On The Money Podcast Transcript: Episode 253

Speaker 1:
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. Discussions 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.

Speaker 2:
Stay tuned for On The Money, Central Florida’s is the most listened to financial call and show, brought to you by Certified Financial group in Altamonte Springs. It’s the only show hosted exclusively by certified financial planner professionals. Monday through Friday, their CFPs provide financial planning and investment advice for a fee, but on Saturdays, the advice is absolutely free and has been for more than 30 years for their WDBO listeners. If you have a financial question you want answered by real fiduciaries, the lines are wide open call 844-580-WDBO, that’s 844-580-WDBO. And enjoy the show.

Chris:
Welcome into another edition of On The Money, presented by the Certified Financial Group on WDBO 107.3 FM and AM 580 Orlando’s news and talk. We are live right now and you can join us by dialing those numbers at 844-580-WDBO, 844-580-9326. We are taking your questions live on the air right now. So go ahead and dial us up 844-580-WDBO. You can also check out the show on Facebook, facebook.com/OnTheMoneyFL and see the live broadcast there. Leave your questions in the comments, and we’ll go ahead and read those out live on the air. We are here. Joined today by Joe Bert and Denise Kovach of the Certified Financial Group. They are both certified financial planner professionals at the Certified Financial Group, and you’ve got express lines right into their office, which financial times calls one of the top 300 firms in the country. And you can call in right now, 844-580-WDBO. Good morning, Denise. Good morning, Joe. What kind of calls will we be taking today?

Joe Bert:
Well, Denise and I are here as we have been for more than 30 years with our WDBO listers taking questions that might be on your mind regarding your personal finances. As we say, we go through life trying some of this, trying some of that, wake up at 50 years old and find out they may have a collection of financial accidents. So we are here as your financial body shop to patch you up, get you on your way. And the problem is that they don’t teach you this stuff in school. We try to figure out how to do it. We go to workshops, we go to seminars, we listen to people on the radio on Saturday morning and we read, used to be Money Magazine, today it’s Kiplinger. But you really don’t know until it’s come time to do it.

Joe Bert:
And as Denise and I and the 12 other certified financial planners here do for our clients, we do financial planning and investment advice for a fee. But here on Saturday morning, we are absolutely free. So if you have anything that’s on your mind regarding your personal finances, things you’ve been thinking about, rumors that you’ve heard, things you don’t understand. I guarantee if you’re thinking about it, there’s a dozen other people in our WDBO listening audience that have the same questions. So we’re here to take your calls, and the good news for you is the lines are absolutely wide open. And you could jump right to the front of the line by picking up your phone and punching these magic numbers.

Chris:
844-580-WDBO, 844-580-9326, 844-580-WDBO. While the listeners do get their calls lined up, we can go ahead and head to our topic of the day today, the effect of divorce on beneficiary designations.

Denise Kovach:
Yeah, Chris. This is an interesting topic I believe. And I’d like to share with you all that I have clients who divorced.

Joe Bert:
No.

Denise Kovach:
Oh, they did.

Joe Bert:
Really?

Denise Kovach:
They, unfortunately.

Joe Bert:
That happens to your top brand?

Denise Kovach:
Oh Lord, yes. Sometimes. But they retained each other as a 100% primary beneficiary.

Joe Bert:
Which means?

Denise Kovach:
Which means the ex-spouse. Let’s say the ex-wife remains primary beneficiary on the IRA accounts, on the transfer on death accounts, so forth and so on.

Joe Bert:
401ks? Life insurance?

Denise Kovach:
All of that.

Joe Bert:
Annuities?

Denise Kovach:
All of that. That was the agreement.

Joe Bert:
Got it.

Denise Kovach:
So-

Joe Bert:
But that was the agreement.

Denise Kovach:
Yeah.

Joe Bert:
Oh, okay.

Denise Kovach:
Absolutely.

Joe Bert:
Got it.

Denise Kovach:
The ex-husband subsequently passed away. The surviving ex-wife was told by her attorney that in the state of Florida, the law changed, which would prevent her from inheriting those assets. And here’s where it gets interesting, under the old law, if a couple divorces and one spouse later dies, if the ex-spouse’s listed as the primary beneficiary, then that ex-spouse will inherit the assets, even if the deceased spouse remarried before his or her death.

Joe Bert:
Okay. We should stop here. Okay. So husband and wife, husband still has his ex as a beneficiary on his 401k.

Denise Kovach:
Correct.

Joe Bert:
They divorce.

