Maggie Nielsen 00:24
since Barb is turning 65 We thought it’d be fun to have a small group discussion with her peers to answer questions about Social Security, Medicare, retirement and all those good things. So let’s dive in, get started and meet them all.
Announcer 00:45
Gloria Steinem once said, we will never solve the feminization of power until we solve the masculinity of wealth. Barbara Provost and Maggie Nielsen are the team at Purse Strings that will help you navigate the ins and outs of financial independence so that you can be financially fearless. This is women and money, the shit we don’t talk about.
Maggie Nielsen 01:09
Welcome ladies, we are so excited to have you here today. So let’s kick off the call by getting everyone introduced if you want to share a little bit about yourselves. Karen, do you want to go first?
Karen Van Maldegiam 01:21
Sure. Hi, everybody. My name is Karen Van Maldegiam. I I am already 65. I am retired and have been for several years. In my former former life. When I was working, I worked for about 40 years primarily in the medical pharmaceutical industry, as well as in consulting for one of the big, big four consulting firms. Awesome.
Maggie Nielsen 01:48
And Maggie, how about you?
Maggie Weiss 01:50
Hey, everybody, I’m Maggie Weiss. And I have spent my career basically volunteering and raising my children, and also working as a textile artist and educator. So I’ve traveled around the country teaching I’ve exhibited around the country, and I have volunteered, probably more than I might have. And I’m retiring from volunteering. I turned 65 At the end of the month. And as of June 1, I am enrolled in Medicare. Awesome.
Maggie Nielsen 02:21
And Geri, how about you?
Geri Bresnahan 02:23
I’m Geri, and I am already 65. And I did the I was an accountant for a few years had kids took a little sabbatical of 20 years, and then hit career part two, currently. So that’s been entertaining to go back into the workforce. But it was interesting turning 65 and getting bombarded with all the information about everything we’re going to discuss today. So I’m really excited to be here.
Maggie Nielsen 02:48
Awesome. And last but not least, Koren. Can you share a little bit about yourself as well?
Koren Vining 02:54
Yeah, absolutely. Thanks for having me. I’m Koren Vining. I’ve been a financial planner for 24 years. And I’ve grew up being told that Social Security wasn’t going to be there. And even in my early years of planning, you know, I didn’t even know to take that into account with people. And once I realized how the rules work, and how much control people actually can have over their Social Security, I really developed a passion for it. So I even have a credential. I’m a certified Social Security claiming strategist, and a certified retirement counselor. And when I’m not telling people what to do with their money, I’m a mom of two boys, nine and 11. And we just started summer, so I have them elsewhere for this call. And then I’m gonna be gonna be spending some time with them this afternoon. So that’s me. Oh, and I work for slugterra investors. I’m supposed to say that.
Maggie Weiss 04:13
Awesome. We are so excited to have you on all of you ladies and have Koren as our expert today. And so we just want to dive in as the age of 65. We always thought that was the age of retirement. But I think it might have changed. So let’s get some insight on that to get started. Well, I
Koren Vining 04:31
can I can jump into that. One of the first things that I always tell people is retirement is when you decide to stop working. So retirement is whatever age you want it to be. But what’s totally confusing is that you have to make your decisions about Medicare at 65. And then with Social Security, you can elect to pull your Social Security as early as 62 Um, but for this age bracket in particular, it’s extra confusing, because you might have it be 66 and four months, you might have it be 66 And two months. Or it might be if you’re born after 1960, then it’s we’re all going to be 67. Unless, of course, Congress changes the full retirement age for Social Security. So a long answer to a short question, Maggie, but it’s, it’s complicated, which makes it easy to understand why there’s like a lot of confusion about it. So
Maggie Weiss 05:36
let’s first start with this Medicare, as you said, everyone needs to do something by 65. Did the other ladies in the room know this? or what have you done? We did.
Geri Bresnahan 05:46
We went after studying 5000 items that came to our house and talking to several other people. We did, you have to do my understanding. And please correct me if I’m sending any misinformation out, but we did Medicare A, which I understand is 80% of everything of medical. And then we did Medicare B, which is supposed to be 20%. And then you have a choice between supplemental and advantage. And we took supplemental. And then so that was but it’s confusing, because you don’t know really the difference between supplemental and advantage. So so that was our option to be able to choose our own doctors as opposed to being in a plan where you had to go in and and network again. So that was what I did.
