Whether you’re a Baby Boomer or a Millennial, how can you make the most out of your retirement plan and inheritance? In today’s episode, Bob Payne and I discuss everything you need to consider in retirement. If you’re ready to secure the best future for your family, stick around for today’s discussion.
One of the biggest concerns people have when it comes to inheritance is the tax implications of receiving that money. People won’t be able to enjoy their inheritance if they have to pay a hefty sum to get the money. So, we’re going to talk about the tax implications of your inheritance to help you maximize your gains. We will also discuss this week’s financial propaganda.
For our spotlight segment today, we have our colleague, financial adviser Frankie Lagrotteria. She’ll give us a breakdown of an actual retirement plan so that we understand how taxes work in these cases.
General Tax Implications
It’s becoming socially acceptable now to leave your family with no inheritance. But if you’re planning to leave something behind, you could encounter misconceptions, especially concerning its tax implications. What do you need to know about the taxation of your inheritance?
[2:49] – Inheritance is taxed on the estate level. The money you receive is already an after-tax inheritance.
[3:59] – However, if you inherit an IRA and you take the money out right away, you’re going to be hit with taxation.
[4:52] – The New SECURE Act allows us to let money in our retirement accounts compound for an additional year and a half. The downside of this is that it could put you at a higher tax bracket.
[5:11] If you’re retired now but haven’t reached 72 yet, it may be smart to convert some of your money into a Roth IRA. When your heirs inherit your money, they can get it tax-free instead of being taxed over 10 years.
[5:30] – Update your beneficiaries about your will. Make sure the beneficiaries are set, and the 529 plans are in place.
[6:24] – If you didn’t have competent advisors checking your plans before, you better check it now because banks and wirehouses don’t pay attention to that.
Challenges for Baby Boomers
Times have changed, and with this change come challenges, especially with financial planning. Baby boomers face hurdles unique to their generation. What are these hurdles, and how can you prepare for them when you build your portfolio?
[11:56] – Even when you have retired, you will still need to provide for the expenses you had while you were working.
[12:49] – Inflation is like a hidden tax. As the cost of living rises, you will need a portfolio that will give you not only safety but also growth.
[14:07] – You could be making these two mistakes on your portfolio right now: (1) you’re taking too much risk or (2) you’re way too conservative.
[15:19] – Ask yourself: When was the last time you evaluated the risk in your portfolio? How do you even know the risk in your portfolio? Put your portfolio under a stress test to see how it will hold up in a bear market.
[16:02] – You might also be overlooking the unanticipated expenses you could have, particularly healthcare expenses.
[17:10] – The income you need today is not the income you’re going to need 10 years from now. Inflation compounds against you, but you need your money compounding for you.
Bob and I scour daily financial news to bring you this week’s financial propaganda. We’re here to help you make sound decisions and protect yourself from the biggest offenders, those who offer obscene financial guidance. And this week, it’s not just the media that’s driving market volatility.
[21:31] – The coronavirus scare in the media is pushing the market toward volatility. However, history shows that the market can be resilient in the face of a viral epidemic.
[24:42] – The media is also propagating a fear of recession and an inverted yield curve. Hence, despite the 30% increase in US stocks last year, a lot of money is going into bonds instead of stocks.
[26:38] – The world market is picking up again, despite the media saying otherwise. And with growth comes an increase in interest rates, which, in return, drives bond prices down.
Financial matters can be confusing, and every decision you make is crucial. It’s not so easy without the help of an advisor, that’s why here at No Payne, No Gain, we give you the opportunity to send in your questions. Stepping in for this week’s Mailbag segment is our special guest, Grace Reddick.
[33:12] – Question #1: I have several brokerage accounts. Is it better to consolidate them or keep them spread out?
[36:01] – Question #2: What proactive steps can I take to protect my portfolio?
We have with us Payne Capital Management financial adviser Frankie Lagrotteria for this week’s Spotlight Segment. Alongside Frankie, we will dissect a financial plan that helped our clients on their path to financial freedom.
[44:21] – Spotlight Segment with Frankie Lagrotteria
[44:37] – Frankie gives a case overview of a couple she helped.
[45:24] – Frankie tells us how she addressed the couple’s pain points.
[46:54] – You can have a portfolio that gains interest and returns over time but is still liquid enough for you when you need it.
“The return on cash is trash.”
To download 5 Ways to Maximize Your Retirement Accounts and Save on Taxes in 2020 and the Highlights from the new SECURE Act, text BULLISH to 555888.
If you have saved over $500,000 for retirement and need a plan based on your retirement goals, Bob and Ryan will create a 360 Financial Portal just for you! Text or call 844-752-6692 to check out the 360 Financial Portal with no strings attached!
Contact us for a consultation with our financial advisors to start a personalized plan
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Payne Capital Management, LLC), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Payne Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Payne Capital Management, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Payne Capital Management, LLC’s current written disclosure statement discussing our advisory services and fees is available for review upon request.