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Federal Employee Financial Planning: Lessons Learned in 2023 (EP57)

In this year-end reflection, Michael, Tommy, Ben, and John dissect the financial landscape of 2023, sharing the surprises and lessons learned along the way. They explain the critical importance of discerning financial information sources, urging listeners to rely on professional advice over sensationalized media information. 

Listen in as they emphasize the resilience that comes from staying the course and making strategic, annual changes to your financial plan. As they wrap up the year, they offer a glimpse into what the podcast has in store for the upcoming year, promising more informative content and actionable financial wisdom for 2024.

Listen to the full episode here:

What you will learn:

  • Why you must be careful about where you get your information. (4:20)
  • The value in having a trusted advisor. (6:50)
  • Why you shouldn’t let fear hold you back from staying in the market. (11:00)
  • How to avoid all the noise out there around finances. (18:00)
  • How AI showcases the importance of doing your due diligence. (22:30)
  • The surprises that came up in 2023. (25:00)
  • The importance of being timely with your finances. (31:00)
  • What you can expect from the podcast in 2024. (34:00)

Ideas worth sharing:

  • “Let the market do its thing. Ultimately, it goes up more than it goes down, but if we make these actionable changes every year on your financial plan, that’s where we can really move the needle.” - Mason & Associates
  • “Take action with what you have right now.” - Mason & Associates
  • “We don’t want to just be an encyclopedia. We want to give you actionable tips.” - Mason & Associates

Resources from this episode:


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Read the Transcript Below:

Congratulations for taking ownership of your financial plan by tuning into the Federal Employee Financial Planning Podcast, hosted by Mason & Associates, financial advisors with over three decades of experience serving you.

John Mason: Welcome to the Federal Employee Financial Planning Podcast. I'm John Mason, Certified Financial Planner and President of Mason & Associates. And in today's episode, we have the usual crew, myself, Tommy Blackburn. Mike Mason and Ben Raikes. So for financial planners and folks, Mason & Associates has spent over three decades helping federal employees retire.

And in this episode, we are effectively concluding 2023 as we record this episode. So we're early December, and what this does is it marks two years that we've been producing the Federal Employee Financial Planning Podcast, and the reach is tremendous, the amount of people that we've made connections with, the reviews. Thank you so much for being on this journey with us. And what it's done is it's actually sparked our YouTube channel, which is gaining tremendous success as well. So big thank you to our audience, to our listeners, to our clients, to everybody that continues to encourage us to do this going forward. So we're going to do two years in 2023 year-end review is what we're talking about today. How's everybody doing?

Tommy Blackburn: Doing great. It's hard to believe 2023 is coming to a wrap here. Man, it's been–it's a sprint. It feels like every year, it feels like it was just the beginning of the year and now we're wrapping it up. We're getting ready for next year. There's a lot going on around here. Families are growing, which is always fun for all of us. a lot of life events within the firm, I believe. And yeah, it's going to be interesting to think about what happened in 2022 and what's happened in 2023. And I would say, as far as like markets are concerned, most of the pundits were completely wrong both years.

Michael Mason:Yeah, I had a golf game the other day, go figure, and talking to somebody about my first hole-in-one, and it was January 1st of 2000. And yeah he went back and he's like, “You mean Y2K?” And many of our listeners may not even remember how big a deal Y2K was. You were getting ready to go, John, to Disneyland with my mom and dad, your grandparents, or Disney World, I guess it was. And that's 23 years ago, about to be 24 years ago. It's crazy how fast a time goes by. So I'm sure as we recap 2023, I'll have a few more comments in reference to that.

Ben Raikes: I feel like the way that we're recapping this right now is kind of funny because it's only been two years but it seems like a lot has happened in these two years. It feels like whenever somebody turns 50 or 60 years old and you give them the card and it says, “Back in this year when you were born, a gallon of milk cost 10 cents and it cost five cents to go to the movie theater.” It just seems like so much has changed and as we're reflecting and looking back on where we are and where we've come from it almost feels that way. I don't know if you all feel the same way or not.

Tommy Blackburn: Well, it's interesting to me that you chose inflation to throw in there because as we reflect back on the last two years, inflation went from being almost a non-topic in financial planning in our daily lives to, man, it was roaring through 2022. And it appears to at least have slowed down quite a bit here in 2023, if not, hopefully coming to a close as far as being a problem.

