Today’s Smart Money Question:
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Here Are Just A Handful Of Things You’ll Learn:
Twice every month, we bring an important financial planning topic to the podcast and take a deep look into it. But every now and then, we have questions from clients and listeners that are too good to keep from you.
On this episode of Smart Money Questions, Matt Hausman will explain three different scenarios and the considerations you need to be making in order to reach the proper conclusion. Like we always say, you need to examine the entire picture before finding an answer that fits your specific goals.
Investing Rental Property Proceeds
Rental properties can be a great source of revenue, but they don’t always work for your portfolio. When it gets time to sell your property or properties, what should you do with the money from closing? What are the best investment options?
That’s a question we recently received and it’s one that doesn’t have a simple answer. There are many different questions we would ask clients to determine tax obligations, goals, debts, and more. Let’s discuss this scenario and what you need to be thinking about before you pick your next investment.
3:07 – Question: I’m selling one of my rental properties in the next month or two and I don’t have any plans to buy another one. What’s the best thing to do with the money from that sale?
4:08 – The first thing to consider is your tax obligation when selling the property?
5:19 – What the IRS is looking at when calculating your taxes.
6:26 – Now what to do with that money. Here are some options.
8:00 – This question reminds Matt of a past client. This is how it played out.
9:58 – You want to understand your tax costs, much like you would for a 401k.
Rolling Over Your 401k
You’ve probably heard about rollover options for your retirement accounts, but is it as simple as people say? We got a question from someone that wanted to rollover an old 401k account because they weren’t happy with the investment options but they were worried about the tax implications.
It’s great to see that she was thinking ahead and trying to plan for taxes, but the good news is there are no tax implications if you don’t take the money yourself. We’ll explain how that process works and what your responsibilities are when rolling over an old retirement account.
13:04 – Question: Are there really no tax implications for rolling over my 401k?
13:39 – First thing to do is reach out and see what your company’s policy is for transferring.
14:13 – How the transfer will actually work.
17:05 – What about an old 401k? Is it the same process?
Trouble Spending in Retirement
Transitioning into retirement seems like it would be easy, right? Free time, vacationing, no alarm clock. Well, hopefully that’s true for your situation but even if you’ve put together a great plan, retirement can still be a challenge because it requires a completely new mindset. For many people, it’s not easy to spend the money you have sitting in your accounts because there isn’t another paycheck coming in.
We suggest you break down your budget into three different categories to make it easier to see exactly where you stand, and that will hopefully give you a little peace of mind to go out and live your life without always worrying what you’re spending. But if you need to generate more income, we’ll tell you about the five ways to do that.
18:18 – Question: Ever since I retired, I’ve had a really hard time spending money. Something about not having a paycheck makes me nervous.
19:38 – Matt’s advice to Jay involves a distribution plan.
20:24 – Look at your budget in these three categories.
21:27 – Five places you can generate income in retirement.
Thanks for listening to this episode of Smart Money Questions. We’ll be back in a couple weeks for another show. Make sure you subscribe to our newsletter to get alerted to that and other financial news.
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