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Retirement Starts Today Radio

Benjamin Brandt wants to teach you how to retire! Listen in as Benjamin Brandt CFP©, RICP© answers the questions on the minds of the modern retiree, often joined by the top experts in the retirement planning industry. Ask Benjamin a question here: https://retirementstartstodayradio.com/ask-a-question/
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Now displaying: December, 2020
Dec 28, 2020

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.

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Dec 21, 2020

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? 

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Dec 14, 2020

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.

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Dec 7, 2020

Welcome back to the Retirement Rewind! I take the last part of the year off from podcasting to spend more time with my family. But that doesn’t mean that you miss out on your favorite retirement podcast. Actually, I have a treat for you today. This episode is so good this is the 3rd time I’m playing it. Press play to find out which retirement podcasts I listen to in my spare time and scroll down to the bottom of the page to find links to my favorite episodes of those podcasts. 

On this episode, you’ll discover more amazing retirement podcasts to listen to. In addition, you’ll learn about the confusing world of reverse mortgages and whether you should plan for a 20% cut to your Social Security.

Outline of This Episode

  • [2:22] Do you understand reverse mortgages?
  • [8:26] Will you be taking a 20% cut on social security?
  • [12:46] Get retirement ready with my favorite retirement podcasts

Do you find reverse mortgages confusing?

I’m sure you’ve seen the ads for reverse mortgages before, but do you really know what they are? A study done on a focus group showed that most people thought reverse mortgages were a government welfare program. They didn’t realize that there were interest and fees involved and many thought that with a reverse mortgage they wouldn’t have to pay any more property taxes. Do you have questions about reverse mortgages?

What exactly is a reverse mortgage?

Commonly known as a reverse mortgage, a Home Equity Credit Mortgage (HECM) is just like any other mortgage -- it has to be paid back. Reverse mortgages are sometimes taken on by people in retirement who are looking for a lifetime income. 

A reverse mortgage works when the HECM calculates half of your home equity value and they set up a lifetime annuity based on that amount. Reverse mortgages can be complicated, so if you are considering one, make sure you read all the fine print.

My 5 favorite retirement podcasts

If you’re listening to Retirement Starts Today you probably love podcasts as much as I do. I got into podcasting because I realized it would be a fantastic way to share my knowledge with a wider audience without having to be a writer. You may be surprised to learn that I have my own favorite retirement podcasts. 

Learning to save for retirement can be kind of boring since all of us retirement podcasters are essentially saying the same thing. It’s the personality of the podcast hosts that really sets these shows apart from the rest. Here are 5 retirement podcasts that I love to listen to and learn from.

  1. Stay Wealthy with Taylor Schulte
  2. Retirement Answer Man by Roger Whitney
  3. Sound Retirement Radio with Jason Parker
  4. Stacking Benjamins by Joe Saul-Sehy & OG
  5. Retirement Repair Shop by Mary Beth Franklin

Resources & People Mentioned

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