RETIREMENT MADE EASY

Listener questions have been piling up and a Q&A is LONG overdue. So in this episode of the Retirement Made Easy podcast, I'll cover as many questions as I can. I'll cover everything from Medicare Part B to SEP IRAs, and the impact of inflation to collecting Social Security benefits. Don't miss this comprehensive episode!

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

• [3:54] Question #1: Does Biden's ESG veto impact your brokerage accounts?
• [7:17] Question #2: Why is my husband's Medicare Part B premium so high?
• [10:00] Question #3: Why can't I contribute to my Roth SEP IRA yet?
• [11:33] Question #4: Can you help us understand the impact of inflation?
• [16:07] Question #5: How should I invest my Roth IRA and 401k?
• [20:00] Question #6: Can you help manage a trust?
• [23:44] Question #7: What happens if you die before collecting social security?

Why is my husband's Medicare Part B premium so high?

The listener's husband turned 65 and applied for Medicare. They were shocked when his Medicare Part B premium was far higher than expected (and his Social Security benefit was reduced far more than they expected). She thought it would be $165 per month, which would cover 80% of his medical costs. Then he'd get a supplement to cover the rest. Why is his premium so high?

The Part B Medicare premium is income-based. The amount you're paying for the premium is based on your income two years prior. I bet if you go back and look at his earnings from two years ago, they were likely over the limit for the $165 premium. There's a premium table that dictates the premiums you're paying today. If you believe you're being overcharged, there's a special form you can submit to appeal the premium. It's linked in the resources below!

Can you help us understand the impact of inflation?

One of the biggest risks of retirement planning is the rising cost of living, i.e. inflation. Inflation heavily impacted people in 2022. Retired people especially felt it. How can we understand the real risks of inflation?

A 62-year-old non-smoking couple in the US has a joint life expectancy of 30 years. The wife is predicted to pass away at 92. If you're planning for a 30-year retirement, you have to factor in the rising costs of living. Inflation WILL impact your retirement.

But our brains find it hard to imagine things in the future. It seems less real. So instead of trying to guess what costs are 30 years in the future, look back 30 years. How were things in 1993? The cost of stamps, Big Macs, cars, and college tuition has risen significantly since 1993. Prices will continue to rise over time. So you need a retirement plan that accounts for rising living costs.

Can you help manage a trust?

A listener's husband passed away. When he died, all of their accounts went into a trust. The trust names his two daughters and son as co-trustees. They are now responsible for making financial decisions for their mom. However, the kids and their spouses seem to be struggling with the responsibility—The value of the trust was down 38% in 2022. What can she do?

Go see an attorney. With the kids being named as trustees, they get to call the shots. The trust should have designated a financial planner or institution to manage the trust after the husband's passing. The trust should also include guidelines of what the trust can be invested in, what income comes out of it for the widow, etc.

The couple should have been working as a team with a competent financial planner so that when the husband passed, the wife could turn to her financial planner. But because that isn't the case, I recommend speaking with an attorney. I'm sure the children are trying to do what's best, but they likely just aren't qualified to manage the fund.

What happens if you die before collecting social security?

I had a 45-minute conversation with a bright and friendly listener. He's a single guy worried about his social security. He's been paying into social security for 39 years. If he delays his benefit until he's 70 and dies, does social security pay out a measly death benefit? If he dies before collecting, where does all of that money go? Is it essentially gone?

Hypothetically speaking, yes, it's gone. There is no residual value there. This gentleman didn't believe this was fair. So what can you do if you're worried about passing away before claiming benefits?

He could always claim his benefit early and suspend it later if need be. You can always start your benefit—and within 12 months of starting it—can suspend or withdraw the application. Hoover, you will have to pay back what you received. What else can you do? Listen to the whole episode to learn more!

Resources & People Mentioned

• 9 Ways the SECURE Act 2.0 Will Impact Retirees, Ep #132
• 3 Steps to Retirement Planning
• Biden Vetoes First Bill
• Medicare Part B Premium Chart
• Medicare Part B Appeal Form

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

The Social Security Expansion Act is being introduced to congress, sponsored by Bernie Sanders, with the "goal" of increasing the solvency of the Social Security fund. Sadly, by 2035, Social Security benefits will have to be reduced by 25% if nothing is done. Senator Elizabeth Warren states that the Social Security trust fund would remain solvent until 2096 if these changes are put into place.

But a lot of the proposed changes in the bill are controversial, to say the least—including how they propose we increase payments into the fund. I'll cover four of the main goals of this bill in this episode of Retirement Made Easy and share my thoughts on each one. Don't miss it!

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

• [0:53] A big thank you to my listeners
• [1:49] Why retirement planning HAS to be customized
• [5:37] The Social Security Expansion Act
• [7:50] Goal #1: To increase the benefits for all recipients
• [9:23] Goal #2: Change the cost-of-living adjustment calculation
• [10:28] Goal #3: Making high-income earners pay more
• [12:41] Goal #4: Increasing the Net Investment Income Tax
• [13:50] My thoughts on the proposed bill

Goal #1: To increase the benefits for all recipients

The bill starts with a fact sheet, which includes these sad facts:

• One in seven seniors relies on Social Security for more than 90% of their income
• Half of Americans 55 and older have nothing saved for retirement
• The average Social Security benefit is $1,688 per month

Many seniors are struggling, which is why they're trying to overhaul social security. That's why their first proposal is to increase the benefit for all Social Security recipients by $200 per month (which would apply to everyone, even those on Social Security who aren't seniors).

Goal #2: Change the cost-of-living adjustment calculation

The bill also proposes changing how the cost-of-living adjustment is calculated. Right now they calculate based on a CPI-W index. They want to change it to a CPI-E index, with the "E" being short for the elderly. It makes a lot of sense. Seniors spend money on doctor visits, medical bills, prescriptions, etc. It's smart to track the cost of living of people in that age group and this index would be a better indication of spending habits for recipients.

Goal #3: Making high-income earners pay more

Currently, you pay into social security on the first $160,200 that you earn. You pay 6.2% and your employer pays 6.2%. The proposed change is trying to hit high-income earners.

Let's say you make $1,000,000. Right now, this person is paying 6.2% into social security on the first $160,200. Anything they earn above that doesn't require paying into social security. This bill proposes that for every dollar they make above $250,000, they'd pay 6.2% into social security.

That's another $46,500 that this person would have to pay that they wouldn't have had to pay otherwise. But it doesn't stop there.

Goal #4: Increasing the Net Investment Income Tax

Anyone making $250,000 or more already has to pay a net investment income tax of 3.8% on capital gains on investments (stocks, bonds, etc.). The bill proposes increasing this tax by 12.4%, taking the net investment income tax to 16.2%.

My thoughts on The Social Security Expansion Act

We currently have a divided congress, so the chances of this bill passing are slim. The bill is also asking politicians—i.e. high-income earners—to vote for a bill that will tax their friends and supporters. Secondly, I think the bill overestimates the tax revenues they'll get. If you slap an additional 12.4% tax on high-income earners, they will strategically pivot.

The extra $200 a month would be a permanent increase for everyone. But many people don't need the extra $200 per month. The increase should be proposed based on need, not a blanket policy.

The amount people get now is based on how much they paid into social security over the years. Your social security check should be based on how much you paid in, not how much someone else paid. It doesn't seem fair.

I know there are a lot of people hurting and inflation is negatively impacting retirees. But I'm not sure this bill is the answer. Listen to the whole episode to hear my thoughts!

Resources & People Mentioned

• 3 Steps to Retirement Planning
• The Social Security Expansion Act
• What Social Security's Cost of Living Increase in 2022 Means for You, Ep #69
• How Rising Interest Rates Will Impact Your Retirement, Ep #121

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

When you retire, where does your income come from? How frequently will you get "paid?" Can you choose when you'll get social security income? In this episode of the Retirement Made Easy podcast, I'll cover how income works in retirement and what you're able to "customize" to you. I'll also cover some listener questions regarding social security and who you should trust. Don't miss it!

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

• [1:50] Where does your retirement income come from?
• [14:16] Tom's Question: How does the spousal benefit work?
• [18:41] Tina's Question: Should I invest in these two mutual funds?

Where does your retirement income come from?

Many people get paid every two weeks working a normal job. But when you retire, how do you decide how often to pay yourself or make a withdrawal? How do you decide when to withdraw from a Roth IRA, IRA, or after-tax brokerage account? How does it work with social security and pensions?

There are a lot of factors to consider. So we break it down into steps and help our clients map it out:

• Step #1: How much income do you need every month to live the lifestyle that you want? If you don't know, head to my website and check out my "Retirement Budgeting Tool." Keep in mind that your expenses in retirement will likely be different than while you were working.
• Step #2: What are your fixed income sources, i.e. social security/pensions?
• Step #3: What gap is there between your fixed income sources and the amount you need to live comfortably every month?

We will come up with a game plan where you draw the money you need from Roth IRAs, IRAs, and brokerage accounts to fill that gap.

If someone needs $2,500 on top of social security and pensions, we might draw $500 of income from their Roth IRA, $1,000 from their IRA, and $1,000 from an after-tax brokerage account. We do this strategically to keep them in the lowest tax bracket possible.

All of that being said, many of our clients like to make withdrawals the first week and third week of the month. Others are fine with only getting paid monthly and prefer to receive their distributions in the same week. It comes down to personal preference (in most cases). However, your pension and social security pay out once a month.

Tom's Question: How does the spousal benefit work?

Tom and his wife are both 62. Tom plans to continue to work while his wife would collect her social security benefit. When they both turned 67, Tom planned to retire and claim his benefit. He understood that his wife would get half of his social security income, or $1,400. In total, they'd receive $4,200 a month from social security.

Tom's wife certainly can claim her benefit at 62. She can also claim her spousal benefit after Tom retires. However, if she claims her benefit at 62, she won't get the full 50% spousal benefit when they're both retired.

For every month that she collects her social security income before full retirement age, it reduces the spousal benefit. However, if both waited until they were 67, he could claim the $2,800 and she could claim the $1,400 spousal benefit.

Tina's Question: Should I invest in these two mutual funds?

Tina asked my thoughts on a financial expert on YouTube. He claims that the best investment strategy for retirees is to own two specific mutual funds. Would I recommend that? I watched the video. This person isn't a financial planner or financial advisor. He isn't licensed to give financial advice at all.

Someone who is licensed—like me—can't put out videos giving blanket advice to people. Anyone else can—but would you trust it? Would you take financial advice from that person? You can't take this as real advice and implement it. I would never recommend that you put all of your money into two specific mutual funds at the advice of someone not certified to give it.

The bottom line? Be careful who you take advice from. Learn more in this episode of Retirement Made Easy!

Resources & People Mentioned

• 3 Steps to Retirement Planning

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

There's a lot of misunderstanding circulating regarding social security claiming strategies with spousal and survivor benefits. Spousal benefits and survivor benefits can be confusing and difficult to understand. So in this episode of Retirement Made Easy, I'm going to tackle this topic. I'll also cover the FairTax Act of 2023 and why you shouldn't make changes to your retirement planning based on this act just yet. Don't miss this informative episode!

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

• [3:16] The basics of the FairTax Act of 2023
• [10:20] The spousal benefit vs. survivor benefit
• [14:45] Planning social security around spousal benefits

The basics of the FairTax Act

The Fair Tax Act is a sales tax bill that was introduced by Republicans to abolish the IRS. It would change the tax code as we know it. I keep getting asked: What's a good strategy in response to the bill that might become law?

Let's backtrack a little first. The act proposes getting rid of the IRS and Federal income taxes across the country. It would institute a 30% sales tax on top of local and state taxes. Why? Because 40.1% of US households didn't pay Federal income taxes in 2022. These Republicans want to recoup money from these households to help cover Medicare and Social Security.

Think of what inflation would be if you had a 30% sales tax. The price of goods and services would go up a lot. It would be offset by the amount you'd be saving on Federal taxes, so your paycheck would go up. But would it offset too much? Would you end up paying far more?

I'm not a proponent of this bill. My response to the questions I'm getting is this: We aren't going to change your retirement plans based on a rumor or possibility. Biden says he'd veto the bill if it got to him. I wouldn't make any changes until this became law.

The spousal benefit vs. survivor benefit

A listener—who I'm going to call Lisa—was married for 20 years and has been divorced for five. She wanted to claim her spousal benefit based on her ex-husband's earnings. She met the time requirements for claiming an ex-spouse. But she was under the impression that if she claimed benefits at 62, she could claim half of her husband's benefit and then claim his entire benefit at his full retirement age. She was misinformed.

At her full retirement age, she can get half of her husband's "Primary Insurance Amount" or PIA, which is his benefit at his full retirement age. So if his benefit is $3,000 a month, she could claim half of that. If she claimed it when she was 62, it would be further reduced. When would she get the full benefit? If he passed away, she'd be eligible for the survivor benefit.

Planning social security around spousal benefits

I spoke with a couple who was clear that social security would be a large part of their retirement income. Someone had misinformed them about how the benefits worked. She was 62 and he was 58. Let's call them John and Joan.

Joan wanted to claim her benefit at age 62. Her benefit was lower than her husband's. She thought it would be dumb to let it sit and not collect it. Then, when he hit full retirement age, she planned on claiming her spousal benefit (50% of her husband's benefit).

But to get the spousal benefit, her spouse has to claim his benefit first. However, when Joan is 67, she won't get the full spousal benefit. Why? Because she collected her own benefit at age 62. Social Security will reduce her spousal benefit because she had claimed her own.

What happens if she waits until full retirement age to claim her benefit? Listen to the whole episode to learn more about collecting spousal benefits.

Resources & People Mentioned

• 3 Steps to Retirement Planning
• The FairTax™ Act

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

What does your dream retirement look like? What will make you happy? What are you working to achieve? Your goals don't have to sound good to other people. They're your goals. They're based on your dreams. To reach your dream retirement, you have to figure out what you want and set specific goals to get there.

You also can't let emotions rule your decision-making. In this episode of the Retirement Made Easy podcast, I'll share some insights from Vanguard and LPL financial's 2023 market reports. But no matter what these reports tell you, you have to follow the long-term plan you've created to reach the retirement of your dreams.

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

• [0:33] What does your dream retirement look like?
• [6:48] 2023: Starting with layoffs and unemployment
• [10:48] Vanguard believes a recession is coming
• [13:51] Short-term emotions negatively impact long-term results

2023: Starting with layoffs and unemployment

There were a lot of layoffs this month (January 2023) and they will likely continue throughout 2023. Google, Microsoft, and 3M had significant layoffs.

Mike Row interviewed the economist, Nicholas Eberhart, about the job situation and unemployment pre-pandemic and post-pandemic. Right now, there are 7 million men ages 25–54 who are not working or looking for work. They're not included in unemployment figures. We've never seen anything like this.

We have 4 million more open jobs versus pre-pandemic and 4 million fewer people in the workforce. As of November 2022, there were 10.5 million jobs available. We can't look at unemployment numbers accurately because we have so many people who aren't even looking for work.

Vanguard believes a recession is coming

In Vanguard's market outlook, they've stated they believe there's a 90% probability that the United States will enter a recession this year. Recessions slow down the economy. Companies' sales and revenue are down and they have to lay people off. However, I don't think we will see the normal amount of layoffs you'd see in a recession, like what happened in the 2008 financial crisis. Many companies have lean workforces as it is. Vanguard is expecting unemployment to rise to 4.5–5% by the end of the year. They're expecting inflation to be 3% year over year.

Vanguard also expects US stocks to realize 4.7% to 6% of growth for the next 10 years, below a typical 10-year average. Their analysts are not optimistic about 2023 or the next 10 years. However, LPL Financial's market outlook is more optimistic and far more detailed. They put a lot of time, money, and resources into their market outlook. Go to my website to get a free copy.

Short-term emotions negatively impact long-term results

In 2022, as the market began a downward trend, people began to abandon their long-term plans for something that felt better. They sold out of long-term investments to avoid a bumpy ride. It probably gave them temporary peace of mind. But I've seen this happen over and over again: People who pull their money out of the market let years go back and never get back in. The market rebounds with them sitting on the sidelines because they got scared.

I spoke with someone last year who gave in to impatience and paid $75,000 over what a home was appraised for. One year later, they know they made a mistake and they're not happy. I spoke with someone else who was convinced Amazon was going to take over the world. He put 90% of his retirement savings in Amazon stock. Guess what happened? Amazon's stock was down 50%. 90% of his retirement nest egg was cut in half. He knew better (and wasn't one of my clients).

The reason we make these mistakes? We let emotions get in the driver's seat because we throw logic out the window. The bottom line? Don't let temporary emotions derail long-term goals. You are where you are now because of past decisions.

If you're doubting yourself and losing confidence, you're not alone. Update your financial plan. Make slight adjustments. You don't have to make drastic changes to see improvements. And if you want a second opinion on your plan, connect with me.

Resources & People Mentioned

• 3 Steps to Retirement Planning
• Vanguard's investment and economic forecasts, January 2023
• Get the LPL Financial 2023 Market Outlook

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

It can be hard to look back at 2022 and see anything positive, right? Inflation is the highest it's been in 40 years. The stock market had a volatile year and many people's investments are down. But the market conditions allowed us to do some positive things we normally couldn't. In this episode of Retirement Made Easy, I share 6 ways that we helped clients find some wins in 2022.

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

• [1:23] LPL Financial 2023 Market Outlook
• [2:34] Get a FREE 30-minute coaching call
• [3:14] Win #1: Tax-loss harvesting
• [4:50] Win #2: Roth conversions
• [8:10] Win #3: High interest rates
• [12:30] Win #4: Social security's cost-of-living adjustment
• [14:36] Win #5: Updating beneficiaries
• [18:11] Win #6: Unexpected Roth conversions

Win #1: Tax loss harvesting

I had a lot of questions from listeners and clients about tax loss harvesting. If you sell a stock, mutual fund, ETF, etc., and book the loss, you can deduct up to $3,000 per year of a capital loss on your tax return. Anything above $3,000 gets carried over to future tax years.

But you have to be careful of the "Wash Sale Rule." If you take the loss, you have to wait 30 days to buy back that particular security. The rule wipes out your ability to deduct that capital loss if you buy back that same security.

Win #2: Roth conversions

Many people also took advantage of Roth conversions. If you have pre-tax 401k money or an IRA, you can pay the taxes on a portion of the account and switch it to a Roth IRA. Why do that when the stock market is down? You're paying taxes on something worth less. So let's say a stock was worth $10 but because of the market, its value dropped to $8. So when you move it to the Roth IRA, you can take advantage of the market bounceback tax-free. Some people wait to do Roth conversions until the end of the year—listen to find out why!

Win #3: High interest rates

How we measure inflation is far different than it was in the 80s. The calculations are completely different. That's why we can't compare the inflation of today to the 80s. If we used the same calculation, the inflation in 2022 would have been in the 'teens.

So where's the opportunity? Series I savings bonds were over 9% last year. Money market rates, savings accounts, CDs, etc. were paying as much as 5.5%. Everyone sought to take advantage of cash alternatives while interest rates were high.

Win #4: Social security's cost-of-living adjustment

Social security's cost of living adjustment, effective January 2023, was 8.7%. It was a nice pay raise. I worked with a couple where the husband is 68 and had already claimed his social security.

They didn't have income problems, so we decided to turn off his social security benefit in 2022. Because you're past your full retirement age, you can stop your benefit and get deferral credits, (up to 8% per year).

So his benefits are growing at 8% per year until he's 70. Secondly, He'll also get the 8.7% bump in 2023. In one year, he'll get a 16.7% boost to his social security benefit. It was a huge win for him and his wife.

Win #5: Updating beneficiaries

I was able to help someone update their outdated IRAs so that her deceased husband was no longer the beneficiary of her IRAs. Instead, we changed it so that her children would inherit the IRAs, without probate getting involved.

We also assigned beneficiaries to her bank accounts so that if something happened to her, it would pass to her son and daughter outside of probate. We made sure her home was titled to pass to her children. Lastly, she had savings bonds that we discovered had matured, so we cashed them out so she could invest the money.

Win #6: Unexpected Roth conversions

I was reviewing a new client's 2021 tax return and got a sense of what their income would look like for 2022. I determined they could do a Roth conversion of $14,000—and pay no income tax—or withdraw $14,000 and take a distribution and pay no federal income tax. I recommended they do a Roth conversion without paying taxes.

I had another client who was laid off in 2022. He found himself in a lower-income situation. What does that mean? He'd end 2022 in a lower tax bracket. Normally, he was in the 24% tax bracket. In 2022, he dropped down to the 12% bracket—with enough room to do a Roth conversion of $25,000. In a normal year, he's been paying another 12% in taxes!

I hope this episode helped you see that even in a year when the market is down and inflation is high, there's almost always a way to do something to benefit your retirement.

Resources & People Mentioned

• 3 Steps to Retirement Planning
• LPL Financial 2023 Market Outlook

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

The beginning of a new year is a great time to review what you should and shouldn't be doing. That's why in this special retirement replay edition of the Retirement Made Easy podcast, we're revisiting episode #110: The Great 8 IRA Mistakes that WILL Cost You Money. This episode covers 8 things you should be mindful of as we dive into 2023:

1. If you're a non-working spouse, take advantage of the spousal IRA option that's available to you (you and your spouse can each contribute up to $7,000 per year.
2. Did you know that you don't have to take required minimum distributions (RMDs) from Roth IRAs? If you don't need the money, don't take the withdrawal and pay unnecessary taxes!
3. Don't roll over an IRA or 401k that has company stock in it or you'll have to pay capital gains on the stock (net unrealized appreciation). Talk to a financial advisor first!
4. Make sure you designate a beneficiary on your IRAs, or your estate will move into probate court when you die (leading to an unnecessary for your family to endure).
5. Don't list a trust as the beneficiary of an IRA. the receiver only has 10 years to empty it and pay taxes. Secondly, trusts are taxed at a high rate ($13,450 and higher is taxed at 37%).
6. If you're under 59 and ½, make sure you do Roth conversions properly so you're not paying Uncle Sam a 10% early withdrawal penalty.
7. Make sure you're not contributing to a Roth IRA or traditional IRA if you're above the income cap, or you'll be paying a steep 6% penalty each year the excess remains in the account(s).
8. Whenever possible, don't do an indirect rollover. If the money from an IRA is sent to you and you don't put it in another IRA within 60 days, you'll have to not only pay taxes on the money but also pay a 10% penalty. Ouch.

If you avoid some of these costly mistakes (and follow some of the advice) you should be well on your way to saving for retirement and avoid getting hit with unnecessary taxes and penalties. Listen to the whole episode for more details!

Resources & People Mentioned

• 3 Steps to Retirement Planning

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

I've been talking about this bill for well over six months and it finally passed in December of 2022 as part of a $1.7 trillion-dollar package. So in this episode of Retirement Made Easy, I'll cover the nine core provisions that are changing and what it means for everyone. There are some changes that I've been campaigning for and there are others that just don't make sense. Many of the provisions don't start until 2024 or 2025 to give administrators some time to get systems in place. Learn how it will impact you by listening!

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

• [3:21] Get FREE resources at RetirementMadeEasyPodcast.com
• [6:40] Change #1: The required minimum distribution age is changing
• [10:29] Change #2 Required minimum distributions for Roth 401ks are ending
• [12:28] Change #3: Catch-up contributions are increasing
• [17:13] Change #4: Implementing a database for accessing old retirement accounts
• [19:12] Change #5: Automatic enrollment in employer retirement accounts
• [20:07] Change #6: Implementing emergency funds in Roth 401ks
• [21:46] Change #7: Employers can match student loan payments
• [24:34] Change #8: 529 plans can be rolled into Roth IRAs after 15 years
• [26:58] Change #9: Domestic abuse survivors can take penalty-free withdrawals

The required minimum distribution age is changing

The original SECURE Act changed the age you're required to take required minimum distributions (RMDs) from 70.5 to 72. Now, the SECURE Act 2.0 is changing the age of a RMD from 72 to 73, starting in 2022. In 2033, the new age will be 75. Why? Because they're extending the life expectancy tables because people are living longer.

Previously, if you forgot to take your RMD, you were penalized 50% of the RMD and you still had to withdraw the money and pay taxes on it. The penalty is now being reduced to 25% (and as low as 10% if corrected in a timely fashion).

SIDE NOTE: I work closely with tax advisors. The IRS doesn't do a good job of auditing and enforcing the penalties on RMDs. Many people get out of paying that penalty.

Required minimum distributions for Roth 401ks will no longer be required

I've been campaigning for this change for years. Starting in 2024, you will no longer be required to take a mandatory distribution from Roth 401ks. Honestly, I'm not sure why someone would leave money in a Roth 401k, because if you roll it over to a Roth IRA, you don't have to take RMDs. But if you leave it in the Roth 401k, once you turn 72 they make you take withdrawals every year. This change just makes sense. Now, these withdrawals are tax-free, but if you want your money to continue to grow, you can leave it in either account.

Catch-up contributions are increasing

Starting in 2025, catch-up contributions to 401ks will go up. In 2023, for someone over 50, the catch-up contribution is $7,500. With the new provision, individuals 60–63 can contribute an additional contribution of $7,500 annually to their 401k, 403B, etc. But why stop at age 63?

To complicate it further, high-income earners (making over $140,000) can only contribute the additional money to a Roth 401k. Why? Because Congress is in debt. They want high-income earners to pay their taxes now. This is another way of punishing high-income earners.

Starting in 2024, the catch-up number will be indexed to inflation. So if there's inflation, you can contribute extra per year. What other positive changes are happening? Keep listening.

529 plans can be rolled into Roth IRAs after 15 years

The SECURE Act allowed 529 plans to pay for trade schools in addition to traditional colleges/school options. The act also allowed 529 plans to pay off up to $10,000 of student loan debt. But what if the 529 plan doesn't get used? What if the child gets scholarships or goes into the military? With the new provision in the SECURE Act 2.0, after the money has been in a 529 plan for 15 years, it can be rolled over into a Roth IRA for the child or grandchild (With a lifetime cap of $35,000).

Listen to the whole episode to learn about other changes, such as implementing emergency funds in Roth 401ks and employers being allowed to match student loan payments (by contributing to their employer-sponsored plans).

Resources & People Mentioned

• 3 Steps to Retirement Planning
• SECURE 2.0: Rethinking retirement savings

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

How is a fiduciary different? What can you expect to pay a CFP? How does capital gains tax work? Did contribution limits increase? In the first episode of 2023, I'm going to revisit some important listener questions from the last few months. They're important things to remember as we enter tax planning season. Check it out!

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

• [0:40] Listener Question #1: How is a fiduciary different?
• [2:29] Listener Question #2: What can you expect to pay a CFP?
• [5:01] Listener Question #3: Why won't I work with Wells Fargo?
• [8:52] Listener Question #4: How does capital gains tax work?
• [13:38] Listener Question #5: Why do you need to find specialists?
• [17:50] Listener Question #6: Did contribution limits increase?

How is a fiduciary different?

A fiduciary is an advisor that is both legally and ethically bound to do things in your best interest. If an advisor isn't a fiduciary, they operate under what's called the "Suitability Standard." What they recommend has to be suitable for you at that point in time.

Imagine you have high cholesterol and a Dr. recommends Lipitor (a brand-name drug), which costs you $300 a month. A fiduciary would recommend using a generic brand that would only cost you $9 a month. As a fiduciary, I think the generic drug is in your best interest. Lipitor IS suitable but costs you abundantly more per month.

So what can you expect to pay a CFP? Listen to hear what the average cost is per hour (and how to determine what is a good value).

How does capital gains tax work?

One of the advantages of owning a residential rental property is that you can depreciate your property over 27 ½ years. What does that mean? It reduces the amount of rental income that's taxable. When you sell the rental property, there is depreciation recapture which will impact your taxes.

I spoke with a couple who wanted to sell their rental properties. When you've lived in your home for two of the last five years, there is a capital gains exclusion of up to $500,000. Let's say this couple lived in their home for 10 years. They bought the home at $200,000 and sold it for $700,000. That's a $500,000 gain that they won't have to pay taxes on. However, anything above that amount will be subject to capital gains tax.

Another listener was retiring at the end of 2022 and had gained $1 million in his company stock. He plans to have no taxable income in 2023, to hit the 0% tax bracket. He was told that if he's anywhere under the 12% tax bracket, he wouldn't have to pay capital gains. That's NOT correct—he will still be taxed on a portion of those capital gains.

Why you need to find specialists

Another listener, Beth, is concerned that her tax advisor (CPA) did tax prep and didn't help her with tax planning. She also has a stockbroker with a large firm in St. Louis, who recommends buying and selling individual stocks and bonds. She asked him point-blank about her retirement plan and he changed the subject.

I think his specialty is the investments themselves, just like a tax preparer focuses on the tax return. You're working with the wrong providers. You need to work with someone who specializes in tax planning and retirement planning. Who specializes in what you need help with? That's who you need to seek out.

Did contribution limits increase for 2023?

Tim is 63 years old and wants to max out his Roth IRA and 401k. He wants to know if the contribution limits increased for 2023. The answer is YES! Roth IRA limits increased to $7,500 for each spouse (for someone over 50). 401k contributions increased by $3,000. That means in 2023 if you're over 50, you can contribute $30,000 annually. That's a total of $37,500 you can save for retirement in 2023.

Resources & People Mentioned

• 3 Steps to Retirement Planning

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

In this special final episode of 2022, I'm going to share clips from the top five most downloaded episodes of 2022. I cover everything from huge retirement mistakes that you should avoid to the types of accounts you want to use to save for retirement. These contain some of my best tips from the year. Don't miss this special edition of the Retirement Made Easy podcast!

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

• [0:29] Episode #118: 3 Types of Accounts You Want to Have to Save for Retirement
• [3:21] Episode #99: The Two Types of People Who Fail at Retirement
• [6:44] Episode #103: How to Avoid these HUGE Retirement Mistakes
• [8:09] Episode #107: 6 Reasons Why People are Scared to Retire in 2022
• [11:37] Episode #108: Two Things You Should NEVER Do

Episode #118: 3 Types of Accounts You Want to Have to Save for Retirement

There are three accounts I believe you NEED to have to save for retirement to create a blended income stream:

• Account Type #1: Roth IRA, 401k, 403B, or TSP
• Account Type #2: The traditional IRA, 401k, 403B, or TSP
• Account Type #3: A brokerage account/trust account/non-qualified account

If you have a measuring cup with three different pots in front of you, you want to take a little bit from the Roth IRA, 401k, and another scoop from the brokerage account.

Having these three types of accounts gives you flexibility in retirement. We plan and calculate exactly what to withdraw from each type of account. You'll only need to make changes if the tax law or your goals change.

Episode #99: The Two Types of People Who Fail at Retirement

The first type of person that fails at retirement lacks a sense of purpose. This is someone who hasn't planned for what they will do with their time. This type of person really struggles once the feeling of living in an infinite vacation subsides. They start to miss the sense of purpose they had when they were working. What can you do to combat this? Listen to hear my recommendations!

Episode #103: How to Avoid these HUGE Retirement Mistakes

You can't retire without a plan. I spoke with someone whose husband always told her that they'd be okay, without showing her the plan to prove it. It's so important to have a plan. This woman is 57 with an 87-year-old mother. If she lives as long as her mother, it needs to last another 30 years—or longer.

Episode #107: The top 6 reasons why people are concerned about retirement in 2022

What concerns leave people afraid to retire? According to the Schroders 2022 US Retirement Survey, these are the top six reasons people are concerned about retiring:

• The impact of inflation: People are scared of the impact inflation will have on their assets. 65% of people listed inflation as their top concern.
• The cost of healthcare: Sadly, we can expect that healthcare costs will always continue to rise. Medicare part B premiums continue to climb—so you have to plan.
• A major market downturn: This is what we're currently experiencing in 2022. This will impact your retirement accounts.
• An unexpected health issue: As you get older, you'll focus more on healthcare, so that you're not stuck draining your savings on an unexpected health issue.
• Taxes reducing retirement savings: This is something a financial planner can easily help you plan so you don't give Uncle Sam more than you have to.
• Not being able to afford the lifestyle they want: Everyone wants to maintain the lifestyle they've become accustomed to. Some want to be able to do more when they retire.

Have you noticed a trend? If you don't carefully plan for your future, it's a HUGE mistake. The people that make retirement planning a priority are the ones who will have the retirement they've dreamed of.

Hear a clip from THE most downloaded episode of 2022 by listening to the whole episode!

Resources & People Mentioned

• 3 Steps to Retirement Planning

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts