#197 – Cracking the Retirement Code
#197 – Cracking the Retirement Code. Listen and read along as hosts David Bezar, Karen Bezar, and Bret Elam talk with Joe Krause!
This program is paid for by JAKIB Media Partners. All opinions or statements expressed on this program are solely those of JAKIB Media or its guests and do not reflect the views of WPHT or Audacy. Today’s program is pre-recorded Welcome to Roadmap to Retirement, the Radio Show with David Bezar, Karen Bezar, and Bret Elam from Thrive Financial Services who have been featured on Fox, ABC, NBC, the Wall Street Journal, and more. 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 00:52
And welcome to another edition of Roadmap to Retirement, the Radio Show with David Bezar, Karen Bezar, and Bret Elam. Glad to be here on this Father’s Day! The gang is all back together again. And we can promise we can give you an unconditional promise again, as we always do. You will be more educated when the show ends 59 minutes from now than when it started. David, over to you.
David Bezar 01:16
Good morning, folks. Good morning, Joe, good to be back in the studio, we got a great show lined up. As always, I just want to give you our phone number right up front 215-798-9088. If you ever want to give us a call with some questions about your retirement planning, if you feel more comfortable, you could always send us an email at [email protected]. So, we got a lot of good stuff. As always, you know, on a weekly basis, there are tons of new things in the news. You know, this week, the big news was that the Fed paused, increasing core interest rates for now, when Chairman Powell did come out with his commentary, he did indicate clearly that it was a temporary pause and that there will be increases in interest rates to stave off inflation. Even though what they’re promoting, I would say is probably the proper word is that now inflation is down from an all-time not an all-time high, but a very high mark of almost 12%. Now down into just under 5% range. But you know, I still think when you go visit the restaurant, the grocery store, the gas pump, you know, the clothing store, you name it, things just cost a heck of a lot more than they used to. So at least for right now, we have a pause. And the result of that Joe is we had an amazing week in the markets, which I’m going to talk a little bit about because these are those times that it’s easy to get LOLed that things are okay. And especially during your retirement years, you don’t want to get blindsided. And there are some statistics out there that we’ll talk about in a couple of minutes. Before we do that. Let’s go to Bret and to Karen just to kind of see what they’re going to be covering in today’s show. So, Karen, why don’t you tell us a little bit about what you’re going to be covering?
Karen Bezar 03:11
So a couple of weeks ago, we touched on why you need a financial advisor. We’re going to kind of dive in a little deeper on that today.
David Bezar 03:20
Okay, so that’s a good topic. One of the things I’ll talk about came out on a publication is what retirees and most investors I would say most consumers that are, you know, investing out there, what is it that they want in their financial service company? So this is coming from a national publication, we’ll dive into some of the details of that. Bret, why don’t you tell us a little bit of what’s going on in your world?
Bret Elam 03:45
Hey, we actually got a great email from one of our listeners last week. So just want to kind of explore that email and continue Karen’s theme about some of the mistakes you can make when trying to find an advisor as well, because this was a glaring mistake, unfortunately, from the email that we got.
David Bezar 03:59
Yeah. And that’s something that’s not uncommon, right? You know, we tend not to be the first financial planner or financial advisors that our clients have dealt with. The vast majority of our clients have worked with somebody previously, and sometimes two, three, or four previous financial advisors. And I think what ends up happening is, you know, people will come out to one of our dinner seminars or one of our educational workshops, they’ll watch one of our educational webinars, whatever that initial introduction is, they’ll get that initial viewpoint that was a little different, right? We’re very focused on the awareness right kind of bringing things to people’s attention, that they may not know that they needed to know about if that made any sense to is the education piece of it. Once we make you aware that this is something you need to know. Let’s dive in and talk about it. Let’s get you educated so that when it comes time to making decisions, you have all the facts to make the best and right decision for your firm, whether that’s with us your existing financial adviser or you know, your kind of handling it on your own. But when people start to experience that, that environment, you know, that kind of really clear conversation with people, they start to go, okay, this is different. I like this. They’re talking with me, not at me. They’re communicating in a way that I can really understand and grasp. And we ultimately, and I’ve used this analogy previously, you know, we end up becoming the relief pitcher, the adviser that they’ve worked with up to this point has done a great job getting them to retirement. But now that retiree or that pre-retiree recognizes there’s a lot more to the game. So they’re looking for somebody who can kind of complete that game. It’s got the total package to make sure retirement, they get that peace of mind,
Joe Krause 06:00
You know, I was trying to describe to somebody the other day, the mystique of Thrive, what makes Thrive so unique. And why I love Thrive. Such an unbelievable advocate for their clients. Pretty amazing. When you say, I don’t know, if you’ve ever stopped to think about what you do, I’m sure, perhaps you do. But from the outside looking in, what you provide for people is amazing, and I think it reaches people where they are in life, versus just this unit. universal message. Really good stuff.
