Managing Your Financial Future with Lucia Capital Group

Maybe you’ve been saving most of your working life in a 401k. Great! But what happens when you retire? Should you leave that money in the 401k, or transfer it to an IRA? The answer, as it turns out, is “it depends.” Today’s episode starts off with an email asking why someone may want to do one or the other – or both. Further along, we answer more of your email questions: taxes, 401k matching funds...

The idea behind a Target Date Fund would seem logical – a kind of “set and forget it” investment that (presumably) gets safer as you age, giving you less exposure to stock market volatility the closer you get to retirement.   But on closer examination, Target Date Funds are not the panacea they appear to be. Yes, there are some qualities that make them worth owning, but as an investment that can c...

"Traditional" investments consist mainly of stocks, bonds, and cash.  Many people get by just fine with these, and simply alter their allocation as they age or as their goals and needs change. Others, though, may want to consider investments that fall outside of the traditional group.  Why?  They may be looking for further portfolio diversification, or a potential hedge against market vo...

It would seem to make sense that if you're retired, you can't "afford" the volatility of the stock market - thus, as you age, common advice is that you should own fewer stocks in retirement. But is that good advice?  The answer may depend on your withdrawal strategy.  Do you need to access the money in your portfolio to help fund your near-term liabilities?  Or do you have enou...

You've been working your whole life, and retirement for you has always been "at some date in the future." As you get older, the question becomes more real, and will eventually require an answer.  This is something that financial advisors and planners deal with every day. How do you know when you're really able to hang it all up?  Maybe your portfolio balance hasn't reached...

As our parents age, it's only natural for us to want to keep an eye on them to make sure their finances stay in good order: bills paid, taxes done correctly, RMDs taken, etc. Sometimes that's much easier said than done. How do you make sure your parents are on top of their financial situation as they get older? Is there a way to protect them from scams?  How do you spot the signs that so...

Have you heard that you're going to be taxed on the Social Security benefits you receive?  Or have you heard that they're never taxed at all? Many people have no idea what to expect. This is because sometimes a recipient's Social Security benefits will wind up being taxed under certain conditions, while others may never pay a dime on their benefits at all, even if they receive the m...

For the past year or so, I-Bonds have come into favor among people who are looking for a higher rate of return on Treasuries. A little over a year ago, they were paying an annualized 9.6 percent rate of return. Today, they’re paying right around 4.3 percent. It would seem, then, that you’d have been better off buying them at that higher rate.  But maybe not – because of the way I-Bonds pay their i...

Tax time may be over for most people, but for financial advisors, tax management is a year-round task.  One of those tasks involves a “postmortem” of their client’s tax situation, where they can determine what may have gone right – or gone wrong – with their most recent tax return.  If you’ve ever wondered what a financial advisor looks for when managing taxes, and what you yourself may want to lo...

Interest rates have risen sharply over the past 16 months, which is good for lenders, but not so much for borrowers.  New mortgages now come with interest rates around 6 percent, pricing some people out of the market. But for those who hold "older" mortgages with much lower interest rates, some opportunities may present themselves.  If you've been working toward paying that mortgage...

Fear can either be a great motivator to get things done, or it can cause a person to retreat, cover up, and hope the issue will go away.  People who are retired have many financial concerns, but their biggest fear (according to the research) is running out of money.  This often causes them to either be frugal beyond all reason, or to ignore their finances completely and just pray it all works out....

Roth IRAs have been in existence for 25 years, and while they're one of the more popular financial planning tools for many people, they're also quite often misunderstood.   Most investors may be aware of the tax-free nature of the Roth, but beyond that, there are a lot of unanswered questions: When can I get to my money? Can I access converted money? What is the 5-year clock? What is a R...

The question is pretty straightforward: Do I need to use the services of a financial advisor, or can I simply manage my investments, my retirement income, and my taxes by myself? The answer, though, is not readily apparent.  A financial advisor can help a person with a little, with some, or with all of their financial needs, depending on what each individual requires.  As we so often say, everyone...

You may have heard of something the investing world refers to as Asset Allocation, which has to do with deciding between asset categories like stocks, bonds, CDs, alternative investments, etc. It's an important part of building your portfolio. But there's another, equally important part that doesn't get talked about nearly enough: Asset Location. This has to do with how assets locat...

Building a nest egg is relatively easy if you're both consistent and patient. Regular contributions over time can lead to compounded growth, which may give you the amount of money you need to live on. But while building a savings can be easy, keeping it from running out is a whole other challenge.  How you take withdrawals from your savings once you're retired is crucial to the survival...

You may have heard of a 529 Plan, which allows you to put money away for someone's college education, have it grow tax-deferred over the years, and then be taken out tax-free when the funds are used for qualified higher education expenses.  The problem has always been, though, that if the money wasn't used for those higher education expenses, it would be both taxed and penalized upon wit...

Does retirement increase or decrease the amount of taxes you have to pay? You might think that once you begin retirement, your tax bill will tend to go up at first, since people normally have much (if not most) of their retirement funds in a company retirement plan (401k, 403b, etc.) - all of which are taxable upon withdrawal at ordinary income rates. But is this really the case?  Should retirees...

So you've got some money to save for retirement... Where should you put it? Would it be better for you to take a tax deduction right now by contributing to your 401k plan, or would paying the taxes now and socking it away in the Roth, with the potential to take it out tax free later on, be a wiser course of action?  This is a common dilemma for many people. What may be the better option for y...

You've finally made it to retirement, and, presumably, you've got a certain amount of money saved up that you'll need to tap into from time to time.  But the problem is that you don't want to take too much, because you don't know how long you'll live, and thus have no idea how much is "too much" to take out. This is a common dilemma for retirees.  You requir...

A steady stream of cash flow is one of the most valuable things you can have, both before and after you retire.  If that income is guaranteed by some entity -- the federal government, the PBGC, or the claims-paying ability of an insurance company -- then so much the better. Pensions and Social Security are two forms of guaranteed income that people receive usually after they've retired. They...

You may have heard that Social Security has something called "Spousal Benefits," where your current spouse can receive a benefit based on your work record, even if they never held a job in which they paid FICA taxes.  But did you know this rule may also apply to an ex-spouse? We've had questions about this in the past, with many people wondering how they can PREVENT an ex from takin...

The US tax system is by design a complicated beast, and trying to understand it all is a futile challenge.  And yet, it's extremely important that people understand how certain elements of it work. As we so often say, tax knowledge is tax power.  Most taxpayers assume that the amount of tax they pay is determined by which tax bracket they're currently in.  This is both a true and untrue...

It's tax time!  Although tax returns aren't officially due until mid-April, the first quarter of every year is when the forms arrive in the mail, as we start to compile information to begin the dreaded process of filing. With the myriad forms that so many people have to deal with, it's good to know which ones you'll most likely be seeing, and what you'll need to do with th...

As of 2023, the age when you must begin taking Required Minimum Distributions from your IRAs has been increased. This means you may have as many as three extra years to allow your savings to grow tax deferred. This may sound like a great idea: why pay taxes now when you can delay the inevitable for at least a little while longer?  But the answer to this question isn't so simple.  Is it always...

The SECURE 2.0 Act is now law. The legislation was signed by the president in late December of 2022, and it provides a whole slate of changes that are designed to help strengthen the retirement system—and Americans' financial readiness for retirement. The Act itself contains dozens of provisions, building on earlier legislation that, among other things, raised the Required Minimum Distributio...