Speaker:
Saving for retirement is a great start, but it’s what you do with this money that really matters. What’s your strategy to reduce taxes? Generate income in retirement? Reduce your risk and get even more from Social Security? This is where you can count on straightforward and objective advice about how you can make your money go a lot further in retirement. Roadmap to Retirement, the radio show, now here are your hosts David, Karen and Bret along with Joe Krause.

Joe Krause:
In 1964, Bob Dylan released a song that was an anthem for change. The song was called The Times They Are A-changin’ and that couldn’t be more true when it comes to planning for retirement today. The strategies that were relevant even a handful of years ago are now obsolete and they could literally steer you off a financial cliff. Good morning, everyone and welcome to Roadmap to Retirement the radio show, along with David Bezar, Karen Bezar and Bret Elam. We welcome everybody and David over to you sir.

David Bezar:
Good morning, everybody and good to see everybody’s got smiling faces this morning. Exciting. Great show lined up Joe, right? I mean like you said planning for retirement has been literally just turned upside down on its head. We’ve got record low interest rates, it’s making it impossible to generate income from CDs and savings account. Company pensions are pretty much all but gone. The threat of massive tax increases could really take a big chunk of people’s IRAs 401(k) I don’t think a lot of people are really thinking about that, and then obviously sometimes really in our faces healthcare, medical costs are all going through the roof. The aftermath of this pandemic could even bring more and more changes, we still don’t even… we don’t have that crystal ball, we don’t even kind of know when it ends and then what’s really the outcome after all the stimulus so on and so forth.

David Bezar:
So, getting back to Bob Dylan, “You better start swimming or you’re going to sink like a stone for The Times They Are A-changin,” right? We got to really make sure that we’re on top of our game. So coming up in today’s show, we’re going to share five ways planning for retirement has been turned upside down.

David Bezar:
These are things including the staggering price tag for healthcare and retirement, why you should brace yourself for massive tax increases in retirement. Plus, the reason record low interest rates are really forcing retirees to take more risk than what they can actually afford. So, one of the things that’s happened is, look we’re all living longer than before which is going to take some really important planning.

Karen Bezar:
And certainly that’s one of the questions we… or one of the concerns that we get a lot of times when we meet with somebody for the first time, we have a questionnaire that they fill out and we ask what are your concerns? Do you have any questions about retirement? And usually the two ones that are most concerning is, is my money going to last? Or am I going to outlive my money? The other one is long term health care is really getting to be a concern for people and not a lot of people can afford it, or they don’t want to have it or there are other options out there. Oddly enough I was reading an article in Investopedia and it agrees with me, so what the article said was running out of money before they die is one of the primary concerns of most retirees. Longevity risk is an even larger concern today as life expectancies have risen, the life expectancy at retirement is just an average age, right? Nobody knows their date of death yet everybody knows their date of birth.

Karen Bezar:
So I always tell people you have to plan for longevity because you just never know. The scary thing is and here’s some statistics, the world was home to nearly half a million centenarians, which are people that are aged over… 100 and over. David do you think you’re going to live to be 100?

David Bezar:
You know that gene that I have [crosstalk 00:04:16]

Bret Elam:
By the way did you notice how Karen said I’m glad Investopedia agreed with me? You see Joe, you see what I have to deal with?

Joe Krause:
I understand, I can relate.

Karen Bezar:
This quarantine is really starting to… it’s really starting to get really tiresome right now.

Joe Krause:
You got lots of years to come.

Karen Bezar:
I know, exactly. So just like retirement hopefully [crosstalk 00:04:37] hopefully we have a lot of years to go but statistically speaking nearly half a million centenarians in 2015. So in 1990 there was… they said it was a four times growth, so four times as many centenarians in 2015 as opposed to 1990. So what’s it going to look like future years and 2050, right? So how many more people are going to live to be 100 or close to that?

David Bezar:
And that’s it. I mean people have in their mind I’m only going to live a couple years and I don’t know if it’s history tends to repeat itself, but fortunately or unfortunately science has gotten better where people are hanging around, here’s a stat for you. Couples who make it out to the age of 65 healthy or not, a 50% chance that one of you makes it to at least age 92 and a 25% chance that one of you makes it to the age 96. That is a long time and here’s the problem that we see all the time is people back in 1950 life expectancy for males 65 and a half and females a little over 71. Today, females aged 85 and men age 83. So when we start talking about longevity and longevity risk and Kiplinger actually said it better than anyone I’ve seen it in a while.

