One For The Money

Welcome to One for the Money! In Episode 88, we explore retirement as a journey—and each important stop along the way. From your 20s through your 60s (and beyond), you'll learn what to focus on at each stage, how to avoid costly pitfalls, and how to test-drive retirement with a mini-retirement that just might change your life.

Welcome to episode 87 of the One for the Money podcast. Retirement is the ultimate dream for many, but there are realities of retirement that everyone needs to be aware of. Better retirement planning will incorporate these realities so it leads to a better life in retirement. In the tips, tricks, and strategies portion, I will share ten tips when you are 10 years from retirement.In this episode...Your Biggest Expense Isn't What You Think [2:08]Your Biggest Fear is Misplaced [3:20]Regret is More Common Than You Think [4:40]The Real Risk Isn't a Market Crash [5:08]Your Most Expensive Years Are… Surprising [5:59]Your Health = Your Wealth [6:26]Identity Crisis Incoming [6:48]Estate Planning is About More Than Money [7:30]We often forget that retirement is only a recent invention. It hasn't been around for that long. For most of human history, people worked until death or until their family could care for them when they were unable to work any longer. Retirement allows one to enjoy a life of leisure even though one is still capable of work. It really is a more amazing concept than we give it credit, and it truly is an absolute luxury of both the modern and first world. It's amazing to think that a person can work and invest for 30-40 years and then live off that work for another 30-40 more years. Your great-grandparents would've thought that was science fiction. And honestly, for billions around the world, it still is.If you are literally and figuratively fortunate enough to enjoy such a dream as retirement, here are the most important retirement realities as I see them.

Welcome to episode 86 of the One for the Money podcast. In the late 1960s and early 70s, a famous psychological study was conducted that has since been called the Stanford Marshmallow test. The study was designed to explore the concept of delayed gratification. In this episode, I'll share how life might be considered one giant marshmallow test.In the tips, tricks, and strategies portion, I will share a tip regarding how to not eat the entire marshmallow.In this episode...The Marshmallow Test [0:36]Delayed Gratification in Personal Finance [2:23]Investing Rewards Patience [10:01]Teaching Financial Discipline [10:46]In the late 1960s and early 70s, a psychologist named Walter Mischel at Stanford University conducted what has become a famous psychological study. The study was designed to explore the concept of delayed gratification — the ability to resist the temptation for an immediate reward in order to receive a larger reward a short time later.Here is how the Experiment was set up:600 preschool-aged children, roughly 4-6 years old, participated in the study. Each child was placed in a room with a marshmallow placed on a table. The researcher told the child that they could either eat the marshmallow immediately or wait 15 minutes without eating it. If they waited without eating the marshmallow, they would be rewarded with a second marshmallow.The researcher then left the room, leaving the child alone with the first marshmallow. The Key Findings as a result of this research were that Individuals had varied Self-Control: Some children immediately ate the marshmallow, while others were able to wait the full 15 minutes for the larger reward. Now you might be wondering what a 4-6-year-old eating a marshmallow has to do with personal finance? Well, that's what was most remarkable about this study was what the follow-up studies revealed. The outcomes were very successful at Predicting Future Outcomes: Over the subsequent decades, Mischel and his colleagues followed up with many of the children who participated in the experiment, and the results were astounding:It found that the children who were able to wait for the second marshmallow, decades later, tended to have significantly better life outcomes in terms of higher SAT scores, lower rates of obesity, more likely to be financially stable as well as to have greater job satisfaction. The ability to delay gratification was a more accurate predictor of future success than their scores on an IQ test.Now it should be noted that while the Stanford Marshmallow Experiment became a widely discussed study about the power of self-control, later research showed that the environment in which a child grows up, including factors like trust in caregivers, socioeconomic status, and stability, can influence how well they are able to delay gratification. For instance, children in more unstable environments may have less reason to trust that the promised later reward will actually come. But suffice it to say, the Stanford Marshmallow Experiment remains one of the most influential studies in psychology, because it exposed the impact that self-control has on later life outcomes.I've read about this study numerous times over the years, but recently it has led me to this thought: is life really just one giant marshmallow test? Is delaying gratification part of the better planning one needs to implement to have a WAY better life?As I thought about this more, I came to the belief that generally speaking, life is one giant marshmallow test and that individuals can both learn and develop the skills so they too can have much better life outcomes. It also seems to me that businesses and politicians can hijack our desires for immediate gratification to their advantage.Individuals...

Welcome to Episode 85 of the One for the Money podcast! Some of you may remember that best-selling book The Automatic Millionaire. It told readers how to easily become a millionaire with a few simple steps. But in this episode, I'll reveal the sad truth: too many people aren't becoming automatic millionaires because they're spending too much money on automobiles. Yes, cars and trucks are putting the brakes on a better future for many Americans. I'll also share the massive benefit of driving one's car until the wheels come off.In the tips, tricks, and strategies section, I'll share some car-buying tips.In this episode...Automating Savings [1:23]The Financial Impact of Car Ownership [2:04]When Is It Ok to Buy a Nice Car? [6:35]The Automatic Millionaire, written by David Bach, became an international bestseller because it gave us that magical formula for becoming a millionaire. Bach's magic trick? Automating your savings and spending. He basically tells you to set it and forget it. You set up automatic contributions to your 401k or IRA, and it's that easy to be on the road to riches. He even argues that you don't need to be making a six-figure income to become a millionaire—you just need to make sure your savings and spendings are adjusted on autopilot and viola, decades later you reap the rewards.And yet, despite this brilliant advice, millions of people are still missing the automatic millionaire bus, and they're doing it by throwing too much of their money at automobiles. While an automobile is designed to take you places, far too often, it takes owners to a future that is much poorer and less fulfilling than it otherwise could be.Now, you might ask, is car ownership really that impactful? Let's look at the numbers from 2024:Americans owe around $1.655 trillion in auto loan debt. That's right, trillion with a T.Over 80% of new car purchases in 2024 are financed, and the average car payment is $742 for new cars and $525 for used ones. (That's a lot of money that could be used to build wealth instead.)Now, why is this a problem? I mean, cars are cool, right? But here's the thing—unless you're driving a classic car like a 23-window VW van (I can dream), cars lose value. In fact, a new car drops thousands of dollars in value as soon as you drive it off the lot. So, people are paying $525-$747 a month for years... for something that's losing value fast. In fact, over 30% of people with car loans have negative equity, meaning their car is worth less than what they owe. Here is something even scarier: When a car is damaged, such as in a natural disaster, insurance will either pay to repair a car's damage or give the driver a lump sum equal to the value of the car. When the damage is severe, insurers usually choose the lump sum. That means if your car with negative equity is totaled. You will be out of a car and still have money you owe on it. Even when the damage isn't severe, it can still pose a huge financial challenge. An Oct 2024 article from the WSJ featured a 34-year-old gentleman who had noticed the main display screen on his new vehicle would often disappear. The car's backup camera didn't always work, and the car would make a screeching noise when in reverse. He decided to bring the car into a local dealership, hoping to trade it in. Only to have the dealership tell him it was worth roughly $24,000, which was just under half of the roughly $50,000 he still owed on his loan. Now, I should confess that I drive a 15-year-old Toyota Prius that I had purchased used. It's been a great car, and I hope it will continue to be for years to come. My wife's car is 7 years old, and it replaced her 16-year-old car at the time. However, I must also...

Welcome to episode 84 of the One for the Money podcast. This episode airs on April 15 which means it's the tax filing deadline. Now no one likes paying more taxes than they have to, and a great way to accomplish this is by using a Roth Retirement account. In this episode, I'll share how everyone can have a Roth. In the tips, tricks, and strategies portion, I will share a tip on how for the same amount of money it may make more sense to complete a Roth conversion than a Roth contribution.In this episode...What is a Roth Retirement Account? [1:56]Direct Roth IRA Contributions [2:46]Roth 401ks, SIMPLE IRAs, and SEP IRAs [3:44]Roth Conversions [7:36]Backdoor Roth IRAs & Pro-Rata Rule [8:36]I remember years ago a coworker of mine shared with me that she and her husband hoped that their income would one day be high enough that they would no longer be eligible to contribute to a Roth IRA. It's true, that certain individuals, can make too much income to contribute to a Roth IRA. But in this episode, I will share how everyone, regardless of their income level can contribute to a Roth IRA or put differently, how everyone can Roth this way. Okay, that was pretty bad but I had to try. But first, it would be helpful to provide a brief explanation of what exactly a Roth retirement account is and how they came about. A Roth retirement account is merely a retirement account on which you invest monies on which you already paid taxes. Because you are contributing money after it's been taxed all of the growth and all of the distributions are 100% tax-free (provided you follow the required distribution rules; age 59.5, etc). These are a fantastic way for individuals to build a tax-free bucket of money that they can utilize in retirement that won't have any taxable implications.Roth IRA Contributions The first way to contribute to a Roth IRA is to make direct Roth IRA contributions. For the 2025 tax year, individuals who earn less than $150,000 or married couples who earn less than $236,000 can contribute directly to a Roth IRA. For those under 50, they can contribute $7000 and for those 50 and older they can contribute $8000. Roth IRAs are a fantastic way to build a tax-free bucket of money for retirement. I set these up for my wife and me early in our marriage and I'm so glad I did. These can be especially great for kids as well. I call them Kid Roths and I've set these up for our three boys. That way they can benefit from decades of compound growth. If you are early in your career it can be a great time to invest in a Roth IRA.Roth 401ks/Simple IRAs and SEP IRAsRoth 401ks/Simple IRAs and SEP IRAs are another great way for anyone regardless of income level to contribute to a Roth investment account. For whatever reason, Roth 401ks, Simple IRAs, and SEP IRAs have no income limits like Roth IRAs do. So regardless of one's income, they can contribute to a Roth 401k. Roth 401ks are great for lower earners as they can allow you to put away even more money on a tax-free forever basis. Individuals can put up to $23,500 in 2025 and for those 50 and older they can put away an extra $30,500. Oddly enough, for those specifically between the ages of 60-63 they can put away $34,750. Why especially those ages, not sure, you'll have to ask Congress.Roth Simple IRAs have lower contribution limits namely $16,000 for those under 50 and $19,500 for those 50 and older. Roth SEP IRA limits are based on a percentage of one's income. These all are great vehicles where individuals can put a lot more money away on a tax-free forever basis. These can make a lot of sense for individuals in their lower-income years such as those early in their career or for those that are late in their career when they are working part-time prior to retirement. However, these can also...

Welcome to episode 83 of the One for the Money podcast. This episode airs in April, which means we are in the final days of tax season. I've never met anyone who likes paying more taxes than they have to, and in this episode, I'll share how you can utilize the standard or itemized deductions so you don't have to pay them. Hence the title of this episode, not your standard tax savings strategy. In the tips, tricks, and strategies portion, I will share a tip regarding how paying it forward can save you on taxes. In this episode...Standard vs. Itemized Deductions [2:15]Tax Planning Strategies for Deductions [7:04]Benefits of Donating Stock vs. Cash [9:17]Importance of Tax Planning in Financial Strategy [11:32]MAINOne of the best financial planning quotes I've read is this “In America, there are two tax systems; one for the informed and one for the uninformed. Both are legal.”How true that is. But the challenge with being “informed” about taxes is that Taxes are incredibly complex. Just the federal tax code alone is over 6700 written pages, and the US treasury's interpretations of the tax code, because it isn't sufficiently clear, are tens of thousands of pages more. For these reasons and others, many individuals ignore the tax laws altogether and consequently pay more taxes than required. However, with a little bit of better tax planning, you can have a better life because you will pay less in taxes and have more money to spend on great experiences.A particular area that many taxpayers don't understand is the deductions everyone receives on their income. Deductions are the amount of your income that is not taxed at all. Taxpayers will take one of two forms of these deductions, which are known as either the standard deduction or itemized deduction. The standard deduction is a default amount of income that you would pay no taxes on. The itemized deductions are for those individuals who have certain key items (such as medical expenses, mortgage interest, gifts to charity, and state and local taxes) that would provide a higher amount of their income that is not subject to tax.Just what are the amounts not subject to tax, well in 2025 the standard deduction for an individual is $15,000, and for a married couple it is just double that or $30,000. A reminder, what that means is on the first $15,000 of income an individual pays 0% in taxes. So if a person has $65,000 of income in 2025, they would only have to pay Federal taxes on $50,000 because the first $15,000 of their $65000 salary is not taxed. I should note that the standard deduction wasn't always this high, but back in 2019 when the Tax Cuts and Jobs Act was passed, it doubled the standard deduction from what it was previously. Before this doubling of the standard deduction, just over two-thirds of taxpayers took the standard deduction and just under one-third itemized deductions, but now with the increase of the standard deductions, over 90% of taxpayers claim the standard deduction with just around 9% taking itemized deductions. That's a good thing for most tax payers as lower earners had more of their income not subject to tax.Just what are these itemized deductions? Itemized deductions are when individuals have items on which they spent their income, that in total, were higher than the standard deduction. Itemized deductions are captured on Schedule A of the tax forms. There are primarily four items. The first is Medical expenses, the second is mortgage interest on your primary and secondary residence, the third is state and local taxes, and the fourth is charitable contributions. For medical expenses, it is only for those that are above 7.5% of your AGI. So if your adjusted gross income was $100,000, you would include with your itemized deductions any medical expenses that were more than $7500 for that tax...

Welcome to episode 82 of the One for the Money podcast. This episode airs in March which means we are in the midst of tax season and there are numerous ways to reduce taxes. One of those ways is to make pre-tax contributions to your 401k or IRA. You don't pay taxes now but will pay taxes later in retirement when you withdraw these funds. But in this episode, I'll share a perspective that argues that certain high earners should halt pre-tax 401k and IRA contributions.In the tips, tricks, and strategies portion, I will share tax savings tips utilizing a trust.In this episode...401(k) Contribution & Tax Efficiency [1:20]Higher Earners & Pre-Tax Contributions [2:47]Beneficiary Impact [6:59]Tax Mitigation Strategies [9:09]In the episode before this one, I shared that saving in a 401k is a great way to ensure you have sufficient income in retirement and a 401k can allow you to do it in an incredibly tax-efficient manner. With a traditional 401k or IRA, you can contribute funds on a pre-tax basis, this is also known as a traditional 401k or IRA. This will lower your taxable income for the year of the contributions. You will pay taxes later when you take distributions from the account in retirement.And recently Congress passed legislation to help certain individuals save even more. Those are individuals that are between the ages of 60-63 who can now contribute an additional $3750 to their 401k accounts. For those under 50 they can put away in a 401k up to $23,500, and those between 50-59 and 64 and older put away up to $31,000 but retirees between ages 60-63 will be able to contribute up to $34,750 in 2025. Why those specific ages, 60-63, and not 65 or 67, well you'd have to ask Congress. While this may seem like something one should take advantage of, Ed Slott, a well-recognized tax and retirement expert has argued that certain higher earners should stop funding pre-tax 401ks and IRAS altogether. Now Ed Slott is a certified public accountant and is a nationally recognized IRA and retirement planning distribution expert, best-selling author, professional speaker, and television personality. So he's no crackpot. He has even hosted several public television programs, including his latest, Retire Safe & Secure! with Ed Slott which was featured on PBS.But the key is understanding the specific people that Ed Slott argues should stop contributing to their pre-tax IRAs and 401ks. Specifically, it is for people who have very large pre-tax 401k and/or IRA balances that should stop because the income forced out of these plans in retirement, via required minimum distributions, will result in them possibly being in even higher tax brackets than they are now.This highlights an issue that I see countless times in my own financial planning practice which is that far too often tax saving strategies can be very short-sighted. The focus often is on how to get a larger refund in the current year and not considering the ticking tax time bombs that we may be setting ourselves up for in the future. The absolute best tax mitigation strategies consider both short-term and long-term implications when it comes to lowering your lifetime tax bill.The reason why high earners with large 401ks and IRAs should consider stopping funding is that when they reach the required minimum distribution age, they may have to take some significantly high distributions. People would be amazed by how many of the retirees I work with don't want these distributions. And my financial practice isn't alone. There are a number of advisors who work with individuals who don't want the funds from their IRAs.I'll share a hypothetical example to give you an idea. Let's say you have a large pre-tax retirement account at age 60 with a balance of ~$2 million and it grows at a relatively modest 7% until...

Welcome to episode 81 of the One for the Money podcast. I am always glad and grateful you have taken the time to listen. There are a host of options when it comes to investing and there is an order of priority in which these should occur. In this episode, I'll share my thoughts on that order. In the tips, tricks, and strategies portion, I will share a tip regarding 401k contributions for those nearing retirement.In this episode...Cash Flow Management [1:58]Emergency Fund [4:17]Contributing up to Company Match [5:51]Paying Down High-Interest Debt [6:20]Funding an HSA [7:50]Saving Further into a 401(k)/IRA [9:03]Extra Savings [10:12]I recently re-read the classic book, The Richest Man in Babylon. It's a great story on how simple steps can help one build wealth, even those who are mired in debt. The truths contained therein are conveyed so well through the story that I'm having my oldest two boys read the book. In the book The Richest Man in Babylon, its emphasis was more on savings than investing. Presently there are almost countless ways one can invest. For that reason and others the investment world can be overwhelming and as a result, many choose not to participate. And that is literally and figuratively unfortunate as far too many fail to make small changes that over time have massive results. This episode is meant to help demystify which investments one should select and in what order. But of course, before we can even think of investing we need to ensure we are monitoring our cash flow. That is the money coming in and the money going out. Some call that a spending plan others call it a budget. I'll go with the former as it seems more palatable and less restrictive than a budget.The general rule of thumb when it comes to spending plans is pretty straightforward. One should allocate ~20% of your spending plan to your savings. Those savings can include an emergency fund as well as your retirement and non-retirement savings vehicles. I mention savings first as you should always get in the habit of paying yourself first. It's an absolute game-changer. As Warren Buffett said so well, Do not save what is left after spending but spend what is left after saving.Approximately ~50% of one's budget should be spent on their needs. This would include housing (be it a mortgage or rent), groceries, electricity, transportation, etc. Finally, ~30% of your budget should be allocated to your wants such as a gym membership, eating out at restaurants, travel, etc. However, this should only be the case if all one's higher interest-rate debt is paid off. I would define higher-interest debt as over 6% which is not your mortgage. Now some might argue that one's health is paramount and that you should devote money to gym memberships, etc. I agree that one's health is critical as I recently shared in episode 78 how the first wealth is health, but one can work out without the need of a gym. Additionally, one can eat without the need to go to a restaurant. For those reasons, these are considered “wants instead of their needs” expenditures. Now that I've set a framework regarding cash flow planning the next step is to consider what should be the order of where one puts their money. This may seem similar to the baby steps that Dave Ramsey has made famous. I will share a few key differences between those steps. Dave's Ramsey's Baby Steps are great as a general rule and the impact he has had on thousands upon thousands of Americans is nothing short of remarkable so I'm in no way trying to belittle his steps. The first step, which I will call 1a, which is similar to Dave Ramseys, is building up an emergency fund. As JP Morgan notes in its Guide to Retirement - Life is uncertain –spending shocks and/or job losses can happen at any time. Emergency savings can...

TRAILERWelcome to episode 80 of the One for the Money podcast. I am always glad and grateful you have taken the time to listen. This episode is part 2 of a 2 part series on Medicare, which is the Federal health insurance program that helps pay for the health care costs of retirees. In episode 79, which was part 1 of this series, I shared what one needs to understand about Medicare and in this episode I'll share the most common Misunderstandings and Mistakes people make with Medicare.In the tips, tricks, and strategies portion I will share a tip regarding choosing between Medicare Advantage and Medicare Supplement Insurance.In this episode...Medicare Isn't Cheap [2:23]Late Medicare Enrollment [4:47]Skipping Part D [5:46]Enrollment isn't One-time [6:48]Ignoring Pre-existing Conditions [7:50]MAINIn Episode 79 of the One for the Money podcast, I shared how expensive healthcare can be in retirement, even with Medicare covering a lot of the expenses. According to a survey released by the investment company Fidelity in August of 2024, most individuals expect healthcare costs in retirement to be~ $75,000 per person or $150,000 per couple but the actual expenses are $165,000 per person or $330k per couple. That is more than double what people estimate they will have to shell out. Medicare will play a major role with regard to their health care in retirement. However, the Medicare system itself can be challenging to fully comprehend given the various coverage options, expenses, and deadlines involved.Due to these misunderstandings far too many American's make critical mistakes regarding their Medicare coverage. Here are five of the most common mistakesFirst, many Americans might assume (given that they've paid into the Medicare system through payroll taxes throughout their careers) that Medicare coverage is completely free. Whereas, in reality, several parts of Medicare (e.g., Part B medical coverage (doctor visits) Part C, and Part D (which provides prescription drug coverage) require you to pay premiums. Further, even if one understands that they will have to pay premiums, they might not be familiar with Income-Related Monthly Adjustment Amount (IRMAA) surcharges (aka IRMAA), which apply to retirees with higher incomes in retirement which can increase their costs further. And so the Mistake people make is thinking Medicare is inexpensive or free but Medicare does not cover 100% of your healthcare  costs. Medicare part A covers inpatient hospital care, skilled nursing facility stays, hospice care, and some home health care,Part A Deductible and Coinsurance Amounts for Calendar Years 2024 and 2025by Type of Cost Sharing20242025Inpatient hospital deductible$1,632$1,676Daily hospital coinsurance for 61st-90th day$408$419Daily hospital coinsurance for lifetime reserve days$816$838Skilled nursing facility daily coinsurance (days 21-100)$204.00$209.50Medicare Part B (Medical Insurance):.Part B is optional and available to anyone who qualifies for Part A. It requires a monthly premium, regardless of work history.Part B covers doctor visits, outpatient care, medical services like lab tests, and most preventive services.Premiums for part B in 2025 as low as 185/mo or as high as 628.90/month based on your income from the previous years. Those higher premiums are a result of the IRMAA charges I...

TRAILERWelcome to episode 79 of the One for the Money podcast. I am always glad and grateful you have taken the time to listen. This part 1 of a 2 part series on Medicare. Medicare is a significant part of every single American's retirement planning. Knowledge of Medicare is critical to making the most of your retirement. In this episode I'll share what you need to understand about Medicare and in Episode 80 airing on February 15th, I'll share the Misunderstandings and Mistakes people make with Medicare.In the tips, tricks, and strategies portion I will share a tip regarding Medicare enrollment.In this episode...Rising Healthcare Costs [1:53]Medicare Basics [2:57]Importance of Annual Medicare Reviews [12:03]MAINIn Episode 79 of the One for the Money podcast, I shared how the first wealth is health. I also shared the importance of exercise and nutrition and how they can increase not only one's life span, but their health span, which is the years one has good health. Because healthier retirees incur fewer health related expenses it really is in retirees long term financial interest to INVEST in their health because health care related expenses in retirement are WAY higher than what most people anticipate.In fact last August, the investment company Fidelity released its Fidelity's latest Retiree Health Care Cost Estimate, which surveyed retirees. Most individuals surveyed expect their share of health care related expenses in retirement to be ~ $75,000 retirement (or $150k per couple), but current retiree healthcare expense data shows that each individual should expect to pay $165,000 or $330k/couple in retirement for health care expenses. That is more than double what people estimate they will have to shell out. Now these estimates assume that these individuals have health care coverage through Medicare. This might have many scratching their heads wondering what Medicare actually pays for. Quite a lot actually, it's just that health care is incredibly expensive especially as one ages.I'll first explain what Medicare is and what it takes to be eligible before explaining why health care costs in retirement are still expensive even with Medicare. Medicare is health insurance for retired Americans. According to usdebtclock.org, the the US government spent ~ $1.8 Trillion dollars on Medicare/Medicaid in 2024 which accounts for over 25% of the annual Federal budget. Some of Medicare is paid for through payroll taxes. Employees pay 1.45% of their income and employers pay another 1.45% of their employees income to the government to help fund Medicare and Medicaid. These are part of the Federal Insurance Contributions Act or (FICA) taxes that we pay on our income. Social Security is funded with a tax of 6.2% paid by the employee and another 6.2% paid by the employer. However this is only paid on the first $176,100 of income. Any income earned above that level is not subject to the SS tax, and that's because there is an upper limit on the social security benefit one could receive. However, the 1.45% medicare tax has no income limit so whether a person earns income of $10,000 or $10 million the Medicare taxes are applied to the entire amount. Now Medicare has been around for a long time. In 1935: President Franklin D. Roosevelt's New Deal included the Social Security Act, which provided retirement benefits but did not include health insurance. Efforts to include health coverage in the program were unsuccessful due to political opposition.By the 1960s, about half of Americans over 65...

TRAILERWelcome to episode 78 of the One for the Money podcast. I am always glad and grateful you have taken the time to listen. In this episode I'll share why the first wealth is health. In the tips, tricks, and strategies portion I will share a tip regarding Health Saving Accounts.In this episode...The Holiday Season [0:57]Health vs. Wealth [1:57]Health Expenses in Retirement [4:04]Exercise and Long-Term Health Benefits [5:38]MAINThis episode airs on January 15th when we get a pretty good sense on how well we are doing on the resolutions we made a few weeks back. Often times, those resolutions focus on our health, which makes a lot of sense given all the delicious food we at during the holidays.According to one medical JournalSeveral studies suggest that the holiday season, starting from the last week of November to the first or second week of January, could be critical to gaining weight. But it's not just the holiday foods to blame. As noted in an article by the University of Rochester Medical Center Shorter days, longer nights, cold weather, decreased exercise and changes in sleep habits all contribute to winter weight gain. When you add in the abundance associated with holiday meals and our tendency to overeat at special occasions, many of us enter the New Year a few pounds heavier than we were before Thanksgiving.This may seem like unusual financial planning advice, but as the great American author Ralph Waldo Emerson said, The first wealth is health. And as Bronnie Ware noted in her Regrets of the dying essay, that health brings a freedom that few realize until it's gone. Years ago, I read an article that featured several prominent financial planners who worked with financially wealthy clients and when asked what was the most important advice they gave their clients, all of them emphasized the importance of health. One of the advisors recommended that for those over 50 you should plan to spend at least 1 hour a day on their physical health. Now some might think, of course these clients were already wealthy so they could in turn focus on their health, but it just goes to show that wealth isn't anything unless one has their health. Many think you should exercise so you can have a longer enjoyable life but often times, your life can be just as long, but just not enjoyable, as I've seen in my own family. Many in my family have a long life span but sadly a poor health span which are the years in which you have good enough health to enjoy it.According to growwellthy.com, which is for an exercise physiologist that helps financial planners stay healthy, 96% of retirees say health is more important than wealth. The website includes a health check quiz that goes over key elements of one's health; namely: Nutrition, regular and appropriate exercise, good sleep, ie more than 7 hours a night, taking more than 7000 steps a day, strength train at least 2 times per week, there were also questions regarding one's physical fitness such as: are you able to get down and up off the floor easily, Can you hang from a bar for at least 30 seconds, do you eat protein at most meals, drink alcohol sparingly and do you drink lots of water? I heard a great quote a while back “A man's health can be judged by which he takes two at a time — pills or stairs.” And it's not just about feeling great, it's having more money to spend on other things that you would enjoy. It really is in your long term financial interest to INVEST in your health and to keep exercising. Because health expenses in retirement are far higher than what most people anticipate.According to

TRAILERWelcome to episode 77 of the One for the Money podcast. Happy New Year as well as this episode is airing on Jan 1st, 2025. Crazy how time flies. I am both glad and grateful you have taken the time to listen. In this episode, I'll share the biggest lessons I have learned in over 25 years as an investor.In the tips, tricks, and strategies portion, I will share a tip regarding setting financial goals.In this episode...The Importance of Starting Early [3:27]The Power of Paying Yourself First [4:19]Market Timing is a Fool's Errand [5:36]The Need for Proper Planning & Tax Strategy [8:02]Spending While You Are Healthy [12:11]MAINI've been investing in the stock market for a little more than 25 years and I've learned a lot about investing and building wealth during that time so I thought it might be helpful for me to share the biggest lessons I've learned at my silver jubilee investing anniversary. But first, I should share that I was introduced to the stock market by accident. I was told by a university guidance counselor that graduate schools and future employers expected those they accepted to be well-read and that one should read the paper every day. After that guidance every day I would grab our local paper and read the current events in the world which would feature such things as natural disasters, politics, wars, etc. I would then skip over the business section to review the sports section. However, as I turned the pages on the business section I often wondered what all of these abbreviations and numbers represented. I learned later that these represented companies that the general public could invest into. Well, one day the newspaper advertised a free investing seminar at the public library in the city closest to my small town. I attended the presentation and it was incredibly interesting. The gentleman who presented spoke of one Warren Buffett and how the stock market was the way to build wealth. At the time of this investing seminar, Warren Buffet's company Berkshire Hathaway had a stock price of a whopping ~$60,000 per share. If you think that's amazing today a single share of Berkshire Hathaway stock is over $700,000.A short time after I was introduced to investing, it seemed the rest of America became interested due to the dot com era. At the time the World Wide Web was a new phenomenon and the stock market rocketed higher. The stock market eventually crashed down to earth, but despite the volatility, I became very interested in investing. These experiences started my journey into investing and here a little over 25 years later are the biggest lessons I have learned about investing and building wealth. The first lesson I've learned in my 25 years is that little actions have massive consequences when given time. In other words, it is WAY more important to start investing than the actual amount you have to invest. Every little dollar can grow to mind-boggling sums given time. One of the best examples I share with clients is that of an apple seed. It's hard to conceive that this tiny little seed could grow into a large tree that could produce thousands of apples, and yet that's exactly what it can do, of course, given the critical ingredient of time. But your wealth can't grow if you don't plant the seeds to start with.As the old proverb goes - The best time to plant a tree was 20 years ago; the second best time is now. As you get older you usually can make more money but you can never get more time!The second lesson I've learned in my 25 years is understanding how paying yourself first makes all the difference. As Warren Buffett said so well “Do not save what is left after spending; spend what is left after saving.” People who know how to manage their cash flow have the best life in the future. They have more freedom, more...

TRAILERWelcome to episode 76 of the One for the Money podcast. I am both glad and grateful you have taken the time to listen. In this episode I'll share how you can use a drop in the stock market to your advantage.In the tips, tricks, and strategies portion I will share a tip regarding year end planning strategies.In this episode...Opportunities in Down Markets [0:59]Investment Strategies During Market Declines [2:55]The Historical Behavior of the Stock Market [11:10]MAINBetter Planning Leads to a Better Life, and that can especially be the case in down markets. Many people fear stock market downturns but hopefully at the end of this episode you are able to see the silver linings amongst the rain clouds. In fact that reminds me of a fantastic quote by one of the worlds most famous investors, Mr. Warren Buffett. He said and I quote ““Big opportunities come infrequently. When it's raining gold, reach for a bucket, not a thimble.”This speaks to the tremendous opportunities that a down market can present, but you have to have the stomach to handle them. During such times it's easy to get gripped by fear and I don't blame people as losses are incredibly hard to stomach. In fact losses are twice as impactful for investors than equivalent gains. Studies have shown that a 10% loss hurts twice as much as a 10% gain. I know this from personal experience when very early in my time as an investor, I purchased a stock which then dropped 50%. I sold out only for the stock since that time to increase over 7,900%. that's right, instead of selling I should have bought more and enjoyed a nearly 8 thousand percent gain. For more details on this painful lesson see episode 18 of this podcast entitled, when life gives you lemons, stay invested.With a pessimistic mindset, you can make really poor decisions and miss incredibly once-in-a-generation type of opportunities, like I did, but with the right mindset you can see the economic rain storms and instead of running for cover you grab a bucket as Warrant Buffett said so well. And when you employ these better investment strategies it will make for an even better life.Here are the strategies to consider based on how far down the market is. I'll use each calendar year, January 1st, as the starting point.Here is what one should do when the stock markets are down 5%.If the stock markets are down 5% from where there were on January 1st, there really is nothing one should do other than stay the course. Drops in this magnitude are far more typical than one might imagine. In fact in the last 44 years, the stock market has been down on average 14.2% at some point during the calendar year. So at one point between January 1st and December 31st of every year since 1980, the stock market was down around 14% on average and yet, 33 of those 44 years, the markets ended up higher on December 31st than where it had started on New years day. Most times the best thing you can do is nothing at all. Here is what one should do when the stock markets are down 10% , the definition of a correction. Your first option is to do nothing and stay the course but there are also some ways to take advantage of these likely temporarily lower prices. The first consideration is to rebalance your accounts. For example, let's say you have identified a portfolio of 80% stocks and 20% bonds to be your ideal portfolio to help achieve your goals. Now let's also say there is a drop in the stock market of ~10% and this causes the stock holdings to go down to 70% from 80%. Alternatively the bonds portion of your portfolio rises by from 20% to 30% in this hypothetical example. Rebalancing merely, shifts your portfolio back to it's initial distribution, so 10% of bonds or bond funds are sold and 10%...