John Mason: It's, as I reflect on two years, and Ben as you were saying, like there's so much has happened. And there's that old saying like, “The closer you get to the end of a roll of toilet paper, the faster it goes,” right?

And it does feel like every year the world is just moving a little bit faster. And as I reflect personally on why that is, I think it is information overload. And as we talk about how often the news and iPhones and Androids and how bad technology can be for a financial plan, it's like when you have all this information at your fingertips, it's exhausting.

And there's a few, it's a little over two years ago that we bought our first camper, and it's a 30-foot travel trailer. It's good size, and ignorance was bliss. We went in and we were like, “We need a bunk bed. Cool.” We basically bought the first thing that we saw that we could tow with a half-ton pickup truck at its limits.

And we were just happy-go-lucky excited. We have not been able to upgrade that camper for the last two years because we know too much. We have so many information. We've seen so many floor plans that we can't actually act on anything which is kind of interesting, and then I reflect as well on this is that maybe you want to make a change. Maybe you want to change houses. We've been in the same house for eight years. Maybe we're ready for something different and maybe we're only ready for something different because every day it's like a hobby to look on Zillow and look at other people's homes all day rather than just being content in our own home.

So as you think about the amount of information that our clients and listeners have to process every day and like not being able to process that correctly, what that could do and how it could derail a financial plan just like it's making our living or our camper decision that much harder.

Ben Raikes: Well, and I think a great point that you bring up there is anytime we are talking to our clients about financial planning, or talking about tax planning, are we talking about investments? What do we always say? In the long term, these are how we expect things will play out. But even in our own personal lives, I mean, think how hard it would be for a client that doesn't live in our world every single day that to your point, John, they're getting an update on Twitter. They're getting an update on Instagram. They're going onto Facebook and they're hearing about some kind of tragedy that's going on in the world. I mean, you've got your phone here, you can summarize and say, “Give me a news feed every five minutes.” And guess what? Every five minutes there will be something going on in the world.

And so it's tough even for us sometimes to tune out the noise. So we really sympathize and empathize with our clients who have those questions for us and we have to keep saying, “Hey. Let's look to the future. Let's have a long-term plan. Let's not get rattled by these shocks and this noise that we see in the market so frequently.”

Tommy Blackburn: I would say too about the information overload is definitely real. We all live it in some form of our life but it drives home to me the value of having a trusted expert in your life. I heard a client telling me about a trusted travel agent they're using and it sounded awesome to me where it was, “Hey, you don't want to go to that village. You want to go to this village. You're gonna get the same experience, but it's not gonna be as crowded. We've got a great house for you. Don't use this rail, that rail,” and all of these pieces of advice as I was listening, it made me think about what we do for clients where there's a ton of information and you can try to figure this out yourself, but when you have that go-to resource, you see it with clients all the time, let's say they just started doing contract work. Well, we can come in and say, “Yeah, probably what you want to do is start an LLC. You want to do these things for the business to get the accounting correct. We're going to have self-employment tax. We're going to have to make estimated,” but being able to just cut to the chase, same thing when clients are retiring, any part of the advice we give, I think it's got to be so valuable of just, “Hey, here's how Medicare is going to work when you get there, and instead of you being overwhelmed by all the information out there. We've distilled it down into what you need to know and what's actionable.”

John Mason: Well, I think that's the best point, Tommy, that you made is the actionable advice, right? So at the end of the day, you can be a really good financial planner, but if you're not distilling one-hour meetings down into bullet points of actionable advice, you're really not doing much for your clients if you're not able to support, empower, educate, and motivate them to make changes in their financial plan.

So hiring a trusted expert helps tune out the noise. Hopefully, we've been able to do that, guys, for two years now that we've been producing this podcast. Hopefully, you know, I guess we could be noise too, right? We're noise, we have opinions, we have ideas, we have thoughts, and we release episodes twice a month with those.

So hopefully two years in, we're not noise. Hopefully, two years in, we're providing actionable advice. Hopefully two years in, when our clients and when our listeners tune in two or three more times a month, that it's real. And I think that's one of the biggest goals that we've had in this podcast is we're not an encyclopedia, just here reciting FERS facts and CSRS facts.

It's like, “Here's a fact, here's how it works.” But then, “Oh, by the way, here's how it actually works in practice.” And if you're not, you know, quote-unquote a “real financial planner” who's actually serving clients, you may know all of the facts and figures in the world, Mike. But if you've never lived through it, it gets really hard to empower clients if you've never actually lived through any of this.

