Powering Your Retirement Radio

The show will be focused on addressing questions on how to plan for retirement, maximize your benefits, saving inside and outside of your retirement accounts, Social Security, Medicare, and all things related to PG&E Retirement—hosted by Daniel W. Leonard, CFP®, EA. Dan is a PG&E Retirement Specialist and has 30+ years of experience in the financial industry; and since 2012, he has focused specifically on working with PG&E employees and retirees.

On a Break Until the 4th Quarter 06/29/2023

How long should I keep my documents? 05/11/2023

How long should I keep my documents? Welcome to "Powering Your Retirement Radio"! Today, I want to address one of the most frequently asked questions about the documents you should keep hard copies of and for how long. It doesn't matter if it's your tax return or investment statements; fortunately, digital copies are acceptable for many of these documents now. But you may have a concern about what happens if the drive fails. Many people still have banker's boxes or a filing cabinet hiding somewhere. And if you are like many people, it is overdue to be cleaned out. I will go over Tax, Healthcare, Legal, Asset and Debt, and Other Documents to keep track of. Let's start with Tax Documents, as outside of CA, tax season is over, and in CA, it is at least starting to slow down. A. Tax returns and supporting documents - 7 years. B. W-2 and 1099 forms - 7 years. C. Deduction receipts and statements - 7 years. D. Business expense receipts and statements - 7 years. E. Investment statements - until you sell the investments + 7 years. F. Property records - until you sell the property + 7 years. G. Retirement plan statements - until you close the account + 7 years. You should keep these documents for at least seven years in case of an audit. The same goes for your W-2 and 1099 forms. Deduction receipts and statements should also be kept for seven years, as should business expense receipts and statements. You might ask why? The IRS can audit your return up to three years after it is filed unless they are claiming fraud, and then it is seven years. Investment statements and property records should be kept until you sell the investments or property, plus seven years. Finally, retirement plan statements should be kept until you close the account, plus seven years. Now for Healthcare documents, things like: A. Medical records - indefinitely B. Insurance policies - indefinitely C. Explanation of benefits (EOB) - 1 year D. Prescription receipts - 1 year E. Health savings account (HSA) statements - 7 years Medical records should be kept indefinitely, as should insurance policies. Explanation of benefits (EOB) should be kept for at least one year, and prescription receipts for at least one year. Health savings account (HSA) statements should be kept for seven years. I got an EOB this week from May of last year. Since I switched carriers this year, it was good to be able to pull out the old policy and call and find out what the charge was for. Also, on HSA, since you can carry forward expenses into the future, it really is seven years after you have claimed the expense since that is when you would claim the deduction. How about those Legal-related documents: A. Estate planning documents - indefinitely B. Marriage and divorce documents - indefinitely C. Adoption and custody papers - indefinitely D. Wills and trusts - indefinitely E. Power of attorney - indefinitely F. Real estate deeds - indefinitely G. Vehicle titles - until you sell the vehicle. H. Lawsuits and settlement agreements - indefinitely This section is simple, keep everything. You need the current copies but also the old copies to document the changes and when they happen. It doesn't happen all that often, but when a distant relative shows up claiming they were promised or are entitled to something, having clear documentation of when a change occurred can save a lot of hassle and potentially money. Now for Asset and debt-related documents, basically for financial information: A. Loan agreements and promissory notes - until the debt is paid off + 7 years. B. Home purchase and improvement documents - until you sell the home + 7 years. C. Vehicle purchase and maintenance documents - until you sell the vehicle + 7 years. D. Investment and brokerage account statements - until you sell the investments + 7 years. E. Real estate purchase and sale documents - until you sell the property + 7 years. Loan agreements and promissory notes should be kept until the debt is paid off, plus seven years. Home purchase and improvement documents should be kept until you sell the home, plus seven years. This is important when you make improvements that will increase your cost basis. Vehicle purchase and maintenance documents should be kept until you sell the vehicle, plus seven years. Investment and brokerage account statements should be kept until you sell the investments, plus seven years. On this one, I tell people to keep their monthly statements for the current year and then keep the comprehensive year-end on file, and they can get rid of the monthly statements. Finally, real estate purchase and sale documents should be kept until you sell the property, plus seven years. Finally, all your other important documents: A. Birth certificates, marriage licenses, and other vital records - indefinitely B. Social Security cards - indefinitely C. Passports - until you renew. D. Education transcripts and diplomas - indefinitely E. Employment contracts and personnel files - indefinitely You should keep hard copies of these documents. Birth certificates, marriage licenses, and other vital records should be kept indefinitely, as should Social Security cards. On Social Security Cards, you can get a new one issued, but you can't get more than three in a calendar year and ten in your lifetime. Passports should be kept until you renew them. Education transcripts and diplomas should be kept indefinitely. Employment contracts and personnel files should also be kept indefinitely. That is a bunch of documents. It's important to note that the above recommendations are general guidelines and may vary depending on individual circumstances or jurisdictional requirements. Always consult with a professional advisor if you have any questions or concerns about document retention. I have attached a link here so you can or fill out an . Until next time stay safe! You can visit the podcast website here: /episode/index/show/pyrradio/id/26802768

