Retirement Planning

Lucia Capital Group Weekly

A Strategy That May Save You Thousands in Taxes This Year

January 23, 2020

Of all of the bills you pay in your life, your tax bill has to be one of the hardest. Unlike with your credit card bill, or your electric or water bill, you get virtually nothing in exchange for shelling out your tax money. So it stands to reason that you’d like to pay only the absolute minimum amount in taxes over the course of your lifetime, if at all possible. At Lucia Capital Group, we love a good strategy – especially a tax strategy. If you’re in a somewhat high tax bracket, and you want to make a gift to someone in a lower bracket – like maybe your kids – you may be able to do it in a way that benefits both the recipient and yourself.

Lucia Capital Group Weekly

Why Tax Knowledge Is Power

January 16, 2020

You’ve probably heard the phrase “knowledge is power” many times in your life. It’s one of the few near-clichés that’s actually packed with truth. The more you know, the more power you have – either literally or figuratively. The phrase fits especially well when it comes to taxes. Many people find the very concept of taxation, or at least anything beyond the most basic elements of it, to be out of their realm of understanding. And it IS complicated. But sometimes all it takes is a little specialized knowledge in a few key areas for you to put yourself, potentially, in a much better financial situation, both now and in the future. So what is this tax knowledge? What do you need to know that could maybe save you from greatly overpaying your tax bill?

Lucia Capital Group Weekly

Three Smart Money Moves to Make in January

January 9, 2020

The 2020’s have begun, and you may have some wonderful new opportunities for financial planning! While some may tell you it’s never too late to get started, when it comes to money in general, and taxes in particular, waiting to take action may be the worst thing you can do. So now that the yearly calendar has reset, it’s time to think about a few things that you might do to potentially make this year a little more financially rewarding, and maybe a little less taxing as well. January can be a particularly good time, because by planning now, you still have (almost) the entire year to make any necessary course corrections along the way. If you wait to get started, your window of opportunity becomes much smaller. With that in mind, “Professor” Rick Plum is here to give you three smart money moves you should consider making in January.

Lucia Capital Group Weekly

A Better Way to Take Your RMDs

December 19, 2019

Here’s the situation: You’d like to give money to one or more charities this year. You’re also over age 70½, which means that you have required minimum distributions (RMDs) from your IRAs. You’ve decided you don’t really need some (or all) of the RMD to spend, so you’re going to give some (or all) of that RMD money from your IRA to the charity. You take the required distribution, it lands in your bank account, and you then turn around and write a check to your charity. You report the RMD as income, and, if you itemize, you deduct it out as a charitable donation. It should be a net-zero to you tax-wise, right? Maybe not. The way our current tax system works, you may have just subjected yourself to extra taxes by doing exactly that. Is there potentially a better way? Yes!

Lucia Capital Group Weekly

The Top 3 Risks in Retirement

December 5, 2019

What is the essence of financial planning? At its most basic level, it’s really all about risk management. This is true about any kind of planning, really. Whether you’re planning a vacation, a wedding, or a big project at work, it’s the risk side that gets the most attention. The greater you feel your potential risks are, the more detailed your plan is likely to be. When it comes to retirement, people often face more risks than they did during their working years. And while there are probably a dozen or more different types of risk that retired people face, most of them can be placed into three distinct categories: living too long, dying too soon, and getting sick along the way.

Lucia Capital Group Weekly

Social Security’s Unintended Consequence

November 21, 2019

You may have heard that Social Security Administration provides something called “survivor benefits,” where qualifying surviving spouses can receive benefit payments as long as certain conditions are met. These benefits were established back in 1940, when there was primarily one household wage-earner and one stay-at-home spouse. The intent was to ensure that if the wage-earner (i.e., the one with the Social Security benefit) died, the survivor would continue to receive that benefit and not have to worry about taking a cut in income. But now that there are so many two-income households, and thus (often) two Social Security benefits, the survivor benefit rules may actually create the unintended consequence of a real cut in your total benefit amount: ironically, the very problem that the benefit is supposed to solve.

Lucia Capital Group Weekly

Turn Your Roth IRA Into a Super-Roth

November 14, 2019

Roth IRAs can be wonderful savings instruments for people looking for tax-free growth potential. But because a Roth IRA is (of course) an IRA, that means you’re stuck with the relatively low IRA contribution limits of $6,000 (or $7,000 if you’re at least age 50). A 401(k) plan, though, has much higher contribution limits at $19,000 (or $25,000 age 50+). Further, some employers also allow for after-tax contributions to their 401(k) plan, meaning that you could potentially contribute up to $62,000 to your company retirement plan, depending on your age and some other factors. These higher deferral limits may offer you the rare opportunity to eventually roll all of your post-tax money from your 401(k) into your Roth IRA – WITHOUT having to do so on a pre-tax/post-tax pro-rata basis.

Lucia Capital Group Weekly

Why Your Home May Be Your Best Tax Friend

November 7, 2019

So have you thought recently about selling your home? If so, you might be selling at a good time.  The Case-Shiller US National Home Price Index tells us that the average price of homes across the country has gone up about 56 percent since its most recent low level back in February of 2012.  For some people in certain housing markets, that adds up to a lot of gain, especially if they’ve owned their primary home for the past seven years or more. But you might also be concerned that you’ll have to pay a bunch of taxes when you sell because your home has gone up so much in value.  Well, there may be some good news for you.  You may be able to keep most – if not all – of the money you get from the sale of your home.

Lucia Capital Group Weekly

Why Millennials Prefer to Rent Instead of Own

October 31, 2019

The Millennial generation is facing some unique challenges in life, and how those challenges are shaping their overall financial picture. One of the big things that Millennials are not doing, is buying a home. And it’s not necessarily because they can’t afford to buy one (although that does factor in for some of them); instead, they’re just choosing to rent. So what’s going on here? Are they just giving up on the American Dream of owning a home with a white picket fence, and two cats in the yard?

Lucia Capital Group Weekly

The Challenges Faced by Millennials

October 24, 2019

When it comes to money, it’s no real secret that the millennial generation tends to do things just a bit differently than the rest of us. And they have good reason. Since they were born, they’ve seen three decades of stagnant wages, a dot-com boom and bust, the Great Recession, and an income and net worth gap that’s at its highest levels in more than 90 years. They are facing some unique challenges in life, and how those challenges are shaping their overall financial picture.

Lucia Capital Group Weekly

Did You Just Get A 6.2% Raise?

October 10, 2019

If you look at your pay stub, you may have seen a deduction for FICA and Medicare. The FICA part is an acronym for Federal Insurance Contributions Act, which is the premium you pay that allows you to one day collect your Social Security benefits. Both you and your employer pay 6.2% of your salary as FICA, and the more you earn, the more you pay in both FICA and Medicare taxes. But while you pay the Medicare tax on an infinite amount of earnings, you stop paying the FICA tax at $132,900 of gross wages in 2019. This means that you get, in effect, a 6.2 percent raise for the rest of the year starting once you reach that level of income. What strategies should you consider with that “raise in pay?”

Lucia Capital Group Weekly

Which Pension Payout Option Should You Take?

September 26, 2019

If you’re one of the lucky people who own a pension, you may have noticed that it before you start receiving the payments, it will offer different payout amounts. Normally, if you are married, benefits have to be paid in the form of a “qualified joint and survivor annuity”. This annuity pays a certain dollar amount to you during your lifetime, usually monthly, with at least 50% of that amount continuing to your surviving spouse after you pass. People who want to maximize their monthly retirement income are often tempted to choose the higher-paying single-life annuity for exactly this reason, but many of them are also concerned about providing for their spouses after they die. So how do you solve this problem? One way to potentially do that is through what’s called a “Pension Maximization” technique.