If you’ve been working from home over the past year you may wonder why you feel even more exhausted than normal. This could be due to Zoom Fatigue.
In this episode, we’ll explore an article from CNBC that references a Stanford study about this phenomenon. In the listener questions segment, I’ll answer questions about RMDs and Roth conversions. Let’s get to the bottom of your exhaustion--press play now.
Over the past year, many of us have been using Zoom and other video conferencing applications to replace in-person meetings. The constant video conferencing has led to increased fatigue at the end of the day and a researcher with Stanford University wondered why. Jeremy Bailenson researched this issue and recently published a paper about how video conferencing affects people on a psychological level.
Jeremy concluded that there are four different contributors to Zoom Fatigue:
To alleviate these issues, Bailenson has the following tips:
Zoom fatigue is a new version of burnout that is important to mitigate. You want to retire when you are ready rather than because you are feeling burnt out due to video conferencing. Try using these tips to help you combat the exhaustion you feel after video conferencing.
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You have fraud protection on your bank accounts and your credit cards, but what about your retirement accounts? Today we’ll explore an article from the Wall Street Journal outlining a case of cyber fraud in a 401K account. We’ll also discuss ways for people to safeguard their savings.
In the listener questions segment, I’ll answer a question about buying an RV in retirement and we’ll wrap up this episode with a question from Hal about whether to make Roth conversions or pay off the mortgage. Press play to get started on this episode of Retirement Starts Today.
Our retirement headline this week is titled Retirement Planning Gives Bigger Role to Theft Prevention as Risks Lurk Online. This article warns us against cyber fraud of retirement accounts. The laws regarding retirement income were enacted well before the internet, so they don’t address who should be responsible for this type of crime. We often have more money saved in our retirement accounts than in our checking accounts, so this kind of theft can be life-changing.
Retirement account cyber fraud used to be typically perpetrated by members of one’s own family, but in the past few years, strangers have played a bigger role in committing these types of crimes.
The article highlights one particular case where the account owners were shocked to discover that ⅔ of their retirement savings had been transferred to an unknown account. The couple then had to postpone their retirement indefinitely.
If you don’t want to have this happen to you there are steps you can take to protect yourself from cyber fraud.
Thieves always want to be ahead of us and the regulators so we have to stay on our toes. Listen in to hear the tips on how you can protect your hard-earned money and retire comfortably. You’ll also hear the answers to 2 relevant listener questions.
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If you have listened to the news at all lately, you probably know what our Retirement Headlines segment will cover. The American Rescue Plan is all any financial news is talking about these days, so in today’s episode, we’ll explore what you need to know about this recent piece of legislation.
Then in the Listener Questions segment, I answer the question: should having a pension change the way we invest the rest of our portfolio? Press play to find out.
The American Rescue Plan is all over the news lately, but the article that I am referencing is written by Jeffrey Levine from Kitces.com titled The American Rescue Plan Act Of 2021: Tax Credits, Stimulus Checks, And More That Advisors Need To Know!
The most talked-about part of this tax legislation is, of course, the $1400 stimulus checks which will be soon sent to eligible Americans to provide economic relief from the ongoing pandemic.
Not only are the checks more generous, but there are also key eligibility changes from the previous rounds of stimulus checks. Eligibility in this cycle has been expanded from including only children under the age of 17 to include all dependents in the household.
However, just because you got a stimulus check last time does not mean you will receive one this time. The income limitations of this package mean that there is a narrower margin of income eligibility. While the beginning of the phaseout starts at the same level of income, $75,000 for individuals and $150,000 for married couples, it phases out much more quickly. The cap for individuals is $80,000 and couples is $160,000.
If your income is close to that income cap and went down this year then you’ll want to file your taxes as soon as you can. However, if you are one of the lucky few whose income rose in 2020 compared to 2019 and are near or above the phaseout range then hold off on filing your income taxes until after you receive your stimulus payment.
The stimulus checks weren’t the only thing included in this $1.9 trillion bill. Another significant change included is a significant increase in the child tax credit. This credit has been increased from $2000 to $3000 and $3600 for children under the age of 6.
It is important to note that not everyone with children age 17 and under will qualify to receive the enhanced 2021 child tax credit amount since the phase-out ranges will be at significantly lower income amounts than the standard child tax credit.
Listen in to find out what else was included and what wasn’t included in the American Rescue Plan and stick around to hear the listener question.
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Enrolling in Medicare can be extremely stressful and confusing. There are so many choices to make, there are different rules to follow, and timelines to be met. Additionally, there is so much information out there that it merely adds to the confusion.
On this episode of Retirement Starts Today, I share with you an article written by Joanne Giardini-Russel from Advisor Perspectives entitled, 5 Tips to De-Stress the Entry into Medicare. If you are starting to dive into the Medicare enrollment process you won’t want to miss these 5 tips.
Make sure to stick around for the listener questions segment to hear a question about enrolling in Medicare as an expat as well as whether you should be doing Roth conversions if your income will decrease. You’ll also learn why it has taken me a year to get around to answering some listener questions!
If you are approaching age 65 you may have noticed all the literature surrounding Medicare that has come in your mail. Rather than help you answer the questions you have about Medicare, they often add to the confusion. The whole process can be overwhelming, but these 5 tips can help you understand what to do to enroll.
Secure a good Medicare guide. Contact several different agencies and agents before turning 65. Prepare a list of questions for them and make sure to check their Google reviews. When selecting an agent you’ll want to make sure to choose one who will stick with you over time and provide follow-up support.
Try not to get overwhelmed by the Medicare enrollment process. Begin your research before you turn 65, and spend time finding a good agent or agency who will be there to support you over the long haul. Educate yourself with available government resources so that you can make informed decisions.
Check out the Boomer Benefits YouTube channel in April to see me on a 3-part series with Danielle Roberts. Make sure that you are subscribed to the Every Day is Saturday newsletter to receive a direct link when it comes out.
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How long have you been saving for retirement? Are you hesitant to break into your retirement funds and start living it up once you retire?
This week I share two Retirement Headlines articles. The first is called Right-Sizing Retirement and it comes from the Financial Planning Association. In this article, the authors pose an important question: why save for retirement if you're not going to spend it?
We’ll also check out another article from Wharton Magazine entitled The Economics of Living to 100. Is your retirement plan ready for you to live until 100? Listen to this episode to understand how you can best combat the uncertainty that retirement brings.
David Blanchett and Warren Cormier recently wrote an article for the Financial Planning Association in which they explore the first 10 years of retirement. What they discovered from the RAND Health and Retirement Study is that early retirees tend to underspend. The authors wanted to find the underlying reasons for why we are seeing this trend in America. This research explores the retirement consumption gap and considers both the wealth available to fund retirement and spending before and after retirement.
Retirees can be broken down into 2 main categories: those who have saved enough to cover their levels of pre-retirement spending and those who did not. Interestingly, both of these types of retirees tend to underspend in early retirement but for different reasons.
Only 18 percent of households in America have enough wealth to cover their pre-retirement spending during retirement. This tells us that most households will not be able to maintain their pre-retirement lifestyle in retirement because they don’t have enough money.
You may think that only those that don’t have enough saved cut their spending in retirement, however, the data shows that most households that have saved more than enough to fund their lifestyles in retirement also decrease their spending in early retirement.
Many well-funded households could increase consumption but don’t. So, why does this group of retirees spend less during early retirement? Potential reasons include the desire to leave a legacy, uncertain medical expenses, or an uncertain life expectancy. There also could be psychological or other reasons not easily discerned from survey data.
The main reason for this lack of spending in the first 10 years of retirement is uncertainty. Does the uncertainty that retirement brings give you pause to live out your retirement fully?
One way to combat this unpredictability is with contingency planning. If you’re listening to a retirement podcast then you probably have a retirement plan, but do you have a plan B? What will you do if life throws a wrench in your plans? Listen in to hear what you can do to combat the uncertainty that retirement brings.
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Have you heard of the Monte Carlo retirement projection analysis? It is being used more and more by advisors and even popular retirement planning websites. Today, in the Retirement Headlines segment, I offer some insight on an article from Kitces.com that argues that using the Monte Carlo projection, a 50%probability of success rate is good enough. Then in the listener questions segment, I answer the question: what should you do if you plan on never retiring? Don’t miss out on my 5 step plan for those that plan on never retiring.
The Monte Carlo analysis is increasingly becoming the most common method of conducting retirement projections for clients. I use it in my own practice and many online retirement calculators such as Vanguard and Fidelity use it too. This risk management technique was actually developed by an atomic nuclear scientist in 1940 to analyze the impact of risks of a project and had nothing to do with retirement.
