Transcript

00:00:00:00 – 00:00:26:27

Mike

Taxes are potentially a real problem. So let’s talk about why that is so, Steve. Right. Steve comes into the office and he is one of these guys, you know, these guys where when they walk into a room, it’s Abby. Is that at least in their minds, they’re the smartest person in the room. Right. That was Steve. He walks in the room.

00:00:26:27 – 00:00:44:15

Mike

He’s got his statement like, imagine this is his fidelity statement. And he has a statement in his hand. He walks into the room in the conference room, and the first thing he does is he slams down the statement on the table, and he says, I’ve got 500,000, my IRA. What do you think I should do about it? 500,000.

00:00:44:15 – 00:01:08:28

Mike

Let’s shut that down. 500,000 in my IRA. Woo-Hoo. What should you do about it? Oh, I look at it like this. And by the way, I do see his account balance says 500,000. But Steve is kind of being a jerk. So I already think, you know, maybe I have a little fun with him. And then I set the paper back down like that.

00:01:10:13 – 00:01:28:19

Mike

So I. I don’t see it. I don’t see. I don’t see it. Steve. Smartest guy in the room. What are you talking about? It’s right here. 500 out. See the number right there? It’s in black and white. I got 500,000. What do you think I should do about it? I just calmly sit back and I pick it up again.

00:01:28:19 – 00:01:53:08

Mike

I. I look at it again, and. I’m sorry, Steve, I. I really don’t see that you have 500,000, by the way. I think at this point, he might have a heart attack. He’s getting so upset. Right? So, Steve, here’s a problem. Here is your statement right here. And that statement says that there is a balance of $500,000. But here’s the deal, Steve.

00:01:55:02 – 00:02:19:11

Mike

I don’t see where it’s all your money. You see this. 500,000 says it is Steve’s. I are a. But what do I know about any account? That’s an IRA. I know it’s not all your money. Something is worth what you can sell it for and put it in your pockets. Let me give you an example. Let’s imagine you have a house, right?

00:02:19:27 – 00:02:47:29

Mike

And as you can tell already, my artistic abilities are not the greatest. But let’s imagine you have a house. And let’s imagine you sell the house for $500,000 after paying the realtor and all that other stuff, you net 500,000 if you have no mortgage you get to keep all 500,000. Yeah, but what if you have a mortgage of $200,000?

00:02:48:19 – 00:03:08:17

Mike

I’ll put em for mortgage. If you have a $200,000 mortgage, you sell a house for five. What do you end up collecting at the end of the day? Not 500. You collect 300. So what’s that house worth to you? Is it worth 502 or is it worth 300 to you if you have a mortgage? Yeah, it’s worth 300 Your equity position is what it’s worth.

00:03:08:24 – 00:03:37:21

Mike

Let’s go back to Steve’s IRA. I said Steve asked if this said Roth IRA, then I would believe you. I would say yes, Steve. I see where you, you, Steve, have 500,000 but that’s not what it said. It said just regular Ira. There is some percentage of this and I don’t know what it is. It depends on Steve’s tax bracket.

00:03:37:21 – 00:04:03:10

Mike

And if you have an IRA or a 41 K, it depends on your tax bracket. But there’s some percentage that belongs to who the i r s this guy. So really, Steve, you’re 500,000. You don’t have 500, you’ve got maybe three 50 and this guy, he has like the rest. Right. Why do I bring this up? Right. Why do I bring this up?

00:04:04:09 – 00:04:23:16

Mike

I bring it up because for a lot of people in retirement and maybe you’re one of them, a lot of your money might be tied up in a four or one K A 43 B a four 57. Anything that starts with a four or an eight, a traditional IRA, a Sep IRA, a Profit-Sharing plan, any of these kinds of things.

00:04:24:06 – 00:04:48:05

Mike

They are all like Steve’s IRA. They’re all like the Steve’s IRA. It’s IRA money. And that means that you get your statement and it’s got your name on it. But in reality, Benny’s name here, or IRAs, is part he’s part owner, IRA’s is part owner, this tax monster part owner. Here’s the problem. This is what this owner this is what Benny can do to you with your IRA at any time.

00:04:48:06 – 00:05:18:27

Mike

Number one, Benny can increase his share any time And guess what that does to you? It reduces your share he can increase his percentage. How does he do that? It’s whenever we watch the guys in Washington, D.C., those weasels in D.C., whenever they increase taxes, guess what happens? It’s essentially saying we’re going to give more money to many of your IRA and less money to you.

00:05:19:00 – 00:05:46:22

Mike

That’s a huge risk. Right now as I’m recording this. There’s our national debt right there. $30 trillion. That is the equivalent look to the right of it. Debt per citizen. $90,000 for every man, woman and child in the United States. They owe $90,000. And you’re thinking, holy smokes, there’s a huge number. How are we going to pay that off?

00:05:46:23 – 00:06:07:03

Mike

Guess what? By Washington, D.C., part of it, what they probably going to do increase taxes which means what to your IRA reduce the value of your IRA. Right. Less money in your pocket. More money in the pocket. But wait I’m not done because it’s not just the national debt that our government has kind of spent. We have Social Security is in the hole.

00:06:07:08 – 00:06:38:24

Mike

We’ve got you know, Medicare is in the hole. And other areas, if you add up on look at this, unfunded liabilities that means the government has promised something, some benefit that they’ve not collected any money on. And this includes the national debt Look at this. Liability per citizen is almost half a million dollars, half for the government. So this is how inept your federal government is.

00:06:39:07 – 00:06:58:21

Mike

They have spent so much money without caring about where they’re going to get it from. They need to collect roughly 500,000 for every man, woman and child in this country just to pay for all the stuff that they promised. Do you think that they’re going to increase taxes down the road, given all that you can almost guarantee it.

00:06:59:12 – 00:07:20:02

Mike

They don’t have an option. They have to increase taxes at some point. And if you have an IRA here, this is your IRA or for one K or whatever. And like Steve, I don’t know how much you have, you might have more than 500. Less than 500 does matter. Remember your IRA for when K for three B is you’re in partnership with the IRS.

00:07:20:26 – 00:07:41:26

Mike

It’s not all your money. It’s some of it is yours and some of it is pennies. So here’s the best thing. This is where I want to wrap up today and this series. What do you can do about that? How am I getting money out of that scenario? Because here’s the cool thing. The IRS says this is what Benny says.

00:07:41:26 – 00:08:07:05

Mike

He goes, hey, if you want. Now, Benny is good in one way. He says, if you want, you can get out of this deal anytime you want by simply doing Roth conversions. You can get out of this deal with me any time you want. You can do partial Roth conversions. You knew total Roth. I don’t care. Buy me out today in some way, shape or form and you can get out of this world.

00:08:07:12 – 00:08:32:16

Mike

And once you’re in a Roth IRA, you are tax free forever, provided that you follow all the rules. How much money, right? Can you be moving into a Roth every year? I do. That math is today. Is this year the right year for you to do conversions to some degree? And if so, how much are you sitting down to your advisors every year to figure that out?

00:08:32:21 – 00:08:55:15

Mike

Five areas you absolutely have to cover. Making sure that you plan for longevity, for inflation, for health care, for market risk. And now today, we’re learning what avoid this guy, the tax monster. Avoid Benny. He’s not a good guy. He’s kind of a jerk. That’s our video. That’s the end of this series. Hope you enjoyed it. We’ll see you again next week.