Denise Kovach:
Correct.

Joe Bert:
The old man kicks the bucket.

Denise Kovach:
Correct.

Joe Bert:
And the ex-wife is still a beneficiary.

Denise Kovach:
Correct.

Joe Bert:
Under the old law.

Denise Kovach:
She would get those assets.

Joe Bert:
Because she’s still a beneficiary, even if he remarried.

Denise Kovach:
Correct.

Joe Bert:
Okay. So he’s been married to the new wife for 10 years and the old wife was still the beneficiary. Under the old law, the ex-wife because she’s a beneficiary still gets the loot.

Denise Kovach:
Correct.

Joe Bert:
Got it. All right.

Denise Kovach:
But let me talk about the new law.

Joe Bert:
The new law, right?

Denise Kovach:
Yeah. The new law states that if a couple gets divorced, then one spouse dies, the ex-spouse is listed as a primary beneficiary, then the ex-spouse will not inherit that asset.

Joe Bert:
Just like the old law.

Denise Kovach:
… and will be treated as if he or she already died.

Joe Bert:
Oh.

Denise Kovach:
Okay.

Joe Bert:
Oh.

Denise Kovach:
Yeah. Now, my client called me on this, obviously troubled with this information. So we talked about a couple of the exceptions to this new law. Okay. And namely, if the beneficiary designation forms were renewed or signed after the divorce, everything’s okay. So if your intention is to leave your ex-spouse as the primary beneficiary of your retirement accounts or transfer on death accounts, then after you divorce, you need to redo your beneficiary change form to have a new date on it. That is in your handwriting, that is dated after your divorce.

Joe Bert:
Oh, post divorce.

Denise Kovach:
Yes.

Joe Bert:
So if your deal was, you wanted to keep the X as the beneficiary,

Denise Kovach:
Correct.

Joe Bert:
… the beneficiary form date should be post divorce.

Denise Kovach:
You got it.

Joe Bert:
Huh.

Denise Kovach:
All right. So, but there is one other thing, if under the divorce decree,

Joe Bert:
Right.

Denise Kovach:
… the ex-spouses cannot alter the beneficiary designations. If it’s noted in the divorce decree, then that’s what’s going to happen.

Joe Bert:
Ah-huh

Denise Kovach:
It’s not going to happen.

Joe Bert:
So, let me be sure. So if I don’t change the date, post divorce,

Denise Kovach:
Correct.

Joe Bert:
… but the divorce decree says, “My ex will get my 401k.” That happens even if I didn’t change the date.

Denise Kovach:
Correct.

Joe Bert:
Aha.

Denise Kovach:
Aha.

Joe Bert:
Now we know.

Denise Kovach:
All righty. My client had a couple of things going for her. One, her ex did update some of his beneficiary forms after their divorce, but also their divorce decree stated that each of them were to remain each other’s primary beneficiary, which was irrevocable. So it’s very important to review your estate planning documents such as your will, your trust, your power of attorney, et cetera. Whenever you reach a life milestone.

Joe Bert:
Life milestone.

Denise Kovach:
Such as a divorce, a marriage, or if there’s simply any kind of change in your financial situation.

Joe Bert:
There you go.

Denise Kovach:
Very important.

Joe Bert:
Planning tomorrow, today.

Denise Kovach:
I think so.

Joe Bert:
That’s what we do. Yep. Yep.

Denise Kovach:
Absolutely.

Joe Bert:
So these are the kinds of issues that Denise and I, and the 12 other certified financial planners deal with day in and day out as Certified Financial Group. It’s not just managing money, although we do an awful lot of that, but it’s really being sure that the ducks are lined up in a row. Everybody out there want to manage your money, but as certified financial planners, what we do is planning first, and investing second, because we believe that good investing requires good planning. And I see we have a caller, Chris.

Chris:
Yes, we do. We’re going to head to Leesburg and have a chat with Laslow.

Joe Bert:
Laslow.

Denise Kovach:
Good morning Laslow.

Laslow:
Good morning. Thank you for taking my call. I have a question about iBounds because of what’s going with the inflation. It’s a good time to get to buy some I-bonds and it’s a good time to get to buy another $10,000 for iBounds for January because of the way the inflation is going.

Joe Bert:
That’s Correct. iBounds you are limited to a $10,000 per year and that’s per person. And the current rate on it is 7.12%. Now that’s the annual rate. Now, the interest rate is adjusted every six months, but I don’t want our listeners to think that you’re going to buy an iBound that has a 30 year maturity, that’s going to pay you 7% for 30 years, because that’s not how it works, because it’s adjusted. However, it’s certainly better than putting in a savings account where you get zero. And of course, if you cash it out early, there’s an early surrender penalty, but it’s, yes. Not a bad way to stock away some cash. Sure.

