As I noted in a previous post, I periodically summarize notes taken from various webinars that I think might be useful to others. Below are seven information tidbits that caught my eye:
Defensive Investing-
Financial markets were volatile in 2022 and, for a while, “there was no (good)
place to hide.” Stocks and cryptocurrencies experienced big drops in value,
bond prices decreased when interest rates rose, and cash assets were eroded by
high inflation. What to do? Successful investors ride through down markets, stick
with a disciplined long-term plan, and
control two things: fees (e.g., low expense ratios) and how they react
to market downturns.
Tax Planning-
Until 12/31/25, taxes are “on sale.” Nobody has a crystal ball, but we know
that tax rates will rise starting in 2026 when the Tax Cuts and Jobs Act
expires. There are only two ways to reduce taxes: 1. Make less income and 2.
When the government lowers tax rates. The highest marginal tax rate was once
91% in the years before President Reagan vs. 37% today.
Budget Culture-
This term was used on a webinar to describe “rules” that there is one right way
to manage money and a strong belief in discipline and will power. With this
mindset, it is easy to blame and shame people who are “under-performing.” The
dominant voices in personal finance advocacy are white, male, and middle class
with privilege. Wealth accumulation and money management strategies that
“worked for them” often do not work for others.
Financial Education-
Personal finances classes can be a “great equalizer” for income and asset
disparities and should be available everywhere and not by ZIP code. It can
completely change a student’s life. One student on a Next Gen Personal Finance
webinar stated, “We only get one life- why wouldn’t you want to take a course
to make it the best it can be?”
RMD Insights-
Required minimum distribution (RMD) divisors
grow by almost a factor of 1 every year after starting at 27.4 at age 72 under
the 2022 revised Uniform Lifetime Table. Each year thereafter, retirees will
withdraw a larger percentage of their tax-deferred assets. Experts recommend
consolidating accounts to reduce the chance of errors. The tax penalty for
incorrect withdrawals is now 25% of the amount that should have been taken out but
was not (and 10% if paid promptly).
Work in Retirement-
A speaker at the 2022 Retirement Summit sponsored by the Employee Benefit
Research Institute (EBRI) noted that 1 in 3 retirees have experience working
after retiring from a primary career. Their primary reasons are that work is
rewarding and provides additional income for discretionary and unexpected
expenses.
Effective Tax Rate-
This is the percentage of income that someone pays in taxes. The formula to
calculate it is Effective Tax Rate = Total Tax ÷ Taxable Income. Someone’s
effective tax rate is useful to determine tax withholding or estimated taxes
for investments, pensions, and Social Security. Their marginal tax rate (tax on
last dollar earned) is useful for financial planning.
Financial knowledge is
power. I hope that you found these information tidbits useful.
This post provides
general personal finance or consumer decision-making information and does not
address all the variables that apply to an individual’s unique situation. It does
not endorse specific products or services and should not be construed as legal
or financial advice. If professional assistance is required, the services of a
competent professional should be sought.