Category: Alliant Webinars

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Okay, it’s 2 o’clock uh Pacific time. So, welcome everybody. Uh good afternoon again. Uh thanks so much. Really appreciate you joining us today. Uh discuss annuities. Uh just talk about annuities, how they work. And today is meant to be an introduction to the topic of annuities. Um, and you know, if you’re interested in additional details, things like that, uh, it’s kind of meant to be the first meeting or maybe the second kind of presentation and for followup u, uh, together onetoone. U, annuities have certainly changed a lot over the years. Um, how they’re used, the way they’re constructed, the financial engineering that goes into them, um, much different than they used to be, you know, even 10 years ago, 20 years ago for sure. And the types of annuities. So today we’re going to go over uh you know just the good, the bad, and the ugly about annuities and uh you know what they are, who would want one, and then kind of build from there. Um by way of introduction, my name is Christian Chaplua um financial consultant here at Alliant Retirement Investment Services working with members clients on the west coast primarily. Uh so that includes California, Hawaii, also Washington State. Uh so I’ve been in the industry 15 years on the personal side. um you know helping uh families, individuals with uh investment management, financial planning, estate planning primarily and everything that goes with that. There’s always subsets of financial planning like budgeting, long-term care, um you know, tax tax savings, Roth conversions, etc. So, happy to kind of answer any questions today on any topic as we go through the the discussion. you’ll have a chance to uh ask a question in the chat or uh the Q&A and then also always available for a one-to-one meeting um on annuities, financial planning, estate planning, other topics. So you can uh you’ll have a chance to just reply uh to a meeting invite uh and then I’ll contact you and then we we can uh schedule that meeting.

Want to mention just housekeeping. Uh this presentation uh tended for educational purposes only and it is proprietary. We do work really hard to get this information to you. There’s a lot that goes on behind the scenes. We ask just to help us protect the integrity of our content um privacy of all participants and do not uh record, reproduce, distribute any uh or part of this presentation. So that includes video, audio, screen chat, uh capture, AI tools, uh without prior written consent. Uh by continuing to participate in this webinar, uh you acknowledge and agree to these terms. So very much uh thank you for your cooperation. Appreciate that.

Before we get started, just a couple of advertisements about upcoming annuities. So we’ve got one on uh October the 1st, uh 2 p.m. our regular scheduled time. Um that’s going to be on the home stretch. Seven things to do in the decade basically before you retire or that’s five years. Um nice checklist to get think about uh financial planning uh you know holistic financial planning and uh getting ready for retirement. So if you’re interested in that uh would love to have you join us. On the 8th we’re going to be discussing uh Roth IRA conversions. It’s one of our most popular webinars. pack strategies always are. Uh so that’s again 2 pm Pacific and just talk about how they work, some of the variables for success, uh operationally um what you need to do. Uh so lots of great information. Hopefully you can join us as well. And then we’ve got our webinars uh invest podcast and also our website blog. Uh all resources, great information for to help you in your financial planning journey. the website blog that’s at our um uh aerys.aligncreditun.com uh location and you can also get our invests podcast uh there as well.

This is a great summary slide how we can help you. Uh so we always encourage folks to think about planning um so important especially as you appro approach retirement. Uh just get a baseline in terms of where you are uh what you need to do. um always opportunities to uh change things, improve things um as you approach that great big milestone. Uh so basic plan uh which is which we call a complimentary foundational um financial plan is um is available to you uh no charge fin foundational financial planning um no obligation no fee. Uh so that includes kind of a a great snapshot and road map uh to your retirement plan. uh advanced planning which includes Roth conversions, tax planning. Uh we do ask for a client relationship there uh to help you with that and that is also no charge for clients and the same goes for estate planning. We have a digital planning estate planning partner uh help you get your living trust and other important documents completed. Uh also available no charge to clients. So we try to incentivize uh everyone to consider seriously becoming a client. We think that we uh offer a very compelling uh service um and uh and very very uh you know lots of value uh very very cost-effective uh on the investment management side and then things like annuities and market length notes and other strategies. So uh again if you’re interested please do reply to the invite um at the end of the presentation and we’ll set up a meeting.

Okay let’s talk about annuities now. Um so annuities our agenda here uh we’re going to go over what is annuity the different types uh kind of some misconceptions talk about taxation um a little bit about the you know sales practices in the industry and uh talk about you know how to look at your annuity if you have one or if you’re considering one. Uh how how to uh update replace your annuity get out of your existing annuity if that uh if that makes sense. and then who generally buys them.

Okay, so uh just quickly read off this definition uh in terms of what is an annuity. Annuity is just, you know, it’s a contract. It’s between you and the insurance company. Uh you put up money up front and then receive payments um either down the road deferred um or over a period of time. So again, that depends on the type of annuity. um you can receive an income stream last your whole life or you can um you know receive a lump sum down the road. Um there’s different objectives when it comes to annuities just like there are different objectives when it comes to portfolios. Um so there could be a growth objective, an income objective, uh you know a conservative uh goal, safe money strategy. Um so lots of different ways to use annuities. um three main reasons that people decide to include annuities as part of their overall uh portfolio maybe as part of their protective income. Uh number one um they’re tax deferred so you pay tax later unless it’s in a Roth account then you there is no tax as long as you meet all the requirements. U there is the opportunity for fixed returns. It’s a CD bond alternative. Uh so you know there are fixed returns available. uh the 10 year is over 5% now uh which is the benchmark for all uh interestbearing kind of securities loans things like that so um you know fixed annuity rates are on the high side and generally you know we can do better with a fixed annuity than we can with a CD so if you’re comparing CDs at line credit union or elsewhere uh we can almost always do better with a fixed annuity um but the term is generally 3 to 5 years so there is the opportunity potential for fixed returns there. And then an insurance company is the only kind of company that can issue an annuity um and provide income for life similar to a pension. A lot of pension plans, they outsource their um income uh obligations through insurance companies and annuitizing those payment streams. Uh so you have the opportunity income for life also.

So here’s some questions you know to think about in terms of uh you know should you buy an annuity think about it how can it fit into your financial plan you know one question is you know have you maxed out your 401k and IRA in terms of tax deferred savings. Uh so the nice thing about nudity is that it offers you an opportunity to um increase your tax deferred account. So, if you max out your 401k, you max out your IRA, um you could actually contribute to an annuity and um there’s no limit on a uh taxable account um with an annuity. So, you maxed out your retirement plan, but um you could also use an annuity, which is a um which is a retirement product, and uh increase your tax deferred uh balance as you prepare for retirement. The nice thing about annuities is that you’re not taxed until you withdraw. So there um unlike a CD, there is no 1099 issued on an annual basis if you have a gain. Um the 1099 is issued when you make a withdrawal. So um annuity is another way to kind of increase your tax deferred balance as you say for retirement as long as it’s in the budget. Uh so another option for you in terms of planning. Uh, another thing to think about is the income stability ratio, uh, your ISR. So, income stability ratio is calculated by looking at all of your, uh, guaranteed sources of income. So, that includes a pension, social security, um, and then also annuity payments. And then you know thinking about how much of your income is coming from uh stable secure guaranteed sources versus variable sources like growth in a portfolio um or or something else. Um so again annuity can supplement um you know your income stability ratio. it can add to your tax deferred savings plan um and you know again mitigate high taxes uh so that you’re withdrawing when taxes are lower or if you again want to add to your retirement savings so that um you have more uh more of a next nest egg as you think about retirement in your horizon.

So there’s different types of annuities um I’ll describe them really quick. So an immediate annuity uh is basically as it sounds it’s annuity that starts income um you know right away. You might have heard of a SPIA single premium immediate annuity. Uh so that’s kind of turning on income right away maybe next month and u and that might be for a certain set period of time like 10 20 years or could be lifetime. There’s also deferred uh annuities which provide either income or accumulation. Uh accumulation is another word for growth. And then in there the subcategories fixed, variable and indexed. So we’ll go through those three different types. But basically at this point in the presentation, you know, it’s a decision in terms of do you want income or do you want growth and then from there we decide what kind of annuity uh might provide some of those uh uh financial planning uh goals. When we talk about fixed annuities as I mentioned uh good CD alternative uh they pay a designated rate of return designed for people want to set aside money draw fixed amount of income maybe um again protected from m market downturns 100% downside protection um you again pay taxes when you withdraw the money in annuity and that happens whether it’s a taxable account or a retirement account um and then you have access at the you know to the funds Depending on the terms and conditions of the annuity, you could have a portion that’s available during the contract period or you could have the the entire amount available at the end of the contract period which is maybe 3 years or 5 years. And then uh you know we have to factor in uh taxes, early withdrawals, things like that. That’s part of the discussion. But that’s kind of uh you know fixed annuities. Again uh the main takeaway here is it is a CD kind of uh you know bond alternative. uh fixed annuity rates these days are kind of in the you know 5 and a half% area um guaranteed for you know a certain amount of time and uh can you know do a little bit better than a CD or um maybe US Treasury

variable annuities um that’s you know they they work basically as they sound they’re variable uh earnings are tied to other assets uh inside of a variable annuity sometimes they’re called sub accounts where you mutual funds inside of that variable annuity. Um, and they benefit or they kind of uh, you know, they grow uh with, you know, with the uh, the performance of the investments inside. Uh, they’re designed for people want to take advantage of both uh, you know, growth um, and maybe income because you can turn on income with some of these variable annuities down the road. Uh, really depends on your goal, the company, the terms and conditions. Um but variable annuities are designed for growth whether or not you have income uh goals and um um and you know that there also um you know some considerations in terms of you know how they work and the fees the potential fees that uh go along with them. We have some of variable annuities that are no fee no charge. Um the biggest category in there is called a RIA registered index linked annuity. uh we work with a lot of people who um you know who purchase a RIA um you know it makes a lot of sense in the right circumstances and then there’s the you know traditional variable annuity which has mutual funds inside of it um typically we’re not working with those very much anymore um even you know historically um I always thought that the costs inside of a variable annuity were kind of high there’s other ways to uh you know to achieve growth. Um but with ARIA uh which is a more current type of variable annuity um you know that you know we we’re getting a lot of um benefits on the cost side because um you know can be uh no fee uh some of these products can be no fee and then um you know the other benefits that they have in terms of growth opportunity and downside protection. So that kind of summarizes in a quick nutshell variable annuities and again if uh you know you’re you’re interested to learn more about this uh category then then do please let me know.

The third category is an index annuity. Um so which is kind of a you know a a blended version of annuity. uh mixes some of the fixed attributes that uh are in a fixed annuity and some of the uh growth characteristics of a variable annuity. They’re often tied to an index like the S&P 500. Uh but uh the biggest distinction about an index annuity is that they are protected against losses usually 100%. Uh almost always 100%. And so uh a fixed index annuity again just like it sounds. a kind of fixed contract meaning that you um are guaranteed against any losses by the insurance company but it also provides the chance for growth. Um and that could be you know 6 8% per year really depends on the type of annuity depends on the performance of the index but it’s kind of a good in between version of uh an annuity. Uh it’s for a little bit more conservative investors. Uh people who don’t want to um lose money but have the um the time frame to uh let the annuity uh work do its thing. And index annuities are typically 5 years or 6 years sometimes 7 years. Um so uh all three of these categories of annuities they have the same attributes you know um death benefits uh they have deferred taxes available and then um again that 1099 uh exposure when you withdraw.

So again kind of think back to you know where we should uh position annuities in our portfolio if we want to learn more about them or decide that this is a good part of uh the overall financial strategy you know decide on you know whether we’re looking for kind of fixed returns or growth related returns and then from there um you know understand you know fixed indexed variable um characteristics whether or not um you know one or the other makes more sense and then you know think about income and whether or not that should be a component of the overall financial strategy of the retirement plan. Uh you know again um looking at income versus other sources which might be pension rental income uh dividend income uh fixing uh you know um uh fixed income portfolios uh all of the above.

So let’s talk about uh some misconceptions and ideas here. Um I you know even today 2026 talked to lots of people that kind of had this impression that annuities are bad, the fees are high, the holding periods are long, the insurance company’s going to kind of uh try to run away with the money. Uh so um you know in UDI’s uh you know my take on the whole sector these days again in 2026 versus 20 30 years ago you know uh my honest opinion is that they’ve changed a lot um they are really um different than they were uh just like many technologies are um again versus 20 30 years ago. So if you had this idea that annuitity is bad um and somebody told you that I would really you know challenge you or suggest you kind of do your homework and you know credit to you for signing up for today’s discussion um cuz you know I do meet a lot of people that still have this idea but um you know that we’ll talk about the fees and the holding periods in a sec um but they have really changed a lot the amount of financial innovation that has occurred in the insurance industry is kind of very impressive they have a lot of PhDs he’s working for them these days and they know that they’re in a competitive marketplace and they know that they have to um you know clear the hurdle in terms of folks like me. Um so you know they have to get through you know my my practice first before they kind of get to a client opportunity uh because annuities can only be sold through agents. And so um you know that’s forced them to be more competitive um you know more innovative and you know the products that we recommend these days are actually quite impressive in terms of you know how they work and the value that they provide um and also their cost effectiveness. So again something to consider not for everybody um but something to consider. Here’s a fee schedule of what the fees used to look like and this is certainly not something that I would recommend. um when we add up all the fees alto together and this is why annuities kind of got a bad reputation uh because they weren’t you know they weren’t a good deal um a long time ago or if you come across annuity like this today um it’s really hard to overcome fees of you know 3 and 1 half to 4%. you know, blending in mortality and expense ratios, sub account fees, which are mutual fund fees, rider charges, um you know, anytime you get to 3 4%, it’s hard to make money. And so we um never recommend something like this. Uh if you come across it, my suggestion would be to give me a call. Uh probably decline um you know, that opportunity because this is way too much in terms of fees to be paying. Um but you can see all the different categories of fees. me and sub account rider charges and they can add up. If you have an annuity today, make sure that you understand what it’s costing you and because it’s really going to impact the performance. Add up all these charges. If you need help calculating all these charges, more than help more than happy to help you kind of think through this and calculate those. Um so again, um you know, if you got one of these legacy older type of annuities, it’s definitely time to consider a replacement uh because these fees are too high. Um, again, just on this topic, you know, I’ll reinforce it. Today’s annuities, um, uh, without an income writer, uh, most annuities that we’re recommending are no fee whatsoever. So, think about it. That’s 3 and a half to 4% that goes in your pocket versus kind of paying for benefits. Riders, which, uh, you know, another word for rider is basically a benefit. Uh, so whether that’s on car insurance or home insurance or in an insurance product. Um so you know my goal u I believe investor goal should be kind of to be aware of their fees reduce them and uh as much as possible in order to get good value. Let’s talk about the holding period surrender charges. So um with annuities um remember it’s a retirement product it’s in a retirement product category. Um there is a commitment period, there is a holding period and if you um cancel the contract, if you cancel the annuity early, there are surrender charges and penalties. Um this is no different uh in my mind at least from a IRA or 401k. Uh IRA and 401ks when you make a contribution there is definitely a commitment period. Um you’re not allowed to take uh money out of your IRA or 401k until you’re 59 and a half basically. um you know there’s some rules around that with a workplace plan if you’re still working there but generally the the idea is that uh until the age of 60 basically you can’t take money out of your IRA or 401k you know people are contributing for decades and they know the deal going in there’s a 10% penalty that IRS will charge you if you withdraw that money sooner and so you know again annuity is a retirement product um there is a commitment period there’s a holding period and if you um withdraw money early then you’ll pay uh a penalty. These uh contingent deferred surrender charges CDSC fees they’re different depends on the company depends on the strategy the product you know could be as high as 8% and then they decline typically over time. So here’s an example of a 5year CDSC starts at 5% by the fifth year you’re at a 1% penalty and after the fifth year um then there’s a zero penalty. you can totally walk away penalty-free. So, that’s how these uh holding period surrender charges work. Uh but keep in mind also that typically again in 2026 um you know insurance companies have had to be more innovative and and competitive most insurance companies and again 99% of the time with us um there is a 10% annual free withdrawal amount that’s available to you annually. So set another way if somebody puts in example $100,000 to annuity they have 10% uh which is $10,000 available to them as a free withdrawal no penalty annually. So um you know there are ways to get you know funds out of the annuity um after you purchase it if unexpected you know expenses come up. Uh but typically you know and I always recommend this always want to think about this with clients is that you know this is a longerterm strategy this is the money that you want to set aside for 3 years 5 years 6 years and that you won’t need to tap it. Um so if you need the money if you need the liquidity then we’re going to go in a different direction. We’re not going to go towards an annuity. Um and we’re always going to respect those holding periods. And that’s why it’s so important to have a financial plan so that you know uh and can think about what your guidelines are, time frames, and uh make sure you’re on the same page with you know both spouses as to when you need might need these funds.

Here’s the third part of the uh kind of misconceptions that we sometimes hear. You know, the insurance company’s going to take all the money and uh and run away with it. Uh so um you know again a long time ago um you know 20 years ago um really differs with the insurance company. Um there were some you know products that were what’s called annuitized and uh it was kind of like a pension. You know if the um if the annuitant passed away um the insurance company would uh keep any remaining balance. Uh so uh that certainly kind of uh left a a bad reputation with with some of these strategies and that you know word got out. Um so the insurance companies they did change um you know nowadays uh there’s typically always a death benefit. Um people rarely ever annuitize um and you know depending on their income needs you know there’s different terms and conditions but uh you know the takeaway from this slide is that there is almost never where the insurance company runs away with your money. If somebody purchases annuity uh almost always at least the one the products that we recommend almost always a death benefit. Uh so you might get you know back a portion of what you put in if you pass away prematurely. Um but again you know this is another misconception to be aware of and to understand that the landscape has changed and uh and like I said before like every technology um when it comes to your 401k your IRA you know the money managers inside there um insurance products these things have all changed quite a bit in the last 20 30 years. Um, so it’s important to keep on top of all the information and innovation. We talked earlier about taxation. So again, annuities are tax deferred. No annual 1099, not until you withdraw. Um, you benefit inside of a annuity from triple compounding, which is earnings on your principal, earnings on your earnings, and also earnings on the taxes that you are not paying. And then if you want to replace an annuity that you have today, um it can actually that transfer can be tax protected. You don’t have to pay tax when you go from one annuity to another. Uh we utilize what’s called a 1035 exchange, which is an annuity to annuity exchange, and you’re tax protected by doing that exchange. So that’s a way to kind of keep your tax bill down until you actually need to withdraw the money. Uh but again, swap out your old annuity which might have uh high fees or might not be working for you or uh not generating the return that you’re looking for. Uh change it out of that old uh annuity strategy into a new annuity strategy and keep that tax protection status uh for any gains that you have there.

Really quickly, here’s kind of a hypothetical comparison of tax advantage vehicle versus a taxable account. So, where you’re paying taxes annually. Um, so no surprise, year 1 through year 2025, um, you obviously have a lot more inside of a um, you know, tax advantage vehicle versus a taxable account. Um, and so the the compounding, the triple compounding really takes effect over 10, 15, 20 years. And you could see these numbers in comparison. Uh so by year 20 uh tax advantaged um you know you’re looking at 739,000 for initial investment of 200,000 uh versus 487,000 again benefiting from all that triple compounding. So most of us are aware of this kind of math uh but it’s uh worth reinforcing.

uh that that chart was based on an 8% return and u some other factors and fees uh but just gives you an example.

So again you know the insurance companies one thing to remember and we all realize this um you know they are in a for-profit business they are looking to kind of uh reap a rate of return return on assets return on income for all of the activity and hard work that they do and uh that’s the case for any service or product that we purchase. Um, so just, you know, remember that the CDSC fees, M&A fees, riders, investment fees, those are all ways that they make money. Um, but they’re not always part of every single annuity uh that’s out there. And uh, you know, the annuity companies are the insurance carriers are basically looking uh for a positive return on their investment. Otherwise, they wouldn’t be in this business. Uh, but that’s certainly not a reason to avoid them. Um, you know, that’s the case with uh lots of different mutual funds, money managers, and other approaches to saving for retirement. And so, um, you know, as long as the fees are reasonable, the insurance companies deserve to be compensated. Um, and then, um, you know, you deserve the benefits inside of these strategies. Also, you know, sometimes uh uh insurance agents kind of uh offer a complimentary dinner, dinner, seminar at a a nice restaurant. Um if you do attend one of these, um just give you heads up that you want to be um just want to be smart going in there. Ask good questions. um you know realize that um it is a sales presentation and um um you know just ask good questions and um don’t be kind of swayed by a nice presentation. Do your homework, get your financial plan done. Make sure you’re working with somebody you trust. U if you hear anything like uh you know double in 10 years um you know ask how that happens. It doesn’t mean it’s not possible, but you know, be aware of high fees, be aware of long surrender periods for sure. You know, typically, you know, greater than five or six years. Um, ask about commissions. Uh, we disclose all of this information up front. Uh, you’ve got your own smell test, you know, when it sounds good to be too good to be true. Ask better questions, ask more questions, and be convinced. You know, that’s how I approach every conversation. you know, I you know, first I have to be convinced and then anything that I recommend. Um, you know, I make sure that I’m working with the client to have a good one-to-one discussion. Um, so ultimately they’re convinced that there’s value there also. Uh, so you do, if you do attend a presentation, uh, just go again in there, um, aware of all the kind of, uh, uh, you know, issues with that sales discussion. If you have an annuity, I would be happy to review that with you. No obligation. Um my my main goal is to think about your financial plan and uh make sure that the asset allocation, financial strategies that you have inside of your uh all your accounts, retirement and taxable accounts make sense for you. And if there’s a chance for an improvement, um then, you know, we talk about that and and see if uh we should implement that. Uh again, uh if you have an annuity today, give me a call. be happy to help you with that. Uh again, I’ve said a few times, but annuities have changed dra dramatically over time. Um there’s a big emphasis on growth and um accumulation products these days, and they do work. um you know I’ve seen people do very well over five or six years um and uh you know uh see see a lot of growth in their accounts um you know and with all the other benefits that come with annuities you know for in for instance downside protection uh protection against losses those can come from fixed annuities from rias from other products um so it’s worth kind of doing your homework and uh seeing if this is a good fit uh again the fees have come down significantly. Um, you know, gone are the days of those 3 4% fees. Uh, these days, um, no fee is typically 0% fee is typically the rule of thumb. And then, uh, the only place people are paying for fees is in an income writer. Um, and that kind of makes sense, um, in most circumstances. Uh, but those fees need to be reasonable also. Um, so again, you got 1035 exchange options available to you. And then again, you know, do your homework. Do that cost benefit analysis.

