October 26, 2022 • 30 mins
They say timing is everything, which is most definitely the case when it comes to year-end financial planning. That’s why Host Josh Bretl is bringing us his Top Six End-of-Year Considerations as we bring 2022 to a close. This episode of Retirement Equals Freedom (crisply choreographed with a big assist from Erin!) features a comprehensive “to do” list related to taxes, retirement account distributions and charitable giving that you’ll want to strategize about over the coming weeks (perhaps with help from your qualified advisor).
You’ll also learn why it’s time to look at your Medicare coverage, whether now is the time to “harvest” losing stock picks and when it makes the most sense to opt for a Roth IRA conversion. The episode wraps with another round of that perennial favorite – Get to Know Josh and Dave – as well as a Dave Relates to Retirees that will leave you with a strange craving for pumpkin spice anything.
And don’t forget a very important year-end homework assignment from Josh that’s applicable to all of us, whatever our stage of life: Get busy dreaming! Each new year brings a chance to build that bucket list!
Stay tuned for frontline reporting on whether Dave is allowed to bring his new water balloon slingshot to the offices of FSR Wealth. And if you haven’t tried it already, click here to get $25 off your first order of Cometeer Coffee. It’s the greatest!
Click here to learn more about or listen to previous episodes of The Retirement Equals Freedom Podcast. And don’t forget to join our private Facebook group, which you can find here. Don’t want to miss a thing? Visit this link to sign up for a weekly email with all the latest!
Need help figuring out your year-end financial planning strategy? Click here to explore the services that FSR Wealth Strategies offers and schedule a discovery call with one of the team’s CPAs. When it comes to living your best life, it’s never too early to get started!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Josh Bretl (00:02):
We make big long plans for people, and we're planning for people for 10, 15, 20 years.
But there's things that we haveto implement every single year.
And a lot of it is very time sensitive.
And so there's things that we need to do withina calendar year or at a certain time of the year.
And so year end is when we do a lot of things.
Dave Schmidt (00:21):
They say timing is everything, which is most definitely the case when it comes to year end financial planning.
In this episode, Josh brings us his top six end ofyear considerations as we bring 2022 to a close.
Today is a comprehensive to-do listrelated to taxes, retirement account distributions, and charitable giving.
(00:45):
You're also gonna learn why it's time to lookat your Medicare coverage, why now is it time to harvest losing stock picks, and when it makes the most sense to opt for a Roth IRA conversion!
Woo.
This is gonna be a good one.
This is The Retirement Equals Freedom Podcast.
Your host, Josh Bretl, is the owner ofFSR Wealth Strategies and for the last few decades, he's the one helping fine folks like you thrive in your retirement.
(01:14):
Me?
Well, I'm Dave Josh's longtime friend,co-host and fan of water balloon slingshots.
So now let me let you let me, end this introductionso we can talk all about year end planning.
FSR Wealth Management is a registered investmentadvisor located in Elmhurst, Illinois.
Information and opinions contained in this audiohave been arrived at by FSR Wealth advisors.
(01:37):
All information herein is for informational purposesand should not be construed as investment advice.
It does not constitute an offer, a solicitationor recommendation to purchase any security.
FSR is not providing legal, tax, accounting,or financial planning advice in this audio.
These views are as of the date of thispublication and are subject to change.
Josh Bretl (02:14):
Oh, David.
Dave Schmidt (02:17):
Josh loves a good slurp.
Josh Bretl (02:19):
When Landon was little, did you guys read the David books at all?
Dave Schmidt (02:24):
Oh, yeah.
Josh Bretl (02:24):
I feel like when I just said, Oh David, it was kind of like how Zach, I think to this day at eight would still read the Oh, David books if we didn't get rid of them for him.
Dave Schmidt (02:33):
They always grossed me out though.
Josh Bretl (02:35):
Yeah, they're always about picking noses and...
Dave Schmidt (02:37):
Yeah, just raunchy stuff.
Josh Bretl (02:39):
Yeah.
So you and I just finished lunch.
And I have, like everything else, aneedless story about it, but this is the first time you have had this restaurant.
This is a go-to for Missy and I I haveterrible eaters as children, one of the few meals they will eat is tacos.
Just traditional ground beef tacos, like thelittle seasoning packet with ground beef.
And they don't even like the shells.
(03:00):
They just like the meat.
And then chips and guac.
Well, you have it so often.
I mean, I don't mind that stuff.
I grew up with that.
I can't eat it anymore.
We've had it so often, it's just repulsive.
So it's gotten so bad where now ifit's Taco Tuesday if we're having tacos in the house, we feed the kids that.
And Missy and I'll actuallyorder from this restaurant.
We went to Guac N Tacos for lunchtoday and it was phenomenal.
Dave Schmidt (03:23):
Phenomenal is the right word.
I am no stranger to tacos as you can imagine.
Erin, you know I love tacos.
And you...
Josh Bretl (03:31):
Why would Erin know you love tacos?
Dave Schmidt (03:32):
Well, because she knows I love food.
Yeah.
And so I naturally love tacos.
Josh Bretl (03:36):
Do you think she's going to make that extrapolation?
Dave Schmidt (03:38):
What does that mean?
Josh Bretl (03:39):
She's going to...
Dave Schmidt (03:41):
It's like big word Friday here in the office.
Josh Bretl (03:45):
Yeah.
Today we're talking about year endplanning, and Dan was just here in the office and Dan is a podcast subscriber.
And he apparently commented to Erin because we toldhim we were going to talk about year end planning.
"What's Dave going to know about year end planning?"
Dave Schmidt (04:00):
Let me correct you.
I'm pretty sure his comment was, "I betDave is the one that knows all about year end planning, and will be teaching Josh."
Josh Bretl (04:06):
I think it was a facetious sound though.
Dave Schmidt (04:09):
Listen, I can pick up on sarcasm.
And I picked up, no sarcasm there whatsoever.
Josh Bretl (04:13):
No, I'm just extrapolating.
Dave Schmidt (04:17):
But yes, Guac N Tacos was delicious.
You have had a client event there in the summer.
And you're doing another one here inOctober, and I will be going to that one.
Josh Bretl (04:25):
I'm sure you will be.
Dave Schmidt (04:26):
Yes.
Josh Bretl (04:28):
Sure you will be.
Dave Schmidt (04:28):
I mean, I'll have some value there.
I'll maybe talk to people or givean introduction or sign autographs.
I'm not sure here.
Josh Bretl (04:38):
So you have a story on here that you mentioned you wanted to talk about.
Dave Schmidt (04:44):
Yes.
So it's pretty cute.
Episode 21, we talked about the secure act,but specifically during our segment of Get to know Josh and Dave, the question that was picked was, what is something that you never received as a child that you always wanted?
And so I went the route of a water balloonslingshot was something that I always wanted heading up to Door County and I never got.
(05:08):
I got a text message from my dad the other day.
Actually, let me read it here really quick.
Josh Bretl (05:12):
This is a text message probably took him a long time to type.
Dave Schmidt (05:15):
Oh, yeah.
Josh Bretl (05:16):
Right, Big Mike.
Dave Schmidt (05:17):
I mean dad, I still have to teach you the difference between a text message and email.
I'll get to that eventually.
But this message said, "Hey,a surprise is headed your way.
You should receive it by Friday.
We are never too old tooutgrow our childhood dreams.
Let we know when it arrives.
Love you."
And I thought, okay, my dad's the best.
We even talked about it in the podcast.
(05:37):
I didn't get the water balloon sling shotbecause my dad didn't want me to get it.
It's because my mom didn't want to get it.
So old man, if that is in fact what yousent me, we are going to have lots of fun.
We're going to start pegging people hereoutside the building when it arrives.
Josh Bretl (05:52):
There's a funeral home across the street from our office.
Big funeral days, we're justlaunching water balloons.
Dave Schmidt (05:57):
Yes.
We could probably hit the gasstation from here if you try.
Josh Bretl (05:59):
Oh, we could, but we won't don't that.
Dave Schmidt (06:02):
No, no, no, no.
We are nothing but professionals here.
Josh Bretl (06:06):
So what do you think he's going to send you after we talk about year end planning?
Dave Schmidt (06:10):
Well, let's hold that off until the Dave relates to retirees because there may be a nice little segue.
How's that big word for you, Josh?
Josh Bretl (06:21):
In high school is when you and I became friends in the nineties, and one of the things that I remember was this big word that you taught me that to this day I still use.
Dave Schmidt (06:31):
Yes.
Josh Bretl (06:31):
And it was a common word between all of our friends.
I had no idea what it was untilI heard I think you use it.
Do you know what this word was?
Dave Schmidt (06:38):
I mean, there's a few.
There's therefore hence.
There's, oh, wait, wait, wait.
Foreshadowing.
Josh Bretl (06:43):
No, no.
There's a plethora.
That was the word that I had no idea what it was.
And I heard you guys were like, thoughtthis was the greatest word ever.
I thought if I'm going to hang out with theseguys, and I want them to make me think I'm cool.
Dave Schmidt (06:59):
Well the verdict's still out on that whole you being cool thing.
But I will say this.
I do feel like we are the most preparedtoday than we've ever been for an episode.
I am so confident in what we're talking about.
Josh Bretl (07:12):
So today's topic, let me introduce today's topic here.
And our office gets really,really busy this time of year.
My dad used to always say, after Labor Day,all of a sudden the phones start ringing.
And it still holds true because peoplecome out of that summer mode, and they kind of get back to business a little bit.
(07:32):
But it's really October andNovember, our office is just nuts.
And that's because of year end planning.
There's a lot of things that we makebig long plans for people, and we're planning for people for 10, 15, 20 years.
But there's things that we haveto implement every single year.
(07:54):
And a lot of it is very time sensitive.
And so there's things that we need to do withina calendar year or at a certain time of the year.
And so year end is when we do a lot of things.
And the reason we do it at year end isbecause we know what's happened that year.
I mean, if we did it in February, we don't knowwhat's going to happen the next 10 months of the year, but by the time we get to October or November, we can make a pretty good estimate of what's going to happen in the last month or so of the year.
(08:19):
Does that make sense, Dave?
Dave Schmidt (08:21):
Well, yeah.
It's not called beginning of the year planning.
Josh Bretl (08:23):
No, no it's not.
No, it's not.
It's end of the year.
It's much harder to extrapolate thefarther out you go from the beginning of the year to the end of the year.
Dave Schmidt (08:33):
That is number three already.
Josh Bretl (08:34):
So what are some things that we look at for the end of the year?
A lot of these are tax related because of their...
Alex (08:41):
Hashtag tax nerd.
Josh Bretl (08:42):
Hi, Al.
By the way.
I am just this close to gettinghim to record Taxes and Os for me.
So if I get it, it's going to be great.
But a lot of these are tax related,and that's because of the tax deadline of December 31st for a lot of things.
So I want to go through these a little bit.
And one of the first, and we talked aboutthis a lot, in fact, we've done whole episodes on this, is converting to a Roth IRA.
Dave Schmidt (09:05):
Oh, I thought you were going to go with Puddin' Cakes.
Josh Bretl (09:08):
We have not done a whole episode on it.
We haven't talked about Puddin' Cakes in a while.
But you know what I might love asan adult more than Puddin' Cakes?
Dave Schmidt (09:16):
Taxes.
Josh Bretl (09:16):
No Roth IRAs.
Dave Schmidt (09:18):
Oh man.
Do I need a Hashtag Roth nerd?
Josh Bretl (09:22):
Hashtag Roth nerd.
Let's see if I can get Al to do that Butthe conversion of a Roth IRA is essentially, we've talked about this, taking money out of your traditional IRA and moving it to a Roth.
And you do this for tax purposes.
So you pay the taxes now so thatyou don't have to in the future.
And the deadline is if you're going to do it in ayear and have it show up in this year's tax return, you have to do it before the end of the year.
(09:48):
So what we do in our office is welook and we say, okay, here's all the income we have so far for the year.
If we add 10,000, 20,000, $200,000 ofRoth conversion, what does that do?
So what tax impact does that have?
And then we compare it to if we don't doanything, what it would be in the future.
(10:10):
And we have pretty sophisticated butyet easy to understand tools that help us walk through all of that.
So Roth IRAs the first one converting to a Roth.
Dave Schmidt (10:20):
Yeah.
Josh Bretl (10:21):
Now that conversion can change every year.
Those are decisions you have to make every year.
So that's why doing things bythe end of the year is important.
The next one is a big deal that few peoplethink about and probably more people should do.
And that's tax-loss harvesting.
Alex (10:39):
Hashtag tax nerd.
Josh Bretl (10:41):
Yeah.
He's going to come in a lot today with that one.
Dave Schmidt (10:42):
Okay.
Maybe I'll just hold off onhitting that button again.
Josh Bretl (10:44):
No, I think you might want to just hold it down.
Dave Schmidt (10:46):
Oh, okay.
Josh Bretl (10:48):
Tax-loss harvesting is only done in non IRA accounts, so they're non-qualified accounts.
You want to think of your individual, yourjoint, your trust, things along those lines.
And if you're holding equities or even anythingthat's gone up or down in value, now is a time that you can actually sell some losers.
(11:08):
So what does that mean?
Well, you may have these large capital gains.
So especially if held stock for a longtime, you may have some losers that you can sell to offset some of those gains.
And there's a way to do that pretty systematically.
And tax-loss harvesting someyears can be really beneficial.
Some years tax-loss harvestingcan be not as beneficial.
(11:31):
It never hurts you.
But this is going to be a year with all thevolatility that we've had, tax-loss harvesting is going to be really important for people.
Dave Schmidt (11:39):
Can you give me some examples of these?
Did you use the word equities?
Josh Bretl (11:44):
Equities are stocks.
Dave Schmidt (11:45):
So not like my house has lost value.
This is nothing to do with...
Josh Bretl (11:49):
No.
So let me put this perspective.
So let's say someone bought Apple in1985, and now they're a gazillionaire.
If they were to sell that, they'dhave to pay taxes on that gain.
Dave Schmidt (12:02):
Capital gains, right?
Josh Bretl (12:02):
Capital gains, Yeah, capital gains.
But let's say they bought something, I don't know.
Dave Schmidt (12:08):
Blockbuster.
Josh Bretl (12:08):
Blockbuster.
I don't even know Blockbuster stocks going around.
They bought something that is way downin value, now may be a time that they can sell that stock that's way down in value, and they're going to get a capital loss.
And they can sell some of the shares ofApple or whatever they have as a gain, and they can offset the gain with the loss.
(12:28):
Now people will say, well, whatif I still want to hold Apple?
Well, there's things that we can do to talkabout that and to make that happen in the future.
But this money that you have these huge gainsin, unless your sole goal is to gift it to your children or to somebody else or to a charity,
if you're going to end up spending that money,most people want to spend their money or at least have the ability to spend their money.
(12:50):
We have to find a way to pay the taxes orget it out in the cheapest way possible.
So tax-loss harvesting is something thatyou have to do before the end of the year.
And there's some time sensitivity to that.
End of the year is also the deadline totake RMDs or required minimum distributions.
(13:11):
And this year it's going to beeven more important for people.
People who have their own IRAs.
They're over the age 72.
They're used to taking RMDs.
But there's one specifically that I want topoint out, and that is for inherited IRAs.
We talked a little bit about this with theSecure act in a prior episode, the Secure Act changed the RMD rules for inherited IRAs.
(13:35):
And what it said was, you had10 years to take the money out.
Well, originally we thought, Hey, withinthe 10 years, you got to take the money out.
They don't care if you do it all in year oneor all in year 10 or somehow spread it out.
Well, the IRS has since two years later comeout with guidance on how that should be done.
And they want you to takeout over that 10 year period.
Dave Schmidt (13:57):
So equal amount, right.
Josh Bretl (13:58):
Equal amount.
So if you have inherited money, someone whopassed away from 2020 on to now, you need to make sure that you're taking those required distributions out because if you don't, it is the single largest penalty the IRS imposes.
And so what they do is they tax you stillas if you should have taken them out.
(14:21):
And then they impose a 55.0%penalty on top of the tax.
Dave Schmidt (14:24):
Oh, my oh my.
Josh Bretl (14:25):
So you don't want to mess around with required minimum distributions.
So that's something that we want to makesure gets cleaned up and gets taken care of.
Dave Schmidt (14:33):
One of your most popular quotes from that episode was...
Josh Bretl (14:36):
Oh, I have many.
Dave Schmidt (14:37):
Well, you do.
There's two.
But one was with the governmentgiveth, they also taketh the way.
But the other one was, with the Secure Act,people could end up paying significantly more taxes that they don't want to pay if they're not paying attention.
Josh Bretl (14:50):
Sometimes I just get teary eyed that you listen to me.
Dave Schmidt (14:53):
Well, Josh, just a quick little breather.
This came to mind because neitherof us are drinking coffee right now.
Did you see Cometeer Coffee had some press?
Josh Bretl (15:04):
No.
Dave Schmidt (15:06):
The long story short, Goldman Sachs said no more free coffee in one of their offices because it was something about productivity or cost or something.
So that day, Cometeer brought a tableoutside one of their offices and gave away like 200 cups of coffee plus free swag.
And they got press and Entrepreneurand Ink Magazine and all these things.
Josh Bretl (15:27):
They probably, everyone heard about it from our podcast.
Dave Schmidt (15:30):
Well, that is exactly right.
Goldman Sachs is a little intimidatedby me being on this podcast.
They've been trying to recruit me as youwell know to be their lead whatever they do.
But yeah, Cometeer man, good for you guys.
Don't forget the small guys like me.
Josh Bretl (15:46):
The fact that you don't know what Goldman Sachs does doesn't really mean anything because no one has an idea what really Goldman Sachs does.
So let's move on.
Let's keep going on year end planninghere after we talk about our Cometeer.
But
(16:06):
Now is a time to talk aboutcharitable contributions too.
And I've always told people nevergive to charity for a tax deduction.
But if you're going to give to charity,make it as tax advantageous as possible.
But there's a couple thingsyou should be thinking about.
And with the new tax law's in there, sometimescharitable contributions don't help as much.
(16:30):
And if you are RMD age, maybe you should belooking at something called we call QCDs, which stands for Qualified Charitable Distribution.
And what that means is taking your RMDmoney, you could go up to $100,000.
Now, I don't have any client right nowthat's donated $100,000 in a year, but you could take that money and you could donate directly from your IRA to a charity.
(16:53):
And so what that means is it doesn'teven show up in your tax return.
So it gets to avoid income, which has the chanceof lowering the taxation on social security.
It has the chance of loweringhow much you pay for Medicare.
There's all sorts of benefits in thesequalified charitable distributions.
Plus, if you're only taking the standard deductionanyways, then these QCDs can really benefit you.
(17:14):
So now is a time to act on that as that's there.
Dave Schmidt (17:18):
All right.
Josh Bretl (17:21):
Let's talk a little bit about Medicare.
We don't do any Medicare in our office.
We don't sell any Medicare policies, but most of ourclients are Medicare age or at least close to it.
But Medicare open enrollment goes fromOctober 15th all the way through December 7th.
So this is a time where if you wouldlike to change Medicare policies, this is the time that you're going to do it.
(17:44):
So if you have any changes, especially checkyour Medicare Part D because those prescription drug formularies is the term they use.
Formularies is what drugs they cover,what price they change every year so do make sure you're checking that stuff off.
Dave Schmidt (18:00):
That was my mistake.
I was looking at Form G, and I wasjust filling out the wrong information.
Josh Bretl (18:05):
You get that G and D all mixed.
Dave Schmidt (18:07):
Yeah, it sounds similar.
Josh Bretl (18:12):
But one of the big ones here, this is kind of the last one that I want to wrap up with in regards to planning, has to do with doing a tax projection.
And I tell every retiree, now is the timethat you have way more control in your life than you've ever had before tax wise.
So by doing a projection, you candetermine do you want to add more income?
(18:37):
Is now a time that we should bepushing income till next year?
And that's different for every person.
But unless you're taking the time at the endof the year to kind of do that projection, which we pretty much do for every single client we have, you don't know that.
And by doing that projection, that allowsyou to make good decisions because you don't really want to give up that year's time.
Dave Schmidt (19:02):
And if they're in the office the same time as me, I can project their next few months of coffee, of Cometeer coffee drinking.
Josh Bretl (19:09):
You could extrapolate how much coffee you're going to drink over time.
Dave Schmidt (19:12):
Now you're just showing off because I don't know how to use the word correctly.
Josh Bretl (19:15):
We're going to get it before the end of the year.
Dave Schmidt (19:16):
All right.
I'll see.
Josh Bretl (19:17):
So now the last bullet point.
Now I said the last one I said wasfinal, and that was the final planning for the year, year end planning.
But this one is the most fun.
This is start dreaming of 2023.
Start thinking big, startfiguring what you're going to do.
Do that bucket list of what areyou going to do in that year?
Because your money is notsomething that you put on a wall.
(19:39):
And it's not art just to look at.
It's there to make your life better.
So what are you going to do next year?
Dave Schmidt (19:45):
It's not like my Sleepy Hollow figurines.
You don't just sit there and admire it.
Josh Bretl (19:48):
That is pure art.
Dave.
Pure art.
Dave Schmidt (19:50):
Thank you, I appreciate that.
So is the mural that you andI had painted a few years ago.
Remember you and I riding thatbull through the pastures?
Josh Bretl (20:00):
I was worried.
I was like, what's he talking about?
Dave Schmidt (20:02):
Yeah.
Anybody who watches ModernFamily will know the bull.
Okay.
Yeah.
2023.
I think that's the year of my arcade.
Josh Bretl (20:10):
Your old school retro arcade in your basement?
Dave Schmidt (20:13):
Yes.
Not me opening my full blownarcade for people to enjoy.
But yes, I think Carla might finallylet me buy an arcade for the basement.
We don't have much room or we put in the office.
That's what I'm trying to actually push for.
And that way you pay for it and then it's here.
Josh Bretl (20:32):
That's not happening.
Dave Schmidt (20:32):
Okay.
So okay, the bucket list, Josh, Imean, what's on your 2023 bucket list?
Have you not sat down and figured it out yet?
Josh Bretl (20:39):
No, I haven't.
And I usually do.
Dave Schmidt (20:41):
Do you?
Josh Bretl (20:41):
Yeah.
I'm a big bucket list planner.
I love that stuff.
Dave Schmidt (20:44):
Yeah, I remember you were about your summer bucket list.
Josh Bretl (20:46):
Yeah.
No, I have not.
We're starting a big house remodel, fix up.
So it's kind of like all that's on my mind.
It's just getting to 2023.
I think we should do a future episodeon bucket list items for 2023.
Dave Schmidt (20:59):
I think that'd be great.
We can ask your clients.
Josh Bretl (21:02):
Oh, what theirs are.
Oh, it's going to be fun, David.
So Dave, I think people want to get to know us.
Dave Schmidt (21:11):
You think so?
Josh Bretl (21:12):
I think so.
Dave Schmidt (21:13):
Yeah.
What, what?
Okay.
Hey, Mr.
Josh, let's take a break.
You've been talking for solong, and my ears are sore.
Let's not make them snore.
Listening shouldn't be a chore.
So let's get to know Josh andDave and watch our ratings soar!
Josh Bretl (21:33):
Well, I don't sing along to this.
You do.
But you can't help yourself to dance.
Dave Schmidt (21:38):
I agree.
Josh Bretl (21:39):
Alex liked the music too, just the underlying music.
Dave Schmidt (21:43):
Yeah.
Did he?
Josh Bretl (21:44):
Yeah.
He wants just that to be able to play in his room.
Dave Schmidt (21:46):
He does have that app now that he can make his own music, right?
Didn't you say?
Josh Bretl (21:49):
Oh, that's right.
Yeah.
On his...
Dave Schmidt (21:51):
On his iPad or Chromebook.
Josh Bretl (21:52):
Chromebook.
Yeah.
Dave Schmidt (21:52):
That's cool.
Josh Bretl (21:53):
All right, Dave, I got a question for you.
Dave Schmidt (21:54):
I'm ready for it.
Josh Bretl (21:55):
Okay.
Dave Schmidt (21:56):
All right.
Josh Bretl (21:56):
And I actually don't know my answer for you.
I know my answer to this, but I don'tknow what your answer's going to be.
Do you like to plan things outin detail or be spontaneous?
If you guys could see theconcentration on his face right now.
Yeah, it's intense.
Dave Schmidt (22:09):
It's like deep thoughts by Dave Schmidt.
I am not spontaneous at all.
I'm also not a planner really at all.
Josh Bretl (22:19):
You just exist.
You're just going from place to place.
Dave Schmidt (22:25):
I'm just kind of there.
Josh Bretl (22:26):
Like a pinball that just goes around.
Dave Schmidt (22:29):
Yeah.
I'm kind of just in the middle, man.
I'm kind of like a free agent inlife, you know what I'm saying?
If Josh needs me to give an introductionat one of his workshops, I'll do it, man.
But ask me to plan a vacation or even look atthe Schmidt calendar for the upcoming weekend.
I'm just not going to, I just don't do it.
Josh, are you spontaneous?
Are you a big planner?
Josh Bretl (22:50):
I'm a planner.
Now I'm going to caveat this,if that's the right word.
I'm going to...
Dave Schmidt (22:57):
Extrapolate this?
Josh Bretl (22:58):
No, this is not an extrapolation.
But anyways, there's a asterisk next to that.
I believe that planning allows me to be spontaneous.
And I actually got that from, I liketo listen to books and read books.
And one I was reading was by aretired Navy Seal named Jocko Willink, and I forget the name of his book.
(23:18):
He has a line in his book thatsays, "Discipline equals freedom."
And I was like, well, that's kind of crazy.
But by knowing what I'm going to be doing, itallows me the freedom to make changes if I want to.
My wife makes fun of me because whenwe go on vacation, we'll pick out the big things we're going to do together.
But I will know.
We went to Paris.
(23:38):
I knew every subway line.
I knew how to get from the airport.
Anything logistical fortransportation, I wanted to know it.
And that way we could make decisions,and we could be spontaneous.
Dave Schmidt (23:52):
Yeah.
We've always thought of you as logistically savvy.
Josh Bretl (23:57):
That was my nickname in high school.
Dave Schmidt (23:58):
Was it now?
Oh, well,
Dave relates to retirees.
Josh Bretl (24:07):
The part everyone's been waiting for.
Dave Schmidt (24:09):
Now, what I did hear is I put three bullet points in our notes.
Josh Bretl (24:12):
Didn't read them.
Dave Schmidt (24:13):
Oh, that's fantastic.
But they're potential ways that Ican relate to year end tax planning.
Now, you care to guess which one?
Josh Bretl (24:23):
I don't know where you're going to go.
I think you're going to go fallharvesting the Schmidt house.
Dave Schmidt (24:28):
Okay.
So here's how I can relate to you, dear retiree.
As soon as it gets to be September 21st,actually earlier than that, Starbucks has their pumpkin spice lattes come out.
Josh Bretl (24:38):
Think about in August this year.
Dave Schmidt (24:39):
It was August.
I've already had nine of them, by the way.
I have a competition with my dad to see who canspend more money on Starbucks pumpkin drinks.
I'm leading nine to one.
So his blood sugar is much healthier than mine.
But Trader Joe's has their pumpkin palooza.
So I plan for the end of the year by just spendingungodly amounts of money on pumpkin stuff.
(25:02):
You go into my house right now, I have 150 bucksworth of Trader Joe's pumpkin stuff, muffins.
I have waffles.
I got pumpkin cereal bars, pumpkin potato chips.
Just picked up pumpkin yogurt covered pretzels.
So I like to plan for theend of the year by harvesting.
You see what I did there?
Josh Bretl (25:22):
I saw it.
I saw it.
Dave Schmidt (25:23):
All these different things of pumpkin.
I have slowly gotten Landonto appreciate the pumpkin.
Carla is kind of annoyed with the pumpkin,but that's how I plan for the end of the year so that I don't run out of delicious gourd flavored things come the new year.
And that is how Dave relates to retirees.
(25:47):
And Erin loves pumpkin stuff just like me.
So Josh, take it away, relate to Dave.
Josh Bretl (25:56):
So year end planning is something, as I said in the beginning, that is time sensitive.
And one of the reasons you do it now is becauseit's going to end, it's going to go away.
And if you don't use it, you lose it.
And I think you kind of get it.
You're kind of in the same boat as retirees, butas a retiree, if they don't use that tax loss harvesting, if they don't do those conversions, if they don't do the charity correctly, the end result is something they can't make up next year.
(26:30):
They can't all of a sudden doit again in the future year.
If you don't get your pumpkin spiced gourd flavoredmeat or whatever you do, there's always next year.
And it doesn't really matter.
I mean...
Dave Schmidt (26:46):
Okay, I have a nickname for Landon and Carla.
They call me slumpy sometimes.
It's a mix between grumpy and sleepy.
Now, if I don't have enough pumpkinto last me through the winter, believe me, I wake up every morning slumpy.
So while it may not be as devastating tooutsiders looking in by not having enough pumpkin stuff, believe me, it gets ugly in my house.
Josh Bretl (27:10):
I see where you're going with it.
I'm just not buying the urgency ofnecessity as it comes into play there.
But it does make sense.
I guess that could probably be said aboutalmost all of your Dave relates to retirees.
So no, I could see it.
I don't want a slumpy Dave.
(27:31):
And I don't want anyone to spend more moneythan they have to in taxes that's out there.
Dave Schmidt (27:38):
That's fair.
Josh Bretl (27:38):
But you could always double up next year.
If you don't get the pumpkin this year,you could always double up next year.
You can't always double up with year end planning.
Dave Schmidt (27:46):
So I went to Trader Joe's this week again, and I came home and Carla's like, oh, what'd you get?
I'm like, oh, I got a couple things at granola.
We're running low.
And I left the receipt in the counter.
She's like, why'd you spend 35 bucks?
I'm like, oh, I got more pumpkin stuff.
She's like, David, why do you?
So I have no self-control.
Josh Bretl (28:04):
How do you think Carla's going to feel that your imitation of her sounded a lot like Becks.
Dave Schmidt (28:09):
Oh no.
Josh Bretl (28:14):
Every lady likes to be compared to her mother-in-law's voice.
Dave Schmidt (28:18):
Yeah.
That's just the way it is.
So, Josh, if I am correct with my dad'slittle surprise, can I bring the water balloon slingshot to the FSR Wealth office?
Josh Bretl (28:30):
You can bring it, and we can talk a lot about it, but I actually don't ever see myself shooting.
I mean, in college, I have to admit I did doit, but I was just shooting other college kids.
I don't know if I could bring myself to doingthat here in good old downtown Elmhurst.
Dave Schmidt (28:46):
Well, I would just shoot it in the back against the fence or something, just to have fun with it.
Josh Bretl (28:50):
It would be fun.
Maybe we get Thornton's over there.
Dave Schmidt (28:52):
Yeah, tag some people.
Oh my goodness.
Yeah.
Josh Bretl (28:56):
Well, Dave, that was a fun episode.
I'm glad Erin brought up year end tax planning andnot just tax planning, year end planning in general.
Dave Schmidt (29:04):
I'm glad you brought the word propagate.
Or no, extrapolate.
Josh Bretl (29:07):
Extrapolate.
Dave Schmidt (29:08):
Yeah.
It's a big word.
Josh Bretl (29:08):
Yeah.
I'm glad you've learned it now.
Dave Schmidt (29:10):
Yeah.
So glad.
Josh Bretl (29:11):
There's a plethora of words you don't know yet, but we'll get there.
Dave Schmidt (29:14):
Wow.
All right.
Well, we'll see what I come up with for next story.
Listeners, we love you.
Thank you for listening to our show.
If you could do us the big favor ofsharing this with one of your friends.
Next time you're out for a pumpkin spicelatte, open up your Apple podcast app and show it to your friend and be like, Karen, you got to listen to Josh and Dave's podcast.
(29:37):
It is life changing.
What do you think?
Josh Bretl (29:40):
I can't wait till somebody says that.
Dave Schmidt (29:42):
Well, people say it all the time on the streets.
You just are not listening hard enough.
Josh Bretl (29:46):
Well, with that...
Dave Schmidt (29:47):
Yeah.
Josh Bretl (29:48):
Debbie.
Dave Schmidt (29:49):
Yep.
Josh Bretl (29:50):
Bye.
Dave Schmidt (29:50):
Extrapolation.
Alex (29:55):
Hashtag tax nerd.
We make big long plans for people, and we're planning for people for 10, 15, 20 years.
But there's things that we haveto implement every single year.
And a lot of it is very time sensitive.
And so there's things that we need to do withina calendar year or at a certain time of the year.
And so year end is when we do a lot of things.
Dave Schmidt (00:21):
They say timing is everything, which is most definitely the case when it comes to year end financial planning.
In this episode, Josh brings us his top six end ofyear considerations as we bring 2022 to a close.
Today is a comprehensive to-do listrelated to taxes, retirement account distributions, and charitable giving.
(00:45):
You're also gonna learn why it's time to lookat your Medicare coverage, why now is it time to harvest losing stock picks, and when it makes the most sense to opt for a Roth IRA conversion!
Woo.
This is gonna be a good one.
This is The Retirement Equals Freedom Podcast.
Your host, Josh Bretl, is the owner ofFSR Wealth Strategies and for the last few decades, he's the one helping fine folks like you thrive in your retirement.
(01:14):
Me?
Well, I'm Dave Josh's longtime friend,co-host and fan of water balloon slingshots.
So now let me let you let me, end this introductionso we can talk all about year end planning.
FSR Wealth Management is a registered investmentadvisor located in Elmhurst, Illinois.
Information and opinions contained in this audiohave been arrived at by FSR Wealth advisors.
(01:37):
All information herein is for informational purposesand should not be construed as investment advice.
It does not constitute an offer, a solicitationor recommendation to purchase any security.
FSR is not providing legal, tax, accounting,or financial planning advice in this audio.
These views are as of the date of thispublication and are subject to change.
Josh Bretl (02:14):
Oh, David.
Dave Schmidt (02:17):
Josh loves a good slurp.
Josh Bretl (02:19):
When Landon was little, did you guys read the David books at all?
Dave Schmidt (02:24):
Oh, yeah.
Josh Bretl (02:24):
I feel like when I just said, Oh David, it was kind of like how Zach, I think to this day at eight would still read the Oh, David books if we didn't get rid of them for him.
Dave Schmidt (02:33):
They always grossed me out though.
Josh Bretl (02:35):
Yeah, they're always about picking noses and...
Dave Schmidt (02:37):
Yeah, just raunchy stuff.
Josh Bretl (02:39):
Yeah.
So you and I just finished lunch.
And I have, like everything else, aneedless story about it, but this is the first time you have had this restaurant.
This is a go-to for Missy and I I haveterrible eaters as children, one of the few meals they will eat is tacos.
Just traditional ground beef tacos, like thelittle seasoning packet with ground beef.
And they don't even like the shells.
(03:00):
They just like the meat.
And then chips and guac.
Well, you have it so often.
I mean, I don't mind that stuff.
I grew up with that.
I can't eat it anymore.
We've had it so often, it's just repulsive.
So it's gotten so bad where now ifit's Taco Tuesday if we're having tacos in the house, we feed the kids that.
And Missy and I'll actuallyorder from this restaurant.
We went to Guac N Tacos for lunchtoday and it was phenomenal.
Dave Schmidt (03:23):
Phenomenal is the right word.
I am no stranger to tacos as you can imagine.
Erin, you know I love tacos.
And you...
Josh Bretl (03:31):
Why would Erin know you love tacos?
Dave Schmidt (03:32):
Well, because she knows I love food.
Yeah.
And so I naturally love tacos.
Josh Bretl (03:36):
Do you think she's going to make that extrapolation?
Dave Schmidt (03:38):
What does that mean?
Josh Bretl (03:39):
She's going to...
Dave Schmidt (03:41):
It's like big word Friday here in the office.
Josh Bretl (03:45):
Yeah.
Today we're talking about year endplanning, and Dan was just here in the office and Dan is a podcast subscriber.
And he apparently commented to Erin because we toldhim we were going to talk about year end planning.
"What's Dave going to know about year end planning?"
Dave Schmidt (04:00):
Let me correct you.
I'm pretty sure his comment was, "I betDave is the one that knows all about year end planning, and will be teaching Josh."
Josh Bretl (04:06):
I think it was a facetious sound though.
Dave Schmidt (04:09):
Listen, I can pick up on sarcasm.
And I picked up, no sarcasm there whatsoever.
Josh Bretl (04:13):
No, I'm just extrapolating.
Dave Schmidt (04:17):
But yes, Guac N Tacos was delicious.
You have had a client event there in the summer.
And you're doing another one here inOctober, and I will be going to that one.
Josh Bretl (04:25):
I'm sure you will be.
Dave Schmidt (04:26):
Yes.
Josh Bretl (04:28):
Sure you will be.
Dave Schmidt (04:28):
I mean, I'll have some value there.
I'll maybe talk to people or givean introduction or sign autographs.
I'm not sure here.
Josh Bretl (04:38):
So you have a story on here that you mentioned you wanted to talk about.
Dave Schmidt (04:44):
Yes.
So it's pretty cute.
Episode 21, we talked about the secure act,but specifically during our segment of Get to know Josh and Dave, the question that was picked was, what is something that you never received as a child that you always wanted?
And so I went the route of a water balloonslingshot was something that I always wanted heading up to Door County and I never got.
(05:08):
I got a text message from my dad the other day.
Actually, let me read it here really quick.
Josh Bretl (05:12):
This is a text message probably took him a long time to type.
Dave Schmidt (05:15):
Oh, yeah.
Josh Bretl (05:16):
Right, Big Mike.
Dave Schmidt (05:17):
I mean dad, I still have to teach you the difference between a text message and email.
I'll get to that eventually.
But this message said, "Hey,a surprise is headed your way.
You should receive it by Friday.
We are never too old tooutgrow our childhood dreams.
Let we know when it arrives.
Love you."
And I thought, okay, my dad's the best.
We even talked about it in the podcast.
(05:37):
I didn't get the water balloon sling shotbecause my dad didn't want me to get it.
It's because my mom didn't want to get it.
So old man, if that is in fact what yousent me, we are going to have lots of fun.
We're going to start pegging people hereoutside the building when it arrives.
Josh Bretl (05:52):
There's a funeral home across the street from our office.
Big funeral days, we're justlaunching water balloons.
Dave Schmidt (05:57):
Yes.
We could probably hit the gasstation from here if you try.
Josh Bretl (05:59):
Oh, we could, but we won't don't that.
Dave Schmidt (06:02):
No, no, no, no.
We are nothing but professionals here.
Josh Bretl (06:06):
So what do you think he's going to send you after we talk about year end planning?
Dave Schmidt (06:10):
Well, let's hold that off until the Dave relates to retirees because there may be a nice little segue.
How's that big word for you, Josh?
Josh Bretl (06:21):
In high school is when you and I became friends in the nineties, and one of the things that I remember was this big word that you taught me that to this day I still use.
Dave Schmidt (06:31):
Yes.
Josh Bretl (06:31):
And it was a common word between all of our friends.
I had no idea what it was untilI heard I think you use it.
Do you know what this word was?
Dave Schmidt (06:38):
I mean, there's a few.
There's therefore hence.
There's, oh, wait, wait, wait.
Foreshadowing.
Josh Bretl (06:43):
No, no.
There's a plethora.
That was the word that I had no idea what it was.
And I heard you guys were like, thoughtthis was the greatest word ever.
I thought if I'm going to hang out with theseguys, and I want them to make me think I'm cool.
Dave Schmidt (06:59):
Well the verdict's still out on that whole you being cool thing.
But I will say this.
I do feel like we are the most preparedtoday than we've ever been for an episode.
I am so confident in what we're talking about.
Josh Bretl (07:12):
So today's topic, let me introduce today's topic here.
And our office gets really,really busy this time of year.
My dad used to always say, after Labor Day,all of a sudden the phones start ringing.
And it still holds true because peoplecome out of that summer mode, and they kind of get back to business a little bit.
(07:32):
But it's really October andNovember, our office is just nuts.
And that's because of year end planning.
There's a lot of things that we makebig long plans for people, and we're planning for people for 10, 15, 20 years.
But there's things that we haveto implement every single year.
(07:54):
And a lot of it is very time sensitive.
And so there's things that we need to do withina calendar year or at a certain time of the year.
And so year end is when we do a lot of things.
And the reason we do it at year end isbecause we know what's happened that year.
I mean, if we did it in February, we don't knowwhat's going to happen the next 10 months of the year, but by the time we get to October or November, we can make a pretty good estimate of what's going to happen in the last month or so of the year.
(08:19):
Does that make sense, Dave?
Dave Schmidt (08:21):
Well, yeah.
It's not called beginning of the year planning.
Josh Bretl (08:23):
No, no it's not.
No, it's not.
It's end of the year.
It's much harder to extrapolate thefarther out you go from the beginning of the year to the end of the year.
Dave Schmidt (08:33):
That is number three already.
Josh Bretl (08:34):
So what are some things that we look at for the end of the year?
A lot of these are tax related because of their...
Alex (08:41):
Hashtag tax nerd.
Josh Bretl (08:42):
Hi, Al.
By the way.
I am just this close to gettinghim to record Taxes and Os for me.
So if I get it, it's going to be great.
But a lot of these are tax related,and that's because of the tax deadline of December 31st for a lot of things.
So I want to go through these a little bit.
And one of the first, and we talked aboutthis a lot, in fact, we've done whole episodes on this, is converting to a Roth IRA.
Dave Schmidt (09:05):
Oh, I thought you were going to go with Puddin' Cakes.
Josh Bretl (09:08):
We have not done a whole episode on it.
We haven't talked about Puddin' Cakes in a while.
But you know what I might love asan adult more than Puddin' Cakes?
Dave Schmidt (09:16):
Taxes.
Josh Bretl (09:16):
No Roth IRAs.
Dave Schmidt (09:18):
Oh man.
Do I need a Hashtag Roth nerd?
Josh Bretl (09:22):
Hashtag Roth nerd.
Let's see if I can get Al to do that Butthe conversion of a Roth IRA is essentially, we've talked about this, taking money out of your traditional IRA and moving it to a Roth.
And you do this for tax purposes.
So you pay the taxes now so thatyou don't have to in the future.
And the deadline is if you're going to do it in ayear and have it show up in this year's tax return, you have to do it before the end of the year.
(09:48):
So what we do in our office is welook and we say, okay, here's all the income we have so far for the year.
If we add 10,000, 20,000, $200,000 ofRoth conversion, what does that do?
So what tax impact does that have?
And then we compare it to if we don't doanything, what it would be in the future.
(10:10):
And we have pretty sophisticated butyet easy to understand tools that help us walk through all of that.
So Roth IRAs the first one converting to a Roth.
Dave Schmidt (10:20):
Yeah.
Josh Bretl (10:21):
Now that conversion can change every year.
Those are decisions you have to make every year.
So that's why doing things bythe end of the year is important.
The next one is a big deal that few peoplethink about and probably more people should do.
And that's tax-loss harvesting.
Alex (10:39):
Hashtag tax nerd.
Josh Bretl (10:41):
Yeah.
He's going to come in a lot today with that one.
Dave Schmidt (10:42):
Okay.
Maybe I'll just hold off onhitting that button again.
Josh Bretl (10:44):
No, I think you might want to just hold it down.
Dave Schmidt (10:46):
Oh, okay.
Josh Bretl (10:48):
Tax-loss harvesting is only done in non IRA accounts, so they're non-qualified accounts.
You want to think of your individual, yourjoint, your trust, things along those lines.
And if you're holding equities or even anythingthat's gone up or down in value, now is a time that you can actually sell some losers.
(11:08):
So what does that mean?
Well, you may have these large capital gains.
So especially if held stock for a longtime, you may have some losers that you can sell to offset some of those gains.
And there's a way to do that pretty systematically.
And tax-loss harvesting someyears can be really beneficial.
Some years tax-loss harvestingcan be not as beneficial.
(11:31):
It never hurts you.
But this is going to be a year with all thevolatility that we've had, tax-loss harvesting is going to be really important for people.
Dave Schmidt (11:39):
Can you give me some examples of these?
Did you use the word equities?
Josh Bretl (11:44):
Equities are stocks.
Dave Schmidt (11:45):
So not like my house has lost value.
This is nothing to do with...
Josh Bretl (11:49):
No.
So let me put this perspective.
So let's say someone bought Apple in1985, and now they're a gazillionaire.
If they were to sell that, they'dhave to pay taxes on that gain.
Dave Schmidt (12:02):
Capital gains, right?
Josh Bretl (12:02):
Capital gains, Yeah, capital gains.
But let's say they bought something, I don't know.
Dave Schmidt (12:08):
Blockbuster.
Josh Bretl (12:08):
Blockbuster.
I don't even know Blockbuster stocks going around.
They bought something that is way downin value, now may be a time that they can sell that stock that's way down in value, and they're going to get a capital loss.
And they can sell some of the shares ofApple or whatever they have as a gain, and they can offset the gain with the loss.
(12:28):
Now people will say, well, whatif I still want to hold Apple?
Well, there's things that we can do to talkabout that and to make that happen in the future.
But this money that you have these huge gainsin, unless your sole goal is to gift it to your children or to somebody else or to a charity,
if you're going to end up spending that money,most people want to spend their money or at least have the ability to spend their money.
(12:50):
We have to find a way to pay the taxes orget it out in the cheapest way possible.
So tax-loss harvesting is something thatyou have to do before the end of the year.
And there's some time sensitivity to that.
End of the year is also the deadline totake RMDs or required minimum distributions.
(13:11):
And this year it's going to beeven more important for people.
People who have their own IRAs.
They're over the age 72.
They're used to taking RMDs.
But there's one specifically that I want topoint out, and that is for inherited IRAs.
We talked a little bit about this with theSecure act in a prior episode, the Secure Act changed the RMD rules for inherited IRAs.
(13:35):
And what it said was, you had10 years to take the money out.
Well, originally we thought, Hey, withinthe 10 years, you got to take the money out.
They don't care if you do it all in year oneor all in year 10 or somehow spread it out.
Well, the IRS has since two years later comeout with guidance on how that should be done.
And they want you to takeout over that 10 year period.
Dave Schmidt (13:57):
So equal amount, right.
Josh Bretl (13:58):
Equal amount.
So if you have inherited money, someone whopassed away from 2020 on to now, you need to make sure that you're taking those required distributions out because if you don't, it is the single largest penalty the IRS imposes.
And so what they do is they tax you stillas if you should have taken them out.
(14:21):
And then they impose a 55.0%penalty on top of the tax.
Dave Schmidt (14:24):
Oh, my oh my.
Josh Bretl (14:25):
So you don't want to mess around with required minimum distributions.
So that's something that we want to makesure gets cleaned up and gets taken care of.
Dave Schmidt (14:33):
One of your most popular quotes from that episode was...
Josh Bretl (14:36):
Oh, I have many.
Dave Schmidt (14:37):
Well, you do.
There's two.
But one was with the governmentgiveth, they also taketh the way.
But the other one was, with the Secure Act,people could end up paying significantly more taxes that they don't want to pay if they're not paying attention.
Josh Bretl (14:50):
Sometimes I just get teary eyed that you listen to me.
Dave Schmidt (14:53):
Well, Josh, just a quick little breather.
This came to mind because neitherof us are drinking coffee right now.
Did you see Cometeer Coffee had some press?
Josh Bretl (15:04):
No.
Dave Schmidt (15:06):
The long story short, Goldman Sachs said no more free coffee in one of their offices because it was something about productivity or cost or something.
So that day, Cometeer brought a tableoutside one of their offices and gave away like 200 cups of coffee plus free swag.
And they got press and Entrepreneurand Ink Magazine and all these things.
Josh Bretl (15:27):
They probably, everyone heard about it from our podcast.
Dave Schmidt (15:30):
Well, that is exactly right.
Goldman Sachs is a little intimidatedby me being on this podcast.
They've been trying to recruit me as youwell know to be their lead whatever they do.
But yeah, Cometeer man, good for you guys.
Don't forget the small guys like me.
Josh Bretl (15:46):
The fact that you don't know what Goldman Sachs does doesn't really mean anything because no one has an idea what really Goldman Sachs does.
So let's move on.
Let's keep going on year end planninghere after we talk about our Cometeer.
But
(16:06):
Now is a time to talk aboutcharitable contributions too.
And I've always told people nevergive to charity for a tax deduction.
But if you're going to give to charity,make it as tax advantageous as possible.
But there's a couple thingsyou should be thinking about.
And with the new tax law's in there, sometimescharitable contributions don't help as much.
(16:30):
And if you are RMD age, maybe you should belooking at something called we call QCDs, which stands for Qualified Charitable Distribution.
And what that means is taking your RMDmoney, you could go up to $100,000.
Now, I don't have any client right nowthat's donated $100,000 in a year, but you could take that money and you could donate directly from your IRA to a charity.
(16:53):
And so what that means is it doesn'teven show up in your tax return.
So it gets to avoid income, which has the chanceof lowering the taxation on social security.
It has the chance of loweringhow much you pay for Medicare.
There's all sorts of benefits in thesequalified charitable distributions.
Plus, if you're only taking the standard deductionanyways, then these QCDs can really benefit you.
(17:14):
So now is a time to act on that as that's there.
Dave Schmidt (17:18):
All right.
Josh Bretl (17:21):
Let's talk a little bit about Medicare.
We don't do any Medicare in our office.
We don't sell any Medicare policies, but most of ourclients are Medicare age or at least close to it.
But Medicare open enrollment goes fromOctober 15th all the way through December 7th.
So this is a time where if you wouldlike to change Medicare policies, this is the time that you're going to do it.
(17:44):
So if you have any changes, especially checkyour Medicare Part D because those prescription drug formularies is the term they use.
Formularies is what drugs they cover,what price they change every year so do make sure you're checking that stuff off.
Dave Schmidt (18:00):
That was my mistake.
I was looking at Form G, and I wasjust filling out the wrong information.
Josh Bretl (18:05):
You get that G and D all mixed.
Dave Schmidt (18:07):
Yeah, it sounds similar.
Josh Bretl (18:12):
But one of the big ones here, this is kind of the last one that I want to wrap up with in regards to planning, has to do with doing a tax projection.
And I tell every retiree, now is the timethat you have way more control in your life than you've ever had before tax wise.
So by doing a projection, you candetermine do you want to add more income?
(18:37):
Is now a time that we should bepushing income till next year?
And that's different for every person.
But unless you're taking the time at the endof the year to kind of do that projection, which we pretty much do for every single client we have, you don't know that.
And by doing that projection, that allowsyou to make good decisions because you don't really want to give up that year's time.
Dave Schmidt (19:02):
And if they're in the office the same time as me, I can project their next few months of coffee, of Cometeer coffee drinking.
Josh Bretl (19:09):
You could extrapolate how much coffee you're going to drink over time.
Dave Schmidt (19:12):
Now you're just showing off because I don't know how to use the word correctly.
Josh Bretl (19:15):
We're going to get it before the end of the year.
Dave Schmidt (19:16):
All right.
I'll see.
Josh Bretl (19:17):
So now the last bullet point.
Now I said the last one I said wasfinal, and that was the final planning for the year, year end planning.
But this one is the most fun.
This is start dreaming of 2023.
Start thinking big, startfiguring what you're going to do.
Do that bucket list of what areyou going to do in that year?
Because your money is notsomething that you put on a wall.
(19:39):
And it's not art just to look at.
It's there to make your life better.
So what are you going to do next year?
Dave Schmidt (19:45):
It's not like my Sleepy Hollow figurines.
You don't just sit there and admire it.
Josh Bretl (19:48):
That is pure art.
Dave.
Pure art.
Dave Schmidt (19:50):
Thank you, I appreciate that.
So is the mural that you andI had painted a few years ago.
Remember you and I riding thatbull through the pastures?
Josh Bretl (20:00):
I was worried.
I was like, what's he talking about?
Dave Schmidt (20:02):
Yeah.
Anybody who watches ModernFamily will know the bull.
Okay.
Yeah.
2023.
I think that's the year of my arcade.
Josh Bretl (20:10):
Your old school retro arcade in your basement?
Dave Schmidt (20:13):
Yes.
Not me opening my full blownarcade for people to enjoy.
But yes, I think Carla might finallylet me buy an arcade for the basement.
We don't have much room or we put in the office.
That's what I'm trying to actually push for.
And that way you pay for it and then it's here.
Josh Bretl (20:32):
That's not happening.
Dave Schmidt (20:32):
Okay.
So okay, the bucket list, Josh, Imean, what's on your 2023 bucket list?
Have you not sat down and figured it out yet?
Josh Bretl (20:39):
No, I haven't.
And I usually do.
Dave Schmidt (20:41):
Do you?
Josh Bretl (20:41):
Yeah.
I'm a big bucket list planner.
I love that stuff.
Dave Schmidt (20:44):
Yeah, I remember you were about your summer bucket list.
Josh Bretl (20:46):
Yeah.
No, I have not.
We're starting a big house remodel, fix up.
So it's kind of like all that's on my mind.
It's just getting to 2023.
I think we should do a future episodeon bucket list items for 2023.
Dave Schmidt (20:59):
I think that'd be great.
We can ask your clients.
Josh Bretl (21:02):
Oh, what theirs are.
Oh, it's going to be fun, David.
So Dave, I think people want to get to know us.
Dave Schmidt (21:11):
You think so?
Josh Bretl (21:12):
I think so.
Dave Schmidt (21:13):
Yeah.
What, what?
Okay.
Hey, Mr.
Josh, let's take a break.
You've been talking for solong, and my ears are sore.
Let's not make them snore.
Listening shouldn't be a chore.
So let's get to know Josh andDave and watch our ratings soar!
Josh Bretl (21:33):
Well, I don't sing along to this.
You do.
But you can't help yourself to dance.
Dave Schmidt (21:38):
I agree.
Josh Bretl (21:39):
Alex liked the music too, just the underlying music.
Dave Schmidt (21:43):
Yeah.
Did he?
Josh Bretl (21:44):
Yeah.
He wants just that to be able to play in his room.
Dave Schmidt (21:46):
He does have that app now that he can make his own music, right?
Didn't you say?
Josh Bretl (21:49):
Oh, that's right.
Yeah.
On his...
Dave Schmidt (21:51):
On his iPad or Chromebook.
Josh Bretl (21:52):
Chromebook.
Yeah.
Dave Schmidt (21:52):
That's cool.
Josh Bretl (21:53):
All right, Dave, I got a question for you.
Dave Schmidt (21:54):
I'm ready for it.
Josh Bretl (21:55):
Okay.
Dave Schmidt (21:56):
All right.
Josh Bretl (21:56):
And I actually don't know my answer for you.
I know my answer to this, but I don'tknow what your answer's going to be.
Do you like to plan things outin detail or be spontaneous?
If you guys could see theconcentration on his face right now.
Yeah, it's intense.
Dave Schmidt (22:09):
It's like deep thoughts by Dave Schmidt.
I am not spontaneous at all.
I'm also not a planner really at all.
Josh Bretl (22:19):
You just exist.
You're just going from place to place.
Dave Schmidt (22:25):
I'm just kind of there.
Josh Bretl (22:26):
Like a pinball that just goes around.
Dave Schmidt (22:29):
Yeah.
I'm kind of just in the middle, man.
I'm kind of like a free agent inlife, you know what I'm saying?
If Josh needs me to give an introductionat one of his workshops, I'll do it, man.
But ask me to plan a vacation or even look atthe Schmidt calendar for the upcoming weekend.
I'm just not going to, I just don't do it.
Josh, are you spontaneous?
Are you a big planner?
Josh Bretl (22:50):
I'm a planner.
Now I'm going to caveat this,if that's the right word.
I'm going to...
Dave Schmidt (22:57):
Extrapolate this?
Josh Bretl (22:58):
No, this is not an extrapolation.
But anyways, there's a asterisk next to that.
I believe that planning allows me to be spontaneous.
And I actually got that from, I liketo listen to books and read books.
And one I was reading was by aretired Navy Seal named Jocko Willink, and I forget the name of his book.
(23:18):
He has a line in his book thatsays, "Discipline equals freedom."
And I was like, well, that's kind of crazy.
But by knowing what I'm going to be doing, itallows me the freedom to make changes if I want to.
My wife makes fun of me because whenwe go on vacation, we'll pick out the big things we're going to do together.
But I will know.
We went to Paris.
(23:38):
I knew every subway line.
I knew how to get from the airport.
Anything logistical fortransportation, I wanted to know it.
And that way we could make decisions,and we could be spontaneous.
Dave Schmidt (23:52):
Yeah.
We've always thought of you as logistically savvy.
Josh Bretl (23:57):
That was my nickname in high school.
Dave Schmidt (23:58):
Was it now?
Oh, well,
Dave relates to retirees.
Josh Bretl (24:07):
The part everyone's been waiting for.
Dave Schmidt (24:09):
Now, what I did hear is I put three bullet points in our notes.
Josh Bretl (24:12):
Didn't read them.
Dave Schmidt (24:13):
Oh, that's fantastic.
But they're potential ways that Ican relate to year end tax planning.
Now, you care to guess which one?
Josh Bretl (24:23):
I don't know where you're going to go.
I think you're going to go fallharvesting the Schmidt house.
Dave Schmidt (24:28):
Okay.
So here's how I can relate to you, dear retiree.
As soon as it gets to be September 21st,actually earlier than that, Starbucks has their pumpkin spice lattes come out.
Josh Bretl (24:38):
Think about in August this year.
Dave Schmidt (24:39):
It was August.
I've already had nine of them, by the way.
I have a competition with my dad to see who canspend more money on Starbucks pumpkin drinks.
I'm leading nine to one.
So his blood sugar is much healthier than mine.
But Trader Joe's has their pumpkin palooza.
So I plan for the end of the year by just spendingungodly amounts of money on pumpkin stuff.
(25:02):
You go into my house right now, I have 150 bucksworth of Trader Joe's pumpkin stuff, muffins.
I have waffles.
I got pumpkin cereal bars, pumpkin potato chips.
Just picked up pumpkin yogurt covered pretzels.
So I like to plan for theend of the year by harvesting.
You see what I did there?
Josh Bretl (25:22):
I saw it.
I saw it.
Dave Schmidt (25:23):
All these different things of pumpkin.
I have slowly gotten Landonto appreciate the pumpkin.
Carla is kind of annoyed with the pumpkin,but that's how I plan for the end of the year so that I don't run out of delicious gourd flavored things come the new year.
And that is how Dave relates to retirees.
(25:47):
And Erin loves pumpkin stuff just like me.
So Josh, take it away, relate to Dave.
Josh Bretl (25:56):
So year end planning is something, as I said in the beginning, that is time sensitive.
And one of the reasons you do it now is becauseit's going to end, it's going to go away.
And if you don't use it, you lose it.
And I think you kind of get it.
You're kind of in the same boat as retirees, butas a retiree, if they don't use that tax loss harvesting, if they don't do those conversions, if they don't do the charity correctly, the end result is something they can't make up next year.
(26:30):
They can't all of a sudden doit again in the future year.
If you don't get your pumpkin spiced gourd flavoredmeat or whatever you do, there's always next year.
And it doesn't really matter.
I mean...
Dave Schmidt (26:46):
Okay, I have a nickname for Landon and Carla.
They call me slumpy sometimes.
It's a mix between grumpy and sleepy.
Now, if I don't have enough pumpkinto last me through the winter, believe me, I wake up every morning slumpy.
So while it may not be as devastating tooutsiders looking in by not having enough pumpkin stuff, believe me, it gets ugly in my house.
Josh Bretl (27:10):
I see where you're going with it.
I'm just not buying the urgency ofnecessity as it comes into play there.
But it does make sense.
I guess that could probably be said aboutalmost all of your Dave relates to retirees.
So no, I could see it.
I don't want a slumpy Dave.
(27:31):
And I don't want anyone to spend more moneythan they have to in taxes that's out there.
Dave Schmidt (27:38):
That's fair.
Josh Bretl (27:38):
But you could always double up next year.
If you don't get the pumpkin this year,you could always double up next year.
You can't always double up with year end planning.
Dave Schmidt (27:46):
So I went to Trader Joe's this week again, and I came home and Carla's like, oh, what'd you get?
I'm like, oh, I got a couple things at granola.
We're running low.
And I left the receipt in the counter.
She's like, why'd you spend 35 bucks?
I'm like, oh, I got more pumpkin stuff.
She's like, David, why do you?
So I have no self-control.
Josh Bretl (28:04):
How do you think Carla's going to feel that your imitation of her sounded a lot like Becks.
Dave Schmidt (28:09):
Oh no.
Josh Bretl (28:14):
Every lady likes to be compared to her mother-in-law's voice.
Dave Schmidt (28:18):
Yeah.
That's just the way it is.
So, Josh, if I am correct with my dad'slittle surprise, can I bring the water balloon slingshot to the FSR Wealth office?
Josh Bretl (28:30):
You can bring it, and we can talk a lot about it, but I actually don't ever see myself shooting.
I mean, in college, I have to admit I did doit, but I was just shooting other college kids.
I don't know if I could bring myself to doingthat here in good old downtown Elmhurst.
Dave Schmidt (28:46):
Well, I would just shoot it in the back against the fence or something, just to have fun with it.
Josh Bretl (28:50):
It would be fun.
Maybe we get Thornton's over there.
Dave Schmidt (28:52):
Yeah, tag some people.
Oh my goodness.
Yeah.
Josh Bretl (28:56):
Well, Dave, that was a fun episode.
I'm glad Erin brought up year end tax planning andnot just tax planning, year end planning in general.
Dave Schmidt (29:04):
I'm glad you brought the word propagate.
Or no, extrapolate.
Josh Bretl (29:07):
Extrapolate.
Dave Schmidt (29:08):
Yeah.
It's a big word.
Josh Bretl (29:08):
Yeah.
I'm glad you've learned it now.
Dave Schmidt (29:10):
Yeah.
So glad.
Josh Bretl (29:11):
There's a plethora of words you don't know yet, but we'll get there.
Dave Schmidt (29:14):
Wow.
All right.
Well, we'll see what I come up with for next story.
Listeners, we love you.
Thank you for listening to our show.
If you could do us the big favor ofsharing this with one of your friends.
Next time you're out for a pumpkin spicelatte, open up your Apple podcast app and show it to your friend and be like, Karen, you got to listen to Josh and Dave's podcast.
(29:37):
It is life changing.
What do you think?
Josh Bretl (29:40):
I can't wait till somebody says that.
Dave Schmidt (29:42):
Well, people say it all the time on the streets.
You just are not listening hard enough.
Josh Bretl (29:46):
Well, with that...
Dave Schmidt (29:47):
Yeah.
Josh Bretl (29:48):
Debbie.
Dave Schmidt (29:49):
Yep.
Josh Bretl (29:50):
Bye.
Dave Schmidt (29:50):
Extrapolation.
Alex (29:55):
Hashtag tax nerd.
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