Retirement Starts Today

Has the Covid-19 pandemic cut into your vacation plans? It seems like everyone’s travel plans have changed over the past year. But what does that mean for employees and companies? Anne Steele and Chip Cutter examine the effects of Covid-19 and vacation taking in a recent Wall Street Journal article that we’ll look at today.  In addition to our Retirement Headline, I’ll answer two listener questions. One is about Medicare before age 65 and the other about investing in bonds. Grab your favorite listening device and join me to help you get retirement ready. Outline of This Episode [1:22] Many people aren’t taking time off right now [6:10] Will Rich’s wife qualify for Medicare after he retires? [10:28] Should we own bonds with these low interest rates? Working too much decreases productivity We have discussed the importance of taking vacations on Retirement Starts Today before. And if you have listened in the past you know that vacations actually increase worker productivity and boost morale. However, this past year, the Covid-19 pandemic has changed most people’s travel plans. Many have decided to postpone taking their vacation days until a time when they can travel more. But with the stress over the pandemic and the changes brought about by working from home, people should be taking time off now more than ever. Companies are becoming increasingly concerned about employee’s lack of vacation time Whether it is because people feel like they can’t or shouldn’t take vacation time right now, companies are becoming increasingly concerned. However, different companies are taking different approaches to the issue. Some are relaxing their vacation policies and allowing the vacation time to roll over while others are forcing their employees to use the time now to try and fend off burnout. Have you used your vacation time over the past year? Vacations are even more important in the lead up to retirement As you approach retirement, it is even more important to take those vacation days. The free time that vacation days offer you an opportunity to explore and practice what you will be doing in retirement. If you have postponed your vacation, consider taking a staycation to practice for retirement. Take this time to explore new hobbies and act out what you would do during your retirement.  In retirement, every day is Saturday! Press play now to listen to the Retirement Headlines segment plus get the answers to our listeners’ questions. Have you signed up for the Every Day Is Saturday newsletter yet? If not, what are you waiting for? Follow this link to get the latest in retirement news in your inbox every Thursday morning.  Resources & People Mentioned Wall Street Journal article - Companies Fret As Vacation Goes Unused Boomer Benefits YouTube video - Medicare Under 65 Connect with Benjamin Brandt Get the Retire-Ready Toolkit: http://retirementstartstodayradio.com/ Follow Ben on Twitter: https://twitter.com/retiremeasap Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter Subscribe to Retirement Starts Today on Apple Podcasts, Stitcher, TuneIn, Podbean, Player FM, iHeart, or Spotify

Has the news about the ups and downs in the market lately got you a bit worried? You aren’t the only one. Many people are even thinking about pulling their money out in case there is a market correction. Does this sound like you? If so, you’ll definitely need to listen to this episode.  When you press play you’ll hear what would happen if you only invested at the market peaks, what to do with an inherited IRA, and what the benefits are of an umbrella insurance policy.  Outline of This Episode [1:25] What if you only invested at market peaks? [5:21] What to do with an inherited IRA? [9:00] The benefits of an umbrella insurance policy What if you only invest at market peaks? Have you ever wondered what would happen if you invested at all the wrong times? Our retirement headline this week is from Ben Carlson who reflects in his widely read 2014 piece, What If You Only Invested at Market Peaks? In his newest article with the same title, Ben introduces a video illustration to turn his story of the world’s worst market timer into a timely cartoon about the rewards of patience and long-term thinking.  Ben responded to the pushback he got from the original article by explaining that while there are risks involved with any investment strategy, the most effective way to combat those risks is with a long-term investment mindset. Long-term thinking will give you the biggest margin of safety when investing.  Are frothy markets making you nervous? The current market volatility has many people looking for an exit strategy. While I share their concern over the rapid growth we have seen over the past several months, this is why we have an investment strategy. Overvalued markets are no reason to deviate from your investment plan.  