12.9.22: Audio automatically transcribed by Sonix

12.9.22: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Retire 360 with your host, Dwight Mejan. Dwight is a licensed fiduciary and financial advisor who always places your needs first. Dwight works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you too. So now let's start the show. Here's Dwight Mejan.

Dwight Mejan:
Welcome back. It's hard to believe it's been another week. I'm your host, Dwight MeJan and sitting next to me is Mitchell Keiser. And in the background is Sam Davis, our executive producer. But we're glad you're with us. So thanks for taking part of your weekend afternoon and being with us to talk about your finances and your financial plan and your retirement. Tune in to this on the podcast. We prefer you go to our website Retire360Show.com. What distinguishes us a little different from the financial planning firms out there? A lot of firms are fiduciaries. We are fiduciaries, but we come at retirement planning on really five pillars. And one of those pillars is income planning. The next one is investment planning. The third one is tax planning. You'll hear us talk about that a lot, and we put that one in the center. And there's a reason for that. I'll come back to that. But there's also health care planning and legacy planning. But in the middle of that is tax planning and what makes our firm a little unique in what we do, Mitchell and Sam, is that we build a retirement strategy around the tax plan.

Dwight Mejan:
We cannot forget taxes. In fact, when we talk about taxes, we ask our listeners and a lot of people where we speak, do you think taxes are going up, staying the same or going down? And an overwhelming percentage believe taxes are going up. And yet what we find when we do a follow up question to that is what are you doing to plan for that increase in taxes? We don't find too many people have a plan for that. So we like to begin where many people have an even started. We're glad you're here and we'd love to hear you reach out to us. If you want to talk to us, we'd love to hear from you. We love hearing from our listeners. You can reach us directly at 910 235 0812. We've got some great stuff that we're going to be covering in this week's episode. So, Mitchell, I would maybe you want to just start with the quote of the week. You want to start there for us?

Mitchell Keiser:
Absolutely. Some financial wisdom.

Producer:
And now for some financial wisdom, it's time for the Quote of the Week.

Mitchell Keiser:
So this is from a Jackie Joyner-Kersee. It is better to look ahead and prepare than to look back and regret.

Dwight Mejan:
Now, what a great quote. Jackie Joyner-Kersee. Of course, she was born in March 3rd of 1962, and she's a retired American track and field athlete. And she ranked among the greatest all time athletes in the heptathlon. I had a hard time saying that heptathlon. Did you know what heptathlon was when you saw that?

Mitchell Keiser:
Enlighten me.

Dwight Mejan:
Well, I didn't know either. I had to look up. I wasn't exactly sure, but it was seven. So there were seven events back then, all kinds of different events that they did daily. But I wasn't exactly sure what the heptathlon was. But she won three gold medals, one silver medal, two bronze medals in those two events at four different Olympic Games. So quite, quite an athlete, but just a great quote about not having a life of regrets. And, you know, unfortunately, you know, I asked people a lot over the years, you know, do you regret the things you didn't do or you regret the things that you did do? I think overwhelmingly what I hear is people think about and I think about that in your own situation a minute and just just pause a minute and think about do you regret more of what you did do or what you didn't do? And the categories that I find overwhelmingly people regret what they didn't do, they didn't take advantage of. And for example, since this is a financial show, people regret not starting earlier on their retirement slate. And we see that quite a bit. Any thoughts you have on that? Mitchell Anything Personally, you're you're the young guy here. And Sam, you're a young guy, too, but I'm the older guy.

Mitchell Keiser:
But yeah, always be saving for a rainy day. I know even now trying to just think 40 years, 40, 50 years out, it's important. It doesn't seem like a big deal. And, you know, even every little bit that you can do makes a difference.

Dwight Mejan:
So absolutely. People don't plan to fail. They fail to plan. And we want those who listen to this radio show, we want you to be good planners. And our goal always during the time that we have with you is to give you actionable steps that you can take and to make this the most productive hour. If you have the privilege of sharing that hour. We know you have lots of places and things you could be doing on your Sunday afternoon, but we're honored that you would spend the time with us and we want to therefore maximize the information that we give you. We don't want it to just be information. We want it to be information that leads to transformation. And we want to help transform your financial future. So we're going to talk about some things today. This week we're going to look at 401K rollover and in service distributions. We're going to talk about that a little bit. We're also going to look at seven questions that we can help you answer for retirement. And then we're going to also look at some signs that you could be ready to retire.

Dwight Mejan:
So we'll look at that as well. And then how to save money. This is the holiday season and we want to help you plan and save and and have a budget for that. So we'll talk a little bit about that. So I want to start out here with just talking about this week's show is for all of you out there that have been disappointed with the performance of your retirement accounts this year. It's been a rough year, hasn't it? Mitchell For sure. We know it's been difficult to look at those statements that you get. You know, we're in the final month of this calendar year and a lot of you are just noting the drop in the portfolio. And with those numbers, you know, just we have some stats here that we'll share with you. The S&P 500, of course, that's one of the broadest benchmarks that we measure performance against in our own portfolios. It's down 17% so far year to date. And Mitchell, why don't you tell the listeners here what the Nasdaq is a little heavier in technology?

Mitchell Keiser:
Yeah, for sure. So, you know, the S&P 17%, that's not good. But the Nasdaq is actually down 29% in 2022, right?

Dwight Mejan:
Yeah, that's that's significant. So some of you that are listening to this that are younger investors, you know, the Nasdaq is a good place right now. And if you're if you're Mitchell, if you're your age, there's some good buys out there. So I want to encourage those of you that are on the, you know, the earlier age scale who are listening to this program, You know, this is a great opportunity for you to be coming into the market right now and doing what we call dollar cost averaging, which is being decided. And every month many of you contribute to your 401. K is very important for you. I think it's a great time of year if you're restructuring your contributions and you get to select within that 401. K the options that you have. Find out where those those heavier tech sector is because that tech sector has been beat up pretty good this year and there's some good buys out there and it's going to rebound and you have a longer time horizon. So great place for you to be, but not such a great place if you're in what we call that financial red zone, which is five years before you're getting ready to retire or you're five years since you've retired. If you're heavy in that Nasdaq tech sector, that's a dangerous spot to be, isn't it?

