The Ultimate Tax Guide for Pre-Retirees & Seniors

Episode 9: Audio automatically transcribed by Sonix

Episode 9: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
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.

Producer:
Welcome to All Things Financial, the show that helps upgrade your financial literacy. Trey Peterson and Yelisey Kuts are retirement planning specialists here to provide a unique and conservative approach to managing your money. Now here are your hosts Trey Peterson and Yelisey Kuts.

Yelisey Kuts:
This is Yelisey Kuts. And today I'm actually I'm joined with uh by Ryan Moffitt. Ryan the the people have spoken. They've been practically begging us to have you back on since your first appearance. Uh, how does it feel to be in such high demand?

Ryan Moffitt:
I feel like I should be giving, like, some type of Super Bowl answer here. You know, Yelisey say. Feels really good. Really good. I think we might plan a trip to Disney after this. Uh, to be coming back to the podcast. You know, I'm happy to be back and happy to, uh, have good conversation about important topics, uh, tax related, investment related, etc..

Yelisey Kuts:
Yeah. Well, we want to shout out some of our listeners, uh, you know, we're obviously we do complimentary consultations all the time and, and we hear from listeners all over the country, and I'm told we have at least one listener in New York. So I just wanted to do a little shout out to my mother. Thank you for listening and keeping this podcast going.

Ryan Moffitt:
Thank you, Mrs. Kuts. Yeah.

Yelisey Kuts:
Uh, but anyways, uh, you know, we we have an agenda, as we always do, and, and I know we don't always, uh, complete every item on the agenda, so I'm not going to I'm not going to say that this is what we're going to go over, but I will mention some of the topics we'd like to discuss, and many of them we will not discuss. So I don't want to get your hopes up. Uh, but one of the first things that we're going to talk about obviously, is tax season. So we'll talk about important tax reminders, what you need to do before April 15th. Obviously the filing deadline, uh, some retirement tax strategies, because that's what we do. We talk about retirement planning. Uh, we'll mention some retirement regrets, what most American seniors are loving and potentially regretting about retirement. And, uh, why don't we why don't we kick things off with our financial a little bit of financial wisdom? Ryan, if you want to do the honors, if you want to do the quote of the week.

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

Ryan Moffitt:
All a week from Will Rogers. And I will say, if you don't know who Will Rogers is. He was a prominent early 1900s actor and, uh, voiceover did a lot of, uh, speaking and known for some humor, etc. but he, he was quoted saying that the only difference between death and taxes is that death doesn't get worse every time Congress meets. So thank you, Will Rogers, for the wisdom and insights on comparing taxes to death.

Yelisey Kuts:
Well, uh, yeah. I mean, that's obviously unfortunately true. Um, actually, they've been quite generous with the state taxes. So, yeah, I mean, uh, definitely, definitely some wisdom there. Um, but as far as some important tax reminders for retirees, the biggest one is we we want to mention this. We can't stress this enough. File by April 15th we'll talk about some exceptions to that a little bit later on. But you know file by April 15th. That is what I would say, the secret of wisdom when it comes to tax season. And unfortunately for many of us, uh, in order to use wisdom, sometimes we need experience. And experience sometimes is gained when we don't use good judgment. And that's why experience is the best teacher. So one of the things that I want to encourage you, rather than benefit from the experience that maybe you have or do not have, uh, we have seasoned CPAs here, in-house here at All Things Financial. We'd be happy to help you, help guide you, and give you some of the advice and wisdom you may need.

Ryan Moffitt:
Yeah, I think actually, I'll say what's interesting is that, uh, the first podcast I was on, I think that was even our quote of the day was learning from other people's mistakes and not just your own. Uh, so you're you're right on. There is, uh, sometimes those lessons are hard, but, uh, definitely dive in with a professional. Um, and like you said, we've got a a team of CPAs here. Uh, whether it relates to just getting your taxes completed or whether it's tax strategy for your retirement plans.

Ryan Moffitt:
Yeah.

Yelisey Kuts:
And I know you work closely with Matt and Jim, and you guys like to banter and, uh, and have a lot of dialogue around tax planning. Yeah. What would you say is like the number one thing let's let's just say step one in making sure that you have a successful and efficient tax season this year.

Ryan Moffitt:
Yeah. Truly, I think, uh, everything that I've heard from our team and then even some others is that it really does start with the basics. And aside from tax season, you have to have some type of organizational system. I think the biggest, uh, um, uh, you know, we'll call it a complaint, the biggest pet peeve or complaint that your tax preparer or your CPA, your accountant, has is that when you come in and you're expecting some type of result, whether it's an additional deduction or some type of, uh, hey, we want to double check this or make sure that happens and then you don't have the documentation prepared for it. And I think the biggest thing and the easiest thing that you can do is actually in preparation of April 15th is more of a continuous, all annual, all year long, uh, type activity. And that really is just be organized when it comes to your documents, your bank documents, your account documents, uh, expenditures, uh, all those types of things have some type of system, whether you, um, whether you are, uh, more of a paper person and you keep everything in a file or whether you are a scanning it at home or whether you've got a scanner app on your phone and you save it that way. There are a lot of great apps out there if you're a phone person for either scanner or receipt tracking, etc.. Um, and I think generally speaking, uh, when when CPAs are going to do your preparation and going to do your strategy, they have questions. Uh, oftentimes they would even say are fairly straightforward and not complicated questions, but are hard to answer because, uh, not prepared in the documentation, not having that organizational system.