Edward F. Sanders - Financial Strategist 04/27/2023

What to do on your worst day 04/13/2023

What to do on your worst day Hello, and welcome back to Powering Your Retirement Radio. Today's episode is not uplifting, but still worth a listen. We will all likely face this event once or twice in our lifetimes. Unfortunately, like most emotional and personal things, you learn by doing it and never really share it with anyone. So, here is an outline of things to consider when your spouse or a loved one passes away. 1 Notify Friends and Family, designate the family members who can help with some of the necessary tasks 2 Contact a funeral home, medical school crematorium according to the deceased wishes 3 If the deceased was religious, contact their place of worship to arrange for services and other customs. Flowers, Picture Boards, Videos, Memorial Cards, Readings, etc... 4 Write the obituary, and send it to the local paper and funeral home. Name, age, city of Residence, date of death, birthplace and year, parent's name, biographic information, survivors, details of the service (Funeral home can help. 5 Update Social Media after the immediate family has been notified 6 Notify employers 7 Notify children's schools 8 Notify Social Security 9 Notify the Professional team, Attorney, advisors, tax professional, executor 10 Locate wills and Trust 11 Order 10 to 20 Death Certificates - Funeral home or Health Department 12 Set up a spreadsheet or notebook to keep track of food, gift cards, letters, phone calls & help provided so you can thank people later. 13 Make a list of people you can lean on for help and emergencies. 14 Call DMV - Car registration Expiration, cancel DL, is Auto Insurance still valid? Varies by state. 15 Rely on supportive people 16 Accept whatever help is offered 17 Allow the emotions to come; it will be a rollercoaster 18 Be honest with children, and allow them to participate to the extent they wish 19 Do judge people's reactions. Everyone grieves differently 20 Collect Veterans benefits 21 Determine recurring bills to be paid and or canceled 22 If the deceased was in a rental, determine the turnover of the property time frame 23 Create a calendar to keep track of important dates 24 Prepare to go through deceased possessions. 25 Practice good self-care For more information, please visit the podcast website: /episode/index/show/pyrradio/id/26524191

Treasury Bills and SVB 03/23/2023

Long Term Care Basics 03/09/2023

Long Term Care Basics Welcome back to Powering Your Retirement Radio. I want to discuss Long Term Care or Extended Care. This is insurance and not an investment. Insurance, in the long run, is better to have and not need, than to need and not have. It is also better to buy it before there is a need because, at that point, it is either very expensive or not available. So why do you need Extended Care Insurance? You need it because of the unknowable circumstances around your future health, not just yours but, if you are married, your spouse as well. As counterintuitive as this sounds, Extended Care Insurance is not for someone who falls ill or needs care. It is for the surviving spouse. I hear all of the jokes and uncomfortable laughter around; they’ll hold a pillow over my head… No, they won’t. Extended Care isn’t just for end-of-life situations. It covers you if there is a car accident, if you have a stroke or if some other issue where you need prolonged care during your recovery. No one wants to be a burden to their children, and even fewer people want to leave a healthy spouse without enough money to live on because the assets went toward their care. So what is there to do? There are a few options, including Traditional Long Term Care Insurance, which is not very popular, but still available. There is Hybrid Life Insurance that provides a Long Term Care Rider. And finally, there are Long Term Care Annuities. Here is a quick overview, which will hopefully give you enough information to determine what makes sense for you. As always, I am happy to chat if you have questions. Traditional Long-Term Care Insurance: This is what most people think of. It’s a use-it-or-lose-it policy where you pay in for your lifetime, and if you never need it, there is nothing to be paid out. This is the insurance I personally own, only because I got it when I worked at Genworth, and it was inexpensive at the time. Given the cost of care, my premiums over my expected life span will equal roughly 6 months' worth of coverage in a nursing facility. Since the average stay is 3 years, I am comfortable with the fact that I have it, even if I don’t need it. Hybrid Life Insurance with a Long-Term Care Rider: This is a life insurance policy with a death benefit that can be converted to pay for long-term care needs if needed. The good part is that if you need long-term care, you have a predetermined amount of coverage. If you don’t need it, there is a death benefit for your heirs, so the money you paid in premiums is not a sunk cost you can’t recover. If you collect on the death benefit, you don’t lose your money, but the growth of the funds is more like investing in a CD rather than the market. The key is that you have protection since you have insurance and you aren’t spending the assets meant to provide your retirement income. This can be purchased over your lifetime or a set number of years, usually 10 or 20 and you are subject to underwriting on these policies. Annuities with a Long-Term Care Rider: These are usually on a fixed or index annuity and are purchased with a lump sum with some kind of multiple, say 1, 2, or 3 times the amount deposited if you need long-term care. So you invest $100,000 in the fixed annuity, and it grows like any other fixed annuity, and like the hybrid policy above, if there is a need for long-term care, the multiplier kicks in, and your $100,000 now covers $200,000 or more of long-term care bills. There is some underwriting, but it generally has a better issue rate than the hybrid or traditional policies. The quick recap is that a traditional policy is less expensive than a hybrid policy, but with no way to recoup the expense if you don’t need it. Hybrid is good for a person who is a planner but wants some protection. The caveat is that you also need to be insurable. The annuity will likely get you coverage in a situation when you can’t get a hybrid policy, but you need to have a larger sum of money all at once. All three will help you protect your assets in the future, but you need to apply and go through the process. A final thought, the people most interested in long-term care are the ones who have seen a parent, spouse, or another relative need care and know what the costs are. If you want to see it for yourself, here is a link to the . Visit the Podcast Website for more information: /episode/index/show/pyrradio/id/26105562

