Our topic on this episode of the Ready for Retirement podcast is “6 "Hidden" Tax Savings Opportunities Before Year End”.

Maximizing tax savings can be one the greatest ways to save money; James gives a checklist of six things we should review for tax savings before 2020 comes to a close. 

Should I take an itemized deduction or standard deduction? When is it best to do charitable giving? How can I lower my future taxable income with a Roth conversion? Is my stimulus check taxable? Listen to find out all of this and more to best take advantage of your tax situation and ensure you’re on track to meet your financial goals.

Are you ready to start focusing on the things that truly matter when it comes to your financial future?

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Our topic on this episode of the Ready for Retirement podcast is “Don't Focus on These 5 Wrong Things”. 

With so much information, it can be difficult to know what’s truly worth spending our time on. James gives examples in this episode of five things we shouldn’t focus on and four things we should focus on. 

Active vs. passive management, fee’s, small impact decisions, recent performance & the news can all be things we focus far too much attention on that won’t greatly impact whether or not we achieve our financial goals. Focusing on consistent saving, creating portfolios that match our objectives, personal goals, and high impact decisions are all things that are extremely important when it comes to reaching your financial goals. 

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Our topic on this episode of the Ready for Retirement podcast is thinking through the question, “Should you Have a 100% Stock Portfolio in Retirement?” 

James discusses the statistical and practical standpoints on this topic to help listeners understand that when you are investing, there are thousands of options. The conventional wisdom is to own more stocks during your working years, as you primarily focus on growth, and own more bonds during retirement, as you focus on income and capital preservation.

James discusses the implications of owning bonds and the primary reasons why bonds can be great for your portfolio, as well as reasons why owning more bonds later in retirement may make achieving your financial goals more difficult. 

So, Should you Have a 100% Stock Portfolio in Retirement? 

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This episode of Ready for Retirement is all about emergency funds. James walks the listener through the purpose of an emergency fund, as well as potential options of what to do with your emergency fund. 

He shares that the purpose of an emergency fund is to be able to cover unexpected expenses, such as loss of income, medical emergencies, or home and auto repairs. Without an emergency fund, when these moments happen, you may have to use credit, or draw from your portfolio, in order to cover the expense. 

So, when people want to make money off of their emergency fund, James encourages them to think of an emergency fund as an insurance policy, not an investment. There are, however, a few options of what to do with your emergency fund. While you can always leave the money in a bank savings account, you will likely receive no interest. 

One of the best options is to move your money to a high yield savings account. Here, you will be able to earn some interest and can still access your money easily. The final option is to purchase a certificate of deposit. While this will likely earn you a little more interest, you will not be able to access your money, early, without penalty. 

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On this episode of Ready for Retirement, James answers the question “Should I do a Roth or Traditional 401k?” James addresses this question by discussing, with practical examples and numbers, when it makes sense to use a Roth 401k, or IRA, and when it’s a better option to use a Traditional 401k, or IRA. 

The general difference between the two is when you pay taxes, and whether your contribution is part of your taxable income. However, there are benefits to both options. With Roth accounts, you don’t have to worry about your tax brackets during retirement, since you’ve already paid taxes on that money. 

Additionally, income from Roth accounts is not considered part of your provisional income, and therefore will not impact your Medicare costs or push you into a higher tax bracket. Finally, there is no required minimum distributions, so you are not required to take any income you don’t want or need. In regard to Traditional investment accounts, you are able to save money in the present, as the money you invest is not taxed when you invest it, but later, when you withdraw the money. 

Therefore, you have less taxable income now. This can be very beneficial if you’re in a higher tax bracket. With Traditional accounts, however, there are required minimum distributions, which means that you may be required to take income you don’t want or need, as well as be pushed into a higher tax bracket during retirement.

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The topic on this episode of the Ready for Retirement podcast is goals. Our host, James, urges listeners to reframe how they think about financial goal-setting. He walks through why goals matter as well as some of the most common goals and how to approach them. 

When you think about goals, consider what is important to you, what you want to be able to accomplish in the future, and what you envision when you picture a successful outcome.

James says that goals are important because if you don’t know what you’re aiming for, you won’t know if you’re on track. Setting a goal helps you to make a plan and determine the appropriate timeline and savings or investment strategy. 

He covers common goals and gives tips on how to think about planning for them: retirement, home purchase, college funds (for children or grandchildren), legacy, and other miscellaneous goals. 

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On this episode of the Ready for Retirement podcast, James discusses target date funds and explains what they are, how they work, what the fees are, and how to know if a target date fund is the best option for you. 

He tells listeners that when creating a 401k, you’re given a list of fund options to choose from as you invest money. One option is to build your portfolio on your own. Another option is to select a target date fund, which is simply a portfolio that is built for you based on the year you think you might retire.

James then discusses the differences that can exist between target date funds such as the peripheral asset classes and fees. You’ll also learn how to decide if a target date fund is right for you. It takes the decision-making pressure off of you and it may have exposure to asset classes you wouldn’t have access to with individual funds in your 401k. 

However, if you know what you’re doing, replicating the blend of a target date fund and creating a portfolio that’s unique to your own personal goals could be more beneficial. 

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Our topic on this episode of the Ready for Retirement podcast is thinking through the question “How soon before retirement should you start to adjust your portfolio?” James discusses the statistical and practical standpoints on this topic to help listeners develop a comprehensive view of this question and its trickle-down effects. 

By the numbers, there are several things to keep in mind: the data regarding positive returns in the S&P 500, your time until retirement, and ways to diversify your portfolio to protect it from drastic swings based on the market. It is also important to recognize that stocks and bonds complement each other and often have opposite returns trends, so when one goes down the other is likely going up. 

When it comes to the practical application of these financial principles, James outlines how this might look in a real-life scenario which is worth a listen. To answer the original question, James summarizes his thoughts by marking the 10-year mark as a milestone at which you should consider adjusting your portfolio to make it more conservative and resistant to market fluctuations. 

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Our topic on this episode of the Ready for Retirement podcast is the question “How much can I spend in retirement?” Most people are concerned that they won’t have enough money and they worry that they will outlive their money, but James outlines the traditional and newer thought processes on withdrawals amounts during this episode. 

While the traditional rule of thumb has been to withdraw 4% of your portfolio amount in the first year and then increase your withdrawals every year based on inflation, Jonathan Guyton has come out with a new school of thought in the past 15 years that is proving beneficial for retirement planning.

Guyton’s guidelines have proven with 95% confidence that a 5.2-5.6% initial withdrawal and then monitoring the market before deciding on your withdrawal amount every year will be sufficient for a 40-year retirement horizon. The four main rules associated with this method are: the portfolio management rule, the withdrawal rule, the capital preservation rule, and the prosperity rule. 

Coupled with the consideration that retirement costs are not static and that your income sources and expenses will likely fluctuate throughout retirement, James encourages his clients and listeners to have a holistic approach. Remaining aware of market conditions and the status of your own portfolio rather than just making blind withdrawals is always the best course of action. 

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On this episode of the Ready for Retirement podcast, James provides listeners with a broad but detailed overview of Medicare. Medicare is the federally maintained health care plan for all qualifying Americans aged 65 and up. 
There is always something in the news about Medicare and it can seem daunting to understand all of the different parts and supplemental plans, but James breaks down the basics during this episode. 

Medicare Part A is also known as hospital insurance, covering inpatient and skilled nursing facility treatments as well as related prescription drugs for a specified length of time. 

Medicare Part B is also known as medical insurance, covering outpatient treatment by healthcare providers and preventative care. Medicare Part D is prescription drug coverage and is often paired up with a Medicare Supplement plan (Medigap). 

Medigap plans coupled with Medicare Part D is one option for reducing your risk in the case of medical emergencies. These plans typically have higher premiums with lower out of pocket costs and are good for folks with health concerns or pre-existing medical conditions.

Medicare Advantage plans are similar to employer-sponsored healthcare plans and typically feature lower premiums and higher deductibles and copays. These plans are good for people who are in good health and do not anticipate needing medical care outside of their network or by specialists. 

James recommends that people looking for more comprehensive information to refer to Ashby Daniels’ book “Medicare Simplified.” 

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