This is a nice summary. So again, if you’re looking for tax deferral, fixed rates, growth with downside protection, could be 20, 30% downside protection. If you’re looking for income, the death benefit, you know, you want to get some credit protection potentially depends on the state you reside in, u you know, this can come from an annuity. Um, you know, I heard a really interesting, uh, quote today. Uh, so I get a lot of research coming from money managers. I thought I’d share this with you. Um, you know, we’re at recent market highs and, uh, a lot of people are concerned about whether or not there’ll be a correction. And, uh, this statistic I thought was really interesting. Um, you know, basically over the last 20 years through like February 2025, so about the last 20 years, seven of the S&P 500’s 10 best trading days came within 15 days of the 10 worst. So, we’ve got again, seven of the S&P 500’s 10 best trading days came within 15 days of the 10 worst. So seven out of 10 times uh the market snapped back so quickly that it was hard to capture that gain. Um so you have to be real nimble and really quick and most people um financial adviserss included aren’t really equipped to uh reverse course within 15 days. So this I thought was a tremendous reminder of why it makes sense to stay invested even though there are some bad days out there. Um and you know the the volatility that we see in the market it’s kind of the price of uh um you know the price of uh being invested uh but you know another great expression that I heard once um you know volatility um is the toll it’s not the exit. So, an annuity can be a great way to keep you invested. Um, you know, go through uh the downside protection, understand how that might work for you, but it can be a great way to stay invested um to add diversification to your portfolios and give you some of these other benefits.

Again, uh annuity might be right for you. It might not be. there are many many instances where annuity is not the good choice. Um so you know that’s best covered with a you know a one-to-one discussion. Um but if you want to supplement social security if you feel that your longevity is in your family you’re going to live a long time if you want to re reduce risk on your part of your portfolio. Um, those are all reasons to consider one. Uh, and then we’ve talked about being, you know, the expense side, hidden fees, high commissions, uh, holding periods, CDSC fees, confusion. Um, after today’s discussion, you’re halfway there in terms of understanding how these annuities works. Um, so it’s important to boil these down into simple concepts so that we can utilize them um, in our financial plans.

So that brings us to the end of our presentation. Um thanks for for listening. Um again this is our value ad. You know talk about financial planning all the different components. Talk about completing your personalized financial plan. Um and then also estate planning coordination. Again we’ve got access to investment portfolios, annuities, dividend portfolios, passive active strategies. The list goes on and on. So, um, you know, there’s a financial plan that’s right for everybody and it’s just a matter of thinking through the different options, uh, with a trusted advisor. And then here’s a quick snapshot of our estate planning. Uh, so trust and will is our digital estate planning partner. Uh, they can, uh, provide, you know, a great platform service to get your, you know, living trust completed, your will, your power of attorneys, uh, all completed at no cost if you become a client of ours. So, I manage the estate planning dashboard. Uh, I basically send you a link. You get 100% discount if you are a client of ours and then, uh, you’re off and running. Uh, it takes about, uh, 2 hours or so to complete this process. Tremendous saving versus going to an attorney. Uh, but if you’re more complicated, then I would advise you go see an attorney. you know, if you got complicated family issues or, you know, real estate or complicated questions, international topics, um then it’s best for you to go see an attorney. But if you got a simple estate plan like most of us do, 90% of the people I work with, then um this service with Trust and Will works very well.

Okay, here um here’s my contact info. Uh that brings us to the end of our presentation. I’m going to launch the poll so you have a chance to set up a meeting with me. Uh so again, if any questions um if um you want to talk about financial planning, get your financial plan done, your estate plan done, um open door uh available to you uh to to get all that completed. So hope to hear from you and uh would love to work together. With that, um I’ve got the chat open. I’ve got the um uh the Q&A open. I’ve got one question so far. Uh so please do uh you know put in uh enter some questions in the chat or in the Q&A and I can uh do my best to answer them and it can be on any topic. Uh happy to talk about almost anything. Um again other financial planning uh or investment topics uh whatever is on your mind.

Okay first question. Um, can NUD be a good choice to provide income for a child who needs support? Uh, does not qualify for government support or special needs? Um, isn’t likely the choice. So, disability or Medicaid, um, special needs trust isn’t likely a choice. Um, so, uh, possibly, um, you know, there it’s on a case- by case basis. So this annuity can be uh structured different ways. Um in this situation it can be providing income you know through the uh the parent or the person um who purchased the annuity u and then funnel through to the child. In some situations there can be um you know a child depends on the age of the child. There are some rules around the age of the child um that we need to verify. I would investigate it. Um especially when you know there there’s a need for income. Um but this annuity might be you know supplementing other sources of income too. Might be other types of strategies. Um okay so the person’s uh thank you for the update. The person’s 20 years or older. So they’re basically an adult. They’re an adult child. Um so that’s good. Um and part of this depends on the annuity company. Um so when you know annuitants are uh younger we’d have to look at like ownership issues uh versus the annuitants which can be two different people. Um and then also whether or not the estate planning uh is a factor component for this. So I would say the answer to the question is it’s possible. Um we don’t get this question a lot u but it’s worth investigating. Then, you know, in these situations, we always bring on our our advanced planning team to help um anytime it gets comp a little more complicated. In this case, I would kind of bring on an advanced planning team. Um, and I’ve got lots of resources for that to help you, but it’s worth investigating uh just to make sure that you’re thinking about income uh providing income for this uh for this person down the road. Okay. Any other questions in the chat um in the Q&A? Let me just scroll through here. Um, kind of a quiet group this time. Only one question. I’ll give you a minute to think about things. Um, like I mentioned, we’ve got those other webinars coming up. Uh, so if you’re interested in kind of, uh, just financial planning in general, uh, Roth conversions, uh, you know, please do join us. Um, you know, the the, you know, I’ll leave you with this idea. Um, you know, the markets are always changing. You know, we can see again the 10-year uh these days is above 5% which um um is quite of a quite a threshold to go through. We’ll see what happens in terms of whether or not it stays there. But, you know, planning for uh you know, different market scenarios over the next 3 to 5 years is an important part of the investment management process we all kind of you know uh have as part of our retirement planning. So uh would very much encourage you to kind of think that through and uh think through all the topics and again whether or not annuity is right for you. Um so uh again things are always changing, products are changing, money managers are changing and you know it’s a full-time job for me just to keep up with all this stuff and to uh you know be a fiduciary and pass on all this information to my clients. Um so um you know I would offer that also for you to consider uh you know make sure you’re you’re planning accordingly and holistically and and uh you know adding all those different things um into your financial plan. Uh you know with retirement planning um you know another tidbit offer that I would give you is that um you know some things remain the same. they’re evergreen. Uh but some things change and so it’s just understanding the difference between the two. Uh got one more question here. Uh so thank you for that. Um person’s asking, can you look at my existing annuity? I think I wanted to roll it over to something else. Um yes, please. Um would be uh really excited to work with you on that. Um so if you uh I’ve got your name. Um, so we’ll uh schedule a meeting and kind of look at your your annuity today. Uh, see how it’s performed, see how the uh what the fees inside of that annuity look like and compare it to another alternative and that could be another annuity or a different strategy. Uh, but yeah, that would be great. Thank you for offering that. Uh, we’ll set up a meeting and uh just review that uh that current annuity.

Okay, I think that’s all the questions for today. um

question. Oh, somebody just asked um you know, can is there a link to review the webinar again? Uh so, uh this is a good question. Uh we do not record these webinars. Uh sorry about that. We do have some recorded content. Um we’ve got some YouTube videos. we have um you know our podcasts but we use these webinars more as you know an opportunity to introduce topics in financial planning and encourage people to give us a call. Um so they are very introductory. We want to make sure that uh when people consider these these strategies that you know we’re working with them and we could you know provide our full advice and counsel. Um so we encourage a one-to-one meeting. Um and again there’s no obligation. Uh so I’d be happy to go through all this information again with you um so that you you you know you get the update or you could catch the the webinar once again. We have a recurring cycle on these topics. You can look on our calendar. Um there’s other advisors that provide uh these webinars um on annuities throughout the country. Um so if you’re on the West Coast, you can catch one of theirs and then kind of you know review things uh you know give me a call again whenever you’re ready. Um and uh and you know that way you can get an update. So sorry that we do not provide the recording. Um uh I know there’s a lot of content available but uh just you know the way we kind of want uh want to work with folks is uh have a one-to-one discussion. Okay, I think that’s all the questions. So again really appreciate participation and uh and all the nice questions. Thank you. Uh have a great end of the week and look forward to seeing you next time. Take care.

An official welcome to everyone and thank you for joining me for uh our third quarter edition of anatomy of a recession. So if you are joining the webinar for the first time, uh welcome. I’m Michael Marx. I’m certified financial planner and adviser with Alliant Retirement and Investment Services or AIS for short. We’re the wealth management division of Allian Credit Union and I am as I said earlier based right here in Houston, Texas. I’ve been doing this for I don’t know more than 30 years now. Uh so today we’re going to take a look at some of the uh latest economic and market indicators and what those might be telling us. We’ll look at a little bit of historical perspective from recessions. We’ll talk a little bit about some modern stuff and I and I understand so this will be there’s a lot going on in the market. Today was even a mixed market and you know we have the UN General Assembly. Um, so if you have some just general general questions, that’s cool. I’ll try and field those the best I can here. Um, as long as it’s not too far out of the realm of of what we’re talking about today. Um, and in the interest of time, but we should have some time. We should have some a fair amount of time at the end here. So, um, just a quick, if I can get the slide to change here, just a quick housekeeping item. Uh so this session is intended for educational purposes in includes proprietary materials. So protect content and privacy. Please do not record, reproduce, distribute, screen capture or use AI based tools to capture any part of the presentation without prior written consent. Thank you for for your cooperation.

So before we turn to the economic outlook, let me just talk a little bit take a couple of minutes about talk about Aerys and how we can help. So our our goal is really full understanding of financial pictures for for the clients and and helping you educate that. But we are primarily adviserss and wealth management. As I said, I’m a certified financial planner. So that includes, you know, your income, expenses, cash flow, savings, investments, insurance coverage, retirement goals, estate planning. We’re very broad-based in what we can do. Will’s trust. Um but the important thing is that look conversations always come first. Uh and any recommendations so these are really really general right so they should be based on individual goals risk tolerance and your overall circumstance. So if you’ve joined us either through an email through us or directly on the credit union website uh this is what we do from broadbase. We’re actually going to be changing our name or so we’ve been told by the marketing department. So we don’t we don’t know what that’s going to be changed to. So stay tuned.

So webinars, we we do webinars throughout the week, different topics, different presenters. Most of us will uh do two a month. I’ve been doing one in the evening such as this and one in the afternoon. If you go to directly to our website right arisaligncreditun.com events you can see a list of our webinars uh you can also see our savvy invest savvy podcast some blog articles in there and other resources so if you haven’t looked I encourage you to take a look um also you can find us just directly on the credit union website in the upper right hand tab it’s a parent invest My next webinar will be October 1st. Sure the weather will be better by then. Uh back in the afternoon, we’re going to be talking a little bit about Roth conversions. This is actually a very effective retirement strategy. Uh a lot of our clients, we’ve actually been able to help save a lot of money in taxes over time. It’s important not to just look at it from that perspective during your lifetime, but as far as how you uh from a legacy perspective, right? If it’s going to go to your kids, grandkids, etc. We want to take a look at from the the tax planning perspective of that

one. After that, we’ll be right back in the evening, October 20th, 6:00 Central, 7:00 p.m. Eastern, and we’re going to be looking at retirement income, the fragile decade. So, and what that is is we look five years before your retirement and five years after and kind of where you should be and things you should be looking for to give you an idea of that. And actually that includes conversions, right? So, so Roth convergence as we were talking about that earlier, that’s something that depending on your situation, you might actually want to start before. And those decisions can also impact the timing of your social security um and the impact of that because it can impact your RMDs as well, required minimum distributions who are unfamiliar with that term. Uh you have take those at 73 or 75 depending on when you were born.

So let’s move into the economic outlook. There’s a great deal of information. So we’re just going to focus on some of the main messages behind each chart rather than every data point. Uh so with that, let’s jump in. So always start with the first one, right? Because that’s what that’s what everyone wants to know is our our recession dashboard. So it just gives you kind of a general headline. Uh and we’ll we’ll kind of examine the details. So this is as of August 31st. So the overall signal remains expansion territory. As you can see, green is good. uh well it’s supposed to be yellow but that looks a little burnt orange to me here uh is is a little bit of a caution and red can be a recessionary indicator. So this is always as a snapshot at any given time. Now this is one framework and it’s not really a forecasting guarantee right signals change as new data arrives. So this is as of now and some of this data will be from Q2 right as we talk about Q3. So I’ll try and give you a little bit of an update and this also gives you an idea of you know how this looked in March and then at the end of last year. So we’re seeing some improvement overall in in many of the factors out there. It might not feel it. I know prices are up. I know inflation is still quite a bear. the Fed is also dealing with it. So let me give you some context on past recessions. So comparatively when you look at current situation now obviously 2020 will have a lot of green and that was a very short period right so that was during co so that was essentially the economy was shut down uh many cities were shut down businesses oh there’s an echo if I’m having an echo let me see you might be logged in twice. Have you even You’re logged in twice. So, if if there’s an echo, I can What I can do is I can maybe you’ll want to um There you go. So, um so, sorry, back to it. So you’ll see with a lot of the historical look backs as far as recessions, there’s a lot of indicators that things went red before things actually went south there. Um 2020 was the exception to the general recession because that was just a general shutdown by the government and global shutdown. So that’s why it was relatively short-lived. It was one of the shortest recessions that we’ve had, but it was a quite the spike. So labor market. So we’re looking at this some of the labor market. So you’ll see some of those those non-form payrolls. Um labor matters. It matters a lot here in the US. And I know we’re talking about AI replacing jobs. We’re talking about well if we went through government um layoffs, things like that, reductions, what companies are doing. This does matter on on unemployment though because I will say this. So when we look at labor markets and non far form payrolls, I don’t remember if it’s in this one, but you really want to look at where the jobs are being created, right? So if the government’s creating the jobs, a lot of times that’s things like healthcare, schools, things like that. Um, and that can be a problem. And the reason why if the expansion is through education and the government spending on that, education doesn’t generate revenue in the public sector. So where we really want to see job creation, it’s over on private uh because there’s revenue that is generated and then there is taxes associated with that and less less so of a burden as far as deficit goes.

So I will tell you just a quick uh on the on the non-farm payrolls. I know that looks great and it is still relatively strong. There is some weakening out there, but not to be confused with a weak labor market because we’re not quite there yet, but we are seeing some softening. So, this is relief at the pump. So, we love this, right? Because we know this is not correct. So, this was as of the end of June. So, when you look at oil is coming down, we know that that is not the case. Actually, oil is well, it did close under 100 today. So that’s actually good news, but it spiked over just a little over 100 as of yesterday. So it came down on hope. Um obviously diesel is part of a concern right within that oil. They generate that regular gasoline. They they generate diesel. They generate jet fuel out of all of those. Um and diesel is is the big push right now. So some folks have asked that question. We might ask that later. So I’ll just address this now. So when we’re looking at the price of diesel versus gas, why is diesel so much higher? It’s because it becomes uh the refining ability, right? It becomes a capacity. It becomes a supply versus that demand. So you are seeing a little bit of a difference there. The pump is still terrible for all of us, especially if we drive bigger vehicles or we have to drive quite a bit. But a lot of your biggest your the biggest rub right now is I would probably say diesel because that is used by everything else, right? So you’ll see those costs start permeating into other goods now. So this is kind of good. So basically higher inflation, right? Borrowing costs, interest rates are higher. So borrowing costs are a little more expensive. So this is a meaningful measure. So and this is the probability of missing a debt payment, right? So it rose over several years but you’ll see this coming down. Now if this improvement persists right then you’ll see some of the spending remains a little more resilient. So we still have a very resilient consumer. So if you’ve heard about a K-shaped economy they’re talking about maybe a C-shaped economy. I’ll kind of give you a little a little touch on that. And this is going to matter going into the fourth quarter, right? Because we go into holiday spending. Um so right now if if you break the economy into into five different income brackets. So there’s the the talk of the K-shaped economy. And what that means is if you look at a K where you have the the the vertical leg and then one going up and one going down. Basically what’s happening is is for those in the upper 40% things are improving, right? and and that’s households 100,000 and up. If you look at the lower 40% and and that’s really households of about 55,000 and below income wise. So it’s more difficult for them, right? Because if if food goes up, there’s a lot less discretionary income. So when you’re seeing travel, things like that, all those records, a lot of the consumption that’s going on, it’s actually being supported by by the upper 40%. So when we talk about this I and we say hey things are good. This is from a very high level. I I don’t want you to think that that I’m not acutely aware profoundly aware that it is difficult for some people because it very much is. Um but at least for an economic discussion that’s that’s kind of where we’re at on this. Um as far as debts go right now we still have really really low default rates. Um, so that’s so good, right? Um, hyperscaler capex. So AI, everybody talks about this. This is, oh my god, this is probably the news for the most part. So I would say this is probably one of your largest economic themes for the US right now. Like your chat GPT, you know, Muse is is the latest. Um and that spending is is construction, equipment, semiconductors, power demand, right? Other parts of of the economy. So so it is a little bit broader. Now this is what matters. So that higher investment doesn’t necessarily guarantee attractive returns for every company, right? So, we do expect to have some long-term winners, productivity gains, profitability, and this buildout, you know, that remains a little uncertain. The expectation is this buildout will still continue for a bit. Um, if you’ve watched the market, for those of you watch the market, so so for the the first quarter, maybe through April, the markets were pretty much flat. And then you see the market just kind of take off. And what that was is is when a company reinvests um it’s basically reinvesting profits. So you know if I’m a if you’re a farmer for example and I’m going to buy two more tractors uh so I should be able to produce more of whatever product I’m growing. So that more product would generate more revenue. Therefore more revenue means my stock price if I publicly traded should be worth more. Right? So when you see this money spent on hypers scaling by those bigs out there in theory they’re going to be able to do something with it. So the the trillion dollar question is what is that something right? How does this get monetized? So that drove the stock price up which drove your uh the stock market up as of pretty much April. So now you’re starting to see some questions. You’re saying okay is that stock price that was here now it’s here. Is it worth it? How long do we have to wait? So that is uh to be determined. So do I think it’s kind of like the the dot? No. There’s a lot of money behind this. So So it is a very different animal. So you’re it’s very well funded by very well profitable companies with huge cash, but there’s a lot going into AI. Um now I will tell you this when you look at I always think this is really interesting because we’re talking about AI when you’re talking about capex and capex is is capital expenditure right is how much companies will will invest in product services whatever building their infrastructure uh when you look at it as a percentage of of GDP so you go through big technology booms and I know when we think about technology we think about it in terms of of what’s going on right now right the internet or or in this case an improvement of technology which is traditional technology which is artificial intelligence but really any kind of technology. So this goes back to railroads, right? Or the electric motor or just the auto infrastructure, right? When you when you look at um the assembly lines, right, that mass production. So then you get into tech and telecom in the ’90s when you start doing internet. So all of these have been huge innovations of US technology and and really technology it improved almost every sector, right? From from even from well, I’m here in Houston. So when you’re looking at oil and gas, right, with with the new tech technology, their ability to find oil, their ability to drill at angles, their ability to frack, whether that’s good or bad, it’s definitely more production, it makes it the possibility for more revenue, right? And as a company, that’s kind of what you’re looking at at the end of the day. So when you’re looking at this as as compared to the size of this country’s GDP, you can see that AI is actually relatively small. And just as a reminder for those unfamiliar with GDP, it’s your gross domestic product. And how they calculate that is they look at the total consumption, which is usually us, right? That’s our goods and services, the stuff that we spend our money on. They look at government spending, right? Defense, schools, roads, etc. You know, infrastructure. They look at business investments from the private sector and then they add net exports which is kind of one of the things that Trump is is kind of flipping out about, right? Imports of when we look at trade deficits. Um to give you an idea, uh second quarter for 2026, our GDP was about 32.5 trillion with a T. So we have a much much even though those are large numbers that are being spent in AI, we have a large economy now. So so relatively speaking it is it is it’s just a lot bigger. So

I would say that there is room to grow and for the cycle to continue but that also means the expectations are rising right on your return on investment. So the message is it’s balanced. It AI investment can support economic activity while investors should remain mindful of valuations and execution of of how they deploy AI and any disruption risks that might be that might be as a result of it. Um I think this is actually pretty cool, right? and it’s creative dra destruction and there’s a lot of concern that AI is going to replace a lot of jobs and it probably will at some point as every technology does at some point but what we found is that as you’ll see that oftent times this new technology even though it eliminated some jobs it created jobs that did not exist before. So, so there is a double-edged sword, right? So, if you are impacted where you lose your job to some type of technology, hopefully there’s another opportunity in some other aspect of it. But, but that I mean with this type of technology, right, it’s it’s different, right? Because there’s education, there’s retraining, um business investments, those matter. So I know that we say this and this is just a chart but we are talking about real people who will lose their job. Um and it does happen but over time you’ll find that that more jobs are created than than jobs that are removed and in theory it makes our job easier and our life better unless you’ve seen Terminator. I’m joking about that. So uh so we’ve covered an economic backdrop. Uh so let’s take a look at some of the market outlooks. So the the economy and the market are related, but they’re not necessarily directly related. So so you know the economy can go up one way and the market might not necessarily agree uh because because markets are forward-looking and they reflect expectations about earnings and interest rates, right? What’s the Fed going to do? What the Fed won’t do? uh stock valuations risk associated uh and that’s why market performance can improve or fall before the economy headlines kind of feel that impact. So right now things are okay. Um it’s a little it’s a little volatile to say the very least. I know there are some naysayers that are saying hey you know the market’s going to crash etc. We’ll talk a little bit about that. Uh but but but is a different time right now when we’re talking at tech boom. So we’re going to party like it’s not 1999.

