Retire With Ryan

In celebration of Financial Literacy Month this April, I want to discuss how to get the most out of your banking experience. On this episode, we’re talking about compound interest and how your big bank could stop you from benefiting from this simple financial literacy concept. As well as recommended alternatives to keep your money safe and working for you.

• What is compound interest? [1:58]
• Why Big Banks aren’t the most bang for your buck [3:48]
• Getting rid of ridiculous bank fees [6:38]
• Upgrading your bank for more financial features [7:56]
• Banking where you’re appreciated [10:52]

Compound interest is one of the cornerstones of financial literacy. Albert Einstein called it the eighth wonder of the world because of the snowball effect that happens with compounding. And with interest rates sitting at four to five percent, you are missing some serious snow if your money is not in a money market fund, high-yield savings account, or a short-term CD. 

A lack of compound interest is one of the biggest reasons to break up with your big bank. Banks like JP Morgan, Bank of America, Citigroup, Wells Fargo, and US Bancorp are notorious for paying their clients little to no interest. I’m lucky if I make a few dollars per year with my Bank of America account! If you're not getting compound interest on your checking and savings account, or if you are and it’s not at least four percent, you should break up with your bank. Or at least keep a minimum amount of money in that account.

The use of online banks has skyrocketed and for a good reason! Online banks like Charles Schwab, Fidelity, and Vanguard provide a much better value to clients than big brick-and-mortar institutions. One of the ways they do this is by cutting back on fees. Big banks will charge fees just to have the account. Not to mention account minimum fees, overdraft fees, ATM fees, and even check fees. 

Another way online banks make the user experience better is through features. A lot of big banks don’t have the greatest features. They may lack online bill pay or a good way to track transactions and overall spending. Big banks are generally older institutions too. Meaning they have old systems that are often too expensive to update and can take forever to adopt features that online banks have had for years. Listen to this episode for more reasons to break up with your big bank!

• 7 Best Short-Term Investments To Grow Your Money, #116
• These Are The 15 Largest Banks In The U.S.
• A Penny Doubled For 30 Days Is How Much?
• Get 25% off of my Retirement Readiness Review online course until June 1st with Promo Code: RETIRE25

www.MorrisseyWealthManagement.com/contact

The Silicon Valley Bank collapse has many listeners worried about the health of other banks like Charles Schwab and TD Ameritrade. On this episode, I want to address the safety concerns you and others may have about your investment accounts with TD Ameritrade and Charles Schwab.

• Comparing Silicon Valley Bank and Charles Schwab [1:27]
• Identifying the safeguards that protect your money [4:53]
• Exploring past worst-case scenarios and final thoughts [7:34]

In the wake of the Silicon Valley Bank and Signature Bank collapses Charles Schwab Brokerage Company has been in the news because there is speculation they made similar long-term high-quality bonds investments that could lead to another bank failure. Banks need to raise more capital anytime bonds decrease in value. Silicon Valley Bank attempted to raise capital by issuing more stock, hoping to right the ship. But this move spooked savers and investors, which created a run on the bank and its subsequent collapse. 

Charles Schwab is a different bank because they are a brokerage firm first. And as a brokerage firm, 95% of their assets are on the brokerage side. That's very important because it means they are not held on the bank side. Brokerage firms are required to segregate their investors' brokerage accounts from their own accounts. So in the event of a Charles Schwab collapse, your money on the investment side would not be at risk because those accounts are segmented.

One of the biggest reasons SVB failed was that 90% of its deposits exceeded the FDIC limit of $250,000. Schwab’s CEO recently stated that only 20% of their deposits exceed the FDIC limit, which further demonstrates their commitment to keeping their client’s money safe. Furthermore, there is a minimum capital requirement brokerage firms must have to ensure they have enough liquidity in the event of a crisis. 

There are also additional protections for your money through SIPC insurance. That stands for the Securities Investor Protection Corporation, which every brokerage firm has to be a member of. The insurance guarantees $500,000 of coverage per customer for securities assets in a brokerage account and up to $250,000 for any uninvested cash. In the event a brokerage firm didn't abide by their requirements to keep their customer accounts segregated, SIPC insurance would kick in to protect you from fraud. Most brokerage firms carry additional coverage above and beyond SIPC insurance as well. Charles Schwab has been noted to offer coverage for up to $1.15 million in cash per customer. Listen to this episode for more on Charles Schwab and TD Ameritrade!