Mitchell Keiser:
Yeah, it's a lifestyle adjustment big time.

Dwight Mejan:
So if you're in that segment, there's a little bit more creative planning that you need to be looking at because some of you are wondering, we get this question quite a bit is, you know, my portfolio is down more than 17% than the S&P 500. So should I hang in? There and wait for it to come back before I make changes to my allocation strategy. And the answer to that is it depends. There's a lot of factors that go into that to determining should you harvest some losses right now? It depends if you're in an after tax account or if you're in an IRA account. Some of it depends on if you're taking income right now or dependent on that income from your portfolio. So there's lots of factors that go into that. And we just want to help you determine what the best steps are for that. And we just encourage you to go to our website Retire360show.com. You can book an appointment with us there or you could call us. Mitch maybe you can give our phone number out to the listeners.

Mitchell Keiser:
Absolutely. Call us at 910 235 0812.

Dwight Mejan:
And we'll take a look at that for you. But we want to talk a little bit. One of the first topics that we want to talk about right now is the traditional 401 K rollover and the in-service distribution and in-service distribution. That's probably a new phrase for some people, but most people know what a 401 K is. If you're working, you're contributing to something like that. It could be a 403 B or something different, but an in-service distribution is basically something that your employer might allow you to do if you're still working. There's a couple of things that go into determining that. One of the things is there, it's called their plan document, and it just depends if their plan document allows you to do that. But what a in-service distribution basically is, it permits the participant in that 401. K plan to roll out most or all of that money into an IRA account. And the reason that's an opportunity for many people is the 401. K is is a great place to invest because for most employers they're going to match you a percentage of your contribution. For example, if you contribute up to 6%, they'll match on that same 6% contribution. But we hear people and this is the thing to be cautious of, we have people that we talk to that say, Hey, Dwight Mitchell, you know, you'll be glad at what I'm doing. I'm putting the maximum in, I'm putting 15 or 20% into my 401 K based on my income, and I'm maxing that out and we stop them right there and say, Hey, that's not necessarily a good thing that you're doing, that what you might want to consider doing is taking that contribution and doing it up to the max of your employer, doing the 6%, and then investing outside the 401 K in either a Roth IRA or a traditional IRA.

Dwight Mejan:
And the reason for that is within that 401K, there are limited choices of where you can invest. Sometimes you can, you know, they have good funds that you can participate in and other times the funds, the choices are not as you don't have as good a selection there. So we tell people, when you go to an IRA account, you open up the entire investment world and you can invest into an IRA that gives you much more opportunity to get more conservative if that's what you are, instead of being so aggressive. So especially those of you that are kind of rounding third bases. I like to say, to use a baseball analogy, if you're in that situation and you're concerned about these market losses, you are a great candidate to go to our website and schedule a complimentary consultation with us. It's not going to cost you anything. We can do a Zoom call. You can come into our office and we'll look at that for you and see if you have the ability to take money out of that for one K, get it over to the IRA and that will actually possibly give you an opportunity to reduce your fees and some of the expenses that you're paying. And it's also going to open up some opportunities of different allocation models and different strategies of how you can invest.

Dwight Mejan:
So great thing for you to look at and consider. So again, if you're nearing that retirement red zone, especially within five years of retirement or you're you've just been retired for five years, don't leave that money in that 401. K because you've got another ticking time bomb, as we like to say, inside of there. And that is the fact that you are at 72 going to have to start taking required minimum distributions. And we talked with somebody about this today about taking that RMD. A lot of folks don't know this, that when you have a 401 K, you must take out your required minimum distribution proportionately from the money that's in that 401 K account. Unlike an IRA, if you have two different IRAs and you like how one of them's performing and you don't like how the other one's performing, you could take the one that you don't like as much and pull the entire minimum distribution that's required out of one of those IRA accounts. And the 401 K is a unique asset that you have to pull that money out proportionately. So you can't commingle money and just say, Hey, I'm going to leave my 401 K money and pull it all out of this. Ira, you violate an IRS rule and you will be faced with a very stiff penalty of up to 50. It's the stiffest penalty in the tax code. So you've got to be careful with that.

Producer:
It's time for this week's problem solver.

Mitchell Keiser:
If you don't mind. How about I give a real a real life solution that we actually had come through our office? Great. I had obviously, I changed the name. So you guys aren't going to know who we're talking about, but just kind of wrote out a skit here. So I'll give you kind of the problem and then maybe you can give the solution. So if somebody was in a similar situation, they would know how to how to respond. Awesome. Okay. So we have Edward and Marie. They're a married couple who are both in their early sixties. Ed is an accountant and Marie is an office manager. They both have retirement plans through their work and are consistently saving enough to maximize the free company match while reducing their current annual taxable income. They have been great savers, but both are disappointed in what has happened to their balances this year. Each of them have seen 20% or more in losses year to date.

Dwight Mejan:
It's a very typical scenario. We certainly hear a lot of people coming in that are concerned about the losses right now year to date for many people, Mitchell That has been people who last year made upwards of low 20, some mid 20% returns for a lot of those people. All those gains last year were wiped out by what's happened this year, year to date. So lots of concern there. So one of the things that could be done for Ed and Marie is they can do a traditional 401 K rollover or an in-service distribution to to a new IRA account. And what this is going to allow them to do is implement a more risk efficient and a market efficient and also a fee efficient strategy risk efficient. Here again, is what we see with 41k accounts. You either have really low yields or you have something where people are taking a lot of risk and the choice they have in the middle isn't performing as well as it could. When we compare the choices outside that 401 K. Year to date, they could be in a similar risk tolerance outside the 401 K and have some investments that have pulled some better yields year to date. So important that you get your tax map done. That's one of the first places where we start is we look at someone's tax return, we build out what's called a tax map. We call it tax mapping. And that's where we individually look at a potential person that we're able to help. We look at their tax return and we plug it into the computer and we have tax planning software. And here again, we're not CPAs, but we work with CPAs that help consult with our clients and people that we're working with.