How to Save $1,000,000 in your 401K 02/23/2023

How to Save $1,000,000 in your 401K How can you save $1,000,000 in your 401k between the ages of 30 and 60? We'll cover strategies for maximizing your contributions, making smart investment decisions, and taking advantage of employer matching programs in this episode. Maximizing Contributions The first step in saving $1,000,000 in your 401k is to maximize your contributions. If you're 30 years old, you have 30 years to save, so the earlier you start, the more you can save. The contribution limit for a 401k is $19,000 in 2022, with an additional $6,500 catch-up contribution for those over 50. Consider increasing your contribution rate by 1% each year to reach the maximum contribution limit. In my experience, you do not need to maximize your contribution from the start. Being consistent over the years yields a far better outcome. Investment Decisions Making smart investment decisions is key to growing your 401k balance. Start by understanding your risk tolerance and investing in a mix of low-risk, moderate-risk, and high-risk options. Consider using a diversified portfolio, which you can adjust as you near retirement age. You need help making investment decisions that align with your goals. This is where consulting a financial advisor is something to consider. Employer Matching Programs Many employers offer matching contributions to 401k plans. If your employer offers a match, make sure to contribute enough to take advantage of the full match. This is free money, so make sure to maximize this opportunity. If your employer does not offer a match, consider other savings options, such as a traditional or Roth IRA. Compound Interest Compound interest is a powerful tool for growing your savings. Over time, the interest you earn on your 401k contributions can compound, increasing the growth of your balance. Consider using an online calculator to see how much you can earn through compound interest over time. At some point, the amount you contribute annually will be smaller than the interest you receive. Saving $1,000,000 in your 401k between the ages of 30 and 60 is an achievable goal with the right strategies in place. Start by maximizing your contributions, making smart investment decisions, and taking advantage of employer matching programs. By starting early and taking advantage of the power of compound interest, you can build a secure financial future for yourself and your family. For more information, please visit the podcast's website: /episode/index/show/pyrradio/id/26003040

