The sun is out. This guy's bloom. There's not a cloud to spoil love you, but it's raining raining in my heart. Will the man.
Good morning everyone today.
My name is Martin Shields and I'm gonna be a host stiff. Let's talk money as always. It's great to be here with you to answer any questions you may have regarding your financial planning or investment manager concerns. And I encourage you to calling those questions because, as I say, you may be doing your fellow listener favor by asking questions that they have. But maybe they're a little bit too shy to get on the radio. But don't be afraid, folks,
just call in and we can chat. I'm harmless. There is no silly or dumb question. Give me a call and we can chat whatever your question is. If it's financial related, I can answer it. If it's not financially you can call in. I probably won't be able to answer it, just not that smart, but give me a call. If it's financial related, I can give you some thoughts. Lots of discuss today. We had the set a Reserve
and J. Powell out in Jackson Holt, Wyoming. They go to nice places folks when they have these meetings and some guidance that he gave us that the market's really liked. We'll discuss that. We'll discuss why is the housing market so resilient as far as the prices and the challenges we're seeing out there, even when we had mortgage rates last year hitting up around eight percent. Now they've come down stainly, which is a good thing, but this is
a tough housing market still. We'll talk about annuities and if there's ever a situation where an annuity is the right thing. You know, if you're a fellow listener that we're not big fans of annuities, but there can't be a case where it might work for you. We wants to talk about situations where you're married and we have these situations where the one spouse does not want to include the other spouse in their estate ideas and moneys from afterwards, But how are you protected with New York
State law. We'll talk about whether there's going to be a recession, right, folks, you've heard this idea that of the last two or three years, that there's going to be a recession, But boy, there is no landing here in this soft landing per se, because we keep moving on. It's not like the economy stops. But I tell you we are looking more and more like we are in
this soft landing. And then also I like to talk about looking back historically at other recessions and what you need to be aware of if in fact we do hit a recession. So again, a lot to discuss, but I encourage you to call in with any questions you may have and you can reach me at eight hundred talk WI. That is eight hundred eight two five five nine four nine. Once again, that's eight eight two five five nine four nine. I hope that you're going to be able to enjoy this this this last weekend and
week of summer. Here. You know, we've had so much rain. It's it's crazy, how green are grasses, and I think that's true for everybody, and how much has been growing. Usually in August it starts to slow down a little bit and things dry up, but that's not the case this year. So I hope that you are able to get out to enjoy this last week and weekend and
week of summer. Let's let's talk about what came out of Jackson Haw Wyoming where J Powell was out there and his announcement was really a pivot from what we've seen over the last almost two and a half years with the Federal Reserve. So the thunder Reserve has was called a dual mandate, right, they have two mandates that they need to meet. One is spray price to ability. And when I say price stability, really what that means is controlling inflation. So you know, they have a two
percent target. That's that's their target for inflation. And we, as you all know, we hit inflation of nine percent back two years ago and we've been steadily coming down. But the other mandate mandate that exists with the Federal Reserve is maximum employment. And you know, you've also known that we've had a very robust economy with a very low unemployment rate right below four percent. So those are the two mandates to manage price stability but also to
maximize employment. Well, for the most part the last two years, the set has been focusing on price stability. They have been raising rates and they raise it up to five percent back about a year ago. That's they control what's called the Federal funds rate, and they raised that up to five percent a year ago and it's been they've been paused, right, they have not been either increasing it
or decreasing it. And certainly there was an expectation here we are August, that we would have had perhaps some rate cuts before this, but some of the inflation data continued to show that inflation was still maybe not coming down at the rate that certainly the Reserve had been hoping. So you know, they've been pausing on that. But now when you have inflation continue to move down, you have
unemployment tick up over five percent. And you know, I think the important thing to appreciate with unemployment, there's a lot of factors that drive unemployment. A lot of it can be seasonality, can even be impacted by hurricanes and other storms, so there's a lot of things. One of the other things that impacts on the unemployment rate is what's called the participation rate of labor as well. So as more more and more people enter back into the labor force, they as they come in, they may be
not having jobs. So before they weren't even looking for a job, they weren't part of the labor pool. But now they've come back in and they are looking for a job. And you know what we saw was after COVID, a lot of folks just dropped themselves out of the laborpool, right. They weren't working anymore, they were not part of the
unemployment rate. But now as everything from the stimulus has left to you know, there could be some challenges they're facing personally that they're going back into the labor pool, and so that increase in people moving back in and they increase in the participation rate can actually increase the
unemployment rate as well. But again, what you're seeing is the Federal Reserve starting to move from focusing on price stability as they see the inflation continue to tick down and it's not at the two percent target, but it's getting closer and closer. We're getting down below three percent. So they're really feeling that the trend and where it is is a very positive element. But the other thing that they're seeing and they're concerned about is the economic
element and the liver element. Right I talked about the part of the dual mandate is maximum employment. They're getting concerned about where do we stand with employment? And you know what I will tell you is think about this. When the Federal Reserve is making these decisions, they are basically driving a massive, massive tanker ship. Right. They're not driving a very quick and nimble speedboat. They're driving a
huge tanker ship. And it takes them a long long time to move the needle on where this tanker ship, which is the economy, is going. So they have to anticipate where there could be economic weakness before it really manifests itself. And you know, in general, the economy, you look at the GDP growth and a lot of other factors, it continues to me very strong. But they don't want
to be late to the party in doing this. And this is where this balancing act is, right folks, which is, you know, they want to make sure that they keep the economy growing, but they also don't want to reinvigorate inflation. They've got to balance that and that's the elements they're
grappling with. But in his announcement out in Jackson Hole, J. Paul basically said, Hey, I think you're going to probably see a at least a twenty five or fifty basis point cut in September and that that trend is going to continue. So he's basically indicated that, you know, there was a long period of time where the Federal Reserve
was increasing rates. Then there's a period of time where they were on pause with rates, and then there's a period of time where we're starting now where they're going to start reducing rates. And that is a good thing. You're talking about it from an investment perspective and from the general economic perspective, and just so the question is why, right, So, when they're lowering rates, that flows although it's a Ceederal funds rate, so it's a very short term rate, it
flows through to the market to all rates. So it flows through to your credit card, to student loans, to loans for businesses, mortgages, anything where you could be borrowing money. Those rates are getting lower, and you know, if you're looking to buy a home and it's going to cost a half million dollars, then you know, along those lines you're going to start to see a benefit with having that be lower. So that's one of the things it's going to stimulate. It's people buying houses. We're going to
go to the phone lines. We have elder from eldert e there.
Oh yes, sir, good morning.
Good morning, how are you.
Oh not too bad? Having my coffee here or listening to you?
Good good what can I help you with it?
The roth iron, as it says, I got to start withdrawing the minimum distribution at fifty nine and a half. Is that true?
Or no? No? No? So this is a roth ira that you have in your name, is that correct?
Yes, sir?
And you've been contributing to this roth iiray over time? Yes, yep. I've had it for okay, so eight eight years, okay, okay. So what exists now is if you want to take money, since you've had it for or five years and you're now fifty nine and a half, if you want to take money from that ross, you can now take that money without paying any penalty and also without paying any taxes on it. So you're now at the point of
which if you want to. Doesn't mean you have to, though, but if you want to, you could start taking the dollars from that roth and do it tax free. Now with a ROTH. The nice thing about it is there are no taxes on the distribution, but also that there are no rmds unlike traditional arrays when you turn seventy three that you're forced to take distributions. With a ROTH, that's not the case. You can just continue to let
it grow now. The only thing is at some point when it does pass on to I don't know if you're married, but if you have any kids. But if it passes on to your heirs, not a spouse, but your heirs, whether it be kids or whoever, they will have to take rm ds with it. But no, that's a great thing about a roth, no requirement of distributions. But again you can now access that without paying penalties or taxes on that roth.
Yeah, I'm fifty five right now and I have it in a mutual fund that it does pretty good, and I don't want to I want to keep contributing to it after fifty nine sixty maybe to all I'm sixty five, but I think I don't know if I misread, if there's something I got to take at fifty nine and a half, I don't know. There's so much stuff, but I want to leave it ahone, So.
Yeah, I can leave it alone. Yeah, it's very confusing. It's very They don't make it easier. In fact, every legislation they put out they make it more and more confusing. They've changed around the R and D rules that makes it more confusing. But yeah, you're right, as long as you have earned income. That's the only thing you need to have, is W two income. And if you do,
you can contribute. And if you're now that you're over fifty, you contribute eight thousand dollars for twenty twenty four into that ross and keep doing it for as long as you want.
I can't contribute that much, but I do you know about you know, eight hundred one thousand bucks a year, Let alone the dividend that it keeps reinvesting, which is great and it's a utility is fund and that you know, the dividends is really great and I don't want to touch.
It, so perfect. Let it, let it be, let it grow, and somewhere down the road you need it, then you can access it.
Okay, all right, good. I've been wanting to call you guys there about this, and you know, and I try to do my research and I get, you know, different whole different directions in my mind's like.
Uh yeah, no, I'll tell you. You know, I've been in the business for twenty years and I've got a CFP. Even as experts like ourselves, it requires a lot of studying and continued education to understand what the current laws are. So you're not alone in that regard.
Yeah, all right, cool, well, thank you. I appreciate it.
All right, do you enjoy your coffee? You enjoy your day now?
All right, thank you?
You got it. Great, great question there, and boy they are confusing in particularly it relates to roths and dive in a little bit because we get this question in regards ross. So I want to cover it for a little bit. But again, if anybody else has any questions, you can reach me at eight hundred eight two five five nine four nine. Again that's eight hundred eight two five five nine four nine. But with a row, if as you put money in, you can at any point
access the principle you're putting in. Right. That's a nice thing, right, And this is why I tell my kids or teenagers that they should be putting those dollars in there, because even down the road, let's say they want to access it, they can access those dollars at the principal amount they're
putting at any point. And another thing that's nice is after you've had that that roth for five years and you've been contributing to it, even the earnings on that from that row, both income and gains, you can you can access that as well. For a down payment on a home. You've got to access up to ten thousand dollars UH tax free for that. So really that can
be a real nice benefit in that circumstance. And this is you know, for younger folks that you think about it, that's probably one of the first things you need to be using those dollars for is for a down payment. So it's a great strategy where you can put those dollars in always access the principle and for certain circumstances
access the growth now. Otherwise, if you were to try to access the growth in a rath and it's been less than five years, you're going to pay both a ten percent penalty and you're going to pay ordinary income on that growth. So you really want to try to avoid that. That is, you know, that's obviously problematic to pay ordinary income and also to pay a ten percent penalty on the fund where you would never have to pay taxes on it, right, So you really want to
try to avoid that. And then the other thing you want to remember is, but once you get that five years and you turn fifty nine and a half. As I was talking to the other callers, you're good to go. You can access those dollars. Okay, We're gonna go back to the phone lines. We have John from East Jound you there.
Yeah, I'm here. How are you today?
Good? How are you? What can I help you with?
Hello?
So I was he.
Yes, can you hear me?
Yep? I can hello.
Okay. I received money through my father's estate earlier this year, and I'm having kind of a difficult time trying to figure out how to go about redistributing or investing the money. So how I mean, am I looking at going to a financial planner or what is the best route to go?
So I mean what we say getting it invested? I mean one holding out John.
Forty seven.
Forty seven. So you know what I would say to you, all things considered, unless you need some cash, you know, for certain things. Now, those dollars should be utilized just like you might your retirement dollars, and they should be invested in that same way. Now. The only thing I will tell you though, and this is where the color alluded to it, there are some more complexities, right, So if it is a either a wrath or a traditional array,
you're going to have require minimum distributions to take. And so that's where again like our firm, like ours, we coordinate that with the clients. We tell them homage, We make sure we withhold any taxes. But you know, from an investment perspective, you know, I would suggest trying to get consolidate your accounts all at one financial custodium make your life easier and all things considered, having an allocation that is similar to what you have on your other accounts.
And if you're forty seven and you know, my guess is you probably have at least ten plus years until retirement, so you can have a pretty aggressive allocation. And again with the only exception B is let's say you think you need cash forar, you're doing a remodeling on your house, or if you want to buy something you know, to have some keep some of that liquid and you know, you put it in a money market earning five percent,
but otherwise utilize that strategy. But again, as you get more and more assets and things get more complex, working with a fiduciary advisor can be beneficial.
Okay, now one more question as far as so this money is, my father passed away and the money was obviously split it to my sister and I saw, am I going to have to pay capital gains or any how Am I going to have to pay any type of taxes on this?
Yeah? Great question. So if it's coming from a taxable count, so if you had it invested in stocks in a taxble account, you will get what's called a step up and cause spaces at his data death. So what that means is any gains that were in that account are wiped away based on the value of the account when he died. Now you know, if there's been gained since then,
then you will have to pay taxes on that. But it's you know, that's a really nice tax situation that exists under current rules that allow that to go away.
For any I raise traditional iarrays, you'll need to distribute that money within ten years, and you're gonna have to pay ordinary income tax on those distributions, assuming that they're all pre tax dollars, and then a roth your wealth will also have to be distributed within ten years, but you will not have to pay any taxes on that distribution.
Okay, so it was this it was the sale of his home, So how would that work.
You're going to have to You'll have a step up and cost basis and you will not have to pay any taxes on that, so that will go away. Okay, I heye to cut you off here, but we are going to go to a commercial break. But hopefully this was helpful.
It was very much. Thank you very much.
You got it all right, folks. You listen to Let's Talk Money, brought to you by Bouchet Finance Group, where we help our clients prioritize their health, will we manage their wealth for life. Welcome back, folks. For those of you just joining us, my name is Martin Shields. I'm the chief Wealth Advisor at bruce Che Finance Group and I'm here today to take your questions on anything finance related. So whatever it is, give me a call and we can chat. You can reach me at eight hundred eight
two five five nine four nine. Again that's eight hundred eight two five five nine four nine. So whatever it is, give me a call, we can chat. I hope that you're doing well. I think it's going to be a gorgeous sunny, late summer day. Get out there and enjoy it. Go do something, get out there, don't sit inside. I want to get out there when it's walking bike ride, going to a restaurant, sitting outside, whatever it is, make sure that you got there and enjoy it. This is
this is like our prime time here, folks. This is the best time of being Upstate New York. Is what we live for right as always. Is great to be here. I've got a number of topics I want to discuss. I do have to mention that I'm going to give a shout out to my son Hayden. We just dropped him off as freshman year at Saint Lawrence University and went well. He hopefully he's doing well after his first night.
But you know, you go through that. We are our daughter Isabelle as a junior at at the University of Vermont and doing well. But you know, you go through these life changes and it's the one thing I talk about this, but it is true. It's important to have a plan because you know it's gonna come. It is gonna come. And this is the same thing with It's true with the retirement, right which is uh, you know, you may not think it's going to come, but it
is going to come. And if you don't have a plan in place, it's going to pop you in the face. And I will say that. You know, both my kids are very good students, so they did well with some scholarship money and everything, but you know, it's still a lot of money, very very expensive these schools are. And so fortunately my wife and I've been doing some saving for a while and you know, in a reasonably good spot.
But when you start, uh, you actually coming to the fact that this is going to occur in writing checks because of reality. So this is a shout out to Hayden. I hope this first night and day goes well. But I'm here to answer any questions you may have, and you could reach me at eight hundred eight two five five nine four nine. Again, that's eight hundred eight two five five nine four nine. So one thing that I wanted to mention I talked about earlier. Just talk about annuities.
You know, we talk about this a lot, folks. We're just not a big fan of annuities. They're just and I bring this up because I see so many new clients that come on that have been sold in annuity, and you know, it's just when I see the expenses that exist, the penalties that exist, when I when I see, you know, the poor performance that exists and here's the kicker. They don't know why they have it. They literally do
not know why they have it. And quite often they'll have it in an IRA where uh you know, that's like we say, wearing a belt and suspenders. That's one of the advantages of an annuity is tax deferred. Element of this and you have an IRA that already has taxed are different elements, so it doesn't work. So well, I'm going to continue, but I'm going to go to the phone lines. They have Dan from Queensberry.
Danny there, Yes, I am.
What can I help you with.
My question?
Well, I got a bunch of questions, but the first group start uh contained with the r M D that have to be taken out here when you turn seventy three. A little confused by what they said that I guess it is you have to take out money the year following the year that you turn seventy three, by April. And if that's the case, would I not only have to pay you know that in April or by April, but also the following by the following December, because I will now be a year older during that year.
You're a smart man, Dan, That is exactly what it is. Right, So it may sound like a benefit to delay until April, but from a tax perspective, now you've got two rm ds you're really taking in the same county year because the second one you do have to take by twelve thirty one. So yeah, it's you get it to delay as far as you know, not having to take it in that county year, but you're going to get a double whammy from a tax for active.
Okay, so I should be taking it by really the year that I turned seventy three, taking it during that year so that I can you know, pay the taxes you know, during that year and not have to double up the following year.
That's correct, That would be my recommendation. Okay.
And the other thing is it doesn't really tell you what you're what the percentage is. It's like you have to go in and put your like there's some kind of calculator. You go in and you put your the amount in there, and it tells you how much they have to take out. Now, I was just wondering why they just didn't tell you what the you know, it's a certain percentage.
Because there are different tables that can be utilized, right, So it's not I mean most of us fall under one IRS table, but there are different parameters that can't change that table. So it's about three point five percent is the first year's approximate distribution rate. Now as you get older, it could tease to increase because really what the IRS wants to do is by time you get to what would be your expected lifetime, that you distribute
most of your IRA. I will tell you that. You know, with our clients, you know, we see as mostly they don't. They were able to grow it fast enough that that doesn't happen. But yeah, it's it's you're better off using the calculator because you can use the table you get there are you can go look at the tables, but it's just easier to put in all your information and let the calculator determine that amout for you.
Okay, And when does I mean, like I'll turn you know, seventy three during like June of that year, when do you when you take the money out? I mean when do they look at the value of your your account? Is it at the by the end of the year or is there you know, specific date that they look at when you use.
So you got it. Yeah, So you've got to utilize the value of your account as the previous end of your close. So twelve thirty one on the previous ended year close, that's the number that you need to put in that calculator. Uh, and that the IRS will be looking at to determine what your arm D should be.
Oh okay, okay. And I've got another question on when you take money out of your regular IRA, and let's say you you put it over into an investment account, do they you know, as far as taxes go in the future, I know you have to pay it and when you remove it from the IRA, But when they look at it in the investment account, does the cost basis start new at that point or do they go look back into the IRA and how much you've made on that.
No, it's going to start are when you're knew when that money come out comes out, you go ahead and get those dollars invested. That begins your new cost basis going forward.
Okay. And one last question. If in my investment account, I sell some stocks that I you know, have a loss on, can that loss be used to reduce my taxes from any money that I did take out of my IRA?
No? That is you've got two different types of taxes. You're if you sell the position in your taxicle account, you can use that to offset gains in your taxile account. Now, the only thing you can do is every year, the IRS allows you to take three thousand dollars of losses to offset ordinary income. And the dollars that come out of your IRA is that's ordinary income. So that's taxed at a different rate. It's a higher rate than launder and capital gains. But you can take up to three
thousand dollars. But that's it. Not no more than that annually against ordinary income.
Oh okay, all right, that's that's helpful, all right, I appreciate it. It covers everything.
Yeah, you got a lot of great questions, Dan. You have a good day now, Yep you too, Bye, way too, yep, you got it. Uh, you know that's Dan had a lot of great questions there as through each of these callers. There's a lot of complexities that exist and uh, making sure that you do the right thing. I mean, we see situations where people come in where, even sometimes with an advisor, if they don't know what they're doing, they make some decisions and it makes you scratch your head.
But let's go back to the discussion we're having on annuities. But again, if you have any questions, you can reach me at eight hundred eight two five five nine four nine. That's eight hundred eight two five five nine four nine. So again with a discussion of annuities, uh, you get to talk about fees, talk about transparency, talk about lock up, locked up into that or you're going to get a penalty to take that money out. So you know, just a lot of reasons why we are not fans of
them all. But you know, it doesn't mean that they're not situations where an innuity could work. If you are in particularly a single person, you don't have any kids that you are concerned about as far as transferring money to, if you are definitely afraid of the markets, and I do know folks like this that they just cannot grasp
their mind around being invested in the markets. And if you're getting close to retirement and you want something that resembles a pension, right, so most people don't have a pension these days, but let's say you've saved money and you want something that resembles a pension, then getting an annuity can work. Right. So you basically get what's called the fixed immediate annuity and it turns into extreme a cash flow for the rest of your life, and that
can be an effective way to utilize it. An annuity you basically, you know, you say to the insurance company, what you're doing is you're giving them a pile of money and they're going to guarantee that income for you know, a period of time. I mean, in general, you're going to be guaranteed it for the rest of your life, but you'll you're guarantee it with even a death benefit, meaning that if you were to pass, some of that money would come back either after five or ten or
fifteen years. But let's say you know you'll live to be you know, you're sixty five, you'll live to be eighty, and now you've lived past the death penalty death benefit amount that at that point if you pass, that money's gone. The money you put in there is God they provided that income to you. You've gone past that death benefit amount and now it's gone. But now if you'll live to be one hundred, you get your income to your
hundred right. So again, if you don't live that long, the insurance company wins if you live to be one hundred and five, you win. But that's the only circumstance in which case that annuity works. And you know, most people don't understand this. So the one thing I would stress to you is before you or any loved ones or any friends buy an annuity, please talk to a fiduciary to confirm that this is right, the right thing
for you. Please, please please make sure you talk to a fiduciary before you make that decision, because that's the problem with an annuity. Once you do it, you're locked in. It's a contract you can't get out without these penalties. So, like any good contract, make sure you get an outside opinion before you make that decision, or somebody you know makes that decision. We're gonna go back to the phone lines. We have Jim from Albany. Jimmy there, Yes, sir, I'm going to help.
You with.
I was thinking about investing in gold.
What's your feelings on like gold ira or something of that nature.
Taking some of my great question and moving it over. Yeah, So what I would say is this, we don't have any gold in our client's portfolios, in large part because we like to invest in things where we can see the cash flow that's being produced, and that's that's what exists. You know, when you invest in a public trading corporation,
it's about cash flow and profitability. Gold, on the other hand, is a commodity, and you know, really what you're doing is you're investing something that does best when there's times of uncertain certainty globally and there can be an elements of supplying demand. Right, That's that's what drives up prices, and it certainly has done well over the last few years.
So the only thing I would say is this, which is, if you're going to put any money in gold, I wouldn't put any more than five or ten percent of your portfolio in there, you know, so put it as part of a diversified portfolio. You know, if you look at gold over the long term, the S and P five hundred has outperformed it pretty consistently with less risk. Right, So you think about what I just said there, you can be invested in an asset class that has greater
return and less risk than gold. So but that doesn't mean you know, for some people, what it does is it's called peace of mind. Right. They want to have something that Let's say everything goes to hell, and you know, gold would probably be an assea class that does well. So that's your five piece of mind that you know
in case everything goes south in a major way. I know, I've got at least a little bit of money's in there, but I wouldn't be putting anything more in there because again, you're probably better off looking at other classes that have better risk adjusted return over time.
All right, Yeah, that's what I was thinking, just a backup plan.
Yeah, I think that works in again from you got it? You take care of now, Jim. Okay, bye, yeah, by yeah great for Jim. You know, again, we don't have in our client's portfolios because as we look in better, I mean there's other we don't have bitcoin in there, we don't have other investments as well. But we we want to be able to evaluate cash flow and how you know, corporations are operating and we can see the linkage between hey, what is the economy doing? Uh, and
well how are these companies going to do? And you know, for us, we do utilize a number of diversifying assets and asset classes from stocks and we have basically, you know, kind of a category called alternatives where gold would exist as well. But you know, the big element is, you know, I see some people that they put in fifty percent of their portfolio and gold. I was like, you know, that's probably that's too much, right, So just utilizing it in a smart way if you're going to go about that.
So let's move on to a couple of the topics as we have a few more minutes left in the show. But if you have any questions, you can give me a call at eight hundred eight two five five nine four nine. Again that's eight hundred eight two five five nine four nine. Let's talk about situations where we see this occasionally. You have a married couple and maybe things aren't so great in that marriage, or maybe they're even separated,
but they stay married for particular reasons. Either they can't figure a way to get divorced, or there can be different situations with them. I think just want to highlight this, which is, you know, I see where they go and they remove each other from their wills and they take
each other off of beneficiaries. The thing to remember is if you're still married in particularly in New York State and many other states have these same rules that when the other spouse dies, that remaining spouse is allowed up to one third. There can be some variations in this, but generally speaking, up to one third of that person's estate. So even if you remove them off as beneficiaries, even if you take them out of your will, you've got
to appreciate that that exists. Now, they may not fight this, So if you put them as if you don't put your spouse to the beneficiary, they may not make a deal out of it, and so it just goes to the beneficiary. But if they do, then in fact they will have to get at least one third of your estate. So it's good to know that because most people make these decisions and they're not aware of that. Now. A couple of things. One is life insurance is not included
in that. If you put somebody else like the kid or whoever, as a beneficiary of life insurance, your spouse does not have any access to that. That goes directly to whoever the beneficiary is. The other thing is with four to one K plans, you cannot change. If you're going to put somebody other than your spouse, you have to have it signed by your spouse with a notary stinguisher, right that is, so you know that prevents that from occurring as well. With an IRA, you can go ahead
and change that and put whoever you want. But again, if the spouse whites remaining after you pass wants to fight it, they can get up to one third of what's remaining. Also, want to talk about real quickly when you retire and relocating. Right, So, we had two of our colleagues, our Esteem colleagues, Nicole Geobel and Scott Throwhecker, this Wednesday did a webinar and it's available on our website at Bouchet dot com under insights. They did a
great job. They talk about you know, what does that look like if you're going to relocate, and what are the decision points that you need to be aware of. I'll come back to that. We're going to go back to the phone lines. We have Chris from Vermont Christian.
