you, then let that work.” 11:23 “Evaluate your Social Security claiming strategies because we know that you can start collecting as early as 62 but there are downsides there – your full retirement age, for most of you, is 66 unless you’re born after 1953 and you can take it as late as age 70. Start thinking about Social Security before you even get there because that’s potentially going to be a big chunk of income for you.” 15:20 “Evaluate your savings. If you have $500,000 in savings, you probably should plan not to take any more than about 4% per year. This is a rule of thumb – it’s called the 4% rule… and doesn’t work in all cases…in fact, if you retire younger than 66, you probably don’t want to take 4% because you’re probably going to run out of money sooner.” 22:35 “Pay yourself first – by that, you’re saving first before you’re spending, and the best way to do that is if you have a 401(k) or 403(b) at your work because it comes right out of your paycheck and you never miss it. Not all of you have 401(k)s, so in that case you’ll have to open your own savings account.” 26:06 “Understand tax ramifications. This one is missed a lot because you may not even realize this but all the money that you’ve saved into your 401(k) or your 403(b) or in many cases your IRAs – [when] that money comes out it’s taxed at ordinary income rates which is the same rates you’re used to paying right now.” 33:03 “Get serious about relocation plans. If you plan to move when you retire, find out how much you’ll actually net for your house and how much it will cost to move to your new location.” 34:30 “In some cases it may make sense to refinance your loan – do that while you’re working because you need the income to qualify.”

Will a financial advisor give you an unbiased opinion? What’s the difference between a TSP and a Roth IRA? Joe Anderson, CFP® and Alan Clopine, CPA answer these questions and more in YMYW podcast episode 91. Original publish date December 17, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:54 “A stretch IRA is a way for your children, when they inherit your IRA, to stretch it over their lifetime…this may go away…if it goes away, we will go back to old rules which means all money in the IRAs needs to be withdrawn within five years, which could put your kids and grandkids in much higher tax brackets.” 05:17 “A Roth IRA will grow 100% tax-free. There is no required minimum distribution in a Roth IRA. If you pass with a Roth IRA, then your kids can take those dollars out tax-free. So, it grows tax-free you’re your life, your spouse’s life and the kids’ lives. It’s very powerful if you do this right.” 06:54 “This is one of the most important times ever to be doing conversions; the unfortunate thing is you have to do it before December 31st for this year.” 13:52 “If you’re broke, you can always pull out your Roth contribution regardless of what age you are – no tax, no penalty.” 15:08 - “I'm in a 30 year fixed mortgage with Wells Fargo. There have been several financial criminal incidents regarding Wells Fargo this past year. Could my mortgage be negatively affected by this as well as the interest rate hike?” 23:03 - “I recently changed my job. My new employer offers a 401(k) plan, but only after I have worked a certain number of hours. So technically, I cannot contribute towards any retirement account. So as to reduce the tax, can I contribute towards my spouse's 401(k), and max out his contributions? We file taxes jointly.” 25:09 - “Will a financial advisor provide an unbiased assessment of a financial plan I already have in place? I already have an Investment Advisor connected with an insurance company who handles our investments. I would like to have an independent financial advisor who can provide an unbiased assessment of our financial plan and investments. Is it possible that an advisor would provide this service and what fee might be expected?” 33:33 - “Can I move money from a retirement account to a Roth IRA and what is the process like? Tax ramifications? Do I have to move all of it? 34:36 - “I am a government employee and have a TSP. What is the difference between that and a Roth IRA? A civilian Roth IRA and TSP?”

It’s your last chance to lower your tax bill – find out some last-minute moves to save on taxes before year-end. Plus, how are your assets titled? Joe Anderson, CFP® and Alan Clopine, CPA explain why making the wrong move could cost you big time in YMYW podcast episode 90. Original publish date December 17, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 13:52 “The market magnet has begun to pull the long dormant mutual fund investors, so domestic stock funds have seen an estimate net flows of $35.8 billion in the past four weeks (Investment Company Institute).” 14:40 “History tells us that money tends to flow near market peaks…it’s interesting how that tends to happen.” 15:12 “Now is a really good time to take a look at your overall portfolio, and look at a rebalance strategy. There are a lot of people who set it and forget it, and then the other side of the spectrum is people who day-trade the heck out of their 401(k) plans.” 20:44 “I’ve got five ways to lower your tax bill now, this is from Nerd Wallet and came out on December 14…when it comes to tax planning, a majority of strategies need to be accomplished by December 31st for that tax year.” 23:30 “There’s a special account called a donor advised fund, where you can set up the account, put your own money into it, and that money will ultimately go to charity, not necessarily this year. Here’s the key – the year that you put the money into the account is the year you get the tax deduction.” 24:15 “It’s a great way to take a deduction when your tax bill is higher.” 27:26 “Offset your capital gains with losses.” 28:21 “When you tax-loss harvest, here’s how you do it properly: you sell the position that’s down to create that loss, and then you buy something that’s very similar so you’re still in the market because the market because the market may come zooming right back.” 29:37 “It’s important to realize how things are titled when it comes to your assets, especially your retirement assets.” 29:55 “A lot of you have named your living trust as the beneficiary of that retirement account…there are pros and cons to this. There’s so much misinformation on what people should do. I would say the majority of you who are married should not name your trust the beneficiary of your retirement account unless a) it’s a second marriage and you want to preserve those assets if you had kids from a previous marriage; b) second of all, if you’re not married and have children and those children might not be able to handle the type of wealth that is inside your retirement account.” 34:59 “If I just named my spouse as the beneficiary, she could keep it in my name and take a required distribution if she wanted to, or she could roll it into her own and avoid any type of income coming out of it and being taxed on it and let it grow tax-deferred until her retirement date.” 36:54 “A retirement account is completely different than say your brokerage account or checking or savings account. A retirement account has to have a required distribution from it…so be careful with how you name your beneficiaries.” 37:12 “The death of the stretch IRA could happen as early as next year.”