And as I had said before, some of the differences I was around during that.com crash and and I’ll tell you a really interesting and little story. So back in the 90s, we were still talking about allocations, measuring risk, and things like that. But if you were investing in the 90s and you grabbed one of those dotcoms, right, that stock was just crazy and they were hot issues and you know, we’re trying to tell our clients and most of whom listened. They’re like, “Hey, you know, these are kind of targets. There’s really nothing that’s that is backing these new companies. It’s just out there.” Um, so we all know how that story ended, right? So there was these inflated prices and a lot of and then the bubble popped and then most of those companies ceased to exist and a lot of people lost a lot of money there. Um and really those people who lost a lot of money are the people who didn’t listen about allocating and risk management and things like that. But with that said though um it’s a cautionary tale. This a little bit different right? So yes, there there are some concerns about concentrated positions and things like that, but the difference is I had alluded to the the difference is is these are very different players. Um they’re wellunded, they’re actually profitable, and they’re taking that profit and investing it back in their infrastructure. Now, with that said, it doesn’t eliminate downside risk. So today’s market, it just has more fundamental support than a simple bubble narrative, which I’ve heard that talked about. And I can tell you as a general rule, uh, most recessions happen with some type of bubble somewhere, right? Whether it was a dot bubble, whether it was a real estate bubble. Um, but usually it happens with kind of a bubble. We don’t really have a bubble right now. So you secular bull market. So the long-term chart talked about secular bull and bear periods. So we talk about cumulative highs right there and we had a fantastic run right through the ‘9s late 80s 90s and then we’re looking at 2010 to right now. Obviously there are some difficult times when you go from 2000 to 2010. That was actually a negative decade. Um so folks who are investing and they’ve been investing relatively recently let’s say in the last 15 years when they when they say hey you know I’m really really aggressive investor that’s fine you might very well be because the belief is the stock market always goes up that is not the case you can take that period from the 2000s where it was actually a negative return over that period you can go into the 70s where where there were negative periods and you can go into the 30s where there were negative stress stretches like decades long. So be mindful. It’s always cautionary tail. I know we’re saying, “Hey, things are good, but you still want to be cautious.” So that was my precursor to this slide. Prices, a lot of prices are back to pre-conlict levels, but not all of them as we well know, right? food food issues. A lot of that is energy issues and that is probably not going to fix itself in the near term despite what Washington is telling us. Um even if something magically changed in the straight uh it would still take months to get everything back running. I can tell you so I think Goldman came out with this that they said about 80% of the oil is traveling through that. I’m not sure about that number and I would question that number because somewhere because about 20 million barrels a day roll through that you know pre-conlict and and now you look at 7 to maybe 15 or 12 million barrels a day. So it es and flows. Maybe it peaked at that point, but as far as sustainable movement on that, we do have the east west pipeline which they just redirected some of that through Saudi so they can backdoor that and load that elsewhere. But I do think at some point one of the things that we learned from that is is you don’t want to be the unreliable deliverer of energy, right? So as they build out these pipelines that impact on the straight will become less and less and less important. Uh but it isn’t going to happen tomorrow, right? That’s going to take some time.

So, let’s talk a little bit about a one-year outlook. So, what’s going to happen? Obviously, we got midterms coming up uh very soon. I think some states have already started their mail in ballots, right? The early voting. Uh we are not quite that that early here in Texas. Uh so we’ll we’ll talk about these six themes and we’ll talk about the influence over the markets over the next year some of the fixed income midterm as I had said market concentration some of the market leadership some of the non US opportunities and maybe some of the common pitfalls out there so these things are all interconnected right so interest rates will affect valuations politics can affect settlement or sentiment sorry about that um and concentration influences right diversification currency movements and so all of this kind of matters as far as international returns and those international the global politics can impact what’s going on right here in the US so fixed income or bonds which is what most people know that now we do call so someone asked why do we call that fixed income versus bond so we call it fixed income so fixed income are bonds but Not all all bonds are fixed income, but not all fixed income or bonds, right? It might be preferred stocks or or um LLC’s, right? Or real estate investment trusts, things like that. But for the most part, we’re just going to talk about bonds and their impact because interest rates are moving. Now, if we had talked about this last year, interest rates were the belief was restrictive. So the Fed was going to lower rates but but interest but inflation has been a bit difficult. So right now you know we had our last rate hike. There will probably be another rate hike. The expectation is one more rate hike before the year end and maybe one in the first quarter of next year. So let me just point something out. So, for those of you who might remember back from economics 101 or finance 101 back in college, or if you’ve just heard this in passing, when interest rates and bond prices, they move opposite to each other. So, when interest rates go up, bond prices go down. When interest rates go down, bond prices go up. The expectation is we are in a rising interest rate market, which is a bummer if you are looking to buy a house right now. um or credit cards that you carry balances, right? So, those can be impacted. But where it matters for um why this matters for those of you who are investing, if you hold those bond funds, right? If we go into some hikes, some of those can get hit. So, there’s some some allocation changes that you might want to do. There’s some changes that we’ve done on our side, look at a different fixed income. But the other aspect when you look at bonds, the longer the bond is, the more sensitive it is to a price movement. So I’ll give you an example. So what this does, we’ll just stay on the top sector because there’s different types of bonds like high yield, corporate, right? Municiples, but a treasury is easy. Everybody knows the T bill, the Treasury bond, all that stuff. So when you look at a 2-year versus a 30-year up there, when they talk about a one-year rise or fall, how does that impact the return? So the 2-year, you see some difference on a 1% movement, but when you go down to the 30, right? So if interest rates fell 1%, that bond price would go up 22%. If it if it went the other way, you’d lose 9%.

be mindful as we move forward on that, right? Interest rates are probably going to rise and that’s the expectations. Munis are pretty nice right now if you’re in a high tax bracket and a lot of folks talk about that. They’re say hey you know what’s taxfree taxree is always nice on paper. Um and basically what this does is assumes you’re in the highest tax bracket. So the highest tax bracket in the US for those who aren’t familiar is 37%. If you make over 200,000 then they add an additional 3.8% on that. So if you you know if you’re earning something that’s tax like like a treasury is taxable. That’s your green line right in the middle. Your municipal is your blue which is right below that. You’re saying well why would I buy a municipal over a treasury? Well you don’t have to pay taxes on that income on that municipal. So, you know, if you’re in the higher tax bracket, that 4 1/2 could be close to a 7 12% return. So, there are there are times where it’s a good idea. One of the things that we look at when we allocate for people when we’re building portfolios, we’re looking at what is in your pocket, right? And that’s part of the planning wealth strategies, taxability, profit conversions, whether it should be in something tax-free, whether it should be something taxable. is it taxes long-term capital gains which are lower than income taxes. So, there’s a lot of moving parts. Um, and obviously each one’s different, right? Because you start looking at when you start getting into the munis, there’s credit quality, there’s which state, um, there’s a lot of different options in there, but it is something to consider. So, the dollar still dominates. Now, it is a little bit weaker. So, this is actually important, right? So this is the leading currency as far as reserves and international debt and global payments. So there was a time so so the US the US dollar has really been the global trade the the preferred currency for global trade since World War II. It hasn’t always been the case. It might not be at some point in the future, but it is the preferred choice probably in the near term, probably in my lifetime. Um, and you know, at some point it was the pound, some point it was a the Swiss Frank. Uh, and and the reason for this is quite simple. Now, the dollar isn’t as strong as it used to be, but it is still hook is still she’s still the best looking girl at the dance. So, she’s the dollar is still very strong. U just not as strong. And the reason for that is when you look at global currency, there’s a few things that you need to look at. So you need to look at as the scale of what it can handle. There’s really only three currencies that can do that at this point, right? It’s the Chinese one, the euro, and the US dollar. So the the case was made back in oh gosh 2008, so 20 years ago, that hey, maybe the euro should be the trading currency. And that was well that was an absolute joke. But um and the reason for it is simple is that the US is the only one that has a unified monetary and fiscal policy which means the Fed makes decisions on rates and the federal government and they’re still in lock step. They might disagree with things but they’re still one and the same right we fought a civil war for that. So when you go to Europe, right, they all use, not all, most use the same currency, the euro. However, Germany can do what Germany wants, France can do what France wants, Greece can do what Greece wants. And we saw that problem happen in 2008, so and 2000. So that’s where we say the euro would probably be a difficult a difficult global currency at this point, but things might change later. And as far as China goes, there’s there’s really just a lack of transparency. They certainly have the scale, right? That’s a big economy, but but at this point, they don’t fully float to the US dollar. There’s there’s a a peg. I mean, they stopped pegging, but it’s still kind of along that. So, the US is still the greenback’s still it. H midterms. What a circus this could be. So, but exciting to watch. So, look, it the election cycle, it can certainly influence the sentiment and increase the volatility in the market, right? But you don’t want to use it as a standalone on on market timing signals or anything like that, right? So, so we’ll talk a little bit about some of the historical patterns on the earnings as far as, you know, back like for 2026. So when we look at the second year of the president’s cycle, right, you probably have some of the lower cycles as far as returns go, you know, amongst that four-year term for the presidency. And that’s actually pretty it’s pretty normal. It’s very normal for the incumbent party to lose seats. So if the Republicans lose seats, it wouldn’t be unheard of. It’s probably more in line with history. I think it’s only happened twice where the incumbent has actually gained seats. So it’s not a big deal. What usually happens though is that because you lose seats, cuz somebody’s always mad about something at this point, right? Someone’s messing up somewhere. You’ll see a lot a lot less delivery of things, right? because they might actually have to negotiate, which would be a would be a fantastic thing if they work together, but I don’t see that happening. Um,

we usually have a lot more volatility, right? So, that’s pretty normal. So, don’t be too concerned about that because again, that’s normal. We kind of look at those in the midterms, turns, movements, things like that. Um, so we normally show some pretty strong recoveries after one year after these corrections happen. So it’s it’s those lows are only obvious in hindsight, right? When you’re in the middle of that storm, it is a rough go. So hopefully with whomever you’re working with, and if not, ARIS is a great choice to work with or even review where you’re currently positioned. U the expectation is volatility is going to increase. it’s certainly not going to go down as we go into the midterm. So instead of attempting to like identify that exact bottom in the market, right? Um it’s really more disciplined allocation and positioning, rebalancing, things like that. Uh we’ll talk a little bit more about that. Um I love this chart because one party always blames the other and I think and and although don’t get me wrong, policy influences things, right? It it definitely matters, but businesses are in business, will always be in business. So, the long-term trend on the market is up. It is there’s been some volatility and and some difficult periods for certain. Uh but you really want to look at a portfolio built for outcome, right? not not necessarily, you know, you don’t want to create like this unnecessary concentration or timing risk. Speaking of market concentrations, so I think this is actually pretty cool. So, you know, probably the S&P is probably the most popular and well-known index here in the US for investors. Hey, buy the S&P 500. And for those unfamiliar with what that is, the S&P 500 is the largest 500 US companies. Uh so you would think, hey, you know, that’s really really well allocated. I’m in 500 different companies. But they are weighted. So not all companies are equal. So the bigger the companies the bigger companies control more movement both up and down um within that index. And that’s not necessarily bad. It’s just it’s just something that you should know because it could definitely impact your positions. When people say, “Hey, you know, I want to invest in AI,” you’re invested in AI. If you own anything like any large cap, anything, those companies are big players before they were being held. They’re still held now. The S&P um to give you an idea, this was what is this? How many stocks? 10, I think. So, yeah, this is the 10 largest companies. They control 38% of the movement of the S&P. So, as a general general general rule, your top five companies run anywhere between 20% to 25 26% of that S&P. So, you might not be as diversified as you think. Again, not bad. Just more cautionary. Uh ah trees don’t go to the sky. Okay. So speaking of that concentration, right, how they’ve outperformed the index before reaching that position, what you’ll find is that larger companies remain successful, but over time it’s really hard to sustain that that same rate of growth. And an easy example that I would give you is Coca-Cola, right? So Coca-Cola, half of the world drinks Coca-Cola. So Coke can’t just say, “Ah, you know what? We want the whole world to drink Coke. We’re going to try and grow that way.” They really can’t do it. There’s too much competition obviously there’s Pepsi. So the way they go about that is through different types of beverages right they might do monster energy drinking they might do water through Dani so they they diversify that other companies will diversify in sense that they just go into completely different models altogether right a completely different business line uh so this supports diversification right beyond just the the concentrated positions where you’re like yeah I want Nvidia yeah I want Apple, etc. And and Apple’s had really a rough go, so most people probably wouldn’t do that, so that’s not the best example, but Nvidia would be one. Um, and Meta, etc. So, know that there’s a lot more opportunity as as those bigger companies become more concentrated and more and more expensive, then there looks at opportunity there, you look at opportunities elsewhere. Um, so this is just some of that com mania, right? when you look at at some of those top companies back then where they were now or where their return is right so that S&P uh equal weight this goes back from March 2000 so actually this is a pretty fun one obviously Microsoft did well exon did well IBM Intel Cisco etc you know less so less so but then you look at like group right it’s absolutely smashed Lucen technologies which is pretty much non-existent So, so this is one of those things. Now, for those of you who are not familiar with the other indexes, so your big ones out there, and there’s many, many, um, how are we doing on time? Okay, we’ll probably want to speed this up. So, the Dow Jones Industrial Average, the S&P 500, the NASDAQ, um, are probably your big three that everybody sees on the news, uh, when they’re looking at news feeds. So, this is not your father’s S&P. And the reason why I bring this up is a general rule, right? It’s the 500 largest companies where where the NASDAQ uh and that’s exposure, you know, if you buy QQQ, right, as an ETF, you’re buying that NASDAQ. Well, before that was like, hey, we’re buying technology and and it tends to be more volatile. Well, what’s happened is those technology companies that were on the NASDAQ before have become these behemoths. So, now they’re part of the S&P 500. So, you’re seeing a lot more overlap. uh where the where the NASDAQ used to be very very different than the S&P 500, not so much. Uh it’s it’s still different but less so. So just be mindful of that. You’re like, “Hey, I love the NASDAQ.” You probably have a lot of exposure to NASDAQ companies as it is right now. Um market leadership. So again, not the com. And I think we want to focus on that because there’s really a lot of talk about AI and concerns and I think some of those concerns are safety concerns um you know going rogue hacking things like that. Um, so, so there are still some lower valuations, right? When you’re looking at at the S&P 500, I mean, yeah, when you’re looking at the technology side, when you’re looking at some of those earnings and you compare them to like the ‘9s or even in the last 12 months, you’re you’re seeing not as as inflated of a price. So, so we’re not saying, hey, we did say earlier that look, it’s becoming more and more expensive, but we’re not like talking.com or anything like that. So, diversification is a key, but there’s still opportunity, and we think there’s still going to be some opportunity for for a little bit at least, probably maybe through next year, but we’re going to have to see how that goes, right? The Fed might have something to say on that. So, uh, the Russell, so this is just some of the small caps, right? So, you know, you have the bigger companies, the Metas, Nvidas, etc., etc., Walmarts, Home Depots, but you have those small companies where they’re looking for the next Bill Gates, right? They’re looking for the next Zuckerberg, um, next Warren Buffett. So, as those bigger companies are becoming more expensive, you’re starting to see some of the opportunity in small companies where they’re a little more nimble, they can make some adjustments. Uh, historically, they they’ve really underperformed some of your bigger companies since well, certainly since COVID, right? because the bigger the big got bigger and wealthier. But we are we are seeing some of the small companies and the small and midsize their price is actually looking pretty good relatively speaking.

Let’s go overseas. Right now we have the UN General Assembly going on. Uh so

we’ll talk a little about this. Now there is a home country bias, right? And I don’t think there’s anything necessarily wrong with that. So, so the US of our investments, it it it’s a percentage, it’s the vast majority of percentage of in people’s investment portfolios. But when you look at like market capitalization, we still are, you know, almost 2/3 of the global economy. But when you look at like GDP, it’s different, right? We’re we’re about a quarter of it. So there’s a whole world out there that’s still doing stuff. So we do think there’s some opportunity going into this year um and maybe into next year. So a little bit broader base on some of the international plays uh global leadership cycles. So I can tell you there’s always an eb and a flow between US and international plays. Lately some of the international plays have outperformed the US. Uh, we’ll see if that continues on or if that if that cycle will shift. Weaker dollars. Supercharge is a non US stock. So, here’s the cool thing about weaker dollars, right? If you’re traveling overseas, it’s a bummer. If you’re buying stuff, it’s from overseas. That’s a bummer, right? Because you can’t buy as much. But if you’re selling stuff overseas, which helps us on our exports, uh, they can buy more stuff. So, um, also with with a better exchange, people come to the United States. I know there’s a little bit of a, uh, tourism push back, but, you know, when you’re looking at trade deficits and things like that, so this could this could help a little bit. So emerging markets they are very much relevant to the AI theme and and emerging markets are are non US but not just non US right they’re um I want to say they’re smaller countries but not necessarily because China and India are are considered emerging markets but generally generally speaking you know it’ be like Brazil or Chile or or some place like that um there’s a lot of there’s a lot of energy development down like Guyana so this can matter Uh so what will happen is that that IT weight in the emerging markets as as those countries start adopting this you can start seeing some movement there. So that could be some opportunity. Now when that happens right you’re looking at like the currency geopolitical concentration risk. You still have to look at that. You can’t just say hey there’s money down there. I should start investing overseas especially in emerging markets because things can change a lot. Um, so final final contact. We’re going into the u into the home stretch here. So I would say this, right? So there’s always a reason to panic when it comes to the market, and this is not the reason to panic, and I don’t think anybody is, but there are some folks that are talking about these really big big pullbacks, market’s going to crash, etc., etc., um, some severe declines. Now I would tell you that when we look it through these things right whether it was a tech bubble or liberation day which was in 2025. So what normally happens is you’ll see these pullbacks and then you’ll see new highs in a relatively short-term period. Obviously some of them have lasted longer but almost every year you can come up with something bad that is going to happen. Um right now we have a war and we have tariffs. So, so that is not helping. And we have the Fed that is looking to raise rates because we have an inflationary we have an inflation concern. Um, but the long story short is, hey, if you’re invested long-term, good quality stuff, long-term, hedge some downside. We can help that if you’ve never done that. Uh, but you don’t want to fall victim to panic attacks. And this goes back 2006, 2025, so 20 years. And basically what it is, it looks at what stocks have done and real estate has done and some international equities and investor returns. And generally speaking, the investor return is usually about half of what the market is because the market will go up and people love that. And then when it falls, they exit out. Um, and they’re waiting for things to get better before before they go back in, which is when you think about it is ridiculous, right? if if you wouldn’t sell your house if your market fell, right? If the if the stock market if the housing market fell for a little bit, you’d probably sit there and hold it for a bit. Um or if you wanted a pair of jeans or something and the price fell. You wouldn’t wait for the price to go back up if you think that’s quality that you’re owning. Quality is the key. And and I and I would say this, right? So, I don’t want to be so flippant or cavalier about this, but if you’re freaking out about the market, that might say something about your risk. And maybe that is a reason to work with the wealth management side. So, you can say, “Hey, look, you know, are you even in the right thing to begin with? If you are concerned about that, this is how we hedge some downside.” Uh, so this is actually kind of cool, right? So, this goes back. It’s the S&P 500. And what they do is they say um so this goes back to 1983 and basically the gray bars are the return for the S&P for that year. So December 31st, right? January 1st to December 31st. So as you can see most years are up years as a general rule. It’s about 3/4 of the time. Now the other part of that are the blue dots. And those blue dots are how much of a pullback the market had during that period from January 1st to December 31st. So people invest knowing that the market is up most of the time. 3/4 of the time I win if I hold it long term. The problem is is what they don’t know is that those blue dots happen every year. So there is always some difficult thing that happens. So it causes a little bit of heartburn. So I think this is a really good chart to talk to people who are brand new to investing or a little worried about markets to say hey look this is really normal this is a really normal cycle we just want to be positioned accordingly.

So can you time the market shortterm maybe a few here or there historically not so much. So they just did a h 100red bucks buy and hold since 1945 versus selling 12 months prior to the peak and buying it back 12 months after that trough. Uh you can see there’s a really big difference on that. Uh and look, I hear great stories are like, “Oh, I bought this. I timed it perfectly.” But but usually and and you might have that, right? You might very well have that happen, but consistently doing it over time is pretty difficult. and you certainly don’t want to concentrate a position in that. So this is what I always think is great because it’s always context, right? This goes back to 1928. If you look at this one over here, how many times the market since 1928 has a market lost over 20%. Right? Six times between 10 and 20. Another six times between 0 and 10, 14. Nobody loves losing money at all ever, right? But when you talk about the upside 14 times, 22 times between 10 and 20 and 36 times that the market closed out over 20%. So, there’s a really, really good case for long-term market investing, but again, you want to match your risk tolerance. You want to match your timeline depending on where you are in that. Um

I would say we’re probably near the end. So this is what we can do. Look is before we close I want to just bring this back to financial planning allocation because that’s always what this is about. We want you to become smarter investors or if you need some help with something we can help. So we can help evaluate not just your asset allocation, right? how social security, how Medicare, how pensions, cash flows, taxes, that retirement income, how you build that structure, how you build that plan, right? Your estate planning after you pass away. So, we do more than just the allocation out there. Um, we can help you build that coordinated plan. Uh, whether you’re dealing with whomever out there, right? Aerys Aerys is a very a very much underutilized resource to the members here. There’s a lot that we can do. Uh if this did raise questions about how you’re allocated or your retirement plan, look, we’d be happy to do that. Uh what we’re going to do is we’re going to go to the Q&A. Oh, this is just one quick one that we added um trust and wills. So, some of your basic planning, trust, wills, power of attorney, living wills, HIPPA, which is your advanced medical directives, etc. Um, I want to thank everyone for attending. We still have a few minutes. So, we’re going to go to the Q&A. Uh, so whether that market’s up or down, uh, you know, you’re uncertain about your risk, we’d be happy to help you. So, if you have any questions, go ahead and put those in the Q&A or in the chat. And during that period, what I’m going to do is I’ll put up a poll. So, that’s my Q&R code and my contact information. If you want to schedule some time for us to look at what you’re doing specifically, double check what you’re doing, uh, see how we can compliment, send me some of the things that you’re already doing out there, uh, go ahead, schedule time with that QR code or give me a call. I will actually put up a poll if you want me to give you a call to do that. Uh, we can look at this from a financial planning perspective, Roth conversions, impact for social security, etc.

and let’s see what questions we might have out there.

