Are you Ready for Taxes in Retirement?
Listen & Read Along to our Latest Episode
At some point, the topic of taxes in retirement is going to get your attention if it hasn’t already, taxes could be your biggest expense in retirement. Every time you turn around, you’ll be paying taxes on your IRA, 401k and other tax deferred accounts, Social Security benefits, investment, income and more. When you add it all up, taxes could be your largest expense in retirement and you could be left with a fraction of your retirement savings. But if you take advantage of some preventative tax planning strategies before you retire, you could save yourself hundreds of 1000s of dollars, the savings could be so significant, you may retire earlier than you thought possible. At Thrive financial services, we will show you the power of these tax planning strategies with our tax analysis. This analysis reveals opportunities that could save you a bundle in taxes with your IRA 401 K, pension, Roth conversion RMDs and more Call to schedule your free tax analysis now at 215-798-9088. That’s 215-798-9088 Nothing in this advertising is intended to give you specific tax or investment advice consult your own tax or financial advisor.
Welcome to roadmap to retirement, the radio show with David Bezar, Karen Bezar and Bret Elam from Thrive financial services who’ve 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 money 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 Caron and Bret along with Joe Kraus.
Joe Krause
Welcome into another edition of roadmap to retirement the radio show as we kick off the month of November 2023. David, I want to begin the show David and Bret I want to begin the show with a major announcement. The major announcement for this start of the program. It’s my 59th birthday cup, I’m not making that announcement because it’s my birthday. It’s the number on the clock, where I made a decision that when I reached 59, I was going to start to zero in on what I believe to be my next 11 years of preparation for retirement. So that’s the reason for the announcement.
David Bezar
Awesome. Well, first of all, happy birthday. But that’s really a great strategy as well, right? Sometimes people wait too long. Some people never really plan the fact that you’ve got kind of the segments of your financial world kind of earmarked out. That’s fantastic. And that’s what planning is all about. And, you know, kind of telling us what that time horizon is, really does position you very well for the topic that we’re talking about today, which is very popular, right? We do the show quite frequently we talk about this topic quite frequently, but taxes in retirement, the surprises, the pitfalls, and then the most important part, what are the opportunities out there. And for me this week, actually, Joe, you know, working with three new prospective clients. And and this is something that you know, two things one we never take offense to. And number two, I always think it’s a great idea that we’re not the only financial planning firm, or quote unquote, financial advisory firm that these folks are looking at. So we’ve been working together now for maybe the past three to four weeks on initial appointment, getting to know each other second appointment is kind of a strategy session where these are the things that we’ve identified could greatly enhance your opportunity to have a very successful retirement. And then we get a you know, kind of a conclusion meeting where we come to agreement, we’re not that we’re a good fit, and let’s implement the plan and get a relationship built. And this week was, you know, really great, because these were people that have talked to other financial advisors, and came back to us and basically said, you know, through the work that we’ve done recently, the due diligence process, we haven’t seen anybody that we’ve spoken to cover the detail, the way that your firm covers the detail, the scope and breadth of the topics that you guys talk about, and then just the pure not On pressure educational approach, that we just feel very, very comfortable moving forward with your firm, and, you know, name brand companies, right that they’ve sat with boutique firms that they’ve sat with one person firms that they’ve sat with, you know, the industry up to this point has basically been set up to help people get to retirement. But what these folks have found, and many, many, many other folks have found is, there’s a whole lot to do once you’ve gotten to retirement. And that’s what you’re talking about Joe. So I think today’s show is going to be really great. So, the show today is going to delve into some of the top tax surprises in retirement, covering kind of both the unpleasant and the pleasant surprises. We’re going to talk about the unexpected tax bills from rollovers, Medicare premium surcharges inflation, we’re going to show highlights of the potential pitfalls. Now on the other hand, it also explores opportunities for tax advantages, such as potentially minimizing capital gains taxes, the benefits of Roth IRAs, life insurance and death benefits, how those work from a tax perspective. So this shows really going to emphasize the importance of planning for tax efficiency in retirement, considering all the different various income streams, and navigating changing tax laws, which is a big, big, big deal to optimize financial strategies. So folks, as you’re listening to the show today, think about these questions, right? Think about are these things that are going to be critically important to make sure that you have the answers to them. So let me get let’s give you a list of 10 questions to be considered. This might be that point in the show where you want to take out your pen, get a piece of paper, write down these questions, and put them into your to do list so that you can make sure that everything is set up, right. Once you have those questions. If you start to struggle with getting the answers, the best thing that you could do is take us up when number one getting our tax plan, right, we’ve got a guide that talks about it, and then scheduling a complimentary consultation. So you can do that by texting the word plan PLAN to 215-999-3272. So here’s the questions. Number one, do you understand the reasons why it can be a myth to believe that taxes will be lower in retirement? Number two, do you know that social security benefits can be subject to taxation? Number three, have you considered the impact of Medicare premium surcharges on your retirement budget? Number four, are you familiar with the widows tax penalty? And its impact? The impact it has on surviving spouse tax breaks, or brackets? I’m sorry? And then number five, do you know how inflation can push taxpayers into higher income tax brackets or reduce the value of the tax credits, the deductions and the exemptions that you may thought you may have thought you could qualify?