Would contributions to a traditional IRA reduce your tax burden? How do you start saving money at a young age and what are the benefits of a Roth IRA? Joe Anderson, CFP® and Alan Clopine, CPA answer your email questions in YMYW podcast episode 89. Original publish date December 11, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 02:31 - “Would contributions to our traditional IRAs reduce our tax burden? My wife and I currently have no tax write-offs and our mortgage is paid off on our home. I contribute the maximum to my 403(b), but I also have a traditional IRA and a Roth IRA, as does my wife. We have been contributing to our Roth IRAs over the years to the neglect of the traditional IRAs. I was wondering if it would make sense to start contributing to the traditional IRAs so we can start to decrease our tax burden every year. Of course, the benefit of the Roth would have tax advantages years from now when I retire. My wife and I are both in our late 40s and I have about 10 to 11 years before I think I can retire.” 10:52 - “How should I start saving? I just started my first job and they don't provide 401(k)s. What should I do to prepare for life, and to start saving? I've heard a Roth IRA is the way to go. Is this something I want? Other than tax benefits, does it grow?” 15:24 - “What are the tax implications of removing part of my IRA to give to my ex-wife? My ex-wife and I had separate IRAs. We divorced in 2014, but I kept the house. I owe her money in several months as a first payment on the value of the home. What are the income tax issues I will face by removing a large portion of my IRA to hand over to her?” 19:09 - “Will a loss on our sold home off-set taxes on a 401(k) withdrawal? My wife is 65 years old and I will be turning 65 in May 2017. We are planning to move out of California to Las Vegas for good. I will have to withdraw 100% of my 401(k) to put as a down payment to purchase a home in Las Vegas. Then, we plan to sell our house in California which is paid-off. We believe that after the sale, we will have a loss. Would we be able to use that loss to reduce taxes on the 401(k) or IRA withdrawal?” 24:38 - “Will a Trump presidency reduce the tax and regulatory burdens placed on my small business? I own a small business in the New York area and have recently started to work on our 2017 financial projections. I have spoken to a number of friends, family and other small business owners about the ramifications of a Trump Presidency. Although I do not agree with many of his polices, I am hopeful that he will be able to reduce the tax and regulatory burdens of operating a business. When creating my forecast, what should assume and what should I ignore?” 27:35 - “Will I be thrown into a higher tax bracket due to a high ordinary income tax? I reach age 66 in July, full retirement age, and will continue working. I'm considering taking Social Security retirement at 66 and contributing to a 403(b) account to increase the balance. Is the entire amount, Social Security and wages, taxed as ordinary income, so that I will be thrown into a higher tax bracket? Is Social Security income counted dollar for dollar? Would it pay me to invest the max amount in my 403(b)?”

Joe Anderson, CFP® and Alan Clopine, CPA start off YMYW podcast episode 88 with a quick discussion on potential tax changes under Trump. Plus, 12 ways you could go broke in retirement and put yourself at financial risk. Original publish date December 11, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 08:28 “There are things that you want to make sure that you take a look at in regards to your overall retirement planning and tax planning, [including] Roth IRA conversions.” 09:00 “Most tax planning strategies have to be finished before December 31st, so now is the season for tax planning.” 10:03 “There’s a lot of confusion about taxes and what may be coming in the next year with the Trump proposals and GOP proposals.” 13:59 “In terms of the Trump proposal – this is also true of the GOP proposal – it would only be three tax brackets, 12%, 25% and 33%.” 14:44 “Under the Trump plan, if you’re married and your taxable income is below $75,000 you’d be in a 12% bracket – if it’s above $75,000 then you’re going to move into the 25% bracket and by the time you hit $225,000 you get to 33%.” 15:00 “When you look at single taxpayers, it’s the same exact thing but cut in half.” 17:12 “One of the biggest things I [would consider] from a planning perspective at the end of this year would be if I’m charitably inclined.” 17:46 “Charitable donations are really important and big right now because if you are in a higher tax bracket this year or next year or in the next couple of years, you want to take that deduction in a year where you get more tax benefit. There is a way to take future year contributions in the current year and that’s by setting up a special account called a donor advised fund.” 23:49 “The amount of money that you have in stocks versus bonds has nothing to do with your age…it all depends on when you cash flow, how much income you need and how much it needs to last.” 27:08 “Multiple streams of income are better than one.” 33:53 “Long-term care – that’s going to be a big deal. Most of these companies are totally getting out of the business.”