Retire With Ryan

Every year, Medicare Open Enrollment presents an important opportunity for retirees and individuals enrolled in Medicare to review, update, and make changes to their health and prescription drug coverage. If you're on Medicare or approaching retirement, understanding the enrollment period and your options is crucial to ensuring comprehensive and cost-effective health care. I'm sharing the seven essential things you need to know to make the most of this important window. Whether you're already enrolled in Medicare or want to stay ahead of your retirement planning, I explain key dates, your options for switching plans, how to review or update your prescription drug coverage, and what to do if your health or coverage needs have changed.  Tune in to learn about navigating Medicare Advantage, Medigap, and everything you should consider before December 7th to keep your health and finances on track as you plan your ideal retirement. You will want to hear this episode if you are interested in... [01:56] Seven key things to know about Medicare open enrollment. [03:04] Making changes to your Medicare supplemental coverage. [04:30] Prescription drug plan options. [05:21] How to evaluate and change Medicare Advantage plans. 07:30] Switching from a Medicare Advantage plan to a Medigap plan. [12:17] Effective dates for making Medicare Changes. What Is Medicare Open Enrollment? Medicare Open Enrollment occurs annually from October 15th to December 7th. During this time, anyone currently enrolled in Medicare has the chance to make changes to their coverage. This window allows you to switch plans, sign up for supplemental coverage, or alter your prescription drug benefits, flexibility that's vital as your health needs or financial circumstances shift. It's important to note that this period is only for those already enrolled in Medicare, not for newly eligible individuals. This annual period matters for anyone with existing Medicare coverage. If you're new to Medicare, say, your 65th birthday is coming up, your initial enrollment period is separate, and open enrollment won't apply until the following year. Retirees and older people who have already navigated their initial sign-up should take advantage of open enrollment to ensure their health plan continues to meet their needs. Your Medicare Options Medicare coverage comes in several forms: Original Medicare (Parts A & B): Provides hospital and medical insurance. Medicare Advantage: All-in-one alternatives to Original Medicare, often with additional benefits and lower out-of-pocket costs. Medigap (Medicare Supplement): Offers extra coverage to help pay healthcare costs not covered by Original Medicare. Open enrollment is your chance to change from one type to another, such as moving from a Medicare Advantage plan to a Medigap policy or vice versa. Switching plans can bring savings or better coverage, depending on your health situation, but there are specific rules, like the six-month initial enrollment for Medigap and state-specific regulations, that you must navigate. Prescription Drug Plans: Reviewing and Updating Part D Prescription needs often change, and so do the offerings of Part D drug plans. This period lets you join, drop, or switch your drug coverage. If your current plan is discontinuing a medication you rely on or raising costs, research alternatives in your area. Lack of creditable drug coverage carries penalties, making it important to have either Part D or a Medicare Advantage plan with drug benefits. Switching Medicare Advantage Plans Medicare Advantage plans differ in costs, networks, and coverage options, and these can change each year. If your doctors are no longer covered or prescription benefits shift unfavorably, open enrollment is the time to shop for a better-fitting plan. Changes due to pricing or plan termination also allow you to choose a new plan that better fits your situation for the upcoming year. Understanding Medigap Eligibility and State Rules Switching from Medicare Advantage to Medigap isn't always straightforward, especially after your initial six-month enrollment window. Some states, including Connecticut, New York, and Massachusetts, offer more flexibility, letting you change plans without penalties for pre-existing conditions. Outside of these areas and time frames, you may face higher premiums or coverage denial unless a "guaranteed issue period" applies, such as following a plan termination or a move to a different state. Timing and Next Steps Any changes you make during Medicare Open Enrollment become effective January 1st of the following year. It's important to act before the December 7th deadline, so plan ahead, review notices, research alternatives, and consult with trusted advisors if you're unsure. Keeping up annually ensures your coverage fits your evolving health needs and budget. Medicare Open Enrollment can feel overwhelming, but it's a vital tool for retirees aiming for optimal care and cost efficiency. Stay informed, review your options, and take charge of your retirement health plan this open enrollment season. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Avoid These Seven Medicare Enrollment Mistakes and Protect Your Finances, #271  Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

This episode is essential listening for anyone who's inherited an IRA, especially in light of the game-changing SECURE Act. If you've inherited a retirement account from a non-spouse since 2020, this episode is packed with details you need to know to avoid unexpected tax bills and penalties. I explain the new rules for inherited IRAs, explaining the requirements and options for non-designated, non-eligible, and eligible designated beneficiaries. Whether you're figuring out minimum distributions or seeking smart tax-planning strategies, you'll get clear guidance on how these updates affect you, plus tips to steer clear of common mistakes in 2025 and beyond. You will want to hear this episode if you are interested in... [00:00] Inherited IRAs: key details explained. [02:36] SECURE Act and rule changes. [04:18] Retirement account beneficiary guidance. [07:13] IRA inheritance withdrawal rules. [10:31] IRA distribution rules explained. [13:36] Get in touch for more inherited IRA guidance & support. Inherited IRAs After the SECURE Act: What You Need to Know Before 2020, inherited IRAs were relatively simple: most non-spouse beneficiaries could "stretch" required minimum distributions (RMDs) over their lifetime, potentially lowering annual tax bills. The SECURE Act changed that. If you inherited an IRA from someone who passed away on or after January 1, 2020, new distribution rules likely apply to you, and ignorance could cost you in penalties. The law categorizes beneficiaries into three groups, and the rules differ based on which kind you are. 1. Non-Designated Beneficiaries Non-designated beneficiaries are not people; think estates, certain trusts (non-qualifying), or charities. Naming your estate as the beneficiary might not be the best move if you want your family to get the most options. Here's why: If the original owner died before their required beginning date (generally April 1 of the year they turned 73), the account must be fully distributed within five years. If they died after that date, the estate can take distributions using the deceased owner's single life expectancy, but this is still less flexible than for individual beneficiaries. 2. Non-Eligible Designated Beneficiaries This is the category most adult children, grandchildren, and some trusts fall into. For these individuals, the rules are as follows: If the owner died before their required beginning date (age 73), you must drain the IRA within ten years, but there's no mandate on interim distributions until year 10. Be careful, though, a massive, one-year withdrawal could push you into a higher tax bracket. If the owner died after their required beginning date, Annual RMDs start the year after death using the single life expectancy table, and the account must be completely emptied by the end of the tenth year. 3. Eligible Designated Beneficiaries This privileged group gets more flexibility, including: Surviving spouses (who can treat the IRA as their own or as inherited). Minor children (of the deceased owner, but only until age 21). Disabled and chronically ill individuals. Individuals no more than ten years younger than the deceased. They're allowed to take stretch distributions based on their own life expectancy, often leading to much smaller annual withdrawals and lower taxes. Planning Opportunities and Tax Pitfalls The IRS wants its share, and waiting until year 10 to take out all the funds could mean a significant tax hit. Instead, you might consider spreading withdrawals over several years, especially if you know you'll retire before year 10, lowering your tax rate in some of those years. Beneficiaries must also remember critical deadlines. Because the IRS allowed a moratorium on required distributions from 2021 to 2024 due to pandemic-related confusion, many will need to start withdrawing in 2025. Missing a required distribution can cost you 25% of the amount you should have taken, ouch! Practical Steps for Beneficiaries Review the decedent's date of death: This will determine which rules apply. Identify what type of beneficiary you are. Plan withdrawals smartly: Don't let inertia trigger a tax bomb in your tenth year. Consult a financial advisor: The rules are complex, and the stakes are high; personalized advice can help prevent costly mistakes. Don't name your estate or a non-qualifying trust as your beneficiary if you want your heirs to have better options. Inherited IRAs under the SECURE Act require more attention than ever before. Get proactive: determine your beneficiary type, mark your calendar for required distributions, and develop a tax strategy that fits your situation. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

You might have seen those viral articles promising a mysterious multi-thousand-dollar Social Security "bonus," but are they actually legit? On the show this week, I separate fact from fiction, debunking the myths and sharing seven actionable strategies to help you get the most out of your Social Security over your lifetime.  Whether you're curious about how working longer, delaying your benefits, checking your earnings record, or understanding tax implications can impact your retirement paycheck, this episode is packed with valuable tips to help you make sure you're not leaving money on the table.  You will want to hear this episode if you are interested in... [00:00] Retirement Planning Misconceptions Explained. [03:25] Filling in or replacing "zero" or low-earning years boosts benefits. [04:26] Reasons for and against early collection. [06:48] Repay benefits within one year of starting to "reset" your claim. [08:15] Eligibility requirements for spousal benefits. [12:28] How to check your Social Security earnings. [13:00] Strategies to delay taxable distributions and reduce Social Security taxation. Debunking the Social Security "Bonus" Myth Many retirees have seen headlines promising a massive Social Security "bonus" that most people don't collect. Let's be real, this so-called "bonus" isn't some sort of secret benefit; it's a reference to the cumulative value you could gain over your lifetime by paying a little attention to your Social Security strategy and reducing your tax liability. In other words, there's no one-time check or hidden program, just savvy planning that can add up to tens of thousands more in your pocket. 1. Work Longer, Maximize 35 Years of Earnings The Social Security Administration calculates your benefit using the highest 35 years of your working life. If you retire with fewer than 35 years of work, the missing years count as zero, lowering your benefit. Even for those with a full 35-year history, additional years of higher earnings (often later in your career) can replace lower-earning years, bumping up your monthly check. Working a little longer not only increases your benefit but may also put you in a better position for retirement overall. 2. Delay Claiming Benefits  While you are eligible to start at age 62, waiting until your full retirement age (typically 66 or 67), or even delaying to age 70, can significantly increase your monthly benefit. For every year you wait past full retirement age (up to age 70), you receive an 8% credit, on top of any cost-of-living adjustments. There are some exceptions where it may make sense to claim early, such as serious health issues or unique family situations.  3. Unwind an Early Claim with Repayment If you've already claimed Social Security but then realize you made a mistake, there is a potential do-over option. If you started benefits within the past year, you can repay the benefits received (without interest) and reset your claiming strategy to earn a higher benefit later. This is a once-in-a-lifetime opportunity and includes repayment of any Medicare premiums withheld, so be sure this move fits your broader financial plan. 4. Don't Miss Out on Spousal and Survivor Benefits If you're married, you can claim a spousal benefit up to 50% of your spouse's benefit at your full retirement age. This strategy can be a huge game-changer for non-working or lower-earning spouses. When a spouse passes away, the survivor can step up to the higher of the two benefits, which is why it's important to maximize the higher earner's benefit for long-term security. 5. Check Your Social Security Earnings Statement Regularly Mistakes happen, even with Social Security's generally high record-keeping accuracy. Reviewing your annual earnings statement ensures all your income is being counted, and thus, your benefit is maximized. Errors not caught early can seriously reduce your benefit down the road. 6. Be Tax-Smart About Social Security Benefits By smartly timing IRA distributions, capital gains, and part-time work, you can potentially reduce or even eliminate the tax owed on your benefits for several years. For couples with a combined income under $32,000, none of the benefit is taxable, while at higher incomes, up to 85% can be taxed. Knowing these thresholds is key to tax-efficient retirement income planning. 7. Get Advice When Needed Social Security may be just one piece of your retirement puzzle, but it's a critical one. Consulting with a financial advisor can help you coordinate claiming strategies, minimize taxes, and make the right decisions for your unique situation. While there's no hidden "Social Security bonus" waiting to be claimed, a thoughtful approach to your Social Security strategy can result in thousands, even tens of thousands, of dollars more in your retirement years. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

