Hosts: Aaron Bert, CFP®, AIF® and Joe Bert, CFP®, AIF®
Hello everybody, welcome to another edition of On the Money with the Certified Financial Group here on News 965 WDBO. It’s ask the experts weekend. We’ve got Joe Bert and Aaron Bert from the Certified Financial Group in today.
Good morning, gentleman.
Morning.
How are you guys, today?
We’re doing great, how are you?
Super, super.
Joe, good to have you back from Lively <?>.
<Inaudible>, good to be back, less the snow.
The snow, where’d you go?
I was in North Carolina.
Beautiful, North Carolina.
Leaves are changing, and Sunday we flew out, snow flurries, baby. Time to get out of dodge.
But came back here, to what 86 degrees on a Tuesday?
Yeah <Inaudible>.
Joe, what can we call you about today?
Well, Aaron and I are here this morning to answer any questions that you might have regarding your personal finances. As we say, we go through life trying some of this, trying some of that, and wake up when we’re 55 years old, look across the kitchen table at Loretta, and say Loretta honey our paychecks are going to stop sometime, and how are we going to continue to live this wonderful lifestyle that we’ve been enjoying over all of these years? And that’s what’s financial planning is all about. What do we need to do now so you don’t look back five or ten years from now and say gee, I wish I would have known, or gee I’m sorry I did. And that’s what Aaron and I and the other certified financial planner professionals at CFG do, day in and day out for a fee. That on Saturday morning, we are absolutely free. So if you have any questions regarding your personal finances that revolve around questions on stocks and bonds and mutual funds and real estate and long-term healthcare, IRAs, and annuities, and reverse mortgages. And all of that stuff that we’d ever learn about in school and we <Inaudible> into and tried it and some of it works and some of it doesn’t, we’re here to fix all that up. We are your financial body shop. So you like that? A financial body shop?
Yeah, I don’t know about that <Inaudible>.
Stay tuned. So we’re the financial body shop, and we’re here to knock out those dents and to put the bond-o in where <Inaudible> bond-o and get you all set up. Do they still use bond-o? <Inaudible>
I was going to say, what’s bond-o?
You don’t know what bond-o is?
Well I’ve heard of bond-o, but yeah know.
The super-duper <Inaudible> back in the day.
Bond-o. No, I’ve never used bond-o.
No, <Inaudible> in the body shop. Anyway, we’re here to use the bond-o or whatever it takes to fix up your financial situation. So the good news for you if you have any questions, just pick up the phone and dial these magic numbers. You don’t even need to use your real name, you could <Inaudible> or Daphne or Jack or Loretta or whatever it might be.
And some people who just like to use those names that you give out. <Inaudible> any Daphnes and Sophias and Lorettas have called there?
That’s correct, that’s correct.
Well the magic numbers are 844-220-0965, 844-220-0965. We also have the text machine up and running as well, 21232. That’s 21232. Alright, let’s start today’s conversation with today’s topic, four ways retirement savers can help reduce their RMDs.
Yeah, actually this is one of those things that — it’s an interesting problem to have because we are encouraging or always encouraging people to save for retirement. One of the best ways to save for retirement is to make contributions into your IRAs or your retirement plans at work on a tax-deferred basis so that you realize the tax savings today. The issue with doing that — one of the issues with doing that is when you actually hit 70 and a half, you have to start taking money out of those accounts and you can’t control how much money you take out of those accounts. It is a determined amount at the minimum, it’s called your required minimum distribution, that you have to start taking out when you turn — get to be 70 and a half. And if you did a good job of saving and if you have Social Security and maybe you have a pension, now you have to pull out these required minimum distributions. Some people don’t realize the tax issues that come about with having those required minimum distributions, so this is all about how to reduce the taxation on your required minimum distribution. There’s a couple of ways that you can do that. Once you reach 70 and a half though, you’re in the point where there’s not a lot you can do. Basically, the only thing you can do is give some of that money away, and the government now has what’s called a qualified charitable distribution. It’s a QCD. You can give up to $100,000 from your IRA directly to a qualified charity and that counts towards your required minimum distribution and then you don’t have to pay taxes on it because you’re giving it to a charity. So that’s one of the ways you can do it if you’re over 70 and a half. But we do have clients who are in that spot between say they retire at 60 and then they don’t have to start taking their RMDs until 70, well they have 10 years where they have no income and they don’t have to do the required minimum distribution. There are some planning opportunities there that you could take advantage of. And one of those is if your income is low enough, is to start doing Roth conversion. So you can reduce the size of your IRA so that when you hit 70 and a half you don’t have to take as much out and start converting some of that when you’re in a low tax bracket into a Roth. We encourage that for a lot of our clients, especially when we’re doing planning and we see the opportunity where there’s not going to be a lot of income. Additionally, you could just take extra distributions before you hit 70 and a half, trying to shrink the size of the IRA. The idea is to get as much money out of that account when the taxes are low so that when you hit that RMD amount, that there’s not as much <Inaudible>. So Roth conversions is one way to do it, just taking money out and spending it which we don’t always encourage it if you don’t need the money. And then the qualified charitable distribution is another great way to do it as well.