First question,

how safe are bonds? Can you lose money in them? The short answer is yes, you can. Uh in in bond funds uh especially, they are there’s no really end date, right? uh bond has a a start date and a maturity date and they come back to what’s called par. Uh but bond funds don’t really have a maturity date. So those turn over. So that can be you want to be careful on what type of bonds you own, what type of we’re in a rising invent uh interest rate market. So you want to be more cautious than ever. Um but there is still a case for fixed income. Uh is 401k good or bad to retire? Um that’s a loaded question. So the question is a 401k good or bad to retire? Uh in general it is a great we’re huge advocates of 401ks, right? It’s pre-tax dollars. It you pay yourself first. You usually get a match. Um but there are some downsides to it. It’s the whether it’s a traditional or a 401k or a or a Roth 401k. What we normally do is when we look at when we’re working with the members, when we do the planning side of it, we look at how it’s positioned. We look at how much of it is positioned. If you have a large 401k, that can come back to bite you a little bit later from a tax side uh during your retirement through required minimum distributions or through a legacy perspective because they changed some of those tax laws uh not too long ago. Um, what I would do is if you haven’t if you’re not one of the yeses, go ahead and schedule some time or just hit the QR code and we can look at where you’re at and percentage of assets and things like that and you want to look at your cash flows and then we can say, hey, you know what, you maybe don’t want to contribute as much here. Maybe you should do a Roth. That’s an option. Maybe you should dial back on that and do some things that are non 401k uh because that’s taxed differently. But as a general rule, I think 401ks are are really a good thing. Great question. Thank you so much. Uh are you a fee or hourly CFP? So we are not hourly. Uh I’d ask about that. We don’t do that. So we are we do both. We do a uh percentage of assets under management uh or we do some transactional but there’s a lot of things that we can actually do from an investment side that actually don’t carry commission or and we don’t have to charge you a fee. We are cognizant of costs um cuz you know we’re part of the credit union. So so that just depends on what you’re trying to do. But we are very transparent. And I can tell you from a fee structure, from the uh from just the traditional managed money where it’s a percentage of assets, we’re actually pretty we’re pretty much in line with everybody else or actually maybe even a little bit, but we can probably save you some money because there’s a lot of your portfolio that I would argue that you don’t even have to do uh as managed money. We can do some things without having to charge you on that. Uh great question. Thank you so much. Uh next question. I know we’re bumping up against the time, but I want to make sure we answer everyone’s question. Uh overvalued with the recent highs. So, so the short answer is I don’t think the market is overvalued with recent highs. I do think uh I do think you’ll every high even if it pulls back, you’ll see another high. There’s no bubble out there. But you still you you still want to be aware of how you’re invested. you you don’t want to take the market as as just a that’s high I shouldn’t invest anymore, right? Because it depends how you’re invested. Some things uh function independently of the market.

Yes, I am a fiduciary. Oh, should we invest in gold and Bitcoin? So to to a certain percentage, right? Um there’s some cryptocurrency in most allocation models right now. I would probably caution against a huge percentage or concentrated allocation for for just a litany of reasons that I don’t have to cover I don’t have time to cover here. As far as gold goes, you’re seeing some of that pullback. Um if you if you view gold as kind of a currency, right? That’s a better way of viewing gold, not as a precious metal. Um so weaker dollar, some some un unrest or or or a lack of confidence in the dollar. You’ll see you’ll see some of that uh that gold up. But but as as the dollar strengthens and things, you’ll see some of that gold pull back. Gold had a great run. If you look at the historical run, gold’s pretty flat, but it had a beautiful run for a while there. But precious metals, yeah, we hold some of that in there anyway. Um, if you’re nearing retirement,

if you’re nearing retirement, is there a general guideline how you should be invested? Um, that’s a good question, but that’s a tough question because that’s a very specific question. And so I’m going to give you some general general general general as a rule. As you get close to retirement, your portfolio becomes a little more conservative, but that depends where you start. Like if you start way up here super super aggressive, then you’ll back it down some, right? You might even back it down quite a bit depending on your allocation. If you’re already super conservative, you don’t want to, and I’m going to jokingly say this, you don’t want to become recklessly conservative because you still want to outpace inflation. Uh should you invest in startups? Well, those can be I guess it depends how much in which startup right so the thing about startup is there’s usually a high payout potential uh but because they are startups the risk uh the evaluation on the risk it just kind of depends on that uh depending on your age and depending on what percentage if you’re close to retirement I would maybe caution against doing really really big percentages in into something like that just because of the risk modeling. Um, but if you have some questions, just give me a call on that and we can talk about it in specifics.

Maybe time for one or two more questions because we’re 2 minutes over. My apologies. Uh, do you see any potential risks going forward? Um, well, there’s no bubbles. So, so I would say this, um, obviously the caution is technology, right? That’s the big one, but we don’t consider that a bubble at this point. debt is one of those other things. Um, but the economy is still pretty strong and the consumer is really strong. So, I still want to be cognizant and respectful of everybody’s time. We’ve run a couple of minutes over.

Let’s see. Maybe maybe I think there’s one more question.

Read that. Are there ways to earn income other than CDs or bonds? Hey, that’s a good question. Okay, so if you’re in bonds, right, and you know interest rates are going up and your bonds might actually take a hit, what are the other ways that you can earn income? Um, you know, like dividend payers, preferred, things like that, real estate investment trust, unit trust, uh, some structured notes, things like that. Um, but if there’s any questions you want us to look at that, by all means, give me a call. Interest rates, it’s a really good time to enter some of the interest rate market right now. like we have some guaranteed things that are over five. So, um it’s fantastic. Um so I think that is all of the questions. Thank you so much for everyone’s participation. Thank you for those great questions. It’s always good to see everybody. Um with that said, I wish everybody a wonderful evening. Um and we will see you on future webinars. Thank you so much. Take care. or have a good night.

Well, good afternoon everybody. Thank you so much for joining me today for the the home stretch, the seven things you need to do uh the decade before you retire. So, this is one of our uh presentations that I do uh quite often, usually about three, four times a year and in addition to many other topics like social security, Medicare, uh you know, other healthcare and retirement, long-term care, many different topics that we do. Hopefully, you’ve listened to some of those. presentations in the past. Uh but uh my again my name is Joe Gaspari. I am one of the financial consultants here with the Alliant Retirement and Investment Services team. Uh I’ve been here for about 13 years with the with Alliant. I’ve been a licensed advisor for about 23 years I believe and I’ve been doing this for a good long time. And uh again uh today I’m going to be talking about retirement planning and the decade before you retire and what things you should be looking at and preparing for for retirement. As I go through the presentation today, uh if you do have any questions, I’ll be taking the questions at the end of the presentation, but if you think of a question at any time, you can go ahead and chat uh type that in in the chat box or the Q&A, the question and answer box, and I will get to those questions. Those will hold till the end of the presentation and I will uh uh be answering those at that time. Um I will also be at the end of this presentation be uh putting up a survey of would you like to have a one-on-one conversation uh after this. So I’m hoping that you will select yes on there and what the as I go through this presentation we’re going to talk about different uh you know you know investments and you know things. What if interest rates are lower? What if interest rates are higher? What if the market’s up? What if the market’s down? What have I saved enough? Am I on the right path to do what I get what I would like to get out of my own retirement? Um, I do a full complimentary plan and hopefully you will take advantage of that full complimentary plan and learn a little bit about here’s what you have, here’s what you want, are you on the right path. It is tailored specifically for you on what you have saved so far, what retirement income do you have, how much would you like to spend in retirement and do you have enough assets to get through to spend what you would like to spend. Um, and again, it’s a great tool that we do use before I do any investing for people, which is again what I do. But, uh, I like to figure out why we’re going to invest the way we would like to invest. And, uh, that starts with the plan. And again, I’ll be offering that to you complimentary. So hopefully it’s something you will take advantage of in the future. So as I go through the presentation here again, if you have any questions, type away and I will get to those at the end and we will go through that. I do have to share that uh we are not able to record for compliance purposes. We are not able to record or distribute the presentation or the deck itself, the the PowerPoint. uh and I cannot have listeners record and distribute this as well.

I do have some other presentations coming up, planning for long-term care. That’s a 6:00 p. p.m. evening central time on October 6th, learning a little bit more about long-term care. And then I’ll be talking about estate planning. All those important documents of powers of attorney for health care, for financial, for wills, trusts, and all those different things that you should be planning for when you are no longer here. Uh who how do you want who do you want things to pass to and what’s the most efficient way to be doing these things? We’ll talk about that in the estate planning webinar. Some educational resources that you have access to, you could see what other webinars are coming up. You could see in or listen to our invests podcast or our Aerys Aerys meaning Alliant Retirement and Investment Services, our website and blog that you have access to as well. So, let’s dig into the home stretch. The seven things you need to do in the decade before you retire. Seven things. Number one, determine when the time is right. Take aim at your retirement uh target. Maximizing your nest egg. How are you invested? and getting a portfolio checkup uh and create a social security strategy. We’re going to dig into a little bit. This doesn’t get too detailed on social security, but we will absolutely touch on it and build a retirement income stream. And then looking beyond the money. So number one, determine when the time is right. Ado van Bismar chancellor in the late 1800s of Germany came with the plan of having some type of uh income a government sponsored income that you could get and it was created that at the age of 70 that you would get this whatever source however much uh this income would be but basically it’s a retirement income retirees starting at the age of 70. It’s great number one that someone is thinking about this, but number two is the life expectancy was only in the 40s at the time uh and that in Germany. So is how many people are actually going to get this income. uh but again that started that strategy and then now today when we look at uh retirement age in the 60s whether if you want to take your social security as early as age 62 your full retirement age which is between 66 and 67 depending on your birth year and then even out up to age 70 if you would like an increased amount of social security income you can defer until age 70 and life expectancy is at least beyond what we uh will as as we get that income, we could expect to live some years uh getting that income. So, you know, kind of a little bit different than the late 1800s as far as when it would start and when uh when how long are people expected to live? So, what age do you think you’ll retire? When we look at age 65, when someone says I’m going to retire more closer to age 60 or I’m going to wait until maybe closer to age 70, as we look at someone’s going to retire later or someone’s going to retire earlier, maybe if someone’s going to retire earlier, if they say they’re going to retire at age 60, maybe the more median age is closer to about 62. Um, so when people want to retire uh closer to that age 62, it’s dependent on many different factors. Uh, sometimes it’s health related, sometimes it’s job loss, downsizing um and or maybe just an early uh retirement uh buyout offers. So, but the majority of times about 70% retirees the reason for early retirement was something out of their own control. It’s not that they said they wanted to retire at 62. Maybe it was forced out of a job. Maybe it was a health it was a health reason. That what happened to my father uh why he retired at 62 to took his social security uh at 62 because he had health issues. His first heart attack being at age 49. Had a bypass at age 51. Another bypass later. And for him to say, I don’t know how long I’m going to be here. I’m going to take it while the taken’s good. Um so again it was that health related early retirement. So nearly half of people retire in their early 60s. Again maybe it’s their choice, maybe it’s not their choice. About 44% of people between the age of 61 to 65. And again some people earlier, some people later uh depending on what your financial needs are. Maybe some people just love what they do and they don’t want to retire. And uh but some people need to have that income in retirement. Planning for different ages in uh for a couple. When we look at um a husband and wife in this case, the male is 25, female 23. And why does that matter so much? It’s not a big difference of only 2 years, which is a reasonable age difference for a couple. But when we look at retirement ages of age 65 and 63. So maybe let’s say this uh the husband in this case was the bread winner and he had the job he had the healthc care coverage and he turned 65 and decides he wants to retire but uh he’s eligible for Medicare but she is not eligible for Medicare in this scenario. So now they’re on the hook for their own health care costs for her in this uh in this case. So sometimes that age difference does come into play. My wife is 2 years older than me. So we’re going to have to work out some of these things. The right now the healthc care is on me. Uh so it’s fine if she does retire earlier. Actually she works part-time. Uh so you know but it might not be that big of a deal for us. But again what is your situation? Then when we look at even in the later years in retirement where he is 82 and she is 80 and now we look at life expectancy that how long is that male going to live? Females live statistically longer than males and even up to 9 years that women can be on their own in retirement because again with that longevity he was already 2 years older than her. So we, you know, that could be certainly be a retirement game changer when there’s only one versus the two of you. Two social security income sources with if you are both here, but if only one of you is here, yes, you get the better of the two, but one source of social security income does go away. So we have to be uh conscious of what uh you know with age differences throughout all of your lives of what does this mean looking at different ages for important ages for retirement. when we look at all of these different milestone uh ages here. Number one, uh 50. Age 50 is when you can actually add a little bit more in your retirement accounts that if you were 49 and younger, you can do what are called catch-up contributions. So, if you’re contributing to a 401k or a traditional IRA, once you get to the age of 50 plus, you can put a little bit more in called catch-up contributions. as early as age 55 is where you can start some earlier uh distributions from qualified retirement plans or maybe some pension income as early as 55 if that’s eligible. uh looking at age 59 and a half. 59 and a half is an important year that you can start to draw from retirement accounts like 401ks, traditional IAS, even Roth IAS and you can get uh and all these withdrawals out without penalties at starting at the age of 59 and a half. age 60 when we look at if uh that an a widow or widowerower is eligible to take social security income early. Um again for widowed situations as early as age 62 if you want to start your own social security uh early as early as age 62. 65 is when you’re going to be enrolling for Medicare plus or minus 3 months there. Age 67 is the full retirement age for social security for most of us. now uh and age 70 for maximum social security benefits. You can take social security as early as 62. Your full social security age is probably 60 close to 67 now for many people. And age 70 is the latest you would take social security. It stops growing at that point. So there’s no need to defer it after that. And then we look at age 73 or 75. If you were born 1959 or earlier, this is these are the ages that you have to start withdrawing from retirement accounts like 401ks and traditional IAS called required minimum distributions. If you were born 1960 or later, though age is now going to be age 75,

taking aim at your retirement target. So number one rule of thumb number one is save enough to generate 70 to 90% of your pre-retirement income. Now again this is a rule of thumb. This is not a hard thing that some like uh if you’re making 100,000 a year can you afford to spend 70 to 90,000 uh a year based on 70 to 90% of your pre-retirement income. So when we look at in retirement what does your spending look like? And this is what the plan that I do offer. And again, I’ll be offering this a couple of times throughout this presentation. Is what does your spending look like in retirement? Are you going to have a mortgage? What are your property taxes? How much is insurance on the home? What about car insurance? What about health insurance? What about what about what about all of these different things that are going to be part of your spending in retirement? if you have social security income and other sources and maybe you’re going to be drawing off of your own accounts, 401ks, IRA or savings and how much can you spend in retirement. But some of the costs that will go down, maybe you won’t have a mortgage. You’re not going to be driving as much back and forth to work. Uh clothing, maybe, you know, less purchase of clothes from, you know, you’re not buying work clothes anymore. uh less going out to lunches or dinners if you were doing that at work. Uh so some of these things where costs may go down. Some costs that can potentially go up. Health care costs in retirement could go up. Maybe you have more time to travel. Uh maybe your home and utility, your utility costs are a little bit more expensive because you’re home you’re um and you’re, you know, the heat’s on more or the air conditioner’s on more uh or water. And uh and then home maintenance. If there are some things uh I’m uh looking at something to fix around the house. I finished my own basement. I did some other things around there. But if it’s something if I’m going to have a project, if I have more time, I might have more projects that I’m going to be working on. Costs that go away. So if you’re not having a job income, you’re not paying into social security anymore and you’re not contributing to a 401k or traditional IAS if you do not have earned income anymore. So again just another reminder if as I go through the presentation if you do have any questions uh type in the chat box or the Q&A box and I will get to those at the end of the presentation. So when we look at in uh an income needs of you know so that’s 70 to 90% of your pre-retirement income for some of the expenses that go away some of the expenses that might go up in retirement some expenses that might go down in retirement. Rule of thumb number two, save a multiple of your salary based on your age. Now, this is not a hard written in stone numbers. And you might say, “Oh, I have a lot more than that or I might have a lot less than these uh based on what age.” So, this is assuming a 55year-old uh making 100,000 that you should have six to eight times that uh that salary. So, 6 to 800,000 saved up um each. So now again it’s not a written in stone number but this is just a guide of how much should you have saved um at certain ages.

Rule of thumb number three save enough to generate a 4% withdrawal rate. Kind of an industry standard of if you have a total assets how much can you start to draw out of these assets that you could be assured it’s going to last for a good long time. and 4%. Sometimes people think 5%, but again, we’re just going to concentrate on the 4% here. So, if you have um what you need in order to withdraw four 40 uh 4% over a 20year period of time, if your desired annual income is 25,000 or 50,000 or even 100,000, you would need to get 25,000, you would need to have 545,000 saved that you’re drawing off of. This is if it is very conservative. Go back to when interest rates are a little bit lower and you’re only earning 1.5% on this. So your earnings and your returns on your asset is very important on this as far as how much you can draw. So in this case, if to do a 4% withdrawal rate, you need 545,000. You need a little over a million to get 50,000 of income and over 2 million to get a 100,000 of income. Now, if you got 5% average rate of return, that 545,000 goes down to 391,000 that you would need because again, now you’re earning more. You’re letting your your money work for you as well for with these withdrawals. And so, if you’re going to earn a little bit more, you could have a less of a a a lump sum um to get to your goal of that 4% withdrawal rate. So sustainable withdrawal rates as we look at um you know if it’s 3% um that you know how long that will last if you took 4% out if you took more and more and more obviously the more you take out the less years you could expect to have that asset. So what if you need to save uh for 24 years? So desired annual income retirement savings required at a 3% rate of return is 476,000 a 6% rate of return 365,000. So a couple of just more numbers on what you would need to save to generate income and how much does uh your assets need to earn to get to that desired income. Maximizing your nest egg. take advantage of work sponsored plans. So here’s we have an example of a married couple both age 50 in this case. Uh he is an income earnner of 150,000 a year and she is a volunteer with no earned income. How much can they save? And this is assuming they want to work for another 15 years until age 65 and how much can they save over this uh period of time. So number one is the 401k that he can contribute um 24,500 and a 401k and we’ll talk about adding catch-up contributions like we talked a little bit earlier. So in this case, he’s going to contribute 24,500 and he gets an employer match of 4500, but because he is age 50 or over, he can do the catch-up contribution of an additional 8,000 because he is age 50 or over. So the base amount 24,500 plus what the company is matching plus the 8,000. And then we start to look at what else can they add to. So you could see there’s income limits. If they this couple wants to contribute to a traditional IRA, they have to have income of capped at 149,000. Now this case they make 150,000. So he is not eligible to contribute to a traditional IRA. But because they are married filing joint, they can have their income is under 252,000. So he can contribute to a Roth IRA. The base amount is 7,500 plus the catchup of an additional 1,100. And even though she is not working, she can use as long as they’re married filing joint, they can uh she can contribute to IAS as well, staying within those same limits of a traditional or a Roth IRA, even though she does not have earned income because you do have to have earned income to contribute to a an traditional or a Roth IRA. But in this case, because they are married filing joint, she can also do a contribution by doing with the spousal uh income. So she’s going to add to an IRA of $7500 plus her catchup. Again, she’s 50 or over as well. So that is a grand total. So they can put $54,200 a year into the retirement accounts uh that they’re eligible for. Now, is that something in your budget? Can you save 54,000 each year as a married filing joint couple? Maybe, maybe not. But it’s certainly something let let’s let that retirement plan help us determine how much you can save for the next years before your retirement. So now this case it says 51,000, but for the next 15 years, if that money is invested and it earns a hypothetical 6% rate of return, now we’re looking at 1.2 2 million uh that could be saved over and earning over that period of time. So there’s absolutely depending on what age you are, maybe you’re at a great place where you think you’ve saved plenty and maybe you’re in a place where I don’t know if we’ve saved quite enough. Uh should I be adding or starting to max out 401k contributions, taking advantage of the catchup contributions if you’re age 50 or over? And uh so how do we make sure we’re getting to that end goal of where you would like to be for your specific retirement? Getting a portfolio checkup. So with uh today, you know that the average uh number of jobs someone might have had is might be 12 jobs over their working years. uh 60 63% of American workers have access to a defined contribution or a 401k, maybe a 403b or some type of savings plan uh that you can save for retirement. 69% of plans have an automatic enrollment. So, when people do leave these jobs, maybe they have their current 401k, maybe they have old 401ks uh that uh that you worked at previously, but in this case, getting that portfolio checkup. In this uh example, we’re looking at someone who’s like kind of a moderate investor. 60% they want in stock investments and 40% in bond investments. So, a 60/40 investor. But let’s say this person had old 401ks too. One in one job is much more aggressive. Maybe it was all stock. Maybe that previous job number two was a little more stock and bond in there as well. Uh but you have this mix of different investments. And again, this current this person currently wants to be a 60/40 investor, but when you look at all their investments com combined, maybe they’re more aggressive than they thought. So, this is absolutely something when we’re doing a retirement plan, looking at your different investments that you’re doing, should you be reallocating, should you be, even if it stays in the plan, maybe you want to start consolidating plans um and getting things in and getting to your end goal of that proper retirement and how aggressive or conservative would you like to be? you and I would work together on on that appropriate investment um list or options that you would have available depending what’s appropriate for you, your time period, your risk tolerance. Um and again, when you look at those old plans, many people don’t even know how they’re invested in some of these older plans. So, that’s certainly something that you and I can look at together. So, what if you have too much invested in the stock market? So, this is an example of in a three-year time period. So, this person has 900,000. You’re you are here. You’re at 900,000. The goal is to get to a million for this investor. And the you got you’re retiring in the next 3 years. So, the thought would be, all right, if I earn an average of 8% in here, I’ll be a little bit more than $1.1 million. I’m going to get to my goal. But what if what if what if that happened in the year ending in 1999 going into 2000 2001 in 2002. If you remember what happened back then we had three years in a row of negative stock market losses in the stock market for three years in a row starting at the end of 99 going into 2000 where we had the.com bust if you remember or the internet bubble. Uh so we had some a time period of not good stuff going on there. The markets were tanking because of uh tech stocks really going down and then we get into 2001 and 9/11 happens. So we have compounded on top of the.com bust. Now we have 9/11 that happens and it kind of shut the world down. I remember I was actually doing lending. I was in the mortgage industry back in 2001, a couple years before I got licensed to do what I do now. Um, but uh, looking at um, you know, the stock market shut down for about a week. Um, I was doing mortgages. People couldn’t lock in rates and we didn’t know where interest rates were going at that point and again the stock market shut down, the bond market shut down uh, for and it was just a brutal time. And then we look at the end of 2001 going into 2002 where we had some corporate scandal things going on. If you remember a company called Enron going out of business. Uh so Enron, WorldCom, Tao, a few companies, Arthur Anderson being the accounting firm for a lot of this. So um they took the fall for some things, but we had three years in a row of the market going down. So, what if you were in that scenario of you’re 1999, you’re three years away and you’re heavily invested and that happens. What if you were a 50/50? It’s kind of 50% stock, 50% bond. You would have gone a down a lot less. You’re not going to dig out of as big a hole. So, it kind of rebounded faster, that 50/50 investor. So, are you invested appropriately for your time period and and your risk tolerance on how you would like to be invested going forward? Here’s another example of a three-year period. Again, you are here, you want to retire in 3 years. This is where some people jump out of the market too fast. So, let’s look at 2007 and 2008. If you remember that one, that was the financial crisis that we went through, the bad mortgage lending things that were happening and defaults and uh again we almost had a meltdown in our financial system and the market tanks in you know starting at the end of 2007 all most of 2008 it’s going down. If you are a 50/50 investor and that’s where you know so your 900 goes down to about 700,000 and you say I’m out. I just want to get into safety. I’m going to put all my money in savings or in very short-term CDs or something like that. I just want safety. And if you were also interest rates went very low at that time as well. So if you were going to jump out of the market and just go to safety like this, the market rebounded, but those interest rates that stayed low for such a long period of time took a long time to get back to where uh if it even made it back to where um it you wanted it to be. So this is where are you invested appropriately for your risk tolerance and your time frame. And sometimes when things take a dive like that in the market, we just kind of kind of wait it out instead of getting ultra conservative after the fact. Updating beneficiaries is another very important thing to do when if you sometimes if you have a new spouse um you know different family then you have younger children if you need a trust. One of the examples that I had, I do know of a couple who got divorced. Um, this is several years ago, but about seven years ago or so, the the ex-husband passed away. He was remarried at the time. So, there was a divorce, he gets remarried, he’s got a new wife, and he ends up passing away. And then they’re going through the assets, they’re going through some things, going through the estate, and there was a pretty heavyduty life insurance policy of about $700,000 death benefit. And the ex-wife was still the beneficiary named on that policy. I know there were attorneys involved, and I know should it have gone to the kids, should it have gone to the new wife, and all these where should it have gone? But, uh, he had named the ex-wife still as the beneficiary. Boy, that could be a big mess. And I do know again there was attorneys involved. Don’t know the result of that but I knew of that case. But uh again making sure your beneficiaries or wills, trusts and all those things are in order. Um see me on one of the estate uh webinars coming up here and uh learn a little bit more about that. Creating a social security strategy. So we’re again we’re going to touch a little bit on social security as I get into that. Another reminder, if you got any questions, type away in the chat box or the Q&A box and I will get to those at the end of the presentation. So, here’s a looking at uh social security where we see the green and then this blue line. The green is years ago when there was that’s the money coming into social security. And what money comes into social security? Out of our paychecks. 6.2% of all of our paychecks go into social security. If you work for a company, the company matches another 6.2%. So your income is 12.4% total is going into social security. If you’re self-employed, you could be putting in 12.4 yourself. Uh so there was more money coming in than there was going out. That’s what the blue line is. That’s the benefits that were going out. And in the meantime, while that was happening, all that extra was I’m sorry, went the wrong way. is there was more money coming in than there was going out. So, it was building up a surplus, this big old trust fund that there was a few trillion dollars in. And now in 20121, we see that crossover where there was about the same money coming in than there was going out. So, but there was no additional money go is being saved in this trust fund. And now we’re in this phase of there’s money going out of the trust fund now. So there’s more money going out of on people on social security, baby boomers retiring at record paces. There’s more people going out of their workforce than there is coming into the workforce. So we’re starting to we have seen now that there’s more money going out than there is coming in. Now we’re dipping into that trust fund where that is expected to run out or go to a zero balance in about 20334 somewhere in that range. And what if that happens? If they do not change anything, it’s roughly about an 80% here, 78%. So 20 22% of our social security may not be paid out. So it’s still a pay as you go strategy, meaning that there will still be workers getting that 6.2% 2% taken out of their paychecks funding people currently on social security, but it might not be enough. So, what are some of the fixit? Um, I talk about this a little more in detail on the social security webinar, but some of the things is are they going to change the retirement age from 67, make it later, 68, 69, or even 70 to get their full amount. Uh, are they going to reduce the amounts just like this? Are they going to take away the cost of living increases that are currently happening? It’s a kind of an inflation number. So that comes out every year in October. They should be announcing what is going to be uh the increase for social security starting January of next year. Are they going to eliminate the increases or are they going to uh be, you know, looking at potentially changing what uh is taken out of our paychecks? Are they going to increase the amount another 3.65% 65% in payroll tax would cover the gap. But again, that’s more taxes that we’re going to be paying. So, how are we going to fix this? And I know it’s talked about every administration. I know Congress is talking about this now, but it doesn’t seem like anything gets done on this specific topic, and it’s certainly an important one. So, what is your full retirement age? Your full retirement age for Social Security is based on your birth year, the year you were born. And right now if you were born uh 1960 or later it’s 67. If you were born before that you can pick find your birth year and you could see what is your full retirement age. But uh majority if you’re not already at that age majority starting next year it’s going to be age 67.

