Retire With Ryan

If you’ve attended one of my retirement readiness workshops, you’ve probably heard me say that every working person needs an emergency fund containing three to six months of income. But what about retirement? Should someone still keep an emergency fund even if they receive a steady retirement income? Listen to this episode to hear me go over the four things you NEED to know about having an emergency fund in retirement.    You will want to hear this episode if you are interested in...

• Do you need an emergency fund when you’re retired? [0:55]
• How much money should you have in your emergency fund during retirement? [3:07]
• Where should you keep your emergency fund? [5:29] 
• Where NOT to keep an emergency fund [8:58]

  Find the right balance

Because most retirees have guaranteed income through Social Security, pensions, and other sources, the typical recommendation to have 3-6 months of living expenses in an emergency fund can be unnecessary. How much you keep in that fund depends on how much retirement income you receive and your expenses. It’s always a good idea to follow a budget and be aware of these numbers. If your income is greater than your budgeted expenses, you may not need as much money in your emergency fund. However, if your income closely matches your expenses, I’d recommend having at least three months of income or more saved in the fund, depending on where your money is invested. If the majority of your money is invested in pre-tax retirement accounts like traditional IRAs and 401ks, I would recommend saving at least three months of income for a rainy day. However, Roth accounts are post-tax, so if that’s where you keep your investments, you shouldn’t need to save as much. 

If you don’t have an emergency fund right now, that’s okay! It’s easy to set a little bit aside each time you take money out of your retirement accounts and slowly build up your fund. You can also take out a little more each time to create this cushion. The important thing is to make sure you keep track of how much you are withdrawing from your retirement accounts annually. You don’t want to accidentally put yourself in a higher tax bracket just to start an emergency fund. 

  Location. Location. Location.

Choosing where to keep your emergency fund is a matter of preference and interest rates. You want to make sure your fund is kept in a comfortable place, but also in a place where it’s going to earn the most interest. One option is a high-yield savings account. However, the term “high-yield” has lost some of its luster in recent years. Your best bet is to do online research to find which banks offer the most bang for your buck. 0.5% is typically the highest interest rate you’ll be able to find. That means if you have a $50,000 emergency fund in a high-yield account, you will earn $250 annually. While that amount won’t necessarily make anyone run out and get one of these accounts right away, if interest rates go back up to what they were even a few years ago (between 2 and 2.5 percent), it could make a big difference in the future. 

Another great location for an emergency fund is a Roth IRA account because the money is already taxed. It may even be beneficial to look at your Roth IRA as your emergency fund in the first place. One of the major benefits of this kind of account is that once the account has been open for five years and the account holder has reached the age of 59 and six months, you can withdraw the entire balance without a tax penalty. Equally important to where you keep your emergency fund is where you shouldn’t. Avoid places that cost you penalties to withdraw funds or accounts that earn little to no interest like traditional IRAs and 401ks. For more information on where you should or shouldn’t keep an emergency fund in retirement, listen to this episode!

  Resources Mentioned

• Bankrate.com 

  Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact

Have you recently received a letter notifying you of an exorbitant increase in your property value that will lead to much higher property taxes? Do you know your options? I get it: Everyone’s taxes increase over time. Dealing with inflation is a universal experience. My goal for this episode is to help you identify and prevent gratuitous increases in your property value. I'm going to show you the essential steps you can take to determine if an appeal is necessary, the tools you need to win, and the exemptions you may not be taking advantage of. 

 

You will want to hear this episode if you are interested in...

• Knowing the rules for property tax revaluation [1:39]
• How to ensure your property records are correct [2:19]
• Why property value research is the essential next step [3:40]
• Why you may not need an official appeal [5:20] 
• Walking through the appeals process [6:12]
• Additional exemptions for your final tax bill [8:20]

  Do your homework

Death and taxes may be a guaranteed part of life, but unfair property tax rates driven up by inaccurate property values don’t have to be. The key to fighting a major hike in your next tax bill is doing your homework. First, make sure that your property records are accurate. Mistakes with your square footage, number of rooms, and number of bathrooms can and do happen! Find this information by searching for your property card on your municipality's website or by simply typing “property card” and the name of your city into a search engine like Google. If you find any discrepancies, correct them by contacting the office of your City Assessor. 

If your property records are correct, the best way to show your property revaluation is too high is by researching surrounding property values. If your neighbor's property value is much lower for a similar size, condition, and build date then you may be gearing up for an official appeal. If not, research other similar homes in your area to build your case. The burden is on you to prove that your new property value is inaccurate so any relevant information helps.

  Know your options

If you are looking at a massive increase in your tax bill due to a new property tax revaluation, it may be worthwhile to reach out to a professional. Lawyers and even real estate agents can help you build a successful appeal against your municipality's decision. However, you must decide if your increase warrants the time and money it would take to enlist their help. A yearly increase of $100 compared to $3000 may be worth fighting on your own or leaving alone altogether. The choice is up to you.

Even if you lose your appeal, there are still options you should consider. Statewide tax breaks and exemptions could be your best option for reducing your next property tax bill. Connecticut offers a credit to residents over the age of 65 or those receiving Social Security disability payments. The catch is that it is an income-based credit. Single individuals who make more than $37,600 annually and married couples that make more than $45,800 each year do not qualify. Veterans can also receive additional reductions if they meet specific criteria. Listen to this episode for more information on exemptions and your options for appealing a property tax revaluation!

Resources Mentioned

• Connecticut Online Database (Vision Appraisal)
• State of CT Guide to Benefits
• Q&A Booklet (PDF)

  Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact

 

Working while collecting Social Security has become a popular choice for those approaching retirement, but is it the right choice? If you’ve been thinking about receiving Social Security benefits early, this is your episode! There are seven things you need to know before making this decision. I’m going to walk you through each of them so you can get all the facts and set yourself up for retirement success!

  You will want to hear this episode if you are interested in...

• Social Security recap [1:24] 
• Is there a limit to how much Social Security you can receive by working and collecting early? [2:24]
• Practical examples of Social Security withholding [4:07] How does all this work? 
• What income counts towards social security withholding? [7:48] 
• The special rule you HAVE to know [9:15] 
• Should you report income changes to Social Security? [10:26]
• Are withheld benefits gone forever? [11:13]

  Know your limits

Ideally, everyone should wait until their full retirement age before collecting social security benefits. If possible, I recommend waiting until age 70 to collect the highest amount owed to you. But life happens! Sometimes it makes more sense to collect early than to wait, depending on your circumstance. If that’s the case, you need to know how your benefits are limited/withheld when you decide to start collecting early while still working and earning additional income. Let’s take a look:

• Limit 1: Between 62 and the year you reach full retirement
• 2021 Earning Limit: $18,960
• 2022 Earning Limit: $19.560
• Amount Withheld: $1 of every $2 over the earning limit (50% penalty)
• Limit 2: Within the year you reach full retirement
• 2021 Earning Limit: $50,520
• 2022 Earning Limit: $51,960
• Amount Withheld: $1 of every $3 over the earning limit (33.33% penalty)

  Make it count

A question I often get regarding collecting Social Security benefits early is “What income counts towards withholding?” The short answer is: only earned income. Things like investment income, pension income, and other forms of passive income will not be penalized. If you are self-employed, only your net income counts as earned income. If you contribute to a 401k or a retirement plan, you don’t have to worry about paying taxes on that money, but anything that reduces your net pay will count towards Social Security withholding.

What about changes in income? Should I report that to the Social Security Administration (SSA)? Surprisingly, this question is often a follow-up to the first one. The answer is a resounding YES. Failing to report income or changes in income to the SSA can result in a stoppage of Social Security benefits until the issue is resolved, or worse, a requirement to pay back benefits received under false pretenses. Bottom line: be honest and plan well so that you don’t find yourself in a difficult situation.

Resources Mentioned

• Collect Social Security Now or Wait? Ep #4 (Podcast Episode)
• Cost-of-Living Adjustment (COLA) Information
• Retirement Earnings Test Calculator
• How Work Affects Your Benefits (PDF) 

 

Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact

Are you receiving the maximum financial benefit from your charitable donations? Are you giving your hard-earned money to the IRS when you could be giving it to charities you’re passionate about? The answer to either question could be burning a hole in your wallet. That’s why it’s important to familiarize yourself with donor-advised funds (DAFs)! Join me as I give an overview of this generosity-focused investment account to help you manage your wealth while making a difference.

  You will want to hear this episode if you are interested in...

• Charitable giving stats you should be aware of [1:19]
• What is a donor advised fund? [2:31]
• How do donor advised funds work? [6:45]
• Making a donor advised fund work for you [9:39] 

 

Understanding donor advised funds

Typically, donating to charity is a one-to-one interaction where the donor needs to know which charity they are giving to and the exact amount at the time of the gift. While that is certainly one way to be generous, it may not be the best way. Using a donor-advised fund could be a game-changer for your wealth management. Donating to this type of investment account allows you to designate cash or securities for charitable use at a later date while receiving an immediate tax benefit. Here are the top three donor-advised fund providers:

 

• Fidelity Charitable Fund
• Minimum fund donation: $5,000
• Minimum charitable contribution: $50
• Additional contributions: N/A
• Charles Schwab Charitable Fund
• Minimum fund donation: $5,000
• Minimum charitable contribution: $50
• Additional contributions: $500
• Vanguard Charitable Fund
• Minimum fund donation: $25,000
• Minimum charitable contribution: $500
• Additional contributions: $5,000

 

Make your donations work for you

The 2021 tax year is a great opportunity to start using a donor-advised fund for your charitable contributions. Take advantage of the ability to deduct 100% of your adjusted gross income (AGI) in cash donations before that percentage drops to 60% in 2022. Another benefit of DAFs is the ability to deduct up to 30% of your AGI from donating publicly traded stock, real estate, limited partnership interests, private C-Corp stock and S-Corp stock, and other privately held assets. 

 

When managed correctly, donor-advised funds will offset your tax costs while ensuring that money goes to your favorite 501-C3 charitable causes. It can also be a generosity-building activity for the whole family. Sitting down to decide which causes to donate to can become a yearly tradition that makes the world a better place, even after you’re gone. A donor-advised fund may not be the right solution for everyone, but it could help you leave behind a beautiful legacy while taking advantage of tax breaks right now. 

 

Resources Mentioned 

• Best Charities for 2022 (WalletHub)
• Is a Donor-Advised Fund Right for You? (Morningstar) 
• Charity Navigator

  Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact

 

Year End Tax Savings Opportunities for Dentists and Small Business Owners, with Dr Mark Costes, Part 2, #72

This week we are featuring part two of my conversation on the “Dentalpreneur Podcast” with Dr. Mark Costes. In our conversation, we finished discussing the 7 year end tax strategies for dentists. While this conversation is tailored to the dental industry, many other high-income earners can learn helpful tips that apply to their situation too. Have pen and paper ready, you don’t want to miss a minute of this informative episode! 

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You will want to hear this episode if you are interested in...

• Tax savings for end of year planning [2:00]
• Maximizing your 401k and IRA options [4:00]
• Tax credits for an electric vehicle [7:00] 
• Protecting your investments in the long term [9:00] 
• Common mistakes people make with investing [11:30]
• Understanding a cash balance pension plan [16:00] 

Tax credits can help

Did you know that you can get a substantial tax credit from the federal government for purchasing an electric vehicle? It’s true! For many high-income earners like dentists, securing a tax credit from the federal government can be a huge benefit when it comes to the end-of-the-year tax bill. 

Under the current rules, when you buy a new electric vehicle, you can claim up to $7,500 in credit against the federal income taxes you owe in the year in which you buy the car. In other words, it reduces your tax liability. If you’re eligible for a refund, you’ll get whatever the amount of your credit on top of that.

Tune into this episode as I expand on tax credits, electric vehicles, and so much more! 

Common mistakes made 

Let’s face it, one of the best ways to learn is by avoiding the mistakes that others have made. Over the years I’ve noticed and documented the most common mistakes that people make when planning for retirement. By far, the most common mistake that people make is procrastinating. When it comes to investing, time is one of the most important factors - by procrastinating you are robbing yourself of a central element that you can’t get back! To learn more about avoiding mistakes like procrastination and making the right choices when it comes to your retirement, make sure to listen to this episode! 

Resources Mentioned

• The Millionaire Next Door

Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact

Every year we have an opportunity to evaluate our current financial status and make changes that can benefit us when tax time rolls around. It’s that time of year again, so I thought I’d bring you some resources to help you make the needed changes that will benefit you.

The format in which I’m doing that is through a recent opportunity I had to be interviewed, on the “Dentalpreneur Podcast” with Dr. Mark Costes. He was asking me about the topic so I provided 7 year end tax strategies for dentists… but the principles apply on a personal or small business level as well. Let’s dive in! 

You will want to hear this episode if you are interested in...

• Potential new taxes due to Capital Gains increases [2:06]
• Cryptocurrencies: Will they be taxed or regulated any time soon? [4:25]
• Ways to reduce your income because of rising tax rates [5:22]
• How Health Savings Accounts (HSAs) can help you pay less tax [6:45]
• What happens to a HSA if you were to die? [10:56]
• Understanding the term “deductible” when it comes to a HSA [12:12]
• What is a 529 plan and how can it be used? [13:53]

Are long-term capital gains going up?

There has been some talk of Congress raising long-term capital gains rates — to equal the highest Federal tax bracket of 35%. The good news at this date is that it doesn’t look like that’s going to happen. The maximum capital gains rate is probably going to land around 25%, and that will only be for those already in the highest Federal tax bracket. For those below that highest rate they will experience a 15% capital gains rate. Those in the bottom two tax brackets will experience 0% capital gains tax.

Should the rates go up — and we’re waiting to see if the current legislation goes into effect — it’s already too late to sell gaining stocks to avoid the higher rate. The law would be retroactive, going into effect as of September 13th, 2021. 

If tax brackets change, how can you mitigate your tax liability?

It’s likely that the existing U.S. tax brackets are changing. In summary, the tax rates will be going up and the income levels that fall into each bracket are going down. That means you may be paying a higher tax rate come next year. What can you do to decrease your income legally?

Health savings accounts are a great idea because the money you contribute to them can be deducted. You can contribute as much as $9200 for a married couple over 55, for example. The effect of that is a significant income reduction. And many people don’t realize HSAs are what is considered a “triple tax free” account. What does that mean?

1. You receive a tax deduction when you contribute to an HSA
2. The money you contribute grows tax-deferred
3. It is tax-free when you use it for health-related costs

To take full advantage of this account, you should invest those funds while they are in the account. Listen to find out how you can use these accounts to their maximum potential.

Resources Mentioned

• How to make the most out of your health savings account (episode)
• The Top Providers For HSA Accounts (episode)
• What Happens to My HSA Account When I Die (episode)

Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

 

What can you do to bring in some additional income into your household? What would it look like to start a new opportunity that works around your schedule? If you are looking for a way to get ahead financially or if you are just looking for a new career, this is the episode for you! For this episode, I’ve brought a special guest, Maria Kertez to help explore the topic of direct sales. After years of hearing about direct sales, Maria decided to take a closer look and was surprised by the results - she is here to share her story and explain how savvy investors like you can get involved. If you are new to the term, “Direct sales” you likely know it by another name. 

Direct sales, “Network marketing,” or “Multi-level marketing” often refers to a variety of business forms premised on person-to-person selling in locations other than a retail establishment, such as social media platforms or the home of the salesperson or prospective customer.

Tune into this episode to hear more about Maria and her story, you don’t want to miss it! 

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You will want to hear this episode if you are interested in...

• Learning about network marketing from Maria Kertez [1:00]
• Dispelling myths about network marketing - is it a pyramid scheme? [4:00] 
• How to make sure you aren’t getting scammed [7:15]
• Work around your schedule [9:00]
• What it costs to get started [14:00]
• Why your mindset really matters [17:00]
• Closing thoughts [20:00]

Direct sales or a pyramid scheme?

Anything resembling a pyramid scheme freaks people out and rightfully so - pyramid schemes are illegal and unethical. Too often, direct sales and “Pyramid schemes” get lumped into the same conversation but there are important distinctions between the two.

Fraudulent pyramid schemes — like Ponzi schemes — are illegal but often try to disguise themselves as multi-level marketing (MLM) programs or direct sales. Traditional MLM programs are legal because there is a real product that is being sold through the channel.

Is it the right time for you to jump into a direct sales endeavor? What should you look for or be wary of? To hear more about protecting yourself as you move forward with direct sales, make sure to listen to this episode featuring Maria’s valuable advice! 

Mindset matters!

While it might sound cliche, the truth is, your mindset really matters! What is the biggest difference between someone who succeeds and someone who fails? More often than not it comes down to mindset. You have the power to write your own story and chart your own path, don’t let negative thoughts and narratives keep you from moving forward! Join me on this episode as Maria shares her story and the important role that mindset played in her growth. 

Resources Mentioned

• www.neora.com
• https://mariakertesz.neora.com/
• https://www.instagram.com/_maria_kertesz_/

Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact

How should your Health Savings Account factor into your plans for retirement? Who should you list as a beneficiary for your HSA? Is it really worthwhile to use an HSA to protect your money? If you are worried about how to factor your HSA into your retirement plan, you’ve come to the right place! On this episode, you’ll hear me answer some important questions about Health Savings Accounts from a listener like you. If you’d like to ask a question, make sure to leave a comment and let me know - I’d love to hear from you! 

You will want to hear this episode if you are interested in...

• Options for your HSA when you die [1:00]
• Who you can name as a beneficiary for your HSA [3:00] 
• Using a Trust to pass on your HSA [5:20]
• Naming your estate your beneficiary [7:00]
• Closing thoughts [8:30]

Why I love HSA’s

If you’ve heard me speak on this topic before, you know that I love HSA’s. The main reason I love HSA’s is for their triple tax savings properties. 

When you contribute money to your HSA, the funds are not taxed. This is similar to a traditional 401(k) or IRA. Additionally, HSA account holders can also grow the funds in their account through interest and, potentially, through investing - unlike other growth options, the increase in funds is not subject to taxes. Finally, funds spent from an HSA are not taxed as long as they are spent on qualified medical expenses. In other words, account holders can’t use their HSA funds to pay for a vacation or buy a new big-screen TV, but they can fund doctor's visits, dental and vision care, etc.

Join me on this episode as I expand on the benefits of using an HSA, who you should list as a beneficiary, and so much more. You don’t want to miss a minute of this informative episode!

Is it a good idea to continue to stay in your home that you’ve paid off in retirement or does it make sense to sell and rent a smaller residence? Can renting end up saving you money in the long run? Join me on this episode as we dive into the world of homeownership and rental properties. We will discuss some critical aspects of this conversion and link to some helpful resources. Make sure you have pen and paper ready, you don’t want to miss a minute of this episode! 

 

You will want to hear this episode if you are interested in...

• Renting or owning your home in retirement [1:15]
• Protecting yourself as a renter [4:00] 
• Why owning your home isn’t always the best investment [7:00]
• How the tax code changes can impact your housing costs [12:00]
• Closing thoughts [14:00]

Does it make sense to sell? 

If you have paid any attention to home prices in 2021, you know that the arrow is still pointing up and to the right. While various parts of the country have taken some time to catch up, the fact is, home values are up by large margins all over the country. Should you sell your home and net a profit like my friend down in Florida did when he sold his home for over $300,000 more than what he bought it for last year? Here are a few factors that savvy investors like you should keep in mind when considering selling your home as you approach retirement. 

• Identify your goals. Are you planning to stay in the area long-term or do you want to be able to move around with ease? 
• Who do you want to rely upon for repairs and maintenance? While it may be nice to not have to deal with those costs, you are also at the mercy of your landlord. 
• Less stability when it comes to renting can give many people pause. Leases usually only last for a year or so.

According to The New York Times, close to 80 percent of people 65 years old and up own their own homes. On the other hand, one of the fastest-growing groups of renters is those in their retirement years. What path is the right one for you and your family? To hear me expand on these factors and so much more when it comes to housing in retirement, make sure to listen to this episode. 

Resources mentioned 

• https://www.nytimes.com/2020/03/12/business/retirement-rent-buy-home.html
• https://www.kiplinger.com/real-estate/mortgages/602858/should-you-rent-or-buy-your-next-home-in-retirement

 

Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact

Elimination Of The Backdoor Roth IRA And Other Possible Tax Changes #67

Does all the talk in D.C. have you nervous about changes to the US Tax Code? What will the new President pass with his allies in Congress? Should you expect to pay more taxes in the coming years? How will this change impact your plans for retirement? Don’t worry, you’ve come to the right place to get the information you need! On this episode, we will cover some of the proposed changes to the tax code that is being discussed in Congress. Have pen and paper handy, you don’t want to miss a minute of this informative episode! 

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You will want to hear this episode if you are interested in...

• Retirement planning for new Connecticut teachers [0:50]
• How the new tax plan will impact higher-income families and individuals [5:00] 
• Small business changes in the tax code [8:00]
• What has changed for IRAs and ROTH IRAs [10:00] 
• Reduction in the estate tax exemption [12:00] 
• What the child tax credit is how it helps [15:00] 
• Closing thoughts [17:0a0]

Changes coming

Let’s face it, most people don’t like change. The financial sector by and large doesn’t like change either - change is unpredictable and risky. Nevertheless, changes are coming to the United States Tax Code and it will likely be here before the end of the year. Should you fear the changes? Could the changes actually help? Last month, House Democrats proposed a slew of changes to retirement accounts for the wealthy on Monday, part of a restructuring of the tax code tied to a $3.5 trillion budget plan. Here is a brief list highlighting some of the changes they are considering in Washington. 

• Limits on High Income Earner Contributions to IRAs
• Increase in Required Minimum Distributions with Large Account & High-Income Earners
• Roth Conversion Limitations for High-Income earners
• End of “Back-Door Roth” Conversions

If all these changes have you panicking, take a breath or two. First, you need to know that none of these changes are law yet so you have some time. Don’t let fear freeze you in your tracks, start planning! If you are looking for a good place to start, take a look around. There are a ton of resources here at your fingertips! 

Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact