Episode Transcript
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Speaker 1 (00:02):
And we're back live in studio this Thursday, July third. Meaning,
if you've got a question for our retirement planning professionals
from Class Financial, We've got a line open for you
right now. I'd love to get you on the air
with us six oh eight three two one thirteen ten
at six oh eight three two one thirteen ten. Joined
this week by CJ. Closs and Eric Schwartz. As mentioned,
they are our retirement planning professionals from Class Financially. You
(00:23):
can get to know CJ, Eric and the whole team
at Class Financial. Also learn more about their separate division.
Sign up for the weekly Market Pulse newsletter. That and
so much more all online clssfinancial dot com. That's Coss
Klaasfinancial dot com. Tell pH number for the office right
here in Madison six oh eight four four two five
six three seven. No charge for that initial get to
(00:44):
know your appointment at Loss Financial. It will be complimentary
to you again their number six oh eight four four
two five six three seven And to get on the
air this morning, regular telephone number at station six oh
eight three two one thirteen ten at six oh eight
three two one thirteen ten, as mentioned, joining us this
more our CJ Claus and Eric Schwartz. CJ, how you
doing this week?
Speaker 2 (01:04):
I'm doing great. How are you, Sean doing really good?
Speaker 1 (01:06):
Great to see you talk with you.
Speaker 3 (01:07):
Eric.
Speaker 1 (01:07):
How have you been as well?
Speaker 4 (01:10):
I'm doing great, Sean, happy to be here.
Speaker 1 (01:11):
It is an exciting day, I think for a lot
of us today as a Fridays.
Speaker 4 (01:15):
Yes, it is.
Speaker 1 (01:15):
It's a really good spirits so it's always a fun
program as well. We've got a really important conversation involving
retirement readiness, and of course we're at that midway point
through the year, so we're going to get some advice
and guidance from CJ and Eric. As mentioned, the phone
lines are open for your questions. Also, great opportunity a
little bit later on the program to win a fantastic prize.
Our friends from Class Financial have provided a twenty five
(01:37):
dollars gift card to Texas Roadhouse. How could you win that? Well,
you could win that with the Class Quiz question of
the week. Give you a little more details on how
you can win it later on the program. Little tip though,
if you listen closely to the show, oftentimes the question
and answer come up during the program. So it's a
great opportunity to win a great prize. Let's get some
great information and before we get to this week's conversation,
let's actually look back at last week's show. I get
(01:59):
the question and answer there as well.
Speaker 4 (02:02):
Eric, absolutely so thank you to everybody for listening as usual,
and congrats to our winner from last week. That was
Serena from Madison. Last week's question was a tru or
false question. In the United States, approximately two point four
million funerals take place each year, and again it was
true or false and the answer was true. We definitely
(02:23):
brought the fun last week Sean with our topic, but
Serena got the right answer and it.
Speaker 1 (02:29):
Was And for folks that missed last week's program or
maybe want to get caught up, there was a lot
of It's a fascinating topic. Obviously, it's sometimes hard for
us to kind of want to talk about those things.
It's an important conversation but really really good content as well.
So yes, yeah, congratulations to Serena. And of course you
two could be like Serena, simply pay cools ten to
the program and I'll tell you a little bit later
on how you can win that twenty five dollars gift card.
(02:50):
To Texas Roadhouse. Great to be back, and of course
they were going to be checking in on retirement readiness.
Of course halfway through the year and maybe been thinking
a little bit about retiring. I'm lucky, lucky either mentally
or physically, and I kind of feel like it's time,
but of course some suggestions to really make sure we're
truly ready to make that decision, right CJ.
Speaker 2 (03:12):
Yeah, that's right. At the midpoint of the year, it's
a great opportunity to kind of hit pause and ensure
that you're on the right track, and it gives you
time to adjust, of course before the end of the
year if you're not. So, Let's walk through a retirement
readiness checklist to help our listeners evaluate key areas that
could make a big difference down the road. So starting
(03:33):
with just basically revisiting your retirement timeline, this is important.
One of the first things to consider is your target
retirement date. Interestingly, working longer can obviously give your savings
more time to grow, delaying portfolio withdrawals and potentially increasing
your solid security benefits. So obviously when you think of
(03:54):
the retirement date, you do need to be mindful of Hey,
if I'm a little off or things are a little
bit tight. Working longer, believe it or not, has massive impacts.
Eric can attest will work with people say I really
want to retire at sixty two, and they get there
and it's a little bit tight, and they could, but
it might put them in kind of leaner retirement years
(04:17):
just one or two years later can be transformative to
their ability to retire and have a lot more flexibility.
Now some of you are thinking, how is that possible,
That's not possible if I've worked for forty years, how
could working for forty two make much of a difference?
And what you're missing is, well, you want two more
years without withdrawing money. You want two more years with saving,
(04:37):
and you want two more years with allowing your pensions
and social security to grow. Those two years in terms
of future kind of sustainability of retirement can be huge.
But obviously retirement readiness isn't just financial. It's also includes
your health, your lifestyle preferences, and your desire or ability
to keep working. So this is important. We address most
(05:00):
the quantitative side of retirement planning. It's what people come
to us for. We're very good at math, we're cross
trained in tax and estate planning and insurance. But we
really help people make wise decisions around planning for and
executing a successful retirement. But within that we must admit
while we are not you're not counselors. Man oh manned
(05:23):
that mental and physical health as you enter and execute
a successful retirement is just huge. Cannot overemphasize it. We
have this phrase, which is, don't retire from something, retire
to something. So often people say I just got to
stop work and I'm just killing me. I can't do
this anymore. That's good, I'm glad you're assessing that, But
(05:46):
what are you retiring too, Because just retiring away from
a stressful job, I hate to say it, you're not
going to be that happy and your body may begin
to shut down if you just sit around now. Interestingly,
many people end up retiring earlier or later than they
would have originally expected. So when you're thinking about your
future retirement readiness and that retirement date, one thing we'd
(06:07):
say is just remain remain flexible because life can throw curveballs.
As a matter of fact, we have ways of quantifying this.
So there are studies that are done to say, hey,
when you were fifty when did you anticipate retiring? And
it's they're actually asking people at fifty and they say
sixty five, and then it turns out that they actually
(06:28):
retired at sixty two, and then the survey will ask them, then,
why did you retire early? And it's often I had
a health issue or a parent who you know, I
needed to move towards, so I had to retire and
move to a new state to support them. Or then
other people will retire later and the question is why
did you retire later, And it goes, well, I didn't
save enough, or my kid was in college longer than
(06:48):
I thought they would be and I had to pay
for some of that. So the point of this is
to say retirement planning and targeting a retirement date critical.
But it's kind of like driving a cross the United
States if you think you're going to show up, you know,
if you're going to drive five thousand miles or two
thousand miles across the United States and you're going to
(07:08):
show up at an exact time in the future, I mean,
that's silly, isn't it. We all know that if you're
going to drive two thousand miles, you better have some flexibility.
