Retirement Starts Today

Tax season is here. This yearly duty is something that a good portion of citizens put off until the last minute, with some even requesting an extension to file later. However, today I have 8 reasons for you to consider filing your taxes early. Listen in to discover why you might want to bite the bullet and file your tax return early this year.

Outline of This Episode

• [1:12] 8 reasons to file your 2021 tax return early
• [4:18] Why you should try to get as small a refund as possible in retirement
• [8:09] Should Marion invest 25% of her portfolio in a fixed annuity over 10 years?

This is a great list to encourage people to get started on their taxes. I've had my thoughts on tax planning for a while now that I'm cohosting the Retirement Tax Podcast with Steven Jarvis. Check it out if you are interested in tax planning strategies in retirement.

Resources & People Mentioned

• The Retirement Tax podcast with Steven Jarvis and Benjamin Brandt
• Retirement Tax Services from Steven Jarvis
• 8 reasons to file your 2021 tax return early by Kay Bell

Connect with Benjamin Brandt

• Get the Retire-Ready Toolkit: http://retirementstartstodayradio.com/
• Follow Ben on Twitter: https://twitter.com/retiremeasap
• Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter

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You may be worried about money in retirement, but are you worried that you won't spend enough of it? Today's retirement headline comes from Neil Templin over at Barrons.com and it examines how people's core spending and saving habits from their working years continue in their retirement years.

Listen to this episode to hear the author's suggestion for how to rectify this issue and whether or not I agree with him.

Outline of This Episode

• [1:22] Retirees aren't spending enough
• [5:30] Create a retirement paycheck
• [7:20] My thoughts on the article
• [10:00] join the newsletter
• [11:07] How to invest for retirement with limited assets

Retirees aren't spending enough

Why do people continue to save in retirement when they are expected to be spending? Retirees Aren't Spending Enough of Their Nest Eggs, Here's Why, an article written by Neil Templin, examines the reasons why some people don't plan to spend down their assets in retirement. These retirees' portfolios remain the same or sometimes even grow at a time of life when they should be diminishing. The author looks into why this phenomenon is happening.

Reasons for reluctant spending in retirement

One study even revealed that ¾ of participants had seen their assets remain the same or grow in retirement. There are numerous reasons why this could happen.

The robust stock market over the past ten years could contribute to a steady or growing portfolio. However, even with strong returns, some people may not feel comfortable enough to loosen their purse strings and spend their savings in retirement. Templin lists these reasons for reluctant spending habits in retirement:

• Fear of running out of money paired with uncertain longevity
• Worry about future medical expenses
• Concern over rising long term care costs
• Learning from a parent's retirement experience
• Spending habits from working years continue through retirement
• Not wanting to be a burden on their children

It is difficult to change the core values that people have about spending. Saving is a habit developed over time and retirees are discovering that they can't simply flick a switch and turn it off.

A solution to reluctant retirement spending

The author next examines research on retirees with pensions. The research showed that those who received more than half of their income in regular payments spent much more in retirement than those who received less than half of their income regularly.

The article concludes that creating a pension-style income or regular paycheck by using annuities could be a solution for retirees who are reluctant to spend in retirement.

An alternative to purchasing annuities in retirement

My concern with purchasing annuities to solve this problem is that this solution eliminates the freedom to choose. With a flexible spending strategy, retirees can spend confidently. They understand that when the market doesn't behave ideally that there is always a plan b to fall back on. This flexible spending strategy relies on education and knowledge to give retirees the peace of mind they need to spend confidently. Listen in to hear how Guyton's Guardrails could inspire confidence in your retirement spending strategy.

Resources & People Mentioned

• Retirees Aren't Spending Enough of Their Nest Eggs, Here's Why
• Join the Every Day Is Saturday newsletter!

Connect with Benjamin Brandt

• Get the Retire-Ready Toolkit: http://retirementstartstodayradio.com/
• Follow Ben on Twitter: https://twitter.com/retiremeasap
• Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter

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Do you know where you'll live when you retire? Deciding where to live in retirement is one of the biggest retirement decisions that you'll make. There are so many factors to consider that it can be overwhelming with the myriad choices.

On this episode of Retirement Starts Today, we'll explore a headline from J.D. Roth at GetRichSlowly.org that reveals a new tool from The New York Times which helps people find places to live that suit their lifestyles.

You'll also hear the answer to Frank's question about the inflexibility of safe withdrawal rules for those who choose to delay taking Social Security.

If you have been considering moving in retirement, don't miss out on this episode to discover how this fun tool could help you narrow down your choices.

Outline of This Episode

• [1:22] A useful tool to help you choose a place to live
• [4:03] My thoughts on purchasing a second home in retirement
• [7:01] On taking larger withdrawals in your 60s to delay taking Social Security
• [11:14] How I use Guyton's Guardrails to set up safe withdrawal rates

This useful tool can help you choose a place to live in retirement

Today's retirement headline, A Useful New Tool to Help You Pick a Place to Live, comes from J.D. Roth's blog GetRichSlowly.org. In the article, the author explores a new interactive tool from The New York Times that could help you decide where to live based on your lifestyle choices.

The interactive quiz uses 35 different factors which can help you narrow down the 17,000 cities and towns across the country they have to choose from. These factors include choices like population density, climate, racial diversity, political affiliation, the average cost of living, and many more. Users can even emphasize which qualities matter most to them.

After exploring a few options, users can compare their favorite choices in an easy-to-read table. Although the tool, isn't the end all be all in deciding where to live, it may be able to accurately narrow down some areas for you to consider.

Since the tool comes from the New York Times, it is behind a paywall you may be blocked if you have already read your free articles for the month. If you haven't, spend some time exploring the variables to see which places look good to you.

You may not qualify for a mortgage

Many retirees choose to buy a second home in retirement, and I work with several clients that have considered this option. When purchasing a home in retirement, it is important to remember a few rules.

Oftentimes, people don't realize that after leaving their career behind it can be very challenging to get a mortgage. Since qualifying for a mortgage depends on income rather than assets, many recent retirees discover that they may not qualify for a mortgage even when they have the assets to purchase the home outright.

One way to prevent this issue is by massaging your portfolio income to a level that the bank would approve to secure the loan. After closing on the mortgage, then you can reset your portfolio withdrawals back to normal.

Don't be afraid to rent

If you are considering purchasing a second home or moving to a new area in retirement, don't be afraid to rent first. By renting for several months in the city you would like to move to, you'll be able to explore the town and understand where the desirable (and undesirable) areas are. Renting first could save you from a mistake that could cost hundreds of thousands of dollars.

Learn more about moving in retirement and how using Guyton's Guardrails could help you set up flexible, safe withdrawal rates in retirement on this episode of Retirement Starts Today.

Resources & People Mentioned

• New York Times interactive tool
• GetRichSlowly.org
• Guyton's Guardrails

Connect with Benjamin Brandt

• Get the Retire-Ready Toolkit: http://retirementstartstodayradio.com/
• Follow Ben on Twitter: https://twitter.com/retiremeasap
• Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter

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Is saving for the future preventing you from enjoying your present life? This may be an unpopular opinion for a financial podcast, but it is important to ask difficult questions to experience growth. If over-saving is preventing you from enjoying your present life, then you need to make changes.

On this episode of Retirement Starts Today, we'll examine an article by Darius Foroux that asks, Are You Saving Too Much Money? After the retirement headlines segment, I'll answer a question from CJ about using a donor-advised fund to offset the last year of high income before retirement. Get ready to ask challenge yourself and explore your financial decisions as you press play.

Outline of This Episode

• [1:42] Saving too much money for your future could prevent you from enjoying your present life
• [4:32] How to know when you're saving too much?
• [6:53] Does it make sense to create a donor-advised fund to get a tax deduction?
• [10:22] What other deductions could you take advantage of?

Saving too much for the future could prevent you from enjoying the present

Today is the most important day that you have to live. If you are saving too much money you may not be able to enjoy today to its fullest. There are people that save up to 70% of their income while planning an early retirement, but this type of habitual frugality can get in the way of enjoying life in the present. Although saving a high percentage of your salary could give you confidence about your future, it can be difficult to unwind that practiced frugality to truly enjoy life.

How to know if you are saving too much

If you're constantly asking yourself on a daily basis how much things cost, you might be saving too much. Try not to calculate your spending down to the penny. Instead, be more conscious of how you spend your money. The is a balance between spending your entire paycheck and over saving is fluid and complex, so it is important to analyze your situation to understand the best saving situation for you.

There are several factors to consider when analyzing your savings patterns:

• How old are you?
• What do you value in life?
• What type of lifestyle do you want?
• Do you have a career you enjoy?
• Where do you live?
• What are the odds you can do your work until you're old?
• Do you have a support system?

Understanding the answers to these questions can help you recognize whether you are saving too much.

How to balance saving for the future while maximizing today

So, how do we balance living in the present and making the most of our lives today while, at the same time, being responsible stewards for our future selves? A good place to start is by coming up with a financial strategy that incorporates your values. Once you do that, you can use the free tools available on the internet to help you determine how much you need to save.

Self-reflection is important to understand whether you are truly living your best life now or if you are waiting for some arbitrary future date to pursue happiness. Are you living your best life now? If not, what are you waiting for?

Resources & People Mentioned

• Boomer Benefits
• Are You Saving Too Much Money by Darius Foroux
• BOOK - Your Money or Your Life by Vicki Robin
• Fidelity Charitable

Connect with Benjamin Brandt

• Get the Retire-Ready Toolkit: http://retirementstartstodayradio.com/
• Follow Ben on Twitter: https://twitter.com/retiremeasap
• Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter

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Deciding whether to delay filing for Social Security is a hefty decision. Waiting to collect Social Security until age 70 will increase your monthly benefit by 32%, but that doesn’t mean much if you don’t live long enough to reap the rewards of being patient. 

In today’s retirement headlines segment, I’ll share an article written by Jeffrey Levine from Kitces.com that discusses a workaround to the seemingly all-or-nothing decision of whether to collect Social Security benefits at full retirement age or to delay filing until age 70. If this decision has been weighing heavily on your mind, you won’t want to miss this episode. 

Outline of This Episode

• [1:22] If you are a do it yourself investor you are your own financial advisor
• [5:30] Retroactive payments are granted as a lump sum payment
• [7:03] Use the nudge strategy
• [9:00] Drawbacks to the 6-month nudge strategy
• [12:48] Using QLACs and MYGAs to enhance a bucket strategy

DIY investors need plenty of tools in their retirement planning toolbox

Jeffrey Levine, the author of Getting Comfortable Delaying Social Security with Six Month Reversible Delays, has a way of explaining complex financial concepts by breaking them into understandable bites. You can follow him on Twitter @CPAPlanner if you are looking for another go-to financial resource. 

Although today’s retirement headline was written for financial advisors, it contains valuable information for the do-it-yourself investor. As a DIY investor, you need to recognize that you are your own financial advisor. Kitces.com offers a wealth of information and is one of my favorite retirement planning resources. 

Nudging your Social Security claiming decision can lessen the worry of making the wrong choice

The biggest question that you probably have about Social Security is how big will your benefit be? The answer hinges on two factors: your earnings history and when you choose to take your benefit. 

By the time you get ready to retire, there isn’t anything you can do about your past earnings history, but you can control when you decide to collect your benefit. The longer you wait to collect, the larger your monthly check will be. Each year that you choose to wait your payment will increase by 8%. 

With lifespans continually increasing it can make a lot of sense to delay filing for Social Security. However, not everyone will live long enough to reap the rewards of delaying their monthly benefit. 

Many people see the decision to delay taking Social Security until age 70 as an all-or-nothing endeavor, but that is not the case. In fact, as Jeffrey Levine explains, this decision can actually be broken up into a series of 8 smaller decisions. 