David Bezar 06:42
Yeah. I appreciate that, Joe and I will tell you, when we started out, I don’t think we did recognize it. Because of the way Bret and I and Karen did our businesses previously to starting to thrive. We thought everybody did it that way, you know, an education-first approach. And because at that time, we were developing clients, like, you know, new clients, first-time clients. We just, that’s the way we did our business when we formed Thrive. And it was now more focused in this boutique environment. Only working with retirees and pre-retirees. We started hearing the conversate. Right, people were telling us their experiences and it really kind of like, we’re like, what do you mean? Like this is how, right? This is what you need to be talking about. So I think we’ve grown to understand, and I’m going to call it Mystique, but you know, it’s just the way we do it and the thoroughness of how we do it. So I think that’s, you know, that’s really important. Let me, let me just cover this real quick. A couple of things. The headline said only 24% of pre-retirees think they have enough money saved for a successful retirement. So one out of four people is still in a position at this day and age, that they’re not sure if they are really prepared. And with all these outliers today, right, high inflation, potential increase of taxation, market, potential market volatility coming our way. And people living longer. Those are four big headwinds. It’s not good to have one out of every four retirees still curious, am I really set up properly? Now, the thing that Karen is going to talk about, and I’ll kind of finish up with as well is here’s here’s what when polled, what most people want out of financial service companies, one fees that are charged are clear and understandable. 60% of the people responded that way to explains things in understandable terms that 56% responded that way, is unbiased and puts the client’s interest first, the definition of a fiduciary. And then for provides clear, useful statements. Right? So clarity in the education, and then five has made me money. So that’s kind of an interesting perspective of what’s most important to maybe not as most important. And that’s what we try to really follow here at Thrive. So if you’re ever interested, like I said before, you can give us a call at 215-798-9088.
Joe Krause 09:18
Roadmap to Retirement, the Radio Show back in a moment. And back here on Roadmap to Retirement, the Radio Show you heard reference in our first commercial break, have some upcoming workshops to attend. You must get registered and go to thrivefinancialservices.com. Bret over to you sir.
Bret Elam 09:40
You know it was interesting to talk about a kind of week in and week out the workshop I had done this past week. It was the first one I had done and probably now probably five months, not one person in the room had gotten the required minimum distribution age has moved to now age 73 just the importance of what we’re trying to do here week in and week out. I’m just trying to be the authority on just keeping the greater Delaware Valley aware of everything that’s going on. And again, as soon as you learn the rules, they change the rules at the end of the day. But on a funnier note, as we are now here, Father’s Day weekend, and now the hottest team in baseball, the Philadelphia Phillies, and I actually received a couple of texts from some existing members of the Thrive army with my golf joke from last week with father’s good old dad jokes. Yeah, nice. That was good. So continuing the theme, and along with the Phillies as well, why did the coach put the frog in the outfield? Again, why did the coach put the frog in the outfield? And the answer is he’s really good at catching flies. There you go. We’ll see if those texts continue again, once more this way.
Joe Krause 10:55
Tell them to continue with that and tell him to kill it from the segment. I like good stuff. I’ll keep my good stuff by the Phillies. So I like it.
