Orlando Sentinel readers called into the Ask an Expert hotline last week seeking free advice from certified financial planners about retirement, investing and other money matters.
The event, held Oct. 4 this year, is sponsored annually by the Financial Planning Association of Central Florida and the Orlando Sentinel. Look for the Ask an Expert feature each Monday on the Sentinel’s Central Florida Business page.
Here is a sampling of questions and answers from the hotline.
Q: When COVID-19 hit, I quit my job working in the schools since I have pre-existing conditions. I only have $16,000 in savings and receive $1,200 a month in Social Security benefits. My expenses are between $3,300-$3,600 a month, including a mortgage payment of about $1,200. I also lease my car at $400 a month. What advice would you give me to help get closer to actually retiring? — N.W., Clermont
A: First, I would consider downsizing your home, so you have a lower monthly mortgage payment or pay even less by renting. Consider getting rid of the leased car and look for a lower-cost vehicle. Look for a job where you can work from home, so you don’t have to put yourself at risk and can earn some extra income. It will be tough, but go over every item in your budget and see what is essential, what can be cut, and where you can save. — Marisa Bradbury, Sigma Investment Counselors, (888) 718-1132
Q: I have two cemetery plots in another state purchased many years ago. I will not need them. Can I give these to the church and receive a charitable deduction? — J.M., Winter Garden
A: Yes, but the effort involved may be more than you’re expecting. If the plots are selling for more than $5,000 you will have to obtain a qualified appraisal of their value. The appraisal must be arranged for and paid by you, the donor. This can be an expensive cost, so you’ll have to determine that your tax savings from the donation are greater than the time and expense to proceed with the donation. — Mike Salmon, Moisand Fitzgerald Tamayo LLC., (407) 869-6228 ext. 112
Q: I will be 70 next September and will start taking my Social Security at that time. My wife, who will reach full retirement age for Social Security in March, has been receiving Social Security disability payments for years. Do we need to do anything to have her Social Security payment go up to her full payment in March so she can receive the higher spousal benefit? — L.R., Indian Shores
A: From what I have experienced, the Social Security payment has automatically increased without having to notify the Social Security Administration. If you do not receive any increase, make an appointment with the Social Security office to address any changes that need to be made to get a higher benefit. — Nancy Hecht, Certified Financial Group Inc. (407) 869-9800
Q: With the uncertainty of the election, should I sell my stocks? — N.N., Orlando
A: Don’t let your political views lead you to impulsive investment decisions. If you are concerned about a market crash, one way to protect your portfolio is to place trailing stop-loss orders on all or a portion of your shares of stock and exchange-traded funds. If they continue to go up in value your portfolio will benefit, however, if they fall in value, they can oftentimes be sold at your predetermined “stop” price depending on how quickly the price falls. — Jay Stokes, Stokes Wealth, (407) 843-4200
Q: My account has risen 30% since March as I have a single position in my 401(k). I am afraid that the market could correct and I would lose most of what I have made. What should I do? — B.M., Orlando
A: Diversification is always advisable in any investment plan, so having just one stock does increase your risk. I would seek the advice of a financial adviser to help you diversify your portfolio and limit your risk going forward. — Christopher Dale, Life After Grief Financial Planning, (407) 917-1913
Q: What is the difference between a Health Savings Account and Flexible Saving Account? — S.V., Kissimmee
A: The FSA must be spent in the same calendar year that the funds are deducted from your payroll, with a few small exceptions. The FSA account is a “use it or lose it” type of account. The HSA does not have to be spent until you choose to spend it. There are requirements such as a high-deductible health insurance plan, but if you qualify for the HSA, consider it. HSA funds could grow over time and assist with your health expenses in retirement, all tax-free. — Helen Von Doltern Fournier, AEGIS Advisors LLC., (407) 539-3939
Q.: I am young. How do I get started investing? — F.D., Odessa
A: You said you had a 401(k) at work so that is a good place to start investing. We also discussed budgeting to keep you on track. — Gregg Collier, Collier Financial Solutions, Inc., (352) 385-0073