The Social Security Fairness Act, which was signed into law at the start of 2025, has been in effect for about nine months since this game-changing legislation repealed both the Windfall Elimination Provision and the Government Pension Offset, restoring and increasing Social Security benefits for millions of retirees, especially teachers and public employees who worked in jobs exempt from Social Security. In this episode, I discuss exactly who qualifies for these newly restored benefits, explain how the Social Security Administration is handling the rollout, and give you a step-by-step guide on what to do if you haven't received your payment yet. I'll also walk you through critical tax changes you'll need to consider if you're now receiving this extra income, and practical strategies to avoid any nasty tax surprises at the end of the year.  You will want to hear this episode if you are interested in... [02:26] Social Security Fairness Act overview and impact. [05:57] Who is eligible for Windfall Elimination Provision (WEP) or Government Pension Offset (GPO). [07:35] Applying for your benefits. [08:16] How much Social Security becomes taxable. [11:09] Increasing withholding on pensions, IRA, 401(k), or earned income. What Is the Social Security Fairness Act? Signed into law by President Biden in January 2025, the Social Security Fairness Act has restored benefits for millions of retirees who were previously penalized due to their employment in jobs that were exempt from Social Security taxes. These roles frequently include teachers and certain municipal or state employees. For years, retirees in those positions received a reduced Social Security benefit due to provisions known as the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). Windfall Elimination Provision (WEP): Affected individuals who worked in both Social Security-covered and non-covered jobs, resulting in a reduced Social Security benefit. Government Pension Offset (GPO): Reduced the spousal or survivor Social Security benefit for those receiving a government pension from non-covered employment (like teachers in Connecticut). With the repeal of these two provisions, retirees are now eligible to receive their full Social Security benefit, as well as the entirety of their eligible spousal or survivor benefits, regardless of their pension amount. Who Is Impacted? The Act primarily benefits retirees who worked in state or municipal jobs excluded from Social Security wage contributions (think teachers, police, firefighters, or other state employees in certain states). It also helps spouses or survivors of such retirees, who, under the GPO, were denied or saw dramatic reductions in their spousal/survivor benefits. As an example, if a teacher in Connecticut was receiving a $3,000/month pension, they were previously eligible for only a fraction of their spouse's Social Security survivor benefit. Now, with the Act's passage, they can receive the full amount, eliminating a significant hardship for many families. The Social Security Administration has processed around 3.1 million payments, exceeding prior estimates, and paid out approximately $17 billion. However, some eligible recipients have yet to see increases, particularly those who never filed because they believed they wouldn't qualify. What Should You Do If You're Eligible? If you haven't received a payment adjustment, you might be missing out on thousands of dollars. File or Re-file: Eligible recipients should visit SSA.gov to update or submit a new application for benefits. Check Your Status: Even if you're not currently receiving Social Security, consult the SSA to determine your eligibility for individual, spousal, or survivor benefits, especially once you reach full retirement age (typically between 66-67). Lots of people have been automatically credited and are receiving retroactive payments, but those who never applied in the first place due to WEP and GPO restrictions must now take proactive steps. Tax Implications of Increased Social Security Benefits More income is always welcome, but it may come with new tax responsibilities. Here's what you need to know: Social Security Taxation Basics: Taxability depends on your total income: adjusted gross income (AGI), plus half of your Social Security benefit, plus tax-exempt interest. Generally, married couples with less than $32,000 combined income owe no tax on Social Security, and between $32,000 and $44,000, up to 50% of benefits may be taxable, then over $44,000, up to 85% of benefits can be taxable. For individuals, the thresholds are $25,000 and $34,000. Avoid Surprises by adjusting your tax withholding, either by filing IRS Form W-4V for Social Security, or updating withholdings on pensions or retirement accounts. You may also make quarterly estimated payments, especially if you live in a state with income tax. Social Security does not withhold state income taxes, so plan accordingly to avoid penalties and interest. With these changes, it's more important than ever to review your retirement plan and tax strategy. Speak to a qualified accountant and financial advisor to ensure you are maximizing your benefits and staying compliant with tax requirements. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Social Security  Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

It's one of the most frequently asked questions by my clients as they prepare for retirement. And while a million dollars may sound like a lot, the reality is a bit more complex. There are several key factors to consider when planning your retirement, including factoring in taxes, evaluating withdrawal strategies, and understanding the cost of living where you plan to retire. Let's break down how you can determine whether your nest egg will support your ideal retirement. You will want to hear this episode if you are interested in... [01:57] Evaluating if a million dollars is enough to retire. [02:47] Tax Considerations on Retirement Withdrawals. [05:04] Importance of Social Security as a retirement income supplement. [06:12] putting together some type of a monthly budget as far as what you are spending money on now and what you plan to spend money on in retirement. [08:37] Risk tolerance's influence on expected returns and sustainable withdrawal rates. [10:51] Risks of exceeding safe withdrawal rates (running out of money early). How Much Can You Live On? How much can you safely withdraw each year without depleting your funds too quickly? In this episode, I'm discussing a dynamic withdrawal strategy, which suggests you can withdraw 3% to 5% of your portfolio annually. Here's a practical example: 4% withdrawal from $1,000,000 = $40,000 per year. But it's crucial to remember: most retirement savings are held in pre-tax accounts such as IRAs and 401(k)s. Distributions from these accounts are taxed as ordinary income. This means the real, spendable income you receive after taxes could be significantly lower. For example, factoring in roughly 15% in combined federal and state taxes, that $40,000 could shrink to about $34,000 per year. Factoring In Social Security and Pension Income Thankfully, your retirement income isn't limited to withdrawals from your investment accounts. For most, Social Security provides a critical supplement—let's say an average benefit of around $30,000 per year. Some retirees might also have pension income, though this is becoming less common. So, your total annual income might look like: $34,000 (after-tax retirement withdrawal) + $30,000 (Social Security) = $64,000 (before factoring in pension or additional income streams) Your personal retirement number isn't "one size fits all"—it depends greatly on what you need to spend in retirement and your other income sources. Know Your Expenses Stop fixating on round numbers like "one million or two million dollars" as retirement goals. The real question is: What are your anticipated expenses in retirement? Start by creating a detailed budget of your expected housing, health, food, utilities, travel, and leisure costs. Once you know your likely annual expense, you can better estimate how much you'll need to cover from savings versus other sources. If your post-tax retirement income falls short of your living expenses, you may need to adjust your plan by saving more, reducing spending, or considering a later retirement date.  How far your savings go will also depend on your investment strategy. A well-balanced portfolio with an appropriate mix of stocks, bonds, and cash is essential. Being too conservative can hurt your portfolio's growth potential. You also need to account for inflation. By following a thoughtful, tailored approach, you can make the most of your retirement—whether your nest egg is one million dollars or not. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Find My Fiduciary  Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

