There are two massive risks retirees will face. The first is tax rate risk, the risk that tax rates in the future will be dramatically higher. This seems likely with whomever is elected in 2020 especially with trillion- dollar stimulus packages and mounting national debt. The second is longevity risk, where you run out of money before you die. This has been a valid concern for years with increased live spans.

Most people are not receiving a balanced approach with their income planning.  Most clients are focused solely on rate of return or are not working with a qualified advisor who could balance  risk retirees will face such as:  analyzing income sources for, escalating healthcare cost, cash flow, and portfolio risk.   Retirees face many different types of risk in retirement.  You may have saved a lot of money in your retirement account, but if it is all fully tax-deferred now and taxable later you have a partnership with the IRS.   

Taxes will be one of the most challenging risks retirees could face moving forward.   If you’re mitigating tax rate risk, you should be executing a series of Roth conversions in a way that stretches out your tax liability over time but quickly enough that you get it done before tax rates go up for good. Ideally, try to get your fiscal financial house in order before 2026 if possible.

Forbes

https://www.google.com/amp/s/www.forbes.com/sites/davidrae/2018/09/20/rich-person-roth/amp/

If you’ve been concerned about tax increases in the future, it may happen sooner than you think. This year’s election is a pivotal one for a number of reasons, and one of those is taxes. If you are wondering what that might look like, then look no further.

Obviously, a proposal this early in the game is subject to dramatic changes, but it does give us something to ponder. While most of these tax changes will only have a significant impact on the wealthiest of Americans, it would, in the end, increase taxes for everyone as expected – further emphasizing the importance of implementing a tax strategy today to take advantage of our historically low tax rates. 

One area of impact you should not overlook would be the elimination of capital assets "step up in basis," projected to increase tax revenues by approximately $40 billion per year. Couple this with the increase in capital gains tax rates, and you can see the benefits of harvesting capital gains sooner rather than later. You may be able to sell assets today and repurchase a similar asset within a specified timeframe, resulting in no current taxation. Your heirs will benefit from a "step up in basis" in case this proposal becomes a reality.

The U.S. economy needs another new stimulus package because US jobless claims and U.S. retail sales confirm the economy is stalling. The IMF is warning about soaring US bankruptcies. Small and mid-sized business bankruptcies are likely to triple if the U.S. government does not provide support it. Basically, American consumers do not have the same confidence they had before Covid-19. They need help. And this help, for the time being, could be through an appropriate stimulus package. Why could social security checks be smaller in the future? We also discuss revenue sharing fees for asset managers.

When you're preparing for retirement, it’s easy to over focus on the big question; “Do I Have Enough Money to Retire?” While that’s obviously an important question, there are many other bad moves that can derail a successful retirement. One of the biggest is the failure to create a written income plan, which describes where your income will come from in retirement. An appropriate retirement income plan accounts for all your income and expenses and identifies any gaps. In the absence of such a plan, it’s all too easy to make mistakes that can sabotage your  retirement. Many Americans ignore or underestimate long-term care expenses. That can be costly since 52% of people turning 65 will need some type of long-term care during their lifetimes. In an era with rock-bottom interest rates, putting too much money into interest-bearing bank accounts is another potential problem. Because banks offer deposit insurance protection, you may fail to realize how inflation is eroding your purchasing power. Every retirement income plan must factor in the cost involved in healthcare, inflation, and low interest rates. 

With the Coronavirus we saw many changes and laws passed to help the American people recover from the fastest economic shut down in history.  Part of the provisions presented came from an IRS revision called the Coronavirus-Related Distribution (CRD). This is any distribution by a person diagnosed with Covid-19, and it can also include a spouse or dependent. If you have been adversely affected by the Coronavirus in some way, for example being furloughed, you may qualify as well.

The CRD allows you to withdraw up to $100,000 from your qualified plan, a 401k, 403b etc.  and if you’re younger than 59½, the 10% penalty is waived. Another benefit is you are allowed to pay the money back over the course of the next three years.

The IRS treats this as a rollover instead of a contribution so you’re not constrained by the traditional contribution limits.

This is where the Roth Conversion loophole comes in. We also saw a swift market selloff.  Find out how to avoid costly mistakes that can set your retirement back.

This week’s retirement reading is from Forbes, titled "4 Reasons Your Taxes In Retirement May Be Lower Than You Think." We will break down this article and provide some insight as this may not be entirely true. Find out some moves you could make to help you maximize your retirement on this week’s show. Link:  https://www.forbes.com/sites/financialfinesse/2020/05/26/4-reasons-your-taxes-in-retirement-may-be-lower-than-you-think/#27bcd4ba5e3c

The Redefining Wealth Framework, offers something of a recipe to ensure nothing is overlooked with the implementation of a retirement strategy. Maybe you’ve covered your emergency fund, income strategy and growth strategy. But what happens if you have a major healthcare crisis requiring assistance and care or an extended stay costing ten thousand dollars a month? Maybe you have investments for long-term growth and an emergency fund, but if the market tanks, where do you get your income while you wait for it to recover? We segment assets , we actively manage the risk side of a portfolio. Learn What steps should you take if you are nearing retirement or are already retired and want to make sure you have the right plan in place? You might be asking yourself, "How much of my portfolio should I have safe vs. risking higher potential gains?" Find out on this episode of The Retirement Talk Podcast. 

We are currently facing unprecedented times as well as an event with the global pandemic caused by a novel coronavirus that began in March 2020. In just a matter of weeks, we went from business as usual to almost no business at all. Yes, stocks are "on sale" now, and for some investors, now is an ideal time to ramp up their portfolios. But for others, it could be a huge mistake. Listen to the show as we discuss how to tell if you are among those who should hit the gas or pump or the brakes.

Coronavirus/COVID-19 has sent the market into its worst drop since 1987, with a lot of uncertainty and volatility in a short timeline. If you are an investor working with an advisor, your advisor should be working with you to adjust your investment plan. What about your 401k? What moves do you need to make right now? Many investors hold too much company stock. And many individuals own too much stock overall, needlessly taking too much risk. Stocks move in many different patterns, which is what makes investing so difficult. Yet, many investors think in only one pattern — cyclically. If a stock falls sharply, won't it eventually come back? Not necessarily. Find out more on this episode of the Retirement Talk Podcast. Resources: For more information or to sign up for one of our seminars, text KNOWLEDGE to 474747. All times Eastern. Tuesday April 21st at 2 pm https://us04web.zoom.us/j/528737165?pwd=N2x0VGJUcXBUY3Zya0NWMGlzSmVOUT09 Thursday April 23rd at 7 pm https://us04web.zoom.us/j/879093655?pwd=ZEVCZmxySVBVQ1ArZWk1RDFNbFlhQT09 Saturday April 25th at 9:30 am https://us04web.zoom.us/j/161225227?pwd=Tmx3WGVzY1htMlNDOURWVkdoR0FNUT09 HCM 401k Optimizer https://www.401koptimizer.com/public Video explanation of our Portfolio A/Portfolio B example: https://www.facebook.com/LSWealthManagement/videos/212194330107045/ LS Wealth Management on Facebook: https://www.facebook.com/LSWealthManagement/

Historically, the market’s reaction to fast-moving diseases has often been short-lived. On average (Since WWII), 5-10% declines happen once a year and 10%-20% declines happen every three years. With the market up over 40% from Christmas Eve 2018 to 2/19/2020, a sizable decline was not unexpected. However, human lives are at risk, so this is much more serious than a normal decline. What should investors do during turbulent times? Find out this episode of the Retirement Talk Podcast.