Grow Money Business with Grant Bledsoe

Most Americans have at least some of their retirement savings sitting in workplace retirement plans like 401ks, 403bs, SEP-IRAs and the like.  And when you leave a job, due to a retirement transition or not, many people wonder what they should do with the savings they’ve accumulated in the plans. 

We’ve noticed that the more people tend to have in their retirement plans, the more reluctant they are to take action out of fear of making a mistake.  In this episode of the podcast we’ll answer several questions about 401k rollovers:

·       Should I keep my savings in the 401k or roll the funds into an IRA?

·       Can I roll my 401k directly into a Roth IRA?

·       My savings is in the Federal TSP.  I’ve heard the plan is really good.  Should I roll the funds into an IRA when I retire or stick with the TSP?

We’ll also review the logistics of 401k rollovers and how you can avoid major mistakes.

Resources:

https://www.morningstar.com/funds/are-low-volatility-etfs-dead

Downsizing from your large, long-held family home is a popular concept for retirees, but may not always be the best choice.  Even though smaller homes are less costly & easier to maintain, giving up your family's major meeting venue may not be the best choice.  This week we respond to a listener question on whether downsizing might be right for them, and cover Nvidia's recent earnings call and an article about the prevalence of gift card scams.

Highlights

[05.30] Market Update – News on Nvidia earnings.

[11.24] Article of the Week – This week’s article on gift card fraud.

[15.40] Downsizing – Grant explains the reasons why people choose to downsize.

[20.00] Not for everybody – Grant explains why downsizing doesn’t suit everybody.

[23.36] Advice - What to consider before downsizing.

Resources

Why gift card fraud slips through the cracks of America’s banking regulation system

https://theconversation.com/why-gift-cards-fall-into-a-gap-in-the-2-tier-banking-regulation-system-and-a-brief-history-of-why-that-gap-exists-236478

Dow Jones Futures Rise; Nvidia Pares Earnings Losses, Salesforce Jumps

investors.com/market-trend/stock-market-today/dow-jones-futures-nvidia-earnings-guidance-salesforce-crowdstrike/

Outlive: The Science and Art of Longevity

By Peter Attia

amazon.com/Outlive-Longevity-Peter-Attia-MD/dp/0593236599

Mailbag Question:

“I’d like to give more money to a couple different charities this year, but my tax person said it wouldn’t help my taxes.  Is there a way I can make a gift that reduces my taxes?”

Intro:

“There are a ton of different ways to give to charity, but not all of them will help you on your taxes.  This week we cover a listener question about tax efficient charitable giving, and when it will or will not help you.”

Resources:

Donor-Advised Funds (DAFs): What They Are and How They Work

nerdwallet.com/article/taxes/donor-advised-funds

Qualified Charitable Distributions (QCDs)

fidelity.com/building-savings/learn-about-iras/required-minimum-distributions/qcds

The New Etiquette of Negotiating With Your Real-Estate Agent

wsj.com/personal-finance/the-new-etiquette-of-negotiating-with-your-real-estate-agent-1ff585c7

Mailbag Question:

“Everything I hear about Social Security is bad, and it sounds like the program will run out of money in a few years.  Is there a good reason I shouldn’t file for benefits now before the money runs out?”

Intro:

“Many retirees are concerned about the state of Social Security, and some of them even expect the program to crumble in the next few years.  Does that mean you should get your money out now before it does?  This week we respond to a listener question about by explaining what’s going on with Social Security, how long it’ll be before the Social Security trust runs out of money, and what will happen when it does.  We also cover an article from Consumer Affairs about why car insurance premiums are rising so much, and review a very strong rebound in the markets”

Resources

The 2024 OASDI Trustees Report

ssa.gov/OACT/TR/2024/

A Summary of the 2024 Annual Reports  

ssa.gov/OACT/TRSUM/index.html

 Auto insurance is outpacing inflation and getting worse

consumeraffairs.com/news/auto-insurance-is-outpacing-inflation-and-getting-worse-081524.html

It’s no secret that the IRS is underfunded right now.  It takes most taxpayers months to receive refund checks, and most would rather go to the dentist than wait on hold to talk with the IRS. 

Our guest this week is Tom Nally, who’s recently launched Tax Now to help taxpayers and their professionals navigate this landscape.  The platform syncs up with the IRS database and simply notifies you when there are updates to your account.  It’s a sorely needed tool, and Tom walks us through what he’s built and how the launch has gone.

We also cover an article about Trump’s interest in allowing the sitting president more control over monetary policy, and summarize a volatile week in the markets.

Resources

Trump’s Plans Stir Fears for Fed Independence, Inflation

wsj.com/politics/elections/trumps-plans-stir-fears-for-fed-independence-inflation-689bc113

Connect with Tomas Nally

LinkedIn - linkedin.com/in/tomasnally/

Website - taxnow.com/

Mailbag question:

“My husband and I are assembling our retirement plan and planning to relocate once I quit working.  We’re trying to decide between Tennessee, Florida and Texas, since they’re all states with lower tax and retirement lifestyle costs.  Which do you think is best?  The lists are all different.”

Intro:

Financial media love to create lists of the “best” and “lowest cost” states to retire in.  This week we answer a question about the differences between Tennessee, Texas, and Florida as retirement destinations, and what you should consider when relocating in retirement.

Resources

The best states to retire in 2024 – Ranked

moneywise.com/retirement/best-states-to-retire-in

The Most Affordable U.S. States to Retire in 2024

fool.com/retirement/relocation/cheapest-states-to-retire/

A Strong Year for 401(k) Balances Masks the Truth About Long-Term Performance

crr.bc.edu/a-strong-year-for-401k-balances-masks-the-truth-about-long-term-performance/

Mailbag Question:

“I recently met with an attorney to get my estate plan done.  They recommended that I create a living trust to hold some investments and my house.  Is that legitimate?  It sounds like an upsell better suited for very rich people.”

Intro:

This week on Grow Money Business we answer a listener questions about trusts and estate planning.  Our faithful listener spoke with an attorney about estate planning recently, who recommended a living trust as part of his plan.  We cover the pros and cons of living trusts and whether the recommendation is an upsell from the attorney.

Links:

https://www.wsj.com/finance/stocks/a-stock-market-rotation-of-historic-proportions-is-taking-shape-da9b6546?mod=finance_feat2_stocks_pos2

https://www.weareatticus.com/learn/what-is-the-uniform-probate-code

Early retirement is a popular goal for many, but actually making it happen can be challenging.  One major obstacle is the early withdrawal penalty imposed to distributions from IRAs & 401ks before 59 ½ years of age.

This week on the show we answer a listener question about how to navigate this landscape and a few possible workarounds.  We also cover whether index investing has impacted the markets, and an article about how inflows to hot investment funds can falsely influence performance numbers

Resources:

GMO: Passive Investing’s Impact Has Been Overblown, But It’s Not Negligible

institutionalinvestor.com/article/2dgy5jctx2rb7g3wv2juo/portfolio/gmo-passive-investings-impact-has-been-overblown-but-its-not-negligible

Hot Funds and the Curse of ‘Self-Inflated Returns’

wsj.com/finance/investing/etf-self-inflated-returns-258e875e

Strategies For Maximizing (Or Minimizing!) Rule 72(t) Early Distribution Payments Using IRS Notice 2022-6

kitces.com/blog/rule-72t-sepp-calculate-payments-rmd-avoid-penalty-tax-early-ira-withdrawals-notice-2022-6/

One question we get a lot is why we’d ever want to invest in countries other than the U.S.  The U.S. stock market has done far better than other countries recently.  It’s the biggest national market in the world.  The U.S. has the strongest, most resilient economy.  And the U.S. dollar is the world’s reserve currency.  Why would we ever want to invest anywhere else? 

This week on the show we cover this question in detail, June’s inflation data, and an article on the impact that inflation has on bond markets.

Links:

https://www.dimensional.com/us-en/insights/global-diversification-still-requires-international-securities

https://www.morningstar.com/portfolios/is-international-diversification-necessary

https://www.mortgagenewsdaily.com/markets/mbs-morning-07112024

Mailbag Questions:

1)         “I’m a small business owner, and have a SEP-IRA that I’d contributed to annually until a few years ago.  Then things got tight during COVID and I took a break from making contributions.  Now business is turning around again.  I’ve been watching the bitcoin ETFs and am wondering if this is a good investment once I start putting money into my plan again.”