A properly invested retirement portfolio should already include a contingency plan for a market downturn. If you are worried about the market then now is a good time to consider your investment plan. You may want to dial back your stock exposure back a few percent to help you sleep at night. If you are within a few years of retirement, you should already be close to a retirement income portfolio of about 40-50% in bonds and cash. Are you worried about a market correction? What to do with an inherited IRA One listener writes about her daughter who inherited a 403B account. She would like to know what the best plan is for this unexpected inheritance. She could either take a lump sum or roll the money into an inherited IRA account which must be withdrawn over a 10 year period. The answer to this question depends on her income. If she has a high income then she should spread the money over the 10 year period taking about 1/10 each year. If her income is not too high then taking the money now and paying the taxes on it shouldn’t be too much of a burden tax-wise. What would you do with such an inheritance? Make sure to subscribe to my newsletter If you have any questions for me, want to hear more about retirement planning, or would like to be first in line for free book copies from the authors that I interview, click here to subscribe to my Every Day is Saturday newsletter. This weekly newsletter is delivered every Thursday morning to remind you that every day is Saturday in retirement.  Resources & People Mentioned What If You Only Invested at Market Peaks? by Ben Carlson USA Today article on umbrella insurance Financial Samurai article on umbrella insurance Connect with Benjamin Brandt Get the Retire-Ready Toolkit:  http://retirementstartstodayradio.com/ Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter Follow Ben on Twitter: https://twitter.com/retiremeasap Subscribe to Retirement Starts Today on Apple Podcasts

Are you setting yourself up for a single-ply retirement? Do you find yourself trying to save money out of habit rather than necessity? Listen to the retirement headlines segment to find out why this may not be the best idea in retirement.  In the listener questions segment, I actually have a listener answer. I asked the subscribers of my Every Day is Saturday newsletter what they were doing to combat Zoom fatigue and Ann replied with a detailed answer. After that, we’ll analyze Social Security claiming strategies and discuss retirement rebalancing strategies.  Outline of This Episode [2:02] What might it feel like to be frugal by choice rather than by default? [5:46] What is your strategy to step away from Zoom calls and recharge your batteries? [8:48] Social Security claiming strategy [11:42] When is the right time to rebalance? How would it feel to be frugal by choice rather than by default? Do you find yourself making money-saving decisions out of habit? Are you like Tim Ferriss and who still buys single-ply toilet paper after all his success? Oftentimes our frugality stems from our upbringing rather than from necessity. To kick the default frugality habit, it helps to look at your formative years. Did your parents instill this habit in you or does your frugality serve a purpose? There is a time and a place for frugality, however, automatic frugality isn’t always the smartest choice. If you are automatically frugal how do you decide where to trim and where to spend? If you are the type of person who is thrifty by default, these decisions can be tough until you realize that survival level spending habits aren’t always the smartest choices.  How do you evolve from scarcity-based decision making to outcome-based decision making? One way to analyze whether your frugality is automatic or purposeful is to define your spending habits. Create an inventory of your spending. What indulgences did you make that were worthy last year? Which extravagances would you repeat? In what areas can you spend money to create more joy in your life? Learn to build a higher-quality life and become frugal by choice rather than by default by listening to this episode of Retirement Starts Today.  What is your strategy to step away from work and recharge your batteries? Over the past year, many of us have become very familiar with working from home. Although working from home allows us more flexibility, studies show we are working more than ever. With so much time spent in front of a screen, we can burn out quickly.  Ann enjoyed the freedom of taking 3 day weekends last year. She has learned to slow down, enjoy her time off, and practice self-care. She also learned to stand up for herself and be intentional about how she takes her vacation time. What can you learn from Ann? Take time now before you retire to enjoy life If you describe yourself as a workaholic, then now is the time to consider what to do in your downtime. If you want to make the most out of your retirement, you’ll need to become comfortable with having free time. What are you doing to practice self-care and make the most of your downtime? Listen in to hear all of this plus the effects that claiming Social Security early or late could have on the total benefits between spouses and how to balance your portfolio in retirement.  Resources & People Mentioned Tim Ferriss BOOK - The 4 Hour Work Week by Tim Ferriss BOOK - The 4 Hour Body by Tim Ferriss BOOK - Tool of Titans by Tim Ferriss Connect with Benjamin Brandt In retirement, Every Day Is Saturday, even Thursday! Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter Get the Retire-Ready Toolkit:http://retirementstartstodayradio.com/ Follow Ben on Twitter:https://twitter.com/retiremeasap Subscribe to Retirement Starts Today on Apple Podcasts,Stitcher,TuneIn,Podbean,Player FM,iHeart, orSpotify

