It’s Sunday, which means...It’s recap time! This week’s theme was Biden’s tax plan impact on investors.

Here’s what I covered in each episode this week:

• Biden’s tax plan impact on capital gains, IRA and 401k accounts, and inheritance taxes
• Then I talked about how likely these proposals are to become law - spoiler - very likely but probably not in 2021
• Then we looked at the overall impact of Biden’s tax plan for investors 

I didn’t have time to get into the tax proposals' impact on real estate holdings, but that’s another big impact for those of you who own real estate, especially rental and investment properties. 

Hopefully after listening to the One Minute Retirement Tip podcast this week, you see that there are plenty of tax changes coming down the pike - some will have little to no impact on you - and others will be pretty penalizing. So be sure to talk with your tax advisor and do any necessary planning and adjustments now, while the opportunity still exists, because the tax climate has never been better, but 2022 could look very different. 

Tomorrow, we are starting a brand new theme: 2021 economic predictions. No I don’t have a crystal ball, but if you listened to the podcast back in January, I was giving away free tickets to our live virtual event with economist, John Mitchell. Really engaging and brilliant man - well, during his presentation of his forecast for the economy in 2021, I made some notes with my key takeaways and I’ll be sharing those takeaways with you next week. 

Also, be sure to check out my YouTube channel - True North Retirement, where I post a new livestream every Sunday. So today at 9am Pacific, 12pm central, I’ll do a deeper dive into the theme for next week, so head on over to True North Retirement on YouTube and subscribe.

That’s it for this week! Thanks for listening and I hope you have a blessed Sunday! 

My name is Ashley Micciche and this is the “One Minute Retirement Tip”.

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week’s theme is: Biden’s tax plan impact on investors 

Today, I’m talking about the anticipated impact of Biden’s tax plan on investors. We’ve talked about some of the changes to capital gains, taxes on inherited wealth, and the funky proposal that I don’t like to the 401k and IRA deduction rules. Some of these changes won’t have a direct impact on you, but the key to remember with tax law changes is that it modifies behavior. It has an impact on decisions business owners make, corporations...it has an impact on corporate profitability and that trickles down to stock price impacts and on your portfolio. 

So whether you agree with the tax changes or not, it’s probably not a good idea to cheer “tax the rich” because it does often have an indirect impact on the middle and working classes as well. 

What is the impact on tax increases for investors? Here’s the breakdown of the impact: 

Savita Subramanian at Bank of America Securities estimates that the Biden tax plan would reduce S&P 500 earnings by 7% under the current plan, mostly stemming from higher corporate taxes. Growth-oriented sectors would be hit the hardest:

S&P 500: tax hit (estimated S&P 500 earnings impact based on Biden’s proposals )

• Technology - down 9.2%
• Health care - down 8.4%
• Communication services - down 8.2%
• Consumer discretionary - down 7.5%
• Financials - down 6.5%

The Tax Foundation determined that the Biden tax proposal would raise $3.3 trillion over the next decade. Much of that 3.3 trillion would come from raising the corporate income tax rate - which I already discussed above.

It remains to be seen if the hits to the bottom line will impact stock prices - especially in the industries I mentioned above. Robust growth would be required to offset those hits to earnings. If growth doesn’t offset the tax hit, then you may see some companies and sectors struggle in your portfolio. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week’s theme is: Biden’s tax plan impact on investors 

Today, I’m talking about the likelihood that the proposed changes from Biden that impact investors will actually become law. Now that the democrats control congress, that likelihood seems very high. 

However, with Covid still front and center, it doesn’t seem likely that will happen in 2021. Maybe 2022 is a better timing for PR purposes? If the economy is in better shape, they’ll likely get less pushback and grumbling among Americans. 

A very important principle in investing is to base your decisions on probability not possibility. Is it possible that taxes will go higher in the next couple years? Yes. Is it also probable? In other words is there a high likelihood that it will happen? The answer here is also yes. 

So I would be preparing now, especially if you’re in a high tax bracket. Even if you’re not, I would still look seriously at a Roth conversion, selling appreciated assets sooner rather than later,  and other ways of potentially reducing your tax bite in the coming years. Or you could just ride it out and see what happens in 4 years...Maybe there will be a new Republician president who will tip the scales in the other direction.

The takeaway here and what’s important to remember is that taxes are very low right now by historical norms. If you have opportunities to accelerate taxes on capital gains, it might make sense to take advantage of the current environment before the tax law changes. 

As always, I’m not a CPA, but I am married to one. My tax advice is free, but I am not a tax advisor and you’re going to want to consult with your tax advisor about the best moves for you. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week’s theme is: Biden’s tax plan impact on investors 

Today, I’m talking about the proposed tax changes to your inheritance. Under current law, inherited assets receive a step-up in basis as of the date of death. So for example, let’s say that your mom knew Steve Jobs and she invested a few thousand dollars in his quirky startup. Well, come to find out 35 years later, her little investment is now worth millions. 