Are you turning 65 soon or starting to think seriously about healthcare in retirement? This week, I discuss the complicated world of Medicare—with a focus on the seven most costly mistakes people make when enrolling.  From missing crucial deadlines and underestimating penalties, to overlooking the true costs Medicare doesn't cover and getting tripped up by income-related surcharges, I give practical advice to help you avoid expensive pitfalls and make confident choices for your health and your wallet. Whether you're working past 65, exploring Medicare Advantage and Medigap, or just want to sidestep penalties, this episode unpacks the essentials so you can enter retirement feeling prepared and protected. Let's get into the key rules, deadlines, and decisions every retiring listener needs to know! You will want to hear this episode if you are interested in... [04:17] Medicare enrollment guidelines & penalties. [09:35] Understanding Medicare coverage gaps. [11:55] Medicare enrollment and switching plans. [17:15] Medicare premiums based on income. [19:50] Avoid high medicare costs. [23:16] How you can use HSA funds. [24:56] Medicare costs and supplemental plans. 7 Medicare Mistakes that Could Cost You Making the transition to Medicare at 65 is a big step for retirees. While the program does have plenty of benefits, it also comes with a few key complexities and deadlines that can trip up the unprepared.  1. Not Enrolling on Time Despite common belief, Medicare enrollment isn't always automatic when you turn 65. You're only auto-enrolled if you've begun collecting Social Security at least four months before your 65th birthday. Otherwise, you must actively sign up to avoid lifelong late enrollment penalties—10% annually for Medicare Part B and 1% per month for Part D, the prescription drug plan. Remember, if you're not covered by qualifying employer insurance (typically from a company with 20 or more employees), you must enroll during your Initial Enrollment Period (IEP), which starts three months before and ends three months after your 65th birthday month. 2. Misunderstanding Late Enrollment Penalties Enrollment deadlines carry not just inconvenience, but long-term financial consequences. For every year you delay Part B, a 10% penalty is added to your premium—for life. For Part D, missing timely enrollment adds a 1% penalty per month delayed. Even if you don't currently take prescription drugs, failing to enroll in Part D or lacking "creditable" drug coverage will trigger this penalty. Many people only find out about these charges after it's too late, so mark your calendar and stay ahead of these key windows. 3. Not Comparing Original Medicare and Medicare Advantage Original Medicare doesn't cover everything, leaving you responsible for 20% of costs and lacking extras like dental or vision. Medicare Advantage, on the other hand, often bundles additional services and may come with lower or even zero premiums, thanks to how the government pays private insurers. However, these plans have different provider networks and coverage rules, so compare carefully based on your health needs, preferred providers, and annual costs.  4. Waiting to Enroll in a Medigap Policy Failing to evaluate supplemental Medigap coverage during your initial eligibility window could lead to denial or much higher premiums later, especially if you develop health conditions. During the first six months after enrolling in Part B, you're guaranteed acceptance into any Medigap plan regardless of health. Afterward, insurers can impose restrictions or deny coverage. States like Connecticut, New York, and Massachusetts offer more flexibility, but most don't—making early action essential. 5. Ignoring IRMAA: Higher Premiums for Higher Incomes Many retirees are surprised by IRMAA—the Income-Related Monthly Adjustment Amount—which increases Part B and D premiums if your income exceeds certain thresholds. These adjustments are based on your tax returns from two years prior. Even a minor one-time income bump (like a large IRA withdrawal) could propel you into a higher bracket, doubling your premiums. Be proactive: monitor your adjusted gross income and consider strategies like Roth conversions, careful withdrawal timing, or appealing based on life-changing events like retirement.  6. Making HSA Contributions After Enrolling in Medicare Once you sign up for Medicare Part A or B, both you and your employer must stop making contributions to a Health Savings Account (HSA) six months before enrollment. Over-contributing subjects you to a 6% excise tax for every year the excess remains. However, you can continue to use existing HSA funds for eligible medical expenses tax-free throughout retirement. 7. Underestimating Out-of-Pocket Costs Even with Medicare, you'll face deductibles, co-pays, and services not covered (like long-term care, dental, and vision). Part A hospital stays have significant deductibles per benefit period, and Part B leaves you covering 20% of outpatient expenses. Medicare Advantage and Medigap plans can help limit these expenses, but each comes with specific limits, provider restrictions, and rules. Without a supplemental plan, your maximum out-of-pocket exposure could reach $9,350 (in-network) or higher, depending on your plan. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

Paying for education is a major expense for many families, so I'm breaking down why 529 plans remain the preferred way to save for college, thanks to their tax advantages and flexible growth. I unpack updates, such as increased limits for K-12 tuition withdrawals, expanded uses for trade and vocational schools, and the new ability to roll funds into ABLE accounts for individuals with disabilities.  Plus, learn about the new Trump accounts, the option to roll over leftover 529 funds into your child's Roth IRA, and strategies to make the most of your education savings. Whether you're a parent, grandparent, or simply curious about planning for future expenses, this episode is packed with actionable insights to help you build a successful financial future for your family. You will want to hear this episode if you are interested in... [00:00] The One Big Beautiful Bill Act and its impact. [03:00] The two types of 529 plans - prepaid tuition and savings plans. [04:06] Paying for K through 12 tuition and out of the 529 plan up to $20,000 per year. [04:31] Wider Usage for Post-Secondary Expenses. [06:20] 529 plan rollovers to ABLE accounts. [08:52] Comparison between TRUMP accounts and 529 plans. [09:33] 529 to Roth IRA conversions. Maximizing the Power of 529 Plans Education expenses, whether for college or trade school, are among the largest financial commitments families face. Recent changes under the "One Big Beautiful Bill Act" have brought new flexibility and opportunities to the popular 529 savings plans, making it easier for parents, grandparents, and guardians to invest in the futures of their loved ones.  529 plans are tax-advantaged investment accounts designed to help families save for future education costs. Investment growth within the account is tax-deferred, and withdrawals are tax-free when used for qualified education expenses. This compounding, tax-sheltered growth can make a huge difference over 15 to 18 years, leading up to a child's college enrollment. There are two main types of 529 plans: Prepaid Tuition Plans: Lock in today's tuition rates at specific colleges or state institutions to avoid the impact of future tuition increases, which often rise more than 5% per year. Savings Plans: Flexibly invest contributions with the ability to use funds at a wide range of educational institutions across the country. Key Legislative Updates in the One Big Beautiful Bill Act 1. Doubling K-12 Tuition Withdrawals Before the new legislation, families could withdraw up to $10,000 annually for K-12 tuition expenses. The One Big Beautiful Bill Act increases this limit to $20,000 per year starting January 1, 2026.  2. Expanding Qualified Expenses for K-12 The act now permits withdrawals for a broader range of K-12-related expenses, not just tuition. As of July 5th of this year, 529 account owners can use funds for: Books and instructional materials Online educational content Professional tutoring Standardized testing fees (e.g., SAT, ACT) Educational therapies for children with disabilities 3. Supporting Trade and Technical Education Not every rewarding career requires a four-year degree. The legislative updates now allow 529 withdrawals for accredited post-secondary programs like HVAC certifications, cosmetology, apprenticeships, or trade schools. These must be programs recognized by the Workforce Innovation and Opportunity Act, lead to a military credential, or carry federal/state government approval. This opens the door for practical, career-focused education to be funded just as efficiently as traditional college. Other Savings Options Also introduced under the act is the new "TRUMP account," which may qualify children born between 2025 and 2028 for a $1,000 government contribution, with annual after-tax contributions up to $5,000. However, unlike a 529, a TRUMP account's assets are transferred directly to the child at age 18. Many may still prefer the flexibility and parental control of a 529, but the option to use both accounts and secure extra government funding adds another layer of planning potential. Perhaps one of the most exciting new features: If a 529 account has been open for at least 15 years, up to $35,000 can be rolled, subject to annual Roth IRA limits, into a Roth IRA in a child's name. This brilliant move allows any leftover college savings to start building long-term, tax-free retirement wealth for your child, giving them a valuable head start. For families supporting someone with a disability, the ABLE (Achieving a Better Life Experience) account remains a vital tool, now bolstered by the ability to make permanent rollovers from 529 accounts. Eligible for those whose disability began before age 46 (up from age 26 next year), ABLE accounts protect benefit eligibility while allowing more robust financial support for care, therapy, and independence. Planning ahead isn't just about numbers; it's about opening doors for the next generation. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Workforce Innovation and Opportunity Act Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

For married couples planning their retirement, understanding spousal Social Security benefits can seem like a labyrinth. This week, I'm answering a listener's question about how spouses can maximize their Social Security benefits. Join me as I break down the key rules, eligibility requirements, and strategies that can help you and your spouse make the most of your benefits over your lifetimes.  Whether you're nearing retirement or still a few years away, I can help you understand primary insurance amounts, full retirement age, and what happens if one spouse claims benefits early. If you want to ensure you and your loved one have a smart plan for Social Security, this episode offers essential insights and actionable advice. You will want to hear this episode if you are interested in... [02:33] Eligible spouses may receive at least half of their partner's full retirement benefit. [05:25] How much of a spousal benefit will you receive?  [07:42] Strategies to manage spousal benefits. [09:54] Spousal benefits are reduced by $1 for every $2 earned over the limit. [10:30] Applying for a spousal benefit. Understanding Spousal and Survivor Social Security Benefits  Spousal benefits exist to ensure that partners in a marriage—including those who spent little or no time in the workforce—can still access a stable retirement income. If you're married, you could be eligible to receive up to half of your spouse's full retirement benefit, commonly referred to as their Primary Insurance Amount (PIA). This benefit is designed for spouses who don't qualify for a significant benefit on their own due to having spent less time in the workforce, perhaps because they were caring for the home or raising a family. At a minimum, every spouse can claim at least 50% of their partner's PIA, but only if their own benefit is less than this amount. This safety net helps ensure that lower-earning spouses are not left without Social Security support in retirement. Eligibility Requirements: Who Qualifies and When? To collect a spousal benefit, several conditions must be met: The Higher-Earning Spouse Must File: You cannot receive a spousal benefit until your spouse has filed for their own Social Security retirement benefit. Minimum Age: The spouse collecting the spousal benefit must be at least 62 years old. Marriage Requirements: You must be legally married, though in some states, common law marriages are recognized. Timing Matters: To collect the full 50%, you must wait until your own full retirement age, which is generally 67 for those born after 1960. Claiming earlier results in a reduced benefit, often as low as 32.5%-37.5% of your spouse's PIA if you file at age 62. For example, in the listener scenario discussed in the episode, the wife began her benefit at 64. Because she started before her own full retirement age, she is only eligible for 37.5% of her husband's benefit—less than half. Strategies for Maximizing Spousal Benefits Determining when to claim Social Security is a nuanced decision: Higher-Earning Spouse Delays, Lower-Earning Spouse Claims Early: Often, the lower-earning spouse might claim their own benefit early, while the higher earner waits until full retirement age or even 70 to claim. This maximizes the survivor benefit for the lower earner, as a widow or widower can "step up" to the deceased spouse's higher benefit. Cost of Living Adjustments (COLA): Increases in Social Security benefits due to COLA apply both to individual and spousal benefits. Because COLA is a percentage, it may cause dollar amounts to shift, but it will not change the eligibility for claiming spousal benefits unless there is a significant gap. Survivor Benefits: If the higher earner passes away, the surviving spouse can "take over" the higher benefit. This makes it advantageous for the higher earner to delay benefits if the couple is concerned about long-term financial security. How to Apply for Spousal Benefits Applying is straightforward and can be done online at SSA.gov, by calling the Social Security office, or in person. Be prepared to provide proof of age, a marriage certificate, and possibly your spouse's work records. Maximizing Social Security as a couple comes down to knowing the rules, timing your decisions, and using strategic thinking to boost your household's retirement income. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Benefits for Spouses  Collecting Divorced Social Security Benefits Ep41 Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

The power of Health Savings Accounts (HSAs) as a tool for both managing health expenses and building your retirement savings is often overlooked. On this episode, I'm sharing the basics of HSAs, highlighting their triple tax-free advantage, and explaining why they might be one of the best ways to maximize your retirement savings, even compared to more familiar accounts like IRAs and 401(k)s. I also unpack some important upcoming changes to HSAs thanks to the One Big Beautiful Bill Act, set to take effect in 2026. These changes expand HSA eligibility, especially for those on healthcare exchange plans and direct primary care memberships. Whether you're new to HSAs or looking to fine-tune your retirement strategy, my practical tips—like how to track reimbursements, invest your HSA funds wisely, and ensure you're making the most of every retirement planning opportunity.  You will want to hear this episode if you are interested in... [00:00] HSA contributions and eligible expenses. [03:33] HSA eligibility and individual plans. [07:27] HSA vs. 401(k) savings benefits. [12:10] HSAs and tax-free retirement reimbursements. [14:57] HSA contributions and Medicare Timing. [16:44] Top HSA provider tips. What is an HSA and Who Qualifies? Health Savings Accounts (HSAs) are often overlooked as powerful retirement planning vehicles. They are tax-advantaged accounts that allow individuals with high deductible health plans (HDHPs) to save and pay for qualified medical expenses. To be eligible, you must be enrolled in a qualifying HDHP; not all plans make the cut, so check with your insurer or employer to confirm eligibility. For 2025, annual contribution limits are $4,300 for individuals and $8,550 for families, with an additional $1,000 catch-up allowed for those age 55 and over. Both you and your employer can contribute, but the total combined contribution cannot exceed these limits. Triple Tax Advantage: The Unique HSA Benefit HSAs are the only accounts that offer a triple tax advantage: Pre-tax contributions: Contributions reduce your taxable income for the year, helping you save on federal and (in most cases) state income taxes. Tax-free growth: Money in your HSA can be invested, and all interest, dividends, and capital gains are tax-free while in the account. Tax-free withdrawals: Withdrawals used for qualified medical expenses remain tax-free, even in retirement. This makes HSAs one of the most tax-efficient savings vehicles available. HSAs as a Retirement Strategy While the primary purpose of an HSA is to cover medical expenses, its value extends far beyond that, especially for forward-thinking retirement planners. Many people cover their current medical out-of-pocket expenses with regular cash flow, allowing their HSA investments to grow tax-free for years, even decades. Upon reaching age 65, you are allowed to withdraw funds for non-medical expenses without penalty (although you will owe income tax, much like a traditional IRA). For medical expenses—including Medicare Part B, D, and Medicare Advantage premiums—withdrawals remain tax-free. However, Medigap policy premiums are not eligible for tax-free reimbursement from your HSA. A strategic approach can involve tracking your unreimbursed eligible medical expenses over the years. You can reimburse yourself in retirement with HSA funds for past qualified expenses, effectively turning your HSA into a tax-free retirement "bonus." New HSA Legislation on the Horizon Looking ahead to 2026, recent legislative changes will further expand HSA eligibility and flexibility.  Expanded Access for Health Care Exchange Plans: Before 2026, only certain HDHPs on the healthcare exchange allowed HSA contributions. The One Big Beautiful Bill Act will enable individuals enrolled in any Bronze-tier plan through the health care exchange to qualify for HSA contributions, potentially making over 7 million more people eligible. Direct Primary Care Compatibility: Membership in direct primary care plans—where patients pay a monthly fee for enhanced access to primary care services—will now be compatible with HSA eligibility, subject to fee limits ($150/month for individuals, $300/month for families, indexed to inflation). Previously, participating in such plans disqualified individuals from contributing to HSAs. Common HSA Mistakes and Best Practices Investing your HSA balance (beyond a buffer for immediate health costs) can help you harness the benefits of compound growth over time. Compare fees and investment options among HSA providers to maximize long-term gains. Be mindful when approaching Medicare eligibility. HSA contributions must stop six months before you enroll in Medicare Part A, due to retroactive coverage. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  IRS List of Covered HSA Expenses Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

The future of Affordable Care Act (Obamacare) subsidies is a pressing issue for retirees and anyone shopping for health insurance on the ACA marketplace.  With the generous subsidies brought by the American Rescue Plan Act set to expire at the end of 2025, I break down exactly how these subsidies work, what changes are coming in 2026, and what that means for your wallet. We're talking eligibility thresholds, how income is calculated, why premiums might rise, and—most importantly—shares practical strategies for lowering your adjusted gross income to continue qualifying for subsidies as the rules tighten. Whether you're planning to retire before age 65 or just want to make sure you're making the most of affordable health options, this episode is packed with actionable advice to help you navigate the shifting health insurance landscape. Stay tuned to hear how you can prepare before the subsidy cliff arrives. You will want to hear this episode if you are interested in... [00:00] ARPA health subsidy set to expire. [06:48] Special enrollment eligibility criteria. [09:49] Estimate income for subsidy applications. [12:50] Retirement subsidy eligibility insights. [16:38] Managing income for post-2025 health subsidies. [19:50] Retirement planning and tax strategies. What Retirees Need to Know About Expiring Subsidies in 2026 For many Americans considering early retirement, one of the pressing concerns is the high cost of health insurance before Medicare eligibility kicks in at age 65. The Affordable Care Act (ACA), often called Obamacare, has provided critical subsidies—tax credits that reduce monthly health insurance premiums for individuals and families who earn between 100% and 400% of the federal poverty level (FPL). Thanks to these subsidies, many retirees have found coverage that's far more affordable than what existed before the ACA. These subsidies aren't static, however. Their availability, amount, and eligibility thresholds have changed over time, notably with the enhancements set by the American Rescue Plan Act (ARPA) during the pandemic. But much of that is set to change again at the end of 2025, and retirees need to understand what's at stake and how they can prepare. How ACA Subsidies Work Right Now Currently, the vast majority of people purchasing health insurance through the ACA marketplace receive premium assistance. As of 2024, 91% of the 21 million marketplace participants benefit from some kind of subsidy, according to the Centers for Medicare and Medicaid. These subsidies are calculated based on household income and size, and for now, thanks to ARPA, even those earning above the previous 400% FPL cutoff have been able to secure relief. The system works on a sliding scale: the higher your income (relative to the FPL), the lower your subsidy—and vice versa. For instance, a single retiree in most U.S. states falls under the subsidy limit if their Modified Adjusted Gross Income (MAGI) is less than $60,640 (400% of the 2024 federal poverty level). For a couple, that threshold is $84,600. The subsidies fill the gap between what the government deems an affordable percentage of your income and the cost of a benchmark "silver" marketplace plan. The Big Change: Subsidy Cliff Returning in 2026 A crucial point highlighted in episode 267 of Carolyn C-B's podcast with Ryan Morrissey: the most generous version of these subsidies, courtesy of the ARPA, will sunset at the end of 2025. We are about to return to a world where if your income exceeds 400% of the FPL by even just $1, you lose all subsidy assistance—an abrupt subsidy cliff. Previously, the ARPA smoothed this out, allowing gradual decreases rather than outright elimination at the cutoff. That made planning far simpler for retirees managing taxable withdrawals from savings or retirement accounts. Starting in 2026, the sudden loss of these subsidies at the income cliff could mean the difference between a manageable $400 monthly premium and a staggering $2,700+ for a similar plan. To add to the challenge, insurers anticipate higher premiums in 2026 as healthier enrollees fall off plans due to pricing and subsidy loss. Planning Strategies for Retirees With the looming subsidy cliff, retirees may need to rethink their approach to generating retirement income. Since eligibility is based on income, not assets, it's possible to have significant savings but low reportable income, qualifying you for subsidies. Key strategies include: Harvest Extra Income Before 2026: Consider accelerating IRA distributions, realizing capital gains, or selling assets in 2025 while subsidies remain generous. Build Up Liquid Assets: By moving assets into cash accounts before retirement, retirees can "live off" cash in years they need to keep income low, preserving subsidy eligibility. Utilize Roth and Home Equity Withdrawals: Roth IRA distributions (if held 5 years and owner is 59½ or older) don't count toward MAGI; home equity lines or reverse mortgages can also provide non-taxable funds. Make Use of Pre-tax Contributions: While still working, increase contributions to 401(k)s, IRAs, and HSAs—these lower MAGI and can be a tool for subsidy planning. Congress may choose to extend or reform these subsidies again, but as of now, retirees should assume the cliff is returning. If you plan to retire—and especially if you'll rely on individual ACA coverage before age 65—be proactive. Monitor federal updates, calculate your projected MAGI, and consult a knowledgeable financial advisor for personalized guidance. Open enrollment begins November 1st each year—make sure to check your state's marketplace for updated premiums and subsidy parameters for 2026. Planning now can safeguard your health and your finances through a rapidly changing insurance landscape. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  The Affordable Care Act (ACA) American Rescue Plan Act (ARPA) Centers for Medicare and Medicaid Services Access Health CT  Health Insurance Marketplace  Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

