kimberly-malesky

Can I retire?

Wed, 06 May 2026 01:42:34 GMT

The number one question I receive over the years is, “Can I retire?”. Various articles flood the internet providing varying advice. Coupled with watching peers and friends retiring adds to the anxiety that one should be okay to retire. Every single individual has a different financial make-up, different goals, different spending habits, liabilities and more. It is for this reason I disagree with advice distributed on a mass level as situations are so different. Your peer may be retiring. Your peer may also have received a family inheritance that you are unaware of, perhaps have paid off their mortgage or even pulled the trigger prematurely. Your neighbor may be younger with many toys, new cars and more. Your neighbor may also have significant debt that is not sustainable. Planning for retirement should be customized to each person, factoring income, spending, assets, liabilities, goals and more. Planning for retirement is important and deserves a customized approach for your unique situation. No one situation is alike to another.

The information contained herein is based on our understanding of current tax law. The tax and legislative information may be subject to change and different interpretations. We recommend that you seek professional legal advice for applicability to your personal situation. As required by the IRS, you are advised that any discussion of tax issues in this material is not intended or written to be used, and cannot be used, (a) to avoid penalties imposed under the Internal Revenue Code or (b) to promote, market or recommend to another party any transaction or matter addressed herein.

Fear of Missing out - My neighbor told me

Wed, 06 May 2026 01:41:31 GMT

I very often field questions form individuals quoting their neighbors, or friends, wondering if they should follow the same financial path and make similar financial decisions and investments. I cannot reiterate enough the caution of falling into this trap. Each individual has their own set of circumstances, goals, investments, income and more. What works for one individual may or may not work for another. While I find it wise to learn what others are doing and encourage questions and inquiries, it is important to maintain an open mind to the response. In one instance a client requested a Roth IRA Conversion on their retirement account. While I didn’t agree with this request due to a lack of financial benefit to the client given their financial make-up and goals, it is the clients monies to do as they wish. My job is to educate clients on the financial outcomes based on various decisions, but cannot deny a clients request if I disagree. Shortly after I received multiple phone calls from other clients’ friends with the original client, requesting Roth IRA Conversions. After educating the friends of the financial ramifications, they came to realize this strategy was not suitable for them. It is human nature to discuss decisions and recommend friends and neighbors follow suit, to thereby validate ones own personal decision. Keeping this in mind will assist in the fear of missing out syndrome. It is easy to fall victim to this, truly.

Marginal tax bracket

Wed, 06 May 2026 01:39:39 GMT

Taxes make most cringe and hesitate to make decisions that will make their taxes increase. This is completely understandable as taxes should be a function of any major financial decision. But when I hear hesitation due to being pushed into a higher tax bracket, it gives me pause. Pause because the reality is different than assumptions made. The Federal tax system is graduated, meaning that we each are taxed at the 10%, 12%, 22%, 24%, 32% and so on tax bracket. The first $19,750 of income (if Married Filing Joint) is taxed at 10% Federal tax rate. The next $60,500 of income is taxed at 12% and so on. If a married couple earns $125,000 in 2021, then we can expect the following tax. Often it is incorrectly assumed that the entire income amount is taxed at the highest tax bracket, which is not true.

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Gift tax exclusion- How much can I give and who pays the taxes? Annual gifts vs. lifetime gifts

Wed, 06 May 2026 01:35:44 GMT

We are naturally generous to our family and children, often supporting family with money each year. This is typically in the form of a gift, or check written to various family members. Commonly this gift amount matches the annual Federal gift tax exclusion amount. In 2021, this amount is $15,000 per donor per recipient. Meaning a husband and wife with one child may each write a check in the max amount each year to this child. Staying within the annual exclusion does not trigger a gift tax for either party. But here’s the kicker- each individual has a lifetime gifting exclusion amount. If you want to gift over the annual exclusion amount, you may do so, without triggering gift taxes as long as you stay within the lifetime amount. You will need to file a gift tax return, however, but for tracking purposes of your lifetime exclusion amount, not to force a gift tax. Each individual has a lifetime gift amount of $11.7 Million dollars and $23.4 Million for a married couple. The majority of individuals will fall within this cap. This means you may gift above the annual exclusion amount without any taxes owed, as long as within the $11.7 Million dollar per individual limit. If you work with a CPA, then s/he will need to prepare an extra form, which should be the only expense related to this gift.

Gifts not subject to any taxes, either annual or lifetime, if you pay for medical or educational expenses directly to the institution. This is often overlooked and an easy fix moving forward.

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Inter-family loans

Wed, 06 May 2026 01:34:27 GMT

Retirement accounts are a wonderful savings vehicle. One often defers income into a retirement savings plan, thereby avoiding taxes and allowing investments to grow tax-deferred. Fast forward to your golden years and the Government wants their tax money, which you’ve deferred for a period of time. To ensure they receive their taxes, they do enforce required withdrawal amounts once you reach the “trigger age”. This age used to be age 70.5 years old, but is now set at age 72. One can expect to withdraw a certain amount of money each year from their retirement account, once they reach the trigger age (other exceptions apply; i.e., if you are still employed and working). This can be a shock to some, especially if the funds are not needed to live off of. The IRS publishes tables to guide you on calculating the required amount you must take each year. This applies to all of your IRA accounts, although you may elect to withdraw the total amount from one account if you wish. Please consult with your financial advisor and tax preparer for assistance with facilitating this calculation each year. It’s also important to note that if your beneficiary is more than 10-years your junior, a different table is used for calculation purposes. Lastly, IRA withdrawals are taxed at your ordinary income tax rate, not at the capital gains tax rate as these funds generally have never been taxed.

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Required Minimum Distributions (RMD)

Wed, 06 May 2026 01:32:03 GMT

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Inherited IRA Required Minimum Distributions (RMDs)

Wed, 06 May 2026 01:20:58 GMT

Inherited an IRA account does not preclude one from taking annual withdrawals. The IRS recently enacted new rules and guidelines on taking withdrawals. The “old rules” used to look similar to a normal RMD for an owner. Now, the government allows you to spread the withdrawals over 10-years as long as the account is emptied, or all funds withdrawn, by year 10. It used to be that the beneficiary could stretch mandatory withdrawals over their lifetime, but there is now a 10-year cap. It is key to work with your financial professional and tax prepare when determining how much and how often to take a withdrawal from an inherited IRA. There can be planning opportunities if you anticipate a low-income tax year. Others who anticipate consistent tax brackets choose to spread withdrawals evenly over the 10-year period.

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How to Be Master of Your Cash Flow

Wed, 06 May 2026 01:18:17 GMT

Financial security requires mastering all kinds of personal finance skills but perhaps the most fundamental is managing your cash flow – or the money you have coming in and going out.

To accomplish everything from maintaining a basic quality of life to building wealth, earning enough money and spending within your means is critical.

Managing your cash flow can be a particularly difficult financial skill to master, according to experts, but doing so can give you the financial foundation you need for future success.

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What Is Cash Flow and Why Is It a Hard Skill To Master?

“Cash flow is by far the most challenging aspect of financial planning for both individuals and families,” says Kimberly Malesky, certified financial planner at Harmony Investment Management LLC in Montecito, California.

Cash flow represents the income you have coming in compared to the money you have going out. Despite being a basic building block of money management, getting a handle on cash flow trips up even seasoned financial pros.

“For a long time, I had big financial goals that I consistently failed to meet. I never went broke or anything, but I just couldn't seem to save up any money, even when I got raises or tried to cut out certain spending habits like getting coffee on the way to work,” says Ann Martin, director of operations at the website CreditDonkey.

Many struggle with similar issues, balancing the money they earn with how much they need to spend on bills, plus other goals like emergency savings and retirement planning.

But Martin and Malesky agree that mastering your cash flow doesn’t have to be impossible – as long as you follow the right strategies.

How Is Personal Cash Flow Calculated?

The first thing you’ll need to do to get a handle on your cash flow is calculate your current status.

“To track yours, start by adding up all of your income sources and then subtracting your required monthly expenses,” says Jake Hill, CEO of the website DebtHammer.

Be sure to include both active and passive income sources. When looking at spending, start with your needs, then move on to wants, carefully tracking exactly how much you spend per month.

“List everything essential that you spend money on each month: mortgage/rent, car insurance, health insurance, utilities, groceries and more. Most people try to add manicures, travel, dining out, shopping, etc., to their essential list. But they are not essential to your living,” says Malesky.

How to Create Personal Cash Flow

Once you better understand your current state of income versus your spending, you can start to make changes to maximize your cash flow – by trimming fat from your budget or adding additional sources of income.

“Having money left over after you've paid your expenses is excellent but you can improve your cash flow with savings and investments,” says Hill.

Follow these three tips to create more personal cash flow:

1. Automate Your Savings

“With your budget in hand, determine the maximum amount you can comfortably save or invest each month and begin putting that amount aside. This will help you build your net worth over time,” says Hill.

Saving money is easier said than done, even if you already have space in your cash flow to do so. To avoid the temptation to spend leftovers, Martin recommends setting up automated deposits into a savings account each month.

“I started by scheduling all of my automatic bill payments to come out of my checking account the day after my paycheck came each month, then I took the further step of opening a savings account and automatically transferring 20% of my money into it every month,” she says.

Building your emergency fund should come first so you don’t have to go into debt if times get tough, but after that, you can direct your savings toward money-earning pursuits like investments.

2. Adjust Your Budget

The next step is to take a look at your budget and make adjustments if any spending is out of hand.

For instance, if your rent is too high for how much you earn, your travel fund eats into your bill payments or your dining out bills have gotten too high, you can take steps to research other options or redirect funds in a more logical way.

According to Martin, you’ll need to be honest with yourself about undisciplined financial decisions you tend to make, then budget to account for them.

Still, that doesn’t mean cutting out all the purchases that bring you joy.

“Hyperfocusing on the number of Starbucks drinks you buy each week is not helpful. Work backwards, deciding how much money you have available to spend on extras each month, and budget that piece. This approach is not only more palatable, but most important, is more effective in yielding positive results,” says Malesky.

3. Generate New Income Streams

Maybe your budget is tight and you’re still struggling to bring in enough money to save. This is one of the trickiest realities of cash flow, and the only solution is finding ways to generate more income.

“Should you figure out you need to increase income to reach your goals, consider alternative sources of income aside from your main profession,” says Malesky.

This might take the form of passive income, which could come from real estate or other investments, or a side hustle to bring in active income, like pet sitting or delivering food.

What is a Trust? Can I put my retirement account in my Trust?

Wed, 06 May 2026 00:53:45 GMT

Simply put, no. Any investment which lists a designated, named beneficiary will not be included in your Living Revocable Trust. This includes 401s, IRAs, Roth IRAs, SEP IRAs, 403bs, life insurance and more. Annuities are excluded unless you registered a non-retirement annuity in the name of your Living Trust.

Remember, retirement accounts are tax-deferred and are not taxed until you physically withdraw funds. Life insurance proceeds are not taxed to the recipient. Life insurance IS included in one’s total estate. This matters if the estate is subject to estate taxes. In 2021, estates less than $11.7 Million (per person) are not subject to estate taxes by the Federal government. States vary regarding any estate taxes, however there is none in the state of California. Below is a common sample breakdown of an estate.

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