Retirement Planning

Year-End Tax Savings

This week, Angela discusses five tax savings strategies to consider before the end of 2025. She emphasizes the importance of planning and understanding tax implications for financial success. The topics include charitable gifting, itemized deductions, investment and retirement portfolios, business equipment purchases, and seeking professional advice.
Key Takeaways 💡
Charitable Gifting Strategies: Due to upcoming changes in 2026, individuals in higher tax brackets should consider accelerating charitable gifts to maximize tax benefits this year. Using a donor-advised fund allows for immediate tax deductions while distributing the funds to charities later. Gifting appreciated stocks or securities to a donor-advised fund offers a double benefit: a charitable deduction and avoidance of capital gains taxes.
Itemized Deduction Changes: State and local tax (SALT) deductions have increased to $40,000 this year, but limitations will apply next year for those in higher income tax brackets. Prepaying state and local taxes this year can help maximize deductions before the new limitations take effect. Consider prepaying property taxes or purchasing a vehicle this year to take advantage of the current deduction rules.
Investment Portfolio Tax Savings: It's important to understand the tax implications of different investment accounts, such as taxable, IRA, and Roth accounts, to avoid future tax burdens. Tax loss harvesting within investment portfolios can offset gains and reduce overall tax liability. Actively managing taxable portfolios to maximize returns, minimize fees, and optimize tax efficiency is crucial.
Retirement Savings and HSAs: Maximizing retirement savings contributions and utilizing vehicles like traditional and Roth IRAs can provide tax benefits and diversify retirement income. Contributing to a Health Savings Account (HSA) offers a triple tax advantage: tax deduction on contributions, tax-free growth, and tax-free withdrawals for qualified healthcare expenses. Reviewing health plans to ensure eligibility for an HSA can be a valuable retirement planning strategy.
Timing Income and Expenses: Instead of solely focusing on buying equipment for tax deductions, consider the timing of income and ordinary business expenses. Delaying income or prepaying rent, taxes, or other necessary expenses can provide tax benefits without acquiring depreciating assets. Prepaid rent strategies can offer ongoing tax deductions if consistently implemented.
Seeking Professional Tax Advice: Consulting with a tax planner, accountant, or tax preparer is essential to identify tax-saving opportunities and make informed business decisions. A tax professional can provide personalized advice based on individual financial situations and goals. Building a team of financial professionals should be a priority to ensure comprehensive financial planning.

How Much is a Million Dollars Really Worth? (Rebroadcast)

This week, Angela discuss the real value of a million dollars in retirement and how to approach financial planning in a personalized way. She emphasizes that financial advice should not be cookie-cutter and must consider individual circumstances, risk tolerance, and future goals.
Key Takeaways 💡
Cookie-cutter financial advice, even from reputable sources like Dave Ramsey or Suze Orman, may not be suitable for everyone due to unique family dynamics, health considerations, cash flow potential, and risk tolerance. Financial plans should be tailored to fit individual circumstances rather than applying a one-size-fits-all approach.
Retirees, especially business owners who receive a large lump sum, should avoid impulsive spending and carefully assess how their money can generate income to cover their living expenses. Spending a significant portion of retirement savings upfront can drastically reduce the potential income generated over the long term, potentially costing them much more than the initial expense.
Spending $100,000 of cash from a lump sum retirement payout could actually cost over $300,000 in retirement income over 30 years, assuming an 8% growth rate and a 4% annual withdrawal rate. This highlights the importance of understanding the long-term impact of immediate spending decisions on retirement funds.
When planning finances, it's important to prioritize personal needs first, then family, and finally community or legacy. Financial advisors often categorize money into 'buckets' for lifestyle, contingency, and legacy, ensuring that personal needs are met before considering leaving an inheritance or contributing to causes.
Entrepreneurs should carefully consider whether reinvesting in another business is the best option in retirement, as they may no longer have the same energy or desire to take on the risks involved. Protecting what they've built and enjoying the fruits of their labor may be a more suitable approach.
Healthcare costs tend to increase in retirement, especially during the 'no-go' years, so retirees should not assume they will spend less over time. It's important to review insurance plans to ensure they provide adequate coverage for in-home care, as many plans are designed to minimize costs for the insurance company.
Retirees should carefully consider the implications of widowhood and ensure they have adequate financial protection for the surviving spouse. This includes reviewing life insurance policies and pension options to avoid disinheriting the spouse, as the survivor may face reduced Social Security benefits and limited options for returning to work.
It's unrealistic to expect an 8% income from investments in today's market, and retirees should be wary of anyone promising such returns. While real estate investments can provide income and growth, the net return after expenses and taxes is often between 3% and 4%.
A million dollars may only produce $40,000 a year of income for most people, depending on how it's invested and the level of risk involved. It's crucial to determine individual needs and create a solid financial foundation before spending any of a large sum of money, as even seemingly small expenses can significantly impact long-term financial security.

Big Beautiful Tax Opportunities

This week, Angela joins the Slice Podcast to talk about the latest tax legislation and how it impacts families, business owners, and retirees. She discusses the extension of current tax rates, the SECURE Act 2.0, 529 plans, charitable giving, Roth conversions, estate tax exemptions, and Trump accounts. She also emphasizes the importance of planning and optimizing financial strategies to take advantage of available opportunities and achieve long-term financial confidence.
 
Key Takeaways 💡
The extension of current tax rates is a significant benefit, as reverting to old rates would have negatively impacted many, especially middle-class married couples. Under the old rates, a married couple with taxable income just under $80,000 would have faced a 25% tax bracket, whereas the current rate at that income level is 12%. Additionally, the standard deduction would have been lower, leading to higher tax burdens for many.
The SECURE Act 2.0 and expanded 529 plans offer new opportunities for financial planning. 529 plans can now be used more flexibly for online academies, tuition, books, and services for individuals with special needs. Grandparents can contribute to 529 plans without it affecting the student's eligibility for student aid, making it a valuable tool for generational educational funds.
Charitable giving strategies can be optimized by using donor-advised funds and gifting appreciated assets. Gifting appreciated assets allows individuals to avoid taxation on the gain and reset their portfolio. Additionally, the cash deduction to charity starts this year, and you get $1,000, which goes to $2,000 next year.
Roth conversions should be considered, especially during market downturns, to convert assets at a lower value and benefit from tax-free growth. By converting during a downturn, individuals pay taxes on a smaller amount and can see significant gains when the market recovers. Planning for Roth conversions should be done in advance to be ready to act when opportunities arise.
Estate tax exemptions are currently high, but nothing is permanent, and planning is essential to take advantage of the opportunity. With estate tax exemptions around $26 million for couples in 2026, families have a chance to transfer wealth without incurring estate taxes. However, it's crucial to stay informed about state estate tax laws and plan proactively, as estate tax laws can change.
Trump accounts, while offering some benefits like government contributions for newborns and employer contributions, require caution due to potential estate tax implications. Gifting to a Trump account requires using some of the lifetime gift exclusion, necessitating the filing of an estate tax return. Individuals with estates over $10 million should exercise caution and consider potential estate tax issues.
Planning is a continuous process that requires annual review to optimize financial strategies and adapt to changing laws. Changes to Trump accounts, 529s, charitable giving, standard deductions, and the SECURE Act all necessitate ongoing review and adjustments. Additionally, the rising costs of healthcare and potential changes to healthcare tax credits make planning more critical than ever.
High-income earners in the 37% tax bracket face caps on itemized deductions, impacting their ability to give back through charitable gifting. The cap on itemized deductions is calculated using a complex formula involving 2/37ths of $100,000 or 2/37ths of the excess over $650,000 of taxable income. Planning is essential to maximize charitable gifting within these limitations, and waiting until the last minute will make it impossible to take advantage of opportunities.

AI and Retirement Planning

This week Angela discusses whether retirement planning is different today with the advent of artificial intelligence compared to the past. She shares her experiences from 2006 and emphasizes that while the tools and technology have evolved, the fundamental principles of successful retirement planning remain the same.
Key Takeaways 💡
Retirement planning software has evolved significantly since 2006, but advisors still need to understand the underlying principles and manually adjust the software's output to create accurate plans. Relying solely on software without understanding the fundamentals can lead to incorrect plans, highlighting the importance of hands-on experience and a deep understanding of financial mechanics.
Technology can aid in communication and problem-solving, but financial advisors must possess in-depth knowledge and troubleshooting skills, similar to a car mechanic who understands how all components work together. Advisors need to understand the intricacies of financial planning and be able to adapt to unforeseen circumstances.
A successful retirement plan requires a solid and truthful budget, clear goals, a healthy risk and income plan, a plan to address potential risks, and an understanding of economic cycles. While technology and tools evolve, these core elements remain constant and essential for achieving a successful and sustainable retirement.
A truthful budget is crucial for retirement planning, and a budget with rounded numbers is a red flag that the person doesn't know where their money is going. Understanding where your dollars are going is essential, as even a small miscalculation can significantly impact your retirement outcome.
While AI and technology offer an "easy button" for retirement planning, relying solely on these tools can be risky, as a successful retirement requires a comprehensive approach that considers individual circumstances and potential risks. Taking the time to develop a well-thought-out plan, even if it means foregoing the easy button, increases the chances of a successful and sustainable retirement.

Do You Really Want a Successful Retirement?

In this episode, Angela discusses the importance of truly wanting a successful retirement and being willing to make the necessary sacrifices to achieve it. She shares a personal story about her grandparents' disciplined approach to finances and uses an analogy of an elite pianist to illustrate the dedication required for success.
Key Takeaways 💡
Angela shares a story about her grandmother, who meticulously kept a budget in a little green book ever since retirement. Despite not having a lot of money, her grandmother never worried about finances because she had a clear understanding of her income and expenses, which allowed her to travel and enjoy her retirement.
Angela asks listeners to consider if they truly want a successful retirement and if they are willing to make the necessary sacrifices to achieve it. She challenges listeners to be honest with themselves about their financial habits and priorities, emphasizing the importance of aligning their actions with their retirement goals.
Angela shares a story about a pianist who, when told someone wished they could play like him, responded that they likely didn't truly want it. The pianist explained that achieving such skill requires immense dedication, sacrifice, and perseverance, implying that many people are not willing to put in the necessary effort.
Angela questions whether listeners are willing to change their lifestyle today to ensure a successful retirement, suggesting potential sacrifices such as downsizing their home, quitting expensive habits, and rearranging their priorities to save more. She stresses the importance of saving at least 20% of one's income, especially for young people, to secure their future.
Angela emphasizes the need to protect one's future through financial planning and insurance, even if it means sacrificing immediate gratification. She highlights the importance of gathering financial data and creating a plan with a financial planner, as well as being willing to implement the plan and make necessary changes.
Angela argues that most people don't truly want a successful retirement because they are not willing to do what it takes to achieve it. She points out the power of immediate gratification and how it can hinder long-term financial goals, urging listeners to examine their thinking and be honest about their priorities.

3 Costly Mistakes When Transitioning Your Business

In this episode, Angela discusses costly mistakes business owners make when transitioning their businesses. She emphasizes the emotional aspect of business ownership and how it can lead to poor decision-making during the transition process. The episode focuses on three common mistakes: running on empty, building a honeybee business, and prioritizing everything, and provides tips for avoiding these pitfalls to ensure a successful transition and retirement.
Key Takeaways
Many business owners drive themselves too hard without planning for the future, leading to burnout, health issues, or even death, which forces them to transition their business under less than ideal circumstances. Waiting until a crisis occurs to plan for the transition often results in not getting top dollar for the business and a grimmer retirement outlook, both financially and physically. Business owners should start planning for their business transition now, regardless of their age, considering that they will eventually exit the business either vertically or horizontally.
Business owners often create a "honeybee business" where every decision and approval must go through them, making the business unattractive to potential buyers or successors. Buyers are less likely to invest in a business that heavily relies on the owner, as it poses risks of instability and loss of customers or key employees after the owner's departure. Instead, business owners should aim to create a self-managing company, like a "Christmas tree," that can sustain and grow even in their absence.
Business owners frequently prioritize everything in their business, living in the moment rather than strategically planning for the future and work-life balance. This approach can negatively impact the business, the owner's health, their family, and their future retirement. To avoid this, business owners should ensure their business is ready to transition or sell every quarter, giving them the choice to either keep growing it or sell it, and they should identify and address any gaps that prevent this from happening.
Progress starts with honesty, especially with oneself, and business owners need to acknowledge the changes they must make to prepare their business for transition. If business owners want their business to be attractive and ready for transition, leave a lasting legacy, and retire successfully, they need to take action now. There are resources available to help business owners with this process, and they should take advantage of them rather than waiting until they are burned out and forced to make hasty decisions.

Where Are You Getting Advice?

In this episode, Angela discusses the importance of seeking sound advice and avoiding common pitfalls. She shares humorous anecdotes of bad advice and emphasizes the need to be cautious about the voices influencing our decisions. Angela highlights the significance of having a trusted team of professionals to address various aspects of life planning, including business, finances, and legacy.
Key Takeaways 💡
It is important to be mindful of the sources of advice we receive and how they impact our decisions, not only in faith but also in relationships, raising children, business, and financial matters. There is a lot of advice available on every topic, but it's crucial to discern whether it's accurate and appropriate for your specific situation, especially with the rise of AI and readily available information on the internet.
Relying solely on a single professional, even a trusted one, can lead to gaps and overlaps in financial plans because they may not have a holistic view or the necessary expertise in all areas. It is important to ensure that the professional is equipped with the right tools and knowledge to provide comprehensive guidance, as even well-intentioned professionals can give bad advice if they lack expertise in a particular area.
Bad advice from even skilled professionals can stem from two main reasons: they may not know what they don't know, leading them to offer advice outside their expertise, or the right questions are not being asked, resulting in a limited or biased perspective. For instance, asking a banker how to pay for a business succession plan may lead to solutions involving banking products, while a broader approach might consider tax benefits, insurance, or alternative funding methods.
As financial situations grow more complex, individuals outgrow the need for a single professional and require a team of experts, with a quarterback to lead the charge and coordinate efforts. The role of a life planner is to help individuals define what it means for them to live life on purpose, understand their future goals, current situation, family dynamics, and feelings about risk and money, and then identify the right professionals to involve at the appropriate times.
When seeking advice for business, money, or legacy matters, it's beneficial to consult with a life planner first to help formulate the right questions and avoid costly mistakes down the road. Life planners can help identify holes in financial plans, determine which professionals need to be involved, and ultimately guide individuals towards living life on purpose.

Retirement Blunders

Angela discusses common blunders people make when planning for or entering retirement. She emphasizes the importance of planning and avoiding mistakes that can jeopardize financial stability and overall well-being in retirement. The episode covers five key blunders and offers advice on how to avoid them.
Key Takeaways 💡
Many people mistakenly treat their first year of retirement as a windfall, especially ranchers, farmers, and business owners who are used to spending when they have cash available. Spending too much money early in retirement can be devastating to long-term financial stability, so it's important to avoid this common pitfall.
To avoid overspending, retirees need a spending plan that their retirement nest egg can support, an investment plan to support that spending plan, and a backup plan for unexpected events. It's crucial to have the discipline to stick to these plans to ensure long-term financial security.
Many retirees incorrectly assume that their taxes will always be low in retirement, but this isn't always the case, especially if they retire in their early sixties without taking Social Security or taxable distributions. Failing to take advantage of lower tax years can lead to significantly higher tax payments later on, especially when Social Security and required minimum distributions kick in, and also consider the widow's penalty.
Taking Social Security at age 62 is a common mistake that can cost retirees a significant amount of money, as waiting each year results in an 8% increase in benefits. It's important to conduct a break-even maximization analysis to determine the optimal time to start receiving Social Security, considering factors like health, life expectancy, marital status, and tax situation.
It is a common misconception that retirees need to lower their investment risk, but this may not always be true, as retirement can last just as long as their working years. Taking less risk can put retirees at risk of not keeping up with inflation, so it's important to get the risk right and plan for the sequence of returns risk, which can be catastrophic to retirement if not properly managed.
Many retirees set themselves up for failure by not having a clear purpose or plan for what they are retiring to, focusing solely on retiring from something. The newness of hobbies can wear off quickly, so it's important to continue using one's God-given strengths and talents, challenge the mind and body, and maintain meaningful relationships to avoid losing purpose and direction in retirement.

One Big Beautiful Bill Act - Part 2

This week Angela continues the discussion on the One Big Beautiful Bill Act. This episode focuses on student loans, charitable gifting, new tax legislation for individuals, and new tax legislation for businesses and farmers. The aim is to provide a broad overview to prompt listeners to inquire about potential impacts on their financial situations.
Key Takeaways 💡
The One Big Beautiful Bill Act introduces a lifetime borrowing cap for student loans, with graduates capped at $100,000 and medical/law students at $200,000, and further limitations for part-time students. Parent Plus loans now have a cap of $65,000, and repayment options have been simplified to just two choices, making it crucial to understand the implications for financial aid planning.
The new tax legislation introduces a 0.5% income floor for charitable write-offs, impacting the ability to deduct charitable gifts, and this floor also applies to corporations. This change means that individuals must now exceed this income threshold before they can begin to deduct their charitable contributions, potentially reducing the tax benefits of charitable giving.
The "no tax on tips, overtime, and Social Security" claims are misleading, as the legislation only provides exemptions on some tips, some overtime, and some Social Security income. There's an above-the-line exemption of $25,000 for qualified tips, but this phases out for higher incomes, and overtime has a $12,500 exemption with the requirement of separate reporting on the W-2, both clauses being eligible for only three years.
The "no tax on Social Security" is more of a senior deduction of $6,000 for those over 65, but it phases out for individuals with incomes starting at $75,000 or $150,000 for married couples filing jointly. This means that the promised benefits may not be as substantial as initially perceived, especially for seniors with higher incomes.
The legislation allows for 100% depreciation and bonus depreciation in one year, increasing the limits around Section 179 expensing up to $2.5 million. Additionally, certain qualified property used for manufacturing, agriculture, chemical production, or refining can be expensed at 100% in one year, though there are strong recapture rules over 10 years to consider.
Environmental quality incentives programs, conservation steward programs, and the agriculture conservation easement program have been funded through 2031, with increased funding due to the redirection of Inflation Reduction Act funds. There is also renewed funding through 2031 for smaller initiatives like well water programs and incentivizing farmers to open land for hunting and recreation, plus a feral swine eradication program for Texas.
The bill includes $66 billion in new spending for farm programs, the largest infusion since 2002, covering commodity programs, crop insurance, conservation, trade promotion, research, education, rural development, energy programs, and support for specialty crops. This presents numerous opportunities for farmers and ranchers to tap into various resources and programs.
The qualified small business stock exemption has been expanded, reducing the holding period to three years for partial gain exemptions, with 50% of gains not taxed at three years, 75% at four years, and 100% at five years. The exemption cap has also been increased to $15 million or 10 times the owner's basis, offering significant benefits for small business owners planning their exit strategies.

Retirement Accounts and Trusts

In this episode, Angela discusses the implications of the SECURE Act and its amendments on retirement accounts, particularly when trusts are named as beneficiaries. She emphasizes the importance of reviewing trusts written before July 2024 to ensure compliance with the IRS's final RMD regulations and to avoid unintended tax consequences. The episode aims to educate listeners on the complexities of tax laws and the need for professional guidance in estate planning.
Key Takeaways 💡
Naming a trust as a beneficiary of a retirement account can be beneficial for several reasons, such as managing inheritances for underage children, protecting assets from spendthrift heirs, creditors, or divorces, and ensuring that assets are distributed according to your wishes even if your heirs predecease their spouses or face financial difficulties.
Updating an estate plan without updating the titling of assets and beneficiary designations can lead to unintended consequences, as retirement accounts are contract property that are paid out per their beneficiary designation; therefore, integrating trust updates with beneficiary designations can simplify estate planning and ensure that assets are distributed according to your wishes.
The IRS released its final RMD regulations on the Secure Act 2.0 of 2022 and Secure Act of 2019 in July 2024, which requires a review of trusts named as beneficiaries of IRAs, and it is important to be aware of these rules to avoid potential tax implications and ensure compliance with the latest regulations.
The SECURE Act eliminated the ability to stretch inherited IRAs over the beneficiary's life expectancy, mandating that the account be fully distributed within 10 years, which can result in significant tax implications for beneficiaries, especially those with high incomes, and there are still planning strategies available to mitigate these tax consequences.
If an IRA is left to an estate, a charity, or certain trusts, the distribution timeframe is reduced to five years, which can significantly increase the tax burden on the beneficiaries, and this highlights the importance of carefully considering beneficiary designations and trust language to avoid unintended tax consequences.
To qualify for the more favorable 10-year distribution rule, a see-through trust must allow the trustee to identify the beneficiary to the IRS, treating them as if they inherited the IRA outright, and the trust must also contain language allowing for the division of subtrusts before the grantor's death and specifically state the percentage of the retirement account allocated to each subtrust.

Your Next Vacation - Retirement

This week Angela discusses the importance of intentional retirement planning compared to the time people spend planning vacations. She highlights the irony that people often invest far more time planning short vacations than their entire retirement, emphasizing the need for early and purposeful retirement preparation beyond just finances.
Key Takeaways 💡
Travelers spend an average of 303 minutes per day on travel content during the 45 days before booking a vacation, totaling about 227 hours or over five and a half work weeks. This highlights how much time people invest in planning short-term leisure activities compared to retirement planning.
Most people spend little to no time planning for retirement, which can last decades, despite its critical importance. Retirement requires intentional planning not only financially but also in terms of physical, spiritual, intellectual, and social purpose to avoid depression and health issues.
Retirement should be viewed as a lifelong journey requiring a clear purpose beyond just leisure activities like golf or travel. Purposeful engagement such as mentoring, volunteering, or community involvement is essential to maintain fulfillment and mental health during retirement.
Without a clear retirement plan, including lifestyle and financial goals, it is impossible to accurately determine the amount of money needed for retirement. Budgeting in retirement should be practiced well in advance to ensure financial freedom rather than restriction.
Most retirement planning occurs too late, often within a year of retirement or after retirement, which limits options and increases risks such as tax liabilities and insufficient savings. Early planning, ideally five years or more before retirement, is crucial to maximize benefits and avoid compromises.
Last-minute retirement planning often results in the realization that 'something has to give,' meaning people may not achieve their desired retirement lifestyle due to lack of preparation. This can lead to reduced lifestyle, increased financial stress, and missed opportunities for tax and asset optimization.
Angela challenges listeners to treat retirement planning like vacation planning by dedicating 227 hours over a year to prepare for retirement. This approach is more manageable as it requires only about 30 minutes a day and can ultimately save money and provide peace of mind.
Angela emphasizes the importance of setting priorities and making time for retirement planning despite busy schedules, noting that failing to do so can lead to significant financial and emotional consequences for individuals and their families.

Why Every Business Owner Needs an Exit Plan

This episode features Rich Hall, a certified exit planning advisor, discussing the importance of preparing businesses for sale. The conversation focuses on the challenges business owners face when selling their companies, the need for proper exit planning, and strategies to ensure a successful transition while aligning with personal and financial goals.
Key Takeaways 💡
A significant portion of business owners' wealth (80%) is tied up in their businesses, yet only about 10% have a formal exit strategy. This lack of planning can lead to financial risks and missed opportunities when attempting to sell.
Many business owners overvalue their companies, viewing them as personal investments rather than marketable assets. This often results in unrealistic expectations and challenges during the sale process.
The value of a business is determined by how easily it can be transferred to a buyer. Businesses that are too dependent on the owner or a few key clients are less attractive to potential buyers.
Only 30% of businesses listed for sale actually sell, and many owners attempt to sell too late, often due to burnout. Proper planning and preparation are essential to increase the chances of a successful sale.
Over half of business exits occur involuntarily due to unforeseen events like death, disease, divorce, disagreements, or distress. Advance planning can help ensure the business continues to operate under such circumstances.
A significant number of business owners (75%) regret selling their businesses within the first year, often due to inadequate financial planning or a lack of purpose post-sale. It's crucial to plan for life after selling to avoid this regret.
Exit planning involves aligning the business's value with the owner's personal and financial goals, while also considering legacy and financial outcomes. Ideally, this process should start 2-3 years before the intended sale.
Businesses that are income-based rather than value-based often struggle to sell, even with strong financials. Owners should focus on making their companies less dependent on themselves and diversifying their client base to enhance attractiveness to buyers.
Living a purpose-filled life post-retirement is essential, as many business owners struggle to find fulfillment after the initial excitement of retirement fades. Planning for a meaningful life after selling is as important as the sale itself.
Business owners should prioritize family and faith, as time spent with loved ones is irreplaceable. Living life intentionally rather than by default is a key takeaway from the discussion.