End of Year Financial Planning For 2023

Join us for a thoughtful episode where we unpack our 2023 edition of key year-end planning strategies for those nearing or embracing their retirement years. We'll explore the nuances of optimizing your investment portfolio, safeguarding your assets, and ensuring a stable, rewarding lifestyle in the years to come. Together, we'll navigate through essential topics like managing RMDs, exploring tax-saving opportunities, and even touching on the often-overlooked emotional aspects of this pivotal life transition.

 

Important Links: Website: http://www.yourplanningpros.com

Call: 844-707-7381

Transcript: 

Marc Killian  00:00

Just a thoughtful episode this week here where we unpack our 2023 addition of key year in planning strategies for those nearing or embracing their retirement years. That's up on the docket this week on plan with the tax man for end of year planning for 2023. Look up in the sky. It's a bird. It's a plane.

 

Announcer 2  00:19

No, it's the tax man. He may not be a superhero. But Tony Morrow has saved many retirement plans with his extreme knowledge of tax planning strategies. It's time for a plan with the tax man. Hey, everybody,

 

Marc Killian  00:33

welcome into the podcast. It's playing with the tax man with Tony Mauro and myself here to talk investing, finance, retirement and end of the year conversation. We got some things to go through this week, here on the podcast that you might want to ask your advisor about or reach out to your financial professional about if you're not already working with Tony and his team. Certainly something to have on your radar. So we're gonna dive in lost a cover this week on the show. What's going on my friend, how you doing? I'm doing well. How about you hanging in there doing pretty well, you and I are just chatting. We're taping this a couple of days before Thanksgiving. So Happy Thanksgiving to you a bit early. You'll be we'll be celebrating later this week. So hopefully all our listeners have a good Thanksgiving as well. That's

 

Tony Mauro  01:12

correct. Yeah. And it's not, you know, we're getting a lot of things on the docket, because tax season will be here. Before we know everybody's you know, focused on the holidays. But season is upon us.

 

Marc Killian  01:25

That's right. It'll fly by right. I mean, Thanksgivings in a couple of days, like I just mentioned, and the next thing you know, it's Christmas, and then boom, the new year. And then Hello, 24. Right. So dry. Well, let's get into some stuff. And we'll talk about it. And we'll try to keep our food conversation to a minimum. So we don't get hungry before everybody can feast on the makes themselves super full coming later on this week. We'll get into some good stuff here on this side of the thing on the side of the coin. Let's talk about general Planning and Investment Strategies. Let's start there, Tony, what a cut what's a couple items that folks might want to have on their end of year checklist in this arena? Well, I

 

Tony Mauro  02:00

think the first thing is, you know, as we're taping this, there's still time for this is to look at this kind of more tax planning, but look at possibly increasing or maxing out your contributions to your retirement plans. If of course you're working, because that is going to save you some tax dollars. And you know, obviously, it's going to get you a little closer to that retirement savings goals. So that's when we talk to a lot of people about this time of year, especially our business owners even, you know, they've got plans that they haven't put maybe as much in as they could, and they're looking for tax deduction. And that's a great way to do it. That's that's one thing. The other thing we look at with more of our individuals, but really everybody is at the end of the year, generally, we try to do a lot of rebalancing of our clients portfolios, along with looking at you know, where they're at on the risk spectrum. And that sounds complicated, but it really isn't, it's basically just taking a look at what grew what didn't and keeping, you know, adjusting things to keep the same balance in the portfolio, as we had at the start of the year and gotten the theory there is really is you know, you're you're taking and keeping that balance the same and the things that underperformed, you know, you're gonna rebalance and put some stuff in there because not everything generally goes up at the same time. And it's a good way to, you know, make sure that we're staying on goal. But I think the bigger thing we tried to do is go back through our risk assessment software. And, you know, we make our clients basically kind of re answer a few easy risk questions, if something's changed in their life, you know, it could be something big. And maybe maybe we need to adjust some things on the risk spectrum as well. Yeah,

 

Marc Killian  03:43

that's great point for sure. So rebalancing, and risk is one maxing out contributions is another when we're thinking about a couple of general planning ideas for the end of the year. And I think you started to touch on this for a second when you mentioned taxes. So let's talk about taxes. Next, obviously, tax loss harvesting this time of the year, we started thinking about these things as the years winding down going into next year, correct?

 

Tony Mauro  04:04

That's correct. Yeah. And a lot of people tend to overlook that. And a lot of people don't like to sell or get out of things that they're down. I mean, harvesting really is just about, you know, taking things that maybe don't make sense in the portfolio or, you know, maybe being down and selling those at a loss to offset gains, is really all that is, and it's a great strategy. It's easy to do. You just got to get by the fact that, you know, well, I don't want to I don't want to admit that it's down and I want to hold on to it forever. Because you know, who knows, right? That's one thing. You know, I think it's it's good. There's also a lot of tax credits coming on the book, the energy credits are coming back. That's more of a tax related issue rather than than financial, but it does help. And there's still the Roth conversions, you know, that you can make and, you know, for a lot of people I particularly liked those Roth conversions, even the backdoor IRAs as well, to get some money out. Have the IOU that you're going to owe Uncle Sam, you know, eventually.

 

Marc Killian  05:03

Yeah, you're right, exactly. And speaking of Uncle Sam, and owing them also RMDs, right. So as the years winding down, don't forget, especially if you have not started, if you're already in the pipeline of doing RMDs, you're pretty much groovy, right? This is going to count this is going to happen. But if you haven't started yet, do not forget it, especially since the rule change. And it's 73. Now, right?

 

05:24

Yes, it's 73. And so you definitely want to make sure that you get to your, your advisor, and make sure that they get those started. So you don't have to deal with a potential penalty letter and fighting with the IRS and all of that, right. And with the winding down telling us what 1231 is the deadline, but let's be honest, right, right. Places are closing people are off. There's, you know, a couple of weeks, actually, yeah, Thanksgiving week, Christmas week, so

 

Marc Killian  05:48

on and so forth. Exactly. I

 

Tony Mauro  05:50

mean, you know, with with everybody, it seems like yeah, not not a lot gets done in December. I mean, it's a little VIP, right? It's weird here, because you think like now after, like, 15/17. Boy, it's really hard to get things done. And if you're going to do RMDs, you want to make sure that that's set up properly, not wait until the last minute and risking it. But if you're just gonna reach out to your advisor, you know, we get a report, of course, for everybody that's turning 73. So we kind of know we reach out to them. But if your advisor hasn't reached out to you, and you're going to be turning, make sure you talk about that.

 

Marc Killian  06:25

Yeah, definitely. Okay. Because again, it's it's a hefty penalty if you don't do it. So if you've not started, make sure you're having that conversation. If it's the first one. Tony, you can continue this on technically you can your first RMD you can pay it into the next year. Right. You've got that very first time. I think it's until April of next year, but just be cognizant that that means you have to do to next year end to Yeah, so

 

Tony Mauro  06:48

you can kick the can down the road a bit. But yes, and you're going to have that one year where you're going to have to do two and depending on how much you need to take out. Right. It can be heavier. Yeah. Yeah. Could be hefty. Yeah. I

 

Marc Killian  06:59

mean, let's say let's say, Yeah, let's say hypothetically, Tony, you got a million dollar for a one or an IRA. And you've got to pull under the calculations kind of wonky. But for keeping it simple for folks, it tends to be somewhere between around right around three and a half percent or so that first time it grows, obviously, based on mortality tables, but I mean, let's let's, you know, that's 35 grand, right? And if you had to do that twice, like in the next calendar year, that could be that could kick you up a tax bracket. So just be careful. It could Yeah, absolutely. Okay. So good stuff to remember, for the end of the year, make sure you're having that conversation about your RMDs. Anything on insurance or health care or health care planning sign, Tony,

 

Tony Mauro  07:38

the other thing I would say there, I mean, there's a lot you could go into, I would just double check, again, with your advisor, hopefully you're talking about this just kind of reviewing, what you have is Does it still make sense? A good thing is to check beneficiaries on insurance policies. I actually was going through my my own this was actually on my retirement accounts, just double checking as part of my own due diligence every year when checklist and I found one that I did not have my son on as a contingent, you know, so I added him. So, you know, there's that kind of stuff, you want to make sure that your coverages are still complete, especially if you're on Medicare, and things like that. And there's not something you might need. I always tell people, it's a tough talk, but to evaluate, potentially, if you're still able and willing to look at the needs for long term care policy for that potential, you know, that you may end up in some sort of assisted living or full blown nursing care. Yeah, I mean, there's a good chance of that, right.

 

Marc Killian  08:37

I mean, the numbers are what they are, we're living longer, it's adding more to it. So certainly worth having a conversation. And during the holiday season, I mean, maybe not the most fun of conversations, but when everybody's together, you know, you know, have some of those chats, right? So to kind of bring some of those things out, especially if you've got elderly parents. I mean, I'm, you know, I'm 52 Tony and my mom's 82. And, you know, those are conversations, we start having more now versus various little things like that, right? Because it's just part of life, right? So it's part of life,

 

Tony Mauro  09:05

and I'm sitting down with my own son this this Christmas, because believe it or not, you know, I've got to think a little bit about succession planning. I mean, I'm not going to be around forever. And I gotta be thinking about my clients that if if something happened to me early, you know, who's gonna take care of the clients, I got to make sure that that's done. And so, again, that's a little more on the business, but kind of a long,

 

Marc Killian  09:31

extended family though, right? Yeah. Yep. So you're looking out for your clients, aka extended family. That's pretty cool, right? I mean, so businesses want to make sure that's another thing too, when you're working with a finance professional, you know, the the industry is really aged right? About that for years. They're starting to be younger people coming into it. But if you know if you're working with an elder, elderly advisor, make sure they get a succession plan as well so that your something happens to him. You know, my CPA was that way. He kept telling only for a couple of years. He's like, Yeah, I'm getting ready to get ready to retire. And but don't worry, I've got it covered right for someone else to come in. And then of course, it was a nice transition period. And if you're listening to the podcast, and you're wondering why I talked to Tony, every week or every month, twice a month, and he don't use him as my CPA, it's only because I don't live nearby. Oh, yeah. I'm on the other side of the country. But yeah, you know what, it's one of those things, but if you need a CPA, hey, Tony's here to help. As always, don't forget, he's a CFP, and a CPA. So he's dealing with both sides of the aisle. So if you got some questions, need some help, as always, check with a qualified professional before you take any action. And Tony is here to help at your planning proz.com. That's your planning proz.com? What about income and lifestyle? Obviously, a lot of those things we just talked about, Tony are things you're going to need to talk with your professional with. But income and lifestyle is probably some places where we can make a few changes ourselves, without having to get too crazy into it. I mean, I just think about we were talking about Thanksgiving, and where we're at this time of year, and just, you know, home budgeting or whatever, people have been tightening up the belts, because inflation has been rough. I know my wife came home and said, look at the price of this turkey like she was blown away. Right? Yeah,

 

Tony Mauro  11:09

yeah. And I think, again, at the end of the year is, you know, we're always thinking about those New Year's resolutions, I think one of them should be as you get to the end of the year, put it on your checklist, to maybe review your budget, you know, your monthly spending, also your income, you know, that you've got coming in, and maybe more so with your advisor on. Okay, we didn't have that great of a year, maybe in the markets, are we still on track to you know, meet our goals? You know, that's just a basic, basic thing. And I think that I wish, I guess I don't think I wish I had more clients that really could say, here's how much I'm bringing in every month, here's how much I'm spending the people that are working or retired. And they don't take the time to do that. They just kind of ballpark it. But even if you're ballpark it, it's better than nothing. And I, it's a good time to review that. I also started checking, even though it's kind of a slippery slope, we could talk hours about it. My Social Security earnings statement every year, I like to look at that once a year and just see, you know, what's going on there. And, you know, I can say, there's all kinds of issues coming down the pike with that, and then nevertheless, it's a good thing to check out. Yeah,

 

Marc Killian  12:20

I mean, we, nobody likes the P word. I get it. When we get close to retirement, we talked about that about a million times, but you still know you have one to a certain degree, right? You don't just super go hog wild. And in with the fourth quarter, you know, holiday shopping, things of that nature, it's just good to have on your end of your checklist to make sure you're keeping it within, you know, the parameters that you set out. That's right, nothing wrong with that. Real Estate, anything there real estate or relocation? I know, obviously, you know, home prices are still high. And, you know, loan rates are still are obviously really high compared to what they had been. But anything there that in case somebody did have this on their radar, you

 

Tony Mauro  12:56

know, I mean, it's a big decision, you know, but for the people a little closer to retirement, you know, some of them are starting to think downsizing, you know, maybe getting into something smaller, I definitely would talk to your adviser about it. Because it all sounds good. But there are some things to consider, you know, some goods and Bad's of it? And are you really going to accomplish what you need to by doing it. So I think that's a big decision you should talk to them about because it's not as easy as just changing your budget, right? I mean, you got to get to maybe sell a place, buy a place, you get resettled, and you start scratching your head saying, Whoa, what just happened there, and I didn't really accomplish anything. And, but for certain people, it may be in the cards, and it might be something that, you know, you should look at dealing I know, I'm not I think I have myself I have too much house, it's just me and my wife. Right, right. You know, once you once you own it, it's like, well, well, I don't want to I don't want to go to something else right now. So I think there's a lot to that.

 

Marc Killian  13:53

Yeah, yeah. And even with the prices being higher and things right now, if it was on your you know, kind of your plan and your strategy, just make sure don't just wholesale chuck it just because you know, you're you're here in the you know, home rates are 8% or whatever, right? Have the conversation, look at the numbers because you to your point about downsizing, you may make enough on the sale of your current place, depending on what kind of place you're moving into, you know, that may not be that big a difference. And then of course, you can always refi later on. So, again, just don't wholesale, check it as the at the end of the year here. If it was already on your you're on your radar, at least until you run the numbers again. So we're just wrapping that conversation. All right. From a technology standpoint, Tony? Probably not a lot here. But I think, again, end of the year, holiday shopping, the scammers are out in Megaforce. Right? So be real Cognizant here too, right.

 

Tony Mauro  14:44

I would say be very, very cognizant, you know, here because it's only getting worse. We see it so much with our clients, and in people scamming on payroll people scamming with credit cards. I've had several clients this year that have had that happened to them. You know, I think we still have a lot of people out there who are writing all their passwords on sticky notes and put them on the back of their computer, you really need to get to some sort of higher level Password Manager, if you will. There's tons of them out there that I think are very good. Yeah, they're not infallible, but they're much better than what you have. And you can you can create different passwords for different sites, and not have to remember them. Just be very, very cautious. I'll give you a perfect example. Although I'm always harping on my staff on this, but I just got an email yesterday in my work email, I get this, it said from a lady's name, that, hey, I need to change my direct deposit information and my payroll account. From I think her name was Wendy Hayward, and it said owner of the tax doctor, and it's like, we don't have any any employees here of that name. Right. I'm the owner of the tax collector. And so I mean, that's a pure scam. Yeah, you know, and they come in and I just had a, we had a payroll client, we do do some payrolls for small businesses. He got scammed off of one of his employees. And our client input A scammers direct deposit information into his employees accounts. He thought it was from his employee and paid out like $500 to a scam. There's no way to get that back. So I mean, it happens to it. It's really happening in a lot. Oh, it's so guy. Yeah. Oh, I just got to be careful. Yeah,

 

Marc Killian  16:32

my mom about two weeks ago, sent me a message and said, Hey, Amazon said that my my prime membership was going to end. And I was like, I've never seen or it was going to end it was, you know, something with renewal or whatever. I was like, I've never seen them, email me about that. Come to think of it. And that was like, can be a scam. Don't Don't, don't click on anything. If you're worried about it, contact them directly, right? And just make sure everything's groovy. So she did. And of course, it turned out to be a scam. And about the same time she messaged me to tell me that yeah, it was a scam. I had gotten a similar email, like the day before. And I was like, Yep, they're just out there trying to say, Oh, your prime memberships up. So click here to renew and, you know, the Nick just tried to get your information. So never click on anything, when you get those emails, even if it looks pretty legit, folks, if you're not quite 100%? Sure, just go directly to the horse's mouth and checking to make sure that sort of did reach out to you if so. All right, final one general wealth considerations, or excuse me, General, generational, say that three types, generational wealth considerations, anything to explore here, I know, we were talking about RMDs earlier, this could be where maybe the QCD comes into play for people like the qualifying charitable donation.

 

Tony Mauro  17:38

It does, you know, I think as you age, this becomes more and more important, you know, because you're seeing the potential and it can be anything about, you know, talking to your advisor, about maybe gifting you know, to your heirs, if that's what you want to do, I definitely think on a legal and estate planning standpoint, you should at least pull out your wills and some of your your documents, your legal documents, make sure they're in order at least once a year and make sure you know where they're at. And that your attorney has copies, you got the financial power of attorneys, that advanced directives, all of that kind of stuff. Because stuff does change, you know, and then you can easily update it and put that on the list for the next year, as is what I'll say. Yeah. And

 

Marc Killian  18:18

you just you just mentioned that yourself, right? People make you know, you had that conversation about your with your son, right, you had that own your own issue there. So and you do this all the time, so it's easy to forget. So bring it up, remind you know, your professional your visor, and don't forget to change them on all of the things to your point, right? There's so many little things you can we tend to think about it like what the will or something like that. But don't forget, there's all these little accounts that you need to change your beneficiaries on. If something changed. That's correct. Yeah. Yeah.

 

Tony Mauro  18:43

I mean, as long as you got a checklist, and you're getting better and better at it each year, and adding stuff to it, then you're going to be in really good shape. It's just you got to go through the exercise each year and start hitting some of this stuff. Hopefully, the advisors got a list for you, you know, and you can, you can basically just answer their questions, you know, and if there's something missing, and you fix it, it's and you move on.

 

Marc Killian  19:05

Yeah, absolutely. So if you got some questions, you need some help, definitely reach out to Tony and have a conversation for some end of the year planning items to consider. And of course, you can find them online at your planning proz.com That's your planning proz.com He has been helping folks for 30 years get two and three retirement. He's a CPA and a CFP, as well as an EA so reach out to them have a conversation of your own at tax Doctor Inc. And of course you can you can find them online at your planning proz.com Hit the subscribe button for Apple, Google or Spotify. Whichever podcasting app you'd like to use the plan with the taxman and you get new episodes as they come out. Tony my friend thanks for hanging out buddy. Have yourself a great Thanksgiving. And I look forward to talking to you in December. All right, you do the same Have a great one. Yes sir. And we'll catch you next time right here on playing with the text me and Happy Holidays everybody.

 

Walter Storholt  19:59

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