Retire With Ryan

Did you take out a parent PLUS loan or private loan to help your kids pay for college? Are you still struggling to pay off those loans?

According to StudentAid.gov, over 9 million people over 50 have student loan debt. Of those, over 1 million have loan balances north of $100,000.

If you're nearing retirement, the last thing you want on your plate is student debt. In this episode of Retire with Ryan, Erik Kroll shares the best way to manage student loan repayment.

• [2:17] The different types of Federal student loans
• [5:32] Private loans versus PLUS loans
• [8:07] The forgiveness programs available
• [9:37] Student loan repayment options
• [22:40] How to start the consolidation process
• [25:48] What to do if you need help with the process

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Student Loans Over 50
• Federal Student Loan Portfolio
• Public Service Loan Forgiveness Program
• StudentAid.gov
• Email Erik at Erik(at)StudentLoansOver50.com
• Set up a phone call with Erik at StudentLoansOver50.com

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If you've inherited an IRA from someone who wasn't your spouse since 2020, you can't miss this episode. Why? The IRS has finally cleared up a lot of questions that had been left unanswered about inherited IRAs from a non-spouse. Though I've covered the topic in previous episodes, I wanted to break down the regulation further in this episode.

• [1:57] The SECURE Act's impact on inherited IRAs
• [4:21] The new IRS regulations
• [6:30] Eligible designated beneficiaries
• [7:52] Non-eligible designated beneficiaries
• [11:07] Do some tax projections
• [12:34] Satisfying distribution requirements

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Fiduciary: How to Find, Hire, and Establish an Aligned and Trusted Partnership with a Fee-Only Financial Advisor
• IRS Single Life Expectancy Table
• Episode #180: New Beneficiary IRA Distribution Requirements
• Episode #200: IRS Update for Inherited IRAs and Roth IRAs

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In March, The National Association of REALTORS® (NAR) settled an antitrust lawsuit. The lawsuit alleged that NAR didn't allow sellers to negotiate what they could pay buyer's agents. The changes outlined in the settlement will impact "business as usual."

As of August 17th, 2024, the way home-buying and selling transactions happen will change. Raquel Fernandez—a realtor with over 20 years of experience—joins me to share what the changes look like for buyers, sellers, and their brokers. Anyone who owns a home—or is looking to buy one—needs to know this information.

• The NAR lawsuit is settled: Now what? [1:20]
• What do the changes mean for you? [2:56]
• Debunking the fake news [9:49]
• What happens if the seller doesn't pay commissions? [16:42]
• What do the changes mean for the future? [27:00]

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel

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What steps should you take to get your financial life in order after a divorce? In this episode of Retire with Ryan I lay out, step-by-step, the checklist of things you'll want to look over, everything from calculating your net worth to designating beneficiaries. There's a lot to consider. My aim is to simplify the process so that you can focus on what really matters—rebuilding your life.

• [0:45] Recap of the last two episodes
• [1:15] Organize your net worth and budget
• [4:27] Review insurance coverage
• [6:28] Review overall debt
• [8:27] Consider hiring a financial advisor
• [9:32] Review your retirement plan
• [10:38] Review your estate plan

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Get a free copy of my net worth statement and budget spreadsheet
• Use my "I love you letter" template
• Fiduciary: How to Find, Hire, and Establish an Aligned and Trusted Partnership with a Fee-Only Financial Advisor
• LegalZoom
• Trust & Will

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In episode #211, we talked about the information you need to gather to prepare to file for divorce and the initial proceedings. But what financial steps do you need to take during a divorce? How do you figure out what life will look like on the other side? How does splitting your assets actually work? Renée C. Bauer—an experienced family law attorney and mediator—joins me in this conversation to help flesh out the details.

Renée has been practicing law since 2003. She's also the author of two books, "Divorce in Connecticut," and "She Who Wins" and the host of the "Happy Even After" podcast.

• [2:16] You've filed for divorce—now what?
• [5:28] Creatively diving into each person's goals
• [10:41] Handling the sale of a house you co-own
• [12:52] How to separate a co-owned business
• [15:54] The Fair and Equitable Division of Assets
• [17:41] What happens if no agreement is reached?
• [20:27] Where retirement assets land in the process
• [23:24] Why a 50/50 split is the starting point
• [27:47] Unraveling emotional attachments
• [30:00] Taking control of your finances

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Episode #211: Financial Steps to Take Before Divorce
• Happy Even After Family Law
• The Happy Even After" podcast
• Qualified Domestic Relations Order
• Connect with Renée on Instagram

www.MorrisseyWealthManagement.com/contact

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We've all heard the statistics that almost half of all marriages end in divorce. And divorce comes at a large cost. That's why you should come up with a plan for life after divorce. Look at your net worth, put together a budget, and make projections for your future. Let's get you prepared as you can be.

To do that, I'm launching a three-part series on navigating the financial considerations when going through a divorce. No one wants to plan for the demise of their marriage. I get it. But if you know you're about to go through the process, there are steps you can take to make it easier.

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• [2:04] Do half of all marriages end in divorce?
• [4:50] Gather key financial documents
• [7:59] Take a look at your income
• [8:18] Consider potential job opportunities
• [9:03] Look at your individual credit score
• [9:40] Consider working with a financial planner

If you aren't managing the household finances, this is especially important. You need to understand how your household is doing. Gather things like:

• Checking, savings, and investment account information. You need to know where the money is and how much is held in the accounts.
• Have an idea of what property you own (which may be easy if it's simply your primary home). Know the value of any assets you have.
• What debt do you have? Do you have credit card debt, lines of credit, mortgages, or other personal loans? Know what you owe (and how debt may be split when divorced).
• What are your household expenses? What are you spending? Look at things like insurance, utilities, home maintenance costs, etc.
• Do you have any retirement accounts or pensions? What will your Social Security benefits look like?

Take an in-depth look at all of this information. When you divorce, that net worth will be divided in some way. Getting a handle on that is important to understand the changes you'll need to make.

You can contact your accountant to get that information if you don't have it readily available (or can't get it from your spouse). If you're not working, it's time to get a handle on what you may be able to earn if you go back into the workforce.

If you won't have income or assets to support yourself, consider the job opportunities available to you. What are your skills? What jobs are out there? Can you improve your skills by taking courses? Do you have any licenses you'll have to renew?

What does your individual credit score look like? After a divorce, you might have to take out additional loans for a mortgage, car, student loans, etc. You'll need good credit to do that. If you don't have a good credit score, look into ways you can improve it quickly.

This is a great time to engage a financial planner for assistance. Listen to hear other things you'll need to consider when going through a divorce.

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Fiduciary: How to Find, Hire, and Establish an Aligned and Trusted Partnership with a Fee-Only Financial Advisor
• Revealing Divorce Statistics In 2024
• Get my free budget template and net worth statement

www.MorrisseyWealthManagement.com/contact

Why would you want to make a Roth contribution? If you believe tax rates will be higher in the future, it could benefit you. How? The contributions grow tax-deferred. When you withdraw the money, it's tax-free. A tax-free income can be very beneficial in retirement.

In 2024, you can contribute $7,000 to a Roth IRA. If you're over 50, you can contribute $8,000. However, there are income limits for the contributions. Individuals who make over $161,000 can't contribute.

Thanks to the 2017 tax cut, there are some additional ways you can contribute to a Roth IRA. I cover four ways you can get money into Roth accounts in this episode of Retire with Ryan.

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• [1:34] How to make a traditional Roth IRA contribution
• [4:06] Option #1: The Backdoor Roth IRA
• [8:06] Option #2: Contribute to a Roth 401K
• [9:16] Option #3: Do a Roth conversion
• [13:17] Option #4: A Mega Backdoor Roth IRA

Let's say you're contributing to a Roth IRA indirectly (I talked about this in episode #176). To do that, you have to set up both a transitional and Roth IRA with the same company. Then, you make a non-deductible contribution to your traditional IRA. After that, you fill out a request form to convert that money to the Roth IRA. They'll move it for you. What's the biggest mistake you have to avoid when doing this? Listen to find out!

If you have the option to contribute to a Roth 401K, use it. Why? Because there are no income limits on who can contribute to a Roth 401K. You could make well over the limits to contribute to a Roth IRA and still make a contribution. In 2024, you can contribute $23,000 to a Roth 401K or $24,500 if you're over 50.

Currently, everyone can convert money in a traditional IRA or 401K into a Roth IRA or 401K. Let's say you have $100,000 in an IRA that you want to convert. You'd have to pay Federal and State tax on the $100,000 you're converting plus any other earned income for the year.

When would this make sense? You don't have to pay a 10% penalty on the conversion if you're under 59 ½. Secondly, if you think you'll be in a higher tax bracket in retirement, and don't need access to the money now, it might make sense to roll it over. It will have time to make back the money you had to pay in taxes upfront.

But your plan has to offer a Roth 401K. You'd choose the amount you want to convert from the traditional IRA to the Roth 401K. You'd pay taxes on the amount you're converting. 40% of 401K plans offer this feature. But you have to consider if the conversion will push you into a higher tax bracket.

Some 401K plans allow contributions above the traditional $23,500 limit. The IRS has a total pension profit-sharing contribution limit. For 2024, that number is $69,000. That's the total that your employer can contribute to your retirement plan. Let's say you and your employer contribute $30,000.

Because you haven't hit the maximum, there's an additional $39,000 that can be contributed to your 401K as an after-tax contribution. Then you have to convert it to your Roth account. That's the Mega Backdoor Roth IRA. If you're over 50, you can also contribute the additional $7,500 catchup.

Government 457 plans and most 403B plans don't allow this after-tax contribution. Many 401K plans do.

How do you get the most out of that contribution? Find out in this episode!

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Fiduciary: How to Find, Hire, and Establish an Aligned and Trusted Partnership with a Fee-Only Financial Advisor
• 7 Backdoor Roth IRA Mistakes to Avoid
• How a Mega Backdoor Roth IRA Can Accelerate Your Retirement Savings

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One of my favorite ways to save for retirement is through a Health Savings Account (HSA). Too many people overlook a health savings account as a great way to save for retirement and healthcare costs. So how do you get the most bang for your buck out of your HSA? I share some simple strategies that very few people employ in this episode.

Disclaimer: I don't work for Fidelity and they do not compensate me for my reviews. I simply believe it's a great option for my clients.

• [2:14] What is an HSA?
• [4:03] The tax benefits of an HSA
• [4:59] Why put money into an HSA
• [9:17] The bucket approach with HSAs
• [10:23] How to grow your HSA
• [13:48] Action steps

HSA plans are considered a triple-tax-free retirement account. When you contribute money to the plan, you get a tax deduction on the contributions (reducing your taxable income). The money in the HSA can be invested and grow tax-free. When you take the money out to use it for qualified expenses, it's tax-free. No other retirement account gives you this benefit.

Let's assume your HSA is offered through your employer. A good HSA is one that allows you to buy individual stocks and bonds or mutual funds at a low cost. If they don't offer this, you may want to move to another HSA provider. Outside of employer-sponsored HSAs, my favorite provider is Fidelity.

If you're just getting started and you're not ready to invest the money (it's being saved for healthcare expenses) you want to at least be earning interest. If you don't choose the stocks, bonds, or mutual funds you want to invest in, your money is automatically swept into a money market option (with rates around 4.5%).

In 2024, a single person can contribute $4,150 to an HSA. If you're eligible for a family HSA, your limit is $8,300. If you're over 55, there's a $1,000 catch-up allowance per year. I would max out your HSA every year and prioritize it beyond your 401K.

You want to let the money grow so that you're only spending your gains in the future. That's why you want to pay most HSA-related expenses out of pocket—not with your HSA. The biggest mistake I see is people spending through their HSA money immediately. When you do that, you won't see tax-deferred growth. So what do you do instead?

If you can, track your expenses on a spreadsheet and keep your receipts. When I pay medical bills, it's entered into my spreadsheet. Let's say my family spent $15,000 on medical bills over the last six years and my HSA has $30,000 in it. If I wanted to, I could reimburse myself at any point in time for those expenses, tax-free.

Once you turn 65, you can use the money in your HSA for any expenses. It acts just like a 401K. I share my whole strategy in this episode—don't miss it.

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Fiduciary: How to Find, Hire, and Establish an Aligned and Trusted Partnership with a Fee-Only Financial Advisor
• Qualified Medical Expenses (per the IRS)
• Fidelity HSA

www.MorrisseyWealthManagement.com/contact

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Will your benefits be there when you need them the most? If so, should you collect your benefits as soon as possible? This is something I'm frequently asked, so much so that I decided it was time to address it. So in this episode of Retire with Ryan, I'll cover how Social Security works, how long Social Security will remain solvent, and whether or not you should collect early.

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• [1:52] How does social security work?
• [4:23] Social Security solvency report
• [6:10] What are the options?
• [10:24] Are there enough people paying in?
• [11:25] Should you wait to collect Social Security?

Every dollar you earn—up to an annual maximum amount—is taxed for Social Security and Medicare. This is known as the FICA tax. You pay 6.2% of your income up to $168,600. The company you work for also pays 6.2%.

If you're self-employed, you pay both portions. The amount you earn over $168,000 isn't subject to the FICA tax (but is subject to the Medicare tax). The limit is adjusted upward annually.

The money is used to pay current Social Security beneficiaries their monthly check. When social security first started, 40 people were paying into the fund to every one person collecting. That ratio is now closer to 2-to-1.

The initial surplus was put into the Social Security Trust Fund to pay for future benefits. Now, more funds are being paid out than taxes being collected. The government is covering the deficit from the trust fund. This is why people are worried that Social Security will go broke.

Each year, a report is issued on the solvency of Medicare, Social Security, and other social systems. It states that, unfortunately, Social Security and Medicare programs both continue to face significant financing issues.

What else does it say? The Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay 100 percent of the total scheduled benefits until 2033. After this, 79% of scheduled benefits will be paid annually.

If nothing is done in the next nine years, starting in 2033, recipients will see a 21% reduction in their benefits. This would be catastrophic for most people.

Most retirees get 40% of their income from Social Security. Congress must do something to make sure people receive the same benefits. What can they do?

• Raise the Social Security earnings limit: They could raise or do away with the annual cap and tax everyone on their entire annual income.

• Increase in the percentage that's paid in: Instead of 6.2%, they may raise the FICA tax to 7.2% or 8%.
• Increase in the age of retirement: Full retirement age for someone born after 1960 is 67. They may raise the age to 68, 69, or 70.
• Increase the taxation of benefits: Social Security benefits are taxed based on your earned income in the tax year you're receiving your benefits. Benefits weren't taxed in the past. But in 1983, Social Security was made taxable.
• Changing the cost-of-living adjustment calculation: In 2024, the COLA was 3.2%. With the high inflation we're experiencing, this adjustment gives people a chance to have their income keep pace with inflation.
• Part of Social Security money could be set aside and invested in stocks/bonds: This is a quite unpopular proposition that some people believe is too risky.

Congress needs to decide what they're going to do and pass a bill into law. However, Congress tends to wait until the last minute to get things done. The last big change was in 1983. Hopefully, the next change will make the system solvent for longer.

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Fiduciary: How to Find, Hire, and Establish an Aligned and Trusted Partnership with a Fee-Only Financial Advisor
• Status of the Social Security and Medicare Programs (2024)
• Cost-of-Living Adjustment (COLA) Information for 2024
• How Medicare Enrollment Impacts HSA Contributions
• Changes to the Social Security Cost of Living Adjustment in 2023

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What are some of the biggest tax mistakes you should be avoiding when you file taxes? CPA Steven Jarvis has worked on thousands of tax returns. He focuses on helping people who have a long-term focus. He wants to make sure his clients only pay every dollar they owe and nothing more. It's not about getting a big tax return. It's about looking at the long-term picture and being proactive. We dig in and dissect the top tax mistakes you need to avoid in this conversation.

• [3:02] Making proactive choices to impact your taxes
• [4:47] Learning about the foreign tax credit
• [6:43] Rollovers from 401Ks to IRAs
• [11:01] Equity compensation and severance pay
• [13:07] Managing advanced charitable giving strategies
• [21:10] What you need to know about HSAs
• [26:32] Pay what you owe—and nothing more

You'll likely roll over a 401K to an IRA only once or twice in your life. In theory, it should be simple—as long as the rollover is treated as a non-taxable event. It needs to be reported on a 1099-R form, which can be confusing. Tax-adjacent events go on your tax returns but you should not be taxed on them.

If you're working with a tax professional, you need to communicate that you're doing a rollover. Before the tax return is filed, make sure you look it over to see if your income changed. If it has—and it shouldn't have—a rollover being improperly filed may be the culprit.

A qualified charitable distribution (QCD) allows you to make a charitable contribution directly from an IRA to a charity. If you donate $1,000, you may save $200–$300 in taxes. If it's a charity that you care about, great. But if you're not charitably inclined, spending $1,000 to save $300 doesn't make sense.

But there are some other tax benefits. A QCD comes out of your income before your adjusted gross income is calculated. Why does that matter? Your adjusted gross income is part of the calculation to determine how much you pay for Medicare. Reporting this correctly is key.

Most custodians don't report how much money went to a charity because the IRS hasn't created a way for them to do it. That's why you (or your financial planner) must provide this information when your taxes are filed. I will send a breakdown of QCDs, distributions, etc. to my clients so they can report it properly.

Steven sees people penalized for over-contributing to HSAs because the form (8889) is confusing and people fill it out incorrectly. That's the #1 thing you have to watch out for with these.

One of the advantages of an HSA is that it can grow tax-free. If you can pay medical expenses from another source while funding the HSA, you'll also get a tax deduction. If you don't need the money for qualified medical expenses down the road, you'll just have to pay taxes on the money (which you can remove at age 65 without any penalties).

If you keep track of your HSA-eligible expenses as you go, and have sufficient documentation, you can also request reimbursement for things that happened in the past.

What other issues does Steven find himself correcting frequently? Learn other tax mistakes to avoid in this episode.

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Retirement Tax Services Podcast
• Steven's book, "Don't Get Killed on Taxes"
• Connect with Steven on LinkedIn
• Retirement Tax Services

www.MorrisseyWealthManagement.com/contact

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