Hack Your Wealth

#55: This week, I explain 6 key areas where there may be significant tax code changes under a Biden administration – including how these changes may impact your personal financial planning and what actions you can take to prepare for them.

What you’ll learn:

• How Biden’s proposal would impact income tax rates, deductions, and Section 199A
• How it could impact capital gains and qualified dividends tax rates
• How estate taxes and the step-up in basis at death could change
• Important changes that would affect retirement account contribution deductions
• How 1031 exchanges for real estate investors might be impacted
• Expected changes to the corporate tax rate

Check it out here:

https://hackyourwealth.com/biden-tax-proposal

Do you plan to make changes to your portfolio or personal finances in anticipation of tax law changes under a new administration? Let me know by leaving a comment.

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Links mentioned in this episode:

• How the final Trump tax bill affects you: analysis for early retirees
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#54: In all my prior jobs except the current one, I can now say in hindsight that my 401k sucked.

It only offered 10-15 fund options…which is like being forced to shop for weekly groceries in a gas station mini-mart when you know that Kroger is on the other side of the street.

Their fund expense ratios were mediocre, even for the passive funds. You couldn’t beef up pre-tax money with additional after-tax money. There was no mega-backdoor Roth conversion option.

These are really easy ways for companies to create value for employees via 401k plans. Why they are so often deficient when it comes to these things, I’m sure I don’t know.

Luckily, there is a way you can take greater control over your 401k money (or IRA for that matter) to invest more freely and build wealth.

It’s called a self-directed retirement account.

This week, I chat with Dmitriy Fomichenko, a financial planner who specializes in using self-directed retirement accounts “with checkbook control” to beef up your investing and retirement planning strategy.

What you’ll learn:

• What is a self-directed retirement account, the different types that exist, key risks, and how they differ from traditional retirement accounts
• The process for setting up a self-directed retirement account, and how to fund it
• Maintenance costs associated with self-directed accounts
• The role of the custodian / trustee / administrator for self-directed accounts
• How to access your self-directed account funds to invest (and key differences here between 401k vs. IRA versions)
• What kind of assets you can invest in with a self-directed account, and how income and expenses generated by those investments are treated
• Why mixing outside funds with self-directed account funds is such a big no-no, and the consequences if you do

Check it out here:

https://hackyourwealth.com/self-directed-retirement-account-401k-IRA

Are you satisfied with your 401k? Why or why not? Does a self-directed account sound appealing? Why or why not? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• Sense Financial free consultation
• List of non-recourse lenders
• Everything you need to know about 401Ks (HYW003)
• IRAs, Roth IRAs, and how to get the tax benefits of BOTH (HYW004)
• 18 real estate investors share what they wish they knew at college graduation
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#53: No matter how you cut it, the cost of college these days is pretty crushing.

And getting into your top choice college is well and good and all, but it doesn’t matter much unless you can afford to attend!

How can parents and families afford college (potentially for multiple kids) without ravaging their retirement savings?

This week, I invited my friend Ann Garcia, aka the “College Financial Lady,” back to the podcast to explain the intricacies of how college financial aid works. She shares insights and wisdom on how to plan for the cost of college, the different types of aid available, and strategies for maximizing financial aid.

We discuss:

• A big picture framework thinking about college financial aid
• The overall financial aid process, timeline, and key dates
• The role each type of aid (need-based, merit, government, and college aid) plays in a family’s financial aid strategy
• How FAFSA works, the 4 buckets of money that must be reported, what money can be excluded
• What federal EFC is, how it’s calculated, and how it’s used
• What the CSS Profile is, key differences vs. FAFSA, and what money must be reported on it
• How CSS Profile schools calculate EFC and differences vs. FAFSA methodology
• When it might be useful to leverage a grandparent-funded 529 plan + tradeoffs
• Student loan options and key types of loans available to students
• Tips for negotiating / appealing your financial aid package
• Financial strategies related to the “prior-prior” year once January of sophomore year arrives
• Financial strategies in the years BEFORE your child applies for college financial aid to maximize aid

Check it out here:

https://hackyourwealth.com/college-financial-aid

Has your child (or children) attended college with financial aid? What surprised you about the financial aid process? What do you wish you had known that you know now? What other questions do you have about financial aid? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• The College Financial Lady
• College Data
• Federal housing multiplier index for financial aid
• 529 college savings plans: rules, tax benefits, & qualified expenses (HYW026)
• College financial aid strategies to optimize your assets, income & EFC (HYW025)
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#52: The competition for admissions to the most elite colleges in America (think Ivy League, US News top 10) is fiercer than ever.

That’s because top colleges provide the best academic opportunities. Resources. Career opportunities. Pathways to elite grad schools. Student and alumni communities (where you’ll forge lifelong connections, friendships, potentially even meet your spouse). Not to mention, you’ll have a powerful brand associated with you for life.

How can students and parents without special connections distinguish themselves amidst a sea of qualified applicants?

This week, I chat again with my friend Shirag Shemmassian, a college admissions expert who has coached thousands of students to successful admission at elite colleges, about the mindsets and accomplishments you really need to win admission to the most elite colleges.

We discuss:

• Biggest myths and misconceptions when it comes to getting into elite colleges
• What elite college admissions committees are looking for, and how to differentiate yourself
• What level/degree of accomplishment you need to get in
• What students (and parents) can do well ahead of the application year to distinguish themselves, and how far in advance to do it
• How lower / middle income / rural / etc students with access to fewer opportunities can still differentiate themselves compellingly
• Why your “message” and the way you deliver it is just as important as your actual accomplishments
• The mindset students should have when writing their college essays
• How to pick an essay topic and write it compellingly (even if you’re not a great writer)
• Who should write your recommendation letters, and how to build genuine relationships with recommenders that blossom into great letters
• The qualities that make a stand-out recommendation letter

Check it out here:

https://hackyourwealth.com/college-admissions

Did you attend (or send your kid to) an elite college? What do you think principally contributed to your / their admissions success? What would you have done differently if you could do it over? Let me know by leaving a comment when you’re done.

NOTE: Apologies in advance we had some audio problems in the second half of the interview, so some parts may sound choppy. However, all key points should still be clear. I’ve also cleaned up the transcript (at the link above) to fill in missing words / phrases, so check that out if you’re struggling to understand any key points.

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Links mentioned in this episode:

• Shirag's guide to getting into top colleges
• Shirag's successful college essay examples
• Shirag's tips on writing the common app essay
• How to attend any college for free, with Shirag Shemmassian, PhD (HYW039)
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#51: Despite the pain (and cost) that not having an estate plan will cause your heirs, fully two-thirds of Americans don’t even have so much as a will if they got hit by a bus.

There are many reasons why people fail to create an estate plan. None are good.

So for this week’s podcast, I invited Spiro Verras, a Florida estate planning attorney, to share key things you need to know about creating a proper estate plan.

We discuss:

• Elements of a good estate plan
• How probate works step by step, how long it takes, and how much it costs
• At what point in your life you should write a will
• Differences between wills and trusts
• Legal formalities of wills and trusts
• How wills and trusts change the probate process
• What DIY-ers need to know before drafting their own estate planning docs
• Special considerations for real estate investors, family business owners, professional service practice owners, and high net-worth individuals

Check it out here:

https://hackyourwealth.com/estate-planning-basics

Do you have a will or trust? What about a medical directive or power of attorney agreement? Have you ever been through the probate process? What was it like for you? Let me know by leaving a comment!

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Links mentioned in this episode:

• Verras Law
• How to write a will
• How to set up a revocable living trust (with sample trust document)
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#50: Social Security is crucial to American retirement. 1 in 5 Americans and 1 in 4 families depend on it. That’s 65M people who will collect $1 trillion in Social Security benefits in 2020.

I said, $1 trillion.

With this massive of an entitlement program, it serves you well to understand how it works in gory detail so you can maximize your benefits. Sound good?

(If you’re a youngster, don’t glaze your eyes over…you may think Social Security is not relevant to you anytime soon, but what you do now impacts how much you collect in the future. So listen up – your retired self will thank you….)

This week, I invited Jim Blair to come share the goods on how Social Security works. Jim is a Social Security expert who spent 35 years at the Social Security Administration advising on benefits and claims, so he knows a thing or two about it.

We discuss:

• How Social Security benefits are calculated
• Key factors to consider when deciding what age to claim
• Optimal claiming strategies and tradeoffs of claiming younger vs. older
• How spousal, divorced, and survivor benefits work (and how they impact your claiming strategy)
• When Social Security is subject to taxes (and how much)
• What is likely to happen to Social Security when its assets go to zero (in <20 years)
• Whether young people should count on Social Security being there in the future as they plan their retirement finances

Check it out here:

https://hackyourwealth.com/social-security-podcast

Do you factor in future expected Social Security benefits into your retirement planning? Or do you just assume it won’t exist by the time you retire? Do you think it’s better to claim younger or older? Why? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• Premier Social Security Consulting
• jblair at mypremierplan.com
• How Social Security Works: The Ultimate Guide For Laypersons
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#49: The Health Savings Account is an incredible tool to take greater control over your healthcare. It is the most tax-efficient investment account on the planet.

So, if you’re eligible for it and not at least considering how to take advantage of it, you’re missing out.

In this week’s podcast, I deep dive on HSAs with Roy Ramthun. Roy is a nationally-recognized HSA expert, because he led the Treasury Department’s implementation of HSAs when they were signed into law in 2003, and then he served as a White House healthcare policy advisor.

I thought I already knew a lot about HSAs, but I still learned new things from Roy.