So here’s what what do people expect? How much can you get from social security? These are maximum amounts. And so this is starting at age 62 in this case 66 or 67 being the full retirement age or even deferring out to age 70 if you are a high income earner for at least 35 years because your social security income is based on your highest 35 years of working. If you maxed out every year um the how much what that social security limit was for what you contribute uh you would get the most which is let’s look at 67 4200 a year um so or if you defer to age 70 you can get a little over 5,000 5100 not a bad income uh for that but you would have to max out what’s the average now we’re looking a little you know probably a little more than half of that but when we start to look at averages of 26 six maybe you know if you have not checked this out ssa.gov gov will get you there. You would have to create a login, create a profile and you can get every year I get email alerts every year after we file our taxes within a couple of months after that your new social security numbers are, you know, available to look at and I could see what I’m going to be getting based on every year I work. I have a number and it’s, you know, my current income is it’s high in my top 35 years. So hopefully my you know um my income will keep increasing you know before I get social security. But again here’s more of the averages if you’re a single person and or if you are married filing joint times by two and just to see what your social security income will be building a retirement income stream. So looking at let’s look at when interest rates were low very low. If you want to, you know, have a $500,000 investment and you want to draw income from your investments, what if we go back to the times when interest rates were very low and look at these how much you know at 0.1 or 0.51% which is not that long ago during COVID uh time is when we had CDs at about that.5%. And that’s $214,000 a year in income or I’m sorry a month in income. Uh, so not going to probably get you too far as far as living expenses. And same with money markets when we look at different levels of bonds, maybe more um, you know, safer, maybe more a little more high risk like high yield bonds will get you more yield and that’ll be you know 500,000 getting 2,700 a month. Now you’re talking that okay, I can get better income but it’s still an opportunity of interestbearing accounts. That’s what all of these are things that will generate interest. Uh but what I can say interest rates fluctuate over time too. So this is not a guaranteed income. Uh amounts of income these income levels can go up or down based on interest rates changing. What if you just did systematic withdrawals? What if you had a stock account in this example of a $500,000 investment? This is saying that you have a 100,000 shares and it’s currently at $5 a share and you want to generate this income. You want to get $1,500 a month out of your investment. So, what you have to do in this, you have to sell shares to get your $1,500. Share prices fluctuate. So, going forward, let’s look at if the share price goes up to $6 a share, you only have to sell 250 shares to get your $1,500 that month. But what if the share price goes down to $4 in this example? Now you have to sell 375 shares. So in in a rising price, you’re selling less shares, but in a falling stock price, you’re selling more shares. So now you’re dipping more into principle on these things. So looking at the examples of the or the difference between an income producing like interest rates uh you’re not distributing from your savings but your income will fluctuate because interest rates change. What if you have the systematic withdrawal plan you have consistent income that was the $1,500 a month nice and consistent but now you might be dipping into the principal on this account.

looking beyond the money. As I get again, I know we have a few questions already, but looking, this is just looking beyond the money now at what your retirement is going to look like other than just income. So, the happiness curve, the human happiness curve, when we’re younger and we have less responsibility, we might be happier. Now we’re getting into ages where we have children, we have college costs, we have life going on, and it seems like that happiness curve goes down. And then in more in retirement when there’s less responsibilities again, now our happiness curve goes back up. Looking at happiness factors, so your health number one, and friendships, family, how are you spending your time? Uh, eeky guy, Japanese term, something to live for. What you love, what the world needs, what you get paid for, and what you are good at. Your eeky guy, creating your retirement living plan, uh, contributing to a cause, visiting family and friends, pursuing hobbies, traveling, starting a business, going back to school. So, again, what does your dayto-day look like? How are you living in retirement? Maybe it’s a lot of travel. Maybe it’s you’re homebound and people coming to you. Uh but uh again, how does that look for you specifically? Things accomplished by uh uh people at age 65 plus. And so Peter Roier invented the thesaurus at age 73. KFC started at uh age 65. Madonna beer uh triathlete at age 72. Grandma Moses, age 76, started painting and can you imagine climbing Mount Everest at the age of 80. Um, that’s uh taking on something big there. So, um, what does your retirement look like and what things would you like to accomplish? Retirement is wonderful if you have two essentials, much to live on and much to live for. Uh, so again, a little reminder, the seven things to do before retirement. and then I would love to work with you. Hopefully, you will say yes. I’m going to put up the survey in just a moment here and then I’ll go through some of the questions that we do have already. And again, if you do have another question, uh go ahead and type it in uh and I will get to that at the uh as soon as I go through these and put up the survey. So, here’s a list of products and services that I do offer as well. If you’re just looking for that uh the completed financial plan, the second one down on the left, uh many different uh retirement accounts that I can certainly offer. If you want to be more aggressive, if you want to be very conservative, I have many different investment options that we can certainly discuss to get you to your end goals in retirement. So, I’m going to go through some of the questions here and I’m going to put up the survey. You see a QR code on the screen here. If you would like to uh schedule a time to meet, again, I’ll put up the survey. Please just say yes on there. If you happen to have your camera ready or your phone, put your camera app on and hover over the QR code, click on the little yellow thing that pops up and you will get access to my calendar. You could even do that right now. It’ll be up here for a few more minutes uh as I go through the questions. So, let’s dig into the questions that I have here. So, first I’m going to do is I’m going to put up the survey. And as I go through the survey, I’m going to put that up. So, hopefully you see that up on your screen. Again, just respond to that as I’m going through the questions here. And uh uh and if you do say yes, I’ll be contacting you in the next day or two to schedule a time and you and I will get together and go over your specific plan or whatever you would like to discuss regarding your retirement. So let’s look at question. Does the 25 times rule uh take into account gross or after tax amount needed to retire in your 401k. So this is looking at so when I do the plan just to to kind of go with that I look at what your spending is going to be. So if you have a 401k that everything is taxable coming out, uh we need to gross that up to net what you wouldn’t like to spend. Maybe you have a lot of money in savings. Maybe you have a lot of money in Roth IRA. That’s all tax-free coming out. Obviously, we don’t have to gross up some of those because it’s taxree. You don’t have to pay taxes. But with uh depending where your assets are and when I plug in assets in the retirement plan that I do, I look at uh where everything is, what types of accounts and what’s the order of operations we should be taking out. Should we take savings first? Should we take 401k next? Should we take Roth IAS last? Or what is your specific order of operations that we would do? But just know that if it is 401k assets and I’m looking at spending, we do need to gross up to net. what you would like to spend. Uh let’s see. If I retire at 57 but wait till 67 to take social security, will I get the full amount uh that I would have gotten if I worked until 67? Um so possibly possibly not. Again, it’s based on your uh top 35 years of working. And uh if you are 57 when you go on the social security site there is an assumption the initial assumption is that you’re going to work until at least 62. That is when your number your final number is calculated. Um so but if you work at 58 59 60 and this is part of your top 35 years of of income every time you work a big number goes on and a lower number goes off. Um, so just know that. So, uh, the assumption is that at 57 that you’re going to work some more years. If you don’t, uh, if you, uh, don’t have 35 years of higher income, the assumption of future income is there. So, the income could potentially be reduced. Not guaranteeing that that will happen, but it could. Uh, when do you start adjusting in the portfolio prior to retirement? 5 years, 10 years. uh the uh adjusting the retirement, it’s always going to be the risk tolerance time frame, how much other assets do you have? Some people have more aggressive accounts if they have more conservative accounts as well. But adjusting your portfolio should always be based on your risk tolerance in your time frame. Um so if you have 5 years to 10 years to go to retirement, um again, it’s the number of assets that you have. Where are these and how are they invested? Do you need any money sooner than later? Um, and again, the plan helps us figure this out as well. Uh, conversion. When should I convert a 401k or traditional IRA to Roth IRA? We didn’t touch too much on really on Roth conversions today, but that’s a big part of the planning process that I do as well. um some people that are heavy 401k and many of us are in that scenario that we have more assets in our 401k. That’s where we’ve done the most of our long-term savings is in a four uh 401k and but it’s all taxable coming out later. uh if you retire at age 65, let’s say, and you have to take out your required minimum distributions at either 73 or 75, depending on your birth year, but you got all those years that you don’t have job income should you be converting from traditional IRA, which is a taxable event, uh to a Roth IRA. So, it’s potential that we can do that staying within lower tax brackets. And again, the retirement planning uh tool that I do use takes that in con into into account. We could say, I want to convert, but I don’t want to go higher than the 12% bracket. How much can I convert in given years? And the plan helps us determine that. So, absolutely, it’s something that we should be looking at Roth conversions uh if it fits in your plan. And I do this with many different people typically, you know, usually October, more in November when people get a feel of where their total income is for the year and where their tax bracket is estimated to be and can we convert from a traditional IRA to a Roth IRA. Again, every dollar that you do is taxable, but we just want to stay within lower or certain tax brackets. Do you offer Roth conversion strategy? Yes, I just I just Sorry, I didn’t even see that question yet. Uh but absolutely uh simulation running the numbers if it makes sense to annually convert. I just kind of said that so I apologize I wasn’t even looking at your question yet but that is certainly something that we do. Uh Roth conversion strategy is a big part of that plan. Um 6 years 2 months and 8 days for me for retirement. Boy, you got that down to the day. Uh and we’re getting toward the end of the day. uh add maybe two more hours um for today. But uh hopefully that retirement is going to come and again I would love to work on that plan with you. Let’s see if we have any others. That was all the questions that I think I had here. I’m just going to wait another second. Uh again, yep, that looks like all the questions that I have for right now. Thank you all so much for your time and attention today. If you did say yes, we’re going to talk soon. If not, hopefully we’ll still have a discussion in the future someday about your specific plan. Thank you all so much and have a great rest of the day.

time for it to grow. I’ll tell you more about that in a second.

So, okay, who can do an IR a Roth conversion? Frankly, anybody can. There’s no age limits, high or low. There’s no income limits, and there’s no requirement to be working. Anybody can do it. So, if you’re newly retired and you’re in a low year, a low income year, hey, a lot of people use those first few years of retirement to really take advantage of it when they’re in a low tax bracket.

But now, here’s the risk is well um well, here’s the reason why you may want to do it. Let’s say you do, let’s say you’re doing $100,000, right? Now, let’s say you’re in a 22% tax bracket. Okay? If you’re in a 22% tax bracket, okay, that’s going to cost you $22,000 to do. So, you know, gee, Bill, that’s that’s expensive. Why would I want to do that? Well, because now it cost you $22,000 to convert that $100,000 from pre-tax to post tax, right? Okay, let’s say you’re 55 years old when you do this. In or whatever age you do it, it doesn’t matter, but you do it today, right? In 7 to 10 years, that money should double. So, your 100,000 will now be 200,000. Remember the rule of 72. how long it if you’re making between 7 and 10% that money is going to double in 7 to 10 years, right? Okay. So now that 100,000 is now 200,000. What’s the taxes you paid on it? 22,000 or the effective rate that you paid is 11%. Give it another 7 to 10 years. Now that 200,000 is 400,000. What’s your taxable rate? it ends up being 5 a 12%. That’s why it makes sense to do a Roth conversion if you can. But there are a couple of things that you need to make sure that you have in mind. Um, one, um, you got to make sure it’s not going to hit you up into Irma if you’re 63 or older. You know, remember I said there’s a 2year look back for that. So, be aware of that. I go a lot more deeper in in other webinars on this. Um, and the other big advantage of it is is you decide when you want to take distributions. There’s no RMDs on it. It allows your account to grow uninterrupted taxfree for the rest of your life and it provides a tax-free inheritance to whoever you want it to go to. So, it’s all taxree. So, good good reason to do that. Now, I’m going to go on this briefly. Used to be that it didn’t matter when you did an uh a Roth conversion because at the end of the year, if you ended up going over or hitting an Irma, you know, tax bracket, you could reccharacterize it and and change it before the end of the year. After 2018, they changed that. So, now you cannot do that anymore. So once you convert to a WTH and do that Roth conversion, you’re stuck. So that’s why I usually say wait till the end of the year when you know what your tax situation’s going to be because if tax bills higher than you thought it would be, well, thanks for playing. You’re out of luck. You accidentally fas yourself out of a credit or income dropped, you know, investments dropped in value after you converted, change your mind for whatever reason. Well, thanks for playing. We have some lovely parting gifts for you. Pay your taxes. So, here are the things that you want to ask. Three questions you want to ask of, you know, before converting is number one, uh, do you have a rough idea what your conversion impact is going to be on your tax bill? Do you have a plan to pay the resulting taxes? Preferably, you want to use money that’s not in your IRA money to do it. you want to take money that’s out of it. Um because you really want to take you really want to keep as much of that in the IRA as possible to really take advantage of it growing. Um also do you have a reasonable expectation that the benefits of prepaying your taxes like this make sense in your overall plan? In other words, do you have time and do you have other money to live off of to so that you don’t have to take the you really need for this to really take advantage, you really need to leave it in for at least seven of 10 years to really makes to have it make sense. So the answer to all three of these questions should be yes. If it is, then it could make a lot of sense to do. Now, doing the whole thing at once, that doesn’t necessarily make a lot of sense to everybody. But here’s what I would say is whatever tax bracket you’re in, fill it up to the next level. This way, you’re not adding, you know, you’re not go and sometimes it could like if you go up into the 24% tax bracket, I have no problem with that. I’ll pay an extra 2%. Because if you go into the 24% tax bracket, you’re not necessarily paying 24% tax on everything. It’s only the portion that’s in that bucket. So yes, it costs you a little bit more to do, but the tax savings in 7 to 10 years, maybe even more. So, you know, once you get into your higher tax brackets, then it doesn’t make as much sense, but it depends on how much time you have. So, there you go. So, couple of things you want to look for when you’re doing Roth conversions is you want to look for low income years if you can. So maybe if it’s your first few years of retirement, but before receiving your social security benefits, pensions, or other, you know, IRA distributions, that might be a good time if you’re a business owner with unusually low sales or unusually high expenses or if you had a non, you know, really high non-recurring medical bills in one year where you get that, you know, you get a deduction that’s really lowering your taxes. Those are all reasons. Hey, you know what? I’m in a low tax bracket this year. Let’s take advantage of this. So, all right. Um, now obviously there are limitations to this. These strategies aren’t for everybody. As you can see, there’s no guarantee that a Roth conversion will achieve the intended results. So, just do a little planning before you, you know, before you just willy-nilly go for it.

All right. Um, okay. Now, when you’re rolling over IAS, there’s two ways to do it. You can do it indirectly, an indirect rollover. It’s essentially known as a 60-day rollover. You can shortterm loan. You can take the money out, take the money. You’re essentially giving yourself a 60-day loan, but you better make sure that you get it in within 60 days because if you don’t, then it’s a taxable event, and they’re going to want their money. A cleaner way of doing it is doing a direct rollover or a trusty torustee transfer. Essentially, what you’re doing is is you’re telling your 401k or your company, they will send it. They won’t send it to you. I mean, they may send you the check, but the check won’t be made out to you. It’ll be made out to here. Here’s here it is right here. It’ll be made out to your IRA for the benefit, you know, it’ll be made out to whatever company you’re transferring it to for the benefit of your IRA. So, even though they may send you the check, the check won’t be made out to you. So, essentially, here’s how it works. Is when you do a indirect rollover, you’re getting the money out. If now you take it out of a 401k, they’re probably going to take a 20% mandatory withholding. You get the money back once you roll it over, but you got to wait till the following year to get it back. So, I would say it’s better it’s better to do it. It’s just cleaner unless you really need a short-term loan. Do it this way where the funds go directly to the new, you know, your new IRA. and you you know even if they send you a check it’s not made out to you. It’s not a taxable event. You can’t cash that check. So there you go. All right. Now coordinating your IRA planning should be it should be with all of your aspects aspects of planning. Um you know your overall retirement plan, your estate plan, your tax planning, education planning, it all you know you want to make sure it all coordinates together. Um, so

the last big thing I’m going to go over here, there’s a few other things that I’m going to zip through because I know I’m getting close to the end of the hour here. Um, but and I try and I try and really honor your time. Um, I’ll stay on for as long as I see I got a bunch of questions, so I’m going to stay on as long as you guys want, but I’m going to try and get this wrapped up within within the next um within the next few minutes. So, I may go a little quicker on a few things. Um, it’s not just what you own, but where you own it. Now, this is a really important concept that a lot of people just don’t understand. Let’s say you have $200,000 total in your retirement. You have $100,000 in an IRA and you have $100,000 in a nonirra. You’re in a 24% tax bracket. You want to own $100,000 of investments in a hypothetical 4% interest rate, right? And then you also have $100,000 of stocks paying you a hypothetical qualified dividend of 4%. Okay, what’s the difference? Does it matter? Well, let’s take a look. Scenario one, you essentially have all the stocks are purchased inside the IRA account, which a lot of people do because they think, “Oh, I’m going to put my stocks in IRA and they’re going to generate $4,000 of qualified dividends. Great.” In general, qualified dividends receive special tax treatment and are taxed at long-term capital gains rates. So these rates are lower in they’re they’re typically lower than ordinary tax rates. So because this income is made inside an IRA and all the withdrawals inside an IRA are taxed with ordinary income, you really lose that benefit. So with that in this case, you’re taking out the four $4,000 of your IRA withdrawals of your dividends. Okay? You’re in a 24% tax bracket. Your tax bill is $960 out of your IRA. Your other $100,000 is earning the same amount, 4% in bonds, paying 4%. Okay. Well, that’s interested ordinary income. So, okay, it doesn’t matter whether you take it one or the other. Your taxes are going to total up to 19, you know, 1920. Okay. Well, let’s say we do the opposite and we say, “Okay, we’re going to keep the 100,000 in the bonds. We’re going to put the bonds in the IRA.” You’re still going to pay the same amount. It makes $4,000. You’re getting $960,

but the ordinary dividends in your ordinary stock account, now they’re taking the capital gains rate, which is 15%. So, you’re paying it’s saving you $360 a year on this amount. So, you may not think that that’s amount, but hey, $360 makes a hell of a lot looks a hell of a lot better in your pocket than it does in Uncle Sam’s, doesn’t it? So all these little things that people don’t think of are ways little things that you can really take advantage of, you know, how you keep your money and diversify from a tax standpoint and make sure it’s you’re really maximizing it. Now obviously there’s no guarantee that the investments will perform as ex you know all the disclaimers are out there. Um, you know, not all dividends qualify for taxation of long-term capital gains rates. You know, talk to your qualified tax professional or uh, you know, but I I can tell you which ones as well when it comes to investments at least. So, and it’s no no guarantee that obviously the tax rates are going to stay the same. So, just be aware of that. Okay. A lot of people don’t properly evaluate the decision to apply for social security benefits. Um, this can be a major mistake and in one, you know, it can cost you more than $100,000 of income over the course of your retirement. So just be aware that social security is one of the best it’s the cheapest annuity I’m using my finger quotes here that you can buy because typically what’s happening is the price compared to other assets used to delay social security. Social security it grows at 8% a year. Now granted it doesn’t always make sense to wait. It depends on a few things and I go through this I do a whole webinar on social security where you know it really depends on one your need it depends on your health your life expectancy there’s a whole slew of reasons but and but just know that you know at least no matter how much you’re making at least 15% of your social security benefits are going to be tax-free.

So you want to really take advantage of that as much as you can. Um the other thing is you want to coordinate your IRA planning with estate planning. Now the big thing with this is is that most people think that okay well your spouse you know um when you are you know on your beneficiary form um IAS avoid probate you know so it goes directly to your uh goes directly to your beneficiaries. Now, the biggest mistake I see a lot of people make with IAS is they do a trust and then they create they name the beneficiary is their trust. Why would you want to why wouldn’t you want to do that? It’s cleaner, right? Well, here’s the problem with that. Beneficiaries in an IRA, when you get a beneficiary to an IRA, I’m going to tell you in a second. Okay? So, if it’s your spouse or any one of these other categories, but primarily it’s your spouse, they can essentially take it and they have the ability to stretch it out over the course of their lifetime. Great. Okay. Well, if it’s not, if it’s your kids or a family friend or whatever or something like that, well, then they can essentially take it out over the course of they can take it. So, if it’s a spouse, she can just or your I say she because women always outlive us. Come on, we all know that. So what happens is is that when you um so when your spouse inherits it, they can essentially treat it as their own. They have the choice. They can either keep it in a beneficiary IRA where then they can take they can take it out over the course of 10 years, right? Or or they can treat it as their own. they can roll it over to their own and if they’re as long as they’re of 59 and a half, you know, they can then take it out over the course of their lifetime. So, you have the choice of whether or not you can do it if it’s a child or a friend or some other family member beyond a spouse. Well, essentially what happens is is you have 10 years to take it out. So, just be aware that you have 10 years. You can’t just take it out over the course of your lifetime. Um, so why would they want to remain as a beneficiary instead? Well, if they remain as a beneficiary, then they don’t have to wait till 59 and a half. They can take it out whenever they want. They can just do it over the course, you know, and they have 10 days to 10 years to do it. Now, here’s the biggest thing I want you guys to know about IAS is that there’s a lot they are a big target for scammers. The reason is because they’re a huge part. Your house and your retirement are your two biggest assets, which means it’s a big target for scammers. There’s a lot of people out there trying to, you know, get a hold of you and do all that. So, just make sure you talk to someone who knows what they’re doing. Any questions, problems, complaint, come talk to me anytime. I’m here to help. So, with that, um, I know I kind of rushed through the last part because I know I’m going over a little bit and I wanted to I wanted to really, you know, value your time. I try and wrap these up in a in an hour and I know I have a ton of questions here. So, um, with that, if you have any questions at all or if you want to do a plan or if you I’m going to get to all your questions. I see that I have a ton of questions here. There’s a couple of things you can do. Um the first thing is you can um oh one if you are uh if you want to do a plan with us um make an appointment. I’m happy to sit down with anyone and it doesn’t cost anything to sit down with me. It doesn’t cost anything to make a plan. It doesn’t cost anything to, you know, do estate planning or any of that. We’re here to help. And um now that being said, we’re a we’re a nonprofit. We’re not a charity. But the one thing, you know, so the profits we do make instead of paying off shareholders or lining the golden parachutes of our corporate executives, it goes back into serving you. So with that, if when you come and make an appointment with me, there is no cost to that. There’s no cost to do a plan. When we do a plan, I will certainly make suggestions to you. But whenever I make a suggestion, I will always give you three things. Advantages, disadvantages, and the cost. Sometimes that cost is a is a fee. Sometimes that cost is time. Sometimes it’s both. But you need to know what each one is to make an informed decision. So I always I will always there’s never an obligation. So, you know, if you just want to sit down and ask me questions, I’m I’m easy. I’m a low pressure guy. So, with that, all right, so let’s get to the questions. I know I ran a little long. I apologize, but okay. Um, so, oh, if you want to make an appointment with me as well, there’s a couple of ways to do it before I last thing before I get to the questions is you can either do this QR code. This will give you to get you to my email. I mean, it gets you to my calendar. Pick a time that works for you. Pick a 30 minute window and we can sit down and you can ask me whatever you want. Um or if you also the other way to do it is um you can I see a bunch of people already requested an appointment. What I request from you in doing that way is just put in either the Q Q&A or the chat. Just put down phone or email. Lets me know how you best want to be contacted. So, all right, let’s get to questions here, shall we? Okay. So, the first question here is from Michael. Okay. Michael asks, “Are social security payments are social security payments contributions that can be deposited into a Roth IRA?” They can be. Um, but you have to have earned income. So, you can’t use social security payments only to fund an IRA. You have to have other earned income. So now you could use your social security payments if you’re converting. You know, you could use those social security payments to to pay the taxes. You could do that, but you can’t use it to fund an IRA because it’s get that’s not earned income. Hopefully that answered your question. Okay. Can an annuity be considered a contribution uh can be a deposit to a Roth? You can do a Roth IRA in an annuity, but you can’t just use annuity proceeds. Again, it’s got to be earned. It’s got to be compensated income. So, you have to have a job that you made some sort of compensation. either it’s personal income or a salary or something that you went out and got paid to for doing work that you’re you’re you know that you’re going to be taxed as ordinary income to the government to fund that. It can’t just be a passive investment or social security or anything like that. But great question. Hopefully I answered it. All right, Michael has another question here. How do you defer RMD and how do you calculate RMD? Well, hopefully hopefully I already answered that. Um, I’ll go through that individually with you, Michael, if you if you want make an appointment with me and I’ll go through that where we can say, okay, take a Well, here I’ll do it here. Uh, let’s see if I can go back here. Essentially, what you do is where is it? Okay, RMDs. So, all right. So, what you do is you take the end of your year balance, your December 31st balance, and then you take your life expectancy factor. You take that factor, you divide into the into the end of your balance. That’s how you get your RMD. Now, that being said, come, you know, just just ask me and I’ll I’ll help you figure it out as well. All right. So, let’s get back to here. All right. Back to questions.

Hold on. Sorry. There we go. Okay. All right. Uh

All right. Next question is from Anonymous. Hello, Anonymous. Um, can you also help Can you also help if self-employed and before only work part-time with no retirement account, now divorced and only received 50K in an IRA account and with a big mortgage, you know, um, anonymous sign up for, you know, take the QR code, put on my and I’ll go through it individually with you cuz sounds like you have a specific need that you want to solve and I don’t know if I can just take this from um I don’t know if I can just take this from your question here. So um make an appointment with me and I’m happy to go through it with you individually with you. Um okay, next question is from RA. Hello RA. I’m retired and I only have a small amount of traditional IRA um and didn’t want it to be taxed. I rolled it into Schwab. Now what? Um I have annuals of 25K just sitting there. Okay. Well, sit down uh sit down and have a conversation with me. I can one I’ll help you kind of if you want to keep it with Schwab I’ll I’ll certainly answer any questions with you. Um if you want to know what some other options are here I’ll explain what those are as well. Uh but make an appointment with me and I’m happy to sit down uh sit down and and help you. It’s I don’t know what question you’re really asking me other than you want to know what you should do and I’m going to need some more information from you to give you that answer RA. All right. Um, moving onward. Okay. The next question is from anonymous again. Uh, maybe it’s another anonymous. Um, can I roll over a 403b into a new Roth? If so, does it does it matter before retiring or during? Um, yes. The answer is yes, you can. You can do it all at once or you could do it over time. It it does matter. It doesn’t matter if you do it before retirement or during retirement. It matters what your tax bracket is when you do it. That’s the key thing. So, you want to max, you want to really manage what your tax liability, and you also want to make sure you’re not hitting any of those pitfall sir charges like, you know, Irma or something like that. Um, so yes, but the answer is yes, you can absolutely do it. All right. Um, okay. Michael’s on the horn again with uh can Roth conversions be done incrementally? Absolutely they can. In fact, if you have a large amount that you want to do, typically I would say, yeah, you want to do it over a few years so you’re not killed with taxes all at once. So, yeah, I would say create a plan on how to do it if you want to do it. And you may not want to do all of it. Like, you may want to keep some of it as traditional IRA. Why would you want to do that? Here’s why. Because let’s say, remember I said I’m going to be doing um a webinar in a few weeks on long-term care. Well, if you have a long-term care issue, I’m going to give you a sneak preview to that. If you have a long-term care issue, well, you want to keep some of it in your traditional IRA. Why? Because anything you’re paying for long-term care is going to offset the income that you’re going to get from taking it out of your IRA. So, if you have, let’s say, $60,000 a year to come out of your IRA to pay for help pay for your long-term care. Well, okay, that $60,000 you’re taking out of your IRA is going to be offset by the $60,000 a year that you’re using for those expenses. They’re deductible. So, it’s going to offset the cost of that. So, essentially, it’s taking out your traditional IRA taxfree. as long as it’s for that reason. So that’s why, hey, you may want to still keep some money in your traditional IRA. That’s why it’s so good to do a plan so you can kind of see what the, you know, I’m going to think about these because that’s is all I do is I plan for these things and I help you plan for them and I kind of see what are the whatifs and help you kind of so you don’t have to kind of fish through them yourself because I know listen your head’s probably spinning. We’ve been on for an hour and 15 minutes now and your head could be spinning by all the different options out there. That’s what I’m here for. I’m here to help walk you through them. So hopefully that answered your question there, Michael. Okay, getting onward and upward to the next question. Okay, can still add anonymous again here with can. Okay, can I still add to a 403b that is doing well even if I don’t work at the company anymore? No, you got to be working for the company to contribute to a 403b typically. Um, that’s one of the benefits of being at a 403b. The problem is is that when you’re no longer working there, no, you can no longer contribute to it typically. Um, now you can, if you’re still working, hopefully your new company will have a 403b. You can certainly do that or you can roll it over to an IRA and, you know, and keep hopefully invest in the same things, you know, the same type of investments within your within your IRA. Um, so no, but you can’t keep contributing to a 403b if you’re no longer working there. Um, okay. Lucy asks, um, “Is it worth it to convert in a higher tax bracket now to lower the IRA balance and avoid future survivor tax bomb?” I would say, Lucy, that’s a great question. The answer is, it depends. It depends on your personal situation. I would say do a plan so we can figure out what that answer is for you. Cuz for one person, it may make sense. for the next person next to them. It may not. So, that’s a personal thing and I would say, you know, let’s sit down and we’ll talk about it. Okay. Uh, all right. Carolyn asks, “Am I taxed on a pension as I am? my tax on a pension as I use it to pay for a long-term care facility. Um, no. Well, typically anything you’re paying for a long-term care, if you’re paying for a long-term care facility, it’s going to offset, it’s going to be taxdeductible. So, whatever taxes you’re paying is going to be offset by that. So, you know, if your pension’s taxable, it’s the same thing. It’s going to be it’s going to it’s going to come off your taxes. So, because it is it is a taxdeductible thing. So, now granted, I’m putting on my disclaimer hat. I’m not qualified to give tax or legal advice. For tax or legal advice, please talk to your qualified tax and legal professional. Okay. Um, Anonymous is coming in with the questions here. Okay. Anonymous asks, um, when in the year do you take the distribution or do you roll it over to continue investing? I’m assuming when in the year do you take the distribution or do you roll it over to con continue investing? Your you mean your RMD, your required minimum distribution. Is that what you’re talking about? Um, you can take them out, whatever works for you. Some people take it out on a monthly basis. Some people take it out on a quarterly basis. Some people take it out once a year. Some people take it out on their birthday. It’s up to you. Um if you’re if that’s what you’re talking about. Um that’s what I would say. And roll it over to continue investing. I mean, you can take if if you’re talking about an RMD because I I assume you’re take you’re talking about a distribution, right? So, uh, oh, Janice, should you do a 30 or 60 minute? I would say start off with a 30 minute appointment. Great question. Um, start off with a 30 minute. If you need to do 60, I’ll I’ll run a little long for you, but most of the first initial appointments are 30 minutes. Um, okay. So, hopefully I answered your question, anonymous. Um, feel free to make an appointment if you if you want to go into it a little further or just clarify the question for me. Um, okay. All right. So, next question. All right, Jan, I answered yours. Do a do pick a 30 minute appointment to start. Uh if you want 60 minutes or more if you’re doing a plan when I I’ll do I’ll take 60 minutes to go over your plan with you. Um that’s usually what it is. Um does it make sense to anonymous again uh does it make sense to consolidate SE IAS from two different accounts? What is the upside of doing it? Um I mean people just do it because it you you know just because you consolidate accounts doesn’t mean you know you’re less diversified. Your diversification comes from what you’re investing it in. It just means that you’re going to get one less statement and you have one less account you got to worry about. Um so yeah, I would typically say a personal I mean it’s a personal choice. Some people like to have it in separate accounts, some people like to consolidate it. Um, as they get older, people, most of my clients want to consolidate their accounts. So, hopefully that answers your question. Um, all right. Lot of good questions here today, folks. Um, again, I’m going to be on for a little while longer. I’m going to open up the lines if people want to ask me just individual questions. Um I’m happy to do so. I’m also going to be keeping these open. So if um so if anybody um if you have a new question coming in, I will I will be on for a few more minutes to answer these questions. Um that being said, I know I ran a little bit long, but you guys had some great questions. Uh, and I did wanted to get through a good portion of, you know, I had a lot of information I want to get to. So, thank you for hanging in there with me. Have a great night, everybody. And, um, if I don’t see you sooner, I’ll see you in two weeks. Good night, everybody.

All right. And that being said, if if I’m going to open up the lines if anybody wants to say hello or ask a question, uh, just unmute yourself. at the bottom of the uh at the bottom of the your screen, you’re going to see a little microphone. Click the microphone and it’ll tell you to uh

uh there you go. It will So, if you if you just want to say hello, feel free to say hello. Everybody’s Everybody’s unmuted, so feel free. I’m on my cell phone. I couldn’t scan. Hello, Ra. Hello. I couldn’t um scan for appointment from my cell phone. Oh, okay. Did you uh Okay. So, do you do you have a Oh, so you Okay. So, I’ll tell you what. Well, um So, you can’t scan it cuz you’re on a cell phone. Did you Were you able to uh Well, I’ll tell you what. I’ll I’ll just add you to the list of and I’ll I’ll reach out to you via your email. Oh, okay. Thank you. You know, or or I mean, yeah, because I don’t I don’t want to do it right now because there’s there’s other people on the line and you know, but but if you you know, but I’ll I’ll reach out to you probably tomorrow cuz it’s getting a little late for me now and my dogs are waiting at home and so is my wife. So, I don’t want either one of them barking at me. So, I’ll probably I’ll probably respond tomorrow and I’ll get a I’ll get an email out to you with a with a link to my calendar where then you can pick a time that works for you. Okay. Okay. Sounds good. Ra, thanks for coming. Is this your first time on um with

Is it the first one? Cuz I haven’t seen your name before. With other people from a line. Oh, so you’ve been on with other people of the line. Okay, that’s good. Okay. Um, well, hopefully like we’re all different. We all have different personalities and and things like that. So, you know, but if you want to Yeah. If you want to sit down with me, I’ll I’ll I’ll reach out to you tomorrow with an email and just pick a time that works for you. Awesome. All right. You have a fantastic evening. You, too, Bill. Mara, she couldn’t take a picture of it cuz she’s on her cell phone. So that’s why she couldn’t take a picture of it because she’s on her cell phone. Mara was telling another client was another person on was saying just take a picture of the uh of the QR code. She couldn’t because she’s got uh some. All right, Valerie’s got her hand up. Thanks for a very clear presentation. Um I think that there was a quick abbreviation and understandably on some of the um I forget the technical term for it. These kind of special eligibility categories for inheriting an IRA and whether or not you have lifetime. Yeah, I was getting to the end and I kind of went through uh I went through it rather quickly and I apologize. Right. Well, in a situation where um an individual has uh two children, one um with kind of a lifelong qualifying disability uh that would allow Yeah. Disabled. Yeah. Yeah. And and and the other non-disabled um who would be hit with a you know, kind of probably an illtime tax bill uh from inheriting an IRA. I didn’t quite I mean I know that there are multiple considerations around that um and it’s kind of more preferential to leave um the holdings in an IRA to the person with a disability. Um but what was this about age 59 um with reference to uh No. Oh, okay. Was that in reference to a spouse? That’s to a spousal IRA rollover. So if you’re inheriting an IRA and you’re the spouse, you have you have two choices. You can remain as a beneficiary. Yeah. And just you have, you know, you have you can take it out over the co. So you don’t have to wait till 59 and a half because you’re a, you know, you’re a beneficiary listed. Just the same as, you know, anyone who inherits an IRA does not have to wait till they’re 59 and a half. They actually have 10 years to take it out, pay it out, right? So what I would recommend in that case is usually take it out over the course of 10 years. I do a whole webinar on just these type of things. Not not not all at once if you’re nonis if you’re non-disabled. Um well, if you’re dis if yeah, if you’re non-disabled, do it. Still spread it out over the 10 years. What a lot of people do is they say, “Oh, I want to keep it. Yeah, I don’t want to do it right now. I wanted to keep earning.” And then they forget about it. And then in the 10th year then they have to take out like let’s say okay they inherited a half million and then and they didn’t do anything about it. Yeah. And then you know you could take 50,000 out a year or if you leave it alone for 10 year in the 10th year if it doubles in 10 years now you’re taking out a million dollars in one year. And you know who the biggest beneficiary is going to be? Yeah. Uncle Sam. But but again for a non-disabled individual they don’t have that. I mean for a disabled individual you have 10 years to take it out. But for a qualifying disabled individual they would then they can take it out over the course of their lifetime. So essentially they’ll get it’s kind of like an RMD. Yeah. You know where you can get an RMD and take it out. So if they’re younger the percentage that they have to take out is a lot less.

Okay, I’m getting I’m sorry. I’m getting confused. I thought for for a disabled individual, they could spread distributions over a lifetime. They can. Okay. But there are required minimum distributions over the time. Essentially, if you’re a disabled person, Yeah. If you’re a disabled person or the the beneficiary is a disabled person, Yeah. it’s like an RMD. You can take it out over the course of your lifetime. It’s called stretch. You can stretch it out over the course of your lifetime. So yeah, in the first few years, you’re not taking that much out. I see. But you’re still going on this schedule of life expectancy. Yep. Okay. All right. That’s what I didn’t didn’t get. And then, you know, I guess that there are additional layers of whether or not you’re leaving it to a special needs trust or, you know, um how you’re I stay tuned for my next one. The one that I’m talking about when I’m talking about estate matters. Yeah, I talk all about that because my sister has a special needs trust. Well, my mom has it for my sister who has MS because my my sister, you know, she’s she’s disabled. So, we don’t want it to have it where she gets, you know, she can’t inherit, she can’t inherit everything, but then she’ll lose her disability benefits. So, what we do is, but my mom didn’t want to just cut her out of the estate. So, what we’re doing is we created a special needs trust. So, we the beneficiary is a special needs trust. She can get income from it, but she doesn’t actually own the assets. So that when the day comes from my sister that well then it goes to her kids. Uhhuh. And and it’s, you know, and it’s and it’s not messing with her disability payments. Okay. All right. No, thanks thanks for for for uh clarifying that they they are on a schedule of RMDs over a lifetime. Now, that being said, I’m not qualified to give tax or legal advice. For tax or legal advice, please talk to your qualified tax or legal professional. But yeah, yeah, if I can find if I can if I can find one who can deal with all of the disability related stuff. Um, which is which is hard. Are you in the state of California? I am indeed. And I would love resources. Um, I’m I’m in the San Francisco area. All right. Well, I’m right in uh I’m surrounded by Janentech. I’m just north of the airport. I live in the city. Oh, really? Okay. I’m in San Mateo, so Yeah. Okay. Well, you’re just south of me. I’m I’m just I’m just uh I’m right at Oyster Point. Oh yeah, I know it well. So there you go. So yeah, you don’t have to do it via Zoom. You can come and see me in person. Well do that these days, but I I welcome it. Thank you. Thanks a lot for the presentation. Glad you’re here. All right. Bye bye. All right. Take care.

All right. Any last questions here? Okay. Let’s see. Let’s see. Margaret asks, “Oh, okay. Hold on.” Uh, when am I do Okay. Mara asks, “When am I doing Oh, Mara, you’re not there anymore. Sorry.” Uh, yeah, I’m doing the Well, she’s not there anymore, so I’ll I’ll reach out to her individually and let her know. Um, all right, Janna, I’m glad that you made an appointment. Um, all right. And uh that being said, if anybody else has any questions, I’m going to be on for a couple minutes longer, but I’m just gonna I’m gonna respond to an email. I There’s a few people left on. I guess you’re just either you fell asleep or you’re on the uh either you fell asleep or you’re uh just waiting around for any last minute nugget questions that anybody else asks. Either way, it’s okay with me. All right. So, let me just get back. Oh, darn it. I Okay. Well, I’m gonna get off that. So, let’s see here.

You’re welcome, Carolyn.

Jason, Rob, are you guys there or uh I see you’re still here. I don’t know if you’re waiting for last minute nuggets or you just fell asleep or you left, but you’re still on. Well, if you want to say hello, feel free.

I’m just going to finish up this email. So, unmute yourself and ask a question or or put it in the thing if you want to talk. All right, it’s let me finish this email.

Hey, we’re going to let Hi everyone. We’re going to give it a minute or so to allow everybody to join and then we’ll get started here. So, just just give us a a minute and we will get going. Well, let’s go ahead and get started. My name is Malcolm Horn and with me is Kim Kennedy. We’re both financial consultants with Align Credit Union. And a common question they get is, “Hey, are you employed by Align Credit Union?” And yes, we are. We’re part of the retirement and investment services division of the credit union. We are located in Denver, Colorado with offices in Lakewood in DTC, but for anybody joining from other states, we are happy to do virtual meetings. And of course, if you live in Colorado and you’d rather do a virtual meeting, we are happy to do so. At the end of this, at the end of the today’s presentation, we’re going to answer any questions that that you might have. I apologize but this this webinar is not going to be recorded. I think we do have some recordings out there on YouTube talking about social security but this today’s presentation is not going to be recorded. Over the next week we are going to be reaching out to everybody make sure that we were able to answer your questions when it comes to social security. Today’s educa today’s webinar is purely educational. We’re not going to be talking about products or investments. It’s strictly, hey, this is what you need to know regarding social security if you have not applied for social security yet. We do have some upcoming webinars that we want to make sure that you’re aware of. We have coming up on Thursday, September 29th, we’re going to be talking about the good, the bad, and the ugly when it comes to annuities. People say, “Oh, annuities are bad. You shouldn’t do it.” Well, not necessarily the case. We want to make sure that we’re educating you on the different types of annuities and show you some are good, some are bad, and some are really ugly. And so, it’s a very good educational webinar that’s going to be look out for those emails that’s going to be coming up. Also coming up is Thursday, October 8th. We’re going to be talking about the seven principles of a successful retirement. things that you need to be aware of when it comes to retirement. Again, very good educational webinar to attend. And then of course, we have a lot of educational resources for you to get smart on various topics. We are not the only ones that do webinars. There are other financial consultants throughout our division that do webinars. Feel free to attend any of those. We produce a podcast that’s out there on our website on various topics. So you can listen to any of those. And then our website and on our website is financial information if you want a specific topic you want to learn more about or we also have a blog on various topics. So with that that’s all I have for you. I’m going to pass it off to Kim and she will get to the nuts and bolts of social security. Well thanks Malcolm and welcome everybody. And I believe Malcolm mentioned we’ll take questions at the end and just put those in the Q&A in the chat. And let me get set up here.

Right. And yep, we don’t record. All right. So, here’s our agenda for date for today. Will Social Security be there for you? You’ve heard for years the system’s going broke. It’s your turn to retire and collect from Social Security and you need to know if it’s going to be there for you. How much can you expect to receive from Social Security? Well, part of being able to retire is understanding your income and also your expenses. So, Social Security is part of that income. When should you apply for Social Security? You can apply as early as 62 or as late as 70. And we’ll explain the differences of those various claiming ages. How can you maximize your benefits? Not a lot of strategies left. A lot of those options went away some years ago, but there’s a couple things left and we’ll show you those. And then lastly, will Social Security be enough to live on in retirement? Well, I’m sure some will do it at a on a shoestring budget, but Social Security was never intended to replace 100% of your income in retirement. So, the first thing we need to do is understand the value of Social Security. Malcolm and I hear from lots of people that they just tend to minimize it, don’t think it matters, don’t think it’s much. But the reality is that Social Security is a major source of guaranteed lifetime income for most Americans. In a lot of cases, it accounts for 40% of their income in retirement. And retirement has certainly changed. If you look at the triangle on the left, it used to be that you went to work for a company for 30 years and you walked out with a gold watch and a big fat pension and that kind of laid the f foundation of your income in retirement. And then on top of that, you had social security. And then the nest egg on the top, what you saved in 401ks, 403bs, IAS was almost like icing on the cake. Well, today, as you see that triangle on the right is flipped upside down. There aren’t that many companies offering corporate pensions anymore. And if you have one, you’re lucky. Consider yourself lucky. And that means that your decision around social security needs to be really smart because it is going to be needed for your guaranteed income in retirement. And then there’s a bigger reliance on your own nest egg, the monies you’ve saved in 401ks and IRA.

And social security offers you income you can’t outlive. So for example, if your benefit is $2,000 today and you live 10 more years, you will have pulled out almost $263,000 from Social Security. And if you live another 30 years, you can see that you’ve pulled out almost $974,000.

And I realize the dollar certainly doesn’t buy what it used to buy, but that’s almost a million bucks and it’s still a good chunk of change. And why that’s important is because we’re all living longer. A male today, age 65, has about a 50% chance of making it to age 87 and a 25% chance of making it to 93. Ladies, you you can see we have a 50% chance of making it to 89 at the age of 65 and a 25% chance of living to 96. And for couples, at least one person has a 50% chance of living to 93 and one a 25% chance of living to 98. My grandmother lived to be 6 weeks before her 101st birthday. Malcolm and I worked with an adviser who had an aunt that at 103 was still in her own home with some help, but it’s a long life, right? So, think about that for a minute. You know, if you retire in your mid to late 60s and live another 25 or 30 years, that’s roughly a third of your life. That means your money needs to last you a long time. Okay?

Social Security also offers annual inflation adjustments. So it again if for example your benefit is $2,000 a month and just using a 2% annual adjustment in 10 years that 2,000 a month is 2438 a month and in 30 years it’s 3623 a month. And inflation adjustments are important because expenses constantly are going up, right? how they calculate that cost of living adjustment each year. It’s based on a CPIW index, which is the consumer price index for urban wage earners. And the good thing about these uh adjustments is it also applies to our unclaimed benefits. So, if you’re 60 or 62 or even 50, it doesn’t really matter. every time you’re going to get an increase each year on your Social Security statement, even though you haven’t claimed yet. Here’s a historical look at those cost of living adjustments, and you can see they vary a lot. I mean, look at 2010, 2009 after the financial c crisis, you can see uh two zeros. And then if you go all the way over to 2023 when we had that hyperinflation, you can see it was 8.7. 22 it was 5.9. This year 2026 it was 2.8. The way they calculate these is the the number comes out in the fall and then it goes into effect the following January. So anybody who was collecting social security this year got a 2.8% raise over what they were re receiving last year. And I’ve seen some numbers floating out there for for next year. I think it’s somewhere around 2.8 or three last I looked. So, let’s take that 2.8 uh from this year and just apply it to dollars. So, if your benefit was $1,000 and you got a 2.8% raise, it’s it’s only 28 bucks more a month, but does help offset whatever happens to Medicare. And if your benefit was 4 grand a month and you got a 2.8% 8% cola, it’s $112 a month increase to 4112. So the colas matter just based because they magnify on a larger dollar amount, you get a larger dollar increase. Social Security also offers survivor benefits. If both a husband and a wife have benefits and one spouse passes away, the surviving spouse gets to keep the higher of the two benefits, but not both. And this show shows the man making more than the woman. And obviously, this is gender neutral. It doesn’t really matter which way. But just to give you an idea, the surviving spouse gets to keep the higher of the two. So big question, a lot of talk about this. Will social security be there for you? Now, there’s a lot in the news about Social Security going broke in 2032, but let’s take a look and see what that really translates to.

The income coming in was $1.449 trillion. that comes from payroll taxes that we all pay in from our paychecks and also interest on the special issue securities of the items in the trust fund. Expenditures 1.609 trillion that’s checks that are being paid out. And you can now see that what’s being paid out is greater than what is being brought in. And that that started happening in about 2021. So it was designed as a pay as you go system, right? So what comes in goes out, but we’re negative. So let me show you when that started. So if you look at this chart, the green represents the revenues. So if you look at the left back in 1980, the green revenues are greater than the blue line, which is the B benefits that are being paid out. So during those years, there was that surplus being built up. And then about 2021, that was the crossover where the benefits paid out is less than the revenues coming in. So that big date that you hear all over the news about 2032 is when that surplus gets absorbed and it’s no longer there. At that point at 2032, if Congress does nothing to shore up Social Security, Social Security’s not broke, but there’s only enough in there to pay us 81% of our benefits. So, nobody wants a 19% cut to their benefits. And I don’t think that is what’s going to happen. They are kicking around a lot of uh provisions that can or proposals that can shore up social security. And as with anything, this this thing has just been kicked down the can and kicking the can down the road and now 2032, right? This needs to be dealt with with this administration or the next because 2032 is right around the corner. So, let me share with you a couple ideas that they are considering. Number one, eliminate the taxable max on earnings subject to social security. So, excuse me, maybe you’re aware, maybe you’re not, but every year there’s a number that once a person earns that amount of money, they no longer pay social security tax for the remainder of the year. So, for this year, it’s 184,500. So, once somebody’s earned that, they do not pay any more social security tax for the rest of the year. If they eliminated that and had lifted that cap and said every dollar earned pays social security, which is what they did with Medicare a long time ago, that would cover all of the shortfall. Number two, if they raise the tax on earnings by 1%. So, as an employee, we pay in 6.2% of our check and our employer matches us and also pays in 6.2. two. If each of us, meaning us and the employer, pays a half a percent more, so we go to 6.7 each, that change alone would cover half of the shortfall. Number three, raise the normal retirement age, right? Uh right now, age 67 is for those born in 1960, just how it used to be, 65 and then 66 and 67. Maybe our kids and grandkids need to work till 70 before they collect their normal retirement age. That would cover a third. Uh number four, lower the benefits for future retirees. With all the advances in medicine and focus on health care, people are living longer. So maybe the formula needs to be adjusted to account for that increase in longevity. That change would cover a third of the shortfall. And lastly, they’re kicking around using a different metric to calculate that cost of living adjustment. I told you it was the CPIW. They’re looking at something called a chain CPI that has something to do with us uh changing our purchasing behavior based on prices going up. And the bottom line of that would mean that our increases to social security each year would be lower. So, I’m sure none of these things would be popular, but they’re also not the end of the world. I I think these are all reasonable, and there’s a lot of other stuff being kicked around out there. Um, so we’ll see. But the bottom line, what Malcolm and I believe for the baby boomers is you’re going to get what’s promised to you. We don’t believe you’re likely to be affected by whatever they reform. Maybe a change in the cost of living adjustment, but we we think that’s it. So, insight number one, Social Security is inflationprotected income. You’ve paid into it every single paycheck. So, be smart about how and when you collect it. How much can you expect to receive from Social Security? Well, your benefit amount depends on two things. One, how much you’ve earned over your working career. and number two, how old you are when you decide to turn your benefit on. So here’s how they calculate it. So at 62, they take each year’s earnings and they index them forward for inflation. They take the highest 35 years of earnings, not the most recent 10 or the high five or the contiguous six. I’ve heard all kinds of crazy things. It’s just clearly every bit of our historical earnings, index it forward for inflation and take the highest 35 years. From there, they come up with a monthly average and it’s called a AIM average index monthly earnings. And they take that monthly average and then they run it through a formula and the result of that formula is how much you will get from social security at your full retirement age. From there, they simply add the cost of living adjustment each year. So, here’s an example. So, let’s say somebody who earned that taxable max for social security every year since they were 22 years old, their aim or the highest average index monthly earnings anybody could have this year is $14,35810.

So, here’s the formula. So, they take the first $1,286 and multiply it by 90%. They take the next $6,463 and multiply it by 32%. And what’s left out of that $14,000 number, they multiply it by 15%. And they simply add those three up. And you could see that the total or the primary insurance amount that somebody could receive this year, the highest anyone could get is $4,216.90.

You may also have heard or read that they are thinking about means testing social security. Well, I would argue that they already do that. So, think about this. For example, let’s say you were a a low wage earner most of your career. Well, look at the first leg of this formula. You get a 90% income replacement on that first 1286. And you can at the second and the third leg, the more money you made, the less replacement of income in your benefit you’re going to get. So, they already do that. Here’s another chart that proves that as well. So let’s say you over your career you averaged about 50k a year. You’re going to get about 45% of that amount as your social security benefit. But jump over two blue bars. Let’s say your average earnings were 150 during your career. You can see you’re only going to get a 27% uh replacement from that income into your social security benefits. So they already do means test it. how to estimate your benefits. There is a an account that you could set up on the Social Security website that social securitycurity.gov/myaccount. Um, and if you do that, you can log in there anytime. You can see what your benefit would be at any amount. It has a really neat kind of a slide rule thing. You can see full retirement, you can see 62, you can see 70, you can see every age in between. It is a um really good I’ll just say surprisingly good website. My husband’s been on social security for quite a while. So I’ve looked at his account a number of times. I mean you can uh see what date your social security benefit is going to hit your bank account. You can see the deductions. You can see deductions like Medicare Part B taxes if you elect to have those withheld. If you want to change your address. If you want to change your bank information. If you need a new 1099. If you lost your Medicare card. It’s really useful. And we had a a identity theft webinar a couple years back and there was a former FBI gentleman that gave the webinar and he said this is way safer than um doing everything through the mail with social security. So take a look at that. That’s one way you can get your benefit. Um you can uh go to the my account and do an estimator. It’s really the same thing. Go to the slide rule. The biggest uh other question we get is the last one. There there’s a lot of calculators out there on the website where you can do some planning. So for example, I had a client who um wanted to retire at 55. She had a pension. She worked for Kors and she knew she wasn’t going to take social security until the earliest of 62. So she wondered how long or how much that 12 years of not earning was going to impact her social security benefit. So there’s a calculator out there where you can go in and plug in all of your historical earnings including in her case those zeros for the 12 years and see what the impact um to the social security benefit would be. And in her case surprisingly it was only $200 a month which isn’t bad for 12 years of zeros. So just different situations where there it might call for a specific calculation. They have a lot of those out there on their website. Full retirement age. So this is the age when you get your benefit without any reductions. So it depends on the year you were born. So if you were born between 1943 and 1954, your full retirement age is 66. And then down at the bottom, if you were born in 1960 or after, it was 67. And then you can see the years in between, it’s 66 and some months. This is what I would expect if they decided to bump it to 68 or 69 or 70 for for future retirees. You know, some kind of graduated scale like this. But for your purposes, now you know what your full retirement age is. Now, what you can apply as early as 62 for social security. So, what happens if you apply early? They’re going to cut your benefit and they’re going to cut it permanently. I make a big deal about that because you can find information on the Social Security website that reads as if, well, if I turn it on early, it’s less, but once I hit full retirement age, it bounces up. And that is not true. So, just know that if your full retirement age is 66 and you turn it on at 62, you’re getting a 25% reduction. And it’s a little worse if your full retirement age is 67 and you turn it on at 62, you get a 30% reduction. Now, you can see also the closer you get to full retirement age, the amount of the reduction is less, right? at 65 it’s, you know, 6.7 on the on the 66 column or 13.3 on the 67. Another question people usually ask is, well, what if I want to turn it on at 63 and a half? Well, those reductions are prorated by month. So, you you can do that if you choose, and they’ll just do the math and figure out what your reduction would be. Now, the other thing that happens to you if you decide to turn on your Social Security benefit early come comes into play if you decide to work and you are subject to what they call the annual earnings test. And here’s what it says. If you apply for Social Security before your full retirement age and keep working, there’s a limit um to when they will start reducing your Social Security benefit. So this year, $1 in benefits will be withheld for every $2 you earn over $24,480 this year. That number changes a little bit each year, bumps up a little bit. Now notice I said $1 would be withheld. So what they do is they withhold those dollars and then once you turn full retirement age, those withheld dollars get thrown into the basket and they recalculate it. Um, so for quick just for a quick if you were to earn let’s just say 75,000 three times that number all of your social security would be withheld. So we heard it a lot especially in the financial crisis and things where people are like I’m I’m laid off. I don’t have a job. They turned it on. Um, boom. Now what? you know, so you’re better off earning as much as you can in that scenario and having it all withheld and then it would be almost like you never took it. The other point I would make about this is people say, “Well, I can retire. I can work part-time. I can earn 40k a year. I can pick up my 62 social security. I’m good.” And not realize that they’re not going to get all of their social security because their earnings are over this this threshold. Um, you know, and I’m not trying to discourage you from working, but I’m just want you to be aware of what that annual earnings test is so you know exactly, you know, what you’re going to get if you do do that. And if you want to avoid the earnings test altogether, if you wait until full retirement age and turn on your social security benefits, you can keep working and earn as much as you want and they will not reduce your social security benefit at all. So the key is your full retirement age. Um, the other thing about social security is what if you decide you want to apply late, like after your full retirement age? Well, as with a lot of things in life, good things come to those who wait. What you end up getting if you wait is an 8% delayed credit. So, it’s simple interest, but if your full retirement age is 66 and you wait till 67, you get an 8% increase of that benefit. And if you wait till 68, you can see 16 all the way up to 32. And if your full retirement age is 67 and you waited all the way till 70, you’ll get 124% of whatever your benefit was. And guess what? They also add the cost of living on top of that. So, let’s say it’s 2%. That’s 10% a year for waiting. I realize the market has uh done more than that of recent years, but who knows how long that will last. It’s kind of nice ace in the hole.

All right, this chart, I just put this in because it’s just a nice picture of viewing your full retirement age and taking it early or late. The top half is 66, the bottom half is 67. to the left of the full retirement age box by age you could see the percentage of reduction and to the right you can see the addition of the delayed credits. It’s just a quick easy way to kind of see the differences there. So the big question is well how long am I going to live and when should I take it? A lot of times we hear people saying I should take it early and save the money invest the money. So here is a what we call a break even analysis and let me just compare somebody taken it at 62 versus 66. So the 62 person is the orange line, the 66 person is the yellow line. That crossover or break even age is 78. So what that tells us is that if you believe you have a reasonable chance of living to age 78 or beyond, you would pull more money cumulatively out of the social security system by starting your social security at full retirement age versus 62. Now let’s compare somebody full retirement age in yellow versus someone who waits till 70 in green. You could see the break even age is 82 and a half. So, same comment. If you’ve got longevity in your your your family and you think you have a reasonable chance of living beyond age 82 and a half, you would pull more money cumulatively out of the social security system by waiting till 70 rather than full retirement age. Now, if you go all the way to the right of this chart and if we had numbers on these lines, you know, between they’re about a half a million dollars um between each other. So, somebody 62 to 66, that’s about a $500 gap. And the yellow line 66 to the green line 70 is another 500,000. So, it’s a it’s a big gap. But the question is, do you know if you’re going to live to 100? And if your if your game or your goal is to beat the social security system and get the most money you can, when do you know that you beat that? I mean, let’s say you’re out here at age 95 on your deathbed saying, “Yeah, I really stuck it to social security and pulled as much out of the system as I possibly could.” That is the standard view of a break even analysis, but I’m going to give you an alternate one today. So instead of thinking about how much money you can get out when and it on your deathbed you really stuck it to the system, think about it, you know, 85, 88, 90, 92. How much money or how much are those checks coming in every month at a time when you may be paying more for health care or prescription drugs? I mean, just how much money is coming in that will help you um meet the expenses of your life? I’ll tell you, both of my folks, long before I was in this business, both took their social security at 62 because my uncle did. It’s never a good idea to just follow along. And they in their 80s, I mean, they spend a good percentage, I’d say 30% on on uh health care premiums and prescription drugs. You know, every new prescription drug is never on a formulary list and cost, you know, hundreds of dollars a month. my two sets. Insight number two, your monthly benefit will be reduced if you claim early. It it could also be reduced for taxes if you choose to have taxes withheld from your benefit. And once you’re on Medicare, they automatically take the Medicare PartB premium out of your Social Security. You can elect to have other healthc care things taken out of there as well if you choose. And if you turn it on before full retirement age and you work, if you make more than that annual earnings test limit, your social security benefit might be reduced because of that. So just things to think about. You know, it’s not just going to be an exact here’s what the benefit is, I’m going to get all of that. These other things could impact you. Well, let’s talk a little bit about spousal benefits. when so social security was instituted in an earlier era when most women did not work outside the home, most married women did not work outside of the home. So to create a measure of financial security for women, social security came up with what was called spousal benefits. Um, and basically what it amounts to is that a spousal benefit is equal to 1/ half of the primary worker’s full retirement age benefit if the spouse starts at full retirement age. So in this case, here’s an example. John’s benefit is 2 grand. Jane did do some work on her own and her benefit is 800. If Jane waits and applies for Social Security at her full retirement age, she would get $1,000 because half of J’s benefit is more than all of her benefit.

Obviously, if Jane didn’t work at all, she’d be getting the same thing. So, here’s some rules that apply to so spousal benefits. So, first the primary worker must have filed, meaning Jon has to turn on his benefits before Jane has the ability to access it access them. And the spouse must be 62. So, Jane would have to be 62 for a reduced benefit or full retirement age for a full benefit. So, we said Jane at full retirement age would get 50%. So, that’s full. If she tried to get a spousal benefit at 62, she’d only get 35%. So, it definitely goes down. And remember those really great 8% delayed credits that I spoke about if we wait for after full retirement age. Those do not apply to spousal benefits.

Well, I’m already widowed or divorced. So, how does that figure in to my Social Security? Well, Social Security has something called divorce spouse benefits. So, you they’re the same as spousal benefits. If your marriage lasted 10 years or more, the person receiving divorce spouse benefits is unmarried, meaning you can’t be married and then try to get a benefit off your ex. Your ex needs to be at least 62 years old. And if the divorce was more than 2 years ago, the ex does not need to have filed for benefits. You could imagine the games if a if an ex knew that if he or she didn’t apply, that meant the ex couldn’t access the benefits. So, Social Security figured all that out. And there’s not a requirement there unless the divorce was less than two years ago. And they’re just trying to make sure people aren’t trying to gain the system. So, here’s the rules for divorce spouse benefits. More than one ex spouse can receive benefits on the same worker’s record. Benefits paid to one ex do not affect those paid to the worker, the current spouse, or other exes. So, let me let me give you a little example of all that mumbo jumbo. So, let’s say Bob Let’s say Bob was married three times, divorced three times. Each of those marriages was more than 10 years. Um, let’s say Bob’s benefit with Social Security is two grand. So, ex-wife number one goes in to claim a divorce spouse benefit at her full full retirement age. What is she going to get? A,000 bucks. Ex-wife number two does the same thing. She also gets a,000 bucks. And so does ex-wife number three. And let’s say Bob the Charmer has a current spouse, which would be wife number four. she could get a spousal benefit also of $1,000. So, it’s not a pie that gets divided up. Each of those ex- spouses and the current spouse would get that 50% uh benefit, you know, based on the age of claiming and all of that. So, I think when Social Security instituted these divorce spouse benefits, divorces weren’t as prevalent and clearly not multiple divorces. Uh, last bullet point on this slide is divorce divorce spouse benefits stop upon remarage. So certainly then you’d be entitled to the spousal benefits of your current spouse instead of the divorced spouse benefits.

