Retirement is About Income … and Taxes

You’ve figured out your budget, your retirement nest egg is substantial, and you’re ready to make the transition to living on income from savings instead of income from work. But have you thought through the tax implications? It’s very common for tax planning to be overlooked, under the assumption that you’ll be in a lower tax bracket and Social Security payments aren’t fully taxed. In fact, a recent study found that 57% of Americans rarely consider the taxes they will pay/are paying in retirement.1 This can be an expensive mistake, and it has implications for other retirement benefits.

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GMB Ep #120: A CFO’s Perspective on Managing Cash, M&A, ESOPs, & the Changing Business Environment

 

Have you ever heard the saying that revenue is vanity, profit is sanity, and cash is reality? Today’s guest, Robert E. Bendetti, is the CFO at Life Cycle Engineering. He holds a master’s degree in accounting and financial management and an MBA specializing in small business management and entrepreneurship, as well as being a certified public accountant. Throughout the episode, we cover several key concepts that help business owners grow their businesses and adapt to ever changing markets.

 

 

Show Notes

[03:21] Background – Robert shares his background and the company’s operations.

[05:20] Cash Flow Management – Robert emphasizes the importance of cash flow management and gives his perspective as a CFO on appropriate cash management for small enterprises.

[08:48] Cash Conversion Cycle – Robert discusses approaches to optimize the cash conversion cycle, emphasizing the importance of timely invoicing, collection challenges, and the smoothness of the payment process.

[11:50] Tips – Robert shares an approach for reducing turnaround time and illustrates a simple mechanism to increase collection rates.

[20:29] Profitability – Robert points out how to convert cash to profit, describing what balance sheet and income statement items need to be monitored.

[23:25] Paying Yourself vs. Reinvesting – Robert outlines how to decide whether to invest additional funds to boost profitability and future growth or pay yourself.

[31:41] Transition – Robert addresses what individuals approaching retirement or transition should consider 18 months before leaving a firm.

[40:25] Employee Stock Ownership Plan – Robert dives deep into ESOP and related topics.

[51:31] Global CFO Council – As President and Founder of Global CFO Council, Robert mentions what he hopes to accomplish through the organization.

 

Resources

Value Your Business Like it’s Your Retirement Plan, Because it is.

Building a successful business can take decades. While working to grow, it’s common to use all available assets above the salary you pay yourself to fund future expansion. Where does that leave you on the retirement side of things? For most business owners, the retirement plan is some form of exit and monetization of your investment.

As you get close to a transition, valuing the business is paramount. The value comes first, and then the sale, and only then do many business owners think about how the sale proceeds will fund retirement.

There’s a better way. Start with the amount of money you need to live the retired life you want. That’s your benchmark of the value you want to get for your business. Then work from there to create the value you need.

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GMB Ep #117: A Top Economist’s Take on Personal Finance With Dr. Laurence Kotlikoff

 

Economics applies to every industry at the individual, national, and global level. In this week’s episode, we have a distinguished guest who is on a mission to make economics useful at all levels. Dr. Laurence Kotlikoff is an economics professor at Boston University. He is also the author of Money Magic, a personal finance book written from an economist’s standpoint. Today’s podcast examines his book and financial outlook, which frequently counters conventional economic theories. Throughout the podcast, he shares his experience in handling personal financial decisions while also discussing some insightful observations about the state of our country.

 

 

Show Notes

[03:38] Introduction – Laurence introduces himself and discusses his current career emphasis.

[06:22] Personal Financial Decision Making – We must see individual financial decisions through the prism of consumption smoothing. Laurence explains what this is and why it is essential.

[12:42] IRA and Mortgage – Laurence outlines why under certain circumstances, it makes sense to withdraw funds from the IRA to pay off the mortgage.

[18:43] Investments – Laurence discusses investments, stocks, and the importance of making sound investment decisions. Furthermore, he evaluates the risk associated with each sort of investment.

[32:06] Social Security – Laurence discusses how individuals can navigate the complex social security web.

[34:10] Viability – Laurence discusses the Social Security system’s viability and what individuals may do to prop it up.

[42:54] Massive Deficits – Whether it is the aggregate federal deficit, unfunded liabilities, or Social Security, taxing one’s way out of some deficits is politically unappealing. Laurence discusses his approach to enormous deficits.

[48:28] Politics and Economics – Laurence discusses the causes of present crises, relating them to a lack of synergy between politics and economics.

[51:33] Campaign Trail – Laurence reflects on his 2016 presidential campaign experience, and shares what he would do differently in 2024 if he was running with an unlimited campaign budget.

 

Resources

Connect with Laurence:

Website: kotlikoff.net/

LinkedIn: linkedin.com/in/laurencekotlikoff/

 

Mentioned in the episode:

Maxifi: maxifiplanner.com/

Economic Security Planning: economicsecurityplanning.com/

Money Magic: An Economist’s Secrets to More Money, Less Risk, and a Better Life: goodreads.com/book/show/56620849-money-magic

GMB EP #116: A Top M&A Advisor’s Perspective on Growing & Selling Your Business

 

An exit strategy is a key aspect in a business owner’s journey. However, the majority of business owners do not consider their exit strategy until it is too late. On today’s episode of Grow Money Business, our guest is Michelle Seiler Tucker, a mergers and acquisitions specialist. She has over two decades of experience in the industry, and in that time, has assisted in selling over 500 businesses. Michelle not only aids business owners in the sale of their companies but also helps entrepreneurs and investors in acquiring businesses. Throughout the episode, Michelle imparts some of her wisdom she has accumulated over the years on growing and selling businesses.

 

 

Show Notes

[02:34] Introduction – Michelle introduces herself and discusses her career.

[07:18] Exiting a Business – Michelle shares key points and considerations when exiting a business.

[19:34] EBIT – Michelle explains why technology trades on multiple sales rather than EBIT.

[20:51] Additional Key Points – Michelle continues to provide her perspectives on a number of crucial elements that influence the sale of a business.

[31:48] Databases – Michelle describes the challenges and concerns regarding databases.

[34:08] Exit Rich – Michelle presents an overview of why she wrote her book, what it is about, and its target demographic.

[37:20] Interest Rates – Michelle shares her views on how interest rates affect the market for business acquisitions and sales.

[43:11] Biggest Mistakes – Michelle covers several of the most common errors she sees sellers make throughout the process.

[45:01] Confidentiality – Michelle emphasizes the importance of maintaining confidentiality when selling your business.

[50:19] Private Equity – Michelle outlines when it makes sense to start a private equity firm.

[56:15] Network of The Professional – Michelle describes the value of a professional network and how that impacts locating future opportunities.

[56:55] More on Mistakes – Michelle shares more insight on common mistakes people make when selling their business.

 

Resources

Connect with Michelle: 

Website: seilertucker.com/

LinkedIn: linkedin.com/in/michelleseiler/

 

Mentioned in the episode: 

Exit Rich – Website: exitrichbook.com/

Exit Rich: The 6 P Method to Sell Your Business for Huge Profit:

amazon.com/Exit-Rich-Method-Business-Profit/dp/1732510288

The One Thing: The Surprisingly Simple Truth Behind Extraordinary Results: goodreads.com/book/show/the-one-thing

Behavioral Economics With Professor John Howe:

growmoneybusiness.com/podcast/behavioral-economics-with-professor-john-howe

GMB Ep #98: Everything You Need to Know About Medicare With Danielle Roberts

 

With the open enrollment period set to start on October 15th 2021, this is a great time to dive deep into the vital facts related to Medicare. In today’s episode, we have a distinguished guest, Danielle Roberts, joining us. Danielle is a co-owner of Boomer Benefits, a firm dedicated to helping senior citizens make confident decisions when enrolling into Medicare, as well as the author of the best-selling book “10 Costly Medicare Mistakes You Can’t Afford to Make”. Throughout this episode, Danielle shares her wisdom on all the crucial points you need to know if you intend to enroll in Medicare.

 

 

Show Notes

[02:25] Danielle’s Background – Danielle introduces herself and explains what they do at Boomer Benefits.

[04:00] Common Mistakes – Danielle shares some of the most common mistakes she sees people make when enrolling for Medicare, and what you can do to avoid them.

[08:01] Parts of Medicare – Parts A, B, C, and D of Medicare and the differences between them.

[10:49] Medigap Plan and Medicare Advantage Plan – Danielle broadly describes the role of Medicare Advantage policy and the Medigap plans while highlighting their differences.

[16:59] Most Suitable Plan for You – Though 34% of beneficiaries choose Medicare advantage plans, Danielle explains how to be mindful when making the best decision for you.

[21:47] Subsequent Changes to the Plan – Danielle’s suggestions on how beneficiaries can change their enrolled plans in subsequent years.

[26:48] Switching Between Medigap Policies – Possible ways to switch between different Medigap policies and the procedures you’ll need to follow.

[28:59] Eligibly Criteria for Medicare – Danielle outlines the eligibility criteria for enrolling in Medicare.

[32:23] Medicare Fund – The correlation between the reserves in the Medicare fund and the benefits Medicare offers.

[38:08] Single-payer System – Danielle shares her insights on the rising health care costs and the viability of a single-payer system.

[42:23] Pharmaceuticals and Drugs – Grant and Danielle discuss some of the current trends in the pharmaceuticals industry and the business interests that may affect Medicare.

[47:09] Boomer Benefits – Danielle talks about how Boomer Benefits helps people with Medicare basics, benefits, and coverage.

 

 

Resources

Connect with Danielle Roberts:

Website: boomerbenefits.com/

YouTube: youtube.com/c/BoomerBenefits

Facebook Page: facebook.com/BoomerBenefits

Facebook Group: facebook.com/groups/BoomerBenefits

LinkedIn: linkedin.com/in/daniellekunkle/

 

Mentioned in the episode:

10 Costly Medicare Mistakes You Can’t Afford to Make:

goodreads.com/book/show/55204934-10-costly-medicare-mistakes-you-can-t-afford-to-make?from_search=true&from_srp=true&qid=1Wia7eTzTY&rank=1

 

The United States Social Security Website: ssa.gov/

Official U.S. government site for Medicare: medicare.gov/

GMB Ep #96: 5 Year End Financial Moves to Make With the Tax Bill Looming

 

As we covered in the previous episode of Grow Money Business, the House Ways & Means Committee recently released proposed tax reform legislation that brings significant changes to the current levels of taxation. This week, Grant dives into five strategies you can utilize to take advantage of the substantial changes introduced by the proposed tax bill and reduce your tax liability. Throughout the episode, Grant reviews some of the sections of the tax code that will likely be updated by the new legislation and actions you can take within this year to make the best of the current tax code.

 

 

Show Notes

[01:52] Background and Progress – Grant starts the conversation with a brief review of the previous episode, explaining why he believes that the proposed tax bill is more likely to be passed in its current form.

[06:11] Profit Distributions From S-Corps  – The new proposed legislation reforms a set of provisions that will tax S-Corporations’ profit distribution at a higher rate. Grant emphasizes the necessity of delaying expenses and increasing the income for this year.

[08:51] Estate Taxation – Grant dives into the effects of the proposed provisions for estate taxation, revocable and irrevocable trusts, and how to take advantage of the current thresholds and exemptions

[13:15] Grantor Trust – The proposed legislation includes some provisions that take away some of the planning opportunities related to trusts that are currently available for taxpayers. Grant shares his take on how to prepare for these upcoming changes.

[18:14] Family Limited Partnership – Grant shares his thoughts on taking advantage of a family limited partnership’s marketability and minority ownership discounts for estate planning.

[23:22] Roth Conversions – The new legislation comes with several changes to the Roth conversions. Grant discusses the importance of the pro-rata rule, which you need to keep in mind if you’re planning to do a Roth conversion of pre-tax dollars.

[33:01] High-Income Earners – High-income earners will have to pay higher tax rates with the proposed tax bill. Grant scrutinizes the necessity of having fewer deductions to increase the income under the current tax rate.

 

Resources

​Ep #95 – We Have a New Tax Bill [And It’s a Whopper]
growmoneybusiness.com/podcast/we-have-a-new-tax-bill-and-its-a-whopper

GMB Ep #95: We Have a New Tax Bill [And It’s a Whopper]

 

The House Ways & Means Committee recently released proposed tax reform legislation that brings major changes to the current levels of taxation, including reversals of several provisions introduced in the Tax Cuts and Jobs Act of 2017. We dedicated this episode to exploring what this new proposal includes and some of the key aspects of the proposal that may interest our listeners. Throughout the episode, Grant dives deep into proposed provisions related to retirement, new tax brackets, business tax, tax on cryptocurrency, estate planning, and more.

 

 

Show Notes

[02:19] Background and Progress – Grant starts the conversation with a brief review of what led to this new proposed piece of legislation, its current status, and the path to getting it signed into law.

[08:16] Roth IRA Conversions – The proposed tax bill calls to prohibit Roth IRA conversions on after-tax contributions, which has been a very convenient maneuver for tax planning. Grant shares his thoughts on what to keep in mind if you’re considering a Roth IRA conversion.

[12:35] High-Income Earners – The new tax bill also brings provisions to restrict high-income earners from doing any Roth IRA conversions starting from 2031. Grant dives into the reasoning behind this, why this provision is proposed to come into effect ten years from now, and some other restrictions that apply to high-income earners.

[16:27] Mandatory Distributions – How the proposed new legislation mandates taking money out of your retirement accounts if the total value of all your retirement accounts exceeds a given threshold.

[20:00] Tax Brackets and Rates – Grant dives into how the tax brackets and applicable tax rates are updated in the proposed legislation and proposed changes to taxation on capital gains.

[27:47] Ultra-high Income – Grant shares his take on the 3 percent surtax proposed to apply for people who make over $5 million.

[29:47] Surtax on Trusts – The proposed legislation also brings provisions to add a surtax on trusts. Grant talks about the proposed tax brackets and rates related to trusts and what you should keep in mind when considering estate planning.

[31:08] Business Tax – How the proposed tax bill affects businesses depending on the type of business entity and some of the planning opportunities that emerge with the new proposal.

[35:35] Business Income Deductions – The new proposed legislation reforms a set of provisions related to business deductions that are introduced in the Tax Cuts and Jobs Act of 2017. Grant explains some of these reforms and what business owners should keep in mind about tax planning.

[39:02] Cryptocurrency Assets – Some of the tax-related legislations that apply to other assets such as stocks and bonds do not currently apply to cryptocurrency assets. Grant shares his thoughts on how that may change in the new proposed tax bill and what crypto investors show know about the new tax bill.

[42:26] Estate Planning – Another provision in the proposed tax bill brings some significant changes to taxes related to estate planning. Grant dives into what these updates include and what you should keep in mind about taking advantage of the current thresholds and exemptions.

 

Resources

https://waysandmeans.house.gov/media-center/press-releases/chairman-neal-announces-additional-days-markup-build-back-better-act

GMB Ep #92: Money Funds & Where to Park Your Emergency Cash

 

You are probably already familiar with the concept of reserving an emergency fund for unexpected expenses.  You may even already have one in place.  However, deciding how much to reserve or where to keep this money can be tricky.  We dedicated this episode to exploring why you should maintain an emergency fund, how to determine how large yours should be, and a few different savings options that can be safe & accessible, while still giving you the greatest possible returns.

 

 

Show Notes

[02:09] Managing Emergency Cash – Why it’s crucial for everyone to set aside some emergency funds and the importance of keeping your cash in the right place.

[05:23] How Much to Save – Grant shares a method of estimating how much you should save as an emergency fund based on your income, expenses, and risk tolerance.

[08:31] Too Much in Cash – Why it’s a better idea to have your emergency savings as investments and the ideal investment method for your funds.

[12:17] CD Ladder & High Yield Savings – Grant explains how using multiple Certificates of Deposits and high yield savings accounts can help you make the most out of your emergency cash.

[16:36] Money Market Mutual Funds – How money market mutual funds work, how they’re different from money market savings accounts, and some of the recent reforms related to money market mutual funds.

[24:14] Types of Money Market Funds – How the reforms led to the creation of two types of money market funds, the differences between the two types, and what you should keep in mind about parking your emergency cash in a money market fund.

[28:24] Government Funds – The feasibility of putting your emergency cash in government funds and the benefits of utilizing multiple methods of investments.

 

Resources

Money-Market Funds Buckled in Two Crises in a Row. Regulators Look to Fix Them Again:
wsj.com/articles/money-market-funds-buckled-in-two-crises-in-a-row-regulators-look-to-fix-them-again-11626687001

Firms Wary as Money-Market Rule Changes Studied After Covid-19 Run:
wsj.com/articles/firms-wary-as-money-market-rule-changes-studied-after-covid-19-run-11630056602

GMB Ep #87: Top 10 List: Behavior Biases Impacting Your Investing

In today’s episode we’re diving into ten behavioral biases that negatively impact your investment decision-making. Throughout the episode, we explore the psychological background of these ten behaviors, how they get in the way of sound investment decision-making, and how you can be conscious about your financial decisions so that you won’t make mistakes because of them.

 

 

Show Notes

[3:10] Oversimplification – Grant explains what happens when our brains are overwhelmed and are trying to process information in the most efficient way by oversimplifying complex scenarios in an attempt to break them down into bite-sized pieces, ultimately leading to poor investment decisions.

[6:15] Restraint – When we come across an opportunity that we think is beneficial to us, it’s very hard to show restraint. The problem that gets in the way of our sound investment decision-making is our overestimation of our ability to show restraint. Grant explains how this practically affected the cryptocurrency market.

[8:53] Familiarity – People naturally trend toward investments that they know and are familiar with. Grant dives into how this can negatively affect your investments and how to avoid falling into this trap.

[11:20] Incentive Bias – How some of the systemic features in our financial systems, in some cases, lead people to make poor decisions and how the general public can identify these incentives that could potentially lead them toward poor investment decisions.

[14:40] Self Attribution Bias – Grant dives into one of the behaviors in which our egos play a major role. He explains how this behavior is largely visible among day traders and how to be aware of this trait of human brains.

[18:05] Information Bias – Picking reliable data is crucial for making savvy investment decisions. For instance, not being able to grasp the difference between correlation and causation can lead to disastrous investment decisions. We talk about why we need to be vigilant about the information we consume.

[20:55] Groupthink – Since humans naturally like to be in groups, it can be extremely uncomfortable to make a decision that severely deviates from what everyone else is doing. In investments, succeeding in some scenarios may require exactly that. Grant explains how we can grow beyond the herd mentality while being open to new ideas to make savvy investment decisions.

[24:30] Anchoring Bias – When we take time and energy to research something and come to a decision, we like to be anchored on that decision, making us less open to ideas that are contrary to our decision. This tendency to remain anchored on our original decision is something that simply gets in the way of making sound decisions.

[26:50] Loss Aversion – The losses in our investment accounts feel worse than the gains feel good. And because of that, people make investment decisions very commonly, in an attempt to avoid the losses, without appreciating the opportunity for potential gains in the same manner. Grant explains why you should try to avoid this behavior in your decision-making.

[28:40] Confirmation Bias – How our minds tend to cherry-pick certain information in an attempt to process information efficiently, how it affects our investment decisions and how to avoid making mistakes that occur due to confirmation bias.

Resources

Investing Myths #3: You Need To Keep Up With the Financial News: growmoneybusiness.com/podcast/ptkre5734rgwc