RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:00:01]

ANNOUNCER: You’ve found it. It’s your safer place for retirement planning. Prepare to be coddled in pure fiduciary goodness with your host, and President of Decker Retirement Planning, Mike Decker. This is Safer Retirement Radio. If you’re in or near retirement, listen up, and learn about a math-based, principle-based approach to retirement that is designed to help you enjoy a safer retirement. These strategies are to help protect and grow what you’ve saved. And live the life you want today. So, grab a pen, because your safer path to retirement planning starts now.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:00:01]

MIKE: Welcome to Safer Retirement Radio, where you get the transparency you deserve. I am Mike Decker, your host, President of Decker Retirement Planning, and I did bring my panel with me today. I’ve got, from the Enforce Business, Servicing Side, Cameron Archibald. Cameron, thank you for joining me today.

CAMERON: Oh, it’s such a pleasure. Thanks, Mike.

MIKE: And on the other side of my panel, the New Business, Josh Hunsaker. Thank you for joining me, Josh.

JOSH: Thanks, Mike.

MIKE: Today, we’re gonna be focusing on a myriad of different topics today. Mostly about taxes, though. We’ve got RMDs coming up. There’s a lot of chatter right now of understanding, or at least stories on our front, about understanding 60-day rollovers versus IRA transfers.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:00:01]

MIKE: Beneficiary IRAs, if you get them what do you do with them? And a number of other aspects to tax planning or tax minimization strategies in retirement. We’ve even got a class, actually.  We just had one at Ruth’s Chris in Salt Lake City. This was a dinner event. And we’ve got some classes on taxes specifically, or tax minimization strategies, at the U and up in Washington. We’ve got a few coming there as well. But, we’re gonna share a few of the secrets today from our proprietary system that’s just revolutionized, at least from our client’s standpoint.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:01:50]

MIKE: How to do tax minimization strategies in retirement. Pretty fun. Got a lot to look forward to. So, Safer Retirement Radio listener, hopefully you’re ready to go for the next 58 minutes.  Now, it’s okay if you’re in the car. Most of you right now are in the car right now. You’re driving to an event, to a friend’s house, home. Wherever it may be. You just flip the switch on. Should you want to hear the whole program, you can go to deckerretirementplanning.com. Click on the website, in the very top there, you’ll see the radio show. You can get individual shows, all the shows, the transcripts, to catch this content.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:02:26]

MIKE: But, you can also go to iTunes, Google Play, or wherever you get your podcasts, and listen to it at your own convenience. Most of our listeners seem to be listening in that way. And as we’ve gotten a lot more podcasts followship, it’s the same content. But podcasts do get a little extra benefit here throughout the week. Extra commentary, I should say. But, before we dive into the taxes, before we dive into all the nuances here. Life planning, understanding if one spouse isn’t gonna live long. How does that affect your financial situation? And all the other topics we’ve got going on today. I wanna talk a little bit about the market.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:03:02]

MIKE: Isn’t that a fun topic? I mean, its finance. Markets affect our growth here. What’s interesting is the news seems to be the doomsday of our finances. Did you guys hear about this? The Wharton Pension Research Council, they said if you wanna-this is for the Millennials. They’re talking to you specifically, but it pays merit to everyone here. And I’m not bashing any Millennial, by the way. They’re simply saying this group of people, if they want to live on half of their final salary in retirement, they need to start saving 40 percent of their income over the next 30 years.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:03:37]

MIKE: That sounds pretty gloomy. And that’s not that the Millennials aren’t making enough money, it’s something else. Cameron, you leaned forward.

CAMERON: No, that’s a pretty tough pill to swallow. I think a lot of Millennials are, you know, struggling, possibly with student loans or, you know, they’re in a tough financial situation already, and hearing that kind of news, that’s gonna sound a little bit overwhelming to that group.

MIKE: And we’re all gonna talk about how this doesn’t have to be overwhelming, but I just need to set the premise. This is what people are saying. MIT economists have a few assumptions with this metric that helped with Wharton’s Pension Research Council. The biggest one is that they wanna retire at 65 years old.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:04:17]

MIKE: Well, with health and medical advances, maybe they wanna retire at 75 years old. Maybe they don’t. How long is the retirement they are predicting for them to retire at 65 and then have…? So there’s a few assumptions here that they’re making, however 43 percent of Millennials say they actually expect to retire. So we need to be mindful of that metric. Now, about half the Millennials are contributing to less than 6 percent of their income in their 401ks right now, which is trouble. But all things aside, Baby Boomers for example, in the 60s and 70s, how much were you really saving at that moment?

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:04:56]

MIKE: There’s a growing-up period. There’s a catch-up period. We’re not perfect at 20 years old, we’re not having perfect finances for the most part. There is a growing aspect. And I want to give Millennials the benefit of the doubt here. But, the second major assumption to this metric is that the investment returns over the next few decades aren’t gonna match the roughly 10 percent historical returns Americans have enjoyed previously. We’ve had a great bull market, haven’t we guys? It’s been pretty fun.

CAMERON: You know, it’s been an amazing decade. So, according to this article and what you understand, what are the reasons that anything will change from those historic rates?

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:05:31]

MIKE: That’s the interesting point here. So Cameron, what they’ve said, and this is according to economists in Vanguard, or they’re investing in Vanguard Predict. Over the next 10 years, annual U.S. stock market returns will likely average 3 to 5 percent. That’s a big change. If we’re going to quantify or talk about how that even happens.

JOSH: You say over the next 10 years?

MIKE: Over the next 10 years, the average is expected to be 3 to 5 percent. When you factor in inflation, Vanguard’s predicting it will be below 2 percent.

 

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CAMERON: That’s not-that’s not too unexpected, especially if we’re planning on having a downturn pretty soon here. We’re gonna have some negative years coming up, that’s gonna pull down the average over the next 10 years, definitely.

MIKE: I mean, that’s true but in 2008, right, we had a massive downturn. It was devastating. And then it shot back up. We had a great bull market.

CAMERON: Yeah, that’s true. So, over the last 10 years, it’s been higher than 10 percent.

JOSH: In part due to quantitative easing, right?

