How Fear Can Hurt Your Retirement

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Transcript

00:00:00:00 – 00:00:19:16
Mike
I can’t tell you how many people I talk to you. They have a couple million dollars save for retirement. They got more money than they’re probably ever going to spend. But they keep working because they’re worried, well, what do I do about my health care, right? If I don’t, I’m not working. I don’t have health care through my company.

00:00:20:11 – 00:00:33:12
Mike
And so they just keep working as though they can’t go out and buy health care. You know, directly, I mean, they can easily afford it, yet it’s a very common concern.

00:00:37:17 – 00:00:59:10
Zach
You’re listening to retirement today on your co-host Zach Holcomb. And alongside me, we have Michael Reese. He’s a certified financial planning professional, and he spent the last 25 plus years helping families get into and through retirement. Retirement. That’s what our show is all about. And we’ve got a great topic today, Mike. We’re going to talk about the three fears, the three big fears that people have around retirement.

00:00:59:27 – 00:01:28:21
Mike
Yeah, that’s right, Zach. So three things that people are scared about when it comes to their retirement. And these are natural fears, by the way, as everyone’s looking to retire. And as you’re listening, you might not be ready to retire yet. Of course. But I thought to myself, let’s talk about the three fears. These are three concerns, worries, fears that I see every day when I talk to people who are trying to plan for that, you know, that retirement of their dream.

00:01:28:22 – 00:01:31:18
Zach
These are common things that we hear quite often.

00:01:31:18 – 00:01:50:29
Mike
Yeah, over and over again, the three things that we’re going to talk about, these are the three fears that we’re going to hit on today. Fear. Number one, people, when they’re getting ready to retire in the back of their mind, whether they admit it or not, they’re worried. And they’re always asking the question, will my money last? Right.

00:01:51:06 – 00:02:07:04
Mike
Because if you think about it here you are. You been saving money all these years. When you retire, that pot of money that you’ve built up, that’s it. There’s nothing else. Right. So we’re going to talk about income planning and that’s how you kind of address that concern.

00:02:07:04 – 00:02:07:24
Zach
Making that money.

00:02:07:24 – 00:02:15:16
Mike
Less. Right. So that’s beer number one. Beer number two. Oh, health care.

00:02:15:29 – 00:02:16:16
Zach
That’s a big one.

00:02:16:17 – 00:02:36:03
Mike
I can’t tell you how many people I talk to. They have a couple million dollars save for retirement. They got more money than they’re probably ever going to spend. But they keep working because they’re worried, well, what do I do about my health care? Right. If I don’t, I’m not working. I don’t have health care through my company.

00:02:36:29 – 00:02:55:10
Mike
And so they just keep working as though they can’t go out and buy health care. You know, directly. I mean, they can easily afford it, yet it’s a very common concern. This is normal stuff. Normal. If you have these fears, you are normal. You are not crazy.

00:02:55:10 – 00:02:56:25
Zach
Yeah. You’re the average retiree.

00:02:56:25 – 00:03:26:18
Mike
You’re the average person, right? What if I get sick? What if I get disabled? We always hear about these horror stories where people get this weird disease and they’re spending thousands of dollars a month on just their medicine, their prescriptions. What if that you. Right. Common concern. And then the third thing that we’re going to talk about, the third fear that we’re going to hit on tonight, we want to talk a little bit about the fear of increased taxation down the road.

00:03:27:09 – 00:03:58:12
Mike
You know, a lot of people, Zach, is, you know, they’ve got a bunch of money saved and maybe you’re like a lot of folks. You have a bunch of your retirement savings in your 401. K or your IRA. This is money that’s never been taxed. And if the government decides they’re going to increase tax rates, which, of course, there seems like they’re always talking about maybe not doing as quickly as they think they will, but they talk about it.

00:03:58:12 – 00:03:58:19
Mike
Right?

00:03:58:26 – 00:03:59:23
Zach
They love to talk about it.

00:03:59:24 – 00:04:27:03
Mike
Yeah. And they’d love to do something about it. But, you know, Washington, D.C. is a bit dysfunctional. Right? To put it nicely. The point is that if taxes increase down the road, which it’s really likely they will do, then that’s essentially that is a permanent loss in your retirement portfolios. You know, when tax rates go up, the IRS share of your money increases.

00:04:27:15 – 00:04:46:27
Mike
Your share decreases. So people are they have a fear that like, hey, what if that happens? How will that affect my financial security? Right. So those are the big three that we’re going to talk about this evening. Yeah, you actually had Zack, a person you talked to. I want you to share the story where you talked to a person on the phone.

00:04:46:27 – 00:05:01:22
Mike
They’ve called in and they want to talk to somebody. Right. In fact, they’re you’re scheduling them to to talk to an advisor. Right. And they had expressed I think you were telling me that they had expressed a concern. If they had, say, something like 800,000. But this was a big worry there.

00:05:01:23 – 00:05:21:11
Zach
Yeah. So I talked to this gentleman and he’s done a great job saving. He’s worked hard for 30, 40 years and he has a $800,000. But he’s paralyzed in fear that if he steps away from his, you know, reliable paycheck, that he’s getting twice a month, that he’s just going to run out of money. And he just has this mentality that there’s nothing he can do.

00:05:21:11 – 00:05:24:20
Zach
He’s like, I just have to keep working, even though he really doesn’t want to anymore.

00:05:24:21 – 00:05:50:13
Mike
And I’m glad you shared that, Zach, because this is something we see a lot. We see people, they’re working, they’ve been saving money. But here’s the big issue. What’s my number is the question like, they have no idea, none how much they need to save, you know, how much they need to have in their accounts, where it’s enough, where they can step away.

00:05:50:16 – 00:06:09:09
Mike
Right. Right. And so I remember a few years ago, maybe now it’s ten years ago, but there was a company at the time i g which is now voya and I think they changed names like ten years ago now. So it probably wasn’t a few years ago was probably ten years ago, but they would have these commercials where people would be walking down the street in these big orange bubbles.

00:06:09:09 – 00:06:30:04
Mike
Yeah, we’re above their heads. Numbers. Yeah. What’s your number? Right. What’s your retirement number? Was the whole campaign right? In the end, the idea was that it’s not it’s different for everyone. Your the amount of money you need to save for your retirement is different from everybody else because your situation is different. But how do you know what that number is?

00:06:30:21 – 00:06:54:10
Mike
This is related. This question is related to the fear of will my money last? How do I know when I’ve had enough? In this example, this gentleman you talk to. Very common situation, by the way. He wants to retire, but he’s scared. He’s like, if I quit today, I only have this 800,000. It’s got to last my lifetime.

00:06:55:00 – 00:06:56:18
Mike
How do I know if it’s enough?

00:06:56:18 – 00:06:57:17
Zach
Yeah. What do I do?

00:06:58:00 – 00:07:11:04
Mike
Here’s what happens. By the way, I had this come up the other day. So, Zach, I was talking to a very nice couple. Let’s call him John and Mary. Not their real names, of course, but, you know, got to call them some names.

00:07:11:04 – 00:07:12:12
Zach
Change to protect the innocent.

00:07:12:12 – 00:07:37:02
Mike
Yes. So they’re on a zoom call and we’re talking. And one of the interesting things they said, they said something that we hear all the time. They said I said, well, do you have a financial advisor? They said, Yeah, we have one. Well, what what does that person say about, you know, about your retirement planning? And here’s what they said.

00:07:37:02 – 00:07:56:00
Mike
They said, Yeah, every time we talk to great guy, but every time we talk to him, he just says, look, stop worrying about it. You got enough money, you got nothing to worry about. And it’s almost like he treats them like, I don’t want to say it this way. I was going to say like children. But it’s not not quite like that.