Yelisey Kuts:
Right. Yeah. And obviously making sure your w-2s your 1099, all of your, your Social Security statements, any income related documents that you might have, uh, you know, there's nothing that your CPA probably loves to hear more than after he's prepared. He or she prepared your taxes for you to give him a call and let them know, hey, I think I missed the 1099. You know, that is not a conversation any CPA obviously looks forward to. So we want to make sure we have everything in place, gather your documents, have everything ready and organized to the best of your abilities. Um, you know, and there's there's a lot of things to that, you know, when it comes to this process. One of the complaints that I've heard from clients sometimes is, hey, you know, I, I heard that medical expenses are deductible. I heard that my charitable contributions are deductible. And when it comes to itemized deductions like that, deductions that you would claim on schedule A, that you would list on, schedule A, those deductions, in order for you to use those, they have to exceed the standard deduction. So the standard deduction, uh, whatever you end up, you end up having in terms of those itemized deductions, they have to. Seed that you're going to take, the greater of the two, you'll have your gross income, and then you'll reduce it by either your itemized deduction or standard deduction.

Yelisey Kuts:
And you know, one of the things I often have a conversation on is the charitable contributions, because we're working with people that are in and nearing retirement, and some of the opportunities are actually begin to become more available the older you get. For instance, QCD is qualified charitable contributions. Uh, so the QCD, basically, uh, the age for that starts at 70.5, which coincides with the old RMD age of 70.5. Obviously the RMD has changed to 72 and then 73, most recently in going to age 75. But the QCD age that's still 70.5. And what that allows somebody to do is, uh, it allows you to give money directly from your IRA, your qualified accounts, your pre-tax accounts. And you can send that money directly to the charity, and you can exclude that from your taxable income. So a lot of times when we're when we're helping folks who give charitably anyways and they're wondering, hey, like is this contribution, this charitable contribution, is it actually helping me in terms of how much I have to pay in taxes? And the answer a lot of times is no, because it's an itemized deduction and you don't have enough itemized deductions to be able to take advantage of that.

Yelisey Kuts:
So you'll be taking the standard deduction. Obviously the charity still gets the contribution. And you know most of us aren't giving to charity to get a favorable tax deduction. But it is a nice benefit. However once you get to the age of 70.5, that's where those QCD TDs could potentially kick in and you can actually lower your IRA balance, lowering your future RMD exposure and also give to the charity while excluding what otherwise would be taxable income. So that's a huge one. And uh, same thing with medical deductions. I don't want to spend a whole lot of time here. But, um, you know, Ryan, if I, if I were to ask you, you know, we we work with retirees all the time. Every day, all day. We're meeting with retirees. A lot of times, we're meeting, uh, new families and we're getting to know new people. And obviously, we're meeting a lot of our existing clients as well and talking to them. But retirees are really, really busy. If you had to pick like, what are the what are the two things that retirees are busy doing? 1 or 2 things that that they're they're mostly occupied with in retirement? What would you say?

Ryan Moffitt:
Yeah, mostly occupied with, uh, people are traveling a lot more, which I think is a wonderful thing. Um, but people are definitely spending time traveling more. And then, um, I think a secondary component is it sounds kind of opposite, almost, but I think people are also trying to, uh, fill their time as well. You know, they're enjoying it. They enjoy the retirement, they enjoy the extra time with family, friends, etc.. Um, and they're looking to say, okay, we've got the travel. Uh, we've got additional, uh, uh, you know, things that we're doing now that we've got the additional time. But I think, you know, a big part of it is saying like, hey, what's what's our next step? You know, what do we need to plan for in the next two years? Five years? Ten years?

Yelisey Kuts:
Well, you, uh, you didn't say the things I was hoping you'd say or kind of ruining my segue into the next topic. Retirees are busy. Retirees are busy doing two things doctor's appointments and grandparenting.

Ryan Moffitt:
That's that's true. That's also really.

Yelisey Kuts:
Unfortunately, only one of those is potentially deductible. So, uh, speaking of the the the medical expenses, the medical deductions, uh, when it comes to your medical deductions. And we've even had clients that if they've had, uh, if they have some procedures that they've been putting off, they put those off into a specific year because they want to have as many procedures or as many, uh, I guess, medical expenses as they can in a calendar year. And the reason for that is in order for you to be able to make a medical expense deduction, those deductions, they have to exceed 7.5% of your adjusted gross income. That's the only way you can count them towards your itemized deductions. So they're actually there is a lot of confusion on what qualifies as a medical deduction. And obviously some of the the more obvious ones are, you know, the fees that your doctor or medical practitioner charges. But on the not so obvious side, you know, you can deduct things like acupuncture. I don't know if that helps anybody, but I'm not I'm not joking. Acupuncture is included. And, uh, and, Ryan, I know you've been on a little bit of a health kick recently trying to lose weight and all that. So, uh, you know, I don't really want to make light of this, but you can actually deduct the amount you pay to participate in a weight loss program. For instance, if, you know, if it's related to a specific disease, um, which includes obesity, not I'm not pointing any fingers or saying anything. I'm just I'm just I'm just leaving that out there for anyone who may benefit from that.

Ryan Moffitt:
Well, the big question for me on that, what I was trying to figure out is, okay, so, you know, if we're considering a weight loss program, obesity, etc., and anybody that's looked into it and anybody that's done anything health related knows that those charts, uh, are hard to line up with, right. It's not hard to be obese.

Ryan Moffitt:
But it's probably not.

Yelisey Kuts:
Hard to be obese. It's hard to not be obese. Ryan I think that's very sure.

Ryan Moffitt:
Very, very correct.

Ryan Moffitt:
But so, you know, looking into this and you say, okay, uh, typically it's uh, what is the diagnosable condition? And the the challenging thing for me personally that I found out is that, uh, my wife saying that I need to lose weight is not a diagnosable condition to people.

Ryan Moffitt:
Uh, the.

Ryan Moffitt:
Medical expenses. But we're going to figure something out there.

Yelisey Kuts:
Well, what I always thought was funny, you know, they they often use the BMI, the body mass index to determine, you know, where you are in the in the scale of healthy to somewhere between healthy and morbidly obese. And I was just always surprised how little it takes to qualify to be obese. And I feel like I've spent most of my life there, even when I've been, like, very physically active and healthy. Uh, so it doesn't really take much to qualify. And the benefit is that you can even like deduct certain costs related to nutrition and wellness and general health. So anyways, the point is I'm not trying to make light of this. Obviously there's, you know, there's a lot of expenses that are related to health care and medical expenses. Um, and a lot of times people don't take advantage of that because, you know, maybe it's hard to get over 7.5% of your adjusted gross income. Or maybe you've just been so used to taking the standard deduction. Uh, a lot of times people find that, hey, like, you can you actually have enough itemized deductions, but you've been taking the standard deduction for so long that you're really not doing your due diligence, not making sure that you're taking advantage of everything, uh, discussing things with your CPA to see, hey, do I qualify to take the itemized deductions this year or am I stuck with the standard deduction?

Ryan Moffitt:
So yeah, I think that's actually feedback that we've gotten from our CPA team as well is, you know, in conversation, a lot of times these things will come up right. And a good accountant will say, hey, that's actually tax deductible because of this qualification. Uh, but because you're so used to well, I just always do the standard deduction. And many people we find just don't know what what is deductible. What can I deduct from my income. Um, and how does it all work that they kind of push the easy button, so to speak, and just go with the standard deduction and yells mentioned earlier that it's it's an either or thing, right. You either take the standard deduction or if your deductible expenses are greater, you take the greater of the two. Um, and really the, the thing that we hear from Jim and Matt and our team on the tax side is that oftentimes these conversations come up, but people aren't necessarily prepared to say, oh, that's right, that is a deductible item. But then I don't have any documentation on it other than knowing that I simply did it right. So I think that's one of the things it's worth diving into and talking to a professional to say, hey, here are the things that I've got going on in life right now. Uh, even if it is something where you say, well, I had to, you know, talk about some medical diagnosis or whatever the case is, because now I am on some type of program, whether it's weight loss or otherwise. Right. Uh, again, I mean, you know, my wife diagnosing me as overweight doesn't necessarily.

Ryan Moffitt:
Count, but.

Ryan Moffitt:
But the workouts have been great. I do have to say that. I'll say they have been great.

Yelisey Kuts:
Yeah. What do you what do you do for workouts?

Ryan Moffitt:
Um, so.

Ryan Moffitt:
I joined a kickboxing gym, which, uh, probably sounds cooler than it actually is, but, uh, I've been doing 6 a.m., six days a week for about three months now. Yeah. So this morning I worked out so hard that I thought I was going to possibly pass away.

Ryan Moffitt:
Well, there you go.

Yelisey Kuts:
Come here for your, uh, retirement planning and also your, uh, health and physical fitness planning. And that one, you could be like Ryan.

Ryan Moffitt:
Great book and great backgrounds.

Yelisey Kuts:
Okay, well, uh, so speaking of, you know, taking the standard deduction, we probably should mention what that is. We're obviously we're referring to 2023. So if you're single that's 13,850. In order to itemize you would have to have more and itemized deductions. And if you're married that's 27,700 for those married filing jointly. And you know, sometimes we the question we get is, well, you know, I'm married. Should I, uh, file separately? Uh, what are some of the benefits to filing jointly? Can I save some money? And, you know, I think in the past, there was, uh, there's a lot more talk about, like, the marriage penalty or some of the marriage benefits. And I think that, you know, there's a lot of that that's been remedied by the existing tax code that we have today. Like, if you look at the tax brackets and you line them up side by side, like someone who's single and someone who's married, like those numbers are, for the most part, just going to double as you go, as you go down, uh, to each, each um, uh, sorry, each rate. Uh, and that really the only time that changes is at the very highest tax brackets. So if you go, go all the way down to like the 37% tax bracket, our highest ordinary income tax bracket, that's where you can see if you're single, you actually are in the 37% bracket if you have more than 578,000.

