Give the Gift of a Lifetime

Your family means the world to you. You want your children and grandchildren to be financially protected, so they have the opportunity to enjoy life, live comfortably and worry less. As a fiduciary, financial advisor, I’ve helped clients’ open traditional brokerage accounts in their own names, and we’ve earmarked the money for their child (or grandchild). This lets my clients’ access their money while their child is still a minor and keep control of it after their child reaches adulthood. Then, when they feel their adult child is ready for it, they can transfer the account to an account in their child’s name. Or they could make their child the beneficiary of the account if they die or become incapacitated. With greater adult control comes higher taxes, though. They are taxed on any earnings at their current tax rate, rather than at your child’s. They will also need to keep in mind gift tax rules when deciding to turn over the account funds to their child, meaning it may not make sense to transfer all of the account’s assets at once. Life Insurance on a Child? After 22 years in this industry, I have heard the many pros and cons on buying a life policy on kids. I sincerely do not have a ‘horse in the race’. As a fiduciary, I am an investment advisor, but I do have extensive experience with insurance planning, as well. Without question, I am always going to do what is in my client’s best interests. And like every other financial product out there, it all depends on your unique circumstances. I would tell parents, first, assess your household budget. Then, take a strong, objective look at your own life insurance needs before buying a policy for your kids. Because, in general, your own life insurance is more important than your child’s. But if you’ve got it covered (human life value ‘covered’, that is), then there are some real benefits to child life insurance policies. Advantages such as, guaranteed insurability, and a cash value life policy acting as a supplemental savings vehicle for your child. And lastly, which we hope and pray, we will never need, is to cover costs if the worst were to happen. On a positive note, you can help your children or grandchildren preserve their ‘insurability’ by putting life insurance in place while they are young. When we are younger, many of us think we’re invincible. Take it from me (after a life-altering spinal cord injury at age 39) we are not! Whatever route you decide to take to give your children or grandchildren an early start down the path of financial security, either financial solution will almost certainly be better than not doing anything at all. Whether it is a traditional brokerage account, or a cash value life insurance policy, it opens up opportunities for helping pay for college, buying a new home or supplementing their retirement down the road. In my estimation, that’s a gift of a lifetime. Email me at garrett.wheeler@securitiesamerica.com for a free PDF resource brochure from Securian called, Gift of a Lifetime. Aloha! -GW SEA Financial Hawaii does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. SEA Financial Hawaii cannot guarantee that the information herein is accurate, complete, or timely. SEA Financial Hawaii makes no warranties with regard to such information or results obtained by its use and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

It’s RMD Time: It Ain’t 70 1/2 Anymore!

In 2020, President Trump signed the SECURE Act (Setting Every Community Up For Retirement Enhancement) into law as part of a far reaching “Further Consolidated Appropriations Act of 2020”. Although the SECURE Act was only signed into law about a year ago (December 2022), it’s mandates are already impacting U.S. small businesses and their employees alike.

What are RMDs (Required Minimum Distributions)?

The first word in this acronym stands out and is key: Required. Required Minimum Distributions (RMDs) are minimum amounts that IRA and retirement plan account owners generally must withdraw annually. The first RMD must be taken by April 1st of the year following your 73rd birthday. Let me explain let’s say you turn 73 years old on August 1, 2023. In this case, your initial RMD would be start by April 1st, 2024. In other words, your first RMD must be taken by April 1st of the year after you turn 73. As a side note, if you were born after 1960, then beginning in the year 2033, the SECURE 2.0 will extend the age at which RMDs must start to 75 years old. There are a lot of moving parts. But as you can see above, the schematic by Michael Kitces, explains the RMD details much better than just words alone.

There are a lot of detail to RMD planning. As an example, retirement plan account owners (like traditional IRAs) can put off taking their RMDs until the year in which they retire (unless they own 5%+ of the business underwriting the plan). Just know this, if you choose to delay taking your RMD, you’ll need to combine your RMDs (first and second) in the same year. That may create a problem by pushing you into a higher tax bracket. Talk to your trusted tax advisor to ensure you are following the guidelines and deadlines! Because, as with all things government-mandated, if you miss your RMD deadline, the penalties can be severe. Here are the IRS guidelines. 