Bret Elam
And then we combine that with number six is are you aware of scheduled tax rate increases after 2025? And how they may affect your retirement income strategy? Next one. Number seven is Have you considered potential tax traps that can occur when rolling over 401 K assets to an IRA very common mistakes we see there. Next one. Number eight is are you aware that capital gains realize in a retirement account, they’re actually taxed at higher ordinary income tax rates? Number nine is do you know that qualified distributions from a Roth IRA, they’re not counted towards social security benefits? Or Medicare premium surcharges? And finally, number 10 is Have you considered all the potential benefits of tax planning and retirement to optimize your overall tax strategy?
David Bezar
So right there, Joe? Right. 10 big questions, lots of information, sometimes misinformation out there when people start to search for this. So again, working with number one, a fiduciary number two people who specialize in these areas, not generalists, but pure specialists in it can at least be a resource for you to get those answers. Again, the quickest, easiest way to get our tax guide playbook. You can do that you could also schedule a consultation with us. Text the word plan PLA and to 21599 930 To 72
Joe Krause
Here’s the added value outside of you providing the answers for the listening audience to all 10 of those questions. When the government decides to make a change in the tax plan, or elevate the amount of money you can put in 2024 in your 401 K, your plan will be able to adapt to those changes. And I think that’s very important roadmap to retirement to radio show good show ahead today with David Bezar . And Bret Elam back in a moment. Here are five opportunities for next week for you to get registered for an upcoming workshop with Thrive financial services. Tuesday, November 7 at the Marshall team in Wednesday, November 8 at Carlucci waterfront also Wednesday, November 8 at the brick side grill Wednesday, November 8 at the great William Penn end. And then Thursday, November 9, at the Yardley in five opportunities to get educated and get registered. Go to thrive financial services.com Right now,
Philadelphia’s am 990 V answer a 990. The answer.com
Announcer
Mike Liddell was a union construction worker who was badly badly injured when he suffered a horrific fall because of someone’s negligence. His life would change forever.
It was just a real downward spiral with everything. Everything you do and you sit at home by yourself all day have no you know, you can’t go out because you can’t drive you can’t walk well, it was just a horrible situation
Announcer
called Brian Fritz at the Fritz and beyond Cooley Law Firm call 215-458-2222
Joe Krause
Delaval insurance wants to save you 40% on your car insurance right now and they will do it today. Here’s Managing Partner Jimmy O’Brien, a lot
of people pay a lot more premium than they need to, and they may not have the coverage to to justify what they’re paying,
Joe Krause
there is no charge for the complimentary insurance review. You will save money and you will connect with a company that is an advocate not a broker, go to digi.com or simply call Jim at 215-354-0122. That’s 215-354-0122.
I’ve met clients that think that I as an independent agent, charge a fee versus going direct to Geico or going direct to progressive. We do not charge a fee.
Joe Krause
Let del Val insurance save you up to 40% on your car insurance. Get your complimentary review call Jim Neil Brenner directly at 21535401222153540122. Your savings are a phone call away. Get
educated and learn about your roadmap to retirement every Saturday morning, right here starting at 8am. Join David Bezar Karen Bezar and Bret Elam of Thrive Financial Services who will teach you about taxes in retirement, Social Security and how to navigate and create a retirement plan that will provide you with peace of mind. Learn from a local company Thrive financial services and advocate and a resource for you and your retirement. Every Saturday morning from eight to 9am on Philadelphia’s am 990 V answer.
It’s roadmap to retirement, the radio show on Philadelphia is a 990 The answer.