David Bezar:
“Longevity risk is actually a multiplier of every other risk we have in retirement. It means more years that we have to navigate the markets risk, inflation eats away at savings.” How about those expensive health care costs? All those things right there we need to be conscious as Karen said, of making sure my money does not… or you realize you want your money to outlive me, not you outliving your money at the end of the day. I mean it’s a concern.

David Bezar:
Yeah, and obviously what goes hand in hand with longevity is health care costs, right? I mean the longer you live, the greater the chance that you’re not going to… you’re going to probably experience some type of a health crisis scenario. Unexpected medical bills are really a major concern for many retirees. Look what’s going on with the pandemic and coming up with a vaccine type situation. You know that prescription drugs are a major issue especially for people that unfortunately are chronically ill. Older people usually have greater healthcare needs, and may require more frequent treatment for a number of different health related situations. We sit down with hundreds of people on a monthly basis, and like Karen said earlier it’s very rare to see that any type of long term care insurance coverage is in the equation, either they don’t want to spend the money or they can’t afford the money. Those who do have it are experiencing major increases in those premiums on an annual basis, because it’s just a risk that can’t be managed by insurance companies.

Karen Bezar:
Yeah, and there’s also statistically speaking 70% of Americans aged 65 and older will need long term care at some point in their lives. When you consider the average cost of a private room in a nursing home if it’s like 100,000 a year, that’s something to really think about. So one of the things we do here at Thrive is that it’s something we definitely include in your roadmap retirement planning, definitely need to know am I going to be okay if you’re single or if you’re a couple, if something happens to one or both of us are we still covered? Are we going to dig into our assets? Definitely something to think about, and if you’ve lived to be 85, 90 or even 100 years old would your retirement savings last? It’s a great question you should be asking yourself now, because we’re living longer more than ever before.

Karen Bezar:
The number of people who will celebrate their 100th birthdays is projected to increase over the next 30 years. So that means you could go 25, 30 or even 35 years, that’s a long time to go without a paycheck. So it’s critical you have a bulletproof income plan that lasts as long as you do. There are some options available today that you may not know exist. The best thing you can do for you and your family is to explore those options with our free retirement income analysis.

Karen Bezar:
Now, you might expect to pay for someone to do a customized analysis for your specific situation but we’re going to cover 100% of the cost just for the listeners who call us today. Our number is 215-987-2430. Remember, successful retirements are not based on how much you have saved, but they’re based on your ability to turn savings and investments into income. So give us a call again, 215-987-2430.

Joe Krause:
Good start to Roadmap to Retirement to radio show here on Talk Radio 1210 WPHT, as we get ready to go to commercial break here in 30 seconds or so. David I would say to you, Brett and Karen, I’ve been standing with you doing this radio show since you started doing radio, and even today I still find myself not understanding the answer to the question, how much are we going to need when we no longer have the ability… meaning my wife and I, when we no longer have the ability to bring income in? What’s the number? I don’t know how to answer the question.

David Bezar:
It’s simple to answer the question just get a report done, right? I mean really our listening audience, just get a report and you’ll know those answers.

Joe Krause:
When we come back, why should you brace yourself for massive tax increases and what you can do to protect yourself, back in a moment.

Joe Krause:
Planning for retirement has changed forever. The strategies that were relevant even just a handful of years ago, are now only obsolete and they could literally steer you off of the financial cliff. Welcome back everyone the Roadmap to Retirement, the radio show.

David Bezar:
Hey, today we’re talking Joe about five ways that planning for retirement has literally been turned on its head. So coming up in this segment, many tax experts, economists CPAs agree that massive tax increases are on their way, literally could be right around the corner. This could be especially painful for anyone who’s close to retiring. So with taxes skyrocketing due to this economic stimulus package and the pandemic, this is one of the big catalysts for it.

