Happy Tax-Max!



The year is ending and that means another year of financial woes to look forward to. If you’re the type who’s planned and ready to take on the next year, then you’ll find bliss with your future financial plans. Reflect on some of the highlights of the past year as well as the things to look forward to in 2018 as the Thrive experts help you prepare for what’s to come while imparting some lessons acquired from past clients. Bret talks about social security, covering the big change happening in 2018, which is the 2% increase. Joe and David also discuss about risk management accompanied by stories of personal encounters. Take on some information and insight you need so you can make better financial decisions not only for the next year but also for the rest that is to come.

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Happy Tax-Max!

I welcome David Bezar and Bret Elam into our show. Karen is not joining us, she’s holding down the home front and it’s a good time to do that. David, welcome in for what is going to be a fantastic and great show. This is the time when we start to make promises to ourselves. This is the time when we make resolutions and some of them are financial.

We want to plan for the upcoming year at a time that most people spend time making those resolutions and setting new goals and priorities. We hope we\’ll be able to contribute to that. We\’ve gotten a lot of great response from our audience. We\’ve got asked to share a little bit more economic information and a little bit more insight into what\’s happening so people can make better decisions. I know Bret is going to be talking a little bit about Social Security. I\’m going to be talking a little bit about risk management. We\’re going to go through a couple of anonymous but actual clients of ours that we sat with.

We get this luxury, which is wonderful, where we get to meet somewhere between 30 and 40 new couples on a monthly basis and we get to jump into their lives a little bit and hear the stories and hear the challenges and hear the wins as well, which is the most fun. What that affords us is it gives us a temperature of what\’s happening out there. We hear from retirees and people who are about to retire what their concerns are and what those areas that worry them are about. Fortunately, we have all the time and solutions for that but it gives us a perspective. When somebody sits down with us, it might be the first time that they\’re having that discussion, but for us, it might be the 40th time that we\’re having that discussion for the month. Not that it\’s old hat, we love what we do but it does allow us to hone and sharpen our skills and keep that blade sharp to help people with their financial planning.

There\’s a statement I try and live by on a daily basis, “Take a lesson from those who have come before us or passed us on the road yesterday.”

It sounds like a little bit of wisdom. I see it every day. I get the opportunity to sit in front of people, 50s 60s and 70s, and just learning through people\’s life experiences at the same time.



We\’ve got a good segment coming up with you and the B-block on Social Security. Take this opportunity to send out some wishes to all of our audience.

We appreciate the Tribe that\’s been continuing to follow us and excited to build. I finished a busy week with year-end tax planning. We talked about a lot of these tax changes that were happening which we\’re going to kick off on our next show. We\’ll dig deep into the 2018 tax reform. David, Karen and I spent a ton of time over this, helping people out with the year-end tax planning. I’m excited to get things moving on the right foot here.

David, let me come back to you. Will the audience thrive in 2018? There\’s a lot to learn. There\’s a lot to know and that\’s what the show\’s all about.

We’re in the know. We have to get people to listen, that\’s it. We want to build our trust. We want to help them prosper and flourish but we can only do that if they come and visit us. Make sure to reach out to us at 1-800-516-5861. Schedule up that second opinion complementary session with us. Spend about an hour and we’ll answer all your questions. Share what you\’d like to share with us. We\’ll dive in to an exploratory on it and basically identify if you\’ve got a green light, a yellow light or red light going forward for retirement.

We coined a new phrase. It’s called Tax-Max. The flip side of it, debt is getting fatter. With the new tax plan coming up, there are a lot of changes. One of the big things that we\’re going to see is our debt is going to go up through the roof. Economic policymakers spend a lot of time squeezing in a lot of topics and trying to get a lot of things done. We\’ve had votes on it. We know things are changing for us. Even before the tax cut, the US economy appeared to be hitting a sweet spot. We saw the unemployment rate is at a seventeen-year low, businesses are ramping up investment and inflation remains contained.

The Fed also raised its economic growth forecasts but left its expectation for the number of rate hikes over the next year completely unchanged. We\’re going to see somewhere between three or four-rate hikes coming up next year. There\’s some worry about inflation and interest rates are going to start to rise and that has an effect on people\’s investments. The reason for seemingly inconsistency is unclear, but likely it\’s part because of continued weakness in inflation. That could have necessitated a downgrade in a number of the hikes that they originally were thinking. We see that they\’re going to be consistent with what they\’re doing. All told, this is not a picture of an economy calling out for a fiscal boost. We\’ve heard that old novel, A Tale of Two Cities, “These are the best of times, these are the worst of times.”

A lot of people are very unclear about what the taxes are going to do, but one thing we do know is that there is going to be a hike in our debt. When we see that happen, it\’s going to basically negate some of the plans that the government had to create stimulus. The plan is estimated to add about $1 trillion to the debt burden that was already slated to grow due to rising expenditures from an aging population. This means interest costs will eat up more of the budget, leaving less room for other priorities. Larger government debt burdens also crowds out investment in the private sector, dampening productivity growth over the long-term. It does raise the likelihood of a fiscal crisis, where interest rates on federal debt would rise suddenly and sharply as investors demand additional compensation to hold on to that US debt.

[bctt tweet=\”Take a lesson from those who have come before us or passed us on the road yesterday.\” username=\”\”]

I didn\’t want to be the sword of Damocles over people\’s heads, but we see this exuberance in the market, we heard that from Alan Greenspan years ago, right before the financial crisis. We\’re seeing that at our workshops where people are coming up and asking, “Should I be investing in Bitcoin? Should I go by that second house? Should I start flipping real estate again?” That\’s that exuberance that gets us a little bit concerned about where the markets are going. This is what\’s going on in the economy, it\’s happened with our policy creators, and we want to share that.

Sometimes when you hear the story, it\’s external noise until it settles into your living room, until it settles into your world.

We want to try to filter the noise for people to get to the core and get them the points that make sense so that they can make proper decisions going forward.

Perhaps this is your opportunity to live up to one of your financial resolutions. Call David, get one of those second opinion appointments and then let the year fall in place.

That\’s what we\’re looking forward to, to see as many new people, meet some new faces, help them get an understanding of their finances and make 2018 a wonderful year.

Bret Elam is here. Social Security is the topic. Planning is always important as we\’ve learned over our show. Bret, welcome.

Thank you, Krause. We\’ve always been talking about, “Let\’s get that map. Let\’s get that blueprint.” We talked about having everything needed to work in harmony between investments and taxes and healthcare and legacy. We\’re going to dive deep into that fifth bucket, which is retirement income distribution. The foundation of that is Social Security income. For those of you who are already collecting Social Security, the good news is we\’re getting a 2% increase. You saw those in your statements you receive from the government. The bad news is if we haven\’t realized that yet, we\’re not going to see it because of the increase in Medicare. We\’ll dive deep into a different segment talking about Medicare and some of the changes that happened in that for 2018 and beyond, as well as to plan beyond that. When we talk about Social Security planning, it’s retirement planning. We say on average, about 65% of a household income is coming from Social Security. You hear about several times on our commercials here talking about that Social Security maximization report.

That\’s one of the reports that is almost the foundation of what our company when we started off. We find that the difference between the worst and the best possible scenarios in a couple taking Social Security, we\’ve seen as high as $200,000, but I\’d tell you typically anywhere between $80,000 and $110,000, we see day in and day out. It’s just understanding the intricacies between the worst and best possible choices that are out there. Security uses a couple acronyms. I\’m talking about the primary insurance amount, which is PIA. The important piece of all this is understanding, “What\’s my benefit at certain periods of time?” If you don\’t have that information readily available, you can always go to SSA.gov. That’s the government\’s website, Social Security Administration, where you can always get your most up-to-date information.

It\’s always important to understand how much you are going to get at different periods of time. A big change happening in 2018, we talked about that 2% increase. People that were turning 62 in 2017, full retirement age, went to 66 and two months. Congratulations to the people turning 62 in 2018. It\’s no longer 66 and two months, now 66 and four months is what full retirement age is. We\’ve talked about how that\’s work-related because a lot of people do plan on working and we\’ll touch on that here in a little bit.