Michael Mason:You know, I think about this information overload and you know where we get the overload is whether it's CNN or MSNBC or Fox News or whatever it is, I'm so tired of tuning these things in. Sometimes I want the business aspect, but every morning the overload is on the crisis at our border or then you have these people that are paid consultants to come in there. If they were really good at what they do, they probably would just be financial planning all day long. And we talk about all the things we shouldn't be talking about if there was going to be information overload in 2023, and here we are December 11th recording this, and if these news channels gave a damn about you and your family, then it would have been information overload on the retired military survivor benefit option is where you'd have had that overload, but there's no overload there.

So all we get when we turn, tune into these channels is political sway. And then they tell you how miserable it is. And if you missed a couple of weeks in this market, especially a couple of weeks between November 1st and today, you lost all your return. You didn't make anything because you're getting bad information overload.

Tommy Blackburn: It's so entertaining to me though to think about the market. I know you probably had a different path we'll go back to, but 2022 we started off the year at a high, and it just went down pretty much the entire year in 2022. And I think coming into the year, forecasts really weren't that bad for the market.

I think it was, “Hey, we might not have the same appreciation we have had, but things are probably going to be okay.” Then inflation came roaring out, rates went up. A lot changed in a short period of very quickly in the bond market in particular, which impacts the rest. 2023, I think we came into the year and all I heard was negative. “It's going to be another rough year. Buckle up. We've got at least another 12 to 24 months of misery ahead of us. And maybe this recession will finally be in full force and we'll get back to business.” And it almost is like the exact opposite has happened. 2023, we've had a pretty good recovery. We're still not back to where we were, but it has not been the apocalypse that I feel like was painted coming into the year.

John Mason: Well, we spent two years trying to basically get back to where we were in 2021. And I'm not sure that we're even back to the highs of 2021 yet. So all of the volatility, all of the euphoria, all of the, the world is ending, all of these things that have happened over the last two years to essentially go nowhere. I mean, that's exhausting, right? So investments are a tool. I think what we ultimately come back to in this podcast is investments are a tool that help you hopefully do the things that you've always wanted to do in your retirement. But at the end of the day, we can't control what goes on in the stock market, and it really doesn't matter what anybody's opinions are.

And at the end of the day, whether you're actively trading or passively trading, you're probably getting to the same spot. And we just need to control the things we can control, which is what we always talk about in this podcast is let the market do its thing. Ultimately, it goes up more than it goes down, but if we'd make these actionable changes every year in your financial plan, that's where we can really move the needle, not necessarily focusing on what these pundits and everybody's saying.

Mike, you mentioned consultants and there's a podcast that we listened to, financial planning industry podcast that often slams the salespeople and consultants and marketing agencies because they'll get on stage at these conferences and they'll be like, “Well, this is how you should prospect or this is how you should add value and this is how you should run your business.”

So number one, they're shooting all over everybody telling them what they should do. And number two, they've never actually run a practice. They've never actually generated a referral, they've never actually converted a prospect to a client, and they've never actually demonstrated that they know how to add any value, but yet, they get 10, 15, 25 thousand dollars to be a keynote speaker. It's entertainment, is what it is, it's entertainment.

Michael Mason:Or held a widow's hand and told her that it's going to be okay two or three days after her spouse just passed away. They've never done it just like your college professors have never done it. They can give you financial planning theory, but until you've put it into play and you've had to hold to that advice, you've had to tell that person that wanted to leave October 15th and go into a 5 percent money market, you had to tell him to hold the line. And if they got that 5 percent money market, they didn't listen to you. It's going to take them two years at 5 percent to make what the market's done from November to date, but if you don't do it in practice and all you're relying on is theory, then it's hard to be a real financial planner. You're just a college professor or a consultant, right?

John Mason: You live in theory land rather than real world. As we think about the media people, what we see on TV, I think we always have to remember that the reason they're on TV is not necessarily to provide a public service, it's to earn ratings and make money, right? So the people that are there designed for one specific reason is to like create urgency and create viewership and generate ad revenue and be an entertainment source. Well, how much income do we make from the Federal Employee Financial Planning Podcast? And the answer would be we've made zero direct dollars from doing this podcast. So why, what's the motivation here? I think we like just talking to each other a little bit is one motivation.

Ben Raikes:We're having fun.