You may hear financial advisors discussing a client’s probability of success to describe their retirement portfolio. Reflecting on your grades in school, you probably aren’t comfortable with anything less than 70% since anything below that would be a failing grade. However, in his article, Derek Tharp argues that a probability of under 70% is still realistic for clients who are willing to make some spending adjustments.
Your retirement isn’t static, it’s a constantly changing dynamic picture that should use a dynamic strategy that fits your unique situation and shifting goals. If you are willing to make the needed adjustments on your path to retirement, then when you hear the news that you have a 50% (or even lower) probability of success, don’t panic, you may actually be in better shape than you may realize as long as adjustments are made.
The Monte Carlo simulation is a useful planning tool but it has its drawbacks. Like many retirement tools, it doesn’t do a great job of modeling human behavior in retirement. If the markets start dropping most people adjust their spending habits accordingly. Guyton’s Guardrails are a better tool for predicting how people might behave as the markets rise and fall. You can learn more about Guyton’s Guardrails in episodes 153, 149, and 93. Stick around until the end of this episode to hear my 5 step plan for those that never plan to retire.
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Have you wondered why the markets had such an amazing year in 2020 when the economy was a mess and everyone was stuck at home? You aren’t the only one. That’s why in this episode, we’ll look at a New York Times article that examines this question.
We’ll also answer some listener questions directly from our newsletter readers. Dave asks about dividend investing in retirement and Brian asks about how to pivot away from target-date funds after retiring.
Recently the New York Times investigated Why Markets Boomed in a Year of Human Misery. This article analyzed the income, spending, and savings levels from March through November of 2020 and during that same time period in 2019. The comparison between these two vastly different years illustrates how policy, markets, and the economy intersect. Ultimately, the article reveals a sharp distinction between the haves and have-nots during the pandemic.
It may be hard to believe, but the study that the article referenced shows that salaries and wages only fell 0.5% during the nine months of the Covid pandemic. This is due to the fact that the millions of people no longer working were disproportionately in lower-paying service jobs while higher-salary jobs were largely unaffected.
Due to the CARES Act, most households received $1200 stimulus checks. That coupled with an expansion in unemployment insurance programs prevented an income collapse. It turned out that Americans’ cumulative after-tax personal income was actually $1.03 trillion higher from March to November of 2020 than in 2019, an increase of more than 8%.
While Americans were earning more in 2020 than in 2019 they ended up spending less. Spending on services like restaurants and travel fell by $575 billion, or nearly 8%. Instead, that money went to spending on durable and non-durable goods. Overall, American spending decreased by $535 billion.
Since Americans were earning more and spending less that meant that savings rates increased dramatically. From March through November 2020, personal savings was $1.56 trillion higher than it was in 2019 -- a rise of 173%! Before the pandemic savings rates were at 7% and spiked to 33.7% in April. This was its highest level on record, dating all the way back to 1959.
These findings are quite unexpected during this time of worldwide crisis. If there is a lesson to be learned here it’s that when the world expects the stock market to zig more often than not it will zag. Remember that the next time the world throws us an economic curveball.
Tune in to find out the answers to our listener questions!
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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.
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.
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?
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.
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.
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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.
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.
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?
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?
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.
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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.
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.
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.
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?
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.
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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!
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.
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.
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.
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.
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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.
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.
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.
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!
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.
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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.
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.
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.
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.
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?
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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.
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.
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.
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.
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.
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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.
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?
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.
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.
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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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.
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.
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.
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.
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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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!
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?
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!
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.
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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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.
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?
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.
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.
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Welcome to Retirement Rewind! Each year I take the holiday season off from podcasting to spend more time with my family. The good news is that I prepare my favorite episodes from the past for you to enjoy.
This episode is an interview with Fritz Gilbert over at the Retirement Manifesto blog. In this interview, Fritz and I discuss his new book, Keys to a Successful Retirement as well as his firsthand experience now that he has recently retired. If you’ve already listened to this episode before you might be surprised to hear the tidbits that you forgot about and if you missed it the first time around, you won’t want to miss the interview this time.
Fritz spent years leading up to retirement trying to understand what retirement would be like. However, after finally retiring, he realized that it isn’t something that you can explain to others. You have to actually experience it yourself to understand. I like his analogy of having a locked door in front of you your whole life and on the day of your retirement, you are finally given the key. What do you think? Do you think the feeling of retirement can be conveyed to others?
Save, save, save! Even if you are one of those people that think they will continue working forever, it is still important to save for retirement. 60% of all people are forced into retirement before they have planned. What if you were forced into retirement tomorrow? Would you be ready? What are you doing now to help yourself prepare for the inevitable time when you won’t be able to work anymore?
I asked Fritz how he would spend his money if he only had $500 to spend on learning about retirement. It’s not a lot of money to spend on such an important topic, but fortunately, there is so much free content available; you can learn just about anything without too much money. YouTube, podcasts, and blogs provide a lot of information for free.
Fritz would spend his $500 in one of two ways. He loves books and feels like they provide a wealth of information. He also values the money he spent on hiring a CFP for a once over on his accounts. As a DIY investor, the peace of mind of having a professional give him the green light was invaluable. If you only had $500 to spend learning about retirement how would you spend it?
Retirement is a fantastic time to devote yourself to the passions that you’ve had to put on the backburner during your working years. Do you have a passion? How will you pursue it in retirement? If you don’t have a passion yet a curious mind can take you a long way to discovering one. Fritz found a passion that he never knew he had. Find out what it is by listening to this interview.
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Are you worried about what the election means for your retirement portfolio? Many people are tempted to make big changes to their retirement savings to reflect their election concerns. On this episode of Retirement Starts Today Radio, you’ll learn what you can do to your portfolio if you are nervous about the transition. You’ll also hear what the new RMD tables mean and how the Biden proposals could change the entire retirement landscape.
Since people are living longer than ever before, the IRS has finally decided to acknowledge these longer lifespans by updating their Required Minimum Distribution tables. According to the longer retirement timeline, retirees can take out smaller mandatory distributions and spread them out over a longer period of time.
What does this mean for you? You can expect to see smaller tax bills and larger IRA balances compounding over time. Listen in to hear the details and learn why this new tax table may seem familiar.
Thankfully, we’re not here to discuss politics. You can go just about anywhere else on the internet for that. However, I do want to touch on the changes that may arise due to the election.
An election year often brings about strong feelings one way or the other and many people feel that they need to make changes to their portfolio based on what they hear on the news. Just because there is an election doesn’t mean that you should make big changes to your retirement portfolio. It’s a good idea to keep in mind that there may be between 4 and 8 presidents in office over the course of your retirement.
Even if there are major shifts in global policy you only want to make tiny shifts in your portfolio. If you listen in I will give you specific examples of what you can do to prepare for the future transition without changing the essence of your portfolio.
I do want to clarify that you should never take advice from me or anyone that you find on the internet. Regardless of who is running the country, I want you to have an amazing retirement.
One of Biden’s proposals could completely change the retirement landscape. How would your retirement plans change if the Medicare age was lowered from age 65 to 60? At this point, it is just a proposal. Stay tuned in to Retirement Starts Today Radio over the coming months to hear the latest on this Biden proposal as well as his plans for Social Security.
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After you finally get Medicare all figured out and everything in place, the last thing you want to do is ever think about it again. But unfortunately, you need to review your Medicare coverage annually.
Danielle Roberts is back, yet again, to help us understand what we need to do annually to review our Medicare plans. In this episode, you’ll learn what to do if you have a prescription drug change, if your Medicare Advantage plan gets discontinued, and how to change from supplemental plans to advantage plans and vice versa. There’s loads of information in this episode so make sure to pay attention so that you don’t miss any details.
The Medicare annual election period runs from October 15 - December 7. This is the time when you can enroll in, change, or disenroll from a part d drug plan or a Medicare Advantage plan.
When Medicare sends your annual notice of change it will lay out all of the benefit changes for the next year. This is one Medicare notification that you do not want to toss in the garbage. Take some time to go over this document to look for premium changes as well as changes in drug tiers for all of your medications. Even if you are happy with your current plans, it is still a good idea to check your coverage. Listen in to learn what you can learn from the MyMedicare.gov website.
If you are looking to change plans you can do so during the open enrollment period which also takes place from October 15 - December 7. It’s quite easy to switch from a supplement to an advantage plan. Simply enroll during the open enrollment period and then cancel your supplement. There are no health questions to answer. However, if you would like to switch from an advantage plan to a Medigap plan, it is more complicated. Discover the order of events that must take place by hearing it straight from Danielle Roberts.
Switching between Medigap plans generally requires a health screening and underwriting which is why it is important to wait until you have been approved for a new plan before canceling your old plan.
Using a broker can help you understand the nuances of Medicare and ensure that you don’t make costly mistakes. Learn more about Boomer Benefits at BoomerBenefits.com.
If you haven’t listened to all 4 of the Medicare episodes with Danielle Roberts, I encourage you to head on over to episode 163 to get started. I know I have learned a ton from Danielle’s expertise and you will too.
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Do you know the difference between a Medicare supplement and a Medicare advantage plan? You’ll need to understand their differences to make an educated decision about which to choose when it is time to sign up for Medicare. Danielle Roberts from Boomer Benefits joins me again to help us wade through the various Medicare supplement choices. Learn how best to fill the gaps that Medicare leaves by listening to this episode of Retirement Starts Today.
One benefit of choosing the original Medicare route is that the federal government will be processing your claims. While this is a positive aspect of choosing traditional Medicare, it also means that there will be deductibles and a 20% out of pocket cost on your claims. For this reason, it is important to consider purchasing a Medicare supplement plan. There are 10 different standardized plans to choose from, although most people choose one of 3 plans.
Find out why Medicare supplements are ideal for customers with some discretionary spending and frequent medical spending.
Medicare Advantage plans are gaining in popularity. The premiums are lower, but there is less choice for the consumer. You must use only the plan’s network of providers and their approved medications. There will also be extra spending on your part in the years that you have more medical spending.
If you want to switch from a Medigap to an Advantage plan there is no required medical questionnaire to fill out. However, if you would like to switch from an Advantage plan to a Medigap plan there is a possibility that you could be denied based on your health.
Listen in to hear what questions you need to ask before you sign up for a Medicare Advantage plan.
Many people are surprised to discover that dental, vision, and hearing are not covered by Medicare. This is because in the 60s when Medicare was created, it wasn’t typical for insurance companies to cover these ancillary medical concerns.
There are a couple of options that seniors have when it comes to dental, vision, and hearing. You could purchase a standalone plan which covers these areas. Or you could choose a Medicare Advantage plan that also covers dental, vision, and hearing.
There is an important consideration you need to be aware of if choosing the Medicare Advantage route. Find out what it is by listening to this episode of Retirement Starts Today.
One last consideration that you need to think of is having a rainy day fund for out of pocket medical costs. If you choose a high deductible plan and then you end up needing cancer treatment that year, you could be hit with a $6500 bill. An HSA is a great way to cover this cost.
Have you listened to all of Danielle’s episodes? If not, head over to episode 163 to get started from the beginning!
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Deciding to retire before age 65 can be a tough decision to make. For most people, this decision will result in an extra $1000 or more a month in health insurance expenses. Retiring after age 65 has its pitfalls as well. On this episode of Retirement Starts Today, Danielle Roberts joins me again to discuss the potential landmines that you need to look out for whether you are planning to retire before or after age 65.
If you are considering working longer just for the insurance Danielle and I both recommend that you don’t. Instead, compare the cost of insurance through COBRA to the cost through the ACA. If you want to retire there are many plans to choose from through the ACA. One way to lessen the costs of insurance is to sign up for a high deductible plan that includes an HSA. That way you are building a healthcare nest egg at the same time. Discover a creative healthcare solution if you or your spouse is significantly younger by listening to Danielle’s advice.
It seems that it would be easy to shop insurance companies on your own these days by browsing through the companies websites. But Danielle recommends using the healthcare exchange at Healthcare.gov instead. She finds this to be a better way to compare carriers and their prices. The options are easier to find and the site will display all the plans that are offered in your area. Have you ever used the healthcare exchange?
Insurance is all about the transfer of risk. When trying to choose between a high deductible plan vs. a lower deductible plan you’ll want to compare your health concerns with your budget concerns. Consider how you use doctors. Do you have monthly visits with different specialists? Or do you visit the doctor once a year for your yearly check-up? If you only go to the doctor a couple of times a year then you don’t need to have a plan with a copay.
Many people delay their coverage of Medicare part B when they are still employed after age 65. This is fine while they are still employed, however, it is important to sign up for Medicare part B and D as soon as possible after leaving their employer-sponsored plan so as not to get stuck with a hefty penalty. Listen in to find out what you need to do to avoid penalties or a lengthy battle with Medicare.
Make sure you are signed up for the Every Day is Saturday newsletter so that you can respond to it and have a chance to receive a free copy of Danielle’s book, 10 Costly Medicare Mistakes You Can't Afford to Make.
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You asked and I listened. This summer I asked you all for your thoughts on the show and many people responded that they wanted to hear more deep dives into complex subjects. We tried this out with the Living Off Your Savings series and now we’re taking some extra time to discuss Medicare. This episode is the first of a 4 episode series on Medicare. Grab your headphones and press play to begin your Medicare education.
Since I am not a Medicare expert, I have invited Danielle Roberts with Boomer Benefits to teach us about this nuanced subject. Make sure to stick around until the end of the episode to learn how you can get a free copy of Danielle’s new book, 10 Costly Medicare Mistakes You Can’t Afford to Make.
The official Medicare enrollment period begins 3 months before your 65th birthday and this is often the time when people usually begin to start thinking about Medicare. Age 64.5 is a great time to begin to research your Medicare choices. In addition to Danielle’s book, there are plenty of resources online to help you educate yourself. After you listen to this series, YouTube and the Medicare website are good places to continue learning.
Some people are surprised to find that Medicare is not free. There are costs involved that you need to be aware of to properly plan for retirement. In addition to the monthly fee taken directly out of your Social Security payment, there are deductibles for inpatient and outpatient services as well as copays or coinsurance for doctor visits. Listen in to understand why it’s important to do your research early on to decide on what kind of extra coverage you may need.
Medicare Part A is what your Medicare payroll taxes have been paying for all these years and it covers hospital stays. Part B is what gets taken out of your Social Security check each month and this piece covers outpatient care. Medicare Part B pays only 80% so it is important to consider how you will cover the other 20%. This 20% can be supplemented in 2 ways. Listen in to hear what the difference is between Medigap and Medicare Advantage plans.
Danielle is a fountain of Medicare information, so you won’t want to miss this series. On the next episode, you’ll hear what to expect if you retire before or after age 65. If you want a chance to get a free copy of Danielle’s book sign up for the Every Day is Saturday newsletter and respond to that email with a promise to leave an honest review of this podcast and Danielle’s book. So, if you haven’t already signed up for Every Day is Saturday, head over to RetirementStartsToday.com and hit subscribe.
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Are you one of the many people still working from home due to the pandemic? What seemed like a phase that would last a few weeks has turned into a trend with no end in sight. While working from home creates exciting possibilities, especially for those considering retirement, it also has its downfalls. Many people have discovered that working from home means the lines between work life and home life are being erased. As long as you are conscious that burnout is a real risk then you can take active steps to keep your home life and work life in balance.
On this episode, I’ll share an Inc. magazine article about avoiding burnout while working from home. We’ll also take a look at a WSJ article on early retirement buyouts. Then we’ll wrap up this episode with a listener question about strategies for those on the cusp of retirement. So, grab your Airpods or your favorite listening device and take a walk with me.
While the work from home revolution that picked up momentum during the pandemic has opened many doors, it has also revealed its own set of problems. People spend more time actively working and it seems that the 40-hour workweek has gone out of the window. Employees are now spending 25% more time ‘at work’ than before the pandemic. Many have stated that they find they are often sending work-related messages and emails after traditional work hours. Their desire to be productive now puts them at risk of burnout.
Microsoft has come up with a creative way to help its team avoid burnout while working remotely. Their solution is to bring back the commute. They don’t recommend you jump in the car and drive to your workplace, but rather a virtual commute. The Inc. article recommends a 20-minute meditation commute. I love this idea. However, if you are not a meditator, a walk to work commute might be a better alternative. Before you start working each morning, head out your front door, and walk around the block. You can use this time to get in the right headspace for work and plan your day.
Working from home can create amazing possibilities, especially for those of you considering retirement. The possibility of working from anywhere means that you could extend your work timeline. However, to take full advantage of the possibilities it is imperative to avoid burnout. As long as you are conscious that burnout is a real risk then you can take active steps to keep your home/work life in balance.
Press play and listen in to hear whether you should consider taking an early retirement package. And keep listening until the end to hear the answer to Frank’s question about one-time financial strategies for those on the cusp of retirement.
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