Joe Krause
And back here on roadmap to retirement to radio show. Thank you very much for listening as we kick off the month of November 2023. Also, in the breaks during the show, you’ll get messaging on upcoming workshops. And you’ll be reminded to go to thrive financial services.com. David, over to you. Yeah. And a big
David Bezar
reminder. And thank you, Joe, for pointing those upcoming workshops where at least attention to them. Because it’s not too late. Right, we still have time. And this is kind of crunch time right now. We still have time to help people put some plans and strategies in place prior to your end. And your end here in the financial field is usually what brought about the 12th of December. That’s fair, but then it’s too late. Yeah, then it writes. Paperwork needs to be submitted to the custodial accounts and strategies have to be implemented. So I guess we’ve got about 30 ish days left of the tax planning calendar. So this is really kind of a great time that if you’re thinking about it, it’s time to actually take action. Right? We got to stop from the thinking and take the action step and find out is there anything out there that could help me when it comes April of 2024 that I’m going to be paying the tax man a lot little bit less money or a lot less money. So take advantage of that. So, jumping into answering those 10 questions that we talked about, you may actually have spent a lot of time and energy, focusing on your savings and investments. But what you got to know is that taxes could turn out to be one of the largest expenses that you have in retirement. As a matter of fact, Lincoln Financial Group, which is a local Delaware Valley company did a report, where they said that the baby boomer segment of the population, number one didn’t really understand that taxes would potentially be the largest expense that they have during retirement. And number two thing that came out of the report was that there was a significant lack of education provided by the financial industry to help retirees understand taxes are going to be one of the largest expenses possible. So today, again, we’re going to dive into the potential tax surprises that can have an impact on your retirement savings and discuss strategies for tax planning, to better manage your future payments to Uncle Sam. So if you want to stay ahead of the game, and make the most of your retirement savings, here’s what I’m saying one more time, sit back, grab a pen and paper and get ready to learn ways to avoid the tax surprises and capitalize on some of the tax advantages in retirement. This is the one show before the end of the year that you do not want to
Bret Elam
miss, again, taxes in retirement, they have hidden obstacles all along the way. But with the right plan, you can navigate them very, very efficiently. And as financial advisors, we work with clients every day to develop a retirement plan to not only help maximize tax efficiency, but again, it needs to fit your specific needs and circumstances that cannot be a cookie cutter plan. And again, whether you’re just starting to plan for retirement, like you just said, Joe, again, happy birthday 59.
Joe Krause
Just the beginning. That’s it, brother, thank you,
Bret Elam
or you’re already on your on your way, is we’re here to help. And again, you want to today we’re talking about all things taxes, if you want to text a word plan to to 159993272, again, text a word plan to to 159993272 and get our tax guide. And let’s schedule that appointment to get together to be proactive before here the end
David Bezar
of the year. Yeah, so it’s crucial to understand and this is the differentiator, a lot of people that sit with us ask the question, what’s different about thrive as compared to the company that I’m working with, or the company I’m thinking about working with, so on and so forth. Here’s what’s crucial to understand that investments alone are not enough to ensure a confident retirement. Right, typical financial advisors, talk to people about things that they get paid to do, and retirement has. And that’s all fine and good on your way to retirement because the primary thing that you need help with, possibly, is your investment management, right, making sure that you’re picking the right type of investments so that you accumulate that nest steak. But when you get to retirement, financial advisors tend not to have the breadth of information, knowledge, or financial incentive to talk to you about the things that you really need to know. So effectively, managing taxes can be just as important as money management. Without a clear and comprehensive plan that takes taxes into consideration. It can be much harder to work toward the specific retirement goals that you’ve set out.
Bret Elam
And again, our goal is to assist you in developing a retirement plan that is tailored again to your unique circumstances and goals. Even though the market may be as predictable as the weather is tax planning is precise. And that’s again, David said it is it can be just as important for for me, I believe it’s almost more important to navigate that because we can be as precise with it. So once we have a clear understanding of your objectives, again, we work with you to identify the most suitable strategies that align with your plan. So again, please text the word plan the 215-999-3272 again, text the word plan to 215-999-3272 and get the 2023 tax guide again before hear at the end of the year and schedule that appointment to get to some year end tax planning completed.
Joe Krause
You know, I want to make sure it’s not lost in the in the conversation into this Your individual plan is created from your individual details. This isn’t this is not a plan that applies to all
David Bezar
right. 100% Yeah, 100%. And that’s, you know, it’s a fantastic point. But what we’ve also noticed over the years is that retirees in general, have the same basic needs
Joe Krause
have a lot of the same common traits.
David Bezar
So like, you know, people want to go on vacation, people want to spend time with their family, people want to have good health, people want kind of the release of stress based on financial decisions. And what we really find is just the word they use job peep, people want a plan, right? The fact that you’re, you’re kind of staging, the, you know, the next, the next piece of your life, not only as a person, but financially, that’s the essence of the plan, like, what do I do at age 60? What do I do at age 61? People should not. And we talked about this a little bit before the show started. Times are different. You know, we were talking about Halloween, and you know, you know, why don’t people do? Like, look, folks don’t get upset with me. And I say this with no disrespect. And this is, you know, coming from somebody who didn’t live the healthiest lifestyle. Being thin, and in shape is a whole lot better than being overweight and out of shape from a health and longevity standpoint. I think everybody would agree with that. For for the majority. I agree. Right? I agree. So then the easy question, Joe, is, why isn’t everybody thin and fit and in shape? Because it takes work. And it takes discipline? And unfortunately, that’s a four letter word for most people, right? You know
Joe Krause
what else it takes? Education, you need to be educated about how to be healthier?