Barbara Provost 06:33
Now, Geri, did your husband retire is he also retired,
Geri Bresnahan 06:36
he is not, but his company was taken over at the end of the year by another company that did not have as good of benefits as what he had. So then we just compared what he had to Medicare, and it seemed like Medicare was a little bit
Karen Van Maldegiam 06:51
better. So I am not on Medicare. And, and neither is my husband. And the reason for that is, so my husband is still working, I am not. He has a great medical plan. We also have a we’re our kids, we had kids late. So we’re still covering both our son and our daughter, who has a disability. So you know, we have to put that in the mix as well. And so we decided, and I talked to, you know, I read the 5000 pages that Geri read, and also talked to several specialists. And and decided not to not to go on Medicare at this time.
Barbara Provost 07:39
How about you, Mags? Well, my
Maggie Weiss 07:40
husband retired at 70. And but he did what Koren said he had to file all the paperwork ahead of time. And then also for Social Security, my understanding is, the longer you wait to withdraw, the more you get with your monthly check
Koren Vining 07:57
for the primary workers benefit so. So what I heard from you is that you didn’t work yourself, at least for income. So if you’re claiming a spousal benefit, his benefit grows 8% per year, from his full retirement age until 70. And what’s also really great about that, by the way, is it magnifies your Survivor Benefit for way down the road, we help. So in general, that’s usually a good decision. And then what’s interesting, though, is when you go to claim your spousal benefit, even though it’s based on his work, record, the age that you are when you go to get it matters for how much you get. So it’s it’s complicated.
Maggie Weiss 08:58
So how would it be different if I was older since I just qualified now, I you know, started the process at 64. My Cobra out in at the end of January. So I had three months where I got catastrophic temporary coverage for my Medicare would kick in June 1. Well,
Koren Vining 09:17
so Medicare and Social Security are very different, even though you go to the same website to apply for both of them. So if you are on social security, they automatically enroll you in Medicare, at least you know Part A, but if you’re not on Social Security or claiming your own social security, you have to go in there and sign up for Medicare. So, Maggie for you, you probably started the process of Medicare. But it’s a separate process hopefully, of actually drawing your spousal benefit from social security. So hopefully you didn’t, like do Bono at the same time, just Medicare. Okay. Good job.
Barbara Provost 10:10
Okay. And I have a question about that. So. So Maggie’s husband’s retired, and she has the opportunity, because she spent so much of her beautiful life volunteering and helping so many people. She wasn’t getting an income, so she can claim spousal benefit. Now, Karen, let’s say she’s worked her whole life her husband’s worked his whole life, do they each just claim their own benefit of Social Security.
Koren Vining 10:36
While it depends on how much their own benefit is. And actually, your financial planners can run very intense calculations on this. But what happens is, each of you, Karen and your husband, you each have your own earnings record, which then Social Security calculates into your own primary insurance amount, your pie a, that’s the big number that used to be at the top of those green statements that we used to get before they change them. And what you can have is you can either take your own benefit, or you can have half of your husband’s benefit. And you’ll just take whichever one is higher. Right.
Karen Van Maldegiam 11:27
And then the other thing that we have to put in the equation is our daughter, because yes, yeah, right now we’re, we’re applying for Social Security benefits for her for her disability. Yeah, but you have to wait two years after you claim Social Security for her to get the full benefit. So yeah, we’re trying, you know, we’re putting everything in the mix. But we should have an answer on whether she gets benefits whether she qualifies later in June.
Koren Vining 12:03
Okay, yeah, that does add a lot of complication for I mean, not even just your social security, but you know, your even your estate planning, right, so if she qualifies for for aid, you know, you have to make sure you’re leaving her money correctly. So it gets really complicated. So, I, I’m sorry, you have to deal with it. And I’m really glad you know that.
Karen Van Maldegiam 12:31
And I’m really glad I have a financial planner.
Koren Vining 12:35
There you go. Yeah, it’s really important.
Barbara Provost 12:38
Point, right. One thing I want to bring up that many people don’t really talk about are the credits. Can you talk about that
Koren Vining 12:47
for the credits to qualify for Social Security? Yes, yeah. So you have to have 40 quarters of earnings in order to get your full social security benefit. So 10 full years, technically, you’re supposed to actually have earned income in each quarter, to get the credits, however, they get their information from the IRS. So I’m not really sure of how they would know the difference, as long as you had minimum, you know, a certain minimum amount of earnings each year. But what’s interesting is the 10 years, or the 40 quarters, is how you qualify for Social Security benefits. But they actually use 35 years of earnings history to calculate your benefit. So for example, for Geri, if you had 20 years of zeros, right, and then 15 years of income, they’re going to figure all those zeros in when they’re calculating your benefit. So it’s for. So that’s actually something really important for people to look at is, don’t just look at your statement, you actually want to log in and download your earnings history. And make sure it’s correct. And also run some calculations, you know, sometimes, you know, even if you don’t want to work your full time career job anymore. Sometimes you could go work at Starbucks, you know, for part time for a year or two. And, you know, make an impact on your Social Security benefits, as well as you know, your retirement savings and everything like that. Did that answer your your question about the credits? Well, I’m
Barbara Provost 14:40
wondering, Geri, did you know that I
Geri Bresnahan 14:42
didn’t know that, so that’ll be interesting. So I will go and look at that. So of course,
Karen Van Maldegiam 14:48
I have a question. So say, you know, you, you worked and then retired, and then you took a job at Starbucks. And that’s your loser, you know, You worked there for five years or whatever? Do they take the Starbuck money? Do they work backwards? Or is it the highest?
Koren Vining 15:10
It’s your it’s your best 35 years. And I’ll tell you a quick, interesting thing. My dad is 83 and still working his full time career job. He just never stopped. And what’s interesting is he gets these huge raises and Social Security every year, in addition to the cost of living adjustments, because they’re actually recalculating his best 35 years. So maybe this year is replacing, you know, one of the low years from right after, you know, he got out of high school and went to work, for example. So, so yeah, if you do have a year of, for example, Starbucks, that’s better than a year in your past or better than a zero, it will actually recalculate. And, and if you really want to, you can actually go into the Social Security website, and you can play with those numbers. I do that a lot, when I’m working with my clients to help them make those decisions about whether they should do more work, you know, or not, whether it would matter, because
Barbara Provost 16:27
if somebody hasn’t earned those credits, they, what might not what get the best, well, amount of money, or
Koren Vining 16:35
if you don’t have the 10 years of earnings history, you just don’t get Social Security. So if somebody, I run into this a lot, because in Colorado, a lot of people work for the state. And in the state system, you don’t pay into Social Security. And I’ve run into people that, for example, might have nine years, right? Not 10, but they’ll have nine. And so and in fact, I’ve worked with a lot of young teachers in my life, and I’ve I’ve told them, like, go work in the summer somewhere else, you know, in a Social Security covered employment. Because if you can get over that hump from nine years to 10, at least you get something, I
Geri Bresnahan 17:22
have a question, is it 35 years consecutively, or overall 35 years of your retirement working
Koren Vining 17:28
group, just your best 35 years 35.
Geri Bresnahan 17:31
If compared to all those zeros or more than that, I’m not sure. Well,
Koren Vining 17:40
and like, like my dad, my dad’s been on Social Security for, you know, 15 years, and all of those 15 years he’s worked. So it’s he’s been able to increase his benefit. Now, I should put in a little note that if you are not at your full retirement age, you’re probably you shouldn’t probably be claiming your Social Security and working at the same time, because they’ll withhold benefits under an earnings test. But once you’re at that 66 and four months, or 66, and eight months, or whatever it is, you can get your full social security and be working as much or as little as you want. Cool.
Barbara Provost 18:24
And what happens if you do really good, sorry. So
Geri Bresnahan 18:26
what if you claim it No, go ahead at your your full retirement age, and you claim it before that point, what happens?
Koren Vining 18:34
So if you are not at full retirement age, let’s say you go in at 60? Well, at 65, there’s no one for whom 65 as their full retirement age. So if any of you, in this conversation, decided to go ahead and claim your Social Security now. Number one, you’d get a reduced benefit from your full option. But then what they do is for every $2 over a certain number, and I can I have to look up the certain number, they’ll withhold $1 of benefits. And so usually, if you’re making 4550 grand, you may as well not claim because they’re not going to pay it to you anyway. And I don’t know how Chicago works. But in Colorado, I mean, even minimum wage jobs are going to put you at that level. So prior to your full retirement age. Well, I think you should just work and not claim Social Security or not work and not claiming Social Security. Because the delay credits between your full retirement age and age 70 are so incredibly powerful. That if you can possibly afford to wait, please wait.
Maggie Nielsen 19:51
And so Karen, that’s kind of what you did, correct?
Karen Van Maldegiam 19:54
Yes. So we’re right. I am not collecting Social Security and My husband is like I said, he’s still working. He’s not claiming Social Security either. But yeah, I’m we’re looking to wait until 70 For for both of us, because we both maxed out everything. But the big, the big question mark is our daughter, right? Because after you, after you go on Social Security, you have to wait two years before she can get her full Social Security benefit on whoever, whoever makes more, right, whoever made more over their career, either me or my husband. That
Koren Vining 20:36
does, it does? Well, like everything, right? When you’re, when you have anyone else to take care of even spouses, you know, you can’t look at your your social security decision in a vacuum. Well, you can. And you, you know, if you don’t look at it in the context of who needs your benefits, in addition to you what other assets you have, you can leave a lot of money on the table bluntly, with Social Security, right.
Barbara Provost 21:07
And then I just for anyone who’s listening, who’s divorced, they can claim their ex husband’s Social Security. And you can, of course, give us the expert opinion. But my understanding is, your ex husband doesn’t need to know that it doesn’t impact his social security do want to touch on there.
Koren Vining 21:25
Yeah, essentially, as long as you can prove that you were married to this person for at least 10 years. You they’ll never know. And basically, the Social Security Administration will pay anybody that qualifies. And so even if you have an ex husband, you could have three ex husbands, and you would is what whichever, if three of those marriages lasted 10 years, they’ll actually give you the best benefit of the three. And then as if you remain on married, as those three men die, if you were to outlive them, you get whichever is the best survivor benefit as well. So as long as the marriage lasts 10 years, that’s really critical. And then also, if you’ve remarried, you can’t get if they’re alive, and you’ve remarried, you can’t have anything off your ex, if your ex is deceased. And you waited to remarry until after you were 60 years old, you can get the Survivor Benefit off a deceased ex. It’s some of these rules are crazy to me.
Maggie Nielsen 22:45
I think just the important thing to note there is like you know, whatever you take doesn’t take out of their pie. You know, it doesn’t need to start a fight. I don’t need to know about it. It’s just everyone’s got their own pie. And that’s great to know. So no one. Yeah, no head butting there.
Koren Vining 22:59
There’s there’s nothing they don’t they won’t know. I actually I was running a class one time and I had a man asked me if there was any way to prevent his ex from claiming off. And of course, no, he, I had to say no to that. Can’t
Geri Bresnahan 23:16
imagine why he’s divorced. Right.
Barbara Provost 23:21
Maggie, did you have a question?
Maggie Weiss 23:24
Yeah. I wondered if everybody understands about IRMAA, because we’re in a position right now. Where could you corn? Can you tell us I can’t remember what IRMAA stands for income reduction.
Koren Vining 23:37
It’s time related. Medicare adjustment. I think there’s two A’s and I can’t now that you’re asking me, I can’t remember the second a, what I will tell you is this is a huge part of the income planning that I do for people. Because basically, once you sign up for Medicare, which is another consideration by the way of maybe whether you stay on an employer plan versus going on Medicare. So if you as a household, make over a certain level, it’s an art, it feels arbitrary. But you if you go $1 over this level, you lock in a surcharge on both your Part B and your Part D and you can’t fix it for two years. Although I will throw in theirs. If you have an event, a qualifying event, for example. You retire in June. So maybe for that year, because you worked for half the year you’re gonna go over the limit, you can actually apply for an exemption on on Irma, but right now for a joint household if the joint modified adjusted gross income is over 206,000 and then There’s a scale where it keeps going up. So key factors here are, if it’s too hard $6,001, you, you get the surcharge. But number two is they add back in to when they make that calculation, they add back in some things that you normally don’t pay taxes on. And the most notable is municipal bond income, which everyone loves Munis because it’s, you know, federally tax exempt income. But a lot of my clients have to phase them out of that before Medicare because of Maggie exactly what you’re talking about. And that’s also a reason that people have to plan ahead for age 73, which is when you’re required minimums come out. Because if your required minimum pushes you over those lines, you still have to pay. So I do in that timeline, right between? Well, whenever you start knowing this information, and the time you hit 73, it’s really important to be working with your financial planner and your accountant on making sure RMDs don’t push you over that line. But Maggie, I’ll tell you when your husband does retire, like if you guys have the arrma when he retires, you can submit I think it’s called an sr 99. You can submit a form, what is it? 44. Look at you already look at you. Good job.
Maggie Weiss 26:40
So we’re in the middle of because David did retire two years ago. Okay. So he, he’s got his IRMAA adjustment, accepted and processed. So what that means you guys is his payment is going down. Oh, good from me if it was 334, now 270. And they have a chart and all, all these payments are a row. So it’s not going to change. It’s the $1 over type of situation. But so they calculate my SS income based on David’s income. So I’m way over $500 for a short time until my numbers get processed, and possibly in 60 days, we’ll wait. It’s going to be the end of June, possibly by the end of June, I will have the reduced payment.
Koren Vining 27:31
Adjustments. Good. That’s awesome. And I actually just learned this today that there’s that if you get a letter from Medicare about an Irma adjustment, you have a deadline of when you can file for file the SR 44. So those letters come out often in November. And so people have to make sure that you know, by the end of January that they filed for those exemptions. Could you you will know all this stuff. This is amazing. Oh,
Barbara Provost 28:02
these are bright. Yeah, I’m telling you, they do their highlight. But there are still questions. I mean, everyone’s trying to wade through it based on their own situations. And what I love is bringing these different situations to light for other people who are listening and they were like, gosh, I I had no idea you know, or no one ever talked to me about that. Or for women who don’t realize that this is the value of having a financial planner, right? I mean, you can study all this stuff and know all this stuff based on these certain situations. But you know, they talked about it, they read all their mails, their incoming mail, talk to the right people up, but there’s still questions we’re always still learning.