• Is my money safe? | Charles Schwab
• Account Protection | TD Ameritrade
• Get 25% off of my Retirement Readiness Review online course until June 1st with Promo Code: RETIRE25

www.MorrisseyWealthManagement.com/contact

The process of writing a will can feel scary, overwhelming, and time-consuming. Studies show that 50 to 60% of Americans do not have one. However, creating a will is the cornerstone of every estate plan. On this episode, I’m going to give you five reasons why you should write your will now and the best ways to get started.

• Why you need a will if you’re charitably inclined [2:11]
• Maintaining control through a will [2:48]
• Taking care of dependants after you’re gone [4:27]
• Using a will to leave a legacy [5:10]
• Making life easier for your loved ones [6:55]
• Creating a will and final thoughts [8:34]

One of the main reasons to create your will now is control. If you don't name the executor of your estate, or you don't name who's going to get your assets, then you will be subject to the specific intestacy laws in the state that you pass away in or where your property is located. Your assets will likely go to family, but not necessarily the family you want it to go to. Nor will it be in the desired percentages without clarity from a will. 

If you are charitably inclined, you may want to leave a legacy gift or a percentage of your estate to your favorite organization. Without a will, it is highly unlikely that will happen. Wills also ensure that any children or grandchildren in your care go to the desired guardian in the event of your passing. You can even designate a guardian for the child and a separate person to manage their finances if desired. But you need a will to make it happen. 

At the end of the day, the last thing anyone wants to do is make their passing harder for grieving loved ones. Establishing a will now, guarantees your family won’t have to jump through hoops just to settle your estate. Having a will cuts down on time and probate costs because it’s immediately clear who should get what. It also prevents the likelihood that your estate will be contested and avoids family drama during an already difficult time.

Your final step in the will creation process is putting together what’s known as a family love letter. This is a guide for your family to execute your wishes in the event of your untimely passing. It can include wills, asset lists, contact information for lawyers and accountants, insurance policies, and funeral requests. Basically anything your family could need to settle your estate and ensure your exact wishes are honored. The inclusion of a family love letter provides much needed clarity and comfort when your family needs it the most. Listen to this episode for more reasons to write your will now!

• Get 25% off of my Retirement Readiness Review online course until June 1st with Promo Code: RETIRE25
• LegalZoom
• Wills.com

www.MorrisseyWealthManagement.com/contact

Women have come a long way in terms of owning their financial power. That’s not to say there aren’t still challenges or wage discrepancies, but globally women are poised to take center stage as their earning potential grows. On this episode, I am joined by Brie Williams to discuss tips and strategies for women to build a better relationship with money, achieve their financial goals, and prepare for a successful retirement.

• Getting to know Brie Williams and unpacking our personal relationships with money [0:42]
• Developing positive and realistic money habits [8:26]
• Creating a budget, paying off debt, and saving for the future [13:16]
• Keeping track of your finances [18:29]
• Three financial tips every woman needs [23:20]

In 1974, the US government passed the Fair Credit Opportunity Act, which made it illegal for financial institutions to discriminate based on religion, race, national origin, or gender. For the first time EVER, women could apply for and hold their own credit cards and exercise unprecedented financial independence. However, generations of gender-based discrimination left a financial literacy gap that is still felt today. That’s why people like Brie Williams are committed to empowering women to own their finances and achieve their financial goals.

Many of our ideas around money come from childhood. Our family’s attitude towards money will impact our own whether we want it to or not. Thankfully, Brie's mother had a healthy outlook on money, and ensured she started gaining financial literacy at a young age. But many people grow up in households where money is the greatest source of stress. This could lead to all sorts of unhealthy relationships with money. Maybe you avoid it and thus avoid planning for the future of retirement. Or perhaps you spend excessively to feel safe. Whatever your financial hang-up is, it’s time to put a plan in place to get control of your financial future.

One of the best ways to develop a better relationship with money is mindfulness. Simply being aware of how you’re spending money can take that relationship in a positive direction. There are several safe apps out there to help you keep track of your finances, but a good ole fashioned pen and paper works too. Having financial conversations is another way to increase money mindfulness. Culturally, we are taught not to talk about money, and women are specifically targeted with this kind of rhetoric. We have to break out of stereotypes and normalize the money conversation for everyone. Discuss your financial goals with trusted family and friends or a financial advisor to make the most out of financial planning.

Everyone is on a journey with their finances. You will make mistakes. But the journey is about gaining competence over time and celebrating the small wins. When we acknowledge our progress, however small, we motivate ourselves to achieve the next positive step. This makes the journey more rewarding because we’re developing healthy financial habits and gaining experience as we go. Listen to this episode for more on building a better relationship with money!

www.MorrisseyWealthManagement.com/contact

The last thing retirees on a fixed income want is expensive monthly healthcare costs. If you’re not careful, you could unintentionally trigger higher Medicare Part B and D premiums through an IRMAA surcharge. On this episode, I’m going to show you how to lower your Medicare costs by lowering your taxable income.

