This week’s theme on the Retirement Quick Tips Podcast is: SECURE 2.0 Act & The BIG Changes You Need To Know

Today, I’m talking about the significant changes to Roth accounts in SECURE 2.0 Act. It’s probably my favorite set of provisions in the new Act, and it’s important to take note of these so you don’t miss the opportunity to get more of your retirement dollars into Roth accounts and enjoy the tax-free growth and future tax-free withdrawals that come along with it. 

Employers will be able to provide employees the option of receiving vested matching contributions to Roth accounts. Previously, matching in employer-sponsored plans were made on a pre-tax basis. [go through example of this]

Now keep in mind that retirement plans and payroll providers will need to actually offer this as an option, which can take time, so it’s likely not going to be a change you’ll see right away. 

Another new opportunity if you are covered by a SIMPLE or a SEP IRA through your work is that you can now have a SIMPLE Roth account, as well as SEP Roth IRAs, for 2023 and beyond. Previously, SIMPLE and SEP plans could only include pre-tax, not Roth funds. 

However, if this applies to you, don’t get too excited. Even though you can now create and contribute to Roth SIMPLE and SEP IRA accounts beginning January 1, 2023, as Jeff Levine, writing for Kitces.com points out: “it will likely take at least some time before employers, custodians, and the IRS are able to implement the procedures and policies necessary to actually effectuate such contributions.”

When hearing of all of these positive changes to Roth accounts, you may be asking yourself, what’s the catch? Why would Congress allow more access and flexibility with Roth accounts, which lowers their tax revenue down the road. 

Well, Congress is as short-sighted as the rest of us, and as that same article on Kitces.com points out: “the changes highlight Congress’s continued march toward ‘Rothification’, perhaps in an effort to grab tax revenue now in order to make Federal budget estimates look better (or at least less bad).”

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.    

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week’s theme on the Retirement Quick Tips Podcast is: SECURE 2.0 Act & The BIG Changes You Need To Know

Today, I’m talking about how you can take advantage of the increasing RMD age to 73 this year, and age 75 in 2033. If you missed yesterday, I explained this important change in detail, so go back and have a listen to episode 1578 for a detailed explainer on this change. 

Moving on to the planning implications and some things to consider with this new change: 

1. Pushing back the RMDs is always welcome news, because it provides more flexibility. You may still end up withdrawing money from your IRA, 401k or other retirement accounts before you reach your RMD age, but the nice thing is you won’t be mandated to withdraw a certain percentage of your account until age 73 or 75, depending on when you were born, and that added flexibility potentially keeps your taxes lower for longer in retirement. This has a ripple effect on your retirement planning, since putting off retirement-account income for a few more years, can also reduce your Medicare Part B/D premiums. That’s because every dollar you withdraw from your retirement accounts counts as income, and this income is what’s used to calculate your Medicare premiums with higher earning households paying higher incomes. 

2. Another important financial planning implication of the pushback in RMD age is that you will now have a few more years of potentially tax-efficient Roth conversions

   1. Explain - income lower in retirement, so it’s an ideal time to consider Roth conversions. Now you have anywhere from 1-3 more years to make those Roth conversions than you previously did, without RMDs increasing your income in conversion years and complicating the decision. 

In addition, the penalty for failing to take an RMD will decrease to 25% of the RMD amount, from 50% currently, and 10% if corrected in a timely manner for IRAs. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.    

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week’s theme on the Retirement Quick Tips Podcast is: SECURE 2.0 Act & The BIG Changes You Need To Know

Today, I’m talking about the biggest change with the new SECURE 2.0 Act to take effect in 2023 - the increasing required minimum distribution or RMD age from 72 to 73 this year, and eventually up to age 75 in 10 years in 2033. 

Here’s what this new change means: The age at which owners of retirement accounts must start taking RMDs will go up to age 73, starting January 1, 2023. 

The previous starting age under the original SECURE Act to take RMDs was 72, so you’ll now have one more year that you could delay taking your RMD from IRAs, 401ks, and other tax-deferred retirement savings accounts.

And of course, we wouldn’t have a new rule for RMDs, without a couple of confusing and complicating factors. The first is that if you turned 72 in 2022 or earlier, you will need to continue taking RMDs, since you’ve already started. 