John Mason:Yeah, so fun, getting the word out, being good, solid advice, and yes, like, we're marketing, but nobody's paying us to do this other than clients who are like, “Yeah, these guys deliver massive value and I want to be one of those.”

Michael Mason:If you never become a client, you know, this podcast cost, cost us money. We're all sitting here with new microphones, right? We want to deliver the best advice we can deliver. We will make clients from it, have made clients from it. But again, we don't do it for the money, you know, we had in this office, we've probably got a hundred years worth of combined experience.

Why would we keep that pent up? Why would we keep it here? I mean, we could tell story after story about how we change lives of people we never see. They see us. ‘Cause now we have our video on this podcast, right? They see us, but we never see them and we change their lives. And I guess I should recant just a little bit. We do make money because a business cannot, you know, afford, you're either growing or you're dying so you have to add those 10 to 15 clients a year to continue growing.

John Mason: So I think as we look to some of the other things that we want to accomplish in this video, and we have some stats, we'll share those with you in a little bit, and they're just kind of like ballpark figures. But what else has happened in 2023? Well, we've had a historic COLA, Tommy, at the beginning of the year, I think it was what, 8.7 and 7.7, you know, between military and FERS and CSRS. And then we have some pretty big COLAs come in next year too.

Tommy Blackburn: We do, and I don't unfortunately know it right off the top of my head. Was it like 3 and 3.3, like 3.4 or something is what I was thinking. Yeah. So, which is historically compared to what we saw the 10 years before, actually pretty good when we saw basically nothing on COLA. So, we are still in a good cost of living for those who get those cost of living adjustments.

John Mason: Yeah, I think it's 3.2 for military and CSRS, social security, 2.2 for FERS. So the cost of living adjusted pension that just keeps going higher. It just keeps going higher every year and because it's one of your largest assets, because it's such a big percentage of your retirement income, you know, maybe groceries have gone up by 5 or 7%. Like we've heard for so many marketing and so many news talk about groceries, and it's like, yes, my grocery bill went up 10 percent but my 100,000 of pension went up by eight, that's more significant than the fact that your grocery bills higher and how about this is a, so maybe surprises good and bad.

I have a diesel pickup truck, right, that's a big old pickup truck, and diesel when I bought that truck I think was close to 5 a gallon, and I saw 380 yesterday, and I saw in Yorktown, Virginia, Ben, gas prices dropped to 280 for regular octane 87. Talk about a surprise.

Ben Raikes: Man, what is Yorktown doing because Richmond doesn't have that.

Tommy Blackburn: Yeah, I don't see that in Williamsburg either.

Ben Raikes: I think I need to make a stop to Yorktown, but it's, again, it's crazy because I keep going back to this concept of what we were talking about earlier before which was noise, right? Because if you were a federal employee, let's go back to inflation, which we've already hit on, you say, “Oh my gosh, my groceries used to cost $250 a month. Now they cost $350 a month.” Okay, well that's an extra 1, 200 coming out of your pocket in a year, and that might be really frustrating. And you turn on the Foxes and the CNNs and the MSNBCs and you're frustrated. What you need is that trusted advisor, that trusted expert that not only says, “Hey, here's what inflation was, and yeah, I don't want to pay $1,200 more in groceries anyway. But take a look at this, you're actually making $10,000 more per year because of your COLI, not your COLA.

Tommy Blackburn: And you also just got that federal long-term care, cost of living increase, that premium increase that so many people were getting. And to put it into context of, yeah, it went up by 20%, but the 8% of your 100,000 pension just went up more than covers it so we're good to pay that long-term care premium. It's putting things into context that way both of you, also are saying things that I was thinking about, it's about that personalized financial plan. It's the same thing with those business speakers you were talking about, I was thinking about, where everybody–either they haven't lived it and they're giving advice that they, you know, it's not practical or they have lived it but it's their business.

I always think about that sometimes like, yeah, I get it works for your business and there are actionable items for me to potentially take from this, but that's not necessarily my life, my goals, and my business's goals. So you have to always remember, are they speaking to you? It should be about your plan.

John Mason: Are they speaking to you, and are they speaking the full truth? Are they speaking the full truth because I think at the end of the day, you don't really know what you don't know about that other person. And I had a client the other day that was like, you know, we're up whatever we're up this year, we're down whatever we were down last year.

2022 was one of the worst years ever for a balanced investor, somebody with stocks and bonds. And their brother, this person's brother was like communicating how much money they made last year and how they're not, they haven't seen their account value go down at all over the last two years, even after withdrawals.