A Reduced Penalty. Wait, What?

Yes, you read correctly. In the past, it was widely known in the planning community that RMD penalties were heavy. How steep? Well, under the prior rules, if a retiree overlooked or just flat-out missed the RMD deadline, they would be hit with a painful penalty of 50% of the amount not taken on time. Today, presently, that penalty has thankfully been reduced to 25%. And lessor yet, 10%, if you correct the oversight within two years.

By the way, even if you inherit a qualified (IRA, etc.) retirement account, it is still subject to an RMD. Note: Roth IRAs escape the RMD requirement in the account (IRA, etc.) owner’s lifetime, but get this: Your heirs will have to take RMDs). Nevertheless, overall, I like the changes and updates to RMDs. It allows hardworking Americans to keep their hard-earned money in retirement accounts for a longer period of time to earn more money for their future. And given the fact that we are all living longer, this can only help. -GW

At SEA Financial Hawaii, we do not provide tax, accounting, or legal advice. Clients should consult their own independent advisors as to any tax, accounting, or legal statements made herein. This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients.

Do I Need a Trust?

Oftentimes, trusts are used as a tax-reduction solution in the estate planning discussion, as part of our comprehensive financial planning process. But it can do so much more in the way of giving clients control over their immortal destiny. As you’ll learn, there are many types of trusts that can be used as part of an individual’s overall financial planning strategy. In our day-to-day meeting with advisory clients, we are finding that individuals need to also consider ‘non-tax reasons’ for the use of trusts. What are these non-tax reasons? Well, they include ensuring that assets pass to the intended beneficiaries at the time and in the manner desired. And defensively, to protect the assets passing to beneficiaries instead of creditors.

I’m often asked by some clients, ‘Do I need a Trust?’ And like many things planning, it depends on your circumstances. But without reservation, I wholeheartedly believe that trusts provide significant benefits.

And similarly, the reasons for establishing a trust are as different as the people who have them. Like financial planning, there are no two alike due to the uniqueness of each person’s needs, desires and concerns. Regardless of their personal differences, many people discover that a trust is a smart addition to their estate strategy. A properly structured trust can be a prudent way to hold and distribute assets. And, depending on the type of trust established, it can protect assets from creditors, reduce estate taxes, and allow for greater control over asset management and distribution after death.

Because SEA Financial Hawaii does not give tax or legal advice, we encourage individuals to consult with their tax and legal advisors to explore the concepts discussed below. However, we do have vetted resources—professional alliances—with various attorneys and firms that we share with clients. In fact, I accompany my clients on their first visit with an estate planning attorney, especially if being referred by us. This referred group of professionals can work you to help determine if, and how, a trust can be used as part of your estate strategy.

So, what is a trust? Investopedia says that a “trust is a legal entity with separate and distinct rights, similar to a person or corporation. In a trust, a party known as a trustor gives another party, the trustee, the right to hold title to and manage property or assets for the benefit of a third party, the beneficiary.” https://www.investopedia.com/terms/t/trust.asp

Simply put, a trust is an arrangement where one person agrees to hold property for the benefit of another person or persons. This is especially useful in situations where the beneficiary is vulnerable or under legal disability, such as when:

  • One spouse wishes to protect assets from their creditors so that they may benefit the other spouse.
  • The beneficiary is a minor.
  • The beneficiary is unskilled in financial matters.

Of course, this is only a cursory list. In the real world, the kinds of situations and outcomes are very broad, and again, unique as the people who have trusts. Years ago, I was told if you have a spouse, children and/or you own a home or substantial assets, you need a trust.

There are all kinds of trusts, with varied uses and purposes. But they all fall into one of two classes:

  • Living and
  • Testamentary.

Living trusts can be either revocable or irrevocable, and testamentary trusts are created at death based on terms in your will. The discussion that follows focuses on some of the more commonly used trusts, including an explanation of any tax advantages.

A Revocable Living Trust is a trust created during the grantor’s lifetime and allows the grantor (you) to maintain total control over the trust during your life. A revocable living trust is an efficient and effective way to transfer property at the time of the grantor’s death.

An Irrevocable Living Trust is a trust that is established by the grantor while they are still alive and which, by its terms, cannot be revoked or terminated by the grantor. One reason to choose irrevocability is to remove the trust assets from the grantor’s taxable estate. An irrevocable life insurance trust (ILIT) is probably the most common example of an irrevocable living trust.

A Testamentary Trust is a trust established under a decedent’s will is known as a testamentary trust, and the grantor is referred to as the “testator,” that is, the maker of the will. Testamentary means “at death,” and such a trust has no legal value or effect until the testator’s death, as it does not come into being until the testator dies. Because a testamentary trust is not actually established until death, the trust may be modified or revoked beforehand by amending the will. After the grantor’s death, the testamentary trust becomes irrevocable. Because it is created by a will, the assets of a testamentary trust are subject to probate and may be taxed as part of the estate.

As a fiduciary financial advisor, my mission is to do what is in the best interest of my clients. When clients ask me why they should have a trust documented and recorded, it comes back to one thing for me: Your desires and wishes. In my work, I find that most trusts are created to help minimize transfer tax consequences (i.e., estate and gift taxes, generation-skipping tax, etc.). However, I often share with my clients that they may offer advantages beyond the surface tax savings. Most importantly, trusts allow you (the grantor) to do what you really want to do with your assets, possessions and wealth. Again, it gives you control over your wishes. Not the courts. That’s invaluable. Years ago, a veteran advisor told me, ‘Just tell your clients this: if they don’t have a trust, the courts will have one for them. However, they may not like it, but by then, it will be too late…’ Yes, not eloquent, but it drove the message home for me.

Finally, here are more non-tax advantages of using trusts. First, control. Gives you oversight as the grantor. Then there is financial management. A trustee you select can ensure beneficiaries are taken care of. And it also provides protection against creditors. An important benefit to some is the use of ‘staggered distribution ages. I have a client who wanted to ensure that the trust made distributions to his children over a period of time to enable them to become more mature and learn how to handle financial matters. In this client’s case, income from the trust was distributed annually plus one-quarter of trust funds (corpus) at age 25, 1/3 at age 30, ½ at age 35 and the balance at age 40. If there was no trust in place, the inheritance would be handed to the children at the age of majority (Hawaii recognizes the age of majority as age 18).

As this brief article explains, it is imperative that you work with an experienced professional. We can provide you with an overview, as well as the costs associated and the complete details including a referral to an estate planning attorney. As indicated, there are a lot of moving parts. But remember this: Life is unpredictable, and procrastination can really hurt you. So, take action today to protect those you love. And I guarantee, you won’t regret it. -SEAFIHI

At SEA Financial Hawaii, we do not provide tax, accounting, or legal advice. Clients should consult their own independent advisors as to any tax, accounting, or legal statements made herein. This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients.

Key Points to Help you Feel more at Ease with this Nutty Volatility

Epic volatility is the norm? Check out this list from the LPL group. First point they make: This. Is. Normal. I love it. Good stuff. The message is this: Hang in there, you’ll be rewarded. And finally, to make you feel better, you’re not alone…

LPL’s article started off with a reassuring message in these times of nutty volatility. It said, “Although market uncertainty might make you feel jittery, keeping your investment cool is critical to your financial success.” I totally agree. No doubt, it’s difficult watching your cherished portfolio bob up and down. Before you drive yourself batty, consider these six things before, as LPL puts it, “acting out of emotion”:

1. Again, remember “This. Is. Normal.”

It goes with the territory and that is, ‘volatility is part of investing’. Yep, when stock prices steadily rise with little movement, it’s easier said than done, but don’t forget the fact that volatility is incredibly common. It’s the norm, not the exception.

The past teaches. Always remember what happened in the past. If you’re old enough, you’ll recall the early 2000’s ‘tech bust’, then again in 2008 with the big boom. It happens. That’s why they call it, ‘cyclical’. The market dips like clockwork almost annually. Don’t fret, and especially don’t freaking panic. Because, let’s face it, the ‘best part may be what happens after these dips’, says LPL. I agree.

Get this, research show that after a correction, the average returns exceed 23% over the next 12 months.1 Nice!

2. Patience, my friend. You’ll be (typically) rewarded.

LPL did a good job with their research. LPL states, “Investing in the stock market gives you a chance to profit from innovation, economic progress, and compound growth. But to get results, you need patience and time.” LPL went on to say, “On this note, it’s helpful to keep the market’s performance history top-of-mind:

Since 1990, the Dow Jones Industrial Average has achieved 9.5% annualized gains, including dividends. Even if you were to look at shorter time horizons since 1950, the S&P 500 has risen 83% of the time across a five-year horizon, 92% across 10-year periods, and 100% of all rolling 15-year periods.2

And while history can’t predict future performance, it can give you an idea of what could happen if you try to take a shortcut or “panic sell” when markets are fluctuating:

From 1990 to 2020, the S&P 500 Index’s annualized gain was 7.5% (excluding dividends), but the average equity investor’s return was only 2.9%.3 Why the 4.6% gap? Because when stock prices begin to fall, many investors given in to fear, which drives them to sell their investments – even though it may not be in their best interest.”

My fav investor, like millions of others’ is the ‘oracle of Omaha’, Warren Buffet. He once famously said, investing in the stock market is “a way for the impatient to transfer money to the patient.”4

3. Market timing doesn’t work

We’ve heard it over and over. But clients keep trying to outsmart the smart guys who do this for a living. Analysts and CFA’s keep telling us not to time the market, it could be a costly mistake. Do people listen? Of course, not. We’re human.

LPL says, “It’s impossible to predict when a stock or the market as a whole will peak or bottom, even if you’re an expert. In a market decline, if you sell in fear of losing more, you’ll then have to figure out when to jump back in, which is equally difficult. Plus you risk locking in your losses if you re-enter at the wrong time. For example, between 1990 and 2020, the biggest gains (and losses) in the market happened within days of each other, which means you didn’t have to be out of the market for long to miss out on the upswing.2 Because even in “bad” markets, there are a lot of good days, and you want to be “in” for those days.”

4. No Sweat, Opportunities abound

The creative analyticals tend to win at this game of looking at volatility from both buying and selling angles. LPL reminds us, “When stocks decline, you can “buy in” at a lower price and potentially make money when the market rights itself. When the decline is part of an overall cycle, this means stocks are trading below their intrinsic values, which means they offer an improved price-to-earnings ratio.”

5. LPL says, “There are ways to enjoy a smoother experience“

Good ‘ol dollar-cost averaging(DCA). It’s simple and basic, but it works. DCA can help reduce the overall impact of price volatility and lower the cost per share of your investments. Forget about timing the market; trying to get in and out at the “right” time. Instead, dollar cost averaging can be a better strategy to help you avoid timing mistakes. Ultimately, it removes the dreaded, ’emotion’ from your decision-making process. DCA can help keep your long-term goals in mind.5

6. We’re all in it together. You’re not alone

As a final reminder, LPL tells us that, ‘in times of market volatility and economic uncertainty, remember that you’re not alone.’ Good advice for the wary. The best advice LPL had in their entire article was this: Consult your financial advisor for additional perspective and context, and review your investment strategy from a life-goals perspective to ensure you’re headed in the right direction to pursue your financial goals. As a fiduciary financial advisor, I commend LPL’s wisdom. Smart guys.

1 Source: LPL Research, Ned Davis Research, FactSet 4/29/22
2 Source: LPL Research, FactSet 4/29/22
3 Source: LPL Research, Bloomberg, DALBAR, ClearBridge Investments 6/30/21
4 Source: “Winning In The Market With The Patience Of The Wright Brothers And Warren Buffett,” Forbes, (January 2018).
5 Source: https://www.forbes.com/advisor/investing/dollar-cost-averaging/

This material was prepared by LPL Financial, LLC.

