Episode Transcript
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Speaker 1 (00:00):
Good morning, folks. My name is Martin Shields.
Speaker 2 (00:03):
I'm the chief wealth a Visor at Bouchet for Edge Group,
and i'm your host today let's talk money. As always,
it's great to be here with you to answer any
questions you may have regarding your financial planning or investment
management concerns, and as always, I encourage you to call
in with those questions. You can reach me at eight
hundred eight two five five nine four nine. Again that's
(00:25):
eight hundred eight two five five nine four nine. Or
if you're too shy to call in, which I hope
you're not. But if you're too shy, you can email
me at ask Bouchet at Bouchet dot com. That is
ask Bouchet at Bouchet dot com and Bouchet is spelled
b O U c h e y dot com. So,
(00:48):
as I always say, there's no dumb or silly question
except for the one you don't ask, and you may
be doing your fellow listener a favor bye asking a
question that they have as well. Right, that quite often happened,
So give me a call or shooting me an email
and I can give you some guidance. Again, I hope
you're doing well.
Speaker 1 (01:07):
On this.
Speaker 2 (01:08):
Let's see here, I'm looking out the window. I'm going
to call this a good Sunday morning. Right It's not
raining right now. It looks like it's rain overnight, but
not raining right now. And I think we're gonna be
getting into the forties, so certainly a good day to
get out there and do some stuff. Yesterday, we have
a new puppy in our house. I don't know if
I'd said that, but we got a new puppy this summer.
Speaker 1 (01:31):
In March. We had to put our lab down. His name.
Speaker 2 (01:34):
Her name was Charlie, and we had her for eleven years,
and so that was so tough, as any of your
dog or pet owners know, it's so tough.
Speaker 1 (01:44):
We loved her.
Speaker 2 (01:45):
That Charlie grew up with our kids, and so to
lose her was heartbreaking. But my wife in particular is
a dog person, and so we got a it's called
a bernardoodle. It was a Bernese mountain dog and a poodle.
And I'm telling you his name is Ali. He's just
a really cute dog, really much different in many ways
(02:06):
than our lab. But we went out walking, myself and
my daughter went out walking with him in Kyriss Park
in Saratoga, and I will tell you, you know, we've been
in Saratoga Greenfield Center for thirteen years now, and anytime
I walk in Congress Park, it is it's such a
great park.
Speaker 1 (02:25):
I mean, it is an amazing park. And you think
about that.
Speaker 2 (02:28):
I always say this when you see these parks and
any ability to put land aside for any type of
activity like this, like what foresight people had to do that.
And if you have the opportunity of haven't ever been there,
to go there, I would highly recommend it.
Speaker 1 (02:43):
It's just a really great little park to do a
walk with. And you know, we're fortunate in this.
Speaker 2 (02:50):
I mean, i'd say in upstate New York for all
the parks we have, the county parks and state parks.
You know, we take it for granted, but we were
really blessed in that regard. So hopefully you can get
out there to enjoy this day and do something that
motivates you and gives you.
Speaker 1 (03:06):
Some good perspective.
Speaker 2 (03:07):
It always, you know, as I've gotten older, just the
concept and going out for a walk I appreciate so
much more. And that's I think one of the great
things about dogs, right and animals is they get you
out walking, and you know, it's a great thing for
our minds and physically it's a great thing. So hopefully
get out there and do something enjoyable today. But we're
(03:29):
not just here to talk about physical exercise our mental exercise,
although it's important, but we're going to be here to
talk about finances and investments.
Speaker 1 (03:38):
Not a great week in the markets.
Speaker 2 (03:40):
We've seen markets come off their highs now, the Dow Index,
it did hit a high this week, but it did
come off that high. And the QQQ, which is still
up nineteen percent, that's one of the major holdings. It
was down slightly this week. And the SPE hundred, which
(04:01):
is another the broad based market is another one of
our major holdings. That's up almost fifteen percent for the year,
but it's down. It was down almost a percent for
the week. So not a great week in the markets.
But again you're going to have that you know, standard
intra year volatility, folks, standard in average intra year volatility
(04:23):
is down fourteen percent, So relatively speaking, we haven't had
a we well.
Speaker 1 (04:29):
I guess we did.
Speaker 2 (04:29):
We did had a twenty percent pullback earlier this year,
but that's that's just slightly above average, right, But in
many ways after that, we've.
Speaker 1 (04:37):
Had actually a very low volatility.
Speaker 2 (04:40):
We have not had increased volatility for the last six
months almost it's been actually fairly low volatility. So again
just always reminding yourself, you know, how am I doing
as far as how am I allocated? You know, am
I allocated properly for where I am at I am
in my life? And as we always tell clients, you know,
(05:00):
when the market's near all time highs, if for whatever
reason you need to raise cash, if you get in
near retirement, these different circumstances, it's not a bad time
to become a little more conservative in that regard. But
if you're a long term investor, you know, you hear
this concerns over bubbles, you know, and I wrote about
that in a blog on my my blog Piece of
(05:21):
Mind Economics, And you know, I don't think right now
we're overly concerned about it. Doesn't mean it can't happen,
but it's more I think, you know, we talk about bubble,
there's there's a few things that need to be in place.
One of the one of the things that is not
in place for a bubble right now is leverage. There's
not an awful lot of leverage out there, relatively speaking,
(05:44):
in companies using leverage.
Speaker 1 (05:46):
Most of these companies.
Speaker 2 (05:47):
That have been especially investing in AI, they have amazing
balance sheets, right, they have so much cash on their
balance sheets. So really not a situation where you know
they've been overly leveraged. Probably if there's one area, there's
two areas where you talk about a bubble wheel, like
a little bit more concerning one. It's just broadly speaking,
the valuation of stocks is more on the higher side
(06:09):
than the lower side. Uh, And certainly that that valuation
really is more in the tech stocks, right, the AI stocks.
But you know, consistently they've been able to grow their earnings.
That's that's the thing too, which is there is a
reason why, uh they have those higher valuations because they've
been able to grow those earnings. But what you have
(06:30):
to appreciate is, uh, if this were to change quickly,
and you know, the money that they're investing in data
centers and you know what they think can come out
of AI, if that were to change quickly, you know
that can the value valuations can reverse course very quickly.
So it's just always an important to remember that. But
I do feel like we're still in a stage where, uh,
(06:54):
you know they're gonna be investing more and more into AI.
I mean, I know our firm is using AI different
ways to help our team be more productive, and I
think that's true across most industries. So if you had
to ask me, and this is why I mentioned in
my blog, you know, I do think the markets have
a ways to go before we're quote unquote in any
(07:16):
bubble territory.
Speaker 1 (07:18):
But it's something to be aware of.
Speaker 2 (07:19):
And you know, we always talk about the importance of rebalancing.
So all that means is, you know, when you're doing
well in your winners, don't be afraid to rebalance a
little bit. Now it's a lot easier to rebalance in
a tax deferred account a WROTH, or in your phone
K or in IRA because there's.
Speaker 1 (07:35):
No tax impact.
Speaker 2 (07:37):
You got to be aware that if you're going to
rebalance in your taxic accounts that you could be paying
taxes on it. But you know, again, for many folks
it might be worth doing that. You always make the
analogy it's like trimming your trees or bushes, right, It
doesn't mean that you're going to cut down.
Speaker 1 (07:51):
Your bushes or your tree but you know, you.
Speaker 2 (07:54):
Want to trim it and make sure that your overall
risk is properly allocated. So just these are smart, just
you know, common sensical type of ways to manage risk.
And that's what it comes down to many ways. It's
just important to manage risk. What's going on to a
different topic that I think.
Speaker 1 (08:14):
It's important to remember as.
Speaker 2 (08:15):
We kind of approach the end of the year from
a tax perspective and charitable giving. But again, if you
have any questions, feel free to give me a call.
You can reach me at one A hundred eight two
five five nine four nine. Again that's eight hundred eight
two five five nine four nine, or you can em
me email me at ask Bouchet at Bouchet dot com.
(08:40):
So whatever question you may have, let's talk a little
bit about end of year charitable giving. So you know,
many of our clients have very philanthropic Uh. They have
a lot of causes they want to support, and as
you know, our firm is also very much involved.
Speaker 1 (08:55):
With the community. Uh.
Speaker 2 (08:57):
You know, that's the one thing I always say with Steve,
he rated an environment of being involved with the community
and charitable giving, and so all of our colleagues really
do that in different ways. As you may have seen.
You know, we have three young colleagues. They did the
men wear pink for breast cancer. I don't know the
exact number, but they I think they came in fifth
(09:19):
of all the teams raising money, which is really impressive.
And I think the Kapal region broke a record for
half a million dollars raised for breast cancer this year.
Speaker 1 (09:30):
So fantastic stuff.
Speaker 2 (09:32):
But if you have trouble interest, a couple of things
you should be aware of as we're going into the
end of the year about ways to give in a
very smart kind of tax efficient manner, right, because you
know you want to give, but you want to try
to do it in the most tax efficient man impossible. Now,
one of the things that have changed is for twenty
twenty five under the old Triple b A, that's what
(09:52):
I call the one big, big beautiful bill, the old
Triple b A that this year for twenty twenty five,
starting up the even if you don't itemize, right, remember
this whole thing, the itemize and the salt deductions and everything.
Many people were just caught up with standard deductions even
if you don't itemize that for single filers, you can
(10:13):
deduct now up to one thousand dollars in twenty twenty
five for your charitable donations, and if you're married filing jointly,
you can deduct up to two thousand dollars. Again, even
if you just standard deduction, even if you don't itemize,
you still have those charitable deduction amounts from a tax perspective.
Speaker 1 (10:31):
So that's nice.
Speaker 2 (10:33):
But one of the things that is also the case
that is now because the salt limits have been increased
to forty thousand dollars from ten thousand dollars, more and
more people might be able to itemize. And what's important
to know, especially for you high income earners, that if
you are going to start itemizing because of the higher
deduction amount and you are charitably inclined you give to charities,
(10:57):
that starting in twenty twenty six, not this year, but
next year, there's going to be a floor or threshold
before you can start deducting, and it's going to be
point five percent of your adjusted gross income. So let's
go through a quick example here. So what that means
is if you make four hundred thousand dollars or more annually,
let's say four hunde thousand dollars.
