Tax Changes, Cost-Cutting, and Financial Peace of Mind with Mark Steber (Jackson Hewitt)

TPIR Ep 91 Full Show.mp3: Audio automatically transcribed by Sonix

TPIR Ep 91 Full Show.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Speaker2:
Welcome to Take Pride in Retirement, the podcast dedicated to helping members of the LGBTQ+ community protect and grow their hard earned money. Get set for a show full of education and insights with your host and advisor, Matt McClure. We recognize every family is unique. The goal of the show is to help you achieve financial freedom so you and your loved ones can have the retirement you've always dreamed of, a retirement you can take pride in, no matter who you are, where you're from, or who you love. So now let's start the show. Here's Matt McClure.

Speaker1:
Hello there, and welcome to another edition of Take Pride in Retirement. Matt McClure here with you, your host, your advisor, your friend, your pal, and your confidant. I really do appreciate you taking the time to be a part of things, and I appreciate you joining me. Whether you're on the podcast, whether you're on the YouTube channel, whether you are watching in, uh, Timbuktu or Texas or Atlanta or Alaska, wherever you are. I just appreciate you so, so much. I really, really do. I would also appreciate you reaching out if you have any questions about anything that I talk about on the show today, a lot of ground to cover. We're going to talk about cutting costs and how important that is in this economy. Yes, it's it's really important in this economy and in all economies really cut those costs. Even little things can really add up. And we'll talk about that. We'll also talk about tax changes this year. I've got a great guest coming on Mark Steber with Jackson Hewitt Tax Service. He's the chief tax officer there. We're going to talk about the importance of those tax changes for this year. How to make sure you don't miss out on any new deductions or anything else that you might be in store for. And then also, we're going to close out with the importance of having an emergency fund. Um, it's really super important for everyone. Uh, but I feel like it's especially true for LGBTQ plus folks.

Speaker1:
I'll tell you why. When we get to that, go to take pride in retirement comm if you've got any questions. As I was saying, take pride in retirement. Comm is the place to go. 855246 9211 is the number (855) 246-9211. Again, you can just call or go to the website. Click on the contact page and just ask your questions and I'll be glad to answer those and um, steer you in the right direction on stuff. You can also reach out for a free consultation, because this is the show for LGBTQ plus folks and allies and everybody else who are just looking for The information that is clear, it is applicable and it is something that can help you live a better life and get to and through retirement. That's my whole goal. All right. And so we're going to talk a lot about managing your expenses today. As I was saying. You know, it's it's not about like like if you cut expenses doesn't mean you have to cut out the joy in your life or anything like that. And it doesn't mean living small either, especially for LGBTQ. Plus folks who have already navigated things like unequal pay and and career disruptions, discrimination in in different ways. It's about creating flexibility. It's about giving you control of the things that you can control, so that you can have guaranteed income in your retirement years and that retirement, guaranteed income in retirement, like your Social Security, like, uh, things like your your own personal pension that I can help you establish those things can do their jobs without putting unnecessary pressure on your savings, right? And so for a lot of people in our community, retirement planning also means planning without kind of that traditional safety net, kind of the family dynamic can be very different for a lot of folks.

Speaker1:
Maybe no pension these days either. No adult kids to kind of fall back on when you get, you know, older and unable to get around like you used to and often, you know, a strong sense of responsibility toward chosen family, because these are the people who usually end up filling that role that, you know, maybe blood relations don't necessarily fill. Obviously, it's not true for everyone, but it's more common in our community. And so that makes really smart expense management even more important. It's really about aligning your actions with your goals. And it's not about depriving you of anything that you need or, or even a lot of the things that you might want or think you want in your life right now. And so, you know, once your paychecks stop and when you reach retirement, you've got to have that source of income. You're relying on a mix of your savings, if any fixed income sources that you might have, including Social Security. And so nearly 90% of Americans ages 65 and older, by the way, do receive Social Security.

Speaker1:
And so when expenses rise faster than income, you know, with Social Security, you get like a cost of living adjustment every year. There's a question as to whether or not that increase actually keeps up with the cost of inflation, with the pace of inflation. And so retirees are often forced as a result to draw down savings maybe earlier than planned. That's not a good thing because that's a that's a two edged sword there. You are receiving that sort of fixed monthly income from Social Security, but then you're also having to draw down what you've saved faster than you thought. So it's it's just not a recipe for longevity in retirement. It's a recipe for, yeah, maybe making it today, but not thriving tomorrow and not having the money that you need should an emergency pop up. And we'll talk more, of course, about those emergency funds a little bit later on. And if you draw down savings earlier than you thought, that's a big risk. And it's a bigger risk for LGBTQ+ individuals who may have already had lower lifetime earnings or experience longer single years you know, or may not be married for as long as others because marriage wasn't recognized until about ten years ago. A little more and you lack access, maybe to spousal benefits earlier in, in the decades. Right. And I know that was definitely true for, for me.

Speaker1:
And so for LGBTQ plus retirees, you know, controlling expenses isn't just about budgeting. It's not about dollars and cents. It is. But it's not only about that. It's about protecting your independence, and it's about reducing the risk of needing financial or housing support later on in life. And here's the thing small cuts can make a big difference in those expenses. Right. I mean, kind of it's almost like, you know, often and I've mentioned Social Security a couple of times, and actually the next episode of the show is going to be a heavy focus on Social Security. But with this episode, it's going to it'll creep in here and there. Um, but I often talk about, you know, when I meet with people one on one and I give them this, it's a Social Security report that outlines different options that you may have based on your earnings so far, projected future earnings and the like. And so I give them that. It's called an RSA roadmap. And I say don't think of this as necessarily Social Security maximization report. Think of it more as an optimization report. Right. Because those two are not the same thing necessarily. So if you have that same sort of mindset about Optimization. Optimization. Optimizing where every dollar is going in this sort of expenses and cutting expenses kind of conversation here, then I believe you're kind of in a better place mentally and emotionally going in.

Speaker1:
That's just that's just me. Right. So the three biggest expenses in retirement are going to be usually housing. Of course, keeping that roof over your head, transportation. You got to get from point A to point B, whether it's car, whether it's mass transit, whether it's calling a cab, right, calling an Uber or a lift or whatever. Also, healthcare, according to the Bureau of Labor Statistics, those are the three biggest causes or the three biggest expenses. I should say in retirement. Healthcare is a huge one that people don't plan enough for. And so many LGBTQ+ retirees, you know, you may live in an older home. You may remain in kind of an urban area that's got higher housing costs, because that's the place where you feel more accepted. That's where that chosen family might be. And so, just as a result, you pay more out of pocket for just keeping that roof over your head. Healthcare costs can be higher due to maybe some delayed care earlier in life, higher mental health utilization because of the things that we have been through collectively and individually. Gaps in family caregiving support because of those differing family dynamics that I talked about. And so look at things like, you know, just just even the little things, as I was saying, subscriptions and memberships huge. How many of those do you have that you've forgotten that you have? And there are apps out there that can help you kind of, you know, determine what those may be.

Speaker1:
Um, I was surprised at, you know, the amount of money that I could save every month when I sort of took a look at this a couple of years ago and, and actually utilized one of those apps, I won't promote any single one, but there are several of them that can kind of take a look, see what subscriptions you might have to different services. And if it's something that you don't use, like if you've got a subscription to a particular streaming service, for example, to watch one particular show or like a miniseries, like a limited run thing, that was like one season and that was five years ago, but you've been paying for it every month since. That adds up. It's money out the door for a long time, so keep that in mind. You know, especially like five, six years ago we were in the middle of the pandemic. And so it's like everybody was at home streaming and doing all the things. And we're like, well, I might as well get this streaming service. So just go back and check those things, right? Because it may only be ten, $15 a month. But all of that adds up. I mean, that's 100. And if it's ten bucks a month, 120 bucks a year, you know, times five years is however much. So it's like it's it's a lot.

Speaker1:
It does add up. And if you put that money into, you know, savings or investments or your retirement accounts and all that. That's money that could be growing and working for you, rather than just being money out the door on something that you didn't need in the first place. Maybe. Or you needed it in the first place, but only for about a month. And you've been paying for it for years, right? Memberships kind of the same thing. Uh, any other subscriptions to, you know, I had a subscription to a particular newspaper, uh, online that I had had since I lived in New York City a few years back. And I was paying for, like, the Cadillac of the subscriptions. And I didn't need that because I didn't use half the stuff. So I was able to cut back on that subscription and save a bunch of money every month while still enjoying the parts of that, you know, getting the news alerts, playing the games and all that stuff that I do every day. So only pay for what you need. In other words, uh, old insurance policies. Make sure that you're not overpaying for those. Make sure that they are still relevant to you. Make sure that any sort of benefits, whether it's a death benefit or whatever, in those insurance policies or if there are any health benefits. Whatever might be the case, make sure they're still relevant.

Speaker1:
Have somebody go over that with you and make sure that you're not overpaying for what you're getting. And if there's something better out there, chances are there are. Depending on how old that policy is, if there's something better out there, then take advantage of that. Right. Unused services tied to past life stages. You know, things like. Oh, if you used to run, uh, you know, a marathon every month and you've got some sort of subscription related to that, but now the knees have gone bad and you don't run marathons anymore. That's something to take a look at. You know, stuff like that. Or either like, uh, some early motherhood, uh, subscription to something online or whatever service that you might have used that. And now your kids in college, like that kind of thing. Right. And so reducing those monthly expenses, even just a little bit, lowers the amount of income you're going to need from your investments in retirement, and that matters a lot during market downturns especially. And all of this really ties directly into taxes, because keeping more of your money starts with understanding what is changing out there. Well, it being the beginning of 2026, here it is tax season once again. And this year is going to be pretty different for a lot of Americans. Joining me to talk more about that is Mark Steber. He's chief tax officer of Jackson Hewitt Tax Service. Hey there Mark how are you.

Speaker3:
Hey Matt. Very excited. Very exciting time. Here it is. Tax season go. Time to get those tax refunds.

Speaker1:
That's right. I mean you you are always the most excited when tax season comes around. And I that's why I always love talking to you around tax time because you're very passionate about it. You know the ins and the outs. And speaking of which, share those ins and outs with us this time around. What are some of those big changes that we're seeing for tax filing season this year?

Speaker3:
Well, like taxes are don't like taxes 300 billion with a B dollars are getting ready to move into the pockets of taxpayers, and those people that file early and file correctly will get more than their fair share of the 300 billion, and that's about 100 million Americans. So paying attention to your taxes. You know, it's a good job in 2025 is going to be one for the record books of good news for taxpayers. We had a big tax legislative legislative change back there in the summer, which put a whole bunch of new stuff which can be confusing and intimidating and daunting, but new stuff that can put more money in your pocket. So you say excited. I say it's getting ready to be the giving cash to taxpayers time. And that's always a good thing. So I'll start off with a few of the big things that people have probably seen, but get into a little bit of the specifics. There's a new deduction if you get money through tips, if you're earning money through tips. And that's a lot of people think if you're a Starbucks worker, your bartender, your food service hospital, the list goes on and on. A new deduction up to $25,000 of deductible tips that are not taxable this year. That's a that's a big one and a new one. Overtime. If you earn overtime in your job and a lot of people have overtime and you can get a new deduction of up to $12,500 of qualified overtime deduction off your tax return, not taxable.

Speaker3:
The big one though for seniors this year there's a new $6,000 per person tax deduction if you're 65 or older. On December 31st 2025, you get a brand new $6,000 per person deduction. And that's not to be confused with the prior senior taxpayer deduction or the larger standard deduction available for seniors. This is a new new new senior deduction 6000, intended to help offset some of the tax liability on Social Security, which is where some of the confusion is. You do not have to be drawing or even eligible for Social Security. You just have to be 65. And if you bought a car, 20 million people buy a car every year. You borrowed money. There's a brand new deduction of up to $10,000 on automobile loan interest expense. And again, you don't have to itemize. You just have to have qualified, manufactured and assembled in the in the assembled in the United States. And you get that deduction. And there's a host of others. They raise the state and local threshold of 40,000. If you if you have that in you itemize. And several states do have that higher standard deduction, higher child credit higher refundable credit. You know there's a lot of other stuff. But those big four including that new senior deduction, those will put more money in the pockets of taxpayers. There's just no question.

Speaker1:
Yeah there you go. And and of course a lot of new stuff there that you just mentioned and and more. So how can folks really, uh, be prepared and prepare those documents, get organized to file this year?

Speaker3:
Well, you start off by saying, I'm excited. I hope other people are excited about going and getting some of that $300 billion. That starts with not dreading tax day, not waiting till April 15th, but getting a plan to be organized. And that starts right now. Those tax documents are coming in even as we speak. W-2s 1099. You know, retirement distributions, Social Security statements and all the rest. You need to have a very simple plan to start being organized around those. The brown envelope in the the household works, the shoebox works. But whatever works for you. But start accumulating those documents because it's critical you be accurate. Also know that not everything comes in the mail anymore. Some things come through electronic transmission. So if you're waiting on a document and it hasn't come, check your email, check your spam folder. Because if it hasn't come by January 31st, the deadline for those types of things. Hope is not a strategy. You need to take some action, and you don't need to wait on that because you might have questions from your tax pro on this and other things, and you don't want to wait up to the last minute. So get a plan for organization that includes the envelope or whatever it is to collect your documents. Start to locate your tax professional. That's not an easy task these days. You want somebody trusted, trained, experienced, branded. That'll be here when you have questions later. Not some of the pop up people that might not have your best interest. So find your tax docs, find your tax pro, and then get a plan on your calendar to get it done and go get that money and start that process and start planning for next year.

Speaker1:
Yeah. And of course, you know, working with a tax pro, I think for for most people it sounds like this time around, or at least at least for more people maybe than in years past. It's pretty important to do that because you might miss something, especially with all of these sort of wholesale tax law changes that we're seeing this year. You might miss some of those new, uh, credits or deductions or things like that that could really benefit you come tax time.

Speaker3:
Yeah. And here's an important point on that. I know I sound like I'm pedaling pro tax prep, but I've seen more mistakes by people who pay false attention to some mistaken understanding or Uncle Bob's tax tip because he watched Tick Tock or whatever. But the reality is simply this. And this is what your listeners need to know. If you leave off one of these many benefits that I talked about and a myriad of others that we didn't talk about that are time tested and in place. If you leave it off, the IRS does not say, oh, hey, Matt, here's 5000 more dollars. You leave it off. It stays off forever until you go and fix it, or somebody finds it and fixes it. But the point is, if you hurry through this and you wait till the last minute and you leave off that new senior deduction, 6000 or 12,000 if you're married, the IRS is not just simply going to mail you 3000 more dollars and say, oh, you left off the senior deduction, Matt. Too bad we caught that for you. That's not how it works. Leave it off. It stays off. And if you're not prepared to put in the legwork to learn about it, to answer the questions correctly or to do it properly, you could cost yourself more than enough money to pay a tax professional to help you, if not this year, in some other years. So it always makes sense. And the more complicated, the more sense. But this year, just due to the changes, it's probably a good idea to get some help.

Speaker1:
Yeah, I think so as well. Well, Mark, just about time for us to wrap up here. But anything else that you wanted to touch on that we haven't mentioned here or maybe you know, some resources for folks online.

Speaker3:
I'll give you two final points in a quick moment. Uh, $300 billion in refunds are coming. 100 million people that will draw in some bad people. Bad practices, bad promises. So pay attention when somebody offers you something too good to be true, whether it's a deduction or a credit or they won't sign it. Uh, it's what your mama always said. If it sounds too good to be true, it's probably not true. Use a trusted tax helper and do a little work on that. And if you need more information, our website at Jackson Hewitt Comm, where they use Jackson Hewitt or not, a lot of information on their calculators, tax tips, frequently asked questions, how to find an office. Just put your zip code in the box, but use a trusted professional this year and every year and go to Jackson Hewitt Comm just to get your questions answered or to debunk uncle Bob at the table.

Speaker1:
Uncle Bob and his tax tips. Sometimes they, uh, are just kind of out of out of thin air and just don't make sense. So, yeah, make sure that, uh, you debunk uncle Bob. Mark Steber with Jackson Hewitt. He's chief tax officer there. Mark, thanks so much. Really do appreciate it.

Speaker3:
Thank you. Matt, go get that money. It's not automatic.

Speaker1:
Really a great discussion there. And make sure that you're taking advantage of all of those different, you know, tax benefits that you are entitled to. Make sure you're getting the deductions. Make sure that you are taking advantage of all the things. Call a tax pro if you have any questions about that. If you want to reach out to me, I can connect you with someone I don't. Do, you know, like yearly taxes? I can help you with future tax planning, but I'm not, you know, someone who can, you know, help you file your taxes this year or anything like that. I'm not a CPA, but that's why I like to talk to folks like Mark Steber to get that, you know, insight and the information to pass along to you for educational purposes. And then you can take that and be like, oh, hey, I need to ask my tax pro about this or that or the other. You're just more informed, right? And so I hope you got something out of that. Always great to talk to, Mark. Uh, but yeah, tax efficiency is really important. There's more flexibility as a result of that when you have when you're getting what All of the the cuts and deductions and all the things. You have more flexibility in your budget because there are more dollars in your pocket.

Speaker1:
You can put more away for tomorrow. You can start rebuilding things like your emergency savings. You can reduce your reliance on withdrawals from your portfolio. In retirement, you can support a strategy of delaying Social Security, for example. You know if that's something that might work for you. And of course, it's all based on your individual situation. It's not one size fits all. And I want to emphasize that. So if you want to reach out, I would be glad to go over everything with a fine tooth comb. I'd be glad to, you know, give you detailed reports and analysis of what you have now, what you could have with a recommended plan, all of that going to your 95th birthday. That's how far we map out things, everything to your 95th birthday. And then look at all the options. Weigh everything in the balance, including social security, including personal pensions, including all these different aspects, and see what works best for you. And if I can help you, I absolutely will go to take pride in retirement. Take pride in retirement. That's the website. And click on the contact page, or schedule a consultation to be taken right into my calendar and see my real time availability. You can also email me Matt at Take Pride in retirement comm. That's Matt at Take Pride in retirement.com or give me a call 85524692178552469211.

Speaker1:
All right. So the next thing that I want to kind of go over here before we wrap things up on this particular episode is that, you know, a lot of people might think, okay, I'm not. If you're in retirement, especially early in retirement, you might have this sort of mindset. If I'm in retirement, I'm not working anymore. Maybe I'm not going and doing as much as I was a few months ago when I was still working all the things. Do I really still need an emergency fund, right? My bills are paid. I'm not working anymore. Like, do I need that? Yes. Is the. Is the big flashing red neon sign answer to that question? You know, I mean, more than you might think. You probably need it because 40% of retirees, according to some studies here that we found, um, about 40% of retirees can't cover one year of unexpected expenses. And, you know, a lot of people that I've seen in my, uh, practice as a financial advisor. Yeah, it kind of fit the bill, but that seems, at least anecdotally, to be true. Typical retirees spend about 10% of their of their income annually on surprises, about 10% a year on surprises. Those are not the good kind. Health care is the biggest wildcard here, especially for LGBTQ plus folks who may not have sort of built in caregivers.

Speaker1:
What are you going to do if you need long term care, even if you just need short term care? Something happens and you've got to recover from it. And you know, you. You know, Social Security doesn't cover long term care. So what are you going to do? You got to have a plan for that. And you got to have an emergency fund to be able to cover any of the expenses that might be necessary to be covered while you are in that sort of recovery mode. Right. You don't want to have to recover financially as well as physically. And so some of those other unexpected things might be home repairs, accessibility upgrades. As you as you age, if you're staying in the home, you might need to build a ramp out front. You might need to have something. If you've got a two story home, you might need to have one of those chairlift things installed. You know, like something like that, or even moving like, that's a big expense too. How are you going to make that down payment on the new home? Right. Uh, it's just it's a lot to to go through. I mean, even, like my, my parents had their HVAC go out a few years ago, and that was a big expense. And they did not have the emergency funds set aside.

Speaker1:
And so it was a struggle for them. And so had they had, that would have been much, much easier. They could just pay cash for it been done. But, you know, now it's it's become sort of a complicated thing. But there was a loan had to be taken out and all those things. So it's it can be a lot. Um, so just make sure that you plan for all of this and have that emergency fund. Not only that, you know, dental, vision, prescriptions, all those things change, right? So if you have some big sort of dental issue, a crown crowns are not cheap. Y'all. Crowns are not. I know I've got one of them myself. I'm sure there are more to come at some point in my life, but, uh, crowns not cheap. Um, you know, if you have vision issues, especially, you have things you have to have surgery for cataracts or that kind of thing as you grow older, um, prescriptions, you know, maybe you have a prescription that's going to be hundreds of dollars a month. And you say, okay, well, where in the world is that money going to come from? The emergency fund if you have it, maybe you're wanting to support chosen family. You know, maybe they have something that has gone on and they don't have an emergency fund.

Speaker1:
But if they are your chosen family, you care for them in that way. And so you want to help and you want to support them. That's something the emergency fund can come in handy for as well. End of life or caregiving transitions as well. Stuff that maybe we don't like to think about, but it's a reality of life. And so what the experts say that you should have in your emergency fund, according to let's go a couple of different sources here to give you kind of a ballpark idea. So JP Morgan says 3 to 6 months of income in an emergency fund. So take your income right now. Divide it into thirds essentially. And so or into quarters rather I should say into quarters. And so a quarter of that should be what you should have at least a quarter to half of that in an emergency fund. About 10% of your annual income, according to Boston College. That's kind of the minimum. I would say the 3 to 6 months thing is better because it's more flexibility for you. And even some recommend 1 to 2 years in spending cash equivalents to avoid selling investments in down markets. And that's not a bad idea either, if that fits into your budget. That could be a good recommendation. But again, it all comes down to what's right for you in your situation.

Speaker1:
And my belief is, and I say it almost every episode, it scrolls across the bottom of the screen every episode on YouTube. No matter who you are, where you come from, who you love. And I'll add to it how you identify or how much money you have. You deserve a retirement you can take pride in. That's my goal to give you that. And so, you know, if you are not sure when to claim Social Security, which we'll talk a lot about next time. If you are not sure how to go about saving up that emergency fund, if you are not sure how to cut some expenses. If you're not sure how to plan long term for your taxes, get in touch with me and I'll be glad to help. Walk you through different things, different options for you, and analyze your situation with a fine tooth comb and then show you what's possible. If you work with me on a retirement that you can take pride in. 855246 9211 is the number to call (855) 246-9211 or go to take pride in retirement comm to reach out. Thanks so much for joining me. That's going to do it for this edition of the show. Until next time take pride in yourselves and take care of each other. We'll see you then.

Speaker2:
Thanks for listening to Take Pride in Retirement. Members of the LGBTQ plus community deserve to work with a fiduciary financial advisor who puts their needs first. To schedule a free, no obligation consultation with Matt McClure and the team at Active Wealth Management, call (855) 246-9211 or go online to take pride in retirement. Com investment advisory services offered through Brookstone Capital Management LLC, a registered investment advisor. Bcm and Active Wealth Management Incorporated are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Matt McClure and Active Wealth Management are not affiliated with or endorsed by the Social Security Administration or any other government agency.

Speaker1:
Registered investment advisors and investment advisor representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interest of our clients and to make full disclosures of any conflicts of interest. Please refer to our firm brochure. The advertised item for for additional information. Information provided is not intended as tax or legal advice and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional.

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