Bret Elam:
If we’re just talking about math and economics and history, where I’m going to put in history, history tends to repeat itself. Remember, conventional wisdom has taught us all while you’re working take money out of your paycheck, go into a traditional 401(k) and IRA while you’re working at a higher tax rate, and then when you go to pull the money out in retirement you’ll pay a lower tax rate for the future. That sounds good in theory, but we need to understand that tax rates are at 100 year lows, and what does the future look like? We’re already… if you knew we just went from 23 trillion to 27 trillion in debt, and now all this… with all that coronavirus spending and again with the debt that was already there here’s some stats for you. This year we are looking at as a country 130 to 140% of GDP in terms of spending versus last year 100%. I’ve seen some stats their projecting in 2024 that the federal deficit will be $40 trillion, which is another third greater from where we are at today.

Bret Elam:
So it’s understanding when you see it on your Social Security statements, the trust fund is expected to run dry in 15 years. You have the tax cuts and jobs act that will expire 2025. Again, history tends to repeat itself. What did legislators do after the high spending period when in World War II? It reminds me back to President Reagan who would only do two movies a year because tax rates went to 94%. He was only keeping six cents on the dollar, what did they do? They raised taxes. So understanding that could happen to you in the future as well, and we got to take control of the situation.

Karen Bezar:
Right, now we know what the problem is, so what’s one of the solutions? If you’re approaching retirement today maybe you should take advantage of today’s low tax rates, right? We know what the tax rates are now, we don’t know what they’re going to be in the future. So something to think about is using a Roth IRA. So again Roth IRA is you pay tax on the funds that you convert now at today’s top tax brackets, we don’t know again what they’re going to be in the future. Then you’ll be able to withdraw them tax free later, that’s really important to remember. When you put money into a Roth IRA you’ve already paid your income tax on it, so when you withdraw money from it for most… in most circumstances you’re taking money out tax free. The reason this is important and why we talk about it is, it’s important to understand we’re taking uncertainty out of your retirement planning, right? We don’t know what tax rates are going to be in the future, and especially right now we’re on the heels of one of the largest stimulus packages that we’ve ever seen in history.

Karen Bezar:
There are talks of another one planning now trying to figure out what’s going on and it’s going to be larger. So our budget… our deficit and our national debt they’ve been greater and will only grow from here. So who’s paying for it, right? Joe are you going to pay for it? You got a checkbook?

Joe Krause:
I’m nervous.

Karen Bezar:
You’re going to write a big check?

Joe Krause:
I’m nervous.

Karen Bezar:
It is.

Joe Krause:
When I hear what Brett said and those statements, I’m nervous.

Karen Bezar:
Right, so again what do we say David? We do Roth conversions, right?

David Bezar:
Yeah. So here I want to clear up some confusion sometimes, and it’s interesting we didn’t announce it a lot but we did a couple of seminars. We wanted to experiment again and see you people coming out and we did one on Thursday night, we had a nice little bit of showing in Fort Washington area. Some awesome questions and it always happens, there is a confusion between what a Roth contribution is and what a Roth conversion. A lot of people go I can’t do a Roth conversion because I make too much money, I’m above those limits. No, there are no limits when you’re doing a conversion, there’re only limits when you’re doing contributions.

David Bezar:
It was interesting because I asked the audience a question, now knowing what you know about Roth IRAs let’s go back 15 years ago, let’s go back 20 years ago. If you were offered by your employer a traditional 401(k) where you got a tax deduction and the money grew tax-deferred, or you could do a Roth 401(k) where you didn’t get a tax deduction but your money grew tax free. Knowing what you know today, which would you have picked? What do you guys think the response was?

Karen Bezar:
I have people saying that to me, they’re like, “Why didn’t I know this before? Why didn’t nobody tell me?”

David Bezar:
It’s huge, right? So what Karen just said and what Brett talked about from a historical perspective, we are in the lowest tax climate that we have seen in 40 years. So let’s think about this psychologically for a second, right? Because that’s the barrier. It’s a psychological barrier. People go, “Well, I got to write a check to pay the taxes.” Yeah, you’re either going to pay them now or you’re going to pay them layer. If taxes are lower from a rate perspective today than they will be in the future, when would it make sense to pay those taxes? Here’s like a perfect example. Now this… if you’re listening today, I want you to listen to this and see, “Hey, does that make sense?” Right? So like over the past week we’ve had some really significant volatility in the markets, and traditional thinking again tells us that when the stock markets down, your stock is down, your mutual fund is down you shouldn’t sell it.