Speaker 1 (11:17):
Right, let's just use that number.
Speaker 2 (11:19):
That that floor is going to kick in at two
thousand dollars point zero point zero five percent of that sorry,
point five percent of that of your grow just gross income.
So that's gonna be two thousand dollars. Now that starting
in twenty twenty six. What that means is you're not
going to get any deductions on your charitable giving until
(11:42):
you give more than two thousand dollars, which for many
people it's not that big of a deal, but we
have to think about this.
Speaker 1 (11:48):
Let's just say you gave two thousand dollars.
Speaker 2 (11:50):
Annually and your incomes four hundre thousand dollars. So every
year you give two thousand dollars, and you know you
would normally be able to write that off, but now
with this new floor can't. So one of the strategies
that we're recommending to clients is if you're kind of
in this bucket, so again more of a high income arder,
that you're going to itemize that one of the things
(12:11):
you can do is take those contributions that you're going
to make in future years.
Speaker 1 (12:15):
So let's say you're gonna make.
Speaker 2 (12:16):
Two thousand dollars. Let's combine those into let's do ten years.
So instead of making two thousand dollars contribution every year
for ten years, what you're gonna do is you're going
to make a twenty thousand dollars donation this year. Take
the full amount. Right, You're gonna take the full amount
this year, And what we're gonna recommend is that you
(12:38):
put it into a donor advice fund. Right, we've talked
about donor advised funds. You can have them through Vanguard
or Schwab and Fidelity and basically it allows you to
contribute to a make it a charitable donation into this fund. Now,
from that fund, you can have it invested into the market,
and annually you can make donations to qualify five h
(12:58):
one C three charity. So it's a great way to
make a donation even if you maybe don't know exactly
where you want to put your money, Well, you can
make it into the donor advice fund, let it grow
and make donations whenever you want. Now, the nice thing
with it is you don't have to make a donation, right,
you could just let it grow until you're ready to
make a donation. But you get the charitable deduction now,
(13:21):
and even a better way to do this, even a
more ideal way, is to contribute highly appreciated stock. So
now think about this. Let's say you have a position
that has eighty percent gain. So like in this case,
we're talking about twenty thousand dollars. You have a position
that you bought for two thousand dollars and now it's
worth twenty thousand. So that's eighteen thousand dollars of cap
(13:42):
of gains that you would have if you sold that position.
But instead you transfer that those twenty thousand dollars of
that stock into the donor advice fund. Now, guess what,
that gain totally wiped away. You pay no taxes on
that gain, and then you can take that twenty thousand
dollars deduction as well, and it goes into the don't
advise fund. You don't need to charity right away. So
(14:04):
really that is a win win win approach, right. You
get to take the highly appreciated stock, you get to
move it to the charity without paying any gains on it,
you get the deduction of twenty thousand dollars. And oh,
by the way, if you made those two thousand dollars
contributions donations every year, and you're in that high income
(14:25):
earner bucket, you would be able to make that deduction
because of the floor ofero point five percent. So again,
this is a great strategy for those that are charitable inclined,
that are going to be itemizing and more in the
high income earner brackets. Now, let's say say you're not
a high income earn maybe you're retired. The other way
(14:46):
to make it's a great way to make charitable contributions
is a QCD, a qualified charitable donation.
Speaker 1 (14:54):
You basically use your IRA to do it.
Speaker 2 (14:56):
Right, So in most cases, if you have an IrH
pre tax dollars, you're going to pay taxes on the distribution, right,
and that's ordinary income taxes on that distribution. Now with
the QCD, you don't pay any taxes on it. It
goes right to the charity without you paint any taxes
on it. So another great way to make a donation
(15:18):
to a charity that's very tax efficient. And you can
start doing this at age seventy and a half. That's
that's when you can start making qcds from your IRA.
Speaker 1 (15:28):
And when you turn seventy three.
Speaker 2 (15:30):
Now when you have rm DS requirement of distributions, these
qcds will qualify as your rm D, so it's again
a win win. You get to make that donation to
the charity, it meets your RMD for at least part
of it, depending on how much your RMD is versus
your QCD, and you don't pay any taxes on that
(15:53):
distribution to the charity. So it is a great way
to be charitably inclined. And then to me your arm
D in a very tax efficient manner. So would highly
recommend looking and that as well.
Speaker 1 (16:07):
So you know.
Speaker 2 (16:08):
The thing is too is these are all this stuff
together gets to be very complex. And again this is
why we always recommend that you know, over time, as
your financial situation gets more complex, you probably want to
be working with an investment fiduciary, a wealth management fiduciary.
Speaker 1 (16:24):
It's just easy.
Speaker 2 (16:25):
And then we see this all the time with prospective
clients coming to us where they're making decisions that you know,
if they come to us, we probably would have said
that's probably not the best decision and we could show
them why. And that's where I think we do a
great job as illustrating to folks in kind of layman's terms,
what you should be doing and why you should be
(16:45):
doing it, and that's important. It's, as I've said all before,
long before, we're big into educating. Our best client is
an educated investor, an educated a person from a financial
planning perspective, and so we try to educate our clients
as much. And you know, one of the big areas
that we've added is the tax planning group. We've got
(17:06):
such great individuals with CPAs or they are road agents
and they just provide awesome tax planning advice that is
really invaluable. And you know, people will quite often ask
me what's the what's the reason to work with our
firm or in investment fiduciary? And I always break it
down into three categories. So this is the value. I
(17:26):
always talk about value, right, because you know, fees and
cost are one thing, but value is really why you
do anything.
Speaker 1 (17:34):
That's when you really think about it. It's cost is.
Speaker 2 (17:36):
Important, but what's more important is the value get something.
I don't want to pay one dollar for something if
I don't get at least one dollar of value, right,
So you're always thinking about, Okay, what are the costs,
but really what are the value because in many things
in life, you can get things in a discount of price,
but is is you getting less value as well? In
most cases the answer is yes. So the value that
(17:58):
we offer to our alliance is threefold. First and foremost
is usually the investment side, right, so as we take
the emotion out of investing, and that's a big deal.
Speaker 1 (18:10):
Right. So, we have many.
Speaker 2 (18:11):
Clients that used to manage their own portfolio and just
the stress of reading the headlines to trying to make
decisions as to what to do and then make a
decision then second guess yourself.
Speaker 1 (18:23):
That adds up that stress.
Speaker 2 (18:25):
We always talk about the importance as you get older
or try to minimize stress. That stress adds up and
it can be problematic. The other thing is, you know,
many times people get it wrong, right, They act more
on their emotions and they sell when they should be buying.
And I think our firm does a great job of
really sticking to our investment plan and following through on that.
And we've done a great job im with the firm
(18:46):
for thirteen years. From a return perspective, we've done a
great job of providing good returns for our clients. They're
very happy with our returns. The next piece is the
planning piece, and as I've mentioned before, we're our client's
personal CFO, so if it's finance related, you probably want
to have a conversation with us, you know. I tell
(19:07):
you that's probably one of the parts I enjoy most
with working with clients. It's just that, you know, you
get into this complexity and you start going through and
you explain to them what the plan is, what the
strategy is, how it's going to be implemented, and then
afterwards they come out and they're like, wow, this is great,
this huge amount of stress off their shoulders. And I
tell you, one of my favorite parts of my job
(19:28):
is telling people to spend more money, and most for
our clients. The reason there are clients is because they've
been great at saving money. But many of them, you know,
they just still spend enough money, right and you know
talk about that, Oh yeah, I think you should be
taking first class instead of that, or you should be
staying at, you know, the high end hotel instead of
the the lower end Marriotte and that brought to that
(19:50):
guidance to me.
Speaker 1 (19:51):
I always appreciate. But there's it's real.
Speaker 2 (19:53):
It's really important because I always say, if you don't
spend those dollars, somebody else will, right, There's always somebody
when it's a son or daughter, niece or nephew, grandchild, charity.
You know, you got you don't want to be foolish
with spending those dollars, but you don't want to be
too conservative either, because somebody else will spend those dollars.
The third thing, and I'm going to tell you this
(20:14):
is probably one of the most important elements, is our
client service team.
Speaker 1 (20:17):
We talked about this.
Speaker 2 (20:18):
Our client service team are these amazing individuals. They're so
dedicated to working with our clients. Angelo Sesney, who's our
director of client services the firm for twenty seven years.
She's just a wealth of knowledge, as are all of
our other individuals. Dam Jamie Jerky really now kind of
heads up our client service team. I just can't say
enough about all of them and everything they do for
(20:41):
our clients. And you know, it's like one of those things,
which is it's amazing when you have to deal with
any of these big financi custodians and you're calling in and you.
Speaker 1 (20:51):
Know, you're one eight hundred number and you're on hold,
and you're trying to get guidance.
Speaker 2 (20:55):
And whereas you know, our clients just call into our
client service team, there's always somebody picking up the phone,
a live person getting into the person they needed to
talk with. They're always there to facilitate anything they need.
With Charles Schwab, the other thing I always described, and
this is really where a whole team comes into play,
but our client service team is particularly good with this
(21:15):
is the way to view that. You know, with us,
there's Charles schwabers at Cristodian, who's just simply a partner.
We don't pay them, they don't pay us, and then
there's the client and we're in between those two, right,
So whenever we see anything happening with our client's accounts,
we're right away talking to both Schwab and to the
client to say, hey did you change your email address?
Because I see it changed here. And that element of
(21:38):
protecting our clients their data, their assets, I'll tell you,
in this day and age and cybersecurity issues, it's so important.
It really, it's always important, but it's become even that
much important more important when we have issues where you know,
I'm telling you it's not just older people that get
caught up in those cybersecurity issues. Use it's younger folks, executives,
(22:02):
small business owners.
Speaker 1 (22:04):
We see it all the time.
Speaker 2 (22:06):
So you know, this is where I think we played
an invaluable role to protect our clients data and assets.
And you know our team, we have John Malay and
Dave Clark. They John is our CEO, Dave Clark is
our chief compliance officer.
Speaker 1 (22:22):
You know, we meet weekly.
Speaker 2 (22:24):
Weekly, We meet to talk about how do we protect
our clients from a uh cybersecurity and scam issue, fraud
and anything that you know, Dave and John are seeing
through discussions with Charles Schwaber Custodian and also just are
our colleagues making sure that they always do the right
things because actually they say that really the biggest issue
(22:48):
with fraud and cybersecurity is not the technology. It's people
making mistakes, right, It's the human error. And boy, I
tell you, those scammers are good these days, and we
see it coming through even with us, you know, to
emails and different things, and you know it's only going
to get better, right, I mean that's with AI, It's
only to be better. So you've got to be better
(23:10):
prepared than ever before. We do on our website at
bouchet dot com. There is a webinar that John and
Dave Clark did which I would highly encourage you to watch.
It's on our insights page. And you know that breaks
out just some really good things you need to be
aware of from a compliance perspective. And this is I'm
telling you, folks, you know this is something you need
(23:31):
to have a conversation with your your kids about. I
always talk to my kids. You know, your spouse, your parents,
even siblings. Make sure that you're on the same page,
because if you're not, you have a problem. It is
it's not always easy to rectify it right, and if
you've been through that, you know that it's it's not
always easy to take that problem and turn it around.
Speaker 1 (23:54):
It could be very challenging.
Speaker 2 (23:55):
So the best thing to do is be out in
front of it to try to prevent it and educate yourself.
But also, again, as I mentioned, that's where our team
is just so invaluable of us helping with our clients
and making sure that they're well protected. Well, folks, we're
gonna go a commercial break, but come back and join
us as we take your questions. You'll listen to Let's
(24:15):
talk money brought to you by Bruchet Finance Group. Well,
we help our clients prioritize their health while we manage
their wealth for life. Come back and join us, folks.
Welcome back, folks. For those who just join us, my
name is Martin Shields. I'm the chief Wealth Advisor at
Bruchet Finance Group and as always, it's great to be
here with you too. Answer your questions whatever it may be.
(24:38):
Give me a call or send me an email and
we can chat. You can reach me at eight hundred
eight two five five nine four nine. Again that's eight
hundred eight two five five nine four nine, or you
can email me at ask Bouchet at Bouchet dot com
and Bouchet spelled b O U c h ey dot com.
(25:01):
So whatever question you may have, we when we go
to the email, we have one from Joseph, says Joseph
this regarding donor advice funds. Regarding this subject, you can
choose the amount of the appreciated investment stock in this
case as you want to and then put it into
the donor advice fund. Right example, someone can just put
half their stock position in and leave the other half
(25:23):
of the brokegecount brokerage account.
Speaker 1 (25:25):
That is correct, Joseph, yep.
Speaker 2 (25:27):
You can determine if it's a is it one share,
is it one hundred chairs, whatever that is, that's completely
up to you.
Speaker 1 (25:33):
You work with your you.
Speaker 2 (25:35):
Know, if it's with Schwab, coordinate with Swab or you know,
with our front we open the donor advice fund for
our clients and we move those funds in there so
that how much you put in there, that's all up
to you. And all you want to try to do
is say, okay, if I want to make a you know,
like in this case, I say that I talk about
twenty thousand dollars. If I want to have it be
twenty thousand dollars, and I do have a lot of
(25:59):
stock in a approach count that has highly appreciated, then
how do I what's the amount of number of shares
that I need to move over at the price to
get that twenty thousand dollars. Now, in general, what I
probably recommend a risk perspective is using In general, I
recommend using individual shares if possible, just because you know
(26:20):
there is the potential they could go higher, but they
could go lower as well. Whereas of a diversified holding
like the SP five hundred. You know, holding that long
term is probably going to work in your favor. So
if you have if I had to pick, I'd be
looking at a stock that has highly appreciated, maybe very quickly,
and maybe a little bit more risk of volatility with
(26:41):
that stock that you want to kind of grab those
gains why you can. So that's the way I would
approach it. But yep, that is that is correct. Let's
move on to some other topics that I want you
to be aware of. One is that if you are
fifty and older and you contribute to a full and
K plan under what's called the Secure Act two point zero,
(27:03):
which is legislation packed it passed a few years ago,
that starting in j Ra first, twenty twenty six, if
you're fifty and older, you're doing a ketchup amount and
your high income earner and that based on the ARISA
and IRS requirement that's one hundred and forty five thousand
dollars of a just a gross income that if you're
(27:23):
in that category starting on Jerry first, your ketchup amounts
are going to have to be raw contributions, right, so
in the past they could be all pre tax and
you know, again, if you're fifteen older and you're below
that amount, then you're fine. You can still make pre
tax contribution amounts. But now if you're high income earner,
(27:45):
that's going to have to change.
Speaker 1 (27:47):
And that's this is you know a couple of things here.
Speaker 2 (27:50):
One is you got to make sure your plan has
that right because plans are not necessarily required to allow
you to do a ketchup amount, and you're not going
to be able to do a catchup amount if you're
in that category if they don't have a WROTH component.
Speaker 1 (28:05):
So again, this is something.
Speaker 2 (28:07):
That if you're a small business owner, you might want
to make sure your plan is updated.
Speaker 1 (28:11):
We're working with all of our.
Speaker 2 (28:12):
Plans to make sure that they have the WROTH option
and the plan allows for a catchup. You also have
to coordinate with your payroll provider because they're going to
need to be aware that after your max out on
your contribution amount for just an individual, that you're now
going forward, your catchum amount is going to be going
(28:35):
into the WROTH right, So you've got to be aware
of that as we go forward here and for twenty
twenty six, the amount is eight thousand dollars is the
catch up amount. Now, also, as we talked about, to
make it even more confusing, there is a window between
age sixty and sixty three where that catch up amount
(28:57):
increases to eleven two hundred fIF fifty dollars, right, so
you know you might want to take advantage of that
as well. And that amount also would have to go
into a ROTH if you are if you're a high incremmer,
So just make sure that you know your plan has
that option.
Speaker 1 (29:19):
It's important. Also they've come out with the new contribution.
Speaker 2 (29:22):
Amounts for twenty twenty six and for pur and k's
four three b's for every individual that you can now
put in twenty four thousand and five hundred. So the
total amount between the employee amount and the catchup amount
is going to be thirty two thousand, five hundred. And
then also starting in twenty twenty six, the IRA contributions
(29:47):
for ross and for true starw arrays has increased from
seven thousand dollars to seventy five hundred dollars, so it's
a five hundred dollars increase. And also the catchup amount
has increase from one thousand dollars. This is for iras
or for a ROSS if you're fifty and older to
eleven hundred dollars. So again all those amounts have increased.
Speaker 1 (30:09):
We're going to be putting out a blog, we'll have
it on.
Speaker 2 (30:11):
Our website that outlines all these but just things to
be aware of as you're doing planning for twenty twenty six.
And again the other element is making sure that you know,
if you're a business owner, that your plan has that
and also that you have that your payroll is set
up to do that as well. These are all important items.
Speaker 1 (30:33):
One of the things I want to talk about.
Speaker 2 (30:34):
You hear this quite often is medicaid planning, right. So
medicaid planning is simply where you do some estate planning
to try to remove assets from your state so that
if you need an assistic care then you could get
that through medicaid through the state. Now, you know, one
of the things I always tell folks is you know,
(30:54):
this is not always a black and white decision.
Speaker 1 (30:57):
Right.
Speaker 2 (30:58):
There's certain situations where it works well, and then there's
other situations where it may not work. So let me
just explain where it doesn't work well. If you have
pensions and you have good social security, so you have
sizeable amount of income from that. And then also if
you add on top of that you have you and
your spouse have iras, and that's the majority of your assets.
(31:19):
You're probably not a great candidate for Medicaid planning because
you know, most more likely not even though costs have
gone up for assistic care and nursing homes, you know
you're probably going to cover most of those costs with
your pensions, with your social security, and the state assumes
a certain amount coming out of traditional arrays.
Speaker 1 (31:40):
Now raw THI arrays are not protected.
Speaker 2 (31:42):
They are basically assumed as an asset that can be
spent down, just like a brokerage account. But now rawthirays
cannot be put into a Medicaid trust, whereas a broken
count could be put into a Medicaid trust. So again,
if you're in the category of pensions, you know, decent
amount of soci security and large I rays not a
great candidate.
Speaker 1 (32:02):
You're not a great candidate for Medicaid.
Speaker 2 (32:04):
But where you know the best option is UH if
you don't have pensions, if you don't have that much
in the way of I rays, but you have a
very large brokerage account UH, or you know a trust
that you know Uh, basically could be spent down. Then
that situation you are a better candidate for medicaid planning.
(32:27):
And really what you're gonna do is you're gonna move
the assets, whether it's you know, homes into those trusts.
You're going to move the assets, the Brokene accounts into
that trust. Now, the thing you have to appreciate there's
a number of kind of restrictions, which is not surprising.
One is there's a five year look back, so you know,
basically it's phased out over five years on the look
(32:48):
back for assets that are removed outside the estate.
Speaker 1 (32:51):
So in that regard, you know, you.
Speaker 2 (32:53):
Want to be aware of, hey, if I'm going to
move assets over uh, you know, if I if it's
safe for a parent, and that parent's youre not doing well,
Like they're not going to be with us six months
from now, it's too late to do medicaid planning, right,
This has to be something you want to be proactive with.
Speaker 1 (33:10):
Now.
Speaker 2 (33:11):
A couple other things to appreciate is which is you're
really giving up control over those assets and in large
part you're limiting your ability to really access those assets at.
Speaker 1 (33:21):
Least the principle of them. So you can move it
into a trust.
Speaker 2 (33:24):
You can get the income, and you can get some
other needs for health and different other expenses that that
trust can provide. But let's say you know, you have
a million dollar trust or two million dollars and you
want to access a half million dollars of it.
Speaker 1 (33:38):
You can't.
Speaker 2 (33:38):
You can't do that right that Now that is not
your asset anymore. It's removed outside your state. So very
important that you realize that you're giving these other people control.
Speaker 1 (33:51):
And usually you know quite often it's a son or
a daughter.
Speaker 2 (33:54):
So you know, again you've got to have that trust
in your kids that they're going to do the right
thing because they're going to.
Speaker 1 (33:59):
Be the trustees. They're going to have control over it.
Speaker 2 (34:01):
Now you know again, now the nine percent of the
time when you're doing this, you do have confidence. You're
going to know that they're going to be doing the
right thing. But you have to be aware of that.
And the other thing to appreciate is, you know, sometimes
when you do Medicaid planning, you know you may be
getting yourself into limited what you can get into as
far as different homes. Right, not all system care or
(34:23):
nursing homes will take medicaid and certainly that more high
end ones may limit that their businesses. Now, there are
some ways to do that, but you have to at
least be aware of, you know, how you could be
limiting you know what type of care you get into.
So all I just tell folks is before they just
go ahead and jump in and start doing medicaid planning,
that again, they.
Speaker 1 (34:44):
Really work with the fiduciary. They work with a.
Speaker 2 (34:46):
Good estate planning firm to say, hey, is this the
right way to do this, or perhaps is there a
better approach something very you know you have to be
aware of in that regard. Well, folks, we're gonna go
commercial break, but come back and join us as we
take your questions. You'll listen to Let's Talk Money, brought
to you by a Bouchet Finance Group. Well, we help
our clients prioritize their health while we manage their wealth
(35:09):
for life.
Speaker 1 (35:09):
Welcome back, folks. For those just joining us, my name
is Martin Shields.
Speaker 2 (35:12):
I'm the chief Wealth Advisor at Bouchet Finance Group and
I'm your host today for Let's Talk Money again. If
you have any questions, feel free to give me a
call or send me an email you can reach me
at eight hundred eight two five five nine four nine.
That's eight hundred eight two five five nine four nine,
or you can send me an email and ask Bouchet
(35:33):
at bouchet dot com. That's ask Bouchet at bouchet dot com.
Let me let's go into another different topic that I
think it's important for folks to know, and that is
if you are going to retire early, and I'm going
to say early in your fifties, let's just say before
age fifty nine and a half, there's two main things
(35:55):
you need to be aware of. One is healthcare expenses.
That is probably one of the tougher elements from an
expense perspective when people look at things from a budgeting
perspective as to how to handle. And I always tell
folks that when you retire, you're not going to be,
you know, having to pay FIKA payroll taxes. You're not
going to have maybe some commuting expenses, or maybe you
(36:19):
won't be eating out for lunch quite as much. And
you know, these days, it's not even about wardrobe. I
think most people their wardrobe it's just pretty standard. It's
not like they're using where that much. The source dress clothes.
But you know, maybe there isn't different expenses than that,
and you won't be saving four retirement, so you have
some reduction in regards to that for your cash flow.
(36:39):
But all things considered, as far as general expenses, it's
actually going to go up. Right when you actually retire,
you're actually I always say it between ten to twenty
percent more because I always say, you think about it,
you've been working forty to fifty hours a week. Now
you're not right, so you got extra time. So in
that regard, you basically want to make sure your budget
(37:01):
higher than what you're spending now. And I think most people,
let's always say too, they don't want to Most people
don't want to go to retirement and live a small life, right,
I mean, especially if you're going to go to retirement early,
Like who wants to retire at fifty five when you
can be doing that for forty years you have your
health and live a smaller life than you are when
you're working. You know, It's just most people are not
(37:23):
inclined to want to do that. So I always tell them,
from a budget perspective, make sure you're adding something back
in there now. Again, from a healthcare perspective, you've got
to be assuming that you know you're going to probably
add about it could be about one thousand dollars.
Speaker 1 (37:36):
Per a month.
Speaker 2 (37:38):
Additional, it depends on what you're getting through your employer
and whether or not you can, you know, have go
out of your spouse's it's just one of you retiring,
but if you're both retiring, you got to assume it's
going to be a lot higher.
Speaker 1 (37:52):
And the other thing to remember is cash flow.
Speaker 2 (37:54):
And you know, just trying to take that cash flow
it's from a IRA when you're not fifty nine and
a half. Yeah, let's hear so when I was talking
about cash flow, So what you have to be aware
of is that from a cash flow perspective, you know,
if you have a broke account, then you can go
ahead and access that for a cash flow. But for
(38:14):
most people, they have an IRA and you can't access
those irays, in particular pretext irays before age fifteen nine
and a half. Now, if you have wroth irays, you've
contried to them, to them all along that one of
the great things about a roth IRA you can always
access the principle on that right, So that could be
(38:35):
a sizeable amount of money, so that you've got to
be aware of that. If you want to, you can
access your wroth, although you know I would tell you
that in general, I always like to see those wroths grow,
you know, and use them at the end of the
latter part of your retirement versus the early part of
your retirement. But there's something called the seventy two T distribution,
and all that is is that it requires you to
(38:57):
take sizeable equal payments out of your IRA for either
five years or true until you turn fifty nine and
a half, whichever is longer. Right, So let's say you
start it at age fifty seven, Well, five years from
then you're gonna be sixty three, right, you have to
do it until you're age sixty three. If you start
it at age fifty two, now it's not five years,
(39:18):
it's till your term fifty nine a half, So it's
seven and a half years that you need to do it.
So you just need to be aware of that that
you need to continue to do that for either five
years or for two term fifteen nine and a half,
whichever is longer. Now, for most people that's not an
issue because they're gonna need cash flow, right, so it's
it's not a problem. And the nice thing with the
(39:41):
seventy two T is, and this is what we do
for a lot of our clients is let's say you know,
you have a sizeable amount in your IRA, but you
don't need there's just a certain amount that you need.
You can actually split your IRA into two, right, you
can split it into two use only one of those
iras for this thirty two T the other one just
(40:01):
let it continue to grow. And that's a great way
to do it if you don't maybe even know how
much you want to take. That way, you're not committing
to that higher amount into your fifty nine and a
half for five years. And so for you know, we
have some clients where we have they have three iras.
They started with one seventy two t uh, and then
(40:22):
they went into and they needed more cash flow, so
they started a second IRA with a seventy two T
and they still have their third IRA, which is money
that they're just letting it grow over time. So you know,
there's ways to set this up that can be advantageous
and provide the cash flow that you need.
Speaker 1 (40:41):
So you know, I always tell uh, you know.
Speaker 2 (40:44):
People who are retiring young, and you know that's an
arbitrary term, like what does retire young mean? But I
think for most people, you know, if you're retiring before
age sixty two to sixty five these days, with longevity, right,
I mean, the fact of the matter is that if you
and your spouse are are indecent health and you're sixty five,
there is somewhere around that eighty percent chance that one
(41:06):
or both of you is going to live to you
be in your mid nineties. Now, again, it depends on
your health, so that that's you know, an unknown but
and it's usually you know, the woman, Uh, they have
longevity over us men.
Speaker 1 (41:18):
So but that is something you have to be aware of.
Speaker 2 (41:21):
When we do planning for our clients, we always bring
it out to age ninety five, so it's it's very
important in that regard. But these are things that from
a planning perspective, you need to be aware of and
just making sure that you have this stuff covered because
you know, you don't want to get into retirement and
then decide, you know what, we're not in a spot
to do this. That's where it becomes problematic. Let's say again, folks,
(41:45):
if you have any questions. You can reach me at
eight hundred eight two five five nine four nine. Again
that's eight hundred eight two five five nine four nine,
or you can email me at Askbouchet at bouchet dot com.
That's asked Bouchet at Bouchet dot com. I want to
actually bring to everyone's attention. I got an email from
(42:07):
one of our listeners that said, Hi, I believe the
thousand dollars chair of reduction for non itemizers doesn't start
to twenty twenty six. And you know, from what I
can tell, I think this emailer is correct. So I
said twenty twenty five. So this is for individuals making
contributions who are non itemizers, that it's twenty twenty six
(42:29):
for that thousand dollars to begin, not twenty twenty five.
So just note that, as always I always say, I
tell all of our colleagues it could be we could
there's a chance we could be wrong if we are
just a minute and say, hey, we're willing to learn.
So thanks for it's MP that is the individual's name
that emailed in for the insight. Let's move on to
(42:52):
a different topic. And this is one of the things
I think it's really important. And it's talking about finances
with couples, right, And we know this how important it
is to make sure from a financial perspective that you're
in line with your spouse or your partner. And so
(43:12):
you know, it's just so important that you kind of
have these conversations. I always now I have, you know,
kids who are moving into the twenties, and you know,
I always tell them one, you know, we try to
educate them from themselves what it means to be you know,
smart financially, you know, from an emotional perspective, from just
a savings and spending perspective, but also you know, if
(43:32):
they're going to have relationship, and it's just so important
to have that conversation one sooner round than later.
Speaker 1 (43:38):
Right.
Speaker 2 (43:39):
It's it's so important, but it's also important to continue
to have it. You know, is being open and honest
and appreciating that it's not easy.
Speaker 1 (43:49):
Right.
Speaker 2 (43:51):
I was just reading this quote here from another advisor.
Money is more than just money. Money is a manifestation
of other feelings. Money represent may represent your values. It
can represent your culture growing up. It can represent freedom
and your desire for independence. It can represent shame if
your grants over money and I think it's a great statement, right,
(44:12):
that is a very accurate statement that you know, we.
Speaker 1 (44:15):
Need to be aware of.
Speaker 2 (44:16):
And I think the only things I'm trying to really
kind of put into your mind here is just being
open and honest with yourself first, right, that's if you
want to be successful with your spouse or your partner
from a financial perspective, just you know, try to admit
and being open of some of our own limitations when
it comes to financial things. I know, my wife and
I you know, that's our success has been, you know,
(44:38):
being aware of each other's strengths and weaknesses in that
regard and being open with each other. Right, That's that's important.
So I would encourage you to have those conversations in
a healthy manner in the right setting to be successful. Well, folks,
it's been a great hour as always to be here
with you. I always appreciate it. Hopefully you have as well.
You were listening to Let's Talk Money brought to you
(44:59):
by Cruchet Finage Group. While we help our clients prioritize
their health while we manage their wealth for life, Folks,
take care of yourself and take care of each other.
Good morning, folks. My name is Martin Shields.
Speaker 2 (00:03):
I'm the chief wealth a Visor at Bouchet for Edge Group,
and i'm your host today let's talk money. As always,
it's great to be here with you to answer any
questions you may have regarding your financial planning or investment
management concerns, and as always, I encourage you to call
in with those questions. You can reach me at eight
hundred eight two five five nine four nine. Again that's
(00:25):
eight hundred eight two five five nine four nine. Or
if you're too shy to call in, which I hope
you're not. But if you're too shy, you can email
me at ask Bouchet at Bouchet dot com. That is
ask Bouchet at Bouchet dot com and Bouchet is spelled
b O U c h e y dot com. So,
(00:48):
as I always say, there's no dumb or silly question
except for the one you don't ask, and you may
be doing your fellow listener a favor bye asking a
question that they have as well. Right, that quite often happened,
So give me a call or shooting me an email
and I can give you some guidance. Again, I hope
you're doing well.
Speaker 1 (01:07):
On this.
Speaker 2 (01:08):
Let's see here, I'm looking out the window. I'm going
to call this a good Sunday morning. Right It's not
raining right now. It looks like it's rain overnight, but
not raining right now. And I think we're gonna be
getting into the forties, so certainly a good day to
get out there and do some stuff. Yesterday, we have
a new puppy in our house. I don't know if
I'd said that, but we got a new puppy this summer.
Speaker 1 (01:31):
In March. We had to put our lab down. His name.
Speaker 2 (01:34):
Her name was Charlie, and we had her for eleven years,
and so that was so tough, as any of your
dog or pet owners know, it's so tough.
Speaker 1 (01:44):
We loved her.
Speaker 2 (01:45):
That Charlie grew up with our kids, and so to
lose her was heartbreaking. But my wife in particular is
a dog person, and so we got a it's called
a bernardoodle. It was a Bernese mountain dog and a poodle.
And I'm telling you his name is Ali. He's just
a really cute dog, really much different in many ways
(02:06):
than our lab. But we went out walking, myself and
my daughter went out walking with him in Kyriss Park
in Saratoga, and I will tell you, you know, we've been
in Saratoga Greenfield Center for thirteen years now, and anytime
I walk in Congress Park, it is it's such a
great park.
Speaker 1 (02:25):
I mean, it is an amazing park. And you think
about that.
Speaker 2 (02:28):
I always say this when you see these parks and
any ability to put land aside for any type of
activity like this, like what foresight people had to do that.
And if you have the opportunity of haven't ever been there,
to go there, I would highly recommend it.
Speaker 1 (02:43):
It's just a really great little park to do a
walk with. And you know, we're fortunate in this.
Speaker 2 (02:50):
I mean, i'd say in upstate New York for all
the parks we have, the county parks and state parks.
You know, we take it for granted, but we were
really blessed in that regard. So hopefully you can get
out there to enjoy this day and do something that
motivates you and gives you.
Speaker 1 (03:06):
Some good perspective.
Speaker 2 (03:07):
It always, you know, as I've gotten older, just the
concept and going out for a walk I appreciate so
much more. And that's I think one of the great
things about dogs, right and animals is they get you
out walking, and you know, it's a great thing for
our minds and physically it's a great thing. So hopefully
get out there and do something enjoyable today. But we're
(03:29):
not just here to talk about physical exercise our mental exercise,
although it's important, but we're going to be here to
talk about finances and investments.
Speaker 1 (03:38):
Not a great week in the markets.
Speaker 2 (03:40):
We've seen markets come off their highs now, the Dow Index,
it did hit a high this week, but it did
come off that high. And the QQQ, which is still
up nineteen percent, that's one of the major holdings. It
was down slightly this week. And the SPE hundred, which
(04:01):
is another the broad based market is another one of
our major holdings. That's up almost fifteen percent for the year,
but it's down. It was down almost a percent for
the week. So not a great week in the markets.
But again you're going to have that you know, standard
intra year volatility, folks, standard in average intra year volatility
(04:23):
is down fourteen percent, So relatively speaking, we haven't had
a we well.
Speaker 1 (04:29):
I guess we did.
Speaker 2 (04:29):
We did had a twenty percent pullback earlier this year,
but that's that's just slightly above average, right, But in
many ways after that, we've.
Speaker 1 (04:37):
Had actually a very low volatility.
Speaker 2 (04:40):
We have not had increased volatility for the last six
months almost it's been actually fairly low volatility. So again
just always reminding yourself, you know, how am I doing
as far as how am I allocated? You know, am
I allocated properly for where I am at I am
in my life? And as we always tell clients, you know,
(05:00):
when the market's near all time highs, if for whatever
reason you need to raise cash, if you get in
near retirement, these different circumstances, it's not a bad time
to become a little more conservative in that regard. But
if you're a long term investor, you know, you hear
this concerns over bubbles, you know, and I wrote about
that in a blog on my my blog Piece of
(05:21):
Mind Economics, And you know, I don't think right now
we're overly concerned about it. Doesn't mean it can't happen,
but it's more I think, you know, we talk about bubble,
there's there's a few things that need to be in place.
One of the one of the things that is not
in place for a bubble right now is leverage. There's
not an awful lot of leverage out there, relatively speaking,
(05:44):
in companies using leverage.
Speaker 1 (05:46):
Most of these companies.
Speaker 2 (05:47):
That have been especially investing in AI, they have amazing
balance sheets, right, they have so much cash on their
balance sheets. So really not a situation where you know
they've been overly leveraged. Probably if there's one area, there's
two areas where you talk about a bubble wheel, like
a little bit more concerning one. It's just broadly speaking,
the valuation of stocks is more on the higher side
(06:09):
than the lower side. Uh, And certainly that that valuation
really is more in the tech stocks, right, the AI stocks.
But you know, consistently they've been able to grow their earnings.
That's that's the thing too, which is there is a
reason why, uh they have those higher valuations because they've
been able to grow those earnings. But what you have
(06:30):
to appreciate is, uh, if this were to change quickly,
and you know, the money that they're investing in data
centers and you know what they think can come out
of AI, if that were to change quickly, you know
that can the value valuations can reverse course very quickly.
So it's just always an important to remember that. But
I do feel like we're still in a stage where, uh,
(06:54):
you know they're gonna be investing more and more into AI.
I mean, I know our firm is using AI different
ways to help our team be more productive, and I
think that's true across most industries. So if you had
to ask me, and this is why I mentioned in
my blog, you know, I do think the markets have
a ways to go before we're quote unquote in any
(07:16):
bubble territory.
Speaker 1 (07:18):
But it's something to be aware of.
Speaker 2 (07:19):
And you know, we always talk about the importance of rebalancing.
So all that means is, you know, when you're doing
well in your winners, don't be afraid to rebalance a
little bit. Now it's a lot easier to rebalance in
a tax deferred account a WROTH, or in your phone
K or in IRA because there's.
Speaker 1 (07:35):
No tax impact.
Speaker 2 (07:37):
You got to be aware that if you're going to
rebalance in your taxic accounts that you could be paying
taxes on it. But you know, again, for many folks
it might be worth doing that. You always make the
analogy it's like trimming your trees or bushes, right, It
doesn't mean that you're going to cut down.
Speaker 1 (07:51):
Your bushes or your tree but you know, you.
Speaker 2 (07:54):
Want to trim it and make sure that your overall
risk is properly allocated. So just these are smart, just
you know, common sensical type of ways to manage risk.
And that's what it comes down to many ways. It's
just important to manage risk. What's going on to a
different topic that I think.
Speaker 1 (08:14):
It's important to remember as.
Speaker 2 (08:15):
We kind of approach the end of the year from
a tax perspective and charitable giving. But again, if you
have any questions, feel free to give me a call.
You can reach me at one A hundred eight two
five five nine four nine. Again that's eight hundred eight
two five five nine four nine, or you can em
me email me at ask Bouchet at Bouchet dot com.
(08:40):
So whatever question you may have, let's talk a little
bit about end of year charitable giving. So you know,
many of our clients have very philanthropic Uh. They have
a lot of causes they want to support, and as
you know, our firm is also very much involved.
Speaker 1 (08:55):
With the community. Uh.
Speaker 2 (08:57):
You know, that's the one thing I always say with Steve,
he rated an environment of being involved with the community
and charitable giving, and so all of our colleagues really
do that in different ways. As you may have seen.
You know, we have three young colleagues. They did the
men wear pink for breast cancer. I don't know the
exact number, but they I think they came in fifth
(09:19):
of all the teams raising money, which is really impressive.
And I think the Kapal region broke a record for
half a million dollars raised for breast cancer this year.
Speaker 1 (09:30):
So fantastic stuff.
Speaker 2 (09:32):
But if you have trouble interest, a couple of things
you should be aware of as we're going into the
end of the year about ways to give in a
very smart kind of tax efficient manner, right, because you
know you want to give, but you want to try
to do it in the most tax efficient man impossible. Now,
one of the things that have changed is for twenty
twenty five under the old Triple b A, that's what
(09:52):
I call the one big, big beautiful bill, the old
Triple b A that this year for twenty twenty five,
starting up the even if you don't itemize, right, remember
this whole thing, the itemize and the salt deductions and everything.
Many people were just caught up with standard deductions even
if you don't itemize that for single filers, you can
(10:13):
deduct now up to one thousand dollars in twenty twenty
five for your charitable donations, and if you're married filing jointly,
you can deduct up to two thousand dollars. Again, even
if you just standard deduction, even if you don't itemize,
you still have those charitable deduction amounts from a tax perspective.
Speaker 1 (10:31):
So that's nice.
Speaker 2 (10:33):
But one of the things that is also the case
that is now because the salt limits have been increased
to forty thousand dollars from ten thousand dollars, more and
more people might be able to itemize. And what's important
to know, especially for you high income earners, that if
you are going to start itemizing because of the higher
deduction amount and you are charitably inclined you give to charities,
(10:57):
that starting in twenty twenty six, not this year, but
next year, there's going to be a floor or threshold
before you can start deducting, and it's going to be
point five percent of your adjusted gross income. So let's
go through a quick example here. So what that means
is if you make four hundred thousand dollars or more annually,
let's say four hunde thousand dollars.
Speaker 1 (11:17):
Right, let's just use that number.
Speaker 2 (11:19):
That that floor is going to kick in at two
thousand dollars point zero point zero five percent of that sorry,
point five percent of that of your grow just gross income.
So that's gonna be two thousand dollars. Now that starting
in twenty twenty six. What that means is you're not
going to get any deductions on your charitable giving until
(11:42):
you give more than two thousand dollars, which for many
people it's not that big of a deal, but we
have to think about this.
Speaker 1 (11:48):
Let's just say you gave two thousand dollars.
Speaker 2 (11:50):
Annually and your incomes four hundre thousand dollars. So every
year you give two thousand dollars, and you know you
would normally be able to write that off, but now
with this new floor can't. So one of the strategies
that we're recommending to clients is if you're kind of
in this bucket, so again more of a high income arder,
that you're going to itemize that one of the things
(12:11):
you can do is take those contributions that you're going
to make in future years.
Speaker 1 (12:15):
So let's say you're gonna make.
Speaker 2 (12:16):
Two thousand dollars. Let's combine those into let's do ten years.
So instead of making two thousand dollars contribution every year
for ten years, what you're gonna do is you're going
to make a twenty thousand dollars donation this year. Take
the full amount. Right, You're gonna take the full amount
this year, And what we're gonna recommend is that you
(12:38):
put it into a donor advice fund. Right, we've talked
about donor advised funds. You can have them through Vanguard
or Schwab and Fidelity and basically it allows you to
contribute to a make it a charitable donation into this fund. Now,
from that fund, you can have it invested into the market,
and annually you can make donations to qualify five h
(12:58):
one C three charity. So it's a great way to
make a donation even if you maybe don't know exactly
where you want to put your money, Well, you can
make it into the donor advice fund, let it grow
and make donations whenever you want. Now, the nice thing
with it is you don't have to make a donation, right,
you could just let it grow until you're ready to
make a donation. But you get the charitable deduction now,
(13:21):
and even a better way to do this, even a
more ideal way, is to contribute highly appreciated stock. So
now think about this. Let's say you have a position
that has eighty percent gain. So like in this case,
we're talking about twenty thousand dollars. You have a position
that you bought for two thousand dollars and now it's
worth twenty thousand. So that's eighteen thousand dollars of cap
(13:42):
of gains that you would have if you sold that position.
But instead you transfer that those twenty thousand dollars of
that stock into the donor advice fund. Now, guess what,
that gain totally wiped away. You pay no taxes on
that gain, and then you can take that twenty thousand
dollars deduction as well, and it goes into the don't
advise fund. You don't need to charity right away. So
(14:04):
really that is a win win win approach, right. You
get to take the highly appreciated stock, you get to
move it to the charity without paying any gains on it,
you get the deduction of twenty thousand dollars. And oh,
by the way, if you made those two thousand dollars
contributions donations every year, and you're in that high income
(14:25):
earner bucket, you would be able to make that deduction
because of the floor ofero point five percent. So again,
this is a great strategy for those that are charitable inclined,
that are going to be itemizing and more in the
high income earner brackets. Now, let's say say you're not
a high income earn maybe you're retired. The other way
(14:46):
to make it's a great way to make charitable contributions
is a QCD, a qualified charitable donation.
Speaker 1 (14:54):
You basically use your IRA to do it.
Speaker 2 (14:56):
Right, So in most cases, if you have an IrH
pre tax dollars, you're going to pay taxes on the distribution, right,
and that's ordinary income taxes on that distribution. Now with
the QCD, you don't pay any taxes on it. It
goes right to the charity without you paint any taxes
on it. So another great way to make a donation
(15:18):
to a charity that's very tax efficient. And you can
start doing this at age seventy and a half. That's
that's when you can start making qcds from your IRA.
Speaker 1 (15:28):
And when you turn seventy three.
Speaker 2 (15:30):
Now when you have rm DS requirement of distributions, these
qcds will qualify as your rm D, so it's again
a win win. You get to make that donation to
the charity, it meets your RMD for at least part
of it, depending on how much your RMD is versus
your QCD, and you don't pay any taxes on that
(15:53):
distribution to the charity. So it is a great way
to be charitably inclined. And then to me your arm
D in a very tax efficient manner. So would highly
recommend looking and that as well.
Speaker 1 (16:07):
So you know.
Speaker 2 (16:08):
The thing is too is these are all this stuff
together gets to be very complex. And again this is
why we always recommend that you know, over time, as
your financial situation gets more complex, you probably want to
be working with an investment fiduciary, a wealth management fiduciary.
Speaker 1 (16:24):
It's just easy.
Speaker 2 (16:25):
And then we see this all the time with prospective
clients coming to us where they're making decisions that you know,
if they come to us, we probably would have said
that's probably not the best decision and we could show
them why. And that's where I think we do a
great job as illustrating to folks in kind of layman's terms,
what you should be doing and why you should be
(16:45):
doing it, and that's important. It's, as I've said all before,
long before, we're big into educating. Our best client is
an educated investor, an educated a person from a financial
planning perspective, and so we try to educate our clients
as much. And you know, one of the big areas
that we've added is the tax planning group. We've got
(17:06):
such great individuals with CPAs or they are road agents
and they just provide awesome tax planning advice that is
really invaluable. And you know, people will quite often ask
me what's the what's the reason to work with our
firm or in investment fiduciary? And I always break it
down into three categories. So this is the value. I
(17:26):
always talk about value, right, because you know, fees and
cost are one thing, but value is really why you
do anything.
Speaker 1 (17:34):
That's when you really think about it. It's cost is.
Speaker 2 (17:36):
Important, but what's more important is the value get something.
I don't want to pay one dollar for something if
I don't get at least one dollar of value, right,
So you're always thinking about, Okay, what are the costs,
but really what are the value because in many things
in life, you can get things in a discount of price,
but is is you getting less value as well? In
most cases the answer is yes. So the value that
(17:58):
we offer to our alliance is threefold. First and foremost
is usually the investment side, right, so as we take
the emotion out of investing, and that's a big deal.
Speaker 1 (18:10):
Right. So, we have many.
Speaker 2 (18:11):
Clients that used to manage their own portfolio and just
the stress of reading the headlines to trying to make
decisions as to what to do and then make a
decision then second guess yourself.
Speaker 1 (18:23):
That adds up that stress.
Speaker 2 (18:25):
We always talk about the importance as you get older
or try to minimize stress. That stress adds up and
it can be problematic. The other thing is, you know,
many times people get it wrong, right, They act more
on their emotions and they sell when they should be buying.
And I think our firm does a great job of
really sticking to our investment plan and following through on that.
And we've done a great job im with the firm
(18:46):
for thirteen years. From a return perspective, we've done a
great job of providing good returns for our clients. They're
very happy with our returns. The next piece is the
planning piece, and as I've mentioned before, we're our client's
personal CFO, so if it's finance related, you probably want
to have a conversation with us, you know. I tell
(19:07):
you that's probably one of the parts I enjoy most
with working with clients. It's just that, you know, you
get into this complexity and you start going through and
you explain to them what the plan is, what the
strategy is, how it's going to be implemented, and then
afterwards they come out and they're like, wow, this is great,
this huge amount of stress off their shoulders. And I
tell you, one of my favorite parts of my job
(19:28):
is telling people to spend more money, and most for
our clients. The reason there are clients is because they've
been great at saving money. But many of them, you know,
they just still spend enough money, right and you know
talk about that, Oh yeah, I think you should be
taking first class instead of that, or you should be
staying at, you know, the high end hotel instead of
the the lower end Marriotte and that brought to that
(19:50):
guidance to me.
Speaker 1 (19:51):
I always appreciate. But there's it's real.
Speaker 2 (19:53):
It's really important because I always say, if you don't
spend those dollars, somebody else will, right, There's always somebody
when it's a son or daughter, niece or nephew, grandchild, charity.
You know, you got you don't want to be foolish
with spending those dollars, but you don't want to be
too conservative either, because somebody else will spend those dollars.
The third thing, and I'm going to tell you this
(20:14):
is probably one of the most important elements, is our
client service team.
Speaker 1 (20:17):
We talked about this.
Speaker 2 (20:18):
Our client service team are these amazing individuals. They're so
dedicated to working with our clients. Angelo Sesney, who's our
director of client services the firm for twenty seven years.
She's just a wealth of knowledge, as are all of
our other individuals. Dam Jamie Jerky really now kind of
heads up our client service team. I just can't say
enough about all of them and everything they do for
(20:41):
our clients. And you know, it's like one of those things,
which is it's amazing when you have to deal with
any of these big financi custodians and you're calling in and you.
Speaker 1 (20:51):
Know, you're one eight hundred number and you're on hold,
and you're trying to get guidance.
Speaker 2 (20:55):
And whereas you know, our clients just call into our
client service team, there's always somebody picking up the phone,
a live person getting into the person they needed to
talk with. They're always there to facilitate anything they need.
With Charles Schwab, the other thing I always described, and
this is really where a whole team comes into play,
but our client service team is particularly good with this
(21:15):
is the way to view that. You know, with us,
there's Charles schwabers at Cristodian, who's just simply a partner.
We don't pay them, they don't pay us, and then
there's the client and we're in between those two, right,
So whenever we see anything happening with our client's accounts,
we're right away talking to both Schwab and to the
client to say, hey did you change your email address?
Because I see it changed here. And that element of
(21:38):
protecting our clients their data, their assets, I'll tell you,
in this day and age and cybersecurity issues, it's so important.
It really, it's always important, but it's become even that
much important more important when we have issues where you know,
I'm telling you it's not just older people that get
caught up in those cybersecurity issues. Use it's younger folks, executives,
(22:02):
small business owners.
Speaker 1 (22:04):
We see it all the time.
Speaker 2 (22:06):
So you know, this is where I think we played
an invaluable role to protect our clients data and assets.
And you know our team, we have John Malay and
Dave Clark. They John is our CEO, Dave Clark is
our chief compliance officer.
Speaker 1 (22:22):
You know, we meet weekly.
