The Countdown to Year-End: Smart Financial Moves for LGBTQ+ Retirees

Episode 77: Audio automatically transcribed by Sonix

Episode 77: 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 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. Thanks so much for being a part of things this time around, as always. This is the show where we help you, the LGBTQ+ community, navigate the winding road to retirement. Um, and do it on your terms. Really? That's that's what it boils down to so that you can have that retirement that you can take pride in. Um, this time around, the clock is ticking on 2025, believe it or not, as we head toward the end of the year, um, you've got a limited time. Whether you're planning for retirement or in retirement, you've got a limited window here to make some very smart financial moves before the end of the year, before December 31st, and we flip that calendar over into 2026. So we're going to talk about that on today's show. Um, the fourth quarter of the year can really kind of make or break you financially a lot of times. And so we'll have some more about that as far as retirement planning goes specifically, and finances in general here. Um, you know, we got talk about RMDs, those required minimum distributions. Maybe you're thinking about a Roth conversion, maybe you've got, uh, some charitable donations. You want to make those different kinds of things, and we're going to break some of those things down here over the next little bit.

Speaker1:
Also going to talk to someone from Bank of America. Shikha Narula with Bank of America, the um, head of rewards there at that bank, that big bank that you may have heard of once or twice, um, she is going to talk about holiday travel and the different trends and all of that, and using rewards to actually be able to cover the cost of a lot of the travel that you do over the holidays and how that can really like, you know, be something that could be advantageous for you. Or if you don't have, you know, if you're not taking advantage of all the rewards that you have, maybe you can take advantage of that in the future as well. So a lot to get to here over the next little bit. Why don't we also tell you that you can go to take pride in retirement? Com. Um, I'm going to do that. Yeah. Take pride in retirement. Com is the website. Uh go there and click on schedule a consultation. You can sit down with little old me, uh, whether it's online via zoom, if you happen to be in the metro Atlanta area, be glad to meet with you at either of our offices. We've got one in Midtown Atlanta right at Colony Square.

Speaker1:
Also have one in Alpharetta. Either way, um, you know, you want to do it. Let's do it. Let's meet. It's free of any cost. It's free of any obligation. You got nothing to lose, really? Um, except for maybe a little a little bit. And I'm emphasize a little bit of your time there, because if you don't want to work with me, you don't have to. And that's really all that comes down to if you meet me and you're like, yeah, I don't really like this guy. Uh, you know, he's, uh, he was much better on the podcast than he is in person. I haven't heard that from anybody, but, uh, if that's you, that's fine. There's a no pressure type situation again. Absolutely free of any cost, any obligation. I'll mention it more as we go on through the show and not only take pride in retirement. Can you schedule a consultation or just reach out via that contact form? You can also get links to the socials and the YouTubes and all the things. Um, you can also give me a call 855246 9211. (855) 246-9211 to schedule that consultation as well. Or hey, just ask me a question. I'd love to talk to you. All right, so let's get some inspiration for this conversation we're about to have, shall we? Let's do that with our quote of the week.

Speaker3:
And now for some financial wisdom. It's time for the quote of the week.

Speaker1:
This week's quote comes from the late self-help author Napoleon Hill. Napoleon Hill in one of his many books. I'm sure that this was said, uh, he said this. Don't wait. The time will never be just right. Don't wait. The time will never be just right. I actually kind of love that because it's, you know, the there may be such a thing as perfect timing. You catch lightning in a bottle, that kind of thing. Um, but if you're just waiting, waiting, waiting for the perfect time, chances are the perfect time for whatever you're talking about is never going to come. And so it's true in in life, in love, in finances as well. And, um, that perfect moment will rarely happen. It can, as I say, but what really matters is the steps that you take now to shape your future. And that's a big part of this show today, because we're getting close to that finish line of 2025, believe it or not. And I'll probably say that about 5 or 6 more times in the show. Believe it or not, we're gonna be at the end of the year here. But it's true, though, like it's snuck up on us in a big way. And, you know, December 31st, it's not just another date on the calendar. It really is a cutoff for some big, important financial steps and decisions that you need to make. And the fourth quarter of the year is when a lot of these big deadlines hit. You know, you've got RMDs, which I talked about those required minimum distributions.

Speaker1:
That is something that that will go into a little bit more about in just a few minutes. But it's that time when Uncle Sam says on those qualified accounts. So anything like a 401 K and IRA, um, something like anything that you haven't gone ahead and paid taxes on at least a portion of, uh, taxes on, uh, at some point in, in, uh, your life yet, if you haven't paid the full that full tax bill that's going to come due, Uncle Sam, ages 73 right now, is going to be like, hey, where's my money? And you're going to be like, here it is, or else you're going to face a big penalty. More about that in a minute. Roth conversions. You've got to make sure and take care of those before the end of the year. If you're spreading those out to not get hit with a huge tax bill at one time in one year. Right. Uh, charitable giving. We got some to talk about that. Even, um, you know, tax loss harvesting, if you have investments outside your IRA or your 401 K. So those are things that you need to look at and think about. And late in the year, you know, your retirement plan should not be on a set it and forget it thing. Any time of the year really. But it should not be a set it and forget it thing. You've got to be making sure that there's maintenance happening, that the things that need to be done are being done.

Speaker1:
And so these last few months of the year, if you haven't, you know, checked the things off your list before these deadlines, They'll determine how much you owe in taxes, whether you meet IRS withdrawal rules, whether you can still take advantage of, you know, things like deductions, you know, before the new year begins. And so here's a here's a good way to think about it. I think it's like you're trying to board a flight these days trying to board a flight. It's pretty difficult, especially when you know, there's no, um, government, uh, that's operating really. Um, and the, uh, the air traffic controllers are calling out of work, and TSA is calling out of work and all that stuff. So but you're trying to board a flight, and if you arrive one minute after the gate closes, doesn't matter how ready you were, you know, you could have had things packed away. Uh, you could have had all of your stuff, you know, your passport on your person and all the things, and you're ready to get on that plane. But if you're there after that gate closes, plane's gone. And so the same goes for year end deadlines in retirement planning. Um, some, some really key facts and figures here that we want to go over with a year end checklist. All right. So the urgency of these things is real. Um, most year end moves have to be completed, not just started by December 31st.

Speaker1:
That's a that's a biggie. It's like, you know, a lot of times if you think about the tax deadline for filing your income taxes every year, you think about that deadline and it's like, oh, you know, before e-filing, I would always remember and this is back in my 20s, I would always be rushing to the post office on April 15th to get there before midnight so that it's, you know, got the stamp on it that says it was mailed April 15th. And that that just doesn't do with things like what we're talking about today. Most of these year end moves have to be completed, not just started or in progress or on the way. Check's in the mail by December 31st. So let's say if you want that Roth conversion or a charitable gift to count for the 2020 tax year, that money has got to leave your account before the year is up. So before midnight, New Year's Eve, uh, that money is going to be out of the account, not just checks in the mail. It's got to be out of the account by midnight, New year's Eve. Missed those. Come with a steep penalty. What did I say about RMDs earlier? Well, it's Uncle Sam when you turn 73 instead of the old, um. You know, I want you poster. Very famous poster with Uncle Sam pointing, saying I want you. Um, he's got his hand out instead of a finger pointing.

Speaker1:
He's got that handout and he says, I want your money at this point in time. So 73, you have not paid taxes on any of these qualified accounts, things like your 401 at work, etc. etc.. Traditional IRA and others. If it's not a Roth, essentially that's what you've got to deal with. You've got to pay the taxes. You haven't paid them yet, so Uncle Sam makes you pay them at 73. So you've got to withdraw a little bit of money, at least from these qualified accounts and whatever that required. Minimum is, is the amount that you at least have to take out and pay the taxes on it. Now, if you don't, this is still like one of the stiffest penalties in the IRS arsenal. It used to be before the secure act 2.0. I believe. It used to be that if you missed your RMD, it was a 50% penalty, a 50% penalty. If you missed your RMD, you would have to pay what you owed and then half of that amount again in that next year because you missed it as a penalty. Now it's still hefty. It's at 25%. There's a 25% penalty, but it's reduced to 10% if you correct it quickly. And still one of the highest penalties in the tax code. Let's not get penalized at all. How about it. All right. So let's make sure that those things are taken care of by the end of the year. Market volatility does, at least historically tend to rise in Q4.

