Your Money, Your Wealth

Joe Anderson, CFP® and Alan Clopine, CPA discuss Social Security strategies for couples claiming spousal benefits in episode 75 of the YMYW podcast, as well as strategies for single people to consider. "Big Al" closes the hour discussing the downsides of annuities. Original publish date October 22, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:25 - “Many Americans will be living solely off Social Security... people are going to need to play catch-up.” 04:50 - “There are new law changes that happened with Social Security last year when it comes to restricted application and file and suspend.” 06:24 - “There are two different benefits that you claim from Social Security if you’re married: you can claim your own or you can claim the spousal benefit. The spousal benefit represents 50% of your spouse’s benefit.” 10:10 - “Just a couple of years deferring your Social Security and deferring your overall retirement means added savings and added benefits.” 11:10 - “The full retirement age right now is age 66…but you can delay it as late as age 70. Every month you delay Social Security you get an increased benefit.” 11:58 - “If you look at us collectively, it makes sense to wait. But if you look at us individually, it’s a whole different matter. Even though we try to tell people to wait until they’re 70, there are situations when you should take it early. One situation is if you’re disabled.” 13:38 - “If you push it (your Social Security benefit) out three years, it adds 30% more income.” 21:45 - “Which annuity is better for a hands on investor?” 25:25 - “Variable annuities are very expensive…understand that variable annuities have high internal costs…and people are purchasing them for guaranteed income.” 29:19 - “You have to look at the present values of those future cash flows to figure out what your internal rate of return is.” 30:34 - “In most cases I would not recommend a variable annuity, I would recommend an immediate annuity. An immediate annuity means you’re going to give your money to an insurance company and immediately receive income. That’s the cleanest way to receive guaranteed income.” 37:35 - “When it comes to retirement accounts, one of the things that is often overlooked is taxes.”

In YMYW podcast episode 74, Joe Anderson, CFP® and Alan Clopine, CPA answer questions about investing for retirement, covering investment options for 403(b) accounts, tax implications of moving part of your IRA and how to avoid tax penalties when withdrawing from an IRA. Original publish date October 15, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 06:30 - “If you have a 401(k) that has a Roth option, you can put $18,000 (per year) into that Roth 401(k).” 07:51 - “If you have a 401(k) that allows you to put yet more money into the 401(k) after you max out, some plans allow you to put after-tax money into that 401(k)... here’s why this could be such a good idea, particularly if you’re close to retirement…” 11:11 - “How should I invest my 403(b)?” 14:38 - “Our advice is always to maximize those (employer’s retirement) plans.” 22:05 - “What are the tax implications of moving a portion of an IRA to open a new IRA with a different firm?” 27:17 - “With a 401(k) by law it’s mandatory to withhold 20% in taxes if you do that with the 401(k).” 28:44 - “Taxes don’t stop when your paycheck does – once you start tapping that retirement nest egg for your living expenses, there are all kinds of new rules and opportunities.” 30:14 - “Will I be penalized for an IRA withdrawal?” 32:08 - “There is no age limit for Roth IRA conversions …so if you take money from your IRA and move it into a Roth IRA, there is no 10% penalty on that conversion. The IRS classifies that as a rollover. There would be a 10% penalty if you’re under 59 ½ and you withheld taxes when you did the conversion.” 32:36 - “Here’s another mistake: don’t withhold taxes when you do a conversion – pay the tax the following year in April when you do your taxes. If that tax bill is too high, re-characterize some, part or all of the IRA that you converted back into the IRA.”

Most women take their Social Security benefits early causing them to lose out on an increased benefit amount. Joe Anderson, CFP® and Alan Clopine, CPA discuss Social Security claiming strategies so you can get the most out of your benefit in episode 73 of the YMYW podcast. Original publish date October 15, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 10:34 - “According to Investment News, most women claim Social Security early (before full retirement age).” 12:14 - “The answer we’ll always give you is to push it [your Social Security benefit] out to age 70 if you have normal life expectancy.” 15:39 - “It’s especially important for women because women live on average four to five years longer than men. If you can wait and take those benefits later, you’ll have a lot more money to work with in retirement.” 17:38 - “Social Security benefits are based on your highest 35 years of earnings.” 22:30 - “When you put a tax strategy or tax plan into place with your retirement savings, you can stretch those dollars out more than you think.” 26:31 - “Worst case is 15% of your Social Security income is 100% tax-free…California does not count Social Security as taxable income.” 33:41 - “When you do a Roth IRA conversion… set up a separate Roth IRA.” 37:51 - “When someone makes a mistake, they finally get serious about getting advice. The truth is you can save more in taxes than you think.”