By using the strategy of nudging the decision forward every 6 months, you can break this seemingly all or nothing choice into 8 separate, independent, reversible decisions which will lessen the fear of an all or nothing approach.

Challenges to using the every 6-month nudging approach

As with every financial strategy, there are drawbacks to using the nudge approach every 6 months. The most obvious is that if you happen to die during your wait, you won’t be able to collect the benefits. The author makes an important side note for married couples to consider this drawback. Listen in to hear what it is. 

Another downfall is that retroactive applications can reduce your lifelong benefits. Something else to consider is that if you file retroactively, you will receive retroactive benefits in a lump sum which could lead to a spike in your marginal tax rate for the year. 

Breaking down the decision of when to claim your retirement benefits into many smaller, less drastic decisions can give peace of mind to the decision-maker especially when they understand that the decision is reversible. 

Resources & People Mentioned

• Getting Comfortable Delaying Social Security with Six Month Reversible Delays
• Kitces.com
• Jeff Levine on Twitter @CPAPlanner
• Connect with our Sponsor Boomer Benefits
• Boomer Benefits Facebook Page
• Boomer Benefits YouTube Channel

Connect with Benjamin Brandt

• Get the Retire-Ready Toolkit: http://retirementstartstodayradio.com/
• Follow Ben on Twitter: https://twitter.com/retiremeasap
• Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter

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Tax scams are as old as taxes themselves, so are you doing everything you can do to avoid them? In this episode of Retirement Starts Today, we'll explore what the IRS labels, 'the dirty dozen' tax scams. You'll learn who is targeted by the various scams and then you'll discover what you should do to protect yourself from scammers. Make sure to stick around until the end of this episode to hear what you should avoid doing so that you don't fall prey to tax scammers.

Outline of This Episode

• [1:24] The IRS has issued a warning to taxpayers
• [6:10] Protection for taxpayers
• [9:00] Dave wonders whether he should build his home with cash or use a mortgage

Watch out for the 'dirty dozen'

Every year the IRS publishes its list of the 'dirty dozen' tax scams that citizens should be on the lookout for. This year's list comes directly from the IRS website in an article called Americans Urged to Watch Out for Tax Scams During the Pandemic. The article breaks up the 12 types of schemes into 4 categories based on who carries them out or whom they affect.

The scams can be described as pandemic-related scams, personal information cons, ruses that focus on unsuspecting victims like seniors and immigrants, and schemes that persuade taxpayers into performing unscrupulous actions. The IRS urges everyone to stay aware of scams and scammers, especially during tax season.

Economic impact payment theft

This first category of the dirty dozen is related to the pandemic-related stimulus payments from the government which are still under threat from identity thieves.

Look for these warning signs to spot identity theft scams. Any text messages, random incoming phone calls, or emails inquiring about bank account information or requesting recipients to click a link should be considered suspicious and deleted without opening. Remember that the IRS will never initiate contact with taxpayers by phone, email, text, or social media asking for a Social Security number or other personal or financial information related to economic impact payments.

Be alert to mailbox theft by checking your mail frequently and reporting suspected mail losses to the post office. It is also important to remember that IRS.gov is the agency's official website for payments, refunds, or other tax information.

Unemployment fraud leading to inaccurate taxpayer 1099-Gs

Stay vigilant about receiving receipts of unemployment benefits that you did not actually receive since this could be a sign of identity theft. This is yet another way that identity thieves try to steal stimulus payments. Taxpayers should look out for a form called 1099-G which reports unemployment compensation that they did not receive.

If you do receive this form, the IRS urges you to contact the appropriate state agency for a corrected form. If a corrected form cannot be obtained in time for taxpayers to file a timely tax return, they should complete their return claiming only the unemployment compensation and other income they actually received.

How you can protect yourself

This year the IRS made its IP PIN program available to all taxpayers. In the past, this program was only available to victims of identity theft. The IP PIN will help prevent fraudulent filings from identity thieves by serving as a key to unlock a taxpayer's tax account. In addition to the IP PIN, the IRS is further working to reduce fraud by strengthening tax software password protocols, asking for driver's license numbers as a way to prove identity, limiting the number of tax refunds going to bank accounts, and making personal information from tax transcripts.