00:07:56:00 – 00:08:03:08
Mike
But it’s they’re basically saying it’s not he says will be okay. But he doesn’t tell us how we will be okay.

00:08:03:08 – 00:08:05:03
Zach
Or why or yeah. Reasoning behind.

00:08:05:03 – 00:08:31:04
Mike
It. And I said, well and I asked him, I said, Well, retirement’s all about, you know, having a, an income plan, you know, a written retirement income plan that maps out how you’re going to get money for the rest of your life. Sure. So when he shows you that plan, you know what? What does that look like? Like, what have you guys discussed there?

00:08:31:04 – 00:08:35:09
Mike
What does that plan look like? What do you think they said to me, Zach?

00:08:35:09 – 00:08:37:24
Zach
Well, we’ve never discussed anything about an income plan.

00:08:37:24 – 00:09:02:13
Mike
Yeah, we don’t. I’ve never seen an income plan. A written income plan. Well, what is? And so I said, okay, well, what is when you talk I mean, I’m sure you guys are getting ready to retire. Obviously, you’ve talked about this because like with our clients, heck, they could be five years away from retirement and we’ve already put together written income plans for them because, you know, you got to have if you’re going to have a goal of retirement, need, have a plan, make it a reality.

00:09:02:13 – 00:09:04:01
Zach
Yeah. You got to replace those paychecks. Yeah.

00:09:04:01 – 00:09:30:15
Mike
You don’t just say, oh, I’m going to retire next week. Maybe I better have a plan. Yeah, right. I mean, ideally. So if you’ve been working with someone for the past five, ten, 15 years and they know you’re going to retire in the next year or two, then it’s kind of their job to come to you and say, Hey, John, Mary, Joe, Carol, Bobby, Susie, whatever your names are, hey, you’re retiring.

00:09:30:15 – 00:09:42:01
Mike
In the next year or two, we need to start putting together a written retirement plan. I’ve started to put that together for you, but let’s have a conversation about what that needs to look like. Well, this couple take home Janna.

00:09:42:01 – 00:09:43:04
Zach
Mary, John and Mary. Okay.

00:09:43:13 – 00:10:03:20
Mike
So John and Mary, this had never happened. Right. And in fact, the interesting thing they said to us, I said so. Okay, so what where do you see us fitting in all of this? They said, well, this is why we wanted to talk to you. You see, we listen to you on the radio. You talk about getting a second opinion, right?

00:10:03:20 – 00:10:22:16
Mike
You talk about getting a second opinion. And you were talking at the time about, you know, different retirement planning concepts. And, you know, Mary and I were looking each other were like, I heard Pfizer never brings this up to us. You know, we have to bring it up to him. And he’s done a great job growing our money over time.

00:10:22:16 – 00:10:49:07
Mike
And he’s a really good guy. He goes, But, you know, we’re getting close to retirement and, you know, that’s like a different stage of our lives. And we’re starting to ask ourselves the question, is it maybe time if we’re changing the stage of life? And our current advisor is not kind of prepping us for that. We’re starting to wonder if maybe it’s time to find, you know, it’s time to transition.

00:10:49:07 – 00:10:52:28
Zach
Maybe. Yeah. Find somebody that’s maybe a better fit for our circumstances.

00:10:52:29 – 00:11:01:00
Mike
Yeah. To a new advisor, someone who specializes in the area. The stage of life where we’re looking to enter.

00:11:01:00 – 00:11:05:25
Zach
Yeah. Which is getting comprehensive retirement planning, not just looking at the investments.

00:11:05:26 – 00:11:09:16
Mike
That’s exactly right. Because as you like to say. Right. An investment plan is not.

00:11:09:16 – 00:11:10:18
Zach
A it’s not a retirement.

00:11:10:18 – 00:11:44:26
Mike
Retirement plan. And so and guess what? That might be you two, you might be sitting there saying, you know, when I talk to my advisor there, great person, great guy, great gal, great person, yet they know you’re retiring or want to retire in the not too distant future. Or maybe they know you are already retired, but at no point do they come to you and say, Hey, John, Mary, I know you’re going to retire in the next year or two or you want to.

00:11:44:26 – 00:12:04:22
Mike
It’s time for us to really sit down and map this out. Let’s create a written retirement income plan where we identify Here’s where your money’s going to come from. Like this is where we’re going to pull money. This is a part of your portfolio we’re going to take money from in your retirement. This is where is it going to come from?

00:12:04:22 – 00:12:22:07
Mike
The IRA, the 401k or the Roth or something else. Here’s when we’re going to pull money out. Here’s how much we’re going to pull out. Here’s when we’re going to take social Security. Here’s why we’re going to take it at that time and so on and so on. Let me give you this in just kind of a quick preview, because this formula, it’s great.

00:12:22:07 – 00:12:43:25
Mike
It works in all markets. It works and markets are good. It works and markets are bad. It just works. And the greatest part about it is it’s easy and it’s simple. It’s not super complicated. So that the best part about that is, you know, what your money is supposed to do for you, right? So when you’re working, all you’re trying to do is trying to it’s growth in accumulation.

00:12:43:25 – 00:13:04:07
Mike
Just grow, grow, grow, grow, grow. I want my pot of money to get as big as possible. But when you get to retirement, you still want that. You still want your money to grow, of course, because of inflation and all that kind of stuff. But you also need income and you don’t want to take income from a pot of money that’s designed to grow, grow, grow.

00:13:04:07 – 00:13:19:26
Mike
Because when when you’re investing for growth, here’s what you know. Some years you’re going to make money and some years, in fact, you’re going to make a lot of money. But what happens in other years, Zach? Do you make money every year?

00:13:20:06 – 00:13:22:08
Zach
I wish you did, but unfortunately you don’t.

00:13:22:09 – 00:13:28:17
Mike
Now some years, you’re going to lose money. Yeah. And in fact, some years you’re going to lose a lot of money.

00:13:28:17 – 00:13:28:26
Zach
Right.

00:13:29:21 – 00:13:35:28
Mike
And if you’re taking income from a portfolio when it’s going up, that’s okay.

00:13:35:28 – 00:13:36:07
Zach
Yeah, that’s.

00:13:36:07 – 00:13:42:03
Mike
Great. No problem. What happens if you’re taking income from a portfolio that’s going down in value?

00:13:42:03 – 00:13:43:17
Zach
That’s not a good situation.

00:13:43:17 – 00:14:11:09
Mike
Not okay, that’s problem. So the easy retirement formula is simply this. It’s a formula. It’s proprietary to us. What we do is we segregate your portfolio into growth components and income components. The idea with the income components, we’re just going to take all of your income from the money we put in the income portion, take all your income from that until it’s gone.

00:14:11:27 – 00:14:34:22
Mike
But the idea is that buys time for your growth side to just grow, grow, grow without being stressed, to take income out of it. So you can have good years, a bad year, and it doesn’t matter. You’re okay and it’s a little different for everyone. That’s a simple formula. It works for everyone and you know what? If you don’t have something like that for yourself, maybe it’s time for that second opinion.

00:14:34:22 – 00:14:35:13
Zach
Zach Yeah.

00:14:36:05 – 00:15:07:08
Mike
Let’s talk a little bit about health care. So this is one of those areas that I think it’s a bit of a fear of the unknown because. Zach I think that for many people and I would even go so far as to say for the vast majority of people once you understand how the health care system works, then that alleviates this fear pretty dramatically.

00:15:07:09 – 00:15:38:17
Mike
Sure. So let’s kind of walk through this. Okay. I’m going to start with Medicare. So once you hit age 65, then you are eligible for Medicare. Medicare, by the way, one of the most awesome programs to be in if you are on the receiving end, meaning you are 65 plus, you have Medicare, you have and if you add on the right supplements, you it’s just like winter, winter chicken dinner, right?

00:15:38:17 – 00:16:05:06
Mike
It’s awesome. Yeah. In fact, it may be the best health care you ever have. You have all these you can have all these different surgeries. It costs you almost nothing. It’s it’s ridiculous. Now, by the way, from an economic design perspective, let’s be honest, Medicare I’ve heard it called. You know, I’ve heard Social Security called the biggest Ponzi scheme in the world because it is set up like a Ponzi scheme.

00:16:05:26 – 00:16:29:04
Mike
Medicare is about three times bigger. Yeah, Medicare by far the biggest Ponzi scheme in the world. The only reason it’s legal is because the government’s doing it. If you and I tried to do it, we’d be in jail. Essentially, what’s essentially what happens with a Ponzi scheme is, you know, you’re older investors, their returns are paid by the new investors.

00:16:29:12 – 00:16:39:06
Mike
Right. Well, what’s Medicare? The people in the system, they’re there. All their benefits are paid by you and I, the people working today, just like Social Security.

00:16:39:06 – 00:16:39:15
Zach
Right.

00:16:40:11 – 00:17:12:03
Mike
But if you’re receiving it, it’s it’s awesome, right? I mean, it’s awesome. But here’s the deal. When you’re on Medicare, you’re going the premium that you’re going to pay for that insurance is based on your income. If you are a married couple in 2022, you can have something like 180,000 of adjusted gross income or less. And if I’m a couple thousand dollars off, I’m sorry, but right around there, roughly 180,000.

00:17:12:16 – 00:17:30:22
Mike
And if you have less than 180 K of adjusted gross income, you’re going to pay about, I think it’s like $160 a month, 70 bucks a month, which is pretty dang cheap. Pretty reasonable for health care. Yeah. If you’re single, you got to cut that in half. It’s like maybe 90,000, but you’re still paying the same, right? 100 and 6070 bucks.

00:17:30:22 – 00:17:59:01
Mike
Yeah, I know. In 2021 it was one 4850. But then they bumped it up and I don’t know the exact number for 2022. So anyway, you’ve got that, that’s your base rate and then you go out and you get a supplement and you know, some people use this Medicare Advantage program, but most people just traditional Medicare, you get a supplement and maybe that’s 100 bucks a month and maybe you get a drug card and that’s maybe 20 or 30 bucks a month all in your pay.

00:17:59:01 – 00:18:27:29
Mike
And right around $300 a month for health care, that’s per person. But I’m here to tell you that covers like everything, like pretty much everything. You’ve got an annual deductible of two or 300 bucks, but I mean, it covers like everything. It’s ridiculous now. It doesn’t cover long term care and things like that. It also doesn’t cover. There are some weird diseases out there, maybe weird prescriptions where it doesn’t cover, but overwhelmingly you’re pretty much covered.

00:18:27:29 – 00:18:29:21
Zach
Yeah, generally speaking, you’re in the clear.

00:18:29:24 – 00:18:49:27
Mike
So 300 bucks a month. And what’s cool is you can kind of budget for that, right? Not a big deal for a married couple, maybe 600 a month. Now, if you make more than 180,000 married, more than 90,000 single and heads up Roth conversions affect that number that will increase your premiums, but for the most part pretty dang good system.

00:18:49:28 – 00:19:02:18
Mike
Yeah. Now but what if you’re 61 years old? Like, I saw a study recently and they said, oh, the average age that Americans want to retire 62 Well, when can you get Medicare again?

00:19:02:19 – 00:19:03:16
Zach
6560.

00:19:03:16 – 00:19:07:05
Mike
Five Like, Oh, I’m 62. What do I do between 62 and 65?

00:19:07:05 – 00:19:08:09
Zach
We’ve got to bridge the gap here.

00:19:08:09 – 00:19:33:14
Mike
Yeah. So well, here’s a lot of you know that for most, if you work for a bigger company, if you retire or you leave the company, quit your job, you can maintain your current health care coverage through something called COBRA. That’s for 18 months, a year and a half. Basically, you got to pick up the price tag for the health that you have.

00:19:33:14 – 00:19:53:13
Mike
Now, don’t be surprised if that’s like 700 a month or $1,000 a month. It’s like some expensive stuff. Yeah, right. But it’s only for a three year, four per year and a half. And then at the end of the year and a half, you’re like, okay, I’m 63 and a half. I can’t get Medicare to I’m 65. I have another I’ve got to plug that year and a half gap.

00:19:53:13 – 00:20:17:06
Mike
What do I do? Simple. You go to healthcare.gov, it’s called the marketplace. And on the marketplace you can shop all these different insurance carriers you pick and choose, hey, you know, I could compare them side by side. Here’s what it costs. Here’s what they provide. You just pick a plan and guess what? You could probably find a plan pretty darn similar to what you have now at work.

00:20:17:17 – 00:20:38:26
Mike
And guess what? It’s going to cost pretty darn similar to what your cobra is going to cost. Right? So it’s like this. Here you are. You’re 62 years old, like this couple. I had a this was before back in December. We’re like, oh, we’ve got 2 million save for retirement. And, you know, they got plenty of money but they don’t want to retire.

00:20:38:27 – 00:20:58:09
Mike
Is worried about health insurance. And I did the math and I said, what is the most money that health insurance would cost the two of you for the next three years? I did the math on that. We calculated that it was pretty much impossible for it to cost more than $50,000 if they spent as much as they could.

00:20:58:24 – 00:21:24:01
Mike
Right. Total. Total. I said, what if we’re wrong? Let’s double it. 100. You got $2 million. What if we took 100,000? Set it aside to handle your health care expenses for the next three years, and then you’ve got the other 1.9 million to essentially retire on. Right. And oh, look, using our easy retirement formula, right. We plugged in the numbers.

00:21:24:01 – 00:21:41:13
Mike
And guess what they had? They still had plenty of money to retire. And so by having that conversation, they kind of looked at each other, said, wow, we didn’t even think about it this way. I guess we can retire. We figured out how we’re going to handle the health care side. That’s always a big concern, by the way, long term care.

00:21:41:13 – 00:22:05:28
Mike
I don’t have time to go into it today, but that is truly an area you got to watch out for. Yep. Right. And then now what? We want to talk about is a third fear, increased taxation. Now, I think there’s a lot of rational thought behind that fear because if you actually look at how our government, you know, their financial maturity level, we could call it, is pretty much nonexistent.

00:22:06:14 – 00:22:06:24
Mike
Right.

00:22:07:05 – 00:22:09:06
Zach
That’s you being kind. I’m saying you.

00:22:09:10 – 00:22:44:11
Mike
I’m being nice today. I want to call a bunch of politicians weasels or something, but I’ll probably get bleep me. Yeah. If you just heard a beep. A black American bleeped out there. Anyway, the point is, these people in Washington, D.C., they let’s put it this way, they’re not really good with balancing a budget. Right. I love how Warren Buffett said he said I can fix the budget overnight, just create a law that says, look, if you guys can’t keep the budget within a 3% variance level, then you’re not eligible for reelection.

00:22:45:08 – 00:22:46:24
Mike
That would fix it pretty fast.

00:22:46:24 – 00:22:47:23
Zach
Things would change quick.

00:22:47:23 – 00:23:18:11
Mike
Yeah, but unfortunately we don’t get to put that into place. So there is a very real possibility. In fact, there’s a high probability that taxes will increase in the future. Right now, in our current tax code, if the politicians do nothing about let’s just imagine they do absolutely nothing. Politicians are really good at that, aren’t they, Zach? They’re really good at flapping their gums.

00:23:18:11 – 00:23:19:29
Zach
Saying they’re going to do something, but.

00:23:20:17 – 00:23:53:20
Mike
Actually doing something, they don’t really do much. If they do nothing, if they do nothing over the next four years, in 2026, taxes are set to automatically increase. When taxes increase, that reduces the value of your retirement accounts like your 401k or your IRA. Now, why is that? It’s because whenever you take money out of a41k or an IRA this now remember this money has never been taxed.

00:23:53:20 – 00:24:18:21
Mike
So every time you pull money out, the IRS is standing there with their hand out saying, hey, give me my give me my cut. Right. I take out, you know, $50,000. The IRS says I want my 20% cut. Say, give me ten. You get 40, IRS gets 20. Well, if taxes go up, their share might go from 20 to 25 or 30.

00:24:19:11 – 00:24:57:28
Mike
So now you pull out that 50,000 and they say, hey, we want 15. You get to keep 35. So you’re 40 went down to 35. The value, the real value to you of that account goes down, the instant taxes go up. Now there’s an except an exception there, and that’s called the Roth IRA or the Roth 41k. So you’ve probably if you listen to radio or you watch TV, you know, financial people for the last several years have been talking about, hey, you got to convert your IRA to a Roth, you got to convert your 41k to a Roth IRA.

00:24:58:09 – 00:25:23:05
Mike
And the reason they’re telling you that is because they’re saying, hey, these increases are coming down the road. We know what the tax code is now. You should take advantage of it. It’s lower today. It’s going to be higher in the future. Pay tax now when the rates are lower and save tax later, the rates are higher. That makes a lot of sense in a lot of situations.

00:25:23:06 – 00:25:42:14
Mike
Not always. Right. Right. And that’s the thing. You got to be really careful here because depending on your situation, what if you’re not going to be in a higher tax bracket later on? Right. What if you really are not going to be in a higher tax bracket? Now, a lot of people, they’re going to be a higher tax bracket.

00:25:42:14 – 00:25:43:27
Mike
They don’t even realize it.

00:25:43:28 – 00:25:44:08
Zach
Right.

00:25:44:14 – 00:26:05:02
Mike
Because of required distributions right there. They’re like, you think, oh, I’m going to be in a low tax bracket retirement. But the minute you hit like 72 and you start taking required distributions, you’re like, Holy cow, what the heck? And the next thing you know, you get vaulted into a high tax bracket because you weren’t expecting because you didn’t take that into account.

00:26:05:02 – 00:26:26:05
Mike
Yep. So you might be thinking, I’m going to be in a low tax bracket. What do I care? Well, guess what? It’s required distributions. It’s like this tax bomb coming your way, right? You got to pay attention to that. You know, if you’ve got like 500,000 or more in your for one case or your IRAs you need, that could be a real problem for you.

00:26:26:23 – 00:26:46:23
Mike
The fact that you should be calling is saying, hey, I need someone to help us look, help me look at this. Right. But there are other people, though. They’re higher earners. Let’s say that you’re working and your spouse is working. And between you, you’re making like 300 grand or something. You’re in high tax brackets. Now, there’s a very good possibility when you retire.

00:26:46:23 – 00:27:06:22
Mike
You mean a lower tax bracket. So should you be doing Roth conversions today only to, you know, pay those high rates today when you’re going to be in a lower rate, when you retire, you’re probably not may not be the best time. That doesn’t mean you shouldn’t do anything, but it just means may not be the best time to conversions.

00:27:07:11 – 00:27:19:03
Mike
Tax planning still matters, right? Here’s the thing, though, that really gets me a little red in the face. You love it when you talk about taxes, don’t you?

00:27:19:05 – 00:27:22:18
Zach
I know you get so just aggravated and fired up.

00:27:22:18 – 00:27:45:01
Mike
I hate that hate. I hate those politicians. I hate giving money. You know, it’s like we work so hard for our money and then we have to try and give it. Look, if I gave portions of my money to the government and if if the government actually were financially mature and they actually spent the money I gave them in a reasonably like reasonably wise way.

00:27:45:01 – 00:27:45:11
Zach
Right.

00:27:46:01 – 00:28:08:26
Mike
It wouldn’t bother me so much would be so bad. But we know they waste money left and right. It’s just ridiculous. They blow money left and right. And it’s just in fact, I’m I’m fully convinced I have no proof of this other than what I’ve seen over my lifetime. But I’m fully convinced that some percentage of what’s going to Washington, D.C., is finding its way in the pockets of the politicians in DC.

00:28:09:13 – 00:28:11:01
Mike
They’re making themselves wealthier.

00:28:11:13 – 00:28:11:19
Zach
And they’re.

00:28:11:19 – 00:28:14:00
Mike
Not spending money the way it should be, and it just makes me.

00:28:14:00 – 00:28:14:10
Zach
Angry.

00:28:14:10 – 00:28:36:25
Mike
I know, right? Here’s what breaks my heart. What really kind of gets me a little upset. It’s like, you know, there’s a couple I met with. Again, this is before the year end. You know, Collin, Bob and Susie, super nice couple, super nice couple. These people, they plan on living in retirement, you know, maybe six, 7000 a month.

00:28:36:25 – 00:29:19:25
Mike
They’re not living this huge lifestyle. Sure. And we were doing the math and we’re that what would taxes look like in your retirement? And in the first couple of years, it only be like a couple thousand bucks or less. I mean, hardly anything. And like, do we have a tax problem? Now, this is actually pretty cool, right? But when we got into their seventies and eighties because it required distributions back a couple thousand a month, go into the IRS each year, it’s projected to be under the current tax code more like $23,000 a year instead of a couple thousand a year, 20, 30,000 a year, y required distributions.

00:29:19:25 – 00:29:22:25
Mike
Yeah. All because not paying attention.

00:29:22:25 – 00:29:23:20
Zach
It snuck up on them.

00:29:23:26 – 00:29:43:19
Mike
And it just. I was so thankful that they called in to get a second opinion, as were they. This is a holy crap. We never knew that was coming. What can we do about it? Well, we were able to help them fix it, right? We’re able to say, look, you do have to pay some tax, maybe pay some more taxes today, but we can avoid a ton of taxes later.

00:29:43:19 – 00:30:06:09
Mike
In fact, in their case, we saved them something like over 150,000 of tax projected over their lifetime. Sure. But they never would have saved that money if they didn’t call, because if you don’t call, you don’t know you’ve got a problem. If you don’t know, you have a problem, nothing happens. Right? Right. So as we’re kind of wrapping up the show tonight, here’s a deal.

00:30:06:29 – 00:30:35:18
Mike
If you’re not talking to your advisors every single year, not every few years, every single year about your tax planning, then you could find yourself in a world of hurt because you’re not paying attention. I don’t want that to happen to you. The best part is it is so easy and is so free to make sure you’re not in that position.

00:30:35:18 – 00:30:57:03
Mike
I don’t want you giving the IRS hundreds of thousands of dollars. You don’t have to. You shouldn’t want to do that either. It’s so easy to fix it. All you do is call us. Give us a call. The phone numbers 512886 5850. Let’s get that second opinion right and let’s make sure that you’re on the right track for your retirement.

00:30:57:03 – 00:31:06:16
Mike
So as we wrap up the show, Zach, let’s get those numbers out there. Hey, you got a call. Let’s get that second opinion. Let’s make sure you’re making the right choices.

00:31:06:16 – 00:31:24:18
Zach
Mike, we’ve only got a few spots left available, so call us now. 512886 5850. Again, that’s 512886 5850. Like Mike said, let’s get a second set of eyes on things. Let’s give you that second opinion that could change your retirement for the better.

00:31:24:26 – 00:31:50:13
Mike
And let’s help set you up with our easy retirement formula so that you can enjoy the best years. What should be the best years of your life? All right. That’s our show this week. See you next week.

 

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