Q: I have a 401(k) and two IRA annuities. Another adviser suggested I combine everything into one IRA for convenience. Is this a good idea? — G.A., Winter Springs
A: If your primary concern is convenience for your required minimum distribution processing and reporting, then yes. If your annuities have guarantees and features you want or need, you might want to keep them separate. — Dennis Nolte, Seacoast Investment Services, (407) 506-2173
Q: I’m in my late 40s and not in need of any income at this point, so is there any reason for me to be invested in bonds or bond mutual funds or ETF’s? — Name not given
A: The answer is most likely yes to some degree based on your comfort level with volatility in your portfolio. Regardless of the need for income, bonds offer an alternative asset class that can provide diversification to an all-equity portfolio while reducing the overall risk of your investments. You should sit down with your financial adviser to see the best allocation for your situation. — John Cash, III, Hubb International, Florida, (407) 781-4400
Q: I want to add my daughter to my account so she can write checks for me. Should I do that? — L.R., Windermere
A: No because the assets could be included in a lawsuit if your daughter was sued. You should consider giving your daughter power of attorney so that she can act on your behalf when you become incapacitated or are unable to make your own financial decisions. — John West, III, Spraker Wealth Management, (407) 478-7899
Q: I inherited an IRA from my brother, who passed away in January 2020 and was 12 years older than me. What are the rules about what I have to take out each year? — L.P., DeBary
A: The new SECURE Act requires non-spouse beneficiaries who are more than 10 years younger than the original account owner to liquidate the entire account within 10 years. You do not need to take an equal amount every year, so you will want to speak to a tax adviser about which years would make the most sense to take the money out. — Tommy Lucas, Moisand Fitzgerald Tamayo, LLC., (407) 869-6228, ext. 116
Q: I am retired with Social Security and a pension. I inherited some series EE savings bonds worth about $13,000 more than was paid for them. How much will I need to pay in taxes i I cash them out? — C.J., Sanford
A: Since you are married filing a joint tax return and based on your current income, you would pay 12% tax on those bonds up to $80,250 in total income in 2020. — Rhonda Shurtleff, Stonebridge Financial Group, (407) 695-7100
Q: I have an annuity worth $750,000. It started with $500,000. If I cash it in, will I have to pay income tax on the gain? — U.K., Orlando
A: Yes, if you surrender the annuity you would have to pay income tax on $250,000. This would be added to your other income for tax purposes. I suggest you reconsider cashing and talk with a certified financial planner to better understand what other options you might have. — Chris Toadvine, Certified Financial Group, (407) 869-9800
Q: Will I have to take a Required Minimum Distribution on my Roth IRA? — R.G. Oviedo
A: Roth IRAs do not have required minimum distributions for the account owner or their spouse. But if you inherited your Roth IRA from a non-spouse, then starting in 2020 you will have 10 years to distribute your Roth IRA entirely. — Charlie Fitzgerald, III, Moisand Fitzgerald Tamayo, LLC., (407) 869-6228, ext. 102
Q: Are there any rules I can take advantage of in 2020 if I would like to donate to charity? — N.L., Orlando
A: Absolutely. Due to legislative changes passed earlier this year, you are now eligible to deduct up to 100% of your income as a charitable contribution. Going forward, you will be limited to 60% of your income. As a planning strategy this year, if you would like to make donations and are over age 59.5, you can take as much out of your IRA this year as you would like and can deduct all of those donations in 2020. — Colby Winslow, Creative Planning, Inc., (407) 280-3029
Q: With Required Minimum Distributions being suspended for 2020, am I still able to make a Qualified Charitable Distribution out of my IRA? — D.P., Orlando
A: Yes. Even though RMDs are waived for 2020, charity rules remain in effect. A QCD is not only a great way to give to a charity, it also reduces the overall balance of your IRA to lessen the amount of future RMD requirements. — Derrick Chandler, Moisand Fitzgerald Tamayo, LLC., (407) 869-6228, ext. 105
Have a question? E-mail [email protected] Include your name (only your initials will be printed), hometown and phone. Questions are answered by Certified Financial Planners from the Financial Planning Association of Central Florida. Answers are for educational purposes only; you should also consult a financial professional. Questions and answers may be edited for space considerations.
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