Retire With Ryan

If you’re a small business owner and are potentially in the market for a new vehicle, this episode is for you! Join me as I discuss potential vehicle write-off strategies that you can only take advantage of in 2022, the logistics of writing off a vehicle for small business use, and other ways vehicles can keep your tax dollars in your pocket.

• Can I write off the purchase of a vehicle as a small business owner? [1:23]
• The logistics of writing off vehicles for your small business [3:39]
• Challenges to taking advantage of Section 179 and other vehicle write-off strategies [8:34]

As a small business owner, you can write off business expenses such as standard supplies and various operational costs. You also have the ability to write off the purchase of equipment under what is known as Section 179 Depreciation. Cars, trucks, and SUVs all fall under Section 179 and 100 percent of the cost can be written off over the course of five years. However, vehicles with a gross vehicle weight rating (GVWR) of over 6000 pounds qualify for “bonus depreciation” and can be written off over a shorter period of time.

The interesting part about this is that there are a number of mainstream SUVs with a GVWR of over 6000 pounds. Meaning, if you are a small business owner and are already looking to purchase an SUV, Section 179 is your new best friend. You should absolutely consult the link below before making your purchase because it could save you tens of thousands of dollars come the 2022 tax season.

So how do you write off the entire cost of a vehicle on your small business taxes? The simple answer is that 100 percent of the vehicle’s use must go towards the business. That can include any activities associated with running the business. However, plenty of small business owners have vehicles that are used for both business and personal use. Thankfully, there is still a tax write-off available in this scenario. 

In order to determine how much of the vehicle’s costs can be written off, you would need to calculate how much of the vehicle’s usage is going towards the business. For example, if the vehicle is used for business 70 percent of the time, you can write off 70 percent of the total cost. This can be a great strategy if you are trying to keep yourself out of a higher tax bracket after a successful year for your business. Listen to this episode for more insight on writing off vehicle purchases as a small business owner!

• Section 179 Deduction Vehicle List 2021-2022 
• Is An Electric Car Tax Credit Worth It?, #63 

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In 2015, Congress passed the Budget Reconciliation Act, which eliminated a few common loopholes used to get retirement-age couples additional spousal benefits. However, if you’re between the ages of 68 and 70, some of these strategies may still apply! On this episode, I’ll break down these strategies and help you take advantage of the free money available to you.

• Am I eligible for spousal benefits? [2:44]
• Applying for spousal benefits [5:46] 
• Is a spousal benefit strategy right for you? [7:26]
• Additional social security benefit strategies [9:53]
• How to switch from spousal to retirement benefits [11:46]

The Budget Reconciliation Act of 2015 ensured that anyone born after January 2nd, 1954 could no longer delay a social security retirement benefit, in lieu of collecting a spousal benefit as a result of a partner collecting their full retirement benefits. Thankfully, if you were born before that date, are younger than 70, and have not begun collecting social security benefits, you're still eligible to take advantage of this retirement strategy.

Delaying Social Security benefits until the age of 70 (if possible) is one of my top retirement strategies. The Social Security Administration rewards those who wait with roughly 132% more benefits than those who retire right at 67. One of the things that can make that wait easier is both spouses having an income. If one spouse receives their Social Security retirement benefits, the other can apply for the spousal benefit. They receive exactly half of the retired spouses' benefit until they receive their full retirement benefits at age 70.

What about divorced couples? If you were married for at least ten years, ex-spouses can still receive a spousal benefit. You only have to know that your former partner is receiving retirement benefits. However, not everyone is on good terms with their ex. As long as you have been divorced for at least two years, you can apply for the spousal benefit whether they are collecting their retirement benefits or not.

Applying for the spousal benefit is as easy as applying for regular Social Security. The best way to do it is to file a restricted application through the SSA website listed below. The only potentially tricky part is signifying that the application is restricted. This is done by answering “Yes” to whether or not you would like to delay retirement benefits if you are also eligible for spousal benefits. If you filed for retirement benefits in the last twelve months and want to change to spousal benefits, it's not too late! You would need to withdraw your application, repay the benefits already received, and refile the restricted application. Listen to this episode for more spousal benefit loopholes!

• The United States Social Security Administration

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In light of the recent stock market decline, many people are wondering what they should do (if anything) to survive the bear market. On this episode, I’m going to give you five tips to help weather the financial storm in your portfolio. Get ready to explore the history of bear markets and time-tested strategies used to come out on top during market declines. 

• What is a bear market? [1:18] 
• The importance of knowing your asset allocation [3:30] 
• Why you should have a diversified portfolio [5:50]
• Don’t time the market [7:35]
• Why statements are unhelpful right now [9:46]
• Should I stop investing? [10:37]
• The impact of having a financial advisor [11:49]

If you’ve listened to or seen any financial talk show in the last few months, you’ve probably heard the term “bear market”. A bear market is when a non-cash asset class (stocks, bonds, real estate, or commodities) has a 20% decline or more in value. The time frame for this devaluation isn’t set and could happen over a short or extended period of time. The reality is bear markets happen more often than we’d like. We are currently in the 7th bear market since 1980 according to the S&P 500, with the most recent being in 2020 due to the pandemic. The length of time it takes the market to recover is truly a case-by-case basis. The COVID bear market of 2020 only took five months to bounce back, while the 2007 housing market crash correction took over four years. Check out this chart for a history of the past eleven bear markets!

The future is impossible to predict. All we have is past data to give us ideas for possible market outcomes. Yet, every time we turn on something like CNBC or FOX Business, we have so-called financial experts telling us to SELL because the house is burning down. If we can acknowledge that the media exists solely to sell ads, then we have to confront the fact that they have a vested interest in their viewers being sucked into the negativity to sell air time. Analysts can say the market is collapsing until they are blue in the face, but they have absolutely no idea what’s going to happen. What we DO know is that people who jump ship and miss the market’s best days will have significantly compromised returns going forward. 

There are those out there who try to “time the market”. This means selling off underperforming stocks with the expectation that they will be able to hop back in right before the value goes up again. The likelihood of getting that timing right isn’t unheard of, but it is highly unlikely. Sentiment changes fast, and before you know it, you’ve missed a major market return that would have been yours if you had just stayed invested. Listen to this episode for more bear market tips!

• Sample Asset Allocation Performance
• J.P. Morgan “Out of the Market” Study

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The usual focus of this podcast is the financial side of retirement. Equally important is knowing what retirement will actually be like. On this episode, I sit down with retirement coach and podcaster Wendy Green to discuss the logistics of retired life, retiree time management, and finding your purpose outside the workplace.

• Getting to know Wendy Green [1:31] 
• Retirement surprises and making the most of your third act [3:23]
• Finding purpose beyond the early retirement phase and leaving behind the legacy you want [8:50]
• The importance of mindset and goal-setting in retirement [14:50]

Most people are counting down the days until they walk out of their workplace for the last time and enter retirement. But few consider this very important question: What are you going to do? How are you going to meaningfully fill your days after devoting 30-plus years to a career? Wendy gives most people a six-month honeymoon period before the golf bags and aimless days get old and 18 months to two years before retirees get their feet under them again. But with a little planning, it doesn’t have to take that long to acclimate.

Wendy suggests identifying and cultivating the roles that serve you while leaving behind the ones that no longer do. Going from strictly planned days to no plans at all can be a difficult transition to make. That’s why Wendy helps her clients put together a schedule that fits the retired lifestyle they want to have. Retirement is the time to pursue passions that were put on the shelf to prioritize family or a career. Take a class. Learn a skill. Go on that trip to Europe you’ve always dreamed of. Fill your days with the things that matter most to you.

When we think about the focus of retired life, we often identify travel and time with family as top priorities. And they are! But Wendy notes that this is more of an early retirement view. Once retirees get a few months or even years under their belt, they often yearn for more, and life starts to become about purpose. They ask bigger questions like why am I here and what SHOULD I be doing with the hopefully 20 to 30 years I have left? 

Volunteering can be incredibly positive for people looking for renewed purpose in retirement. It’s important to find things that will bring you fulfillment and leave behind the kind of legacy you desire. Wendy has witnessed clients find purpose in everything from working with organizations tackling food insecurity and homelessness to puppeteering and working with children. Age is just a number when it comes to making an impact. Get out there and discover your next passion. Listen to this episode for more of Wendy’s insights on retired life!

• Visit Wendy’s website 
• Listen to the Hey, Boomer! Podcast on Spotify and Apple Podcasts
• Follow the Hey, Boomer! Podcast on Instagram 

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This week, I’m continuing my discussion about the probate process with Judge Edward C. Burt Jr. (aka Ned). We’ll dive into what happens if someone dies without a will, the specifics of the full probate process, establishing the authenticity of wills, and Ned’s final tips for making probate as simple as possible.

• What happens if I die without a will? [3:36]
• Diving deeper into the probate process [6:23]
• How do I file a will? [9:57]
• Determining the authenticity of multiple wills [12:42]
• Ned’s final tips for simplifying the probate process [14:30]

If you die without a will, it is known as dying intestate. This means the probate court will have to decide how your assets should be divided up. The process of doing so can be burdensome and expensive, which is why having a last will and testament is highly recommended. Assuming there is a will, the average probate process can take six to nine months. A will should be filed within 30 days of the deceased’s passing. Once a notice has been published in the newspaper, anyone has 150 days to file a claim against the estate, and fiduciaries have 60 days to respond to any claim. One of the final steps is filing an estate tax return within six months of the initial passing, but Ned suggests taking care of this as soon as possible because there are no extensions allowed and penalties for filing late.

While probate can be a lengthy process, there is a lot you can do while it’s still ongoing. If the claims process has concluded and no claims have been filed against the estate, executors are able to request a distribution from the court. You can also sell real estate during the probate process. Most wills give executors that right without probate court approval. Ned recommends including this in your will as a huge probate time saver. If the person who passes away is not the sole owner of any real estate and has less than $40,000 in assets, they are eligible for a streamlined probate process. All it takes is a few forms filed through the probate court, which Ned believes most people can do without professional help. 

Many people believe their last will and testament should be filed with the probate court upon creation, but this is a common misconception. Original copies of the Will are filed when a person passes away. Lawyers used to hold onto the original copy of a will, but that is rarely the case now because if they misplace it they would be liable for malpractice. If you lose an original will, a conformed copy can be filed with the probate court and may need its witnesses to corroborate the authenticity of the document. 

In situations where multiple wills are filed for the same person, determining the authenticity of the deceased’s final wishes can be tricky. Testimony is taken from both the witnesses who signed the will and the attorney who facilitated the creation of it to try and sort out the discrepancy. Interested parties can submit any evidence necessary, including professional testimony from experts, to try and prove things like diminished capacity in cases where a secondary will is contested. Listen to this episode for more information on the probate process!

• Simplifying the Probate Process with Probate Judge Edward C. Burt Jr. (Part 1), #101 

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Is Probate a difficult and expensive process? Is there any way to avoid it altogether? If you’re diving into estate planning and have questions about Probate, this episode is for you! I’m joined by special guest Judge Edward C. Burt Jr. (aka Ned) who has served as a Probate Judge for the last 10 years. We’ll discuss common misconceptions about Probate and strategies to make it as simple as possible.

• Getting to know Ned and his Probate background [1:06]
• Can I avoid Probate? [3:40]
• Should I have a will? [7:17]
• The logistics of sending your estate through Probate [9:39]

Most people have zero idea what Probate court is or how to navigate the process because it’s usually an extremely sad circumstance that brings families to the court. Probate court is often viewed as the place where families go to settle a loved one’s estate when they pass away as well as any outstanding debts. However, there are many other matters handled by the Probate court like adoptions, name changes, conservatorships, and issues of guardianship. And while many people try to believe Probate court can be avoided, that is rarely the case.

Couples often have established through a deed that the ownership of jointly owned property will transfer to the surviving spouse in the event of the other’s death. This is known as the rights of survivorship. One of the biggest misunderstandings about Probate is that people assume just because a joint asset like real estate is in survivorship does not mean that it doesn’t have to be Probated. There may be inchoate taxes due to the state for the spouse that passes away. Though inchoate taxes are unlikely, the deed itself needs to be Probated to receive a certificate of no tax due which is required to sell the property down the road. Not doing so could hold up the closing process or cause the sale to fail entirely.

Having a professionally prepared last will and testament is the number one way to prepare you for the Probate process. A “simple will” should suffice for young married couples, but as you get older or if there are significant assets to manage, a more complex legal document may be required. While a will doesn’t help you avoid Probate, it does provide the instructions for the distribution of assets during the administration of Probate making the process go smoothly. For more information on the Probate process, listen to this episode and tune in next week for Part 2!

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What is a target date retirement fund? If you are invested in a 401k, you are likely invested in a target date retirement fund as well. On this episode, I’ll dive into the four things you need to know about target date funds, including what they are and how they can help you save for retirement. 

• What is a target date fund and why am I invested in it? [1:12]
• Comparing target date funds [4:03]
• How do target date funds work and should I invest in them? [6:55]
• The pitfalls of target date funds [9:22]

In 2006, the Pension Protection Act was signed into law with the hope that it would bolster retirement plan design and the number of people saving for it. This required 401k providers to adopt automatic enrollment features and have default investment funds other than a money market account. Thus, target date funds became the new default and many people became invested in them without realizing it. This is also true for the employees of companies who change 401k providers. Most people are unaware of what their default investment fund is if they don’t specifically look into it.

However, it’s easy to spot target date funds in your portfolio. These mutual funds are easily identifiable because they have a year in the name, such as the Vanguard 2035 Fund. The year corresponds to the year you expect to retire, often when you turn 65. These funds use a preset mix of stocks, bonds, and cash so that investors don’t have to put much thought into who they are investing in. The companies that put together target date funds try to build the best portfolio for someone at their expected retirement age.

By design, target date funds start out as an aggressive investment that gets more conservative the closer you get to retirement. This benefits investors who don’t want to keep a close eye on their portfolio as they get ready to begin their third act. Upon reaching retirement age, the fund will remain mostly static, with no more than 50% invested in stocks. When deciding which target date fund to invest in, the first thing you should determine is your asset allocation. This is the percentage you are invested in high risk/high reward investments like stocks, real estate, and commodities versus safer, low-yield investments like bonds and cash. 

Once you determine your desired allocation, it’s time to pick a target date fund! The key here is research. Look into either the fund you are currently invested in or the other options available to you to see which one is closest to your ideal asset allocation. Additionally, you should rebalance your allocations to make sure you aren’t taking a loss or leaving money on the table. Listen to this episode for more information on target date funds!

• The 5 Step Portfolio Process, #17
• Vanguard Target Retirement 2035 Fund (VTTHX)
• Fidelity Freedom 2035 Fund (FFTHX)
• American Funds 2035 Target Date Retirement Fund (AAFTX)
• BlackRock LifePath Index 2035 Fund (LIJAX)

www.MorrisseyWealthManagement.com/contact

Do you own disability insurance? If you’ve been thinking about it and need more information, this episode is for you! Join me as I sit down with disability insurance expert Tim Kukieza of Ash Brokerage. We discuss the key questions everyone should be asking about disability coverage and what you need to know to financially protect yourself and your loved ones from a disability event.

• Getting to know Tim Kukieza [1:13]
• What is disability insurance? [1:46] 
• How much coverage do you need? [4:27]
• Breaking down different disability insurance policy types [6:43] 
• The benefits and logistics of owning an individual plan [13:35]
• Social security disability benefits versus an income protection plan [22:07]

Have you ever considered purchasing disability insurance? If you decided not to, it might be because you think the odds of ever needing it are too low to be worth the investment. Tim believes that has a lot to do with the phraseology of disability insurance. People see the word disability and assume that this coverage won’t apply to them. However, Tim wants people to see these policies as income protection insurance based on sickness or an accident. People fall ill and get injured every single day. Especially with the advent of COVID, disability insurance is more necessary than ever. While it can’t protect you from your place of employment shutting down, it can protect your income if you get sick and need to quarantine.

You are also much more likely to suffer an accident or illness than a death event during your working years. Yet, people tend to prioritize life insurance over disability insurance. After all, death is guaranteed, right? The reality is that no one plans to get sick or hurt, but one in four 25-year-olds will experience at least a 90-day disability event before the age of 65. In fact, 90% of all income protection situations are related to illness. Purchasing disability insurance is a great way to ensure your finances don’t take a hit when you do.

When deciding how much coverage you need through a disability insurance policy, the first thing you need to be aware of is that your actual income is not your take-home pay. For instance, if you make $1000 per month, you’re probably only receiving about $700 of spendable income. Income protection through disability insurance typically pays out 60% of your regular income to keep you afloat during a disability event. That may not seem like a lot, but if you normally take home $700 from your paycheck, then $600 is not far off. That’s more like 85% of your take-home pay versus 60% of your gross. These benefits are also tax-free if you’re using after-tax dollars to pay for them.

Something else to consider is the difference between getting the individual policy described above and a group policy through your employer. The benefit of a group policy is that employers can pay up to 100% of the premium for their employees. That means these benefits could be free to you! The downside is that they will be taxed, so 60% of your gross income drops to somewhere around 45%. Listen to this episode for more information on disability insurance!

• Email Tim Kukieza
• Follow Tim Kukieza on LinkedIn 
• Ash Brokerage 

www.MorrisseyWealthManagement.com/contact

In light of the recent rise in interest rates, I thought it would be a good time to dive into the difference between owning individual bonds and owning bond mutual funds. On this episode, I’ll discuss the key differences between the two and what you should be looking for in your retirement portfolio.

• An overview of bonds [1:00]
• Taking a closer look at bond mutual funds [5:38]
•  What about owning individual bonds? [11:07]

One of the most important decisions an investor can make regarding their portfolio is their asset allocation. This is the amount of money you divide between growth investments such as stocks, real estate, and commodities versus safer investments like bonds and cash. Once you determine your allocation amount for bonds, it’s important to understand the types of bonds available for purchase. The first are corporate bonds, which pay the most in interest but carry the most risk. Next, there are municipal bonds, that also have varying degrees of risk, depending on the municipality you're buying them from. And lastly, there are treasury bonds backed by the U.S. government that most people consider the safest bonds you can buy. 

Regardless of which type of bonds you own, the greatest challenge with investing in bonds is rising interest rates. Bond prices and interest rates have what is known as an “inverse relationship”, where they always move in the opposite direction of each other. When interest rates go down, bond prices tend to go up. Likewise, as interest rates go up, bond prices are driven down. One way around inflation is through purchasing I bonds, but you can only purchase up to $10,000 worth per person, per year.

You have two choices when it comes to deciding how you want to own your bonds: you can own bond funds or purchase individual bonds. Owning bonds through a bond mutual fund allows you to put your money into a pool with other investors. A financial professional then invests that money according to what they think the best opportunities are. You can purchase funds that specifically invest in corporate, municipal, and treasury bonds or go with a fund that invests in a lucrative mix at the bond manager's discretion. 

An extremely important thing to look at when purchasing mutual bond funds is the internal cost of the fund known as the “expense ratio”. Funds with lower expense ratios tend to yield higher returns due to lower operating costs, so it’s important to keep track to have a successful retirement portfolio. Another aspect of bonds that you can control is the length of their duration/maturity. If you believe that interest rates will continue to rise, you have the option to purchase shorter duration bonds to prevent further declines in value. However, the trade-off is that you will lose out on the often higher interest rate of medium to long-term bonds. Listen to this episode for more information on individual bonds and bond mutual funds!

• Understanding Bonds and How to Use Them, #15 
• Increase Your Cash Return With I Bonds, #84 
• Bankrate 
• Morningstar 

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Health insurance is one of the top concerns for retirees today and there seems to be a lot of confusion about when to sign up for Medicare. If you’re still working at age 65 and debating signing up for Medicare, this episode is for you! Listen as I take an in-depth look at the five things you need to know before signing up for Medicare. 

• When you NEED to enroll in Medicare [1:07]
• Medicare and self-employment [2:26]
• What if I have COBRA insurance? [3:39]
• Should I enroll in Part A? [5:13]
• Exploring the Medicare enrollment timeframe [7:57]

If you have health insurance through your employer and you’re still working at the age of 65, you’re probably wondering how Medicare fits into the picture. You, or your spouse, can wait to enroll in Medicare until you are no longer working or you lose your health insurance, whichever comes first. This is generally true for large companies (20 plus employees) so double-check with your insurance provider or HR team to make sure you are enrolled in a group health plan as defined by the IRS. As long as the answer is yes, you can delay Medicare enrollment while you or your spouse have coverage through a qualified plan.

For those self-employed or who work for a company with less than 20 employees, you need to enroll in Medicare when you turn 65 to avoid the Part B late enrollment penalty. You definitely want to avoid this because once you are subject to it, you have to pay the Part B late enrollment penalty for life.

Another scenario to consider is turning 65 during a period of transition. What happens if you lose your job or retire halfway through the year? Many people have the option to use COBRA insurance which extends your existing company health insurance for up to 18 months while you figure out your next option. However, being on COBRA insurance does not exempt you from enrolling in Medicare. If you turn 65 while using COBRA insurance, you need to enroll or you will be subject to the Part B late enrollment penalty.

Additionally, a question I get often is whether or not a client should enroll in Medicare Part A. As a reminder, Part A is free to those who’ve worked for at least 10 years and helps cover the costs of a hospital stay. Part B has a monthly premium and helps cover the costs of preventative care. A common misconception is that because Part A is free, you should enroll in it as soon as you turn 65 so you have coverage for a potential hospital stay. The problem with enrolling in Part A is that if you are currently covered by a health savings account (HSA), you and your employer can no longer contribute to it and you have to take out any contribution you’ve made in the previous six months. It’s better to enroll in Part B first and wait to enroll in Part A until you no longer need an HSA. Listen to this episode for more information on when to enroll in Medicare!

• How Does Medicare Enrollment Impact HSA Contributions, #91 

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