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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: January, 2022
Jan 31, 2022
Is saving for the future preventing you from enjoying your present life? This may be an unpopular opinion for a financial podcast, but it is important to ask difficult questions to experience growth. If over-saving is preventing you from enjoying your present life, then you need to make changes. 

On this episode of Retirement Starts Today, we’ll examine an article by Darius Foroux that asks, Are You Saving Too Much Money? After the retirement headlines segment, I’ll answer a question from CJ about using a donor-advised fund to offset the last year of high income before retirement. Get ready to ask challenge yourself and explore your financial decisions as you press play. 

Outline of This Episode

  • [1:42] Saving too much money for your future could prevent you from enjoying your present life
  • [4:32] How to know when you’re saving too much?
  • [6:53] Does it make sense to create a donor-advised fund to get a tax deduction?
  • [10:22] What other deductions could you take advantage of?

Saving too much for the future could prevent you from enjoying the present

Today is the most important day that you have to live. If you are saving too much money you may not be able to enjoy today to its fullest. There are people that save up to 70% of their income while planning an early retirement, but this type of habitual frugality can get in the way of enjoying life in the present. Although saving a high percentage of your salary could give you confidence about your future, it can be difficult to unwind that practiced frugality to truly enjoy life. 

How to know if you are saving too much

If you’re constantly asking yourself on a daily basis how much things cost, you might be saving too much. Try not to calculate your spending down to the penny. Instead, be more conscious of how you spend your money. The is a balance between spending your entire paycheck and over saving is fluid and complex, so it is important to analyze your situation to understand the best saving situation for you.

There are several factors to consider when analyzing your savings patterns:

  • How old are you? 
  • What do you value in life? 
  • What type of lifestyle do you want? 
  • Do you have a career you enjoy? 
  • Where do you live? 
  • What are the odds you can do your work until you’re old? 
  • Do you have a support system? 

Understanding the answers to these questions can help you recognize whether you are saving too much. 

How to balance saving for the future while maximizing today

So, how do we balance living in the present and making the most of our lives today while, at the same time, being responsible stewards for our future selves? A good place to start is by coming up with a financial strategy that incorporates your values. Once you do that, you can use the free tools available on the internet to help you determine how much you need to save. 

Self-reflection is important to understand whether you are truly living your best life now or if you are waiting for some arbitrary future date to pursue happiness. Are you living your best life now? If not, what are you waiting for?

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Jan 24, 2022

Deciding whether to delay filing for Social Security is a hefty decision. Waiting to collect Social Security until age 70 will increase your monthly benefit by 32%, but that doesn’t mean much if you don’t live long enough to reap the rewards of being patient. 

In today’s retirement headlines segment, I’ll share an article written by Jeffrey Levine from Kitces.com that discusses a workaround to the seemingly all-or-nothing decision of whether to collect Social Security benefits at full retirement age or to delay filing until age 70. If this decision has been weighing heavily on your mind, you won’t want to miss this episode. 

Outline of This Episode

  • [1:22] If you are a do it yourself investor you are your own financial advisor
  • [5:30] Retroactive payments are granted as a lump sum payment
  • [7:03] Use the nudge strategy
  • [9:00] Drawbacks to the 6-month nudge strategy
  • [12:48] Using QLACs and MYGAs to enhance a bucket strategy

DIY investors need plenty of tools in their retirement planning toolbox

Jeffrey Levine, the author of Getting Comfortable Delaying Social Security with Six Month Reversible Delays, has a way of explaining complex financial concepts by breaking them into understandable bites. You can follow him on Twitter @CPAPlanner if you are looking for another go-to financial resource. 

Although today’s retirement headline was written for financial advisors, it contains valuable information for the do-it-yourself investor. As a DIY investor, you need to recognize that you are your own financial advisor. Kitces.com offers a wealth of information and is one of my favorite retirement planning resources. 

Nudging your Social Security claiming decision can lessen the worry of making the wrong choice

The biggest question that you probably have about Social Security is how big will your benefit be? The answer hinges on two factors: your earnings history and when you choose to take your benefit. 

By the time you get ready to retire, there isn’t anything you can do about your past earnings history, but you can control when you decide to collect your benefit. The longer you wait to collect, the larger your monthly check will be. Each year that you choose to wait your payment will increase by 8%. 

With lifespans continually increasing it can make a lot of sense to delay filing for Social Security. However, not everyone will live long enough to reap the rewards of delaying their monthly benefit. 