David Bezar:
But what we tell our clients who are in IRA accounts, we want you to sell the stock. Why? Because the value is less, the tax rate is lower than it will be in the future. So your tax obligations going to be a whole lot less today to do it. Now, the caveat is we didn’t tell you, you couldn’t buy that stock, mutual fund, bond, whatever, right back. But now buy it in a Roth IRA… buy it in a Roth account. If we believe… and this goes against conventional wisdom, or what most people have been brainwashed to think, if we believe that that stock, that holding is going to go back up, wouldn’t we want it to go back up in an account that we don’t have to pay taxes on?

David Bezar:
So traditional thinking says, “Don’t sell when the markets down,” we hear at Thrive say, “You really should consider selling and converting over to a Roth IRA.” Does that make sense?

Joe Krause:
No, it makes clear sense when you listen to it. Now, applying it is the next step. You have to be willing to learn how to apply it, that’s where the conventional… the struggle I think comes in for a lot of people.

David Bezar:
Yeah, and that’s where we come in.

Joe Krause:
Yeah.

David Bezar:
I mean we help with that, right? We take people by the hand, to us it’s a math situation. We’re not emotionally tied to the highs and the lows of the market, so we get people to kind of walk through that. Again, most people don’t realize it but the taxes are lower now than they have been like I said earlier in the past 40 years, and many tax experts, CPAs even economists agree that given this skyrocketing national debt, the trillions of dollars in economic stimulus, there’s no doubt that massive tax increases are on their way it’s just a matter of when and the election is going to have a lot to do with that. This really does pose some pretty serious threats to anyone who’s in either the doorstep of retirement or really has retired. I mean it’s going to rob you of a lot of the money that you’ve worked very hard to save and secure for yourself.

David Bezar:
So believe it or not there are some choices that you can have, right? You can do nothing and end up being kind of at the mercy of Uncle Sam, or you can take advantage of some of the defensive tax planning strategies that we’re talking about here on the show today. It literally could end up helping you save 10s of thousands, if not hundreds of thousands of dollars. So what I would encourage you to do is give us a call and schedule a time to get a retirement tax analysis done. It literally… like I said it’s a free analysis, it could end up saving literally hundreds of thousands of dollars. You can do that by calling us at 215-987-2430. Again, 215-987-2430 to get your free retirement tax analysis.

Joe Krause:
All right, good stuff. Great stuff actually, as we get ready to go into the commercial break. Trivia question time, Brett gave us the answer in his segment. What are the three subjects that Brett did very well in high school?

Bret Elam:
I don’t know about history.

Joe Krause:
History, I thought it was-

Bret Elam:
I’ll take economics and math-

Joe Krause:
Math, economics and history. I’m going to say you were good in history as well. 96% of Americans forfeit 111,000 in Social Security income. We’ll tell you why, when we come back.

Joe Krause:
Welcome back everyone to Roadmap to Retirement, the radio show. Thank you very much for tuning in and listening. David, as I mentioned going into the commercial break, $111,000 in Social Security Income left on the table, not in your account, left on the table. Big numbers, and it could be a lot bigger than that-

David Bezar:
Yeah-

Joe Krause:
That’s just one example.

David Bezar:
It’s just a function of not knowing what your options are, and that’s what life’s about, right? It’s options, but life is also about the decisions that you make, right? And the real big problem with retirement planning and we’re going to discuss a lot more right now is there are no do overs, you got one shot. So the decisions you make are going to be critically important, and sometimes it makes sense to have some counsel to help you make those decisions. So, coming up in today’s… in this segment, we’re going to talk about company pensions and are they actually headed for extinction? I mean that’s something USA Today did a whole article on, plus the one thing that could help you get more from your Social Security benefits that 97% of Americans are actually missing.

Joe Krause:
Yeah. So again today five ways retirement plans has been turned on its head. So conventional wisdom history… Again, you start thinking about your parents, maybe your grandparents, we were built on the three legged stool in retirement. You get a pension, you get Social Security and you have your savings, three legged stool. Well guess what’s happening today? That stool’s tipping over. Pensions are going away, Social Security doesn’t look like what it used to and people are not saving the amount that they need to as well. The danger comes here is the false hope of security and interest rates are through the roof, you go back a generation ago into the ’80s and everybody had a pension. For those of you that still have a pension today here’s a new problem, is that they’re at risk of poor performance and bad management.