Your 401(k) plan options probably include at least one target-date fund. Joe Anderson, CFP® and Alan Clopine, CPA discuss this one-step strategy for investing for retirement in episode 72 of the YMYW podcast, then answer listeners' investing questions. Original publish date October 8, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:47 - “Unfortunately, a lot of you are not using these target-date funds correctly…first of all, a target-date fund has its own allocation.” 07:53 - “There are two expenses in any investment: expense ratios and then the other cost is risk.” 11:32 - “Should I withhold my taxes when purchasing a home?” 17:06 - “Will I be taxed if I don’t touch the funds in a transferred IRA?” 19:21 - “We now have a monthly standing lunch n’ learn; it’s called Road to Retirement…it’s an introduction to financial planning and the key areas you should look at. We’ll go into some specific strategies when it comes to taxes, Social Security, investments.” 22:02 - “What are the pros and cons of investing before/after tax dollars into a 401(k)?” 26:34 - “If we were disciplined enough to save those tax savings and invest it, we’d probably come out ahead…but most of us don’t do that and we just spend whatever we have.” 28:59 - “What should I do with my portion of my ex-husband's IRA?” 32:47 - “I am 51 years old and finally in a job which offers a 401(k) option…should I invest in my 401(k) or pay off my debt?” 35:58 - “Even if I don’t have an [employer] match, I still want to save for retirement and I don’t want to ignore it. The longer you give that money to compound, the more you’re going to have. So the sooner you start saving, the better.”

A reverse mortgage gives you the opportunity to tap into your home equity to generate retirement income. Joe Anderson, CFP and Big Al Clopine, CPA discuss whether a reverse mortgage is the right move for you in YMYW podcast episode 71. Original publish date October 8, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 01:02 - “I’ve got a lot [to explain] about retirement that you need to be aware of, some new tax plan strategies, pros and cons of retiring in your seventies…” 04:44 - “Part of the reason why college is so expensive is because you can borrow money so now colleges are charging more and administrators are paid more.” 13:57 - “Have you ever considered how you will use your home equity in retirement? If you’re going to stay in your home, will you tap into that?” 18:42 - “Home equity has not always been part of the retirement income discussion.” 22:10 - “What happens is either you borrow a lump sum or a payment stream or just a line of credit that you can draw when you need it; so then what happens is you don’t actually make payments – the interest that you would have normally paid just keeps accruing and adding to your loan so when your house is sold, whatever your loan is gets paid off by the equity.” 24:55 - “How do you use a reverse mortgage properly?” 25:28 - “Here’s a way to get cash flow: if you don’t have any in your savings, you can get a home equity line on a reverse mortgage and pay for your bills that way…” 28:54 - “If all your money is sitting in traditional retirement accounts, it’s 100% taxable. For a lot of you, that’s where the majority of your savings are. If there were a way to get control over your taxes, the home equity loan can be a tool if you utilize it with other strategies so you pay less taxes for the rest of your life…there are a lot of ways to reduce taxes in retirement.” 32:55 - “With an IRA or individual retirement account, you can buy stocks, bonds, mutual funds and ETFs. With a MyRA (my retirement account) you’re buying U.S. treasuries.”

Joe Anderson, CFP® & Alan Clopine, CPA answer personal investing questions in episode 70 of the YMYW podcast, then welcome New York Times and USA Today bestselling author, Dr. Daniel Crosby on the show to discuss his book, The Laws of Wealth, on behavioral finance. Original publish date October 1, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 01:07 - “Will I be penalized for an excess contribution to my IRA?” 02:57 - “You may or may not be able to deduct it based on your income level and if you’re in another retirement plan.” 08:25 - “Will the 401(k) distribution tax be offset by the loss of my section 1231 property?” 10:26 - “That qualifies for a special tax treatment because it’s a business asset, it’s under code section 1231 which simply means this – if you sell the rental property at a gain, you get that lower capital gains rate.” 17:15 - “Once you get to know what some of the rules are, you can actually pay a lot less in taxes.” 18:43 - “Should I cash out my investments or continue to invest?” 21:21 - “You can make your own dividend, which people still don’t understand. A dividend is not a coupon payment.” 25:16 Start of Interview with Dr. Daniel Crosby 27:36 - “People who watch more CNBC tend to have worse results. People who are monitoring every little thing that Janet Yellen does are actually getting outperformed by people doing nothing at all, so there are a lot of ways investing runs contrary to our natural human tendencies.” 30:06 - “Part of the reason why I wrote the book was to try and address the delta between what the research says are the determinants of investment returns and what most people understand them to be.” 30:18 - “What do you think is the biggest bias that hurts us the most?” 33:55 - “Most people are overconfident and the people who aren’t overconfident tend to be depressed – there isn’t a lot of middle ground.”

Joe Anderson, CFP® & Alan Clopine, CPA discuss the latest statistics on who’s most likely to get audited, how often it happens, and what to do if it happens to you, in episode 69 of the YMYW podcast. Original publish date October 1, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed.  00:00 - Intro 00:56 - “The latest stats on how often we’re being audited. Who’s more likely to get audited? I’ll take it one step further – what do you do if you get audited?” 09:44 - “There’s such a lack of planning, and that’s why we do the show.” 13:30 - “The oldest baby boomers are turning 70 ½; those who were born in the first half of 1946. When they turn 70 ½ that triggers a required minimum distribution (RMD) 17:42 - “The truth is, our tax rates now are lower than most times in our history...” 22:28 “A sole proprietorship goes on your tax return on what’s called schedule C. You show your income, you show your deductions, and whatever the profit is – that’s what you pay income taxes and self-employment taxes on.” 26:22 - “In general, corporations have a lesser chance of being audited than individuals.” 34:02 - “If you have to go to an audit office, here’s what you do…”

Joe Anderson, CFP® & Alan Clopine, CPA discuss the importance of properly diversifying your 401(k) in episode 68 of the YMYW podcast. Plus, should you invest in real estate or index funds? How you can determine stock loss with a non-public company? Finally, 8 financial tasks you must do by year-end. Original publish date September 24, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 00:53 - “Why do I need to diversify my 401(k)?” 03:57 - “Bonds are there to even out the ride, to even out the overall portfolio.” 05:57 - “When you take a long-term average of asset classes, more often than not emerging markets is either the top performing asset class.” 11:05 - “Should I invest in real estate or index funds?” 15:35 - “If you are so inclined to do real estate, treat it as if it were a business, a company or another job because there’s a lot to it. There are a lot of things that can go wrong.” 21:32 - “How do you determine stock loss in a non-public company?” 26:42 - “When you have rental real estate and you sell that at a loss, that’s considered business with a tenant and you can generally take an ordinary loss.” 27:23 - “What is the best way to transfer or refinance through a quit claim?” 32:45 - “If you would like to go through a comprehensive retirement planning course, go to our website at purefinancial.com to learn about the course. 35:27 - “Rebalance your portfolio, and that could potentially create tax loss harvesting.”

Joe Anderson, CFP® & Alan Clopine, CPA discuss some last-minute tax planning tips before year-end in episode 67 of the YMYW podcast. They also answer frequently asked financial questions, including whether you can roll your solo 401(k) to a simple 401(k). Original publish date September 24, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 04:35 - “One of the most critical elements is checking your emergency funds.” 07:55 - “Take your retirement budget for a test drive and adjust your spending plan.” 16:15 - “Can I convert my Individual 401(k) to a SIMPLE 401(k)?” 17:50 - “We like solo 401(k)s a little bit better, because if you’re not making a lot of money you can put a lot more money into it if you want to shelter that.” 22:02 - “You have to do [Roth] conversions before December 31st…you can convert any dollar amount you want to.” 24:29 - “Should I be concerned about the Department of Labor scare?” 29:11 - “In some cases, the financial industry, banking industry or maybe insurance companies might feel a bit of a hit because they’d have to do things differently but I think over the long term this is good for people and the industry… in fact, this should have been done a long time ago.” 30:02 - “Where should I invest my inherited money?” 35:03 - “You just have to figure out what your goal is and that will help you figure out how to invest it.”

The state of the US tax code couldn’t be more uncertain. In episode 66 of the YMYW podcast, Joe Anderson, CFP® & Alan Clopine, CPA discuss the presidential candidates’ opposing views on taxes and explain what tax strategies you should take advantage of now before it’s too late. Joe and Al answer some listeners' questions later in the show. Original publish date September 17, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.  00:00 - Intro 2:37 “When you look at Clinton, her proposals for the most part are adding extra taxes for those that make a lot of money.” 2:57 “Trump wants to lower the tax rates and the highest would be 33% instead of what it is right now -39.6%.” 8:06 “When it comes to your own retirement, trying to conserve your own dollars and pay less taxes is huge, because if you can pay less in taxes then you can live closer to that lifestyle you want to live.” 12:05 “What is the best way to leverage an old ex-employer's 401(k)?” 15:37 “At 70 ½ you have to take a required minimum distribution and if you don’t, it’s a 50% penalty.” 15:54 “Should I retire at 66 or take a low paying job?” 16:49 “A lower-paying job will never hurt you. They will never reduce the benefit, it will help you.” 20:10 “How do I report my estate distribution?” 24:55 “What should I spend first in retirement to minimize high RMDs and avoid return risk? 35:10 “There’s something called smart beta. What’s your take on it?”