Many people see the decision to delay taking Social Security until age 70 as an all-or-nothing endeavor, but that is not the case. In fact, as Jeffrey Levine explains, this decision can actually be broken up into a series of 8 smaller decisions. 

By using the strategy of nudging the decision forward every 6 months, you can break this seemingly all or nothing choice into 8 separate, independent, reversible decisions which will lessen the fear of an all or nothing approach.

Challenges to using the every 6-month nudging approach

As with every financial strategy, there are drawbacks to using the nudge approach every 6 months. The most obvious is that if you happen to die during your wait, you won’t be able to collect the benefits. The author makes an important side note for married couples to consider this drawback. Listen in to hear what it is. 

Another downfall is that retroactive applications can reduce your lifelong benefits. Something else to consider is that if you file retroactively, you will receive retroactive benefits in a lump sum which could lead to a spike in your marginal tax rate for the year. 

Breaking down the decision of when to claim your retirement benefits into many smaller, less drastic decisions can give peace of mind to the decision-maker especially when they understand that the decision is reversible. 

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Jan 17, 2022

Tax scams are as old as taxes themselves, so are you doing everything you can do to avoid them? In this episode of Retirement Starts Today, we’ll explore what the IRS labels, ‘the dirty dozen’ tax scams. You’ll learn who is targeted by the various scams and then you’ll discover what you should do to protect yourself from scammers. Make sure to stick around until the end of this episode to hear what you should avoid doing so that you don’t fall prey to tax scammers. 

Outline of This Episode

  • [1:24] The IRS has issued a warning to taxpayers
  • [6:10] Protection for taxpayers
  • [9:00] Dave wonders whether he should build his home with cash or use a mortgage

Watch out for the ‘dirty dozen’

Every year the IRS publishes its list of the 'dirty dozen’ tax scams that citizens should be on the lookout for. This year’s list comes directly from the IRS website in an article called Americans Urged to Watch Out for Tax Scams During the Pandemic. The article breaks up the 12 types of schemes into 4 categories based on who carries them out or whom they affect. 

The scams can be described as pandemic-related scams, personal information cons, ruses that focus on unsuspecting victims like seniors and immigrants, and schemes that persuade taxpayers into performing unscrupulous actions. The IRS urges everyone to stay aware of scams and scammers, especially during tax season.

Economic impact payment theft

This first category of the dirty dozen is related to the pandemic-related stimulus payments from the government which are still under threat from identity thieves. 

Look for these warning signs to spot identity theft scams. Any text messages, random incoming phone calls, or emails inquiring about bank account information or requesting recipients to click a link should be considered suspicious and deleted without opening. Remember that the IRS will never initiate contact with taxpayers by phone, email, text, or social media asking for a Social Security number or other personal or financial information related to economic impact payments. 

Be alert to mailbox theft by checking your mail frequently and reporting suspected mail losses to the post office. It is also important to remember that IRS.gov is the agency’s official website for payments, refunds, or other tax information. 

Unemployment fraud leading to inaccurate taxpayer 1099-Gs

Stay vigilant about receiving receipts of unemployment benefits that you did not actually receive since this could be a sign of identity theft. This is yet another way that identity thieves try to steal stimulus payments. Taxpayers should look out for a form called 1099-G which reports unemployment compensation that they did not receive. 

If you do receive this form, the IRS urges you to contact the appropriate state agency for a corrected form. If a corrected form cannot be obtained in time for taxpayers to file a timely tax return, they should complete their return claiming only the unemployment compensation and other income they actually received. 

How you can protect yourself

This year the IRS made its IP PIN program available to all taxpayers. In the past, this program was only available to victims of identity theft. The IP PIN will help prevent fraudulent filings from identity thieves by serving as a key to unlock a taxpayer’s tax account. In addition to the IP PIN, the IRS is further working to reduce fraud by strengthening tax software password protocols, asking for driver's license numbers as a way to prove identity, limiting the number of tax refunds going to bank accounts, and making personal information from tax transcripts. 

It is important to stay one step ahead of scammers so that you can protect yourself from fraud. Remember that the IRS will never ask you for your personal information via phone, text, or email. 

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Jan 10, 2022

Do you have gold as a part of your investment portfolio? Several years ago there were loads of infomercials about investing in gold, but after today’s retirement headline you may want to think twice about complicated investment strategies.

Don’t miss out on this real-world cautionary tale which provides an example of how and why owners of IRAs with assets invested in nontraditional means need to follow strict guidelines. Press play to listen.

Outline of This Episode

  • [2:32] Don’t make this $300,000 tax mistake
  • [5:25] You don’t have to invest your IRAs in stocks and bonds
  • [12:40] You don’t need complexity to have great retirement investments
  • [13:50] When the first RMD is taken from an IRA is the money considered earned income?
  • [16:08] Does the custodian of an IRA pay taxes directly before distribution of the money?

Are you signed up for the Every Day Is Saturday newsletter?

If you have been wondering how you can submit your own listener question, make sure to head on over to my website RetirementStartsTodayRadio.com and simply click the ask a question button.

Another way to submit a question is by responding to my weekly Every Day Is Saturday newsletter which is delivered every Thursday morning. By joining the newsletter not only will you be reminded that in retirement every day is Saturday (even Thursday mornings), you’ll also get links to articles and resources that were mentioned on the show. 

Why one couple owes the IRS $300,000 for storing gold in their home

How’s this for a headline? A Couple Stored a Gold IRA at Home. They Owe the IRS More Than $300,000. Today’s retirement headline was written by Laura Sanders at WSJ. The article discusses a scheme that was promoted years back when ads extolled the benefits of using IRA assets to buy silver and gold coins to store at home or in a safe deposit box. However, the IRS has made it clear that there are strict rules that must be adhered to regarding IRA investments, and the couple failed to follow those rules.

You don’t have to invest your IRAs in stocks and bonds

Many people don’t realize that retirement investment accounts don’t have to invest the assets in typical securities like stocks, mutual funds, and ETFs. The law actually gives retirement plan investors many options on how they invest funds, as long as it’s not in collectibles such as artwork. Retirement accounts can hold investments in real estate, litigation funding, deeds of trust, and even cryptocurrency. One thing to watch out for with these kinds of alternatives is if your investment asset isn't liquid you could be in for some trouble around the time of your 72nd birthday when RMDs start.

Make sure to follow the rules

The article emphasizes that savers who have decided to invest in alternative assets must follow strict rules so that they are not considered self-dealing. Investors who do not follow the rules closely are risking financial catastrophe. Listen in and click through to the article to hear the details of the case so that you can understand how to avoid this type of costly situation.

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Jan 3, 2022

You may have noticed how the spirit of giving changed your mood this holiday season. That is because giving can actually increase your happiness. This week’s retirement headline from BigThink.com is titled How Generosity Changes Your Brain, and it discusses recent research on how giving to others promotes happiness. On this episode of Retirement Starts Today, you’ll learn how acting on your generosity creates numerous psychological and physiological benefits in your body.

If one of your goals for 2022 is to be more generous or even if you simply want to reflect on the acts of gift-giving that you experienced over the holiday season, don’t miss the retirement headline segment. Then make sure to stick around until the end of the episode to hear my favorite retirement resources.

Outline of This Episode

  • [2:42] How generosity changes your brain
  • [8:02] How you can incorporate giving into your retirement plan
  • [9:47] Dave is looking for quality retirement resources

Giving can increase happiness

Can spending your money maximize your happiness? We’ve all been told that money can’t buy happiness. However, new research suggests that the opposite is actually true: spending money can bring joy. 

Rather than buying things to increase happiness, researchers have found that sharing wealth with others is what creates long-lasting contentment. New research has been able to scientifically measure the ways that giving can improve joy. Giving actually releases neurochemicals like oxytocin and endorphins in your brain that are known to increase happiness. Have you noticed this phenomenon whenever you give to others?

Volunteering is sharing the gift of your time

In addition to giving money and gifts to others, giving the gift of time increases happiness as well. During the working years, donating time can be a challenge with all the other commitments that people have. This issue disappears in retirement.

Volunteering can even improve health. Science shows that generosity can increase longevity. Researchers found that retirees who volunteer were less likely to die over the course of a 5-year study. The results of the study showed that volunteering boosted people’s overall well-being. Regular volunteering is even more beneficial to health than giving financially. Do you have plans to make volunteering a regular part of your retirement?

How to maximize your happiness through regular giving

Making a habit of generosity is a great way to improve your happiness and health in retirement. Whether you choose to give financially or donate your time, the results will benefit you.

Now that you know that giving can increase your joy, you can find ways to maximize that happiness. One way to ensure that you are optimizing your giving is by giving consciously rather than setting up an automated gift to charity each month. 

If you do automate your giving, looking at your bank statements each month to see how much you spend on yourself and comparing that with your spending on others can also increase your contentment. 

Have you thought of giving your time or money in retirement? Volunteering or donating money in retirement can also give you a renewed purpose. Think about ways that you could increase giving in ways that align with your values. Listen in to hear my favorite volunteer opportunity.

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