👋 Financial Breakaway Newsletter | August 2024
Welcome to the August edition of the Financial Breakaway Newsletter!
As summer winds down, it's the perfect time to refocus on your retirement planning. Whether you’re approaching retirement or already navigating it, now is an ideal moment to review your investment strategies, consider any adjustments, and make sure your retirement goals are on track. Scroll down for insightful news and options to help you make a strong financial breakaway this August!
Newsletter Highlights
🌅 Retirement: IRS Ends Inherited IRA Confusion: Annual RMDs Required for Many
📈 Mid Career: Congratulations on Your Raise: Three Things to Do With It
📚 Short Shifts: What I’ve been reading
💻 Webinar Replay: The Confident Retiree
⏰ Open Virtual Office Hours: Mondays & Fridays!
❓❓QUIZ TIME❓❓: What is the primary focus of goals-based retirement planning?
A.) Matching or beating a benchmark index
B.) Optimizing market returns and risk by asset class
C.) Funding personal spending goals
D.) Achieving the highest possible market returns
*Answer below
• Retirement •
What I’ve Been Reading…
Final IRS Regulations Issued On Inherited IRAs, RMDs, SECURE Act
The IRS finalized rules under the SECURE Act, keeping the 10-year rule for inherited IRAs, which replaces the Stretch IRA that allowed lifetime distributions. Most beneficiaries must fully distribute inherited IRAs within 10 years, but the rules split inherited IRAs into two groups:
- If the original owner was under RMD age, beneficiaries can withdraw funds in any pattern within 10 years.
- If the owner was at or beyond RMD age, beneficiaries must continue the deceased's RMD schedule for nine years and also fully distribute the account by year 10.
Roth IRAs don’t require withdrawals for the first nine years but must be fully distributed by the end of the 10th year. Penalties for missed RMDs from 2021-2024 are waived, with enforcement starting in 2025.
My thoughts on this article…This has been a mess and a big cause of confusion for people who have inherited IRA’s post 2020, so it’s nice to finally have the final rulings. However, the 10-year rule still will frustrate some beneficiaries as it’s just not as good as the old Stretch IRA rules. The distinction between IRA groups adds complexity but offers some flexibility, making it important to reassess estate and retirement plans to align with these changes.
• Retirement •
What I’ve Been Reading…
Social Security Login Changes Taking Effect Soon
The Social Security Administration (SSA) is transitioning users to the Login.gov platform for online account access, aiming to enhance security and simplify the login process. This change impacts users who created their accounts before September 18, 2021, requiring them to switch to Login.gov or another government-approved authenticator like ID.me by September 2024. This move is designed to streamline access to online services and ensure robust security measures. The SSA encourages all users to set up a "my Social Security" account, which offers various services like tracking benefits, replacing Social Security cards, and preventing fraud.
My thoughts on this article…The SSA’s transition to Login.gov is a positive step towards enhancing the security and ease of accessing social security services online. Given the increasing cybercrime threats, a more secure authentication process is crucial. For users, particularly those less tech-savvy or abroad, this transition might initially seem challenging, but the long-term benefits of increased security and streamlined access are significant.
• Mid-Career •
What I’ve Been Reading…
Congratulations on Your Raise: Three Things to Do With It
When you receive a raise, it's important to manage it wisely to avoid lifestyle creep and ensure a comfortable retirement. Financial planner Andrew Rosen suggests dividing the raise into three main areas: investing, savings, and spending. This strategy, referred to as the "holy trinity" of getting a raise, helps balance enjoying the present while securing the future.
My thoughts on this article…I don’t work with Mr. Rosen or know him at all, but I agree with his article. I might say do #2 first then go to #1 but all things considered, it’s good advice. Lifestyle creep is real and finding balance now while planning for your future retirement will have your future self thanking you.
• Short Shifts •
- 🔌 Here's what the CrowdStrike outage exposed about our connected world. It's not good. - Yahoo Finance
- 📈 Fed’s key inflation gauge rose 2.5% in June from a year ago, easing path to rate cut - cnbc.com
- 🤔 Consumer Sentiment Drops in July: What Is It and Why Does It Matter? - nerdwallet.com
• Webinar Replay •
opens in Zoom replay (not gated)
Quiz Answer:
C.) Funding personal spending goals
Source: kiplinger.com