We\’ve touched on that in the past where more and more people are extending the line as the life expectancy is now much further out for all of us. It\’s becoming a more relevant conversation in your early 60s than it was perhaps before.

People probably live longer in retirement than they were in their working lives, so it’s making sure that we\’re making those right decisions as well. A lot of the same foundations are staying the same. Let\’s say someone\’s turning 66 this calendar year, you can take Social Security as early as age 62. If you do that, you\’re going to see a permanent reduction in all your benefits that you\’re going to receive in your lifetime, whether it\’s your own benefit or a spousal benefit, once you\’ve hit full retirement age, whether it\’s 66 or 66 and two months or 66 and four months.

For those of us that are turning 62 this calendar year, that’s when we achieve 100% of “full retirement age income.” We can defer Social Security as far out as age 70 where we can earn at the height 132% of what that full retirement age income is. We talk to a lot of people and we\’d meet them all the time. David, Karen and I have met people that are either widowed or have gone through a divorce. It\’s important to understand all the benefits to which you\’re entitled to. We talk about that all the time during our workshops and we probably haven\’t found any workshop that we haven\’t found somebody that was due benefits from Social Security. Our premise about education and advocacy is teaching people what there is to know about Social Security and what to say when you\’re on the phone with them or going to see an appointment to ensure that you\’re getting every single dollar that you\’re entitled to.

When we talk about a divorce, a couple of things need to happen to be able to collect money from a former spouse. First thing is you’ve got to be divorced at least two years, you\’re over the age of 62, they’re over the age of 62, you\’re not remarried and the last thing is your marriage had to have lasted for at least ten consecutive years. You\’re eligible to possibly receive a spousal benefit off of a former spouse. Some of those changes that happen with Social Security, we talked about file and suspend, file and restrict. We talked about it on previous shows and I\’m thinking about it a tiny bit here as well. Age will dictate if you have the ability to pull benefits from a former spouse.



There’s a story of a young lady, Jill, 65 years old, she’s planning to retire at age 68. In 2018, she hits 66. She\’s going to work another almost three years. She’s been divorced two-plus years and all those other parameters I said. What we shared with her is that she\’s going to be able to collect a benefit off of her former spouse at her 66th birthday. Once she then hits the age of 66, she\’s in that 8% growth on her own benefit. Then in retirement, she can then switch to her own benefit or she could continue to let it defer all the way out to age 70. In her situation, she\’s going to take it at age 68, but while she\’s working for those last couple of years, once she hits 66, she\’s going to be able to collect Social Security benefit and have her own benefit continue to grow as if she wasn\’t collecting that. That\’s an awesome story and that\’s a lot of what the Social Security report goes through. Looking at information, come and get that second opinion, understand how Social Security works for you. Social Security Maximization report is one of the reports that\’s included in that second opinion.

Do you have a thought on the best time to take it or is that too broad of a question? Perhaps based on the different individual you\’re having the meeting with.

Not only their age but their circumstances, no ifs and buts, that\’s what the report goes into. We do a little bit of a dive deeply called dental pain to find out that information. On average, we say 67 and four months is the ideal age to take your own benefit. We\’ve got just a little bit of time left here in this segment. The idea is understanding how spousal benefits work, your own benefits, survivorship benefits. Survivorship benefits upon the passing of the first spouse, the surviving spouse always keeps the greater of the two benefits. When we get to next week\’s show, we\’re going to dive deep into taxes a little bit. We talk about it during our tax workshops all the time.

Social Security income is going to be taxed like no other benefit wherever going to receive for the rest of our lives. We encourage people to come in, whether it\’s that income plan, the investment plans, and the healthcare plan. It\’s putting all those different puzzle pieces together because it\’s important that they all work in synergy in putting those plans together. We talked about health and wealth, we\’d love the opportunity to sit down with you and find out what best works for you.