TRAILERWelcome to episode 75 of the One for the Money podcast. I am both glad and grateful you have taken the time to listen. They say wisdom is learning from the mistakes of others and in that spirit, this episode will feature the mistakes a retirement expert made about her own retirement and I'll share ways to avoid these same mistakes. In the tips, tricks, and strategies portion, I will share a handy rule of thumb regarding knowing if you are on track for retirement.In this episode...Who Is Alicia Munnell? [1:45]Mismanagement of Investments [2:47]Failure to Utilize Roth 401(k) [5:24]Premature Government Pension Withdrawal [8:14]Using Retirement Funds Early [10:07]MAINMost people really only have one shot at retirement so you want to be sure you get it right and you will want to be sure to avoid any mistakes. They say wisdom is learning from the mistakes of others and in that spirit, there was a recent article in the WSJ on the ways a retirement authority got it wrong. This can serve as an example of what not to do. The Oct 12, 2024 article states in its opening line “Alicia Munnell spent decades trying to improve how Americans retire. Even she made mistakes in her retirement planning.”First, let me share more about Alicia Munnell. She is an economist who served as an assistant secretary at the Treasury Department under President Bill Clinton. Her time in the Treasury Department was preceded by 20 years at the Federal Reserve Bank of Boston. After her time in the public sector, she established Boston College's Center for Retirement Research, a think tank in 1998. Alicia, who is 82 years young, has been steeped in finance for many decades and her work covered everything from improving the 401(k) to whether the U.S. faces a retirement crisis.(Her Answer: Probably yes, since she and her colleagues calculate about 40% of the working population isn't saving enough to maintain their lifestyle throughout retirement.) And yet despite the focus of her life's work, she made some basic mistakes about her very own retirement. Here were some of her mistakes along with my thoughts on how she could have avoided them. One mistake she repeatedly made was not regularly monitoring her investments. Like many people, she said that she lacked the time and interest to manage money. What she would do would rely on the occasional advice from her son, who works at a financial firm.In her words “Every now and then, he tells me to send him my asset allocation and then he tells me how to adjust it. If I had to figure out what to invest in, I'd have no clue,” said Munnell. “People have busy lives. Retirement planning should not be something they have to put a lot of effort into.”This boggles the mind. I am shocked a retirement authority, who highlights the importance of 401ks handles her retirement investments so carelessly. First, she doesn't have a set schedule to review her investments on a regular basis, instead, she said that “every now and then” she reaches out to her son who works at a financial firm for changes she should make. And because she approached things so haphazardly, she or her son never consider her overall goals or taxable implications regarding her investments as demonstrated by the other mistakes that she had made. Here's how Alicia could have avoided this investment management mistake. She should have spent the time with her husband outlining their specific goals for retirement. These goals would then be used to align her investments with those specific goals. She then should have had regularly scheduled meetings to confirm their goals and re-align their investments if necessary. She should have assumed this responsibility herself or delegated it to a financial planning professional who was aware of her goals and could...

Welcome to episode 74 of the One for the Money podcast. I am so very grateful you have taken the time to listen. In this episode, I will share when you should max out your retirement plan such as a 401k, and when you should not. In the tips, tricks, and strategies portion, I will share a retirement saving tip for those who don't have access to a retirement plan through their job. In this episode...1978 Revenue Act [1:05]When Not to Max Out Contributions [3:03]When You Should Max Out Contributions [6:46]1978 was a watershed moment in the history of retirement for Americans. That was the year that a Revenue Act was enacted by congress and established 401k and 457b retirement plans. 401k retirement plans are for the private sector and 457b plans are for state and local government employees, as well employees of certain tax-exempt organizations. These plans now allowed employees to defer some of their income and avoid taxes on that income until they take it out later in retirement. This was huge. People could now save for retirement in tax advantaged ways. Prior to that, most American's relied on pensions from their employers for income in retirement. With a pension, the employer is committed to providing a specific amount of money to the employee for life during retirement. And that was feasible when people worked for several decades for the same employer and didn't live that long in retirement. But as individuals started changing jobs more frequently for better opportunities and peoples life expectancy increased significantly, the pension system became untenable for both the public and private sector. 401ks are for companies government employees use 457b plans and public school employees (teachers) and non profits use 403(b) plans. Specifically regarding 401ks, 68% of private sector American workers currently have access to an employer sponsored retirement plan.For those Americans who have access to a retirement plan at work be it a 401k, 403b, 457b, SEP IRA or Simple IRA some wonder whether it makes sense to max it out every year. As with any financial planning, it depends upon your unique situation and circumstances.When you should NOT max out your 401k/403b/457b/SEP or Simple IRAThere are times when you shouldn't max out your retirement account. One of the most obvious reason is if you have high interest debt that needs to be paid off first. However, I would recommend in this scenario that you at least contribute to the company match as that is free money. No higher contributions should be made until after your high interest debt is paid off. You need to pay down high-interest debt, for example credit card debt. The average credit card currently has an APR of more than 20%, which is well above the amount you could reasonably expect to earn on a diversified portfolio in any given year. That's why it is always better to funnel extra cash toward paying down high-interest debt instead of maxing out retirement plan contributions.Another reason not to max out contributions to your work retirement plan is if you don't have a sufficient emergency fund. As a reminder, you should have 3-6 months of your minimum expenses in savings to cover a potential financial emergency. We learned this first hand a few months ago when our eldest son nearly drowned while surfing. He was rushed to the hospital and was released the next day, but I was glad we had the savings to cover the incredibly high costs we have incurred as a result.A third reason why you shouldn't max out your company retirement plan is if you haven't yet funded a Health Savings Account or HSA. As a reminder, HSAs are available to individuals with qualifying high deductible medical plans. HSAs are incredibly powerful as they are the only triple tax free retirement account and they have the added advantage of early...

Welcome to episode 73 of the One for the Money podcast. I am so very grateful you have taken the time to listen. In this episode, I will share why investors should look beyond investing in just the S&P500. In the tips, tricks, and strategies portion, I will share a tip regarding mutual fund and ETF management fees (also known as expense ratios). In this episode...Cost Considerations [2:39]Growth Limitations [4:55]Diversification and International Exposure [9:49]Years ago, I spoke with a gentleman who had his own company. He learned I was a wealth manager and expressed his frustration that the advisor who was managing his company's 401k plan had made some poor predictions about the economy and consequently grossly underperformed the stock market. He then asked me an interesting question: why not just invest everything in the S&P500 and be done with it?This gentleman isn't the only one with that same question and some, in fact, follow this philosophy by investing only in the S&P500 believing it is a wise investment strategy. Here are several significant reasons why investors should look beyond investing in just the S&P500.But first, it must be noted that the possibility of this discussion is entirely thanks to the pioneering work of Jack Bogle of Vanguard. He deserves so much credit for what he accomplished in ensuring people could invest in passive index-based funds. Before him, you couldn't inexpensively invest in the 500 stocks of the S&P500. There wasn't an option, but because of the index funds he created, he made it possible to do so incredibly inexpensively. It will cost you just $3 a year for every $10,000 to invest in the 500 companies of the S&P500 index. That is remarkable. Now many think one can solely invest in the S&P500 and be done with it. But historical analysis has shown that there are compelling reasons to invest in more than just the stocks listed in the S&P500. Indexing vs Indexing plusThe first reason is that investing in an index can actually be more expensive. Many think it is a really inexpensive way to invest and from a cost of management perspective, it is. But you have to consider more factors than just the cost of management. I'll explain. The S&P500 is an Index. An index is just a publicly available list of stocks. It's sort of like an investment recipe. But unlike grandma's tried and true chocolate chip cookie recipe, the “ingredients” of the S&P500 change from time to time. In a dynamic capitalist-based economy, companies grow bigger and others grow smaller. This requires changes to be made to the list of stocks, or in other words, changes to the investment recipe. And whenever changes are made to the index, it's announced so everyone knows the stocks that will be added, the stocks that will be removed, and the date when it will happen. Consequently, everyone knows what all of the indexes are going to buy and sell. As one can imagine the costs can increase as a result. There are passive investment strategies, like factor investing which I featured in episode 68, where they employ more flexibility in what they buy and sell. Buying stocks whenever one else is, is a lot like buying roses on Valentine's Day. It's a more expensive way to buy both roses as well as stocks. We have a very recent example. On September 6 of this year, 2024, it was announced that the company Palantir would be added to the S&P500 Index starting on Sept. 23, 2024, and you will never guess what happened, The stock rose 13% in the next trading session. By the time all of the indexes add this stock to their investment list, the price of the stock will likely be much higher. That's an expensive way to buy stocks.Another reason why the index can be more expensive is because they only buy and sell a few times a year...

Welcome to episode 72 of the One for the Money podcast. I am so very grateful you have taken the time to listen. Estate and tax planning are critical aspects of better financial planning so your beneficiaries can have a better life. In this episode, I'll discuss the individual states with the highest estate and inheritance taxes. You'll learn why you don't want to die in Oregon or Maryland or a few other states. In this episode...Federal Estate Taxes [1:49]Estate Taxes vs. Inheritance Taxes [3:04]Considering Your State [3:38]Benjamin Franklin famously said “In this world, nothing is certain except death and taxes” and in this episode, my focus is on a combination of the two, namely estate and inheritance taxes which are levied at one's passing. A reminder, your estate is the sum total of all your assets at death. It would include retirement accounts, your home and other real estate, vehicles, jewelry, your classic 23-window van, and other valuable items. For a number of Americans, their estate will be worth millions of dollars. Many wonder if it would be taxed. As a reminder, there are often two categories of taxes you have to consider, namely Federal and State taxes. The good news is that most won't have to worry about Federal estate taxes because the Tax Cuts and Jobs Act which was passed a few years ago, doubled the amount of an estate that won't be taxed. Now only those estates that have a value over $13.61 million for an individual or $27.22 million for a couple will be taxed. Those are 2024 numbers and each year it is adjusted for inflation. It should be noted that starting in 2026, if the TCJA does expire then those numbers will be halved. But even in half, those are pretty large values that an estate would have to exceed for that amount to be subject to tax. Consequently, only a tiny percentage have to factor federal estate taxes into their financial planning, and those that do can pay lawyers and accountants to minimize or eliminate most of the Federal estate taxes. But just because we don't have to worry about Federal taxes, doesn't mean that our estate won't be taxed because our state residence may apply a tax or even two. The two types of taxes are estate taxes and inheritance taxes. Estate taxes are paid by the estate of the person who died before assets are distributed to the heirs of the estate. Inheritance taxes are paid by heirs on the gifts they receive. There are twelve states and the District of Columbia that impose estate taxes and six states impose inheritance taxes. Maryland is the only state to impose both an estate tax and an inheritance tax (spouses are usually exempt from the inheritance tax).Now most states have reduced or eliminated their estate and inheritance taxes over the past decade to dissuade well-off retirees from moving to more tax-friendly jurisdictions. But even if you don't consider yourself particularly wealthy, the value of your home and funds in your retirement savings could exceed the estate tax threshold in some states. With that in mind, if you live in a state that imposes an estate or inheritance tax—and you don't plan to move—you may want to talk to a certified financial planner or tax professional about steps you can take to reduce the size of your estate.Just so you are aware here are the states that tax your estate and those that tax the heirs of your estate.The Estate tax states are Washington, Oregon, Minnesota, Illinois, Vermont, NY, Maine, Mass, Connecticut, RI, Maryland, and DC.The Inheritance tax states are Nebraska, Iowa, Kentucky, Pennsylvania, NJ, and Maryland.As noted previously, the state of Maryland is on...

Welcome to episode 71 of the One for the Money podcast. I am both glad and grateful you have taken the time to listen. In this episode, I'll share about an estate plan checkup, for those that have one and for those that don't. In this episode...Importance of Estate Planning [1:03]Review and Update of Estate Plan [2:34]Consequences of Not Having an Estate Plan [4:38]An estate plan is an absolutely crucial part of one's financial plan. Over a lifetime you accumulate assets—real estate, investment accounts, a classic VW van, etc. When you pass away, there needs to be an orderly way for these assets to be distributed to those people you want to receive them. An estate plan is the way to carry out your wishes. Otherwise, the state of your residence, i.e. California, Hawaii, Texas, etc, will decide how it is divided up amongst your family. And if your estate is of significant value, you'll have a lot of people claiming to be your family. Because estate planning is a critical piece of better planning it is one of the five financial planning domains I focus on with my clients. These five domains are investments, income (aka cash flow), Insurance, taxes, and Estate planning. Of those five domains, estate planning is the one most often ignored and that makes sense for a few reasons. We usually have a long time before we have to worry about it so it's easy to put it off and the second reason is that no one wants to consider their own death. It's rather depressing. But despite these facts, it's incredibly important that any adult who owns real estate and or has children must have an estate plan. For those who already have an estate plan in place, I say well done! You should commend yourself for doing what far too many do not. But even if you already have one it's important to complete a periodic check-up of your plan. Here is when to consider a checkup:First, When was the last time your estate plan was reviewed? If it has been ten years or more you will want to review it to ensure it reflects your current desires and circumstances and that the people who are assigned as the decision-makers are the people you still want.The second reason to consider a check-up is if there have been substantive changes in your life or the life of your beneficiaries. For example: marriages, divorce, births, adoptions, or even challenges faced by your beneficiaries (such as health events or substance abuse) all of which can change how you might wish to distribute your assets. Additionally, moving to a new state can affect your estate plan due to differing laws, so a review is advisable when relocating.Now if you have reviewed your estate plan and everything reflects your current desires and circumstances the next thing you need to do is ensure your loved ones know about it. Do they know where to locate the documents in the event they are needed? Do the people who will make the financial and medical decisions on your behalf, know they have that responsibility?It would be helpful to rehearse such a scenario to see how it plays out. The military practices scenarios to ensure they have made the necessary preparations as do firemen, policemen, lifeguards, and other professionals. It would be wise to consider what would happen if you and your spouse were incapacitated and couldn't make a decision-what would happen then. Would the person named in your durable power of attorney documents know they are making the decisions and what you wanted them to decide? This is especially relevant for those of you in the later stages of life (70s and above). An older family member of ours recently had a health event, that put our preparations to the test. For a year before we had expressed the need to get the estate planning documents in the hands of the decision makers only until this recent scare had this been remedied. It's wise to...

Welcome to episode 70 of the One for the Money podcast. I am so very grateful you have taken the time to listen. In this episode, I answer the question “How much should one spend on vacation?”In the tips, tricks, and strategies portion, I will share some cost-saving travel tips. In this episode...How Much Should You Spend [3:15]Why You Should Travel [6:21]Travel Saving Tips [8:56]MAINWhen it comes to travel, St Augustine and Mark Twain said it best in my opinion. St Augustine said that -The world is a book and those who do not travel only read one page. And Mark Twain said - Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one's lifetime.My family and I are enamored with travel because of what we learn about the world, other cultures, and about ourselves. There are few things that create better memories than a vacation. Some have argued that life is really about collecting wonderful memories and research has shown that people tend to be happier when they have purchased experiences rather than things. That certainly is the case with our family. When both my children and my business were young, we traveled by car around the Western United States and Western Canada. We love the outdoors and visited over 25 national parks in both the US and Canada with Banff, Jasper, Waterton, Glacier, Yosemite, and Crater Lake being some of our favorites but there were so many others that were really great as well. As my business and kids grew we have been fortunate to be able to take a few international trips with Moorea and Cinque Terre being some of our favorites. When our family talks about our favorite memories it almost always involves experiences we've had together on our trips and our favorite family photos have come from our trips as well.This is why I am a strong advocate of traveling. It doesn't have to require an airplane, because seeing a local museum or park can also provide a memorable time. In fact, when I was a kid our family never took an airplane on our trips. Instead, we all piled in our wood-paneled station wagon with the rear-facing seats in the back and went to the national park near our home, and a couple of times we visited family that lived in the Western States of Utah, California, and Texas. It was an incredibly long drive from Alberta, Canada but I have some cherished memories from those trips. One question that many ask is how much should one spend on travel. Some financial experts recommend that you spend 5-10% of your net income per year on vacations.For example, if your net income is $100k a year, and as a reminder that is your income after taxes and retirement contributions. then you could reasonably spend $5-10k a year on vacations.My family and I tend to spend more than 10% but we restrict our expenses in other areas of spending to compensate. We only eat out rarely and if we do it's usually inn-n-out. Our kids don't participate in club sports and just play AYSO soccer instead. With savings in those areas, we are able to do more on our vacations. When it comes to money for vacation it should be saved in advance of the year of travel and would be in addition to what you have in your emergency savings.I recommend you tentatively plan your upcoming trips for the coming years so you can anticipate the expenses. We have already planned our travel destinations for the next 2-3 years. I'll do research on the expected expenses and create a Google spreadsheet that forecasts potential transportation, accommodations, food, activity, and other related

Neither a Borrower Nor a Lender Be- Ep#69Welcome to episode 69 of the One for the Money podcast. I am so very grateful you have taken the time to listen. In this episode, I shared whether it is wise to lend money to family or friends. In the tips, tricks, and strategies portion, I share a tip regarding loans from a 401k. In this episode...Just Say No [1:24]If You Can't Say No [6:06]401k Emergency Loan [9:20]MAINRecently I re-read The Tragedy of Hamlet by William Shakespeare. There are so many great quotes from this play. Just a few of these include:Brevity is the soul of witthere is nothing good or bad but thinking makes it soand one of the more famous lines - to be or not to be, that is the question.But the quote most relevant to the subject of this podcast episode comes from Polonius' counsel to his son Laertes. Amongst other sage advice he provides his son, he tells him t0 “Neither a borrower nor a lender be; for loan oft loses both itself and friend.”Over the course of life, we will invariably all experience times where friends and family will ask us for money. It's important to prepare prior to such a request as the wrong approach could ruin some of our closest relationships. Charles Barkley shared his thoughts on giving money to family.Barkley and the rest of the Team USA basketball players were in Atlanta preparing for the 1996 Olympic Games when he heard a conversation between his teammate Grant Hill and Hill's mother. Janet Hill told her son that she was only staying in town for a few days, because she had to return to work. Barkley wondered why she was still working, considering that her son was making tens of millions of dollars playing in the NBA. And Grant Hill's mom said the following:“Do not start taking care of your family and friends. They never gonna stop, and it's gonna ruin all your relationships,” She also said. “When you start giving people money, they never gonna ask for money [just] one time. No matter what you do for them, the first time you tell them no, they hate you.”Barkley took the advice to heart and started to tell people no when they asked for money, which temporarily led to some ruined friendships.“It was a tough and painful lesson for me,” Barkley said.Some would think that professional athletes should share. Here is why most shouldn't:Nearly 80% of NFL players go bankrupt or are under financial stress within two years of retirement and 60% of NBA players go broke or are bankrupt within five years of retirement. Just look at the sad cases of Antoine Walker, Bernie Kosar and others.When a family or friend asks for money, there could be a variety of reasons. Investing in their startup or helping them during a financially hard time. -The first thing I recommend is to thank them for coming to you and before you can consider helping them you will need to ask them for more details.For those wanting you to invest in their startup or small business, you have every right to ask for their business plan. How will they generate profits, what sort of experience do they have in that line of business, how many others have invested, what is their path to profitability, etc. If they can't answer those basic business questions, they are likely doomed to failure as most...

Welcome to episode 68 of the One for the Money podcast. This is part 2 of a 2-part series on novel investment strategies. In this episode, I'll review a novel investment strategy called factor investing.In the tips, tricks, and strategies portion, I will share a second tip regarding stock options this time regarding incentive stock options also known as ISOs. In this episode...Investment Factors & Potential Higher Returns [1:15]Factor Investing - Passive vs Active [6:32]Incentive Stock Options [9:12]Factor investing is a strategy that chooses investments based on certain attributes or factors that historically have had higher rates of return. The assumption is that these same attributes will continue in the future. The First one is that historically, stocks have outperformed bonds. Since 1926 stocks returned between 8% – 10% whereas the bonds returned between 4% – 6%. If you invested $1 in 1926 and earned the bond average of 5% it would be $113 by 2023, but if that dollar earned the stock average of 9% return it would be $4269. That's why for longer-term goals we invest in stocks because historically they give you more to spend in the future when things will cost more.The second investment factor is that smaller companies tend to grow faster than larger companies. Amazon and Apple all started in a garage and look at them now. But if people only invest in the S&P500 which all of the large American companies then they will miss out on buying the Apples, Teslas, Nvidia, Microsofts when they were smaller. From 1927 through December 2023 small stocks outperformed large stocks, 55% of the time after one year, 59% of the time after 5 years, and 68% of the time after 10 years.The third factor to consider while investing is the price of the stocks you are buying. Some stocks are more expensive than others. Confusingly, this has nothing to do with the price of the stock but rather the price of the stock relative to the earnings of the company. This is known as the P/E ratio. On average, value stocks have outperformed growth stocks by 4.4% annually in the US since 1927. From 1926 through December 2023 value stocks were higher than growth stocks, 59% of the time after one year, 70% of the time after 5 years, and 78% of the time after 10 years. The final factor to consider is profitability. That may seem like a captain obvious type comment but factoring in companies with higher probability can make a significant difference for investors. From 1963 through December 2023 high profitability companies were higher than lower profitability companies, 67% of the time after one year, 82% of the time after 5 years, and 92% of the time after 10 years. Successful investing really should target factors that generate higher expected returns. Looking at average annualized returns going back decades, small-cap stocks have beaten large caps, value has outperformed growth, and high-profitability stocks have outgained low-profitability stocks. Unlike active investing or trend models, factor investing doesn't use a crystal ball but instead is grounded in economic theory and backed by decades of empirical data. Of course, past performance is no guarantee of future results but investing based on science is way better than investing based on an active manager's hunch or predictions about the future.Tips & TricksISOs are usually issued by publicly traded companies or private companies planning to go public. My tip regarding ISOs is whether you should take a higher salary and fewer ISOs or a lower salary...

Welcome to episode 67 of the One for the Money podcast. I am so very grateful you have taken the time to listen. This is part 1 of a 2-part series on novel investment strategies. In this episode, I'll go over what is sometimes referred to as the borrow, spend, die strategy.In this episode...SBLOC Defined -[1:45]SBLOC in Practice -[4:58]Stock Options - Restricted Stock Units (RSUs) -[6:30]Most people are familiar with the notion of buying and selling investments. The goal when buying an investment is that it increases in value and then you sell the investment to enjoy the proceeds. But there is a strategy where you can spend without ever having to sell. This is much less complicated than it may sound when one realizes it's not all that different from a home equity line of credit, or HELOC, for short. With a HELOC the homeowner will borrow money against their appreciated property and aren't required to sell their home to do so. There is a similar option with stock market investments and it is called a security-based line of credit, or SBLOC for short. Here is how they work.An SBLOC (Securities-Based Line of Credit) is a special type of loan where you use your non-retirement investments as collateral. Just how can you use some of this newfound wealth without triggering a huge tax bill and not missing out on potential future gains? Why an SBLOC of course. These allow you to borrow against these shares using your stock as collateral.In fact this is the exact same strategy that many uber wealthy utilize to access the wealth formed in the publicly traded companies that they founded. The strategy is sometimes called the borrow, spend, die strategy. They borrow from their massive wealth, spend the proceeds and when they die some of their shares are sold to pay off the loans. Often this can lead to massive tax savings as when they die, there could be a step up in the basis at death and the taxes could be severely limited.Tips Tricks and Strategies RSUs (short for Restricted Stock Units) are a type of compensation given to employees by a company. They represent company shares that an employee will receive in the future. However, there are certain conditions, such as working for the company for a certain period of time or achieving specific performance goals, which must be met before the employee actually receives the sharesOnce your shares are granted and taxes paid, there is no taxable benefit to staying invested in those shares. For many investors, it may make more sense to sell all of the shares and diversify their investments or use the proceeds to pay of higher interest debt.ReferencesSecurity Based Line of CreditBorrow, Spend and Die StrategyRestricted Stock UnitsConnect with Jonny Westhttps://BetterPlanningBetterLife.com Connect with Jonny on LinkedInSubscribe to ONE FOR THE MONEY on Apple...

What is one of the best ways a husband, wife, father, and mother can show their love financially? Hint it's not diamond rings, cars, fancy trips, or a big house. It's WAY cheaper than that.In this episode...Financially caring for family in case of an accident [1:15]5 factors that impact the price of life insurance [4:43]The right type of Life Insurance [7:08]If you died yesterday, how financially secure would your family be today, tomorrow, and for the years to come?This is an incredibly depressing thought no doubt, but that's exactly why we should address this just-in-case scenario. Because if you love your family, you will want to make certain that they are taken care of financially if you are not here today. Term life insurance is the only instrument that can provide sudden wealth for your loved ones in their greatest time of need all for just a fraction of the cost of the wealth obtained. Term life insurance can be incredibly inexpensive far too many Americans lack life insurance. Too often you see, what I refer to as the worst type of life insurance, the GoFundMe page. But with term insurance being priced like a commodity, it really shouldn't be this way for millions of families.Some people don't bother with Life Insurance because they don't want to “waste” money on term life insurance premiums. I can certainly relate because that's the reason I never purchased term life insurance for many years.For those who worry about the cost of life insurance here are the five factors that impact the price#1 - A person's Age - all things being equal, a 35-year-olds policy will be less expensive than a 40-year-olds#2 - A person's Gender - Men are more expensive than women. Men do stupid things and have a higher probability of death at all ages.#3 A person's health rating - Think, BMI, smoker/non-smoker, etc ones driving record is also included. #4 The amount of the benefit - $2m of coverage will cost you more than $1m#5 How many years you have coverage - Getting coverage for 10 years will be less than 20 years of coverage. I must note that life insurance shouldn't just be for the working spouse. If there is a stay at home parent they need life insurance as well. We cannot underestimate their contribution to the family. If they were to pass it would be devastating for the family and sure money would never replace their absence, it would help ease the tremendous burden so the working spouse can take the requisite time and have the means to help their family heal. Tips Tricks and StrategiesI absolutely love what I do but it wasn't until after a lot of research that I finally found my dream career. This career has married things that I love, namely personal finance, education, and being able to have a positive impact on others and for that reason, I became a Certified Financial Planner in order to have the greatest impact on my clients. But that's not actually, how it started out for me. Due to my naiveté, I joined a “financial services" firm that claimed to put financial planning at the forefront of what they did but in truth, they primarily pushed expensive insurance that the overwhelming majority of people don't need. But, in my defense, it wasn't anything like what I was promised during the interviews with the firm. I had interviewed a few actual CFP®s from the firm who spoke of the merits of being fiduciaries, a fiduciary is a professional that puts the interests of clients above their own, (apparently, this was in name only) and they in fact did not do comprehensive planning nor were they fiduciaries but the main efforts was to sell really expensive life insurance.What sort of expensive Life Insurance am I talking about; namely Index Universal Life (IUL), Whole life, and similar permanent life...

Welcome to episode 65 of the One for the Money podcast. There are two huge risks when it comes to retirement, and they are contradictory to one another. In this episode, I'll share those risks as well as a strategy to address them. In this episode...Retirement is a Miracle [1:13]The first biggest risk in retirement [2:25]The second biggest risk in retirement [2:44]Enjoying more in retirement through planning [11:29]Before we talk about these risks, it's helpful to first appreciate the absolute miracle that is retirement. A hundred years ago, three-quarters of the world's population lived in extreme poverty. Today, it's less than 10%. Interestingly, the two biggest risks retirees will face are contradictory to one another. The first is the most obvious one, running out of money. That's really everyone's biggest fear. But since people are so focused on the fear of running out of money they ignore the second biggest risk in retirement which is dying with WAY too much money. But, with the right retirement income strategy, you can spend WAY more money WITH your loved ones all while having a much more fulfilling retirement, and still leave your loved ones with a generous inheritance. Sadly way too many people go into retirement without a plan and just wing it instead. In episode 62 of this podcast, I shared the regrets of retired Americans and how more than 6 in 10 retirees say they change their retirement if they had the opportunity. I believe it is helpful to think of your approaching retirement as summiting your financial Mount Everest. Taking withdraws from your investments in retirement is like climbing down which requires even more guidance because the financial mistakes in retirement are WAY more costly, because when you are still working, you have the time and income to overcome most financial mistakes, but not in retirement. For these reasons, you need a plan that is designed to address your specific retirement needs. But not any plan will do because having the RIGHT plan is JUST as important as having a plan at all. Way too many people think they have a retirement plan when all they have is an expensive product sold to them by some salesman. Others may have a very “light” plan by following a certain rule of thumb believing that a one-size-fits-all all plan will fit their specific situation. Examples would include the 60/40 rule (having 60% invested in stocks 40% invested in bonds, and selling which is up for the year to provide the income. Or there is the 4% distribution rule. Neither of which accounts for how your account is invested or when is the best time to take social security or how to mitigate taxes.What people need instead is a tailor-made income model to provide an inflation-adjusted income throughout their retirement.For this reason, I create and implement a retirement income distribution plan for clients that accounts for all their income sources, pensions, social security, and rental income, and consequently we are able to maximize their income spending so that they can achieve wonderful goals throughout their retirement. With the properly structured retirement income models, we are able to help clients spend (i.e. enjoy) more in retirement.Having a dynamic retirement Income model puts clients at ease and helps them enjoy retirement. They don't have to fear running out of money or dying with too much. aspects of the strategy include investing...

Welcome to episode 64 of the One for the Money podcast. I am so very grateful you have taken the time to listen.While investments, taxes, estate plans, risk management and cash flow are critical aspects of a financial plan, they won't mean anything if they aren't aligned with what matters most. In this episode I'll share how one can align their financial plan with exactly that.In this episode...Where does Happiness come from [1:13]Financial success and relationships [5:41]Experiences or things, what will you remember most? [12:15]A better life is a result of actions you have taken via better planning and when it comes to financial planning it's imperative that the focus is on what is absolutely essential for happiness. The pursuit of happiness has been a recurring theme on this podcast and I have encouraged clients and listeners to pursue the things that ultimately lead to happiness. The Harvard Study of Adult Development started in 1938 has been investigating what makes people flourish. The study was launched as a result of the generosity of WT Grant and as a result is sometimes called the Grant study. and his goal for the study, using his words, was to “help people live more contentedly and peacefully and well in body and mind through a better knowledge of how to use and enjoy all the good things that the world has to offer them.” It's the longest in-depth longitudinal study on human life ever done, and it's brought the researchers to a simple and profound conclusion: Good relationships lead to both health and happiness. it's not career achievement, money, exercise, or even a healthy diet that brings happiness. Rather the most consistent finding they found through 85 years of study is that Positive relationships keep a person happier, healthier, and help a person live longer. Those who scored highest on measurements of "warm relationships" earned an average of $141,000 a year more at their peak salaries.If relationships are the most important criteria for a long and happy life, than surely the most meaningful relationships have the most importance, for example, one's marriage or one's relationship with their children. Whether it's right or wrong, good or bad, money has a significant impact on these relationships.I talk with many clients and most say that they would rather spend more time with their family then have a bigger inheritance. For this reason, I encourage my clients to spend their money having family get togethers, because this is what will help them the most. But it's more than just having good memories, people that have better relationships do better in many facets of life, including money. The Harvard Study of Adult Development noted that the warmth of childhood relationship with mothers matters long into adulthood: Men who had "warm" childhood relationships with their mothers earned an average of $87,000 more a year than men whose mothers were uncaring.Interestingly, while the poorer participants had shorter lifespans than the Harvard men (attributed to more dangerous work conditions, and poorer access to health care) when it came to happiness, the inner-city men were just as happy as the Harvard men, and their families were just as happy and in some cases, happier.Tips Tricks and StrategiesI will answer the question on whether one should spend money on experiences or should they spend it on things, and provide a strategy to help you decide. Most of the research shows that experiences can provide more joy and actual things. For instance, while a vacation might only last a week, a new car can be driven for many years. However, a 'thing' might last longer physically, the enjoyment of it and the memories it creates can wane over time. On the other hand, experiences act more like appreciating assets, in that the initial experience might be short, but the value of it...

The Case of Optimism - Part 3 - Ep #63Each year I record one episode of this podcast that makes the case for why we should be optimistic. This is part 3. (Click here for part 1 and here for part 2) There are a lot of disturbing events and trends that are happening in the world at present and yet despite all of these concerns I'll argue the case for why we should remain optimistic about our future.In this episode...The climate is actually great [6:18]How Happy Are Americans? [14:17]How Americans are missing out on billions [16:23]This episode is airing in June of 2024 and we are starting to see some market volatility of late. That can create a lot of fear in the hearts of investors. Add to that a war that continues to rage in Europe, Add to that a war that continues to rage in Europe, and finally add to that a presidential election this November where a solid majority of people overwhelmingly don't want either candidate to be president. There is a lot we can worry about but yet despite all of these concerns we really should remain optimistic. Let's look at some of the evidence as to what's so great:The first is to consider the state of democracy. We are in an election year where we are told that our democracy is at stake, and you get that from leaders and followers of both political parties. For this reason the upcoming presidential election is one of investors chief concerns. there certainly has been more challenges to the pillars of democracy in the USA and also in other countries around the world but it's much wiser to step back and take a longer view of the state of democracy. In 1976 just 23% of countries were legitimate electoral democracies but it's 51% now. That is remarkable progress. The brutal terrorist attacks perpetuated by Hamas on October 7th, were absolutely sickening. Iran fired 170 drones, more than 30 cruise missiles and more than 120 ballistic missiles but due to the marvels of technology and the help of allies 99% of them were intercepted or eliminated.I recently read the book “Unsettled” by Steven E Kooning, The subtitle of the books is this “What climate science tells us, what it doesn't, and why it matters”. Dr. Kooning notes that heat waves in the US are now no more common than they were in 1900 and that the warmest temperatures in the US have not risen in the past 50 years. Weather-fixated television news would make us all think that disasters are getting worse. They're not. Around 1900, 4.5 percent of the land area of the world would burn every year. Over the last century, this declined to 3.2 percent. In the previous two decades, satellites have shown further decline — in 2021, just 2.5 percent burned.Here's additional details on how far we have come: Global poverty rates have been reduced by 50% in the past 20 years. A hundred years ago, three-quarters of the world's population lived in extreme poverty. Today, it's less than 10%. Human life expectancy has doubled over the past century, from 36 years in 1920 to more than 72 years today. Americans fell to 23rd place in happiness, down from 15th a year ago, according to data collected in the Gallup World Poll for the World Happiness Report 2024. In the U.S., self-reported happiness has fallen in all age groups, but especially among young adults. Americans 30 and younger ranked 62nd globally in well-being. If you want to know how great you have it, you should really travel more to third world countries. What we have here in America, especially the freedoms provided by the inspired...

The Top Regrets of Retired Americans and How to Avoid Them - Ep #62In episode 61, I shared the top financial regrets of Americans and how to avoid them but in this episode, I'll share the top regrets of Retired Americans and how to avoid them. The future is unknown so no one can plan their retirement perfectly we will all have some regrets, but it's important to be aware of what the most common regrets are for retirees so we can take action now to avoid them in the future. In the tips, tricks, and strategies portion, I will share a tip regarding how to spend more in retirement. In this episode...78% of retirees wish they would have saved more [2:10]Retire Earlier [13:44]Dynamic Retirement Spending Strategies [15:59]More than 6 in 10 retirees say they would go back and change their retirement planning if they had the opportunity. This comes courtesy of a survey conducted by the Lincoln Financial Group and their results reveal many of the top regrets of retirees. businesswire.com referenced this survey and also shared 10 ways today's retirees say they would have planned differently.Save MoreAccording to an annual study by the Transamerica Center for Retirement Studies, a full 78% of retirees wish they would have saved more. The majority (70 percent) would advise changing savings habits by saving or investing more or earlier. Other savings regrets included not making the most of their 401(k) plan, not enrolling in the plan early enough, and not saving the maximum amount allowed by their plan. What if I told you that if you invested $5000 per year for 40 years from age 25 to age 65 ($200,000 total) you could then withdraw ~$140,000 each year for the following 30 years? Not having a plan for retirementAccording to a Transamerica study it found that only 18% of retirees have a written plan. This is one of my favorite things to do with clients when we plan financially. As we enter the data in their financial plan, and add their goals and wishes, it shows them everything that is possible. It's especially great when I am able to surprise clients by telling them they can retire much sooner than they thought they could.Plan more carefully for the fun they want to have in RetirementTwo-thirds of pre-retirees (68%) have not completed a budget of anticipated income and expenses, according to Fidelity Investments. With the proper financial plan, I can show how they can spend much more in the earlier years, while they have the best health to do so. It's highly unlikely you will run out of money.In fact, overall, the retiree finishes with more than double their starting wealth in a whopping 2/3rds of the scenarios, and is more likely to finish with quintuple, or 5 times, their starting wealth than to finish with less than their starting principal.Plan For Health CareMany people are surprised when they hear that Medicare does not cover everything. The annual expenses for a couple in retirement are around $12,000. One of the best things a person can do to prepare for healthcare costs in retirement is to exercise regularly. In episode 29 of this podcast I shared how many retirees can have a healthy...

In this episode, I'll share the top 3 financial regrets of Americans and how to counteract them. No one manages their finances perfectly so we all have regrets, but it's important to be aware of what the most common ones are so we can take actions to avoid them.In this episode...Emergency Funds [03:15]Investing for Growth [08:02]Buying a Home [9:57]Unconventional emergency fund options [14:25]Now no one is perfect when it comes to financial decisions. Like everyone else, I've certainly made my fair share of financial mistakes which I chronicled in a few different episodes of this podcast. In episode 18 I shared about a time when I sold a stock for a 50% loss because I succumbed to fear during the Great Recession only to see that stock since that time, rocket over 11,000% higher. You heard that right, I missed out on an 11,000% return. In episode 43, I shared the financial mistakes I made as a young adult and what I wished I had known about money sooner. Having financial regrets is a normal part of learning and growing, but it's important to be aware of the biggest regrets so we can take actions preemptively to avoid them.So just what are the most common regrets of Americans so we can avoid them. These insights are courtesy of the personal finance software company Quicken, which surveyed about 1,000 Americans and found that a whopping 80% said they have financial regrets. The top three regrets were not having a big enough emergency fund (mentioned by 28% of respondents), not investing aggressively enough (25%) and not buying a house when they were younger (22%). A few of the other regrets mentioned were lending money to a friend and family member and not investing in stocks. Emergency FundAs a Certified Financial Planner™, financially speaking I know that few things can provide the peace and security that an emergency fund can provide. An emergency fund is way more than for just emergencies, instead it's financial insurance allowing you to have way more freedom in how you choose to live your life. For example, having an emergency fund allows you to quit a toxic workplace. I recommend having three months' worth of expenses in savings if both spouses work and if you are single or only one spouse works, then you will need 4-6 months worth of expenses saved. Sadly, far too many Americans don't have emergency savings as nearly 6 in 10 Americans could not come up with $1000 in the event of an emergency. Far too many think their credit card is their emergency fund.How do we prevent this regret and ensure we have an emergency fund. The first step is to have a budget and ensure that you have extra money left over each month. The next step is to set aside these extra funds into an account that you don't regularly access.Not Investing For GrowthThis had to be tied to the fact to some painful emotional memories. Maybe they succumbed to fear in the moment and sold stocks only to see the stock market soar higher. Here is why it's so important to invest with a higher allocation to stocks. For nearly a century, stocks have provided returns of nearly three times that of inflation. As an asset class, they have been the greatest generator of effortless wealth in history. Since 1926 stocks returned between 8% – 10% where as the bonds returned between 4% – 6%. The best way to counteract this fear of not investing aggressively enough, is to ignore the noise and stay invested. Buying A Home The third biggest regret for American's was not buying a home when they were younger. This one seems a bit unfair as there can be a lot outside of ones control when it comes to purchasing a home. Prices...

WARNING - Why Taxes Are Going Higher for EveryoneThis episode is airing on April 15th, our tax filing deadline and a key aspect of my financial planning practice is to identify and implement tax-saving strategies for my clients. In this episode, I'll share why it's almost certain that everyone's taxes will be going higher in the future because of our annual federal deficit and our cumulative national debt.In this episode...The Government Spends Worse than a Drunken Sailor [3:10]Tax Burdens by Income Level [07:12]Possible revenue streams for the US Government [11:02]Tax Saving Strategies [15:24]The National Debt The federal government of the United States has an annual budget. It's the set amount that the Federal government spends throughout the year. The amount they are currently spending is much more than the “income” they receive from individual and corporate taxes. In the Calendar Year of 2023, the federal government spent $6.3 trillion but only collected $4.5 trillion in taxes. Just what happens when you add up all of this overspending year after year? That's called our national debt. Right now that total is over $34Trillion dollars. I shared more in episode 33 of this podcast entitled Time to Pay the Piper. Our debt is steadily climbing at over $34T as of this recording and is expected to be over $5oT by 2032. you can see more at the website usdebtclock.org. We must get our deficits lowered because the interest costs are set to become enormous. In 2028, Federal tax revenue is expected to be $6.1T, actual spending is expected to be $11.7T and just the interest payments on the debt will be nearly $2.7T a year. In order to reduce our debt and the interest we pay on it, we will need to stop adding to it each and every year with the government's extra spending. As John Mauldin says: “Yet people continue to say we could balance the budget and pay down the debt by“making the rich pay their fair share.” I wish it were that easy. I really do. But sadly, as I'll show you, it's not.”Tax LoadHere's how it looked in 2020 (the latest available data from the IRS courtesy of the Heritage Foundation).The top 1% earners in America, those that earn over $548k/year earn 22% of the income and pay 42% of the income taxes received by the Federal government.The top 5% earn more than $220K 38% and pay 62% of the taxes paid to the government. The top 10% earn more than $152K earn 49% of the income and pay 73% of the taxes paid to the government.The bottom 90% (those that make less than $152K) earned 50% of the income and paid 26% of the taxes.The US deficit will rise by an average of about $2 trillion/ year for the next decade.As John points out, to account for the extra $2 trillion of spending we will need $2T more of tax revenue. If we raised taxes by about 50% on everybody, from the bottom 1% to the top 1%, it would only get us $850 billion which is a little less than half the way there. Clearly, we don't have enough money just to match the current projected spending of the government. Instead, they have to reduce spending and raise taxes on individuals and corporations and likely also look for additional sources of tax revenue because income tax by itself won't cut it. The most likely option in my opinion is a national sales tax or value-added tax.Suffice it to say, we and really our children are in a heap of trouble given our debt obligations. We'll eventually have to pay the piper for our overspending. What exactly happens is uncertain but I believe what is almost certain, is that our taxes will be going

Tax Advantaged Investment Accounts, Ep #59It's April and taxes are on the forefront of everyone's mind. An essential part of building wealth is to not pay more taxes than you have to. In this episode, I will be getting back to the basics and provide and overview of tax-advantaged investment accounts. In this episode...Pre-tax account strategies [4:03]After-tax account strategies [6:11]How young adults can benefit from HSA accounts [12:26]Taxes can be incredibly confusing regarding how they work and the terminology does not help. Terms such as Gross Income, Adjusted Gross Income, Modified Adjusted Gross Income, above-the-line deductions, below-the-line deductions, tax credits, tax deductions, and Marginal tax rate vs effective tax rate are all important to understand how taxes work and how to implement tax saving strategies. If you want to learn more about these terms consider listening to Episode 8 and Episode 9 of this podcast. In this episode, I'll provide a more basic understanding of tax-advantaged investment accounts and how these accounts can help you save on taxes. More specifically, how different investment accounts are taxed because knowing the differences can help a person decide when it is to their advantage to pay taxes. This is an important topic because I often see individuals and families paying way more taxes than they need to because they don't understand the differences between tax-advantaged investment accounts and how they allow tax optimization.There are 3 different types of tax-advantaged accounts we will discuss each one below.Pre-tax Accounts - Also known as traditional retirement accounts. Most know these as their 401(k) or IRA. In these accounts, you contribute a portion of your salary before you pay taxes. You will still have to pay taxes on this money but you will pay it later, when you take the money out of the account. These types of accounts make the most sense when you are in your highest earning income years. Deciding to pay taxes on the money put into these accounts during retirement when your income is lower can save you a significant amount of money in taxes. After-tax Accounts -After-tax accounts are when you pay taxes on the money before you make contributions to the account. These are commonly recognized as Roth 401k or Roth IRA retirement accounts. 529 accounts are also after-tax accounts. The advantage to these accounts is you never have to pay taxes again on the money contributed if you follow the distribution rules. This type of tax-advantaged account makes a lot of sense in your lowest and lower earning income years. By deciding to pay taxes when your income is lower you can save a significant amount in taxes. HSA Accounts -HSA accounts are the only accounts that are considered triple tax-free. With these types of accounts, you don't pay taxes on the contributions or distributions or anytime in between. The contributions are tax-deductible, and both the growth, and distributions (if used for a qualifying medical expense) are tax-free. As long as you follow the rules with HSAs you will pay ZERO taxes on them. Only people with a qualifying high-deductible medical plan are eligible to invest in HSAs. Contributions to HSAs are limited to an annual amount. For 2024 the limits are as follows: Individual $4,150, and Family $8,300. For those 55 and older you can contribute an additional $1,000. You may use funds in an HSA at any time for medical expenses. If you do not use all of...

Retiring Out of the States - What to Consider, Ep #58Last episode we discussed the implications of where you choose to retire in the United States. In this episode, we will dive into what to consider when retiring internationally. Retiring outside of the United States is not a simple decision but one we hope to offer guidance on today.In this episode...Top countries for Americans to retire to [03:12]Factors to Consider when retiring out of the states [8:47]How to “test drive” international retirement [10:45]For those that want to retire internationally, you are not alone. Global Citizens Solutions is a firm that helps Americans retire abroad. They have listed the top 10 countries to retire by considering criteria such as housing, benefits and low-cost perks, Visas and residency ease, cost of living, cultural assimilation, quality and accessibility of healthcare, development, climate, government stability, and the opportunity to semi-retire.The number one country to retire to as ranked by the Global Citizens Solutions is Portugal followed by Mexico and Panama. You may be considering retiring out of the States to pursue a happier life and an adventure, you will also be able to take advantage of stretching your funds through a lower cost of living and meeting financial goals that wouldn't be possible to achieve by staying in the United States.My practice helps take clients to and through early retirement and retiring in a country with a lower cost of living makes early retirement much more feasible. Take Portugal for example, the number one country for Americans to retire to offering beautiful beaches, a warm climate, and a rich culture. Portugal offers programs to help Americans retire to Portugal.Most obvious factors to consider when moving to another country in retirement:Cost of Living - This is a significant factor to consider when choosing to retire abroad. Retiring to a country with a significantly lower cost of living can change lifestyle during retirement.Climate —It is important to consider what climate you want to retire to. Why make such a massive move to only have to endure winter? Healthcare Access and Expenses— This is one of the top considerations with international retirees. The average married couple in America spends over $250k during retirement on healthcare alone. There are countries where your health care dollars can go further and you will be surprised how good the healthcare you receive will be.Housing— will be a significant factor to consider, for example, some of the houses in Costa Rica are gorgeous but they come at a steep price. You may want to consider the cost of buying a home outside of the States.Culture— There may be significant cultural differences as well as language barriers to consider.In short, if you are looking to retire outside of the States some of the factors you will want to consider are Cost of living, Climate, Healthcare Access, Housing, and Culture. There are a host of other factors as well such as tax and legal factors and proximity to family. My practice helps take clients to and through early retirement, one strategy to consider is to spend the first few years of retirement in an international location with a lower cost of living.The idea of living internationally might sound exciting but, you might still have some hesitation. A great way to temporarily test drive a retirement out of the country is doing a home swap. There are websites that provide a platform where you can exchange homes with other international travelers. Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People...

Retiring Out of State - What to Consider, Ep #57When it comes to retirement for citizens in the U-S-of-A, you have 50 different states to choose where you would like to spend your retirement. It's not a decision to take lightly as there are advantages and disadvantages that every state offers. There are a host of factors to consider when retiring to another state and I'll go over a few of them here.In this episode...United States Retirement Migration trends [03:35]Factors to Consider when retiring out of State [05:47]How to save on taxes for those with residences in two states [12:57]More than a few Americans decide to relocate to another state. Smart Asset examined U.S. Census Bureau migration data to uncover where retirees are moving. They noted, unsurprisingly, that a lot of seniors are moving out of expensive northeastern cities and into other parts of the country. Here are some of the key findings of their analysis of the census data:The most popular city for retirees to move to was Mesa, Arizona which topped the list for the nation's highest net gain of seniors for the third consecutive year. In fact, the influx of retirees more than doubled that of the second place city.The most popular state is Florida which sees a massive influx of seniors. Florida netted more than 78,000 senior residents from other states in 2021 – three times as many as the second-ranked state. Miami, Jacksonville, St. Petersburg, and Tampa all placed among the top 20 cities gaining the most seniors.Smart Asset noted that Taxes and climate appear to influence retirees.The most obvious factors to consider when moving to another state in retirement. Proximity to Family - As you get older, you want to cherish your time with family. Obviously, you'll get more of that when you live closer to one another. Additionally, you may need some assistance as you get older so you will want to have family close to help you. Clearly, being geographically close to family is a compelling reason to retire to another state but maybe not too close to your family, as the comedian George Burns put it “Happiness is having a large, loving, caring, close-knit family in another city”. But it should be noted that he didn't say in another state.Cost of Living —The next most important factor when considering retiring in another state is the cost of living. This has more to do with just taxes as things can be significantly more or less expensive. Climate — There's a reason why more retirees are moving to sunnier climes such as Florida, Arizona, Texas and the like. Taxes — Are a huge consideration when deciding to retire in another state. Some states tax income at higher rates, some don't tax income at all. Some tax social security benefits and some don't at all. Others have no to low income rates but have higher property tax rates to make up for it. Some have high sales tax and a few have none.In short, if you are looking to retire to another state some of the factors you will want to consider is proximity to family, the climate, the cost of living and of course taxes. Because if you live close to family near the border of two different states, it might make a big difference in which of the fifty nifty United states you decide to retire to. There is a tax saving strategy for those who have residences in two different states. We'll call it the 183 rule. Why that number, because there are 365 days in a year and 183 days is just over half. If a person has residences in two different states, say California and Nevada, they would want to become a resident in Nevada and spend 183 days or more in their Nevada residence. This would ensure that their income would be taxed at Nevada rates and not Californias, because...

How to Become a Member of the Two Comma Club, Ep #56This episode focuses on the behaviors needed to become a member of the two-comma club. What exactly is the two-comma club? Well, it's just a different way of saying how to become a millionaire, since one million dollars is represented by 7 numbers, the number 1 followed by 6 zeros, consequently there are two commas required to break those numbers up.In this episode...Who Wants to be a Millionaire [01:26]USA has a lot of millionaires [03:23]The Abundance Mentality [05:49]Prerequisites to becoming a Millionaire: The Success Sequence [07:28]What you should do [09:20]What happens to those that didn't model the behaviors [14:13]Years ago there was a hugely popular game show entitled Who Wants to Be a Millionaire. It captivated the American public. The television network ABC first launched the American version of the game show in 1999 and it became the highest-rated television show later that year, and has since had 21 seasons with several different celebrities serving as the game show host.In 2023 here in the US of A, we have never had more millionaires than we do right now. Based on the latest estimates from the Federal Reserve there are around 16 million American households with a net worth of $1 million or more. That's up from fewer than 10 million millionaire families in 2019.While saving and investing are important behaviors to cultivate on the path to becoming financially independent (or a millionaire) there are prerequisites behaviors that must be mentioned. In an opinion piece in the WSJ by the wonderful Jason Riley, he emphasized the success sequence. That sequence is often credited to research done by Brookings Institution scholars Isabel Sawhill and Ron Haskins, though others have made similar observations. The success sequence is simply this:If you finish high school, get a job, and get married before having children, you have a 98% chance of not being in poverty.Recently Dr. Melissa Kearny, MIT-trained economist wrote a book entitled The Two-Parent Privilege. In it she shared the story of how declining marriage rates are driving many of the country's biggest economic problems and how the greatest impacts of marriage are, in fact, economic: when two adults marry, their economic and household lives improve, offering a host of benefits not only for the married adults but for their children. A summary of the book notes that For many, the two-parent home may be an old-fashioned symbol of the idyllic American dream. But The Two-Parent Privilege makes it clear that marriage, for all its challenges and faults, maybe our best path to a more equitable future.Here are a few additional behaviors I would add:Not borrowing money when you don't have to. Just because you are approved for a loan doesn't mean you can afford the thing you are trying to purchase. Don't confuse approval with proof that you can afford the car or whatever it is you are trying to buy with borrowed money. If a person has a new luxury car they are wasting money and most who have them don't have the money to waste. You should only borrow money to buy an house and pay for some college. And even with college there are many reasons not to borrow money to pay for college. See episodes 15 and 16 of this podcast for more information.Another thing to note, just because a person has a high FICO score it doesn't necessarily mean they have made smart money choices but simply the fact that they have shown the ability to borrow money and pay it back consistently. One's personally accrued net worth and the savings rate is a far better determiners of smart money choices.In the end, it all comes down to discipline. Everything changes...

All That Glitters Isn't Gold, Ep #55On my drive to work, I mostly like to listen to podcasts but on occasion, I will listen to the radio. And frequently, I hear advertisements that claim that the economic sky may be falling and that one needs to invest in gold to protect themselves from the oncoming economic apocalypse. Well, the truth regarding investing in gold is a very different story and those that invest in gold may not have fools gold but I'll share why it could be very foolish to do so.In this episode...Using Fear to Sell [2:54]The lies salesmen tell you about Gold [4:10]Gold has grossly underperformed for over 40 years [6:26]Three Additional Reasons to NOT invest in Gold [10:25]Beware When Salesmen Use Fear to Sell [13:13]This communication regarding a precious metal is limited to a general and educational discussion as an asset class such as an economic or market commentary. This is not a promotion or solicitation for the direct purchase of a hard asset. Gold has enamored the mind of mankind for millennia. There are tales of Eldorado, the lost city of gold, or King Midas who had the golden touch, or even a leprechaun that hides a pot of gold at the end of a rainbow. In fact, the very state I reside in, California, owes much of its initial rise to the tens of thousands of people that came out west in hopes of also striking it rich in the gold deposits after gold was first discovered in 1848 at Sutter's mill. Gold holds a certain allure to people and the commercials advertising investing in gold use this perception to peddle an investment theory regarding how gold supposedly has these incredible wealth-preserving capabilities. Now the advertisements I have heard always focus on fear and emotions with references to a teetering economy or references to the stability of the dollar owing to our massive national debt. That they use fear is no surprise as few things motivate people like fear. Greed is a close second, but fear is certainly the most powerful.Since 1980, Which Investment Has Generated the Best Returns? Stocks bonds or gold?From January 1980 through January 2023, the S&P 500, with dividends reinvested, returned an annualized 11.4% before inflation. Adjusted for inflation, it was 8.0%. As for bonds, the benchmark 10-year Treasury note delivered an annualized total return of 5.6% over the same period. Adjusted for inflation, it was 2.4%.What were Gold's returns since 1980? Gold had an annualized return of just 3.1% before inflation. After adjusting for inflation, the average annualized return was negative. 0.01%. Meaning you had less money than you started with 44 years later.Let me repeat that, since 1980, over 44 years, gold has had a negative return when adjusted for inflation. Again, how these people can get away with these lies on the radio and TV is beyond me. Now if that's not enough reason to convince you why you shouldn't invest in gold let me share 3 additional reasons why all that glitters isn't gold.First - Gold pays ZERO incomeGold doesn't produce income. It's only worth what someone will buy it from you in the future, whereas stocks pay income via dividends and bonds pay income via interest payments. I like Apple products. I own a Macbook Air, a watch, an iPhone, iPad and Airpods, and Apple TV. These are all products Apple makes. They sell these products to consumers for a profit. Some of those profits are shared with stockholders/part owners in the form of...

For Investors, Elections Do Not Matter - Ep #54Recently, I read that one of investors' chief concerns is the upcoming presidential election that occurs in November of this year. It seems every year we are told that this is the most important election of our lifetimes only for the next election to be even more important than that. In this episode, I will share why elections do, and do not matter for investors.In this episode...America is the Best Country in the world [02:05]Americans have more freedoms [04:04]It's All About the Constitution [6:48]Election Outcomes Don't Matter for Investors [10:14]We need to vote [16:51]How to have more influence via voting [19:22]The Inspired ConstitutionOur founding fathers understood that power corrupts and absolute power corrupts absolutely and for these reasons, they put tremendous checks on the powers of government to limit their influence on the freedoms of American citizens. In doing so they provided many more freedoms for the citizens of the United States than any other nation where they could go on and pursue their happiness. Allowing us, individually to determine our ultimate destiny.The freedoms enshrined in the Constitution has enabled America to drive the progress of humanity further than any other nation in history. Stock Market Ignores Election OutcomesU.S. stocks have trended up regardless of whether a Republican or Democrat won the White House. A $1,000 investment in the S&P 500 Index when FDR became president in 1933 would have been worth over $19 million in 2023. During that time there have been seven Republican and eight Democratic presidents. But We Must VoteMany could complain about the government, media, and academia but if one fails to take action to make the changes by voting not just in the general elections but the primary elections as well. How to Have More Influence via Voting If you take the initiative to understand the elections and especially the ballot propositions, you can guide multiple other voters on how to vote, magnifying the result. That can have a huge effect. Your endorsement holds WAY more weight than some politician, businessman, or celebrity.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedThe US ConstitutionGuidetoelections.comConnect with Jonny Westhttps://BetterPlanningBetterLife.com Connect with Jonny on LinkedInSubscribe to ONE FOR THE MONEY on Apple Podcasts, Spotify, Google PodcastsAudio Production and Show

Another year has passed, which means that many are a year closer to retirement. The most successful retirements are planned many decades in advance. This episode of the One for the Money podcast focuses on what one should do in the last decade of work before retiring. A mistake in these years can ruin the prior decades of work and jeopardize retirement dreams. In this episode...Better planning [01:22]Assessing financial readiness [03:09]Health and financial planning [07:36]Tax diversification [10:25]Estate considerations [13:31]Planning before retirementFew things are looked to with more anticipation than retirement, and sufficient savings to provide the income to fund retirement is at the top of the list of retirement readiness. Fidelity, an investment company, suggests that by age 55, individuals should have approximately seven times their current income saved. However, this is just a general rule and doesn't account for factors such as pensions, life expectancy, and other sources of income. Seeking advice from a Certified Financial Planner is crucial to ensure a more thorough assessment of your preparedness for retirement. Certified Financial Planners can also determine if enough or too much is being saved. Considering an individual's unique circumstances, they will also determine whether money should be saved in pre-tax or after-tax accounts. A healthy retirementPeople can be set financially for a wonderful and early retirement, but that won't matter if they have poor health. Now is the time to start or increase healthy habits, enabling you to thrive both now and during retirement. Those 50 and older should "invest" an hour a day into their health. Longevity is most impacted by major, modifiable behaviors such as exercise, sleep, nutrition, and emotional health. Exercise itself is in a league of its own because of its ability to extend one's life and reduce all-cause mortality. It is the most challenging aspect of people's behavior because of the significant time commitment, but having healthy habits entering retirement will make retirement significantly better. Estate plansAn estate plan is a critical part of financial planning and cannot be missed. This estate plan must be communicated to the beneficiaries. The primary reason for an estate plan isn't to avoid probate. Rather, estate planning preserves family unity. When the last parent or grandparent dies, money goes into motion, and some people's love for money can destroy lifelong family relationships. This tragic circumstance happened to my father's family. That's why, every fall, I focus on my clients' estate planning preparedness. I also continue to spend time and money on my own understanding of estate planning.The last decade before retirement has critical planning considerations to help ensure a better retirement through better planning. It's imperative to take advantage of the next ten years and utilize these points. Tremendous progress towards the best retirement possible because the best retirements don't happen by accident but are planned for years in advance.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedHow much do I need to retire? | FidelityCongratulations, You Already Have an Estate Plan - BUT YOU DON'T WANT IT!, Ep #21

Many feel that the country and the world are on the brink of challenging times, and many investors wonder if they should get out of the market and wait to invest because a better time may come along in the future. In this episode of the One for the Money podcast, I share why this is always the wrong strategy.In this episode...Fear of investing in uncertain times [01:19]The relationship between difficult times and stocks [04:30]Investment mistakes and the importance of discipline [10:37]Don't let emotions get the best of you [13:18]Planning and spending for more experiences [17:16]Investments in uncertain timesWhen someone is about to make a significant investment, they often wonder if there might be a better time to invest later. This same fear is gripping the hearts of people invested in the stock market, with many wondering if they should be more conservative.With ongoing conflicts in Europe and the Middle East, there is a growing concern that we are heading towards a period of instability. Despite predictions of an economic downturn, it has yet to materialize. The upcoming presidential election is causing anxiety as both major party candidates have historically low approval ratings. As a result, many individuals are hesitant to invest or stay invested.Losses are twice as impactful for investors than equivalent gains. Studies have shown that a 10% loss hurts twice as much as a 10% gain. However, being afraid of the future market is a dangerous mindset that will not lead to successful investing. For this reason, one should always invest according to one's goals and in alignment with time-tested investment principles. Data perspectiveSince 1926, bonds were negative just 15 times, with an average loss of just 2.4%. Over that same period, stocks were negative just 25 times, with a significantly higher average loss at 13.2%. That's why bonds are beneficial for short-term goals: fewer years with negative returns, and those negative returns were considerably less than what they were for stocks.For longer-term goals, we invest in stocks. Since 1926, stocks returned between 8-10%, whereas bonds only returned between 4-6%. Over the past century, the U.S. stock market has been up nearly 75% of the time, and for 60% of the time, those increases were more than 10%. More than 33% of the time, those increases are more than 20%. Historically, you are more likely to have a gain of 20% in your investments than to experience a down year.Investment behaviorSome don't succumb to the fear of a down market but rather the belief that they can correctly time the markets and know when to sell or buy. But the two most successful investors in history, Jack Bogle and Warren Buffett, said they had never met anyone who could correctly time the markets. The famous investor Peter Lynch explained the fool's errand of market timing best when he said, “More people lost money waiting for corrections and anticipating corrections than the actual corrections themselves.”JP Morgan's Guide to Retirement highlights the perils of trying to time the market and why it doesn't work. Using data from the S&P 500, the guide shows the performance of $10,000 invested between January 1, 2002 and December 31, 2021. The initial investment would have grown to over $61,000 during that period. But if the best ten days were missed, then the initial investment would have grown to only just over $28,000. That's missing only ten days out of 5,000 or just 2% of the time invested. If you have long-term investment goals, investing and staying invested is essential. Every investor should have an investment plan that aligns with their goals and can help them navigate challenging market conditions.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA &...

Giving to others can be an incredibly rewarding experience. Have you ever wondered how you can give better? In this One for the Money podcast episode, I discuss ways to improve our giving and make it more impactful for both others and ourselves. In this episode...The season of charitable donations [01:12]Donor-advised funds [03:39]Donating appreciated assets [05:26]Giving retirement money [06:33]Planning charitable giving [09:32]The month of givingFor many people, December is the season of giving. While many may think of presents around a Christmas tree, December is also when the most money is given to charitable organizations. According to the Blackbaud Institute, in 2021, over 20% of all donations for the year were received in December. Americans gave an astounding $471 billion to charity in 2020, nearly 70% of that coming from individuals. What's fascinating is that philanthropic giving is highly correlated to the stock market's strength. The better the stock market performs, the more charitable contributions are made. Investing to giveA donor-advised fund is an investment account you set up to hold your donations, allowing you to receive a tax deduction. The great thing is that you don't have to decide where to donate these funds until later. The money can grow until you find the charity best aligned with your values. Donor-advised funds can accept non-cash assets, as well as stock, mutual funds, bonds, and even S and C corp stock.While a donor-advised fund can be a potent vehicle for charitable contributions, the fact that they can receive stock provides an introduction to another powerful way to give to either a donor-advised fund directly or to a charity itself. Some may think it's best to sell appreciated assets and give the money to charity. A better way is not to sell the asset at all and give it directly to the charity. Donating appreciated stock to a charity can be more beneficial than selling it. The charity can receive more without paying taxes, and you can qualify for a larger tax deduction.Qualified charitable distributionsWhat if you want to give some of your retirement money to charity? A qualified charitable distribution(QCD) is a tax-free donation from an IRA to a qualified charity. While a QCD can't be deducted from your taxes, the savings on your income may make this type of donation beneficial to your taxes. A QCD counts toward satisfying the required minimum distributions. QCDs must go directly from the IRA to the charity. Clients can be provided with a checkbook just for their QCDs so they can make direct contributions. While there isn't a deduction for these contributions, they're a great way to give unwanted retirement funds to charity.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedOverall Giving Trends - Blackbaud InstituteTrends that Will Shape Philanthropy in 2022 | Giving USA2021 Donor-Advised Fund Report | National Philanthropic TrustWho Itemizes Deductions?

In February, I visited the beautiful island of Maui, Hawaii, and trained in helping clients plan for their ideal life. It's not just the right way to plan but the only way to conduct financial planning for clients. In this episode of the One for the Money podcast, I share details of this type of planning. At the end of the episode, I share a thought-provoking strategy from a book I recently read called Die with Zero.In this episode...Focus on the essentials [01:20]The godfather of life planning [02:22]Life choices with limited time [06:14]Untapped potential [08:32]Dying with zero [11:24]Listening first, then planningWhen financial planning, focusing on what is essential for you to have the life you desire is imperative. The worst thing I could do for a client is to immediately start solving their financial problems without an understanding of what they truly want. Financial solutions without the proper context have the potential of putting a ladder on the wrong wall and having clients start climbing. The key to discovering what is essential for clients to have an ideal life requires something you may not experience in many investment firms: an investment of time and a lot of listening. After going through this planning myself and taking a number of my clients through the same process, I've concluded that it's not only the best way to plan financially for clients; it's the only way. Prioritizing people in their financial plansGeorge Kinder, the godfather of the life planning movement, has been at the forefront of the financial services industry for more than 35 years. He spearheaded the movement to put the lives that clients desire to live at the center of their financial plans. George Kinder has distilled this planning via five unique steps he has termed the EVOKE process: Exploration, Vision, Obstacles, Knowledge, and Execution. As George Kinder describes, “Life planning focuses on the human side of financial planning and puts people, not products, at the center of analysis and advice and helps clients meet unique goals and unlock the greatest meaning in their lives.”EVOKE life planningDuring the exploration phase, clients share everything that would encompass an ideal life for them without any emphasis on prioritization. It's imperative to understand what is essential for each individual, even with couples. The vision stage prioritizes the elements of one's ideal life through inspirational writing exercises. This process helps to shape financial plans that aim toward what matters most to the clients. The Obstacles stage involves identifying barriers hindering the realization of clients' goals and finding solutions to overcome them. EVOKE planning's collaborative process empowers clients to make their dreams feel attainable. The subsequent stages, Knowledge and Execution, involve conducting comprehensive financial analyses and implementing tailored strategies that align with clients' aspirations, making every financial decision resonate with their passions and purposes.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedKinder Institute of Life PlanningDie With Zero: Getting All You Can from Your Money and Your Life

Ensuring You Get to Spend More of Your Hard Earned Money & the Government Gets to Spend Less, Ep #49For many of my clients during the fall, I implement a powerful strategy called a Roth conversion, which can significantly lower the taxes paid during retirement. In this episode of the One for the Money podcast, I review this strategy that can help retirees spend more of their own money rather than the government. Listen to the end, where I share additional powerful tax-saving strategies you may want to consider during your employer's open enrollment. In this episode...Retirement tax planning [01:20]Timing Roth IRA conversions [05:38]The importance of tax diversification [12:16]When Roth conversions aren't the best idea [13:20]HSAs and healthcare expenses [15:19]Planning for retirement taxesWe've all made poor decisions when it comes to spending. However, our spending is still way better than the government's bridges to nowhere, costly, incomplete high-speed trains, or countless other examples of wasteful government spending. This reason is why I love helping clients keep more of their money to spend by utilizing tax-saving strategies.These strategies are necessary because people don't pay less in taxes accidentally. Instead, lower taxes result from executing strategies over many years and being proactive with tax planning. Most Americans have two options. They can hope taxes will be lower in the future, or they can take action to retire as diversified as possible. Benefits of Roth conversionsRoth conversions are a great way to become tax-diversified and reduce taxes when conditions are right. Roth conversions work just as they sound, converting portions of not-yet-taxed retirement accounts to never-again-taxed accounts. There are no income limitations, but since income taxes will be paid in the year of the conversion, it makes the most sense to complete Roth conversions in the years when your income is lower. When the math works, a Roth conversion is one of the best strategies to mitigate taxes. Most Americans save for retirement in traditional or pre-tax retirement accounts. This money will be taxed upon withdrawal during retirement. Consequently, retirement accounts are essentially co-owned with Uncle Sam. How much is owned by Uncle Same will depend on whatever the tax rates are in the future.Reasons not to do a Roth conversionAlthough Roth conversions can be a great option, there are some reasons why you may not want to consider them. Since the converted amount cannot be used for tax payment, you would have to make sure you have the tax money saved up. Also, if you expect to be in a lower tax bracket in retirement, then a Roth conversion may not be the best decision for you. If you have a child who is applying to college and seeking financial aid, a Roth conversion would show you as having a higher income, which may affect your child's eligibility for financial aid. It's crucial to weigh the benefits against these factors and consider speaking with a certified financial planner and a tax professional to help you make an informed decision.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC. Resources & People MentionedNational Debt ClockHistory of the US Federal Budget Deficit

For some people, spending money can be a hard thing to do. As a financial planner, one of the things that has surprised me the most is the difficulty some clients have in spending their money. In this episode of the One for the Money podcast, I share ways to help make spending easier. Listen to the end, where I share a spending tip for the rest of your life.In this episode...Learning to spend in retirement [02:22]Why do some people save and some spend? [06:00]Being prepared “just in case” [10:02]The rest of your life analysis [13:11]The decumulation paradoxAccording to a 2018 Investments & Wealth Institute study, nearly six in seven retirees only spend down the earnings in their portfolios and spend none of the principle itself. This phenomenon is called the decumulation paradox.People who have always been in a saving mode find flipping the switch to spending difficult. Spending can be particularly challenging when someone has retired or is on a mini-retirement because they no longer have a salary every month because everything can depend on their nest egg. This is why people with guaranteed sources of income, such as pensions and annuities, tend to spend more money during retirement.Spending more in retirement Psychological barriers can prevent us from spending what would bring more enjoyment and happiness intellectually. Clients may understand that dying the wealthiest person in the graveyard isn't a good goal, but they may still struggle emotionally with spending money.I realize that some may see spending more as a “first-world problem,” but I will say that having worked with hundreds of individuals, I've seen people with limited income build significant wealth. One of my goals is to encourage people to spend more of what they worked and sacrificed so hard to make possible. It's important for those who have made wise decisions to save and accumulate funds to spend what they've earned. Money is a resource, not an end in itself. Just in caseSome individuals avoid spending money due to what I call the “just in case” factor. They don't spend money in case their children require financial assistance, in case they incur medical expenses, or in case they experience an extended long-term care situation. We are all aware of relatives with dementia for years, which appears to factor into our planning for the worst-case scenarios.There are ways to plan for these scenarios without sacrificing our ability to make memories both now and in retirement. Some of the help I give clients is giving them the peace of mind to spend on what they want. Then, they can make the memories that last lifetimes. Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedThe Decumulation Paradox: Why retirees are not spending more?Regrets of the DyingWhy Most Retirees Never Spend Their Retirement AssetsHow to Get Clients to Spend More Money - Articles - Advisor Perspectives

Surveys have shown that money cannot buy happiness; however, certain types of spending can increase happiness. In this episode of the One for the Money podcast, I talk about ways to increase happiness, not through increased spending, but by improving the way money is spent.In this episode...Life, liberty, and the pursuit of happiness [01:05]Money does not guarantee happiness [02:06]Spending money on others [04:03]Opportunities to anticipate [07:47]Pursuing happinessAmerica's purpose aligns perfectly with human purpose: life, liberty, and the pursuit of happiness. Pursuing happiness has been a recurring theme in this podcast, and I regularly encourage clients and listeners to seek the things that ultimately lead to happiness. Those things are only sometimes directly influenced by money. Happiness is derived through positive emotion, engagement, relationships, meaning, and accomplishment. Money neither buys nor guarantees happiness. I have met both wealthy and poor people who are equally unhappy. When I visited India years ago, I walked past a squatters' camp on my way to see a temple. The makeshift shelters were built of worn blue tarps and cardboard boxes. Despite their difficult living conditions, these people had joyful countenances that still impact me today.Using money for what mattersWhile money can't buy or guarantee one's happiness, there are instances where money via spending CAN make you happier. Spending money on others rather than ourselves has proven to lead to more happiness for the spender. Spending money to buy ourselves more time might seem simple, but it goes a long way. Sometimes, I spend a little money to have more time with my family. That extra time is priceless. With more time, you can do other things like exercise, volunteer work, or other activities linked to increased happiness. Connecting with friends, attending an event, and learning new things are all great ways to spend your time positively. Important to note is the critical issue of how people consume this extra time. Spending all your free time binge-watching shows, playing games, or scrolling through social media is quite different from doing something meaningful, engaging, or growth-promoting. ExperiencesResearch suggests that happiness is more often derived from experiences rather than material possessions. However, it's important to remember that material things can also bring us joy if we use them to create experiences like going on a picnic or visiting a national park or museum. Simple, low-cost activities can provide small but meaningful boosts to happiness in the short term that accumulate one step at a time to significantly impact happiness in the long term.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedWhen it Comes to Early Retirement - Start with Why, Ep #1Too Much Money & Too Few Memories, Ep #24Michael Kitces6 Ways Money Really Can Buy Happiness For Your Financial Planning ClientsConnect with Jonny West

A will is a crucial component of a financial plan, but it may not be sufficient on its own. In this episode of the One for the Money podcast, I share why many people would benefit from a trust. In the tips, tricks, and strategies portion, I share a tip regarding locating unclaimed money.In this episode...More than a will [01:13]Trusts vs. wills [04:06]Inadvertent disinheritance [06:52]Finding unclaimed assets [10:40]More than moneyWithout an estate plan, transferring an estate costs much more because a lawyer is necessary. Also, the process takes much longer because of the backlog in the courts. The records are 100% public, so there's no privacy whatsoever. If you don't want scammers to harass your children by knowing how much they received, make sure you have an estate plan.While avoiding expensive lawyers and keeping your final financial information private and away from the eyes of scammers are great reasons to have an estate plan, the primary reason is to preserve family unity. As I mentioned in the previous episode, family unity is the most important legacy you leave behind. Without an estate plan, your heirs may have some strong disagreements. Relationships could be ruined over a simple thing like money.Will vs. trustSome law firms prefer wills over trusts because the result is more lucrative. That's why some law firms charge so little for wills; they want the probate business. Changing a will requires certain steps; the same witness must sign the updated will. Trusts are easier to change than wills, and assets will be distributed based on an attached document. That document can be periodically updated, and distributions are based on the latest version. A trust is much more flexible than a will to make those changes. Trusts are great when you have several beneficiaries on accounts. You won't need to update your accounts if you've named the trust as the beneficiary. With a will, you can't control the distributions. With a trust, you can for some beneficiaries. Smoothly transferring assetsCertain situations almost require a trust, as inadvertently disinheriting children is too easy, as with blended families. For example, if a husband and wife each have kids from a previous marriage, and the husband were to pass away, the wife may inherit everything. Then, when she passes, only her children may inherit all of the money. Inadvertently, this would disinherit the husband's children from the previous marriage. Because of gift taxes and other complications, the solution isn't as simple as inheriting children giving a portion to the others.One important thing to note about the transferring of assets is that property transfers first by title, then by beneficiary designation, and finally by probate or will through the courts. Some assets can't have a beneficiary named, like a house. So if your will states that your 401k will be split between your kids but names only one of your kids as the beneficiary, that beneficiary will supersede the will. In that scenario, the title beneficiaries would need to match the will. By establishing trust, you can easily address this concern. Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedMissingMoney.comNational Association of Unclaimed Property AdministratorsThe Only Legacy that Matters - Ensuring Family Unity via Estate Planning , Ep...

An estate plan is a crucial part of one's financial plan, but most people don't have one. Those who do have a plan likely need to make updates or changes. This episode of the One for the Money podcast discusses the impact of an estate plan on the family. In the tips, tricks, and strategies portion, I share a tip regarding legacy contacts for your smart devices.In this episode...The crucial estate plan [01:08]Planning for the details [04:04]Family matters [06:32]Legacy contacts for smartphones [08:33]Proactive unityWhat happens when someone dies without an estate plan? The reality is that everyone does have an estate plan. Every state in the United States has a default plan, but it takes much longer and is much more expensive than necessary. There is one primary goal with estate planning: to preserve family unity.When the last surviving parent or grandparent dies, money often creates tension among family members. Unfortunately, some prioritize their love for money over maintaining lifelong family relationships. My father and his family experienced this firsthand. We learned an important lesson from this experience - to prioritize our family's well-being, having a comprehensive estate plan and regularly reviewing it is essential.Review your plan with the right peopleWhen it comes to estate planning, a general attorney may not be the best fit for expressing your exact wishes. While they can assist with avoiding probate, they may not take into account the preservation of your family's relationships. Estate planning often involves filling out forms that may not fully capture your desires if the right questions aren't asked. For instance, let's say that Mom promised her classic Volkswagen van to one son, while Dad promised it to their daughter. If the estate plan documents don't clearly state who inherits the van, it can create family tension. Families often have disagreements over sentimental heirlooms, such as a piano or jewelry. It's essential to consider how crucial family unity is to you after your passing. If it's important, then you should take the time to discuss how to pass down heirlooms with your loved ones.CommunicationCommunication can be an issue with the most basic estate plan. What if special needs children are involved or children who suffer from substance abuse? These complicated issues deserve attention. You need to communicate your wishes should you become incapacitated. What if you told your oldest child that you don't want to be on life support, but your youngest isn't aware of that fact and wants to believe that you might still recover? That's why it's not only critical to have a durable power of attorney but to communicate your wishes as well. You don't want this to come up for the first time around your hospital bed. It's not fair for the person left responsible to have to guess.A financial planner is an excellent option to review your documents because the lawyer who drew up the plan will unlikely look at it again. Regularly review the decision makers regarding your healthcare directive and the trustee. Things change, and you may not want the person in charge now that you named previously. Family unity has a better chance with a well-written, executed, and communicated estate plan. Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedClick here for the funny estate planning commercial What Makes Life Meaningful? Views From 17 Advanced Economies | Pew

Many people wonder if financial planners are worth the fees they charge. In this One for the Money podcast episode, I'll help you learn the value a financial planner can provide. In the tips, tricks, and strategies portion, you'll learn how to identify competent financial planners and avoid hucksters and salesmen.In this episode...Money is a sensitive topic [01:07]How financial planners add value [03:46]Providing peace of mind [09:34]Planner? Advisor? Agent? [13:47]Identifying competent financial planners [15:46]The cost of not having a financial plannerDiscussing finances can be a delicate and personal matter for many individuals. Unfortunately, some people equate their financial prosperity with their overall success in life, causing anxiety and fear over their perceived lack of progress. As a financial planner, I've had the opportunity to meet with countless clients to review their financial situations. I'm pleased to say that individuals are often pleasantly surprised by how well they're on track for their financial goals.Many people avoid seeking the help of a financial planner due to the complexity and emotional nature of finances. Instead, they attempt to manage their finances on their own or rely on advice from colleagues, friends, or family. However, in my experience of reviewing numerous financial plans, I have encountered many instances where mistakes or missed opportunities. These mistakes can include problems with company 401k plans, cash management, debt repayment, or tax planning, each of which can result in significant financial losses.A financial planner often means greater resultsAccording to Vanguard's research paper from July 2022, financial advisors have the potential to increase their clients' net returns by up to 3% or more. However, the value added may vary depending on the client's situation. To demonstrate the impact of a 3% increase in returns, consider this example: If $10,000 is invested at a 4% rate for 30 years, it will grow to just over $32,000. But if the same amount is invested at a 7% rate, 3% higher, it will grow to over $76,000. This example shows how a financial planner can significantly impact someone's financial future. While these results are not guaranteed, they highlight the value that professional investment advice can bring. Most mutual fund assets are advised, which further supports the importance of seeking the help of a knowledgeable advisor who can provide tailored guidance.How to choose the right professionalIt is crucial to choose a financial planner who is certified, meaning they have completed at least seven college-level courses covering a wide range of financial topics such as investments, retirement plans, taxes, insurance, and estate planning. They also have bachelor's degrees. I wouldn't let my friends or family work with anyone who wasn't a CFP. Sadly, a CFP isn't a guarantee they will have your best interests in mind, as I've seen too many CFPs sell only insurance products and not provide comprehensive planning.A financial planner should thoroughly analyze your tax return every year and identify all the ways to help you avoid paying extra taxes. Without studying your tax return, how can any financial planner provide guidance regarding contributions, distributions, or other tax mitigation strategies? To create a comprehensive financial plan that aligns with your ideal life, a financial planner should consider all aspects of your financial situation, including investments, taxes, savings, pensions, income, goals, and real estate, and analyze the impact of adjustments on your ideal life. Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People Mentioned

This One for the Money podcast episode is for young adults and those younger. This information is what I wish someone had shared with me at that stage of life. Would I have heeded the advice? I can't definitively say, but what is definite is that knowledge proceeds wisdom. With the knowledge provided in this episode, hopefully some listeners can make wiser decisions to create a better life.In this episode...Reasons understanding money is so important [03:34]When not to borrow money [10:11]Avoid credit cards at all costs [12:29]Building wealth is about discipline [15:55]Lessons from Everyday Millionaires [17:50]How to keep your spending simple [21:10]When to borrow moneyOnly borrow money when investing in appreciating assets. Borrowing money to buy real estate is a positive example. A car, however, is a depreciating asset. For example, if you purchased a car for $25,000 and were paying 6% interest on the loan, your car would be worth $22,000 the day after its purchase. If the car is paid off in five years, the total payments would have been $31,000, but the car's worth would be around $7,500. Sadly, this was a lesson I learned the hard way. My twin brother and I borrowed money to purchase a used Jeep Wrangler. We fell in love with the vehicle at the auto dealership and even paid extra for drive-train insurance. Two days later, the clutch went out, and the dealership said it wasn't included in part of the drive-train. That wasn't the only issue we had with the Jeep. It was constantly in the shop, and we had expensive mechanical problem after problem that the dealership said our drive-train insurance didn't cover. Avoid credit card debt at all costs. Literally. Credit card debt leads to long-term borrowing habits that are tough to overcome. Instead, it's best to avoid developing these negative habits altogether and save yourself the trouble.If you had $10,000 in credit card debt with 17% interest and paid the minimum payment of around $142/month, your balance would have decreased by only a dollar by the time interest is applied. I learned this lesson the hard way by borrowing money on a credit card because I had no other options. Because of that, I missed a few credit card and student loan payments. Later, a company ran my credit, and I wasn't approved to buy anything. In my mid to late 20s, when I learned the power of money, I mended my ways, paid off all my debts, and maxed out my savings.Make budgeting simpleBudgeting is key to succeeding with money, but many make it harder and more tedious than it has to be. Keep it simple by maxing out your retirement and other savings, then spend the rest. This strategy has made one of the biggest differences for me. Because I was maxing out my 401k and my wife's Roth IRA, I didn't have to worry about budget categories since we didn't go into debt for our regular spending.Sometimes the easiest way to control your spending is to set bigger goals. It's way easier to limit what you spend at restaurants and Amazon when saving for a trip to Tahiti, a newer car, or a down payment for a home. It has been way easier for me to skip restaurants and eat at home when I know that my family can enjoy new cuisines in another part of the world because of it.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedLetter to a High School...

The timing of when you start receiving Social Security benefits can greatly affect your retirement experience. In this episode of the One for the Money podcast, I share a few things every American should know about Social Security. At the end of the episode, I share a tip on where you can find out the details regarding your Social Security benefit.In this episode...Eligibility for Social Security [02:19]Is Social Security enough? [03:16]Retirement doesn't mean lower living expenses [06:32]Will Social Security run out? [08:46]Estimating your benefits [15:03]What is Social Security?Social Security is an essential aspect of retirement planning, providing a source of income not affected by market fluctuations. Given its significance, Americans need to have a thorough understanding of Social Security. To receive Social Security benefits, individuals must contribute by paying FICA taxes. Employees and employers each pay 6.2% up to a certain level of income. A self-employed individual is responsible for paying the employer and employee portions of Social Security.Relying on Social SecurityUnfortunately, living on Social Security alone leaves people on the brink of poverty. According to the Social Security Administration, 21% of married couples and about 44% of unmarried people rely on Social Security for 90% or more of their retirement income. Social Security was never meant to provide for a comfortable retirement. Rather, it is intended to help ensure lower-paid workers do not have to retire in relative poverty. Social Security retirement benefits will replace only about 40% of your pre-retirement income if you have average earnings. Your Social Security benefit is determined by calculating your average monthly income over your lifetime. This figure is then divided into three portions using a formula, with the lowest portion being given the most weight. The result is that the less a person earns while working, the more income Social Security replaces.Living expenses in retirementMany assume that Social Security will be enough because their living expenses will reduce in retirement. Unfortunately, expenses don't go down as much as one might expect. More and more people are taking mortgages into retirement. Homes require regular repairs and maintenance, and some of those repairs can be very expensive. Transportation costs will remain about the same, as well as everyday household expenses. In retirement, expenses for healthcare and leisure activities increase significantly, with healthcare being particularly costly. A couple, on average, spends over $250,000 on health care in retirement. Consequently, people are expected to need 70-80% of their pre-retirement income to live comfortably in retirement. Social Security doesn't provide enough to meet that need, which is why people need to supplement Social Security with 401k or IRA savings.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedFear Over Social Security's Future Leads Some to Claim Retirement Benefits Early - WSJSSAWhat Is Social Security Tax? Definition, Exemptions, and ExampleSocial Security Benefit Amounts

The critical piece of many Americans' retirement is their Social Security benefit. Without a strategy for claiming Social Security, many Americans make a decision that can cause them to lose out on hundreds of thousands of dollars. In this episode of the One for the Money podcast, I review the factors you should consider when deciding when to take Social Security.In this episode...Assessing your options [01:16]Later filing eventually passes earlier filing [04:25]When should you consider taking Social Security early? [05:56]Social Security when you have other income [09:26]Many people take Social Security too early [10:59]Strategies for married couples [12:29]Timing depends on the individualI'm often asked when a person should take Social Security. The answer to this question requires discussing goals, assessing additional sources of income in retirement, and running projections in my financial planning software. Far too many Americans don't consider these factors when making this critical decision. Instead, they take Social Security based on what their friends decided to do - friends who likely have very different financial situations and goals. Benefits of delayingIf you take Social Security at age 62, your benefit will be up to 30% less than at age 67. That reduction is for the rest of your life and is a 6% yearly decrease when taking benefits early. If you wait until age 70, your benefit will be 32% more each month than it would be at age 67 for the rest of your life. That's an 8% increase each year you wait.While taking early Social Security would mean collecting for more years, eventually the benefits of filing later catch up with earlier filing. How long would you need to live to have gained more with later filing? According to JP Morgan, a median Social Security earner taking benefits at age 67 will have received more at just over age 76 than if starting at age 62. If you take benefits at age 70, you'll have received more by age 80 and five months than if you had started at age 62. By age 90, you will have accumulated $125,000 more if you waited until age 67 versus 62.Life expectancy and incomeDeciding when to take Social Security depends on two main factors: life expectancy and sources of income. If you have a shorter life expectancy based on family history and health and don't think you'll live into your late 70s or early 80s, delaying Social Security doesn't make sense. However, if you have a long life expectancy, it can be in your best interest to delay taking benefits as long as possible. Taking early Social Security may also make sense if it's your primary source of income in retirement. You may not have the option to delay. Other than that reason and a shorter life expectancy, I firmly believe it makes more sense to delay Social Security provided a comprehensive analysis was completed. Social Security is critical to retirement, so choosing wisely and assessing goals is imperative. This decision is far too important to leave to chance or go along with the crowds.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedWhich Social Security Claiming Strategy Generates the Highest Legacy Value? | Financial Planning Association

In the One for the Money podcast, we've been discussing finances and children in our recent episodes. In the previous episode, we covered lessons for kids a few years away from adulthood. In this episode, we will focus on investing for kids only a few years old. Don't miss out on the end of the episode, where we'll discuss how a new law has made 529s even more valuable.In this episode...Improving investment returns with time [01:56]UTMAs and UGMAs [03:43]Setting up a kid Roth [08:10]The power of 529s [11:54]Turning a 539 into a Roth IRA for your kids [15:35]Time is crucialMoney invested in the stock market should always be for the long term. The short term poses a high level of risk, while the long term yields significant rewards. The amount of time invested in the market profoundly affects returns, as it is the exponent in the compound interest formula. Compared to other factors, time has the most significant impact on investment returns.Maintaining a healthy lifestyle through diet and exercise can add time to our lives, but we cannot go back in time and invest earlier. However, we can encourage our children to invest as soon as possible to increase their investment time horizons.Investments for childrenThe Uniform Transfers to Minors Act (UTMA) is a law that permits minors to receive gifts without the assistance of a guardian or trustee. The gifts may include money, patents, royalties, real estate, and fine art. Children can receive these gifts directly without an additional step involving parents, guardians, or trustees. While most of these gifts are arranged by parents to provide assets for their children, some minors have a guardian or trustee instead. An extension to UTMA is UGMA (Uniform Gifts to Minors Act), which expands the types of assets you can give. While UGMA only allows financial products like stocks, bonds, and mutual funds, UTMA includes both financial and physical assets. Once the child reaches legal age, they no longer require a custodian and can spend the money as they please. The age they become legally independent is determined by their state of residence, usually 18 or 21 years old, but each state has the option to adopt and amend the UTMA.College savings and 529sA college savings account, also known as a 529, is a great investment option for our children's future. Currently, the total student loan debt in the US is a staggering $1.7 trillion, making it the second-highest consumer debt category after mortgage debt. Surprisingly, due to government regulations and unintended consequences, Americans owe more money on school loans than credit cards and auto loans combined.529s may seem simple at first glance, but they offer a range of benefits beyond their basic strategy. You can designate any person as a beneficiary and even save for future college expenses or for children who have not yet been born. Additionally, changing the beneficiary is allowed at any time. Parents and grandparents can start saving now to ensure a brighter financial future for their heirs, taking advantage of the power of compounding interest.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedThe Psychology of Money: Timeless lessons on wealth, greed, and happinessUniform Transfers to Minors Act (UTMA): What It Is, How It WorksUGMA-UTMA Account: The Benefits of One | Vanguard

We spend ample time, effort, and resources to ensure our children have a good education when they leave school. However, far too many young adults enter the world without understanding personal finances. In this episode of the One for the Money podcast, I provide information that will likely help your kids more than Pythagoras' theorem or algebra. In the tips, tricks, and strategies portion, I share a tip to help understand interest rates and rates of return.In this episode...We want the best for our children [01:52]Money communication [02:59]The power of interest [06:07]Teaching our mistakes [09:38]The Rule of 72 [12:16]Interest of stocks and bonds [16:49]Teaching money communicationWanting what's best for our children is the remarkable selflessness of parenting. We want them to have a better life than we have. What our children know and believe about money will profoundly shape their lives and empower them to do greater things. However, the lack of knowledge can create conditions of predictable misery.How can we expect our kids to speak to their spouses about money if we haven't had these conversations with them first? Money issues are the leading cause of divorce. My mother and late father are an example of this. They were married for twenty-five years and were both loving and kind. However, they were raised with different philosophies regarding money that they didn't discuss. While a lot of stress and heartache preceded my parents' divorce, I believe that if they had talked about money with their own parents, they would have more easily been able to talk about money with each other.Values and moneyValues determine how we manage our time and money. Jim Grubman, a family wealth psychologist, said, “Without an understanding of values, you can't really make great choices.” Teaching children the value of a dollar or the satisfaction of earning and saving money requires conscious effort. The goal isn't for everyone to have the same values. Rather, families can use these values to find common ground and create ground rules for decisions. A family may talk about the principles of lifelong learning or hard work, but how individuals apply these principles can differ based on personal values. Helping make sense of financesAre we teaching our kids about budgeting, taxes, investing, Social Security, Medicare, and saving for retirement? If we haven't taught them, who will? What mistakes and pains could we help them avoid? While most parents want their kids to have a better life than they had, we don't often don't teach them the principles required to achieve it. I offer a service to my clients to teach their children about the financial fundamentals of building wealth. Many have taken me up on the offer to discuss the principles of budgeting, discipline, saving, investing, taxes, and compound wealth with their children. While I am certainly no substitute for what parents can teach their children, I'm happy to augment these efforts. As a Certified Financial Planner, one of my main goals is to help clients and their children make sense of the financial world. When people understand finances, they make the best decisions wherever life and money intersect. With this greater understanding, we can create a plan so their life unfolds how they want it. Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People Mentioned78% Of Workers Live Paycheck To Paycheck

Many Americans dream about owning property they can rent for passive income. In this episode of the One for the Money podcast, I examine whether investing in real estate or the stock market is better. Listen to the end when I share tax-saving strategies associated with selling real estate.In this episode...All investments carry risks [02:22]Advantages of investment properties [06:24]Capital expenditures [11:04]So which is better? [15:41]The primary home exemption [17:14]The dream of owning rental propertyOwning a home is one of the more common American dreams. Many Americans also dream about owning an additional rental property to generate passive income. Many wonder which is the better investment: the stock market or real estate. Both stocks and real estate can be worthwhile investments, but all investments carry risk. Investing in real estate is hugely appealing. Real estate is tangible and practical. You can use the property yourself if you need shelter again. A stock or a bond can't do that for you. Even if you own 10% of a publicly traded company, they aren't going to allow you to move into their headquarters! Another reason people like the idea of investing in real estate is that it's simpler to understand than stocks and bonds.Challenges in real estate investmentsHowever, just because an investment on the surface seems easy to understand, that doesn't make the investment any less risky. Income isn't necessarily guaranteed. Additionally, squatters seem to have an insane amount of rights when they occupy a property, and evictions can be lengthy and costly. Even with a great tenant, there are still challenges. If you don't have a big enough down payment, generating positive cash flow may take a long time. That means you will be funding losses each year.Too many people oversimplify the math. They assume they'll pocket the difference between the rent and the mortgage, failing to account for various fees, taxes, maintenance, and vacancies. You must have experience and intimate knowledge of home values to do well with real estate. Without the time to gain that knowledge, purchasing properties at a discount can be difficult when up against a large corporation with cash offers. Of course, the same could be said of individual investors competing against large investment firms. Tax breaks on real estateHomeowners can save money on taxes and make money from property by taking advantage of the primary home exemption. The principal residence exclusion is an IRS rule that allows people who meet specific criteria to exclude up to $250,000 for single filers or up to $500,000 for married filing jointly in capital gains tax from profit when they sell their primary residence. To qualify for this exclusion, you must have owned and lived in the property as your primary residence for two of the five years immediately preceding the sale. That means you could move out of your primary residence for a few years and then rent it for income while still enjoying the tax savings when you sell it.Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.Resources & People MentionedRich Dad Poor DadWhy Rental Properties Aren't Good Investments | Wealthfront35 Insightful Landlord Statistics – 2023 - Flex | Pay Rent On Your Own...