Dave - I would not recommend your "hope to die soon" strategy. :) Paying capital gains over time makes good sense. If you have sufficient records, you are able to select the highest cost trade lots as you sell your funds. For example, with each trade you might sell the shares you bought in 2015 instead of the shares your bought in 1992.
Dave - depending on how much need for an income in retirement, you might consider keeping your taxable income in the 15% tax bracket. Future investing you might consider using a "last in first out, long term cost basis" reporting.
Wayne - Having assets titled in the name of your living trust provides a clear transition plan when you are "gone" or incompacitated. Avoiding probate and having a successor trustee are the main benefits.
Wayne, I agree with Mark and Jacob. Different states have different estate planning rules. A trust can avoid a lot of the troubles associated with probate at multiple locations. Plus there's the peace of mind knowing there shouldn't any fights over things.
Lester - Currently, $5.45 million (per person!) can be passed to your heirs without estate taxation. You and your wife will be able to pass almost $11 million using "estate portability" rules (an AB trust is not required today to ge the double exclusion). Although you are not currently in an estate tax situation, I'd still recommend working with an estate attorney to get something set up to make sure your assets transfer as you wish.
Lester - I'm not sure about Massachusetts, but the lifetime gift tax exemption is $5.43 million. There are other benefits to have trusts though. You should ask your attorney the benefits.
Dear OrenCPA, I'm not sure which ETFs you are talking about but the 3 minimum volatility etfs at ishares are all stocks. And they probably can invest in almost anything to achieve their low volatility/risk goal. But none of these include fixed income. I suggest that you could reduce your total portfolio volatility by using equities AND fixed income/cash. I've already mentioned Vanguard Wellsley Income Fund as a good alternative for a blended fund (both equities and fixed income) with relatively low volatility. Remember you can have inidividual holdings within the ETF that have high volatility BUT if they go in different directions at the same time, the overall volatility would be low. A financial planner can help you come up with a mix that specifically suits your situation and your goal of lowering risk.
Barry, social security rules just changed. How old are you? The key dates for grandfathered positions are 62 by 12-31-15 (there was one for another feature for those who were 66 by April 31 but it isn't effective anymore. If you WERE 62 before 12-31-15 you will be able to file a restricted application at your normal retirement age and draw off your spouse's benefit while letting yours grow until age 70. Maximizing social security is complex and alas, not everyone at the social security office can give you a good answer.
OrenCPA, unfortunately an ETF name doesn't always match up with what it invests in. As Bobbie mentioned, it could be invested in almost anything. One way to see how it is currently invested is by visiting the ETF company's website or a third-party research tool like Morningstar.com. These resources should provide information about how the ETF is currently invested and what the goal of the ETF is in terms of types of stocks, bonds, etc.
Stuart, when you decide to sell to fund your RMDs/Required Minimum Distributions, it is a great time to rebalance. Decide what to sell based on what allocation you want left after the RMD.
Robert, Can you please provide more background on yourself- age? working? will the funds be needed in the next few years? Are the funds ultimately for retirement?
Seb, I believe Bobbie is correct. If your wife's employer has good investment options, then it might make sense to rollover those funds to avoid the RMD for now.
Ann -- Do whatever you just did to post your question :)
Robert, people used to ask my contractor husband to give them an estimate over the phone re: painting their house. Of course he couldn't as he had no idea of what they were talking about. Well that is kind of like your question. We would need a lot of context for a good answer. Why not spend a little on an hourly fee only advisor so you can get a good answer? That said, be sure to have keep a good cash emergency fund. Then perhaps use a target date fund for the remainder. Vanguard has good ones.
Zane, if you're truly looking for low-risk, then you might try shopping around for a good savings account. Many online banks now offer rates in the 1.00% range. It's still not great, but it beats the 0.10% or some other ridiculously low rate many other banks are paying right now. With that said, keep in mind that even a savings account has risks over the long-term if you're talking about retirement investments. In this case, it's the risk that your savings won't keep up with inflation and possibly lower your future standard of living.
Zane the best rates I've found are at Ally Bank of Capital One 360 but we are still talking perhaps 1% (Ally offers a good rate on checking as well). Why not dollar cost average (invest an equal amount monthly...this can be set up to be automatic) into funds over the next year to ease the pain of a potential market decline? Be sure to keep enough cash for any purchases/needs in the next few years as well as an emergency fund.
That's about all we have time for in this edition of Maximize Your Money. Thank you to everyone who submitted a question, and we're so sorry we weren't able to get to everyone.
Anita, one caution. If you do meet someone who says they do know exactly what you should do without doing a plan, be very careful. Sometimes an "advisor" is selling a product that they think is the perfect solution for anybody or anything.
And, a big thank you to all of the NAPFA planners who were on hand to take questions today!
Please join us for our next chat on September 15. We're looking forward to answering more of your questions.
That you Kiplinger for making this possible!
Dave,Couple options might include:
Dave - I would not recommend your "hope to die soon" strategy. :) Paying capital gains over time makes good sense. If you have sufficient records, you are able to select the highest cost trade lots as you sell your funds. For example, with each trade you might sell the shares you bought in 2015 instead of the shares your bought in 1992.
Dear OrenCPA, I'm not sure which ETFs you are talking about but the 3 minimum volatility etfs at ishares are all stocks. And they probably can invest in almost anything to achieve their low volatility/risk goal. But none of these include fixed income. I suggest that you could reduce your total portfolio volatility by using equities AND fixed income/cash. I've already mentioned Vanguard Wellsley Income Fund as a good alternative for a blended fund (both equities and fixed income) with relatively low volatility. Remember you can have inidividual holdings within the ETF that have high volatility BUT if they go in different directions at the same time, the overall volatility would be low. A financial planner can help you come up with a mix that specifically suits your situation and your goal of lowering risk.
OrenCPA, unfortunately an ETF name doesn't always match up with what it invests in. As Bobbie mentioned, it could be invested in almost anything. One way to see how it is currently invested is by visiting the ETF company's website or a third-party research tool like Morningstar.com. These resources should provide information about how the ETF is currently invested and what the goal of the ETF is in terms of types of stocks, bonds, etc.
