I met with a 75-year-old prospective client last year that got annoyed when RMDs started on his $250,000 IRA. He was proud that he converted the whole thing that next year and now “pays no taxes” on his IRA. That may be true, but he doesn’t pay now because he has already paid, and paid more than he would have if he’d just taken RMDs. To make matters worse, he’s single with no kids and was leaving everything to charity so the charity gets less also.
I Shouldn’t Take Money From Retirement Accounts Before 70½ Unless I Need It
This is ignoring the effect of RMD rather than fearing it. The common scenario is an early retiree who loves paying little in the way of taxes through his sixties and reaches 70½ with a large balance. The resulting RMD kicks him in a higher bracket. When he passes, it will be even worse on his surviving spouse due to the compressed tax brackets single filers face. Ouch.
If So And So Wins The Election, We’ll Go Broke
I cannot remember a national or even state-wide election in which I wasn’t told that the election of a candidate was going to be the end of us all. And just when I thought it couldn’t get worse, 2016 came and the rhetoric and the blame reached new levels. By simply adding this comment about politics to this column, it is almost a sure thing I will get at least one email from someone accusing me of being politically motivated. That’s how polarized we seem to be.
This year’s mid-term election is no different than every other election I’ve witnessed. Turn on the TV and all the candidates are accused of being evil people with bad agendas. Now, bashing the competition goes back much farther than my recollection. Check out some of the flowery but vicious rhetoric between Thomas Jefferson and John Adams. We venerate them as founding fathers and patriots, but they called each other many nasty things including traitors.
I am not suggesting that you dismiss a client’s concern. They have every right to their viewpoints and feelings. But extrapolating those feelings into political or economic problems that we cannot recover from simply does not jibe with our history.
We have had plenty of tough times yet keep making progress. It isn’t fun, but we do it. To abandon sound long-term financial plans designed to overcome short-term issues out of a fear over short-term events is not a good strategy.
It takes some time and a lot of empathy, but I have found that working through a good financial planning process shifts the focus on how to be more resilient and away from requiring good guesses about what will happen next.
Dan Moisand, CFP, has been featured as one of America’s top independent financial advisors by Financial Planning, Financial Advisor, Investment Advisor, Investment News, Journal of Financial Planning, Accounting Today, Research, Wealth Manager, and Worth magazines. He practices in Melbourne, Fla. You can reach him at www.moisandfitzgerald.com.