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.