Wilson Financial Advisors

If you have both the Desire and the Ability to retire early, DO IT!....

Now, some people have the desire- which is, they desperately want to retire as soon as they can and have plans laid out of what they want to do in retirement but they don't have the Ability (the resources) to do so.

Others may have the Ability, but they don't have the Desire- they simply don't want to retire, they love what they do!

But if you have both the DESIRE and ABILITY. Why wait?

In my experience, retirement is divided in three phases.

The Active Yeare - starts at retirement until around age 70. These are the years where you are doing all those things you dreamed of doing. You have the energy and health to do so.

The Ease Back Years- from 70 or so, until around 80. Things start to scale back. Maybe not the cruises every year.

The Still Years - 80+ and on. things calm down. You've crossed off your bucket list. You now enjoy just being with others and family in your own environment.

So think about this... If you could extend that TIME in the active years while you are younger and HEALTHy, take advantage of it!

Now of course, all this still requires a plan to make it happen.

I coach my clients that don't have the abiltiy but have the desire, how to get there.

I coach my clients that have the desire and abiltity to PULL THE TRIGGER!

There's a lot of fear about Social Security running out of money, but here’s why I’m not worried...

💰 Funding Structure: Social Security is primarily funded by payroll taxes from current workers. As long as people are employed and paying into the system, Social Security will continue to have a steady stream of revenue.

📉 Trust Fund Reserves: Even if the Trust Fund reserves are projected to be depleted around 2034, payroll taxes will still cover about 80% of promised benefits. While adjustments will be needed, this doesn’t mean the system will collapse.

📊 These are projections and change as economic environments change

Hey look, once an entitlement is introduced, it never goes away. Political football🏈

I get it, while Social Security faces challenges, I’m confident that the program will adapt and endure, maybe not in it's current form.

But if you are currently receiving SS benefits, I can not see a path for your benefits being reduced.

There are good reasons NOT to roll over your 401k AND good reasons TO roll it over...

One of which is, you have more investment options

Rolling over your 401k can provide you with a variety of investment options to consider.

This can be a good reason to explore the possibilities and make the most of your retirement savings.

By diversifying your investments, you can potentially maximize your returns and secure a more stable financial future.

Don't overlook the potential benefits that come with exploring different investment options when rolling over your 401k.

Ok, this is beginning to sound like a commercial, so why not check out the full video below to weigh it out.

Don't rollover that 401k if you have company stock!!!

Want to maximize your retirement strategy?

🚀 Don’t overlook the power of Net Unrealized Appreciation (NUA). When you have company stock in your 401(k), rolling it over into an IRA might not be the best move.

I have seen a lot of people that were advised to roll over their 401k into an IRA with company stock. The 401k was simply rolled over in cash, stock was sold before rolling it over.

By leveraging NUA, you can transfer the stock into a taxable brokerage account, paying ordinary income tax only on the cost basis, not the full market value.

The growth is then taxed at the more favorable long-term capital gains rate when sold.

💡 This smart tax strategy can significantly reduce your tax bill and boost your retirement savings. Explore NUA before making any decisions! 🌟

Want to get to that first 100k faster❓ ...

You could earn a greater return, like 10, 12 or 15% or more in the stock market📈 !!!

After all, that xyz stock last year just soared🚀

But I got a word of warning for all you would-be day tradin' warriors chasing returns. When you join that command, you take on debit. A debit you owe to your own personality. Each and every man under that command owes a debt that they may not be able to repay, but you will keep on chasin' those returns, and you will want those returns. And you will git those returns, or you will die tryin’. (Lt. Aldo Raine - improvised)

Instead, don't concentrate on things you can't control, but that of which you CAN control!

Like how much you contribute to your investments. As your income increases, increase the amount to your investments. Incrementally , over time THAT will make a difference.

Potentially, far more than chasing returns.

Invest wisely, be patient and the rest will take care of itself.

instead of fixating on the grand sum of 1 million dollars, shift your focus to the initial $100,000....

This is where the real magic happens due to the power of compounding growth.

By investing $500 per month at an 8% interest rate, it would take approximately 10.6 years to achieve your first $100,000 milestone.

However, each subsequent $100,000 will require less time to reach because of the compounding effect.

This marks a turning point where the time to reach the next $100k decreases significantly.

Initiate your financial journey early, stay committed, and exercise patience.

With each milestone reached, the time to attain the next $100k diminishes, paving the way for financial success.

Thinking about contributing to a Roth IRA but your income is too high? No worries, there's a neat trick for that!

It’s called the Backdoor Roth Strategy, and it’s pretty simple:
1️⃣ First, you contribute to a Non-Deductible IRA.
2️⃣ Then, you convert it to a Roth IRA.

This way, you can sidestep the income limits and still enjoy the benefits of a Roth IRA. It could be a smart move to keep your financial plans on track. 💪💰

Oh, but alas... there are some things to consider first🫢 Like the Pro-Rata rule....

More on that to come. but for now, just know there is a way around the income limits when contributing to a Roth IRA.

Questions? let me know

🏡 Real estate investing can be lucrative, but it's important to be aware of the potential downsides: 🚫

High Initial Costs 💸
Significant upfront investment for down payments, closing costs, and renovations.

Ongoing Maintenance 🔧
Continuous upkeep and unexpected repairs can be costly and time-consuming.

Market Volatility 📉
Economic downturns and local market changes can impact property values.

Illiquidity ⏳
Selling property can be time-consuming, limiting cash flow flexibility.

Management Hassles 🏢
Dealing with tenants and property management can be stressful.

Regulatory Risks ⚖️
Changes in laws and regulations can affect profitability.

Geographic Risks 🌍
Location-specific factors like natural disasters and economic changes can impact investment.

Despite these challenges, real estate investing offers rewards like steady cash flow, tax benefits, and long-term appreciation. By being aware of these pitfalls and making informed decisions, you can successfully navigate the real estate market.

💬 What are your thoughts on real estate investing? Share your experiences and insights in the comments!

Sometimes you need more than a "spit ball" of what your retirement will look like...

Sure, you could plug in the numbers in a spreadsheet or an online retirement calculator.

But a true retirement plan will address issues such as:

Tax Planning Strategies: Should you convert to a Roth IRA, and when? Tax Loss Harvesting. What to do with that Inherited IRA since tax law changes?

Social Security Optimization: Just when should you start collecting social security?

Which accounts should you pull from first?: Tax deferred, Tax Free or taxable?

What if you have multiple goals?: College funding for the grandchildren, Vacation home, Philanthropy and legacy planning.

Estate Planning: Do you really need a trust? How much life insurance do you need? Which type?

How about long term care insurance ? Is it right for you?: and do you choose hybrid or traditional?

Oh, and what about investing? How should my investments be allocated? Or more importantly how should my "accounts" be allocated?

Maybe its time to 'Rev" up your retirement plan....

Get some real advise.

Real Estate investing offers some advantages, Subscribe to my newsletter for more! Just kidding. here are some advantages....

Advantages would include, rental properties can generate consistent income, possibly providing a reliable cash flow. In particular for retirees or those seeking to supplement their income.

And if you can get some properties in desirable locations, hey, that can attract long-term tenants, which could reduce the frequency of vacancies and the associated costs. Another advantage.,

Over time, real estate typically appreciates in value, allowing you to sell the property for a profit. This could significantly increase your overall return on your investment. Also, Properties in growing areas or cities with expanding economies often see faster appreciation. Next, there are some tax benefits.

You could deduct mortgage interest, property taxes, and other expenses from your taxable income. As well as claiming depreciation on your properties, which could reduce taxable income.

Of course, you will need to get with your tax advisor on this. Hey, what about an inflation hedge? You see, As inflation rises, most often property values and rental income tends to increase as well.

This helps maintain the purchasing power of the income generated. And if the property is financed with a fixed-rate mortgage, the cost of debt remains the same even as rental income increases, effectively reducing the real cost of the loan over time.

Another advantage is leverage. You can use borrowed funds to purchase real estate, allowing you to control a larger asset with a relatively small initial investment.

And that leverage could increase returns on the investment, since the property’s appreciation and rental income are earned on the total property value, not just the initial equity investment

Owning real estate properties can generate passive income, correct? Well...

As per the IRS, the income received from renting out a property is typically classified as passive income, exempt from payroll taxes like social security and Medicare .

However, very few real estate investments are completely hands-off; there is usually some level of involvement required.

This may include dealing with tenants, overseeing maintenance and repairs. Even if you outsource these tasks to a property management company, you will still need to review financial reports, communicate with the property manager, make decisions on property upgrades or repairs, and occasionally inspect the rental property.

So, while rental income is considered passive income by the IRS, the responsibilities involved can lean more towards being active than truly passive.

Don't get me wrong. I REALLY like real estate ownership as part of your portfolio. It adds diversification. But know the advantages and dis-advantages before you take the leap.

More to come on that!

It doesn't matter where your assets💰 are LOCATED... just save!...

Really❓

"I beg to differ sir, we started a game we never got to finish"🤠... Doc Holiday, from Tombstone (one of my top favorite movies- but I digress)

If all your money is in one bucket vs. having it spread out in different buckets...

Tax deferred, Tax free, and taxable...

It DOES make a difference!

It requires some strategizing, a bit of preliminary thought, and effective ex*****on.

Stay diversified my friends- That Financial Guy

Should you compromise your retirement?...

Well, sometimes you must!

Which is more important to you? to retire early no matter what. Even if it means to sacrifice your lifestyle spending, or to retire with the amount of income and lifestyle spending you want even if it means working a little longer?

That's where the compromise comes in to play. I see it all the time.

OOps! I retired at the wrong time!!!....

Markets are dropping and I am withdrawing from my investments to live on.

What you are experiencing is called sequence of returns risk.

Sequence of returns risk refers to the order in which investment returns occur. If negative returns happen early in retirement, it can significantly reduce the portfolio's value and shorten its lifespan.

By saving two years of income separately, retirees can avoid withdrawing from their investment accounts during bear markets, giving their portfolios a chance to recover during market downturns.

By setting aside this amount, you can help buffer against unforeseen expenses or market fluctuations. Additionally, having this reserve can mitigate the impact of sequence of returns risk.

Preparing financially for retirement involves more than just accumulating wealth. It's essential to plan for potential risks like sequence of returns.

Yeah, it's all about planning.(I know, boring stuff but comes in handy when the time comes)

Should you plan to live on 75% of your pre-retirement income when you retire?... 🤷‍♀️

I don't prescribe to this model. ❌

Everybody is going to be different. Think about it. Perhaps you had a rather large income 💰 but were maxing out your 401k, contributing to a brokerage account and had large debt payments.

When you retire, your job is to spend! 🤑 So contributions would stop and hopefully debt is out of the picture.

So concentrate on what your current living expenses are and go from there.

You probably will want to add to it for your lifestyle needs.

For some it could be only 40% of their pre-retirement income.

For others maybe more.

Planning for retirement is personal and unique. That's why having a custom plan that addresses your wants, desires and dreams is so important.

Want to reduce taxes in retirement?...

Sure you do!

Here's an idea 💡

Consider a QCD. (Qualified Charitable Distribution)

I meet with a lot of clients that are retired and give regularly to their church or other charitable organization .

If they have IRA's and are over age 70 1/2 then they can gift those donations from their IRA's and not pay taxes on it.

Some will use their RMD's (required minimum distributions) from their IRA's to do this.

Normally, withdrawals from IRA's are fully taxable, but by utilizing the QCD, it's not!

So think about it🤔

If you are already making charitable donations, why not make it from your IRA?

Even if you don't itemize deductions, this will still work.

Something to consider. Of course check with your tax professional before implementing this strategy.

Are my social security benefits taxable⁉️ ...

Yes and no.

Social security benefits could be taxed anywhere from 0% to 85%, depending on your total income. To determine if benefits are taxable, take half of the Social Security money you collected during the year and add it to your other income like pensions, wages, interest, dividends and capital gains.

🙎 If you are single and that total comes to between $25,000 and $34,000, then up to 50% of your Social Security benefits may be taxable.

👬 If you are married filing jointly, then the threshold is between $32,000 and $44,000.

If it’s more than $34,000 for single tax payers and more than $44,000 for married filing jointly, then up to 85% of your social security is included in your taxable income.

Just because you are in these thresholds doesn't mean that either 50% or 85% of your social security benefits WILL be taxable at that rate (It's UP to)

This calculation to determine how much of your social security benefit is taxable can be a little confusing. There is an IRS calculator that you can use that will help, I'll leave it in the comments

Sounds like this could take a little planning? Yes

Tax filing deadline is April 15th!📅 ...

Most people don't think about taxes until the first of the year.

When it comes to tax planning strategies, it should be done throughout the year.

One strategy that is most helpful is "tax loss harvesting".

Tax-loss harvesting helps you reduce taxes by offsetting the amount you have to claim as capital gains or income.

Basically, you “harvest”, or capture investments to sell at a loss, then use that loss to lower or even eliminate the taxes you have to pay on gains you made during the year.

But be aware of the wash sale rule. If you sell a security for a loss and buy it back within 30 days (or something substantially equal) then it negates the loss.

A little something I do to help my clients to minimize their tax exposure.

Does it make sense to take social security at age 62❓ ...

Sometimes, it does...

1️⃣ If you need the money: so, if you have had it with work and are really ready to retire and that extra benefit would just help you get there. Hey, consider taking it early to help your reach that goal.

2️⃣ What if you don't think you are going to have a long life expectancy? Maybe because of family history or perhaps bad health and don't think you will reach that break even point.

3️⃣ Maybe you have a pension or annuity that will pay out an income that you can rely on now and not be concerned about a higher payout from social security in the future.

4️⃣ You have a spouse that was a high income earner and will collect benefits later. Then you could collect early and later switch to a spousal benefit when they start collecting.

Hey, everyone is different and it takes a LOT of planning when deciding when to collect social security.

The average life expectancy👴 in the US is 76.4....

If the break even point to collect social security benefits is between age 78 and 80 starting at full retirement age or beyond vs 62, Why wouldn't you pull the trigger early?

Well, you have to take into account that the average life expectancy is taking into account from birth. 🐣

So, when you look at infant mortality, car wrecks, and premature deaths it doesn't look at the total picture.

Perhaps, look at someone that has made it to age 65 and look at THEIR life expectancy. (after all, we are talking about retirement planning and when to take social security)

If you made it to age 65, the average life expectancy for males is age 83👨‍🦳 and for females 👩‍🦳 is age 86.

This is something to take into consideration, when deciding on when to collect social security benefits.

More to come...

check out full video in comments below

3️⃣ important ages to consider when collecting social security benefits...

👉 Age 62: This is typically the earliest you can collect. BUT if pulling the trigger early your benefits would be reduced by 25 to 30%

👉 Full Retirement Age: For those born in 1958 it's age 66 and 8 months. And for those born in 1959 its 66 and 10 months, and for those born in 1960 and after its age 67. This is the age where you will collect the full benefits.

👉 Age 70: If you delay collecting social security to age 70 then there would be an annual increase of 8% in your benefits.

Of course, this could all change if the gov-ment 🏯 tinkers with it!

Which is right for you❓ When should you pull the trigger?🤷‍♂️ BIG question, which takes a plan.

Fortunately, I know a guy.😉 (by the way that's me, just in case you were wondering)

More to come on this matter this week.

What❓ You mean to tell me we can retire early❓❓❓❓….

That was the reaction I got recently after building a plan for a couple in their 40’s.

They were great savers, and it took only a few “tweaks” here and there and a some strategies they haven’t thought of.

And all without an !

By the way, loving my financial planning software. Very intuitive

I love it when a plan comes together.

Can a Roth IRA be used as an estate planning tool❓ ....

Absolutely! The benefit of leaving a Roth IRA to heirs is that it is tax free to them (as long as certain rules were followed)..

Distributions will not be taxed when the beneficiary withdraws from the account.

Personally, I like life insurance as a legacy planning tool. But some retirees may not be able to qualify for health reasons or it may be cost prohibitive.

That's why some retirees will convert a portion of their IRA to a Roth IRA and essentially give an advanced gift to their heirs by paying their future taxes now.

Yet, another reason to consider Roth conversions in retirement.

Does it make sense to do a Roth Conversion in retirement❓...

The Roth is all about taxes. Do you think taxes will be higher in the future?🤔

Well, we are currently in a low tax rate environment, but that is about to change in 2026🗓️ if congress doesn't act.

The current rates will revert back to the old rates, which means higher taxes in the future.

That's why some retirees are doing Roth conversions now so they would not have a high IRA balance in the future.

Because at RMD age (for most is age 75) you are forced to take a distribution and pay taxes on it.

Something to consider...

Okay so here's a situation for you...

let's say you've been saving like crazy in
your 401k and you're getting close to
retirement.

The only thing is your 401k
plan may not offer a lot of investment
choices for you or maybe there's just
not good choices for your
situation and you would love to get that
money out of the 401K and invest it the
way you want to, but the thing is you're
still employed

Well you can with an In-service withdrawal. IF you are age 59 1/2 or over, and your plan allows it, you can take money out of your 401k and roll it into an IRA , then invest the way you want!

Now there are some advantages and
disadvantages of doing an inservice
distribution

advantages would include:

✔️ more investment choices and more controll
✔️ access to professional advice
✔️ consolidate retirement assets
✔️ convert to a roth once rolled over (some 401k plans do not allow this)

disadvantages would include:

❌ may lose special pricing or fee reduction, if offerred
❌ If you have company stock, could miss out on NUA (net unrealized appreciation)
❌ Loan provisions that 401k offers

In service withdrawals are a common way to take control of how your 401k is invested but its a personal decision. Sometimes it makes a LOT of sense to do it and sometimes it does not.

That's why personal finance is PERSONAL.

If we need to talk about this, let me know.

Many people will ask me, "When is an opportune time to convert to a Roth IRA" ?. 🤔💼

One would be, when the market takes a dip. It's not a crash, just a temporary stumble. But guess what? This could be your golden ticket to tax-savvy wealth building! 💰📉

Consider this:

1️⃣ Buy Low, Convert Smart: When the market is down, asset values are lower. Converting to a Roth IRA during these downturns means you're paying taxes on a smaller amount, maximizing the value of your conversion. It's like getting a discount on your future tax bill! 💡💸

2️⃣ Set Yourself Up for Success: By converting when the market is down, you position yourself to capitalize on potential future growth in a tax-free environment. As the market rebounds (as it tends to do), your Roth IRA assets have the green light to soar without the drag of future taxes. 🚀💼

3️⃣ Stay Ahead of the Curve: Converting during market lows not only optimizes your tax situation but also gives you a strategic edge in your retirement savings game plan. ⏳💪

Right now, markets are on a high note, but when the market presents opportunities, it's up to you to grab them with both hands! 🤝💼

Market downturns are just one opportunity when it may make sense to convert to a Roth IRA. Many others! This is something I discuss with my clients throughout the year.

A little planning, yes, .. but well worth it in the long run.