But if you’re turning 72 this year or later, again the age that you need to start goes up to age 73, so you won’t need to take your first mandatory distribution until the end of the calendar year that you turn 73. The other complicating factor is that the RMD age will eventually go up to 75, but not for 10 years, in 2033.

In effect, if you were born in 1950 or earlier, your RMD age is 72. If you were born in 1951-1959, your RMD age is 73, and if you were born in 1960 or later, your RMD age will be 75. 

That’s it for today. Thanks for listening! 

Tomorrow I’ll talk about some things you’ll want to think about and some potential financial planning implications with this new change to RMDs. My name is Ashley Micciche and this is the Retirement Quick Tips podcast.    

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

Welcome to a new week here on the Retirement Quick Tips podcast! I’m your host Ashley Micciche, co-owner of True North Retirement Advisors, an independent financial advisory practice managing $340 million in client assets. I’m a Chartered Retirement Planning Counselor and I’m using my 15 years of experience as a financial advisor to help you gain clarity and make a plan for the retirement you envision.

On this podcast, I cover everything from investing, to retirement spending, to taxes in retirement in just a few minutes each day, so if you’re 5-10 years on either side of retirement, and looking for some daily doses of retirement planning wisdom, stick around this week as I talk about the SECURE 2.0 Act & The BIG Changes You Need To Know.

The original version of the SECURE Act passed and was signed into law in late 2019. With the original SECURE Act, there were several major changes that impact retirement plans…the biggest one being 

In 2022, Congress passed an expansion of the original SECURE Act, with more far-reaching implications for nearly all retirement investors. The good news is that these implications are largely positive changes, so this week, I’ll break down some of the key provisions of the new SECURE 2.0 Act to help you better understand what it will mean for you and your retirement. 

That’s it for today. Thanks for listening! Come on back tomorrow…where I’ll talk about the change that impacts every single one of you if you have an IRA or a retirement savings account through work, and that is the increase in the required minimum distribution age.

My name is Ashley Micciche...and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

It’s Sunday, which means...it’s recap time here on the Retirement Quick Tips Podcast

This week the theme was: 10 Things You Must Do Before Retirement - Part 2

In case you missed any episodes, here’s what we discussed this week…

• Decide Where You'll Live

• Increase Your Emergency Savings

• Re-Allocate Your Investment Portfolio

• Structure Your Time To Avoid Boredom

• Consolidate & Simplify Assets

Some additional must do items that landed on the cutting room floor, but are also worthy of consideration: Update your estate plan, create a plan B (i.e. part time work), maximize your savings in the last 5-10 years before retirement (including HSA), plan for a Roth conversion in early years of retirement

The most important takeaway from this week is…by ticking these boxes, you’ll be preparing yourself for a smooth transition into retirement, and you’ll avoid many of the traps that people fall into like not having enough cash on hand for emergencies and having an investment portfolio that’s too aggressively invested and misaligned with your age and stage of life - just 2 examples of what I talked about this week. 

Tomorrow, I’m starting a brand new theme: SECURE Act 2.0 & The BIG Changes You Need To Know

One of the biggest pieces of legislation to pass that will impact the vast majority of you in retirement is SECURE Act 2.0, which just became law. Next week, I’ll break down some of the most important aspects of the new law to help you better understand what it will mean for you and your retirement. 

Thank you so much for listening this week! If you’re enjoying the podcast, chances are someone else you know who is getting close to retirement could also benefit from checking it out, so please share the show with a friend, a neighbor, your sister, or your boss. Just go to your favorite podcasting app, hit the share icon, then text or email the show link to someone you know who is eyeing retirement. 

Thanks for sharing the love and spreading the word. I hope you have a blessed Sunday. My name is Ashley Micciche, this is the Retirement Quick Tips Podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week’s theme on the Retirement Quick Tips Podcast is: 10 Things You Must Do Before Retirement - Part 2

Today, I’m talking about the importance of consolidating and simplifying your assets. 

[Why retirement is an ideal time to do this]

Motivating factor for many new clients to work with me. They want to have a strategy and a plan before they retire, they want their assets in one place, and they want someone to manage everything for them so they don’t have to worry about it. 

What to consolidate 

• Investment accounts at different financial institutions 

• No need to diversify in this way (SIPC + additional coverage) 

• Makes things much easier to track - everything from understanding your entire portfolio performance, to getting monthly statements & annual tax filings is simple and streamlined

• Old 401ks and other workplace retirement plans - then once you retire, you can rollover your current 401k or workplace retirement plan into an IRA account and have everything in one place. 

• It’s not time consuming. It usually takes just about 2-4 weeks from start to finish to get everything in one place, and usually you’re not the one doing the legwork - you can accomplish it by signing a few forms. The financial institution you’re consolidating assets with takes care of the rest

• You also may decide that you don't want the headaches of owning other assets like real estate - many people start divesting some assets accumulated in working years, but decide they no longer want the headaches associated with being a landlord, or owning more than one home, etc. 

Lastly, looking more long-term its much easier for your spouse and your heirs to deal with your estate when you have assets consolidated in one place when you pass away. The complications of having a bunch of different assets scattered about creates stress and confusion in an already stressful time for your family. So do yourself a favor now, and your family a favor down the road but consolidating and simplifying your assets before you retire.

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.  

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week’s theme on the Retirement Quick Tips Podcast is: 10 Things You Must Do Before Retirement - Part 2

Today, I’m talking about structuring Your Time To Avoid Boredom. 

Usually after the first few months or once you’ve completed all those projects you’ve put off for years because you were always working, research shows that many retirees become bored, which can lead to anxiety and depression. 

There are also the social contacts at work that need to be replaced by spending time with friends and family so you don’t feel isolated and lonely. 

In fact, loneliness is a big problem for Americans. The U.S. Health Resources and Services Administration has declared a “loneliness epidemic,” specifically citing the increasing phenomena of “no participation in social groups, fewer friends, and strained relationships” as the culprits.

We all know about the loneliness and dramatic increases in depression and anxiety caused by the social isolation during the pandemic. But even prior to Covid in 2018, one survey found that 46 percent of Americans felt alone, and 43 percent of Americans felt that their relationships were not meaningful.

Author, Arthur Brooks states: “Numerous studies have shown that one of the great markers for happiness among people at midlife and beyond is people who can rattle off the names of a few authentic, close friends. It is not necessary that they be numerous to achieve happiness, and, in fact, people tend to get more selective about their friends as they age and reduce the number of true intimates.”

The point is that it’s important to invest in relationships and new hobbies now, before you enter your retirement years. What hobbies have you neglected, or what new hobbies would you like to try? Try them now, while you’re still working. That way, you’ll be able to meet new friends and people who share your interests. 

Investing the time into existing friendships and spending more time with your family now is crucial…[story of making a list - helping me invest in spending time with the people I care about most]. 

Another important way to structure your time is to get more involved in your church or charities you’re passionate about, and spend more time volunteering. 

A few years ago, we had a psychologist come and give a talk to our clients about retirement. One of the things she talked about was making sure that ½ of your time is structured in retirement. 

As someone with small kids, I’ve come to appreciate the structure and predictability of a routine and a rhythm to life. I resisted it for several years, but as a way to maintain my sanity as a parent of 4 small children, I’ve created structure and routines so my kids know what to expect, and they feel secure in not wandering aimlessly from day to day and week to week. The same structure and routine that benefits little kids is useful for retirees too, since it keeps you active, and ensures that you won’t fill all of your days with bingewatching Netflix or YouTube, all of which will help keep boredom, anxiety, and depression at bay. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.  

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week’s theme on the Retirement Quick Tips Podcast is: 10 Things You Must Do Before Retirement - Part 2

Today, I’m talking about re-allocating your portfolio to match your risk tolerance and income needs. 

One of the main problems I see with someone’s investment portfolio as they approach retirement is that it doesn’t match up with their age and stage in life. Sometimes it’s too conservatively invested, hampering growth, but most of the time the portfolio is invested far too aggressively, sometimes with 80% in stocks or more. This can be disastrous if not fixed in the years leading up to retirement. 

With losses in many portfolios exceeding 15-20% in 2022, this should be instructive & motivating in helping you to re-allocate your portfolio prior to retirement. 

Step 1 - getting to the right allocation before retirement. What is the right allocation? The right balance varies based on a number of factors, but for someone approaching retirement, it should be around 50-65% in stocks for most people.  (age-weighted AA cheat sheet)

Step 2 - focusing the portfolio on income - dividend paying and growing stocks and bonds that generate income. Thankfully with interest rates heading higher, bonds investments that actually pay decent income are easier to find. 

