Tax Planning

A Better Way to Take Your RMDs
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!

The Top 3 Risks in Retirement
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.

Social Security’s Unintended Consequence
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.

Turn Your Roth IRA Into a Super-Roth
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.

Why Your Home May Be Your Best Tax Friend
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.
Why Millennials Prefer to Rent Instead of Own
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?

The Challenges Faced by Millennials
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.