Yelisey Kuts:
But if you're married, it doesn't double like it does in the previous. Tax brackets. If you're married, that number is 693. So of course, if you're making more than that, if you're in that category, you could say, hey, that is a marriage penalty. If you're if your income exceeds $693,000, it seems like there would be a benefit. Uh, whereas if you're single, each of you could potentially have 578,000 and still be in that 37% for prior to the 37% bracket. So, um, you know, there are some, some differences like that. But really, I would encourage you to sit down with your CPA, find out what makes the most sense for you. Um, you know, there's there's actually a study that I looked at by the Congressional Budget Office and, um, you know, outside of what the congressional outside of what the name says, they obviously they do a lot of budgetary, um, estimates and things that that I've referenced in previous podcasts in terms of our spending as a nation and what we can anticipate. But they also they, um, they, they've also done a few, uh, a few studies on, like the tax system that we have and, and they mentioned some of the objectives that's relevant to the taxation of families. And there's really three items that this one study that that the CBO did that I thought was really interesting, that the three objectives of our federal income tax system.

Yelisey Kuts:
The first one is equal treatment of married couples, which basically means that, like the household with the same income pays the same amount of taxes regardless of who earns the income in the household. So we know that when we're married, filing jointly, um, of course, maintaining a progressive taxation so people who have higher incomes, they eventually enter a higher marginal tax rate. And actually, you know, I had a teacher back in, you know, in, uh, in high school and, uh, his name was Mr. Heller, and I doubt he's listening to the podcast, but his name is actually Mr. Heller, so I probably should change that up. But, uh, he used to always complain about getting overtime. Hey, you know, they're giving me overtime, and it's it's pushing me into a higher tax bracket. And, uh, and I always kind of thought that was funny because, you know, like, as many of, you know, we have a progressive tax code, um, depending on how much income you have that determines what rate you're in. But it doesn't mean that just by just by having an additional amount of income, that now all of your income is taxed at a higher rate. That's not the case. Uh, all of us are in the 10% tax bracket. We then have income that spills over into the 12% tax bracket. And then if we have even more income than only that, income spills over into the 22% tax bracket.

Yelisey Kuts:
And surprisingly, there was a study I read a couple of years ago, I and once again, I don't I don't have the, the the source for you. Uh, but I'm sure it'd be pretty easy to find. Uh, but there is a study that basically they surveyed average Americans, and they asked them if your employer were to give you a $1 raise, pushing you into the next tax bracket. Will the impact be significant or minimal? And I just thought, you know, obviously it's it's minimal. It's minimal because only that one additional dollar gets taxed at the higher rate. But surprisingly the results from the survey were 50 over 50. Half the people thought it was minimal, half thought it was significant. And obviously Mr. Heller would fall into that significant category because a lot of times people think if I get pushed into a higher tax bracket, that means that now all of my income will be taxed at 12 or 22%. And that's just not the case. The only exception to that is when you're in retirement. In retirement now, you do have to consider a few additional things. You do have to look at, uh, the fact that, hey, one additional dollar doesn't just mean that I, I now have one extra dollar taxed at 22%. It could potentially mean that now more of my Social Security is taxable. It could mean that, hey, I now have more income, more.

Yelisey Kuts:
My adjusted gross income is such that I have to pay more for my Medicare Part B premiums, or maybe certain tax credits are being phased out. So even though when it comes to your ordinary income taxes, uh, you know, we do have a progressive we have progressive taxation here, uh, even though when it comes to that, maybe it's not as significant, but there could be other, uh, other ramifications based on the additional income that you've introduced. So of course, we the progressive taxation, that's something that that our federal income tax system, that's one of the objectives. And the final one is marriage neutrality, meaning that your a couples marital status should have no influence on their tax liability. So these three things seem pretty standard. Pretty normal. Something that of course like yeah obviously that is the objective of our federal tax system. One of the things that I thought was interesting, though, is the study also describes that satisfying all three objectives is the unattainable ideal. And it goes on further to explain that our current tax system can only meet two of those, but not all three objectives. So I found that very interesting. And and obviously the most obvious example is, um, is that our tax code, as we get to those higher tax brackets that I mentioned, where it doesn't quite double when you go from the 35 to the 37% bracket.

Ryan Moffitt:
So.

Yelisey Kuts:
Ryan, what are your thoughts?

Ryan Moffitt:
Well, I think, you know, uh, for your your teachers sake and, you know, correct me if I'm wrong here, but I think there's some easy solutions to. And this is for a lot of people where they end up with a little bit extra income. Uh, they got the increase at work, whether it's their annual increase or they got a promotion or whatever the case is, and now they're into a little bit higher income. Right. And maybe it's something that pushes them up into the next tax bracket. Uh, maybe they were already on the cusp. Uh, but I think some of the easy ways to also help for that is also just looking and saying, when I'm doing my planning and what I'm doing, my retirement planning, uh, if I got that increase, if I'm getting that overtime, am I also changing my contributions to how much I'm saving in my K, my IRAs, my Roth, uh, whatever it may be? Am I changing those contributions at the same time? Uh, the limits go up each year, and for 2023, the 401 K limit was 22.5. They just upped it to 23,000 uh, for this year. Um, and then on the IRAs, uh, with the catch up and everything at $7,500, you can save over $30,000 pre-tax, um, in any given year between a couple of different, couple different routes. Right. So you get that little bit of overtime or you got your 2%, your 3% wage increase if you're worried about cash. I was already on the cusp of the tax bracket. Perhaps you need to look at some contributions to to bring some of that, uh, taxable income down a little bit.

Yelisey Kuts:
Yeah. And and it's worth noting, too, um, if you're an active participant in an employer sponsored plan, like a 401 K or 403 B or your spouse's, that could affect weather, that could affect your IRA contribution deductibility. So in other words, if you're actively participating in a 401 K, your contributions to the IRA may not be deductible. And also good reason to consider to, uh, instead contributing to your Roth IRA. Like if you can't deduct the IRA contribution, why do it instead? Put it in the Roth IRA is what I'm getting at.

Ryan Moffitt:
Right? And if it's not deductible and you might say, well, Roth isn't going to help me this year, but Roth absolutely will help you in the future, right? The two tax free, uh, forms of income that you can have down the road are either Roth or life insurance. Right? For either one of those things are great, uh, avenues if, uh, if you have additional income, if it's not tax deductible, it may not be an impact this year, but definitely down the road. Uh, it'll help you out for sure.

Ryan Moffitt:
So, yeah, for sure, for sure.

Yelisey Kuts:
Um, well, you know, just a few, a few other things to to note here. Um, obviously, outside of maximizing your IRA contributions, the one thing that that doesn't present a problem, but the one thing that most of us are aware of, especially as we get closer to the age of 73, is for all of this time you've been diligent, you've been consistent, you've been putting money away, um, into your 401 KS, your IRAs and your tax deferred accounts, the pre-tax accounts. And eventually you have to start pulling money out. Right. You're required minimum distribution. Now, you know, most of us like, you know, if you were to do a show of hands and say, hey, you know who's excited about taking their RMDs? No one is. Because if you know the best case scenario, you would like to be able to take distributions from those accounts at your discretion. If you need the money, pull it out. Take it out. Uh, unfortunately, that's not exactly the way it works. You can take the money out if you want to, uh, at any time. But there's also a required minimum distribution. Now, it's important because, you know, sometimes we have accounts in multiple places. And, uh, a lot of times, you know, you talk to folks and they don't realize that, hey, like, if you have money in a, in an old 401 K in an IRA and maybe some other tax deferred account, that's that's different.

Yelisey Kuts:
In that scenario, you would have to take three RMDs. However, if you have multiple IRAs, or if you were to roll everything from the employer sponsored plan to an IRA, then you could satisfy the RMD from one account. So the difference is, even though they function in a very similar way, if you have different tax classifications, you would have to take an RMD from each account versus if you had multiple IRAs, same tax classification, you could simply satisfy it for one account. And the reason for that why that's important is because, you know, depending on the types of investments you have, it might not be convenient to satisfy your RMD from each account. So, uh, but the biggest thing is making sure you take the RMD. There's, you know, there's a there's a stiff penalty for for not for failure to take your RMD. It actually it used to be 50%. So like imagine if your RMD was 20 grand and you didn't take it. You would have to pay 50% $10,000 in a penalty for failing to take your R and D. So the secure act 2.0, they actually they reduced the penalty down to 25%. So still obviously very stiff. Not something.

Ryan Moffitt:
Very.

Ryan Moffitt:
Generous to reduce it.

Yelisey Kuts:
Very generous 25%. What a relief. Uh, but if you amend your return and actually fix it, take it it, you know, subsequently the subsequent year and you actually make an amendment, they can reduce the penalty down to 10%. So nothing anyone wants to deal with. So we encourage you to take your RMD, uh, whether or not you need it. Um, that is the advice here on the RMDs and of course, yeah. With your tax professional. Yeah. Do a lot of planning ahead of time. It's not, you know, uh, planning for your RMD, incorporating your RMD, making sure that it's coordinated with all the other income sources that you have. So there aren't any surprises and, and tax, uh, penalties, if you will, that you have to deal with later on.

Ryan Moffitt:
Yeah. If RMDs QCD age 70 one half age 73. There's a lot of, uh, a lot of stats and abbreviations and numbers out there. And, uh, for a lot of people, this is this is any industry, by the way, right? This is if you're a CPA, you know, this stuff like the back of your hand. If you're in a financial industry, uh, like we are, obviously we know this stuff. Well, um, but there's a lot of things that, uh, you know, we don't know in other industries. So if you're the person out there listening to this saying, gosh, this is making my head spin, I promise you, there may be something that you do for a living that maybe makes our head spin just to kind of equalize the conversation here. But what I will say is that this is also the value in finding a professional, the value and finding somebody that does know what they're talking about. Right. Uh, there's always, uh, that, that balancing act between, hey, is this something that I tackle on my own or is it worth my time, or is it worth my money just to find somebody that knows what they're doing? And the statistic after statistic will certainly show, uh, that when you find the right person that knows what they're doing in the long run, it actually saves you more money and puts you in a better financial position. Um, whether that's investing, whether that's taxes, whether that's planning for your RMDs, etc..

Ryan Moffitt:
And I would also say, don't wait until you're 70 years old or 73 years old to start planning for these things. There are things that you could be doing today, uh, to start planning for these. There are things that you could start doing by saying, hey, am I a charitable giver? Yes or no? How much do I give annually? Gosh, I don't know. I've never tracked it. Maybe it's worth figuring it out. Um, going through some basic calculations. And we do this for clients all the time, as we say, hey, you know, your RMD is coming up. Uh, should we be doing some planning for that? Yes or no? We try and identify. Is this a need that you will have? And can we help, uh, mitigate some of that and make it easier to process, whether that's in two years from now or five years or even ten years from now, there are things that can be done today. So we encourage you to certainly, uh, talk to your CPA. Um, if you don't have one, if you don't have a financial planner or you just haven't heard from them in a long time, uh, we'd be certainly happy to help, uh, and go through an analysis and give you that complimentary consultation and look at these things with you, because it is important to map them out and plan and know what you're getting into before you're actually there.

Yelisey Kuts:
That's that's really good advice. Uh, one thing that I just remembered that is definitely worth mentioning, uh, and we get this question all the time that the IRA contribution deadline, like, if you are going to contribute to your IRA or your Roth IRA, excuse me, it's actually not the end of the calendar year, right? People often think it's December 31st. Oh, I missed it for 2023. I can't I can't go back and do anything. I can't change how much I owe in taxes at this point. Uh, that's actually not true. You can contribute to an IRA until April 15th, the tax filing deadline. It's not the end of the calendar year, but the tax filing deadline. And you can deduct those contributions from your 2023 taxes, uh, if you're able to do so on the traditional IRA. So I thought that was worth mentioning. Obviously, we're going to move on from this topic to talk about a few other things, but, um, that's a big one that we get, um, this time of year almost daily.

Ryan Moffitt:
Yeah, absolutely.

Ryan Moffitt:
I'm glad you brought that back up, LSA. That's a great point.

Yelisey Kuts:
Okay. Well, um, so there's a study done by Thinkadvisor and, uh, really what they're trying to do is they're surveying retirees to see how American seniors and retirees are feeling. And they wanted to know what are they regretting? What are they happy about? Um, so I just want to start with the first one. So according to Thinkadvisor, the largest regret of retirees today is financial. 78% of retirees are saying that they that they're sorry they didn't save enough money or prioritize their finances early enough. Um, that's interesting, 78%. And I think that a lot of the numbers that we see from some of the studies that we've cited from fidelity that show, uh, the average savings rate and how much people are actually putting away and depending on the age category, how much they have saved for retirement. I think that that really just coordinates well with this number, because in many cases it does seem pretty inadequate.

Ryan Moffitt:
Yeah, for sure, if you get 78% of the population saying. That. Wow. I should have prioritized things differently. And this is, uh, I think there's a, you know, everybody's everybody's, uh, story is a little bit different in the sense that, um, you know, whether it's, uh, moved around a lot or whether it's, you know, an industry that changed dramatically, that changed their income, um, whether they had a ton of kids. I've got four kids and they are not cheap. Anybody that's got kids knows that, uh, sometimes it can be hard to save, uh, when you've got, uh, our kids are, uh, 14 down to six. So we've got some that are in sports and some that are still just doing a little bit of everything, trying to keep themselves entertained. Right. So, uh, it's easy to see how how it happens and it's easy to see how people can get there. But the, the priority that should be placed on saying, what do I need to do? What do I need to accomplish today? Um, now, whether you're 40, like I am, or whether you're 50 or whether you're even 60, hey, what do I need to do today to really secure my financial peace, my financial freedom in retirement?

Yelisey Kuts:
Yeah, I, you know, sometimes I forget, Ryan, that you're 40 and I forget how much all of this advice.

Ryan Moffitt:
Applies to you.

Yelisey Kuts:
I'm joking. So anyways, the second regret. 52% of retirees, uh, they actually regret not having prioritized their health earlier in life. So, um, you know, they're making health a top priority. 82% are making it a top priority now in retirement. And I would encourage you to talk to Ryan if you need help with this. I doubt many of you are interested in going and taking it to the extremes that he has. Waking up at 6 a.m. in the morning to do some kickboxing, but I'm sure Ryan would would, uh, be happy to have you join tag along.

Ryan Moffitt:
I don't know about.

Ryan Moffitt:
The rest of the country, but I know here where we're located at, uh, pickleball has become a huge thing and tons of our clients. Hey. What's new? What's going on? Oh, I got pickleball this weekend.

Ryan Moffitt:
Where? You know everybody? Yeah, everybody.

Ryan Moffitt:
They're opening up pickleball courts. It seems like everywhere currently. I know tons of people that are doing this.

Ryan Moffitt:
You know, one thing.

Yelisey Kuts:
That's not often discussed is, uh, the pickleball related injuries. It seems like a pretty safe sport. But, you know, a lot of times, you know, the injuries are folks that are, uh, playing like they did back in their 20s, but they're in their 70s. So I just want to caution people, you know, pickleball can be a dangerous and a hazard in retirement.

Ryan Moffitt:
So I got a little bit of insight, uh, from a couple of our clients talking about pickleball. And, uh, a couple of them are fairly serious about it, and they they both have said that. Well, we play enough that we've kind of got the idea of who shows up to to the court. Right? So you kind of get an idea pretty early on, like, hey, is this going to be a real competitive game? Um, a good activity, a good, you know, workout, etc.. Get my heart rate up? Or is this going to be more just like for laughs and for fun? And we're all having a good time. But, uh, there are a couple of our clients are actually quite serious about it.

Ryan Moffitt:
Yeah, I.

Yelisey Kuts:
Think that'll probably be me when I retire. I struggle to just play just for fun when it comes to anything, including board games with my children, which, uh, we all found out the hard way. The dad doesn't like losing.

Ryan Moffitt:
Yeah.

Ryan Moffitt:
Uh, Yelisey say, has flipped many a board game, uh, when he's down.

Yelisey Kuts:
All right, moving on to the third disappointment. Uh, 21% of retirees are disappointed that they didn't travel more before retirement. Everybody thinks about traveling in retirement. You have your bucket list items, all the things that you eventually want to do. We've had a number of people that have purchased RVs and really just made a road trip, like a two year long road trip or traveled, uh, you know, the world, and they finally start planning to do all these things. Surprisingly, they're many are disappointed that they didn't do it earlier.

Ryan Moffitt:
You know, it is funny. Uh, we talk to people, um, whether it's, uh, you know, topical advice or, you know, existing, uh, and often I'm surprised how often I hear, like, the camper van come up, and I'm not talking like giant RV. Luxurious king size bed. This is more like, uh, you know, like like like an old van with a, like, a bed in the back. You just want to travel across the country. And I'm kind of like, man, I don't want to do that at my age.

Ryan Moffitt:
Yeah.

Ryan Moffitt:
You know, today I want the big, luxurious RV, or even better yet, a hotel. Uh, but I guess there's that adventurous spirit, uh, with a lot of people and just kind of the idea of the adventure and the exploring and being able to just kind of go, uh, without, without a plan is something that a lot of people look forward to.

Yelisey Kuts:
Yeah. And I think that a lot of it too, like while you're working, you know, just it just seems like, uh, just the stress and, and the demands that are placed on you while you have children or while you're in the middle of your career, it almost doesn't, you know, like I don't see something like that as something I have any interest in because I can't imagine being able to relax, especially like taking a long road trip. Like, for me, the travel part is the part I want to minimize. Like I want to minimize the actual travel. I want to get to my destination and enjoy where I'm going. Uh, but in retirement, obviously you don't have that. So you could just, you know, uh, relax for once and take your time and take however long it gets to. Yeah. Enjoy the journey a little bit. So. Yeah.

Ryan Moffitt:
Um, yeah.

Yelisey Kuts:
Well, let's move on to, to things that, uh, that aren't regrets, but things that retirees are actually loving about retirement. Um, surprisingly, considering the numbers, we just we just mentioned on some of the things that they have regrets, over 90% of retirees actually say they enjoy being retired. Um, you know, that's an interesting stat, because, you know, while 90% may say they enjoy being retired, um, they're actually, you know, you have to make sure that you find something meaningful to do in retirement because, uh, you know, there's actually a many other stats that support that about like a huge number of people. I don't have the exact stat, but I think I mentioned it in a previous podcast. Um, they experience adverse health effects like things like heart attacks and strokes, uh, compared to people who keep working, like. Numbers are actually staggering that like in those first couple of years of retirement. And I think that a big part of that is a lot of times people retire without a plan. And I think that, you know, although it might sound like really appealing to finally not have to wake up at 7 a.m. like you did for the last 20 years to finally not have the commitment that you have and the requirements, like I mentioned, the demands that that maybe your job has been placing on you for all these years. While that might sound appealing to have absolutely nobody telling you what to do, I think that that really just kind of that's that's more of like the honeymoon phase of retirement. You have to find something meaningful to do. And whether that's volunteer work or maybe finding a job that you know is isn't necessarily something you have to do out of necessity, but something you enjoy doing, but some way to provide meaning and value for your life and what you're doing. I think that's really the key to retiring well in and making sure that you actually don't experience some of the negative health effects.

Ryan Moffitt:
Yeah, and I couldn't agree more based on the conversations we have with people, the people that have that that purpose. And hey, what's tomorrow bringing are definitely part of that 90% that are enjoying and are happy in retirement. And the the next stat is actually really interesting. 72% of retirees say that they feel younger than their actual age.

Ryan Moffitt:
Well, it's.

Yelisey Kuts:
Because they're finally prioritizing their health.

Ryan Moffitt:
Right?

Ryan Moffitt:
It's that pickleball is what it is.

Ryan Moffitt:
Pickleball. I think that's a.

Ryan Moffitt:
Really cool stat though.

Ryan Moffitt:
You know, I agree.

Ryan Moffitt:
Fun, fun to hear that people are feeling younger than their their current age.

Ryan Moffitt:
So yeah, I for.

Yelisey Kuts:
The last five years I've been I've been saying I feel older than my current age. So I'm looking forward to when that flips in the other direction.

Ryan Moffitt:
Right.

Ryan Moffitt:
Well, I know we're talking about retirement. I know we're talking about, uh, planning and all these things. But I tell you what, a lot of times people, uh, you know, yell, say, when I was your age, people would say, oh, just wait till you're 40. This is going to happen. That's going to happen. No, you're just going to start feeling, you know, not as good your shoulder is going to hurt for no reason. Yeah. For me, that was at age 37. So 40 was a breeze.

Ryan Moffitt:
Gotcha.

Yelisey Kuts:
Well, I'm sure at this point listeners are dying to know how old I am. So, uh, to satisfy your curiosity, I am 35 years old. That's just five years younger than our seasoned Ryan.

Ryan Moffitt:
Uh, 93% of retirees say they can do things they couldn't while they were still working. Um, whether that's, again, travel watching after the grandkids, a lot of things like that. So really opens up a ton of time, um, volunteer work, etc. almost half of retirees surveyed said that they picked up a new hobby. I actually think that's really interesting, something brand new that they hadn't done before, or didn't think that it would be an interest to them.

Yelisey Kuts:
Yeah. It almost, you know, reminds me of like during Covid, uh, people all of a sudden, you know, they were unexpectedly unemployed, uh, and not to get political, but, you know, they just had more free time. They, you know, and one of the biggest things, like whether you're following on social media or, or or just, you know, in life, you would just see people pick up new hobbies, do things that they wanted to do for years. And, and, uh, you know, obviously there's more to life than work. And I think that sometimes we put a lot of these things on hold until we're retired. And really, I kind of like that initial stat that we had a little earlier saying that most retirees wish they traveled more prior to retirement. I think a lot of times people realize that, hey, I wish I picked up this new hobby or I did this thing and and I would just encourage people like whatever those bucket list items are, the things that you hope to eventually do. Don't wait until retirement to do it, even though sometimes retirement is the only creates that opportunity because you do have more time. But pursue some of those things now, whether it's, you know, if you're married with your spouse or with your children and really take advantage of those years prior to retirement as well.

Ryan Moffitt:
Yeah, absolutely.

Ryan Moffitt:
Um, last couple of quick stats as we wrap things up. But 89% of retirees say it's important to travel in retirement. So back onto that travel talk. Almost 90% say that it's important to them at that point. And then 18% of retirees say that they volunteer their time and expertise to organizations. So this is a really interesting this is probably 7 or 8 years ago for me, and I was doing some work at the local high school in town where I live, and I was in their like wood shop area, talking with the the teacher there. And in the back of the room was a well, he was an old guy. He was literally a hundred years old, 100 years old. This was like seven, eight years ago. And he was there and I was talking to the teacher and I said, like, who's the gentleman in the back? And they just said, well, you know, he retired. He was a teacher here, and he's been retired for 40 years. But after a few years in retirement, he just wanted to come in and start helping out the younger teachers. And he's been doing that for almost 40 years. 100 year old guy coming into the high school every single day thought it was amazing. So volunteering your time, volunteering your expertise. Et cetera. Um, with that Yelisey, say any last words of wisdom or thoughts before we close out.

Yelisey Kuts:
Uh, no. I think this has been a great podcast. Hopefully you found it to be valuable. We obviously it is tax season. That was the focus of what we discussed today. Uh, we do have a team of professionals, CPAs, uh, that work in a variety of areas where we can help you. Um, you know, if you have a question that's related to retirement anyway, whether it's life insurance, long tum care, Medicare, tax planning, investments, we probably have an expert who can help you in any of those areas. Uh, I have yet to find a question that we haven't been able to answer with somebody on our team who's had, uh, many years of experience and knowledge in a variety of areas. So, uh, yeah, this has been a fun, fun time. Hopefully, as I mentioned, uh, you've had you've enjoyed it as much as we have. Yeah.

Ryan Moffitt:
Check out our other podcast, ATF Podcast.com. If you do have additional questions like Yelisey, say said, um, or you want to look at a potential retirement consultation, a complimentary consultation, uh, the phone number is (612) 286-0580. We'd be happy to get in touch and talk through, uh, what your goals for retirement are.

Producer:
Thanks for listening to all things financial. You deserve to work with retirement planning specialists who care about your money, and take a unique approach to your financial and retirement needs. Visit all things financial.com and set an appointment today.

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