And I looked the client, we do a lot of virtual meetings, as y'all know, I looked the client eyeball to eyeball, best I could do in Zoom. I said, “Your brother's a liar. Your brother's a liar. Either he got extremely lucky and went to cash at the exact right time or he's a liar, but this is not something that's going to consistently happen like we know the market has not gone up over the last two and a half years. We know that bonds are still down from their high. We know that stocks are still down from their high. So if you're taking distributions from your investments, what does that mean happen to your account value? It's down.”

Tommy Blackburn: You were doing some very unorthodox things at all the right times in order to be up, to your point.

Michael Mason:I mean, it could happen. We've seen where it happens. It could happen. We've seen where it happens. Where does it happen? It happens, you know, somebody sold him an index of annuity, and they say things like this, “Get market performance, and then never lose anything.” And then they look at the wrong number. They look at the protected withdrawal value. You have to have the whole story, right? So we knew.

John Mason: You sound like “Angels in the Outfield”.

Michael Mason:Yeah, it could happen. Liar is really tough, you know, of all the words. Many times there's a bunch of what you want to call liars in Washington, D.C. He's just, he's unfortunately misguided. He's probably not lying on purpose. He's just misguided and somebody misguided him.

John Mason: Well, that's probably more politically correct, I would say, which is, you know, it's good that this is quite the role reversal here. My dad reigned me in. That doesn't normally happen. But it's the whole truth and nothing but the truth.

Michael Mason:What was the movie? “Princess Bride”? Liar!

Ben Raikes: I want to take this in a slightly different place, but it's along the same lines. We're talking about truthful information and personalized information. And I want to maybe pivot to those who are maybe listening to this podcast but are still in that group of do-it-yourselfers. And we're thinking about all the things that have changed. What's one of the biggest technologies that came out this year that has impacted almost everybody's lives, whether you know it or not?

Tommy Blackburn: I had this written down as well as artificial intelligence. AI is huge.

Ben Raikes: Exactly. Artificial Intelligence, AI, and specifically when we talk about ChatGPT. So you can go into ChatGPT and you can say, write me a 100-page horror story, and it's going to sound convincing. You can tell it to write you songs. You can tell it to compose you emails. You can tell it to organize your travel plans. I mean, this tool is incredibly robust and incredibly helpful. What it's not is it's not guaranteed to be accurate. You can go into ChatGPT and say, “Hey, tell me about my FERS retirement. How do I calculate that pension?” It's going to pull from blogs. It's going to pull maybe some information from OPM. It's going to pull from thousands of different places and spit out an answer and you say, “Oh, great. Thank you, ChatGPT. That made things really easy.” You're never going to know whether that answer is truthful. It's in front of you, but you don't know whether it's correct and I'm sorry for circling back on hiring a trusted advisor and someone that can meet with you face to face and personalize your goals, but the ChatGPT, it's just more and more noise. And I think we need to make that clear.

John Mason: Well, correct me if I'm wrong, guys. I think ChatGPT, G-P-T ends in 2021. So the useful data that's there is through 2021. So we were searching for a keynote speaker for our client event, and the first person that popped up is deceased, right? So that's what ChatGPT does to you. Well, what if the tax law changes, right? So in 2026, we sunset the current tax law. Well, if ChatGPT doesn't advance in time. to understand what that means, you're working on old, outdated information. And that's, frankly, I mean, this year at Federal Employee Health Benefits, we have a Medicare Part D, right? So if you ask Chat, “Tell me how Medicare and FEHB coordinate.” It's 2021 before we even have these new plans.

Tommy Blackburn: And it was interesting with AI, as part of the, it's just another tool that it can potentially, certainly be noise. So it is interesting. And to me, it's like the trusted expert and advisor knows how to use a tool and use it to be advantageous, whereas if you don't know what you're doing, it's the same thing with like TurboTax, I've got TurboTax doing my tax return, well if you don't know what you're doing, it's just a tool, it's just a piece of software, you have to be the expert, or you have to have hired the expert who knows how to properly utilize things to get the most out of it, and it can be noise, absolutely.

Michael Mason: I would say that, you know, in ChatGPT's favor, it might give you a better calculation for your first retirement than 95% of the financial planners out there that won't read the book.

Tommy Blackburn: Well, it's going to be like Google. It's going to be like a souped-up version where it's like–

Michael Mason:And we know how good Google is.

Tommy Blackburn:Right, exactly.

Michael Mason:I mean, you can plug in CSRS voluntary, you don't even have to say voluntary contribution plan. CSRS VCP, and you're going to get a whole lot more information than the average planner could give you. But back to your point, John, if you said, “I retired military 20 years ago and didn't take survivor benefits.” If the knowledge base was 2021, ChadGPT is not going to tell you that 2023 is an open season is it?

Ben Raikes: And the bigger piece of that too is, again, the personalized aspect of it is they're not going to know that here's how it could impact your life if you pay 250 grand to buy back survivor benefits. It's not going to say that, “You know what, if you actually retire this year, here's how your entire plan works and you actually can do it.” So one, it spits out information that may or may not be true and up to date. And two, it's spitting out information that's just general. It doesn't mean anything personally to you.

John Mason: It’s not customized to you. So ChatGPT was certainly an advancement or a surprise for 2023 that I don't think any of us saw coming. Inflation may be cooling down and dropping to the level it has was a surprise that we didn't see coming. The stock market rally this year was a surprise we didn't see coming, so–

Tommy Blackburn: And the other surprise with inflation, I guess a potentially pleasant surprise, was I bonds. And of course, our money market rates are on cash, CDs, and so forth, but who saw I bonds coming? I mean, that was like this tool that nobody's looked at in decades and all of a sudden inflation rolled up and I bonds became very attractive again and they probably are losing their attractiveness as inflation comes down, but that was a pleasant surprise.

John Mason: So don't let this be a surprise. You're all proud of yourself. You're listening to this podcast and you have a five or six percent CD, you've made some money in cash and you're thinking life's great. Well, on April 15th, you may not think life's as great if you haven't prepared. So don't wake up April 15th if you haven't done a tax projection by the end of this year, that shows like maybe you had some capital gain distributions on mutual funds. Maybe we have 10, 15, $20,000 or more of bank interest. Well, folks, all of this is material. This is material. And you've never–

Tommy Blackburn: When you've always said what's about what it is like it was last year that nope, not gonna be the case.

John Mason: I mean, for 13 years and I know Ben and Tommy, you're the same. And Mike, you probably weren't doing as advanced tax projections 13 years ago as we are now. I literally used to put $0 on the interest line or just skip over it entirely 'cause it was irrelevant. It has been irrelevant our entire career. And guess what? It's very relevant now.

Michael Mason:It’s kind of funny as I'm thinking $0 on the interest line, you know, what a shift. When you look at the mortgage interest that you can claim, most of us at two and a half percent mortgages, and then you got a 5%, yeah, you made more mortgage interest or more interest on your bank CD on 100,000 than you paid on your $200,000 mortgage. Kind of a flip-flopping things, huh?

Ben Raikes: I’m feeling a little excluded from this conversation right now, Mike. What are you talking–there's two and a half percent mortgages out there?

Michael Mason:That's something at that time

Tommy Blackburn: And to me that's a solid part of a good advice relationship because when rates were historically low, Mason & Associates was pushing their clients to refinance to those historic lows, which maybe you thought didn't seem like that big of a deal at the time, but we made hay with what we had, and then now you have a two and a half percent rate, and your cash is earning you five or six percent, and that's an awesome place to be, but it's because you took action with what you had at that moment in time.

Michael Mason:And many of that advice, I mean, there was a long period where it went from like three and a half down to two and a half. But those last ten people, let's say, that we gave advice to, if they didn't act within a very short window, 30 to 60 days, it was a bad decision, right?

John Mason: Oh, it got nasty fast. I had a client who I met with last week for end-of-year tax projections and whatnot, and he, again, you know, eyeball to eyeball via Zoom, best we can, was like, “John, thank you so much,” I was like, what are you talking about? He's like, “That advice to refinance whenever it was, thank you,” and the mortgage wasn't huge it's 100, $150,000 mortgage and the savings like he was probably at four and we dropped to three and a half or something, but I'm not sure that the refinance was necessarily that tremendously valuable compared to what he had before. I had to drag him into it, kicking and screaming like, “Yes, CapCenter does it at no cost. And this will be a good idea. And you're going to win from this and you'll save a dollar, which is better than saving 0.” But the fact now that the 30 years north of seven, it didn't matter that we only went from four to three and a half. It just was like, I refinanced, I took advantage of an opportunity and I'm so glad I did that, and I'm so glad that I'm not at seven.

