Avoiding Financial Penalties

by Mike Lester

Nov 22, 2021

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Speaker 1 (00:02):

Welcome to the Retirement Wealth Podcast. Our goal is to help those retired, or soon to be retired investors, make more informed financial decisions and live an enjoyable retirement. Our host Mike Lester is the founder and CEO of Talon Wealth Management. Mike is an investment advisor representative of Retirement Wealth Advisors, Inc., an SEC registered investment advisor. Thanks for joining us today, and let’s get started.

Kristen (00:31):

Mike, do you and the family typically put up an artificial tree or a real Christmas tree?

Mike (00:36):

Well forever, and by ever mean for 40 years, that means with my parents, always real tree, and then up until I was about 40 it was a real tree. And then this one year we got this one tree, I had it put up, and had the decorations and the lights all over it, and I don’t know if it’s the next day or later that night, Katie and I are sitting there and we’re like, why is the carpet moving?

Kristen (01:01):

Oh gosh.

Mike (01:02):

So I got down ,and somebody who knows more about plants and Christmas trees than me probably knows what this is. I could tell you, it looked like some kind of an aphid.

Kristen (01:11):


Mike (01:11):

Not millions, probably billions of these things. And then they all, I don’t know if when the Christmas tree heated up from the light bulbs or whatever, they all decided to launch this mass exodus from the tree and it was nasty.

Mike (01:25):

So I had to take the whole tree out immediately. I didn’t know what to do. So I bug bombed it basically. You know, one of those foggers. I couldn’t figure out how to spray into a tree. So I just bug bombed the whole thing and it sat on my back porch and we went and got an artificial one and it just got thrown out. So after that, Katie was like, again, no thanks. We’re not doing real trees anymore. We went artificial. So, and those are a pain in the butt too because one light goes out on your artificial, now you got to get a the new one, those things are expensive. I hate it.

Kristen (01:54):

Well, they’re getting more expensive. According to the Wall Street Journal, artificial Christmas trees could cost up to 25% more this year due to the shipping crisis. You’ve got the congested ports, so products are delayed. Shipping costs are very, very high. Retailers, have to raise their prices to cover all of that. In fact, the CEO of the well-known Balsam Hill decor company says they’ve never raised prices this high, and still going to make less money than normal. Just another one of the many sectors being hit so hard by the supply chain issues.

Mike (02:30):

It’s economics. They’re forced to raise their price to a certain price point because of the cost. They’re hoping people actually pay that, Kristen.

Kristen (02:38):


Mike (02:38):

So what if people aren’t going to pay it? I’m not convinced that they are. A lot of these benefits are running out jobs, numbers. Haven’t been great. They’ve raised the price of their product. At what point does somebody go, Hey, you know what? I’m just going to pull that Chevy Chase and go out in the forest and cut a tree down because I’m just not going to pay that. And then next thing you know, their stock price is going down. As the cost of goods goes up and up and up, at some price point, people aren’t going to pay it. And it becomes a problem for the market, if you’re invested.

Kristen (03:04):

Your story about the bugs coming out of your tree made me think about Chevy Chase with the raccoon or a squirrel. I forget which animal it was.

Mike (03:12):

It was a squirrel.

Kristen (03:13):

Unforgettable movie, but I had the animal wrong. But this time of year, there’s a lot going on preparing for the holidays. And of course, football. Expect to hear the whistle more often during NFL games, as the league recently announced a new 15 yard penalty for taunting. Some fans are calling it the, no fun league instead of just the NFL anymore, because of all the penalties that can slow down the game.

Mike (03:40):

My goodness.

Kristen (03:41):

It’s not that fun, when you have all of these TV timeouts and reviews and things like that. Players and coaches have to constantly stay up to date with the rule changes. It sort of sounds like what you do as a fiduciary, a financial advisor and the founder of talent wealth management, in helping people avoid some of the penalties that come up with a wrong move in retirement. Because a lot of people don’t know what to watch out for.

Mike (04:05):

Well, just to be clear, I don’t think there’s a no taunting role in financial service.

Kristen (04:10):

In retirement?

Mike (04:10):

And retirement.

Kristen (04:11):

Ha ha, we’re retired you’re not.

Mike (04:13):

Exactly. Look at me. I’m retired. My financial advisor is doing a great job. Look at you.

Kristen (04:19):

You’re not.

Mike (04:20):

You’re not, I’m on a beach. I’m having a good time, looking at my phone.

Kristen (04:27):

Can we please make that a rule though, there’s all these other silly rules, let’s add that.

Mike (04:28):

You’re allowed to taunt other retirees, or people who are still working and you’re having a good time. But rules are rules. And when it comes to investments and when it comes to the government, when it comes to taxes, the problem with them is that the penalties are really, really severe. And I get it. You know, NFL players, the penalties sound huge, but with the amount of money they’re making, it’s really not that big of a deal. But for a client of ours, for example, or anybody who’s out there, you know, we’re, we’re very, very focused on making sure these penalties don’t become an issue because they’re big. So for example, if you miss your required minimum distribution, they call it an RMD, this is the number where the government says, you have to take a distribution from your retirement plan.

Mike (05:12):

It used to be 70 and a half, now it’s 72. If you miss that distribution, they penalize you 50% of what you had to take. So if you had to take $20,000 and you didn’t, your penalty is now 10,000, and you still have to take it. So all of that’s problematic, there are plenty of issues out there when we’re working through financial plans. It’s not just the requirement of distributions. We can work through the process of making sure that happens for clients, but there are other things like Medicare part B, if you miss that, or if you have too much income from the sale of a property or a business, your Medicare part B goes up. It’s very confusing for individuals, because frankly I’ve never seen sort of like this government pamphlet or government program or government thing that explains to people how to retire, right?

Mike (05:58):

Sort of individual private businesses like ours at Talon wealth management, where we’re walking people through the process. But there isn’t a community alert on, if you don’t take your arm to your penalize, or if you have too much income, your Medicare part B premium goes up to a high level. People get confused. They make, in some ways a mistake, if they didn’t know they made a mistake and the mistake winds up, costing them. So it’s really our job to help people in this situation and guide them through, Hey, listen, if you do this, if you do that. The great thing about the people that we’re working with is we can help guide them when they call me up and say, Hey, Mike, this is what’s going on. Can you please do an analysis of it for me and make sure this isn’t going to cause any problems? Sure, we can do that.

Speaker 1 (06:40):

If you would like to have a comprehensive financial plan and an analysis of your current portfolio, go ahead and visit our website at retirement.tips/plan, and we can do that for you complimentary. Thanks so much for joining us on today’s show. Be sure to subscribe to our podcast, visit our website retirement.tips for more free retirement planning and investment resources. Thanks for tuning into today’s show. And we’ll see you next time on the retirement wealth podcast. Exposure to ideas and financial vehicles discussed should not be considered investment advice or recommendation to buy or sell any financial vehicle. This information should not be considered tax or legal advice. Individuals should consult with professionals specializing in the fields of tax, legal, accounting or, investments regarding the applicability of this information to their situation. Past performance is not a guarantee of future results. Investments may actuate, and when redeemed maybe worth more or less than originally invested.


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Mike Lester

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Avoiding Financial Penalties