I figured that you all may be a bit sick of hearing the news lately which is why this week’s episode will focus only on listener questions without the Retirement Headlines segment. I’ve got 2 listener questions that will pique your interest. Chris asks about long term care insurance. What is the difference between hybrid and traditional policies and when can someone self insure? And Janet wants to know about the tax benefits of life insurance to fund your retirement. Don’t miss the answers to these complex questions, press play now! Outline of This Episode [1:22] Chris has a long-term care insurance question [8:33] Consider your home equity as a quasi-long-term care policy [10:09] Janet is curious as to how life insurance could be used as a tax strategy Do you even need long term care coverage? The question of how to pay for long term care comes up when creating every retirement plan. It is extremely difficult to plan for long-term care due to the myriad unknowns. Will you even need coverage? This question can be difficult to answer since the duration and level of long-term care varies from person to person. This is why we look at the statistics. A person turning 65 today has a 70% chance of needing some sort of long-term care service in their life. And 20% of people will need it for longer than 5 years.  How much does long-term care cost? Since 70% of people end up needing long-term care service, it is prudent to be prepared. But how much money will you need? The average stay for a nursing home resident is 28 months and the average stay for assisted living is 27 months. When you consider that nursing homes cost $225 per day for a semi-private room and assisted living costs half that, and you take the average length of stay you can round the total cost to $200,000. To self insure or purchase long-term care insurance  Now that we have analyzed the 3 parameters surrounding the issue of long-term care -- the likelihood of needing long-term care, the length of stay, and the cost -- we can analyze how to cover this cost. There are a couple of different ways to tackle this problem. You could self insure or purchase one of the many types of long-term care insurance policies. Long-term care insurance may give you peace of mind, but is it worth the cost? Self-insuring may be easier than you think if you can handle the market risk. Listen in to hear an option for self-insuring that you may not have thought of before. Can life insurance be used as a tax strategy? The shakier the stock market feels, the more we’ll hear about alternative investing strategies. Janet was curious about how life insurance could be used as a tax-saving strategy since all of her assets are in tax-deferred accounts. What she is referring to is overfunding a life insurance policy and living off the proceeds tax-free for decades. Does that sound too good to be true? If so, it probably is. Listen in to hear why life insurance is not as special as it sounds, you’ll want to hear how this strategy could backfire on you and ruin your retirement. If you have a question that you’d like answered on the show you can ask in one of two ways. The easiest way to ask me a question is to simply reply to the Every Day Is Saturday newsletter. The second way is to visit the Retirement Starts Today website and click the Ask a Question tab. Resources & People Mentioned LongTermCare.gov Kiplinger’s article Vanguard article Connect with Benjamin Brandt Get the Retire-Ready Toolkit: http://retirementstartstodayradio.com/ Ask me a question: https://retirementstartstodayradio.com/ask-a-question/ Follow Ben on Twitter: https://twitter.com/retiremeasap Subscribe to Retirement Starts Today on Apple Podcasts, Stitcher, TuneIn, Podbean, Player FM, iHeart, or Spotify