Joe Krause:
Again, we’re going to chat here real quick just talking about a great article and this was done pre-COVID. This was done pre-COVID about the climate that’s out there related to corporate pensions, and this was done by a human resource consulting firm because we get so many people that feel like they’re bulletproof, because they have a pension that’s out there. But understanding the practice of companies sending that monthly retirement check to their former workers as David said, is heading towards extension and the remaining pensions they’re in a difficult shape of where we’re at right now. Here we go. Nearly two thirds of pension funds currently are considering dropping their guaranteed benefits within the next five years.

Joe Krause:
Again, from the study that was done… ready? Most US companies no longer or are even offering those pension benefits which typically provided… again, there’s guaranteed payments but pension funds that still operate must gain in value to ensure that there’s enough money for those obligations that are met. Guess what’s happening? Baby boomers are living longer and longer and longer putting the stress that’s on those system, which is why they’re saying, “We’re done. We’ll give you a 401(k) match, a bigger 401(k) match, the onus is on you to deal with it. We’re not dealing, what’s the problem?”

Joe Krause:
longevity risk, we talked about it a little bit ago. By late 2019… ready for this? The average pension fund had 85% of funds necessary to meet its obligations over time due largely to low interest rates. Well, guess what? The FEDs come out and said we’re keeping interest rates where they’re at for the next five years. It’s not going to improve that situation as well. The firm also reported that 63% of companies with defined benefit pensions are considering termination. Termination of those plans, that means they’d be closed off from future people being able to contribute. That report comes us… this sounds like corporate pensions are going to absolutely disappear. You got to be conscious of what’s coming and not have that false hope of security.

Karen Bezar:
Remember Bret said in the beginning, this is before COVID, all of this information. So now because we have the COVID crisis state pensions… their plans across country they’re already more than $1 trillion short of funding needed to pay their future obligations to retirees. According to… this is according to retirement experts, this is not Karen saying this, this is retirement experts and people doing these studies. Pensions typically receive funding from employer contributions that are invested in a wide range of assets including stocks, bonds. Gains from those investments are designed to help reduce the amount that the employer is going to need, right? To add to their pension fund, but there’s so much market volatility out there. Markets going up, markets going down due to… we got the election coming up that’s causing craziness in the market.

Karen Bezar:
We’ve got just the coronavirus itself adding to the volatility, and there’s just so much going on out there and again we have low interest rates that aren’t helping the situation. Something really important to remember, and if you don’t believe us just google Kline-Miller Multiemployer Pension Reform Act of 2014 and we’re in to 2020 and this is all before COVID.

Karen Bezar:
Again, Kline-Miller Multiemployer Pension Reform Act of 2014. So what’s another concern that we have out there? It is Social Security is not going as far as it used to. So now we have the concern for pensions losing money and not paying their full pension amount. Now we have to worry about Social Security may be going away. US News said first of all Social Security was designed to supplement not cover your full retirement. According to the US News, average Social Security check right now as of May 2020 which is crazy is 15, 13 a month for… average Social Security check for one person. That’s crazy and now we have to… Now because of everything that’s going on, we have to start worrying isn’t going to be there when we need it?

David Bezar:
Yeah, I would say pre-COVID I used to make a lot of times a comment that if you’re my age or more, if you’re like a real baby boomer nothing really to worry about related to Social Security. I will tell you honestly that I’ve kind of retracted that opinion. As a matter of fact in April Social Security trustees actually revealed that if lawmakers don’t come up with a solution to pump more money into the program, benefit cuts may be on the table as early as 2035, right? Not necessary running out of money but benefit cuts to keep the fun going. Karen hit on… this is the big problem. The COVID crisis unfortunately is only making things a whole lot worse because Social Security’s main source of revenue… I don’t know a lot of people know this, but Social Security’s main source of revenue is payroll taxes. And with millions of Americans out of work and jobless claims hitting high record marks and programs not bringing in money as it normally would have. So we may find that it’s trust funds… the Social Security trust funds are actually running dry, and unfortunately the prediction is because of COVID it could be prior to 2035. And with 64% of Americans today kind of relying on Social Security as their main source of income, that’s a future crisis about to happen.

Bret Elam:
And that’s it. So what’s the bottom line? You got to have a plan? So again don’t be emotional we still have to stay rational with it all, but it’s like you said Krause 97 or 96% of households leave $111,000 on the table, you have to have a plan to maximize your benefits. Again, you’ve contributed a lot of money in the Social Security, 6.2% of your paycheck is coming out every payroll and going right into the Social Security tax. David just talked about the concern of so many people that’s been laid off that aren’t paying [inaudible 00:28:24] but here’s the bottom line, you got to get every last penny that’s yours, but do it in a rational approach. I love what Stanford Center of longevity said that Social Security is the most perfect source that is out there of retirement income. Why? It does three things. It’s indexed to inflation. It’s guaranteed for as long as you live. Again, Congress and the government has to make some changes that are out there. It’s unrelated to the fate of the financial markets.

Bret Elam:
Obviously, COVID have been a concern but there’s got to be some rationale into why the decisions are being made and understanding that Social Security is confusing. We just had a couple in this past week both born 1954, so a lot of the old rules of Social Security went away that they thought, but their benefits were unique where once she hit age 66 it absolutely made sense for her to turn her Social Security on because her spousal benefit was going to be more than her own benefit. So she was never going to get more than what that spousal was going to be because her husband was a high income earner. So conventional wisdom for them was I’m waiting until he retires at age 68 because I’m going to be able to get my half when he retires and turn his on.

Bret Elam:
What we shared with them yeah you’re going to get 1400 when that time period comes no matter when he starts us his, but today you can start your check today and get 1200 dollars in your account for the next 30 months until he retires, and then you are going to get that 1400 dollar check when he starts his Social Security. Again, they make it confusing and here’s the bottom line, you got to get to read analysis in the report because Social Security doesn’t make it easy. There’s 567 different ways to put it all together and it’s why I always share with people, have you made an average or above average income throughout your career? Again, those traditional rules of Social Security do not apply conventional wisdom. Hey, I’m just going to wait till age 70 to get the most amount, it actually could end up costing you money and here’s why. Because you’re not considering putting all the different puzzle pieces together taxes, required minimum distributions, Medicare surcharges and premiums, spousal benefits, what applies to me, it’s all about the net income could be far less.

Bret Elam:
So we want to show you how you could get even more income from Social Security with that customized Social Security analysis. Again, the analysis shows you precise precision, that timing exactly to the month of how to get the most income out of Social Security while considering the impact it could have on your taxes, again required minimum distributions, Medicare, again spousal benefits and more. Again, some advisors are out there actually charging for this report, for that customized analysis, for that specific situation but we want to cover 100% of those costs because so many people are relying on Social Security as that foundation for them. Again, the three legged stool is gone.

Bret Elam:
So if you and or your spouse have not yet filed for Social Security call and schedule right now, for your free customized analysis at 215-987-2430. Let me remind you 96% of Americans forfeit an average of 111,000 of Social Security income, and this analysis could help you from making the same mistake. Again, call us right now at 215-987-2430 to get your free analysis.

David Bezar:
To me it sounds like that’s the right place for everybody listening to the show right now to start. If you’re going to do something start and get a Social Security analysis, so you could begin to think about what that roadmap or what that plan should be. So what’s your strategy to generate income in retirement? We’ll share some surprisingly attractive options after the break.

David Bezar:
Welcome back everyone to Roadmap to Retirement the radio show as we deliver the show on talk radio 1210 WPHT. Today, the way we plan for retirement is rapidly changing, you’re faced with a lot and there’s a lot more to come. Record low interest rates on traditional income sources, we talked about it today, company pensions. If they’re not already completely gone they are gone. As of right now massive tax increases, man was I surprised about 94% or whatever it was following World War II, healthcare medical costs going through the roof and if that weren’t enough we get to live longer today than we did yesterday.

Joe Krause:
Good times.

David Bezar:
Yes, those good times.

Joe Krause:
Hey, listen before Brett jumps in because it’s always good to give a couple examples. Because I think people relate well when they… that kind of sounds like me if I’d say.

David Bezar:
I love the examples by the way.

Joe Krause:
Yeah.

David Bezar:
I process something better that way.

Joe Krause:
Yeah, we’ll do a couple of those but I want to let people know we did a webinar maybe two months ago that was received incredibly well. I mean we had over 400 people attend that webinar and it was on a lot of the topics that we’re doing today. A lot of the feedback that we got is, “Hey, can you guys do that again? But do a deeper dive,” right? So we built a new webinar where we’re going to really do some case studies and really get in the weeds on how some of these defensive tax planning strategies can really prepare you well. So I really want you to put on your calendar and join us. The date is 9/17 so that’s next-

Bret Elam:
Thursday.

Joe Krause:
That’s next Thursday. The webinar is actually going to be… there’s going to be a 10 o’clock segment, there’s going to be a one o’clock segment and then there’s going to be a 7PM segment. They’re all going to be the same so you don’t have to attend all three by any stretch, but we wanted to give you a broad enough span of time that you get to at least one of them. I will tell you it’s probably going to be the best 45 minutes you could spend, if you’re really concerned and want to make sure you got all your puzzle pieces of retirement. Go to our website at Thrivefinancialservices.com to get some more information for that.

Bret Elam:
Yeah, I think about some of the examples as you said Joe, you learned through examples that we share during the workshops quite a bit. One of the favorite… well, my favorite ones that I have that’s out there just a normal everyday couple making $48,000 from Social Security retirement. That’s enough for them to be able to make it, and they’re not paying any taxes whatsoever but the conventional wisdom bully got ahold of them and said, “Don’t touch your IRAs till retirement.” 70 and a half now, age 72. That’s conventional wisdom and everything that we talked about here today, it would have been a mistake. Because they were leaving money on the table and I was leaving money on the table to pay Uncle Sam at the end of the day, and it was all about putting the money back in their paycheck, in their pocket.

Bret Elam:
So what we had shared with them because they had some investments where they’re not IRAs, but they had long term capital gains associated with them. So we believed in the stock, we said, “Keep the stock, but let’s sell it and buy it back.” So we realized them as $20,000 in long term capital gains and again we share this a lot at the workshop where we have the picture so you can try to imagine what we’re talking about here on the air. So taking someone from 48,000, let’s sell off some of that Apple stock was what was actually it was. So we took their income from 48 Up to now 68,000. So realize some of that long term capital gains and then for them not touching their IRA 401(k), and they wanted to remain very tax efficient.

Bret Elam:
So in saying that we identified $12,000 and again everyone’s situation is the same. Of that they could go take from an IRA, to a Roth IRA just simply moving from the left pocket to the right pocket, and people are all up in arms, “Why would I end up paying taxes because doing the Roth conversion and all that?” When we did that their taxes from point A, when we met them was 48,000 [inaudible 00:36:34] income was zero taxes.

Bret Elam:
We showed them how to take their income from 48 up to 80,000 a 70% increase, and their federal tax bill went from zero to $46. There’s question we always ask, “If you knew there was a legal and unethical way on how you could take long term capital gains or IRA money and put it in Roth accounts, doesn’t it make sense of how to figure out how that applies to me?” It’s one of the [inaudible 00:37:02] moments that people have all the time.

Joe Krause:
I don’t know how… it’s just not a must for everybody to do, right?

Bret Elam:
That’s a real case. I mean that’s a sample of something we did for a client, a 70% improvement in their income. Now, they always have cash but their income, taxable income and only paid $46 more. I mean it’s-

Joe Krause:
Yeah.

Bret Elam:
It’s unbelievable.

Karen Bezar:
I have another example before I jump into it. I think that’s what makes us different from other financial advisors is we focus on the whole picture. We don’t just focus on growing your assets but we take into account or… Yeah, into account tax planning which is really important, because I’m going to give you numbers here. I’m a visual person but I’m going to go slow and do the best I can but this is an actual client that came in. Their current account value was $1,613,605, so we do a Roth conversion analysis. So we’ll put up on our screen for you so you can see before and after picture and what we take into account, we just don’t throw numbers together we take into account… Okay, if you have $1,600,000, you’re going to have approximately a 25% tax liability, okay?

Karen Bezar:
This is just the second time you meet with us. You have annual pretax earnings rate, right? That money is not going to sit there and grow at zero percent, right Joe? If you’re 55 and you have 1,600,000 in accounts, by the time you’re 72 it’s going to be more than 1,600,000 and people just don’t always grasp that. Then we always… we actually adjust for some advisory fees in there or account fees that are going to be in there. So the before picture, this person would end up paying $456,200 on required minimum distribution, that’s the taxes they would pay $456,200 just on the taxes. Some people don’t need those required minimum distributions so what do they do with them? They put them in back in something that’s going to make interest again. So now-

Bret Elam:
The vicious cycle.

Karen Bezar:
It’s a vicious cycle, they’re going to have to pay taxes on the money that they reinvested.

Joe Krause:
With the 456,000 in taxes-

Karen Bezar:
That’s just taxes.

Joe Krause:
Was on the 1.6 that was being withdrawn under the required distribution that they were required to take?

Karen Bezar:
Yep, 100%.

Joe Krause:
Wow.

Karen Bezar:
Yep, so then you’ll pay taxes on money reinvested and this person had people or heirs, family they were leaving the money to and now because of the new the SECURE Act they’re going to have to pay taxes on the remaining balance, and those taxes we approximated $300,000. So 1.6 million the overall tax effect is going to be $920,000, is going to all go to taxes instead of going into the pocket of you or your family. If you convert to Roth they would end up paying… We did it now systematically before they turned 72, they were going to pay instead of 456, $403,000 on taxes. No taxes on growth that they reinvest their money, because if you go from traditional to Roth the money goes into your Roth account, you paid your income tax, the rest it grows tax free.

Karen Bezar:
So whenever you take money out you don’t pay income tax, and then when you leave it to your family members they don’t have to worry about paying tax on it. So your children, your grandchildren, whoever it is you decide to leave your money they don’t have to worry about paying income tax. Look, you’ve work hard for your money so don’t you want to keep more in your family’s pocket? I’m all for paying our fair share taxes and helping other people out but right now that makes sense to me, and we will hold you by the hand and take you every step of the way. I think that’s something that differentiates us.

David Bezar:
I think it’s a great point because everybody’s expectations are if you have the title financial advisor or financial planner, everybody’s the same. The thing that we hear most and I heard it on Thursday, we had a gentleman who was sitting in the front row former Air Force guy, really nice person. He actually… he was interested. He handed me his business card and it had some interesting comments when… He basically said, I’m a pain in the butt, right? And he said… and he said this in front of everybody publicly. He said, “I’ve been over my retirement planning years. I’ve been to 40 financial planning oriented seminars, and this in one hour learned more tonight than I did in the previous 40.” Those are the words directly out of his mouth and I really hope folks that you get a sense that, that’s what Thrive is all about.

David Bezar:
We are about taking a look at the total picture and making sure that all the puzzle pieces of retirement fit together properly, because what’s the picture like if you’re missing one of the puzzle pieces, right? It doesn’t look like the finished product, and see today folks there’s three unique challenges that retirees of the past aren’t experiencing, we talked about them today. We talked about low interest rates. Back in the day when a CD was paying 7, 8, 9, 10% yeah, made things a little bit easier, potential tax risks. Now, we did see those like Brett said back after World War II, but [inaudible 00:42:34] I can’t happen. I actually had a guy call me. That can’t happen, that’s a false statement that taxes could double. Oh, really? They did. And if it happened once, could it happen again? Of course the answer, right? Yeah. Then we’ve got longevity risk. These are things that weren’t happening 20 and 30 years ago.

David Bezar:
So today retirement has a different plan to it. So if you stay the normal course, the conventional course there’s a chance that your retirement train is going to get derailed. So I’ve got two recommendations. One recommendation is join us, join us on that webinar on September 17 at either 10AM, 1PM or 7PM. You can get registered for that by going to our website Thrivefinancialservices.com, and I would also encourage you to schedule a discovery call with us and find out about that tax… the retirement tax analysis, the Social Security analysis. What do you got to lose, right? We spend 15, 20 minutes on the phone get to know each other, and let’s see if it makes sense for us to get together and do that analysis. That way you can get complete and utter confidence about your retirement. I really, really hope that you do that.

Joe Krause:
I really, really hope that they do as well when you consume the information that was provided today just really, really great educational information. Really quick before we say goodbye 9/17, September 17th, 10AM, 1PM, 7PM. It’s a 45 minute educational must attend and you can get registered by going to Thrivefinancialservices.com. That’s going to do it for Roadmap to Retirement, the radio show. On behalf of David Bezar, Karen Bezar and Bret Elam, I’m Joe Krause. See you next week everybody.

 

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