We discuss:

• How Roy got the nickname “Mr. HSA”
• Why HSAs are so special and how they work
• Tax benefits of HSAs at both federal and state level
• The 3 main eligibility criteria for HSAs
• Ways to fund HSA contributions
• What health expenses are considered qualified
• HSA bank options and factors to consider when selecting a custodian bank
• Reimbursement rules, receipt saving tips
• Tips for maximizing the growth of your HSA
• What happens to your HSA when you retire or pass away

Do you have an HSA? What kind of health expenses have you been able to save on using an HSA? Any follow up questions for Roy? (He’s offered to help answer them.) Let me know by posting a comment on the show notes page.

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If you liked this episode, would you please leave a quick review on Apple Podcasts? It’d mean the world to me and your review also helps others find my podcast, too!

Links mentioned in this episode:

• HSA Consulting Services
• Health Savings Accounts: Contribution Limits, Eligibility Rules, Benefits
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#48: Seniors often enter retirement (a) thinking Medicare is free, and (b) not at ALL clear how the details work – rules, restrictions, limitations, costs.

But it’s most certainly not free: your portion of costs could be unlimited and bankrupt you. And, like other healthcare matters in the US, “how it works” gets complicated fast!

How can seniors (and their loved ones, like you) make sense of it all?

This week, I talk with Danielle Kunkle Roberts, a nationally-recognized expert on Medicare insurance, about how to evaluate, navigate, calculate, and decide on the best configuration of Medicare coverage for you and your family. If health insurance “peace of mind” is important to you in your elder years, this is an action-packed episode you do not want to miss.

What you’ll learn:

• Medicare eligibility requirements
• Options for expats who haven’t paid into Medicare taxes
• What exactly Medicare covers, how each “part” works, and premium costs
• How to determine which doctors, hospitals, clinics, and pharmacies will accept your Medicare coverage
• How the premium surcharge (IRMAA) works if your income exceeds certain thresholds
• All-in costs you can expect to pay for Medicare coverage
• How the “initial enrollment period” works, including how the penalty works
• How Medicare Advantage works + when it’s a better choice than original Medicare (tradeoffs, considerations, cost differences, network differences)
• How Medigap works and tradeoffs and considerations
• How expat retirees should plan for Medicare, given it generally doesn’t cover them overseas

What other questions do you have about Medicare? If you’re looking into Medicare for yourself or a loved one, are you leaning toward original Medicare or Advantage? Why? Let me know by leaving a comment right now.

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Links mentioned in this episode:

• Boomer Benefits website
• Boomer Benefits Book: 10 Costly Medicare Mistakes You Can’t Afford to Make
• Boomer Benefits private Facebook group
• Boomer Benefits YouTube video: Will Medicare Cover My Procedure?
• Medicare.gov: What Medicare Covers
• Medicare.gov: Find & compare doctors
• Medicare.gov: Medicare plan finder tool
• CPT codes & ICD 10 codes: How medical billing & insurance claims work (HYW020)
• HYW private Facebook community

 Intro/Outro: Old Bossa by Twin Musicom.

#47: In this week’s podcast, I explain how to create a family emergency binder using 11 essential categories of info to make it easy for loved ones to understand your finances and figure out what you have, what you owe, and what you’re owed.

What you’ll learn:

• 11 essential types of info to include in your binder
• Tips on how to organize documents, PDFs, spreadsheets, and videos
• How often to update it + tips on staying organized
• Why it’s worth starting now, even if it takes a long time to finish

Do you have a family emergency binder? What other info do you think belongs in it? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• Free downloadable checklist: 11 Essential Categories of Financial Info For Family Emergency Binders
• 16 essential estate planning checklist topics to protect your family and give you peace of mind (HYW009)
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#46: Most people know what life insurance is. But they tend to think of it as term life: fixed payments for 20-30 years that pay out a death benefit if you die before the term is up (while paying nothing if you outlive it).

There’s another type of life insurance called permanent life insurance. It never expires. The most common type is whole life insurance.

Whole life insurance can get very complicated, so I invited a financial planning veteran with extensive experience in it (not affiliated with any insurance company) to share insight on how it works.

This week, I talk with Eric Brotman, CEO of BFG Financial Advisors, a wealth management consultancy, about the intricacies of whole life insurance: who it’s best suited for, its tax and estate planning benefits, and how to use it for investing purposes.

What you’ll learn:

• How a policy his parents bought for him at 14 which he inherited at 24 got him hooked on whole life insurance
• The main tax advantages of whole life
• How whole life is used for estate planning
• The type of securities life insurance companies invest in
• How to choose a whole life insurance company
• How life insurance broker commissions work (and how much they are)
• What paid-up additions are and why they matter
• How to borrow against your whole life policy
• The tradeoffs of borrowing from vs. against your policy
• How whole life can supplement social security in retirement

If you have whole life insurance, are you satisfied with it? Why or why not? If you borrow against your life insurance to invest in other assets, what do you invest in? Let me know by leaving a comment.

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I need your help, please leave a listener review :)

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Links mentioned in this episode:

• Brotman Financial Group
• www.lowtaxbook.com
• Don't Retire...Graduate Podcast
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.