The Life Planning 101 Podcast

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.

This Week in the Market - Episode 82 (7/18/25)

In this episode, Kade Sparger is joined by Aaron Kennedy and Sam Barker to discuss the market's recent all-time highs and the factors driving it. They touch on the impact of tariffs, tax policies, and the potential of AI and deregulation on economic growth. Aaron emphasizes the importance of long-term planning and not getting caught up in daily market fluctuations.

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.

One Big Beautiful Bill Act - Part 1

In this episode, Angela discusses the "One Big Beautiful Bill Act" and its implications for individuals, business owners, farmers, and ranchers. She provides an overview of the bill, focusing on key aspects such as permanence and stability in the tax code, student and child-focused provisions, charitable gifting, state and local taxes, and new tax legislation.
Key Takeaways 💡
The extension and expansion of the 2017 Tax Cuts and Jobs Act brings permanence to several provisions, preventing taxes from reverting to 2016 rates and rules, which includes the alternative minimum tax (AMT). This stability allows families and business owners to make informed decisions about their financial future without the uncertainty of fluctuating tax laws.
The estate tax exemption is set at $15 million per person, adjusted for inflation, providing a stable foundation for estate planning. This permanency helps small business owners, farmers, and ranchers plan their estates with more certainty, although significant inflation may still require additional planning for larger estates.
The Section 199A business owner deduction, which allows a 20% deduction on business income for pass-through entities, has been extended and expanded. This extension includes higher income phase-in amounts and a minimum deduction, offering significant benefits to small business owners by reducing their taxable income.
Businesses can once again depreciate 100% of assets placed in service after January 19th, 2025, regaining the first-year bonus depreciation. Additionally, the ability to expense depreciation on equipment has increased to $2.5 million, up from $1.25 million, providing valuable tax benefits for business investments.
Opportunity Zones have been made permanent, offering a rolling five-year deferral of capital gains for investments in designated areas. Investing in rural Opportunity Zones may qualify for a 30% basis increase, enhancing the tax benefits and incentivizing investment in these areas.
Businesses that utilized the Employee Retention Credit (ERC) should seek counsel to ensure compliance, as the audit time has been extended, clawbacks are being enforced, and penalties have been elevated. The IRS is scrutinizing ERC claims, and businesses need to verify their eligibility and documentation to avoid potential issues.
Several electric vehicle and clean energy credits are set to expire soon, including credits for commercial clean vehicles, new clean vehicles, and previously owned clean vehicles. To take advantage of these credits, purchases must be made before September 30th for electric vehicles and December 31st for solar, wind, and home energy improvements.
The cap on the federal deduction for state and local taxes (SALT) has been temporarily increased to $40,000, but it begins to phase out with $500,000 of income and reverts back to $10,000 in 2030. However, the pass-through entity workaround, which allows deducting property expenses within a pass-through entity, remains a viable strategy to regain missing state and local tax deductions.

This Week in the Market - Episode 81 (7/2/25)

In this episode of Life Planning 101's Black and White Market Minute, Kade Sparger is joined by Aaron Kennedy and Sam Barker to discuss the current state of the market and potential future trends. They analyze recent market performance, the impact of economic news, and the psychological factors influencing investor behavior. The speakers also delve into the implications of the recent "big, beautiful bill" and offer advice on personal finance strategies, including Roth conversions and disciplined spending.

This Week in the Market - Episode 80 (6/27/25)

In this episode, Aaron Kennedy and Sam Barker discuss portfolio management, specifically focusing on individual stock portfolios and the quality growth portfolio. They explore the decision-making processes involved in managing these portfolios, the impact of timing on returns, and the importance of diversification. The conversation also delves into the potential risks and opportunities presented by autonomous vehicles and their impact on the automotive and insurance industries.

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.

This Week in the Market - Episode 79 (6/20/25)

In this episode, Aaron, Sam, and Kade discuss the impact of politics and tariffs on the market, the psychology of investing, and strategies for long-term financial success. They emphasize the importance of ignoring short-term political noise and focusing on long-term investment goals.

Financial Literacy (Rebroadcast)

Here’s the reality: financial literacy should be a required class in school—but for most people, it never was. And because of that gap, many of us are fumbling through adulthood, reacting to financial crises instead of preparing for them. This week we discuss 10 questions to jumpstart your financial literacy.

This Week in the Market - Episode 78 (6/13/25)

In this episode of Life Planning 101, Sam and Aaron discuss the market's reaction to recent geopolitical events, including the Iran-Israel conflict and China tariff deal. They also touch on the surprising rise of gold on national balance sheets and the potential impact of increased oil prices. At the conclusion of the episode, they share their outlook on the summer months and the overall health of the market.

Life Planning at 18

In this episode, Angela addresses 18-year-olds and their parents about essential financial and legal considerations as they transition into adulthood. She emphasizes the importance of financial literacy and proactive planning to secure a stable future. The discussion covers medical and financial powers of attorney, building excellent credit, planning for the future, and investing in oneself through financial education.
Key Takeaways 💡
Upon turning 18, parents no longer have automatic access to their child's medical information or the ability to make medical decisions on their behalf; therefore, it is crucial for 18-year-olds to establish a medical power of attorney with HIPAA privileges, allowing their parents (or chosen representative) to access medical information and make informed decisions if the young adult is unable to do so themselves.
Similar to medical information, financial information becomes private at 18, and parents lose the automatic right to manage their child's finances; to address this, a durable power of attorney is essential, enabling parents to assist with financial matters such as bills and loans without needing court intervention, while avoiding the complications and liabilities of being directly on their child's bank accounts.
Having excellent credit is crucial and can save a person six figures over their lifetime by securing better loan terms and lower insurance premiums; building good credit involves using credit responsibly, such as through revolving lines of credit (credit cards) and installment credit (loans), and resources like "Seven Steps to 720" can provide valuable credit education.
It is important to think about the future and not get caught up in only living in the present; young adults should research and align their education and career paths with their life goals and desired lifestyle, considering the financial implications of different choices to avoid costly reinventions later in life.
Investing in oneself through financial literacy is essential for long-term financial stability; young adults should prioritize paying themselves first by saving and investing 20% of their income, learning to live off the remaining 80%, which will help them avoid financial struggles and make informed decisions about housing and other obligations.

This Week in the Market - Episode 77 (6/6/25)

In this episode, Sam Barker and Aaron Kennedy discuss the recent market trends, focusing on the impact of news and emotional reactions on stock prices. They also touch on employment numbers and the shift in market drivers from traditional consumer-based indicators to technology-driven factors. It's important to stay calm and not make emotional decisions based on media influence.