Every year in January I let my clients know what their RMD (required minimum distribution) will be for this year. This year I was able to notify 16 clients that they did not have to take their expected first RMD at age 72, here is why:
You may have seen recently that Secure Act 2.0 was recently signed by President Joe Biden. I wanted to reach out to let you know how this impacts you directly in 2023. Previously, if you reached age 72, this would have been the year your Required Minimum Distribution must begin. However, due to the recent law change, you are not required to start taking distributions from your retirement accounts until you turn age 73. Of course, you can still take distributions if that is part of the plan, but you are not required to do so until next year.

My clients can allow their funds to defer for another year…. Or will it change again?

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Never Live Above Your Means
Live like you make 10% less than you do, stash that extra cash in a bank account that is inconvenient to go to, you will think twice before making a withdrawal.

Never Donate Money over the Phone
Always ask for information from the charity be sent to you via mail, that way you can see if it is legit and do your homework.

Never Shop when you’re Emotional
It is just like eating when you are bored, you over indulge, end up with stuff you don’t really need or may not even like.

Never Buy a New Car — If You Can Help It
I always buy a car that someone else leased and returned. The car will be low mileage, well maintained, still have warranty, and be a good price.

Never Post Money or How Much You Make on Social Media
It is nobody’s business how much you make, and you make yourself a target for a number of unwanted solicitations.

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Cheap people and frugal people are two very different types. Cheap people focus on price first, when it comes to spending their money. Frugal people focus on quality first when it comes to spending their money. Whether you consider yourself cheap of frugal, it does not matter if you do not have a handle on your spending.

We are in a new year and now is the perfect time to start new habits. Take a hard look at how you spend, are you analyzing as a cheap or frugal person, then spending like you have no worries at all?

Here are two tips to help you spend and save. First tip: set a dollar limit that you can spend each month without any thought as to what or why you are spending, maybe $100/month. Second: set up a savings or investment account separate from your regular bank account or credit card. Every paycheck make sure to move a fixed amount to this separate account, this will force you to save in an area that is not readily accessible, thus forcing you to accumulate long term wealth.

Frugal or cheap does not matter if you overspend in the end.

Disclosures:http://www.hechteffect.net/?page_id=31

The New Year is upon us and it is time to think about change. Everyone hates resolutions, so don’t worry, I will not ask you to make of list of things you resolve to change.

I am asking you to think about each item as you purchase throughout the coming year. We all know that everything has gotten very expensive, and many items are not ever available right now. How you spend will have a huge impact on your short and long term financial success.

I would like you to look at each item you plan to buy; I don’t care if it is at the grocery or online, then ask yourself “Do I need this or just want this”? Need of course have to be purchased, wants are another story.

If you are considering purchasing a “want” item, can you pay cash for it? Why do you want it? Will it be detrimental to your financial success?

It is a simple, maybe painful question, but planning for the “want” items vs impulse buying can make you a prudent shopper and help lead to financial success.

Disclosures:http://www.hechteffect.net/?page_id=31

I know, I keep giving you things to do. I just want to make sure you have a successful 2023!
Please review these items:

Evaluate Your Credit Cards
Interest rates have gone up a lot this year, pay your cards off, then, and make sure you do not carry balances next year.

Dive Deep into Your Budget
Look at where you are spending. Are items needs or wants? I have said it in the past, how you spend will have a huge impact on your future.

Review Your Investments
Now is a great time to look at your asset allocation, the performance of your funds, and how much you are contributing to your plans.

Disclosures:http://www.hechteffect.net/?page_id=31

End of year tasks can be daunting, but going over this list is one you should not ignore.
These items will help you move into the New Year with a smile and sense of relief knowing that you have taken care of yourself.

Max out your retirement contributions. The money will go to the IRA or you – which do you prefer?

Look at a Roth conversion if it makes sense from a tax standpoint. Can you pay the taxes on the dollars you convert out of pocket? If so, this may work for you.

Match up Capital Gains with Capital Losses.

Look at all of your insurances to make sure you have the coverages you need.

Fine-tune your budget. How you spend is more important than how you save.

Once you have finished this checklist, you can move on to the holiday checklist with a clear mind!

Disclosures:http://www.hechteffect.net/?page_id=31

1. Avoid selling your investments
It can be tempting to pull your money out of the market when the economy is in a slump. Recessions and market downturns often go hand in hand, and if we experience a recession, there’s a chance that stock prices could fall even further. Any dividends being paid will reinvest on sale that is a good thing.

2. Strengthen your emergency fund
Because downturns are one of the worst times to withdraw your money from the stock market, it’s especially important to have a healthy emergency fund. Ideally, this means having enough savings to cover at least three to six months’ worth of living expenses.

Step back, take a breath, and stay the course. You are investing for the long term.

Disclosures:http://www.hechteffect.net/?page_id=31

Apparently, the Secure Act did not provide enough for us, so there is a part 2. Secure Act 2.0 has not passed yet, but here are the provisions:

Starting in 2023, the age for taking RMDs would jump from 72 to 73. Then, starting in 2030, it would creep up again to 74. And, finally, it would rise to 75 in 2033.

Allowing 401(k) safe harbor plans to replace SIMPLE plans mid-year. Penalty-free withdrawals up to $1,000 per year to cover personal or family emergency expenses.

Additionally, under current law, failure to comply with RMD requirements results in an excise tax equal to 50% of the year’s required distribution amount. New proposals would decrease the penalty to 10% or 25% if the individual promptly corrected the failure to take a timely RMD.

I like these provisions, we have no idea if they will pass or not.

Disclosures:http://www.hechteffect.net/?page_id=31

Last week I lost 5 clients, they were all between 87-92 and had been clients for 30 years. It is always so hard to say goodbye. I met most of these clients when they were getting ready to retire. I have gone through many life-cycle events with them, met their children and grand-children, many of which are now also clients. Economically, we have been through a lot together. There have been 12 market crashes, countless tax law changes, and many different administrations. Through all of this I am touched by the comments from their families as to how easy their retirement lives were.

I am honored to have known them all.

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