Join Al Smith in this insightful episode of ‘Retirement Unpacked’ as he helps listeners navigate the crucial financial moves needed before year-end. With topics ranging from IRA contributions and qualified charitable distributions to Roth conversions, Al provides expert advice to ensure your retirement planning stays on track. The episode also delves into the dos and don’ts of holiday spending, offering strategies to manage gift purchases smartly without falling into debt.
Welcome to Retirement Unpacked with Al Smith, owner of Golden Eagle Financial. You want a retirement plan that alleviates your fears about the future so you know your money will last. As a chartered financial consultant, Al Smith will help you find a balance between the risk and reward of the market and the safety of your retirement income. And now, here’s your host, Al Smith.
Al Smith (Host) :
Welcome to another program of Retirement Unpacked. I want to thank you for tuning in. It’s a great day here in Colorado, and I have some good information for you. Before I dive into that, I’m going to be doing these reminders for the next several programs because there are some financial things that we must pay attention to before the end of the year. Now, IRA contributions and Roth contributions, you can wait on those until April 15th or until you do your taxes, assuming if you did your taxes on April 15th. However, there are some things that need to be done by year-end. Those of you who are listening and are over age 73 or age 73 or over, will have required minimum distributions from your IRA. And something you may or may not know about, there’s something called a QCD. What that is, That is called a qualified charitable distribution. And what that means is you can move money from your IRA if you have required minimum distributions and they can go directly to your church or to the American Cancer Society, or to the Red Cross, or any 501 nonprofit. It has to go directly from the IRA to the charitable institution, and you do not have to declare that as income. And this isn’t a deduction like if you itemize your deduction. This is just money that goes from your retirement account to the nonprofit that you do not have to declare as income. Now, if you take a distribution from your IRA and you put it in your checking account, and then you write a check to that institution, it doesn’t work that way. In order to have it go not taxed, it has to go directly from the IRA to the charitable institution, and there is a special form you can use to make that happen. If that’s something that your own advisor hasn’t guided you toward or explained, give my office a call and I can help you get through that. My number is 303-744-1128. The other big thing that needs to be done before December 31st is Roth conversions. You have the opportunity and the option to convert all or part of your traditional IRA to Roth. Now, when you do that, you pay tax on it at the time that you do it, but all of the growth of that Roth and the future income from it will be tax-free. Now, there’s a small caveat. The first five years, if you take money out of the Roth, the growth or the interest would be taxable. After five years, both the amount you convert and the growth or the interest will be tax-free. But that does have to be done before December 31st. And what I usually recommend people do is especially if they come into my office, is bring in, if you’re working, bring in the pay stub from your most recent pay stub so we can get a feel for what kind of tax bracket you’re going to be in, and we can select an amount to convert. from your traditional IRA that will keep you in the same tax bracket that you are now. So these are some things that need to be done before the end of the year. It’s also not a bad idea to do a little bit of planning toward the end of the year because by that time usually you have some idea how well you’ve done during the year and And any downfalls or pitfalls or praises that you have, things that have gone well, it’s a good idea to sort of reflect on those and take a look and see where you are financially. Which brings me to today’s topic. It is that time of year that many of you, probably all of you, are going to be doing some Christmas shopping. And it’s a time that can be harmful to you financially if you put all of your purchases on a credit card or if you overspend or any one of those things. So although it’s a joyous time of year, we’re celebrating Christmas. the birth of our Savior, but at the same time, purchasing gifts is traditional. I’m not suggesting you not do that, but there are some ways to make it more or less beneficial, not only to you, but to those for whom you may be purchasing gifts. And some ways to save, it’s a little bit like anything else. If you do some planning, And what I suggest is that you create a budget for yourself, a realistic budget. I heard on one of the big national news channels that the average person spends about $600 to $700 on Christmas gifts. And so I’m not telling you how much to spend, but I would create a budget. And then once you’ve created that budget, think in terms of allocating a particular dollar amount for each person for whom you’re making a purchase. And once you do that, it makes shopping a little bit easier when you begin with a plan. I always talk about how important it is to have a retirement plan. And I think having a plan for doing your Christmas shopping also makes some sense. And some things to do I think that are important is allocate a dollar amount for each person for whom you’re purchasing a gift, something that is reasonable. And once you have allocated that dollar amount, start thinking in terms of the person for whom you’re getting this gift. What kind of things does this person like? And if there’s a certain thing a person likes, you can sort of guide your gift in that direction. And you can also be flexible in the amount you spend. Hypothetical example, let’s say if you know someone who really loves to play golf. And you know this person already has lots of golf equipment, so you don’t necessarily want to get him a particular piece of equipment, a club or something like that, that is necessary. tremendously unique and he or she may or may not like it but it’s fairly certain that this person who loves golf is going to need golf balls and you can get those in a sleeve with as few as three and I don’t recall the exact dollar amount but I think it’s under ten dollars or you can get as many as a dozen and depending on The brand of ball, that can be between $25 and $50. So you can tailor a gift when it’s something like that based on the amount of those that you may be looking for. And I think if you’re really familiar with the likes and dislikes of the person for whom you’re shopping, it certainly makes it easier. And the big question is, should you do your shopping online or should you go to a brick-and-mortar store? Now, online has tremendous advantages. You can sit at your kitchen table or at your desk and peruse Amazon or any other websites that you want. You can find really cool, extravagant gifts at L.L. Bean or Walmart. places like that that have wonderful gifts that are highly priced, or you could find some bargain things through Amazon or many other sites. The disadvantage, obviously, when you’re shopping online, you can’t touch it, feel it, you can’t necessarily ask questions about it, although you could probably get reviews and so forth, but it’s extremely efficient. On the other hand, if it’s something that you feel that you need to touch and see and ask questions about, then going to a brick and mortar store makes a lot more sense. If you’re thinking about a clothing item, a sweater or something like that, you can touch it and feel it and you can actually hold it up to get some idea if it will fit the person for whom you’re doing the shopping. One of the other things I highly recommend is shopping early. Some things that make very attractive gifts, when you go online, you will find that they are out of stock. On the other hand, by shopping early, and it’s maybe early now, here we are a few weeks before Christmas, but it’s certainly not too early to get a lot of your shopping out of the way. There’s going to be a greater selection, no questions. Now, some things I would recommend that you don’t do are go to a shopping mall without specifics in mind. You can have a good time in Cherry Creek or Park Meadows or whatever with, you know, an unused credit card or a fat amount in your bank. Use your debit card. and end up doing your shopping that way. But if you don’t have specifics in mind, you’re going to end up getting something that is the shiny object or just something that catches your eye, which may be sort of impulsive rather than something you really haven’t thought through. One thing I would not do is purchase a gift for someone that is not returnable. Most gifts are returnable, but some of them aren’t. And I think by going with something specific in mind, It’s far better, especially if that specific thing is returnable. And if you know exactly what that item is, then I think it’s fine to go online to do your shopping. And some other important things, let’s say if someone really likes music. Find out exactly what kind of music they like before you get them a CD or a collection or whatever it is. A really cool gift, you may know someone who collects vinyl records. Well, you can find older vinyl records. I think there’s a record store or two in Denver and Boulder that have old vinyl records that are in very good condition. That would be extremely unique. And when you’re shopping, think in terms not of what you think is cool and what you like, but think about that other party. What does that other party like? What does he or she collect? People who collect certain things are going to be always happy to get one more of whatever it is. I know people who collect mugs. They have a mug from everywhere they have ever been. I know other people collect little shot glasses. Those are pretty insignificant gifts, but there are things that you can purchase for people for Christmas that will enhance what they are already collecting. Art. I wouldn’t too much recommend providing art for a gift unless you know very specifically about the taste of the person for whom you’re shopping because art is very much in the eye of the beholder. You could show me an item of art that might sell for thousands of dollars and I may not like it and I could also go to a thrift store and find something that’s very inexpensive, and I might find that very pleasing to the eye. So unless you know really the kind of art someone likes, I would lean away from that as far as a gift. But there’s a lot more to talk about, about purchasing Christmas gifts and minimizing the amount you spend and looking at some original gifts, which we’ll talk about after the break.
Al Smith (Host) :
I’ll see you next time.
Announcer (Host) :
There are no systematic ways to ensure your dreams come true in retirement. That’s why he draws on decades of experience to set you on your path to success. Sure, he’ll give you details and charts with analysis and all of the necessary things. But he also knows that you’re more than a financial spreadsheet. You’re a person with hopes and dreams who has a picture of what you want your retirement to look like. When you’re ready to get started creating a strategy that puts you on the right path towards those hopes and dreams. You need to contact Al Smith of Golden Eagle Financial for a free consultation. Just go to klzradio.com and click on Advertisers to get in touch. Investment advisory services offered through Brookstone Capital Management LLC, a registered investment advisor. BCM and Golden Eagle Financial Limited are independent of each other. Insurance products and services are not offered through BCM, but offered and sold through individually licensed and appointed agents.
Al Smith (Host) :
Welcome back to Retirement Unpacked. And we talked a little bit about some of the things that you need to do before the end of the year. And that included required minimum distributions and also possible Roth conversions. And if those are something that you may be looking at, if those transactions are on your mind, give my office a call and we’ll make sure that that it gets done right. My number is 303-744-1128. We’ve been talking about trying to save money during Christmas. Well, the word save money is sort of an acronym because our culture has taught us that you save money by buying something that’s discounted 10%. You’ve saved money. And the reality is of the vocabulary is you save money by not spending money, whether it’s at full price or a discount. But that’s how our culture has, especially our advertising and marketing culture, has sort of usurped the language. But we’re talking about how when you plan work, what you’re going to purchase for someone for Christmas, and allocate a dollar amount, you’re far better off, and that’s much better than going to the mall without some specific things in mind because that can lead you to the shiny object, maybe to some things that are more expensive, and if you end up spending more on a particular individual or couple or something, that leaves less money for everyone else. But let’s think about something. that might be more original. Not necessarily an inexpensive item, but I have seen some things that might look like a very attractive gift. I’ve seen opportunities where you can ride the railway through the Royal Gorge. And they have those, I think they have them throughout the winter, although I’m not absolutely certain. I have not done that, but I have been to the Royal Gorge and seen it, and I can only imagine that riding that train would be a wonderful experience. So that is something you could get a couple. I would certainly enjoy that more going with someone else, someone who enjoys photography like I do. A 23 and me. So I know a lot of people, they think, well, gee, I think I’m English, Irish, a little German or whatever. But when you do one of those DNA tests, if you know someone in particular who has not have that done, they might find it very interesting. They might find some relatives they did not know they had. They may find some genetic links to some parts of the world where they did not know they had any relatives. A lot of things can be original gifts, so to speak. If you know someone truly enjoys a particular activity, and that activity, you have to buy tickets or whatever it is, tickets to a particular event, while they’re not inexpensive, that can be a really special gift if you’re trying to please someone who likes maybe going to the theater or to plays. or to Nuggets games or Avs games. And if those are beyond the budget, go to a DU hockey game. I’ve not been to one, but I’ve heard they’re very exciting. And nearly every year, Denver University has a very high quality hockey team. I know they’ve won the national championships more than once. So some original things. I know people who have gone to visit the four heads in South Dakota, Mount Rushmore. And if you know someone who’s already planning to go there, kick in a little bit extra so that they can go on a helicopter ride. because viewing Mount Rushmore as well as Crazy Horse from a helicopter would be, in my thinking, an awesome experience, because I think I’ve seen pictures of it taken from a helicopter, and that would be tremendous. Another example, I would love to go on a helicopter ride on the 4th of July, At about the same time, fireworks were being shot off in multiple areas throughout the city. If you know someone who really likes to ski but they don’t get up too often because of the cost or one thing or another, buy someone some lift tickets. So a lot of different things you can do. And I think I mentioned it earlier, but you may know someone who – you know, collects things. I know someone who collects these nutcrackers and the person already has a pretty good extensive collection of those. So knowing a person really well makes shopping for him or her much, much easier. Some other things. What if you know some young people and you didn’t really know what to purchase for them? How about opening up an investment account? Well, you don’t necessarily need enormous amounts of money to do that. you can open up an investment account through me for as little as $100. It’s a few hoops to jump through with paperwork and so forth, but once the account is open, this young person, and this can be a teenager or somebody in their 20s that does not have an investment account, you can link that account to their bank. So that young person can, in addition to investing in the stock market at a young age, he or she can have automatically moved from their bank account into their investment account a certain amount of money that they want to invest every week, every month, however they want to do that. And establishing that at a young age can have tremendous rewards when they are older and I have met lot of people who are in or near retirement but I have not had anyone that I sat down and said sir or you and your wife have saved too much money I’ve never had that opportunity arise but I do know that by starting early and having that compound interest work for you, there will be a lot of better choices later in life. And it doesn’t, I don’t mean just retirement, I mean when people get married and want to buy a house, things like that. Now, what about circumstances where, for whatever reason, you really don’t have a lot of money to spend, but you have some time and some imagination? You can provide very, very useful service to people who may really, really enjoy it. For example, If you know a couple with small children, you can provide a certificate for free babysitting for whatever period of time that you want to do that. If you know someone who’s a caregiver, offer to do that caregiving yourself so that that person can have a day or a night off or something like that. If you know a couple, perhaps, who really enjoys a particular kind of food, Mexican food, Italian food, whatever it is, offer to make that couple or individual a gourmet meal. Now these are things that you can do without spending a lot of money. Offer to detail someone’s car. Offer to clean someone’s home or apartment. Pay for a class for someone to take for something they like to do. Photography. kayaking, climbing, offer maybe a one-day bicycle tour or a coupon for an oil change. There’s all kinds of things you can do to make your Christmas more joyous and make Christmas joyous for those whom you love. God bless you. Thank you for tuning in. Let’s continue to pray for the leaders who will be leading our country in a few months. And also, let’s continue to pray for the folks in Israel. Thanks for tuning in. Again, God bless you. Hopefully, you’ll be here next week.
Announcer (Host) :
But are offered and sold through individually licensed and appointed agents.
