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Financial Symmetry: Balancing Today with Retirement

When considering retirement, do you wonder what financial opportunities you may be missing? Busy lives take over and years pass without taking advantage. In this retirement podcast, the Financial Symmetry advisors unveil financial opportunities, to help you balance enjoying today so you are ready to retire later. By day, they are fiduciary fee-only financial advisors who answer questions about tax savings, investment decisions, and how to save more. If you’ve been putting off your financial to-do list or are just not sure what you’ve been missing, subscribe to the show and learn more at www.financialsymmetry.com. Financial Symmetry is a Raleigh Financial Advisor. Proudly serving clients in the Triangle of North Carolina for over 20 years.
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Now displaying: November, 2021
Nov 22, 2021

The end of the year is a great time to start tax planning for next year. 

Video example: https://youtu.be/lzghkK2iP3Q

This week we are discussing the strategies you can utilize to enhance your tax situation before year-end.

You’ll learn which tools you can use and how the actions you take in one area of your financial life can flow into other areas.  

Are you maximizing your retirement account contributions?

When considering your pre-tax retirement account contributions there are a couple of aspects that you should consider. These contributions are a great way to reduce your tax burden, but you also need to examine your cash flow. 

Do you maximize your employer match? If not, look at your budget to see how you could take advantage of this free money. You could also take your savings a step further to maximize the pre-tax retirement account contribution cap. In 2021, the yearly max was $19,500, but in 2022 that number rises to $20,500. 

If you are maximizing your savings, it is important to review whether you are at risk of over-contributing both this year and next. After analyzing the amount that you want to save, then you can consider which account type is best for you to save in. 

Harvesting capital losses or capital gains

Another tax opportunity is to harvest capital gains and losses. Harvesting capital losses can offset any capital gains that you have realized over the year. This year it may be difficult to find capital losses; however, this is a concept that you can explore so that you can understand how it impacts your tax return. Harvesting capital losses creates an opportunity to reduce your tax burden. 

Itemizing vs taking the standard deduction

The standard deduction changed in 2017 to $12,500 for singles and $25,100 for married people filing jointly and thus causing 90% of filers to utilize the standard deduction. There are 4 deduction categories to consider when calculating whether to take the standard deduction or to itemize deductions: state and local income taxes, mortgage interest, charitable contributions, and medical deductions.

Listen in to learn if you should take the standard deduction or whether it would make sense to itemize, you’ll also hear how you could receive a tax benefit of $600 for charitable contributions.

Should you utilize Roth conversions?

Roth conversions can be an exciting opportunity to take advantage of current tax rates and have your investments grow tax-free. However, you have to be careful about how you take them. The best way to consider whether to make Roth conversions is to zoom out and look at your overall lifetime tax plan. 

If you are in a higher tax bracket than you are projected to be in the future then taking a Roth conversion now doesn’t make much sense. You also need to consider how taking a Roth conversion now could trigger other events, especially if you are 63 or older. Listen in to hear how doing a Roth conversion at age 63 could trigger an additional Medicare premium. 

Outline of This Episode

  • [2:42] Your retirement account contributions
  • [6:00] Harvesting capital losses or capital gains
  • [8:47] Review your deductions
  • [14:23] How to utilize Roth conversions
  • [18:05] Tax withholding for high earners
  • [20:58] Utilize catch-up contributions to supersize your savings
  • [27:50] RMDs are back in 2021
  • [29:39] Create a checklist of these opportunities

Resources & People Mentioned

Connect With Chad and Grayson

Nov 9, 2021

Welcome to this bonus episode of Financial Symmetry with Allison Berger and Grace Kvantas. Grace and I bring you this episode as a special preview to the upcoming Women: A Force in Business Conference in Raleigh, North Carolina.

This episode and our presentation are targeted toward women professionals looking to build their retirement nest egg. Our goal is to help women achieve success and financial wealth. So if you are a woman or if you love a woman, listen in to hear how women can achieve more success and improve their financial well-being by harnessing their financial superpowers. 

Women are stressed about money

A recent study has shown that women are more worried than ever about their finances. ⅔ of women worry about money at least once per week and 40% suffer physically due to their financial stress. This is no surprise when you discover that the top emotion that women feel about money is overwhelm whereas for men it is confidence. 

The pandemic has made women’s financial worries worse than ever since they were the hardest hit by layoffs. Once you compound women’s stress with the gender pay gap, a longer life expectancy, and a predominantly male financial industry then you realize that the odds are stacked against us.

Women are actually better investors

It is a common misconception that men are better investors than women, however, this isn’t true. Women simply don’t talk about money in the same way that men do. Women are actually more likely to do well in the markets for several reasons.

Women typically spend more time researching investment choices which leads to better selections. Women also tend to buy and hold equities longer than men, this leads to less trading costs and fewer taxes on their investment income. Overall, women are more intentional investors than men. 

Harness these 5 investing superpowers

You don’t have to carry so much financial worry. One way to ease that worry is by using your inner investing superpowers. Grace and I are here to help you to implement these superpowers so that you have a better investing experience and feel less stress when it comes to finances. If you can implement these superpowers you can come ahead financially and position yourself for a more secure retirement.

  1. Have a plan. We’ve all heard the saying: “Failing to plan is planning to fail.” This is true with your finances as well. Your financial life will run more smoothly when you have a plan. Having a plan in place helps you identify what your life goals are so that you can create a financial road map for how to achieve them. Your investment strategy will stem from your life goals. 
  2. Know your safety net. Make sure you understand what an appropriate emergency fund for your household is and put it in place. This will help build your confidence so that you can take long-term steps to achieve financial success. 
  3. Take calculated risks. Invest for the long term by building a globally diversified investment portfolio of equities (companies you use every day). This will allow you to build wealth and purchasing power over time. 
  4. Automate your savings plan. Pay yourself first. Women are busy, so creating an automated savings structure will help ease your worries about saving. Make sure that you are contributing at least the minimum amount to get an employer match in your 401K. Another way to automate your savings is to set up monthly transfers from your checking account to a savings account. By automating your savings you will build wealth over time.
  5. Know when to act and when not to. Successful investing is a lot like riding a roller coaster. The only time you will get hurt is if you get out of your seat. Make sure to stay strapped in through times of market turbulence. Bear markets can be as financially dangerous as a bear, so it is important to stay in your place and not try to flee. Instead, when you encounter a bear market, think like an opportunist, not as a victim. This will ensure that you continue to build your wealth over time. 

Listen in to hear what action items you need to take now to improve your financial well-being. 

Outline of This Episode

  • [1:45] Women are more stressed about money than ever
  • [6:03] Why are women better investors than men?
  • [7:30] 5 Investing superpowers
  • [14:13] Progress principles

Resources & People Mentioned

Connect With Allison and Grace

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Nov 1, 2021

Anxiety-inducing headlines, all-time stock market highs and an economy still recovering from a pandemic, have left many people hesitant to invest their cash savings.

Video recap: https://youtu.be/YuytDPFD0wQ

None of us can make uncertainty disappear, but considering potential outcomes and evidence can make a huge difference in the returns you receive over your investing lifetime.

This week we are discussing strategies for how to fight the fear that comes when markets are near all-time highs.

Watching the news can be expensive

When reading and watching the news, it can be hard to remember that financial headlines are are designed to pull at your insecurities.

Many of our everyday conversations now include inferences to supply chain issues, potential tax hikes, and inflation.  The wall of worry can seem higher when crawling out of a pandemic shutdown and continues to impact investor’s confidence.

So naturally, record market highs have people wondering whether now is a good time to invest. The fear of an impending fall in the markets causes some to hold onto their cash instead of investing. Others don’t know what the right choice is for their money and are crippled by analysis paralysis.

By holding too much in cash, you’ll face the erosion of purchasing power over time due to inflation, but also experience the opportunity cost of stock market gains and the FOMO byproduct.

A financial planning process can help you make decisions

You don’t want to get stuck with analysis paralysis. A financial plan is key to understanding your investment strategy and helping you answer the question: should I invest my cash?

Walking through the financial planning process can help you create a disciplined and diversified strategy to provide added confidence in making your financial decisions.

By creating a financial plan, you can dial in your specific goals and time horizon. This helps you determine how much you’ll need in the short-run and how much you could afford to risk for the potential of higher expected returns in stock investments.

What if I invest it now and the bottom falls out?

The potential for an immediate drop after investing is always a risk investors wrestle with. And if investing in March 2000 or October 2007, you’d have to wait roughly 6 years each time to see a new all-time high.

Alternatively, there have been at least 10 record highs achieved each year over the past 9 years. So if you waited to invest during that time, because what goes up, must come down, you could still be waiting. Paralyzed by the fear of an impending drop.

One way to combat that fear is to analyze the numbers. Let’s look at historical data.

Of the people who invested at all-time highs since 1926, 81% were better off 1 year later and 77% were better off 5 years later. That still leaves a chance that you will lose money in the short-run, which is why it is important to have a safety net. And to this point, all market declines have been temporary.

Investing is like a roller coaster ride. The only time you could get hurt is if you get out of your seat.

Investing pitfalls to watch out for

The average investor is susceptible to several common investing pitfalls.

One of these is recency bias. If a stock has performed well in the past then many assume that it will continue to do well. Rather than make this assumption you’ll need to study its performance over time.

Another pitfall is market timing. Many people get a feeling about the market and they try to time their entrance and exit, but history has shown that most people can not time the market accurately. Time in the markets is better than timing the markets.

Listen to this episode of Financial Symmetry to hear all of the perils that could arise by pressing play now.

Outline of This Episode

  • [3:08] What is it about headlines that make people feel uncertain
  • [5:51] A financial planning process can help you make decisions
  • [8:14] What if I invest now and then the bottom falls out?
  • [12:50] Pitfalls that average investors fall into
  • [17:25] Today’s progress principle

Connect With Chad and Mike

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