Transcript
Mike:
All right, gang Michael Reese certified financial planner here again, we’re talking about a great topic here. We’re going to talk all about this question. Can you really, like, can you really retire on a six figure income in retirement, a hundred thousand or more and have it all be completely tax free? This my friends, is gonna be awesome.
Mike:
All right, gang today’s topic. Can you retire on a six figure income in retirement and have it all be tax free now, by the way, I’m going, I need to make one big assumption in this video, and that is that you’ve saved enough money to retire on a six figure income. And so what is enough money? Well between social security and hopefully just social security, maybe retirement savings maybe saving one and a half million, something like that could probably help get you there really big caveat here. If you have a large pension, you might not be able to do it because those pensions, we can’t control them from a tax planning perspective. So let’s imagine you’re like most people though, retirement is all about your social security and maybe a 401k IRA after tax money. That’s your deal. You want to retire on a tax free income. Well, that’s what we’re going to handle. So in order to do that, you got to understand how the tax buckets work.
Mike:
We’re gonna talk about that in a minute, but before I do remember like us share us subscribe. You never want to miss out on these really cool videos, right? Okay. Let’s dive in tax buckets. What are they? You got to understand them. This is how you retire tax free tax bucket. Number one, that is your after tax bucket. That is money in this tax bucket is money you’ve already paid tax on in your investing. Maybe it’s a, an individual account, a joint account, a trust account, but it’s money where you’re investing it. And every year you get something called form 10 99. And it basically is a big old packet of, of tax stuff that tells you here’s how much interest you had last year. Here’s how much capital gains short-term long-term, et cetera. That is an after tax account. The next bucket you need to know about is the tax deferred bucket.
Mike:
Now I’m here to tell you right now, 99% of the tax problems in retirement, come from this tax deferred bucket. This is an awesome bucket while you’re working a horrible bucket when you’re retired. So what’s in the tax deferred bucket. It’s your 401k, your 403 B four 57. IRA, SEP IRA, simple IRA, all of those types of accounts, where you get a tax deduction today for putting your money in the money grows tax deferred. But when you pay all the tax, yeah, later on, when you pull the money out, right, that’s bucket number two, that is big danger land, red, red bucket. We don’t like that. And then our third bucket, this is Nirvana. This is where we want to be our third bucket. It’s a green bucket. It’s our tax three bucket. Tax-Free what’s in the tax-free bucket. I’ll tell you what, my friends, there’s only two things in that tax-free bucket.
Mike:
Number one, anything, any type of retirement account that has the word Roth in front of it. R O T H. You know, and that is for Senator Rob out of Delaware who created this? You could have a Roth IRA, a Roth 401k, a Roth four oh three B a Roth four 57. If it says Roth that’s tax-free. We love that. That is awesome. That is a power tool for you to use when it comes to your retirement planning. Next tool. The next thing in that tax-free bucket properly designed life insurance that is life insurance. That’s designed to be really a cash heavy accumulator, something that delivers tax-free income in retirement. The death benefit is kind of an afterthought it’s designed to be as small as possible. So three buckets after tax tax deferred. Tax-Free alright, what’s our topic. How do you retire with a six-figure income completely tax-free?
Mike:
Well, the answer is pretty simple. You got to get almost all of your money moved in those tax-free buckets. Meaning you got to get almost all your money in either Roth accounts like Roth IRAs or properly designed life insurance, or a combination of the two. So here are some key numbers that you need to think about when you get to retirement. If you want to tax retirement, your after tax account, you should only have enough money there for emergencies, right? If you want a hundred thousand of income, maybe you got like 50 grand. They’re not more than one years of income, like a hundred grand. Be the most like one year of income is the most money you want to have in an after-tax bucket. Ideally, number two, the tax deferred bucket. So after tax, you know, one years of income or less tax deferred, if you’re married, you really want to have it.
Mike:
Once you go into retirement, ideally you want less than 500 K in something like that. Ideally less than 500 K if you can get it down to two 50 K even better, if you’re single, keep it down to a couple of hundred thousand or less. Why? Because if you have numbers much bigger than that required, distributions are going to crush you and kill your tax-free dreams. And then bucket number three, the tax-free bucket. How much of your money should be there? Well, it is the, let’s a M a P a M a P. What does that stand for? As much as possible, right? If you
Mike:
Could have all your money there, that would be ideal. That would be awesome, but
Mike:
That’s not realistic. So how do you get there? How do you enjoy that tax free retirement? It’s all about while you’re working and maybe early retirement years pay some tax today and start shifting assets over and the sooner and faster you get assets shifted over the sooner and faster. You enjoy that tax free retirement. Now here’s the deal. Taxes are complicated. It’s different for everyone. If you want to talk to me or our team on that, if you want our advice on how to do it, Hey, click the link below. It says talk to mike.com that takes you to our online calendar, sets you up for an initial 15 minute call. So you can talk to us either way. I hope you enjoyed this. It’s all about prosperity planning. Remember, right? All about prosperity planning, prosperity planning is about enjoying the three CS. You want to have control of your finances. If you have control of your finances, that leads you confidence that you’re making the right financial decisions. When you have control and confidence, that leads to the third C, which is comfort. That peace of mind that you are in great shape, no matter what I want you to be on that path. All right, gang, like us subscribe, share, and I’ll look forward to talking to you again, our next visit.