• Understanding MAGI limits [2:01]
• The IRMAA appeals process [5:44]
• Reducing your taxable income through generosity [7:40]
• Tax-efficient investment strategies [10:46]
• Converting traditional IRAs and 401ks to Roth accounts [12:46]

When you enroll in Medicare, you’ll receive a letter detailing your annual Part B and D premiums. The amount is based on the modified adjusted gross income (MAGI) from your tax return two years prior. So for those enrolling in Medicare for 2023, your MAGI will be based on your 2021 tax return. Calculating your MAGI is also not as straightforward as something like an adjusted gross income. The modified adjusted gross income is your adjusted gross income plus tax-exempt interest, plus any interest earned or accrued from US savings bonds used to pay for higher education, plus any income earned while living abroad or from any specific sources not included in your AGI, such as Puerto Rico, American Samoa, Guam, or the Northern Mariana Islands.

Once your MAGI is calculated, the government uses that number and your filing status to determine how much your premium will be. If you are even a single dollar over the limit, you could be forced to pay double for your Medicare premium. That’s why knowing how to reduce your taxable income is a great way to avoid the IRMAA Medicare surcharge.

Avoiding the IRMAA Medicare surcharge should be the first thought in every new Medicare enrollee’s mind. The first option is to file an appeal. Form SSA-44 allows for eight circumstances to justify an appeal including marriage, divorce or annulment, death of a spouse, loss of income-producing property, loss of pension income, or an employer settlement payment. But the most important reason to appeal for retirees is a work stoppage or work reduction.

As previously mentioned, reducing your taxable income is another great way to fight an IRMAA Medicare surcharge. One strategy is to convert traditional IRA and 401k monies to a Roth IRA before the age of 73. Essentially, you’re paying tax now on the Roth funds so you don’t have to pay later, and anything you withdraw will not be considered taxable. Listen to this episode for more on MAGI limits and reducing your taxable income to decrease Medicare costs!

• Avoid Overpaying for Medicare In 2021 and Beyond, #31

www.MorrisseyWealthManagement.com/contact

The second-largest bank collapse in US history occurred on March 10th, 2023 at Silicon Valley Bank. Two days later, Signature Bank experienced the third-largest collapse. In the wake of these financial shockwaves, people are concerned about the impact of these events on their retirement funds. On this episode, I’m breaking down how banks default, what happened with SVB and Signature Bank, and how you can protect your money from failing banks.

• Digging into the recent banking debacle [2:16]
• Understanding bank defaults [6:03]
• Protecting yourself from failing banks [8:33]
• The impact of bank defaults on retirement funds [11:19]

If you’ve had access to the news at any point in the last few weeks, you’ve probably seen that California-based Silicon Valley Bank (SVB) and New York City-based Signature bank experienced the second and third-largest banking collapses in U.S. history, respectively. SVB predominantly served the tech companies and venture capital funds that Silicon Valley is known for. That niche led to $140 billion in unusual growth between Q1 of 2020 and Q1 of 2022. 

As you may already know, the money banks safeguard doesn’t lie dormant. Financial institutions use the funds to make investments, like the U.S. savings bonds SVB had their money in. Due to the recent historic and meteoric rise in interest rates, the value of savings bonds has dropped well below their initial value. As a result, SVB’s investors began demanding their money. All while the struggling tech companies SVB services were in desperate need of more funding, causing the bank to sell more of these treasuries at a loss. The perfect storm created enough concern for the bank’s stability that companies pulled their money out left and right. SVB collapsed within 48 hours because it could not meet the estimated $42 billion demands of its patrons.

The collapse of a bank is not something you see every day. In fact, zero banks collapsed in 2021 and 2022, and only four collapsed between 2019 and 2020. Even though banking defaults are unlikely, the small chance has many people wondering how to keep their money safe. Especially their retirement funds. It’s estimated that 94% of SVB depositors were over the $250,000 per person per bank FDIC limit. Many of the bank's clients were large companies that used the institution for payroll. If the Federal Reserve hadn’t allowed that limit to be exceeded as of March 13th, we would be looking at a banking catastrophe.

The best way to protect yourself from failing banks is to know the $250,000 FDIC limit. That means spouses are jointly insured for up to $500,000 of deposited funds. If you have more than that, you should double-check your bank’s limit and switch if they can’t accommodate your financial situation. The long-term impact of these events on retirement funds should be minimal. However, the short-term impact is still being felt as volatile markets ride a rollercoaster in the aftermath. Listen to this episode for more on the recent banking defaults and how you can keep your money safe!

www.MorrisseyWealthManagement.com/contact

Do you need a redo on your Social Security? If you started collecting your benefits too early or spent the money too quickly: fear not! Your retirement isn’t ruined. On this episode, I’m answering a listener question and discussing three ways you can have a do-over with your Social Security benefits.

• Can you get a Social Security do-over?[1:34]
• The power of delayed benefits [3:01]
• How to get a lump sum Social Security payout [5:07]

Choosing when to start collecting Social Security benefits can be tough. Not every answer is right for every retiree. In general, I recommend that single people with a reasonable benefit or the highest-earning spouse in a relationship delay their benefits until age 70. This is because, between full retirement age and age 70, you’re earning an extra 8% credit for every year that you wait to start collecting. But what happens if you don’t wait? What if you’re like one of our listeners who started collecting benefits at 62, but now they have a job offer and are considering returning to work? Thankfully, there are three ways you can get a redo with your Social Security.

One way to rewind the clock on Social Security is to pay it all back. Social Security allows you to start over by paying back everything within 12 months of collecting your initial benefits. If your spouse is collecting a spousal benefit off of you, or if you have minor children who receive a benefit, you will have to repay that as well. If you elected to have Medicare Part B or D coverage, those premiums would need to be paid directly because they typically are deducted from your Social Security check. 

Usually, people don’t wait until they turn 70 to start collecting Social Security benefits because they are afraid they won’t live until then. The good news is studies show retirees that make it to their full retirement age have a 95% chance of making it to age 70. The other good news is the little-known lump sum option that Social Security recipients have at their disposal. By waiting up to six months after your full retirement age, you can receive a lump sum payment of up to 6 months of benefits. Knowing that you could collect that lump sum at any time if needed can act as a mental safety net while you wait to reach age 70. Listen to this episode for more on getting a do-over with Social Security!

www.MorrisseyWealthManagement.com/contact

Healthy finances are only one side of retirement planning. Healthy living also needs to be a priority for every retiree. On this episode, I sit down with Nancy Schwartz of Envision Healthy Retirement to discuss how to live a healthy lifestyle in retirement, get the most out of a post-career world, and create a lasting legacy.

• How Nancy got involved with retirement health and the importance of good sleep [1:17]
• Redefining purpose in retirement [7:41]
• Steps to take leading up to retirement [15:15]
• How Nancy’s programs help others transition into healthy retirement [19:24]

Moving from a full-time career to healthy retirement is a huge shift. Not just in our schedule but in our identity. You’ve likely spent decades developing your values and strengths inside of a career. The good news is that everything you've worked so hard for comes with you in retirement. Nancy says a healthy retirement is about refocusing all of your knowledge and skill into something bigger than yourself. That could look like becoming a mentor, leaning into a philanthropic role, or even board work. It doesn’t matter who you are. Retirement can be about rediscovering joy and the passion to give back and support others.

For those approaching retirement, the idea of doing any more work after crossing the finish line of a long and productive career may seem ludicrous. If it’s not a sandy beach or golf course, you probably don’t want to be there. That’s normal. But in my experience, most retirees are out of that phase within 12 months. Human beings need purpose! And retirement is the perfect opportunity to redefine yours. Nancy talks about leaning into excitement and curiosity to discover what that might look like for you personally. After all, everyone is different. No two retirements will look alike.

When you spend thirty to forty years working in a high-stress, high-demand corporate job, you may discover that your health has taken a hit. This is exactly where Nancy found herself when she was quickly approaching retirement. It also became apparent to her that most retirement courses focused on the tactical and strategic side of things. They left out important lifestyle aspects that impact our longevity and aging process. Retirement planning isn’t just about finances, although that is a major part of it. Equally important is our health and how we take care of ourselves to maximize the years we have left.

This is why Nancy's retirement planning programs have a huge emphasis on health and lifestyle. Her 12-week course is a proprietary science-based program focused around personal growth. One key area of that course is time. Just as professionals need to use time blocking to stay organized, retirees can structure their time to ensure the engagement of mind, body, and soul. She also helps retirees plan for the non-financial financial aspects of retirement planning like wills, trusts, and healthcare proxies. Nancy’s holistic approach to retirement is refreshing, and I hope you all check out the soon-to-be-released online course through her website. 

• Envision Healthy Retirement 

www.MorrisseyWealthManagement.com/contact

Over the last year, I’ve heard a lot of buzz about using alternative investments to boost portfolios. However, most people don’t know you need to be an accredited investor to take advantage of these opportunities. On this episode, I’m breaking down alternative investments, how to become an accredited investor, and my personal thoughts on investing outside normal investment accounts.

• What is an alternative investment? [0:54]
• How to qualify as an accredited investor [5:48]
• My thoughts on alternative investments [7:33]

The world of investing is vast. There are tons of things you can put your money into and hope for a quality return. Typically, people invest in what is known as registered investments. These include stocks, bonds, mutual funds, ETFs, and stock options. There are requirements that companies have to go through to register an investment so that investors can perform their own due diligence. Registered investments tend to lack the element of surprise because they have been around for a while, and there is a good deal of information on them.

However, certain non-registered investments are considered alternative investments and may offer greater diversification and returns than traditional investment options. Alternative investments are broken into five main categories: hedge funds, private capital, natural resources, real estate, and infrastructure. Because these investments are much riskier than traditional investments, the government requires you to be an accredited investor before pouring your money into them.

Why limit who can make alternative investments? Authorities want to make sure that the people buying them are financially stable and experienced. They want to make sure you are informed about the risk involved in these ventures. And if there were to be a loss, they want to ensure it won't be catastrophic. The truth is a complete loss of your money in a private placement is very possible. If you're buying high-quality stocks, mutual funds, or ETFs, you're never going to wake up one day and find out that it has gone to zero. But if you invest in a private placement, there's a strong likelihood that could happen, and your investment could be completely worthless.

However, if high risk and high reward entices your investment dollars, you need to follow these requirements to become an accredited investor. According to Rule 501 of Regulation D issued by the SEC, a person must have an annual income exceeding $200,000 or $300,000 jointly for the last two years to become an accredited investor. They also need the expectation of earning the same or higher income in the current year. Additionally, you can be considered an accredited investor if you have a net worth exceeding $1 million, excluding your primary residence. Listen to this episode for more on becoming an accredited investor!

www.MorrisseyWealthManagement.com/contact

Listeners of the show know I love utilizing Roth accounts for retirement savings when it makes sense for the given situation. But one listener is concerned that the government will decide to start taxing Roth distributions after years of building up their Roth 401k. On this episode, I’ll give you my take on the taxability of Roth accounts as well as helpful retirement savings information for those who use them.

• Will Roth accounts be taxed? [1:29]
• Exploring the taxability of matching Roth 401k contributions [5:33]
• How the Secure Act 2.0 changed the catch-up contribution for Roth accounts [6:52]
• Final thoughts [10:29]

Studies show a roughly 30% increase in companies offering the Roth 401k as an option for employees to save for retirement. Many people take advantage of Roth accounts for their obvious benefits. Mainly the fact that Roth accounts are not pre-tax accounts. Meaning you pay taxes on any money you put into a Roth account upfront, that money grows tax-deferred while it sits, and then you can withdraw the money tax-free. It’s a great way to save for retirement if you don’t want to worry about taxes on the back end. But this sweet setup has one listener wondering if Congress could decide to pass laws requiring Roth account distributions to be taxed?

The short answer is yes. The U.S. government could pass any law it wants. There’s also a precedent for it, considering Social Security was not taxable until Congress voted to change it in the 80s. However, while a similar change to Roth accounts is possible, I do not believe it’s likely. Traditional retirement accounts are tax-deferred, so the government has to wait until the money is distributed to get their tax revenue. Considering where the national debt is at, it feels unwise to attack an option that gets the U.S. Treasury its money upfront.

Another reason I think it’s unlikely that the government will choose to tax Roth accounts on the back end is all of the positive changes made towards them in the recently passed Secure Act 2.0. One positive step for Roth 401ks is that you can now receive the vested amount of your 401k match for the Roth account into the Roth account. Previously, employer match contributions had to be placed into a traditional 401k even if the initial contribution was put into a Roth. Those looking to take advantage of putting matching contributions into a Roth 401k should remember that Roth accounts are not pre-tax accounts. So any contributions, including matching ones, will need the tax paid upfront. 

Additionally, the Secure Act 2.0 made a significant change for catch-up contributions, which allow people over 50 to add up to $7,500 to their standard 401k contribution of $22,500. Starting in 2024, if you are an employee that earns over $145,000, you will not be able to make the catch-up contribution on a pre-tax 401k basis. However, catch-up contributions can still be made to a Roth 401k with the taxes paid upfront. For more on the taxability of Roth accounts, listen to this episode!

• 9 Ways The Secure Act 2.0 Can Impact Your Retirement, #133

www.MorrisseyWealthManagement.com/contact