Dwight Mejan:
And that tax map begins to build a strategy of not only where income is going to come from, but what bucket of money it's going to be drawn from. And a lot of people don't know that, you know, where do I pull money from when I retire right away? Should I pull it out of my IRA or should I pull it out of my after tax account? We had somebody come by the office this week that had a very substantial portfolio and he was in his mid sixties about seven years from having to take required minimum distributions. And he was pretty proud of the fact that he was living on his wife's Social Security and had a sizable portfolio. And while he was proud of his ability to save and that was really what he was telling, telling us is that he was a good saver over the years. One of the things that was damaging potentially for him in the future is the amount of money he's going to have to pull out for RMDs. His his tax map is going to be pretty substantial as far as the amount of taxes he was going to estimated oh, over the next seven years to the rest of his lifetime. So got to get that tax map and then look at the strategies for building an income plan, then an investment plan. And then we also focus on health care planning and legacy planning. Those are the five pillars that we talk about. So that's where we start. We're going to take a little bit of a break here and pay some bills and we'll be right back with you.

Producer:
Are you interested in protecting your assets from market volatility, rising taxes and economic uncertainty? Then tune in to Retire 360 with Dwight Mejan to learn how you can protect and grow your hard earned money. Retire 360 Sundays at 3 p.m. right here on talk 97.3 F 104.1 FM and 990 AM WEEB. Schedule a free no obligation consultation now at Retire360Show.com.

Dwight Mejan:
Alright well welcome back to Retire 360 Show and good to be back thank you. For those of you who are listening again for the first time and some of our consistent listeners, welcome back. Good to have you back and thanks for Sam being with us there behind the scenes. And Mitchell here, we're just kind of talking with them at the break. An old guy like me gains a lot of confidence from these two young stallions next to me when it comes to technology. So I'd be lost without them. So special thanks to them. Teamwork makes the dream work, doesn't it?

Mitchell Keiser:
Yep. That's what we call job security.

Dwight Mejan:
Way to go on. Marrying my daughter is pretty good job security, too.

Mitchell Keiser:
There you go. Double whammy.

Dwight Mejan:
Good deal. So, hey, we're we're back and we're going to get into right away. Here are seven questions that we put together. I'm going to have Mitchell kind of pose them here and we're going to both cover them and I'll tackle them. And Mitchell may add some things here to it, but how we can help you answer some retirement questions that we get quite often. So, Mitchell, why don't you start us out there with number one?

Mitchell Keiser:
Yeah, I'll tee it up. So when should you and your spouse claim Social Security benefits if you have not already? Do you know the best way to maximize your benefits? That's probably our most one of our biggest question.

Dwight Mejan:
Absolutely. It's for people still work and there's that that magical formula they think that's out there to do that and we don't believe this is anything in retirement for that matter. It's not a one size fits all, is it? It's it's very unique to your situation because not everybody is retiring, not only with the different amount of money, but people have different types of accounts. You know, we talk about this a lot. There's there's three basic types of accounts, or we call them buckets of where your money is sitting for retirement. You have your taxable bucket, which of course is subject to taxation on the earnings right away. A good example of that is CD's rates are starting to clip up a little bit, but interest that you earn on those types of accounts is taxable in the year that you earn it. Then you have your tax deferred buckets, which those would be. Those are typically the higher ones aren't they, that we see with people coming in. Those are your IRA accounts, your 401 KS, All the deferred savings accounts that you have invested in, that is probably the biggest bucket that we see with people in retirement And upwards of 80% or more of people's money that we typically see is sitting in in that tax deferred bucket. And then there's, of course, the tax free bucket. What's an example of that? Mitchell What would be account for tax free like a Roth, Correct. A Roth account. And that's ultimately the place where you want to get money as you move through retirement and eventually before you get your wings, as we like to say, and fly out of here, the goal is to have more and more money accruing in that Roth bucket.

Dwight Mejan:
But a lot of people think, you know, I didn't contribute to a Roth, so it's too late for me. I'm not working anymore. However, there's this beautiful thing in the tax code called a Roth conversion, and we're not going to go deep on that here in this segment. But Roth conversions are basically ways that you can move money from that tax deferred bucket and get it into that tax free bucket. And there's strategies on how to do that. I go back to what we were talking about earlier. It's getting that tax map and understanding where am I in relation to my my planned retirement, How do I get money into that Roth bucket and what's the implications for my tax? What's the tax implications for that? So we want to build a tax efficient portfolio. And those Roth conversions are one of the ways that we can move money over to that tax free side. Now we've got to pay there's no way around paying the taxes, but there are strategies to minimize the taxes that we pay over our lifetime. And that's one of the things that the tax map helps us explain to people who want that complimentary map. They can contact us. 910 235 0812 and just arrange a time. We can do a zoom call with you. You can come to our office. We're in Southern Pines and we'll run that and show you some strategies that you can look at implementing to create a bigger tax free bucket of money that you can draw from in retirement.