David Bezar
It’s a great point. It’s a great point. Well, again, same thing with what we do, right. The need for comprehensive retirement planning is there for most people when it comes to retirement, again, not necessarily getting the retirement. But once you’re in retirement. So as financial advisors, we understand the importance of paying close attention to the future potential tax liabilities that our clients may be, you know, projected to experience. In fact, we believe it’s an essential element of any well crafted retirement plan, you got to put the tax bite into the equation. Our goal is to help our clients live their dream retirement, and taxes can easily interfere with those dreams, especially today, because things are different. We’ve got global war potential, we’ve got inflation, we’ve got increasing taxation, all at the same time that people are living longer. So after all, every dollar that goes toward taxes is one less dollar available for those things like travel, hobbies spoiling the grandkids, or any other enjoyable activity. So let’s dive into some of the biggest tax surprises that retirees commonly encounter. But don’t worry, it’s not all bad news. We’ll also highlight some pleasant tax surprises that may prove helpful as you attempt to better manage your future exposure. So
Bret Elam
first unpleasant surprises, the myth that taxes will be lower in retirement, we hear it all the time again, conventional wisdom says, Put as much money away and tax deferred accounts while you’re retiring, because we know in retirement, you’re going to be in a lower tax bracket. And we asked that question all the time at our educational workshops, and people are like, Yeah, I don’t necessarily believe that. And it’s true. People say you’re not going to need as much money to spend nor as much money to pay for taxes. But one of the biggest surprises for retirees is the misconception that taxes will be lower after retirement. Again, many assume their tax burden will decrease. But it’s not necessarily the case. Again, retirement income is generated from tax deferred accounts, like 401, Ks and IRAs, again, the tax bomb, these are fully taxable accounts when you pull them out. And again, additionally, tax deductions may decrease in retirement. Now the kids are out of the house, maybe interest deduction is gone when the mortgage is paid out. And David said it from that study from Lincoln, that taxes and health care two biggest expenses that you’re probably going to have in retirement, and please understanding income and retirement is different than income while you are working. And effective retirement planning includes budgeting for all major expenses. And one of those expenses absolutely needs to be not only current, but future taxation, as well.
David Bezar
Yeah, but why don’t you just mention again to how people can get in touch with us so make sure are they’re not missing out on the opportunity that’s right in front of them.
Bret Elam
Yeah, that’s uh, I mean, we’re talking all things taxes today. And again, you can text the word plan 215-999-3272. Again, text the word plan to 215-999-3272 Make sure you get our 2023 tax playbook. And again, it’s not too late. We got about 30 to 40 days left here in 2023 for some actionable days that are left to do some forward tax planning and as
Joe Krause
we go to the break this other suggestion do what a lot of people do, go to thrive financial services.com and download this edition of the show this podcast and read either read or listen to it. Listen to it while you walk and continue to educate yourself roadmap to retirement to radio show back in a moment. Here are five opportunities for next week for you to get registered for an upcoming workshop with Thrive financial services. Tuesday, November 7, at the Marshall tin in Wednesday, November 8 at Carlucci is waterfront also Wednesday, November 8 at the brick side grill Wednesday, November 8 at the great William Penn end. And then Thursday, November 9, at the Yardley in five opportunities to get educated and get registered, go to thrive financial services.com Right now
this is Philadelphia’s am 990 The answer?
According to Forbes 96% of Americans claim their social security benefits at the wrong time. 96% and this mistake could cost them an average of $111,000 Can you afford to lose $111,000 in Social Security income? I didn’t think so. Learn how you can avoid this with a free social security analysis from Thrive financial services Thrive Financial Services is right here in the Philly area. And the professionals at Thrive have been featured in Kiplinger’s The Wall Street Journal, and in 2020 was inducted into the Inc 5000. Among some of the nation’s fastest growing private companies. This amazing team is here to help you. If you’ve saved more than $250,000 and have not filed for Social Security benefits. Be one of the first 10 callers to schedule your free social security analysis now at 215-798-9088. That’s 215-798-9088. While you learn in this free analysis could help you save a fortune. Call 215-798-9088 Nothing in this advertisement is intended to give you specific tax or investment advice, consult your local on tax or financial advisor. Delaval
Joe Krause
insurance wants to save you 40% on your car insurance right now and they will do it today. Here’s Managing Partner Jimmy O’Brien, a
lot of people pay a lot more premium than they need to, and they may not have the coverage to to justify what they’re paying, there is
Joe Krause
no charge for the complimentary insurance review. You will save money and you will connect with a company that is an advocate not a broker, go to dvigi.com or simply call Jim at 215-354-0122. That’s 215-354-0122.
I’ve met clients that think that I as an independent agent charge a fee versus going direct to Geico or going direct to progressive. We do not charge a fee.
Joe Krause
Let del Val insurance save you up to 40% on your car insurance. Get your complimentary review call Jim mule Brenner directly at 21535401222153540122. Your savings are a phone call away. Before the opening bell on Monday contact David Bezar Karen Bezar or Bret Elam fried financial services 215-798-9088. Get on the original roadmap to retirement and get yourself educated about the tax benefits of a Roth IRA. It’s your roadmap to retirement and it starts by getting educated from advocates who will help you navigate your own roadmap to retirement, leave a message at 215798 90 Ada. Now
back to roadmap to retirement. The radio show on Philadelphia am night at the answer
Joe Krause
back here on roadmap to retirement to Radio Show with David Bezar . And Bret Elam. We thank everybody for tuning in, as David said, and then Bret just mentioned when we went into the break up 30 to 40 days left in that proactive opportunity left here in the year of 2023. Good time to put thinking cap on and get underway
David Bezar
and take some action take action.
Joe Krause
Right big part of it. Alright, so
David Bezar
quickly, we talked about the need for comprehensive retirement planning. Brad talked about one unpleasant surprise which is the myth that taxes are lower in retirement. That’s a big one. We hear that from so many people. We really show people once we do their cash flow analysis. Most people get very surprised I didn’t realize I was going to make that kind of money in retirement. So there’s the bitter sweet side of that. The other unpleasant surprise is Social Security taxation. So imagine relying on a source of income that you thought was going to be tax free, only to find out based on your income and how it’s all structured, there’s a thing called the provisional income formula. That’s an IRS formula to figure out how much of Social Security would be taxed. Now, a lot of people think it was tax free. And at one point, it was tax free for everybody. But that rule changed. And now you could find out that up to 85% of your Social Security benefit is actually subject to taxation. Now, how would that impact your retirement plans? Well, that is precisely what some retirees actually discover, when they start collecting Social Security retirement benefits. Now, it’s easy to understand the confusion, as every paycheck received over the decades of employment shows a deduction for FICA tax fic, a tax to fund social security and Medicare. This may actually lead some to believe that the taxes on their social security benefits have already actually been paid. Unfortunately, depending on the retirees total income, and their filing status, that’s important. A portion of your Social Security benefits actually may be taxable. And again, the portion of the benefits that could be included as taxable income. This blows people away, Joe, could be as high as 85%.
Joe Krause
Is this a fair statement? Most people think Social Security is not taxable. We
Bret Elam
see we see a lot of people. Yeah, I mean, it was tax free up until the 80s. And where 50% came in. And then in the 90s, it became up to 85%, as David share, and you get another misperception too, as much as you have Social Security taken out of your paycheck, it’s tax free. A lot of people also think because I have Medicare taken out of my paycheck, I don’t have to pay for Medicare in retirement. That’s completely a misperception. But another unpleasant surprise, is Medicare premium surcharges. So Medicare uses what they call is means based test. And my gosh, is it so important to talk about forward tax planning, especially when we talk about this, this topic right here and forward tax planning are conversations that need to be had today, to not only help you out in tax planning today, but for the years to come as well. So while technically not defined as a tax, there are Medicare premium surcharges that apply to certain income levels. And we spoke about a couple weeks ago, that new level for an individual is $103,000. And if you’re a married couple, it’s $206,000. So in other words, the higher your income, the more that you may be required to pay for Medicare coverage. And that could also result in additional health care costs and retirement plan higher than you ever anticipated. I would say, it may be the number one unpleasant surprise because people have no idea how Medicare works. They’ve heard the word taxation and they think Medicare may be free. And then all of a sudden, you’re like, what’s this all about? So it’s important to understand the appeal process, and how Medicare works all together and the importance of forward tax planning. And then we’re going to talk about the next unpleasant surprise, which is the widow tax penalty. And again, this is the importance of tax planning. And so when we talk about the widow’s tax penalty, again, it can create retirees off guard at the worst possible time, which is the death of a spouse. So in general, a surviving spouse may find themselves with less income. This is important because this happens all the time, is that a surviving spouse may find themselves with less income after their spouse’s death, while still potentially being in the same or higher tax bracket. And this is because the survivors income may be reduced by the loss of a social security check or depending upon pension benefits that were selected. While taxes may increase as a survivor is no longer able to file a joint tax return. And we hear it all the time. It’s like I won’t need as much I literally just had this conversation yesterday, where a Social Security check went away. But yet the required minimum distributions from an IRA stayed for that spouse. And it went up and here’s the conversation that that this client had. I counted didn’t talk about that. I know. And it’s the importance of forward planning again, besides death, and besides divorce, what’s worse than paying taxes is paying more taxes, especially when you had the opportunity to be proactive about it. So understanding the net effect can be higher tax rates applied to a smaller income, which can significantly become a financial burden during what is already a challenging time. Yeah,
David Bezar
Joe, I would say, though, quote unquote, widow tax that Bret just went over, typically completely misunderstood. Number two, very rarely considered in any financial plan, not even on the radar, right. And number three, we’ve seen it, that because of the lack of planning, when we met when we meet with a widow, or a widower, doesn’t man or woman, because there was no prior planning to that unexpected passing of the spouse. They’re in higher Medicare surcharge levels. They’re in higher tax brackets, they’ve got less cashflow. It triggers a lot of things. If you don’t do planning for it. Quick
Joe Krause
question on that. Does it affect you in the year of the loss? Or is it a bigger ramification to you? In the year? The next tax year? Yeah, it’s
Bret Elam
a great question. Yeah. Which the year in which you have a spouse passes away? And is of the utmost importance that we’re planning that year? Because the hits going to come? The following year?
David Bezar
Yeah. So let’s jump into another covering a lot of unpleasant surprises, we got some good ones. This one we call the inflation tax. This is this is relevant, right? I mean, this is current event type situation. So while inflation and higher prices can be a significant problem, especially for retirees, many people do not realize that it can have a similar impact as a tax. So when the federal government prints more money to fund spending, that is not covered by tax revenue, it can result in increased costs, cost of goods and services, eroding the purchasing power that retirees have, and causing them to tap into more of their retirement savings than expected. So as a result, retirees may be left with less money to enjoy the retirement, either due to the tax side of things, or possibly the inflation. This is something we haven’t seen in 40 years, and it’s come back so strong. And there’s such a debate whether it’s getting better or worse every single day. I gotta tell you, like Bret said earlier, it’s like predicting the weather, who knows what that’s going to happen. So it’s really important to understand the potential impact of inflation on retirement savings and incorporate it into the overall financial planning. Make sure right, it’s going to help you make sure that you’ve got an enjoyable retirement. Listen, folks, again, 30 to 40 days, take action. The easiest way to do that is text the word plan PLA n 2215999 3272. That will get you the brochure to guide it’s fantastic, but also take advantage of scheduling that complimentary consultation where we can get into the nitty gritty with you roadmap
Joe Krause
to retirement a radio show one more reminder in the upcoming break on workshops, where you could then go to thrive financial services.com and get registered back in a moment. Here are five opportunities for next week for you to get registered for an upcoming workshop with Thrive financial services. Tuesday, November 7 at the Marshall team in Wednesday, November 8 at Carlucci is waterfront. Also Wednesday, November 8 at the brick side grill Wednesday, November 8 at the great William Penn end. And then Thursday, November 9, at the Yardley in five opportunities to get educated and get registered. Go to thrive financial services.com Right now,
Philadelphia’s am 990 D answer a 990 v answer.com.
Announcer
Mike Liddell was a union construction worker who was badly badly injured when he suffered a horrific fall because of someone’s negligence. His life would change forever. It was just
a real downward spiral with everything. Everything you do in your home by yourself all day have no you know, you can’t go out because you can’t drive you can’t walk well, it was just a horrible situation
Announcer
called Brian Fritz at the Fritz and bianculli law firm called 215-458-2222 del
Joe Krause
Val insurance wants to save you 40% on your car insurance right now and they will do it today. Here’s Managing Partner Jimmy O’Brien a lot
of people pay a lot more premium than they need to And they may not have the coverage to to justify what they’re paying,
Joe Krause
there is no charge for the complimentary insurance review, you will save money and you will connect with a company that is an advocate not a broker, go to digi.com or simply call Jim at 215-354-0122. That’s 215-354-0122. I’ve
met clients that think that I as an independent agent, charge a fee, versus going direct to Geico or going direct to progressive. We do not charge a fee. Let del
Joe Krause
Val insurance save you up to 40%. On your car insurance. Get your complimentary review call Jim Yul Brenner directly at 21535401222153540122. Your savings are a phone call away.
