TRANSCRIPT FOR THE June 22, 2017 “ON THE MONEY” SHOW

Hosts:    Nancy Hecht, CFP®, AIF® and Joe Bert, CFP®, AIF®

– Hello everyone, welcome to On The Money with certified financial group, a part of the new 965WGBO. Ask the experts weekend. We’ve got Joe Bert and Nancy Hecht here. They’re a certified financial professionals and certified financial group and they’re here taking your calls. That’s 844-220-0965 is the number to call in. 844-220-0965. If you text your questions at 21232. Good morning, everyone.

– Hello.

– Good morning.

– How are you guys doing today?

– We’re doing great. It’s good to be here, and we are live this morning. So unlike some previous shows, we are here live to take your calls. So if you have any questions regarding your personal financials, Nancy and I are here to take them. So as we say in our ads, people go through life, trying some of this, trying some of that. Looking at retirement and we want to try to figure out how they’re going to supplement their Social Security so they can enjoy those — at least <?> call them the Golden Years. And and we say on Monday through Friday, we do this for a fee, but on Saturday morning we do it absolutely for free. So <Inaudible> questions regarding your personal finances as they may relate to decisions that you’re trying to make about stocks and any real estate and long-term health care and your IRA and annuities and your 401(k) and reverse mortgage, life insurance, all that and more, Nancy and I are here to take your calls. And the good news for you is there’s absolutely no one in line so you can jump right to the head of the line because there is no line, by dialing these magic numbers. And they are:

– 844-220-0965. Or again, you can text to 21232. And Nancy, you’re here to talk about — you have some workshop you’re going to tell us about, and then you’re here to talk about it’s not about the income, your income and spending.

– Right. Okay. So the upcoming workshops are on Saturday, September 16th from 11:00 to 1:00. Financial basics like strategies for success, hosted by Gary Abley. Social Security boot camp claiming strategies from 6:00pm to 7:00pm on Thursday, October 19th, hosted by myself and Denise Kovach. And House Care Options in Retirement, Saturday, November 4th, from 9:00am until 11:00am. Also hosted by Gary Abley. And the last one on the books is When Can You Retire? Know Your Number. Saturday, January 6th, from 9:00am to 11:00am, hosted by Gary Abley. If anybody wants to register for one of the workshops, if you go to our website: financialgroup.com, click on the workshops and you’ll be able to reserve your spot.

– Right there. That’s financialgroup.com. People ask us, so why do you do this kind of stuff? We do it for basically two reasons:

1. So we can avoid some of those financial disasters that we some time see coming in our office that folks that haven’t prepared or unfortunately had made some bad decisions going to these free lunch and dinner seminars. They’re trying to fix those situations. And secondly, to tell you what we do as financial planners, as certified financial planner professionals, and how we may be different from all those folks out there that are just trying to sell you another indexed annuity, so. Once again, go to our website. That’s financialgroup.com. As we have a call here from Timothy. Laurel <?>.

– Yeah, Timothy’s got a question about paying on the mortgage and the interest, if it helps at all. So hang on, let me get Timothy here.

– Go ahead, Timothy.

– Hi Timothy. What’s your question?

– Good morning. So, I was told that if I pay my mortgage, split it between the middle of the month, and at the end of the month, it lowers the interest overall rather than one big lump payment at the end of the month.

– <Inaudible>

– Yeah. What you’re doing here is you’re making double payments.

– It’s called bi-monthly mortgage payments. It’s actually how I happen to pay my mortgage. And what you end up doing is knocking years off of the total length of the mortgage. Therefore, paying less in interest payments. So you’re not lowering the interest rates, per se, but you could knock it by making bi-monthly payments. You end up making 13 payments a year, so you could knock potentially about 10 years off of the life of your mortgage. Now, depending on who you have your mortgage with, there may be a small fee for doing that. You know, maybe $2 a month or something to set it up. But I happen to think it’s a real easy way to pay your mortgage and pay it off easier — or faster, excuse me.

– First of all, depends on where you are in the mortgage cycle. You’ll save the most if you’re early on the mortgage cycle, particularly with 30-year mortgage. But yea, it does by making extra payments, that does, as Nancy said, reduce the amount of interest that you have to pay, but it doesn’t necessarily reduce your interest rate.

– Timothy, how far into your mortgage are you?

– I believe this is the second or third year.

– Oh, okay. So you can definitely benefit by — how long do you plan on staying in the house?

– Mmm. Let’s say 10.

– Oh, okay. That’s fine. Yeah. So, if you set up bi-monthly payments, you could knock a chunk off —

– Actually, semi-monthly.

– Or semi-monthly. Semi-monthly payments, you can knock off a chunk from the end. So, I’ve been doing it for years. It’s easy. It’s mindless. Saves you money.

– Excellent. And I don’t know if you have other callers. I’ll definitely defer to the next caller, but if you have a moment, I just have another question.

– Go right ahead.

– So, recently I did cash surrender value on a whole life policy — a life insurance policy. And my understanding of it is if you paid more into the premiums, then the amount you receive back is the cash surrender, then you don’t — there’s no tax obligation. Is that accurate?

– Yes, it is. Yes it is.

– So let me be sure I understand your question. If you pay in more premium than you got back, there’s no tax consequence.

– Right. So, over the — let’s say if–

– Yes, you pay the 10,000, you got 5,000, and you got 5,000. There’s no taxes on the 5,000 because you didn’t make any gain on the 10,000 that you put in.

– Okay <?>. Perfect. That makes total sense.

– Very good.

– Excellent. Thank you guys so much for your help today.

– We appreciate your call.

– So once again we got some lines open here for you. 844-220-0965. 844-220-0965. Or you can text us at 21232. That’s 21232. And Nancy, you were saying.

– Yeah, Laurel had alluded to a topic that — it was a topic of discussion this past week. It goes back like you know 20M years when I first started in business, there was a guy that had said if I only could make X number of dollars, all my problems would be solved. If I only had so much money. You know, and that’s so much an X number of dollars is different for everybody, but the problem is not the income. The problem is how you’re spending it. And that’s the part of the equation that people don’t look at.

– Yup.

– You know, I had done the Father’s Day thing and advice from your fathers, and I would say probably 75% to 80% of the fathers had advised their children live below your means.

– Exactly.

– And make sure that you save something for yourself.

– Yeah. That’s the ultimate challenge.

– Yeah. You know, everybody thinks if I win the lottery, or I can get this huge bonus, if I just had more money, and that’s the wrong side of the equation to be looking at. You have to look at how you’re living your life and how you’re managing your cash flow.

– Exactly.

– And making sure that you have an emergency fund.

– And the secret is as you know it’s to pay yourself first.

– Exactly.

– Discipline yourself. Set aside that money, and then spend what’s left. Unfortunately we try to save what’s left, and at the end of the month there’s not much left.

– Exactly. Exactly.

– Alright. Cindy has a call here, right, Laurel? Put her through.

– Yeah, Cindy has a question about her daughter’s 401(k). Go ahead, Cindy.

– Hi. My daughter recently switched jobs and she transferred her 401(k) like she was supposed to directly from  one company to the other. But then she got a check in the mail for $365 from the 401(k) company that she was with. And she doesn’t know what to do with it.

– Cindy, ask your daughter if she had made a Roth or an after tax contribution to the 401(k). Because if it was not a pre-tax dollars, then it would not transfer over into the new 401(k). So anything that was after tax — if it was Roth, or if it was an after tax contribution, that is just paid out. And if there was no earnings on that $365, then it’s not taxable.

– Okay. Could it be possible that this is just something that paid in after she left the company? They took it out from her last check?

– It’s possible, but I don’t think so.

– Yeah, probably not.

– <Inaudible> it probably has something to do on after tax contribution that they made. What they did was they rolled over all the pre-tax and the earnings on that money. And it’s probably some after tax contribution of somehow made for her. What I’d look at is the pay stub and see if anything was withheld, because the rule is if money comes out  of a 401(k), if it’s not directly transferred to the new custodian, they have to withhold 20%. So if there was nothing withheld, chances are that’s her money, and it’s free and clear.

– Okay. Alright. Thank you so much.

– You’re welcome, Cindy. Thanks for the call. Here we go.

– Okay.

– All right, Laurel. We’ve got a text question here.

– All right.

– I have several rental properties, each in a separate LLC. Would I need a different brokerage account for each LLC in order to preserve my asset protection. While the LLC stands on its own, if in fact you are sued, however — if the LLC is sued, that LLC stands on its own. Because if you have rental properties, that’s  why many <?> peoples put their rentals in individual LLCs because if somebody tripped and fall on that property, they’re going to sue the owner, and the LLC owns it and so on and so forth. But you as an individual, your LLC is one of your assets, and there is no asset protection per se in an LLC. So if you have a car wreck, and an LLC is an asset in which you own, then that LLC is subject to claims of credit <?>.

– Okay. But the question is would I need a different brokerage account for each LLC–

– It doesn’t do anything.

– In order to <Inaudible> — yeah.

– I don’t see how that does anything. I think his real question is is what — I think he or she is laboring under a false impression that the LLC gives him asset protection. It only gives you asset protection in terms of what activity that LLC is engaged in. So if you’re sued for something else, and you own the LLC, then the LLC is subject to claims of predators because it’s an asset of yours. Okay? That is it. Another text question. DTI was very high. 50,000 in student loans, deferred 10,000 in carded <?>  loan. 657 credit score. Pay on student loans or eliminate the $10,000 in debt first?

– <Inaudible>

– Do you understand what DTI —

– I have no — debt to income.

– Yeah. Very good. That’s very good. Okay.

– Yay for me. Not that I could read it, but anyways. If the student loans have been deferred, and the credit card is probably compounding at a decent rate, I would try an attack that first.

– Yup.

– You want to go for the higher interest and get that knocked off, and then go to the next highest interest thing. If you can manage both of them and don’t do one to the detriment of the other — maybe do one in favor of the other, but still paying a little bit towards the student loans. But if they’ve been deferred, knock off the high interest.

– Yeah. The biggest thing that a credit scoring agency looks at is your loan payment history. So you want to keep those loans current, and that will increase your credit score. As Nancy said, if in fact the student loan is deferred, I’d tackle the $10,000 of credit card debt. So that would do. All right. We’re going to take a break here. Once again, we’ve got lines open at 8 — what’s our number here? 844-220-0965.

– 844-220-0965. This is On The Money on News 965 WDBO.

– Welcome back to On The Money here on News 965 WDBO. If you’ve got questions about your investments, retirement. If you’ve got money questions, give us a call. 844-220-0965. Again, 844-220-0965. You can text in your questions to 21232. And I know Nancy you have a listener question. We also have Angelo on the line. Let’s talk to Angelo.

– All right, Angelo, go ahead.

– Angelo, good morning.

– Good morning, good morning.

– How can we help you?

– So I have been reading this stuff that says that the price of gold and silver has going through the roof pretty soon, and I can start buying these gold coins from this company that gets delivered to my house. I know I can put them in my IRA, apparently, or I can just keep them in a safe. And I’m wondering how long do you think it’ll take before this is worth a whole lot of money.

– Well, first, if you buy gold through one of those services, you have to overcome the unbelievable mark-up price. It goes to them.

– Really?

– Yes. Yes, you do. So, a lot of people buy gold as a hedge against stock and bonds. It’s good to have a diversified portfolio. If I have gold as one of the allocations for my clients, I’d buy it through an exchange traded fund that purchases 100% gold bullion. Angelo, I’ve been watching silver since 1983. And really, not a whole lot has happened with the price of silver, and the way you’re looking at buying gold, to me, is not the most effective way. Just my own humble opinion. Because it is an extremely expensive way to buy it. You may not be getting 100% pure gold in the coins. It may be gold clad. And you wouldn’t know that until after the fact. Again, it’s not a bad thing to have as a small portion of your portfolio because it generally works in opposition to stocks and bonds, but I’m not a fan of buying gold in that method.

– Angelo, Nancy’s 100% right on that score. In fact, a better way to buy that is just to buy the gold itself. We can buy for our clients. We buy it at 2% over the spot price. You can have it held by a third party custodian for 1% per year, and you know that you’re getting real gold, and not the big mark-ups. One of the things you really want to stay <?> from are these companies that promote this gold that you see on TV–

– And that’s exactly what he’s talking about.

– They want to sell you these coins.

– Right. Right. And that’s what he’s talking about.

– What they want to sell you is the new ismatic <?> coins. The collector’s coin.

– Right.

– Now that’s the real mess <?>. So Angelo, you’re smart to just stay away — you’re smart to call in, number one. And number two, take Nancy’s advice as I assume you always do.

– But if you want a little bit more information, please go to our website financialgroup.com and you can throw a question in on there, or get information about purchasing it for the 2% over as Joe just mentioned, so. Thank you.

– Thank you, Angelo.

– All right, we have Mark on the line now, too, and Mark wants to know what to do with his annuity.

– Hi Mark, how are you doing?

– Good morning.

– Good afternoon. How are you doing?

– Good. How can we help you?

– What’s your question?

– Good morning. My question is I’ve received two annuities from my father when he passed away, approximately $100,000. My question is can I better serve to put that money towards my mortgage to pay it down, or to use part of it to pay it down and leave a little in reserve to pay the taxes on it next year?

– Well, first of all, let’s be sure — were they IRA annuities?

– No. They were straight annuities.

– Okay. How much gain is in the annuities? That <?> you only have to pay taxes on difference between what he put in and what it earn.

– <Inaudible> I don’t know. <Inaudible>

– That’s the important part of the equation.

– And the permanent you think <?> you want to use is cost basis. What is the cost basis? What was deposited versus the market value? Are you the only beneficiary of these annuities that you’re discussing?

– Well, there was sort of myself and my two brothers, and we each got separate checks.

– I see. Okay. Oh, you were cashed out already?

– I’m sorry.

– You were cashed out?

– Yeah. Yeah, I already cashed <Inaudible>

– Wow. So the horse is out of the barn.

– Okay. So, Jeff, what you want to find out is how much is taxable versus not. And were any taxes withheld prior to getting the check?

– No, they weren’t.

– Okay.

– I elected to have the <Inaudible> of paying this without any taxes.

– Okay. All right. It’s important for you to withhold whatever might be necessary to pay your taxes next year. And then you thinking about paying down your mortgage?

– Correct.

– Okay. And then it’s a home that you plan on staying in for five years or more?

– Yes.

– Then I think that that’s a great idea, and it was a wonderful gift that you got from your dad to be able to help you do this.

– Let me ask a couple more questions, Mark.

– Okay.

– What I might look at — did you have a retirement plan?

– Yes. I do. I’ve got a 401(k) through my company, both Roth and  traditional <Inaudible>

– If you can hang on through the break, I want to get back to the question. All right? We’ll talk to you on the other side of the break.

– Awesome. And if you got questions you need answered. We’ve got a whole half an hour. 844-220-0965. This is On The Money on News 965 WDBO.

– This is On The Money right here on News 965 WDBO where we’re answering your questions about your money. IRAs, retirement, mortgages, whatever you got. 844-220-0965 is the number you need to call. Get your questions answered and we have open lines. 844-220-0965, or text us in your question to 21232. I know we have a couple text questions to get to, but right now we are talking to Mark. Right, Joe?

– Yes we are. Good morning, Mark <Inaudible> thanks for sticking around. Let’s get back to your situation for our listeners that just might’ve tuned in. You inherited some money through an annuity from your father or grand father, and you got about $100,000, you said?

– Correct.

– Okay, and at this point we don’t know what the tax consequences on that as we said to you earlier. You’ll have to pay taxes on whatever gain might be the difference between what was invested and what you got will be taxable to you. So whatever’s left, your question was should you pay down your mortgage, and my question back to you was: Do you have a 401(k) or retirement plan, and your answer was yes, I believe.

– Yes. And I’m almost 60, so I’m getting close to retirement.

– Okay. Are you putting in the $24,000 per year that you’re able to do?

– I’m <Lost Signal>

– Oh, you’re breaking up, Mark. You’re breaking up. You there?

– I’m sorry. I’m putting in 12% to 13% so.

Okay so if you’re earning a couple hundred thousand dollars a year, that’s 24,000.  But if you’re — if the actual dollar amount that I want you to focus on.  So at your age, you’re able to put in $24,000 per year.  Forget your percentage.  And does your wife have a retirement plan.  Does your wife work outside the home?

No she does not.

Okay, so depending on your incomes, I’d want you to focus on maxing out your 401(k) plan.  Use some of that money to fund your 401(k).  Now you can’t write a check to your 401(k), but what you can do is reduce your paycheck, and so you just live off the annuity money that your not bringing home, because you increased your 401(k).  And secondly, if you wife doesn’t have an IRA, then you can set up what’s called a spousal IRA, and assuming she’s the same age, you’ve got $6,500 a year you can put there.  What’s the interest rate on your mortgage, Mark.

I just — we just bought the house.  So it’s, I think 4.2.

4.2.  And what’s your income?  What’s your tax <Inaudible>

Income is over 80,000.

Okay so, so your probably in the 15% tax bracket.  Your effective rate on that mortgage is probably in the range of about 4%.  I like the idea of getting a <Inaudible> deduction, because you’re going to save immediate money, and that money will <Inaudible> in a tax deferred basis.  Some people like to pay down the mortgage, and know that’s behind them.  You know, and maybe you do a little of each.  What do you think Nancy?

Well yeah, I mean put a little bit towards paying down the mortgage, and then pay roll deduct more directly to your 401(k).  And then Joe’s suggestion is one that is a nice one.  Paying yourself that income out of the annuity.

For our listeners.  Go ahead.

Yeah, no, and we’ve been talking about the difference, and you’re going to have to pay taxes on the gains.  Gains from annuities are taxes, ordinary income.  They’re not taxes <?> capital gains rate, so that’s an important factor too.  So that could potentially be at a higher rate than you would pay.

For our listeners that might not be familiar with what the options are when you inherit an annuity, if it’s an IRA, there’s an ability to do what’s called a stretch <?>, if you’re a spouse, you can defer the taxes.  But in your particular case, it was not a retirement plan.  It was just a pure straight annuity.  The options that you had were to defer cashing it out for up to five years.  So that’s an option.  If you don’t need the income now, and you’re going to be in a lower tax bracket five years from now, you may have done that.  And there’s a new program out now that we just uncovered that will allow you to, if you’re in the first year, to take those annuity, or actually do a what’s called a 1035 exchange.  And exchange the annuity directly into another annuity, and do what’s called a stretch.  And have that income paid out to you for your lifetime, and you can get substantially more benefit from that as opposed to paying the taxes right up front.  So everybody’s situation is unique.  Just want to make you aware of the options that you have when you do in fact inherit an annuity.

Appreciate your call Mark.  Thank you.

Thank you for hanging on Mark.  Alright so we have a text question.  Just opened a taxable mutual fund in March, and I find my return is higher than my Roth IRA as the 5,500 limit restriction is bottlenecking it.  So my question would be — if I was actually talking to this person is, what is the taxable mutual fund invested in, versus what the Roth IRA is invested in.  It’s not a function of the title or the type of account.  It’s account function of the investment vehicle used.  I’m going to guess that the taxable mutual fund is all in equities, stock-based mutual fund.  And the Roth is probably a combination of stocks and income, or maybe all income.  And that’s why the return that the return is seeing is higher.  It has nothing to do again with the title of the account, it has to do with how the assets are invested.

And you may just want to consider, if you’re looking for a higher returns, just convert that Roth asset into a similar type of account that you have in the other account.

Just changing the underlying portfolio.

Yes, yup.

Keeping the Roth title.

Yes, thank you.

Alright another text here.  I’m over 70 and a half, and I began taking RMDs, required minimum distributions last year, but am still confused if I must take an RMD from all IRAs, as I have several IRAs with the same company.  You have to take your required minimum distribution based on the 1231 Balance of all of your IRA accounts.  However, you don’t have to take withdrawals from each individual account.  If you have say five different accounts, and last years balance was $15,000 in each.  And you had to withdraw 6% of the total to meet the required minimum distribution, you could do that all from one, or you could do it from — part from any of them.  The important thing is, is that you withdraw the proper dollar amount.  It doesn’t necessarily matter where it’s coming from, just that the proper amount is withdrawn.

Yeah, and that’s something that we do for our clients on a regular basis.  For those that are clients that 70 and a half, we had a system set up to notify them, and to be sure that they are in compliance.  Because the penalty for that is 50% of what you should have taken out plus taxes.  So you’d end up with very little after the IRS is through with you.  So it’s a very, very important number to know and to stay on top of.  So we can do that.  And you had another listener question.

Yes I did.  I did.  When is the right time to create a will?  Okay, so the right time to create a will is when you have stuff.  When you have stuff.  And a lot people think, oh I’ve done my estate planning, I have a will.  A will says this is what I have to the public, and if you have any claims against me, now is your time to do it.  If you want to keep your affairs private, a lot can be accomplished through titling of assets, as opposed to putting everything you have in a will.  If you have different banking accounts, checkings, savings, money market, and it’s joint with somebody, you can add a transfer on death, in-trust for type of designation on to the title.  And it will go from the account owners to the beneficiary without probate, which is an important thing, a will subject to, to probate in the state of Florida it starts at 3%.  And it will keep your things private.  We know that with retirement accounts and insurance policies, you’re automatically naming a beneficiary, so you want to make sure periodically that your beneficiaries are current.  There hasn’t been a life change, death, divorce or a primary beneficiary or a contingent beneficiary.  We talked a couple weeks ago about an ex-spouse getting all the proceeds.  There was an article in the paper, somebody hired somebody to kill their husband for life insurance proceeds.  And he had never changed the beneficiary to the new wife.  So, she ended up in jail, and broke.  So you want to check your beneficiary designations.  Make sure that you have contingents on there also.  And put stuff in the will, like, you know the furniture, and the jewelry, and all those other little types of items.

The crystal and the.

Those are the types of items that create fights in families when people pass on, so you can make a list that is long as is necessary with an item and a persons name attached to it.  So wills are important.  I think the overlooked will is the living will, which says how you want to be taken care of if you cannot speak for yourself.  You want to make sure that somebody is given durable power of attorney to act on your behalf.  Either you can do one for financial only and health only.  You can give the durable power of attorney for financial and health to one person.  So there’s a lot of estate planning to be on the will that are important, but when you got stuff, you got to make sure it goes where you want it to go, and titling can accomplish a lot of it.

Yeah, a lot of people think that, you know they get lazy about changing the beneficiaries on their IRAs, their 401(k)s as you said, and the annuities, the life insurance policies.  And they think, we’ll I just did my will, that’s going to take care of all that.  Nope.  It doesn’t work that way, because that beneficiary designation overrides anything that might be said in a will or a in a trust.  So it’s very important.

And having absolutely nothing done is not nice for your survivors.  As my father-in-law passed away almost three years ago without a will, and we’re still dealing with it.  So.

Alright we have a text question here.  If someone had the assets, does the cost basis defer to the cost on data transfer?  The answer is yes.  In other words, if you bought something for $50,000 and it’s worth $100,000 today, and you decide to give it away, that cost basis transfers over to the donee.

It’s called the step-up in basis.  That’s the term that we’ve used.

Like that happens in death.

Okay.  Your right.

You know and that’s a good point.  I was referring to a lifetime transfer.  If it’s a lifetime transfer, there is no step-up.  But at death, that’s one of the benefits of dyeing, is because the step-up, or your survivors get a step-up in basis.

Right, right.  Which reduces the taxes.

Right, right.

Okay, alight.  Lines are wide open.  844-220-0965.  That’s 844-220-0965.  You can text us at 212-322-1232.  And Nancy the next workshop coming up is I think Gary Abling in September.

Right, right, Saturday, September 16th from 11 to 1:00pm hosted by Gary Able Financial Basics, Life Strategies For Success.

Yeah, in that one, he talks about what you need to do now so you’re prepared as you approach those retirement years, because we don’t potentially think about it until it’s staring us right in the face.  And the best time to do the planning is when you don’t have to make immediate decisions.  So Gary is a CPA, as well as a certified financial planner professional.  And he’s going to give you some great information.  Once again, if you’d like more information about that workshop, or any of the other upcoming workshops at Nancy, and certified financial planners, that CFG host, you can go to our website, that’s financialgroup.com.  That’s financialgroup.com.  Click on our workshops.  You can make a reservation right there.  You can also learn about Nancy, and me and the other certified financial planner professionals that make up the certified financial group.  So once again that’s who we do day in and day out.  We’re about to take a break and we’ll be back right after.

Alrighty, and like he said if you’ve got questions now’s the time to call, 844-220-0965.  Again, 844-220-0965 or text us 212-232 this is on the money, right here on news 965 WDBL.

Thank you so much for listening to on the money right here on news 965 WGBO.  This is our last segment, but we are back every Saturday, 9:00am to 10:00am.  I know my days.  9:00am to 10:00am, answering your money questions.  Alright Nancy, you had a couple points you wanted to make before we wrap it up here.

Right, we had gotten a question about what is there new to look forward to for Social Security in the coming years.  So one nice thing is that there is going to be an increase for recipients of 2.3%.  It’s the largest increase in a long time.  And first of all, last year was the first increase in 10 years.  2.3% is not quite keeping pace with inflation, but it’s getting awful close to it.  The offsetting thing that’s not so great is the amount of dollars that we have to pay Social Security tax on is also being increased.  It’s going from $127,200 to $130,000 next year.  And I would imagine we’re going to see that creeping up every single year.  One big change I would love to see that would maybe stop the taxability increase, is maybe the deferral rate at 8% getting lowered to maybe 6% or 5%.

Meaning the credit that you defer?

The deferral credit.  Yes.

So why don’t you explain what that is.

Full retirement age is creeping up, and soon full retirement age for a lot of people is going to 67.  So any year that you defer beyond full retirement age, you get an automatic 8% bump in what you will receive.

Per year.

Per year, and you can do that depending on when you meet full retirement age either for four years, eventually, it’s going to be only for three years.  I don’t know any place that is unequivocally guaranteeing an 8% increase for three years period.

Right.

And the federal government should not be doing it, in my opinion, and I think if it was a 5% or 6% guarantee that would still be an awful nice guarantee that would save a heck of a lot of money from coming out of the trust fund.  And maybe allow the interest and the body of the trust fund to last a few years longer.

The non-existent trust fund, but it’s out there and paid for.  So yeah.

Well, yeah.

But you’re right, I think that — I think part of the tax bill coming down is going to remove the cap on income, or really substantially raise it in terms of what goes into Social Security.

Yeah.

So the higher income folks won’t be paying more into the system to provide us some solvency.  I guess it’s projected the 2030, ’34, ’35, is when if we don’t make nay changes, that they’re going to run out of funds.  And Medicare and Medicaid is an even worse shape than that.  So things have to be adjusted because they can’t go on at this rate forever.

And people panic when they hear that.  It’s going to be gone, but the prediction is that those of us paying in are going to be able to pay for the people that are receiving.  So the money will go into Social Security system, and them automatically be sent out.

Yeah, the real challenge is you’re going to have more people on retirement than are paying into the system, which is real —

Right now we have three workers for every one recipient.  And that number is going to go down.

Yup, and I think I know those three personally.  So let’s.  Keep it up.

I used to personally know the people that I was paying Social Security for.  So, but you know, we have a lot of information on this.  The next Social Security boot camp is in October, and there’s a number of other workshops coming up, as I had mentioned.  If you want more information on the workshops on us, we have planner blogs that you can go and read.  Just go to financialgroup.com, financialgroup.com.  If you want to take advantage of the complementary consultation that we offer to all of our listeners, you can just click on that to make an appointment.  There’s a ton of information we have.

There are calculators there, you can figure out what your RMD is if you know what you’re balance was on December 31st.  You can plug that in, and plug in your age, and it will tell you what your required distribution is for this year.  So there’s all kind of good stuff as Nancy said on our website, financialgroup.com.  That’s financialgroup.com.  You can sign up for the workshops.  You can see Nancy and my smiling faces, along with the other certified financial planner professionals that work with us at the certified financial group.  So we’d love to see you.  We do this day in and day out for a fee, but then a morning, as we say, we do it for free.  We’re glad that you were able to join us.  And once again.

I think I — one thing that I find interesting on the website is if you go on the information to know and planner blogs.  Because you get an idea to see how we think.  You know what are our attitudes are about the particular topics that we’ve chosen to write about, and what are thought process is.  And it’s a great way to get an insight as to a particular person or a planner, and the topics that we have as top of the brain from speaking to our clients, and speaking to the listeners on the radio.

Yeah, the info to know section is particularly important, because that — we have some white papers on there to describe some of those things that you’re advertised, and almost found too good to be true, or that theses free luncheons.

Like the coin.

Like the coin.  Or the free luncheon, dinner seminars that are touting these special kind of annuities that promise you everything including the kitchen sink.  So if you want more information, once again, go to our website, that’s financialgroup.com.  Financialgroup.com  and we’re just about ready to wrap up.  We want to appreciate your time this afternoon, as Nancy said.  You can reach us on Monday through Friday at 407-869-9800.  That’s 407-869-9800.  Or you text it or e-mail either one of us.  Nancy@financialgroup.com or Joe@financialgroup.com.  And that’ll show up right on our desk.  We’re glad to answer any questions that you might have.  So once again thanks for joining us this Saturday, and we’ll see you next week.

Dictation made on 7/26/2017 2:43 PM EDT.

 

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