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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.

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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.

Financial Propaganda

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.

The Mailbag

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?

Spotlight Segment

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.” 

—Bob Payne

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! 

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