Bret Elam 11:03
Yeah, absolutely. So last week, Erik and I went through a bunch of different topics. And I just want to read simply in an email that came over from one of the members of the Thrive army. And it went like this, it says I looked like this person had switched her job. And it said, so the cash, meaning the 401k was sent to my financial advisor, I’ll leave what company it was done with just because this wasn’t necessarily a good scenario, said we discussed the options and decided to keep some of the monies in cash. And the rest went into a managed fund. To my surprise, at the end of the year, the company notified the IRS that I took the entire amount as income. And therefore, federal and state taxes were due yet I never took money out of the account. Even if this was the proper procedure, you folks mentioned that taxes should only be based on the cost of the stock, not the gains I paid on the entire amount. So my two questions are, why was it considered income? And why was it the full amount? When an additional question? Is there anything I can do at this point, as you know, that income spike affected my Medicare status cost went up. So hey, she got the Domino’s that’s what we talked about week in and week out, unfortunately, the last comment that was made about Medicare, that’s the cause and effect, and so on, addressed the questions, and just continuing the theme of some of the mistakes that can be made in dealing with different advisors that are out there. So we talked about that subject. And Joe, you talked about it last week about that topic of anyway and how to very tricky conversation. And my encouragement is, yeah, it is. And it’s why you need to work with somebody that has the right experience of making sure it’s right. So in the scenario and reading the email, remember, it’s only if it’s individual stock inside your 401k that is subject to anyway. So it’s only individual stock, it’s not all the funds, it’s not all the cash, it’s not all the mutual funds that are in there, it’s only the stock that is proper in there, so number one, when you move money from a 401k to an IRA, please, please, please, you’re going to want to do a rollover, so that none of that money is taxable. Now and looking at this email that came over in case the transaction was done incorrectly, which it sounds like it was done here, you always do have the option within 60 days after that transaction occurs to get all that money back into an IRA, including the mandatory 20% withholding that your 401k company has to withhold for it not to be deemed as a taxable event number one, it should never come out as a taxable event. But number two in the event of a mistake luck with what we’re talking about here, you do have a 60-day period in which that can be called fixed, including the tax money must be put back in otherwise that money is subject to income tax at the end of the day. The important thing to understand is you’ve got to work with somebody that knows what the heck they’re doing with it all.
Joe Krause 14:23
Just a quick question for clarity. So if you use the 60 days, that you’re permitted to correct the mistake, then you can act at that point
Bret Elam 14:36
Null and void. It’s almost like null and void at that initial transaction. That’s what they call it an indirect transfer indirect rollover again, you want to avoid that at all costs that should only be used for damage control, we’re talking about really special circumstances again when you typically move money from a 401k to an IRA or 403 or thrift savings plan or 457 plan typically will be done as a direct rollover so that we’re not worrying about any kind of taxation, it should be a nontaxable event and I’m reading this email, it’s concerning because there’s so much out there. And when we start talking about inevitably, some of the mistakes that people are making, it’s important to start understanding the knowledge and experience of the person that you’re working with. Because again, we talked about some of the issues that are out there today is there’s a lot of knowledgeable people and it’s even here with our staff is when we’re talking to even people in the industry. It’s some of that intuition and awareness and any experience that you need to have of when to question people. But when you’re relying on somebody that you believe is act in your best interest, you need to go a little bit deeper and understand do they have the knowledge and experience to help you because somebody is helping you navigate the road up through retirement, it’s a whole different skill set, navigating the road down related to that. So when we talk about knowledge and experience, a good financial adviser can provide you with that knowledge and experience that you need to build that what that solid retirement plan, they need to have an in depth understanding of the financial industry, like anyway, like how to transfer things appropriately. So you’re not getting slammed with taxes like this young lady had just shared with us, where again, they they have an in-depth understanding of the overall industry as well as access to a wealth of resources and tools that can help you make what informed decisions don’t just go through life. Again, you got to be informed, and understanding of how we can inevitably pull all those things together. So as we talk about the, as Karen had said, benefits of working with an advisor, we’re going to talk about some of the pitfalls. And if you’re ready to start working with an advisor, you already have one, it’s important to avoid some common mistakes. So one mistake that I’m going to chat to chat about is really talking about mismatching advisors’ experience with your retirement needs. Again, one mistake that’s easy to make is not matching and advisors’ experience with the very different needs that are what unique to retirement as David described, we describe ourselves as that relief pitcher to close the game out. While an advisor and a broker may have been a good fit during the accumulation phase of your financial life, it’s important to remember that retirement brings its own set of unique challenges, from taxes, and Roth conversions, to optimizing Social Security benefits, selecting the right Medicare options, planning for health care expenses, legacy, which buckets do I pull from, for my distribution needs, it’s different knowledge that’s needed at the end of the day-
Joe Krause 17:38
And different for each person, unique..
Bret Elam 17:41
This is not a broadcast message for as many as a lot of members of the Thrive army, listen to this. Get your customized plan at the end of the second. It’s why it’s crucial to work with an advisor who has experience and knowledge and retirement planning, who can tailor their services to your specific needs. Don’t settle for an advisor who doesn’t have the necessary skills or experience to help you navigate the so critical, important phase of your financial life. It’s such a big deal. The next mistake I’m going to chat about is ignoring your gut and not switching to a new advisor. So sometimes, even if you have a long standing relationship with your advisor, your gut tells you that something isn’t right. And that it’s time to switch to a new advisor. However, people often hesitate to take action because they feel uncomfortable telling their long-standing existing advisor that they’re leaving this loyalty thing that we’re talking about, but your retirement and your financial wellbeing. They’re at stake. And it’s important to prioritize your financial wellbeing over the discomfort associated with making a change. Again, we’re creatures of habit at the end of the day, it’s hard to make change, but sometimes it’s necessary. So lack of attention, a feeling that your savings is exposed to too much risk. Not really understanding your plan are all valid reasons for considering going in a different direction with a new advisor. So don’t let embarrassment or fear hold you back from making that change. You need to make to have that peace of mind and security that inevitably you deserve. If you feel it’s time to move on. You have got to trust your gut. Sometimes it’s that intuition that helps you get over the hump and pull all those different pieces together because, again, you don’t get a do-over. You get one chance to make a lot of these critical decisions as you’re entering retirement and you’re stuck with them. Again, we have a couple aged 65 There is a 50% chance that one member of that couple makes it to the age of 92. That’s 27 years and then a 25% chance that one makes it to the age of 96. You may be spending as much time in Retirement as you did in your working life. So I’ll conclude and saying finding a great advisor who genuinely cares about your goals, and is committed to helping you pursue the retirement you deserve is a rare treasure. If you have such an advisor, hold on to him. However, if you’re unsure whether your current advisor is a right fit, do not hesitate to seek a second opinion, it’s impossible to get a second opinion from the person who gave you the first one. And if you don’t have an advisor, consider whether it’s a good decision to do it alone, Karen talked about over the last couple of weeks. Remember, there’s no better time to take charge of your financial future than now David just shared 24% of people feel confident they have enough savings that’s out there. So whether you’re already retired, or retirement is on the horizon, our firm Thrive Financial Services can help you provide the direction you need to face the future. With financial confidence, confidence is such a powerful thing. So get started today, by scheduling your “Roadmap to Thrive” session, don’t hesitate, call us now at 215-798-9088. Again, that’s 215-798-9088 to book your consultation, and take that first step to a financially confident future.
Joe Krause 21:22
And here’s what I would add as we get ready to go to the break here on Roadmap to Retirement, the Radio Show in reference to the embarrassment. You can do what you want to do in your retirement. Unless you’re willing to do that make that decision. And that’s okay, that’s okay to make it. That’s hard to do it. Back in a moment.
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Joe Krause 21:50
And welcome back everyone to Roadmap to Retirement, the Radio Show. I’ve often said sometimes the conversation that goes on between the breaks would be just humorous for the odd and what would be humorous for the audience to listen in? Yes, I am sure that countdown care three comes before four.
Karen Bezar 22:09
Good job, Joe. And on that note, I do want to wish the three gentlemen in the room here, a very Happy Father’s Day. Thank you. I appreciate everything my husband does every day as a father and I know you too, personally. And I know you’re great fathers as well. And to every father out there. Thank you and happy Father’s Day.
Joe Krause 22:29
Yeah, good stuff, I appreciate that. Thank you.