MIKE: Yeah. And we’ll drive into that in just a second. Thank you, Cameron. TARP and quantitative easing, QE1 and QE2, but Morningstar Investment predicts even a more meager return, of 1.8 percent over the next 10 years.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:06:42]

MIKE: Now, for all of you still listening with me, that wanna get through the garbage here, the doomsday aspect. It really doesn’t have to be this bad. And let me just illustrate a few aspects right here, okay? The first one is that the markets don’t trend, they cycle. Okay? You can Google this if you want. Now, Google is not a perfect situation for all data being 100 percent accurate. So, that’s my asterisks. Work with a professional, not a blog. But, all things being equal, there’s something called the 18-year market cycle.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:07:21]

MIKE: It’s 18 year market cycle. It’s not necessarily 18 years exactly. It suggests around 18 years the markets will cycle between an up cycle, like a bull market, or a flat cycle. Where you’re not making much money. Now think back to your investments, Safer Retirement Radio listeners, from 2000 until 2009. Did you make much money? Most people did not. It was around two, three, maybe 4 percent, roughly speaking. That sounds like a similar situation.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:07:54]

MIKE: But if you look before that, the 90s, so let’s say ’87, the Black Monday. Bottom of the market until December of 1999. Just threw out some numbers here, some dates. Incredible returns. Let’s take bottom of 2008 until right now. Incredible returns. The point here that I’m trying to illustrate, is markets don’t trend, they cycle. And with interest rates being at all-time lows that could suggest some difficult times. From 2000 to 2008, interest rates weren’t nearly this low. And most of us thought it couldn’t go lower.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:08:33]

MIKE: It very well can go lower. And if we take the case study of Venezuela or Japan, or some of these other countries, it very well can go lower. But to be fearful of the future is unnecessary. Now I’ve said this before, anxiety is fear of the future based on assumptions. The assumption were making is that there’s no way to make money if the markets are only doing two, three, 4 percent a year. Now, how many of you would be able to survive with an asset allocation pie chart drawing 4 percent a year, when you’re making 4 percent at best, and you factor in that the markets crash every 7 to 8 years.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:09:17]

MIKE: And we’re due for a market crash, and a lot of people are saying this December may be the time. That’s a tough pill to swallow. But it doesn’t have to be that way. We’re gonna end the show and we’re gonna begin the show with the principles that govern proper retirement planning. Should you follow these principles, this fear is not something that would face your reality. Let me explain.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:09:42]

MIKE: The first principle that governs proper retirement planning is draw income from principle guaranteed sources. So, for let’s say right now all of you listening right now. Let’s say that today was your retirement date and you had mapped out that all your income sources for the next 10, 15, 20 years are coming from principle guaranteed sources. Do you care if the markets crash in December knowing that if they crash, you don’t lose a dime? The answer is no. You don’t have to care. Doesn’t matter.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:10:17]

MIKE: You sail through the market crashes unaffected. This is called the avoidance of sequence of return risk, and it is critical to every retirement plan. There are three essential retirement plans anyone can have. The first one is a pie chart, where everything’s at risk, and you’re just hoping that the law of averages will be in your favor. Benefits: it has the highest upside potential. Detriments: it has the highest low side potential. It is all that risk. If that’s a risk you want to take, that is fine.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:10:52]

MIKE: The research suggests in retirement that the risk is greater than the benefit. The other extreme, and we see a lot of these people that come in, and if you’re one of them, that’s okay. Please don’t feel upset. Some people just can’t bear the risk and they put all of their assets into an income rider, or an income annuity. I’m not saying that they are good or bad. All I’m suggesting is that based on our data, and we have a database of around 14,000 FIA’s or income annuities to research.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:11:28]

MIKE: And according to our data the actual average return on investment year over year is about 1.8 to 2 percent return. Well that’s fantastic if the markets are gonna do 1.8 to 2 percent, but you’re locked in. There’s no flexibility. It is a self-made pension for life. You’re paying an insurance company to get your own money back. Benefits: Okay. You have guaranteed income until you die. The detriments: No flexibility. If inflation skyrockets, if something drastically changes in your life, you’ve taken basically a roller to this dough and spread it really thin, and you’re hoping that you’re get through it all.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:12:07]

MIKE: Kind of a weird analogy. But, when all is said and done, you’re stuck. You’ve triggered it. It’s on. You have income for life at that rate. Period. The third option is that you can take your assets and use deliberate intentions on how you’re organizing it. Structure the next 10, 15, or 20 years to, like the first principle suggests, draw income from principle guaranteed sources, and then follow the second principle, which is diversify by purpose, not just by risk.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:12:44]

MIKE: You’ve done that by drawing income from the next 20 years of principle guaranteed sources. Great. Principle one, principle two, checked. For all of you who want risk, frankly I don’t care if you wanna buy and hold, use robo-investing. Use absolute return models or do value investing or dividend investing or… The list goes on. You don’t need to touch those assets for 20 years. So if the markets do turn over, you don’t need to touch it. You’ll avoid sequence of return risk. And it just can ride itself out. Plain and simple.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:13:20]

MIKE: You’re also putting assets aside for emergencies. Cameron, we call this emergency cash. Can you just talk a little bit about the importance of this? I don’t think people give enough merit to the importance of setting funds aside for emergencies.

CAMERON: Yeah, first of all, this is not cash that’s supposed to make you a great return. We purposely have it, at best, in a money market account. Because it is fully liquid, full accessible. There’s been so many times where clients have called in said, “Hey, you know, my car transmission went out.”

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:13:55]

CAMERON: Or, you know, “I have this emergency operation.” Without compromising the integrity of your safer distribution plan, we can safely pull from emergency cash that can help get you back to even keel. I can’t even count the numbers of times where this seemingly boring, you know, pure cash account, has come in to rescue the day on these income plans. Because it preserves the assets that you need to grow your plan instead of compromising them by taking from those early, you simply pull from the emergency cash.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:14:30]

MIKE: Oh, yeah. Car goes out. Okay? Pull your emergency cash. Roof needs to be replaced. That’s an expensive one.

CAMERON: That’s a common one, too.

MIKE: Pull your emergency cash. You have a sudden trip to the hospital and need some… And that does happen to our older clientele. Sudden stroke. Heart attack. Whatever it may be. You’ve got your emergency cash aside. You’re not destroying your retirement. That’s why the second principle’s so important. The third principle, use a distribution plan.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:15:01]

MIKE: Now, I know I said a pie chart is one of the options people have. Based on our research, it is also the riskier plan. Principles don’t change whether you want to ignore them or not. That’s fine. That’s up to you. But the third principle, use a distribution plan, not a pie chart. The distribution plan lays out the terrain like a map that you can calculate or plan your entire retirement. You can see your tax burdens ahead. We’ll talk about that in a moment. You can see your income. You can build in a cost-of-living adjustment throughout all of your retirement. It gives you the tools to be able to plan a retirement that you would hope for.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:15:40]

MIKE: If you wanna see this is person, it’s a 2000 dollar effort on our part. 2000 dollar value. We will give it to you right now at no cost to you. There’s two ways you can take me up on this offer. All I ask, rules of engagement, is you’re 55 years or older. And you have at least 250,000 dollars of assets saved up for retirement. Why do I have that? Because if you’re younger than 55 years old, we may not be able to provide the value that you need. Unless you’re currently retired and just younger. In which case, we’ll make an exception.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:16:13]

MIKE: If you don’t have at least 250,000 of assets saved up for retirement, it’s not that we’re trying to push you away because we only want big accounts. It is that we provide value for those who have that amount of assets or more. When you come in, here’s what happens. When you come in, you come into one of our beautiful offices. San Francisco, California. Kirkland, Washington. Seattle, Washington. Renton, Washington. Salt Lake City, Utah. Lehi, Utah. You come in. Our office manager will greet you. Pour you a nice cup of coffee, hot chocolate, whatever your preference is.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:16:46]

MIKE: We have wonderful, beautiful views and comfortable offices, to where you can come in and visit with us and go over the specific details so you can enjoy a safer retirement. That first visit, we wanna talk about the markets as they are, and we wanna cross reference it with your portfolio as it’s currently done. That’s up to you and your comfort level. You don’t have to do that, but it’s more effective if we can do that. The second part is, we wanna talk about the pitfalls that most retirees face. And the third part is we wanna present what a safer distribution plan or a safer retirement looks like for you, by using these principles that govern proper retirement planning.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:17:22]

MIKE: If you wanna take me up on that 2000 dollar offer at no cost to you right now, call right now, 833-707-3030. That’s 833-707-3030 or you can go to deckerretirementplanning.com and click the button at the bottom. Get started. Right there, let us know what you wanna talk about. It’s at no cost to you.  833-707-3030 or go to deckerretirementplanning.com and at the bottom, click “Get Started.” I know that was a bit of a rant, guys. Are you ready to dive into the stories, the content, taxes, and so much more?

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:17:57]

JOSH: Yeah, let’s get to it.

MIKE: What I wanna talk about first. And I believe this is…We talked about a safer distribution plan, which is essentially a spreadsheet that maps out your income for life. What’s interesting is the tax implications or the tax burdens that this can show without-or it can show that the pie chart just can’t seem to show. We had a situation where a client came in and said, “Can you help me understand the tax implications of having 100 percent of my retirement in pre-tax funds?”

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:18:37]

MIKE: For many of you, this may be a similar situation. Most of your retirement assets are saved up in your 401k. Maybe all of your assets are non-qualified assets. Wherever you are on the scale, and the metrics, what we wanna talk about right now is, how can you see the tax implications of your retirement? Cameron, can you talk a little bit about this? Because you’re the one that deals mostly with our clients and helps them see the tax implications.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:19:08]

MIKE: Tax minimization strategies as they’re going through retirement.

CAMERON: Yeah, you know. A lot of clients will come in and they have this great nest egg, like you said. And, you know, a lot of education around retirement saving for the last few decades has been, “Put into your company 401k.” You know, “Make sure you’re putting into IRAs,” and, you know, from an accountant’s standpoint, it’s usually, “Go pre-tax. Go pre-tax.” And so many clients are in that situation.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:19:41]

MIKE: Which can make sense. You can make sure you’re not gonna jump a tax bracket. You’re putting funds away. I mean, there is a huge benefit to that.

CAMERON: Oh yeah. Completely. We’re not ragging on accountants at all. You know, we recommend our clients work with accountants and other financial…

MIKE: Accumulation investors.

CAMERON: Yeah, yeah, correct. Sorry, that word slipped my brain there. Anyway, back to what we were talking about. So say you do come into retirement with 100 percent pre-tax. A lot of clients may not realize that other streams of income they have, it could be pensions, it could be Social Security for many, are typically pre-tax as well.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:20:20]

CAMERON: There’s kind of an idea out there that, “Once I get to retirement, my taxes will go way down.” And for some clients, that’s true, but for many, especially after seeing a safer distribution plan where they can take more income typically than they thought, their tax situation becomes a little more complicated. I mean, this particular client, among many, was kind of blown away by, “I’m gonna have to pay this much in taxes over retirement, but wow, thank goodness I have this safer distribution plan, or I probably would have overspent.”

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:20:55]

CAMERON: “And I probably would have, you know, taken too much and ended up paying so much more in taxes and eating away at my nest egg in the early years.”

JOSH: Yeah.

MIKE: There’s a couple points here I want to illustrate when it comes to the safer distribution plan or even a safer tax plan. Those are two words. Same spreadsheet, different goals. If all of your assets are qualified, that means they’re all in a 401k or an IRA, and that’s really where you’re gonna take your income. Without careful, deliberate planning, you’re essentially taking your paycheck and paying the same amount of taxes as there are.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:21:33]

MIKE: Some clients don’t want to take all the income that they need. They wanna pass it on to the beneficiaries. Okay, that’s one conversation. The next is, “I wanna spend everything, but I don’t wanna pay all the taxes that are there.” Okay. So, right now, the client is coming to us, not through their fault, they’re not the financial professional. But, they’ve essentially painted themselves into a corner from a tax situation. And that’s where we come in. Here are a few things that we wanna be able to address right away. First off, what’s your age? If you’re 70 years old, okay, we’re talking about RMDs right away.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:22:06]

MIKE: If you’re 55, 60 years old, we’ve got 10 to 15 years to adjust and deliberately plan your tax situation so that you’re not going to accidentally bump yourself into the highest tax bracket. I’ll never forget, a few years ago, we had a client that came in, wanted to plan with us. 74 years old. Had 13 million dollars. Most of it was qualified. Their RMDs put him into an extremely high tax bracket right away. That’s not the situation that you want.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:22:39]

MIKE: Now, okay, granted. For all of you who have a million dollars, 500,000 or so, I don’t want to be insensitive to the fact. Oh I’d love to have 13 million dollars. Okay? But what I am saying is, if you have 500,000 dollars, if you have a million dollars, if you have two million dollars, whatever it is that you have, the same tax burden can get you, unless you can plan ahead of time. Let me explain. If you come in and you’re 55 to 60 years old, great. 55 to 60 years old, we can coordinate the efforts before you’re 59 and a half or 60 years old to where you can be moving around IRA to IRA assets.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:23:21]

MIKE: When I say moving around IRA assets, one of the most effective strategies we offer is the IRA to Roth conversion. There’s many ways to do that. Not the contribution, but the conversion. It’s a backdoor Roth conversion. It’s simple to do if you have the resources and the calculators to do so. But, over from the ages of 60 to 70, if we are able to slowly hack away from your IRA assets and put them into a Roth, they’re growing tax-free. They’ll distribute tax-free and they’ll pass to your beneficiaries tax-free. That’s a huge savings that we can do up front.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:23:54]

MIKE: If you’re still working, great. If you’re retired, we can do these conversions while you’re also taking income. It’s just simple storytelling of what is your narrative. The other aspect that’s just so critical when it comes to understanding tax implications or tax minimizations. And we’re not CPAs, is understanding the vehicles or the instruments that are available to you and how you can use them.  There’s something that we have that’s proprietary. We don’t talk about it on the radio, at least on the show.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:24:27]

MIKE: We have classes about it. We jokingly call it “tax vacuum,” because it’s a way that we’re able to take out a lot of the tax burden so you’re taking more gross income than you would have. We don’t have time to dive into it today. We’re not even gonna talk about it over the radio. Frankly, because this is such a unique situation, case by case. But it is something that has just been revolutionary for our clients. We’ve saved some of our clients seven figures. You heard me right.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:25:01]

MIKE: Seven figures on their tax minimization strategies. From age 50 to 60, you have the prep. From 60 to 70, you’ve got the implementation of the minimization strategies. And from 70 on, it’s at that point, tax mitigation. Not tax mitigation. That’s the wrong word.

CAMERON: You know, a lot of it at that age is tying any outstanding IRA assets into Required Minimum Distributions as part of your income plan. On your safer distribution plan, instead of having to take massive year-end withdrawals and saying, “Well, now what do I do with this?”

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:25:42]

CAMERON: Each distribution plan is tailor-fit and customed to where we can draw that as monthly income throughout the year. And it feels more like when you were in your 60s. It just has a little bit more preparation on our end. And having someone in your corner to help calculate and determine which accounts your RMD should come from. It’s really a fun conversation. I think most clients are nervous the first year. “Oh, we’ve really gotta get this right.” You know, I get some nervous calls. And then as they see that we’ve already factored this into their income safer distribution plan, and then we show them.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:26:20]

CAMERON: This is exactly down to the penny what you need to take as income this year from these IRA accounts, and then you know, here’s how we’re gonna do it. Here’s some options. And so clients have really appreciated that value that Decker Retirement can offer.

MIKE: Yeah. Now let’s talk about the RMDs real quick. This is a fun one. The debate that seems to be happening online between financial professionals and every which way, is “Do you convert 100 percent of your IRA assets to Roth or not?” What’s…? Go ahead, Josh.

JOSH: Well, it’s gotta be different for every person. You know, I don’t feel like it’s a…Kind of like you said last week.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:26:59]

JOSH: You don’t deal in absolutes.

MIKE: New Star Wars. What’s it called? I can’t even say it.

JOSH: The Mandalorian?

MIKE: Mandalorian comes out on Disney Plus. Another Star Wars movie comes out. I mean, there’s a lot of Star Wars here, but the Sith never deals in absolutes. Right?

JOSH: Right.

MIKE: Regardless of your percentage of IRA to Roth, to non-qualified assets. If you have 80 percent of your assets in IRA qualified assets. If you have 10 percent in IRA assets, I don’t care. I have never once seen the number suggest that you should convert 100 percent of your assets or none of your assets.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:27:40]

MIKE: I have never seen that. And the reason why, is-just hear me out. Why? Now, that may seem a little silly, and a lot of you are going, “Well, that’s a stupid rebuttal.” Why would you convert 100 percent or none of it, zero or 100, when you can take RMDs and calculate it specifically to be a part of your income and stay in the smallest tax bracket? Why wouldn’t you do that? Why wouldn’t you balance your investments as opposed to doing absolute one side or the other?

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:28:13]

MIKE: It makes no sense. I honestly believe it’s because most people haven’t done the calculations, because they don’t honor the third principle of retirement planning, and use a distribution plan. They’re doing asset allocation. They’re doing the pie chart. They’re ignoring principle one. And they’re just kind of going through it from a CPA point of view, which is historical, not future-prediction. It’s because there’s a lack of tools. That’s why we develop them. That’s why I wrote those algorithms years ago. Is because people need to have the blueprint, the map, whatever you wanna call it. The tool to have the foresight to see what they should be doing.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:28:51]

MIKE: And that’s what we do from age 60 to 70. If any of this tax conversation seems of interest to you, and some of you want to learn more about it, then I would encourage you to call us at 833-707-3030. Come in for a complimentary visit. We’ll talk about your tax situation. You can also go to deckerretirementplanning.com and click on the bottom to get started. And down there you can put, as one of the options, a safer tax plan so we know you’re coming in to talk about taxes. You can also do the full Decker Review. Up to you. Must be 55 or older and have at least 250,000 of assets to be able to come in. That’s all that we ask.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:29:30]

MIKE: And it will be at no cost to you. But when it comes down to it, folks. There’s a lot more information you can pull from your finances that you may not realize you could even do. We’re a math-based, principle-based firm and we built the calculators. We built the spreadsheets. We built the algorithms. Wrote ‘em for you. So you can have more clarity. It’s kind of fun why we called the slogan of the show “Get the Transparency that You Deserve.” It’s because we want you to know, eyes wide open, what to expect.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:30:00]

MIKE: Retirement’s a beautiful thing. And you should be able to enjoy it how you want to. 833-707-3030. That’s 833-707-3030 or you can go to deckerretirementplanning.com and click “Get Started” on the bottom today. Let’s keep talking about taxes, shall we? I’m not done with the topic. Are you guys done?

