Latest / Money In Motion with Klaas Financial / Ready to Retire? Assessing Your Retirement Readiness

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Ready to Retire? Assessing Your Retirement Readiness · Money In Motion with Klaas Financial

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And our phone lines are open for you right now at six oh eight three
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two one thirteen ten. That's six oh eight three two one thirteen ten.
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If you have questions for our retirement planning professionals from Class Financial love to have
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you join us this morning. I got a telephon number for the station six
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oh eight three two one thirteen ten. Get you right on the air.
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You can learn more about COSS Financial on their website coss Financial dot com.
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That's k l aa S Financial dot com. Great website to learn more about
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the team at Costs Financial, learn about their separate divisions, how they can
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help you or if you're an employer. Great information all available at coss Financial
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you can also check our check out and sign up something I did a number
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of years ago, sign up for the weekly Market Pulse newsletter. It's a
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great weekly email. It's got a snapshot of what's been going on in the
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markets, as well as a link to the most recent podcast. Again that
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available to you at Cossfinancial dot com. That's k l aas Financial dot com.
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Telephone number six eight four four two five six three seven. Don't forget
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no charge for that initial gets to know you appointment at Class Financial. It
1:06
will be complimentary to you again their number six oh eight four four two five
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six three seven, and of course to get on the air six oh eight
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three two one thirteen ten. That's six oh eight three two one thirteen ten
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and joining us this morning from Class Financial, our retirement planning professional CJ Closs
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and Malia Quavis. CJ, how you doing this morning? I'm doing great,
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Reach, I'm doing really well. Malia, how are you this morning?
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Excellent? It was fantastic getting to see both of you yesterday outside of
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the radio station at a chance to get together just talk about some things.
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And we've got speaking of talking about things, we've got a fun and exciting
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program today talking about retirement readiness, which I don't want to make promises,
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but I will say this. This is probably one of those shows that no
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matter who you are, I promise you you are going to take some great
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information away from the program. And I could almost say that, actually should
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say almost I could that every week. I can give that guarantee. But
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it's in a fantastic show. I was going over the notes. It should
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be a really really informative this morning. Don't forget as we talk with Cjen
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Malay, the phone lines they are open six oh eight three two one thirteen
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ten, the website It's always there for you, Class Financial dot Com and
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their telephone number six oh eight four four two five six three seven. Before
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we get rolling on this week's conversation about retirement writing this One of the other
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cool features of the show is the Closs Quiz. Question the week your chance
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to win a fantastic prize this week, no exception, a chance for you
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to win a twenty five dollars gift card to Texas Roadhouse. Little tip listen
2:35
closer to the show. Oftentimes both the question and answer come up during the
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program and before we get rolling on the conversation this week, let's actually take
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a look back at last week's program. Get the question and the answer there
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as well. Yeah, so last week we had a great conversation about those
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listeners who actually have the opportunity to perhaps have a pension for themselves in retirement.
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And just a shout out to one of our listeners who actually called in
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last week who corrected us me exactly. They corrected a mistake I said,
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which was that the state of Wisconsin. When we looked at the pensions for
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state of Wisconsin, including the pensions from the Wisconsin Retirement System, I would
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like to formally correct myself. I said it was not taxable. That is
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incorrect. It is taxable. So all you excited people that heard me say
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it wrong, I said it wrong. So I apologize, but thank you
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for listening so carefully. This information is really important and it does impact your
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future, so we appreciate you calling in for that clarification. So when we
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talked about pension options last week, the question actually was which pension option usually
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provides the highest monthly payout? Is it a single life or is it a
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fifty percent joint and survivor option. So Lauren of some Prairie congratulations to her.
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She correctly answered single life usually has the highest. So listen carefully to
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today's show, and of course you're listening part of last week's program or any
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of the shows, don't forget you can listen to the podcast subscribe as well
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at Cossfinancial dot com. That's Closs k l aa S Financial dot com.
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Phone lines are open here at station to get you right on the air with
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CJ and Malia ah yet to do is give us call six oh eight three
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two one thirteen ten. That's six oh eight three two one thirteen ten will
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get you on the air with CJ cost and only equibus our retirement planning professionals
4:25
from Class Financial their office telephon number six soh eight four four two five six
4:30
three seven no charge for the innacial gets to know your appointment at Class Financial
4:32
again the number six oh eight four four two five six three seven. So
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as mentioned this week, we'll be talking about retirement readiness and maybe we're thinking
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that you know, mentally or physically it's time to retire, but what about
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suggestions for folks who really want to make sure everything is in place before they
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make that decision. I'm assuming that's that's pretty important, isn't it? It
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is? Yeah, there's there's a lot of talk about this subject, particularly
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this year. Twenty twenty four will be a record year for retirement in the
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US, with an average of eleven thousand Americans a day expected to celebrate their
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sixty fifth birthday this year, So approximately four point one million Americans will turn
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sixty five this year, in the year twenty twenty four, and every year
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through twenty twenty seven moving forward, and this is according to a report from
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the Alliance for Lifetime Income. The figure represents the largest surge of retirement age
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Americans in history. So, obviously, for retirement planning firms like us,
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it means we have a large pool of people that we can serve. But
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for those individuals who are being served, they have to kind of understand am
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I ready for retirement and what are the considerations of retirement? So many of
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the people we speak with have been thinking about retirement for a while, but
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the question comes up, how do you know? What is that checklist?
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What's the specific age, what are the possibilities, so on and so forth.
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That's what we're going to go through is a checklist of your retirement readiness.
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So the first consideration is choosing your retirement date. Obviously, the longer
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you work, you are likely to be financially better off as you can delay
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portfolio withdrawals. You can add additional funding into your retirement plans that offer continued
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tax deferral or tax compounding, which also translates into a larger Social Security benefit
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in the future. Well, it's worthwhile to consider your expected retirement date from
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several additional angles, not just the financial dimension. You also want to consider
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your quality of life issues and your health and whether you can continue to do
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your job later in life. We've talked about this on previous shows, but
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there's actually a disconnect between when Americans think they will retire and when they actually
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do. And actually, when you dig into that, the reason for why
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there's that disconnect, it is often an earlier than expected layoff, or a
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health shoe that pops up, or a health issue of a loved one.
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So that disconnect between when you think you're going to retire with that age and
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when you actually do is you can imagine that could be many years of income,
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many years of benefits that suddenly poof goes away, and the question is
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are you ready for that? So research suggests that people often do a poor
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job of estimating when they expect to retire. As it turns out, people
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who thought they would retire on the earlier side often end up working longer,
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and then people who thought they were going to retire later end up retiring earlier.
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So unfortunately, there's a pretty big disconnector that we see between expectations and
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reality. Talking this morning with our retirement planning professionals CEJ Closs, Emilia Quavis.
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Of course they come to us from Class Financial. You can learn more
7:46
online thewebsite class financial dot com. That's Klaasfinancial dot com. Great website to
7:51
learn more about Class Financial. There's separate divisions. Also chance to sign up
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for the weekly Market Pulse newsletter as well as listen back to this in previous
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shows podcast. Again that available to you at classfinancial dot com. Speaking of
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things available to you, the telephone number for Coss Financial six oh eight four
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four two five six three seven. No charge for that initial get to know
8:09
you appoyment dec Class Financial. It will be complimentary to you again their number
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six oh eight four four two five six three seven and the full nine six
8:18
oh eight three two one thirteen ten. That's six soh eight three two one
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thirteen ten. Talking about retirement readiness this week in Malia, how important is
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it to consider how much income you'll be needing in retirement. It's kind of
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important, you know, we need the income to live our lives. So
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number two on our retirement readiness checklist is to take a close look at how
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much you currently spend on a yearly basis versus how much you think you will
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spend in retirement, so those numbers really can look quite different. So we
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would have you sit down for cash your anticipated income needs, hopefully with your
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your financial planner, to make sure that your craft out the retirement plan that
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makes sense for you, and you really do want to right size your income
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needs by looking at line by line items in your budget. I know people
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don't always like that word budget, but budget really is about how much do
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you spend on a monthly basis, So you want to make sure that what
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you're spending now kind of aligns to what you're planning on spending and retirement and
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what's going to need to be adjusted. So one common rule of thumb,
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we don't like common rules of thumb, but everybody still asks us what are
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they is maybe the eighty percent rule. So what that means is in retirement,
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you'll need to replace about eighty percent of your working income, so your
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income tax rate may go down and you won't be adding to retirement accounts as
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you did when you were working, and that represents the bulk of that twenty
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percent reduction. So that's where the eighty percent idea comes out. But then
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there's other people will say you know, I wreck commend you plan to replace
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one hundred percent of your income because you are planning on doing maybe extensive travel,
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or you're going to be in pickleball tournaments across the United States. Who
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knows what that might look like, but understanding what kind of income you're actually
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going to need is really really important, So so you know. Another item
10:20
to consider is, although you may no longer be paying payroll taxes towards Social
10:24
Security, you'll need to consider the cost for Medicare. So just a reminder.
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In twenty twenty four, the standard monthly premium for Medicare Part B and
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that's the part that covers most of your doctor services, is one hundred and
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seventy four dollars and seventy cents or higher depending on your income. And then
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you'll also have to pay twenty percent of Medicare proved amounts for most medical services,
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as well as an annual deductible of two hundred and forty dollars. These
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are surprises to people as they enter retirement post age sixty five, and they're
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like, I just thought Medicare was going to cover everything and I don't have
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to pay anything. And so that's where we start saying, well, you
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want your income to be generated to cover all the great things you want to
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do and all the things that you have to do, which obviously includes your
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health insurance coverages. So the other item to be really clear on is that
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you're spending is not going to be static year to year. So generally earlier
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in retirement, we see people spending a little bit more than they might ten
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years from now, and you know that's to be expected. Their health is
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good and they want to get out there and visit grandchildren and travel the world,
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so those years might be more expensive than what you're forecasting ten years from
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now or later. And finally, again, new retirees may not necessarily find
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themselves living une less. So what that really means is that, you know,
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I think I'm not going to need to buy clothes to go to work,
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I'm not going to be driving the car as much, et cetera,
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et cetera. But what we found through a research survey done by the Employee
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Benefit Group, they found that some retirees reported their spending as much higher than
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they thought, or a little higher than what they could actually afford. So
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in twenty twenty two to twenty seven percent of retirees report spending more than they
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had originally expected. So we would say plan to spend that you're going to
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spend more, quite honestly, and if you have to ratchet it back because
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you're not spending it, that's even better. And I know one of the
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things that we've talked about it on previous shows that you've mentioned is oftentimes people
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think we may change our spending habits and retirement. Now, oh yeah,
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there is. It doesn't always work out that way. We are who we
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are and we've got to work with it. Really really great advice this morning
12:46
from CJ Class and Malia Quaves. Fantastic program. Don't forget if you've got
12:50
a question, love to have you join us six h eight three two one
12:52
thirteen ten. That's six h eight three two one thirteen ten, gets you
12:56
right on the air with Malia and CJ. Of course, they come to
12:58
us from claw Financial their website coss financial dot com. That's Klaasfinancial dot com.
13:03
The telephon number six O eight four four two five six three seven no
13:07
charge for the initial gets to know you appointment at costs financial. It will
13:11
be complementary to you. Again that number six oh eight four four two five,
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six three seven. What about income sources and retirement. We'll get the
13:18
details on that. We'll also take your call next as Money in Motion with
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Cost Financial continues here on thirteen ten WIBA and our phone lines are open for
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you right now. We'll love to have you join us. Six oh eight
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three two one thirteen ten. That's six oh eight three two one thirteen ten.
13:35
You're probably this morning if you are on the Beltline going westbound. We're
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gonna get an update here coming up in about seven minutes. You're probably sitting
13:41
in traffic right now at an accident at Seminal Highway, which basically has the
13:45
westbound belt Line closed from Stone Road all the way up through Seminal Highway.
13:48
Again, we'll get you an update on that. It's a great show also
13:50
to be listening to. If you are new to the program, maybe you're
13:54
running a little later than normal, Welcome to the show. I mentioned the
13:56
website coss financial dot com and what a great resource it is for you not
14:00
even learn more about COSS Financial, learn about their separate divisions. Also,
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what great place is to sign up for that weekly Market Pulse newsletter. It's
14:07
a cool little informative weekly email. It'll snapshot of what's been going on in
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the Market's also linked to the most recent podcast that available to you at cossfinancial
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dot com. That's COSS k l a A S Financial dot com and their
14:18
telephone number six oh eight four four two five six three seven. No charge
14:22
for the initial get to know your appointment at COSS Financial. It will be
14:26
complimentary to you again their number six oh eight four four two five six three
14:30
seven. Talking this week about the steps and some important points when it comes
14:35
to retirement readiness and we think about potential sources of income, where's the money
14:41
going to come from when we're in retirement. Also, I know one of
14:43
the things that folks fear, and who can blame them is that question about
14:48
what if I run out of money? And how what do we need to
14:50
know? There? And CJ and we're looking at this stuff. These are
14:52
these are the type of things we think about, things that keep folks up
14:54
at night. These are those type of questions, aren't they? They sure
14:58
are? Yeah. So, as just said, we're going through our retirement
15:01
readiness checklist. We've gone through number one, which was choosing your retirement date.
15:05
And there's a lot of things that can impact when you retire, at
15:09
what age, what's going on around you. Malia then just went through taking
15:13
a look at how much you earn now and how much income comes in versus
15:18
how much you will need in retirement to kind of replace that standard of living,
15:24
and then yes, now we're going to be looking at where are you
15:26
going to derive that income from to meet those needs? So how much of
15:31
your income needs will be supplied from other sources than your portfolio? This is
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critical. So listen to anybody who's listened to like ads or shows. They'll
15:41
be like, what's your retirement number? I think there was a company that
15:45
did a number, and there was like a little squirrel that would walk around
15:48
with the number that you needed, and people were walking around their numbers everywhere.
15:52
But the idea being is that really the way it works? That they're
15:54
just there's some number that I need to get to, and then once I
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get to that number, I'm fine, and I can compare my number against
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other people's numbers, And the answer is no, not really, not really,
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that's not really the way it works. Because an example of this would
16:08
be within the number that I might need, whatever that number is it's not
16:14
going to show how much I have in pensions or Social Security or other outside
16:18
sources, because those outside sources when my spouse and I die generally have no
16:22
value to the estate. That's not always true, but generally true. And
16:27
so therefore, you could have a State of Wisconsin employee, as an example,
16:30
who has an ETF pension that generates eighty thousand a year in income in
16:36
retirement that they might need very little to nothing in their portfolio to retire comfortably.
16:44
Let that sink in. And by the way, in the state of
16:45
Wisconsin, you state employees both pay into the ETF pension or the WORS pension,
16:52
and you also pay into Social Security. So unlike other states where you
16:56
opt out of one or the other, you pay into both. Now I
16:59
know for for the State of Wisconsin employees, they're going, yeah, but
17:02
that means my take home pay is way lower. That's true. That's true.
17:04
You do get hit on the front end, but on the back end
17:08
you have a much better retirement benefit than a lot of your private employee counterparts.
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And so long story short here is like understanding where your income is going
17:18
to come from is key. So the first question is how much do I
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need. That's what Malia just went over. The second question is where will
17:26
that income come from? And often we come to find out that Social Security
17:30
could be supplying I don't know half of that, and if you're a State
17:34
of Wisconsin employee, maybe you've got a pension that covers the other half.
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Now, in many circumstances, what I just described is not true where you
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go, Yeah, I'm not a State of Wisconsin employee. I've got my
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Social Security, but we need maybe double that to live comfortably. Which then
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this is where your private four to one K plan and private investments and savings
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and other resources like that come in to play. So long story short here
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is just be aware of not only what you need, but then where that
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income will come from, and just make sure that where it's going to come
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from is a source that can last. Talking this morning with CJ. Coss
18:14
and Maleia Quavis, our retirement planning professionals from Class Financial working through this retirement
18:18
Ready checklist. Of course, miss any part of the program, you can
18:22
always listen back at classfinancial dot com. That's k l Aasfinancial dot com.
18:26
It is the website for Class Financial. Their telephone number six soh eight four
18:30
four two five six three seven. No charge for that initial gets to know
18:33
you appointment at COLSS Financially eight will be complementary to you again their number six
18:37
oh eight four four two five six three seven. Enjoin us on air if
18:41
you've got a question six soh eight three two one thirteen ten. That's three
18:45
two one thirteen ten. And when we start talking social security your pension,
18:48
CJ. I know we've talked in depth on both those quite a bit in
18:52
the past. These are important decisions and you really don't want to just kind
18:56
of take them lightheartedly, do you. You don't to know, so there's
19:00
a lot of decisions you have to make, be as it relates to claiming
19:03
a pension especially and then also when you draw your social security. So we've
19:07
dedicated entire shows to this topic. If you're ever interested, you can go
19:11
to our podcast or our website and just do a search for the topic of
19:15
social security or the topic of pension and you'll find probably dozens of shows on
19:21
the topic that we just dug in on that alone. But yes, you
19:23
want to be aware of again how much income do I need? And then
19:27
and then where will that income come from? Which then naturally leads into our
19:33
fourth retirement readiness checklist item, which is is it going to last throughout your
19:40
retirement? So where is this income coming from? And is it sustainable?
19:45
So once once you've determined your in retirement income needs and how much of them
19:51
will be covered by Social Security and pensions, then your portfolio is going to
19:55
have to supply the leftover. And when we say portfolio, people get co
20:00
used by this. Portfolio is any any money you have set aside that is
20:06
not your emergency reserve at the bank. Let me repeat that, quote unquote
20:08
portfolio is any money you've set aside that is not your emergency reserve or I'll
20:14
say like your general checking account at the bank. So that portfolio could be
20:18
money in a money market account. That could be money in a stock that
20:22
could be money in a mutual fund. It could be money in a four
20:25
oh one gay and irate, a taxable account. It doesn't really matter.
20:27
We just use the term portfolio to encompass all that stuff. Now, what's
20:33
key about this is all that stuff has to cover that difference. So I'm
20:38
going to do some math for you all here. If I have one hundred
20:41
thousand dollars income, need. We'll call it a post tax income need in
20:45
retirement, and between my spouse and I, our social securities cover fifty percent
20:52
of that. So that's fifty thousand dollars a year of post tax post Medicare
20:57
income. By the way, if you're tracking with me, that probably means
21:00
my way might have spouse and I would have sixty thousand of gross social security
21:04
income, we might net fifty. So we have to what we have fifty
21:10
thousand dollars of an unmet need? Where does that come from our quote unquote
21:15
portfolio? So what if our portfolio is I'm just going to grab a number
21:19
out of the air, five hundred thousand dollars, Well, that would mean
21:23
that we would need to generate fifty thousand dollars a year, which is our
21:27
gap, right, fifty thousand dollars a year of net income out of our
21:30
portfolio. Anybody who's listened to our show right now, their alarm bells should
21:36
be going off, which is uh, that's probably not sustainable, which is
21:41
correct because what you want to do is you want to look and say,
21:44
whatever that gap is that I need to cover, I need to divide that
21:48
gap into the amount of money that I have set aside in my portfolio to
21:52
find what is called a distribution rate or a withdrawal rate. And depending upon
21:56
how old I am and my health and how long I have retirement, typically
22:00
a ten percent withdrawal rate from a retirement portfolio, especially if I'm a healthy
22:07
sixty five year old, is not a sustainable distribution rate. It's too high.
22:14
Therefore, you would need to really sit down with an advisor or yourself
22:18
to figure out do I need to work longer? Do I need to save
22:21
more? Do I need to adjust down my spending? Do we need to
22:22
move How can we make this math work? Because what you don't want to
22:26
do is enter retirement just saying we're good. You know, I've got half
22:30
a million dollars and I've got fifty thousand a year coming in from Social Security.
22:33
We'll just we'll kind of figure it out. And by the time you
22:37
do figure it out, it's too late, because the way it happens is
22:40
you come rushing into our office or somebody else's going we thought we were good,
22:45
but we've got one hundred grand left and we're seventy five years old,
22:48
and like, how do we make this work? Unfortunately, when that happens.
22:52
Your options are really limited, so I cannot encourage you all enough prior
22:56
to just kind of like pulling the plug and walking away from from work,
23:00
sit down with a retirement planning expert, just to make sure you've dotted all
23:03
your eyes, crossed all your t's, and that you're confident you can,
23:07
you know, live live throughout a long retirement with your portfolio. Talking this
23:11
morning with CJ. Closs and Malia Equavis, our retirement planning professionals from Class
23:15
Financial. The website colss Financial dot com. That's COSS k l a a
23:19
s Financial dot Com. They're telephon number six so eight four four two five
23:22
six three seven. No charge for the financial get to know you appointment at
23:26
COSS Financially. It will be complementary to you again their number six oh eight
23:30
four four two five six three seven. And the website COSS Financial dot com
23:33
that's k l a a s Financial dot Com. We'll talk about taxes,
23:37
we'll get to the Money in Motion Listener question corner. We'll also do the
23:41
COSS Quiz Question League. We will do all of that next as Money in
23:44
Motion with COSS Financial continues right here on thirteen ten. WI b A.
23:51
Talking with our retirement planning professionals C. J. Closs and Malia Quavis.
23:55
Of course they come to us from COSS Financial, the website coss financial dot
23:57
com. That's k L a A S Financial dot com there telephone number six
24:02
So eight four four two five six three seven, talking this week about a
24:07
retirement readiness checklist, getting some great, great information and kind of walking through
24:11
the process checking off each of those points. And something we haven't talked about
24:15
it is vital is understanding tax management when it comes to retirement income, isn't
24:19
it, Malaia, Yeah, it would just be fun to just talk about
24:22
the income side of things. Unfortunately there's the other side, and so this
24:26
is super important that you understand the taxation of what your retirement income is going
24:32
to look like. So this would be number five on our checklist. Again,
24:36
it'd be simple if we could just bring a single portfolio into retirement,
24:40
but generally that's more complicated. We've got retirees. They hold their assets in
24:45
a variety of what we would consider kind of tax silos. There's some that's
24:48
tax deferred. For many of us, as a majority of our income that
24:52
we've put aside into four oh, one ks or four three b's. We
24:56
have our portfolios there all so include taxable after tax accounts that have been earning
25:03
money in investments and we pay tax along the way. And then finally,
25:07
many people have wroth accounts that as they take that money out someday it won't
25:12
be taxable. And then perhaps you have money just sitting in savings and making
25:18
a little bit. So each of those accounts carries a treatment, and then
25:21
there's implications for as you take that money out, how that's going to affect
25:26
your overall income. And it's important that you know you sit down and understand
25:33
the taxation of your Social Security alongside the pensions as we spoke of earlier,
25:38
because what you're going to want to figure out as you sit down with your
25:41
financial planner is how to harmonize the money as it comes out, Meaning you
25:48
know, when does it make sense to take more out of those pre tax
25:52
accounts before you're forced to with required minimum distributions? Are you going to look
25:56
at perhaps taking one social Security income and waiting and delaying the second one in
26:02
the household because of other factors, Does it make sense to perhaps consider actually
26:08
converting some of your traditional I rays over to Roth. So if this all
26:15
sounds complicated, we're just going to say it can be. It is,
26:18
and that's why we would prefer that you get some tax guidance as you plan
26:22
your withdrawal strategy. So keep that in mind that all dollars do not come
26:27
out the same, and you want to know what's going to be ahead of
26:32
you as you file taxes the following year. Some other important items to have
26:37
in your checklist should include do you have a plan for health insurance? We've
26:41
had whole shows on this. If I am pre sixty five? Is most
26:45
of my debt paid off? Very very important? As you enter retirement,
26:48
are your estate plans in order? And finally, do I have ample emergency
26:53
funds? Because even in retirement, emergencies come up. So we want you
26:57
to be ready for retirement where it's for you to get there. So please
27:02
just sit down with someone who can guide you through the process. Really good
27:06
show this morning, and don't forget if you want to listen back if you
27:07
miss part of the program. If you're new to the show, welcome,
27:11
I don't forge you can listen back. We mentioned some of the previous shows
27:14
podcasts you can listen back to all of those as well as this one right
27:17
at the website classfinancial dot com. That's Klaas Financial dot com. Tell if
27:22
a number six soh eight four four two five six three seven, no charge
27:25
for that initial gets to know you appointment at Class Financial. It will be
27:27
complimentary to you again their number six oh eight four four to two five six
27:32
three seven mentioned the website as well. A great feature over there, it's
27:34
the opportunity to submit a question to be answered here on the program the Money
27:37
in Motion Listener Question Corner, And this week Christy writes in says, I
27:41
have inherited an ira approximately twenty five thousand dollars from the passing of my aunt
27:47
or aunt What are your choices? What are my choices? I receive this
27:51
inheritance and that's from Christy. See for submitting the question. And as you
27:56
can imagine, Christy, it's easy for us to get these ahead of time
28:00
because then we can kind of like make sure we've got our ducks in a
28:03
row to answer it. So, but first things first, it's so sorry
28:07
to hear about the loss of a family member. I'm not sure exactly when
28:11
this happened, but always tough to lose a family member, So condolences on
28:15
your situation there, but you do have some choices and likely you'll want to
28:21
meet with a financial advisor or an account and just to get clarifications on your
28:25
situation. So a couple high level reminders here. Remember an inherited IRA,
28:30
also known as a beneficiary IRA, is an account that you open up when
28:34
you inherit an IRA after the original owner dies. Now Christy, since this
28:40
was your aunt, that means that, by definition, you are not the
28:42
spouse. If you were the spouse, if it was a spouse that passed
28:47
away, then you would have other options that are not available to non spouse
28:52
beneficiaries of a retirement account. But in this case, you're a non spouse
28:57
beneficiary of a retirement account and so your options we'll call it simpler. Well
29:06
I shouldn't say simpler. Your options are more complicated but straightforward. So what
29:11
you can do with that money is you could transfer that money into an inherited
29:14
IRA. If you do so, then typically what you have to do as
29:18
a non spouse beneficiary is you have to begin taking a minimum distribution from that
29:23
account December thirty, first of the year after the owner died. If that
29:30
owner had reached their required beginning date, which think of this as we'll just
29:34
call it seventy four to keep things simple. So if the individual who owned
29:38
that account, this is your aunt, Christy, your aunt was over seventy
29:42
four years old, had reached the required beginning date, then generally speaking,
29:48
you will have to take a minimum distribution each year over the next ten years.
29:53
By the end of the tenth year, all the money has to be
29:56
out of the account. Now, Christy, if your aunt died before reaching
30:03
her required beginning date, which again for simplicity, I'm just calling it seventy
30:07
four, it's actually a little bit more com or nuanced than that. But
30:11
if your aunt did not reach that then typically you do not have to take
30:15
out a minimum distribution, but all the money must be out of that account
30:19
by the end of the tenth year. And remember, since this is an
30:23
inherited retirement account, there is no ten percent penalty in the event that you
30:29
are under fifty nine and a half. Christi, because many people say,
30:32
but CJ, when I move it into the inherited IRA, I can't touch
30:34
it till fifty nine and a half. Nope, that's not true. That
30:37
rule applies to your own IRA, but it does not apply to inherited irays.
30:42
So just remember has to be out within ten years. That is part
30:47
of the new rule as part of the Tax Cuts and Jobs Act and Secure
30:49
Act. Over time is that we've had to adjust. Actually it's not Tax
30:52
Cuts and Jobs Act, it's the Secure Act. It's part of the Secure
30:56
Act. You now have to have the money out within ten years. And
30:59
I'm assuming Christy that your aunt died here within the last year or two.
31:03
So lots of things to consider. Kind of bounce on all over the all
31:07
over the place here with my answer, but by all means, make sure
31:11
you reach out to an advisor or to an accountant to work through your situation
31:15
individually. It can really be a blessing, but it can also be something
31:18
that you want to make sure that you manage properly. A really great email
31:22
don't forget you two can be like Christy. Emails accepted at Coassfinancial dot com.
31:26
That's k Laasfinancial dot Com. The telephon number for COSS Financial six oh
31:30
eight four four to two five six three seven, No charge for the initial
31:33
gets to know your appointment at Class Financial. It will be complimentary to you
31:37
again their numbers six oh eight four four two five, six three seven.
31:41
Want to hold on to that telephone numbers well, because it's time now for
31:44
the coss quiz question of the week. It works like this. In just
31:45
a moment, I'll ask you the class quiz question the week. You will
31:48
then have thirty minutes from the ed Today's program to call the Class Financial Office
31:52
right here in Madison at six oh eight four four two five, six three
31:55
seven. If you are the first call with correct answering, win this week's
31:57
prize, which is a twenty five dollars gift card to Texas Roadhouse. This
32:02
week's class quiz question the week is this approximately how many Americans will turn sixty
32:07
five and twenty twenty four? Is it two million or more than four million?
32:14
Telephone number six oh eight four four two five, six three seven.
32:16
First garth correct answer won that twenty five dollars gift card to Texas Roadhouse.
32:21
Don't forget as well. Let's Class Financial Office right here in Madison. Six'
32:23
oh eight four four two five six three seven. C. J. Malia.
32:28
It's always great talking with you guys. You enjoy this beautiful day.
32:30
Thanks. We are seven days fifteen hours, fifteen minutes away from the world's
32:35
largest broadfast. We'll get some details on that next as Madison in the morning
32:38
and ask the experts continues here on thirteen ten Wiba