Dwight Mejan:
It's kind of nice to know that that grows tax free from that point. It's not subject to required minimum distributions like the other tax deferred bucket. And it's nice to know that when you pull that money out, all the earnings that you accumulate are growing on a tax. Free basis as well. And your kids, the next generation inherits that money on a tax free basis. So lots of benefits there to Roth conversions. The other thing I will say is we do a lot of workshops and I always ask this question how many people think taxes are going up? The overwhelming percentage of the audience says believes taxes are going up, and yet hardly anybody raises their hand when we ask if they have a tax conversion strategy to get more money into that tax free bucket. So there's a little bit of a quandary there between believing taxes are going up and then not making strategies within the retirement plan to mitigate those taxes that are coming. So interesting. But as it relates to Social Security, which was the question, we need to look at that as part of your tax map. Most listeners, if you don't know this full retirement age right now for a lot of people is $66 and ten months, 66 and 12 months. And what we're seeing right now is people if they're if they're at 67, I'll use that age. If you wait to full retirement age, you can go on to the Social Security government website and you can find out what your tax full retirement amount is.

Dwight Mejan:
If you haven't done that, you just log in to the Social Security government website and you can find out what your estimate is. But you know whether you should take it or not. If you have other sources of money to live on or let's say you have a high tax deferred bucket of savings 401 K IRA account, it might make sense for you to live off of that and get that 8% raise because every year you delay past full retirement age, there's an 8% increase in your Social Security benefits. So that is a significant increase. And I don't know too many places where you can go tax free and earn 8%. So the best way to maximize that Social Security is going to be to delay it. But we got to look at what other sources of income you can take. Some of you have pensions and you can kind of time your pension. Maybe the pension should start and delay Social Security. So we just need to look at that and we need to look at the tax map to see what would take place there. And we just tell people, you know, schedule a complimentary session, go to the website Retire360Show.com and schedule that consultation and we'll we'll look at that so again it's not a one size fits all Mitchell for us to know when that best age is it's going to be unique to everybody's situation but what's what's another question that we get here?

Mitchell Keiser:
Sure. So what is your budget and tax plan for retirement? Do you expect it to change in the future? And are you accounting for inflation and future tax increases?

Dwight Mejan:
You know, it's interesting that that question comes up around what's your budget? Because we ask a lot of folks, you know, what what is your budget going to be? What do you want to what do you need in retirement? And then what do you want your lifestyle to be? And one of the biggest things that we challenge people was when they meet with us is we send them home with with an assignment before they come back or before we talk again is they need to understand what their budget is. And a lot of people just don't know exactly what their budget is going to be in retirement. And they don't have any idea about the tax plan because taxes get complicated, because when you're working and you just have ordinary income coming in, you're just basically following an ordinary income tax strategy. But when you retire now you have Social Security to consider. And contrary to what some people understand, is that Social Security could be taxable, up to 85% of your benefit could be taxed. I hear a lot of advisors sometimes say 85% of your Social Security is taxed, that that's not necessarily true. Some people aren't taxed at all on Social Security.

Dwight Mejan:
Some people are taxed on 30% of their Social Security. There's a formula that actually goes into that. It's called provisional income, and there's lots of different sources of income that determine what amount and how much of Social Security is going to be taxed. So you've got to understand that whole tax structure and our tax mapping will help you see what, if any, of your Social Security is going to get taxed. And that's going to help account for the timing of all of that of when you should take it. And inflation, you know, inflation's running at a little over eight and one half percent right now. Many people are feeling the effects of that. I know a lot of people that talk for us this past week with power being out here in Moore County, a lot of people are just concerned and rightfully so, about basic things, their refrigerator, you know, you think about having to fill that back up with meat and everything with the prices of things at the grocery store. So people really understand what inflation is right now. And it. Is a concern and it should be so. What's next there?

Mitchell Keiser:
Absolutely. So how should you best manage your account balances and required minimum distributions?

Dwight Mejan:
Sure. Well, we can know that required minimum distributions start at age 72. There is some talk right now around what's called the Secure Act 2.0. Secure Act has been around for a couple of years, but the Secure Act 2.0 is talking about raising required minimum required minimum distribution, age to age 75. And for a lot of people, they think that's great. They can defer three more years if they want to wait to take out RMDs. But we don't find that to always be the best time to wait until you're forced to take distributions. We. One of the things that we look at is it's best for some people to start taking distributions out of their IRA accounts when they're 65 seven years before or even sooner to take out required minimum distributions. Of course, you have to do it at 72 currently, but you might want to look at how taking money out sooner than that, putting it into a Roth account that may make the most sense from an overall tax savings standpoint. So we look at that and it's just important to get advice on the timing of that. And don't just wait because you could create a bigger problem down the road when you delay doing this. And that's the biggest thing that we see is people wait until they're forced to take money out of an IRA and now you're at the mercy of what the government's telling you you have to do rather than designing a plan around it.

Mitchell Keiser:
Sure. So you touched on this a little bit, but I'll just ask you anyhow, should you consider converting some of your savings to a Roth IRA?

Dwight Mejan:
Yeah. Again, not not wanting to make a, you know, a blank statement to everybody here that's listening. That does depend. We love the Roth conversion options, but I certainly am a big fan of looking at, let's say, for example, a listener's in this 12% tax bracket and they have, you know, ten or $20,000 left before they jump up into that next tax bracket, which is 22%, 10% higher. I'm a big fan of maximizing what we call maximizing your bracket, which is basically saying how much do you have left in that 10% bracket where you can harvest some money out of that IRA to pay the tax on it, get it into a Roth account before it jumps up to that 22%. And that's, you know, again, that's where taxes stand today. But again, taxes are likely to go up. And when they do, it's an even higher percentage of tax that you pay. Some people don't realize, just to bring the listeners back to this, when Kennedy was in office back in 19 mid 1960s, what is our current tax bracket today for somebody in the 24% bracket? Going back that far, the tax bracket was 56%. So it's more than double what the current tax rate is at 24% if you're in that bracket.

Dwight Mejan:
So think about that. If you were pulling out 10,000 from your traditional IRA, you were paying tax of $5,600 and you were keeping about $4,400. Wow. Today, people are keeping somewhere between 9070 $600 on that same bracket, if they're somewhere between ten and 24%. So you don't have to go back to far in recent history to see tax rates that were very, very high. So, you know, converting to that Roth IRA, definitely a fan of it. But we again, I keep going back to the tax map and you're hearing that a lot this episode. If you don't work with a fiduciary and that's really important that you do work with a fiduciary advisor. We are fiduciaries and we take into consideration the tax implications of your portfolio and taking money out of that. And that's going to be a big part of our discussion with you and with our clients. It's a big discussion that we have with them. So definitely something that we need to look at. So reach out to us and let us know how we can help you in that area.

Mitchell Keiser:
All right. So real estate, what should you do with your real estate? Do you plan to downsize and do you have rental income to account for?

Dwight Mejan:
Yeah, Another another great question. You know, a lot of people the kids get out of the house in retirement or pre retirement and they're in just too much square footage and they just don't want to maintain it anymore. Or they got a lot of their retirement built up in their house and they want to maybe they want or need more income. So they're looking at the timing of what do I do with this real estate? So we always tell people that real estate is going to fall into another category on your on the tax return that's going to fall into a capital gains rate. Again, we don't want to make this a tax show today, but, you know, real estate is something else that can complicate the tax return, because what happens with real estate, with capital gains. Is it could take capital gains on your tax return and your income pushes up capital gains. So your income actually sits underneath any capital gains that you have. And if you're married and you're filing jointly, any capital gain that you have above 112,000 is a little bit of change on there. But above 112,000, if you were just filing a tax return, which nobody on this radio program is going to do this because you have other income, but if you just filed a tax return on capital gains, you would pay 0% on if you're married, filing jointly. That's the key here. If you're married, filing joint on $112,050, and that's because you have your standard deduction is $28,700 if you're married, filing joint, and then you've got to add 83,000 on there before you hit the 15%. So if you add the 83,000 plus, that standard deduction above that amount is where you pay capital gains of 15%.

Dwight Mejan:
But if you have income and we show people examples of this, you're going to have pension income, you're going to have IRA withdrawals. Those are the two common sources of ordinary income that starts to push up your capital gains. So where you may not think you have any capital gains, ordinary income will push that up. So you've got to be careful with that. So if you have real estate, you plan to downsize. You've got to make sure that you do that in the right year. If you had a big IRA withdrawal this coming year and you're wondering if you should accept an offer on your home or when you should close on it, just make sure you didn't have a lot of extra income this year outside of an ordinary year, because it could certainly cause some other problems in terms of taxes for this coming tax year on your tax returns. So definitely seek some advice on that. Talk to a CPA. And you know, there's some great CPAs around here. Mitchell But we find to a lot of CPAs that are busy with tax returns. So you've got to get that tax advice. And again, we're not CPAs, but we can encourage you to go seek counsel on that. But we can also run the numbers for it on a tax map and we can get that over to your CPA. As far as them blessing what we're telling you to consider and they can guide you specifically there on what to do as well. Sure.

Mitchell Keiser:
All right. So on the topic of Medicare, what is your plan for Medicare and potential long term care needs?

Dwight Mejan:
Well, I'm going to spend that one back to you, Mitchell, because you've spent the last six, seven, eight weeks almost here with Medicare enrollments. And that's sure. Mitchell Mitchell's a junior associate at 360 Capital Management, but this time of year, he's been tasked in our office with helping people in that Medicare either transition and tell the listeners a little bit, you know, the enrollment period has ended, but tell them what might have happened, especially if our listeners here in Moore County.

Mitchell Keiser:
Yeah, so I'd say more county and the hovering or the bordering counties since we did have that power outage, we're working right now to get a some special election, some exemptions that if people missed their Medicare enrollment time, that they would still be allowed to do so. So if that's something that you may be missed or you've questions on, definitely reach out about that. But just so you know, as far as Medicare planning, what the best option is for you, it could be different. You know, we have I wouldn't just say that we recommend one thing for, you know, it's not a one size fits all. There are different plans that work better for different people. So my recommendation, you know, not that you have to work with us, but if you were going to look into Medicare, make sure that you're working with somebody that's going to represent both sides of the aisle because there is supplements and there's advantage plans. And a lot of times most people, from my experience, I don't see most people that do both. Usually somebody does one or the other. So make sure that you're you're getting unbiased advice. And I wouldn't I wouldn't be close minded because I think a lot of times there's people that are close minded to one type of plan or they hear horrible things about other things. You've just got to be in the know and make sure that you're working with somebody that makes you feel well informed.

Dwight Mejan:
Absolutely. And something you said there, Mitchell, goes back to When I started in this industry almost 30 years ago, I was captive on the insurance side so I could only offer products through one carrier. And today Medicare and all the health care plans, they're changing so much. It's kind of like when those of you who are retired, when you were working for one employer, you had you didn't have one health plan for 30 or 40 years where you work there. That employer, the human resource Department, was changing carriers all the time because they were trying to save the company money and provide the best level of benefits for their employees. And it's no different in retirement. You just lost the health care the human resource department making. Those decisions for you. So it's important to partner with a fiduciary or, as I like to say, in the insurance side of the business in retirement planning, make sure you're working with an independent rep who has unbiased advice. And the best way you know that is ask them how many companies they represent. We've got over 100 different companies and we work both sides of that. Mitchell works a lot on the Medicare Advantage platform. That's one side of Medicare for people. And a different side is the traditional Medicare that's been around for a long time, since the mid sixties, and that's where the Medicare supplement comes into play. So but work with that independent agent and just make sure you're getting that fiduciary advice on the insurance side.

Mitchell Keiser:
Absolutely. Well, changing gears here a little bit, what would you say about legacy planning? What legacy would you like to leave for your children or grandchildren?

