TRANSCRIPT FOR THE FEBRUARY 18, 2017 “ON THE MONEY” SHOW

Hosts: Gary Abely, CFP®, AIF®, CPA and Joe Bert, CFP®, AIF®

Hello everybody and welcome to another edition of On the Money with the Certified Financial Group here on News 96.5, WDBO.  Joe Bert, Gary Abely are here in the studio taking your phone calls at 844-220-0965, 844-220-0965.  The phone lines are now open as I just pressed the button.  Joe, how are you today?

I’m doing great, how are you?

Aw, hanging in there.  It’s another long week, busy week, and February is almost over.

Hard to believe.

It’s crazy, isn’t it?

Hard to believe.

Trump’s 30 days is Monday.  It’s going to be very interesting.  We’ve got a special edition of Orlando’s Morning News on Monday morning and 30 days in, a lot of headlines in the news.  Dow is up, Dow is down.  I think we’ve finally come to the conversation we needed to — that I was looking forward to all week long of how do I make sense of all these headlines.

And that’s why we’re here.

Yes, absolutely.

<Inaudible> we just want to remind everybody, 844-220-0965.  This is the number to jump in if you have a question for Joe or Gary and Joe, for any new listeners we have out there, what can the audience call you about?

Once again, Gary and I are here to take any questions that might be on your mind regarding your personal finances.  As we say, they don’t teach us this stuff in school and we go through life trying some of this, trying some of that, and we wake up some morning having breakfast with our wife and say, Loretta, we’re 10 years away from retirement and what are we going to do? We’ve got a little money in our 401(k)s, got the IRAs, we went through that seminar, bought this thing, we have no idea what it is, but the guy said it’s the end all, be all for our retirement.  But I’m not so sure.  So here we are this morning.  Gary and I are here to take your questions about anything that might be on your mind regarding your personal finances.  We go through life making decisions about stocks, and bonds, and real estate, long-term healthcare, IRAs, annuities, life insurance, reverse mortgages, 401(k)s, all that and more.  Gary and I deal with that every day and as we say, on Monday through Friday we do it for a fee, but on Saturday morning we do it for free.  Good news for you, there’s absolutely nobody in line and you could be our first caller this morning by picking up the phone and dialing:

844-220-0965.  844-220-0965.  We do have the text machine up and running as well, 21232.  That’s 21232.  Now, a lot of questions last week gentleman about required 401k and IRA withdrawals.  I wanted to bring that up first thing this morning because it’s going to be a very popular topic last week, and I know, Gary, you are the gentleman —

Well, it’s very important to make sure when you hit that ripe age of 70 and a half that you take your required minimum distribution and it’s a little bit less than 4%.  They don’t want you to use up all of your account, but the IRS would also like to start receiving some taxes that have been deferred for awhile.  And it’s really important to know that it is a 50% penalty for those who do not take it out in time.  In essence, you have until April of the following year —

April 1st.

April 1st, yes.  And now we don’t recommend people necessarily do that, wait until the following year, because then you also have to take the distribution for that following year in that year.  So, now you’re doubling up in one year which could actually throw you into a higher tax bracket.  So, it’s really important.  The other thing is sometimes you see different 401k plans with different rules.  Right? Some of them will allow somebody who is still working at age 70 and a half to not take money from that 401k.  Other is — I was helping somebody out with a Delta plan yesterday and they do require money taken out even if the — in this case it was a stewardess.  She does have to take money out of her 401k even though she plans on working a couple years beyond the age of 70 and a half.

That’s interesting.

So, you do have to look at the plan rules in addition to the overall general rules.

So, let’s get back to that.  If you’re still working, for many plans you can not have to take out the required distributions if you’re 70 and a half.  In fact, this is a big year for the Baby Boomers.  Those — the first year of Baby Boomers in 1946 goes through 1964, so the Baby Boomers are turning 70 and 70 and a half this year.  So, this is a big year when those RMDs are going to start coming out and they have to make those withdrawals.  But as I was saying, if you’re still working and you’re not a 5% shareholder and you can continuously contribute to a 401k and not be required to do the distributions, and many plans allow you to roll over an old IRA or 401k which you would normally have to take an RMD from —

That’s right.

— and roll it into that plan and continue the tax deferral for as long as you can.

Yeah, it’s a great — for those who want to work into their mid 70s.  And we’re living a lot longer, so that might be something worthwhile to consider.

Alright, we’ve got a call here.

Got a couple of callers here.  It’s 844-220-0965.  If you want to join the conversation, 844-220-0965.  Edgar is on in Orlando.  Edgar, you’re up first with the Certified Financial Group.

Good morning, Edgar.

Okay.  <Inaudible> good morning.  I’ve got two retirement plans.  I’ve got a pension through my employer and also an investment plan.  And in the investment plan I have about $120,000 right now.  I’m 52 years old.  I want to know — I have it mostly in stocks.  I think it’s almost 95% in stocks and then the rest in bonds.  I want to know —

Individual stocks, Edgar, or mutual funds?

Yeah, like mutual fund type — yeah.  It’s mutual fund type stuff.

Got it.

I’d like to retire when I’m about 65, 67.  I’m 52 now.  I’m wondering when should I switch it over.  Because I’ve got a blend in that investment fund, I’ve got a targeted retirement blend, it’s a Vanguard program.  And then I’ve got stuff in other — like a 50/50.  I’ve got a target retirement and then the other one I’ve got the mutual fund.  So, I’d just like to know what should I do — when should I switch that over to a safer investment?

Well, Edgar it is going to depend on exactly what target-date fund you have selected.  So, if you’re 12, 13 years or so away from retirement, you may have selected a 2030 or a 2025 fund, something like that.  And in a lot of cases, they’re going to be managed with about 60% or so in equities and the balance in fixed income or bond funds.  Specifically, Vanguard uses a fund of funds.  So, the target-date uses some of their index funds.  What I would say is you want to calculate your overall asset allocation to equities versus fixed income because I suspect that other fund you own is probably all equity.  And a general rule of thumb — and I caution that this is a general rule of thumb — is 110 less your age is a good starting point for the amount you might want to have in equities.  Now with that number, you can adjust it up or down based upon your personal risk tolerance.  For example, if you want to be aggressive — and let’s just say you’re 50 to make the math easy — 110 less 50 says about 60% of your money should be in equity mutual funds and the balance in fixed income.  Now, if you want to be a little more aggressive, you can up that.  The beauty of the target-date funds, Edgar, is they are managed so that as you get older and closer to that retirement date, they keep taking a little bit of the equity off the table and adding a little bit of fixed income.  But, what we see sometimes — and this is the case with you — is you don’t pick just the target-date, you also pick other funds.  And that’s why it’s necessary for you to do some math.  And we typically — if you were coming into our office, Joe, we would have him start out by doing a risk assessment questionnaire and it would let us know are you a balanced investor, are you moderately aggressive, are you moderately conservative, and then we would help guide you that way.

Yeah, the mistake I think that many people make, Edgar, and this may be in the back of your mind, is they have this target in their mind they’re going to retire at 65/66, and all of a sudden I need to put all my money in something that’s “guaranteed secure” that I don’t lose any money.  Which is a huge mistake because when you’re 65 years old, when we do planning for our clients we’re projecting over 20, 25 years in retirement.

Or more.

Or more, yeah.  And that’s many, many years.  So, you need to have your money continue to grow.  But what you don’t want to do is take unnecessary risks.  You want to be as conservative as you possibly can be and still have a high probability of still having money when you’re 87 years old.  And the only way to do that, for everyone, is to do what we call planning.  And that’s what Gary, and I, and the 10 other certified financial planning professionals <Inaudible> do day in and day out.  We look at what your income is, what your income needs are, what your sources of income will be with Social Security, a pension, and then what’s that delta? What’s that gap between the guaranteed fixed income you’ll have and your spending? And that has to be made up by what you’ve been able to save and invest over your lifetime.  And then you have a target rate of return of that money and then our job is to construct a well diversified portfolio using some of the best money managers in the world to hit that target and make it happen.  And then we stress test it.  We run what’s called a Monte Carlo analysis.  Why don’t we talk about what that is because <Inaudible>

 

A Monte Carlo analysis looks at your particular asset allocation and determines over the history of the market performances how likely you are to run out of money based upon your particular spending and the investment growth and it will give you kind of a mid-line that will let you know okay, if this were a normal situation you might run out of money at 87 or 88, etc.  But, there will be a lot of circumstances and situations where you would have run out of money before or had money later.  So, the key thing is you do want a little bit of a buffer because nobody wants to run out of money.  I think that’s the biggest fear out there and so — but having the Monte Carlo testing will give you some comfort to know what you can spend and have a high likelihood of not running out of money.  And Edgar, there’s about a one in three chance if — we didn’t ask if you were married — but if you were a couple age 65, that one of you lives to 95.  And so typically I like to plan for at least a 30-year period for somebody retiring at 65.  And that means you probably still want to have about half of your money in equity funds even at the age of 65.  That answer your question?

 

Very good, thank you.

 

Okay.

 

Yes sir, very good.  Thank you very much.

 

Thank you for your call, Edgar.

 

Alright Edgar, thank you so much for the call.  If you want Edgar’s line, it’s 844-220-0965.  844-220-0965.  We also have our text machine up and running as well, 21232.  They are Joe Bert and Gary Abely from Certified Financial Group and we do have a text question in for you gentlemen:  Over the course of my life, I have saved up 25,000 wheat pennies.  Will I be able to use these for my retirement?

 

Well, you will.  You will.  You know, it’s funny because I have three SND coffee cans of wheat pennies at my house and —

 

Are you kidding me?

 

No, I’m not kidding you.

 

Wow.

 

I was a coin collector.  I skipped lunch all through elementary school.

 

And you discovered the <Inaudible> penny?

 

No, no, no, no, no, so on Fridays I would go to the lunch lady with my $2.50 and I would buy four silver half dollars, Kennedy <Inaudible> 64, so she finally decided she was going to start collecting.  So, I did that for about four years.  The other thing I collected was wheat pennies.  What you’ll find is most wheat pennies are worth between $0.04 to $0.06 and on a rare occasion you might have a beautiful, lustrey red — the ultra pure, ultra fine penny that might be worth a dollar or two.  Now, of course there’s some rare ones that go for 1,200, but the issue with that is selling these darn things and you’ve got 25,000 of them.  It’s just the problem is when you get them rated by NGC or PCGS, the last time I went to a show I think it was $35 to rate a coin.  And you can’t afford to do that when you’re dealing with a penny.

 

Pennies, right.

 

So, the big issue that that person will have is going through those and finding the good ones from the bad.  But you know, I look at that and I say okay, you have 25,000 pennies.  Will you be able to use this for retirement? Yes.  But, I do hope you have more than pennies.

 

That’s not going to get you through retirement.

 

That doesn’t get you a lot.  That <Inaudible> even worth $0.04 a piece, that gives him — worth the value of 100,000.  That’s probably worth about $1,000.  And that’s —

 

So, you’re saying if you try to start selling them now? Take awhile? 844-220-0965 is the number to join us here on the radio today.  21232 is the text machine if you want to text.  Keep it to about 160 characters because it’s all we can see on the monitor here.  We are planning tomorrow —

 

Today.

 

With the Certified Financial Group here on News 96.5 WDBO.  Now, it’s time to get the three big things you need to know.

 

The information presented on this program is believed to be factual and up to date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed.  Discussion and answers to questions do not involve the rendering of personalized investment advice, but is limited to the dissemination of general information.  A professional advisor should be consulted before implementing any of the options presented.  Certified Advisory Corp is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded, or exempted from registration requirements.

 

And welcome back to On the Money here on News 96.5 WDBO.  We are here with the Certified Financial Group, Joe Bert and Gary Abely, here in the studio taking your calls at 844-220-0965.  844-220-0965.  Let’s get right back to our phone calls as we are five minutes away from the latest news, weather, and traffic with Dave Wall in the News 96.5 newsroom.  Margaret in Orlando.  Margaret, you’re on with the Certified Financial Group.

 

Good morning.  Thanks for taking my call.

 

Good morning, Margaret.  Thanks for calling.

 

I was gathering my papers to do my taxes for this year and it was at that point I realized I forgot to take out my RMD last year.

 

Oh.

 

Yeah.

 

Alright.  Was this the first year for you or did you just —

 

How old are you, Margaret?

 

No, no I started taking it out in 2014.

 

Ah-ha.  And you took it out in 2015, but you did not do it in 2016?

 

Exactly.

 

Ah-ha.  Well, let’s back up here.  First of all, let’s look at your situation and I think we have some good news for you, perhaps.  You have more than one retirement account, or was it coming out of one account?

 

I take it out of one account.

 

You take — but you have more than one?

 

I have two accounts, but I take it out of one account.  The one that’s the bigger account.

 

Okay.  Alright.

 

Yes.

 

<Inaudible>

 

And your custodian should have sent you notices.  Did they not do that to you?

 

Oh yes.  Oh yes.

 

Oh, you just ignored them.

 

No, it wasn’t ignoring.  I had some medical problems — no, I have medical problems going on.

 

Okay, okay.

 

And complications.  I just — it just totally went past me.

 

I understand.  Well, the good news is Mr. Abely may have some relief for you here.  Mr. Abely?

 

Well, what I would suggest that you do is attach a letter to the tax return.  The first thing you will need to do is for 2017, take out the amount that you should have taken out for both 2016 and 2017.  And you want to do that when you first recognize the error.  So, in this particular case you know about it now so the first thing you should do is on Monday, if you haven’t already, take out what you should have taken out for 2016.  Now.  You may want to take out what you should take out for 2017 also on Monday so that that same mistake doesn’t happen.  You know, you <Inaudible> your particular case, you had a medical situation.  I have been practicing for about 30y as a CPA and I have never had a situation where, if when the tax payer recognizes their error and they’ve written a letter — in your case I would use your medical situation as an excuse or as an explanation of a contributing factor, and simply say you noticed this error.  And I’d basically ask for relief.  And more often than not, I think you’ll find that the IRS isn’t as bad as people think.

 

There’s a form 9523, I think, that you need to attach to your tax return as I understand.

 

Right.

 

Is this something I can do electronically or I have to actually mail-mail it because I have to send this letter with it?

 

Yeah, you need to mail it.  You need to mail it because you’ll want to have a letter of explanation.  And if you want to give us a holler on Monday, I can help you —

 

The office is closed, Monday.

 

Oh, well if you want to give us a call on Tuesday.

 

You may have trouble making those withdrawals on Monday because chances are <Inaudible>

 

Absolutely, I forgot about that.

 

But the first chance you get, that’s what Gary was saying.  Get that done and I think you’ll be okay.

 

And if you need help, if you’re not using a CPA, give us a holler on Tuesday and I can help you with the form.

 

Okay, but you are suggesting I take out for both years, last year and this year?

 

Yep.  Absolutely.  Get it out of the way and you know it’s done.

 

Yes.

 

You have to do it anyway.

 

Oh yeah, right right.  I was devastated when I realized it.  It was like, oh my God.  I am paranoid when it comes to the IRS.

 

Don’t be.  They’re not so bad.

 

Oh my God, oh my God.

 

Alright, Margaret.  Thank you so much for the phone call, really do appreciate it.  If you want Margaret’s line, it’s 844-220-0965, 844-220-0965.  Text machine is up and running as well, 21232.  We’ve got a couple of text questions, but we are one minute away from the latest news, weather, and traffic, so if you want to call in, now is the perfect time.  That way we’d get you screened and lined up during the news.

 

While we have a minute, Gary’s got a workshop coming up, Countdown to Retirement: The Number You Need to Know.

 

Absolutely.  So, we’ve got a financial basics workshop.  It’s called Life Strategies for Success.  We started doing this in high schools and found that the teachers were taking more notes than the students.  So, recommend you sign up for it.  It’s free.  It’s March 4th from 11:00 to 1:00pm.

 

Phone number?

 

407-869-9800.

 

What’s the website?

 

Financialgroup.com.

 

We’re planning tomorrow —

 

Today.

 

Right here on News 96.5 WDBO.  Welcome back to On the Money here on News 96.5 WDBO.  This is the show where we are helping you plan tomorrow —

 

Today.

 

With the Certified Financial Group.  Joe Bert and Gary Abely are here from Certified Financial Group to take your calls at 844-220-0965.  844-220-0965 is the number to get your question answered right here on the radio today.  Also have the text machine up and running as well, 21232.  Before we get back to the phone call and the questions, I want to remind everybody of the workshops that Certified Financial Group offers.  Gary, what do you got coming up here?

 

Well, the first one we have coming up is the financial basics workshop.  So, if you didn’t learn it in high school or maybe even college just how much you should be saving and how much you need to have in order to retire, come to that if you want to learn the basics of what is a mutual fund, what’s a stock, what’s a bond.

 

If you pretty much went to school before 1993, you did not learn that in school.

 

I hear even today people are graduating without really good understanding on how much to save.  The other one we have coming up is Healthcare Options in Retirement.  And that one is Tuesday, March 14th from 6:00pm to 8:00pm and in that workshop, we have our estate planning attorneys that help us then go over Medicaid Options for long-term care, VA benefits for long-term care as well.  And the next one of course will be talking about Medicare options and long-term care options in retirement because it’s — the whole ABCs of Medicare is awfully confusing.  So, if you’re close to Medicare age, you’re going to want to come to that one.  The next one we have is April 4th: When Can You Retire? Know Your Number.  So, it’s really important to know how much do I need to have before I say <Inaudible>

 

Get back to Edwin’s call this morning.

 

Edgar.

 

Edgar, Edgar’s call this morning.  Am I going to be okay? Well, you need to know what your number is.

 

You do need to know your number.

 

Yup.  Because before you say goodbye and I quit, you want to make sure that you don’t have to come back to that same place and say oops, I miscalculated.  I need my job back.

 

I’ve got a really dumb question for you.

 

No dumb questions.

 

How do I know my number?

 

Well, we have to calculate it.  And honestly that workshop is two hours.

 

<Inaudible> now, or is it <Inaudible>

 

Close.  It’s going to be a combination of what you have and what that will grow to, and then how much you need to save between now and your retirement age.  But of course the biggest item is how much are you going to spend in retirement? So this is when we talked about sometimes I’ll get a budget and it will say $100 for auto expenses and then I look at the couple and I say okay, what kind of cars are you driving and it’s a 2008 car and I say well, that’s not going to last for another 30 years.  Oh, well we replace our cars every five years.  Well, then you’re going to need about $300 a month each for a typical Camry budgeted to include maintenance, insurance, and replacing those vehicles.  Same thing.  People don’t budget for home repair and maintenance.  We’ll see a low amount there for healthcare.  So, we help people with specific items that are often under-budgeted.  So, healthcare for example for a couple aged 65, we’d recommend about 1,100 a month and that shocks people until we break down that figure into okay, here’s a typical dental, vision, Medicare premiums, Medicare supplement, etc.  And that’s not even counting long-term care.

 

The toughest cases that we work on are clients that have launched into retirement with doing actually no planning and do what we call back of the envelope financial planning.  They look at what their sources of income are going to be, their Social Security, maybe they have some interest, dividends, they can draw so much from their investment accounts, and they sail off into retirement and they come to see us five to six years into retirement and the wheels are coming off because they really did not do all the necessary forecasting that you have to do.  And that’s what we do.  We do it for a fee.  We work with our clients to really give them guidance and peace of mind and the most important thing, say you know what you need to do now, so as I say so you don’t look back 5 or 10 years from now and say gee, I wish I would have known or gee, I’m sorry I did.  And that’s what this is all about.  And it’s not selling you a product.  It’s not people go to these seminars, these workshops, these free luncheon deals and get the perfect solution for you.  All you need to do is put your money into this product and it will satisfy every need that you have and that is generally a disaster.

 

That’s right.  We don’t recommend product.  The last workshop we have is Social Security Boot Camp: Planning Strategies and that is in mid April, April 20th from 6:00pm to 7:30pm.  So, we have lots of items that are all on our — or lots of workshops that are on our website, financialgroup.com.  There’s a workshop tab and we just ask that you register there because we do offer some snacks about halfway through the workshop.

 

Oh good, good.  I can <Inaudible>

 

He’ll keep the attention.

 

Absolutely.

 

Well, they’re absolutely free and we do them in what’s called our classroom.  We can get about 25, 30 people in there comfortably.  We don’t sit you in some small room around a conference table.  And it’s done classroom style and people walk away with a lot of good information.  And the reason we do this frankly is to give you information to keep you from making those mistakes.  And secondly to introduce you to what our firm does and this way whether you need financial planning now or sometime in the future, perhaps you’ll give us an opportunity to earn your business.  So, go to our website, that’s financialgroup.com, for more information.

 

And the phone number to reach you guys at Certified Financial Group?

 

407-869-9800.

 

He is Gary Abely, he is Joe Bert the Oracle of Orlando.  Certified Financial Group.  We’re taking your calls this morning at 844-220-0965.  That’s 844-220-0965.  Like you heard Gary say just a month ago, there are no stupid questions.  So, come on and give us a call.

 

By the way, I want to mention that Gary is going to be on television on Tuesday morning, 7:00, on Fox 35 taking tax questions.

 

That’s right.

 

And he’ll be doing a little interview and then talk about what tax changes and what you need to know as you file your 2016 taxes.  So tune in.  That’s Fox 35, 7:00.  7:00 through 9:00 he’ll be there to answer — to take questions —

 

7:00 to 9:30.

 

7:00 through 9:30 on Fox 35.

 

Alright, and then the text machine is up and running as well.  21232.  Please keep your text comments to about 160 characters.  We’ve got a text question here, gentlemen: Would it be a good investment to invest in marijuana stocks? I have been seeing a lot of the news <Inaudible> on Facebook about investing in penny stocks.

 

Only if you want to see your investment go up in smoke.  Now, this is the wild, wild west.  You <Inaudible> pop up on the Internet.

 

All over.

 

You’re going to be getting this stuff in the mail.  This reminds me of the dot com boom back in the late 90s.  Everybody had another great idea.  Marijuana, because of the publicity it’s getting — it’s now legalized in some states — you want to get in on the ground floor.  They think it’s the idea to — you could be buying the next Anheuser Busch and get in on the ground floor of the pyramid.

 

Right.

 

The answer is no.  It’s — right now, it’s — well, it’s a high risk/high reward proposition.

 

Right.

 

And you’re doing it through penny stocks and penny stocks are notorious for being —

 

Pump and dump.

 

Pump and dump.  What happens is that somebody gets a hold of some small company and they want to go out and they buy a whole bunch of the shares for pennies on the dollar and then they do a big marketing campaign to pump up the price of the stock and people go out and buy it and what was selling for $0.02 is now at $0.03, $0.04, $0.05, $0.10 and the guys that got in on the ground floor for $0.02 dump their stock and all of a sudden the bottom falls out of it and you’re left holding stock that’s now worth a penny.

 

Right.

 

Stay away from that junk.  Because that’s what it is is junk.

 

Junk.

 

Alright, just like that.  21232 to get a tax question.  If you’ve got a phone call question, it’s 844-220-0965.  Just like Rob in Orlando.  What’s up, Rob? You’re on with the Certified Financial Group.

 

Hey there.  Thanks for taking my call.  Quick question.  Years ago as a realtor I had added a <Inaudible> designation to I guess assist from a tax perspective.  And I’ve always been filing just my normal profit loss statement, but I don’t know if I’ve ever taken advantage of the <Inaudible>.  Does that help me in any way from a tax standpoint with <Inaudible>?

 

So, to make sure I understand, you are — you have been filing, Rob, as a sole proprietor under schedule C, is that correct?

 

Correct.

 

Okay.  What some folks will do is form a limited liability company or an S corp or some form of entity and pay themselves a salary and take out distributions to avoid some self-employment tax.  So, you know as a realtor that you pay both income tax and then self-employment tax at a rate of about 15% on the profit from your business.  And so what some folks will do who have a business that’s very profitable is say well you know, the business profit component, I hate to pay the self-employment tax, so why don’t I start up an S corp or some other entity so that I can pay myself a salary and take the rest out as distributions? So, I would say it really depends on your level of income and — one rule though that you want to make sure you keep in mind is before you can take distributions from an entity, you first must pay yourself a reasonable salary.  And the doctors used to form these S corps and they’d pay themselves a salary of 40 and take out 400,000 of distributions.  That’s just not reasonable, right?