Around your arrival time or you're going to have problems.
So in a similar way, when you're planning for a
life of retirement, you better have some flexibility around when
you think you're going to retire, because as you get
(07:29):
closer to that, there may be some curve balls to assess.
Speaker 1 (07:32):
Really important things to remember as you plan for that retirement.
Talking this morning with our retirement playing professionals from Class Financial,
CJ Class and Eric Schwartz. If you've got questions, I've
got a phone line open for you right now six
eight three two one thirteen ten. That's six poh eight
three two one thirteen ten, No, I forget. You can
learn more about Colass Financial on their website Coss financial
dot com. That's Coss k l as Financial dot com.
(07:53):
So Eric, you know, I think about you know, you
kind of begin the year with a certain amount of
money set can contribute into your retirement accounts. Should folks
be looking to maybe make some adjustments at this mide
your point.
Speaker 4 (08:06):
Yeah, it's a great opportunity to evaluate that you don't
necessarily have to make an adjustment, but keep in mind
your contributions that are going into your employer sponsored retirement plan.
Your four oh one K or your four oh three
B for example, those those have a December thirty first
deadline for getting any contributions in those have to come
out of your payroll, right, so iras give us a
(08:27):
little bit more flexibility where we can make contributions until
you know the tax deadline the following year. But now
is a good time if you want to actually make
some changes to the amount you're contributing that you can
actually you know, make an impact by the end of
the year. So you want to look at whether or
not you are contributing enough to first of all your
four one K or your four oh three B, and
(08:50):
separately even you know, even your IRA with those longer
contribution deadline, still a good idea to start looking at that.
Keep in mind that this year's maximum contribute levels for
four toh one ks or four h three b's for
twenty twenty five it's twenty three thousand, five hundred if
you're under age fifty. Now, if you're over the age
of fifty, you get a catch up contribution of seven thousand,
(09:12):
five hundred. And if you're in that very special category
of individuals between sixty and sixty three, your additional catchup
contribution is eleven thousand, two hundred and fifty. Now that
is if your plan allows, but again sixty to sixty
three you get those special additional catch up contributions. Iras
(09:34):
for this year are at seven thousand dollars for contribution limits,
and then you do get that extra thousand if you
are over fifty. So just take a pause now here
a little more than you know halfway through the year
and start thinking about things like, hey, did you receive
a raise this year, or maybe you got a larger
than normal bonus and you have an opportunity to increase
(09:56):
the amount you're contributing, cause these small changes will will
add up to big, big impacts over time. So just
take a pause. Make sure that you are maximizing those
employee employer retirement options, which includes your employer match, So
don't forget about that. That is free money that your
employer is offering to give you. Make sure you are
(10:19):
contributing enough to actually get the full match, because that
is free money and we don't want to leave it
on the table. Another really really impactful employer benefit, or
in this case, an employer benefit that people don't always
think about, is a health Savings account or an HSA,
So if you're eligible, are you contributing to it. Hsas
(10:42):
offer what we call triple tax advantages, and what that
means is the amount that you put into an HSA
you get to deduct on your tax return, so you
have to lower your taxable income. The dollars that go
into the account, they grow tax free, and then when
you draw the funds out, they are as long as
they are used for an approved expense, they are tax
(11:04):
free distribution. So we have three levels of tax benefit there,
and the allowable contribution level is this year forty three
hundred dollars for single individuals and eight thousand, five hundred
and fifty for families. You do also get an extra
thousand dollars for those over fifty five. Again, these are
(11:24):
these are small changes and small steps you can take,
but over time they can add up to a big,
big impact. So take a pause and make sure you're
maximizing these options.
Speaker 1 (11:33):
Talking this morning with Eric Schwartz and CJ. Closs are
retirement planning professionals from Class Financial. If you've got questions
for Eric and CJ. Love to get you on the
Airtelphale number six eight three two one thirteen ten. That's
six soh eight three two one thirteen ten and Bill
joins us. Bill, Welcome to the program. You're on the
air with CJ. Closs and Eric Schwartz of COSS Financial.
Speaker 3 (11:51):
Good morning, guys, how we doing?
Speaker 2 (11:53):
Good morning?
Speaker 4 (11:54):
You know.
Speaker 3 (11:55):
I so my situation is, I'm walking up on thirty
seven years federal service, but I'm only fifty eight and
my mortgage. I paid off my mortgage. I really don't
have any major outstanding deaths. I don't have credit card
deaths or anything like that. And I'm sitting there thinking,
you know, how far are down the road I want
to go? And the one thing that kind of I
(12:18):
found interesting when you said, what was your retirement date? Well,
I'm two years beyond my retirement date now when I
planned on retiring at fifty six because that's when I
was eligible now. So the quandary that I have is,
so do I hang on doing what I'm doing because
I don't mind my job. It's like every other job is.
You know, sometimes you like the job that you don't
(12:40):
necessarily care for the people you work for with, you know, anyway,
So if I if I taken, if I pull the plug,
and draw my pension and stuff. You know, if I
get a part time job work in three days a week.
I mean, I don't want to have to work, but
I'm not against it just because I'm kind of a
social person. So I have no problem, you know, getting
(13:01):
a part time job. So what is what is your
thoughts of that? I mean, do you think it's better
to stick it out and keep bank rolling or to
take and when you're ready to just go and if
you need to or want to get a part time job.
Speaker 2 (13:14):
Such a great question, Bill, Thank you so much for
calling in and asking it on the air. So I'm
gonna I'm going to kind of reframe your question a
little bit to the listeners and then then we'll answer it. So,
so Bill is saying, hey, I knew, being a federal
employee that I would have the option of claiming my
pension at a certain time after a certain number of
years in age, and it would be one hundred percent vested,
(13:36):
so to speak. And so I knew I had this
option retiring early, but now I'm here a couple of
years beyond it and just evaluating whether or not I
should just go ahead and do it. So great question.
We run into it with state employees. Eric works with
a lot of our State of Wisconsin Department of Employee
Trust Funds recipients, and similar questions abound there, which is like,
(13:58):
I'm young, but I could retire because I've got the
full pension here. And here's what I'd say you could.
You could retire and do exactly as you said, just
get a part time job somewhere else to maybe get
some benefits or whatnot. But what you're going to find
is exactly what you just said, which is like, well,
can I retire and be done? And that gets tricky
because it's like what are you going to do for
(14:20):
health insurance? And is it going to be expensive or cheap?
And is the Affordable Care Act giving you subsidies or
not giving you subsidies? And how significant tire those? And
now that you're retiring at fifty eight, if you live
to ninety, we got a lot of years of an
ARC to try to have you live comfortably and travel
and do all the things. Plus you're young and healthy
enough that you might actually get a little bored. So
(14:42):
there's some complexity to these. I'll call them super early retirements.
I would define super early as anything before sixty. Some
of the complexities can be financial. Some of the complexities
can just be I'm young and healthy enough that I
want to be a contributing member to some sort of job.
So what we'd say is, I would, really, it's going
to sound silly, but I would sit down with some
financial advisor, Bill, just to evaluate that, to determine can
(15:06):
you actually fully retire and not need any other sources
of income. I do realize your federal pension would be significant,
but is it significant enough to allow you the flexibility
to do what you want to do without having any income?
And if the answer is no, then you're right. You're
going to have to evaluate part time working income or
just staying a few years longer in the federal job
(15:27):
so that when you do retire, you know definitively that
you have no financial needs. So I know, I'm not
really answering your question, but I'm kind of reframing it
through a slightly different lens. And I'm just so thankful
you asked the question, because there's others out there who
are thinking the same thing.
Speaker 3 (15:42):
So thanks, Bill, awesome, thank you you too.
Speaker 1 (15:45):
Great to hear from you, Bill, Thank you for calling
you too. Could be like Bill, if you got a question,
love to get you on the air six oh eight
three two one thirteen ten. That's six soh eight three
two one thirteen ten. Can you continue our conversation with
CJ and Eric as Money in Motion with Coss Financial
continues here on thirteen ten, WIBA, don't forget out the
website costs Financial dot com. That's coss k l a
A S Financial dot com and they're telephone number six
(16:06):
oh eight four four two five six three seven. More
of Money in Motion comes your way next here on
thirteen ten WYBA doing a mid year check up with
our retirement planning professionals from Class Financial, CJ. Closs and
Eric Schwartz. Of course you can learn more online the
website coss Financial dot com. That's Coss k l a
A S Financial dot com and they're telephone number six
o eight four four two five six three seven. So
(16:29):
Eric has excuse me, pardon me, CJ. You know, as
we talk about about this topic this week about retirement readiness,
how do you kind of quantify or begin to understand
how much you really need in retirement.
Speaker 2 (16:44):
That's a great question, Sean, and what I'd encourage people
to think about Obviously, you can outsource the answers to this,
right you can. You can meet with people like us
or others in the community or in the communities in
what you live and just say, hey, I don't know
how to do all this math. Can you help me
consider it? Cause they're there are a lot of considerations.
Now we're going to go through a fifty thousand foot
view here of some of the basic considerations. But I
(17:07):
will I will remind you these are not comprehensive. But
at the high level again thinking from a really high
fifty thousand and thirty thousand foot view, is what are
the major considerations around you know, understanding how much money
I will need? Do I have enough? Have I saved enough?
And we would say it's two core elements. Element number
(17:29):
one is what are your expenses? Got to quantify that.
An element number two what are your available income sources,
both now and in the future. Let's take Bill who
called in earlier. If Bill is still listening, you know
one thing I didn't mention is you know, does he
have a Social Security benefit? Was he was he contributed
to any Social Security? If he had non federal employee income,
(17:52):
Does he have a spouse does a spouse have social Security?
You get the idea, like, because if he's fifty eight
and he has a spouse's who's god a soci security benefit,
that spouse may or may not be old enough to
start drawing on soci security until some point in the future.
But start with your expenses. So a common guideline that
you'll often hear in the industry is that you'll end
up needing about eighty percent of your pre retirement income
(18:17):
in retirement to live the same lifestyle. We would say, whatever,
that's a really dangerous number to use. That's a good
rule of thumb, But my gosh, we have people who
get to retirement, they pay off a mortgage and it
turns out they need fifty percent of their pre retirement income.
We'll have other people get to retirement and move from
(18:38):
say Rockford, Illinois, where we have an office, where it's
very inexpensive housing in terms of the cost high property taxes,
by the way, but low cost of home acquisition. They
then move to be near their kids and say some
part of Florida or Arizona or Tennessee, and the cost
of housing skyrockets and suddenly they need one hundred and
twenty percent of their prevoittiytirement income. You get the idea,
(19:02):
don't just rely on rules of thumb. Be aware of
your expenses. Am I planning to downsize? Am I planning
to move somewhere else? What will my expenses look like
in retirement? It is very often, very very very often
you don't need anywhere near one hundred percent of your
pre retirement income. One core reason for that because some
(19:25):
people they can't they can't figure this out in their brains.
They're like, what are you saying? That makes no sense?
If I'm living off of if I'm making one hundred
thousand dollars a year, I'm going to need one hundred
thousand dollars a year in retirement to live the same lifestyle.
And I go, Nope, there's two things you're missing. In
most circumstances. You're saving into a four or one K
plan when you're working, so you're not going to need
that portion of your income. And secondarily, you're paying this
(19:47):
little thing called a fyke a tax. FIKA is Social
Security and medicare combined that account for about seven and
a half percent of your income. Your employer typically picks
up the other half unless you're self employed and you
pick up all those payroll taxes, but the the idea
being you don't pay FIKA taxes in retirement. So right there,
there's a seven and a half percent savings of what
(20:07):
you will not need in retirement. So very often you
do not need anywhere near one hundred percent of your
pre retirement income. But it is critical for you to
go down through the list. What will I actually need
to spend money on? Okay, so that's that's half the equation.
What are my expenses? The other half of the equation
(20:28):
is what are my income sources? Right, simple concept, so
you know, it's is it. Do I have Social Security?
Or like Bill, was I a federal employee and I
didn't save in a social Security system? Or maybe I did?
What pensions do I have available to me? What part
time work will be available to me? Do I want
to work part time? How large is my portfolio? Do
(20:50):
I have pensions from an old, old employer that I
need to you know, get my arms around and understand.
Do I have a spouse who's going to still work?
Does that spouse have Social Security? Once you've evaluated all
of what will be available to you into the future,
it does start to help you to hone that age,
right Like, oh, let's say I'm not Bill and I
(21:11):
don't have a federal pension, and I'm not a State
of Wisconsin employee and I don't have an ETF pension. Well,
then it's probably going to be mostly what you have saved.
And Social Security it's going to be pretty simple. And
you can't even draw Social Security till sixty two under
most circumstances. So right there, you got it kind of
a minimum age to think about. And then most people
(21:32):
it's somewhere between sixty six and sixty seven is when
they get their full unreduced Social Security, So boom, right there,
there's another kind of demarcation line. And then you don't
get Medicare, which is kind of like senior healthcare for
or I'm sorry, healthcare for seniors here in the United States,
that doesn't come in until sixty five. So you get
the idea. You need to kind of figure out when
(21:54):
these income sources and health insurance for seniors are going
to start to become available to you and evaluate those
income streams because that'll help you understand when you find
the match between what your expenses will be and enough
income sources to offset that. And then finally within that evaluation,
this is where it gets more complicated and you might
(22:15):
need some help. Do you understand what a sustainable withdrawal
rate from a portfolio is? Now? If you're a State
of Wisconsin employee or a federal employee and you say, no, no, no, no no,
My pensions and social security are going to cover all
of my expenses and more, will God bless you? That
(22:36):
is fantastic, And we work with a lot of people
like that. That is great, But that is not the
majority of people listening to me right now. The majority
of people listening to me are going to go, well,
the pensions and social security cover some, but I'm going
to need some from my IRA or four oh one
K or four oh three B. And then the question becomes, okay,
if that's you, what is a sustainable withdrawal rate? And
(23:00):
are you accounting for inflation adjustments between now and when
you die? And will that money last? And have you
invested it appropriately? You get the idea. This is where
it's it's art and science combined, because we don't know
what the future holds for markets, and so you've got
to got to generally build a portfolio that can sustain
volatility in the future. So those are the two parts
(23:22):
of it. It's both income and expenses. You're going to
want to sit down either on your own or with
your spouse or with a financial advisor.
Speaker 1 (23:28):
Important factors there for sure. As we talk this morning
with CJ. Closs and Eric Schwartz, they are our retirement
planning professionals from class financial website cossfinancial dot com that's
coss k l aas financial dot com. Del for number
six oh eight four four two five six three seven.
No charge for that initial get to know you appointment
tech Loss Financial. It will be complementary to you again
their number six oh eight four four two five six
(23:50):
three seven. We'll do the Closs Quiz question a week.
We'll also button things up about some other things you
should be reviewing mid year. We'll get those details next.
As Money in Motion with Coss Financial continues right here.
You're on thirteen ten WYB. I don't forget. If you
miss any part in today's program or you'd like to
share it, you can always head on over to classfinancial
dot com. That's coss k l a as Financial dot com.
(24:11):
Subscribe to the podcast right at the website telphon number
six O eight four four two five six three seven.
No charge for that initial get to know you appointment
tech costs financial. It will be complimentary to you. So, Eric,
as we're kind of sitting at the mid of your point,
what else should we be reviewing right now?
Speaker 4 (24:26):
Yeah, to wrap things up for us today, Sean, I
want to just start by touching on tax efficiency and
then we will we will end our show today by
just touching on a few other kind of kind of
random topics that will pull together. But starting with with
tax efficiency. This is not something that we see people
thinking about a whole lot before they get close to
(24:47):
the end of their career. So we want to we
want to be evaluating whether or not your your retirement
assets are diversified across what you'd call taxable, tax deferred
or ROTH account. So what this has to do with
is how you will be taxed when you draw the
dollars out in retirement. So the most common type of
(25:09):
retirement account we see are tax deferred accounts. That means
that the dollars in there have never been taxed before
and they are growing tax deferred. So when you draw
the funds out they will all be fully taxable to you.
We also see wroth accounts, which are a newer type
of retirement accounts, so they generally folks have less wroth
dollars than they do tax deferred. But these are dollars
(25:32):
that have already been taxed and they are growing tax free,
so when you take the dollars out, there will not
be any tax due on them. Then finally, taxable taxable
assets are generally dollars that are in an account that
does not have any sort of tax qualification. So basically
it's an investment account. You're paying taxes on any interest
(25:56):
in dividends or capital gains on an annual basis, and
when you draw the funds out, you will you will
pay tax on any of the gains that you've made
over time. So that's just a general investment account, not
really receiving any sort of tax benefit. So those are
the three kind of large or high level types of
(26:16):
dollars we see. We want to make sure that you have.
You know, we want to be as balanced as possible
among these because there are there are different times in
your retirement when when different types of dollars will be
beneficial for you. This is also a good opportunity to
check in on something called a Wroth conversion, which we've
talked about on the show before, and that's a way
of maybe balancing out some of those some of those
(26:40):
different retirement assets you have, because generally tax deferred assets
are the highest balance for folks, So you can consider
a Wroth conversion to move some of your tax deferred
dollars to the Wroth side of the column. And we
also want to be thinking about how how future required
minimum distributions and Social Security taxation will be affecting your
(27:03):
retirement income. So remember required minimum distributions or rmds are
are most important as it applies to tax deferred assets,
and it's a it's a minimum amount that eventually you
will need to take out of that taxable account. So
when you're taking dollars out, you're you're paying full income
tax on them. So this again was going to loop
(27:25):
back to that being diversified across the three different types
of investment accounts. And finally just to kind of wrap
up tax here, this can get really complex, really fast.
So this is a space that we would encourage you
to speak with a tax specialist or a financial advisor
on because not only is it complex, but it is
(27:47):
changing all the time. So so take that, take that
information to an expert, and and talk through that. A
few other items here I just want to wrap up
with it's a good opportunity to evaluate the progress you've
made on paying down debt. I think oftentimes people have
(28:07):
very lofty goals of eliminating debt really quickly throughout the year,
and then life happens. So just take stock of where
you are with that. Make sure that you're thinking about
where you're going to get health insurance from. If you're
planning to retire before age sixty five, so we can
go back to our color bill earlier, this would be
(28:28):
a big consideration for him thinking about retiring prior to
age sixty five when he's eligible for medicare. We want
to be making sure that we're keeping the estate plan
up to date, so this includes your wills, your powers
of attorney, and your beneficiaries. Great time to stop, pause
and evaluate that. And then finally take a look at
(28:52):
your emergency savings and make sure you have that as
a level at a level that you are comfortable with.
Because inevitable, plea, something unexpected comes up, and we want
to make sure you are ready.
Speaker 1 (29:05):
For that really full show this week for sure with
a lot of really good information. Don't forget if you
messaged any part today's program or you want to listen back,
just head on over to class Financial dot com. That's
colss k l aa as financial dot com Artell for
number six oh eight four four two five six three seven.
No charge for the financial get to know your appoyment
deck colss Financial. It will be complimentary to you again
(29:26):
their number six oh eight four four two five six
three seven. Time now for the class quiz question of
the week. It works like this, just a moment, I'll
ask you the class quiz question of the week. You
will then have thirty minutes for today's program. We call
the Class Financial Office right here in Madison at six
oh eight four four two five six three seven. If
you are the first car correct answer, you win this
week's prize, which is a twenty five dollars gift card
to Texas Roadhouse. This week's class quiz question the week
(29:49):
is this. If you are under fifty this year, the
year twenty twenty five, what is the maximum you can
contribute to your four oh one K or five O
three B is it twenty thousand or twenty three eight thousand,
five hundred dollars. Telephone number six oh eight four four
two five, six three seven. First call correct answer to
win that prize. This week's prize, of course, that's Coss
Financials office right here in Madison again the number six
(30:11):
h eight four four two five six three seven. CJ.
Speaker 3 (30:14):
Eric.
Speaker 1 (30:14):
It's always great to talk with you guys. Have a
great fourth and we'll do it all again in a week.
Speaker 3 (30:18):
Thanks yous.
Speaker 1 (30:19):
Don take care guys. Doctor Greer comes your way next
right here on thirteen ten Wiba. This is Money in
Motion with Coss Financial Asset Advisors, LLC, a registered investment
advisor registered with the SEC. The contents of this show
are for informational purposes only and should not be considered
individual investment advice. Coloss Financial does not offer tax or
(30:40):
legal advice. Any opinion offered during the course of this
show is the opinion of that particular investment advisor representative
and not necessarily the opinion of cost Financial News comes
your way next right here on thirteen ten Wuiba
And we're back live in studio this Thursday, July third. Meaning,
if you've got a question for our retirement planning professionals
from Class Financial, We've got a line open for you
right now. I'd love to get you on the air
with us six oh eight three two one thirteen ten
at six oh eight three two one thirteen ten. Joined
this week by CJ. Closs and Eric Schwartz. As mentioned,
they are our retirement planning professionals from Class Financially. You
(00:23):
can get to know CJ, Eric and the whole team
at Class Financial. Also learn more about their separate division.
Sign up for the weekly Market Pulse newsletter. That and
so much more all online clssfinancial dot com. That's Coss
Klaasfinancial dot com. Tell pH number for the office right
here in Madison six oh eight four four two five
six three seven. No charge for that initial get to
(00:44):
know your appointment at Loss Financial. It will be complimentary
to you again their number six oh eight four four
two five six three seven And to get on the
air this morning, regular telephone number at station six oh
eight three two one thirteen ten at six oh eight
three two one thirteen ten, as mentioned, joining us this
more our CJ Claus and Eric Schwartz. CJ, how you
doing this week?
Speaker 2 (01:04):
I'm doing great. How are you, Sean doing really good?
Speaker 1 (01:06):
Great to see you talk with you.
Speaker 3 (01:07):
Eric.
Speaker 1 (01:07):
How have you been as well?
Speaker 4 (01:10):
I'm doing great, Sean, happy to be here.
Speaker 1 (01:11):
It is an exciting day, I think for a lot
of us today as a Fridays.
Speaker 4 (01:15):
Yes, it is.
Speaker 1 (01:15):
It's a really good spirits so it's always a fun
program as well. We've got a really important conversation involving
retirement readiness, and of course we're at that midway point
through the year, so we're going to get some advice
and guidance from CJ and Eric. As mentioned, the phone
lines are open for your questions. Also, great opportunity a
little bit later on the program to win a fantastic prize.
Our friends from Class Financial have provided a twenty five
(01:37):
dollars gift card to Texas Roadhouse. How could you win that? Well,
you could win that with the Class Quiz question of
the week. Give you a little more details on how
you can win it later on the program. Little tip though,
if you listen closely to the show, oftentimes the question
and answer come up during the program. So it's a
great opportunity to win a great prize. Let's get some
great information and before we get to this week's conversation,
let's actually look back at last week's show. I get
(01:59):
the question and answer there as well.
Speaker 4 (02:02):
Eric, absolutely so thank you to everybody for listening as usual,
and congrats to our winner from last week. That was
Serena from Madison. Last week's question was a tru or
false question. In the United States, approximately two point four
million funerals take place each year, and again it was
true or false and the answer was true. We definitely
(02:23):
brought the fun last week Sean with our topic, but
Serena got the right answer and it.
Speaker 1 (02:29):
Was And for folks that missed last week's program or
maybe want to get caught up, there was a lot
of It's a fascinating topic. Obviously, it's sometimes hard for
us to kind of want to talk about those things.
It's an important conversation but really really good content as well.
So yes, yeah, congratulations to Serena. And of course you
two could be like Serena, simply pay cools ten to
the program and I'll tell you a little bit later
on how you can win that twenty five dollars gift card.
(02:50):
To Texas Roadhouse. Great to be back, and of course
they were going to be checking in on retirement readiness.
Of course halfway through the year and maybe been thinking
a little bit about retiring. I'm lucky, lucky either mentally
or physically, and I kind of feel like it's time,
but of course some suggestions to really make sure we're
truly ready to make that decision, right CJ.
Speaker 2 (03:12):
Yeah, that's right. At the midpoint of the year, it's
a great opportunity to kind of hit pause and ensure
that you're on the right track, and it gives you
time to adjust, of course before the end of the
year if you're not. So, Let's walk through a retirement
readiness checklist to help our listeners evaluate key areas that
could make a big difference down the road. So starting
(03:33):
with just basically revisiting your retirement timeline, this is important.
One of the first things to consider is your target
retirement date. Interestingly, working longer can obviously give your savings
more time to grow, delaying portfolio withdrawals and potentially increasing
your solid security benefits. So obviously when you think of
(03:54):
the retirement date, you do need to be mindful of Hey,
if I'm a little off or things are a little
bit tight. Working longer, believe it or not, has massive impacts.
Eric can attest will work with people say I really
want to retire at sixty two, and they get there
and it's a little bit tight, and they could, but
it might put them in kind of leaner retirement years
(04:17):
just one or two years later can be transformative to
their ability to retire and have a lot more flexibility.
Now some of you are thinking, how is that possible,
That's not possible if I've worked for forty years, how
could working for forty two make much of a difference?
And what you're missing is, well, you want two more
years without withdrawing money. You want two more years with saving,
(04:37):
and you want two more years with allowing your pensions
and social security to grow. Those two years in terms
of future kind of sustainability of retirement can be huge.
But obviously retirement readiness isn't just financial. It's also includes
your health, your lifestyle preferences, and your desire or ability
to keep working. So this is important. We address most
(05:00):
the quantitative side of retirement planning. It's what people come
to us for. We're very good at math, we're cross
trained in tax and estate planning and insurance. But we
really help people make wise decisions around planning for and
executing a successful retirement. But within that we must admit
while we are not you're not counselors. Man oh manned
(05:23):
that mental and physical health as you enter and execute
a successful retirement is just huge. Cannot overemphasize it. We
have this phrase, which is, don't retire from something, retire
to something. So often people say I just got to
stop work and I'm just killing me. I can't do
this anymore. That's good, I'm glad you're assessing that, But
(05:46):
what are you retiring too, Because just retiring away from
a stressful job, I hate to say it, you're not
going to be that happy and your body may begin
to shut down if you just sit around now. Interestingly,
many people end up retiring earlier or later than they
would have originally expected. So when you're thinking about your
future retirement readiness and that retirement date, one thing we'd
(06:07):
say is just remain remain flexible because life can throw curveballs.
As a matter of fact, we have ways of quantifying this.
So there are studies that are done to say, hey,
when you were fifty when did you anticipate retiring? And
it's they're actually asking people at fifty and they say
sixty five, and then it turns out that they actually
(06:28):
retired at sixty two, and then the survey will ask them, then,
why did you retire early? And it's often I had
a health issue or a parent who you know, I
needed to move towards, so I had to retire and
move to a new state to support them. Or then
other people will retire later and the question is why
did you retire later, And it goes, well, I didn't
save enough, or my kid was in college longer than
(06:48):
I thought they would be and I had to pay
for some of that. So the point of this is
to say retirement planning and targeting a retirement date critical.
But it's kind of like driving a cross the United
States if you think you're going to show up, you know,
if you're going to drive five thousand miles or two
thousand miles across the United States and you're going to
(07:08):
show up at an exact time in the future, I mean,
that's silly, isn't it. We all know that if you're
going to drive two thousand miles, you better have some flexibility.
Around your arrival time or you're going to have problems.