I have a question about tax free bombs municipal bonds. They generally have a if you buy a new issue, they have a thirty year thirty years bob, but not callable for eight years. And I'm concerned about the secondary market if in Vermont I only get the tax free Vermont tax free on Vermont BOB to other states recognized out of state communis at double tax free. If you would address it as that both state and federal and city I guess been in New York.
Yeah, so great, great question, Chris. So, just so our listeners understand, a municipal bond is a bond issued by let's say, it could be a county or city municipality. And when those bonds are issued, if it's issued from the state that you're in, then you don't pay any state taxes as you mentioned, and you know also don't paying federal taxes. Now, those bonds can vary as far as maturities. You know, they can go out as you mentioned enough to thirty years. They can be you know,
five years or ten or fifteen years. And certainly if you go on the secondary market, you can buy them, you know, with one year left or two years of that let's say that thirty year bond. You know, when you're buying a media bond, what you have to be aware of is there's two things. One, some are what's called revenue backed media bonds, meaning that there's particular revenue that is set aside to cover that and and that kind of helps to make sure that that bond is stable,
but it's also a functional does that revenue continue? And then there's other bonds called general obligation bonds, which is the full budget of that municipality that covers that. You know, in general, and certainly in good times, MEATIA bonds are pretty safe because you know, most these entities have the ability to tax some element of this. But there can't be situations where these municipalities or these entities do go
in a bankruptcy. And that's the concern obviously with any bond, which is whether it's corporate bond or a government bond. If that happens, they're going to default on that bond and you may not get much of your money back. So you know, I don't know exactly what municipality you're talking about, Chris, but that's really what you want to look at, is what is the financial health of that
municipality and are they in a good spot. I don't know, Like I know, with New York State, you can buy Puerto Rico bonds and those bonds are also tax free in New York State. I don't know if Vermont has that same reciprocality with Puerto Rico or not off the top of my head, but you can check to see that. But otherwise, in general, you cannot buy a New York State bond and get a tax deduction for Vermont COREGT.
Well, well, my concern is, of course, the person that is than this is a salesman and on a secondary market. If I have a Vermont bond double tax free only the other people in Vermont, I have a very limited market to sell it to. So the markup between value you know, what I have to pay to sell it may eroad a bit of the value of having a tax free bond.
So that's correct. So again this is a great point, right you know, I don't know who the person isn't selling it, but you know, one, you should probably be buying a diversified fund of a funded for bonds, or you know, you should be planning to hold that Vermont bond to maturity. You know, you can get Vermont bonds that are five years. You don't have to get one that's thirty years. You can get one that's five years or ten years. There are different levels that you can
do with that. And again, if this person is selling something and they're kind of pushing it. My general consideration is to stay away from that because you know, if we had a client that wanted to Vermont bond, I would just make sure I got one that met their maturity requirements. And that's because I'm a fiduciary. So just just be cautious that somebody's trying to sell you something in their lot. They're having your buy some of this thirty years long. I would be a little wary of that.
Well, I can't find the quotes on them at the secondary market quote other than the go to my financial advisor.
Yeah, I mean, Chris, Well, all I would tell you is that before you make the decision, I would start either you know, getting a second opinion from a fiduciary who can really look into this for you, and or I would just work with a fiduciary and and they'll make sure that they can get you in a bond that suits your your time horizon and the right credit risk for you.
Thank you, you got it.
Yeah, I mean again, folks, where we're hearing a lot about today is a lot of complexity out there. You know, make sure before you're making decisions that you're getting the right guidance and overview and insight so that you don't make a decision and regret it. Because I see that a lot, you know, perspective clients coming in they've made the wrong decisions. Well, folks, we're going to go. We're done. It's been an hour. I hope that you learned a lot.
It's been great to be here with the answer questions as always, greatly appreciate it. You're listening to Let's Talk Money, brought to you by Bouchet Financial Group. What we help our clients prioritize their health while we manage their wealth for life. Folks, as they always say, take care of yourself and take care of each other and have a great day.