Speaker 2 (22:24):
Weekly, We meet to talk about how do we protect
our clients from a uh cybersecurity and scam issue, fraud
and anything that you know, Dave and John are seeing
through discussions with Charles Schwaber Custodian and also just are
our colleagues making sure that they always do the right
things because actually they say that really the biggest issue
(22:48):
with fraud and cybersecurity is not the technology. It's people
making mistakes, right, It's the human error. And boy, I
tell you, those scammers are good these days, and we
see it coming through even with us, you know, to
emails and different things, and you know it's only going
to get better, right, I mean that's with AI, It's
only to be better. So you've got to be better
(23:10):
prepared than ever before. We do on our website at
bouchet dot com. There is a webinar that John and
Dave Clark did which I would highly encourage you to watch.
It's on our insights page. And you know that breaks
out just some really good things you need to be
aware of from a compliance perspective. And this is I'm
telling you, folks, you know this is something you need
(23:31):
to have a conversation with your your kids about. I
always talk to my kids. You know, your spouse, your parents,
even siblings. Make sure that you're on the same page,
because if you're not, you have a problem. It is
it's not always easy to rectify it right, and if
you've been through that, you know that it's it's not
always easy to take that problem and turn it around.
Speaker 1 (23:54):
It could be very challenging.
Speaker 2 (23:55):
So the best thing to do is be out in
front of it to try to prevent it and educate yourself.
But also, again, as I mentioned, that's where our team
is just so invaluable of us helping with our clients
and making sure that they're well protected. Well, folks, we're
gonna go a commercial break, but come back and join
us as we take your questions. You'll listen to Let's
(24:15):
talk money brought to you by Bruchet Finance Group. Well,
we help our clients prioritize their health while we manage
their wealth for life. Come back and join us, folks.
Welcome back, folks. For those who just join us, my
name is Martin Shields. I'm the chief Wealth Advisor at
Bruchet Finance Group and as always, it's great to be
here with you too. Answer your questions whatever it may be.
(24:38):
Give me a call or send me an email and
we can chat. You can reach me at eight hundred
eight two five five nine four nine. Again that's eight
hundred eight two five five nine four nine, or you
can email me at ask Bouchet at Bouchet dot com
and Bouchet spelled b O U c h ey dot com.
(25:01):
So whatever question you may have, we when we go
to the email, we have one from Joseph, says Joseph
this regarding donor advice funds. Regarding this subject, you can
choose the amount of the appreciated investment stock in this
case as you want to and then put it into
the donor advice fund. Right example, someone can just put
half their stock position in and leave the other half
(25:23):
of the brokegecount brokerage account.
Speaker 1 (25:25):
That is correct, Joseph, yep.
Speaker 2 (25:27):
You can determine if it's a is it one share,
is it one hundred chairs, whatever that is, that's completely
up to you.
Speaker 1 (25:33):
You work with your you.
Speaker 2 (25:35):
Know, if it's with Schwab, coordinate with Swab or you know,
with our front we open the donor advice fund for
our clients and we move those funds in there so
that how much you put in there, that's all up
to you. And all you want to try to do
is say, okay, if I want to make a you know,
like in this case, I say that I talk about
twenty thousand dollars. If I want to have it be
twenty thousand dollars, and I do have a lot of
(25:59):
stock in a approach count that has highly appreciated, then
how do I what's the amount of number of shares
that I need to move over at the price to
get that twenty thousand dollars. Now, in general, what I
probably recommend a risk perspective is using In general, I
recommend using individual shares if possible, just because you know
(26:20):
there is the potential they could go higher, but they
could go lower as well. Whereas of a diversified holding
like the SP five hundred. You know, holding that long
term is probably going to work in your favor. So
if you have if I had to pick, I'd be
looking at a stock that has highly appreciated, maybe very quickly,
and maybe a little bit more risk of volatility with
(26:41):
that stock that you want to kind of grab those
gains why you can. So that's the way I would
approach it. But yep, that is that is correct. Let's
move on to some other topics that I want you
to be aware of. One is that if you are
fifty and older and you contribute to a full and
K plan under what's called the Secure Act two point zero,
(27:03):
which is legislation packed it passed a few years ago,
that starting in j Ra first, twenty twenty six, if
you're fifty and older, you're doing a ketchup amount and
your high income earner and that based on the ARISA
and IRS requirement that's one hundred and forty five thousand
dollars of a just a gross income that if you're
(27:23):
in that category starting on Jerry first, your ketchup amounts
are going to have to be raw contributions, right, so
in the past they could be all pre tax and
you know, again, if you're fifteen older and you're below
that amount, then you're fine. You can still make pre
tax contribution amounts. But now if you're high income earner,
(27:45):
that's going to have to change.
Speaker 1 (27:47):
And that's this is you know a couple of things here.
Speaker 2 (27:50):
One is you got to make sure your plan has
that right because plans are not necessarily required to allow
you to do a ketchup amount, and you're not going
to be able to do a catchup amount if you're
in that category if they don't have a WROTH component.
Speaker 1 (28:05):
So again, this is something.
Speaker 2 (28:07):
That if you're a small business owner, you might want
to make sure your plan is updated.
Speaker 1 (28:11):
We're working with all of our.
Speaker 2 (28:12):
Plans to make sure that they have the WROTH option
and the plan allows for a catchup. You also have
to coordinate with your payroll provider because they're going to
need to be aware that after your max out on
your contribution amount for just an individual, that you're now
going forward, your catchum amount is going to be going
(28:35):
into the WROTH right, So you've got to be aware
of that as we go forward here and for twenty
twenty six, the amount is eight thousand dollars is the
catch up amount. Now, also, as we talked about, to
make it even more confusing, there is a window between
age sixty and sixty three where that catch up amount
(28:57):
increases to eleven two hundred fIF fifty dollars, right, so
you know you might want to take advantage of that
as well. And that amount also would have to go
into a ROTH if you are if you're a high incremmer,
So just make sure that you know your plan has
that option.
Speaker 1 (29:19):
It's important. Also they've come out with the new contribution.
Speaker 2 (29:22):
Amounts for twenty twenty six and for pur and k's
four three b's for every individual that you can now
put in twenty four thousand and five hundred. So the
total amount between the employee amount and the catchup amount
is going to be thirty two thousand, five hundred. And
then also starting in twenty twenty six, the IRA contributions
(29:47):
for ross and for true starw arrays has increased from
seven thousand dollars to seventy five hundred dollars, so it's
a five hundred dollars increase. And also the catchup amount
has increase from one thousand dollars. This is for iras
or for a ROSS if you're fifty and older to
eleven hundred dollars. So again all those amounts have increased.
Speaker 1 (30:09):
We're going to be putting out a blog, we'll have
it on.
Speaker 2 (30:11):
Our website that outlines all these but just things to
be aware of as you're doing planning for twenty twenty six.
And again the other element is making sure that you know,
if you're a business owner, that your plan has that
and also that you have that your payroll is set
up to do that as well. These are all important items.
Speaker 1 (30:33):
One of the things I want to talk about.
Speaker 2 (30:34):
You hear this quite often is medicaid planning, right. So
medicaid planning is simply where you do some estate planning
to try to remove assets from your state so that
if you need an assistic care then you could get
that through medicaid through the state. Now, you know, one
of the things I always tell folks is you know,
(30:54):
this is not always a black and white decision.
Speaker 1 (30:57):
Right.
Speaker 2 (30:58):
There's certain situations where it works well, and then there's
other situations where it may not work. So let me
just explain where it doesn't work well. If you have
pensions and you have good social security, so you have
sizeable amount of income from that. And then also if
you add on top of that you have you and
your spouse have iras, and that's the majority of your assets.
(31:19):
You're probably not a great candidate for Medicaid planning because
you know, most more likely not even though costs have
gone up for assistic care and nursing homes, you know
you're probably going to cover most of those costs with
your pensions, with your social security, and the state assumes
a certain amount coming out of traditional arrays.
Speaker 1 (31:40):
Now raw THI arrays are not protected.
Speaker 2 (31:42):
They are basically assumed as an asset that can be
spent down, just like a brokerage account. But now rawthirays
cannot be put into a Medicaid trust, whereas a broken
count could be put into a Medicaid trust. So again,
if you're in the category of pensions, you know, decent
amount of soci security and large I rays not a
great candidate.
Speaker 1 (32:02):
You're not a great candidate for Medicaid.
Speaker 2 (32:04):
But where you know the best option is UH if
you don't have pensions, if you don't have that much
in the way of I rays, but you have a
very large brokerage account UH, or you know a trust
that you know Uh, basically could be spent down. Then
that situation you are a better candidate for medicaid planning.
(32:27):
And really what you're gonna do is you're gonna move
the assets, whether it's you know, homes into those trusts.
You're going to move the assets, the Brokene accounts into
that trust. Now, the thing you have to appreciate there's
a number of kind of restrictions, which is not surprising.
One is there's a five year look back, so you know,
basically it's phased out over five years on the look
(32:48):
back for assets that are removed outside the estate.
Speaker 1 (32:51):
So in that regard, you know, you.
Speaker 2 (32:53):
Want to be aware of, hey, if I'm going to
move assets over uh, you know, if I if it's
safe for a parent, and that parent's youre not doing well,
Like they're not going to be with us six months
from now, it's too late to do medicaid planning, right,
This has to be something you want to be proactive with.
Speaker 1 (33:10):
Now.
Speaker 2 (33:11):
A couple other things to appreciate is which is you're
really giving up control over those assets and in large
part you're limiting your ability to really access those assets at.
Speaker 1 (33:21):
Least the principle of them. So you can move it
into a trust.
Speaker 2 (33:24):
You can get the income, and you can get some
other needs for health and different other expenses that that
trust can provide. But let's say you know, you have
a million dollar trust or two million dollars and you
want to access a half million dollars of it.
Speaker 1 (33:38):
You can't.
Speaker 2 (33:38):
You can't do that right that Now that is not
your asset anymore. It's removed outside your state. So very
important that you realize that you're giving these other people control.
Speaker 1 (33:51):
And usually you know quite often it's a son or
a daughter.