I’m feeling optimistic this year and I want to continue to spread that optimism. That’s why I want to focus several shows on travel. Most people’s travel plans were foiled by covid in 2020, so 2021 will be the year of the vacation! We’ll be interviewing experts and discussing the mental and physical health benefits of travel. We get started on that road today with a Retirement Headline from Harvard Business Review.  Outline of This Episode [1:52] Let’s explore the relationship between well-being and time away from the office [5:02] What should Seth’s mom do with her $500,000 portfolio? Are fewer vacation days negatively impacting your work? You have probably heard that without recovery periods, your ability to perform tasks effectively diminishes significantly. However, this is in direct conflict with the common practice of powering through work without a break.  The Harvard Business Review performed a study with the US Travel Association to help understand the relationship between wellbeing and taking time away from work.  They discovered that there has been a significant decline in vacation days over the past 2 decades. In 1996, Americans averaged 21.1 vacation days per year and in 2016 that number fell to 16.1 vacation days per year.  Is technology helping or hindering your time? Although productivity has increased due to technology, our inability to unplug has offset those gains. In fact, our inability to step away from technology has even led to bad vacations. According to the article, poorly planned vacations do not improve energy levels or reduce stress, effectively eliminating the time away. Learn what you can do to make the most of your vacation time by listening to this episode of Retirement Starts Today.  How to double your chances of getting a raise People who took fewer than 10 of their vacation days per year had a 34.6% likelihood of receiving a raise or bonus over a three-year period of time. Whereas, people who took more than 10 of their vacation days had a 65.4% chance of receiving a raise or bonus. So, double your chances for a raise and take a vacation!  What would you do with an extra $500,000 laying around? Seth’s mom insists that she doesn’t need the money in her $500,000 401K until it’s time to start taking RMDs. He wants to help her understand what she should do with the money.  My first question is why doesn’t she need it? Many people are worried about having enough money to last the rest of their lives. Is she underspending to make her money last longer? After understanding her reasons, there are a few things she can do.  Long term tax planning is key here. You may be surprised to learn that sometimes it is better to pay more in taxes now to help save on your lifetime tax bill. Listen in to learn how long-term tax planning can affect retirement planning.  Resources & People Mentioned Harvard Business Review article Smart Asset Tax Calculator Schwab Annuity Calculator Connect with Benjamin Brandt Get the Retire-Ready Toolkit:http://retirementstartstodayradio.com/ Follow Ben on Twitter:https://twitter.com/retiremeasap Subscribe to Retirement Starts Today on Apple Podcasts,Stitcher,TuneIn,Podbean,Player FM,iHeart, or Spotify

Would you want to raise your standard of living for half of what you live on now? Tim Leffel did, which is why he chose to uproot his family from their life in Nashville to move to a small city in Mexico. Tim is the author of the book A Better Life for Half the Price and he joins me today to discuss the pros and cons of living abroad. Don’t miss the opportunity to learn how you can save money by living abroad. Tim is an expert in the subject and has written extensively about this topic. Listen in to hear this interview.  Outline of This Episode [1:22] What made Tim decide to live in Mexico? [5:06] Why did he rent before buying? [7:08] What are examples of how he saves money by living in Mexico? [10:45] Do you need to know Spanish before moving to Mexico? [13:55] Why would people not want to move abroad? Why did Tim choose to move to Mexico? Tim and his wife have traveled extensively and even lived in Seoul, Korea, and Istanbul, Turkey when they were young. When they had their daughter they knew that they didn’t want to live in the far flung reaches of the world but they still wanted the experience of living abroad.  Mexico was close by and easy to travel to, plus they liked the culture and the food which made it an easy choice to settle on. They chose to live in the central Mexican town of Guanajuato which is a mid-sized city of 200,000 with pleasant weather all year round.  It makes sense to rent first before purchasing abroad Tim chose to rent for a year first before taking the plunge and purchasing a home. He remarks that buying a house abroad is not like it seems on those popular house hunting TV shows.  There is a lot you need to think about when buying a home abroad. The zoning laws aren’t the same as in the U.S. and it can be hard for a foreigner to understand what things are worth without living there first. Tim recommends putting in the time and effort to truly understand the market value before purchasing a home.  What are examples of how he saves money by living in Mexico? It’s no secret that living in Mexico is less expensive than living in the U.S. Rent in the United States can easily cost $2000. In Mexico, you can find a house to rent for a fraction of that. Healthcare expenses are notoriously high in the U.S. and in Mexico, Americans are shocked to find how easy it is to pay for those expenses out of pocket. Tim finds that his total monthly expenses in Mexico are roughly equivalent to what he paid in rent in the U.S. Not everything is cheaper in Mexico though, listen in to hear about what costs more in Mexico. Do you need to know the language first? You would think that you need to be fluent in the language before moving abroad, but there are some places in Mexico where you can get by being monolingual. Tim still doesn’t consider himself fluent, although he is learning the language. Since his daughter went to school in Mexico, she had the opportunity to become fluent. Would you want to learn the language before moving abroad? Connect with Tim Leffel CheapLivingAbroad.com CheapestDestinationsBlog.com TimLeffel.com BOOK -A Better Life for Half the Price by Tim Leffel Connect with Benjamin Brandt Get the Retire-Ready Toolkit:http://retirementstartstodayradio.com/ Follow Ben on Twitter:https://twitter.com/retiremeasap Subscribe to Retirement Starts Today on Apple Podcasts,Stitcher,TuneIn,Podbean,Player FM,iHeart, or Spotify

I’m thrilled to be back sharing the latest retirement headlines with you after my short holiday break. The biggest news on the retirement radar this week is that the 2nd Coronavirus stimulus package has passed. Together, we’ll take a look at the most relevant parts. Then I’ll answer the question: do you need a Roth IRA even if you make more than the income limits allow for? Let’s start preparing for tomorrow by learning today. Press play now.  Outline of This Episode [1:22] What will the Coronavirus stimulus package bring for us? [7:19] Health expenses are now deductible after 7.5% AGI [9:07] Standard deduction + $600 if you are married filing jointly in 2021 [10:45] Unemployment benefits have been extended [13:09] Does Janet need a Roth IRA? Will you be cashing a $600 stimulus check? The 2nd Coronavirus stimulus package has recently been passed and rather than have you read this 5500 page piece of legislation, I’ll cover the highlights that most pertain to you. Jeff Levine, @CPAPlanner on Twitter was a great source to help me understand the most important information in this bill.  Perhaps the biggest news out of the stimulus package is that new stimulus checks are heading our way. These checks aren’t structured exactly the same as the last ones. The checks are $600 for each person in your household if your income falls under a certain amount. Find out the income limitations by listening to the details here.  If you subscribe to the Every Day is Saturday newsletter this week, we’ll have a link to a calculator that can help you calculate the amount you’ll receive.  Health expenses are now deductible after 7.5% Another change brought about by the Coronavirus stimulus package is that healthcare expenses are deductible after 7.5% of your income. This number often bounces back and forth between 10% and 7.5% of your adjusted gross income (AGI). This means that your healthcare expenses must be 7.5% of your income to be deductible and even then it only counts for the amount that is over 7.5% of your income.  Unemployment benefits have been extended If you found yourself unemployed, like many this year, there’s good news. The stimulus package added federal unemployment benefits for another 11 weeks. This means that $300 per week will be added to your state’s traditional unemployment benefit.  These weren’t the only changes in the bill. You can learn more about how the latest Coronavirus stimulus bill could affect you by listening to this episode of Retirement Starts Today Radio. Do you really need a Roth IRA? Janet’s financial advisor told her that since she is over the income limitations to save in a Roth IRA that she doesn’t need to open one. However, Janet is a few years away from retiring and she is worried about retiring without one.  In my opinion, everyone could use a Roth IRA eventually. If your current income doesn’t allow for it, you can always fund a Roth IRA with a Roth conversion. Listen in to hear how you can fund your Roth most effectively while filling up your tax bracket.  Resources & People Mentioned Jeff Levine on Twitter @CPAPlanner Nerd’s Eye View Blog by Michael Kitces Connect with Benjamin Brandt Get the Retire-Ready Toolkit:http://retirementstartstodayradio.com/ Follow Ben on Twitter:https://twitter.com/retiremeasap Subscribe to Retirement Starts Today on Apple Podcasts,Stitcher,TuneIn,Podbean,Player FM,iHeart, or Spotify

