Are you prepared for retirement? These 6 questions will help you see if you’re ready in YMYW podcast episode 83. Original publish date November 19, 2016 (hour 1). Note that content may be outdated as rules and regulations have changed.
- Have you explored downsizing your living expenses?
- Do you have a clear end game?
- Where are you on your debts?
- Have you “right sized” your mortgage?
- Have you considered the different types of income sources available to you in retirement?
- How would continuing to work at your peak earning years impact your quality of life in retirement?
Later, Joe Anderson, CFP® and Alan Clopine, CPA discuss what Trump’s presidency could mean for your taxes. Plus, strategic tax moves for year-end, including tax-loss harvesting and proper asset allocation.
1:36 “Here’s the first question: have you explored downsizing your living expenses?”
4:21 “I would say a lot of individuals need to reduce their living expenses.”
5:09 “Do you have a clear game plan? You may have a general sense of how much money you need to retire, but you aren’t truly ready to retire until you understand what it means in day to day terms.”
5:21 “It’s comparing your retirement number to your anticipated monthly expenses, making adjustments as needed and from there it’s doing simple mathematics.”
10:02 “It’s [about] looking at your entire overall situation to make sure that you answer a few different questions to make sure you’re doing everything appropriately.”
11:00 “There could be some tax reform, there could not be…but we can at least tell you some ideas that Capitol Hill is throwing around and to make sure you’re prepared…the thing you can control is how much you pay the IRS.”
11:49 “I would say the people who are going to be affected if any of the changes go through is going to be small business owners, corporations and people who have a ton of money.”
14:16 “There are few things that won’t change, probably – one is the definition of income. Everything is still income whether it’s salary, pension, rental income, interest, dividends, lottery income, gambling income, all of that is still income so that’s very unlikely to change. The tax rate, however, could change but the fact of how income is being calculated is one thing that’ll likely stay the same.”
14:40 “Another thing is the 1099 forms which you get if you’re an independent contractor. Those will still be very applicable.”
16:26 “Reply to every IRS letter unless it says not to – this is common sense and it won’t change under Donald Trump.”
20:12 “Do not talk to the IRS if they visit you…if they come to your home or business, decline to speak to them and tell them your lawyer will call.”
22:53 “If you understate your income by 25% or more – that’s substantial understatement – the IRS can go back six years. Keep your tax returns forever.”
24:10 “Avoid amending returns; but if you do amend, don’t cherry pick…amended returns have a high audit rate, especially they request a refund.”
25:46 “Be careful with a big refund. If you’re getting a giant refund, the IRS is more likely to look at your tax return.”
29:04 “I’m going to give you some quick tips for end of year tax planning, some real simple things you can do.”
29:10 “One of them is tax-loss harvesting. What is it? Let’s say you had a loss in a certain position, you sell it and buy something similar. Those losses will offset any future gain.”
31:23 “Certain asset classes are in favor at certain periods of time in a cycle.”
34:07 “If you don’t have the right asset location, it’s going to be pretty difficult for you to do tax loss harvesting. Asset location is looking at what asset classes you hold in each account (tax-deferred, taxable, tax-free)…so you need to understand the taxation of the assets you hold in each account.”
36:06 “It’s about being more tax-savvy in your overall scheme of things to make sure you get the best after-tax rate of return.”
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IMPORTANT DISCLOSURES:
Pure Financial Advisors is a registered investment advisor. This show does not intend to provide personalized investment advice through this broadcast and does not represent that the securities or services discussed are suitable for any investor. Investors are advised not to rely on any information contained in the broadcast in the process of making a full and informed investment decision.
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
• Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.
• Opinions expressed are not intended as investment advice or to predict future performance.
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CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
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CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period.