The One Big Beautiful Bill Act affects charitable contributions for retirees and individuals considering their tax strategies. I'm walking you through three major changes: the restoration of the charitable cash deduction for non-itemizers, new limitations on how much can be deducted for larger contributions, and a cap on itemized deductions for high earners. Whether you give to charity every year, are planning a large gift, or just want to maximize your tax benefits, I'm sharing practical tips about when and how to make your contributions in light of these updates. You will want to hear this episode if you are interested in... [00:00] More about increased standard deductions due to the SALT cap. [06:09] New charitable donation tax deduction limits starting in 2026. [10:20] The One Big Beautiful Bill Act limits itemized deductions in the highest tax bracket. [11:29] Front-load large charitable contributions this year for better tax deductions before a cap starts in 2026. How the One Big Beautiful Bill Act is Changing Charitable Giving and Deductions There are three pivotal ways the new One Big Beautiful Bill Act (OBBBA) is altering charitable contributions. Whether you're a casual donor or serious philanthropist, these changes will affect your strategy starting in the next tax year. Here's what you need to know: 1. Restoration: Above-the-Line Charitable Deductions for Non-Itemizers For years, most taxpayers lost the ability to deduct their charitable contributions unless they itemized deductions—a rare scenario since the 2017 tax act doubled the standard deduction. Previously, a temporary provision under the CARES Act allowed a small above-the-line charitable deduction for non-itemizers. However, that expired in 2021. Thanks to section 70424 of the OBBBA, this above-the-line deduction is back, and it's here to stay—starting in 2026. The new rule permits single filers to deduct up to $1,000 and joint filers up to $2,000 in cash contributions, regardless of whether they itemize. There are, however, clear conditions: Only cash gifts qualify: No clothing drop-offs or appreciated securities—just cash, checks, or debit card donations count. Certain charities excluded: Gifts to supporting organizations ("509A3" charities) or donor-advised funds won't count toward this deduction. 2. New Limitations for Itemized Deductions and Carryforwards Historically, taxpayers who itemize could deduct up to 60% of their adjusted gross income (AGI) in cash gifts to public charities, and up to 30% or 20% for gifts of securities or for donations to private charities. The OBBBA introduces a new wrinkle: starting in 2026, there's an additional cap—regardless of what percentage of your AGI you donate, your deduction will be reduced by half a percent (0.5%) of your AGI. Here's how it works: Apply the usual AGI percentage limits (60%, 50%, 30%, or 20%) per current IRS rules. Subtract half a percent of your AGI from your allowable deduction. For example, if your AGI is $60,000 and you donate $50,000 in cash, ordinary limits allow a $36,000 deduction. With the new rule, you must subtract $300 (0.5% of $60,000), leaving $35,700 as your deductible amount for the year. If your donation exceeds the limit, you can still carry forward the extra for five years, but the carry-forward will also be subject to the new cap in future years. 3. Caps on Itemized Deductions for Top Earners For those at the pinnacle of the income scale, in the highest (soon to be 37%) tax bracket, the OBBBA imposes an extra limitation. Starting in 2026, you'll see a 2% reduction in the tax benefit of your itemized deductions. That means a $10,000 gift, which may have saved you $3,700 in taxes under the old rules, might now only save $3,500. If you're planning a substantial charitable contribution and expect to be in the top tax bracket, aim to make your gift in 2025 to maximize tax savings before the cap bites.  Whether you itemize or not, these new caps and restored deductions mean you probably need to take a second look at your charitable plans. Smart timing—waiting until 2026 for the non-itemizer deduction, and acting before then to maximize deductions for itemizers—can make a significant difference for your taxes and your favorite causes. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

The brand-new "Trump account" is a tax-deferred savings option for American children created by the One Big Beautiful Bill Act. I break down who's eligible for up to $1,000 in free government contributions, how these accounts work, and how they stack up against other popular savings vehicles like 529 plans, IRAs, custodial accounts, and regular brokerage accounts. If you're a parent or grandparent thinking about the best way to jumpstart your child's financial future, you'll want to tune in for my honest comparison of the Trump account's pros, cons, and quirks, plus tips on making the most of these new opportunities. You will want to hear this episode if you are interested in... [00:00] Trump accounts for children, including eligibility and benefits, compared to other savings options. [04:52] Invest in low-cost US index funds for a child's account. [08:41] 529 accounts offer conservative investment options and potential benefits for education savings. [11:59] Consider a regular brokerage account instead of a Trump account, especially if it's not for college. What Parents Need to Know About the New Trump Account Saving for your child's future can be complicated, and with the introduction of the new "Trump account" via the One Big Beautiful Bill Act, parents have another option to consider. In a recent episode of the Retire with Ryan podcast, host Ryan Morrissey breaks down the ins and outs of this novel account.  What is the Trump Account? The Trump account, established by the One Big Beautiful Bill Act, is a new type of tax-deferred investment account specifically designed for American children. It bears similarities to familiar accounts like IRAs and 529s in that all investments inside the Trump account grow tax-deferred, letting parents and children potentially maximize compounding returns.  Eligible children, those born between January 1st, 2025, and December 31st, 2028, are entitled to a $1,000 government contribution just for opening the account, regardless of parental income. That's free money that, when invested early, could grow substantially over time. How Does the Trump Account Work? Parents (or guardians) can contribute up to $5,000 per child per year (indexed for inflation starting 2027) until the child turns 18, and employers can contribute up to $2,500 annually, also not counted as taxable income for the child. The account must be opened at investment firms, which are required to limit investment options to low-cost index funds (with expense ratios under 0.10%), such as S&P 500, total stock market, or similar broad-market funds. Once the child turns 18, they gain full access to all the assets in the account. Investments in the account benefit from tax-deferred growth, and withdrawals are taxed at favorable capital gains rates (15% or 20%) rather than ordinary income rates. How Do Trump Accounts Compare to Other Savings Options? Traditional & Roth IRAs: IRAs, including Roth IRAs, require earned income to contribute, posing a barrier for most children. While Roth IRAs trump Trump accounts for long-term tax benefits (withdrawals are tax-free), children generally can't access this unless they have income from work. Also, traditional IRAs add tax deductions but are taxed as ordinary income on withdrawal, compared to the Trump account's capital gains treatment. 529 College Savings Plans: 529s are tailored for college expenses, offering tax-free withdrawals for qualified education costs and sometimes state tax deductions. Plus, investment options can become more conservative as your child nears college age, something currently unavailable in Trump accounts, which are stock-only (at least for now). If used for non-educational purposes, 529s face ordinary income tax and penalties, whereas Trump accounts are taxed at capital gains rates for any withdrawal purpose. Brokerage & Custodial Accounts (UGMA/UTMA): A plain taxable brokerage in the parents' name offers flexibility, letting parents control access and investment options, paying minimal taxes on dividends each year. Custodial accounts shift tax liability to the child but must legally transfer to the child between ages 18 and 25, depending on state laws. Notably, assets in a child's name weigh more heavily against them on financial aid forms than if held by the parent. Who Should Consider Opening a Trump Account? If your child will be born between 2025 and 2028, opening a Trump account is almost a no-brainer to snag the free $1,000. But for ongoing contributions, think about your goals: Saving for college? Stick to a 529 plan for tax-free education withdrawals and more investment flexibility. Want to help your child start life with a nest egg for any purpose? Trump accounts work, but remember your child gets full control at 18. Prefer more flexibility or control over when and how your child accesses the funds? Explore regular or custodial brokerage accounts. The Trump account is an interesting addition to the range of savings vehicles for children, especially thanks to the initial government contribution and low-cost investment options. Still, its quirks, like the child's access at 18 and limited investment choices, mean it won't be a perfect fit for every family. Analyze your family's needs, long-term goals, and how much control you wish to maintain before making your move. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

The One Big Beautiful Bill Act, signed into law on July 4th, brings about several important tax changes. I'm discussing what these updates mean, especially for retirees, and sharing practical advice on how to take advantage of new deductions and avoid unexpected tax hits.  From permanent adjustments to tax brackets and an increased standard deduction, to special benefits for those aged 65 and older, I cover everything you need to know to optimize your retirement strategy. Whether you're curious about Social Security taxation, itemized deductions in high-tax states, or planning smart Roth conversions, this episode is packed with insights to help you make informed financial decisions for your golden years. You will want to hear this episode if you are interested in... [00:00] An overview of the One Big Beautiful Bill Act (OBBBA). [06:13] Roth conversion tax implications. [07:29] Additional deductions for those over 65 increase total deductions. [11:35] TCJA and SALT deduction changes. [13:43] Strategies to lower taxable income for retirees. Key Tax Changes Every Retiree Needs to Know About the One Big Beautiful Bill Act One of the most impactful provisions of the OBBBA is making existing federal income tax brackets permanent. The 2017 TCJA tax brackets —10%, 12%, 22%, 24%, 32%, 35%, and 37% —had been set to expire after 2025, which would have led to higher rates. The new act not only locks these rates in place but also indexes the brackets for inflation. While there are minor changes in the income thresholds at the lower brackets, the net result is stability for taxpayers, and retirees can now plan with confidence, knowing their marginal tax rates aren't set for an imminent hike. Higher Standard Deductions Standard deductions also see positive changes, rising to $15,750 for individuals and $31,500 for married couples filing jointly. Previously, these figures were $15,000 and $30,000, respectively. With higher deductions, more retirees may find it beneficial to take the standard deduction rather than itemizing, saving time and potentially reducing taxable income. Extra Deductions for Retirees 65+ Perhaps the most significant impact for retirees: From 2025 through 2028, filers aged 65 and up can claim an additional $6,000 deduction per person. For couples where both spouses are over 65, that's a $12,000 boost, on top of the already existing extra deduction for seniors ($2,000 for individuals, $3,200 for couples). So, if both spouses are over 65 and income is below the required threshold, the combined standard deduction could reach $46,700. There is a catch, though: this extra deduction phases out as income rises, disappearing entirely for individuals making $175,000 or more and couples earning $225,000 or more in modified adjusted gross income (MAGI). The deduction is reduced by 6% for every dollar over $75,000 (for individuals) or $150,000 (for couples). For example, if a couple's MAGI is $200,000, they'd lose $3,000 of the $6,000 deduction per spouse. Timing IRA distributions or Roth conversions helps you stay under these thresholds and maximize deductions. Social Security Taxation Although there was political talk about ending Social Security taxation, the OBBBA preserves the old rules. How much of your Social Security benefit is taxable depends on your combined income, still calculated as adjusted gross income plus 50% of your Social Security benefit. The deduction enhancements may help lower your taxable income, keeping more Social Security benefits untaxed, but there are no direct changes here. Being mindful of when and how you draw taxable income can keep more of your Social Security out of the IRS's reach. Itemized Deductions and SALT Cap Changes For high-tax state residents and those with larger itemized deductions, another headline is the increase in the state and local tax (SALT) deduction cap. Temporarily, from now through 2029, the cap rises from $10,000 to as much as $40,000 (with phase-outs for high earners, those over $500,000 in MAGI lose this benefit, and it disappears after $600,000). This can provide significant relief for homeowners or retirees in states with high property or state income taxes. The mortgage interest deduction rules remain unchanged, and when combined with the higher SALT cap, could make itemizing more attractive for some. The One Big Beautiful Bill Act creates opportunities and considerations for retirees. Take the time to review your financial plan, explore new deduction limits, and coordinate with tax and financial professionals. Thoughtful adjustment now can lead to years of improved after-tax retirement income.  Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

This week on the show, we're discussing the specifics of Required Minimum Distributions (RMDs) as we head into the second half of 2025. Whether you're approaching your first year of RMDs or have been taking them for a while, I break down everything you need to know, from when you need to start taking distributions based on your birth year, to how RMDs are calculated, which accounts are affected, and the potential tax consequences for missing a withdrawal. I'm also sharing eight practical strategies you can use to lower your future RMDs, including asset diversification, Roth conversions, tax-efficient income planning, optimizing Social Security timing, and even using charitable contributions to your advantage. With real-world examples and actionable tips, this episode is packed with valuable insights for anyone looking to navigate their retirement withdrawals as tax-efficiently as possible.  You will want to hear this episode if you are interested in... [02:48] Calculating your Required Minimum Distribution. [05:02] IRA distribution factors & penalties. [10:40] Retirement tax strategy tips. [13:35] IRA conversion tax planning. [15:37] Optimizing social security timing. [18:48] Tax-efficient investment account strategy. Smart Strategies to Manage Required Minimum Distributions (RMDs)  New rules over the past few years have pushed back when retirees must start taking RMDs. As of today: If you were born in 1959 or earlier, your RMDs begin at age 73. If you were born in 1960 or later, the threshold moves to age 75. RMDs apply to traditional IRAs, rollover IRAs, SEP IRAs, SIMPLE IRAs, and most employer-sponsored plans, including 401(k)s and 403(b)s. Importantly, Roth IRAs are not subject to these mandatory withdrawals during the owner's lifetime, providing an attractive planning opportunity. How RMDs Are Calculated Your annual RMD is determined by dividing the prior year's December 31 retirement account balance by a life expectancy factor from IRS tables. Most people use the IRS Uniform Lifetime Table. If your spouse is more than 10 years younger, you get a slightly lower withdrawal requirement by using the Joint Life Expectancy Table. For example, if you are 73 with a $500,000 IRA, and the IRS factor is 26.5, your RMD would be $18,868 for that year. If you miss your RMD, penalties can be steep, 25% of the amount not withdrawn, though if corrected within two years, the penalty drops to 10%. RMDs are generally taxed as ordinary income. If your IRA contains after-tax contributions, those aren't taxed again, but careful tracking is essential. The key is smart, proactive planning. RMDs increase your total taxable income, which can impact not just your IRS bill, but also Medicare premiums (thanks to the "IRMAA" surcharge) and eligibility for certain state tax breaks. Eight Strategies to Lower RMD Impact Here are several tactics to help retirees minimize RMDs' sting and keep more of their wealth working for them: Diversify Account Types Early Don't keep all retirement savings in pre-tax accounts. Consider a mix of pre-tax, Roth, and taxable brokerage accounts so you have flexibility in retirement to optimize withdrawals for tax purposes. Build an Optimized Retirement Income Plan Work with a financial advisor or CPA to design an intentional strategy for sourcing retirement income. With careful planning, you can potentially lower how much tax you'll owe and avoid unwelcome surprises. Do Roth Conversions When Taxes Are Low If you retire before collecting Social Security (and RMDs), you might have years of low taxable income, prime time to convert part of your traditional IRA to a Roth IRA at a low tax rate. Once in the Roth, future qualified withdrawals are tax-free. Delay Social Security for Strategic Reasons Delaying Social Security not only increases your monthly benefit but also gives you more low-income years for Roth conversions, thus reducing future RMDs. Consider Working Longer If you continue working past RMD age and participate in your employer's retirement plan, you may be able to delay RMDs from that plan until you retire (as long as you don't own more than 5% of the company). Aggregate and Simplify Accounts Roll over old 401(k) accounts into a single IRA if eligible. It's easier to track, calculate, and satisfy RMDs, reducing the risk of costly missteps. Optimize Asset Location Hold faster-growing investments (like stocks) in taxable accounts and slower-growing ones (like bonds) in IRAs. This helps slow the growth of your RMD-producing accounts, keeping future required withdrawals smaller. Use Qualified Charitable Distributions (QCDs) Once you're RMD-eligible, you can send up to $100,000 per year directly from your IRA to charity. It will count toward your RMD but won't be taxed, potentially a win-win for you and your favorite causes. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Retirement topics - Required minimum distributions (RMDs) | Internal Revenue Service   Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

With the recent passage of the Inflation Reduction Act, also known as the Big Beautiful Bill, significant changes are coming to both solar panel and electric vehicle tax credits.  I break down what these changes mean, how they can affect your savings, and what steps you might want to take before these credits disappear. From figuring out if solar panels make sense for your home to understanding how electric vehicle credits work (and when they're expiring), this episode is packed with actionable insights and tips, especially for those planning for retirement or looking to cut down on monthly expenses. You will want to hear this episode if you are interested in... [01:31] Residential solar panels are popular for reducing electric bills, offering significant savings, especially for retirees. [05:23] Solar tax credits are expiring soon. [09:07] Solar investments offset electric costs and protect against future rate hikes, beneficial long term. [11:28] Costs and break-even of electric cars. [13:08] Act now if you want to take advantage of solar tax credits. The Solar Panel Tax Credit is a Fading Opportunity One of the biggest draws for homeowners considering solar panels has been the significant federal tax credit, currently set at 30% of the total installation cost. This credit has made solar an appealing investment for many, offering a direct dollar-for-dollar reduction in the taxes owed. In high-cost electricity states like Connecticut, this can mean hundreds of dollars in monthly savings on your utility bill. However, the Big Beautiful Bill brings an unfortunate change: the solar tax credit is set to disappear at the end of this year. That means if you've been thinking about going solar, now is the time to act. If you don't install solar panels before the deadline could add years to your payback period, undermining the investment's attractiveness and putting it out of reach for many. Energy Savings of Battery Storage and EVs While solar panels are great for energy savings, adding a battery storage system further enhances their benefits. A battery can store excess solar power for use during peak times or outages, which is particularly helpful for retirees planning to stay in their homes for decades and looking to insulate themselves from rising electricity rates. Electric vehicles (EVs) also offer savings for households with high transportation costs. The federal EV tax credit, worth up to $7,500 on new cars and up to $4,000 for used EVs, has also been a strong motivator for those considering a switch from gas-powered vehicles. The Big Beautiful Bill also changes the EV tax credit, which will disappear even sooner than the solar incentive. Although there are several important limitations: only vehicles assembled in North America qualify, and there's a cap on purchase price ($55,000 for sedans, $80,000 for SUVs). Income limitations apply as well; single filers must earn less than $150,000 ($300,000 for married couples) to claim the new vehicle credit. The used EV credit comes with lower income caps ($75,000 for singles, $150,000 for couples) and is worth up to $4,000.  Should You Act Now?  Before making any big investment, think about the following: Timing: Both solar and EV credits will soon vanish. If you want the tax break, don't wait. Financial Health: The best return comes from paying cash, not financing or tapping retirement accounts. Long-term Plans: Solar and EV investments make the most sense if you plan to stay in your home and keep your vehicle for years to come. Manufacturers may eventually lower prices as credits disappear, but there are no guarantees. With energy incentives set to change dramatically, the window to maximize savings is closing fast. For homeowners and future retirees, the time to act is now, whether that means installing solar, purchasing an EV, or both. Consult with a financial advisor to consider how these decisions fit into your overall retirement and financial readiness strategy. The Treasury Department's official list of eligible vehicles shows that the cars, trucks, minivans, and SUVs listed below qualify for a full $7,500 tax credit if placed in service between January 1 and September 30 of 2025.   In some cases, only certain trim levels or model years qualify. More vehicles may be added to or removed from this list as manufacturers continue to submit information on whether their vehicles are eligible. Acura ZDX EV (2024-2025 model years; MSRP $80,000 or below) Cadillac Lyriq (2024-2025 model years; MSRP $80,000 or below) Cadillac Optiq (2025 model year; MSRP $80,000 or below) Cadillac Vistiq (2026 model year; MSRP $80,000 or below) Chevrolet Blazer EV (2024-2026 model years; MSRP $80,000 or below) Chevrolet Equinox EV (2024-2026 model years; MSRP $80,000 or below) Chevrolet Silverado EV (2025-2026 model years; MSRP $80,000 or below) Chrysler Pacifica Hybrid PHEV (2024-2025 model years; MSRP $80,000 or below) Ford F-150 Lightning (2024-2025 model years for Flash trim, 2023-2025 model years for Lariat and XLT trims; MSRP $80,000 or below) Genesis Electrified GV70 (2026 model year; MSRP $80,000 or below) Honda Prologue (2024-2025 model years; MSRP $80,000 or below) Hyundai Ioniq 5 (2025 model year; MSRP $80,000 or below) Hyundai Ioniq 9 (2026 model year; MSRP $80,000 or below) Jeep Wagoneer S (2025 model year; MSRP $80,000 or below) Kia EV6 (2026 model year; MSRP $80,000 or below) Kia EV9 (2026 model year; MSRP $80,000 or below) Tesla Cybertruck (2025 model year for Dual Motor, Long Range, and Single Motor trims; MSRP $80,000 or below) Tesla Model 3 (2025 model year for Long Range AWD, Long Range RWD, and Performance trims; MSRP $55,000 or below) Tesla Model X (2025 model year for AWD trim; MSRP $80,000 or below) Tesla Model Y (2025-2026 model years for Long Range AWD and Long Range RWD trims; 2025 model year for Performance trims; MSRP $80,000 or below) Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

This week, I'm addressing a listener's question: Should you collect Social Security at age 62 and invest the money, or wait until your full retirement age, or even age 70, for a bigger benefit? I break down the math and the risks, weighing the advantages of guaranteed annual increases and cost-of-living adjustments against the potential (and pitfalls) of stock market returns.  I also explain key rules, such as the earnings limit for early filers, tax implications, and who might benefit from collecting early. Whether you're eager to take Social Security as soon as you can or are considering holding out for a larger payment, listen in for the practical insights you need to make a smart decision for your financial future. You will want to hear this episode if you are interested in... [03:27] Earnings limits on collecting your Social Security benefits. [05:29] Where to invest to potentially achieve more than 6% return. [07:37] Consider delaying Social Security benefits, but weigh the risk of investing against guaranteed returns. [12:39] Collect Social Security early to invest if you don't need it for living expenses and want to leave a larger inheritance. [13:42] Wait to collect Social Security until full retirement age or 70, especially if dependent on it for income or if you're the higher-earning spouse, to maximize benefits. Social Security's Built-In Return for Waiting First, it's essential to understand how Social Security rewards patience for those born in 1960 or later; claiming at 62 results in a significant reduction, down to just 70% of your full retirement benefit. Each year you wait between 62 and your full retirement age (67 for most), your benefit grows by about 6% per year. From 67 to 70, that growth jumps to 8% per year. This increase is essentially a "risk-free" return, as it's guaranteed by the government, not subject to market swings.  The Pitfalls of Early Claiming and Investing It's not uncommon to hear the argument that you could claim benefits early, invest the money (usually in the stock market), and potentially earn more over time. But this approach is riskier than you might realize. Market Volatility: Historically, a diversified stock market fund (like a total market index fund) has surpassed 6% annual returns over long periods, but not always. Roughly 10% of five-year periods since 1926 have lost money. That means there's a real chance you'll underperform Social Security's consistent increase, or even lose principal. Taxes: Investment returns, especially dividends, are taxable, which further erodes your effective return. Social Security also may become partially taxable depending on your income, especially if you claim while still working. Earnings Limits: If you're working between 62 and your full retirement age, you face earnings limits. For example, in 2023, you can only earn $23,400 before your benefit is reduced, making early claiming unattractive for those who don't plan to retire immediately. The Power of Cost-of-Living Adjustments (COLAs) Over the last ten years, annual cost-of-living adjustments (COLAs) have averaged 2.6% per year. COLAs are applied to your current benefit, so the longer you wait and the higher your starting base, the more you benefit from these increases. Over the decades, this compounding effect can create a significant gap in monthly income between early and later claimers. That means, to truly keep up with waiting, you'd need not just to match the 6-8% annual increases but also beat COLAs, meaning your investments would need to return nearly 9% per year, consistently, and after taxes. Who Might Consider Claiming Early? While waiting typically yields the best results for most retirees, there are exceptions. Early claiming might make sense if: You have significant wealth and don't need Social Security to live (your goal is to leave a bequest for heirs). You have health issues and a below-average life expectancy. You're single and want to maximize your estate since Social Security benefits don't pass to non-spouses. However, for the majority, especially married people or those relying on Social Security as a main income source, waiting yields more lifetime income and a more robust safety net for both spouses. Timing your Social Security claim isn't about grabbing the first check you can; it's about weighing guaranteed growth against market risk, tax implications, earnings limits, and your own longevity and needs.  Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  State Street's Total Stock Market Index Fund Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

I'm exploring a common dilemma for anyone coming into a lump sum of money, whether from an inheritance, the sale of a business, or another windfall: Should you invest in a traditional brokerage account or opt for an annuity? On this week's episode, I discuss the key differences between annuities and brokerage accounts, highlighting the five major pitfalls of annuities that are often overlooked. You'll learn why transparency, flexibility, and tax efficiency make brokerage accounts a better fit for many investors, especially those seeking to beat inflation and maintain control of their funds. You will want to hear this episode if you are interested in... [06:12] Annuities have capped returns and may not keep up with inflation, making brokerage accounts a better investment for retirees. [07:59] Fixed annuities vs. inflation risks. [11:21] Brokerage accounts offer easy, penalty-free liquidity for investment withdrawal. [14:56] Brokerage accounts offer tax advantages, such as zero percent tax on long-term investments and flexibility to access funds at any age. [19:55] Traditional brokerage accounts offer transparency, ease of understanding, and no hidden fees, providing clear valuations and peace of mind. [20:54] Potential conflicts of interest associated with high commissions given to advisors who sell annuities. Understanding the Five Key Advantages of Brokerage Accounts for Lump Sum Investors Inflation Protection A primary concern for retirees is ensuring their income grows at least as fast as inflation. Fixed annuities, which guarantee a steady interest rate, sound appealing in their promise of stability, but these tend to pay rates (typically 4-6% as of now) that may barely keep pace with rising costs. If inflation spikes, the real value of your money could erode. Contrast this with long-term investing via a brokerage account. If you were to invest in a broad index fund tracking, say, the S&P 500, you'd historically average about a 10% annual return since 1957. Even accounting for average inflation (let's say 3%), you're left with a meaningful net gain. Over decades, this growth can make a significant difference, allowing your income and nest egg to grow, not just hold steady. Easy Access to Your Money Life is unpredictable. You might need to access your savings for a sudden expense, a home repair, a medical event, or a business opportunity. With annuities, most contracts enforce a "surrender period" during which you'll pay penalties (sometimes starting at 7% and declining over many years) for early withdrawals above a limited free amount (typically 10% per year). Paperwork and delays are another downside. Brokerage accounts, on the other hand, offer quick and penalty-free access. Whether you need all or just part of your funds, they're typically available within a couple of business days. You'll pay taxes on any gains, sure, but you'll sidestep surrender charges and bureaucratic hurdles.  Potentially Lower Taxes With Brokerage Accounts Tax treatment is often overlooked but can have a big impact on your bottom line. Annuitized payouts and withdrawals from annuities are taxed at ordinary income rates, with gains coming out first (LIFO: last in, first out). That can mean higher taxes for many, especially if you're in a modest or high tax bracket. With a brokerage account, long-term investment gains are generally taxed at lower capital gains rates (15% for most, and sometimes 0% for those in the lower brackets). Plus, if you inherit a brokerage account, most investments receive a "step up" in basis, the new tax cost becomes the value at the decedent's death, potentially eliminating decades of capital gains tax if sold immediately. Simplicity and Transparency Annuities come with layers of complexity, including various types (fixed, indexed, and variable), confusing rider add-ons, differing fees, and ever-changing product features. Even professionals can struggle to keep up! Brokerage accounts, by contrast, are simple and transparent. You get a clear statement showing exactly what you own, its value, and the associated fees, which are commonly lower than those inside annuity products. No hidden surrender charges or high ongoing costs. Avoiding Aggressive Sales Tactics and Conflicts of Interest Annuities are lucrative for the agents who sell them, with commissions sometimes soaring to 7%. This can create an inherent conflict of interest, particularly for seniors who might feel pressured into buying. Choosing a low-fee brokerage account, especially with the guidance of a fiduciary, fee-only financial advisor, can help you avoid these conflicts. You retain control, minimize costs, and benefit from unbiased advice. Annuities do have a place for certain ultra-conservative investors who value guarantees above all else. However, for most people, especially those seeking growth, flexibility, and transparency, a brokerage account is often the safer and smarter long-term choice. If you're unsure about your unique situation, consider consulting a fee-only advisor who will put your interests first and steer clear of high-commission sales pitches. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

From the truths about making large purchases in retirement to whether you really need to pay off your mortgage before you stop working, I'm sharing years of financial expertise to challenge a few retirement myths so you can make balanced, informed decisions. We're talking strategies for charitable giving, clearing up misconceptions about reverse mortgages, and explaining why inflation may be your biggest risk in retirement.  If you're looking for practical advice on enjoying your savings while still planning for the long run, or if you want to protect yourself from financial scams and fraud, this episode is full of actionable tips to build your financial confidence for the years ahead. You will want to hear this episode if you are interested in... [02:02] Leaving money to charity after death reduces estate value for taxes, but offers no immediate tax deduction. [04:17] Qualified charitable distributions and large donations can reduce taxable income, but are only deductible if you itemize. [08:11] Don't rush to pay low-interest mortgages; invest instead, as returns can potentially exceed mortgage interest rates. [13:03] Balance stocks with bonds and cash to manage risk and volatility. [10:10] Reverse mortgages can be a great idea in certain circumstances. Navigating the Maze of Retirement Myths Retirement often brings a sense of relief; finally, you get to enjoy the fruits of your labor! However, it's also a period rife with uncertainty, especially when so much advice and information clash or seem outdated. In this episode, I'm tackling six of the most persistent myths retirees face.  1. Myth: Leaving Money to Charity Is Best Done After Death Many retirees assume that bequeathing assets to a charity upon passing is the most virtuous and tax-efficient way to give back. While this is always an option, leaving money to charity at death doesn't net you a tax deduction; it simply reduces the size of your taxable estate. For the vast majority, it's more impactful to consider gifting while alive. There are several ways to make charitable giving work for you, including: Qualified Charitable Distributions (QCDs): Donate part or all of your required minimum distribution directly from your IRA, reducing your taxable income. Cash Donations: If you itemize deductions, you can deduct cash gifts, potentially even enough to tip you into itemizing territory if the gift is large. Gifting Appreciated Assets: Donating highly appreciated stocks or real estate can minimize capital gains and offer you an income stream. 2. Myth: Large Purchases Are Off-Limits in Retirement Worried that buying a boat or funding a dream trip will doom your financial future? It's a myth that large expenditures are always ill-advised. With a solid withdrawal strategy, say, 5% of a $2 million portfolio, making a one-time, reasonable purchase might slightly reduce your yearly income, but if balanced against market growth and overall planning, it's rarely catastrophic. Thoughtful, planned spending helps you enjoy retirement, so don't deprive yourself unnecessarily! 3. Myth: The Less You Spend, the Better Many retirees become excessively frugal, reluctant to draw down the savings they worked so hard to accumulate. But can't take your money with you. While it's wise to have a budget and withdraw at a sustainable rate, being too conservative may rob you of life's joys, like travel, hobbies, or supporting family, while you're healthy enough to enjoy them. The key is balance: know your withdrawal rate and revisit your plan regularly. 4. Myth: You Must Pay Off Your Mortgage Before Retiring It's comforting to be debt-free, but urgently paying off a low-interest mortgage could backfire. If your mortgage rate is 5% or lower and your investments are earning more, you could be better off keeping the mortgage and leaving your assets to grow. Plus, withdrawing large chunks from retirement accounts to pay down a mortgage could trigger higher taxes or Medicare premiums and leave you with less liquidity. Carrying a modest mortgage into retirement is not a financial failure; it may be a savvy move. 5. Myth: Reverse Mortgages Should Be Avoided Reverse mortgages have a bad rap, often viewed as predatory or risky. While there were issues in the past, today's products are much more regulated. If you're 62 or older, a reverse mortgage can provide tax-free cash, letting you access home equity without moving. It's especially valuable if much of your net worth is tied up in your home, or unexpected expenses crop up. Investigate carefully, but don't dismiss this option out of hand. 6. Myth: A Market Crash Is the Greatest Retirement Risk Market volatility grabs headlines, but inflation and the risk of outliving your money are bigger threats. The right asset allocation, mixing stocks for growth with bonds and cash for stability, is essential. Yet, don't forget about inflation: stocks have historically been the best hedge. Also, financial scams are a growing risk; safeguard your accounts with strong passwords and authentication. By understanding the realities behind these common misconceptions, you can build a strategy that sustains not just your finances but your lifestyle and peace of mind.  Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Charles Schwab Understanding Reverse Mortgages: Unlocking Home Equity for Retirement Income with Mitch Cooper, #242  Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

Building on last week's discussion about why rolling over your old 401(k) into an IRA could be a smart move, this episode flips the script. It explores seven compelling reasons you might want to leave your 401(k) with your previous employer instead. I break down factors like fees, company stock advantages, penalty-free withdrawals, legal protections, and unique investment options that could all influence your decision.  If you're approaching retirement or just planning your next career move, this episode is packed with insights to help you make the best choices for your financial future.  You will want to hear this episode if you are interested in... [04:12] Leave company stock in 401k to use net unrealized depreciation, potentially saving on taxes via long-term capital gains. [08:55] Consider keeping company stock in an old 401(k) to avoid taxes and penalties if under 59.5 years. [10:01] IRA withdrawal exemptions and strategies. [16:01] Consider keeping your old 401 (k) for potential loan access, but check if your provider permits non-employee loans. [17:50] Deferring 401(k) distributions explained. When to Leave Your Old 401(k) With Your Previous Employer Changing jobs often means making quick decisions about retirement savings. While rolling over your old 401(k) into an IRA is a common choice, there are significant advantages to leaving it where it is. This week, I'm discussing the situations when maintaining your previous employer's retirement plan is advantageous.  1. Potential for Lower Fees If you worked for a large organization, their 401(k) plan might offer exceptionally low administrative and investment fees, especially if they've chosen robust menus with index fund options. While IRA costs have dropped due to strong competition among major financial institutions like Schwab, Fidelity, and Vanguard, some large employer plans still offer a lower cost.  Always compare fees before making a move; sometimes, your old 401(k) will be the most cost-effective option available. 2. Tax Benefits of Company Stock (Net Unrealized Appreciation) Do you have significant company stock in your 401(k)? You could benefit from the unique tax break called Net Unrealized Appreciation (NUA). This allows you to pay lower long-term capital gains rates on your stock's growth instead of higher ordinary income rates. However, to take advantage of NUA, you must carefully roll out your stock and be mindful of any 10% penalty if you're under 59½. Know your stock's cost basis and consult with a tax professional to determine if waiting is best, especially if your cost basis is higher. 3. Penalty-Free Access Between Age 55 and 59½ Left your job between 55 and 59½? Here's a little-known benefit: you can tap your old 401(k) penalty-free before age 59½. If you roll the balance into an IRA, that door closes, unless you qualify for rare exceptions. This rule can be crucial if you need those funds to bridge the gap to retirement, so consider leaving at least part of your balance in the plan until you turn 59½. 4. Enhanced Creditor Protection Federal law (ERISA) offers 401(k) plans strong protection from creditors and judgments, even in bankruptcy. While rollover IRAs are also protected under federal and many state laws, the details can get complicated. Certain states may limit IRA protections, so it's wise to investigate your state's rules. Segmenting rollover IRAs from contributory IRAs can also help simplify tracking and protection. 5. Access to Stable Value Funds Some 401(k) plans offer stable value funds, a low-risk investment choice that often comes with a guaranteed minimum rate of return. While money market funds are currently paying more, that could change if interest rates drop. In lower-rate environments, stable value funds could offer an edge and a safe harbor for your retirement assets. 6. Possible Loan Availability Need to borrow against your retirement savings? Some plans allow you to take a loan from your 401(k), even after leaving the company. However, this isn't universal, since loan repayments are usually tied to payroll. Check with your plan administrator to see if this benefit applies; if it does, it could be an important safety net. 7. Required Minimum Distribution (RMD) Deferral if Still Working If you work past age 73, keeping your funds in a 401(k) with your current employer lets you defer required minimum distributions (RMDs). That's not the case with IRAs. Consolidating old 401(k)s into your current plan can simplify RMD timing and let your funds grow tax-deferred a bit longer. Make an Informed Move Rolling over your 401(k) may seem automatic, but there are times when staying put is the better choice. Carefully assess fees, tax implications, creditor protections, and your unique needs. Most importantly, consider working with a fiduciary, fee-only financial advisor who understands your entire financial picture. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Charles Schwab Fidelity Vanguard Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

In today's episode, I'm diving into a topic that's top-of-mind for anyone who's switched jobs: what should you do with your old 401(k) plan? I discuss five key reasons why moving them into an IRA could simplify your financial life, from consolidating accounts for better control to gaining access to a broader range of investment options, reducing fees, optimizing Roth and after-tax funds, and making it easier to work with a financial advisor.  Whether you're planning your next career step or just want to make your retirement savings work harder for you, this episode is packed with practical advice to guide your decision. Stick around until the end, and don't forget to tune in next week when I cover situations where rolling over your 401(k) might not be the best choice! You will want to hear this episode if you are interested in... [00:00] Vested retirement funds offer four options: keep them in the plan, or withdraw and pay taxes [04:46] Rolling over a 401(k) to an IRA offers more control and access to your retirement funds, preventing forgotten accounts as you change jobs [06:41] Consolidate investments for simplicity and control; update records if keeping old retirement accounts [12:05] Convert Roth contributions to a Roth IRA to start the five-year period and ensure future gains grow tax-free, especially for after-tax funds in a 401(k) without in-plan Roth conversions [13:13] Rollovers to an IRA can facilitate Roth conversions and allow financial advisors to manage retirement accounts. Consolidate Old 401ks for a Smoother Future When you change jobs, it's important not to leave your old retirement accounts behind. For many Americans, the primary vehicle for saving for retirement is their employer-sponsored 401(k) plan. But what should you do with that 401(k) once you've moved on? Rolling it into an Individual Retirement Account (IRA) may be the smart move, offering control, flexibility, potential cost savings, and tax advantages. Let's walk through five compelling reasons why a 401(k) rollover into an IRA might make sense for you. 1. Greater Control and Account Consolidation One of the biggest headaches of changing jobs multiple times is having various retirement accounts scattered across different institutions. Not only is it difficult to keep track of these accounts, but there's the risk that you might forget about them entirely. By rolling old 401(k)s into a single IRA, you consolidate your investments, making it easier to manage and monitor your retirement savings. With all your funds in one place, you'll have more control over your asset allocation and will be better positioned to implement a cohesive investment strategy. Additionally, consolidating accounts reduces the administrative burden of managing multiple logins and statements. 2. Expanded Investment Choices and Flexibility Most employer-sponsored 401(k) plans offer a fairly limited menu of investment options, typically ranging from a dozen to twenty funds. These may or may not align with your preferred asset allocation strategy, and some plans are more limited than others. By rolling over your 401(k) into an IRA at a major discount broker like Schwab, Fidelity, or Vanguard, you unlock a much broader universe of investment possibilities, mutual funds, exchange-traded funds (ETFs), stocks, bonds, CDs, and more. This flexibility lets you fine-tune your portfolio, properly diversify, and better tailor your investments to your risk profile and retirement timeline. 3. Potential for Lower Investment Costs 401(k) plans, particularly those from smaller employers, often feature higher administrative and fund expenses, sometimes reaching 1% or more in annual fees. These extra costs chip away at your investment returns over time. With an IRA, especially when investing in low-cost ETFs or mutual funds, you can often significantly reduce the expense ratios you pay. Over decades, even a modest reduction in annual fees can translate into thousands more in retirement savings due to the power of compounding. 4. Managing Roth and After-Tax Contributions Many 401(k) plans now offer a designated Roth component as well as avenues for after-tax contributions. When you roll over your account, this is a valuable opportunity to ensure your Roth and after-tax money are treated with optimal tax efficiency. For example, rolling Roth 401(k) funds into a Roth IRA starts the five-year clock for tax-free withdrawals on earnings, which is critical for planning your retirement withdrawals. Additionally, an IRA rollover can be structured to split after-tax contributions into a Roth IRA, giving those funds tax-free growth potential rather than the more limited advantages offered inside the 401(k). 5. Access to Professional Management If you want professional help managing your retirement investments and financial planning, rolling your assets into an IRA is almost always a prerequisite. Advisors generally cannot manage assets held within a former employer's 401(k) platform, but with funds consolidated in an IRA at a major custodian, they can actively manage your investments, make ongoing adjustments, and assist with tax planning and distributions as you transition into retirement. Assess Your Situation Before Moving While rolling over your old 401(k) to an IRA offers considerable advantages, it's not always the perfect solution for everyone. Each situation is unique, and certain protections or features (such as early withdrawal options or creditor protections) may be stronger inside a 401(k) for some individuals. Be sure to review your specific circumstances carefully, ideally, with a trusted financial advisor, before making any big moves. A well-considered rollover could make your road to retirement much smoother, giving you more control, lower costs, and better investment options along the way. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Download my entire book for FREE  Schwab Fidelity  Vanguard Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan