On July 10, 2023, I walked out of my old office for the last time. Upon my departure, I gave up a lot of my identity. I spent eight years with the firm and was one of four owners. I lost some relationships. No, I didn’t lose friends or leave on bad terms, but I walked away from the thing that connected us and the daily social interaction it facilitated. I said goodbye to the daily structure. And, oh yeah, I gave up a nice paycheck. No matter how much money you have in the bank, how well prepared you may be, that’s scary. And while I wasn’t retiring, almost every retiree faces these same challenges. Below are a few strategies to help you sleep better at night in your first few years of retirement. 1. Retire “to” not “from.” I drove from my old office to my new one. I didn’t stop at home. I didn’t stop for coffee. I don’t even think I listened to the radio. And I wouldn’t advise this. I encourage my clients to take some time to breathe. Do the home projects you’ve been putting off for 30 years. Spend time with your grandkids. Take that trip. When I arrived at my new office, I had my new identity, much the same as my old. Professionally, I am a financial planner, an owner and an entrepreneur. The gig economy has made it much easier to work when you want, how you want, in the industry you are passionate about. The most important thing about retiring “to” something is that you know who you are. Remember: “Retired” says only what you don’t do. Make sure you know what you do do. Now, I know you’re asking, “How does this make things less scary?” Two reasons. First, being busy inherently reduces stress. Second, many of the things that people retire to pay something. Probably not what you’re used to, but they take stress off your portfolio, and your shoulders, between retirement and Social Security. 2. Cash is king. Not in an investment sense and not forever. I often encourage retirees to have a year’s worth of expected expenses in the bank, including any one-time, big-ticket items. That’s much more than the three to six months you’d read about in a personal finance textbook. It’s really uncomfortable to watch your checking account deplete without the bi-weekly refills. One strategy that may help is to hold that year’s worth of expenses in a savings or money market account that deposits the exact amount of your old paycheck into your checking account every two weeks. 3. Have a financial plan. Think of your financial plan as your gas gauge. It will tell you how far you can go without running out. Ideally, you have many more miles than you plan to drive. A proper financial plan will also address cash flow, risk management, investments and estate and tax planning. However, the core thing you want your financial plan to tell you is this: “You’re going to be OK.” That will certainly help you sleep at night. If you want reaffirmation of your plan, you can check your numbers for free here. 4. Have an appropriate asset allocation. Your investments are the actual gas in the tank. Cerulli Associates and other financial firms have long documented the difference between “investment” returns and “investor” returns. The latter typically are much lower than the former because we are human beings. We buy at highs and sell at lows. Vanguard’s Advisor’s Alpha study highlighted behavioral coaching as the most valuable service financial advisers provide. Much of this panic selling is due to having a portfolio that made much more sense in your 30s than it does in your 60s. Weekly, I come across Baby Boomers who have more risk in their portfolio than I do. I am 37. A subsequent article will serve as a guide to find your appropriate asset allocation. In the meantime, you can use this free tool to gauge how much risk you’re comfortable with. 5. Have an income plan. Throughout your working career, if you’re an employee, you have an income plan. It’s your paycheck, and it’s probably as steady as your job. In the last 15 years, I can count on my two hands the number of pre-retirees who have an income plan for the next chapter. The financial plan tells you how much you can spend every year. The income plan tells you where it’s going to come from every month. When I started my own firm, I knew that I had two years of runway, literally making no money, before I would run out. My financial plan told me that. Where I would draw excess money for expenses was part of my income plan. Fortunately, things ramped up quickly, and there were only a few months where this was necessary, but the fact that I had a plan meant I could sleep soundly. Credit: Kiplinger.com

The Internal Revenue Service is warning taxpayers about bad tax information on social media that can lure honest taxpayers with bad advice, potentially leading to identity theft and tax problems. Social media can routinely circulate inaccurate or misleading tax information, where people on TikTok and other social media platforms share wildly inaccurate tax advice. Some involve urging people to misuse common tax documents like Form W-2, or more obscure ones like Form 8944 involving a technical e-file form not commonly used by tax payers. Both schemes encourage people to submit false, inaccurate information in hopes of getting a refund. The IRS warns people not to fall for these scams. Taxpayers who knowingly file fraudulent tax returns potentially face significant civil and criminal penalties. “Social media is an easy way for scammers and others to try encouraging people to pur sue some really bad ideas, and that includes ways to magically increase your tax refund,” said IRS Commissioner Danny Werfel. “There are many ways to get good tax information, including @irsnews on social media and from trusted tax professionals. But people should be careful with who they’re following on social media for tax advice. Unlike hacks to fix a leaky kitchen sink or creative makeup tips, people shouldn’t rely on made-up ways on social media to patch up their tax return and boost their refund.” Social media: Not the ideal place for solid tax advice. Social media can connect people and information from all over the globe. Unfortunately, sometimes people provide bad advice that can lure good taxpayers into trouble. The IRS warns taxpayers to be wary of trusting internet advice, whether it’s a fraudulent tactic promoted by scammers or it’s a patently false tax-related scheme trending across popular social media platforms. While some producers of misleading content are driven by criminal profit motives, others are simply trying to gain attention and clicks. They will post anything, no matter how wrong or outlandish, if it garners more attention. The IRS is aware of various filing season hashtags and social media topics leading to inaccurate and potentially fraudulent information. The central theme of these examples involves people trying to use legitimate tax forms for the wrong reason. Here are just two of the recent schemes circulating online: Fraudulent advice on Form W-2. This scheme, circulating on social media, encourages people to use tax software to manually fill out Form W-2, Wage and Tax Statement, and include false income information. In this W-2 scheme, scam artists suggest people make up large income and withholding figures, as well as the employer its coming from. Scam artists then instruct people to file the bogus tax return electronically in hopes of getting a substantial refund—sometimes as much as five figures—due to the large amount of withholding. There are two other variations of the W-2 scheme. Both involve misusing Form W-2 wage information in hopes of generating a larger refund: • Fraudulent Form 7202: This scheme involves encouraging people to use Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals, to claim a credit based on income earned as an employee and not as a self-employed individual. These credits were available for self-employed individuals for 2020 and 2021 during the pandemic; they are not available for 2023 tax returns. • Fraudulent Schedule H: Another scheme encourages people to invent fictional household employees and then file Schedule H (Form 1040), Household Employment Taxes, to claim a refund based on false sick and family medical leave wages they never paid. The IRS is actively watching for this scheme. In addition, the IRS works with payroll companies and large employers—as well as the Social Security Administration—to verify W-2 information. Form 8944 scheme. Another example of bad advice circulating on social media involves Form 8944, Preparer e-file Hardship Waiver Request. Wildly inaccurate claims made about this form include its use by taxpayers to receive a refund from the IRS, even if the taxpayer has a balance due. This is false information. Form 8944 is for tax professional use only. While Form 8944 is a legitimate IRS tax form, it is intended for tax return preparers who are requesting a waiver so they can file tax returns on paper instead of electronically. It is not a form the average taxpayer can use to avoid tax bills. Taxpayers who intentionally file forms with false or fraudulent information can face serious consequences, including potentially civil and criminal penalties, like criminal prosecution for filing a false tax return and a frivolous return penalty of $5,000. How taxpayers can verify information. The best place for taxpayers to learn how to properly use tax forms, and to accurately follow social media channels related to taxes, is to go to IRS.gov. • IRS.gov has a forms repository with legitimate and detailed instructions for taxpayers on how to fill out the forms properly. • Use IRS.gov to find the official IRS social media accounts, or other government sites, to fact check information. Report fraud. The IRS encourages people to report individuals who promote improper and abusive tax schemes, as well as tax return preparers who deliberately prepare im proper returns. To report an abusive tax scheme or a tax return preparer, people should use the online Form 14242, Report Suspected Abusive Tax Promotions or Preparers, or mail or fax a completed Form 14242 and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations. Center in the Office of Promoter Investigations. Mail: Internal Revenue Service Lead Development Center Stop MS5040 24000 Avila Road Laguna Niguel, CA 92677-3405 Fax: 877-477-9135 Alternatively, taxpayers and tax practitioners may send the information to the IRS Whistleblower Office for possible monetary award. Credit: TheTaxBook.com Cross References: IR-2024-98