Here Are Some Goals For the New Year You Might Consider
As we approach the end of 2022, gas prices have doubled and we have 40-year-highs in inflation. The first six months of 2022 were the worst the stock market has had in 40 years. As of 11/28/2022, the S&P 500 Index is down 17% and the Nasdaq Index is down almost 30% in 2022.
Mortgage rates for 30-year loans have more than doubled from 3% one year ago to a high of 7% recently. On a $500,000 loan the increased interest rates have raised the monthly mortgage payment from $2,103/month to $3,307/month, resulting in a sharp drop in home sales. The Fed has raised interest rates sharply to fight inflation, though it may cause a bad recession. Large firms have recently announced thousands of layoffs.
At the end of every year, it’s a tradition for many Americans to look back, reflect, and make New Year’s Resolutions for the next year. Here are some goals and dreams my clients say they hope to achieve.
Losing weight and quitting smoking are the two biggest New Year’s Resolutions. In 2022, a client needed $500/month for a weight loss program that offered her the support she needed. She wanted a healthier diet with more expensive organic foods and grass-fed beef. Her increased retirement income strategies easily covered this extra expense. In only three months, she reached her goal of losing 25 pounds and was able to fit into clothes she had not been able to wear in years.
More travel in retirement is the top bucket list item for Americans. A client’s life-long dream was to visit Antarctica. She found that a 14-day trip will cost $15-27,000. No Problem! Eight years ago, she had deposited $270,000 in a private pension account. In 2023, she will trigger her annual income of $27,000, guaranteed every year she is alive. She will easily be able to afford the Antarctica and other future overseas trips.
A goal of many is to earn a safer income that is also steadier than stock market dividends or bond interest. Two years ago, an 80-year-old client was able to achieve this by buying solar business equipment and leasing it out to huge food companies on a 10-year lease with a 10-year warranty that covers all repair costs. The annual depreciation allows her to pay no income tax on an income that is triple what stock market dividends or bond interest pays.
Substantially increasing retirement income is a goal of most. In 2019, a new client said that they currently spend $50,000/year but wanted to spend $75,000/year when they retire in seven years. They also wanted to remove 90% of their financial assets from stock market risk. A series of strategies were implemented, that will generate a $120,000 annual retirement income in 2027. Also, a large Roth IRA Conversion was accomplished in 2020 without owing any federal income tax so that much of the wife’s retirement income will be tax-free for life.
Leaving a Large Legacy for Your Child is a worthy goal. In 2022, a retired widow did a $600,000 Roth IRA Conversion and had $250,000 of additional taxable income. By using advanced tax strategies, she owes $0 federal tax in 2022 and creates $2.5 million more wealth to leave to her only child.
Conclusion: What dreams and goals will you take action on in 2023?
To schedule a free consultation on taxes or retirement planning, please contact Dr. Harold Wong at (480) 706-0177 or
Dr. Wong earned his Ph.D. in Economics at the University of California/Berkeley and has appeared on over 400 TV/radio programs.