Saving for Retirement 02/09/2023

Saving for Retirement How much should I save for Retirement Annually? The amount you should save for retirement annually depends on several factors, including your age, income, current savings, and retirement goals. Generally speaking, financial experts recommend saving 10-15% of your income each year for retirement. However, it's important to remember that this is just a guideline, and you should adjust your savings rate based on your own individual needs. How much do I need to save to be able to retire? The amount you need to save to be able to retire comfortably depends on several factors, including your age, income, current savings, and retirement goals. Generally speaking, financial experts recommend having saved 10-12 times your annual income by the time you retire. So, for example, if you make $50,000 per year, you should have saved at least $500,000 by the time you retire. It's important to note that this is just a guideline and that you should adjust your savings rate based on your own individual needs. How much do I need to save for health care in retirement? The amount you need to save for health care in retirement will depend on several factors, including your age, current health care costs, and your retirement goals. Generally speaking, financial experts recommend saving between 3-8% of your income each year for health care in retirement. However, it's important to remember that this is just a guideline, and you should adjust your savings rate based on your own individual needs. What is a safe withdrawal rate in retirement? A safe withdrawal rate in retirement is the amount of money you can safely withdraw from your retirement savings each year without running out of money. Generally speaking, financial experts recommend withdrawing no more than 4-5% of your retirement savings each year. However, it's important to remember that this is just a guideline, and you should adjust your withdrawal rate based on your own individual needs. What are the pros and cons of Dollar cost averaging? The pros of dollar cost averaging include the following: 1. Reduced Risk: By investing a fixed dollar amount over time, you will be able to spread out your risk and potentially minimize losses if the market drops. 2. Lower Start-Up Costs: Dollar cost averaging allows you to start investing with a smaller amount of money, which can be helpful if you don't have a large sum to invest all at once. 3. Emotional Benefits: Investing with a regular, fixed amount each month can help to manage your emotions and reduce the temptation to invest impulsively. The cons of dollar cost averaging include the following: 1. Lower Average Returns: Investing regularly each month means that you may miss out on larger gains that could be made if you invested a lump sum all at once. 2. Reduced Flexibility: With dollar cost averaging, you are limited to investing a fixed dollar amount each month, which can limit your ability to adjust your investments in response to changing market conditions. 3. Opportunity Cost: By investing smaller amounts over time, you may miss out on larger investments that could potentially generate higher returns. What are the go-go, slow-go, and no-go phases of retirement? The go-go phase of retirement is the period of time when you are most active and able to do the things you want to do. During this phase, you are able to travel, participate in hobbies, and engage in social activities. The slow-go phase of retirement is when you may need to start slowing down a bit due to age or health issues, but you are still able to do some of the things you enjoy. The no-go phase of retirement is when you are no longer able to participate in activities as you have in the past actively, and you may need to rely more on family and friends for help. For more information, visit the podcast's website: /episode/index/show/pyrradio/id/25860222

Long Term Perspective 01/26/2023

2023 Tax Numbers to Know 01/12/2023

Secure Act 2.0 12/29/2022

Secure Act 2.0 Welcome back to Powering Your Retirement Radio. On December 23, 2022, Congress passed the SECURE 2.0 Act of 2022 as part of the Consolidated Appropriations Act of 2023, a $1.65 trillion omnibus spending package to keep the government running. The new retirement legislation makes significant alterations to the retirement account rules. Many of these changes impact workplace plans. Not all provisions are effective immediately or even in 2023. Some do not apply until 2024, and some do not for a decade! Here are some of the key impacts: RMD Age Increase: The age for required minimum distributions (RMDs) is increased to 73 starting in 2023. This age will increase to 75, but not until January 1, 2033. If you are currently taking an RMD under the old 70 ½ or 72 RMD age rules, continue to follow their existing RMD schedule, and nothing will change for you. QCDs Expanded: Starting in 2023, a one-time only, $50,000 QCD to a charitable gift annuity, charitable remainder unitrust, or a charitable remainder annuity trust will be allowed. Also, the QCD limit of $100,000 will be indexed for inflation starting in 2024. Roth Changes: Beginning in 2024, this will no longer be the case, as Roth assets in a plan will be exempt from lifetime RMDs. The trend toward “Rothification” continues as Congress seeks immediate tax revenue. SEP and SIMPLE plans can allow Roth contributions beginning in 2023. Further, all plan catch-up contributions for age 50-or-over higher income employees (over $145,000) must be Roth contributions, starting in 2024. Finally, beginning immediately, plans can allow employer-matching contributions to be made on a Roth (after-tax) basis. 529 Plans: Effective in 2024, beneficiaries of 529 college savings accounts are permitted to roll over up to $35,000 throughout their lifetime from a 529 account in their name to their Roth IRA. These rollovers are subject to Roth IRA annual contribution limits, and the 529 accounts must have been open for more than 15 years. This new rule will allow any “leftover” funds in the plan to avoid tax or penalty if rolled over. 10% Penalty Exceptions: Hopefully, you'll never need any of these new 10% penalty exceptions that have been added, all of which have different effective dates. These include distributions for terminal illness (effective immediately), federally declared natural disasters - $22,000 limit (effective retroactively to 1/26/21), pension-linked emergency savings accounts - $2,500 limit (2024), domestic abuse - $10,000 limit (2024), financial emergencies - $1,000 limit (2024), and long-term care - $2,500 limit (effective three years from the date the new law is signed). Missed RMD Penalty Reduction: Effective in 2023, the penalty for failure to take an RMD is reduced from 50% to 25%. If the missed RMD is corrected promptly, the penalty is further reduced to 10%. (I think this is a way to raise revenue. Many times the penalty was waived in the past. We'll see if the IRS is still as lenient with the lower penalty.) What’s NOT in this Act: There is no fix to the “at least as rapidly rule” for those beneficiaries subject to RMDs for years 1-9 under the 10-year rule when death is on or after the RBD (required beginning date). Congress could have easily corrected that here, but it chose not to. So, it seems more likely the IRS will keep this complicated RMD rule in place when it issues final regulations. For more information, visit the Podcast Website: https://poweringyourretirement.com/2022/12/29/ep-046/ /episode/index/show/pyrradio/id/25443894

Tax Loss Selling 12/15/2022

The Great Reset 12/02/2022

The Great Reset The great reset is coming. Every year at the end of the year, everything gets set back to Zero. Everyone likes it when the market is up, but 2022 certainly has not been an up year. Every year on December 31st, all reporting systems reset. When the market is up, an advisor dislikes the reset since you lose the good performance. When the market is down, we don’t mind it as much because it is great to forget the downturn. Regardless of whether the market is up or down, the fact that the reset happens means you need to understand math. For instance, this year, the market is currently down 17%, which means if you started the year with $100,000, you’d have $83,000 today. If the year ended today, it would take a 20% return on the $83,000 to get back $100,000. If you were up 17% and then lost 14.5%, you would be back at $100,000. Enough math. The market goes up and down. Percentages can play games with what you need to make up for downturns. The key to remember is currently, every time the market has gone down, it has come back and reached new highs. While I can’t say that will happen again, with certainty, it seems likely that it will happen. If you are retiring this year, it can be a little trickier since you will be pulling a higher percentage of your portfolio since it is the account would be down. As the market grows, you will be taking a smaller percentage. If you are still working, you are regularly investing in your 401k, which means you are Dollar Cost Averaging each month. As the market falls, you buy a few more shares each month than before. The whole time you are lowering your cost basis. Once the market returns to its previous high levels, you don’t lose those shares. They are there for as long as you hold them. Once you retire and start taking money out of your account, you are not likely to take all your money out simultaneously. So, you start systematically withdrawing money out of your account. This is essentially the same concept of Dollar Cost Averaging but reverse. If the market is going up, you sell fewer shares every month, and if it goes down, you will sell a few more shares. Since retirement is hopefully a multi-decade experience, you are going to sell shares and take money over several market cycles, meaning the withdrawals will likely average out over time. From 1950 to 2020, on 12 different occasions, the S & P 500 fell 20% or more, with an average fall taking over 340 days and the average decline being just over 33.3%. The market falls more than 10% about every 1.2 years, and from 1980 to 2020, there have only been two years without a 5% loss and another 4 years where it only fell 5% one time. So that is 34 years with multiple 5% declines. I know that is a lot of numbers, but the story's moral is that despite this lackluster year, with high inflation, and political upset, what is happening in the market is not unusual. There are lots of people that want you to reposition portfolios and change strategies. Now is not the time to change your plan. Good solid diversified portfolios are meant to weather difficult markets. The goal is not to not go down but to go down less. With the market down 17%, you need a 20% return to break even. If you are only down 13%, you only need a 15% return to break even. Stay strong, review your plan, and know your numbers. Visit the podcast website here: /episode/index/show/pyrradio/id/25182486

HSA Ideas 11/17/2022

Health Savings Accounts - Basics 11/10/2022

Social Security COLA Adjustment 10/20/2022

Required Minimum Distribution Strategies 10/06/2022

Tax Buckets 09/22/2022

Tax Birthdays and Milestones 09/15/2022

401k Tune Up Pt 2 08/25/2022

401k Tune Up Pt1 08/11/2022

401k Tune Up Pt1 1. Contribution Calculation Every year, when you get a raise, you automatically save a little more money. At some point, you will likely hit the 401k contribution limit. Currently, that limit is $20,500. That amount is known as your Elective Deferral. If you divide the elective deferral amount by your base salary (ex. $150,000), the result would be the exact percentage you need to save to reach $20,500. Annual Contribution / Base Salary = Decimal X 100 Contribution % $20,500 / $150,000 = 0.1366 X 100 13.66% $10,000 / $150,000 = 0.0667 X 100 6.67% If you only want to save $10,000 and you make $150,000, your savings percentage would be 10,000 / 150,000 = 0.0667. In the PG&E 401k, you must save a whole number as a percentage. So you can round up or down depending on your cash flow needs. 6% of $150,000 would be $9,000 and 7% would be $10,500. In tip #5 I will explain why you don’t want to maximize your contribution before the end of the year unless you use tips #4 & #5. ProTip: Sign up for the 1% annual increase in your contribution limit each year in April. After your raise hits your paycheck, 1% goes to your 401k and the rest to you. This will help you reach your elective deferral limit sooner, which will help you maximize your savings over your career. 2. Catch Contributions (50+) Age has its advantages, and one of them is the US Government tries to encourage people when they turn 50 to increase their savings. The government allows you to save an additional $6,500 per year. PG&E requires you to make a separate election for the catch contribution. When you turn 50, if you go into your Fidelity Net Benefits account, you set up your elective deferral amount on the page. You can select a percentage for the catch-up contributions. The calculation is the same as above. The difference is you would divide $6,500 by your base salary. Annual Contribution / Base Salary = Decimal X 100 Contribution % $6,500 / $150,000 = 0.433 X 100 4.33% Again you need to pick a whole number percentage. In this case, as long as you can afford I would round up. I’ll explain why in tips #4 & #5. 3. Minimum Contributions to Maximize Match Cash Balance (Union & Management) (New Pension) Union Match equals $0.75 per $1 up to 8% after 1 year of service. Management and A&T Match equals $0.75 per $1 up to 8% as soon as you start contributing. Final Average Pay Matching Calculation (Old Pension) Union The match equals $0.60 per $1 up to 3% or 6%. 1 to 3 years of service is $0.60 per $1 up to 3% 3 years + is $0.60 per $1 up to 6% Management and A&T The match equals $0.75 per $1 up to 6%. 4. Monthly Matching Since PG&E matches every month, you need to make a contribution on each paycheck, or PG&E won’t add a matching contribution. The easiest way to see if you to make sure you are getting the maximum match is to look at your last December stub and make sure you made a contribution. At least once a year, a PG&E employee assures me they contribute monthly. After pulling their December paystub, they pull their November paystub, and so on, until they see the contributions. Then the realization that they have been missing out on a month or two of matching dollars for several years. You can either adjust your contribution percentage downward using Tip #1, which, if done right, would pull the same amount of money and get the maximum matching amount. Or, you can read Tip #5, save more, and get the maximum matching amount. to be continued... 5. Spillover Election 6. After-Tax Contributions, regardless of income 7. BrokerageLink *Bonus Tip Visit Podcast website: /episode/index/show/pyrradio/id/24008829

Roth Conversion Gotcha's 07/29/2022

Roth Conversion Gotcha's Welcome back to Powering Your Retirement Radio. I will revisit my Roth Conversions on Sale (Episode 33). I have received several calls on the episode, and in some cases, the idea of doing a conversion did not make sense. There are a few reasons why. First, you have to have an idea of what your retirement income is going to be. If you are currently in the 24% Federal tax bracket, you want to ensure the conversion won't push you into the 32% bracket. You also have to have a feel for your retirement income. Many people see a dip in their income when they retire. If you end up in a lower tax bracket in retirement and you pay taxes at a higher tax rate now, you could be overpaying your taxes. You may avoid a giant Required Minimum Distribution later or higher tax rates, but those numbers are variables you can only guess at. Second, Medicare assesses (IRMAA). IRMAA charges are something that surprises many people. Because Medicare starts tracking your taxable income at age 63. Medicare sets IRMAA charges based on a 2-year look back, so when you turn 65, Medicare looks at your age 63 income. Currently, in 2022 your Part B Premium is $170.10 a person. If in 2020 you made$175,000 your Part B cost would be $544.30 a person. That is almost $375 a month or $4,490 a year more. So large Roth Conversion can have unintended consequences down the road you aren't even aware of. Third, when you pull money from a Roth IRA, the Roth Distribution Ordering Rules come into play. The good news is contributions to a Roth are never subject to taxes or penalties. However, conversions are a different story. The converted amounts must stay in the Roth IRA for five years or until you turn 59 1/2. Finally, earnings on the money have a higher bar. If there are earnings, you have to be over 59 1/2, and the account has to be open for five years, or your earnings are subject to tax and penalties. These 3 points are a good reminder of why even the most confident do-it-yourself investor should check with a professional to ensure they don't miss something. Imagine finding out two years from now the Roth conversion you made will cost you an additional $4,490 in Medicare premiums. Not a great feeling. Thank you for tuning in this week. I will be back in two weeks with another episode. Until then, stay safe. Visit the Podcast website: /episode/index/show/pyrradio/id/23877525

When will the bear market end? 07/14/2022

When will the bear market end? Welcome back to Powering Your Retirement Radio. In this episode, I discuss the three items mentioned in the article at the bottom of this post. The TLDR answer is nobody knows how it will end, but it doesn't mean people won't try to predict it. The key is to focus on what is controllable. What are the three common reasons Bear Market's reasons end? 1) Individual investors throw in the towel - Capitulation. While it does happen, there are many occasions that it has not happened. 2) Fear hits a high - measured by the VIX (CBOE Volatility Index). In 2009 the VIX was close to 80, and in 2020 the VIX hit the high 60's. In the 2008 - 2009 bear market, the market fell another 19% after the VIX peaked. 3) Stocks have to get cheaper - P/E Ratio. In 2008 - 2009 stocks hit a low of 13x Long Term Earnings. That is roughly 20% below the long-term average. Some people believe doing nothing is the right thing to do. Sometimes it is the right thing to do. Sometimes it isn't. As I said earlier, you have to control what you can control. Adjusting your portfolio sometimes makes sense. Sometimes being consistent and Dollar Cost Averaging is the way to go. However, now is not the time to make radical changes. In a retirement account, almost nobody needs all their money at one time. The best way to ensure your account is correctly allocated is to confirm your risk tolerance and that your investment still matches. Remember, stay calm and adjust if needed. Please consult your financial advisor and tax preparer before making any changes to your portfolio. -------------------------------------------------------------------------------------------------------- The article referenced was by Jason Zweig, entitled "You Can't Predict When Bear Markets End. So Don't Try" This is a link to where it should appear, as of today (7/12/22) the website only shows articles until 7/8/22, and the article appeared on 7/13/22. Visit the Podcast website: /episode/index/show/pyrradio/id/23728310

Roth Conversions are on sale! 06/30/2022

Digital Assets & The Fed Meeting 06/16/2022

Digital Assets & The Fed Meeting Welcome back. This week I talk about Digital Assets and the Fed Meeting yesterday. The show was recorded Monday so that you can hear my predictions. Spoiler alert, I didn’t do too bad. Last week I attended the Digital Assets Council of Financial Professionals (DACFP) this April. I completed their certification course, and this week I finished the Certified Digital Asset Advisor™ (CDAA™). DACFP is headed up by Ric Edelman, which, if you have a 401K plan through Fidelity, you may be familiar with since his old firm Ric Edelman Financial Engines, helps manage many 401ks. I have a similar offering, but it is not nearly as large of an operation. On the plus side, it is a more personalized approach. So, Digital Assets (Bitcoin, Ethereum, etc.) have been in the press a lot in the last month. In the Digital space, they call it a Crypto Winter. In the stock market, it is like a Bear Market. So, we heard from everyone from, Advisors to Money Managers to Miners. The correction in Digital Assets, like any other asset, is healthy, but that does not mean pain-free. The best analogy I heard was it is like a Root Canal. Once it is over, you feel better and are in a better place, but nobody is hoping for one. There is a lot of concern about safety and scams, and rightfully so. Most people have heard of FOMO (Fear of missing out), while with Digital Assets, many people are YOYO (You are on your own). As the industry matures, there will be more regulation, but when you have a decentralized asset, that means YOYO. Some people that are old enough may remember Bearer Bonds, where you clip an interest coupon and go to the bank to get your interest. Just like those days with Digital Assets, if you are doing this without help, you hold all the passwords and if they are lost, so are your assets. If someone gets those passwords, they can take your assets. Hopefully, by July, I will be able to assist people looking to invest in Digital Assets. On to the Federal Reserve and the Markets. The confusion seems to be the order of the day. The Fed has seemed to be behind interest rates for several months, trying to raise interest rates to tame inflation. A few weeks ago, the prediction was a 75 bp move backtracked to 50 bp. In my opinion, putting them in the wrong place. If they raise by 75bp as people think they should, then it would seem like things are worse than just two weeks ago when they said 50bp, down from 75bp at the last meeting. If they do 50 bp and it doesn’t help, the Fed will blame them for being too conservative. *(What happened – edited in) The Fed raised 75bp, and the market initially reacted favorably. However, overnight everyone got to worrying, and things sold off at the open. With a few minutes to go in the day, the S&P 500 is off over 3.25% for the day. The good news is that people saving for retirement are constantly Dollar Cost Averaging (DCA). Over time as the price rises and falls, you continue to buy shares. Sometimes at a higher and sometimes at a lower price. Over time using DCA, you tend to own more shares, which is a good thing, provided the market eventually hits a new high, as it has every time it has declined in the past. Maybe this time it will be different. Unfortunately, sometimes it takes a long time to recover. That is why planning for the long term is an excellent way to prepare when you are saving for retirement. /episode/index/show/pyrradio/id/23432888

What the Heck? 06/02/2022

What the Heck? What the heck? There are so many things that make us scratch our heads when we hear how they work. In this episode, I will share with you what are, what the provision between Social Security and Medicare is, and finally I wrap up with why the self-employed have to file returns to avoid a very on their Social Security benefits. In 29 states and Puerto Rico, there are Filial Laws on the books. The short version is that children can be held responsible for certain expenses incurred by their parents. When I heard about Filial Laws and did a little research I was shocked that these laws are on the books. Now, let's be realistic, I don’t think this is going to see widespread enforcement any time soon. With a little Googling, I found that Pennsylvania may have been the last state to actually enforce these laws. That was in 2012. Given state budgets, it wouldn’t shock me to see this topic crop up from time to time over the next decade. I do help the occasional client with Extended Care policies. These are clients that have experienced the decline of a parent and want coverage or are driven by the desire to not be a burden to their children. agreement between Social Security and Medicare Anyone collecting Social Security who is 65 or older is hopefully aware that Medicare premiums are automatically deducted from Social Security payments. As you are also likely aware that every year there is a Cost of Living Adjustments (COLA) for both Social Security and Medicare. Occasionally, the Medicare increase can be greater than the Social Security increase. Since Social Security payments are larger than Medicare payments everything works out okay most of the time. In recent years, with very little or no COLA on Social Security, you could end up with a larger Medicare premium increase than a Social Security payout increase. The Hold Harmless Provision says if the Medicare bill increases more than the Social Security payment increases, they can not lower your Social Security payment to cover the cost. As you might guess, there are exceptions to this. The one I hear of the most often is for those deferring Social Security payments until age 70. Since they are paying Medicare premiums out of pocket, they pay for the increase since they are not collecting Social Security yet, and their payment can’t be reduced. on your Social Security Haven’t filed a tax return in a while? If you’re self-employed or have a side-gig, you could be losing out on Social Security. Because self-employed taxpayers pay both the employer and employee portion of the social security tax, they are personally responsible for reporting their earnings to the Social Security Administration. They do this by filing Schedule SE with their 1040. However, there is a limited amount of time in which to do so. Namely, three years, three months, and 15 days following the end of the calendar year in which they earn the income. Self-employed taxpayers who for whatever reason fall behind in their filing requirement, or need to amend a previously filed return, will not get credit for their self-employment income if the earnings aren’t reported within this time period. As a reminder, the Social Security Administration no longer mails out annual Social Security statements. If you haven’t done so yet, you should register on the Social Security Administration's website to view a record of your earnings. Check the website periodically to ensure that your wages and net self-employment earnings are properly reflected. If there is an error, you must act before the three-year time limit expires to ensure you get credit for all your earnings. That is it for this episode, if you knew about all this, good for you. I know a lot of advisors that don’t. I am always interested in topics you may have an interest in feel free to drop me an email with your suggestions. I will have a series of podcasts over the summer focused on Digital Assets, stay tuned for more on that in one of my upcoming episodes. Until the next episode, be well, and stay safe. Dan Leonard /episode/index/show/pyrradio/id/23290265

Doom and Gloom: When will it end? 05/20/2022

Doom and Gloom: When will it end? Well, the sell of continues. When will the doom and gloom end? That is the question of the day. Welcome back to Powering Your Retirement Radio. More than 10 trillion of paper wealth has been lost since the beginning of 2022. The NASDAQ and Russell 2000 have reached Bear Market levels. The S&P 500 is approaching and may actually get there before this episode is released. The Fed draining liquidity from the markets to fight inflation is the leading cause of the pain the market is experiencing. To a certain extent, the Fed is seemingly okay with hurting the financial markets in an attempt to curb inflation. Over the last 3 trading days stocks, bonds and commodities are down. Since 1965 this has only been the case less than 9% of the time. The Stay at Home Stocks tracked by Piper Cornerstone is down by more than 54% from their peak six months ago. That is more than the 2008 16-month meltdown. This is only a basket where 2008 was the whole market, but it is not a good sign. Economists predicting a Recession jumped from 17% to 30% in a short period. That doesn’t mean anything other than people's opinions about the market are changing. Since WWII, there have been 12 Recessions with an average decline of 30%. Finally, the Smart Money ve Dumb Money Index shows the Dumb Money Confidence reaching one of the lowest readings in 23 years. The Crowd Sentiment poll has moved into the extreme pessimism territory. So when will it end, good question, nobody thought 2008 would stretch on for 16 months. When it turned it turned quickly and many people missed out on the initial rebound. Nobody knows when the market will turn. Likely it will not be expected, people trying to outguess the market will likely be caught flat-footed. People who hold their course will make their money back in time. There is no guarantee that will happen, past predictions are no guarantee of future returns. Blah, blah, blah, we are all adults, you should not rely sold on this podcast and post for advice. I am always happy to talk to people and you can set up a time to talk at Hang in there, the market can make us all second guess well throughout plans. Until next time, stay safe and remain strong. Here is a link to an article that which most of these numbers came from: /episode/index/show/pyrradio/id/23157782

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