If your mom died today, she has a massive gain in the stock. The stock is worth millions so her gains would be millions and she would pay upwards of 23% of her gain in taxes if she sold her stock before her death. If she waits until she dies and doesn’t sell the stock, the gains are wiped out, and now the new cost basis in the stock is whatever Apple’s stock price was the day she died. So if you sell the stock the very next day, your gain amount and taxes owed would just be the difference in price from the day she died to the day you sold it. 

Under the proposed tax change, this step up is wiped out, so all those gains get passed to you and now you owe a boatload - likely millions in tax - if you sell the stock. 

This change will have the most impact on any greatly-appreciated inherited assets — such as stocks or real estate or a parent’s home. Any asset that was bought long ago and likely has a big gain - that’s where it will be felt the most. 

Like all other tax policy changes, this will definitely impact behavior. Depending on the circumstances, some older Americans may decide to sell part or some appreciated assets to eat some of the tax on the gain themselves rather than holding until their death. It will be interesting to see what happens on this one. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week’s theme is: Biden’s tax plan impact on investors 

Today, I’m talking about proposed tax changes under the Biden Administration to tax rules for 401k and IRA accounts. Instead of being able to deduct your Traditional IRA and 401k contributions from your taxes, you would receive a tax credit instead. 

This one is actually a little complicated to explain, but let’s give it a shot: 

The proposal is to change the tax deduction on 401k and IRA contributions to a tax credit. The credit would equal 26%. What that means is the 26 percent credit is equal to a deduction at a 20.5 percent marginal tax rate for all taxpayers, independent of their income level. If none of that makes sense to you, good. At least you and I are on the same page. 

Let me try to explain it another way...

For every $100 you contribute to the plan the deduction you get is 20.5% or $20.50. The goal here with this change  is to give a larger tax benefit to lower income earners, since this credit amount is higher than their deduction they would currently be getting if say their income is $40,000...the deduction is only 12% in this income tax bracket, but the 20.5% credit gives them a better tax benefit. 

One of the problems here is that the credit starts to become less attractive at higher income levels. If you’re effective tax rate is any higher that 20.5% which it is for a lot of people, not just the highest earners, then you’ll benefit less from those 401k contributions if this becomes law.

As a practitioner, people at the lower income levels aren’t contributing to retirement accounts because they don’t get enough tax benefits. They don’t contribute to retirement plans because they can’t afford to. I give this proposal a thumbs down because I don’t think it’s going to d oa darn thing to incentivize people at the lower income ranges to save more, and it’s only going to penalize those who do contribute who now won’t be as incentivized to save in 401k accounts since the tax benefits are lessened. In reality, I think it’s just going to incentive more people to save in the Roth 401k. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week’s theme is: Biden’s tax plan impact on investors 

Today, I’m talking about biden’s plans for capital gains. Here’s what it will look like if Biden’s plans become law: 

It’s mostly upper-income individuals who would face higher capital gains taxes under the Biden plan. Under current law, the maximum effective federal income tax rate on net long-term capital gains and qualified dividends recognized by individual taxpayers is 23.8%.

Under the Biden plan, net long-term gains (and presumably dividends) collected by those with incomes above $1 million would be taxed at the same rate as income - which is the 39.6% maximum rate. When you layer in the 3.8% for net investment income tax, the maximum effective rate on net long-term gains would 43.4%. That would be almost double the current maximum effective rate of only 23.8%! 

Holy expletive! That’s a massive increase in taxes! However, it’s important to note that that tax increase is for those making more than $1 million. If your income is much lower than that, I haven’t seen any tax proposals from Biden that would increase taxes for even those making $100,000-$200,000 of income per year. 

So hopefully, this change won’t impact you because your income isn’t high enough, but it is a big problem for high income earners or those planning to sell a business with a low-basis. So if that’s you, you’ll want to do some serious planning to try to mitigate the impact of the capital gains tax. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

Welcome to a new week and a new theme here on the One Minute Retirement Tip! 

This week’s theme is Biden’s Tax Plan and its impact on investors. 

If you’re wondering how Biden’s tax plan is going to impact everything from capital gains to your 401k to estate and inheritance taxes, tune in this week, because I’m breaking that down for you now that Trump’s cologne smell in the oval office curtains is finally wearing off. 

By the way, I had to look this up, because I’m sure fun facts like that exist for the former president. I googled Donald Trump cologne to see what I could find and surprise surprise, he already thought of the idea himself - Success by Trump cologne spray for men is a spicy woodsy scent that is very pleasing and always classy.

You can find it at WalMart online for $57, but you better hurry because there were only 3 left when I looked.

Ok, enough about Trump. ½ of you aren’t even listening anymore today, shutting this off at the mere mention of his name. 

No this week we’re talking about Biden and his tax plan and it’s impact on investors. 

So stick around because each day this week I’ll help you consider how the proposed tax changes might impact you as an investor, how likely they are to actually become law, and what you can do now to insulate yourself and your retirement from the impact of higher taxes. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

It’s Sunday, which means...It’s recap time! This week’s theme Early retirement offers - should you accept?

Here’s what I covered in each episode this week:

• Can You Afford To Take An Early Retirement Offer?
• If You Don’t Accept Early Retirement Will You Get Laid Off Anyway?
• How Will Early Retirement Affect Your Money?
• What Are Your Other Work Options Instead Of Early Retirement?
• Weighing The Complex Decision Of Early Retirement Offers

Hopefully after listening to the One Minute Retirement Tip podcast this week you realize that an early retirement offer is a complex decision, with a lot more to decide on than what’s in your deal. So if you find yourself faced with an early retirement offer, now you’ll be able to make a more informed decision about the best decision for you. 

Tomorrow, we are starting a brand new theme: The Biden tax plan and capital gains.

Now that the election is over and Biden is hanging pictures on the wall in the White House, we have some idea of what to expect from a Biden administration in terms of taxes. He plans to raise taxes - we know that and with a narrow control of congress, he’s likely to get his plans enacted into law. 

So we’ll take a look at the Biden tax plan and in particular how it will impact you and your capital gains next week. 

Also, be sure to check out my YouTube channel - True North Retirement, where I post a new livestream every Monday. Each week’s livestream is a deeper dive into the theme for the week, so if you want to hear more from this week’s topic head on over to True North Retirement on YouTube and subscribe. 

That’s it for this week! Thanks for listening and I hope you have a blessed Sunday! 

My name is Ashley Micciche and this is the “One Minute Retirement Tip”.

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week’s theme is: Early retirement offers - what should you do if this happens to you?

Today, I’m talking about weighing the complex decisions of early retirement offers. As I discussed throughout the week, determining whether or not you should accept an early retirement offer is not an easy decision for most of us and it’s something that should 

I hate to be the bearer of bad news, but when you’re in your late 50s and early 60s, you just don’t have the same opportunities to move into a new career or move across the country or just be flexible in general about work, the same way you might have been in your 20s or 30s. The decision to work and your ability to work later in life has serious implications for your long-term retirement success. 

So we need to get this decision right if you’re faced with an early retirement offer. So let’s bring this all together and discuss all the different aspects of an early retirement offer to consider: 

• First of all, you need to determine if you can afford to take an early retirement offer, and if you can’t you’ll need to weigh the likelihood that you could get let go later anyways and make a plan B
• How will your early retirement offer impact your money - mostly your health insurance, social security, and your retirement savings. I talked about that at length earlier this week but you’ll also want to understand the impact of early retirement on your pension if that’s part of the deal too
• And then if you do accept an early retirement offer, would you retire? Would you work part time or try to find another full time job? Are there job opportunities in your field or would you need to change careers? No easy task late in career. Or perhaps you have expertise in an area where consulting work is in high demand.
• Most of us don’t plan on early retirement - after all you are still working when you receive the offer, so it’s important to ask yourself are you ready to retire - not just financially but emotionally as well. Moving into retirement is one of the most important transitions you’ll make in life. It will completely change your daily routine and how you spend your time. You’ll need to make sure you’re really ready to retire and make some plans for how you’ll spend your time in retirement so you don’t become bored or depressed after the initial honeymoon period wears off. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast

This week’s theme is: Early retirement offers - what should you do if this happens to you?

Today, I’m talking about other work options instead of early retirement: 

1. Your first work option instead of early retirement is just to keep working at your job and hope that you don’t get laid off later on or the company doesn’t go out of business. As I mentioned earlier in the week, it’s important to understand as much as you can about the financial health of the company you work for when deciding on taking an early retirement offer.
2. You could take the early retirement offer and retire. You’ll want to make sure you can afford to retire. If you want some help with answering that question, I have a free tool for you - The Retirement Success Forecaster - just complete a 2-page questionnaire, send it back to me and I’ll send you your personalized results. Just go to truenorthra.com/retirementsuccess. 
3. Finding another full time or part time job is possible, yet as I have experienced with my clients and people I know who were laid off close to retirement, it’s very hard to find a job and if you do, its usually always a cut in pay to go start somewhere new so late in your career. 
4. Related to finding another part-time or full-time job is starting your own side hustle. Maybe you have expertise in a specific area and a lot of contacts, that would allow you to do consulting work. 

Whatever it is, don’t feel trapped in your options and consider alternatives that may be viable for you. The key word there is viable. You must make sure that whatever decision you make about whether to take or not take your early retirement offer - that you can afford to live with the consequences. The numbers have to pencil out. Otherwise, you’re playing with fire with your long-term financial security in retirement. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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Tags: retirement, investing, money, finance, finances, financial planning, retirement planning, saving money, personal finance, wealth management, money tips, fee only financial advisor, financial planner, financial podcast, retirement podcast, financial independence podcast