It is important to stay one step ahead of scammers so that you can protect yourself from fraud. Remember that the IRS will never ask you for your personal information via phone, text, or email.

Resources & People Mentioned

• Americans Urged to Watch Out for Tax Scams During the Pandemic

Connect with Benjamin Brandt

• Get the Retire-Ready Toolkit: http://retirementstartstodayradio.com/
• Follow Ben on Twitter: https://twitter.com/retiremeasap
• Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter

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Do you have gold as a part of your investment portfolio? Several years ago there were loads of infomercials about investing in gold, but after today's retirement headline you may want to think twice about complicated investment strategies.

Don't miss out on this real-world cautionary tale which provides an example of how and why owners of IRAs with assets invested in nontraditional means need to follow strict guidelines. Press play to listen.

Outline of This Episode

• [2:32] Don't make this $300,000 tax mistake
• [5:25] You don't have to invest your IRAs in stocks and bonds
• [12:40] You don't need complexity to have great retirement investments
• [13:50] When the first RMD is taken from an IRA is the money considered earned income?
• [16:08] Does the custodian of an IRA pay taxes directly before distribution of the money?

Are you signed up for the Every Day Is Saturday newsletter?

If you have been wondering how you can submit your own listener question, make sure to head on over to my website RetirementStartsTodayRadio.com and simply click the ask a question button.

Another way to submit a question is by responding to my weekly Every Day Is Saturday newsletter which is delivered every Thursday morning. By joining the newsletter not only will you be reminded that in retirement every day is Saturday (even Thursday mornings), you'll also get links to articles and resources that were mentioned on the show.

Why one couple owes the IRS $300,000 for storing gold in their home

How's this for a headline? A Couple Stored a Gold IRA at Home. They Owe the IRS More Than $300,000. Today's retirement headline was written by Laura Sanders at WSJ. The article discusses a scheme that was promoted years back when ads extolled the benefits of using IRA assets to buy silver and gold coins to store at home or in a safe deposit box. However, the IRS has made it clear that there are strict rules that must be adhered to regarding IRA investments, and the couple failed to follow those rules.

You don't have to invest your IRAs in stocks and bonds

Many people don't realize that retirement investment accounts don't have to invest the assets in typical securities like stocks, mutual funds, and ETFs. The law actually gives retirement plan investors many options on how they invest funds, as long as it's not in collectibles such as artwork. Retirement accounts can hold investments in real estate, litigation funding, deeds of trust, and even cryptocurrency. One thing to watch out for with these kinds of alternatives is if your investment asset isn't liquid you could be in for some trouble around the time of your 72nd birthday when RMDs start.

Make sure to follow the rules

The article emphasizes that savers who have decided to invest in alternative assets must follow strict rules so that they are not considered self-dealing. Investors who do not follow the rules closely are risking financial catastrophe. Listen in and click through to the article to hear the details of the case so that you can understand how to avoid this type of costly situation.

Resources & People Mentioned

• A Couple Stored a Gold IRA at Home. They Owe the IRS More Than $300,000

Connect with Benjamin Brandt

• Get the Retire-Ready Toolkit: http://retirementstartstodayradio.com/
• Follow Ben on Twitter: https://twitter.com/retiremeasap
• Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter

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You may have noticed how the spirit of giving changed your mood this holiday season. That is because giving can actually increase your happiness. This week's retirement headline from BigThink.com is titled How Generosity Changes Your Brain, and it discusses recent research on how giving to others promotes happiness. On this episode of Retirement Starts Today, you'll learn how acting on your generosity creates numerous psychological and physiological benefits in your body.

If one of your goals for 2022 is to be more generous or even if you simply want to reflect on the acts of gift-giving that you experienced over the holiday season, don't miss the retirement headline segment. Then make sure to stick around until the end of the episode to hear my favorite retirement resources.