As Aaron said, one of the things that really pops out when we do planning for clients, particularly does that don’t need the money today and don’t have the income because they’re in a low tax bracket, but they have a pretty good sized 401k IRA, is to do that Roth conversion. But don’t go crazy with this, you don’t want to push yourself off in the 25% tax bracket. So you look at how much you can take out in a low 10%, maybe 15% tax bracket and take advantage of that.
Or tax-free.
Or tax-free.
Yeah, there is another way too, and one other thing that a lot of people don’t realize as well is that if you’re still working and you’re 70 and a half and your employer has a 401k and your 401k plan allows rollovers into that plan, you can actually defer your RMD by rolling your IRA into your employer sponsored plan as long as you’re not more than a 5% owner of that company.
So there are some strategic reasons as they say.
Strategy <Inaudible>, an official financial plan word.
I guess you learn that as a CFP, correct.
I like it.
That is correct.
Well 844-220-0965 is the number to dial us up today, if you have a question for the panel. Again, 844-220-0965. 844-220-0965.
And while we’re on IRAs and 401ks, there has been some new tax proposals in fact I believe it is law, that if you have suffered some damage in the hurricanes, you now have the ability to make some withdrawals from your 401k and avoid the 10% penalty if you’re under the age of 59 and a half. So you still have to pay taxes on it and you have a few years to spread the taxes over. But talk to your tax preparer this year if you have some damage. You may be able to — and you need some money for your repairs and you’re tapping into your 401k to do it, there may be a way for you to get that money without the 10% penalty. So talk to your tax preparer about that.
<Inaudible> information, alright again. 844-220-0965 is the number to dial in. 844-220-0965. Jim in Orlando is up next. Jim, go ahead, you’re on with the certified financial planners with the Certified Financial Group right here on WDBO.
Good morning, Jim.
And good morning, gentleman.
Good morning, Jim.
The — if I want to do the required minimum distribution from an IRA before they send me the letter early next year, can I do that now?
Well, it won’t do you any good. I mean you could take it out now, but you’d have to take out the pro rata amount every year based on the value on December 31st on the previous year. So come next year, you’ll get a letter based on what the value is in December 31st telling you what you’ll have to take out in 2018.
Okay, <Inaudible> I need the money.
Oh, <Inaudible> well that’s a deal. Well that’s a whole different deal.
Yeah, I mean if you need the money and that’s your only source of income, then yeah, you should take the distribution.
No, that’s not the only source of income <Inaudible> I’ve had some unexpected expenses.
Sure.
And I was just wondering if it made any difference whether I do it now or do it when they send me the letter or what.
Well if you can push it off — it really depends on your income needs. So if you could push it off until next year, then that’ll apply towards your required minimum distribution for next year. It’s by calendar year, though. It’s not just within a rolling 12 months. So you have to take it every calendar year.
This year, I took it like when they send me the letter, but this time I could use that money.
Well it’s always your money Jim, so if you need the money, grab it. But you’ll have to pay taxes on it this year and then whatever your balance is left after you’ve made that withdrawal on December 31st, then you’ll have to take out that required distribution for 2018.
Okay. Another question is healthcare <?> expenses, <Inaudible> doubled that up, now?
That’s the — the homestead exemption, you’re talking about the State of Florida for your property taxes?
Yeah. That I’m not aware of.
I haven’t heard of that, either.
That I’m not aware of.
Well I thought I heard that.
Maybe you’re thinking of the personal exemption that they’re talking about increasing.
The new tax bill.
Yeah.
They’re talking about doubling the personal exemption.
Actually, the standard deduction.
Yeah, okay. What am I going to do with that?
Well, who knows? Right now, the house bill is what it is and it’s got to go to the senate, but the house and the senate they’ll come up with a bill and hopefully something will be on the President’s desk before the end of the year to sign. So at this point, it’s just a lot of conjecture, but it’s taking a little bit of shape that we saw released on Wednesday. We have some things we can talk about that as well.
So they don’t know how much it will increase or <Inaudible>
It’s going to double.
Oh, it is.
Yes. That’s the proposal, but you never know what the house is going to do.
Okay. Alright, Jim. Thanks so much for the phone call. If you would like Jim’s line, it’s 844-220-0965. 844-220-0965. Text machine up and running as well, 21232. Got a text question in, gentleman. Why do some people think the bond market is in a bubble and how is the equity market impacted?
Why is the bond market in a bubble? Why do some people think it’s in a bubble?
That’s what the texter writes in at 21232.
Well it’s been a good bond market as well as a good stock market, but what we anticipate is going to happen and we can see it happening already is the The Fed will begin tightening, which means interest rates will go up. When interest rates go up, the value of your bonds go down. I don’t care if it’s a government bond, if it’s a municipal bond, if it’s a corporate bond, all bonds act the same way. When interest rates go up, the value of your bond goes down. So you want to be careful, you don’t want to go too long with bonds in terms of maturity. But most people need some bonds in their portfolio or bond funds as we use them for stability. So that’s <Inaudible> maybe talk about. It’s been a wonderful time for bonds the last several years, the bond prices have been very stable and that’s the good news. The bad news is that yields have been awful. Yep.
Alright, well that’s an interest text.
There you go.
Just like that, 21232. I think you guys have got some workshops coming up this week for —
Actually today, Gary Abely has a workshop on Medicare, it was a full house. In fact, there’s standing room only so if you made a reservation you better get there because that’s going to be a — it is sold out.
It is a sold out show, standing room only, so if you don’t want to stand, get there early.
However, next Saturday everything you wanted to know about mutual funds. This is another great one Gary Abely, CFP, CPA will be conducting next Saturday morning in our offices in Altemont Springs. And a lot of people own mutual funds. You have them in your 401ks, you have them in your IRAs, you may have them individually. There was an interesting article, Aaron. I don’t know if you saw it — or maybe you did see. The Morningstar?
Yes.
Why don’t you talk about that?
Morningstar is — it was actually in ad Wall Street Journal last week and basically talked about the history of Morningstar, how they got started. And how so many people have come rely on the start rating system to make mutual fund investment decisions. And Morningstar — the Morningstar rating system if you’re not familiar with it, Morningstar is a company who houses data on mutual funds. Started collecting data back in the ’80s, ’70s and ’80s.
Yeah.
And started out of Chicago and they started collecting data on mutual funds and as time has progressed, they were publishing that data so that people could get an easy way or financial advisors at the time could get an easy way to consolidate individuals and do comparisons on different mutual funds. Well they ended up developing a rating system, and it’s the star system. It goes from one star to five stars, with five stars being the best within their rating system. But it’s purely looking backwards. It’s looking into the past based off of performance to determine which are the funds that did the best in the past. And they never meant it for forward looking. The problem is that a lot of people misconstrue what that rating system is all about and they use it for forward looking to make mutual fund decisions going forward. Always assuming that funds that have performed well in the past are going to continue to perform well in the future. And what the study showed is that that is very much not the case. And so it was a very interesting article on Morningstar. Did we put that on our website, yet? I don’t know <Inaudible>
I don’t know if we have or not, but the point is that you buy a five star fund today thinking that’s what it’ll be forever and <Inaudible> wake up three or five years later and find out it’s no longer a five star, it’s now a two star.
Right. And there’s a lot more that goes into mutual funds than just strictly performance. There’s manager tenure, there’s fees, there’s style drift, there’s the <Inaudible>, there’s a lot of different criteria that go into choosing and selecting a mutual fund rather than just looking strictly at performance. And unfortunately a lot of people just look at performance. And within our system, within the way we operate, performance is one of the last things that we look at.
It is important, but it isn’t the end all be all and as Aaron was alluding to, these will be some of the things that Gary will be covering next Saturday morning in our office in Altemont Springs from 11:00 on and about an hour and a half session. He’s going to talk about what you will need to look at besides just the star ratings. And mutual funds — when as soon as they get that five star rating, boy they spend the money in advertising. And that’s where you see five star — because that’s what people are gravitated to because it’s the only criteria that the general public really has <Inaudible>. It’s like a five star hotel. That kind of — but it isn’t the end all be all and only to be disappointed somewhere down the road. So as Aaron said, we have a very sophisticated methodology to use from the Center for Fiduciary Studies that looks at 11 distinct criteria in analyzing mutual funds. Every mutual fund is scored and graded before it goes into the client’s portfolio, and then we grade it again on a regular basis to determine whether or not we want to keep it in there. And performance is important, but it isn’t the end all be all.
Just like five stars on Yelp is not the end all be all for a restaurant.
I guess not, yeah.
And I think part of the point there too, I mean performance is what everybody wants, it’s why you invest money. Because you want performance. However, when you’re comparing — there are 20,000, 30,000 mutual funds out there. There’s actually more mutual funds than there are stock in the New York Stock Exchange. And when you’re comparing mutual funds, if you have several that are very close in performance, there are a lot of criteria that you need to be checking off underneath that before you’re making an investment selection. You can just go for the one that just performs the best.
So once again, if you want more information about everything you wanted to know about mutual funds, Gary Abely, CPA, CFP will be covering that at our offices next Saturday, I said 11:00. It starts at 9:00, 9:00 next Saturday morning from 9:00 to 11:00. You can go on our website, that’s financialgroup.com, financialgroup.com, you can make a reservation right there, and we hope to see you there.
Alright, well if you’ve got a question for Aaron or Joe Bert, it’s 844-220-0965. That’s 844-220-0965. The text machine is up and running as well, 21232, already got a text question in, we’ll take some more right after we get the Three Big Things You Need To Know.
Hey, welcome back. This is On the Money with the Certified Financial Group here on News 965 WDBO. We are two minutes away from the latest news, weather, and traffic with Dave Wahl over at the News 965 with Joe and Aaron Bert are live here in the studio taking your phone calls and your text questions at 844-220-0965, that’s 844-220-0965. So we’ve got a text question in there, we’ll get to those on the other side. But Joe, I believe you have an announcement that you can see today <Inaudible>.
Not only can you hear us, if you are so inclined you can tune in and watch what goes on behind-the-scenes. It’s not a pretty picture, but it is what it is, you know what I mean?
Yeah.
It is what it is. Go on Facebook, Facebook live, go to Facebook.com and Facebook/certifiedfinancialgroup. That’s our CFG webpage on Facebook, you can like us and follow us and you can also go there and view our livestream of today’s show and future shows as well. We also post a lot of really good information on there, so if you follow us you’ll be updated whenever we post anything. We also put our TV appearances up there and lots of good stuff. So Facebook.com/certifiedfinancialgroup.
I also like looking at your TV appearances.
<Inaudible>.
Well I tell you what, we’ve got one minute. We went a little long in the first segment, we have one minute away from the latest news, weather, and traffic, so real quick wanted to make the announcement about Gary Abely’s workshop tonight, sold out.
That’s gone, but next Saturday, 9:00 everything you ever wanted to know about mutual funds but didn’t know who to ask, Gary Abely will cover that in detail next Saturday morning at our offices in Altemont Springs between 9:00 and 11:00. Go to our website, that’s financialgroup.com, financialgroup.com, click on workshops. You can make your reservation right there, I’m sure that one is going to fill up fast if it’s not already filled up.
Alright, and 844-220-0965 is the phone number to dial us up today. We’ve got a full lines open, all lines are open and now is the perfect time to call in, get your questions screened so that when we come back from the latest news, weather and traffic you’ll be able to get it answered right here on the radio. So it really guarantees we don’t run out of time. Again, 844-220-0965. 844-220-0965. Tax machine is up and running as well, 21232. <Inaudible> do about 160 characters, that’s all we can see on our screen. If it’s anything longer than 160, we may not get to it. Again, 21232. Time for news.
And welcome back, this is On the Money with the Certified Financial Group here on News 965 WDBO. All part of our ask the experts weekend we do right here for you on WDBO. Joe and Aaron Bert are here in the studio, taking your phone calls today at 844-220-0965. 844-220-0965. Joe, what can the audience call you about today?
Once again, Aaron and I are here to answer any questions that you might have regarding your personal finances. As we say, we go through school and they don’t teach you this stuff. We try some of this and try some of that, and we wake up when we’re 55 years old and find what we have is our collection of financial accidents. And we are here as your financial body shop to fix you up and answer questions that you might have, decisions you might have to make regarding your 401k, regarding an IRA, regarding real estate, stocks and bonds and mutual funds and long-term healthcare, and annuities and life insurance, all of that any more, all of those questions that might be lingering through your mind, didn’t know who to ask. Well we are here. And the good news for you is there’s absolutely nobody in line, so all you have to do is pick up the phone and dial these magic numbers.
Magic, magic. 844-220-0965. 844-220-0965. Text machine is up and running as well, 21232, just keep it to about 160 characters, that’s all we can see on our screen. If the message gets cuts off, we may not be able to answer properly. So that’s when you just give us a phone call, 844-220-0965. Text or <Inaudible> in gentleman. I am 72, not working, and am required to take withdrawals annually from my federal government TSP as well as my annual RMD from the TSP. Can I place the — and that’s why we ask you to keep it to 160 characters. The question has been cut off and therefore <Inaudible> maybe.
You know what I think he might be going with that? And this is a common question. Can you place those RMDs into a Roth?
Okay.
And that’s what my guess is, and the short answer is that is no. You can’t do that. You have to take the RMD, have to pay taxes on it. You can take out more than that but the RMD — that’s a strange thing, on how would they ever know — what’s what? But the truth of the law is that you can’t take that RMD and place it into a Roth.
Right. You have to realize taxes on that RMD, but you can take more than the RMD and put that into a Roth.
Yes.
So if you have — say your RMD is $1,000 and you could take out $2,000, put 1,000 of it into a Roth conversion, pay the taxes on it, keep it into a Roth so it would stay tax-deferred, and then take the remainder and you’ve got to spend it. <Inaudible>.
You got to do it.
Yep.
Alright, well just like that 21232. Let’s go to Mike in Orlando on the phone lines. Mike, you’re on with the Certified Financial Group here on WDBO.
Good morning, Mike.
<Inaudible>, hey how are you doing on the is beautiful day, today?
We’re doing great, how are you?
Great. I had a question. My daughter does commercials and stuff and she earns money but she’s only 14. And I want to know, can she have her own Roth IRA since she does pay income taxes on her money that she earns?
Of course. Yes.
She can. The question is what can she invest it in, and she’s limited because she’s not 18 years old. Therein lies the problem. But she can — <Inaudible> she can put her money into a Roth. You could put it into some form of bank instrument, but I don’t believe that she can invest in mutual funds until she is of age.
Yeah, can you do a custodial IRA for her and then turn it over?
No, <Inaudible> there’s no such animal as a custodial IRA. You’re thinking of a custodial account that you would set up before somebody is before the age of 18.
Correct.
<Inaudible> good idea.
You know, if you go online and I don’t know who you use for investment purposes, but Fidelity who we use as our custodian has a great section on their website called the Fidelity Roth IRA for kids. And it allows you to open a Roth IRA for children and the parent, grandparent, or friend can manage it on behalf of the child. So yeah, that’s a great place to go, it outlines the whole thing for you and actually let’s you open an account right there if you’re interested in doing so.
And as far as contributions, they’re the same as if you’re 18, based on your income?
Yeah, well you have to have the earned income. You can put up to $5,500, it’s obviously because they’re under 50, so yeah $5,500 and you have to have that much earned income and put it right into the Roth account.
Alright, well that’s good news to hear because I only told if you can put in even $5,000 when you’re 14, you’ll thank me when you’re older.
That’s a great start <Inaudible> that’s a wonderful thing that you’re doing for her.
The key is to have her keep her hands off it because that’s the temptation that you get when you get to be a teenager or in college <Inaudible> newly married and all of that stuff, and you lose that opportunity to let the money compound and grow for you.
That’s a great idea, Mike. Thanks for the call.
Alright, no problem. Thank you guys.
<Inaudible> alright, if you want Mike’s line, it’s 844-220-0965, 844-220-0965. The only thing I was thinking about at 16 was trying to <Inaudible> buy a car when I got my <Inaudible>.
Of course, that’s the key.
Alright, we wanted to talk to you guys about the new tax law. You guys had some things you wanted to share on that, let’s get to that right now.
Well you know <Inaudible> the house version was released Wednesday and they’re going to have the highest bracket as 39.6. However, there is a little hooker in there. They’re calling it the bubble tax, if your income is over $1M then that has another 6% surcharge on top of that for the next couple hundred thousand dollars to <Inaudible>, yes, yes, yes. The devil is always in the details, always in the details. So that’s in there. And there’s something that I just saw this morning about 529s. They want to liberalize that to allow you to use the 529 plan not only for college but for K through eight education. So that may be an opportunity.
K through 12.
I’m sorry, K through 12. Thank you, yes, K through 12.
<Inaudible> discriminate against the high schoolers.
K through 12 and obviously all the way through college. So that might happen, but once again this has got to go through the senate than it’s going to go through committee and who knows what the end result will be, but there was some interesting features in there and let’s hope that at least they get the corporate rate down. I think that’s critical <Inaudible>
That’s the big thing right there.
That is the big enchilada. So let’s hope that that happens. We’ve got a call here, Kyle? Who do we have?
Yeah, we have Robert in Altemont Springs. Robert, you’re on with the Certified Financial Group here on WDBO.
Good morning, Robert.
Hey Robert.
Yes, yes good morning. I have a question. I’m 60 years old. I’m still working, and I would like to take money out of my retirement account. I have a thrift savings. My question is would they tax me at a higher bracket when I’m still working, or if wait a couple of years when I retire will be the lower tax rate?
So let me be sure we understand you. You’ve got money in your 401k, now?
Yes.
And you want to withdraw, and you need the money is what you’re saying?
Yeah, but I’m still working, <Inaudible> I think I can — yeah, I think I can wait when I retire a couple of more years.
Oh, well that’s certainly the <Inaudible>.
What’s the difference with tax, the taxes <Inaudible> when they take it out? Because I’m 60 years old.
Well so you’re over 59 and a half so there is no 10% penalty or early withdrawal penalty, so you could put that out of your mind. The only thing you’re going to be taxed on is the amount that you withdraw is going to be added to your regular income. So if you’re still working and you have income, and then this additional amount will add to your income which may push you into a higher tax bracket.
So what you want to do is delay that for as long as you can so when you have little or no income, you pull it out, and then you have little or no taxes, depending of course how much you pull out. So this is where the planning comes in, Robert.
Oh, I understand.
Yeah, you understand?
Okay. <Inaudible>
<Inaudible> while we got you on the phone, let’s talk a little bit about your retirement planning and so forth.
Okay.
How long do you plan to work?
I’m 60 years old, probably two more years, 62.
A couple of more years, so you’ve got 62 and you’re going to grab Social Security at 62?
Yes. Alright, let’s talk about that. You are — you maybe making —
I also have another thing to put in the mix. <Inaudible> I also have — I know so many people don’t have, I have a retirement kind of a pension.
You have a pension, that’s great.
Yeah.
Okay, that’s good, okay.
So I’m going to have a pension, I’m going to have Social Security and I’m going to have thrift savings.
Okay. You’re probably doing in your mind what we call informal or back of the envelope financial planning, which means that — this is what virtually everybody does because they don’t know how to calculate this. So what you’ve probably done is you figured okay, I’m spending so much every month, every year, right? You know how much you’re spending, right? And then you know how much you’re bringing in with your salary and what Social Security is going to give you and what the pension might give you and that kind of balances out. And you think you’re going to be okay, that’s probably what you did, right?
Yes, exactly.
Okay. You’re about to launch into a disaster.
Maybe.
More likely than not. And I don’t want to discourage you, but I’m going to trying to avoid you becoming a casualty of — we see this often. People walk into our offices four or five years after retirement because they’ve done exactly what you’ve done, and the wheels are coming off and they don’t know why.
Right.
The reason being is because you haven’t calculated or haven’t figured in all of those incidental expenses on top of your basic living expenses like groceries, gasoline, electricity, so on and so forth. On top of that, you haven’t figured inflation because I guarantee you the price of gasoline, groceries, electricity is going to be a lot higher <Inaudible> now than what it is today. And at age 62 statistically, you’re going to live another 25 years. So if you’re out on basically kind of a fixed income, you’re going to have a decreasing lifestyle. And what you don’t want to do is jump into the retirement pool too soon, you’re grabbing Social Security at 62, when you do that you’re taking a 25% haircut over and above what you’re going to get if you would have waited until full retirement age. And also your pension that you’re getting is probably going to reduce if you grab it earlier. So I understand you’re at a point in life that you really want to kick back and enjoy life, I understand that 100%. And unfortunately — I hear you. I understand <Inaudible>
<Inaudible> a few people <Inaudible> just keep working while you can.