CAMERON: No way, let’s keep going.

MIKE: Yeah, that’s a silly thing isn’t it? Let’s wrap up the tax conversation with just the due diligence. Cameron, RMDs, 60-day rollovers.

 

RR S3 E19 RETIREMENT TAXES AND HOW TO HELP CONTROL THEM:     [00:30:36]

MIKE: Josh, I think you had a couple of situations actually on the 60-day rollover where a client may have gotten bad information from Google. Can you just talk about how it all works? The different ins and outs of handling an IRA asset?

JOSH: Yeah, I mean, for this particular…We had a client that, I don’t know if they looked it up on Google or if they had an advisor give ‘em some bad information. But somewhere along the lines, they were told that they could take a loan against their IRA. And whoever told ‘em that was referring to a 60-day rollover.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:31:09]

JOSH: And, basically, a 60-day rollover, it applies to qualified assets where you can take the funds out of your IRA and then deposit it into another IRA within 60 days. Now, there’s a couple of caveats there.The purpose of it is so that you can move your IRA assets, not so you can take a loan against them. And then the second piece there is it definitely has to be within 60 days. There’s no exceptions to that rule. If it’s not done in 60 days, then it just counts as a distribution against you. Which is actually what happened with this client, is they thought they were able to take a loan, hold on to that money or use it for a couple months, and then pay it back to their IRA within a few months.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:31:49]

JOSH: And they had ended up passing that 60 day mark. Luckily, it wasn’t a huge amount, and they were able to be just fine, but it can cause a little bit of a headache. And it just kind of goes to show, where do you get your information from? We always say to work with a fiduciary. I remember I had a finance professor who said…He had a doctor of financial planning actually, and he said he always gets a kick out of people that say, “Oh, well I’m working with my uncle. He’s a finance expert.”

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:32:22]

JOSH: And he said, “Okay, well, what does that mean? Does that mean that he went to school for eight years to become a finance expert? Does that mean he passed some licensing exam? What does it mean that he’s a finance expert?” And in my mind, it’s the people that have the tools, that have knowledge. And I feel like that’s what we have here, is we’ve got the distribution tools, we’ve got the knowledge. We have the experience behind us to be able to show that we are experts in our field. That we’re able to help people walk through this.

MIKE: Sure. We specialize in what we do.

JOSH: Yeah, we specialize in what we do here.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:32:53]

JOSH: And I think that that’s kind of the caveat there is there is so much information out there, and a lot of it comes from, you know, your next-door neighbors, rather than from a professional or from somebody who is a specialist in their field.

MIKE: Well, many claim, few actually are. For all you listening right now, here are the three checks to find out if you’re working with a fiduciary. Must be Series 65 licensed. Must work for an RIA, Registered Investment Advisory Firm. That means it’s fee-based only. And must be independent. No one’s telling them what they can or can’t sell. They don’t check off all three of these, then you’re likely in a situation like Tony Robbins was.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:33:31]

MIKE: Where they’re claiming to be a fiduciary, but they’re not. And, according to Tony Robbin’s metrics, when you get rid of the smoke and mirrors and dual-hat disclosures and all the nonsense that clouds this industry, only 1.6 percent of all financial professionals are actually fiduciaries.

CAMERON: Well, and to go back to Josh’s point, just because in retirement, they’re not the best fit for you anymore, doesn’t mean they couldn’t’ have been a good fit in your accumulation phase. In your example you said, so-and-so said “My uncle is a financial expert.”

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:34:05]

CAMERON: But, maybe he was an expert at the accumulation side, and once you get into retirement, it’s a different game. You know, you want someone who specializes in retirement, because an accumulator will probably not give anywhere near the same advice as somebody who only does retirement as a purebred fiduciary like Decker Retirement.

JOSH: Right, definitely. And I didn’t mean to say. Everybody has an uncle who might be really good at finances, but what I was really getting at is, people a lot of times will choose their advisor based off of familial relationships rather than information.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:34:41]

MIKE: Have you ever heard Dave Ramsey talk about that? It’s funny.

JOSH: About choosing your advisor based on family?

MIKE: Yeah.

CAMERON: Maybe it’s so-and-so from your church or…

MIKE: Oh, he hates it. He says stop working with someone that you like. Work with someone that’s gonna actually do their job.

JOSH: Yeah, definitely.

MIKE: Amen, Dave.

JOSH: We had another client, you sparked a little bit of memory for me. She was using a friend as an advisor, and her friend said, basically if you move your money out of these accounts, then we’re no longer friends.

CAMERON: That sounds like an abusive relationship.

JOSH: Yeah.

CAMERON: Jeez.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:35:23]

MIKE: So, let’s continue on this train of the dos and don’ts and little intricacies. Wouldn’t it be nice if the financial world was so simple that it’s easy to navigate? I mean, really. I know that would have me out of a job, but there are so many complicated moving parts to finance that just seem to overwhelm a lot of people. And some people, it doesn’t overwhelm them, it’s just frustrating. Let’s talk about beneficiary IRAs. Bennie IRAs, another taxable situation. Gotta handle them with care.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:35:51]

MIKE: They can be a blessing. They can be a big headache. Josh, you had a situation with a client actually discussing what can be done about the beneficiary IRA recently, right?

JOSH: Yeah. This was a client that received-she inherited a beneficiary IRA. But the estate that came from, they did it a little bit, I’ll say creatively. They put the beneficiary IRA into an estate and then named her the executor of the estate. Which can be a good idea depending on the situation.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:36:26]

JOSH: But, in this case, it caused a little bit of headache because the firm that the funds were held at didn’t have her as an existing client. She didn’t have any IRAs over there or any other accounts over there. They created this account and said, “Hey, by the way, you have this account over here.” But they wouldn’t tell her any information about the account. She would call in and say, “Hey, I need to know a little bit about this account that I have over there,” and they’d say, “Well, what’s your Social Security Number?”

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:36:51]

JOSH: And she would give it and they’d say, “That doesn’t match the account.” Because the account had the estate’s social security number, or tax ID number. And so she got stuck in this loop of going back and forth with this brokerage firm. And it took us about 10 months to get those funds moved over, because it was just all this back and forth of…They would say, “Yes, you’ve got this money over here. You need to do something with it.” And then she would try to do something and they’d say, “Oh, well, you can’t touch this money, ‘cause the tax ID doesn’t match.”

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:37:20]

JOSH: And she had to go back through several channels to the original lawyer that set up the estate to get the tax ID number. And so it was just a little bit of a headache for her, and now that it’s all taken care of, I’m sure it’s a blessing to have those assets. But it’s difficult to try to navigate those waters without somebody that can walk with you through the process and help you figure out what to do next. You know, somebody says, “You can’t touch this.” Well, they really mean you have to do something else before you touch this. And that’s kind of where we can in and help you navigate what to do next.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:37:53]

CAMERON: Yeah, and another benefit to that is, oftentimes those beneficiary IRAs, once we are able to help the clients get them moved over, they tie in perfectly with the client’s income plan. To where, you know, Mom’s inheritance that she left you is a big blessing, because it provides income for, you know, a couple years or some portion of your distribution plan. And every time, you know, you collect that check you can think, “Wow. That’s Mom smiling down. You know, what a blessing.” As opposed to, “Well, I have an account somewhere, you know. I don’t really know to get at it.”

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:38:30]

CAMERON: And so it’s really nice. A lot of these clients love, you know, seeing that able to be put to good use in their own retirement.

MIKE: Well, if you don’t take the distributions from your beneficiary IRA, you’re penalized.

CAMERON: Yeah, correct. It works like a regular RMD at that point, so it becomes a big curse with the penalty.

MIKE: It’s a severe curse. Unless you follow the second principle that governs proper retirement planning. Diversify by purpose. A beneficiary IRA is an income stream, unless you just-and I’m not suggesting this-but unless you just liquidate it all at once.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:39:06]

MIKE: That’s a big tax hit. That’s why I’m not suggesting that. All I’m saying is, it’s an income stream that you can calculate into your plan. And then that situation becomes a blessing. Not necessarily a curse. So, I mean, you can pull it out and you can…Yeah. Put it into an account that you have access to.

JOSH: Yeah, it’s all about the strategy. Just using that distribution plan. And once that’s in place, there’s all kinds of hurdles that you can get over. But, having that distribution plan in place gives that money that purpose, to know what to do with it.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:39:38]

MIKE: Now let’s talk about, the beneficiaries typically come from someone who’s passed. What about your situation? What if you feel like your spouse, or maybe you, will be passing in the near future. How does that affect your finances? How does that affect your legacy planning? How does that affect your income? There are so many aspects there, it’s almost like one of those topics we don’t want to talk about. But we need to talk about. Cameron, you had a recent situation for a client who was on this very topic.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:40:13]

MIKE: Can you talk a little bit about that conversation? What had happened?

CAMERON: Yeah, you know, it’s an interesting aspect with our industry. That is the endgame, you know, of our clients, of all of us, is we’re all gonna pass one day. And, you know, when we get to meet our new clients, in the Enforce side, we’re so excited to work with them. You start to get to know them, and it usually, you know, fosters years of a wonderful relationship, with the expectation we’re gonna help ‘em for decades.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:40:42]

CAMERON: Now, you know, once in a while, that is just not how life works. We had a client, you know, we had just finished the planning process with them. They were all fired up, excited, and the conversation became, “My husband has a terminal illness. How does this affect our financial situation?” And this was a blow to everyone involved. It was a big shock, and within a couple months, that client did pass away. I think the, kind of, the takeaway here, for this client, is she was able to not have to worry about the financial aspect of this grieving process.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:41:26]

CAMERON: Our department was able to help facilitate updating her save-for-distribution plan. Updating beneficiaries. Getting things titled and transferred in all of the correct ways. So that she didn’t have to. You know, a lot of times our clients will come over and their accounts will be a million different places. You know, they’ve had different jobs throughout their whole working life. They’ve been, you know, and so if a spouse were to suddenly pass in that previous situation, it would be a headache for years to come of “Where is his or her money?”

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:42:06]

CAMERON: Where, “That is now mine, but I’ve never heard of it.” And so it’s kind of simplifying your life by bringing things together into one distribution plan where you know where everything is. It can just really ease, at least in part, an otherwise very difficult time.

MIKE: Well, I’ll never forget a client we had. She raised a family, hadn’t really worked much, never really dealt with the finances. Just salt of earth, wonderful woman. Her husband worked in the business as sales department of Staples. Had a wonderful career. Just a wonderful gentleman.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:42:46]

MIKE: I can’t say enough good things about him. Really loved this couple. When he passed, she just had no idea what to do next. Was absolutely crippled by…And it wasn’t a surprise of a passing. He was getting up there, and it was very much expected. After one visit, we just reviewed what we had already gone through with her safer distribution plan. And the anxiety just melted away. Sure, she had to deal with the funeral and sure, she had to deal with some very difficult transitions.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:43:26]

MIKE: But, when it came down to her finances, livelihood, paying the bills, and all those aspects, it just took a week or two. We transitioned what needed to happen in this situation. And she was able to transition into her next chapter of life, and then she’s been doing very well ever since. Spending time with friends. She got a little pig, actually, as a pet to keep her company.

CAMERON: That’s so fun.

MIKE: Just the cutest little teacup pig. And then has a cat as well. They both get along. Transitions are tough.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:44:05]

MIKE: We don’t need to make it more difficult by not understanding the finances. In her situation, the income never ceased. It just kept going. The bills were getting paid. Everything was just fine. What’s interesting is when people come in for their first introductory visit, and they want to talk with us. What’s typically happening is the person who handles the finances has the most skepticism because, why fix what’s not broken?