Tommy Blackburn: Yeah. I don't know, something about when you look out and see what everybody else has got up against, you feel a little bit better. You mentioned taxes. I wanted to go back to the flip side on interest rates, too. Not only that could it make your tax bill go up, but it also used to be, “Hey, if you're underpaid, the penalty's not that steep typically, because it's based on prevailing interest rates. So the IRS didn't charge you a lot of interest for being under-withheld into the system.” Well, that's changed as well. And so now you're going to probably be paying 7 or 8 percent on those underpayments. You probably want to make sure you have more incentive to be paid in timely than you did previously.

John Mason: So making sure that we're in safe harbor whether it's the state of Virginia or your federal safe harbor. Look at your tax return from last year. You can use the 110%. Tommy is one way, 110 percent of what we owed last year, or 90% of what we owed this year, you're in safe harbor and not subject to those penalties.

Tommy Blackburn: As long as the other little asterisk there, you're right, is was it timely? So it's not only like at the end of the year,” Hey, I got myself paid in to make that test work.” If you didn't do it correctly throughout the year, the IRS says, “No, we see what you did. You get to pay us.”

John Mason: That's a great point. So we just did end-of-year tax planning, and I don't know how many Roth conversions we did. We're going to have a separate episode, I think, on Roth conversions. Maybe not today. But we did a lot of Roth conversions and Roth conversions with estimated tax payments. And the beautiful part of Roth conversions and estimated tax payments is you convert 50, and then you deposit 50 into your Roth. If you have taxes withheld, you convert 50, you deposit 40, as an example. So withholding is easy, right? So withholding is easy because the IRS just thinks it was there timely. The conversions by default in tax software, the tax software thinks you did a conversion every once a month for 12 months, doesn't it?

So if you do a Roth conversion in December, a 100 grand, TurboTax thinks that you did one-twelfth of that every month. And then you make an estimated payment, Tommy, like you said, in December, well, you're underpaid. So we fix that with IRS form 2210, right? 2210 is how we fix that problem. And how many times have we seen CPAs, tax professionals, clients, not file the 2210?

It's a form that, that for whatever reason gets missed. Well, that's going to be a substantial, you know, lack of a better term—if you don't file that form correctly this year.

Tommy Blackburn: Yeah, it does get missed quite a bit. Maybe sometimes there's like some details that is not there on the surface without maybe the advisor or somebody sharing. I think the other part is just laziness. Well, not knowing and or laziness and Michael, tell me there's a better way to say it than laziness.

Michael Mason:No, I think laziness is good, but it takes us back to which we laugh about here is, you know, “My CPA is really good because I got $10,000 back last year.” You were probably going to get that 10,000 anyhow. You probably should have got 11,000 because they filed whatever that form was. So the things that they have no control over, which is you overpaying taxes all year long, they claim credit for. The things they could claim credit for, they don't do. Right? They don't file the, what is it, 90–what's the one for your Roth conversion?

John Mason: The 8606.

Michael Mason:The 8606.

Tommy Blackburn: Oh, yeah, that one's always a battle. Yeah, so if you do a Roth conversion, 8606, put that in your head, that form should be on your tax return.

John Mason: Well, guys, I know we're getting close to the end of this episode, I think I want to share a little bit with the audience and, you know, admittedly the four of us haven't talked a ton about what 2024 looks like, but I think we should share just a little bit what's to come from the Federal Employee Financial Planning Podcast in 2024. Some of the things that came to mind was we're probably going to stick on a similar cadence, right? So two or three episodes a month seems to be a good number for us so expect that to continue into 2024. We had some great guests over the last two years, James Anderson, Heather Szajda, Bryan Gay, to name a few.

We plan to continue to have exposure and bring high-quality guests on this show. Ultimately, the four of us are going to be the ones driving it, but when we can find a great guest to bring on, that's a goal going into 2024. And I was also just thinking like, again, we don't want to be the encyclopedia. Ultimately, we want to present high-quality information that's real and actionable. So as I think about what we want to do this year, that's kind of where I see the podcast going. And then as far as numbers go and for our audience, I'd love for you to make us hit these numbers. I think we're going to be close to 30,000 downloads this year, which is pretty awesome, you know, for Mason & Associates and the Federal Employee Financial Planning Podcast.