[bctt tweet=\”We’re in the know. We just have to get people to listen.\” username=\”\”]

The consultation or the conversation with Thrive Financial Services is complimentary. Get educated, stay educated. It\’s okay to be smart enough to know what you don\’t know and figure it out. David, we have been at it now with the show and the theme has been consistent, going all the way back to our opening show. I imagined perhaps it will be consistent all the way through 2018. Education is the foundation for you to make the right decisions, whether you\’re talking about Social Security or investment.

When Bret and I got together and came up with our business model and figuring out what we wanted to do and how we wanted to do it, we looked at our pasts. I started in this business back in 1989. I\’m in my 29th year, I was much younger back then. My clients were my age and what we were doing for people at that time was very different. What started to happen was as I mature chronologically, my clients were doing the same thing. The questions that were being asked were different. I started to see that I needed to expand my knowledge. I had to broaden the scope of work that we would be able to do with the clients if we were going to continue to service them.

We saw that the overarching question for people who are five to six years out from retirement or who are in retirement, the real big question is, “Is my money going to last? Am I going to outlive my money?” It\’s really a concern for people. We get to sit across the table 30 to 40 times on a monthly basis and that\’s the common theme there. We said that we wanted to keep this theme of education going, become a repository. That’s why when we talk about Social Security, we have our financial advisors get certified by the National Social Security Advisors Association. It\’s an accreditation and goes through a curriculum. They have to take an exam and it\’s pretty thorough. It does get in there. What we find is when we say to people, “Haven\’t you had this conversation with your existing advisor?”

The answer is, “I have. I did ask the question about Social Security, but they said that\’s not really my expertise. You should call Social Security.” I have nothing against Social Security, but Social Security is set up in such a way that they can\’t answer your questions because it could create liability for the government. If you can frame your question in a yes or no answer, you\’ll get an answer, but if you ask for advice, you\’re not. We see this as, like Bret said, it could make up almost 65% of a household income in retirement. We want to make sure we have those answers for people.

What are some other areas?

The investment area is another area that we want to make sure we give people good information, good answers to their questions. It\’s an area that\’s mystical. Most financial advisors are very focused on impressing people with rates of return and don\’t talk about risk management. Like I said during the economic review, there are chances at some point in the future that this market\’s going to turn in the opposite direction. It always does. What goes up does come down, what does go down also comes back up. We want to help people with that information and one of the tools and one of the reports that we use has become the gold standard by fiduciaries out there. It\’s a tool called Riskalyze.

Riskalyze is we find a number. This number that\’s assessed by the tool is an objective mathematical approach to removing the subjectivity by quantifying the risk of investors and their portfolios. I know I sounded like I just graduated from the Wharton School of Business on that, but what that basically means is we\’re trying to marry up what somebody’s agita level is and what level of agita the portfolio has. The idea behind this is the first thing that we do is we make an assessment through a behavioral questionnaire that we give to a prospective client. It asks questions designed to find out where\’s the pain point. What percentage of principal would have to be lost to economic condition for them to go into a level of panic?

Once that\’s done, we get this assessment between one and 100, where 100 means the tolerance level is off the charts. They love to be at the casinos on a daily basis. The risk is not a concern for them whatsoever. It’s down to a level one where the money is buried in the backyard in a cookie jar. We believe that investing is broken because most financial advisors use these ambiguous terms like conservative or moderately aggressive and those things cause confusion in the investment arena. There\’s uncertainty of what one advisor uses versus another advisor.

When we use Riskalyze, all that noise goes away because we get a numerical assessment based on their answers between that range of 1 and 100. Then what we do is we basically take all of their investment holdings and we assign each and every holding a risk profile. That\’s done through historical performance and calculating the different risk weightings inside of a portfolio. We aggregate that number up on all their holdings to an account and that\’s where we try to marry the two up. I\’ll give you an example. Let\’s say a typical client for us comes in with a risk tolerance level of around 35, meaning that they are more focused on principal protection, very conservative, not so focused on growth anymore. That’s probably appropriate. Risk is for people who don\’t have what our clients have, which is typically a couple of million dollars sacked away for retirement. Why put it to risk if you\’re living the lifestyle that you want to live? Why risk it? It\’s providing what you need. We\’ll see 35, but a lot of times people come to us where they have other financial advisors managing their portfolios.

