Josh Scandlen Podcast

Interest and dividend income are other areas of the tax code that punishes the ignorant.    You have income on lines 8a, 8b, 9a and 9b? Why?  Is there a strategic reason for earning this income in order to pay tax? If so, that's fine.  Maybe you need the cash to help pay the bills, pay tuition, take a vacation, etc.  However if you're receiving this income because of how your investments are designed without any strategic intent, I suggest you consider a different plan of action  Let's start by looking at what types of income you have.  If you have interest income, from bonds and/or CDs, this income is taxed at ordinary income rates.  Worse yet, there is NOTHING you can do about it other than paying the tax on it...as ordinary income. Consider moving ANY holding you have that yields ordinary income(OI), into your Traditional IRA in order to defer those OI taxes as long as you possibly can.  Remember your IRA is taxed as Ordinary Income anyway. So, having an

In the previous episode  (https://youtu.be/S34U7tDqr4w) we discussed how Dave Ramsey made the HUGE mistake in mixing average market returns with volatility. It is true the market has returned over 10% a year since 1926.  However, the mistake Dave makes is assuming that means one can take a distribution of anything less than 10% and NEVER TOUCH PRINCIPAL.  This is a horrendous mistake to make. And for those who follow that advice they could easily find themselves out of money before they are out of time.  In this episode I bring back the Vanguard report that shows the volatility of the market going back nearly 100 years.  What Vanguard shows us is that while the average return has been a bit over 10% only 6% has the market actually given us a return in ANY given year of between 8 and 12%!   This means the VAST, VAST majority of times the market gives us numbers way above, or way below, average.    What this means is you simply can not use an average rate of return t

Dave Ramsey is asked a question "Is a million dollars enough to retire on?"  Here's the link for that episode...https://youtu.be/B3Jt6jb46XQ Unfortunately, his answer is HORRIBLE!  Absolutely HORRIBLE!  He asks the caller, "can you live on $70,000 a year?"  Because the market returns 10%, or something like that, and if you're only pulling out 7% you're actually ADDING to your principal, is his insinuation.  NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!!!!!! I can not state this loudly enough NOOOOOOOOOOOOOOOOOOOOOOOO! This is stunning and absolutely horrible advice.  There is something called "Sequence of Return Risk" and if you don't understand it, you could be doomed.  As I wrote in the comments section of his video: If you are pulling out 7% a year on a million. That's $70k.  Now let's say it's 2000 and the markets dropped 9%. Your account value dropped to $910,000.  $70k on that  is...7.6%. After taking out the 70k you're portfolio is $840. The markets drop

The new tax law that we're all living under now (2018) presents wonderful ways for YOU to reduce your taxes now...and in the future. But like all things, only those with the knowledge of the bill will benefit.  Is it any wonder why corporations and other entities spend so much money lobbying Congress for just a line item?  No, because they are knowledgeable of what they need to pay less. And they'll spend tooth and nail to try to enact that provision. But just because you don't have a multi-million dollar lobbying firm representing your interest doesn't mean you can't take advantage of what the law allows. So, in the next few videos we're going to dive into this.  First, we're going to talk about capital gains.  If your TAXABLE INCOME puts you in the 10 or 12% tax bracket, you will pay 0 on any capital gains you have so long as you remain in the 10-12% bracket!. This holds HUGE potential benefits, my friends.  But only if you know what to look for  In this video, I'll show

Linked below is a good article you should read, especially if you’re considering hiring a financial advisor. But I don’t think it actually goes far enough in examining the fees for service financial advisors charge. Some firms/advisors charge low fees and offer “comprehensive financial planning”.   Other firms charge higher fees and also offer “comprehensive financial planning.” Which should YOU go with? Well, if both firms are offering the same advice, it would make sense to go with the lower cost, right? Well, is the lower cost firm actually offering “comprehensive financial planning?” That’d be like a mechanic saying he’s going to maintain your vehicle for you for a fee, but what he really only does is oil change and rotate the tires.   A different mechanic though also says he will maintain your vehicle for you but he does true full service, belts, brakes, alignments, spark plugs, filters, engine maintenance, truly the whole thing…but, of course, he charges a MUCH higher fee. However if

Dividends historically have accounted for nearly 40% of a portfolio value's growth.  Even with the low dividend yields today, dividends still play a HUGE role in growing the net worth for investors.  In this video I show you exactly how dividends improved the performance of the Vanguard S&P 500 fund (VFINX) by 50% from 2003 until March 2018.  I compare the PRICE ONLY performance of the VFINX to the price + dividend performance.  Price only performance increased an initial $100k investment to $297k.  Yet, dividend reinvestment increased that $100k to $406k at then end of those 15 years time.  Don't forget this is in a low dividend yield environment too. In fact, after 2008 many of the higher dividend paying companies, banks come to mind, STOPPED even paying dividends.  Yet, the numbers speak for themselves; Dividends added 50% more growth than just price.  The interesting thing is that if you look at index annuities, they don't use dividends in their returns t

In this episode, we dive even further into the BLS and other research on retirement income.  The Pension Rights Center says the average Social Security benefit per beneficiary is $1,360.  While the average asset distribution was $1,542 per household.  They claim less than 30% of retired households have pensions and less than 7% have VA benefits.  And the average earned income in retirement is $25,000. The BLS provides this table: Age of Household Median Income Mean Income Households Aged 55-64 $62,802 $89,986 Households Aged 65-74: $47,432 $68,905 Households Aged 75 and Older: $30,635 $45,989 Notice the difference between median and mean.  IT's HUGE!  We want to look at the median when we can as opposed to the mean, i.e., average  In the video, we're going to dissect the income sources AND, as always, the tax consequence of having income from various sources. Again, using the Tax Foundation handy-dandy calculator, you'll see very quickly that depending on how where yo

It's time to dispel a myth that plagues retirement planning: Health Care will NOT be your biggest expense.   Your largest expense in retirement, by far, is the cost of your housing.  And it's not even close.  In fact, looking at numbers from the Bureau of Labor Statistics, link is below), it's not until you reach the age of 75 and beyond that health care costs become your 2nd largest expenditure. And even then it's a far distant second than from what you will spend on housing.   And even then, food, transportation and "other" expenditures are all within striking distance of health care.   But housing remains above and beyond the most expensive item a retiree faces, accounting for 36.5% of a retiree over 75 expenditures. Health care comes in a distant second at 15.6. I am not sure why the financial industry keeps harping on the rising costs of health care in retirement while paying absolutely no attention to the cost of housing.  Think about it like this.  Fidelity says

In Part Two of our tutorial on how to maximize Social Security we discuss: When should you apply for benefits? Well, comes down to three things mainly: your health/life expectancy, your CURRENT income needs and your survivor needs. Delaying when you file not only increases your benefit when you ultimately do file, but you get increasingly more benefits each year due to Cost O Living Adjustments.  So, at 70 your benefit will be 1900 more, per month, than if you took an early benefit at 62.  At age 80 the spread will grow to $2500 a month.  At 90 the the difference has grow to $3000 a month! So, don't just get caught up in the differences of monthly benefits now, you need to look at how those differences change over time. And it's just remarkable.  How to increase my benefits? Number one thing you can do is to log into SSA.gov and verify your AIME is correct.  If there are missing data in there, you need to contact Social Security to get it changed.  Second thing is to impro

#1. Make sure your earnings record has been recorded correctly. #2. If you have zero in your earnings record, every year you work will increase benefits. #3. Coordinate your benefits with your spouse. #4. MINIMIZE taxes! #5. Take advantage of your TWO Standard Deductions --- Support this podcast: https://anchor.fm/josh-scandlen-podcast/support

The Tax Foundation has a most wonderful calculator you can use to gauge your tax, now and in the future.  Now this calculator was set up to show you the benefits of the Tax Cut and Jobs Act (TCJA).  And there are many, many benefits to that new law.  However, if you dive a bit deeper you can see how different sources of income can really hammer you tax-wise in retirement.  Watch as I walk you step by step to see how much more you'll pay in taxes if you take Social Security early and have large Required Minimum Distributions.  You won't want to miss this.   In fact, I suggest you start NOW planning for your future tax burden. The earlier you start planning the less painful it will be in the future.  https://taxfoundation.org/2018-tax-reform-calculator/ --- Support this podcast: https://anchor.fm/josh-scandlen-podcast/support

Medicare Premiums can easily double for widows if they're not careful.  In this video I show you how the tax code discriminates against widows who, with their spouses, saved money in IRAs. Now, when the first spouse dies, the surviving spouse is going to hammered by the tax code AND could easily pay double for Medicare.  This would seem to be an issue many people would want to focus on, right?  Well, no. For some reason,  the taxation to surviving spouses escapes most peoples and advisors radar.  I don't know why, but if there is anything that God has put me on earth to do is to explain how widows will pay more in tax, at at time they can least afford it.  Don't let this be you!!! Strategize now with your tax person, your advisor, with your computer software...anything and everything that will help you see the light.  Your surviving spouse will PAY if you don't do something!  https://www.kitces.com/blog/bipartisan-budget-act-2018-irmaa-medicare-premium-surcharges

Vanguard produces some of the best content on financial planning, investment and retirement topics out there.  While their literature is wonderful, I do not recommend Vanguard for personal financial planning though.  This is because Vanguard still is way too focused on simple asset allocation and portfolio advice as opposed to real, full-fledged financial planning.  In fact, I would not recommend any large company for YOUR unique financial planning simply because of the boilerplate nature of these firms planning recommendations.  If you want REAL financial planning you really need to go to a REAL financial planning shop, like that can be found through NAPFA https://www.napfa.org/, XY Planning Network www.xyplanningnetwork.com or Garrett Planning Network, garrettplanningnetwork.com.  In this just published piece, there are three main things I want to focus on that should help you with your own planning. 1.  Vanguard's model, based on 10s of thousands of projections, show a fu

Investment fees are one of the two biggest detriments to successful investing.  I discuss this in detail when it comes to using Monte Carlo analysis to determine one's ability to retire in my podcast here: http://heritagewealthplanning.com/podcast-episode-8-why-your-monte-carlo-analysis-is-crap/ In this video though I show you how a portfolio with an all-in fee of .18% has a 95.7% retirement success. Whereas the exact same portfolio with a 1.50% fee has a 74.4% success.  Everything is the same.  I use the calculator at www.firecalc.com if you want to run your own numbers.  The lower cost portfolio not only had a 28% higher success than more expensive one but its average account balance after 30 yrs was over $1 million.  The higher fee portfolio average account balance after 30 yrs was less than $500k.  So, if an advisor were running a monte carlo analysis based on this portfolio and NOT taking into consideration investment fees that advisor would provide a very misleading en

SSA.gov --- Support this podcast: https://anchor.fm/josh-scandlen-podcast/support

Everyone wants to achieve retirement happiness right?.  Yet, it never ceases to amaze me that when it comes to the discussion about retirement people overlook the most important issue; whether or not there is a mortgage. Why do I say this is the most important issue? Well, simply look at this study https://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm from the Bureau of Labor Statistics (BLS): “Housing was the greatest expense in average dollar amount and as a share of the household budget for older households. ” (Older households being over the age of 55). Housing is a Retirees Main Expense: Let me reiterate;  HOUSING EXPENSE is the greatest expense for households with people over the age of 55! In fact if you dive into the numbers, nothing even remotely comes close.  Looking at the study you will see that housing expense accounts for 1/3 or more of ALL expenditures, which is double the next biggest expenditure. People always say health care will be the biggest expense

What is the number 1 concern for people thinking about retirement?  Turns out they are mostly worried about running out of money.  Can't blame them actually.  Who wants to go back to the workforce after 5 years of retirement?  Shoot, would you even be able to go back to where you left? Probably not.  So, a career as a Walmart greet waits you... Well, not so fast! Lots of studies have come out over the last 15 years or so that shows as people get older in retirement they actually spend less each and every year. And, yes, this does include health care expenses too. Weird huh? I mean why haven't more people been saying this stuff.  Come on, you're not that ignorant are you? The investment industry has a huge incentive to get you to save, save, save in order to charge you fees for that savings! I'm not saying don't save. Indeed, I think you should, up to the point that it makes sense to stop.  And that is where consumption comes in.  How much will you actually need in retir

Revocable Living Trusts do NOT shield one from estate tax, be it an heir or the grantor of the trust.   Your heirs actually don’t pay estate tax, anyway. YOUR estate pays the tax. A Revocable Living Trust (RLT) is included in YOUR estate. Thus if your estate is large enough, your RLT will be subject to estate tax, indeed. It’s an irrevocable trust that is not included in your estate. And will not be subject to tax to your heirs. Income received in the trust will be subject to tax, either to the estate or the heirs. But that’s a topic for another discussion. Estate tax is not an issue for the VAST majority of tax payers when it comes the Federal Estate tax. However if you live in a place like MA, your exemption is only $1mm! And that includes everything you own, your home, investments, even life insurance. The tax your heirs are going to pay is if they inherit an IRA, 401k, 403B. They will pay Ordinary Income tax on the distributions they take from those accounts. --- Support this podcast: https://anch

My answer to a Quora.com question.  Well there are pros and cons of both. Vanguard is the lowest fee for their investment platform. No getting around that. And now they offer “financial planning advice” to go along with it. HOWEVER, having worked at Vanguard and another large financial planning firm, I wonder the true nature of their advice. Is it TRULY specific to YOUR needs, or is it boilerplate, off the shelf advice focusing primarily on investments. At my previous firm we could NOT talk about the benefits of Roth Conversions, Social Security maximization, asset LOCATION to name a few things. Big firms are so scared for their reputations they are VERY hesitant to allow any kind of individual planning discussion. I know. I was there. Which is why I left. Thus financial planning consisted of simple risk tolerance discussions and asset allocation advice. That was it. Ameriprise, to their credit, does focus on the FULL plan. You’ll walk out of your meeting with a full financial plan tailored to you

I had NO clue that distributions from Roth IRAs are used on your FAFSA and can affect your ability for need-based aid. But they do!   Let me repeat that. ..Distributions from Roth IRAs are used in your FAFSA as a way to determine how much your Expected Family Contribution (EFC) is.   Thus, if you have a Roth and thought you could pull from it, tax free, well you'd be right... BUT, that doesn't mean this is a good idea.  Not if you think you can get need based aid. In fact, when I was researching the benefits of the Roth for my book, 21 Reasons You NEED A Roth IRA http://heritagewealthplanning.com/books/, I was thinking the Roth would be a wonderful account to use for college funding.   Well it CAN be but you've got to tread carefully here.  The Fafsa form is about 2 years behind.  Thus, here it is 2018 and we have to show our 2016 tax forms to the colleges my daughter is thinking of attending.  So, what we did in 2016 is what matters, even though it's not 2018. So