We'd like to see 60 or a hundred thousand downloads next year. And we want to continue to spread this information. And oh, by the way, hopefully, the video version will continue to take off as well. So, that's the content that we're looking for, and then hopefully some numbers and stuff to keep us motivated.

Michael Mason:Yeah, I want to say to you guys and challenge this team. So, for those folks that don't know my complete background, for about 12 years, I coached Little League Baseball. And one thing that I learned, you have to find about seven different ways to say the same thing, you know, cause yeah, I can tell you, you're doing this, you know, and then same thing with golf, you're casting, John might understand what I mean by casting, but the next child may not. So you have to find multiple ways to say it until it finally sinks in. So I want to challenge the people around the table is that you, we will repeat ourselves multiple times on these podcasts.

People could go back and find the same information on an earlier podcast, but maybe it's not said the same way like the CSRS offset lady that called in the other day and it was $40,000 to buy her CSRS offset time, the time she had taken out, but it created $20,000 of income for the rest of her life and maybe somebody at the federal government could have answered that, but they didn't, but they wouldn't have said, “You give 40,000 one time, you'll get $20,000 cost of living adjusted every year for the rest of your life.”

If we could do that at Mason & Associates, we'd have people lined up down Cannon Boulevard waiting for that investment. So saying it different ways until it finally clicks with the person that you're trying to educate is going to be important to us.

John Mason: We definitely wouldn't be doing the podcast if we had that sort of investment vehicle, I can tell you that. And I think, Mike, you challenged us, you know, we got into a funk. Last time we got together for recording, we recorded one episode, I think, maybe two, and it was hard. This is not, you know, audiences we’re saying this for your benefit to like, this is hard work. This is not easy coming up with topics and getting together and Drew driving over here to help us record.

Like, there's a lot of work pre and post-production that goes into this. And being able to continue this for two years puts us in the top like one percent of podcasts. I think most release like one episode and quit. so the fact that we're here for two years is something to celebrate, and I would just challenge not only us to think about creative ways to say things the same, but different, but challenge the audience too. Like, you're going to see a survivor benefit podcast in 2024. I guarantee it. I guarantee it. And it's going to be one of the most listened to but if you've already listened to one of those, don't just skip it.

If you've already heard something on social security, don't just skip it because 30, 40-minute episodes or whatever these are, there's going to be something that you didn't catch before, so I challenge you, we challenge you, don't skip it, because you've heard it from us before. There's always going to be some new takeaway.

John Mason:Absolutely.

Michael Mason:John, as we wrap it up, because I know that's where we are, you just sparked one of those great Masonisms in my head. Most people do a podcast or two and they quit. Do you know the Masonism I'm thinking about?

John Mason:“Work it til it works.”

Michael Mason:“If it's a good idea, work it until it works.” If you only work it to see if it works, guess what? You'll never see it. You have to work it until it works.

Tommy Blackburn: It's interesting. I was actually thinking the same thing. Maybe not frame that way. That's what's always great. Essentially what you're saying is how do you frame something is how people perceive it and that's reality, but Charlie Munger, Warren Buffett's right-hand man who just passed, you know, multi-billionaire, extremely successful, at least financially in life, I'm sure, in many other ways.

I watched, I think it was a CBS thing on him, an interview before he passed that he had recorded. He basically said the same thing, where he said it's about grit, it's about soldiering on and it's just about persistence. So I agree. We're going to keep on persisting. We're going to come up with new creative ways to deliver the same message, to get it to the best way to resonate.

John Mason: Well, thank you guys. Another awesome episode of the Federal Employee Financial Planning Podcast. Thank you to our audience for sticking with us for this entire episode. Help us celebrate two years by doing a few things for us.

Number one, help us celebrate by leaving us a review and a comment wherever you're listening to your podcast. We'd love to see those five-star reviews and your comments. You've been on this journey for two years with us. So help us celebrate two years. And if you haven't already, check out our YouTube channel, Mason & Associates YouTube channel. So /@fedemployeefinancialplanning. We have tons of YouTube videos out there. We'd love for you to check out that content. Remember things are what they seem. We're here to support and empower, educate, and motivate you to make changes in your financial plan. Thanks again for being with us on the Federal Employee Financial Planning Podcast. ​

The topics discussed on this podcast represent our best understanding of federal benefits and are for informational and educational purposes only, and should not be construed as investment, financial planning, or other professional advice.

We encourage you to consult with the office of personnel management and one or more professional advisors before taking any action based on the information presented.