Laslow:
And right now it’s core interest rate is 0%.

Joe Bert:
That’s correct.

Laslow:
It’s good to wait until maybe because they’re talking about maybe the interest going to go up a little bit because of the inflation, it’s a good thing to wait. I feel like-

Joe Bert:
No, no, no, no. You can’t play that game. In fact, because you’re limited to only 10,000 a year, grab your 10 grand now, and come January, do another 10, or you’ve got a timeframe in which to do it. But, yeah. If you got the money, Laslow, and you don’t need the money. If you don’t need the money in the 12 month timeframe, I definitely do it.

Laslow:
And I have to wait for a year to…

Joe Bert:
No, no, no, no. It’s a calendar year.

Laslow:
Calendar year.

Joe Bert:
You can do December, then do it again in January. Right.

Laslow:
Okay. And after adjusting, we understand adjusting this interest in October, May or-

Joe Bert:
Every six months.

Laslow:
… something like that.

Joe Bert:
Right.

Laslow:
Every six months. So if I buy it for January, my interest is going to stay seven point something-

Joe Bert:
Yes, yes.

Laslow:
… for the next six months or until May?

Joe Bert:
Yes, no. No, it’ll stay for that six month period. And then when it’s adjusted again, then you know what the new interest rate is.

Laslow:
Okay. Thank you so much for that.

Joe Bert:
You’re welcome. Laslow, that’s a good Hungarian name.

Laslow:
Yeah, that’s a yes. Yes. I’m from Hungary. Yes.

Joe Bert:
Yes.

Laslow:
Because I visit your store over there sometimes, when I was there. On Leesburg, it’s too far. I hope you guys have an office close by like [crosstalk 00:11:04].

Joe Bert:
Well, actually, Laslow, we did open an office. Right? Denise, in Windermere-

Laslow:
Windermere.

Joe Bert:
… which is a little closer.

Denise Kovach:
It is. It’s over there off of McGuire road and Colonial. It’s still a little ways from you, Laslow, but it’s-

Laslow:
Yes.

Denise Kovach:
It’s closer to you. And I want to say Laslow, my husband’s Hungarian too. His last name is Kovach.

Laslow:
Yeah. I recognize the name.

Joe Bert:
Yeah, the Kovach. That’s right.

Laslow:
The Kovach, Yes.

Joe Bert:
Yeah. You have a beautiful country. I visited Budapest a few years ago. And what a marvelous city that is.

Laslow:
Yes. I still go back sometimes, because I guess that I have relatives over there.

Joe Bert:
I understand. Well, welcome to our country, Laslow. Thank you for the call and Merry Christmas.

Laslow:
Okay. Thank you very much. You too. [crosstalk 00:11:44]

Joe Bert:
You’re quite welcome. You’re quite welcome. Yeah. There’s been a lot of iBonds. Once again, you can buy up to $10,000 per individual, per year, and you can buy another 5,000 if you do a paper wise. But I want to caution our listeners, as I said, when we start getting these calls, when they announce the interest rate a while back, it’s not like buying a 7% CD, that’s going to be guaranteed for seven years, or 30 years, which is the maturity on these things. So it’s certainly better than putting it in a money market account where you’re going to get zero. And if you don’t need the money, don’t need to cash in for emergency purposes, even if you did, you’re still only giving up three months of interest. Still not a bad deal.

Denise Kovach:
And, Laslow, he mentioned putting in some more money, and you had said, maybe in 12 months or whatever. So basically, he was worried about interest rate going up, and if this is the right time to do that. And you said, “Put some in there, just a little bit and then put some maybe next time.”

Joe Bert:
Yeah.

Denise Kovach:
Kind of laddering where the rates are going to go.

Joe Bert:
Yep. Yep. For sure.

Denise Kovach:
Does the CD make sense in a year from now or what?

Joe Bert:
Yep. Now the interest rate is taxable, you got to understand that. But nevertheless, for guaranteed money, it’s not a bad deal. But it’s not like buying a CD that’s guaranteed for that period of time. And I think this is where the confusion is, because the financial press hypes these headlines, “7% guaranteed by the government.” Whoa.

Denise Kovach:
Yeah.

Joe Bert:
Yeah. So you got to understand it’s not all what it appears to be. So anyway, that’s what we got there.

Denise Kovach:
Interesting.

Joe Bert:
Yep.

Chris:
And if you want, that’s good stuff there. And I think we can take a quick break here and jump back on that, or we can then change topics, come back, or take some more of your calls. We got all open lines, 844-580-WDBO, go ahead, give us a call, join us live on the air right now just like Laslow did. You don’t have to be Hungarian to join the show today. 8844-580-WDBO, 844-580-9326. We’re planning tomorrow-

Joe Bert:
Today.

Chris:
… with a certified financial group on WDBO. Welcome back to On The Money, presented by the Certified Financial Group. You want to call in and join us here, you can, at 844-580-WDBO, 844-580-9326, 844-580-WDBO. Real quick here, let’s go ahead and take advantage of the opportunity we got to tell the listeners about scoremyfunds.com.

Denise Kovach:
Well, Score My Funds gives you the opportunity to send in your mutual fund or ETF tickers, the symbols of those. And what we will do is enter those into our system to let you know how good or bad your investment is. So there’s, I think, 11 criterion that judges the type of fund that you’re investing in and basically give you an idea of it’s a good, bad, or ugly. Right?

Joe Bert:
It’s what we do for our clients on a regular basis, when we invest our clients’ money, we have a very rigid, strict system that we put every investment through because we’re independent, we have the ability to pick and choose from the very best money managers out there in the world. And we run them through a filter and they’re scored on 11 different data points. And it’s what we do to determine the viability or quality, if you will, of every mutual fund or ETF. And scored on how long the manager has been there. What the fees of the investment are, what their performance is on a one, three, and five year basis versus their peers, measuring what’s called alpha and Sharpe ratios, which is a function of how much return you’re getting for the amount of risk that the manager is taking. Style drift, style consistency.

Joe Bert:
So all those things add up to give you a score. And if it scores well, we’ll choose it. If it doesn’t score well, we won’t choose it. And if you are on it, we’ll tell you about it. So we would be glad to do that for you absolutely free. We’ll send you that report within 48 hours. All you have to do is go to scoremyfunds.com, that’s scoremyfunds.com. Put in the ticker. And if you don’t know the ticker, there’s a pull down menu, just plug in the fund name, it’ll give you the ticker. And we’ll shoot that score to you, absolutely free. And if you’d like to follow up, of course, we give you the opportunity to do that as well. So we provide that service for our WDBO listeners. We’ve got an awful lot of people over the last several months take advantage of it if you haven’t done so.

Joe Bert:
And this is funds that you may own in your 401k, your IRA, or individual brokerage account. So give it a shot and I think you’ll be some surprised. Hopefully, pleasantly surprised at what you own. And then it will also show you how you’ve diversified or not diversified, where you may be overloaded, taking more risk than you need to. So that’s an opportunity. Go to scoremyfunds.com, scoremyfunds.com. And I see we got another call there. Can we catch that before the bottom of the hour, Chris?

Chris:
Yes, We can. And again, I just want to emphasize, it’s free.

Joe Bert:
Yep.

Chris:
It’s free, everyone.

Denise Kovach:
I guess it is.

Chris:
It’s free.

Joe Bert:
Yep.

Chris:
All right. Let’s go to the phone lines. Mark, calling in. Mark, welcome onto the show.

Joe Bert:
Good morning, Mark.

Denise Kovach:
Hey, Mark.

Mark:
Good morning. How are you?

Joe Bert:
Good. What’s up?

Mark:
… that call.

Joe Bert:
Sure.

Mark:
I have a quick question. So I’ve been trying to advise my father a little bit here, as he gets older. He is in his seventies, and he is about now 95% in equities, which concerns me. But nevertheless, I’ve been trying to tell him to take as much gain as he can this year on the capital gain side of things while it’s a known quantity. We know it’s 20% plus the one and a half percent Obama tax. But is that something you would recommend for someone his age? Because he’s really reluctant to want to pay the tax, and I’m saying, “It’s the lowest it’s ever been, take it now. Take your gain now.”

Joe Bert:
Well, you’re right. And here’s the question that I would ask your dad if he was sitting across the table from me is, what is his need for this money? If he doesn’t need this money, Mark, I mean, you know his financial situation certainly better than we do. But if he doesn’t need the money, let it ride because you and your siblings are going to inherit it. You’re going to get a step up in basis. And assuming the laws don’t change, will be able to sell it and pay absolutely nothing.

Joe Bert:
I understand, people look at my age and maybe I’m too aggressive. Well, maybe you’re not too aggressive if you don’t need the money. You and I have a lot of clients like that, Denise. We ask our clients, “Is this money for you? Or is this for your kids and grandkids?” And in many cases, the clients have enough income coming in, that this money is really, I don’t want to call it play money, but they’re never going to use it. They have enough set aside for long term care and for everything else that they need, that this is money, you need to think about the future generations. And if that’s the case, get the step up in bases and don’t pay any taxes.

Denise Kovach:
Well, at the same time, if he’s got some capital losses-

Joe Bert:
Exactly, I’m glad you brought that-

Denise Kovach:
… that can Offset the gain-

Joe Bert:
Yep.

Denise Kovach:
… you might take a look in his portfolio to see if that exists. I would probably say, no. Because the market has been doing what it’s been doing. I know a lot of people don’t have a whole lot of losses in their portfolio, but if there are, Mark, some of that, or all of that could offset the gain. If, if you wish to sell.

Joe Bert:
And just for your dad, I presume he’s single. He pay 15% on everything over $40,000 of taxable income. And he wouldn’t pay the hits at 20% rate until he gets it to over 445,000 taxable income. So you’re right. We’re in really low tax situation now, but once again, if he doesn’t need the money, you and your siblings are going to get that money and sell it absolute tax free, under current law.

Denise Kovach:
Thanks for the call, Mark.

Chris:
Thanks for the call, Mark.

Denise Kovach:
Hopefully that answers your question.

Chris:
Appreciate that call, Mark. If you want to join in, take a call in just like Mark, 844-580-WDBO is the number, 844-580-9326. We’re planning tomorrow-

Joe Bert:
Today.

Chris:
… with Certified Financial Group on WDBO.

Speaker 2:
Welcome back to On The Money, Central Florida’s most listened to financial call and show, brought to you by Certified Financial Group in Altamonte Springs. It’s the only show hosted exclusively by certified financial planner professionals. Monday through Friday, their CFPs provide financial planning and investment advice for a fee, but on Saturdays, the advice is absolutely free, and has been for more than 30 years for their WDBO listeners. If you have a financial question you want answered by real fiduciaries, the lines are wide open call 844-580-WDBO, that’s 844-580-WDBO. And enjoy the rest of the show. (singing).

Chris:
Hey, welcome back to on the money presented by the Certified Financial Group on WDBO 107.3 FM, in AM, 580, Orlando’s news. And talk open lines for you right now at 844-580-WDBO, 844-580-9326. Let’s go to those phone lines and talk with Scott calling in from DeLand.

Joe Bert:
Good morning, Scott.

Denise Kovach:
Hey, Scott.

Scott:
Hey, how are you?

Joe Bert:
Good. What’s up?

Scott:
Hey, I’ve got of a kind of a weird situation this year. So after COVID hit, I kind of ended up doing some work, and my income come up this year. Basically I’ve been doing consulting, so it’s unexpected income. And then another thing happened, is that somebody has given me some money in a trust. And this is, I think it’s the type of trust that you have to basically pay the taxes on the way out. And I’m trying to figure out if the money’s put in the trust, and then when you collect it, I think they give out interest on the trust or something like that, then you have to pay taxes on it. So anyway, the bottom line is this. I wasn’t sure if they consider that it’s just ordinary income and I’m basically trying to get close to the age for, I’m trying to put money away for retirement. So I don’t know if I could do some kind of a forced increase in my retirement plan and take advantage of that with that trust.

Denise Kovach:
Scott, let me ask you a question, is it an irrevocable trust? Is there a-

Scott:
Yeah.

Denise Kovach:
Okay, it is.

Scott:
It’s irrevocable.

Denise Kovach:
So, it’s not considered ordinary income. What that is, is it’s going to come out as trust rates and I believe that’s 35 to 37%.

Scott:
Okay.

Joe Bert:
Well, that’s if it stays in the trust. See the trust has to distribute. That’s the downside on an irrevocable trust is that, the tax rates, as Denise said, are very high. They’re higher than income tax rates in some cases. And so they have to distribute the income. And if they distribute the income, it’s not taxable in the trust, but it’s going to be taxable to you.

Scott:
Okay. Yoh, I just didn’t know if that was taxed as ordinary, because at my age I can go put higher rates into my IRAs and that kind of thing. And I was trying to.

Joe Bert:
Well, but unfortunately it is not earned income.

Scott:
But it’s considered separately. I didn’t know how it was treated because they say you have to pay tax on it. And I know that there was a set aside, I set aside whatever. I really just I’ve been setting aside because I know there’s this burden coming up. So basically there’s no getting around it. I’m going to have to pay whatever rates are applicable for that.

Joe Bert:
Right. But you can’t consider that when you’re looking to set up or put money into retirement account, you have to have earned income. Now you said you had consulting income which would qualify.

Denise Kovach:
Correct. How old are you, Scott?

Joe Bert:
Scott, are you there?

Chris:
So we might have lost Scott.

Joe Bert:
I think we lost him on of sale. Okay.

Denise Kovach:
One thing I think Scott should do is, seek the council of a CPA on this one.

Joe Bert:
You’re right. Yeah. All right. But there are opportunities there to save some money on taxes. So thanks for the call, Scott. Sorry, we lost you. And now we have Dave in Apopka.

Chris:
Yeah, let’s do it. Dave, welcome on the show.

Joe Bert:
Good morning, Dave. What’s up?

Dave:
Well, I have a quick question. I don’t know if what I’ve heard is all wet or whether it’s true. Can the wife file half of my social security and not touch hers until she reaches whatever age she wishes to retire, whether it’s at full or at 70, whatever the case may be.

Denise Kovach:
Well, that sounds like you’re talking about a restricted application, and that strategy has expired. How old is your wife?

Dave:
63.

Denise Kovach:
Yeah. Yeah. She no longer qualifies for that.

Dave:
Okay.

Denise Kovach:
So, what happens is first of all, you must be taking your social security in order for her to file on your social security.

Dave:
Mm-hmm (affirmative).

Denise Kovach:
And nowadays it’s when she does that, it’s called deemed filing. So if half of your social security is higher than her social security, she will automatically get that. Otherwise, she will get her own. So she doesn’t have a choice in that regard.

Dave:
Okay.

Denise Kovach:
Yeah. That was a great strategy back in the day.

Joe Bert:
Yeah. Back in the day she could file and suspend. Isn’t that what you did?

Denise Kovach:
Well-

Joe Bert:
And then she let hers run up to what benefit would be at age 70.

Denise Kovach:
Well, Dave would file and suspend.

Joe Bert:
File and suspend. She felt restricted up.

Denise Kovach:
And then she would file on it. Yeah. But that’s long gone. So Dave, hopefully that answers your question.

Dave:
[crosstalk 00:25:13] dollars short. Unfortunately, yes. All right. Appreciate it.

Joe Bert:
You’re welcome, Dave. Thanks for the call.

Denise Kovach:
Thanks Dave.

Chris:
Thanks for the call, Dave. Appreciate it. Let’s keep rolling right along here. 844-580-WDBO if you want to call in and join us, 844-580-9326. We are going to head to Upstate New York.

Joe Bert:
New York.

Chris:
We’re going to chat with Rich.

Denise Kovach:
Wow.

Joe Bert:
All right. Good morning, Rich.

Rich:
Good morning.

Denise Kovach:
Good morning.

Rich:
I have a question. My wife and I are going through this big debate and she refuses to think that I’m right. So I’m calling you as sort of impartial. Here’s the reality. She is going to be leaving her job with the school district where she’s going to be 55. She’s going to continue to work till 62. She wants to take the pension at 55. I want her to wait till 62, but I’m going to put Francine on the phone so that I’m out of it.

Francine:
Hi.

Joe Bert:
Hi, Francine. Good morning. Thanks for calling.

Francine:
Thanks. So I’m just trying to figure this out. If I took the pension at 55 and I lived to age 80, it would pay me $563,000, over those years. And if I waited to 62, the pension would be $8,000 more. But from 62 to 80, it would pay me $571,000. So it’s a difference of, whatever, $8,000. So to me, I would think I would benefit from taking it earlier.

Denise Kovach:
Well, one of the things you have to think about, Francine, is those monies are going to be taxed obviously as ordinary income. So that has to be factored in as well. And what’s the difference in the pension amount, between your age now at 55 versus 62.

Francine:
Okay. 55 would pay 21.6.

Joe Bert:
$21,600 a year?

Francine:
Yeah.

Joe Bert:
Okay.

Denise Kovach:
Okay.

Francine:
And at 62, it would pay $30,100.

Joe Bert:
So it’s about, like you said, about eight grand. Now, is that the single life option? Which means if you pass away, Rich gets nothing?

Francine:
No, it’s the joint.

Joe Bert:
Survival option.

Francine:
Yeah.

Joe Bert:
Okay. Okay. There’s pros and cons in this decision, and certainly you can do the math, which you did, and you look out where you’re going to get more money. When we do financial planning, what we like to look at is getting as much guaranteed money as you can get when it’s time to retire. And the reason being, it’s because the only place to get the guarantee is through social security and through a stable pension. The rest of it, you’re going to be relying on investments and we all know what investments do. There are no guarantees in that world.

Joe Bert:
So what you want to do oftentimes, is look at the guaranteed money. I would want to know more about your financial situation to determine if that’s appropriate for you. But I really like to get the guaranteed money. And that’s why we suggest to many people who wait to take your social security at age 70. Even though, now, that being said, if your health changes, you want to grab the money early on. But in your particular case, it doesn’t make a difference because Rich is going to get the same amount as you are going to get.

Francine:
Right.

Denise Kovach:
And if you don’t need the money, you might consider just leaving it there so you do get that bigger, bigger check every month.

Joe Bert:
Yeah. That increase is happening without your paying taxes. Now you can improve that situation by taking the money at 55, if you’re disciplined and invest it. Unfortunately, what many people do is, they got that extra money and they find a way to spend it. And you’re going to hurt yourself a little bit. So I would lean maybe more toward taking it at 55, if you discipline yourself, pay the taxes and invest it. I’m sure you have a retirement plan through work, a 403(b) plan.

Francine:
Yes. Yes.

Joe Bert:
Are you maxing that out, Francine?

Francine:
Yes.

Rich:
I just want to add, her pension has a COLA, so she-

Joe Bert:
Oh, oh.

Denise Kovach:
Typically [crosstalk 00:29:11].

Joe Bert:
That’s even better. Yeah. If you don’t need the money, I let it ride. I like the guarantee. That’s a-

Francine:
Okay. I was just looking at it like, say, God forbid I died at 70.

Joe Bert:
Yep.

Francine:
So then I only collect it from 60 to 70.

Joe Bert:
Sure, I understand. And then, the other thing is look at your health. But once again, you set it up for the survivor benefit. So it’s not like you’re going to use it. It’ll continue going for Rich.

Denise Kovach:
Yeah.

Francine:
True. True.

Joe Bert:
When you go into retirement, I like as much guarantee as you can get. And then what we do on the other side is figure out how to then structure your portfolio to get you the income you need with the least amount of risk. But let’s try to take as much risk as we can off the table.

Francine:
Okay. Appreciate it. Thanks a lot.

Joe Bert:
You’re welcome, Francine. Yeah. Thanks for the call. Merry Christmas.

Chris:
Thanks so much, Rich and Francine.

Rich:
Thank you, bye.

Chris:
That was a very fun calling. Calling all the way from Upstate New York. We like that. Hey, if you want to call in, you can call from anywhere. Just like that. 844-580-WDBO, 844-580-9326. Go ahead, give us a ring. Join us here live on the air. We’re going to hit you with the three big things you need to know. But then back to your phone calls, 844-580-WDBO. We’re planning tomorrow-

Joe Bert:
Today.

Chris:
… with the Certified Financial Group on WDBO. And welcome back to On The Money, presented by the Certified Financial Group right here on WDBO 107.3 FM, at AM 580, Orlando’s news and talk. 844-580-WDBO, are those lines. If you want to call in and join us here right now. Real quick, before we head back to the phone lines, we do have Don in Winter Park calling on. So we are going to get to Don here in just a moment. But we do have a couple of workshops coming up that we want to talk about.

Denise Kovach:
Chris. You’re right. The next one that’s coming up is going to be in January. It’s actually on the 22nd. It’s going to be hosted by Gary Abely, here in our office. And it’s basically entitled, “Will your savings last a lifetime?” So it’s going to be here in our learning center. And it’s from 10 until 12. Again, that’s January 22nd. And if you have an interest in learning, if your savings will last to a lifetime, you can go online and click on, is it workshops?

Joe Bert:
Workshops, or events.

Denise Kovach:
Events.

Joe Bert:
Events.

Denise Kovach:
That’s what I thought. And you can register right there. So do so before it books up, I know his workshops book up pretty fast.

Joe Bert:
They do. And this once again, this is a Saturday morning. It’s right after our program. So if you come in a little earlier, you can see the monkeys here behind the glass doing the radio show. And we’d be glad to meet you as well. So that’s January 22nd, at our offices up here in Altamonte Springs from 10 to noon. Gary’s a great teacher. In addition to being a certified financial planner, he’s also a CPA. He’ll provide some refreshments and hope to see you here, and get your new year kicked off right. And I want to mention something, I said this about six months ago. Denise and I, and our firm is regulated by the Security Exchange Commission in Washington. That’s the regulatory body that tells us what we can and cannot, should and should not do with our clients.