Speaker1:
So it's a great time to review that asset allocation. All of those things I can help you do that if you call even for that free consultation. That's one of the things that we do in that free consultation is that I will I'll tell you, I'll be like, look, let's do a deep dive. Let's do an analysis of where you are right now. Do you have proper asset allocation? Are you taking the amount of risk that's right for you, whether it's enough risk or not, enough risk, too much risk, whatever the situation is in your own portfolio, because everybody's situation is different. That's why it's important that you sit down with me and look at these things. And again, as I say, market volatility tends to rise generally speaking in Q4. So it's a great time to do that. Go to take pride in retirement. Com and schedule that free consultation. Once again take pride in retirement. Com or call 855246 9211. And don't forget the human factor here right? I mean banks and custodians are slammed at the beginning or at the end of the year. Rather, it's the holiday rush. Things are kind of crazy for everybody. And so waiting until that, like last week of December, to maybe request something be moved out of an account to make to pay an RMD, you know, to do whatever you might want to do with it can lead to missed deadlines because of the delays in the processing.

Speaker1:
So just make sure and take care of things ahead of time so that you're not staring down that deadline and then get penalized for something that you thought you took care of, but really and truly wasn't taken care of because you were just behind the eight ball there. All right, again, take pride in retirement for the free consultation. Um, and, you know, I mean, missing those deadlines can mean not only penalties like we talked about with RMDs. It can also mean a higher taxable income, say, next year. Like if you if you miss doing a Roth conversion this year and you double up next year on it, let's say you were going to do, um, I don't know. Let's do a nice round number, $10,000 converted this year as an example because it's a nice round number, $10,000 converted to a Roth this year, $10,000 converted to a Roth next year and the year after. And however many years you want to do it, whatever again, makes sense for you is what we would do. But if you want to do that and you miss it this year, you wait until next year. Maybe that throws you into a higher tax bracket. And so at least on a portion of what you are, um, making next year in 2026, for example, being, you know, right now, 20, 25. Um, that will throw you into a higher tax bracket. So at least for a portion of what you owe, you'll be taxed at a higher rate, potentially in 2026.

Speaker1:
And so you can, you know, mean mean losing out on deductions as well. Not only that higher taxable income. Um, you can also, you know, face bigger IRS penalties or big IRS penalties, not bigger but big IRS penalties including that 25% potentially. And this is the thing. It's not just about avoiding mistakes. It's about creating peace of mind. It's about having a plan and sticking to it. And that gives you that peace of mind. Having a plan in writing. How many of you have a plan in writing for your retirement? Show of hands. I can't really see through the camera or through my microphone, but I would imagine maybe a few are raising their hands. If you do have a retirement plan that you have in writing. Are you confident in it? Raise your hand. Oh, I saw a few hands go down. Okay, good. That's. My abilities are, uh. You know, my my ESP is really working today. But, yeah, I mean, you know, that's just kind of a funny illustration based on my experience of things. You probably, if you even have a plan in writing, a retirement plan in writing, you might not have the most confidence in it. Maybe it's been a while. Maybe you have set set it and forgotten it right over the years. And so do you feel in control of your finances if that's the case? Probably not. So take control of your finances. And this is really, really a key point for LGBTQ+ retirees.

Speaker1:
A lot of us, myself included, have had to catch up financially because we didn't have access to things like spousal benefits or tax advantages in earlier decades. And so now it's like every dollar saved, every tax break captured means that much more to LGBTQ+ folks. So our community really is a community that needs to focus on this. Take advantage of everything that we can control, all the things that we can control as long as we can control them. And so by planning ahead, you give yourself that peace of mind. Yes. But you also give yourself a gift of choice. More flexibility, less stress, the confidence to retire on your own terms, to get that retirement that you can take pride in. 855246 9211. For the free consultation or take pride in retirement. Comm. So, um, let's talk about here before my conversation with, uh, our good friend from Bank of America. Let's talk about the real kind of magic of all this. Bringing it all together. Ah! Let's join hands and sing Kumbaya and bring it all together. Um. The secret to smart retirement planning. It's not doing a bunch of separate tasks and everything. Kind of living on its own island. It's coordinating them so they work together. And so this is one of those things that I can help you through. And the team at Active Wealth Management, which is my firm that I am affiliated with here, what we can do for you, those RMDs, those Roth conversions, charitable giving, making sure all of those things are connected.

Speaker1:
Every move affects your taxable income. And when you make sure that those are in line and that those are all synced together, you can unlock some major savings, some potential tax savings as well, like, say, make a qualified charitable distribution, a QCD from your IRA that goes directly into a charity and that amount does not count as taxable income. And so that means you can reduce your overall income. That could make room for a Roth conversion. All while staying in the same tax bracket. So that is something to keep in mind about how all of these things work together. Again, they don't live on islands out by themselves, floating in the ocean. The ocean of finances. It's how many, um, metaphors can I mix today? Um, they're not floating on islands out there in the ocean by themselves. They all work together. They all are. Um. They have this relationship where one affects the other. Right. And so it's like, sort of conducting a symphony. Your own financial symphony. Each note really has to fit together in that chord. Right. Your RMDs, your conversions, your giving, all the things have to fit together. And it's a beautiful sound. Otherwise, it can be something that is ugly, ugly, ugly. Um, and a few more key points to remember here. Charitable deductions can offset income from a Roth conversion in the same year. As I mentioned, income smoothing is something that you can consider as well, converting smaller amounts each year.

Speaker1:
And we're talking about the Roth conversions. Converting smaller amounts each year can also help keep you below the thresholds for Irma surcharges. That's the Medicare surcharge, right? Irma Irmaa income related Medicare adjustment amount threshold. That means you'll have to pay more for certain parts of Medicare in your premiums. If you make over a certain amount of money in the and it's got a two year lookback period. Married couples can use each spouse's tax bracket strategically to reduce overall taxes as well. That's something you talk talk with about your tax professional. And then also, you know, careful timing can help you avoid double RMD years if your first one was delayed. So yes, take care of it before the deadline. We can help you do all of that. Take pride in retirement. Take pride in retirement. Com or call (855) 246-9211. Well, believe it or not it is just about holiday travel season. It sneaks up on us each and every year, it seems like. And it often comes with a big price tag that forces a lot of us to really stretch our budgets to the max here, not only for, you know, like our monthly budgets as we get later on into the year, but really our annual budgets as well. And joining me now to talk more about this is Shikha Narula who is Bank of America's Head of rewards. Shikha, thank you so much for taking some time for me. I really do appreciate it.

Speaker4:
Absolutely. It's my pleasure to be here.

Speaker1:
It is getting to be a busy, busy time of the year. And as I said, you know, I mean, it's a lot of financial strain on people as they plan for this travel during the holiday season. And, you know, in a lot of the time, I mean, we, we plan sort of for the same kind of trips year to year, unless we have relatives that move around a lot or something like that. Um, but stretching our budgets has become more of a thing as inflation has gotten, uh, you know, worse over time. And obviously the inflation rate has come down, but those higher prices are still with us. What are some simple things that people can do to really, I don't know, just spend smarter when it comes to their travel.

Speaker4:
Yeah. So I think through a little bit of smart planning, people can still give themselves and their families the holiday trip that they deserve. You know, some of the strategies I can share. Number one, start by planning early. I know I'm always thinking ahead, thinking about that next holiday. So you know, when you start early, you can give yourself the time to find the best deals. And there are a lot of tools out there. There's flight and hotel trackers that you can use, um, you know, so that you can make sure you're getting the best price on travel and accommodation. So use some of those tools. Number two, make a budget and then stick to it. So make sure you know you're budgeting for line items, not just for flight and accommodations, but also the additional things that you're going to purchase while you're on that reservation on that trip, you know, the restaurants that you're going to be eating at. So account for all of that. Um, and then third, make sure you're maximizing the rewards that you can get from your credit card as well as other loyalty programs. Um, so we know to a survey that we recently did, um, 61% of Gen Z and 54% of millennials said that they're planning to use the rewards to fully or partially fund holiday travel. So to me, that's a great way. If you have accumulated some of those cash back, you know, make sure now is a great time to use it to book that travel. And then once you're traveling and you're making those purchases during your travel, make sure you're choosing the best card that can help you maximize the rewards so you can start to accumulate some of those rewards for your future purchases so you can offset some of those costs.

Speaker1:
Yeah, it's very important to make sure that you take advantage fully of those rewards and everything that you have. But beyond, you know, maybe just the points or the miles, what are maybe some of the less obvious perks, but but still, you know, ones that are valuable for folks that a strong rewards program can really offer for people who are traveling for the holidays.

Speaker4:
Yeah, I think banking reward programs can offer a variety of benefits and rewards. So, um, one of the great things about Bank of America is no fee preferred rewards program is we reward our clients for their loyalty based on their entire banking and investing relationship across Bank of America and Metal. So not just for credit card spending. And there's a wide variety of perks that we offer to our clients that they can use while they're traveling, whether they're traveling domestically or internationally. So, you know, some examples I can share. Um, you know, the program offers foreign currency exchange rate discount. It offers no fee ATM transactions so you can have access to cash without paying any fees. Um, wherever you go. And then there are some partnerships that we have with some premium travel providers that can help you get some discounts and deals that you can take advantage of. So various ways to kind of help ease some of the costs associated with travel.

Speaker1:
Yeah, great. Great tips there. And you know, I mean obviously the number one tip that you had for us was was starting to plan early. Right. But maybe if somebody is just now starting to kind of get their their plans in place, maybe starting to um, think about their holiday travel a little bit more, is there a maybe an easy to implement tip that you would have for them? Uh, for, you know, getting started on the on the process at least?

Speaker4:
Yeah. So the tip I'll share there is make sure you're letting your rewards right. So, um, layer one, think of the retailers and travel providers that you're going to be using on your trip, the hotel you'll stay at, the airline you're going to use, the restaurants you're going to eat at. You know, make sure you're signed up for their loyalty program so you can take advantage of some of the perks that they have. Um. Layer two make sure you're using a good cash back credit card. So, you know, bank of America Customized Cash Rewards credit card gives you 3% cash back in one of six very popular spending categories of your choice each month, which includes travel and gas and EV charging stations. So make sure you have something like that. Um, layer three um, bring in something like a Bank of America Preferred Rewards program that gives bonus rewards on top of the base credit card bonus that you already earned. So, you know, as an example, on top of the customized cash, um, standard 3% cash back that you get in your category of choice, you can get a bonus 25 to 75% rewards bonus through the Preferred Rewards program. And then lastly, you know, think of some of the merchant deal platforms that are out there and can you take advantage of that? Um, our bank deal program offers deals and discounts from some popular retailers and restaurants. So make sure you're taking advantage of all the benefits that are out there and there. There are several for sure for you to be able to leverage.

Speaker1:
Definitely. All right. Well, um, just about time for us to wrap things up here, but anything else before we run that comes to mind that you wanted to share?

Speaker4:
Yeah. So as you're thinking about your 2026 financial plans and goals and whether you're planning to buy a car, renovate your home, or save up for that next travel or holiday season, uh, vacation, uh, make sure you're using a financial institution that will meet your unique needs and will reward you for everyday banking. Um. Our preferred rewards program. It offers members extensive rewards and benefits across deposits, investments, credit cards, mortgages and auto loans. So make sure you're taking advantage of some of that. And it's, you know, offered to our clients with a no fee. So certainly a great way for you to be able to reach your goals in 2026.

Speaker1:
Perfect. Shikha Narula is with Bank of America. Thank you so much for taking some time for me. I really do appreciate it.

Speaker4:
Thank you for having me. And if you want to learn more about Bank of America's Preferred Rewards program, make sure you go to Bankofamerica.com for Preferred rewards.

Speaker1:
We will send our listeners in that direction. Thanks so much. Well, that's going to do it for this edition of Take Pride in Retirement. Thank you so much for being a part of things. I really do appreciate it. As always. I say this every time, but I say it because I mean it. It's not just something that I script out in my mind. It's something that I truly, truly mean. I am so appreciative to you for being a part of this show and for being a part of this, the movement that I'm trying to create here, where, you know, I'm just trying to empower LGBTQ+ individuals and couples and families of all different shapes, sizes, whatever. No matter who you are, where you come from, who you love, how you identify, or how much money you have, you deserve a retirement you can take pride in. And that's what I want to help you achieve. Once again, go to take pride in retirement. Com or call (855) 246-9217. We'll get you that free consultation. It's absolutely free of any cost or any obligation. And the end of the year is a really big opportunity to sort of make sure that you're taking advantage of those smart strategies that we've been talking about here, protecting your income, reducing that tax burden now and in the future, and make sure that everything works in harmony to give you a retirement you can take pride in. So until next time, take pride in yourselves and take care of each other. We'll talk to you then.

Speaker2:
Thanks for listening to Take Pride in Retirement. Members of the LGBTQ+ community deserve to work with the 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 in sold through individually licensed and appointed agents.

Speaker1:
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. 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 ADV two, item four for additional information.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including world-class support, share transcripts, powerful integrations and APIs, advanced search, and easily transcribe your Zoom meetings. Try Sonix for free today.