Dwight Mejan:
That's a great question. Comes up a lot and we see it actually, people start thinking about legacy. Just to be very blunt. Naturally, people think about it. The closer they get to their own mortality, they start to think about the grandkids. They think about maximizing the estate. Many people want to help pay for college education for their kids. They want to see the benefit of that legacy while they're living. You know, and there's a there's a lot of things that go into legacy plans. I know a lot of our listeners wonder at times about trusts. We're going to be going into 2023 and we're going to have some special guests who can talk about trusts and doing estate and legacy planning, because we're not lawyers either. But just part of retirement planning has to do with us making sure that the people who we serve have the right documents in place, the power of attorney, the will, whether or not a trust is necessary for them, very important that they look at that. So, you know, building a legacy, I always admire people who are planning for that when they're younger. They're thinking about it maybe early in their sixties and they already they have a target in mind of what they want to do and they know what they want their money to do. And those are always a joy to work with people like that, because when someone has specific targets on their objectives and goals, it's a little easier for us, isn't it, Mitchell, to to come up with the plan and the solution and put a plan together.

Dwight Mejan:
And it's okay if you don't. That's part of what we're throwing these questions out there and getting you to think about that. So hopefully the the mind's turning a little bit and you begin to think about, hey, what do you want your children to receive and your grandchildren? What do you want that to be about? But we're more than happy to look at that with you. And hey, we realize that there's a lot of people that do what we do at 360 capital management. But I will tell you this. I say there's three C's that we look at when people come to us, and it's not just us being interviewed. We're interviewing people who come to help us to see if we're a fit as well. But those three C's are character chemistry and competency, aren't they? We're looking at people who have the we have chemistry with, and we're also looking at that character to see people are giving us good information. Those are the people we can help the best. The listener, on the other hand, is always looking at competency as well. Do we have the knowledge, the expertise, the acumen, the business acumen to take them where they want to go? And we understand that we have to demonstrate that, but we also have to demonstrate character and chemistry. But we look at that as well. We're not always a fit for everybody that comes to us. So. Well, we're going to take another break and we'll be right back. Thanks for listening.

Producer:
You're listening to Retire 360 with Dwight Mejan.

Producer:
As the song.

Producer:
Says, it's the most wonderful time.

Producer:
But don't let holiday spending wreck your retirement plan. I'm Matt McClure with the Retirement Radio Network. Powered by a life just over $832. That's how much the National Retail Federation says the average American plans to spend on holiday gifts, food and decorations this year. Many of us will spend much more than that. So how do you keep from overdoing it? Financial website Investopedia has some tips on keeping holiday spending under control. Number one is perhaps the most important set spending limits for yourself. Tyler Ferguson with Jack's Federal Credit Union agrees.

Speaker5:
Some can even go old school like myself and use a cash spending plan to ensure that you're staying inside of your budget. You're actually using cash to mitigate those swiping of the cards. It's also an effective plan if you have kids wanting to shop as well.

Producer:
That from news for Jack's. The number two tip from Investopedia is to make your own naughty or nice list. In other words, if you're shopping list includes more than five people outside your immediate family, start cutting it, then bake cookies or other treats to give to those who didn't make the cut. That way you spread holiday cheer without breaking the budget and you don't seem like Scrooge Humbug. Other bits of advice from Investopedia include being realistic about your budget. Collecting coupons or discount codes and organizing group volunteering instead of holiday parties. Ferguson says one thing you should not overlook is getting the kids involved.

Dwight Mejan:
For the younger kids.

Speaker5:
You want to give them a smaller dollar amount, maybe a $10 cash transaction to kind of help provide them a visual observation of what they're using the funds for. And then for your older kids who have either been saving themselves already or they have a lump sum to kind of go shopping with can open up an account for them. Go over how to budget and how to spend.

Producer:
So how can you give this holiday season without busting your budget? That's a key question to consider. As Santa starts warming up the sleigh with a retirement radio network powered by a married life, I'm Matt McClure.

Dwight Mejan:
All right. Well, welcome back to a Retire 360 radio show. We're glad to have you back here. And we're going to jump into our next segment, aren't we there? Mitchell So why don't you take the listeners through what are we going to talk about here next?

Mitchell Keiser:
All right. So cost cutters in the holidays, how do you save how do you budget? And we're here to talk about it, give you some tips and tricks.

Producer:
Here's the cost cutter of the week.

Dwight Mejan:
Well, it certainly is that time of year where it's exciting, but it can also become January can become kind of depressing for some people when they get that credit card statement in it. So we want to give you some things that you can do in advance to not have any regrets. We talked a little bit about regrets here earlier in the show, but we don't want you to have regrets over something you did that you said you weren't going to do. So we're going to talk about a few things here. Mitchell, why don't you start us off with the number one cost cutter for the holidays here?

Mitchell Keiser:
Sure. So the number one thing is create a holiday budget. There's a lot of tempting deals, shiny products, new things coming out all the time, new chargers, everything has to have a new charger to.

Dwight Mejan:
Just.

Mitchell Keiser:
Talking about. So they're so they're gouging you this way or the other way. And it's easy to kind of get sucked into overspending. We just recommend start with a budget that includes all your anticipated costs travel events, groceries, home decor, spending. Establish those spending limits in advance for yourself. I know something that me and my wife do. So most banks have like a Christmas. It's like a Christmas fund or a Christmas saver. Well, they just, like, deduct money out of your account every month. So, you know, if you wanted just an example 1000 for Christmas, you could just have them take, you know, 90 bucks a month. Just have them just deduct it right out of your checking account. And then in December, they'll just give you that money. That's one way where, you know, just even putting cash aside throughout the year, just to lighten the load a bit.

Dwight Mejan:
I learned something right here. I didn't even know that banks did that for you. The little savings. So.

Mitchell Keiser:
Well, some some do. I guess the banks that I use, they do.

Dwight Mejan:
So my wife and Mitchell's wife right now are out shopping. So hopefully your wife is talking to my wife right now about how to do that.

Mitchell Keiser:
So I'm hoping my wife spending your wife's money.

Dwight Mejan:
All right. All right. Well, we might need to take a break and make a phone call here and see who's got credit cards here. But in all seriousness, just watch. You know, the other thing is just simply watch the watch the credit cards. You know, put that money aside in a cash envelope. We know people who do that. I have people put aside every money every month. They put it in the envelope system. And many people are familiar with the envelope system is just put that money in an envelope in cash and you just work up that budget, get your list of people you're getting those gifts for, and put that budget to work and spend out of those envelopes. And when it's done, it's done. Yep. So. What about number two there? You're doing good.

Mitchell Keiser:
All right, so shop early and save on shipping. So I guess it's it's a little better than it was. But some of those shipping costs in order to get something here within a month or two, you have to expedite that shipping. So, again, you're just kind of you're planning ahead. You're trying to think, I guess we're we're kind of mid December here. But if you haven't started yet, we would just say start now, even just for the sake of shipping, because that's tends to be a big a big cost.

Dwight Mejan:
It's a big date coming up on that, isn't there for shipping.

Mitchell Keiser:
Yeah.

Dwight Mejan:
So we got isn't it December 14th that that would one of the days where a lot of the big name retailers.

Mitchell Keiser:
Yeah I did hear something about that. Yeah.

Dwight Mejan:
What was that again. I heard something about. I don't know they did that.

Mitchell Keiser:
So there's like a free shipping day or something where there's like 1000 or so big name online retailers that are going to give free shipping prior to Christmas. They're guaranteeing it's going to be there before Christmas. So that's something to keep your eyes peeled about. I don't know if I'd count on that. I don't know if I'd wait until December 14th, but I do think that is something that's going to be a. Out there.

Dwight Mejan:
Well, you know, this could be a great way to to to finish last minute holiday shopping. But as I say, that if my wife's listening to the show right now, she's thinking, I haven't even begun to started start shopping for my lists by December 14th. So I'm kind of waiting for the best last minute deals, I guess, is what I tell her. So I don't know if she's buying that or not.

Mitchell Keiser:
But the ones on December 24th.

Dwight Mejan:
Yeah, I've been there, done that, but I hadn't forgotten yet, though. A Christmas gift. But I've been out there last minute, though I will say that not the best way to do that either. Brings a little stress to the holidays. So I guess do as the young guys say and not as the old guy does here. So that's why I'm letting you take that one.

Mitchell Keiser:
Absolutely.

Dwight Mejan:
So, number three, some people right now, the cost to travel, you know, is higher may need to just stay home for the holidays. It's a great way to to save money. I know it's a time where people love to be together with families, you know, but we may have to just consider skipping the pilgrimage to see the relatives and build your own traditions at home. You know, travel has gotten expensive and inflation has wreaked havoc on budgets this year. So we may just have to reconsider where we go, how far we travel. You know, maybe some of you might have treated family members to fly out. Obviously, you may need to reconsider that for this holiday season as things get more costly.

Mitchell Keiser:
Yeah, the and the next one here is just kind of an add on. I'll just add to what you're saying is if you do travel or if you guys are going on vacation, seeing family, just be very conscious of the days that you travel. You know, I saw because we were looking at flights to travel on a Tuesday or a Thursday is like half the cost of traveling on a Friday, Saturday, just being aware of those types of things.

Dwight Mejan:
Absolutely. That's a great, great point. Look at the dates when you travel. It's a great way to save if you're going to travel anyway. And if you're if you're off anyway for the holidays and you're you're flexible on your travel dates, it's a great way to save money.

Mitchell Keiser:
So, yep, the hotels, the airlines, they're all trying to gouge you around Christmastime because they know people are people are moving, people are traveling. So just be conscious of those things as well.

Dwight Mejan:
Yeah, absolutely. So number five is give the gift of your time. You know, gifts don't always need to be in the form of physical items. You know, consider volunteering and spending a day with a special loved one this holiday season. I know we've gotten a little taste of time here this past week in more county just trying to look out for family members in town or neighbors or people that just need assistance. So, you know, it doesn't always have to be the gift of money or cash or spending something on somebody's you know, time is spelled. You know, I know kids spell time, you know, not Tim, it's L-O-V-E, so. What's the sixth one there?

Mitchell Keiser:
All righty. So make it a potluck. So throwing a party of spending your time, your energy, your money. A lot of times people think they need to go all out and spend gobs of money on. I mean, just food, catering, food, alcohol. It adds up. Alcohol is a big, big thing. I would just be I guess it's kind of personal advice to I mean, a lot of times people aren't going to care how much money you spend on that stuff. What's most important is that you're spending time together and you're not going to necessarily impress anybody by spending thousands or hundreds or thousands of dollars. And if that's what you need to do to impress them, they're probably not worth impressing. So just keep that in mind.

Dwight Mejan:
I had a client that left the office last week and said they were heading out to do some holiday shopping. And it's this client's done very well for themselves, saved very well in retirement. And I just kind of happened to pick up on the fact that she was heading out to Aldi to do her shopping for a holiday party. So just great wisdom there. You know, she'd done very well in retirement, but was living very frugally, living within her means. So it kind of I kind of heard that and said to myself, that's interesting. So a lot of good advice. There doesn't have to be the the high end places because it's it's like you said, Mitchell, It's about being together. So number seven there is, you know, do it yourself. You know, some of you listening may practice a craft like woodcarving or leather working or pottery making baking or some other form of art. But, you know, use your talent to create a heartfelt and cost effective gifts. You know, I, I can tell you, you know, being 53, I've got what I call my pick me up file. And it's it's the stuff that my kids have done for me over the years or the cards that they wrote with their own handwriting. It means the world to me. I've kept that stuff. And if I'm just going through a a patch or a season, I just need a good pickup or when my wife's gone or I just need to pick up, I'll go into my file drawer and I'll just take some time and start reading that stuff. So the things that people did definitely matter. You know, I think the older you get, you appreciate that stuff more. So sure, use your skills and I guarantee you you're going to make somebody make somebody's day. So anything else on there you want to add? No. All right. Well, we're going to take another quick break and we're going to finish up. So thanks for listening to Retire 360 and check out our website Retire 360 show. If you'd like to book a complimentary consultation or call us at 912350812. We'll be right back.

Producer:
You're listening to Retire 360 with Dwight Mitchell.

Speaker5:
But if this ever changing world in which we live in.

Producer:
Makes you give in an. Are you interested in protecting your assets from market volatility, rising taxes and economic uncertainty? Then tune in to Retire 360 with Dwight Marjan to learn how you can protect and grow your hard earned money. Retire 360 Sundays at 3 p.m. right here on talk 97.3 F 104.1 FM and 990 am W We've scheduled a free no obligation consultation now at Retire360Show.com.

Mitchell Keiser:
Hi, folks. Welcome back. My name is Mitchell Kiser. I'm the junior associate here with Dwight Mejann, who's our senior financial advisor. And we've got Sam Davis, our executive producer. And we're just going to finish up here with a couple of fun but important topics for you to know and how you can get in touch with us if we can answer any questions for you.

Dwight Mejan:
Fantastic. Mitchell One of the things we've talked about a lot this time of year because people are in the kind of the habit, if they're still working within their four one case of just kind of restructuring next year, the contributions that they're making, how do they allocate differently? They're looking at this year as we started the show out with markets being down significantly, S&P 17%, we saw NASDAQ 29% earlier in the show. So people are naturally wondering, hey, how do I how do I reallocate or should I reallocate my portfolio into what funds? You know, people just have a lot of gray in their mind about where do I go? And one of the things that we want to just touch on is the percentage of bonds in the portfolio. And many investors we find just have no clue what percentage of their portfolio is sitting in bonds. And you've seen that before. Mitchell with people who come to the office and will ask them that. But this is the worst year recorded in the history of the market for bonds. It's been a terrible year for bonds, and the feds are still looking to raise interest rates yet a couple more times this year. And with that comes, you know, a further reduction in bond portfolio values. So, you know, particularly if you are in a 401 K plan, again, if you're in that for one K plan and you've already left that employer, we would encourage you to reach out to us and talk about how you can complementary.

Dwight Mejan:
We'll show you how you can roll that IRA account, get it out of there, out of that for one K and get it into something that has more options where you can create more diversification within that IRA account. But Bonds, the biggest danger I see right now is in target date funds. So if you're wondering if you're in a target date fund, if you have a retirement plan at work and it says, you know, Vanguard 2026, I'm just using Vanguard as one asset manager, but you can have a bunch of different firms if there's a retirement year as part of the name of that portfolio. You've got to be very, very cautious with that because you don't maintain control over how that allocation strategy works. It's done on a systematic basis. So the closer you get to that target year, for example, 2026, more and more money is moving out of equities and moving into bonds. Wow. So what happens is as there's further reductions coming probably through the first quarter, is what we're hearing the Fed saying those bond portfolios will continue to digress and you'll see a further reduction in the bond portfolio. So we believe you have more control outside of that and you just homework assignment for you is this get out your statement, look at your 401. K log online and see exactly what percentage of your retirement funds is sitting in bonds.

Dwight Mejan:
And if it's a high percentage, we would encourage you to just reach out to us and, you know, set a complimentary consultation with us. You can go to Retire360Show.com and we'll we'll see if that makes sense what you're in and we'll go from there but bonds can take up more than 40% or more of the portfolio for many retirees and pre retirees. So just get in touch with us. The other thing we would tell you to look at is a bond replacement. One of the products and this is not necessarily good for everybody, but we would talk to you about fixed indexed annuities where you could get some equity exposure out there. There's some really good short term products on the market today where you're not tying up your money for ten years. And there's actually some pretty good fixed rates out there. Right now. We're seeing rates north of 6% right now on fixed accounts for five year terms. So there are some really attractive options out there. But the fixed indexed annuity accounts protect your principal and they allow you the ability to lock in your gains and take a stream of income that you can never outlive. So might be an appropriate spot for some of our listeners to go to, but any final thoughts on that? Mitchell Anything else I missed there?

Mitchell Keiser:
No, but we'd be happy to talk to you folks. If anything that we said today. You've any further questions on or if it's like, Hey, I need to learn more about that, you can reach us at our office at 910 235 0812 in our website Retire360Show.com. You can check out as part of this podcast or you just want to learn more about who we are. I can check us out there.

Dwight Mejan:
Absolutely. Well thanks for being with us this week. We'll look forward to talking with you next week. Be safe, everybody. And just remember while you rest. Money never sleeps. So keep that in mind and we'll we'll keep you posted on how to make that money working while you are sleeping. And that's one of the pillars that we've built our company upon, is that we were we want to help you design and create simplicity and confidence in your retirement years. Take care, everybody.

Producer:
Thanks for listening to retirement. 360. You deserve to work with an experienced and licensed expert who will strategically work to protect and grow your hard earned assets to schedule your free no obligation consultation with Dwight visit Retire360Show.com or pick up the phone and call 910 235 0812. That's 910 235 0812. Investment Advisory Services offer through Brookstone Capital Management LLC BCM a registered Investment advisor BCM and 360 Capital Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.

Producer:
Registered Investment Advisors and Investment Advisor Representatives Act as fiduciaries For all of our investment management clients, we have an obligation to act in the best interests of our clients and to make full disclosures of any conflicts of interest, if any exist. Refer to our firm brochure the ADV two A page four for additional information, any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by BWR. Information provided is not intended as tax or legal advice and should not be relied on as such. You were encouraged to seek tax or legal advice from an independent professional. Dwight Marjan and or 360 Capital Management are not affiliated with or endorsed by the Social Security Administration or any other government agency.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including transcribe multiple languages, upload many different filetypes, enterprise-grade admin tools, automated translation, and easily transcribe your Zoom meetings. Try Sonix for free today.