Outline of This Episode

• [2:42] How generosity changes your brain
• [8:02] How you can incorporate giving into your retirement plan
• [9:47] Dave is looking for quality retirement resources

Giving can increase happiness

Can spending your money maximize your happiness? We've all been told that money can't buy happiness. However, new research suggests that the opposite is actually true: spending money can bring joy.

Rather than buying things to increase happiness, researchers have found that sharing wealth with others is what creates long-lasting contentment. New research has been able to scientifically measure the ways that giving can improve joy. Giving actually releases neurochemicals like oxytocin and endorphins in your brain that are known to increase happiness. Have you noticed this phenomenon whenever you give to others?

Volunteering is sharing the gift of your time

In addition to giving money and gifts to others, giving the gift of time increases happiness as well. During the working years, donating time can be a challenge with all the other commitments that people have. This issue disappears in retirement.

Volunteering can even improve health. Science shows that generosity can increase longevity. Researchers found that retirees who volunteer were less likely to die over the course of a 5-year study. The results of the study showed that volunteering boosted people's overall well-being. Regular volunteering is even more beneficial to health than giving financially. Do you have plans to make volunteering a regular part of your retirement?

How to maximize your happiness through regular giving

Making a habit of generosity is a great way to improve your happiness and health in retirement. Whether you choose to give financially or donate your time, the results will benefit you.

Now that you know that giving can increase your joy, you can find ways to maximize that happiness. One way to ensure that you are optimizing your giving is by giving consciously rather than setting up an automated gift to charity each month.

If you do automate your giving, looking at your bank statements each month to see how much you spend on yourself and comparing that with your spending on others can also increase your contentment.

Have you thought of giving your time or money in retirement? Volunteering or donating money in retirement can also give you a renewed purpose. Think about ways that you could increase giving in ways that align with your values. Listen in to hear my favorite volunteer opportunity.

Resources & People Mentioned

• Boomer Benefits
• How Generosity Changes Your Brain from BigThink
• BOOK - Control Your Retirement Destiny by Dana Anspach
• PODCAST - Control Your Retirement Destiny
• Devin Carroll's YouTube Channel
• Taxes in Retirement Facebook Group with Andy Panko
• The Boomer Benefits Facebook community
• PODCAST - Retirement Answer Man with Roger Whitney
• PODCAST - The Retirement Tax Podcast with Steven Jarvis and Me

Connect with Benjamin Brandt

• Get the Retire-Ready Toolkit: http://retirementstartstodayradio.com/
• Follow Ben on Twitter: https://twitter.com/retiremeasap
• Subscribe to the newsletter: https://retirementstartstodayradio.com/newsletter

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Would you want to raise your standard of living for half of what you live on now? Tim Leffel did, which is why he chose to uproot his family from their life in Nashville to move to a small city in Mexico. Tim is the author of the book A Better Life for Half the Price and he joins me today to discuss the pros and cons of living abroad.

Don't miss the opportunity to learn how you can save money by living abroad. Tim is an expert in the subject and has written extensively about this topic. Listen in to hear this interview.

Outline of This Episode

• What made Tim decide to live in Mexico?
• Why did he rent before buying?
• What are examples of how he saves money by living in Mexico?
• Do you need to know Spanish before moving to Mexico?
• Why would people not want to move abroad?

Why did Tim choose to move to Mexico?

Tim and his wife have traveled extensively and even lived in Seoul, Korea, and Istanbul, Turkey when they were young. When they had their daughter they knew that they didn't want to live in the far flung reaches of the world but they still wanted the experience of living abroad.

Mexico was close by and easy to travel to, plus they liked the culture and the food which made it an easy choice to settle on. They chose to live in the central Mexican town of Guanajuato which is a mid-sized city of 200,000 with pleasant weather all year round.

It makes sense to rent first before purchasing abroad

Tim chose to rent for a year first before taking the plunge and purchasing a home. He remarks that buying a house abroad is not like it seems on those popular house hunting TV shows.

There is a lot you need to think about when buying a home abroad. The zoning laws aren't the same as in the U.S. and it can be hard for a foreigner to understand what things are worth without living there first. Tim recommends putting in the time and effort to truly understand the market value before purchasing a home.

What are examples of how he saves money by living in Mexico?

It's no secret that living in Mexico is less expensive than living in the U.S. Rent in the United States can easily cost $2000. In Mexico, you can find a house to rent for a fraction of that.

Healthcare expenses are notoriously high in the U.S. and in Mexico, Americans are shocked to find how easy it is to pay for those expenses out of pocket.

Tim finds that his total monthly expenses in Mexico are roughly equivalent to what he paid in rent in the U.S. Not everything is cheaper in Mexico though, listen in to hear about what costs more in Mexico.

Do you need to know the language first?

You would think that you need to be fluent in the language before moving abroad, but there are some places in Mexico where you can get by being monolingual.

Tim still doesn't consider himself fluent, although he is learning the language. Since his daughter went to school in Mexico, she had the opportunity to become fluent. Would you want to learn the language before moving abroad?

Connect with Tim Leffel

• CheapLivingAbroad.com
• CheapestDestinationsBlog.com
• TimLeffel.com
• BOOK -A Better Life for Half the Price by Tim Leffel

Connect with Benjamin Brandt

• Get the Retire-Ready Toolkit:http://retirementstartstodayradio.com/
• Follow Ben on Twitter:https://twitter.com/retiremeasap

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Despite the economic downturn, 2020 turned out to be a fantastic year for charitable giving. In this episode, we'll look at how people chose to give and you'll learn about the efficiency of giving through donor-advised funds (DAFs).

In the listener questions segment, you'll learn how to survive a bear market in retirement. We'll investigate the length of the average bear market and see how you can prepare for the worst in your retirement years.

Outline of This Episode

• 2020 was a banner year for giving
• Planning ahead can help alleviate a hefty tax bill
• What is the average length of recovery from a bear market?
• Look into Guyten's Guardrails

Shwab and Fidelity both showed an increase in giving

You would think that with the economic downturn of the last year that people would tighten their bootstraps and cease giving to charities, but it turned out that the opposite was true. The two largest brokerage firms, Schwab and Fidelity, recorded increases in charitable donations.

Donations were made in response to the Covid pandemic and the social justice protests that marked the year. The biggest recipients of these charitable gifts were organizations that provide food and other necessities

Donor-advised funds are an important vehicle for charitable giving

Fidelity Charitable and Schwab Charitable both use donor-advised funds as a vehicle for charitable giving. Donor-advised funds (DAFs) have become popular since they are simple and make for an easy way to give strategically. These charitable investment accounts allow a donor to make a charitable contribution, receive a tax deduction, and then distribute the money over time. Have you thought of changing the way that you make charitable contributions?

What are the benefits of using DAFs?

DAFs have become more popular in recent years due to changes in tax laws. The new standard deduction for charitable giving increased to $24,800 for a married couple. By creating a DAF, donors can contribute a lump sum every few years and then administer the funds to the charities they choose over time. Many advisors recommend donor-advised funds as a receptacle for their clients to strategically deduct charitable contributions. Listen in to hear a real-world example of how a DAF can be used.

Planning ahead can create a tax deduction

We must all pay our taxes, but we never want to overpay -- no one wants to leave the taxman a tip. If you are charitably minded, a donor-advised fund is an excellent way to implement a multi-year tax strategy and take advantage of the standard deduction. Think about how lump sum giving every few years could change your tax situation. It pays to plan your taxes ahead in retirement.

Resources & People Mentioned

• Investment News article on charitable giving
• Guyton's Rules for Withdrawal Rates
• Guyton's Guardrails are discussed in - Episode 181, Episode 153, Episode 149, Episode 93

Connect with Benjamin Brandt

• Get the Retire-Ready Toolkit: http://retirementstartstodayradio.com/
• Follow Ben on Twitter: https://twitter.com/retiremeasap
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