It’s very important that your portfolio is re-allocated before retirement so you don’t suffer big losses in the couple years before and the couple years after retirement. This could force you to work longer, if a quarter of your nest egg is wiped out in a significant down market, and the more in stocks you have, the worse the drop will be and the longer it will take for your portfolio to recover, potentially forcing you to push back your retirement date, just to make up for the bad timing of wanting to retire when a bad bear market hits your portfolio. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.   

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week’s theme on the Retirement Quick Tips Podcast is: 10 Things You Must Do Before Retirement - Part 2

Today, I’m talking about one of the most important things you can do to protect yourself financially in retirement, and that is beefing up your cash savings. You’ll want more cash on hand in retirement than you might have needed while working, but you want to take advantage of the fact that you’re still working and still have income coming in to beef up that bank account balance BEFORE you retire. It’s going to be a lot harder to increase your cash savings post-retirement, since you’ll be needing to use your assets to live on at that time. 

So why do you need more cash in retirement? Why isn’t a few thousand dollars or 3-6 months worth of expenses in the bank enough? Well, those rules no longer apply when you’re retired for a couple of reasons: 

First of all, you’ll want to consider maintaining even more cash for emergencies in retirement because you’re no longer working. When you’re retired, and the older you are, the harder it is to go out and find a part-time job or a side gig. So if you have a sudden and unexpected expense or medical bills, paying for your emergency with a high interest credit card or having to liquidate your retirement portfolio, can be devastating and can completely derail your retirement plans. So we need lots of cash on hand in retirement. 

The other reason why you want to keep a lot of cash on hand that can save you in times of market downturns, recession, and crisis, is so you can reduce or suspend all together your portfolio withdrawals. If your portfolio drops 10 or 20%, you make that drop significantly worse but also taking money out, and exacerbate the downturn in your portfolio. So having cash on hand will allow you to stop some of the bleeding and suspend your portfolio withdrawals in a market downturn. When you can do this, especially if it happens in the early years of retirement, you give yourself a better shot of not running out of money in retirement and preserving more of what you have in the downturn. 

Now that I’ve addressed the why behind needing more cash than the standard 3-6 months of cash on hand, let’s talk about how much cash you should have. 

At a bare minimum, you’ll want about 6 months worth of monthly expenses on hand for emergencies. So if you spend $5,000/month, you’ll want $30,000 in cash, just for emergencies. 

In addition, to protect yourself in the next market downturn, you’ll want to keep another 12 months worth of your portfolio withdrawals on hand. Why? Well the aveage bear market lasts 14 months. Some are shorter, and some of the deeper ones are even longer. So if you can stop your portfolio withdrawals for a year while the stock market is reeling and we’re in the midst of a recession, you can sleep better at night and not make the problem worse. So 12 months of suspended withdrawals from your investment portfolio should be enough, even if the downturn lasts a little longer than that. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.   

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

This week’s theme on the Retirement Quick Tips Podcast is: 10 Things You Must Do Before Retirement - Part 2

Today, I’m talking about deciding where you’ll live in retirement. 

Why before? Not necessary of course, and a lot might depend on what happens with the housing market, but I have a client who just bought their snowbird home. They are still a few years away from retirement. Both work remotely since Covid, and they’re in their peak earning years, so it made more sense for them to purchase a home now, so they started wintering in AZ this year, and will eventually move there full-time in retirement. 

I liked this plan, because they are still working and their income can easily support both mortgages now, and although they needed to take out a mortgage now, they bought the house when rates were still low, and they will be able to pay it off once they retire and sell their other house. 

By wintering in a warmer state, it also makes working longer more palatable, so they can extend their working years. (Not realistic for every one, but that’s why I think it’s important to at least DECIDE where you want to live before you retire, while not necessarily buying a home there yet).

The considerations for moving are multi-faceted - weather, cost of living, estate taxes, housing (palm springs 55+), would you live there full time or part time? How much time would you spend there? If not more than a few months a year, would it make more sense to just rent a place for a month or 2 out of the year? 

It’s important to work out where you’ll live long-term in retirement BEFORE you retire, since you have more options available to you while you’re still working and before you make any permanent decisions like transitioning into retirement. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.    

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance