Today’s Prep:
Think about the taxes! Eric answers three questions from the mailbag today that all involve financial decisions with tax implications.
(Click the featured times below to jump forward in the episode)
Equipping Points:
Allison in Johnston is about to turn 65 with plans to work another 2-3 years. She just found out that her previous employer’s pension requires her to take money as soon as she turns 65. Should she take the lump sum or monthly payment? Eric says to think about the tax implications. It all depends on your plan, how much income you have, and what you need to make your plan work. Getting a retirement review with a financial advisor may help as you make this big decision.
Larry in Ankeny has retirement savings, credit card debt, and a mortgage. Should he take out the retirement savings to pay off the debts? Eric says the answer really depends on your age, where your assets are, and the taxes. The credit card debt with the high-interest rate should be paid off sooner. Whereas the mortgage payment, you might want to consider if it is worth paying off just yet.
Renee in Des Moines does not have a complex legacy plan, but wants to leave something behind to her son, sister, and the church. She has life insurance, retirement savings, and then a house. Does it matter who gets what? Eric says, yes! Think about how things will be taxed and what will be more beneficial.
Listen to the entire episode or skip ahead to a particular question using the timestamps below.
[0:46] – Mailbag: Should I take the lump sum or monthly payment for my pension?
[4:55] – Mailbag: Should I use my retirement savings to pay off debts?
[9:57] – Mailbag: Does it matter who gets what asset in my legacy plan?
Today’s Takeaway:
What people don’t look at is: how about the tax nature of that pension? That pension is 100 percent taxable.
-Eric Peterson
Related Resources:
Subscribe To The Podcast:
Apple Podcasts - Google Podcasts - Spotify - Stitcher - iHeartRadio - TuneIn
Check out some other recent episodes
Stories People Tell Themselves
When it comes to where you’ve ended up financially, you may have a running narrative on how that happened. There are a number of common stories people tell themselves to make sense of their situation. On today’s show we discuss some of these stories and how we can both understand them and improve upon them.
Read MoreFinancial Main Characters and Secondary Characters
When you watch TV shows or movie, it doesn’t take long until you realize who is the main character or who is more of a secondary character. When it comes to your financial life, which strategies, products, or tools are main characters in your financial plan and which ones are secondary?
Read MoreSeparating Your Money
Do you have all of your money in one place? Sometimes your money should be kept in separate funds and separate places so that it can be used for the appropriate purposes. You want to be able to access the money you have when you need it, both now and in the future.
Read MoreRescuing Old Accounts
Do you have an old account laying around collecting dust, so to speak? Instead of forgetting about these, it’s important to find them, assess them, and get them up-to-date. It may even be an easier process than you think.
Read MoreSECURE Act 2.0 – What Retirees Need to Know
Congress passed the SECURE Act 2.0 at the end of 2022, and you might have missed it because it was part of a larger bill.
Read MoreRetirement Lifestyles
Retirement planning is so much more than simply having enough money socked away. Social activity, hobbies, skills, physical activity, and routines are all big components of your life now and likewise, should be in your retirement.
Read MoreGood Intentions and Financial Advice
How can you use your money wisely? Eric answers three questions that range from short-term travel plans to long-term estate planning decisions. While it’s good to be a good steward with your money, remember what it’s really there for.
Read MoreMailbag: Should I Invest Unused Travel Funds Into Something More Practical?
How can you use your money wisely? Eric answers three questions that range from short-term travel plans to long-term estate planning decisions. While it’s good to be a good steward with your money, remember what it’s really there for.
Read More