Join us for a thoughtful episode on end of year financial planning for 2023. We’ll explore the nuances of optimizing your investment portfolio, safeguarding your assets, and ensuring a stable, rewarding lifestyle in the years to come. Listen in as we discuss essential topics like managing RMDs, exploring tax-saving opportunities, and more. We’ll also share 2 Centrus guides designed to help you plan for a prosperous new year!
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Episode Transcript
Note: This transcript was produced using AI, so please excuse any typos and inaccuracies…
Marc Killian 00:00
Join us for our final episode of 2023. And we talk about end of year financial planning some key items to think about as the year is winding down and we’ll be back with new episodes, and 2024. But we thought we would leave you with some interesting things to think about to just consider as the year is winding down with Judy and I here on playing wise, retire free with Jim Wilson.
Announcer 2 00:29
Any successful plan requires wisdom and preparation, and retirement is no different. It’s time for the plan wise retire free podcast. Hey,
Marc Killian 00:38
everybody, welcome into the podcast. It’s playing wise, retire free with James Wilson and myself here to talk about end of year financial planning ideas. As again, the year is winding down. Jude and I are taping this just a couple days before Thanksgiving. So Happy Thanksgiving to you. But Happy
Jude Wilson 00:54
Thanksgiving man got a lot to be thankful for 2023 was a good year. It’s ending on a good note. Yeah,
Marc Killian 01:02
absolutely. And we hope that all of our listeners enjoy their holiday season as it is upon us. And you and I usually do this each year, we usually wrap up at the end of November, beginning of December, and then we get get back with new episodes in January. So I thought, you know, good time to have an end of the year conversation, dude run through some things. And as a matter of fact, we’re going to tie this in with an end of the year checklist that folks can pick up from you guys at centrist Fs if they’d like to do so as well as three actions to consider when volatility strikes. A couple of giveaways here on the podcast. And if you’d like to get a copy of those, just email the team info at sin trust fs.com. That’s info@cntrusfs.com. And we’ll have that information for you can just send an email, they’ll shoot that over to you in the PDF and that’ll be a great way for them to kind of tie in what we’re talking about you this week with these PDFs as well with this checklist.
Jude Wilson 01:57
Yeah, I love it. Because you know, in the podcast, we’re going to speak in general, the PDFs is going to give a little bit more flavor and information that is actionable. A little more
Marc Killian 02:09
Turkey and gravy to get in stuffing to go with the way to tie it together. Man, I love it. It’s gonna give them the gravy to go with the potatoes. And we’re going to talk about today right there. Or either or whichever way you want to go. By the way. Are you are you a stuffing kind of guy I love I love me.
Jude Wilson 02:25
I am and Thanksgiving is my favorite time of the year because I’m not a big heavy eater, except for Thanksgiving right
Marc Killian 02:33
now sisters
Jude Wilson 02:34
are amazing cooks. Okay, I’m looking forward to it.
Marc Killian 02:37
Let’s see, we’re down here in this in the southern part of the country. Now y’all have collards because I said that to somebody the other day. So we have collard greens here at Thanksgiving. And that was one of my northern folks I talked to and they were like Nope.
Jude Wilson 02:53
My cousin Vinnie, but we won’t go there you go. There
Marc Killian 02:55
you go. Well, I guess we should jump in and have this conversation to get into some into the year items here. So let’s start June with some general planning and just general investment strategy conversations. What’s something it’s probably pretty key for end of the year. So
Jude Wilson 03:08
there’s a number of different things, I think I’d like to start out by talking about investments, and rebalancing. It’s a it’s a simple strategy, but people often miss it. Everybody’s heard, buy low and sell high. We’ve been programmed with that since we were kids. But very rarely do we do it, you know, because to buy low, either means you found something that nobody knows of. Or more likely, you’re you’re selling an investment and buying something that’s a non performer. And that’s really the traditional way that investment managers look at rebalancing, right, just because something was not a performer this year, doesn’t mean it’s not going to be a great performer next year. So rebalancing is a really important strategy. And most money managers look at that. And individual investors typically miss that. And so when, if you’re listening, and as we talked about in the beginning of the show, we’ve got a PDF that goes over the mathematics on why this makes sense, and how this can possibly add some additional alpha or additional return to your portfolio just by doing a simple strategy of selling some of your top performers and buying some of the performance that didn’t fare so well this year, but might be supercharged for next year. Yeah,
Marc Killian 04:41
exactly. And you know, so rebalancing, looking at that risk situation, having that conversation with your financial professional, is certainly a good idea to do you to do as the year is winding down. And of course that’s all part of the review process is to so many advisors will have those conversations in November in December or they have them at the beginning of the year, but either way, especially if you’re thinking about changing things that for, you know, 2024, even January’s not the worst, right. So, and these are some of the items, again, that are going to be on this end of your checklist. If you’d like you to copy that, again, it’s complimentary. So just email him at info at centrist fs.com. And what about anything else in there? So like, for folks that are maybe not retired yet, but maybe still working? Maxing out those contributions? Good idea? Oh,
Jude Wilson 05:24
absolutely, I find that people who are still working and contributing to a retirement plan, they’re normally at least putting in up to the match. So some companies will match 6%, let’s say, and people have that Senator Forget it mentality, hey, I’m not going to miss out on free money, of course, I’m going to I’m going to contribute to to the match. But then they miss out on the opportunity to contribute so much more above that, that could reduce their taxable liability and really set them up to to grow their net worth and grow their retirement assets. So at the firm, we always review this in the third quarter and try to talk to our clients about where are you at as there’s still room to contribute more to the 401k? And do you have the cash flow to do that. And then the next thing we do is we look at where those dollars should be, whether on the traditional 401k side where you’re getting a tax deduction for putting that money away, or on the Roth side, where you’re not getting a tax deduction for putting that money away. But that money will be tax free for the rest of your life. There’s, there’s a fine balancing act with that. And we take our clients to a process to make sure that we’re maximizing that balance as best we can.
Marc Killian 06:45
Yeah, great points, for sure. And, again, as the years went, this is, you know, you’re also by dollar cost averaging. And you’re just, it’s just a good idea to consider. And it’s a good general basic things to come to have a conversation on. And of course, as always, let me remind folks don’t do don’t take any action unless you’ve talked with your advisor. But these are items to consider. So make sure you’re having those conversations with your professional and bringing some of these things up. But that’s again, a good item for the checklist as well. And if you need help, well, Jude and his team are here to help you. So taxes, what about the old tax conversation, obviously, as the year is winding down, we start thinking about this more Jude, because we’re moving our way, you know, into the new year, when we start to really think about it before we get to April. So what some things to consider here. Yes,
Jude Wilson 07:26
so if you’re a do it yourselfer, or you’re you have a financial advisor that, you know, may not be looking at taxes as a holistic part of your finances, then you need to be proactive and look at your investments for a couple of opportunities. One is tax loss harvesting. And that’s a fancy word for just taking some of the losses that you may have in your portfolio that haven’t been recognized yet they’re there or something that you bought at a certain level and now is worth less, you haven’t sold it yet. But you may want to sell it to nullify some of the gains that you’ve had. And so that’s an important strategy that we’re always talking to our clients about. And one of the things I really want to kind of emphasize here is clients who have mutual funds, you have mutual funds, I have mutual funds, it is a mutual solution. For a lot of people, I like to compare it to getting on a bus, a bus is going to take you pretty much pretty close to your destination, but it’s not gonna drop you at the front door. And that’s okay, mass transit, I love it, you know, compared to getting a Lyft or Uber or limousine that’s gonna put you right at your destination. And so with the mutual fund, because it’s a mutual solution for a lot of people, they’re not looking at your, your specific situation and saying, Okay, this client is in, is in a high tax bracket, or had a better than expected year, let’s take some losses to try to balance out their taxable liability. So that’s something that you’re going to have to do as a consumer, or have a financial advisor that’s looking at your specific situation. Now, the flip side of the coin, that to follow the analogy all the way through and beat it beat a dead horse, the limousine the Uber the lift is accustomed money manager. And some of our clients have custom money managers that we’re meeting with, and we’re creating a tax budget at the beginning of the year. So we were looking at last year’s taxes and saying this year, let’s create a tax budget for how much capital gains we want to recognize in the year and as part of the customer money managers responsibility to work with us in the client to do that. So I Either way, you’d need to look at what your investments are doing and what is the potential tax liability of your investment and how that could be the benefit you or hurt you, or you’re
Marc Killian 10:11
looking to secure your financial future as we approach the end of 2023 Centaurus financial strategies is here to guide you on a path to financial clarity and confidence in today’s ever changing economic landscape. Understanding how to manage your finances effectively is more crucial than ever. That’s why we at centrist financial strategies have crafted a comprehensive guide just for you. Our 2023 End of Year financial planning checklist is your roadmap to navigating the complexities of financial planning. Whether you’re fine tuning your retirement plan, assessing your assets and debts or seeking ways to optimize your tax strategies. This checklist covers it all. But that’s not all. When you download our checklist. You’ll also receive our exclusive bonus guide on the mark three actions to consider when volatility strikes. This invaluable resource helps you stay calm and focused, even when the market is unpredictable. Learn how to rebalance your portfolio seize investment opportunities and understand the power of diversification. So why wait, take the first step towards a secure financial future visit centrist fs.com/ 2023 plan to download your FREE 2023 end of the year financial planning checklist and the bonus guide today. Charts your future and live your life with confidence with centrist financial strategies. Check this episode’s description for a link to the guide or again go to sin trust fs.com/ 2023 plan to download it for free right now. What about RMDs? On that side of things do too. We address a couple things there obviously, from the tax standpoint, right? You’re from the US I guess Yeah, right. You gotta you got to pay taxes on this money. So yeah, as the year is winding down, don’t forget to add, especially if you haven’t started these, don’t forget to ask your advisor, hey, is there anything I need to do around my RMDs
Jude Wilson 12:03
that is an area when we are bringing in new clients that we often see other advisors have missed or some of the do it yourselfers have have missed. And usually the IRS will allow you to get away with it one time, if you did not take an RMD required minimum distribution. By the way, for those of you who are wondering what to sorry to be spared for, you’ve got to take a minimum amount out of your IRA over the age of 72. Depending on your on your birthdate. If you don’t take that required minimum distribution, the IRS could tax you up to 50% of what you were supposed to take out. So like I’ve said, I’ve seen people who missed it once and write a letter to the to the IRS asked for mercy. And most of the time they granted if you’re consistent abuser, they’re not going to let you get away with that. So one strategy that we’ve used for people who really don’t need that income, they’ve got a big IRA, but they they have income from various other sources that they’re living on is a que si d, the QCD stands for qualified charitable donation. So if you can, instead of taking that RMD and putting it in your pocket, if you direct it directly to a charity, that avoids the taxable liability on that income, and very few people know about the QCD strategy. Yeah, there’s others. But I think that’s a simple one to go with. Yeah,
Marc Killian 13:27
especially if you’re charitable minded, right, we’re into the fourth quarter holidays are upon us, right? So it’s a good way to maybe satisfy some of the RMD especially if you’re in a great position where often dude, I mean, we you know, I, you and I chat about this all the time. We know advisors all across the country, and they’re always talking about how their clients are saying, Oh, I gotta take this money. The government’s making me because I’m of this age, and I don’t need it because I’ve done a great job planning or because my planners done a great job planning, right. So what do I do with it? You know, and so this is an option if you’re certainly if you’re charitable minded, so something on the end of your item to ponder for sure. All right. Let’s see, what else can we run through here? A couple other things to think about? Let’s talk about income and lifestyle just in general, right. So this is, you know, if we’re talking about some of the stuff we just covered, that’s kind of some big stuff you need to work with your professional lawn, but maybe on the income and lifestyle side of things. This is a little bit something more you could do yourself. You’re right, you know, at home, right? Because again, we’re thinking about it, especially with inflation being what it’s been as the holidays are upon us, we’re kind of feeling the pinch, right? We went out we were just talking about Thanksgiving, the wife went out and got a turkey and she’s like, God, I can’t believe the price of turkeys. Right. So maybe budgeting or just kind of you know, running through some of those the the income and lifestyle what some things to think about there for folks as the years winding down.
Jude Wilson 14:41
So this is one of my favorite topics for two sets of people. There’s a set of clients that we affectionately call Henry’s high earners, not rich yet. Okay, so these are people that that make a much better than average income, but sometimes they spend a much better than average. And, you know, if they redirected those dollars, they could really grow their net worth very quickly. But what I learned early on in my career as a rookie is everybody hates budgeting. Everybody hates, you know, well, there’s, there’s certain people, engineers and some doctors out there that love their spreadsheet, and they they don’t mind. But for the normal people, we hate budgeting. And so at the firm, what we’ve done to try to simplify this is we, we look at a client’s tax returns, and we look at their W two, and we see exactly where the money from a benefit standpoint is being spent in what’s net coming into your household. And then we look at their savings account and say, okay, you’ve got $100,000, net coming into the household, and you’re spending about $75,000, where’s the other $25,000 going? Because we don’t see it in your savings account, we don’t see it in your checking account. And that’s kind of a come to Jesus moment where they have to look at themselves and say, Holy cow, I’ve got a hole here. So we don’t tell people, Hey, you should only spend X amount on going out to eat or X amount on vacation, but we do bring it to light to them. Here’s the Delta, here’s the deficit where you’re losing money unknowingly and unnecessarily. And so for people who are not clients, I would tell them to go through a very similar process. Look at your pay stub, look at how much net is coming in, multiply that times 12 or 24, however you get paid, and then say to yourself, where’s all the money going?
Marc Killian 16:44
Because there’s only two things you can do with it, right? I mean, you’ve either spent it or you’ve saved it. And if you don’t have it, guess what? Exactly,
Jude Wilson 16:51
it was just that simple. Just that simple. And sometimes it’s so shocking to people. We call these financial termites in our at our firm, we we’ve got a whole list of financial termites, but that’s one thing. So the other group of people are people who are already in retirement. And for our clients, every time we do a review for our retirees, we asked them one simple question, how’s your income? Do you feel that you’re able to live the lifestyle that you become accustomed to based on the income that you’ve had this year? And they say yes. Or they say, No, I need a little bit more income? If they do, because we’ve built out the bucket plan. And we talked about the bucket PLAN strategy a lot, we can develop a cost of living adjustment to their income. But sometimes, believe it or not, there’s some people that tell me, dude, I put an extra $10,000 in the savings account, I don’t, I’m getting too much income. So now we’ve got a just because you’re getting paid, you’re paying taxes on income that you don’t need. So sometimes we have to just the opposite way. So you’re not paying too much in taxes. But at the end of the year, it’s a good time to kind of sit down and do that evaluation.
Marc Killian 18:03
Yeah, definitely add some good points for sure. So all these little nuances, right, there’s so many little things that kind of go on. And again, that’s why it’s a good idea, obviously, to work with a professional. But another piece to do to help out is these things that we’re talking about these giveaways we’re doing here on the podcast, three actions to consider when volatility strikes, and the end of the year checklist. You just give me a little bit about those. What’s the deal with those?
Jude Wilson 18:25
Yeah, I love both of these PDFs, because we talked about before about how important it is to balance the folio. That may give you a little bit of a better return, while the three axes to consider is going to show you the math and the science behind that. Because we’ve studied this over decades and know the strategy works. Not only can it possibly help increase your long term returns. But we’ve also shown that it can reduce the overall risk in a portfolio by rebalancing. So this is something that most people don’t think about. And I really want them to see it visually and see the math behind it. Because then you can’t you can’t dispute it. So that’s one of the pieces. And then the other piece is the end of the year checklist. We don’t have time in this podcast to talk about everything that we think clients should do. This checklist is pretty thorough, and will really help clients just go down the list and check it off. Yep, I did that. Yep, I did that. Oops, I forgot this. So I think it’ll be something that is actionable for people to look at.
Marc Killian 19:37
Yeah, I mean, and that’s exactly why we’re given an out right because we can’t run through the whole thing. Otherwise we’d have you folks here forever and you got things to do right? So we always used to bake that’s right turkeys debase and all that stuff. So we got a lot of stuff you know, in here for you folks this week. So again, if you’d like to pick up a copy of these, they’re complimentary. Just email them at info at centrist fs.com That’s info at SunTrust fs.com to get a complimentary copy of that, stop by the website as well. If you’d like to get some more tools, tips and information from the team, you can do that. Again, it’s interest fs.com as the main website for Jude and his team, of course, he’s a holistic wealth manager and centrist financial strategies, helping folks all around the country, but he’s based out of Orlando in Bradenton. So if you guys have questions, need some help, get on the calendar, have a conversation and do something, something for yourself and your your retirement future, especially as the year is winding down. And don’t forget to subscribe to the podcast. If you have not done so, consider doing so for the new year coming up. You get new episodes as well as you get to check out the past episodes. And of course, that’s always complimentary as well check out podcast for different places. And the good thing is, is you can always kind of go back and review something that really piqued your interest and then use that when sitting down with your financial professional. So reach out to Jude subscribe to the podcast plan wise retire free is the name of it. Plan wise, retire free, Judy, anything else before we go that I might have missed that you want to touch on? No,
Jude Wilson 21:01
I wow. I think this was really impactful. We got a lot of good nuggets out. So I just want to tell everybody, we’re very grateful for you spending your time with us and listening to us sharing a podcast with other people and for our clients out there. Thank you. You are our client family and we love you and we appreciate you. Absolutely
Marc Killian 21:25
Have a great holiday everybody enjoy your holiday season, dude. Now we’ll be back with brand new fresh episodes in 2024 here on playing wise retire free. So again, reach out if you got some questions need some help, you can find them online at centrist fs.com and get your copy of the end of the year checklist or three actions or both actually, three actions to consider when volatility strikes and we’ll catch you next time here on Plan wise retire free with
Walter Storholt 21:56
The preceding program is sponsored by Jude Wilson, who is solely responsible for its content. Financial Planning and advisory services are offered through prosperity Capital Advisors, PCA and SEC registered investment advisor with its principal place of business in the state of Ohio centers financial strategies in PCA are separate non affiliated entities. PCA does not provide tax or legal advice, insurance and tax services offered through centrist financial strategies are not affiliated with PCA. information received from this podcast should not be viewed as individual investment advice. Product discussions and illustrations are hypothetical in nature and will vary based on many factors including but not limited to age, health, product, insurance, carrier and product design, you should consult the insurance carrier website and policy for detailed information. For information pertaining to the registration status of PCA, please contact the firm or refer to the Investment Advisor public disclosure website
Marc Killian 22:43
WWW dot advisor info.sec.gov. For additional information about PCA including fees and services sent for our disclosure statement as set forth on Form ADV from PCA using the contact information here in please read the disclosure statement carefully before you invest or send money. Or you’re looking to secure your financial future as we approach the end of 2023 centrist financial strategies is here to guide you on a path to financial clarity and confidence. In today’s ever changing economic landscape. Understanding how to manage your finances effectively is more crucial than ever. That’s why we at centrist financial strategies have crafted a comprehensive guide just for you. Our 2023 End of Year financial planning checklist is your roadmap to navigating the complexities of financial planning. Whether you’re fine tuning your retirement plan, assessing your assets and debts or seeking ways to optimize your tax strategies. This checklist covers it all. But that’s not all. When you download our checklist. You’ll also receive our exclusive bonus guide on the mark three actions to consider when volatility strikes. This invaluable resource helps you stay calm and focused, even when the market is unpredictable. Learn how to rebalance your portfolio seize investment opportunities and understand the power of diversification. So why wait, take the first step towards a secure financial future visit centrist fs.com/ 2023 plan to download your FREE 2023 end of the year financial planning checklist and the bonus guide today. Charts your future and live your life with confidence with centrist financial strategies. Check this episode’s description for a link to the guide or again go to sin trust fs.com/ 2023 plan to download it for free right now.