Welcome back to another edition of Retirement Rewind -- episodes so good we played them twice!  Time for travel is by far the number one thing that Retirement Starts Today Radio listeners look forward to in retirement. That’s why I interviewed David Jacoby on to this episode and why it was chosen as a Retirement Rewind.  David Jacoby is a financial planner and travel expert who specializes in helping travelers and expats. David, himself has lived in 4 different countries and even built his business while living abroad. On this episode, he’ll help us understand the unique aspects of retiring abroad. If travel abroad piques your interest then you won't want to miss this interview. Outline of This Episode [2:06] The 3 types of people that are interested in travel abroad [5:22] When does traveling extensively turn into living abroad?  [9:10] How to determine where you might want to live? [13:33] How do people plan for their elderly years? [15:26] How does health insurance work when you live abroad? [17:42] What do people neglect to plan for? The 3 types of people that are interested in travel abroad  Many people are interested in traveling when they retire, but David Jacoby has found that there are 3 types of people that come to him for his services.  Digital nomads or globetrotters are people who work remotely or are location independent entrepreneurs.  Next are people who want to retire abroad for financial or social reasons. They are looking for the right country to move to.  The last group of people is those who are not quite ready to retire abroad and still live in the U.S. They may be traveling a bit right now to scope out potential locations.  Would you consider living abroad when you retire? When does traveling extensively turn into living abroad?  Traveling abroad and living abroad aren’t quite the same. Rather than living full time in another country, some people would rather keep their house in the U.S. and spend extended vacations in other parts of the world. Others just want to sell it all and start fresh in exotic locales. However, before this romantic idea sets in, it’s important to do your homework first. David encourages his clients to visit a place 2-3 times in different parts of the year before making any final plans. Renting a place for 3 months or so will give you a better feel for everyday life in your desired location.  How to determine where you might want to live? Some people may not know exactly where they want to live, they just have a general idea. They may prefer a tropical climate, be near the ocean, or perhaps they have always wanted to live in Europe.  David can help his clients consider practicalities when choosing a location. Oftentimes visas and taxes play a huge part in choosing where to settle. For instance, Portugal, Spain, and Italy have easily obtainable visas for Americans while other countries in Europe are more challenging for American citizens to move to. But what about healthcare? Have you considered travel health insurance? No matter where in the world you choose to settle you’ll need to think about health care especially since Medicare does not work outside the U.S. Depending on where you live you’ll either rely on the local system of care or pay for private health insurance.  Some people even chose to forgo health insurance. This sounds crazy but when you consider that the costs of medicine in many parts of the world are 1/10 of what you pay in the U.S. it isn’t that scary.  You need to understand why you should still enroll in Medicare even if you plan to live abroad for several years, so make sure to listen to this interview with international travel expert, David Jacoby. Connect with David Jacoby Remote Financial Planner 4 Ways Moving Abroad Can Radically Improve Your Finances Connect with Benjamin Brandt Get the Retire-Ready Toolkit:http://retirementstartstodayradio.com/ Follow Ben on Twitter:https://twitter.com/retiremeasap Subscribe to Retirement Starts Today on Apple Podcasts, Stitcher, TuneIn, Podbean,Player FM, iHeart, or Spotify

Welcome to this episode of our Retirement Rewind. Retirement Rewind episodes are so informative that we decided to play them again while I take the month of December to spend a bit more time to enjoy my family. Estate planning attorney, John Ross from the Big Picture Retirement podcast, joins me to discuss how you can preserve your IRAs for your heirs in the wake of the SECURE Act. Check out this interview to discover how to optimize legacy tax planning, how to utilize an accumulation trust, and learn about the charitable remainder trust. Outline of This Episode [1:22] How has the loss of the stretch IRA changed estate planning? [4:06] An accumulation trust may be the key to planning your estate [6:44] A new opportunity for state income tax planning [9:22] How to turn a 10-year stretch into a 20-year stretch [16:32] A case study [18:44] You may want to consider a charitable remainder trust How has estate planning changed with the elimination of the stretch IRA? The SECURE Act brought about huge changes to estate planning when it effectively killed the stretch IRA. The stretch IRA provided the opportunity for people to name their spouse as a primary beneficiary and their children as secondary beneficiaries.  Upon inheritance, the IRA could be sent into a conduit trust and the RMDs were sent directly to the beneficiary. Those RMDs were based on the life expectancy of the beneficiary. One benefit of this trust was that it was doled out over a lifetime, another is that the IRA was preserved and protected from creditors. With the SECURE Act in place the conduit trust will no longer set the standard. What will replace the conduit trust? Now that the conduit trust is defunct, how should people plan their estate? An accumulation trust may be the key. Inheritors can no longer withdraw those IRA funds over the course of their lifetime. They now have only 10 years to draw on the IRA. In those 10 years a lot can happen. If your inheritor gets sued, divorced, or has problems with creditors then the IRA is at risk of disappearing. One solution to this problem is to set up an accumulation trust.  You may want to rethink your beneficiaries Now that the long-term stretch IRA is gone we need to rethink legacy planning. You may be thinking that 10 years is too short of a window for your inheritors. However, there is a way to stretch that 10-year window into 20. You could stretch these funds into 20 years by leaving your spouse half of your IRA and your kids the other half. Find out how this could work by listening to this interview with Johnn Ross.  Now is the time to review your estate plan Instead of thinking of this change in the law as an inconvenience, take the opportunity to review and update your estate plan. Many people set up their estate plan and then never revise it, but a lot can change over the years. When was the last time you reviewed your estate plan?  Connect with John Ross Ross and Shoalmire Law Firm Big Picture Retirement Connect with Benjamin Brandt Get the Retire-Ready Toolkit:http://retirementstartstodayradio.com/ Follow Ben on Twitter:https://twitter.com/retiremeasap Subscribe to Retirement Starts Today on Apple Podcasts,Stitcher,TuneIn,Podbean,Player FM,iHeart, orSpotify

What would happen if you go over your tax bracket by $1 when doing a Roth IRA conversion? On this Retirement Rewind episode, we’ll explore the best way that you can take advantage of the current tax cuts and get the most out of your money. What will Roth conversion season mean for you? Listen in and find out! Outline of This Episode [1:22] Why do we wait so long to convert our Roth IRA’s? [3:44] What happens if I go over my tax rate? [6:40] What about Medicare? [13:15] Why are Roth IRA conversions such a big deal? [15:48] How do Duane’s earnings this year affect his Medicare premiums? [17:15] Should Don put 100% of his portfolio in stocks? Why should you wait until the end of the year to convert your Roth IRAs? It’s a good idea to wait until the end of the year to convert your IRAs into a Roth. This is because you’ll have a good idea as to how much you will earn during the year.  The reason that you’ll want to wait until the end of the year to make a Roth conversion is to understand how much you’ll be making this year so you can fill up your tax bracket with the conversions. Will you take advantage of Roth conversion season? Why should you bother to convert your traditional IRA into a Roth?  The funds in your IRA are pretax dollars so when you convert them to a Roth you pay taxes on them. It’s a good idea to convert your IRA into a Roth so that you can pay taxes now rather than later. Roth conversions are a fantastic way to take advantage of the current tax cuts since it’s better to pay the devil you know than wait until later on in retirement when you’ll have no idea what the tax rates will be like. Have you been converting some of your traditional IRA into a Roth over the years? If you haven’t now is a great time to start! What happens if you go $1 over your tax bracket? You may have the idea that if you go even just $1 over your tax bracket that all of your planning will be for naught. Before you panic too much, let’s talk about marginal income tax rates.  Those couples who are married and file jointly and earn $79,000 per year will be taxed at a 22% federal income tax rate. However, that doesn’t mean that all $79,000 is taxed at the same rate. The rates are different for different parts of your income. The first $19,400 is taxed at 10%. Then the income from $19,400 to $78,951 is taxed at 12%. So that means only $49 would be taxed at 22%.  This type of taxation is called marginal income tax. A marginal income tax ensures that if you get a raise your net income won’t decrease. Hopefully, understanding how marginal income taxes work will help you understand that the sky will not fall if you go over your tax bracket by a few dollars. What if you go over the income bracket for Medicare? Unfortunately, Medicare is not as forgiving as the marginal income tax system. Many people don’t realize that Medicare has income-based premiums. If you make over $170,000 then you will no longer qualify for the Medicare Part B standard premium and you will also pay more for the Part D drug plan. Listen in to hear how much your Medicare premiums could be and find out the answers to our listener questions. Connect with Benjamin Brandt Get the Retire-Ready Toolkit:http://retirementstartstodayradio.com/ Follow Ben on Twitter:https://twitter.com/retiremeasap Subscribe to Retirement Starts Today on Apple Podcasts,Stitcher,TuneIn,Podbean,Player FM,iHeart, orSpotify