So in a similar way, when you're planning for a
life of retirement, you better have some flexibility around when
you think you're going to retire, because as you get
(07:29):
closer to that, there may be some curve balls to assess.
Speaker 1 (07:32):
Really important things to remember as you plan for that retirement.
Talking this morning with our retirement playing professionals from Class Financial,
CJ Class and Eric Schwartz. If you've got questions, I've
got a phone line open for you right now six
eight three two one thirteen ten. That's six poh eight
three two one thirteen ten, No, I forget. You can
learn more about Colass Financial on their website Coss financial
dot com. That's Coss k l as Financial dot com.
(07:53):
So Eric, you know, I think about you know, you
kind of begin the year with a certain amount of
money set can contribute into your retirement accounts. Should folks
be looking to maybe make some adjustments at this mide
your point.
Speaker 4 (08:06):
Yeah, it's a great opportunity to evaluate that you don't
necessarily have to make an adjustment, but keep in mind
your contributions that are going into your employer sponsored retirement plan.
Your four oh one K or your four oh three
B for example, those those have a December thirty first
deadline for getting any contributions in those have to come
out of your payroll, right, so iras give us a
(08:27):
little bit more flexibility where we can make contributions until
you know the tax deadline the following year. But now
is a good time if you want to actually make
some changes to the amount you're contributing that you can
actually you know, make an impact by the end of
the year. So you want to look at whether or
not you are contributing enough to first of all your
four one K or your four oh three B, and
(08:50):
separately even you know, even your IRA with those longer
contribution deadline, still a good idea to start looking at that.
Keep in mind that this year's maximum contribute levels for
four toh one ks or four h three b's for
twenty twenty five it's twenty three thousand, five hundred if
you're under age fifty. Now, if you're over the age
of fifty, you get a catch up contribution of seven thousand,
(09:12):
five hundred. And if you're in that very special category
of individuals between sixty and sixty three, your additional catchup
contribution is eleven thousand, two hundred and fifty. Now that
is if your plan allows, but again sixty to sixty
three you get those special additional catch up contributions. Iras
(09:34):
for this year are at seven thousand dollars for contribution limits,
and then you do get that extra thousand if you
are over fifty. So just take a pause now here
a little more than you know halfway through the year
and start thinking about things like, hey, did you receive
a raise this year, or maybe you got a larger
than normal bonus and you have an opportunity to increase
(09:56):
the amount you're contributing, cause these small changes will will
add up to big, big impacts over time. So just
take a pause. Make sure that you are maximizing those
employee employer retirement options, which includes your employer match, So
don't forget about that. That is free money that your
employer is offering to give you. Make sure you are
(10:19):
contributing enough to actually get the full match, because that
is free money and we don't want to leave it
on the table. Another really really impactful employer benefit, or
in this case, an employer benefit that people don't always
think about, is a health Savings account or an HSA,
So if you're eligible, are you contributing to it. Hsas
(10:42):
offer what we call triple tax advantages, and what that
means is the amount that you put into an HSA
you get to deduct on your tax return, so you
have to lower your taxable income. The dollars that go
into the account, they grow tax free, and then when
you draw the funds out, they are as long as
they are used for an approved expense, they are tax
(11:04):
free distribution. So we have three levels of tax benefit there,
and the allowable contribution level is this year forty three
hundred dollars for single individuals and eight thousand, five hundred
and fifty for families. You do also get an extra
thousand dollars for those over fifty five. Again, these are
(11:24):
these are small changes and small steps you can take,
but over time they can add up to a big,
big impact. So take a pause and make sure you're
maximizing these options.
Speaker 1 (11:33):
Talking this morning with Eric Schwartz and CJ. Closs are
retirement planning professionals from Class Financial. If you've got questions
for Eric and CJ. Love to get you on the
Airtelphale number six eight three two one thirteen ten. That's
six soh eight three two one thirteen ten and Bill
joins us. Bill, Welcome to the program. You're on the
air with CJ. Closs and Eric Schwartz of COSS Financial.
Speaker 3 (11:51):
Good morning, guys, how we doing?
Speaker 2 (11:53):
Good morning?
Speaker 4 (11:54):
You know.
Speaker 3 (11:55):
I so my situation is, I'm walking up on thirty
seven years federal service, but I'm only fifty eight and
my mortgage. I paid off my mortgage. I really don't
have any major outstanding deaths. I don't have credit card
deaths or anything like that. And I'm sitting there thinking,
you know, how far are down the road I want
to go? And the one thing that kind of I
(12:18):
found interesting when you said, what was your retirement date? Well,
I'm two years beyond my retirement date now when I
planned on retiring at fifty six because that's when I
was eligible now. So the quandary that I have is,
so do I hang on doing what I'm doing because
I don't mind my job. It's like every other job is.
You know, sometimes you like the job that you don't
(12:40):
necessarily care for the people you work for with, you know, anyway,
So if I if I taken, if I pull the plug,
and draw my pension and stuff. You know, if I
get a part time job work in three days a week.
I mean, I don't want to have to work, but
I'm not against it just because I'm kind of a
social person. So I have no problem, you know, getting
(13:01):
a part time job. So what is what is your
thoughts of that? I mean, do you think it's better
to stick it out and keep bank rolling or to
take and when you're ready to just go and if
you need to or want to get a part time job.
Speaker 2 (13:14):
Such a great question, Bill, Thank you so much for
calling in and asking it on the air. So I'm
gonna I'm going to kind of reframe your question a
little bit to the listeners and then then we'll answer it. So,
so Bill is saying, hey, I knew, being a federal
employee that I would have the option of claiming my
pension at a certain time after a certain number of
years in age, and it would be one hundred percent vested,
(13:36):
so to speak. And so I knew I had this
option retiring early, but now I'm here a couple of
years beyond it and just evaluating whether or not I
should just go ahead and do it. So great question.
We run into it with state employees. Eric works with
a lot of our State of Wisconsin Department of Employee
Trust Funds recipients, and similar questions abound there, which is like,
(13:58):
I'm young, but I could retire because I've got the
full pension here. And here's what I'd say you could.
You could retire and do exactly as you said, just
get a part time job somewhere else to maybe get
some benefits or whatnot. But what you're going to find
is exactly what you just said, which is like, well,
can I retire and be done? And that gets tricky
because it's like what are you going to do for
(14:20):
health insurance? And is it going to be expensive or cheap?
And is the Affordable Care Act giving you subsidies or
not giving you subsidies? And how significant tire those? And
now that you're retiring at fifty eight, if you live
to ninety, we got a lot of years of an
ARC to try to have you live comfortably and travel
and do all the things. Plus you're young and healthy
enough that you might actually get a little bored. So
(14:42):
there's some complexity to these. I'll call them super early retirements.
I would define super early as anything before sixty. Some
of the complexities can be financial. Some of the complexities
can just be I'm young and healthy enough that I
want to be a contributing member to some sort of job.
So what we'd say is, I would, really, it's going
to sound silly, but I would sit down with some
financial advisor, Bill, just to evaluate that, to determine can
(15:06):
you actually fully retire and not need any other sources
of income. I do realize your federal pension would be significant,
but is it significant enough to allow you the flexibility
to do what you want to do without having any income?
And if the answer is no, then you're right. You're
going to have to evaluate part time working income or
just staying a few years longer in the federal job
(15:27):
so that when you do retire, you know definitively that
you have no financial needs. So I know, I'm not
really answering your question, but I'm kind of reframing it
through a slightly different lens. And I'm just so thankful
you asked the question, because there's others out there who
are thinking the same thing.
Speaker 3 (15:42):
So thanks, Bill, awesome, thank you you too.
Speaker 1 (15:45):
Great to hear from you, Bill, Thank you for calling
you too. Could be like Bill, if you got a question,
love to get you on the air six oh eight
three two one thirteen ten. That's six soh eight three
two one thirteen ten. Can you continue our conversation with
CJ and Eric as Money in Motion with Coss Financial
continues here on thirteen ten, WIBA, don't forget out the
website costs Financial dot com. That's coss k l a
A S Financial dot com and they're telephone number six
(16:06):
oh eight four four two five six three seven. More
of Money in Motion comes your way next here on
thirteen ten WYBA doing a mid year check up with
our retirement planning professionals from Class Financial, CJ. Closs and
Eric Schwartz. Of course you can learn more online the
website coss Financial dot com. That's Coss k l a
A S Financial dot com and they're telephone number six
o eight four four two five six three seven. So
(16:29):
Eric has excuse me, pardon me, CJ. You know, as
we talk about about this topic this week about retirement readiness,
how do you kind of quantify or begin to understand
how much you really need in retirement.
Speaker 2 (16:44):
That's a great question, Sean, and what I'd encourage people
to think about Obviously, you can outsource the answers to this,
right you can. You can meet with people like us
or others in the community or in the communities in
what you live and just say, hey, I don't know
how to do all this math. Can you help me
consider it? Cause they're there are a lot of considerations.
Now we're going to go through a fifty thousand foot
view here of some of the basic considerations. But I
(17:07):
will I will remind you these are not comprehensive. But
at the high level again thinking from a really high
fifty thousand and thirty thousand foot view, is what are
the major considerations around you know, understanding how much money
I will need? Do I have enough? Have I saved enough?
And we would say it's two core elements. Element number
(17:29):
one is what are your expenses? Got to quantify that.
An element number two what are your available income sources,
both now and in the future. Let's take Bill who
called in earlier. If Bill is still listening, you know
one thing I didn't mention is you know, does he
have a Social Security benefit? Was he was he contributed
to any Social Security? If he had non federal employee income,
(17:52):
Does he have a spouse does a spouse have social Security?
You get the idea, like, because if he's fifty eight
and he has a spouse's who's god a soci security benefit,
that spouse may or may not be old enough to
start drawing on soci security until some point in the future.
But start with your expenses. So a common guideline that
you'll often hear in the industry is that you'll end
up needing about eighty percent of your pre retirement income
(18:17):
in retirement to live the same lifestyle. We would say, whatever,
that's a really dangerous number to use. That's a good
rule of thumb, But my gosh, we have people who
get to retirement, they pay off a mortgage and it
turns out they need fifty percent of their pre retirement income.
We'll have other people get to retirement and move from
(18:38):
say Rockford, Illinois, where we have an office, where it's
very inexpensive housing in terms of the cost high property taxes,
by the way, but low cost of home acquisition. They
then move to be near their kids and say some
part of Florida or Arizona or Tennessee, and the cost
of housing skyrockets and suddenly they need one hundred and
twenty percent of their prevoittiytirement income. You get the idea,
(19:02):
don't just rely on rules of thumb. Be aware of
your expenses. Am I planning to downsize? Am I planning
to move somewhere else? What will my expenses look like
in retirement? It is very often, very very very often
you don't need anywhere near one hundred percent of your
pre retirement income. One core reason for that because some
(19:25):
people they can't they can't figure this out in their brains.
They're like, what are you saying? That makes no sense?
If I'm living off of if I'm making one hundred
thousand dollars a year, I'm going to need one hundred
thousand dollars a year in retirement to live the same lifestyle.
And I go, Nope, there's two things you're missing. In
most circumstances. You're saving into a four or one K
plan when you're working, so you're not going to need
that portion of your income. And secondarily, you're paying this
(19:47):
little thing called a fyke a tax. FIKA is Social
Security and medicare combined that account for about seven and
a half percent of your income. Your employer typically picks
up the other half unless you're self employed and you
pick up all those payroll taxes, but the the idea
being you don't pay FIKA taxes in retirement. So right there,
there's a seven and a half percent savings of what
(20:07):
you will not need in retirement. So very often you
do not need anywhere near one hundred percent of your
pre retirement income. But it is critical for you to
go down through the list. What will I actually need
to spend money on? Okay, so that's that's half the equation.
What are my expenses? The other half of the equation
(20:28):
is what are my income sources? Right, simple concept, so
you know, it's is it. Do I have Social Security?
Or like Bill, was I a federal employee and I
didn't save in a social Security system? Or maybe I did?
What pensions do I have available to me? What part
time work will be available to me? Do I want
to work part time? How large is my portfolio? Do
(20:50):
I have pensions from an old, old employer that I
need to you know, get my arms around and understand.
Do I have a spouse who's going to still work?
Does that spouse have Social Security? Once you've evaluated all
of what will be available to you into the future,
it does start to help you to hone that age,
right Like, oh, let's say I'm not Bill and I
(21:11):
don't have a federal pension, and I'm not a State
of Wisconsin employee and I don't have an ETF pension. Well,
then it's probably going to be mostly what you have saved.
And Social Security it's going to be pretty simple. And
you can't even draw Social Security till sixty two under
most circumstances. So right there, you got it kind of
a minimum age to think about. And then most people
(21:32):
it's somewhere between sixty six and sixty seven is when
they get their full unreduced Social Security, So boom, right there,
there's another kind of demarcation line. And then you don't
get Medicare, which is kind of like senior healthcare for
or I'm sorry, healthcare for seniors here in the United States,
that doesn't come in until sixty five. So you get
the idea. You need to kind of figure out when
(21:54):
these income sources and health insurance for seniors are going
to start to become available to you and evaluate those
income streams because that'll help you understand when you find
the match between what your expenses will be and enough
income sources to offset that. And then finally within that evaluation,
this is where it gets more complicated and you might
(22:15):
need some help. Do you understand what a sustainable withdrawal
rate from a portfolio is? Now? If you're a State
of Wisconsin employee or a federal employee and you say, no, no, no, no no,
My pensions and social security are going to cover all
of my expenses and more, will God bless you? That
(22:36):
is fantastic, And we work with a lot of people
like that. That is great, But that is not the
majority of people listening to me right now. The majority
of people listening to me are going to go, well,
the pensions and social security cover some, but I'm going
to need some from my IRA or four oh one
K or four oh three B. And then the question becomes, okay,
if that's you, what is a sustainable withdrawal rate? And
(23:00):
are you accounting for inflation adjustments between now and when
you die? And will that money last? And have you
invested it appropriately? You get the idea. This is where
it's it's art and science combined, because we don't know
what the future holds for markets, and so you've got
to got to generally build a portfolio that can sustain
volatility in the future. So those are the two parts
(23:22):
of it. It's both income and expenses. You're going to
want to sit down either on your own or with
your spouse or with a financial advisor.
Speaker 1 (23:28):
Important factors there for sure. As we talk this morning
with CJ. Closs and Eric Schwartz, they are our retirement
planning professionals from class financial website cossfinancial dot com that's
coss k l aas financial dot com. Del for number
six oh eight four four two five six three seven.
No charge for that initial get to know you appointment
tech Loss Financial. It will be complementary to you again
their number six oh eight four four two five six
(23:50):
three seven. We'll do the Closs Quiz question a week.
We'll also button things up about some other things you
should be reviewing mid year. We'll get those details next.
As Money in Motion with Coss Financial continues right here.
You're on thirteen ten WYB. I don't forget. If you
miss any part in today's program or you'd like to
share it, you can always head on over to classfinancial
dot com. That's coss k l a as Financial dot com.
(24:11):
Subscribe to the podcast right at the website telphon number
six O eight four four two five six three seven.
No charge for that initial get to know you appointment
tech costs financial. It will be complimentary to you. So, Eric,
as we're kind of sitting at the mid of your point,
what else should we be reviewing right now?
Speaker 4 (24:26):
Yeah, to wrap things up for us today, Sean, I
want to just start by touching on tax efficiency and
then we will we will end our show today by
just touching on a few other kind of kind of
random topics that will pull together. But starting with with
tax efficiency. This is not something that we see people
thinking about a whole lot before they get close to
(24:47):
the end of their career. So we want to we
want to be evaluating whether or not your your retirement
assets are diversified across what you'd call taxable, tax deferred
or ROTH account. So what this has to do with
is how you will be taxed when you draw the
dollars out in retirement. So the most common type of
(25:09):
retirement account we see are tax deferred accounts. That means
that the dollars in there have never been taxed before
and they are growing tax deferred. So when you draw
the funds out they will all be fully taxable to you.
We also see wroth accounts, which are a newer type
of retirement accounts, so they generally folks have less wroth
dollars than they do tax deferred. But these are dollars
(25:32):
that have already been taxed and they are growing tax free,
so when you take the dollars out, there will not
be any tax due on them. Then finally, taxable taxable
assets are generally dollars that are in an account that
does not have any sort of tax qualification. So basically
it's an investment account. You're paying taxes on any interest
(25:56):
in dividends or capital gains on an annual basis, and
when you draw the funds out, you will you will
pay tax on any of the gains that you've made
over time. So that's just a general investment account, not
really receiving any sort of tax benefit. So those are
the three kind of large or high level types of
(26:16):
dollars we see. We want to make sure that you have.
You know, we want to be as balanced as possible
among these because there are there are different times in
your retirement when when different types of dollars will be
beneficial for you. This is also a good opportunity to
check in on something called a Wroth conversion, which we've
talked about on the show before, and that's a way
of maybe balancing out some of those some of those
(26:40):
different retirement assets you have, because generally tax deferred assets
are the highest balance for folks, So you can consider
a Wroth conversion to move some of your tax deferred
dollars to the Wroth side of the column. And we
also want to be thinking about how how future required
minimum distributions and Social Security taxation will be affecting your
(27:03):
retirement income. So remember required minimum distributions or rmds are
are most important as it applies to tax deferred assets,
and it's a it's a minimum amount that eventually you
will need to take out of that taxable account. So
when you're taking dollars out, you're you're paying full income
tax on them. So this again was going to loop
(27:25):
back to that being diversified across the three different types
of investment accounts. And finally just to kind of wrap
up tax here, this can get really complex, really fast.
So this is a space that we would encourage you
to speak with a tax specialist or a financial advisor
on because not only is it complex, but it is
(27:47):
changing all the time. So so take that, take that
information to an expert, and and talk through that. A
few other items here I just want to wrap up
with it's a good opportunity to evaluate the progress you've
made on paying down debt. I think oftentimes people have
(28:07):
very lofty goals of eliminating debt really quickly throughout the year,
and then life happens. So just take stock of where
you are with that. Make sure that you're thinking about
where you're going to get health insurance from. If you're
planning to retire before age sixty five, so we can
go back to our color bill earlier, this would be
(28:28):
a big consideration for him thinking about retiring prior to
age sixty five when he's eligible for medicare. We want
to be making sure that we're keeping the estate plan
up to date, so this includes your wills, your powers
of attorney, and your beneficiaries. Great time to stop, pause
and evaluate that. And then finally take a look at
(28:52):
your emergency savings and make sure you have that as
a level at a level that you are comfortable with.
Because inevitable, plea, something unexpected comes up, and we want
to make sure you are ready.
Speaker 1 (29:05):
For that really full show this week for sure with
a lot of really good information. Don't forget if you
messaged any part today's program or you want to listen back,
just head on over to class Financial dot com. That's
colss k l aa as financial dot com Artell for
number six oh eight four four two five six three seven.
No charge for the financial get to know your appoyment
deck colss Financial. It will be complimentary to you again
(29:26):
their number six oh eight four four two five six
three seven. Time now for the class quiz question of
the week. It works like this, just a moment, I'll
ask you the class quiz question of the week. You
will then have thirty minutes for today's program. We call
the Class Financial Office right here in Madison at six
oh eight four four two five six three seven. If
you are the first car correct answer, you win this
week's prize, which is a twenty five dollars gift card
to Texas Roadhouse. This week's class quiz question the week
(29:49):
is this. If you are under fifty this year, the
year twenty twenty five, what is the maximum you can
contribute to your four oh one K or five O
three B is it twenty thousand or twenty three eight thousand,
five hundred dollars. Telephone number six oh eight four four
two five, six three seven. First call correct answer to
win that prize. This week's prize, of course, that's Coss
Financials office right here in Madison again the number six
(30:11):
h eight four four two five six three seven. CJ.
Speaker 3 (30:14):
Eric.
Speaker 1 (30:14):
It's always great to talk with you guys. Have a
great fourth and we'll do it all again in a week.
Speaker 3 (30:18):
Thanks yous.
Speaker 1 (30:19):
Don take care guys. Doctor Greer comes your way next
right here on thirteen ten Wiba. This is Money in
Motion with Coss Financial Asset Advisors, LLC, a registered investment
advisor registered with the SEC. The contents of this show
are for informational purposes only and should not be considered
individual investment advice. Coloss Financial does not offer tax or
(30:40):
legal advice. Any opinion offered during the course of this
show is the opinion of that particular investment advisor representative
and not necessarily the opinion of cost Financial News comes
your way next right here on thirteen ten Wuiba
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