Retire With Ryan

The One Big Beautiful Bill Act affects charitable contributions for retirees and individuals considering their tax strategies.

I'm walking you through three major changes: the restoration of the charitable cash deduction for non-itemizers, new limitations on how much can be deducted for larger contributions, and a cap on itemized deductions for high earners.

Whether you give to charity every year, are planning a large gift, or just want to maximize your tax benefits, I'm sharing practical tips about when and how to make your contributions in light of these updates.

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

• [00:00] More about increased standard deductions due to the SALT cap.
• [06:09] New charitable donation tax deduction limits starting in 2026.
• [10:20] The One Big Beautiful Bill Act limits itemized deductions in the highest tax bracket.
• [11:29] Front-load large charitable contributions this year for better tax deductions before a cap starts in 2026.

How the One Big Beautiful Bill Act is Changing Charitable Giving and Deductions

There are three pivotal ways the new One Big Beautiful Bill Act (OBBBA) is altering charitable contributions. Whether you're a casual donor or serious philanthropist, these changes will affect your strategy starting in the next tax year. Here's what you need to know:

1. Restoration: Above-the-Line Charitable Deductions for Non-Itemizers

For years, most taxpayers lost the ability to deduct their charitable contributions unless they itemized deductions—a rare scenario since the 2017 tax act doubled the standard deduction.

Previously, a temporary provision under the CARES Act allowed a small above-the-line charitable deduction for non-itemizers. However, that expired in 2021.

Thanks to section 70424 of the OBBBA, this above-the-line deduction is back, and it's here to stay—starting in 2026. The new rule permits single filers to deduct up to $1,000 and joint filers up to $2,000 in cash contributions, regardless of whether they itemize.

There are, however, clear conditions:

• Only cash gifts qualify: No clothing drop-offs or appreciated securities—just cash, checks, or debit card donations count.
• Certain charities excluded: Gifts to supporting organizations ("509A3" charities) or donor-advised funds won't count toward this deduction.

2. New Limitations for Itemized Deductions and Carryforwards

Historically, taxpayers who itemize could deduct up to 60% of their adjusted gross income (AGI) in cash gifts to public charities, and up to 30% or 20% for gifts of securities or for donations to private charities.

The OBBBA introduces a new wrinkle: starting in 2026, there's an additional cap—regardless of what percentage of your AGI you donate, your deduction will be reduced by half a percent (0.5%) of your AGI. Here's how it works:

• Apply the usual AGI percentage limits (60%, 50%, 30%, or 20%) per current IRS rules.
• Subtract half a percent of your AGI from your allowable deduction.

For example, if your AGI is $60,000 and you donate $50,000 in cash, ordinary limits allow a $36,000 deduction. With the new rule, you must subtract $300 (0.5% of $60,000), leaving $35,700 as your deductible amount for the year.

If your donation exceeds the limit, you can still carry forward the extra for five years, but the carry-forward will also be subject to the new cap in future years.

3. Caps on Itemized Deductions for Top Earners

For those at the pinnacle of the income scale, in the highest (soon to be 37%) tax bracket, the OBBBA imposes an extra limitation. Starting in 2026, you'll see a 2% reduction in the tax benefit of your itemized deductions.

That means a $10,000 gift, which may have saved you $3,700 in taxes under the old rules, might now only save $3,500. If you're planning a substantial charitable contribution and expect to be in the top tax bracket, aim to make your gift in 2025 to maximize tax savings before the cap bites.

Whether you itemize or not, these new caps and restored deductions mean you probably need to take a second look at your charitable plans.

Smart timing—waiting until 2026 for the non-itemizer deduction, and acting before then to maximize deductions for itemizers—can make a significant difference for your taxes and your favorite causes.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

The brand-new "Trump account" is a tax-deferred savings option for American children created by the One Big Beautiful Bill Act.

I break down who's eligible for up to $1,000 in free government contributions, how these accounts work, and how they stack up against other popular savings vehicles like 529 plans, IRAs, custodial accounts, and regular brokerage accounts.

If you're a parent or grandparent thinking about the best way to jumpstart your child's financial future, you'll want to tune in for my honest comparison of the Trump account's pros, cons, and quirks, plus tips on making the most of these new opportunities.

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

• [00:00] Trump accounts for children, including eligibility and benefits, compared to other savings options.
• [04:52] Invest in low-cost US index funds for a child's account.
• [08:41] 529 accounts offer conservative investment options and potential benefits for education savings.
• [11:59] Consider a regular brokerage account instead of a Trump account, especially if it's not for college.

What Parents Need to Know About the New Trump Account

Saving for your child's future can be complicated, and with the introduction of the new "Trump account" via the One Big Beautiful Bill Act, parents have another option to consider.

In a recent episode of the Retire with Ryan podcast, host Ryan Morrissey breaks down the ins and outs of this novel account.

What is the Trump Account?

The Trump account, established by the One Big Beautiful Bill Act, is a new type of tax-deferred investment account specifically designed for American children.

It bears similarities to familiar accounts like IRAs and 529s in that all investments inside the Trump account grow tax-deferred, letting parents and children potentially maximize compounding returns.

Eligible children, those born between January 1st, 2025, and December 31st, 2028, are entitled to a $1,000 government contribution just for opening the account, regardless of parental income. That's free money that, when invested early, could grow substantially over time.

How Does the Trump Account Work?

Parents (or guardians) can contribute up to $5,000 per child per year (indexed for inflation starting 2027) until the child turns 18, and employers can contribute up to $2,500 annually, also not counted as taxable income for the child.

The account must be opened at investment firms, which are required to limit investment options to low-cost index funds (with expense ratios under 0.10%), such as S&P 500, total stock market, or similar broad-market funds.

Once the child turns 18, they gain full access to all the assets in the account. Investments in the account benefit from tax-deferred growth, and withdrawals are taxed at favorable capital gains rates (15% or 20%) rather than ordinary income rates.

How Do Trump Accounts Compare to Other Savings Options?

• Traditional & Roth IRAs:

IRAs, including Roth IRAs, require earned income to contribute, posing a barrier for most children. While Roth IRAs trump Trump accounts for long-term tax benefits (withdrawals are tax-free), children generally can't access this unless they have income from work. Also, traditional IRAs add tax deductions but are taxed as ordinary income on withdrawal, compared to the Trump account's capital gains treatment.

• 529 College Savings Plans:

529s are tailored for college expenses, offering tax-free withdrawals for qualified education costs and sometimes state tax deductions. Plus, investment options can become more conservative as your child nears college age, something currently unavailable in Trump accounts, which are stock-only (at least for now). If used for non-educational purposes, 529s face ordinary income tax and penalties, whereas Trump accounts are taxed at capital gains rates for any withdrawal purpose.

• Brokerage & Custodial Accounts (UGMA/UTMA):

A plain taxable brokerage in the parents' name offers flexibility, letting parents control access and investment options, paying minimal taxes on dividends each year. Custodial accounts shift tax liability to the child but must legally transfer to the child between ages 18 and 25, depending on state laws. Notably, assets in a child's name weigh more heavily against them on financial aid forms than if held by the parent.

Who Should Consider Opening a Trump Account?

If your child will be born between 2025 and 2028, opening a Trump account is almost a no-brainer to snag the free $1,000. But for ongoing contributions, think about your goals:

1. Saving for college? Stick to a 529 plan for tax-free education withdrawals and more investment flexibility.
2. Want to help your child start life with a nest egg for any purpose? Trump accounts work, but remember your child gets full control at 18.
3. Prefer more flexibility or control over when and how your child accesses the funds? Explore regular or custodial brokerage accounts.

The Trump account is an interesting addition to the range of savings vehicles for children, especially thanks to the initial government contribution and low-cost investment options.

Still, its quirks, like the child's access at 18 and limited investment choices, mean it won't be a perfect fit for every family. Analyze your family's needs, long-term goals, and how much control you wish to maintain before making your move.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

The One Big Beautiful Bill Act, signed into law on July 4th, brings about several important tax changes. I'm discussing what these updates mean, especially for retirees, and sharing practical advice on how to take advantage of new deductions and avoid unexpected tax hits.

From permanent adjustments to tax brackets and an increased standard deduction, to special benefits for those aged 65 and older, I cover everything you need to know to optimize your retirement strategy.

Whether you're curious about Social Security taxation, itemized deductions in high-tax states, or planning smart Roth conversions, this episode is packed with insights to help you make informed financial decisions for your golden years.

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

• [00:00] An overview of the One Big Beautiful Bill Act (OBBBA).
• [06:13] Roth conversion tax implications.
• [07:29] Additional deductions for those over 65 increase total deductions.
• [11:35] TCJA and SALT deduction changes.
• [13:43] Strategies to lower taxable income for retirees.

Key Tax Changes Every Retiree Needs to Know About the One Big Beautiful Bill Act

One of the most impactful provisions of the OBBBA is making existing federal income tax brackets permanent. The 2017 TCJA tax brackets —10%, 12%, 22%, 24%, 32%, 35%, and 37% —had been set to expire after 2025, which would have led to higher rates.

The new act not only locks these rates in place but also indexes the brackets for inflation. While there are minor changes in the income thresholds at the lower brackets, the net result is stability for taxpayers, and retirees can now plan with confidence, knowing their marginal tax rates aren't set for an imminent hike.

Higher Standard Deductions

Standard deductions also see positive changes, rising to $15,750 for individuals and $31,500 for married couples filing jointly. Previously, these figures were $15,000 and $30,000, respectively.

With higher deductions, more retirees may find it beneficial to take the standard deduction rather than itemizing, saving time and potentially reducing taxable income.

Extra Deductions for Retirees 65+

Perhaps the most significant impact for retirees: From 2025 through 2028, filers aged 65 and up can claim an additional $6,000 deduction per person.

For couples where both spouses are over 65, that's a $12,000 boost, on top of the already existing extra deduction for seniors ($2,000 for individuals, $3,200 for couples).

So, if both spouses are over 65 and income is below the required threshold, the combined standard deduction could reach $46,700.

There is a catch, though: this extra deduction phases out as income rises, disappearing entirely for individuals making $175,000 or more and couples earning $225,000 or more in modified adjusted gross income (MAGI).

The deduction is reduced by 6% for every dollar over $75,000 (for individuals) or $150,000 (for couples). For example, if a couple's MAGI is $200,000, they'd lose $3,000 of the $6,000 deduction per spouse.

Timing IRA distributions or Roth conversions helps you stay under these thresholds and maximize deductions.

Social Security Taxation

Although there was political talk about ending Social Security taxation, the OBBBA preserves the old rules. How much of your Social Security benefit is taxable depends on your combined income, still calculated as adjusted gross income plus 50% of your Social Security benefit.

The deduction enhancements may help lower your taxable income, keeping more Social Security benefits untaxed, but there are no direct changes here. Being mindful of when and how you draw taxable income can keep more of your Social Security out of the IRS's reach.

Itemized Deductions and SALT Cap Changes

For high-tax state residents and those with larger itemized deductions, another headline is the increase in the state and local tax (SALT) deduction cap. Temporarily, from now through 2029, the cap rises from $10,000 to as much as $40,000 (with phase-outs for high earners, those over $500,000 in MAGI lose this benefit, and it disappears after $600,000).

This can provide significant relief for homeowners or retirees in states with high property or state income taxes. The mortgage interest deduction rules remain unchanged, and when combined with the higher SALT cap, could make itemizing more attractive for some.

The One Big Beautiful Bill Act creates opportunities and considerations for retirees. Take the time to review your financial plan, explore new deduction limits, and coordinate with tax and financial professionals. Thoughtful adjustment now can lead to years of improved after-tax retirement income.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

This week on the show, we're discussing the specifics of Required Minimum Distributions (RMDs) as we head into the second half of 2025.

Whether you're approaching your first year of RMDs or have been taking them for a while, I break down everything you need to know, from when you need to start taking distributions based on your birth year, to how RMDs are calculated, which accounts are affected, and the potential tax consequences for missing a withdrawal.

I'm also sharing eight practical strategies you can use to lower your future RMDs, including asset diversification, Roth conversions, tax-efficient income planning, optimizing Social Security timing, and even using charitable contributions to your advantage.

With real-world examples and actionable tips, this episode is packed with valuable insights for anyone looking to navigate their retirement withdrawals as tax-efficiently as possible.

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

• [02:48] Calculating your Required Minimum Distribution.
• [05:02] IRA distribution factors & penalties.
• [10:40] Retirement tax strategy tips.
• [13:35] IRA conversion tax planning.
• [15:37] Optimizing social security timing.
• [18:48] Tax-efficient investment account strategy.

Smart Strategies to Manage Required Minimum Distributions (RMDs)

New rules over the past few years have pushed back when retirees must start taking RMDs. As of today:

• If you were born in 1959 or earlier, your RMDs begin at age 73.
• If you were born in 1960 or later, the threshold moves to age 75.

RMDs apply to traditional IRAs, rollover IRAs, SEP IRAs, SIMPLE IRAs, and most employer-sponsored plans, including 401(k)s and 403(b)s. Importantly, Roth IRAs are not subject to these mandatory withdrawals during the owner's lifetime, providing an attractive planning opportunity.

How RMDs Are Calculated

Your annual RMD is determined by dividing the prior year's December 31 retirement account balance by a life expectancy factor from IRS tables.

Most people use the IRS Uniform Lifetime Table.

If your spouse is more than 10 years younger, you get a slightly lower withdrawal requirement by using the Joint Life Expectancy Table.

For example, if you are 73 with a $500,000 IRA, and the IRS factor is 26.5, your RMD would be $18,868 for that year. If you miss your RMD, penalties can be steep, 25% of the amount not withdrawn, though if corrected within two years, the penalty drops to 10%.

RMDs are generally taxed as ordinary income. If your IRA contains after-tax contributions, those aren't taxed again, but careful tracking is essential. The key is smart, proactive planning. RMDs increase your total taxable income, which can impact not just your IRS bill, but also Medicare premiums (thanks to the "IRMAA" surcharge) and eligibility for certain state tax breaks.

Eight Strategies to Lower RMD Impact

Here are several tactics to help retirees minimize RMDs' sting and keep more of their wealth working for them:

1. Diversify Account Types Early

Don't keep all retirement savings in pre-tax accounts. Consider a mix of pre-tax, Roth, and taxable brokerage accounts so you have flexibility in retirement to optimize withdrawals for tax purposes.

1. Build an Optimized Retirement Income Plan

Work with a financial advisor or CPA to design an intentional strategy for sourcing retirement income. With careful planning, you can potentially lower how much tax you'll owe and avoid unwelcome surprises.

1. Do Roth Conversions When Taxes Are Low

If you retire before collecting Social Security (and RMDs), you might have years of low taxable income, prime time to convert part of your traditional IRA to a Roth IRA at a low tax rate. Once in the Roth, future qualified withdrawals are tax-free.

1. Delay Social Security for Strategic Reasons

Delaying Social Security not only increases your monthly benefit but also gives you more low-income years for Roth conversions, thus reducing future RMDs.

1. Consider Working Longer

If you continue working past RMD age and participate in your employer's retirement plan, you may be able to delay RMDs from that plan until you retire (as long as you don't own more than 5% of the company).

1. Aggregate and Simplify Accounts

Roll over old 401(k) accounts into a single IRA if eligible. It's easier to track, calculate, and satisfy RMDs, reducing the risk of costly missteps.

1. Optimize Asset Location

Hold faster-growing investments (like stocks) in taxable accounts and slower-growing ones (like bonds) in IRAs. This helps slow the growth of your RMD-producing accounts, keeping future required withdrawals smaller.

1. Use Qualified Charitable Distributions (QCDs)

Once you're RMD-eligible, you can send up to $100,000 per year directly from your IRA to charity. It will count toward your RMD but won't be taxed, potentially a win-win for you and your favorite causes.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• Retirement topics - Required minimum distributions (RMDs) | Internal Revenue Service

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

With the recent passage of the Inflation Reduction Act, also known as the Big Beautiful Bill, significant changes are coming to both solar panel and electric vehicle tax credits.

I break down what these changes mean, how they can affect your savings, and what steps you might want to take before these credits disappear.

From figuring out if solar panels make sense for your home to understanding how electric vehicle credits work (and when they're expiring), this episode is packed with actionable insights and tips, especially for those planning for retirement or looking to cut down on monthly expenses.

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

• [01:31] Residential solar panels are popular for reducing electric bills, offering significant savings, especially for retirees.
• [05:23] Solar tax credits are expiring soon.
• [09:07] Solar investments offset electric costs and protect against future rate hikes, beneficial long term.
• [11:28] Costs and break-even of electric cars.
• [13:08] Act now if you want to take advantage of solar tax credits.

The Solar Panel Tax Credit is a Fading Opportunity

One of the biggest draws for homeowners considering solar panels has been the significant federal tax credit, currently set at 30% of the total installation cost. This credit has made solar an appealing investment for many, offering a direct dollar-for-dollar reduction in the taxes owed.

In high-cost electricity states like Connecticut, this can mean hundreds of dollars in monthly savings on your utility bill. However, the Big Beautiful Bill brings an unfortunate change: the solar tax credit is set to disappear at the end of this year.

That means if you've been thinking about going solar, now is the time to act. If you don't install solar panels before the deadline could add years to your payback period, undermining the investment's attractiveness and putting it out of reach for many.

Energy Savings of Battery Storage and EVs

While solar panels are great for energy savings, adding a battery storage system further enhances their benefits. A battery can store excess solar power for use during peak times or outages, which is particularly helpful for retirees planning to stay in their homes for decades and looking to insulate themselves from rising electricity rates.

Electric vehicles (EVs) also offer savings for households with high transportation costs. The federal EV tax credit, worth up to $7,500 on new cars and up to $4,000 for used EVs, has also been a strong motivator for those considering a switch from gas-powered vehicles.

The Big Beautiful Bill also changes the EV tax credit, which will disappear even sooner than the solar incentive. Although there are several important limitations: only vehicles assembled in North America qualify, and there's a cap on purchase price ($55,000 for sedans, $80,000 for SUVs).

Income limitations apply as well; single filers must earn less than $150,000 ($300,000 for married couples) to claim the new vehicle credit. The used EV credit comes with lower income caps ($75,000 for singles, $150,000 for couples) and is worth up to $4,000.

Should You Act Now?

Before making any big investment, think about the following:

• Timing: Both solar and EV credits will soon vanish. If you want the tax break, don't wait.
• Financial Health: The best return comes from paying cash, not financing or tapping retirement accounts.
• Long-term Plans: Solar and EV investments make the most sense if you plan to stay in your home and keep your vehicle for years to come.

Manufacturers may eventually lower prices as credits disappear, but there are no guarantees.

With energy incentives set to change dramatically, the window to maximize savings is closing fast. For homeowners and future retirees, the time to act is now, whether that means installing solar, purchasing an EV, or both.

Consult with a financial advisor to consider how these decisions fit into your overall retirement and financial readiness strategy.

The Treasury Department's official list of eligible vehicles shows that the cars, trucks, minivans, and SUVs listed below qualify for a full $7,500 tax credit if placed in service between January 1 and September 30 of 2025. In some cases, only certain trim levels or model years qualify. More vehicles may be added to or removed from this list as manufacturers continue to submit information on whether their vehicles are eligible.

• Acura ZDX EV (2024-2025 model years; MSRP $80,000 or below)
• Cadillac Lyriq (2024-2025 model years; MSRP $80,000 or below)
• Cadillac Optiq (2025 model year; MSRP $80,000 or below)
• Cadillac Vistiq (2026 model year; MSRP $80,000 or below)
• Chevrolet Blazer EV (2024-2026 model years; MSRP $80,000 or below)
• Chevrolet Equinox EV (2024-2026 model years; MSRP $80,000 or below)
• Chevrolet Silverado EV (2025-2026 model years; MSRP $80,000 or below)
• Chrysler Pacifica Hybrid PHEV (2024-2025 model years; MSRP $80,000 or below)
• Ford F-150 Lightning (2024-2025 model years for Flash trim, 2023-2025 model years for Lariat and XLT trims; MSRP $80,000 or below)
• Genesis Electrified GV70 (2026 model year; MSRP $80,000 or below)
• Honda Prologue (2024-2025 model years; MSRP $80,000 or below)
• Hyundai Ioniq 5 (2025 model year; MSRP $80,000 or below)
• Hyundai Ioniq 9 (2026 model year; MSRP $80,000 or below)
• Jeep Wagoneer S (2025 model year; MSRP $80,000 or below)
• Kia EV6 (2026 model year; MSRP $80,000 or below)
• Kia EV9 (2026 model year; MSRP $80,000 or below)
• Tesla Cybertruck (2025 model year for Dual Motor, Long Range, and Single Motor trims; MSRP $80,000 or below)
• Tesla Model 3 (2025 model year for Long Range AWD, Long Range RWD, and Performance trims; MSRP $55,000 or below)
• Tesla Model X (2025 model year for AWD trim; MSRP $80,000 or below)
• Tesla Model Y (2025-2026 model years for Long Range AWD and Long Range RWD trims; 2025 model year for Performance trims; MSRP $80,000 or below)

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

This week, I'm addressing a listener's question: Should you collect Social Security at age 62 and invest the money, or wait until your full retirement age, or even age 70, for a bigger benefit?

I break down the math and the risks, weighing the advantages of guaranteed annual increases and cost-of-living adjustments against the potential (and pitfalls) of stock market returns.

I also explain key rules, such as the earnings limit for early filers, tax implications, and who might benefit from collecting early.

Whether you're eager to take Social Security as soon as you can or are considering holding out for a larger payment, listen in for the practical insights you need to make a smart decision for your financial future.

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

• [03:27] Earnings limits on collecting your Social Security benefits.
• [05:29] Where to invest to potentially achieve more than 6% return.
• [07:37] Consider delaying Social Security benefits, but weigh the risk of investing against guaranteed returns.
• [12:39] Collect Social Security early to invest if you don't need it for living expenses and want to leave a larger inheritance.
• [13:42] Wait to collect Social Security until full retirement age or 70, especially if dependent on it for income or if you're the higher-earning spouse, to maximize benefits.

Social Security's Built-In Return for Waiting

First, it's essential to understand how Social Security rewards patience for those born in 1960 or later; claiming at 62 results in a significant reduction, down to just 70% of your full retirement benefit.

Each year you wait between 62 and your full retirement age (67 for most), your benefit grows by about 6% per year. From 67 to 70, that growth jumps to 8% per year.

This increase is essentially a "risk-free" return, as it's guaranteed by the government, not subject to market swings.

The Pitfalls of Early Claiming and Investing

It's not uncommon to hear the argument that you could claim benefits early, invest the money (usually in the stock market), and potentially earn more over time. But this approach is riskier than you might realize.

• Market Volatility: Historically, a diversified stock market fund (like a total market index fund) has surpassed 6% annual returns over long periods, but not always. Roughly 10% of five-year periods since 1926 have lost money. That means there's a real chance you'll underperform Social Security's consistent increase, or even lose principal.
• Taxes: Investment returns, especially dividends, are taxable, which further erodes your effective return. Social Security also may become partially taxable depending on your income, especially if you claim while still working.
• Earnings Limits: If you're working between 62 and your full retirement age, you face earnings limits. For example, in 2023, you can only earn $23,400 before your benefit is reduced, making early claiming unattractive for those who don't plan to retire immediately.

The Power of Cost-of-Living Adjustments (COLAs)

Over the last ten years, annual cost-of-living adjustments (COLAs) have averaged 2.6% per year. COLAs are applied to your current benefit, so the longer you wait and the higher your starting base, the more you benefit from these increases.

Over the decades, this compounding effect can create a significant gap in monthly income between early and later claimers.

That means, to truly keep up with waiting, you'd need not just to match the 6-8% annual increases but also beat COLAs, meaning your investments would need to return nearly 9% per year, consistently, and after taxes.

Who Might Consider Claiming Early?

While waiting typically yields the best results for most retirees, there are exceptions. Early claiming might make sense if:

• You have significant wealth and don't need Social Security to live (your goal is to leave a bequest for heirs).
• You have health issues and a below-average life expectancy.
• You're single and want to maximize your estate since Social Security benefits don't pass to non-spouses.

However, for the majority, especially married people or those relying on Social Security as a main income source, waiting yields more lifetime income and a more robust safety net for both spouses.

Timing your Social Security claim isn't about grabbing the first check you can; it's about weighing guaranteed growth against market risk, tax implications, earnings limits, and your own longevity and needs.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• State Street's Total Stock Market Index Fund

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

I'm exploring a common dilemma for anyone coming into a lump sum of money, whether from an inheritance, the sale of a business, or another windfall: Should you invest in a traditional brokerage account or opt for an annuity?

On this week's episode, I discuss the key differences between annuities and brokerage accounts, highlighting the five major pitfalls of annuities that are often overlooked.

You'll learn why transparency, flexibility, and tax efficiency make brokerage accounts a better fit for many investors, especially those seeking to beat inflation and maintain control of their funds.

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

• [06:12] Annuities have capped returns and may not keep up with inflation, making brokerage accounts a better investment for retirees.
• [07:59] Fixed annuities vs. inflation risks.
• [11:21] Brokerage accounts offer easy, penalty-free liquidity for investment withdrawal.
• [14:56] Brokerage accounts offer tax advantages, such as zero percent tax on long-term investments and flexibility to access funds at any age.
• [19:55] Traditional brokerage accounts offer transparency, ease of understanding, and no hidden fees, providing clear valuations and peace of mind.
• [20:54] Potential conflicts of interest associated with high commissions given to advisors who sell annuities.

Understanding the Five Key Advantages of Brokerage Accounts for Lump Sum Investors Inflation Protection

A primary concern for retirees is ensuring their income grows at least as fast as inflation. Fixed annuities, which guarantee a steady interest rate, sound appealing in their promise of stability, but these tend to pay rates (typically 4-6% as of now) that may barely keep pace with rising costs. If inflation spikes, the real value of your money could erode.

Contrast this with long-term investing via a brokerage account. If you were to invest in a broad index fund tracking, say, the S&P 500, you'd historically average about a 10% annual return since 1957.

Even accounting for average inflation (let's say 3%), you're left with a meaningful net gain. Over decades, this growth can make a significant difference, allowing your income and nest egg to grow, not just hold steady.

Easy Access to Your Money

Life is unpredictable. You might need to access your savings for a sudden expense, a home repair, a medical event, or a business opportunity. With annuities, most contracts enforce a "surrender period" during which you'll pay penalties (sometimes starting at 7% and declining over many years) for early withdrawals above a limited free amount (typically 10% per year). Paperwork and delays are another downside.

Brokerage accounts, on the other hand, offer quick and penalty-free access. Whether you need all or just part of your funds, they're typically available within a couple of business days. You'll pay taxes on any gains, sure, but you'll sidestep surrender charges and bureaucratic hurdles.

Potentially Lower Taxes With Brokerage Accounts

Tax treatment is often overlooked but can have a big impact on your bottom line. Annuitized payouts and withdrawals from annuities are taxed at ordinary income rates, with gains coming out first (LIFO: last in, first out).

That can mean higher taxes for many, especially if you're in a modest or high tax bracket. With a brokerage account, long-term investment gains are generally taxed at lower capital gains rates (15% for most, and sometimes 0% for those in the lower brackets).

Plus, if you inherit a brokerage account, most investments receive a "step up" in basis, the new tax cost becomes the value at the decedent's death, potentially eliminating decades of capital gains tax if sold immediately.

Simplicity and Transparency

Annuities come with layers of complexity, including various types (fixed, indexed, and variable), confusing rider add-ons, differing fees, and ever-changing product features. Even professionals can struggle to keep up!

Brokerage accounts, by contrast, are simple and transparent. You get a clear statement showing exactly what you own, its value, and the associated fees, which are commonly lower than those inside annuity products. No hidden surrender charges or high ongoing costs.

Avoiding Aggressive Sales Tactics and Conflicts of Interest

Annuities are lucrative for the agents who sell them, with commissions sometimes soaring to 7%. This can create an inherent conflict of interest, particularly for seniors who might feel pressured into buying.

Choosing a low-fee brokerage account, especially with the guidance of a fiduciary, fee-only financial advisor, can help you avoid these conflicts. You retain control, minimize costs, and benefit from unbiased advice.

Annuities do have a place for certain ultra-conservative investors who value guarantees above all else. However, for most people, especially those seeking growth, flexibility, and transparency, a brokerage account is often the safer and smarter long-term choice.

If you're unsure about your unique situation, consider consulting a fee-only advisor who will put your interests first and steer clear of high-commission sales pitches.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

From the truths about making large purchases in retirement to whether you really need to pay off your mortgage before you stop working, I'm sharing years of financial expertise to challenge a few retirement myths so you can make balanced, informed decisions. We're talking strategies for charitable giving, clearing up misconceptions about reverse mortgages, and explaining why inflation may be your biggest risk in retirement.

If you're looking for practical advice on enjoying your savings while still planning for the long run, or if you want to protect yourself from financial scams and fraud, this episode is full of actionable tips to build your financial confidence for the years ahead.

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

• [02:02] Leaving money to charity after death reduces estate value for taxes, but offers no immediate tax deduction.
• [04:17] Qualified charitable distributions and large donations can reduce taxable income, but are only deductible if you itemize.
• [08:11] Don't rush to pay low-interest mortgages; invest instead, as returns can potentially exceed mortgage interest rates.
• [13:03] Balance stocks with bonds and cash to manage risk and volatility.
• [10:10] Reverse mortgages can be a great idea in certain circumstances.

Navigating the Maze of Retirement Myths

Retirement often brings a sense of relief; finally, you get to enjoy the fruits of your labor! However, it's also a period rife with uncertainty, especially when so much advice and information clash or seem outdated. In this episode, I'm tackling six of the most persistent myths retirees face.

1. Myth: Leaving Money to Charity Is Best Done After Death

Many retirees assume that bequeathing assets to a charity upon passing is the most virtuous and tax-efficient way to give back. While this is always an option, leaving money to charity at death doesn't net you a tax deduction; it simply reduces the size of your taxable estate. For the vast majority, it's more impactful to consider gifting while alive.

There are several ways to make charitable giving work for you, including:

• Qualified Charitable Distributions (QCDs): Donate part or all of your required minimum distribution directly from your IRA, reducing your taxable income.
• Cash Donations: If you itemize deductions, you can deduct cash gifts, potentially even enough to tip you into itemizing territory if the gift is large.
• Gifting Appreciated Assets: Donating highly appreciated stocks or real estate can minimize capital gains and offer you an income stream.

2. Myth: Large Purchases Are Off-Limits in Retirement

Worried that buying a boat or funding a dream trip will doom your financial future? It's a myth that large expenditures are always ill-advised. With a solid withdrawal strategy, say, 5% of a $2 million portfolio, making a one-time, reasonable purchase might slightly reduce your yearly income, but if balanced against market growth and overall planning, it's rarely catastrophic.

Thoughtful, planned spending helps you enjoy retirement, so don't deprive yourself unnecessarily!

3. Myth: The Less You Spend, the Better

Many retirees become excessively frugal, reluctant to draw down the savings they worked so hard to accumulate. But can't take your money with you. While it's wise to have a budget and withdraw at a sustainable rate, being too conservative may rob you of life's joys, like travel, hobbies, or supporting family, while you're healthy enough to enjoy them. The key is balance: know your withdrawal rate and revisit your plan regularly.

4. Myth: You Must Pay Off Your Mortgage Before Retiring

It's comforting to be debt-free, but urgently paying off a low-interest mortgage could backfire. If your mortgage rate is 5% or lower and your investments are earning more, you could be better off keeping the mortgage and leaving your assets to grow. Plus, withdrawing large chunks from retirement accounts to pay down a mortgage could trigger higher taxes or Medicare premiums and leave you with less liquidity. Carrying a modest mortgage into retirement is not a financial failure; it may be a savvy move.

5. Myth: Reverse Mortgages Should Be Avoided

Reverse mortgages have a bad rap, often viewed as predatory or risky. While there were issues in the past, today's products are much more regulated. If you're 62 or older, a reverse mortgage can provide tax-free cash, letting you access home equity without moving. It's especially valuable if much of your net worth is tied up in your home, or unexpected expenses crop up. Investigate carefully, but don't dismiss this option out of hand.

6. Myth: A Market Crash Is the Greatest Retirement Risk

Market volatility grabs headlines, but inflation and the risk of outliving your money are bigger threats. The right asset allocation, mixing stocks for growth with bonds and cash for stability, is essential. Yet, don't forget about inflation: stocks have historically been the best hedge. Also, financial scams are a growing risk; safeguard your accounts with strong passwords and authentication.

By understanding the realities behind these common misconceptions, you can build a strategy that sustains not just your finances but your lifestyle and peace of mind.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• Charles Schwab
• Understanding Reverse Mortgages: Unlocking Home Equity for Retirement Income with Mitch Cooper, #242

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

Building on last week's discussion about why rolling over your old 401(k) into an IRA could be a smart move, this episode flips the script. It explores seven compelling reasons you might want to leave your 401(k) with your previous employer instead.

I break down factors like fees, company stock advantages, penalty-free withdrawals, legal protections, and unique investment options that could all influence your decision.

If you're approaching retirement or just planning your next career move, this episode is packed with insights to help you make the best choices for your financial future.

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

• [04:12] Leave company stock in 401k to use net unrealized depreciation, potentially saving on taxes via long-term capital gains.
• [08:55] Consider keeping company stock in an old 401(k) to avoid taxes and penalties if under 59.5 years.
• [10:01] IRA withdrawal exemptions and strategies.
• [16:01] Consider keeping your old 401 (k) for potential loan access, but check if your provider permits non-employee loans.
• [17:50] Deferring 401(k) distributions explained.

When to Leave Your Old 401(k) With Your Previous Employer

Changing jobs often means making quick decisions about retirement savings. While rolling over your old 401(k) into an IRA is a common choice, there are significant advantages to leaving it where it is. This week, I'm discussing the situations when maintaining your previous employer's retirement plan is advantageous.

1. Potential for Lower Fees

If you worked for a large organization, their 401(k) plan might offer exceptionally low administrative and investment fees, especially if they've chosen robust menus with index fund options.

While IRA costs have dropped due to strong competition among major financial institutions like Schwab, Fidelity, and Vanguard, some large employer plans still offer a lower cost.

Always compare fees before making a move; sometimes, your old 401(k) will be the most cost-effective option available.

2. Tax Benefits of Company Stock (Net Unrealized Appreciation)

Do you have significant company stock in your 401(k)? You could benefit from the unique tax break called Net Unrealized Appreciation (NUA).

This allows you to pay lower long-term capital gains rates on your stock's growth instead of higher ordinary income rates. However, to take advantage of NUA, you must carefully roll out your stock and be mindful of any 10% penalty if you're under 59½.

Know your stock's cost basis and consult with a tax professional to determine if waiting is best, especially if your cost basis is higher.

3. Penalty-Free Access Between Age 55 and 59½

Left your job between 55 and 59½? Here's a little-known benefit: you can tap your old 401(k) penalty-free before age 59½. If you roll the balance into an IRA, that door closes, unless you qualify for rare exceptions.

This rule can be crucial if you need those funds to bridge the gap to retirement, so consider leaving at least part of your balance in the plan until you turn 59½.

4. Enhanced Creditor Protection

Federal law (ERISA) offers 401(k) plans strong protection from creditors and judgments, even in bankruptcy. While rollover IRAs are also protected under federal and many state laws, the details can get complicated.

Certain states may limit IRA protections, so it's wise to investigate your state's rules. Segmenting rollover IRAs from contributory IRAs can also help simplify tracking and protection.

5. Access to Stable Value Funds

Some 401(k) plans offer stable value funds, a low-risk investment choice that often comes with a guaranteed minimum rate of return. While money market funds are currently paying more, that could change if interest rates drop.

In lower-rate environments, stable value funds could offer an edge and a safe harbor for your retirement assets.

6. Possible Loan Availability

Need to borrow against your retirement savings? Some plans allow you to take a loan from your 401(k), even after leaving the company. However, this isn't universal, since loan repayments are usually tied to payroll.

Check with your plan administrator to see if this benefit applies; if it does, it could be an important safety net.

7. Required Minimum Distribution (RMD) Deferral if Still Working

If you work past age 73, keeping your funds in a 401(k) with your current employer lets you defer required minimum distributions (RMDs). That's not the case with IRAs.

Consolidating old 401(k)s into your current plan can simplify RMD timing and let your funds grow tax-deferred a bit longer.

Make an Informed Move

Rolling over your 401(k) may seem automatic, but there are times when staying put is the better choice. Carefully assess fees, tax implications, creditor protections, and your unique needs.

Most importantly, consider working with a fiduciary, fee-only financial advisor who understands your entire financial picture.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• Charles Schwab
• Fidelity
• Vanguard

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

In today's episode, I'm diving into a topic that's top-of-mind for anyone who's switched jobs: what should you do with your old 401(k) plan? I discuss five key reasons why moving them into an IRA could simplify your financial life, from consolidating accounts for better control to gaining access to a broader range of investment options, reducing fees, optimizing Roth and after-tax funds, and making it easier to work with a financial advisor.

Whether you're planning your next career step or just want to make your retirement savings work harder for you, this episode is packed with practical advice to guide your decision. Stick around until the end, and don't forget to tune in next week when I cover situations where rolling over your 401(k) might not be the best choice!

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

• [00:00] Vested retirement funds offer four options: keep them in the plan, or withdraw and pay taxes
• [04:46] Rolling over a 401(k) to an IRA offers more control and access to your retirement funds, preventing forgotten accounts as you change jobs
• [06:41] Consolidate investments for simplicity and control; update records if keeping old retirement accounts
• [12:05] Convert Roth contributions to a Roth IRA to start the five-year period and ensure future gains grow tax-free, especially for after-tax funds in a 401(k) without in-plan Roth conversions
• [13:13] Rollovers to an IRA can facilitate Roth conversions and allow financial advisors to manage retirement accounts.

Consolidate Old 401ks for a Smoother Future

When you change jobs, it's important not to leave your old retirement accounts behind. For many Americans, the primary vehicle for saving for retirement is their employer-sponsored 401(k) plan. But what should you do with that 401(k) once you've moved on?

Rolling it into an Individual Retirement Account (IRA) may be the smart move, offering control, flexibility, potential cost savings, and tax advantages. Let's walk through five compelling reasons why a 401(k) rollover into an IRA might make sense for you.

1. Greater Control and Account Consolidation

One of the biggest headaches of changing jobs multiple times is having various retirement accounts scattered across different institutions. Not only is it difficult to keep track of these accounts, but there's the risk that you might forget about them entirely. By rolling old 401(k)s into a single IRA, you consolidate your investments, making it easier to manage and monitor your retirement savings.

With all your funds in one place, you'll have more control over your asset allocation and will be better positioned to implement a cohesive investment strategy. Additionally, consolidating accounts reduces the administrative burden of managing multiple logins and statements.

2. Expanded Investment Choices and Flexibility

Most employer-sponsored 401(k) plans offer a fairly limited menu of investment options, typically ranging from a dozen to twenty funds. These may or may not align with your preferred asset allocation strategy, and some plans are more limited than others.

By rolling over your 401(k) into an IRA at a major discount broker like Schwab, Fidelity, or Vanguard, you unlock a much broader universe of investment possibilities, mutual funds, exchange-traded funds (ETFs), stocks, bonds, CDs, and more.

This flexibility lets you fine-tune your portfolio, properly diversify, and better tailor your investments to your risk profile and retirement timeline.

3. Potential for Lower Investment Costs

401(k) plans, particularly those from smaller employers, often feature higher administrative and fund expenses, sometimes reaching 1% or more in annual fees. These extra costs chip away at your investment returns over time.

With an IRA, especially when investing in low-cost ETFs or mutual funds, you can often significantly reduce the expense ratios you pay. Over decades, even a modest reduction in annual fees can translate into thousands more in retirement savings due to the power of compounding.

4. Managing Roth and After-Tax Contributions

Many 401(k) plans now offer a designated Roth component as well as avenues for after-tax contributions. When you roll over your account, this is a valuable opportunity to ensure your Roth and after-tax money are treated with optimal tax efficiency. For example, rolling Roth 401(k) funds into a Roth IRA starts the five-year clock for tax-free withdrawals on earnings, which is critical for planning your retirement withdrawals.

Additionally, an IRA rollover can be structured to split after-tax contributions into a Roth IRA, giving those funds tax-free growth potential rather than the more limited advantages offered inside the 401(k).

5. Access to Professional Management

If you want professional help managing your retirement investments and financial planning, rolling your assets into an IRA is almost always a prerequisite. Advisors generally cannot manage assets held within a former employer's 401(k) platform, but with funds consolidated in an IRA at a major custodian, they can actively manage your investments, make ongoing adjustments, and assist with tax planning and distributions as you transition into retirement.

Assess Your Situation Before Moving

While rolling over your old 401(k) to an IRA offers considerable advantages, it's not always the perfect solution for everyone. Each situation is unique, and certain protections or features (such as early withdrawal options or creditor protections) may be stronger inside a 401(k) for some individuals.

Be sure to review your specific circumstances carefully, ideally, with a trusted financial advisor, before making any big moves. A well-considered rollover could make your road to retirement much smoother, giving you more control, lower costs, and better investment options along the way.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• Schwab
• Fidelity
• Vanguard

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan