What This Tax Season Taught Us
by SGL Financial
Our 2 Cents – Episode #252
What This Tax Season Taught Us
Breathe in the fresh air and the sweet start of a brand-new episode of Our 2 Cents. This week, we’re diving into post-tax filing season takeaways, the rewarding role of volunteering in retirement, and listener questions. Listen in now!
- Post-Tax Filing Season Lessons:
- You filed your taxes—but what did you learn? This year’s tax season revealed more than numbers. Here are the takeaways worth paying attention to.
- Give Back, Gain More:
- Want more purpose in retirement? Explore the impact of volunteering and why it plays a meaningful role in your next chapter.
- What would you do if you retired?
- Listener Questions:
- “I’ve managed my money myself over the years and have to say that I’ve done pretty well. Everyone tells me that I should have a financial advisor now that I’m about to retire, but I’m having trouble with the concept of turning it all over to someone else since I’ve proven that I can do it. What’s your argument for why I should have someone else manage it?” — Sam
- “I’d like for my wife to be more involved in our retirement planning, but she’s always hated talking about money. Any suggestions?” — Eric
- “My mom passed away last year, and we’re about to sell her house. I’ll be getting about $150,000 from that sale, and I don’t need the money, so I want to just give it to my daughter so that she can get her student loans and other debt paid off. Can I just wire the money directly to her after I get it from the sale or will that create some kind of tax problems?” — Rebecca
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Podcast Transcript
Announcer: You’re listening to Our 2 Cents with the team from SGL Financial, Building Wealth for Life. Steve Lewit is the President of SGL Financial and Gabriel Lewit is the CEO, they’re here to discuss all the latest in financial news, trends, strategies, and more.
Gabriel Lewit: Well, hello, everybody, welcome to another episode of Our 2 Cents. We are thrilled to have you here today with us.
Steve Lewit: You won’t believe what we were discussing just-
Gabriel Lewit: Well, Elmer Fudd. I don’t know how it came up but, yeah.
Steve Lewit: How did Elmer Fudd come up?
Gabriel Lewit: I think half our listeners probably don’t even know who that is but he’s an old school cartoon, right?
Steve Lewit: Yeah, old school cartoon.
Gabriel Lewit: Rascally Rabbit, was that the guy?
Steve Lewit: I don’t know. I know Elmer Fudd, I would watch that cartoon every once in a while with his mispronunciation of the Rs.
Gabriel Lewit: Yeah, he was with Bugs Bunny, right? I think he was-
Steve Lewit: Yeah, Elmer Fudd and Bugs Bunny. Yeah, exactly right.
Gabriel Lewit: Yeah, he was using the wascally wabbit there.
Steve Lewit: The wascally wabbit, right. Now, why did that-
Gabriel Lewit: Looney Tunes.
Steve Lewit: Yeah.
Gabriel Lewit: A part of Looney Tunes, okay.
Steve Lewit: Now, why did that pop into our heads-
Gabriel Lewit: Who knows?
Steve Lewit: … just before we went on air?
Gabriel Lewit: Folks, we got to get ourselves amped up for the show and we never know where it’ll take us.
Steve Lewit: And Elmer did it. Thank you, Elmer.
Gabriel Lewit: Well, again, we welcome you to the show, we are very excited as always to be able to spend 30, 35 minutes here with you talking about all things retirement, financial planning, retirement planning, health, wellness-
Steve Lewit: Guess what?
Gabriel Lewit: … you name it.
Steve Lewit: Guess what?
Gabriel Lewit: What?
Steve Lewit: Tax season’s over.
Gabriel Lewit: Well, it is and I think what we wanted to talk about today is, now that you’ve had a short chance to digest your tax bill, hopefully not, or refund.
Steve Lewit: I bet some people are still digesting their tax bill.
Gabriel Lewit: Or your tax returns, right. There are some key takeaways that we can cover where you can look at your tax return and what happened with it and do some forward-looking planning.
Steve Lewit: Oh, that’s great.
Gabriel Lewit: So, we’re going to talk a little bit about that here today.
Steve Lewit: Excellent, yeah.
Gabriel Lewit: We’re also going to talk about listener questions.
Steve Lewit: Yeah, we have a few actually.
Gabriel Lewit: We have a few, one might be a little bit deeper of a dive. And if we have time or we’ll see where the show meanders to, we might talk a little bit about volunteering in retirement as that has been a topic that we’ve seen come up a few times recently and we thought, hey, I don’t know if we’ve talked about this on the show much before is what we thought-
Steve Lewit: Yeah, good.
Gabriel Lewit: … so we’re going to talk about that here as well.
Steve Lewit: I like the agenda.
Gabriel Lewit: So, stick with us here, we’ve got a wide range of places to dive into here today. Let’s talk about taxes though to kick things off here. Well, the first question is how was tax season for you? Did you get a big refund and are you very happy about things or did you owe a big tax bill and you’re still fuming? Wherever you landed on that spectrum, we’ve got some strategies, tips and ideas here for you to take away from today’s show.
Steve Lewit: Yeah. The statistics are saying, Gabriel, that there is an average, I think, of $300 more refund this year because of the Big Beautiful Bill.
Gabriel Lewit: Yup. Well, it should have increased refunds because it was an additional credit. Well, the senior tax credit in particular but, yeah, other credits were there as well. There was changes to itemizing and a few other things and SALT caps which is state and local taxes not caps on salt, all right. Well, salt shakers have caps. No, just making sure that was clear.
Steve Lewit: Yeah. I think I understand, yes.
Gabriel Lewit: Well, when we use acronyms-
Steve Lewit: I do.
Gabriel Lewit: … you never know, right?
Steve Lewit: You never know.
Gabriel Lewit: If I said SALT caps, I don’t know if everybody knows what I’m talking about.
Steve Lewit: Some people might not know what that means.
Gabriel Lewit: All right. Well, yeah, so let’s talk about some of these scenarios. Let’s just talk about an easy one, you got a big refund.
Steve Lewit: Yup.
Gabriel Lewit: Is that good or bad?
Steve Lewit: Good. Well, it may be good, we’re not sure, I’m not sure.
Gabriel Lewit: Yeah.
Steve Lewit: It’s usually good to get a refund but, if you overpaid a lot during the year, that means you gave Uncle Sam your money to use during the year and now they’re giving it back to you with no interest.
Gabriel Lewit: Yeah, let’s use an example, a real life one, I’m just going to simplify it a little bit. A client had almost a $10,000 refund.
Steve Lewit: Yes.
Gabriel Lewit: Okay. And you’d say on the surface, “Yeah, that’s great, I love getting $10,000 from the government,” but did you really get it from the government?
Steve Lewit: No. No, they’re not giving you $10,000, they are giving you your own money back.
Gabriel Lewit: Yes, yes, so let’s talk about that because not everybody understands this. Many of you listening probably do know this but for some it’s still new news, okay. So, if you get a refund, what that means is, based on your income throughout the year, you would have owed a certain amount of tax. But, throughout the year, you paid to the IRS either through an estimated payment or more likely through withholding on your various income sources $10,000 more than you would have ultimately have needed to pay into them and they just gave that money back to you, okay?
Steve Lewit: Right. And you are congratulating your accountant or CPA and saying great job, you are congratulating yourselves, you’re going out to celebrate and nothing really happened other than you got your money back.
Gabriel Lewit: Well, actually, let me use an even easier example. We’ll use $12,000 per year and you’ll see why I’m going here in just a second. So, let’s say you got $12,000 back, what that really means is, throughout the year, you could have withheld $1,000 a month less.
Steve Lewit: Yes.
Gabriel Lewit: Meaning you would have taken home an extra $1,000 a month more every single month and then you would have had a refund of zero at the end of the year.
Steve Lewit: That’s correct.
Gabriel Lewit: Okay? That’s what $12,000 a year refund means. Or a $6,000 a year refund would be $500 a month extra.
Steve Lewit: And you could have invested that money.
Gabriel Lewit: Invested it, deployed it, put it in a savings account, bank account, earned interest on it to-
Steve Lewit: Or spent it.
Gabriel Lewit: Well, you could have spent it. For people that are going to spend it, oftentimes getting bigger refunds at the end of the year is actually better.
Steve Lewit: It’s probably a good idea.
Gabriel Lewit: So, that’s why I said it’s not always good or bad. But for those who are investing money consistently or saving money consistently, big refunds at the end of the year are actually typically going to drag down some of the interest you could have earned over time.
Steve Lewit: And some people, Gabriel, do look at it as a saving-
Gabriel Lewit: Forced savings.
Steve Lewit: A forced savings plan, exactly.
Gabriel Lewit: Yeah. Well, so part of it is also you can control, people don’t know this, you can control how much you get back at the end of the year.
Steve Lewit: Yeah. I was going to say, how does that happen that you got a $10,000 extra donation to the IRS?
Gabriel Lewit: Well, it could have been poor planning.
Steve Lewit: Yup.
Gabriel Lewit: Okay? You didn’t map things out the right way, you were paying an estimated payments you didn’t need to pay based on previous year’s income. It could be you’re over withholding on your standard withholding amounts, you could adjust those. So, yeah, you have to decide do I want to get big refunds, do I know what caused the big refund and is it something that I’d be better off getting monthly or do I like the forced savings that this provides for me.
Steve Lewit: So, do you think, Gabriel, during the year, let’s say six months into the year, most folks should run a, not a sample, a pre-tax return to see where they’re at?
Gabriel Lewit: Well, yeah, not to advertise for what we do here, explicitly here.
Steve Lewit: I was leading you into that.
Gabriel Lewit: But yes, to some extent, that’s the solution to this is you run a tax analysis, okay. We call them tax analyses, tax map, tax plan, there’s actually slight variations to each of those.
Steve Lewit: I thought that was pretty slick how I did that.
Gabriel Lewit: We typically do those through the month of May through October as the core and, obviously, actually through the rest of the year as well. But the whole goal of that is to better understand your taxes and what’s driving refunds or owing money, which we’re going to talk about in a second, and whether or not there’s tax strategies you can employ to save more money for the year ahead.
Steve Lewit: Or doing Roth conversions and things like that.
Gabriel Lewit: Yes, exactly, okay. But I don’t want to go too far down that rabbit hole at the moment. Now let’s talk about the other side of the coin, you owed a big chunk of money in taxes.
Steve Lewit: Nobody loves that.
Gabriel Lewit: Or possibly even penalties because you under withheld.
Steve Lewit: Nobody loves that.
Gabriel Lewit: Nobody loves paying taxes, nobody is … Well, I have one client that says, “I don’t mind paying taxes, it just means I kept more of my money throughout the year,” he really was pragmatic about it. But the vast majority of people do not like the … They find it a surprise, they don’t plan ahead for it, it catches them off guard, they scramble to figure out where to get the money from, it’s usually very unpleasant. And also penalties, of course, if you under withhold, can add up to hundreds or thousands and people don’t like paying fees and penalties.
Steve Lewit: Yup.
Gabriel Lewit: I’ve never met anybody that likes paying fees and penalties.
Steve Lewit: Not one.
Gabriel Lewit: Okay. But, yeah, that’s the opposite side of the coin and the question is how could you have avoided that-
Steve Lewit: Yes. And avoid it this year.
Gabriel Lewit: … okay, and it’s the … Yes, and/or for the year ahead. And it’s the reverse of what we were talking about before but the same concept applies, you could run a tax analysis or a tax map or a tax plan, project how much you would have withheld on the year, how much you might have owed based on various income levels and adjusted those ahead of time to have made sure you paid in enough money through withholding your estimated payments to not have to pay a big surprise at the end of the year or get penalties.
Steve Lewit: Yeah.
Gabriel Lewit: Yeah.
Steve Lewit: So, Gabriel, what do people do, for example, they own mutual funds and tax time, all of a sudden, they see $25,000 in capital gains on their tax return, and they didn’t sell anything during the year?
Gabriel Lewit: Yeah. So, this is a bit of a transition into not necessarily owing money or getting a refund but better understanding your tax return and the 1099s you received and what caused those. So, yeah, if you own mutual funds but you never sold anything yourself, inside the fund, they may have sold stocks at gains or losses in theory but at gains very commonly and those get passed through to you and you actually might be owing taxes on those gains even though you never sold anything yourself.
Steve Lewit: Right. And the implications of that, Gabriel, these additional pieces of income show up and they affect your social security, they affect your IRMAA, they affect your tax freezes, there’s a domino effect on that and I know that’s another subject too.
Gabriel Lewit: Yeah. We could spend probably 15, 20 minutes on every one of the topics you just mentioned.
Steve Lewit: Exactly, exactly.
Gabriel Lewit: But, yeah, to give a quick list here of other things you want to assess as you think back to last year’s taxes that you hopefully just completed here recently is, yes, number one, did you owe, did you get a refund. Number two, did you get capital gains that you were surprised about that you didn’t prepare for.
Steve Lewit: Or dividends.
Gabriel Lewit: Yup. Number three, what bracket were you in, were you in a higher bracket than you thought and what new planning strategies arise from understanding which brackets you’re in. If you’re retired and on Medicare, did you inadvertently bump yourself into a Medicare surcharge bracket called IRMAA, income-related monthly adjustment amount.
Steve Lewit: Did you break yourself through a social security threshold so, instead of having 50% of your social security tax, you push yourself to 85%.
Gabriel Lewit: Yeah. Some people had made money, contributions to money … Sorry, contributions to money.
Steve Lewit: Money needs all that.
Gabriel Lewit: Money contributions to a-
Steve Lewit: It needs all the help it can get.
Gabriel Lewit: … Roth IRA and then realize they were over the income limits when they filed their taxes and then they have to claw that back out. All these things and more are generally what you can cover with forward-looking proactive tax planning versus big surprises and, oh, my gosh, how did this happen type reflexes after you file the next year.
Steve Lewit: Yeah. And the thing about tax planning, Gabriel, is a lot of taxes aren’t self-evident because they’re hidden like breaking through an IRMAA bracket or breaking through a social security bracket or-
Gabriel Lewit: Or a Medicare … Senior deduction, sorry.
Steve Lewit: Senior deduction miss, yeah.
Gabriel Lewit: Yeah.
Steve Lewit: So, you have to really pay attention yet we’re so busy that we rarely do and then it comes out in April when we do the tax return.
Gabriel Lewit: Mm-hmm, yeah, yeah, exactly.
Steve Lewit: So, surprise, surprise.
Gabriel Lewit: Indeed. Yes, indeed. So, yeah, if you were surprised, if you’re looking for help, if you’re not sure what caused what, you’re struggling with this whole tax world and navigating it, we are here to help. You can give us a call at (847) 499-3330. Let us do a tax analysis for you and let us talk to you about your financial picture and your tax picture combined and then we can make really wise tax planning recommendations based on that and put you on the right track for next year’s tax season even though that’s a year away and probably long off your radar here at the moment, okay.
Steve Lewit: Okay.
Gabriel Lewit: What you think, Steve? Did we cover everything we wanted to cover there?
Steve Lewit: Yeah, I just … It’s not what you make, it’s what you keep and taxes are a big deal, the tax drag and … We never did a session on tax drag and what that is and how it looks, we’re touching on it now but taxes are the singular part of planning that most people pay the least attention to and …
Gabriel Lewit: And, in many cases, should be paying the most.
Steve Lewit: The most, yeah.
Gabriel Lewit: Yeah.
Steve Lewit: Yup.
Gabriel Lewit: All right, all right. Well, let’s see, Steve. I’ll let you sit in the driver’s seat for a moment. Do you want to talk about listener questions or volunteering?
Steve Lewit: Let’s do volunteering quickly and I’ll tell you why. I have a client that is about to retire and he is really scared of retiring, he doesn’t know … He’s a high energy, high achiever, he doesn’t want to go back as a consultant in his field, he’s been successful and he’s looking at me and says, “Steve, what do I do?” and the first word I say is you can volunteer. And when I was younger, I thought volunteering was just something you did because you had nothing else to do but volunteering really is an important part of our community and very heart-warming and their mission to … I have a client that volunteers with kids teaching them how to read and she’s so enamored with it and it makes her feel so good and these kids love her and it’s like, “Hey, that’s great, I wish I had time to do that.”
Gabriel Lewit: Yeah.
Steve Lewit: Yeah. So, I think this is a big deal and I would like to do that before we talk about a question about selling a building.
Gabriel Lewit: Okay, yeah. Well, yeah, funny, I echo that. When I was a kid, I think a lot younger, if I heard the word volunteering, I was like, “Oh, I want to do that.”
Steve Lewit: I don’t want to do that, yeah.
Gabriel Lewit: We do some volunteering now for our company throughout the year, we do one to two, usually a couple of volunteering events throughout the year where we try to get our whole team together to do something for the local community and they’ve been some of our … We do other events with our team as well like happy hours and golf outings and things like that but the volunteering has been some of the events that everyone says they had the most fun at.
Steve Lewit: Yes. And feel good about.
Gabriel Lewit: Yeah, yeah. So, I think, as you grow, as you age, it can become more meaningful for you as well and might be something that, when you finally have the time in retirement to do it more, you could really make that something that becomes important to you.
Steve Lewit: Yeah. And I’m sure you have wonderful stories like I have. I have a client in California who volunteers at the San Diego Zoo and he’s become a tour … He took me through the zoo and it was this man is like a genius because he knew about the primates, he knew about the flowers, he knew about the elephants and it was this guy built a whole entire life in volunteering and learning about zoos and animals and flowers and things in a zoo. And the San Diego Zoo, by the way, is a magnificent zoo, everybody should visit that, it’s one of the best in the world.
Gabriel Lewit: Indeed, yeah. Well, so also part of … I don’t think I mentioned this but I meant to, this week here, April 19th through 25th is National Volunteer Week-
Steve Lewit: Oh, nice.
Gabriel Lewit: … which was part of why I wanted to talk about this here. But yeah, I think you’re spot on. For most people, volunteering can give them a real sense of purpose if they feel like they’ve lost a sense of purpose after losing their job, it can also give them a sense of community. So, a lot of the same, I guess you’d call them benefits that people don’t even realize they have from their working years, they get through volunteering, a social community, a sense of purpose, something to do, structure and schedule. And if you can find something you actually really like and enjoy to do and don’t do it too much, you really can find that it adds a lot of meaning and value to your life.
Steve Lewit: Yeah. I had one client say, “Yeah, I’m volunteering my time on the golf course.” He’s going to play every day.
Gabriel Lewit: Yeah. Well, that’s a different type of-
Steve Lewit: Of volunteering.
Gabriel Lewit: Yeah, it’s a different type of volunteering. But, yes, the data here, just to get a little data oriented, says that people who volunteer consistently report higher levels of happiness and lower rates of depression than those who don’t.
Steve Lewit: Well, you feel needed. When you volunteer, it’s like you fill a void that nobody else is doing so there’s a sense of really doing something meaningful and not without your it’s really best for me, it’s really best for them attitude.
Gabriel Lewit: Yeah. Well, so what we wanted to cover here in the spirit of Volunteering Week, National Volunteering Week, just three ways that you could think about volunteering and then we’ll talk about listener questions, okay? But the first is time. Obviously, somewhere where they just need manpower and they need people to help and you being there giving your time is very, very valuable, okay? So, you’ve got mentoring students, serving at food banks, supporting your church, non-profit events, zoos.
Steve Lewit: Yup.
Gabriel Lewit: Yeah, you name it, there’s a lot of ideas. If you Google them or ChatGPT them these days, it’s almost more popular than googling, you’ll find no shortage of ideas of ways you could give your time. We once sorted books for one of our volunteer events.
Steve Lewit: Yeah, we did.
Gabriel Lewit: We did cards for elderly folks that can’t get out of their rooms or their homes just to put a smile on their faces. You could go sponsor a stretch of the highway and-
Steve Lewit: And clean it.
Gabriel Lewit: … pick up some trash on a pretty summer day. You name it, sky’s the limit.
Steve Lewit: Yeah, yeah. Go comb a horse or something like that. You brush a horse, you don’t comb a horse.
Gabriel Lewit: Do they seek volunteers for that?
Steve Lewit: Absolutely.
Gabriel Lewit: Oh, okay, yes.
Steve Lewit: Yeah. Call a horse farm and say I’d like to volunteer, absolutely. So, find something that you’ve always wanted to do. If I were retired, I think I … I don’t know … What would you do, Gabriel?
Gabriel Lewit: What would I do?
Steve Lewit: Yeah. If we retired, you and I, which we’re not doing, but let’s say suddenly you were retired and you didn’t … What would you do?
Gabriel Lewit: Is this a get to know you session?
Steve Lewit: I guess. I’m curious what would you do.
Gabriel Lewit: We often do those on the show, we haven’t done one in a while.
Steve Lewit: Because I’m thinking what would I do if I was retired, where would I … I would volunteer.
Gabriel Lewit: Yeah. Well, I would see if any … I do like coaching sports.
Steve Lewit: Yeah, you love it.
Gabriel Lewit: At the moment, my answer-
Steve Lewit: You love that.
Gabriel Lewit: … maybe I could help coach some sports team or somewhere. I do that a lot for my kids when they were younger, now they’re on some travel teams and they don’t need me because they pay their coaches and I feel like I would still enjoy doing that.
Steve Lewit: Yeah. I’ve always wanted to be-
Gabriel Lewit: I also think there’s a lot of really bad youth coaches out there and I think I would be much better at it than them.
Steve Lewit: There are really some horrible youth-
Gabriel Lewit: I feel bad for some of these kids.
Steve Lewit: We’ve had some folks with our grandkids, my grandkids, not the greatest coach.
Gabriel Lewit: Don’t go there.
Steve Lewit: You know what I’ve always wanted to be is a big brother. And I think, if I retired, the first thing I would investigate is that program, the big brother program.
Gabriel Lewit: There you go. That’d be cool.
Steve Lewit: Yeah. And maybe I’ll do that anyway.
Gabriel Lewit: Well, now that you’re a piano expert, you could teach me how to play the piano.
Steve Lewit: I’m not that.
Gabriel Lewit: Well, that actually brings us to the next item, and I don’t want to spend too much more time here which is talent. If you’re very talented at something-
Steve Lewit: Well, I’m not very talented at playing the piano.
Gabriel Lewit: … you could teach people-
Steve Lewit: Two years into it.
Gabriel Lewit: … and really feel like you’re … Well, there’s a phrase I heard once which is learn, earn, return. I don’t know if I shared that on the show but it’s this life career arc progression. Before you earn, you learn. Once you earn, you become good at something hopefully and then you can return by giving your talent and your skills to those who need it, mentoring people, you don’t have to do it for money.
Steve Lewit: Is that the same as paying it forward?
Gabriel Lewit: Kind of. It’s a little different.
Steve Lewit: A little different, yeah.
Gabriel Lewit: And then the last one, so time, talent, treasure meaning your money. You could gift your money to places in need of your money.
Steve Lewit: Yeah. Look, we have-
Gabriel Lewit: They will treasure it in their treasury.
Steve Lewit: We have clients that give to colleges, that give to save the children, that give to churches, synagogues, mosques, we cover the territory.
Gabriel Lewit: Yes, indeed. So, yeah, so time, talent, treasure. Now, think about this, if this is something that’s been noodling around in your head and you haven’t pulled the trigger on it, go ahead and maybe Google some options, look around you, say, hey, let’s just start with one day, go pick one day and volunteer and see if you like it, try it on for size.
Steve Lewit: Yeah. There must be a very different nonviolent analogy you can give other than pulling the trigger.
Gabriel Lewit: Okay. Well, yeah, sure. You could roll that rock down the hill.
Steve Lewit: Yes. Let’s get to listener-
Gabriel Lewit: Push that car forward.
Steve Lewit: Let’s get to listener questions.
Gabriel Lewit: Kickstart things into motion. I don’t know, man, what do you want me to say there?
Steve Lewit: I don’t know.
Gabriel Lewit: It’s just the one that came to my head.
Steve Lewit: Well, I know.
Gabriel Lewit: Yeah.
Steve Lewit: I use it all the time.
Gabriel Lewit: All righty. Yes, yes, yes, yes, all right. Okay, moving on, if you have … Well, if you have questions on National Volunteer Week, you could call us I guess but I don’t know what we’d tell you.
Steve Lewit: Yeah, that’d be interesting conversation.
Gabriel Lewit: All right. Yeah, let’s get to some listener questions here. So, the first one we’ve got here is from Sam and we might talk about this one a little longer than the others, we’ll see. So, Sam says, guys, I’m paraphrasing here, I managed my money myself over the years and I’ve done pretty well, everyone tells me I should have a financial advisor now that I’m about to retire but I’m having trouble with the concept of turning it all over to someone else since I’ve proven I can do it. What’s your rationale or argument for why I should have someone else manage it?
Steve Lewit: Ooh, that’s a big question.
Gabriel Lewit: Okay.
Steve Lewit: Yeah. You want to take a crack at that … Why don’t you take a crack and then I’ll correct you?
Gabriel Lewit: Well, why don’t you take a crack and I’ll correct you, huh?
Steve Lewit: Okay. In that case, Sam. Sam, you’ve done well managing money and you’re retiring, when … I won’t say that we can manage money better than you can, I don’t know that, you never know what the market’s going to do and you could have good years and bad years. But when you retire, the focus is no longer on just growing your money, all the rules change. It becomes a matter of planning taxes, of planning income, building a portfolio that matches those goals and then figuring out how you get the money to your kids if you have them. So, it’s a much more complex challenge you have in retirement than just putting your money in the market and making it grow.
We think that’s very valuable, we know how to add wealth, I’m giving a commercial here but that’s what we do which is why we would say you should be looking at an advisory that can help you with the new rules of the game that you’re entering into.
Gabriel Lewit: Yes.
Steve Lewit: Yeah.
Gabriel Lewit: And I’m going to say something that you tend to always say, I actually thought you might have started with this. So, Sam, you manage your money yourself over your time horizons here over the last 20, 30 years, whatever it’s been but retirement we always start with a plan.
Steve Lewit: Yes.
Gabriel Lewit: Okay? So, number one is, yes, if all you had to do is just invest your money and there’s nothing else to it, that’s pretty simple. That’s typically in the accumulation years, what most people do is they just invest very aggressively and they have a long time horizon. But in retirement-
Steve Lewit: It’s like climbing up the mountain.
Gabriel Lewit: … you tend to have a much, as you said, more complex scenario with a lot of things to include and we always recommend that you have a financial and retirement plan which helps you navigate all those challenges and give you a picture of where you are and where you’re headed over the next 30 years. Because of all that increased complexity, we think the need for a plan is even more important than it is when you’re in your younger years although we think it’s important then as well for a wide range of reasons. So, it goes beyond just managing money when you get into the planning aspect of things. You’ve said this before, how many people out of 100 people you see, every 100 people, how many typically have a plan.
Steve Lewit: Yeah. One, two.
Gabriel Lewit: One or two, yeah.
Steve Lewit: I mean a real plan.
Gabriel Lewit: Yeah, real plan, not very many.
Steve Lewit: Yeah, yeah.
Gabriel Lewit: And the idea here is, if it was just as simple as chuck all your money in highly aggressive stocks and stay 100% invested for 30 years, yeah, you wouldn’t need an advisor. But as markets crash, withdrawal needs pop up, we just talked about earlier, IRMAA brackets for Medicare, tax planning, Roth conversions, estate planning, gifting, charitable donations, tax brackets, all these things really add complexity versus just grow your money as quick as possible.
Steve Lewit: Yeah. And I had another thought for you, Sam, is that, when you hire an advisor, you don’t have to give everything to … Well, at least not here. Some places demand that you give all your money but you don’t have to give all your money. You could, for example, give three quarters of your money or half your money, you retain the other half as the growth part of your portfolio but the advisor plans all your money even the part they’re not in.
Gabriel Lewit: The less speculative stuff, yeah.
Steve Lewit: The less speculative stuff.
Gabriel Lewit: You can do the less speculative stuff, right?
Steve Lewit: Yeah.
Gabriel Lewit: Because if you … We’ve often found that people that have really felt like they could keep doing this on their own, they’re usually picking stocks, they’re buying aggressive things and they’ve 10x their money and they think that they’re going to be able to continue to do that in retirement which actually brings me to the last point I wanted to say which is the stakes of mistakes are higher-
Steve Lewit: Oh, that’s so important, yeah.
Gabriel Lewit: … in retirement than they were when you were 20, 30.
Steve Lewit: Well, I-
Gabriel Lewit: If you made the wrong move when you’re 30 and you lost half your money, you got long time to recover. If you’re 70 and you lose half your money because you made the wrong bet or move or too speculative risk, the stakes, again, are much higher if you were to make mistakes in retirement.
Steve Lewit: Yeah. I say it more firmly than that, Gabriel. What I say at my seminars, when you retire, you got one chance to get it right. Because, folks, when we get people 10 years into retirement come to us and say, hey, we didn’t get this right, can we fix it, we don’t often have the time in their life to fix it.
Gabriel Lewit: Well, there is no rewind button.
Steve Lewit: No, you can’t start all over again.
Gabriel Lewit: Yeah.
Steve Lewit: Like you said, when you’re younger, you can start all over. In retirement, you can’t. Great question, Sam.
Gabriel Lewit: Yeah. So, Sam, very good question, there’s obviously lots we could talk about there to unpack each and every one of those items. If you’re out there and you’re in a similar boat, come on in, let’s do a preliminary we call plan review for you. Let’s get a picture of where you are now, where you’re headed as is and then we can talk about options that could perhaps optimize that further for you, okay?
We do have a couple other listener questions here. We’ve got Eric, this is an interesting one which we have heard a couple times before but I don’t know if we’ve ever talked about this. Eric said he’d like his wife to be more involved in their retirement planning but she doesn’t like talking about money and tends to just defer to him. Any suggestions?
Steve Lewit: It’s hard, Gabriel, to make somebody interested in that which they are not interested in. So, my experience with our clients that come in and say my spouse doesn’t care is a spouse comes to one or two meetings and then I never see them again. I don’t know, I don’t really have-
Gabriel Lewit: The mysterious missing spouse.
Steve Lewit: Yeah. I don’t really have a game plan to get the spouse involved. Do you?
Gabriel Lewit: Well, if they’re really not interested, no.
Steve Lewit: Yeah.
Gabriel Lewit: Like you said, yeah.
Steve Lewit: What are you going to do? Force-feed them you got to come in?
Gabriel Lewit: You could attempt to say, “Hey, I think it’s really important you know just a little bit about this, honey. Because, if something happens to me, I don’t want you to feel like you’re just completely caught unaware.” Sometimes approaching from that angle.
Steve Lewit: Yeah, but she’s going to say okay and that’ll be the end of it.
Gabriel Lewit: Yeah, you can-
Steve Lewit: Yeah, you’re right, honey, talk to me next year.
Gabriel Lewit: Yeah. Yeah, it is hard to encourage someone to be interested in something in which they are not that interested in. You could send them our podcast, maybe listening to me and you talk is more interesting than reading books or other stuff.
Steve Lewit: But, Eric, I give you a lot of credit of being thoughtful enough to ask this question because wanting your spouse involved is a big deal and she probably will feel that and may come around. Keep going-
Gabriel Lewit: Yeah. I’d say the-
Steve Lewit: … don’t stop.
Gabriel Lewit: Yeah. The last thing there is, when your financial plan especially with us is done, to your point, share it with her so at least she is involved, has a quick once over with the final plan, understands a great plan is in place and feels good about it. That should help as well, I think, for many people.
Steve Lewit: Yeah. If you go and say, “Hey, I’ve got this great plan, let me take five minutes and share it with you,” she’ll share your enthusiasm and she’ll … I think she will love the fact that you’re confident and have a plan and that will give her a lot of peace of mind.
Gabriel Lewit: Yeah. We’re close on time here but let’s cover our last listener question for today from Rebecca. Rebecca, you mentioned which we’re sorry to hear about your mom passed away last year but you’re about to sell her house this year and you think you’ll receive about 150,000 in proceeds and you want to gift it to your daughter to pay off loans and other debt.
Steve Lewit: Nice.
Gabriel Lewit: Rebecca just wants to know can she just wire the money directly to her daughter after she gets it from the sale or will that create any tax problems.
Steve Lewit: No, just wire the money, Rebecca. Now, people get confused about this, Gabriel, because the annual gift deduction right now is 20,000 I believe.
Gabriel Lewit: Yeah, it was 19. It’s either 19,500 or 20. I can’t recall off the top of my head.
Steve Lewit: Well, we’ll check that out but let’s say it’s 20,000. So, Rebecca, when you give 20,000 … By the way, the recipient of a gift, no matter what size has no tax implications.
Gabriel Lewit: 19,000, yeah.
Steve Lewit: 19,000.
Gabriel Lewit: Per person.
Steve Lewit: So, 19,000 is what you can give each year without anything happening so to speak. If you go over 19,000, let’s say you send 119,000, that 100,000 goes against your lifetime gift exemption and right now for a single person or for each person, whether married or single, the gift exemption I believe is 16 million.
Gabriel Lewit: 15 million I believe.
Steve Lewit: 15 million. So, unless you’re planning to use your other 15 million for something else, you can give as much money as you want without any tax repercussions.
Gabriel Lewit: Yeah. You just got to file a form on your taxes if you go over the annual exclusion, yeah.
Steve Lewit: The annual limit and it’s very minor in your tax preparation.
Gabriel Lewit: Yup, yup, yup.
Steve Lewit: Go for it.
Gabriel Lewit: So, yeah, yeah. Well, the final thing I’ll say there is, when she had sold the house, she’ll have gotten a step up in basis. Now, if that house appreciated between the time mom passed away and when you sell it, there could be a small amount of capital gains-
Steve Lewit: On the gain.
Gabriel Lewit: … on the gain there even in a one year or one-and-a-half-year period. So, just super quick on that front.
Steve Lewit: Keep that in mind.
Gabriel Lewit: Yup. Well, we can help you calculate that too. All right. Well, our friends, we’ve enjoyed spending time with you today. Hopefully you’re thinking about all the fun things you’d like to do on National Volunteer Week to help those around you. Hopefully you’re thinking about tax planning and how we can help you save money on taxes going forward. As always, if you have listener questions, you can zap those over our way, just email us info@sglfinancial.com anytime. And if you’d like to take us up on tax planning or discussing your financial and retirement plans, we are here, just give us a call, (847) 499-3330, or go to sglfinancial.com and click contact us anytime.
Steve Lewit: You bet.
Gabriel Lewit: All right. Well-
Steve Lewit: That’s-
Gabriel Lewit: … tonight is the first round of the Bears draft. Well, all teams draft.
Steve Lewit: Well, tonight is the third game of the Knick’s first round which they’ve split.
Gabriel Lewit: Well, there you go.
Steve Lewit: They gave away again, yeah. And the Giants, my Giants have two picks in the first round.
Gabriel Lewit: So, if you have a team, go team.
Steve Lewit: In the top 10.
Gabriel Lewit: And, otherwise, we’ll talk to you on the next show.
Steve Lewit: Stay well everybody.
Gabriel Lewit: Bye-bye.
Steve Lewit: Bye.
Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL a call at (847) 499-3330 or visit us on the web at sglfinancial.com and be sure to subscribe to join us on next week’s episode.
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