Karen Bezar 22:31
And I’m going to continue to discussion about, you know, financial advisors, whether you need one or not. And I’m going to continue with some of the mistakes that people make when they’re trying to look for a financial advisor. And I would say one of the big mistakes is just making sure they’re actually an advisor. And they’re not just you know, let’s just say, a life insurance agent out there. They can sell certain products that may make you think that yeah, I’m safe and set for retirement, but they can’t do the whole picture. So make sure you’re dealing with somebody who can tactically and licensed wise call themselves a financial advisor, and that they’re fiduciary, right? It’s always common sense, you always should do what’s right for your client. But I don’t unfortunately, the world doesn’t always work like that. So I can honestly tell you here all of our financial advisors are fiduciaries and their advisors so and if you’re interested in continuing the conversation with Bret discussed, give us a call 215-798-9088 If you’re don’t want to give us a call, go on our website, thrive financial services.com. And then we will, you know, be happy to schedule a consultation with us as well as come to some of our seminars over the summer. We’d love to meet you.
Joe Krause 23:52
Well. And I will say this I will add in I think it was two weeks ago or maybe it was last week Bret was talking about the expansion of Thrive continues. And I will tell you this, everyone that comes on board to join Thrive has to check every box, meaning they fit the process of what Thrive stands for exactly very, very important.
Karen Bezar 24:14
And we have a great team here at Thrive. And that’s the other thing is we are a team approach. So it’s not just Bret, even though he’s your advisor, there’s a whole lot of people behind the scenes that are doing a lot of the work. So another word for that. Really thank God because they can keep you on your toes sometimes, right?
Bret Elam 24:33
Yeah, team together everyone achieves more. Yeah, for sure.
Karen Bezar 24:37
Yeah, I wouldn’t want to do it any other way actually either. So another thing a mistake maybe is you want to select an advisor who gets to know you. So what do I mean by that? About that? Right? So if you meet with an advisor and let me start off also by saying you should interview advisors for your retirement because it’s very important We’ve had people come in and you know, they come in and say, Look, you’re not the first company we sat with, but maybe we just did something different that they saw, hopefully. And that’s why they came on board with us. But if you’re sitting with an advisor, and they start off, the first thing they start doing is like, just, you know, let me see your information. And then they look at your portfolio, and they start saying, oh, I can, I can do this. And we can do that, and all of that stuff. And you know, it doesn’t work like that with us. When you come in for your first consultation, your first appointment, we send you some information, because we need information about you before we even take the next step. And we talk to you when we find out what you want out of your retirement. And we take a look at the whole picture. There are a lot of questions that we ask that sometimes people don’t even think about. And the questions such as, what do you want to do after you retire? Where do you want to live? What things do you like to do? What kind of expenses do you have coming up, and things of that nature? And when we meet with you the first time, we don’t discuss any money, we don’t discuss anything in detail, because we don’t know you. And we don’t know your backstory when you come in and meet with us a second time. If you’re happy to share your information, that’s when we’ll actually go through the details and say, hey, look, you can maybe adjust this or adjust that these are things you can do. These are things you can improve upon. And again, it’s a scary thing you want to know if you were secure in your retirement, like David said in the beginning to that statistic is shocking. But they probably don’t have a financial advisor, that is guiding them correctly through retirement, or they just have the wrong one. Aadvisor’snother area where you really need to understand is you want to understand your advisors fees. Here, because we are fiduciaries and we are regulated by the SEC, we do have to be very transparent with all of our fees. You ask us I remember one time I was with David and an appointment. And the guy asked about fees. And David shared the information, showed him in print, and he’s like, wow, he’s like, You’re the first advisor to actually he sat down with two or three others that was forthcoming and didn’t just kind of like try to sell sell the story, you know, like that political answer, right? You know, you know, when you see a politician on TV, and they ask a question, and you’re like, they did not answer the question, we will answer the question. And one of the things we do on your second visit with us, we run a lot of reports, and one of them is a report, we called Riskalyze, the term that company might change the name, but it’s still a report on your current assets, your current portfolio, and what people don’t realize is outside of your advisors, fees, everything that you’re invested in. So if it’s, you know, the Vanguard, you know, whatever bond fund, or whatever it is, there’s always little fees and taught inside of those, and we will put your portfolio in and we will bring up each holding that you have, if it’s 10. Or if it’s 30, or 40, you’re gonna see each of your holdings, and we can show you what your internal fees are. So sometimes if you think you’re doing great, and you’re getting a five or six or 7% return, there’s internal fees that might be up to 1%. I’ve seen higher, and then what your advisor is charging, it’s taking it’s eating away at your growth. That’s important.
