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.
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.
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:
Understanding the answers to these questions can help you recognize whether you are saving too much.
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?
Subscribe to Retirement Starts Today on
Apple Podcasts, Stitcher, TuneIn, Podbean, Player FM, iHeart, or Spotify
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.
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.
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.
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.
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.
Subscribe to Retirement Starts Today on
Apple Podcasts, Stitcher, TuneIn, Podbean, Player FM, iHeart, or Spotify
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.
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.
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.
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.
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.
Subscribe to Retirement Starts Today on
Apple Podcasts, Stitcher, TuneIn, Podbean, Player FM, iHeart, or Spotify
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.
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?
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?
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.
Subscribe to Retirement Starts Today on
Apple Podcasts, Stitcher, TuneIn, Podbean, Player FM, iHeart, or Spotify