Heads up, Military Servicemembers and Federal Employees! What You Need to Know about the Thrift Savings Plan

For the past twenty-two years I’ve worked with clients who have a wide variety of workplace retirement accounts. From 401(k) to 403(b), including the Thrift Savings Plan (TSP). All of these programs vary in terms of their investment offerings, fees, and other characteristics. But the largest employer in the country–the U.S. government–has the TSP. It is the Federal government’s own ‘defined contribution’ plan. Both civilian Federal government employees (i.e. GS-types) as well as military servicemembers have access to the TSP. In fact, even our U.S. military veterans, can choose to keep their TSP accounts. One caveat: Veterans can no longer make contributions. But there are a multitude of things we can do to remedy that issue.

As a whole, all workplace-defined contribution plans are pretty similar in their features (i.e., many today offer Roth options, as well as, employer matches). However, the one big thing that makes the TSP unique is that it has lower fees compared to private-sector plans. This is a good thing. Another unique feature is that it has a fixed-income investment option, which is exclusive to the TSP.

Last year (2022), the Thrift Savings Plan saw some major changes, including the opening of a “Mutual Fund Window”. This is another positive, I believe. What it does is it supplements the previously very limited TSP offering of investment funds. One additional thing to note: Participants need to know that the associated expenses make it quite pricey. Another techy update to the TSP was the introduction of a smartphone app. This is cool, but it requires some time to implement. I know this because I recently helped a longtime client (a ‘nuke’ from Navy/Pearl Harbor who moved to New Jersey) navigate these new changes. He had to decide if investing through the Mutual Fund Window made sense for him; it did. We had to go through an entire re-registration process for the new site via the mobile app to ensure his critical information (i.e. beneficiary information) got transferred correctly.

It only makes sense that the majority of my military clients transition into new “encore” careers. They’re still quite young in comparision to the traditional, civilian retirement age here in the U.S. of age 60+. One thing I always emphasize is the need to compare and contrast what they have (TSP) versus what is now available to them (i.e. 401k, etc.). We always start by looking at balancing their new cash flow–what the can afford to sock aside–especially during their transition period.

As for my clients who are still on active duty, it requires an annual review like many of my civilian clients. What’s different about my valued military guys is this: they deploy. And when they deploy to combat zones, there are benefits, as well as related TSP considerations to be aware of. For one, their income earned while deployed in a combat zone is tax-free. This is a good thing, for sure. But we need to keep an eye on woefully blending or commingling this tax-free combat pay with taxable earnings. This messes things up. But we can work to prevent this by planning for it. From the get-go, I implore my military (and civilian) clients to communicate and keep me posted on recent changes, like going on deployments. We can avoid issues by making Roth contributions during periods where income is not taxed. Another point worth noting during a period of combat deployment is that the annual deferral limit increases quite drastically. Again, a good thing. This is an opportunity for them to contribute even more money to the TSP. Of course, it all boils down to cash flow. And very much like their civilian counterparts, I find that every single military client has a unique set of circumstances.

The bottom line is that the TSP is very similar to the other workplace retirement plans, such as the 401(k). However, Federal employees and especially, our hard-fighting military servicemembers have a very different job–they serve our country! For this primary reason, it is my mission to give back and serve their families.

What is an RIA, anyway?

An RIA is a registered investment adviser. Is that a stockbroker? No. Here’s an objective, succinct piece from TD Ameritrade. It explains the stark differences between an RIA and other financial planners and registered reps from broker-dealers. As I shared in my New Year’s article (December 28, 2022), you would think that all financial advisors are legally obligated to act in the best interests of their clients, right? Surprisingly, the answer is no. Only fiduciary financial advisors are required to act in the best interests of their clients. I’m still blown away by that, and clients of investment salespeople should be too.

Benefits of Working with an RIA (TD Ameritrade)

RIA’s are fiduciaries. It is what sets them apart professionally. That word, fiduciary, means a lot. It is an odd word, but arguably the most important word in financial planning and wealth management. It originates from the Latin word, fidere (“to trust”). But as I pointed out previously, it is much more than just a word. It is a service mindset. Serving others’. As fiduciary financial advisors (vs. commission-based agents), we are legally obligated to act in your best interest when helping you make decisions about your money. Do yourself a favor, work with a fiduciary.

Legal disclaimer

The content on this page provides general consumer information. It is not legal advice or regulatory guidance. The TWG LLC updates this information periodically. This information may include links or references to third-party resources or content. We do not endorse the third-party or guarantee the accuracy of this third-party information. There may be other resources that also serve your needs. Aloha!

Fight Inflation by Hedging Your Retirement Portfolio

The Seesaw Effect of Stocks & Bonds and Yield & Price

With the stock market struggling to break out of this down market, and with bearish experts saying a recession is looming, some clients are seeking fixed income. As investors, we’ve all heard the idiom, stocks & bonds, right? Basic diversification. Remember the seesaw effect: When yields rise, prices fall. Supposedly, the idea is when one goes up, the other goes down, like a seesaw. So, what happened in 2022, when both markets were down? Short answer: Inflation. A fundamental principle of bond investing is that market interest rates and bond prices generally move in opposite directions. When market interest rates rise, prices of fixed-rate bonds fall. This is interest rate risk. Misconception that if a bond is a US Gov’t obligation, the bond will not lose value. In fact, the US Gov’t does not guarantee the market value of a bond if you sell the bond before it matures. But, yes, it is complicated. Check out this PBS special.

https://www.pbs.org/newshour/show/how-interest-rate-hikes-impact-bonds-and-stock-prices

It’s a bit early to state with certainty that the bear market is over for U.S. stocks (look at what happened just yesterday—1/30/23). With a plethora of issues like record inflation, rising interest rates, the ongoing Ukraine war, along with pending profit downgrades, and added tensions with China, we’re in a tough spot as a world economy. And on top of that, there are some forecasters pegging the probability of a recession at 60%+. However, anecdotally, most investors I’ve talked to have moved on from their dire inflation concerns. But the macroeconomic picture is far from being completely rosy. As a result, more and more investors are hedging by increasing their exposure to safer havens like, U.S. Treasuries, Munis and investment-grade bonds. Amidst the turmoil, these investors are just trying to ride it out, staying patient and in the meantime, collecting some income. In my opinion, not a bad idea. But of course, it all depends on where you stand. If you’re getting closer to retirement, you might want to discuss with your financial advisor an allocation shift to hold some of your retirement monies in a traditional savings or money market account. The good news is that interest rates are up. As a result, you’ll be earning more in interest now than you would have over the last several years.

Make no mistake about it, this inflation thing is real. I recently went to Zippy’s here in Honolulu and simple food for the soul, Oxtail Soup, is $28! I was floored, but still ordered it. Inflation is everywhere and impacts everything we buy. But it is nothing new. I still remember the impact inflationary pressures had on us as a kid growing up on the island of Maui in the mid-seventies. At the time, gas prices were soaring, and supply levels were diving. OPEC decisions made us wait in our cars in long lines for hours at a time just to get fuel for our cars. But we survived and just like we did, keiki today will reflect on what it was like to live in 2022 with the worst inflation to hit our U.S. economy in 40 years. Hopefully inflation has peaked in 2022. For more clarity, many of us are waiting for the Federal Reserve to speak up. Up to this point, Powell & Co. has remained committed to their campaign of interest rate hikes. In fact, it has been the most aggressive since the Carter and Reagan administrations. For now, we’ll see what happens tomorrow when Jay Powell talks to the world. My advice: Take it in stride, one step at a time…gw

2023 TAX SEASON REMINDERS

2023 TRADITIONAL IRA AND ROTH IRA ESTABLISHMENT DATES
The deadline for establishing a Traditional IRA or a Roth IRA in order to make a 2022 contribution is Tuesday, April 18, 2023. All applications must be signed and submitted (including e-signature applications) to Advisor Services in good order by Tuesday, April 18, 2023.

IRA CONTRIBUTION DEADLINE FOR TRADITIONAL IRA AND ROTH IRA ACCOUNTS
The contribution funding deadline for Traditional IRA and Roth IRA Accounts is Tuesday, April 18, 2023, regardless of whether the client has filed an extension with the Internal Revenue Service (IRS) to file their tax return.
It is very important that IRA contribution checks and deposit manifest clearly indicate the contribution year as 2022 or 2023. Per IRS regulations, if a tax year is not indicated, the contribution will be coded and processed as a current year contribution. In order to adjust 2023 contributions to 2022, a letter of instruction is required from the client no later than Tuesday, April 18, 2023.

“RMD Time”—Required Minimum Distributions (RMD)

Of course, clients’ The Wheeler Group LLC can reach out to us with any specific RMD questions. Since it is highly dependent on your unique situation (i.e. age, holdings, etc.) you need to reach out to your personal financial advisor. Here are some general RMD points of discussion:

  • For clients who attained the age of 72 in 2022 and are taking advantage of the April 1st, 2023, extension please see below to determine applicable deadline regarding Required Minimum Distribution (RMD).  Note:  Any requests to sell mutual funds, stocks, or bonds in order to make an RMD must be received by Advisor Services prior to the dates noted below to allow for trade settlement and processing.
Year client reached the age of 72RMD MUST be made by:Investments must be sold by:
2022Friday, March 31, 2023Wednesday March 29, 2023
ATTENTION!
  • Clients are subject to a 50% federal excise tax on any percentage of an RMD not taken by the required deadline.

As fiduciaries, we are here to help our clients. However, when it comes to tax advice and preparation, you need to contact your CPA, or accountantcy provider. At The Wheeler Group LLC, we DO NOT PROVIDE TAX ADVICE. We are trusted financial advisors and as such, we are here as a financial resource to provide valuable information and keep you on track. At the same time, never hesitate to reach out and contact us. Here’s to a healthy, prosperous 2023 to you all. Aloha!

A New Word for the New Year

Recently, I had a client ask me, “hey, Garrett, are you a fiduciary?” Yes, I am, I told her. And thanks for asking, I replied. I worked hard to earn that right to answer in the affirmative. The fact is that every client should ask their potential advisor the very same question. Yes, it is an odd word, but arguably the most important word in financial planning and wealth management. Unfortunately, few people are familiar with what it truly means. It originates from the Latin word, fidere (“to trust”). But it is so much more than just a word. As fiduciary financial advisors (vs. commission-based agents), we are legally obligated to act in your best interest when helping you make decisions about your money. This is a huge differentiator.

One would think that all financial advisors would be obligated to do this, act in the best interests of their clients. However, less than 15% of financial advisors are fiduciaries, yet the majority of consumers think that EVERY financial advisor is a fiduciary. To be clear, only financial advisors who are fiduciaries are required to act in the best interests of their clients. Scary, right? For this reason, I want to share three reasons why you need to have a fiduciary financial advisor in your corner—no matter your stage in life.

  1. Objectivity: When making choices about your retirement savings, assets, investments, or anything else, a fiduciary will look objectively at your financial picture.
  2. Disclosure of Conflicts of Interest: A conflict of interest is when someone is in a position to make a decision based on an ulterior motive. Fiduciaries are required to disclose and avoid conflicts of interest.
  3. Scope of Financial Concerns: As fiduciaries, we are here for you when it comes to any and all questions you may have about your money. Whether it’s a one-and-done meeting or a nurturing a long-term relationship, you can come to us.

I hope these three considerations have armed you with the knowledge to vet potential financial advisors. If you are looking for a fiduciary, or if your current advisor only provides a suitability standard of care, we would love to connect with you. Please reach out to us for an introductory conversation. And, as always, our initial advisory session is without cost or obligation to you. We’re on your side. Our goal is simple, to focus on what best meets your objectives. 

Together, let’s make 2023 a year to remember.

Ideas without action are worthless. —Harvey Mackay

Hau ‘oli Makahiki Hou! Happy New Year!

Legal disclaimer

The content on this page provides general consumer information. It is not legal advice or regulatory guidance. The TWG updates this information periodically. This information may include links or references to third-party resources or content. We do not endorse the third-party or guarantee the accuracy of this third-party information. There may be other resources that also serve your needs. Aloha!

Retiree Regrets and Mistakes to Learn From and Avoid

“It’s good to learn from your mistakes. It is better to learn from other people’s mistakes.” — Warren Buffett

I recently watched a CBS Morning news segment entitled, ‘What would you tell your younger self?’ Great segway into planning for a long retirement, God willing, right? Stats say that many retirees are not happy with the way they prepared for retirement. The way I see it, today’s workers can learn from these regrets and avoid them by creating a retirement plan and sticking to it. Yep, I know, easier said than done.

Planning for retirement can seem confusing and complicated, so it’s not surprising that two-thirds of retirees say they have regrets about how they prepared for it, according to a recent survey. More worrisome is the fact that many of today’s workers continue to do the same things the retirees wish they had not. So, I suggest to younger people that they learn what can go wrong in retirement NOW, to avoid it later in life. Same old story: If I only knew what I know now, right? Anyway. Life is unpredictable. Help yourself. Do what you can to plan for a long life.

After 22 years of helping people with planning for a rewarding retirement, I hear a lot of the same things repeated from retirees about what they would have done differently. Many preretirees ask themselves questions like, ‘Have I saved enough money to retire?,’ or ‘Will I be able to maintain the standard of living I’ve grown accustomed to?’. Financial planners cite three retirement phases: Go-Go, Slow-Go and No-Go. In the Go-Go years, typically 65 to 75, healthy young retirees spend a lot on travel, hobbies, and scratching life-long dreams off their bucket list. Retirees are less active between 76 and 85 in the Slow-Go years and tend to spend their No-Go years of 86 to 100 quietly. More than more than half (55 percent) of retirees said they have retirement planning regrets. The Washington Post ran an article entitled, “The top regrets of retirees” (https://www.washingtonpost.com/business/2018/12/10/top-regrets-retirees/). Citing a Global Atlantic survey (2018 survey of 4,200 pre-retirees and retirees in the United States), here are three (3) regrets of retirees:

1.               Being too reliant on Social Security.

2.               They did not pay down debt before retiring.

3.               They didn’t save enough.

See the article for more details. One point it made was that thirty-nine percent (39%) of retirees reported spending more than they expected. And consistent universally in the financial planning world, the article reiterated, “The risk of running out of money is real.” When you get right down it, why waste your energy mourning the past? Move on. You can’t change the past. And if you do have regrets, well, avoid spending too much time in what my mother (author, Dr. Linda Wheeler, https://www.drlindawheeler.com/) calls, ‘the tunnel of suffering.’ She tells audiences, ‘Don’t grow roots there…work to get out!’ So, the point is, adapt and take a page from the late poet and author Maya Angelou’s playbook. Angelou said, “Do the best you can until you know better. Then when you know better, do better.” What else is there, right?

Another idea is to focus on what really matters. At 88, Clint Eastwood was asked, “How do you remain so young and active?” The now 92 y.o. Clint replied, “I don’t let the old man in.” Yep, tough mindset for sure. Some fight the frailty aspect of aging. Others just give in, saying c’est la vie. All I know is that life is unpredictable. In my practice, we discuss risks in retirement. Longevity happens to be one of them. Optimists will comment, what is wrong with living a long life? Nada. It is about addressing the risks if you choose. My partners at St. Francis Healthcare are sponsoring a FREE virtual LTCi educ session I am conducting tomorrow evening via Zoom. Join us. Here is the link to register: https://www.stfrancishawaii.org/s/courses