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Barbara Provost 29:25
You said there’s something we need to do at 65? Yes.
Koren Vining 29:28
So at 65 Well, ideally a few months before you turn 65 You need to make a decision of whether you’re going to enroll in Medicare, or if you have creditable coverage from an employer, then you don’t have to enroll in Medicare. I will say it’s super important, in my opinion, that you actually go to HR and get a piece of paper that says you have of creditable coverage. And you also have to make sure that your prescription plan with the employer also, like separately is good enough. My ex, an ex family member of mine, I’m recently divorced, locked in a lifetime of Part D penalties, because they didn’t know that the Part D was will a required and that it has a separate qualification for creditable coverage. So. So basically, within the timeframe that you’re turning 65, you have automatic and you have an open enrollment period, basically based on your birthday. And what’s also really important as you want to start making decisions about whether you’re going to do an advantage plan or a supplement plan, because this is the window when they can’t take into account pre existing conditions. And also, you have to think too, about what if I am not as healthy in five years as I am today. So for example, if you start out on an advantage plan, and then need to switch over to a Medigap plan, there can be pre existing condition limitations. So I could keep going, but I’ll stop for a minute.
Maggie Weiss 31:39
But um, Koren, I’m wondering, can you tell us a little bit more about that, um, penalty, the party penalty that doesn’t? It sounds like it doesn’t ever resolve if they’ve messed it up at the
Koren Vining 31:51
beginning? No, it’s basically there, the penalties for not enrolling in Medicare are permanent. So there’s the IRMAA, which is simply an income based adjustment, right? It’s not a penalty, it’s an adjustment. But the penalty comes in is is when you didn’t follow the rules, right? So you didn’t apply, you didn’t sign up for Part A and B when you were supposed to or you didn’t sign up for Part D when you were supposed to. And kind of like the penalties that came into play with the Affordable Care Act where now all of us are subject to penalties if we don’t have health insurance. With Medicare, it’s the same, but it is a permanent penalty. So I don’t know. I I don’t know the schedule of the penalties, I could find out. But whatever is assessed is forever. Well, till you die.
Geri Bresnahan 32:52
Actually, I might be married to a loophole because he did not sign up for Medicare at the time or the party. But there was something that because his employer had more than 20 employees that he was able to get on without penalty. But that was the only reason. And I don’t know if that holds true, but
Koren Vining 33:12
it does. Okay. That’s That’s what I was. That’s part of the creditable coverage exception. So if, if you or your spouse is covered on an employer plan with at least 20 employees, and the coverage meets the criteria set by Medicare, then you are you’re off the hook, no penalties. But that’s why that’s why I recommend though getting the piece of paper, right from HR or, you know, the the health insurance company. The other piece that’s interesting is that there are some not good exceptions with if you’re on COBRA and then being able to go into a Medigap plan with pre existing conditions. So I’m going to say I don’t know enough to reel it off the like, I’d have to go look at my notes. But if you’re in a situation where you’re considering COBRA coverage in lieu of Medicare coverage, email me or ask your financial planner, and I’ll look up the rules for you. I don’t claim to have them all memorized, by the way. So I just claimed to know where to go.
Maggie Nielsen 34:32
I feel like everything here is like an if then statement. And you just have to like follow it all the way down to follow the charts because there’s like so many acronyms. So if you’re listening and you’re lost, like this is why we work with a financial professional for all like our if then scenarios because that you can see there’s so much going on. Karen, what was your question?
Karen Van Maldegiam 34:51
Isn’t there also some sort of rules about HSAs? Yes.
Koren Vining 34:56
Oh, I’m so glad you asked that question. Yes. A lot of people miss this. So the minute you’re in Medicare, you must stop all HSA contributions. You can keep the account, right, and you can still use the account. But you have to stop contributing as soon as you’re on Medicare. And there’s no exceptions. Like, it’s just, you’re just must stop. So yes, thank you, Karen.
Geri Bresnahan 35:28
I think that’s the big fear is that there’s so you don’t want to sign up for anything or choose anything? Because you’re afraid of like, Did I miss something? Or is should I have done any better? Or is this going to hurt me? Because there’s so many things like, once you do this, you can’t go back.
Maggie Nielsen 35:42
But it’s also if you don’t do anything, so it’s that like, you can’t be in the analysis paralysis forever? Because if you don’t take action that can also bite you.
Koren Vining 35:51
Well, and and that’s why, I mean, that’s why people like me have jobs. Right? It’s so you know, sometimes I sometimes we nudge you to, to make the moves that you need to make? Because that is real, the paralysis? I see it. I see it all the time.
Maggie Nielsen 36:12
Maggie, what questions did you have?
Maggie Weiss 36:14
I just wanted to clarify HSAs Health Savings Account? Oh, yeah, we did something else. But um, yeah,
Koren Vining 36:21
they’re the ones that you can do if you have that, like a high deductible plan. Side note, what’s cool about HSAs, if you are still able to contribute, is you you can use them for your the entire duration of your retirement as tax free money for medical expenses, not your Medicare premiums, but your medical expenses. And that’s actually a little loophole for folks that are in the accumulation phase. If you’re too high of an earner to do a Roth IRA, for example, you can you know, do an HSA, and then just keep the HSA intact and pay still pay out of pocket for medical expenses. And then you’ve accumulated this bucket of money that, yes, it has to be used for medical, but it’s tax free. And we’re all going to have medical expenses.
Geri Bresnahan 37:15
Would you explain what’s what is the difference between a Roth IRA and another IRA? I’m not clear on that. Yeah,
Koren Vining 37:24
no, I, oh, I’d love to, um, when IRAs first started, we would put money into them pre tax, right. So it would lower your current taxable income. And the presumption was that when you were retired, you would have less income, therefore, lower income taxes, right. So you’re kind of kick the can down the road on the taxation. While I’m, I don’t remember what year, maybe 2025 years ago, the Roth came out, and it flip flops when you pay the taxes. So instead of paying the taxes at retirement, you go ahead and pay your taxes now on money you’re earning, now, it goes in the Roth. And as long as you follow the rules, your contributions and all the growth are completely income tax free. Now, you can’t make too much money to be able to contribute to a Roth. But I will tell you a trick is that no matter how much money you make, you can actually convert money from a traditional IRA into a Roth. And also, if most employers now are offering Roth 401 K options, and again, no income limitation on a Roth 401 K option. And so a lot of my high earners, I’m really pushing them to suck it up and pay taxes now, and use the Roth 401 K. Because, you know, I don’t know what’s going to happen with the tax code. But I do know that we are at historically, the lowest levels. And so they’re certainly not going to get any lower. And I have to assume they’re gonna get higher at some point in time. And most people’s income in retirement doesn’t go down that much. Like our lifestyles don’t really change that much. So, um, so yeah, I’m like Roth all the way. And it’s also how we solve some of those IRMAA problems that Maggie was awesome enough to bring up is, you know, if you can shuffle money over into Roth IRAs, then there’s no requirement on distribution. So you don’t get an aroma surcharge, maybe, and so much better to leave a Roth to your kids than a traditional I don’t know if everyone knows this, but if, if if I inherited an IRA from my dad, I have to pay income taxes at my tax rate. Not at his. So, you know, we all hope for our kids to be successful, right and do well for themselves. So if if that’s your hope, then you also might not want to leave them a traditional IRA, it’s better to leave them a Roth.
Karen Van Maldegiam 40:18
So isn’t there a tat what they call a tax bomb? So when? Well, two things, one is when there’s an IRA, and you inherit it, don’t you only have like, 10 years to take it? Or a short amount of? Yeah. And then what if you have an IRA, you have to start taking distributions? And that could put you you know, in? I don’t remember all the details, but I think you have to take it over a certain period of time or start taking it. Yeah.
Koren Vining 40:49
So if you inherit an IRA, I’ll I’ll exclude spouses, if you inherit an IRA from your spouse, you can just take it over as your as your own right. But if, if I inherit an IRA, I have to liquidate the whole thing within 10 years. Now I can choose, right, if I want to take it out pieces, or, you know, however that goes, but I do have to take the money out within 10 years, and included in my personal income taxes. And if I’m having an inherited IRA, at the same time that I’m 73, then I’m also having to take those requirements comes from my own account, which is going to push me up, maybe push me up a tax bracket for ordinary income taxes. And also could could put me in in territory of those IRMAA surcharges that we were talking about. Is
Karen Van Maldegiam 41:45
there any way around any of that?
Koren Vining 41:49
Well, um, medically, yes, yes. There’s, there’s a couple of things. Um, you know, I guess I’ll speak to if if we have accounts that we’re going to leave to somebody someday. You know, one of the things I look at with, you know, all my clients, I’m hoping you’re sharing your estate plans, for example, with your financial planner. And so somebody comes to me and says, I want to leave money to charities, I want to leave money to my children, right, I want to leave money to, I don’t know, my nephew. What you can do is, for example, leave the IRA money to the charities, because the charities don’t pay income taxes, and then leave the Roth or the non qualified securities, to the kids. Also, life insurance is amazing for taking care of tax problems. It’s even in retirement, it’s a it’s a phenomenal tool, because it’s immediate, tax free cash. And it can allow your beneficiaries if they do have a tax bomb, right to help them pay for it. But also, I mean, if you leave a $2 million property to your, you know, that’s $2 million today, and it’s worth $10 million, when you die, and you leave it to your kids, the probability is the IRS is going to want some estate taxes out of that. And they don’t take like a portion of the deed. So you know, the family would have to sell the house or mortgage it or all these other things. So when you talk about solving tax problems, whether it’s a state or income. Insurance is really powerful for that. It’s so
Maggie Nielsen 43:41
it’s so interesting, because I’ve talked to so many different women and some are like, what my kids get they get that’s their burden. They’re lucky they get something and which I could see, absolutely. But then there’s also other people who are like, Alright, I want to make sure that whatever I have, they get the most of the least is about to tax, and I want to put them in the best situation and not make the inheritance a problem. And so it’s funny, you know how forward thinking or not, you know, people want to be, and you know, we could all see both sides, but it is not just planning for us and our tax burden during retirement, but what that looks like kind of handing it off. And like I said, some people don’t care and some people do want to make the most of that money. And I’m sure you know, there’s everything in between.
Koren Vining 44:23
Yeah. One comment I would just make on that is that I think that most people if they understand that they’re having to choose between leaving their money to their kids and donating it to the IRS. Most people won’t choose the donation to the IRS. And sometimes people don’t understand that that’s what they’re doing. And so right you know, another reason why we, you know, talk with our girlfriends about what’s going on and we talk with our planners. Yeah,
Karen Van Maldegiam 44:55
I think the planner and your tax advisor need to you need to Have both really?
Koren Vining 45:02
Absolutely, yes, absolutely.
Barbara Provost 45:04
Yeah. And an attorney so that you have Goodwill’s and POS and trusts and all that
Maggie Nielsen 45:09
probate. Yeah.
Barbara Provost 45:13
Well, this has been I mean, I think we went over our time. I think we could talk for a couple more hours, there’s a lot more questions, we may have to tee something like this up again. But let me just ask you a closing question for my BFF. So how do you want to spend your retirement? What is working all those hard years? look like for you? And how do you want to spend your time when or if you’re retiring?
Karen Van Maldegiam 45:36
So I guess I’ll start since I’m retiring? So, you know, that was a real, that was a question that I had I and actually, I asked some, some of my BFFs, you know, that were retired. It’s like, what do you do all day? Right? Because, because, you know, we went to school, and then we, you know, then we worked, you know, and that’s taken up the majority of our life. And, you know, I wasn’t convinced they were telling me oh, I do this, I do that it’s the best thing ever. I’m like, yet, right. But actually, I would say, and I know, core, and you, you have three stages of retirement on your website, and I, I think the 60, you know, being 60 and are in your 60s, I think, is one of the best times of our lives. And I have never been bored. You know, I’ve been retired, you know, five years, and I’ve never been bored. And I’m really enjoying life. I, you know, I have time, I was able to spend a lot of time with my parents, before they passed and time with family, which, you know, could be good or bad, depending, right? But no, I mean, kidding aside, it’s been great. And then really just time with friends. I mean, there were so many years as you were raising your kids and working your butt off, that I lost touch with so many people, I mean, people from grammar school, this group, right. And I’ve really reconnected. And then all the things that I wanted to do, you know, that are on the bucket lists, even weird things, like, you know, paint by number or join a book club. And, you know, I’ve been traveling a lot, and I spent a lot of time, I never realized how much I liked the outdoors. You know, I sat in office all the time. And so I’m really enjoying it. And, and, you know, I think once a, it’s kind of weird, because I set goals when I retired. This is how I want to spend my my time. And it’s a pie chart. And you know, I’ve got like the plan and the actual so and then I try and jump but you know, it really keeps me It keeps me kind of, you know, honest, so to speak. And, you know, I enjoy I spend a lot of time with my friends, walking, kayaking, bike riding, all that kind of stuff. So it’s really, to me, it’s, it’s kind of like when you were young, and you could do all the fun stuff. Now you’re older, and you can do some of the fun stuff. But but you got the money now to do it too. Right. And and the time. So it’s, it’s really a great, you know, a great time of life, at least from my perspective.
Barbara Provost 48:18
Awesome. And you plan that? I mean, you plan all of that out with your financial advisor and your financial
Karen Van Maldegiam 48:25
advisor, you know, one of the questions they ask is, so how do you want to spend your retirement? And, you know, it’s a lot and I’m like, I don’t know, and we thought we’d move, but you know, what we I think it’s it’s kind of evolving and evolving plan. So we thought we would move and downsize and all that kind of stuff. And what we realized is, you know, what we really want to be by family and our friends. And, and that’s what we have here. So. So we’re here and when it gets cold, then we’ll go someplace warm.
Koren Vining 48:58
That’s incredible.
Maggie Weiss 48:59
So I’ll chime in, because we also thought we would move and surprisingly got a dog two years ago. And so we really liked the yard. But we went around looking at houses and everything when before the interest rates went through the roof. And it’s incredibly difficult to find a spacious, smaller house, even if even without a huge yard, which we have now. So we’re kind of in a holding pattern, because I’m really not sure what’s going to happen in the housing market. And you see this big studio behind me. I know I would like to come to the studio for a couple more years, but I need to downsize and to find a smaller house that even would have a decent garage that I can convert or something like that. It’s been tricky. So the other complication is kind of like Karen’s situation. Although David’s retired from his academic job, he is still working on writing papers and solving theory. So he’s not ready to get the camper and drive across the country with me. Or, you know, check out every national park. I can barely get them to one a year. Maybe
Karen Van Maldegiam 50:11
we should, we should connect and go go camping around the country because yeah, Dave that my Dave’s not buying it either. He’s like, no.
Maggie Weiss 50:20
Okay. Well, so I think I remember growing up hearing about your trips, Karen, because Didn’t your family going to camp we camped
Karen Van Maldegiam 50:28
for years and even even after we were, well, not after we were married, but before we were married, we camped a lot. Well,
Maggie Weiss 50:36
I was in awe of that. So that’s on my bucket list.
Geri Bresnahan 50:40
What’s my retirement is interesting, because since I did my career, part two, I’m like, what people are retiring at 65. I’m just gonna start it. And I’m like, What do you mean, you have a lake house there, and you’re going for like, three months. So fortunately, I have the consulting. So I can, it’s sort of flexible. So I want to learn how to I thought I was going to move to Colorado. And then I went there. And I’m like, No, I would miss family. But I do want to learn how my goal is to learn how to downhill ski, without it taking me three hours to get down the hill, because I’m always ready, buddy or myself. But I’m traveling, I’m going to run a marathon with my sons in Scotland. So those are my and then the housing market too, is kind of, you know, kind of holding you back. So we’re, it’s kind of in limbo, we’ll have to see apart What’s
Maggie Nielsen 51:29
your retirement looking like?
Barbara Provost 51:31
Well, you know, purse strings is my passion project. And I love working with Maggie. And this is a, this is such a sweet spot for me like it’s not work. I just love this work so much. I think it’s such a gap that’s out there that I’m really hoping to fill for so many women. I think it’s what I was ultimately born to do you know how we have to kind of find our space. So I love it. But I do kind of look at those, you know, those cruises along the Rhine and things like that. And I think to myself, you know, we should just book one of those and do it. So I’m trying to you know, dip into a little bit more retirement behavior. But purse strings is my my passion that I think I will continue to do for a while. Not ready to give it up or even think about that. And then tennis. Tennis is my thing. I love tennis. I watch tennis. I play tennis five times a week. So that’s my favorite thing to do. So, Maggie, what’s your retirement plan?
Maggie Nielsen 52:33
Yeah, we don’t know yet. I’m playing right now start funding it and go back to its original post of will Social Security be there when you need it? We will talk about that one later. Because that one is long way down the line. But you know Barb’s not going anywhere anytime soon. But no, this has been wonderful. I think there’s been so many different you know, action steps to take out of this depending on where you are. Maggie, Geri, Karen, we appreciate you coming on here and sharing your stories as well as Koren you know giving us that all those experts all that expertise and I think we really highlighted why you do need this professional team and it as a team those tax the state the financial planner, as there’s so many if then statements going on, we got to make sure we don’t leave any cash on the table. Does anyone else have any parting thoughts before we sign off today?
Geri Bresnahan 53:22
This was great. Thank you. Thank you.
Koren Vining 53:25
Thanks for including me, this was so much fun. God
Maggie Nielsen 53:28
I’m glad everyone had fun today.
Maggie Weiss 53:30
Thanks so much. Thank you yours.
Maggie Nielsen 53:33
So yeah, thank you for tuning in. Remember to like and subscribe because that helps us grow and remember just to take one small action is that so important to do? So let’s keep talking about this shit and we’ll talk to everyone soon.
Announcer 53:46
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