Your Money, Your Wealth

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 Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 01:02 - "I've got a lot [to explain] about retirement that you need to be aware of, some new tax plan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 Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 01:07 - "Will I be penalized for an excess contribution to my IRA?" 02:57 - "You may or may not be able to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?"

Joe Anderson, CFP® and Big Al Clopine, CPA discuss a two-decade study on the character traits of America's wealthy and uncover the lessons that can be learned from the millionaire next door, on episode 65 of the YMYW podcast. Original publish date September 17, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 06:41 - "Successful people often spend more time early in life focusing on bettering themselves which leads to higher income the remainder of their lives." 06:50 - "We need to keep investing in ourselves all throughout our career – things are changing so rapidly that we have to stay ahead of the curve." 13:23 - "The first check you write every single month should be to yourself – to your 401(k) or IRA. If you can automate it, all the better." 16:12 - "If you're thinking about saving money in taxes in retirement, having some of your dollars come out tax-free is key because that's what is going to keep you out of higher brackets later." 19:11 - "A lot of people don't realize they can take control over their taxes and especially in retirement." 22:00 - "If you're not maxing out your 401(k) plans and Roth IRAs, you have to get there." 24:52 - "A lot of you underestimate how much you are actually spending." 31:11 - "The fee-only community is pretty small. The really good fee-only advisors have minimums of millions of dollars." 32:07 - "Right now we have a tax system that starts at a lowest bracket of 10% and goes up to 39.6%. Hillary wants to keep that in place but an extra 4% if you have more than $5 million in income." 32:30 - "Donald Trump wants to change the brackets to be 0%, 12%, 25% and 33%." 34:35 - "Couple more things – for the alternative minimum tax, Donald Trump wants to eliminate it all together, and Hillary wants to expand it a little bit by having a 30% minimum rate for incomes over $1 million."

Joe Anderson, CFP® and Big Al Clopine, CPA discuss the good, the bad and the ugly of baby boomers' retirement plans in episode 64 of the YMYW podcast. Plus, Big Al quizzes Joe on retirement and investing questions. Original publish date September 10, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 03:30 - "There is talk about how to fix Social Security. I personally think what they'll do is they'll raise retirement age; they may raise the rates, or the amount we put in Social Security..." 08:49 - "How will you make your money work for you while reducing your risk? How will you avoid the retirement tax trap that we've been talking about that could cost you thousands of needless taxes?" 16:10 - "There are ways that you can increase your possibility of working longer; one is staying healthy, one is performing well at your current job…going back to school and learning new skills." 18:07 - "As you near retirement, tax planning becomes more important than ever, but you must use a forward-looking tax strategy." 21:42 - "True or false? If you take your Social Security benefit early, you'll lock in reduced monthly payments for life." 24:08 - "At what age do you qualify for the maximum Social Security retirement benefit? 68, 70 or 72? If you wait until age 70 you get the maximum benefit." 30:22 - "How do I avoid filing a trust return every year?" 33:27 - "I am a non- U.S. citizen living outside the U.S. and trading stocks through a U.S. internet broker. Do I have to pay taxes on the money I earn? 34:22 - "How do Roth IRAs gain interest?"

Oregon's State Senator Ron Wyden is proposing a limit on Roth IRA accounts so high-income households would face restrictions on this tax-advantaged retirement account. Would this solve anything? Joe Anderson, CFP® and Big Al Clopine, CPA discuss in episode 63 of the YMYW podcast. Later, 6 reasons to convert to a Roth IRA in your 50s and 60s. Original publish date September 10, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:50 - "People who have a retirement plan through their employer tend to have more money in retirement." 05:17 - "There's no such thing as a mega-Roth IRA." 07:12 - "Taxpayers 'are pouring dollars into incentives for retirement savings, but still far too many Americans struggle to set money aside after they cover their basics. Tax incentives for savings ought to be available to more working families and more generous to middle class.'" 11:49 - "The IRS is getting their tax money upfront when you put money into a Roth." 14:19 - "At age 70 ½, you have to take a required distribution." 23:18 - "What does a [company] match mean? It's when you put a dollar in and your company matches it." 26:50 - "If you have extended your tax return or even if you have not…and you did a Roth conversion last year, you're allowed until October 15 to re-characterize that amount." 30:53 - "If you pass away with a retirement account, the IRS wants their tax money…When you pass away, it will go to your named beneficiary…your spouse has different rules." 33:58 - "Roth IRAs do not have a required distribution to the owner but if I'm a beneficial owner it doesn't matter what type of retirement account it is…they will have to take that requirement."

Investing expert Larry Swedroe joins Joe Anderson, CFP® and Big Al Clopine, CPA to discuss his new book on factor-based investing in episode 62 of the YMYW podcast. Larry also discusses smart beta, his take on the upcoming election, and how investors should react depending on the outcome. Original publish date September 3, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed. 00:00 - Intro 02:02 - "Can the IRS take the property from my trust?" 04:38 - "How much can I collect in widow's benefits?" 08:24 - "Can I re-gift a stock?" 12:35 - "A 401(k) plan will allow someone to put an amount directly into their paycheck into an account that will grow 100% tax-deferred…it's out of sight, out of mind." 15:02 - "When you start tapping your retirement nest egg, there are all types of rules – if you don't have a retirement nest egg, you have nothing to tap." 15:50 Start of Interview with Larry Swedroe 18:27 - "We identify eight factors in this book – six for stocks and two for bonds…" 20:12 - "We should have a risk-based explanation for these premiums and/or a behavioral explanation that should hold up." 20:20 - "The book goes through all of these issues for every one of the factors we recommend, and shows you the historical evidence." 22:47 - "Now there's something that's called smart beta. What's your take on that? That's just factor investing with a marketing ploy isn't it?" 24:49 "That, to me, is smart beta because it's patient trading and over time will outperform the index." 25:44 - "There is a thing that you can call smart beta, but 98 or 99 percent of what the industry calls smart beta is marketing hype." 29:19 - "Never let your political views influence your investment decisions. You should have that well thought-out investment plan that has your asset allocation. The only thing you should be doing is 1) rebalancing if necessary and 2) tax managing if the opportunity to harvest a loss is there." 33:38 - "The more you look at your portfolio, the more hazardous it potentially is to your wealth." 35:35 - "If you can't ignore the noise of the market…don't check your value." 35:55 End of Interview with Larry Swedroe