Joe Krause 28:22
Is it fair to say that most people have no idea what they are?
Karen Bezar 28:26
I would say, I don’t say that the majority of people are just say people just don’t understand or understand.
Joe Krause 28:33
And that’s again, definitely one of them. By the way, I’m just not singling myself out of that.
Karen Bezar 28:37
That’s, and that’s something you’re going to get with us, you’re going to get an education, when we build, you know, when our team builds a portfolio for a client. We look at all of those things, we you want money, you want growth, but at this point in your career, it was as you’re entering retirement near retirement, do you want to keep taking risks? And do you want internal fees and fees that you don’t even know we’re out there eating up your money for your financial future and for your family? You know, just very important. And another thing is you want communication, right? So you want to know that your advisor again, Bret touched on that, that they’re speaking your language, I had met with a gentleman, and he was actually a rocket scientist. That was his job. And he said to me, he’s like, you need to explain things in terms that I understand. So even if you could be so intelligent in your field, but you want to understand and will explain in terms that you understand. Again, it’s ongoing communication with our clients and with you again, we work as a team approach so if you need Bret, you call Bret, right? We’re gonna get somebody to help you and you’re gonna get an answer sooner rather than later. So if you’re thinking yet, why do I need an advisor Remember, you’re going to get knowledge and experience you’re going to get objectivity when that market goes down. We’re there to talk you off the roof and say hey, your plan, stick to your plan. We’re good, ongoing support. That’s what you’re going to get if you have a team like here at Thrive. So if you’re interested, and you would like to come in, give us a call at 215-798-9088. We would love to meet with you. And hopefully, you can take the next step and meet with us.
Joe Krause 30:19
And hopefully at one point, have a conversation with David Bezar, Karen Bezar, and Bret Elam. I’ve learned a lot from the Thrive clients. Over the last five years, as we go to a commercial break, you’ll hear messaging on one of the upcoming workshops. And then on the other side, David Bezar is back in a moment. Over the next two weeks, here are two workshops being held at the Washington Crossing Inn. Washington Crossing Pennsylvania, June 22. And June 28, the workshops will begin at 6 PM. Go to thrivefinancialservices.com. Get registered and get educated or call 215-798-9088. And again on June 22, and June 28, at the Washington Crossing Inn. Go to thrivefinancialservices.com. Back here on roadmap to retirement, the radio show again, the number of Thrive is 215-798-908. David, Happy Father’s Day, sir, over to you.
David Bezar 31:27
Thanks, Joe. Same to you. I think we certainly covered today on the show, you know, some of the reasons why working with a quality financial advisor wouldn’t make sense for retirees and pre-retirees. The other thing too, is, you know, being a full-time financial advisor slash planner, it’s our responsibility to stay as current as possible. Question the kind of old school way of doing things, and making sure just like, you know, and I’m not comparing ourselves to a physician or an attorney, but you know, the continuing education and staying on top of the game and making sure that you’re utilizing the most advanced tools possible to make sure somebody has that sense that they’re going to be okay in retirement. So that’s something we really advocate here, right? Because I think I shared this maybe a couple of weeks ago. You know, our core values as a company are described in an acronym. And the word is LEAD. L, E, A D, and L stands for learning. So you know, we’re not only teaching people, we’re learning ourselves, again, the most current the most advanced financial planning strategies, information, whatever it may be. So that’s outright. The E stands for excellence. So, we really talked about it, it’s just as easy to be excellent as is to be terrible, right? It’s just, it’s just focused. It’s about, you know, kind of where you put your attention to what you hold people accountable to things in that. We want excellence, we want excellence in our customer service, our financial strategies, you know, the way our offices look, so on and so forth. The A, which kind of ties everything is that attention to detail. We don’t leave any stone unturned, we want to make sure we’re dotting the i’s crossing the t’s, like we work off of agendas and checklists. When we sit down with a client, we actually ask permission, is it okay, if I use this agenda? Is it okay? If I take notes? Is it okay that I use this checklist? We don’t want to miss anything, we want to make sure you get the best experience possible. And that all ties down to the D which stands for discipline, right? All those things kind of go out the window if you don’t apply discipline. So with that little preamble, I want to talk about us staying on top of our game. And one of the things that I think makes Thrive unique is our attention to detail our commitment to excellence, our learning our discipline related to tax planning, right? So we know a lot about portfolio management. We know a lot about risk management. We know all the essentials that you need to be able to help somebody navigate retirement successfully. But one of the things that we have become a standout firm in is our tax planning strategies. And some of them are very basic and mundane and some are, you know, pretty sophisticated for our ultra-high net worth clientele. But one thing that translates across all the potential people in our audience that are listening today and certainly in our client base is kind of uncovering the myth that we all bought into related to tax planning, which was delaying your taxes as long as possible in retirement, right? If you’ve got a 401k if you’ve got an IRA if you’ve got a set plan, whatever it may be, whatever it may be some type of tax-deferred plan Do not tap into that account and incur taxes, wait as long as you possibly can. Now, most financial advisors are telling people to wait until the required minimum distribution age, which is now 73 For most people. So that’s a long time, right. And the idea behind that used to be, by the time you get to that age, you will probably be in a lower tax bracket, now on the surface, and that, that strategy is called the Common Rule. That’s the strategy called the Common Rule. But when you look at it today, if you’ve got a couple, the receiving to Social Security checks, if they happen to have pensions, and then on top of it, let’s say, and we meet tons and tons and tons of people that have at least a million dollars sitting in an IRA account between those sources of income, chances are, they’re not going to be in a lower tax bracket. So that whole idea, you know, that ideal situation of deferring taxes as long as possible, basically collapses, the common rule collapses. So we’ve been talking about this for years, most recently, and this is going back to November of 2020. Toe so it’s not, you know, in the distant past, this is relative, I would say a current situation. The CFP, the Certified Financial Planning Board of Directors, they announced the recipients back in November of 22. For the best financial paperwork, not paperwork, best financial thing and paperwork, the best financial papers, meaning research paper awards, and this was during the sixth annual academic research, colloquium. Did I say that correctly?
David Bezar 36:58
Anyway. So the two authors one was James DeLeo. He’s from Pepperdine University, their graduate business school, and Andrea Simon, who served at the University of Southern California, both are in the economics department. They were recognized for their presentation on a paper called seeking tax alpha in retirement income planning. And according to their paper, financial advisors, and their clients can generate a meaningful amount of tax alpha by rethinking the retirement income planning process. In a discussion with this publication about their results, the pair said one clear takeaway from their paper is the need to rethink the so called common rule, retirement account withdraw strategy. Now that is, that’s in the retirement space, right? The retirement planning space. That’s earth shattering. Like that’s groundbreaking, right? This rule, common rule, tax strategy, where delay taking time, you know, delay taking any money out of your retirement account, so you can delay pay in taxes as long as possible, is basically gone, by the way over the dinosaurs. But here’s the thing, Joe, do you think most people know that? Do you? Do you think most people are scouring the internet looking at, you know, newspapers, whatever the source is going, what’s the what’s the most recent strategy for me to start taking money out of my retirement plan? Or are they kind of counting on the professionals that they’ve been dealing with for 15, 20, 30 years?
Joe Krause 38:45
Set it to forget it, right.
David Bezar 38:47
I would say instead of forgotten right. Now. Here’s the thing, right? And, again, it just is what it is. The average age of a financial advisor today is 62 years old. Now gonna be 60 in I guess, less than a little over 30 days from now, which is mind-boggling.
Joe Krause 39:07
You’re gonna love 60.
David Bezar 39:08
Yeah, we’re gonna be 60.
Joe Krause 39:14
What do I have two years? I know I look 60. But I have 64. One year, bro, one more year.
David Bezar 39:23
I’m bringing you I’m trying to bring them along as many people as I can. So my point so the average age is there. And look. The old cliche is an old dog doesn’t really what does that cliche.
Karen Bezar 39:36
You can’t teach an old dog. No trick complete mess.
David Bezar 39:40
Right? So if you’ve been doing something for a long period of time, and that’s been your strategy, it’s gonna be really hard for you to go to your existing client base and say, Hey, why were they? I really kind of didn’t stay as current as I needed to stay. And we’re going to have to shift your entire strap now. That’s like turning in Erica. Have a carrier, right? I mean, like, holy smokes, what do you that strategy is now completely out the window. So what it’s what I just read, right and this is something here Thrive we’ve been practicing for a long time, which is not the common the Tax Alpha strategy is trying to be as strategic as possible in how you distribute your retirement, how you distribute all of your assets, fulfill your retirement income needs. During that retirement phase, it is not a set it and forget it each year is going to be a different coordination a different set, like a different path each year, depending on what happened the previous year, right? What your income needs may be for a given year, right? Last year, you weren’t taking any trips this year, you’re taking a big European trip, because it’s been this pent up desire that you’ve had for two years and three years, because of COVID. You couldn’t do it so on and so forth. That’s going to take a potentially different strategy, right? Tax alpha, alpha, meaning, hey, we have to figure out what is going to produce the best overall results. And the results don’t always just come down to did I see an increase in the value of my investment portfolio. Right? Because again, it’s not what you make in the in the big at the end of the day, it’s what you keep at the end of the day. And you know, there’s a lot of things going on. You know, I’m trying to look for this thing that I saw over the weekend. I’ll try to give you a description of it. Right? It said, I think back in the 60s, I’m probably gonna mess this really up. But I think it was back in those 60s and the 60s or 70s, we had the oil crisis, right? And then it was, you know, I’m going to do Joe, I’m going to abandon I’m gonna save it for next week.
Karen Bezar 42:01
67 Yeah, that’s why we work as a team here Thrives.
David Bezar 42:05
Exactly. So that makes me fail
Joe Krause 42:06
That was a good bail, you can recycle that next week,
David Bezar 42:09
I’m actually it was, there was two things. One was tax-related, like, here’s all the things that have happened, and where did all of our taxes go. And then the second thing was, these were all the crises that were, you know, kind of the, the headlines for lots of years, that a lot of it never came to fruition. And it kind of related back to taxes. So I definitely want to cover that. Let’s just real quickly tell people that we get the difference between the common rule and where it falls short. And the Tax Alpha strategy, which will have a meaningful according to these two authors, a meaningful impact on your financial retirement. So if you’re interested in getting a comparative analysis between what your strategy is today, and what it could be, we do that tax analysis, we normally charged $3,500 for that, but because you’re listening to the show, we’d be happy to waive that underwriting cost to do that report and we would do a complimentary. The easiest way to do that Joe is just give us a call to schedule an appointment with us. You could do that or call us at 215-798-9088.
Joe Krause 43:24
If you don’t know. There’s no way you know, got to find out. Roadmap to Retirement, the Radio Show good listening today. On this Father’s Day special thanks to all of our listeners for tuning in to Roadmap to Retirement, the Radio Show on behalf of David Bezar, Karen Bezar, and Bret Elam. I’m Joe Krause. See you next time everybody.
Thanks for listening to Roadmap to Retirement, the Radio Show from Thrive Financial Services. If you’re like most Americans, you have more questions than you do answer about what to do with your retirement savings. If you have a question about your IRA or your 401k pension or other tax-deferred accounts, if you have a question about reducing taxes, generating income or filing for Social Security, whatever it is, David, Karen, and Bret are here to help and often your questions can be answered in a simple phone call, call 215-798-9088. And so you know no statements made during Roadmap to Retirement, the Radio Show shall constitute tax legal or accounting advice you should consult your own legal or tax professional on any such matters. information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investment or investment strategies investments involve risk and unless otherwise stated or not. Guaranteed Be sure to first consult with a qualified financial adviser and or tax professional before implementing any strategy discussed here David Bezar, Bret Elam, and Karen Bezar from Thrive Financial Services and Thrive Capital Management are licensed to offer investment advisory services through Thrive Capital Management LLC and SEC-registered investment advisory firm office headquarters located in Fort Washington and offices of convenience used exclusively for client meetings in Exton, Yardley, and Cherry Hill. Roadmap to Retirement, the Radio Show was a paid commercial announcement from JAKIB Media Partners. If you’d like to learn more about the power of the Radio Hour contact Joe Krause at 267-261-3428. Today’s program has been pre-recorded.