While you can, exactly. Because chances are you’re making more money than you were 10 years ago, is that a fair statement?
Yes, that is fair.
Yeah, so see? You’re like a professional athlete. You’re at your peak earning years, and what you want to do is keep building up that cookie jar so when you have to start withdrawing from it, you’ve got a lot of cookies.
<Inaudible>.
There you go, there you go. So what you need to do is sit down with a certified financial planner, have him or her do a plan for you to be sure that you don’t jump off a cliff too soon and you think your parachute is going to open and it doesn’t open and you find out that you run out of money when you’re 74 years old. And you’re saying paper or plastic, you know?
Yeah, I understand.
So I’m just — Robert, I’m not just here to discourage you, I’m here to give you advice that we see day in and day out when we do financial planning. This is what it’s all about.
Can I have one more question?
Of course.
Yeah, of course.
Okay. There’s two things that people say like if I pay off my mortgage.
Okay.
That’s good, or if I just pay my mortgage every month I get a tax deduction every year.
Perhaps, yes. It all depends on your situation, and that may change with the new tax laws depending on what the standard deduction is going to go to. You may lose <Inaudible>
I was always wondering what would be better, to pay off the house or just pay every month, my mortgage is affordable, you know?
Yes.
Yes, depends on what your interest rate is, how long you’ve been paying on it, I mean there’s a lot of factors that — we get that question a lot too, should I pay off my house? Well it depends on how long you’ve had the mortgage and what your interest is.
You know what happens, Robert? When people rush to pay off their house, then what they have is they have extra money that they they’re not using for the mortgage. And the extra money happens to disappear. You know, it runs through your fingers and now you’ve got extra money that you didn’t have before and the problem is you’re not saving it. So <Inaudible> when you’re paying down the mortgage, you’re forcing yourself to build equity and not to blow that money. So everybody is different, everybody is unique, but I would encourage you, Robert, to get together with a certified financial planner professional, have him or her look at your situation, and this way when you do retire you’ll retire with a high degree of confident that you’re not going to run out of money before you run out of breath.
Thank you so much, I appreciate your time.
I appreciate your call, Robert, thanks for being <Inaudible>.
Thank you, Robert.
Excellent Robert call, thank you so much. Alright, 844-220-0965 is the number to jump in on the conversation. We are very close to our Three Big Things We Need To Know, so Bob in Orlando, hang on the line. You’ll get your question right after we get the Three Big Things. But right now, I just want to say if you want to call in, it’s 844-220-0965. Or text in, it’s 21232. We are planning tomorrow —
Today.
With the Certified Financial Group here on News 965 WDBO.
It is the final segment of On the Money with the Certified Financial Group here on News 965 WDBO. We are taking your phone calls at 844-220-0965. But because it is the final segment, let’s get right back to our busy phone lines, talk to Chris in Titusville. Chris, go ahead, you’re on with the Certified Financial Group here on WDBO.
Hey, thanks for taking my call.
Sure, good morning. How can we help you?
So yeah, my situation is basically I’ve got about $70,000 in student loans. I got a couple of bachelors degrees but right now I’m working a job that’s not really what I aimed for. I’m kind of torn between applying for a better job that has to do with my degree or going back to school for my masters, and I wasn’t really sure how loans go for that. Any suggestions as far as —
How loans go for your master’s degree?
Yeah, like would I be able to put them on hold and then have a better shot of paying them off with a masters, or would it better to just go in with my bachelors degree and get the best job I can?
Well, I would get the best job you can and go to night school.
Okay. So make as much as money as I can with a degree that I have and then —
Exactly. Because what you really want is the job experience in your field. I presume you’re going to get a master’s degree in your field and not go off and do something different, right?
Exactly.
Okay. So my recommendation would be — Aaron may disagree with me.
<Inaudible>.
My recommendation would be is get a job in your field, it’s going to be entry level. Make as much as you can, work on paying down those loans and go to night school. Now that’s going to be a grind, man. That’s going to be a grind, but that’s what you’re doing. You’re laying the foundation for the rest of your life and that’s what you need to do.
Alright, great. I’m <Inaudible> it’s going to be easy, but.