When we do the profile of what the risk is in the portfolio, we see things like 65 and 70 and 72, which is a much higher level of risk. That Delta between the two is showing that there\’s too much risk for this person\’s tolerance level. The idea of that assessment is to bring it in alignment. There are many different ways, changing the composition of the portfolio, move some of those to different asset classes, things like that are going to help that person get their risk in alignment.

[bctt tweet=\”Education is the foundation for you to make the right decisions.\” username=\”\”]

Which is where you want it to be. Ultimately, that\’s what you\’re trying to do, get everything lined up.

It\’s something that we visualize. When people are in our office, the tool is up on a big screen TV and it\’s not to impress, but it\’s to illustrate because it\’s dynamic. We can sit there with the client and change some of the dynamics and the parameters and they can see what that ultimately does to either their risk tolerance or their risk profile. One of the greatest features of this analytical tool is that we have it set up from a management perspective that if the portfolio risk drifts out of tolerance levels, it automatically indicates to us what we have to do from an investment management side to get that risk back in alignment with the client.

A lot of people ask us, “How do you manage this? If you’ve got a couple of hundred clients, how do you know what to do with someone else?” We\’ve automated that process to basically identify for us. This Riskalyze report is cool and it makes our life as advisors easier but very thorough and very detailed. This report is one of the reports that we do in our second opinion consultation review, that complimentary appointment. Spend about an hour with us on the front end. We go through data finding and get all this information in, come back for one more appointment, which is also complimentary, and we\’ll be able to share that Social Security maximization report that Bret spoke about.

Riskalyze is one of the reports which has got a lot of value for people. We can do a stress analysis on the overall retirement and we can do your taxation, your forward tax planning, all in that timeframe. You get those reports. People can get one of those consultations with us by calling 1-800-516-5861. If anybody calls, we\’ll make sure they get a copy of our book, Roadmap To Retirement: Navigating Your Way To Peace.

It would be cooler or nice for our audience and for me as well to maybe ask you to reflect back on a client or a story that you maybe had a big impact on you or was meaningful or very measurable for you.

It\’s going to combine a little bit of everything that we\’ve talked about and put it together. We met a young lady, a 67-year-old, in the middle of fall. She came out to one of our tax workshops and everything was okay. Her husband wasn\’t doing too great at the time. When she came in and we met, we did that fact finder and her husband had passed away in between when we met and we scheduled for the second time. We postponed that second appointment. It became shortly after Thanksgiving and I knew there was some tax planning that needed to be done. We reached out and sent condolences when everything happened and so forth and just said, “I understand this is a hard time in your life, but things are changing and this is going to be the last year that we\’re going to be able to file a joint tax return.”



She came in and he had already started his Social Security. She had not yet started hers. She had already been in the Social Security in between when she met us and him passing away. Social Security had said, “He had passed away. You have not started your benefit yet. Why don\’t you start your own benefit because it\’s greater than his is?” It was like, “Time out. We talked about it a little bit ago.” They\’re not supposed to be giving advice. What should have happened and since has been fixed, she could continue collecting what his benefit was and continue to let her grows, which we luckily got back in there and we were able to undo what they had done. She\’s continued with his Social Security payment where we\’re going to get then switched to her own payment at age 70.