It’s roadmap to retirement, the radio show on Philadelphia is a 990. The answer
Joe Krause
back here on roadmap to retirement, the radio show with David Bezar and Bret Elam. It’s our final segment on what has been a show filled with good information, a lot of information, but good information read over to you today
Bret Elam
we’re talking about all things tax planning him. We’re going to continue along here with some more unpleasant surprises. But we’re going to have some pleasant surprises and some opportunities here in the last segment. And again, if you’re just joining us, you want to text the word plan to 215999327 to again text the word plan to 21599327 to get our 2023 tax guide. And again, we got about 30 to 40 days left. For some actionable items, we’re more than happy to chat with you related to some tax planning. So let’s jump into our next unpleasant surprise talking about the tax cuts and Jobs Act sunset. So as part of the 2017, tax cuts and Jobs Act legislation, tax rates were temporary lowered. And I’m not sure too many people took advantage of them. But we’re big advocates of it. However, it’s important to know that these lower tax rates are set to expire after 2025 resulting in potentially higher tax rates, especially for retirees and everyone else as well. This looming expiration of the tax cuts may impact retirees retirement income planning as they may need to account for potentially higher tax rates. When estimating these things out into the future. A lot of people have the misperception, they’re only going to go after the millionaires and billionaires time out. There’s a lot of millionaires that are listening to today’s show. So please understand when these tax cuts sunset, back in 2026, it’s going to affect everybody, it’s gonna affect everybody. And my bet is our listening audience. And again, if I asked a question besides death and divorce, what’s worse than paying taxes? The answer you get as more taxes. So if you knew today, tax rates, for example, today’s taxes at the 24% is almost $400,000. And if you move to 2026, higher tax brackets for married filing jointly, couple start at $76,000. The importance of needing to plan and again, failure to account for these potential changes in tax rates could result in unexpected tax liabilities, and reduced retirement income, making it crucial for retirees to stay informed about all these tax law changes, and make sure that we’re proactive and adjusting your retirement income plans accordingly.
David Bezar
Yeah, and just on that topic, real quick, like one of the tax planning software’s that we designed and we use in our creation of financial plans, actually has that ability to run the case study showing the tax increases that are projected for 2026. When we show people that they’re like, I’ve never seen that before, like when I asked my financial advisor, they go, Well, we got to talk to the CPA, they don’t even come into the dialogue of what’s going on with taxes. You talk to the CPA, it’s tax, let’s say it’s tax preparation, right? And that’s probably a big answer. Yeah, let’s wait and see what happens. Well, you know, holy smokes, you know, could be too long, too long of a wait. And
Joe Krause
on that software that you utilize that allows you to also input the individual scenario scenarios that are current today so you get a real true look.
David Bezar
Oh, it’s it’s a very precise cashflow, income source expense tax efficiency analysis, and it’s customized 100% customized Alright, so right covered tax cuts and Jobs Act sunsetting. We know that’s one of the reasons that taxes will go up. Another one is an unpleasant surprise that people find out unfortunately too late is is the potential IRA rollover tax pitfalls. So, you know, let’s say you’ve worked for decades, you’ve likely been regularly contributing to an employer sponsored retirement plan such as a 401, k 403 B 457 Plan or anything similar to that. Now, as you’re preparing to retire and leaving that employer, you may have come across advice or information, suggesting that you should consider changing your company plan to an individual retirement account an IRA, that you can control directly, right, you’ve got complete control over it. This is commonly referred to as an IRA rollover, and can be an excellent idea to take more control of your retirement savings. However, it’s important to note that unless this rollover is done properly, properly, you could potentially face a very large and unexpected tax bill,
Bret Elam
this one almost becomes a no brainer for people. But we see people screw this up all the time, and again, navigating the intricacies of the IRA rollover and the tax implications. That can be complex. But it’s crucial to understand the rules and regulations surrounding such transactions. Again, Miss handling an IRA rollover, we said it just resulted in unintended consequence parmi tax consequences, such as early withdrawal penalties, immediate taxation of the rollover event. And again, to avoid unexpected tax liabilities, it’s essential to carefully follow the proper procedures of an IRA rollover, including timely transferring of the funds from the plan to your IRA. And it’s also ensuring that the rollover is completed in the right timeframe. And again, this is the importance of the word awareness that I speak about all the time are conversations that need to be had, that you didn’t know that needed to be had, by asking a series of questions that you didn’t even know that needed to be asked. And so many times, we work with our clients of getting on the phone with their 401 K provider, because they don’t even know what questions to ask, when you start asking about what are all the different ways how I can pull my money out of my 401k in the most tax advantaged way. Yeah,
David Bezar
I want to make one quick comment here, too, Joe, this is really, really important on this topic. It looks as though that the federal government through the Department of Labor is going to approve a final version of what’s called the fiduciary rule. And the fiduciary rule relates to people’s retirement plans, which are called ERISA plans. And right now, if you are, well, what it’s going to be projected is there’s a lot of bad information being provided out there, recommending people rollover or transfer of 401 K 403 B money into IRA accounts. And it’s being done by people who are not fiduciaries. So like transactional registered representatives that are not under the fiduciary rule, insurance agents that are under the fiduciary role, they may talk to you, you got an employer sponsored plan, they tell you to roll it over, they put it into products that are commission driven, that there you know, may not necessarily be in your best interest. So they’re trying to change that to where only fiduciaries like Bret and I can talk to people about rolling over their retirement plans that are ERISA under the ERISA guidelines, so it’s important to know that that’s coming down the pike. Alright, so let’s hop into it
Joe Krause
also leaves people vulnerable who have things on autopilot got big
David Bezar
time. Yeah, big time. So let’s give a pleasant surprise. Right, let’s talk about the potential favorable capital gains tax rates. So as we mentioned earlier, there are also some potential pleasant tax surprises that you could take advantage, but it’s important to understand that the tax code treats assets in varying ways. So one example that is often misunderstood, is capital gains, capital gains taxes. Capital gains earned in what’s called a non qualified brokerage accounts are something that’s not a retirement plan. So a non qualified brokerage account are typically taxed at a lower rate compared to withdraws taken from an IRA or a 401 K plan. In fact, it may even be possible to realize capital gains in a way that results in this would be very, very favorable in a 0% tax rate. So for instance, in 2023, if you’re a married couple filing jointly, and your taxable income, including capital gains, earnings is less than $83,350. You won’t owe any capital gains taxes. What that does is presented strategically opportunity to plan your capital gains sales in a way that keeps your taxable income below the threshold, potentially resulting in no capital gains tax owed. And that can be a very, very pleasant tax surprise, probably
Bret Elam
my favorite surprise that I help people accomplish all the time. But again, today’s show, we’re talking about all things tax planning, and we’re now talking about some pleasant surprises. Next pleasant surprises Roth IRA is favorable for both Social Security tax and Medicare irmo, which we spoke about a little bit earlier. So qualified distributions from a Roth IRA, are not counted when determining the taxable portion of your social security retirement benefits, or surcharges related to Medicare. And again, Social Security benefits may be subject to federal income tax, if your provisional income, and again, it’s the calculation of how Social Security the government deems of how much of your Social Security tax or of your Social Security benefits are taxable, again, up to 85%. Again, when you take money from a Roth IRA, they do not count towards provisional income, which means they won’t trigger higher taxation on your Social Security benefits. Additionally, because those incomes don’t show up on the tax return, they help you similarly to Medicare premium surcharges, which again, are additional charges on top of normal Medicare for high income beneficiaries. So because qualified distributions are not included in modified adjusted gross income, it means they will not increase your premiums. And to get by strategically utilizing Roth IRA distributions in retirement, you can absolutely minimize the impact of your taxation on Social Security and lessen what any of those surcharges may be for Medicare, which always ends up being another pleasant surprise.
David Bezar
Yeah, the less pleasant surprise Joe and I know we have to fly on this is the tax favorable treatment of life insurance death benefits. So just real quickly, folks, life insurance death benefits are generally income tax free to the beneficiary means a beneficiary doesn’t have to pay any federal income tax on death benefits received from a life insurance policy. A lot of people don’t believe in life insurance, but it’s a great planning tool, if appropriate. And it’s a way to pass on assets to beneficiaries, where the government doesn’t get a piece of it, if it’s structured properly. So it’s, you know, it’s really a good thing. So, you know, again, I hope today’s show was very helpful, right tax planning can indeed be a very powerful tool to help you better manage or even avoid unpleasant tax surprises. The key is working with a knowledgeable financial planner who understands the implication of taxes, and how they can provide significant advantage in overall retirement planning, you got to be proactive, and the easiest way to be proactive Joe is texting the word plan PLA and to 215999 30 to 72. We’ll send out our 2023 tax guide, and give you the opportunity to schedule that complimentary consultation, get it done in the next 40 days. And you may have a surprise a very pleasant one, when it comes for 2024.
Joe Krause
And real quickly on the life insurance topic that is a very challenging topic to understand as well when you get into death benefit, and how to set everything up and all of that stuff as well. So definitely worth a conversation with Dr. Financial Services. That’s going to do it for this edition of roadmap to retirement the radio show. As we do our shows over the next 11 years, I promise to work or share with our listening audience how I’m going to get that beach house down in Cape May where I can officially retire when I get there at 70 years old on behalf of David Bezar . And on behalf of Bret Elam and Karen Bezar . I’m Joe Kraus. 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 answers about what to do with your retirement savings. If you have a question about your IRA or your 401 K 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 Caron and Bret are here to help. Often your questions can be answered in a simple phone call. Just call 21579890882157989088. 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 preparer. should not 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 risks and unless otherwise stated are not guaranteed. Be sure to first consult with a qualified financial adviser and or tax professional before implementing any strategy discussed here. David bizarre Bret Elam and Karen Bezar of Thrive financial services and thrive Capital Management are licensed to offer investment advisory services through Thrive Capital Management LLC, an SEC registered investment advisory firm office headquarters is located in Fort Washington and offices of convenience used exclusively for client meetings and Exton Yardley, and Cherry Hill roadmap to retirement the radio show is a paid commercial announcement from Jacob media partners. If you’d like to learn more about the power of the radio our contact Joe Kraus at 267-261-3428. Today’s program has been pre recorded.