Joe Bert:
And up until about nine months ago, there was a rule that we could not use endorsements. We could not have clients say nice things about us, simply because that was the rule. And it’s changed. And about three months ago, we sent out a survey to all of our clients and got over a 33% response on our survey, which just blew me away. Anybody that knows anything about surveys, if you get a 2% to 3% response, you’re doing good. We got a 33% response with over 98%, love ya, rating. And the ones that didn’t love us, that complained, maybe our office was a little too far away or something like that.

Denise Kovach:
Mm-hmm (affirmative).

Joe Bert:
So what we’ve decided to do, and we started this yesterday. What we did is we contacted some of those folks, and asked them to come in and on camera, do some testimonials for us. And I had the privilege yesterday of meeting some wonderful people, not only my clients, but Denise’s clients. In fact, one of your clients is maybe listening right now. I know he rides his bike. Gentleman by the name of Joe, down there in St. Cloud. He rides his bikes and listens to the program. So if you’re listening, Joe, shout out to you and Catherine. But I had a wonderful opportunity to meet all the folks that came in yesterday and we hope to do some commercials. And you’ll see some of our clients actually say what they believe about us in Certified Financial Group. But the rules are changing, and we’re glad to be part of that, and look for stuff coming out from CFG. Now you got to be on Spectrum, because it’d be on Spectrum Cable. So you got to be a Spectrum subscriber.

Denise Kovach:
Say that three times faster.

Joe Bert:
Spectrum subscribers. Anyway, so we did that and it was a great… I told Denise it was a really a heartwarming feeling for me, because I had an opportunity to meet all the people. Nancy, and clients of Harry, and Roger, and Denise, and Gary, and me, of course. And it was just a fun day. So anyway, we did that and that’s what we did.

Denise Kovach:
I’m looking forward to seeing that conversation.

Joe Bert:
I am too. I am too.

Denise Kovach:
When’s it going to be available?

Joe Bert:
The production should be done by the end of the month, and hopefully you’ll kick it off early next year.

Denise Kovach:
Perfect.

Joe Bert:
So-

Denise Kovach:
Looking forward to it.

Joe Bert:
Yep. So once again, get back to that workshop and I see we lost our caller, down to star, we get sidetracked here, therefore he didn’t get you.

Denise Kovach:
Well, I saw what he was asking.

Joe Bert:
Yeah, go ahead.

Denise Kovach:
I think, what he wanted to know is can he roll over his IRA to his Roth IRA?

Chris:
Correct.

Denise Kovach:
And absolutely, he can. But that’s called a Roth conversion. Whatever amount he rolls over into that Roth will be considered ordinary income. But the advantage of doing so at the end of the day, if tax laws do not change, is that after holding that IRA for five years, being 59 and a half, any withdrawals coming out are tax free. So the answer is yes. But-

Joe Bert:
Right. And one of the things that Denise and I do when we work with our clients doing financial planning, our software, we can show you exactly what the tax impact of that is, and whether or not it makes sense. On paper it might look like it makes sense, but when you consider the long term implications of paying those taxes today, what you give up for the future, it might not make sense. That’s one of the benefits of, with a certified financial planner, somebody that does financial planning for year four fee. We don’t do it for free folks. We know what our value is worth. But our fees are modest and the benefits far outweigh the cost.

Joe Bert:
So if you want more information about what we do go to our website, that’s financialgroup.com. financialgroup.com, you can learn all about Denise, and me, and the 12 other certified financial planners at Certified Financial Group, how we work with our clients as a fiduciary, providing financial planning and investment advice. We’ve been here in Central Florida for more than 40 years, and we encourage your inquiry. So once again, that’s financialgroup.com. We offer no obligation visit, we’d love to meet you.

Chris:
Absolutely great stuff. Head on over there. Go check out some of these workshops. You can sign up online sooner rather than later, because they do sell out very, very, very quick. And then also don’t forget, check out, scoremyfunds.com. Appreciate everyone tuning in and joining us here on the show this week. Certified Financial Group, we’re planning tomorrow-

Joe Bert:
Today.

Denise Kovach:
Today.

Chris:
We will be back the same time, same place next week, right here on WDBO 107.3 FM, in AM 580. (singing)

 

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