It\’s always great to go get that report and figuring out the puzzle pieces. Social Security said, “Your benefits higher than his, take it now.” No. Let\’s take his and get the most amount out at age 70. That was a big deal. In addition to that, she had about $2.4 million. In 2018, she\’s going to be filing a single tax return. In 2017, she’s still filing a joint tax return. We sat down and talk about that tax clarity map that we\’ve talked about in the previous shows, we\’re able to come up with pulling $30,000 out of her IRA 401(k) this calendar year. In addition to that, pull out $26,000 in long-term capital gains from growth in her stocks from over the years. She said, “Why would I do that? I\’m fine.” I said, “Because you can do it at zero taxes.” She said, “Excuse me?” I was like, “That\’s the purpose of the workshop that you came for.” She goes, “How come I\’ve never been told this before?” I was like, “That\’s where we feel our value is and we\’ve talked about it time and time again.” She said, “If you can get on the telephone with my accountant to validate this, I think we\’ll be working together for quite a few years.” We got on the telephone with her accountant who\’s a CPA. She was from a small independent company and she\’s like, “I\’ve heard your name but I’m not sure where.” She was saying, “It\’s great that you do these free educational workshops.” She wanted to know our credentials and so forth and understanding that we were a fiduciary.

We sent over her tax clarity report and she simply validated every single thing that we said. She\’s like, “This is great.” In fact, the accountant said, “How can we work more together?” She appreciated the forward tax planning that we did. Not only were they not getting the right guidance from a Social Security standpoint, but that forward tax planning, being able to realize an additional $56,000 of income that she would have typically have paid in 2018, that’s almost approximately $13,000 in taxes that we\’re able to take in 2017 and zero taxes.

Great story from Bret from 2017. David, how about you?

There are two categories that I would want to share with our audience. There are two client experiences and many people have fallen into these two categories. One category is what I call a retirement rescue. Those are when somebody comes out to our workshop, whether it\’s for Social Security and Medicare planning, taxation in retirement or retirement income planning workshop. They schedule a complimentary consultation and they come in and you can sense it, there\’s a degree of embarrassment, there\’s a degree of fear, there\’s a degree of concern because they don\’t think that they have enough money for retirement. “I don\’t have enough money. I don\’t think it\’s going to work. I\’m not sure I should even be here.” We put them at ease very quickly because we\’re not snobs. We\’re not prejudiced and we don\’t care.

[bctt tweet=\”It’s okay to be smart enough to know what you don’t know and figure it out.\” username=\”\”]

Money works 24/7 for whoever wants it to work for them. We need to tell people what the rules are and how it works. There are many times that these folks that feel they\’re not going to be able to live the lifestyle they want in retirement through just some basic changes, nothing drastic, but giving them clarity and the mechanics to do those few changes, we can show them that they now are going to have retirement. They\’re going to live the lifestyle level that they want and the money has been stressed through our analysis that it\’s going to last their lifetime and you literally see the life come back into their face.

There had been many times where hugs and kisses happened. I know today in a politically correct world, you\’ve got to be careful but I got to be honest. I\’m happy to get those because I know that we\’ve impacted somebody\’s life and it came through a complimentary consultation. Then on the flip side, we see these guilt-free retirements where it’s the exact opposite situation. They\’ve got two Social Security checks, two pension checks, a couple of million dollars, they\’re never going to spend down their assets and the concern is how do I get this money to my beneficiaries in the most tax-efficient way. We show them through a very deliberate process that Bret and I and Karen have come up with where they can go hog wild and spend their assets and enjoy their families while they\’re alive and not have to die to transfer the money.

We\’ve set up mechanisms that their beneficiaries will receive a significant inheritance in a tax-free fashion and it\’s an a-ha moment because they thought they had everything set. They had twenty-year experience with their advisors and they look at us and they said, “Our advisor never told us about this. We didn\’t know about it. We\’re going to do a little bit of research will be back to you.” We get a phone call and they\’re back in our office. We execute the plan and hugs and kisses abound. I love those two experiences. They\’re so opposite in emotion but absolutely awesome.

What will your financial resolution be for 2018? I want to go to Bret and David. Will you Thrive in 2018? You say what, Bret?

Just get that second opinion. You can\’t get a second opinion from the one who gave you the first.


Enjoy the holidays. The new year abounds. We will help you make it a fruitful one, come in and see us.

On behalf of David and Karen Bezar, on behalf of Bret Elam, on behalf of everyone from Thrive Financial Services, a special thanks to all of our audience who have been with us from the very beginning.

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