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:44:34]

MIKE: The perception is a 10-year bull market and it’s gonna keep happening. We’ve already talked about how that’s not. And we could be in 2 or 3 percent earnings a year for the next 10 years or so on average. That’s pretty tough to retire on. Where was I going with that? The person who’s typically the one dragging their significant other to our visits, is the one who doesn’t understand or believe in their current setup. And thinks it’s just too risky.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:45:05]

MIKE: They wanna be able to understand what happens should their significant other pass. They want to make sure that both teams are on the same page. They want to make sure that they understand, frankly, how to run the household should the worst happen. And that is an appropriate request. If you’re like that, and you’re listening right now, I do wanna invite you in. Get the ducks in a row. Make sure that all your eggs are not in one basket. That you’re diversified by purpose. Make sure you’re drawing income from principle guaranteed sources. And make sure you have an income plan so you can see down to the [INAUDIBLE] what to expect with a cost-of-living adjustment for as long as you live.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:45:45]

MIKE: Those are not unrealistic requests. And they fulfill the principles that govern proper retirement planning. That’s something you wanna talk about. And you wanna understand. “Okay, should the worst happen, what does it look like for me?” We can have that conversation for you right now. Call 833-707-3030. That’s 833-707-3030. Must be 55 or older and have at least 250,000 of assets saved up for retirement. If we invite you in at no cost to you for this 2000 dollar introductory visit value at no cost to you. When you come into one of our offices. Or we can do it virtually over the phone.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:46:19]

MIKE: We’re happy to have that conversation with you, so you can see, eyes wide open, what to expect. And alleviate the anxiety. The unknown of what will happen and how things will change. We can illustrate that for you. We hope it won’t be soon. But you never know when it happens. 833-707-3030 or go to deckerretirementplanning.com. At the very bottom of the page, you can click “Get Started.” We’re happy to have that conversation for you at no cost to you. And these are very, very productive conversations. We had another client, our dentist from Washington. I know we’ve talked about him before.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:46:54]

MIKE: Eight months or so after we finished his plan and funded it, had a stroke. Incapacitated, could not handle the finances. His wife was able to sail through the financial strain of the situation. Emotionally, it was difficult. She was taking care of him as he was recovering. And then thank goodness, he’s had a full recovery and we’re very grateful for that. But the family finances were not affected. We helped them through that, and that’s the beauty of when you’re working with a fiduciary.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:47:26]

MIKE: Somebody’s gonna walk every step of the way throughout your retirement. And especially with a company that’s set up to have longevity. A lot of shops have one or two guys or girls. When they retire, it’s kind of like, “Okay.” You gotta find a new person. But that doesn’t seem like a good source. We’ve got the wise generation at our firm. We’ve got the younger generation at the firm. We all operate off of the same principles, the same math-based approach. And so whether you’re gonna retire and stay alive for the 10 years, 30 years, or 50 years, the cool part about it is, we can keep the same plan moving ahead.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:48:04]

MIKE: With the flexibility of whatever life may throw at you. 833-707-3030. Call right now or go to deckerretirementplanning.com, to take us up on that offer. We’ve only got 10 minutes left, guys. Had a lot of content here. Lot of heartfelt discussion.

JOSH: Yeah, it’s been a really great show.

MIKE: With taxes, if you’re in Utah right now. I’m just gonna open up. You can go to our website, deckerretirementplanning.com, Safer Retirement Education Events. It’s at the top of a menu bar. We have a special one-night only class that we’re gonna be doing, specifically on taxes for high net-worth individuals.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:48:39]

MIKE: It’s at the University of Utah. Very excited about it. Details. It’s November 12. Details are on our website. If you’d like to attend, it’s a class at no cost to you to educate you on tax minimization strategies. For those who are okay with risk, and those who hate risk. Let’s not be reactive to the tax burden, let’s be proactive. And minimize our taxes before tax rates go up, or whatever may happen. The future’s unknown. Or, you can be proactive in preparing for whatever may come.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:49:09]

MIKE: I wanna have a quick aside. It’s the holiday season coming up here. And, I typically remind our listeners of this fun game you can do when the kids and grandkids come over to understand, “Okay. What do they really want?” It’s called the sticky-note game, and whether you’re gonna do this over Thanksgiving, Christmas, Hanukkah, Kwanzaa or just New Year’s or generally speaking, whatever. People are gonna come over.  The holiday seasons tend to bring people over and it’s not a sad conversation to say, “Hey, one day, we’re gonna pass.” Everyone knows that.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:49:44]

MIKE: That’s just, we haven’t found the Fountain of Youth. There’s no pill that creates immortality. So, to have the conversation to discover what they really want is a fun one. Sticky-note game, everyone gets a different color. Each family is assigned to a different color. And they can put a sticky note on what they would view as valuable. And it’s very interesting, you know. Your casserole dish that you thought was just worthless is really precious to one of your kids. Or let’s say your model airplane collection, or whatever it may be.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:50:21]

MIKE: What is of value to your kids, you will not realize. So we say, “All right everyone. We won’t be around forever. We’d like to play the sticky-note game. So everyone, here’s your sticky notes. Put a sticky note on anything and everything. If it’s breakable, just put it next to it. Anything and everything that you would perceive as something that you’d want. The Steinway. You could even put it on the house if you want. You can have a little designated area if you want the house. You can do that.” I’m not saying they’re gonna give them the house. But they would have the option to buy the house instead of just giving up to auction or having lawyers have to execute estate plans that maybe weren’t fully thought through.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:51:00]

MIKE: And you can gather all this information, write it down, and it’s just a fun time. Very reminiscing as well. When we did it, I was the only one that put a sticky note, so to speak, on my grandfather’s ship. Not a real ship.  t was a model ship from…

CAMERON: Pretty generous grandpa if it was a real one. [OVERLAP] Sailboat there.

MIKE: Yeah, it was a beautiful ship. A replica of one of the 1600s ships that they were doing. I mean, Christopher Columbus, kind of looking ship. Beautiful. He spent a long time building it, and it’s just delicate. Just beautiful. Built it, I mean, really.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:51:38]

MIKE: He was a Boeing engineer, so the craftsmanship is just remarkable. And it’s at my desk in my office today. No one even thought anyone would care about the ship. They thought, “Oh, we’ll just give it away to some kid or whatever. No one really values it at all.” I valued it. My brother valued his model airplanes. Took a bunch of those. The beautiful part of, you know. Oh, I’ve got a couple of cups too. That were hand-blown that were purchased at an art fair. Years ago, Bellevue Art Fair. Fun place. My wife and I, we have juice out of them. When we have our juicer and Bull, we’ll take a drink every morning from those cups. And they’re just so fun.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:52:11]

MIKE: It’s those special moments that we wanna preserve. Its memories that you can leave lasting effects for your kids and grandkids and for future generations. And it’s a fun activity for the holidays. I encourage you to do it. And then tell your attorney about what they want, so he can make sure that we’re not gonna split a Steinway three ways, which means you have to sell it and give them the cash. Those are very hard situations. We don’t wanna put your kids in that corner. Relationships can be ruined over situations like that.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:52:41]

MIKE: With the five minutes or so left, gentlemen, shall we review the principles that govern proper retirement planning?

CAMERON: Yeah, let’s go through ‘em.

MIKE: Good roundup? The first principle is only draw income from principle guaranteed sources. The reason why is you want to avoid sequence of return risk.

JOSH: Yeah, and that’s really the biggest part of our distribution plan. And what helps us to be able to sail through some of the market downturns and through hurdles that people have in retirement, is having that distribution plan coming from principle guaranteed so their income is mostly unaffected for several years in a row.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:53:29]

JOSH: No matter what happens. They just sail through without any problems.

MIKE: Yeah.

CAMERON: And that leads perfectly into our second principle, diversify by purpose, not just by risk. You may have a nice pie chart for your accumulation phase, but don’t kid yourself, most of that is at risk. And so once you go into the distribution phase of your life, it makes more sense to have a distribution plan, not a pie chart guesser.

MIKE: Oh yeah. Which is the principle three.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:53:57]

MIKE: Use a distribution plan, not a pie chart. And the beautiful part here, if we can illustrate the second principle and third principle, is let’s understand every investment with a triangle. Every investment has two traits of the triangle. I’ll say that differently. There are three traits that every investment can have. There’s growth, there’s principle protection, and there’s liquidity. Every investment can only take two of those traits. And so a lot of practices will pick two and then rally around those two traits for the entire plan. It doesn’t make sense.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:54:28]

MIKE: You can have your cake and eat it too when you diversify by purpose and by risk. You do that by having some principle guaranteed liquid accounts. That’s your emergency cash. You have some growth and principle guaranteed accounts. That’s where you’re drawing your income. Principle guaranteed source. And you have some liquidity and growth. That’s your risk bucket, or your risk accounts that you don’t need to touch for 20 years or more. But you can set yourself up for success. That you can capture those…

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:54:59]

MIKE: Have the probability of having a higher return on your investment with those accounts. And if the markets do go down, you can ride it out, because you’re not touching it for 20 years. Just like you experience in your accumulation years. When all is said and done, though, having a math-based, principle-based approach is just critical. It really is. And when it comes down to the transparency, let’s not put a square peg in a round hole. Let’s make sure that it’s authentically your plan. That we can account for all the different nuances that happen.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:55:33]

MIKE: If you wanna sail for a month right after retirement, which we had a client recently do. That was fun. He said, “All right, we’re retired.” We funded the plan, and then they left for a month. Didn’t even hear from them until they got back. What a fun time. We have an RV group that we work with as well. We handle their different retirement plans, and they just spend their time going around the nation on their RV. I think even in Canada, too.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:56:00]

MIKE: We’ve gone to Banff and Whistler. Which is fun. This is what retirement’s supposed to be. It’s a wonderful time and when it all comes down to it, if you wanna have these conversations with a purebred fiduciary who can help line up your narrative, your retirement story. With a math-based, principle-based approach. It’s a 2000 dollar offer we’re giving away right now at no cost to you. Must be 55 years or older and have at least 300 or 250,000 of assets saved up for retirement. You can come in at no cost to you.  833-707-3030.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:56:34]

MIKE: That’s 833-707-3030 or go to deckerretirementplanning.com. And on there, you can click on the bottom, “Get Started.” And let us know what you wanna talk about. A full Decker Review is fine. If you wanna get a Safer Distribution Plan, we can focus just on that. If you wanna talk about tax minimization strategies, you can click on that, or a myriad of other options. We are here for you. Cameron, Josh, thanks for joining us in the show today.

JOSH: Thanks, Mike.

CAMERON: It’s been a great show. Thanks, Mike. Thanks everyone who’s listening.

MIKE: Yeah. Now in closing here I wanna remind everyone, you can subscribe to our newsletter, which has great market commentary, safer market commentary is what we call it.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:57:09]

MIKE: As well as other retirement related articles, nutrition, health, vacation, a number of other things. Subscribe, it comes out every Wednesday or Thursday. Also, you can go to our education source for articles. We’ve got two e-books in particular I want to highlight. We have the e-book “Principles that Govern Proper Retirement Planning,” so you can study it and cross-reference your current plan. See if you’re checking all the boxes or not. And then the other e-book, “Social Security.” We didn’t talk about that today, but Social Security is very misunderstood in my opinion, on how it affects your plan.

 

RR S3 E19 RETIREMENT TAXES CONTROL THEM     [00:57:45]

MIKE: If you file too early, your income is hurting, but if you file too late, you’re hurting your estate. Check it all out at deckerretirementplanning.com. We’re gonna sign off today, but thank you for listening. We’ll be here, same time, same place, next week. Thanks for tuning in everyone.

 

Decker Retirement Planning Inc. is a registered investment advisor in the state of Washington. Our investment advisors may not transact business in states unless appropriately registered or excluded or exempted from such registration. We are registered as an investment advisor in WA, ID, UT, CA, NV and TX. We can provide investment advisory services in these states and other states where we are exempted from registration.