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Created: January 22, 2021
Modified: August 10, 2023

Podcast Episode 184: Planning Items to Put On Your List for 2021

What You’ll Learn:
After one tumultuous 2020, we’re bound and determined to have a positive year in 2021. No matter what comes our way, let’s keep taking steps to build a strong financial plan. To help you do that, we’ve laid out four planning items that should be on everyone’s list.

Last year might have been difficult for a lot of people but it served as motivation to attack the new year with focus and discipline financially. We’ve heard a lot of people say that they want to get things in order and start taking control of their financial future.

The hardest part is knowing where to start. So whether you’ve already built a financial plan or you’re new to the process, let’s talk about the areas you should focus on this year. We will help you with that by laying out four important planning items for 2021 on this episode of the Money Wisdom podcast.

With a large stimulus package just passed at the end of 2020 and more relief likely on the way this year, the first place to start is to get a grasp of the details in these bills. A great way to do that is to have your advisor provide an update on all the planning items that might be included in the legislation. Just think back to the CARES Act last year to see how much it can impact financial planning.

The next recommendation would be to review the SECURE Act, which brought significant changes to retirement planning a year ago. It got pushed to the back last year due to the pandemic and everything else that happened, but the SECURE Act included two big elements for retirement planning. The first allowed required minimum distributions to be pushed back to the age of 72. The other one was anyone who inherits an IRA has to empty that account within 10 years, which could have a huge impact on your beneficiary’s taxes. Revisit this to see how it impacts your retirement planning.

Next up is income. A new year brings additional income for many people. If you fall into this category, there are some things to be thinking about. The first is how does it impact your taxes? Be considering what you can do to lessen any tax obligations you might have. The second thing to plan for is how you want to use this extra money. Make sure whatever decision you are making fits into your overall plan. It shouldn’t be a separate investment decision.

The last thing you need to be doing is to assess your overall financial health. Do you know exactly how well you are doing in relation to retirement? Most people are in better shape than they think, but they are also taking on too much risk in most situations. Make it a priority to have your overall finances reviewed by a professional to determine how well you’re doing. It’s always going to make you feel better to know for sure.

Tackling each of these financial planning items will get you on track and can help put you in a stronger position before the year ends.


Also on this episode, Joel answers a few questions from listeners. As always, you can send them in through the website or schedule a Money Map review with us and talk to us in person.

The first one asks how can you be confident in the amount of money you have to leave behind for your kids without risking your own retirement? This is a great question because many parents want to give their children a better future but not at the expense of the present. The way we determine this is to do an income analysis to see how much you have. Once we know how much you need and how much is left, then we build a plan that allows you to give as much as possible.

We received another question about whether or not the 4% rule still applies. For those that don’t know about this, the 4% rule says that if you had a million dollars, you can take four percent from it every year in retirement, and statistically there’s a very small chance you’d run out of money. The problem is that rule assumed interest would stay at the same levels they were 10 and 20 years ago. Now the probability has dropped if you still follow that four percent withdrawal rate. The good news is there are other options that we can help you with. 

The final question came from someone who might get laid off soon with a one-year severance package as part of the exit. This is something Joel has been passionate about for many years and has even a book about how to proceed if you’re forced to retire. Check it out here. Remember that it can be positive for you and we’d love to walk you through that process.

[2:49] – Understanding new legislation

[5:57] – The SECURE Act 

[9:28] – Adjusting to new income levels 

[12:56] – Assess your overall retirement health

[16:18] –  Mailbag question about leaving money behind to kids 

[19:11] – Giving your children a better financial opportunity

[21:01] – Mailbag question about the 4% rule

[22:56] – Mailbag question about severance packages and leaving work early. 

Thanks for listening to this episode. We’ll be back again next week for another show.

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