Yeah.
Yeah, I’m trying to get myself in a better situation so it’s going to be a grind, I agree.
Yes.
Yeah, and I don’t think you get there by piling on more debt to go grad school, and Joe is right <Inaudible>
That’s what I was afraid of, yeah.
That’ll kill you. You’ll be paying that off for the rest of your life.
Yeah, and the experience that you’re going to receive as work experience is probably just as valuable as that degree anyways, so keep working.
And depending on who your employer is, some employers will pay for some or all of your education, the master’s degree.
That’s what I’m thinking, of maybe going to work for a university where I can get a degree as I work, something like that.
Well, even in the private sector, there’s some employers that will — depending on what your field is, some employers will pay for you to get your masters degree, so that’s <Inaudible>.
Okay, yeah that sounds like a good plan. I guess I needed to bounce some ideas <Inaudible>.
Well there you go. Thank you for call.
Thank you. Alright, thanks for the call.
Alright, Chris <Inaudible> let’s get to Bob with Orlando. Bob, you’re on with the Certified Financial Group here with <Inaudible>. Oh wow, <Inaudible> there we go.
We lost Bob.
Aw.
A little feedback there. Bob had — I believe it was were there any other company sponsored retirement plans outside of the 401k?
<Inaudible> company sponsored retirement plans depending on <Inaudible>.
Well that answers the question, there we go.
It depends on what your employer offers, now if he’s the employer, he has a lot of options. If he’s not the employer, then the company — I mean there are a lot of options. There’s 457 plans, which are called deferred compensation plans, there’s 403bs which are usually for non-profits. There’s SEP-IRAs, there’s SIMPLE IRAs, there’s a whole gamut of retirement plans that are available. So if you’re the employer, you can find the one that fits your needs best to minimize costs and to maximum benefits for yourself and your employees. <Inaudible> yeah, so the answer is that is yes, there’s a lot of options.
As I like to say, there’s a veritable plethora.
A veritable plethora. I like it. You’ve got some goldmine phrases today.
When you get to be my age <Inaudible>.
And we are — if you just joined the show, the tail end of this, we are livestreaming on Facebook right now and we did get a question through Facebook that we’d like to address as well. And the question was is there a place to park money from a real estate investment property sale before you find another investment <Inaudible> 1031 exchange that gives you more than 45 days to <Inaudible>.
And the short answer is no. However, that being said what you want to do is talk to an attorney that is experienced in the 1031 area and he or she may have some alternatives for you because it is a very intricate part of the law. 1031 exchange is not a do-it-yourself kind of project because if you miss crossing a t or dotting an i, the whole thing will blow up on you.
And a 1031 exchange for those who aren’t aware of what it is, it gives you the ability to take an investment property and defer the gain on it by buying a life type property. So if you have a piece of land, you can sell that land for a profit, for further profit by buying another piece of land.
Well it doesn’t have to be land, it could be <Inaudible> property, investment property. So you can sell land and buy an apartment building or sell the apartment building or buy land or something that you use for investment. But 1031 exchange as we say is an area that is intricate.
And you don’t want to mess it up.
And you don’t want to mess it up, you need a qualified custodian and an attorney that knows what he or she is doing.
Alright, we have one minute. Workshop.
Workshop coming up, Gary Abely next Saturday at our office in Altemont Springs from 9:00 to 11:00. It’s going to be everything you wanted to know about mutual funds but didn’t know who to ask. And Gary would be covering that. <Inaudible> all of things we do as certified financial planners in building portfolios, the 11 distinct criteria that you should look at when you pick a mutual fund. It’s a lot more than how many stars, diamonds, or smiley faces a mutual fund may have. So he’ll be covering that from 9:00 to 11:00 in our offices in Altemont Springs, we’ll provide some light refreshments. Go to our website, that’s financialgroup.com, financialgroup.com and click on workshops, you can make a reservation right there and hope to see you there next Saturday 9:00.
Alright, that’s going to do it. <Inaudible>.
Bye Facebook <Inaudible>.
There you go. <Inaudible> waiting, okay got to send it out, we’re saying goodbye on Facebook. Alright, that’s going to do it for this week’s edition. Stay tuned for Florida Homes and Gardens and we’ll be back here with the Certified Financial Group planning tomorrow —
Today.
On News 965 WDBO.
Dictation made on 11/7/2017 1:50 PM EST.