Speaker 2 (33:54):
So you know, again you've got to have that trust
in your kids that they're going to do the right
thing because they're going to.
Speaker 1 (33:59):
Be the trustees. They're going to have control over it.
Speaker 2 (34:01):
Now you know again, now the nine percent of the
time when you're doing this, you do have confidence. You're
going to know that they're going to be doing the
right thing. But you have to be aware of that.
And the other thing to appreciate is, you know, sometimes
when you do Medicaid planning, you know you may be
getting yourself into limited what you can get into as
far as different homes. Right, not all system care or
(34:23):
nursing homes will take medicaid and certainly that more high
end ones may limit that their businesses. Now, there are
some ways to do that, but you have to at
least be aware of, you know, how you could be
limiting you know what type of care you get into.
So all I just tell folks is before they just
go ahead and jump in and start doing medicaid planning,
that again, they.
Speaker 1 (34:44):
Really work with the fiduciary. They work with a.
Speaker 2 (34:46):
Good estate planning firm to say, hey, is this the
right way to do this, or perhaps is there a
better approach something very you know you have to be
aware of in that regard. Well, folks, we're gonna go
commercial break, but come back and join us as we
take your questions. You'll listen to Let's Talk Money, brought
to you by a Bouchet Finance Group. Well, we help
our clients prioritize their health while we manage their wealth
(35:09):
for life.
Speaker 1 (35:09):
Welcome back, folks. For those just joining us, my name
is Martin Shields.
Speaker 2 (35:12):
I'm the chief Wealth Advisor at Bouchet Finance Group and
I'm your host today for Let's Talk Money again. If
you have any questions, feel free to give me a
call or send me an email you can reach me
at eight hundred eight two five five nine four nine.
That's eight hundred eight two five five nine four nine,
or you can send me an email and ask Bouchet
(35:33):
at bouchet dot com. That's ask Bouchet at bouchet dot com.
Let me let's go into another different topic that I
think it's important for folks to know, and that is
if you are going to retire early, and I'm going
to say early in your fifties, let's just say before
age fifty nine and a half, there's two main things
(35:55):
you need to be aware of. One is healthcare expenses.
That is probably one of the tougher elements from an
expense perspective when people look at things from a budgeting
perspective as to how to handle. And I always tell
folks that when you retire, you're not going to be,
you know, having to pay FIKA payroll taxes. You're not
going to have maybe some commuting expenses, or maybe you
(36:19):
won't be eating out for lunch quite as much. And
you know, these days, it's not even about wardrobe. I
think most people their wardrobe it's just pretty standard. It's
not like they're using where that much. The source dress clothes.
But you know, maybe there isn't different expenses than that,
and you won't be saving four retirement, so you have
some reduction in regards to that for your cash flow.
(36:39):
But all things considered, as far as general expenses, it's
actually going to go up. Right when you actually retire,
you're actually I always say it between ten to twenty
percent more because I always say, you think about it,
you've been working forty to fifty hours a week. Now
you're not right, so you got extra time. So in
that regard, you basically want to make sure your budget
(37:01):
higher than what you're spending now. And I think most people,
let's always say too, they don't want to Most people
don't want to go to retirement and live a small life, right,
I mean, especially if you're going to go to retirement early,
Like who wants to retire at fifty five when you
can be doing that for forty years you have your
health and live a smaller life than you are when
you're working. You know, It's just most people are not
(37:23):
inclined to want to do that. So I always tell them,
from a budget perspective, make sure you're adding something back
in there now. Again, from a healthcare perspective, you've got
to be assuming that you know you're going to probably
add about it could be about one thousand dollars.
Speaker 1 (37:36):
Per a month.
Speaker 2 (37:38):
Additional, it depends on what you're getting through your employer
and whether or not you can, you know, have go
out of your spouse's it's just one of you retiring,
but if you're both retiring, you got to assume it's
going to be a lot higher.
Speaker 1 (37:52):
And the other thing to remember is cash flow.
Speaker 2 (37:54):
And you know, just trying to take that cash flow
it's from a IRA when you're not fifty nine and
a half. Yeah, let's hear so when I was talking
about cash flow, So what you have to be aware
of is that from a cash flow perspective, you know,
if you have a broke account, then you can go
ahead and access that for a cash flow. But for
(38:14):
most people, they have an IRA and you can't access
those irays, in particular pretext irays before age fifteen nine
and a half. Now, if you have wroth irays, you've
contried to them, to them all along that one of
the great things about a roth IRA you can always
access the principle on that right, So that could be
(38:35):
a sizeable amount of money, so that you've got to
be aware of that. If you want to, you can
access your wroth, although you know I would tell you
that in general, I always like to see those wroths grow,
you know, and use them at the end of the
latter part of your retirement versus the early part of
your retirement. But there's something called the seventy two T distribution,
and all that is is that it requires you to
(38:57):
take sizeable equal payments out of your IRA for either
five years or true until you turn fifty nine and
a half, whichever is longer. Right, So let's say you
start it at age fifty seven, Well, five years from
then you're gonna be sixty three, right, you have to
do it until you're age sixty three. If you start
it at age fifty two, now it's not five years,
(39:18):
it's till your term fifty nine a half, So it's
seven and a half years that you need to do it.
So you just need to be aware of that that
you need to continue to do that for either five
years or for two term fifteen nine and a half,
whichever is longer. Now, for most people that's not an
issue because they're gonna need cash flow, right, so it's
it's not a problem. And the nice thing with the
(39:41):
seventy two T is, and this is what we do
for a lot of our clients is let's say you know,
you have a sizeable amount in your IRA, but you
don't need there's just a certain amount that you need.
You can actually split your IRA into two, right, you
can split it into two use only one of those
iras for this thirty two T the other one just
(40:01):
let it continue to grow. And that's a great way
to do it if you don't maybe even know how
much you want to take. That way, you're not committing
to that higher amount into your fifty nine and a
half for five years. And so for you know, we
have some clients where we have they have three iras.
They started with one seventy two t uh, and then
(40:22):
they went into and they needed more cash flow, so
they started a second IRA with a seventy two T
and they still have their third IRA, which is money
that they're just letting it grow over time. So you know,
there's ways to set this up that can be advantageous
and provide the cash flow that you need.
Speaker 1 (40:41):
So you know, I always tell uh, you know.
Speaker 2 (40:44):
People who are retiring young, and you know that's an
arbitrary term, like what does retire young mean? But I
think for most people, you know, if you're retiring before
age sixty two to sixty five these days, with longevity, right,
I mean, the fact of the matter is that if you
and your spouse are are indecent health and you're sixty five,
there is somewhere around that eighty percent chance that one
(41:06):
or both of you is going to live to you
be in your mid nineties. Now, again, it depends on
your health, so that that's you know, an unknown but
and it's usually you know, the woman, Uh, they have
longevity over us men.
Speaker 1 (41:18):
So but that is something you have to be aware of.
Speaker 2 (41:21):
When we do planning for our clients, we always bring
it out to age ninety five, so it's it's very
important in that regard. But these are things that from
a planning perspective, you need to be aware of and
just making sure that you have this stuff covered because
you know, you don't want to get into retirement and
then decide, you know what, we're not in a spot
to do this. That's where it becomes problematic. Let's say again, folks,
(41:45):
if you have any questions. You can reach me at
eight hundred eight two five five nine four nine. Again
that's eight hundred eight two five five nine four nine,
or you can email me at Askbouchet at bouchet dot com.
That's asked Bouchet at Bouchet dot com. I want to
actually bring to everyone's attention. I got an email from
(42:07):
one of our listeners that said, Hi, I believe the
thousand dollars chair of reduction for non itemizers doesn't start
to twenty twenty six. And you know, from what I
can tell, I think this emailer is correct. So I
said twenty twenty five. So this is for individuals making
contributions who are non itemizers, that it's twenty twenty six
(42:29):
for that thousand dollars to begin, not twenty twenty five.
So just note that, as always I always say, I
tell all of our colleagues it could be we could
there's a chance we could be wrong if we are
just a minute and say, hey, we're willing to learn.
So thanks for it's MP that is the individual's name
that emailed in for the insight. Let's move on to
(42:52):
a different topic. And this is one of the things
I think it's really important. And it's talking about finances
with couples, right, And we know this how important it
is to make sure from a financial perspective that you're
in line with your spouse or your partner. And so
(43:12):
you know, it's just so important that you kind of
have these conversations. I always now I have, you know,
kids who are moving into the twenties, and you know,
I always tell them one, you know, we try to
educate them from themselves what it means to be you know,
smart financially, you know, from an emotional perspective, from just
a savings and spending perspective, but also you know, if
(43:32):
they're going to have relationship, and it's just so important
to have that conversation one sooner round than later.
Speaker 1 (43:38):
Right.
Speaker 2 (43:39):
It's it's so important, but it's also important to continue
to have it. You know, is being open and honest
and appreciating that it's not easy.
Speaker 1 (43:49):
Right.
Speaker 2 (43:51):
I was just reading this quote here from another advisor.
Money is more than just money. Money is a manifestation
of other feelings. Money represent may represent your values. It
can represent your culture growing up. It can represent freedom
and your desire for independence. It can represent shame if
your grants over money and I think it's a great statement, right,
(44:12):
that is a very accurate statement that you know, we.
Speaker 1 (44:15):
Need to be aware of.
Speaker 2 (44:16):
And I think the only things I'm trying to really
kind of put into your mind here is just being
open and honest with yourself first, right, that's if you
want to be successful with your spouse or your partner
from a financial perspective, just you know, try to admit
and being open of some of our own limitations when
it comes to financial things. I know, my wife and
I you know, that's our success has been, you know,
(44:38):
being aware of each other's strengths and weaknesses in that
regard and being open with each other. Right, That's that's important.
So I would encourage you to have those conversations in
a healthy manner in the right setting to be successful. Well, folks,
it's been a great hour as always to be here
with you. I always appreciate it. Hopefully you have as well.
You were listening to Let's Talk Money brought to you
(44:59):
by Cruchet Finage Group. While we help our clients prioritize
their health while we manage their wealth for life, Folks,
take care of yourself and take care of each other.
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