 

Right.

 

So, probably if your profits from your business is, I would say, 80 or under, you’re probably not missing out on any planning opportunities.

 

Okay.  Perfect, perfect.  I appreciate your help.

 

You’re very welcome.

 

Alright Rob, thank you so much for the phone call.  If you want Rob’s line, it’s 844-220-0965.  That’s 844-220-0965 and the text machine is 21232.  Guys, we’ve got a call from New Jersey.  Eileen is listening on News965.com.  Eileen, go ahead with your question for the Certified Financial Group.

 

Hi Eileen.

 

<Inaudible> in a couple years, I’m going to have to start drawing on my IRA and I want to know the actual percentage that has to be drawn every year.

 

It changes every year.  The first year I can tell you is 3.65% of the balance on December 31st of the year preceding the year you turn 70 and a half.  There’s an IRS table — and your custodian or whoever is holding your IRA will be contacting you and telling you how much you need to take out.  I have a question for you Eileen.  You’re listening to us up in New Jersey?

 

Yes.

 

On the Internet, I presume?

 

No, on my cell phone because my daughter lives in Florida and I’ve been there a couple times.  And I’ve listened to the radio station and I’m really impressed.

 

Well, thank you very much.

 

I appreciate your call all the way from New Jersey.  Yeah, it’s 3.65% of your balance.  But, your custodian will tell you what you need to take out and let’s talk about if you have more than one IRA and more than one account, how that’s handled Gary for our listeners while we’re on RMDs.

 

Right.  So, you need to calculate the 3.65% of — is your first year — of all of your accounts.  But you may pull from just one account if you like.

 

Okay.

 

And so it’s not necessary to take the exact RMD amount from each account.  But you do need to calculate it for all of the accounts excluding Roth accounts.  And of course this is the minimum.  If you need more money, of course you can take out more.  We generally caution our clients from taking out more than 4% from their retirement accounts because that seems to be a pretty good number to avoid outliving your money.

 

Okay.  If I take the 4% and I really don’t need all of the money —

 

Right.

 

What can I do with it to try to —

 

Keep it growing?

 

Yeah.

 

Yes.

 

That’s a good problem to have.  What we have sometimes is some of our clients have to take their RMDs and they simply transfer it into a brokerage account that we may be managing as well.  And so, we’re taking it from one investment bucket — you have to pay taxes on it so you want to make sure you withhold enough so that when you’re investing it you’re not having to sell an investment to pay taxes.  So, as long as you have the withholding amount, if you don’t need it, you can just continue to invest it in a very similar investment.

 

Okay.  Thank you very much.

 

Thank you very much.

 

Appreciate the call all the way from New Jersey.

 

Eileen, thank you so much for listening to News 96.5 all the way up there on — again, she’s got the News 96.5 app.  It’s real simple <Inaudible>.  You can listen to Certified Financial Group every Saturday even if you’re taking a road trip out of town.  So as I say, she’s not listening on the Internet.  I want to know what radio she has to pick 96.5fm all the way from Orlando up in New Jersey.  That is a strong radio and I would like to get one of those myself.  844-220-0965 is the number to call in with your question today.  I know you’re looking at the clock saying oh, it’s 48 after, 12 minutes to 10:00.  Oh, I’m probably not going to get my question.  No, call in to get on the line.  And the show gets over, Joe and Gary always stay after just a little bit to give you a private consultation off the air.  So don’t be afraid.  If you’ve got a question, the number to dial is 844-220-0965.  844-220-0965.  And the text question line is 21232.  And we did have a caller in earlier, Joe and Gary, what is the number to reach you guys during the week? She wants to call and set an appointment with you.

 

407-869-9800.

 

One more time.

 

407-869-9800.

 

Alright, it’s time for the three big things you need to know.  We’re planning tomorrow —

 

Today.

 

On News 96.5 WDBO.  Welcome back to On the Money here on News 96.5 WDBO.  We are here with the Certified Financial Group taking your calls at 844-220-0965.  844-220-0965.  Joe Bert, Gary Abely are here to answer your questions.  I know we’ve got five minutes away until 10:00 and the latest news, weather, and traffic so it’s your last chance to get your question answered.  21232.  That’s 21232.  Let’s get to a phone call real quick.  Talk to Maria on line one.  Maria, go ahead with your question for the Certified Financial Group.

 

Yes, I am Maria Sylvester.  I am retired from <Inaudible>.  Yes, I am retired and I am not working.  Still, I have a Social Security and a little bit pension, $300 pension.  Still, I have to do my — every year, my income tax?

 

Well Marie, you would need to do an income tax return if you had federal withholding from that pension because — and the only way to get your refund because it sounds as though with just those two things, just Social Security and just the pension, you would owe no income taxes and otherwise you would not need to file.  But, big but, if you do have federal withholding from your pension, the only way to get that money back is to file the return.

 

Yeah, yeah.  Oh, okay.  Okay.  So, you want me to — you’re saying it’s alright for me to do income taxes, right?

 

You would need to do the income tax return if you had federal withholdings so you could get that money back.  Otherwise, if it’s just those two things, you would not need to file.  Thanks for your call.

 

<Inaudible> two things.  One moment.  <Inaudible> I have an $8,000 that I get in every month, <Inaudible> income.

 

Okay.  You need to file.

 

Yeah, you need to file a return.

 

Well, thank you for the call.

 

Alright Maria, thank you so much for the phone call.  If you want Maria’s line it’s 844-220-0965.  Quick text question in, 21232 gentlemen: What is the good target to shoot for for your 401k retirement account? 1M? 2M?

 

Well, good question.  I wish we knew this particular individual’s age and we also need to know what the person plans on spending in retirement.  So, 1M would roughly give you about a $40,000 a year income.  2M would give you roughly 80,000 a year withdrawal amount.  And unfortunately, if he’s 20 years old that may not be enough because inflation over the last 50 years has been closer to 4%, not the 2% we’re experiencing now.  So, really that person needs to sit down with somebody to do a little bit of math.

 

Okay.

 

Don’t have enough info there.

 

Before we get out of here, Gary, I want to ask you this question.  Could we experience a 2,800 <?> drop in the Dow?

 

Absolutely, and that would be normal and I’m glad you asked.  We have been talking to our clients because the market has been hitting all-time highs and really doing a gut <?> check with them to explain to them that a normal intra-year decline for the markets since 1980 is about 14%.  14% times the Dow now, that’s where we get that 2,800.

 

So you’re saying sometime between January and December, the average drop and <Inaudible>

 

<Inaudible> high, yup.  Exactly.

 

So, you can expect that that’s going to happen.  But the interesting thing is if you look at the chart that we sent to our clients this week, that more often than not even though you experience a drop sometime during the year, the year ends up a profit.

 

Exactly.

 

And if any of our listeners would like that chart e-mailed to them, just contact our office, financialgroup.com, and we’d be happy to send that chart to you.  It’s really an interesting talking piece.

 

Okay.  Just like that and the number to reach everybody at the Certified Financial Group and to sign up for any of those great resources and the workshops you guys have over there.

 

So, the workshops we recommend signing up on the website at financialgroup.com because we want to register to know who’s coming.  And then to reach us on Tuesday, they may call 407-869-9800.

 

And real quick, we’ve got about 45 seconds.  Where is the office located?

 

We’re south of 434 in Altamonte Springs just right off of the Longwood exit.  So, very easy to find.  You can Google us.  A map will pop up.  Go to our website, you can find a map.  But we’re very easy to find right there off of I-4.  We have a standalone building, about 8,000 square feet and 32 employees.  And we’d love to see you.

 

And you can see your sign from I-4.

 

You can see it, especially the I-4 ultimate cleared away a lot of trees.

 

It’ll be real easy to see the building.

 

<Inaudible>

 

Well, that’s going to do it for this week’s edition of On the Money.  If you missed out, you’ve got the resources to get them during the week and we’ll be back right here, next Saturday, at 9:00 on News 96.5 WDBO.  We have been planning tomorrow —

 

Today.

 

Right here with the Certified Financial Group.  The news is next on News 96.5 WDBO.

 

Dictation made on 2/21/2017 3:16 PM EST.

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