Okay. Survivor benefits. We talked a little bit about this upfront. When one spouse dies, the survivor gets to keep the higher of the two benefits. So here’s an example of um how that works. Joe and Julie are married. Both are over full retirement age. Joe’s benefit is 3,600. Julie’s is 1,500. Joe dies. Julie notifies Social Security and her $1,500 benefit is replaced by a 3600 survivor benefit. So, yep, Joe passes away. Julie gets to keep Joe’s at 3600 as her survivor benefit, you know, as long as she’s full retirement age. So the only thing about this slide is it says Julie notifies social security. Honestly now um hospitals, mortuaries, hospice. So they’re notifying social security right away. My dad just passed away last month and my mom called anyway and they already knew. So anyway, it’s just something that I think they’re cuz what they do if you died this month, they’re going to come in and take whatever payment they gave you back. So, I think they’re trying to get smarter and notify sooner so things don’t carry over for more than one month. Now, here’s an example of delayed claiming. Joe and Julie are married. Joe’s benefit is 3600, but he decided to wait till 70. So, he got 124% of that benefit. So, he’s getting $4,464 a month. Then, he dies. Julie will get the $4,464 a month, not the 3600, as long as she’s full retirement age or older before she claims it. So, that’s good to know. The rules that go along with survivor benefits is the couple must have been married at least 9 months at the date of death. The survivor must be at least 60 for a reduced benefit or full retirement age for a full benefit. So my example of Julie being full retirement age when she goes to get the survivor, she would get Joe’s 4,400 bucks. Survivor benefits are not available if the widow or widowerower remaries before age 60. I guess they think you’re long young enough that you can um get that from your second spouse. Unless that spouse unless that excuse me, unless that marriage ends, then you could go back and get the survivor benefit from your first deceased spouse. I guess you get whichever one is greater. And the last bullet point here, divorce spouse survivor benefits are available if the marriage lasted 10 years. So, if you remember Bob and his three ex-wives and his current wife, if Bob dies, all of those ladies just double their money. They’re each now getting 2,000 a month.

Okay, survivor benefits is one of the most convoluted uh uh calculations within social security, but that it depends on two factors. So number one, the survivor benefit will depend on the age at which the deceased spouse originally claimed his benefit. They call that the original benefit. So think of Joe. How old was Joe when he turned his on? If Joe claimed before full retirement age, the survivor benefit for Julie is limited to the higher of the benefit or eight the current benefit or 82.5% of his full retirement age benefit. If if Joe claimed after full retirement age, then the survivor benefit will include any of those delayed credits. And that was the example I gave you of Julie. So the second piece of the puzzle with survivor benefits is the age at which the widow or widowerower claims the survivor benefit. They call that the actual benefit. So in my example, if Julie claims before full retirement age, the survivor benefit will be reduced. She can claim as early as 60, but it drops all the way down to 71.5% of the full amount. And if the survivor claims at full retirement age or after, then the survivor benefit will equal 100% of what Joe was getting or the original benefit. So, a little complicated. If you’re in this situation, when Malcolm or I reach out to you, um we can help you if you’ve got some numbers, we can help you walk through um this calculation if you like. So remember in the beginning when I talked about social or survivor benefits or taking excuse me when I talked about taking social security prior to full retirement age I said if you claim early you are stuck with a reduced benefit for life. Well survivor benefits is the only place in social security where you can take it before your full retirement age that doesn’t affect your own benefit. Right? because it’s based on a deceased spouse. So, this is the only place where you can do something before full retirement age and not impact your own social security benefit.

Okay. Point number three, if you’re widowed or divorced, you may be eligible for survivor benefits, divorce spouse survivor benefits, divorce spouse benefits that can increase your monthly check. So again, if you’re in any of these categories, we are happy to help you uh take a look at the math on that and see if there’s anything that you might be eligible for that would increase your monthly benefit.

When should you apply for Social Security benefits? Well, there are a lot of factors to think about when you decide to apply. Number one, your health status. Are you healthy? Number two, your life expectancy. Number three, your need for income. You know, if you need if you have an awful health situation and you’re not expected to live a long time and you need the money, well, by all means, take it early. Quit working. Enjoy what time you have left. Number four, whether or not you plan to work. That has to do with if you want to retire early and work and you’ll you be subject to that annual earnings test. And then lastly, your survivor needs. If you’re married and let’s say you’re the man that makes more money than your wife, uh, but you think you might pass away early, doesn’t mean you should necessarily take it early because you would be leaving your wife with a, um, potentially lower benefit. So, in married situations, you kind of need to factor in both your life expectancy and your spouse’s. So why delay your benefits? Well, bigger checks to start number one. So if we just look at the top line, age 62, you’re going to get if your full retirement age is 67, you’re going to get 70% of that. So let’s say you’re going to get 21,00 bucks. There’s no COLA. That’s the first year. Let’s drop down to age 67. So at age 67, you get a 100% of your benefit. Let’s without the COLA, that’s a $3,000 uh monthly check. With the COLA, it’s $3,312.

And if you drop all the way down to 70, where you’re getting 124% of those delayed credits, that first check is 3720, but when you factor in the cost of living adjustments, that first check is $4,359. So, the colas definitely magnify the amount of money you’re going to to get. And I I didn’t bring it up when we were talking about statements, but when you look at your Social Security statement, let’s say you’re 64 and you go online and you see what your benefit is, that amount does not include the cost of living adjustment. So, when you do your planning, you know, with us or whomever or on your own, just make sure you factor that in. So, uh, here’s another reason why you might want to delay benefits. There could be more income later on. So, let me walk you through this. There’s three people. Somebody took it at 62, 67, and 70. Now, they’re all 70. So, the first line is the person that claimed at 62. They’re they’re now 70. They’ve been getting checks for eight years, and at 70, their check is 2,460 bucks. The person that claimed at 67 is now 70. Been getting checks for three years. And at 70, that person is getting $3,515. Now, the 70year-old, uh, his first check at 70 is $4,359.

Let’s say all three of those people live 15 more years. So, if you drop down to age 85, the person that started at 62 is getting $3,311 at 85. The person that started at 67 is getting $4,731 a month at 85. And the person at 70 at 85 is bringing in $5,866 a month. not quite double what the person who started at 62 is. So again, it’s just part of thinking about longevity, inflation, uh your spouse’s longevity. You know, all of those are pieces of this puzzle. And you know, unfortunately, none of us have a crystal ball to know how long we’re going to live. That’s for sure. Um how can you maximize your benefits? Like I said earlier, most of the strategies um have been kind of taken away. Social Security made some big revisions some years ago, but here are a few things you can do. I mean, the first thing you could do is improve your earnings record. So, go look at your earnings record out on the Social Security My Account. Is it accurate? Mistakes are really, really rare, but every now and then, especially if you’re self-employed, um there could be an error. Are there any missing years? We had a gal come through our office and she brought her social security statement and right in the middle of her work history, there were like three years of zeros. Of course, that begs the question, hey, were you not working those three years? Were you in school? Were you taking care of little kids? is. And she’s like, “No, I’ve always worked. I’ve always paid into Social Security.” Well, come to find out, she was working for a company that was withholding Social Security from her paycheck, but not uh sending it into Social Security. A big no no. Some people went to jail and all of that, but almost everybody in her company’s record got fixed ex except hers. So, six months back and forth with the IRS and Social Security, her record finally got updated. And lastly, can you improve it by working longer? Remember, I said your Social Security benefit is based on a 35year average. Well, let’s say you only worked for 32 years. So, do you know what they do for those three years that you don’t have an earnings history? They use zer. So three zeros in a simple average is really going to bring down the the resulting number. So maybe it makes sense to work a year and replace a zero. Or if you don’t have any zeros, but you have some, you know, early years where your earnings were lower, maybe it makes sense to work and replace some of those lower earning years just to beef up your benefit. And again, one of those calculators out there on Social Security’s website, you can plug in all the numbers and say, well, if I work, you know, two more years and earn, you know, X amount of money, what will that do to my benefit? So, you can look there and go through that process and decide whether you think it’s worth it for you or not. Okay. applying for social security at the optimal time. You know, like my parents, just because your neighbor or brother or whoever applied at 62 doesn’t mean you should. Everybody’s got an individual situation. You need to look at your income needs, not just now, which I hear a lot. People say, “Look, if I take it at 62 and I do this, I’m good. But what about 10 years from now? What if taxes go up? What if inflation goes up?” So, I want you to think about your income needs both now and in the future. And then, you know, the the $20 million question, your life expectancy and your spouse’s life expectancy. So, there’s a couple ways to coordinate spousal benefits that are left that can can help. The first one’s called the maximization strategy. This is where the lower earning spouse’s benefit is more than half of the higher earning spouse’s benefit. In this strategy, both spouses delay until age 70. And what this does is it maximizes lifetime benefits over average or long life expecties. There’s also a hybrid strategy and in this case the lower earning spouse’s benefit is less than 50% of the higher earning spouses. So the lower earning spouse claims early and the higher earning spouse waits till 70. What this does is it generates some income sooner while maximizing the higher earning spouse’s benefit over both lifetimes, i.e. while that person’s alive and then also as the survivor survivor benefit for the surviving spouse. So that’s a couple different strategies that are still left out there. Okay. So when to apply? If you these are just summary points. If you apply early, your benefit starts lower and stays lower. Cost of living adjustments magnify the impact of early or delayed claiming. The longer you live, the more beneficial it is to delay. If only our crystal ball was working. Your benefit may be taxed and reduced to cover Medicare premiums. Don’t let the earnings test discourage you from working. Just understand how it impacts you. and delaying benefits may give uh your surviving spouse more income. Let’s talk a little bit about taxes. Some people are surprised to know that benefits are even taxed. Um so here’s the tax chart of how it works. They look at something called provisional income. So down at the bottom, provisional income is comprised of adjusted gross income. So earnings, dividends, rental income, pension income that’s taxable, all of that plus 1/ half of your annual social security benefit plus any tax exempt interest like from MUN bonds. Even though the interest is tax-free at the federal level, it’s considered part of this provisional income. So if you add up all that stuff at the bottom of the page, then you take it to these tax tables. If you’re married filing joint and all that adds up to over $44,000, you’ve just triggered the maximum taxation on your social security, which is up to 85%. It’s not an 85% tax. What it means is is if you take your total social security, 85% of that amount is what’s going to land on your 1040 and be taxed at your ordinary income tax bracket rate. If you’re single, it’s a little worse. you only have to hit 34,000 before you trigger that 85% tax benefit. So, you know, when this was started um back in the I think the 50% layer layer was mid 80s and the 85% layer was early 90s, they’ve never adjusted these brackets for inflation. So, you know, it probably didn’t affect a lot of people back then, but now, I mean, it it it’s not easy to stay below this. So we usually get the question what’s excluded from that provisional income calculation. So across the top is the formula adjusted gross income tax-free interest and 50% of your social security. That’s what’s used. What’s not included? Roth IRA distributions if you’re lucky enough to have a pension or annuity that’s non-t taxable. Qualified charitable distributions. If you’re giving away, if you’re over 70 and a half and you’re giving some of your IRA or other pre-tax money directly to a charity, you don’t pay tax on that. Inheritance, gifts, life insurance proceeds, qualified medical distributions from health savings accounts. Those are all the things that are not included in that provisional income calculation. So, ways to minimize um again, there’s not a lot. Those benefits or those tax brackets are pretty low. If you have income that you don’t need in other investments, consider repositioning those into tax advantaged investments, not mun bonds. I mean, what we’re talking about here would be uh cash value life insurance or tax deferred um non-qualified tax deferred annuities. Uh think about your IRA required minimum distribution. So, all the money we have in our pre-tax 401ks, 403bs, traditional IAS, none of that money’s been taxed. So at 73 or 75 depending upon when you were born you have to start taking money out and the first year is about 3.7 3.8% but that’s going to fall into your adjusted gross income and probably push you into a higher tax bracket. So maybe it makes sense to pull some of that money out to reduce that requirement by the time you hit that age. Convert traditional IAS to a Roth IRA. We Malcolm and I love Roth IAS. Uh but you know PE but don’t run out and convert a half a million dollar 401k to a Roth because you’ve just added $500,000 to your taxable income for the year. I mean we we help people with Roth conversions and Roth conversion strategies all the time. Makes sense to maybe do it at a certain time when income is lower um or you’re retiring midy year, you got you know six months worth of income. uh delay social security. It reduces the number of years your benefits are subject to tax. That’s it. I’m gonna skip these. Um so we want you to consider social security in the context of everything else you have going on, right? Don’t make a decision in a vacuum. Do you have pensions? Do you have IAS and 401ks? What do your required minimum distributions look like? What other investments do you have? And are you planning to continue working? We realize you probably have questions. When should you apply? What if you want to keep working? What if you’ve already applied? What will your benefit be? How can you coordinate? What’s the best long-term strategy for you? What do you do next? Malcolm and I offer a complimentary planning session. We call it a discovery session and where we gather some information from you and we run it through our software um and and just talk about kind of whatifs. What if you apply? When’s the best age to apply? What if you retire at this stage? So, I’m going to give you just a quick example of how that looks. So, this is Richard and Deborah. They’re both 62. Richard wants to retire at 67. He’s got some health issues. He thinks he’ll only live to 85. Deborah wants to retire early at 65 and she thinks she might live till 95. They have savings and they each have a 401k. Um, both of them are contributing the max to their 401k and their employers give them a 3% match. They each make 150. There’s their social security benefits. Richard at full retirement age is almost 41K. Deborah at 65 is almost 35K. Richard has a little pension. We factor in their living expenses. It has an inflation rate. We always break out health care because it’s a higher inflation rate. Travel, we break out because you’re probably not going to travel till you’re, you know, 95. Our software pulls in the actual IRS federal tax tables. We can pull in state tax tables from any state. In this example, I’ve picked Colorado. So, here’s their cash flow overview. So the red line that goes across the screen is those expenses that I just went through. How we’re going to cover those expenses are determined by the color of the bar. So on the left you see those teal blue bars. That’s the two of them working for three years. Then Deborah retires. Richard works for two more years. When Deborah retires, she’s turned on social security. That’s the Navy blue blocks. Richard retires in 2030. Now, there’s social security from both of them. The mint green is his pension. And then you can see there’s a little bit of yellow u on top of that getting them to their expenses. And that just indicates that they would need to withdraw money from somewhere to meet their expenses. But you go out about six or seven years and you see the orange that is above the expense line. And that orange means that’s the year that they must begin required minimum distributions. And at that point, you can see that they have more income coming in than they have planned expenses. And if it worked exactly like this, and we know it won’t ever work exactly like this, and uh Deborah lives to 95, she’ll have about $2.4 million left. Um we can look at tax bracket and see, you know, in those early years why they’re the first five years why they’re both still working. there there are some taxes but not over 24% and then when they’re both retired you see that block of you know six or seven years from Deborah’s retirement until they turn RMD age no taxes so those are the great years to do Roth conversions. So then we can do a whole bunch of whatifs. So the first thing I’m going to show you is what if Richard decides to delay his social security to 70? What is the benefit of him doing that? So, our software would lay that choice on top of the original choice of full retirement age. And you notice when he retires in 2030, on top of that blue bar, there’s a little bit of gray and there’s gray for a number of years. That means they would have less in their portfolio. Well, of course, because he didn’t turn on social security, and that doesn’t catch up and become a benefit until he’s 80. So that’s kind of the break even of that decision for Richard. So at 80, it would be a benefit to him. And from 80 till, you know, the end of Deborah’s life, that would add $240,000 to their portfolio.

Some B not not a great benefit if he thinks he’s only going to live to age 85. Uh, but other benefits, I mean, if it doesn’t necessarily help Richard, it would increase the survivor benefit for Deborah, right? If she would get the age 70 benefit instead of the full retirement age, it’s a bigger social security benefit, so more of the income would be tax advantage because 85% of it is subject to tax. And while they wait to turn on social security, they would potentially be spending down IRA money, which would reduce the RMD. So, those are some possible other benefits of that decision. But what if we went the other way? What if Richard said, “Well, what if I want to retire early and turn on social security at 63? Is that a possibility?” Well, yeah, you see a lot of gray on this chart. And it costs them about a million dollar at the end, but what does that do to the cash flow? You know, they’re still fine, right? I mean, and so now at Deborah’s 95, instead of leaving 2.4 4 million to the kids, she’s leaving 1.3. And maybe that makes more sense to them. That might be a better value position if Richard does have health issues and wants to just get out and enjoy life. So, you know, all that is um if the numbers work, then it just becomes what’s in your heart and what what makes the most sense to you where you are in life. So, the bottom line is that social security is just too important for guesswork. Uh, you just got to make the decision in conjunction with everything else you have going on. I’m going to skip this because we’re running a I’m running a little late. Um, we’re here to help answer your social security questions. We can help you plan a retirement withdrawal strategy. We can help you decide by running a plan if it makes sense for you to spend down some of your IRA money and defer or take social security a little later. We can help you look at your employer plan and and determine what rollover options are available. We can create a Roth conversion plan for you. We can help you decide on what your best long-term strategy is. If you decide that it makes sense to move any of your retirement account money, we can make sure it’s done in the right way and there’s no taxes. Um the So, those are just some of the things we can do. We also we’ve partnered with a company called Trust and Will and anybody who becomes a retirement client with us, not just having money at the credit union, but if you go through a process with us and you decide you want us to help you with your retirement um investments planning, those types of things, we can provide this estate planning service to you at no cost. And as you can see, there’s a lot of different things there that this would offer. Um, so as I mentioned, we do complimentary foundation planning. We can do advanced planning uh for Roth conversions and look at taxes. I mean, we are not tax people, but obviously we have to be smart enough and our software is smart enough to look at the tax implication of things. just talked about in it’s estate planning, investment management. I mean, a lot of people don’t even realize Alliant has an investment management department. That that is what where Malcolm and I work and that’s the type of advice we serve and help our clients with. And there’s all kinds of different investment choices out there. And you know, we can help you decide which one is appropriate for you based on what you need, what amount of risk you’re comfortable with. Are your expenses a lot higher than your your income? Um, do you hate the stock market? Do you hate safe investments? You know, all those kinds of things come into making a decision. So, with that, uh, we’re going to open it up for questions. I know I ran a little bit over. Sorry about that. Um Malcolm’s going to come back on and I believe he’s going to start a poll. Oh yes.

So the poll is um we’re going to reach out to all of you anyway. But if you want to get in touch with one of us sooner than later, you know, answer yes to this poll and um we’ll be happy to reach out to you first. Guess I didn’t turn my camera on. Let me see.

Let me see. Your camera’s on, Kim. Oh, it is. I can’t see. Yeah. Okay. I can only see you. All good. Okay. Good. Good. Good. Me anyway. Yes. All right. So, here’s a question. Uh, could it be advantageous to take social security before 70 to cover the Irma expense rather than having to pay to pay it from investments? I will not need to depend on social security for income.

So take it at before 70. So I think what is I think what he’s saying is he’s expected to have Irma expense. So his pure mean is going to be higher. Should he take social security to cover that, you know, higher cost of health care or continue to delay it? He doesn’t necessarily need social security for it. Well, he might be better off trying to do something to reduce the investment side of things so your income’s lower. I mean, yeah, that’s a strategy, but maybe Roth conversions are better. I mean, it depends on how many years you have between now and then. The next question, which you know, I don’t think we really get into much, but does anything change if you retire or reside outside of the US as an expat? I I’m going to say I don’t know. Talk to a tax accountant. Yeah, I think that’s into that too much. It’s very complicated. So, we don’t try to steer clear of that. I know there are certain countries that you can go to and it’s treated the same way, but yeah, talk to an accountant and because every country is a little bit different and we’re just not an expert when it comes to there. No. Yeah. So, uh, what other questions? I think that’s what I got off easy today. Yes, you did. I’m already running a little late. There you go. For clarification, is rental income a a potential if the 24,000 max limit for work before the $2 reduction every the annual earnings test. So, no, it’s it’s a W2, you know, sweat of the brow income. So, passive income doesn’t count on the annual earnings test. It does count on the AGI for provisional income, but not on the annual earnings test.

That’s it. That’s it. That’s it. Guess your job. There you go. All right, everybody. We appreciate you um tuning in today and uh if you come up with any other questions, we’ll look forward to answering those when we talk with you over the next week or two. Thanks.

Does that mean I cannot claim the spousal social security? No, you can’t. And so, like in in the presentation, if you have a a spouse that works, you are entitled to a portion of that. And so, uh no, I get that question all the time. And you are, uh definitely entitled to that. No work is required. So, it doesn’t mean that you can’t claim. You just uh you have to uh apply for your spouse’s record and you have uh you have to wait if you wait until your full retirement age, your spousal benefit is up to 50%. So, remember that. And you can start claiming as early as age 62, but you’re going to be getting that reduced uh monthly amount. So, as a homemaker, in my eyes, that is a full-time job. you just don’t get paid for it, but you know, you are entitled to your spousal uh social security. Great question.

All right.

And for those I know there’s a lot of you in in attendance. Um, you know, if there are questions that you have that you can’t come up with now, uh, or you don’t have, but they come up later, I get a ton of questions after the fact. Uh, so, you know, my information is on the screen there. So, please take uh my the scanning scanner there, QR code, my direct numbers there, my email. So, please please take a look at that. I have another question. How much do you charge for a consultation? Zero. We do not charge fees for consultations here, which is again a good benefit that I I beg you to to take advantage of because there are other firms out there who charge an arm and a leg just to, you know, see how you can work with them. We do not do that here at the credit union. So again, please check that yes uh for an appointment and I will reach out to you and set something up and I can I love to meet in person. I’m located here in the Chicagoland area by O’Hare, but we also uh do Zoom meetings. I I do a lot of Zoom meetings with uh with members as well as phone consultations. So, um do not hesitate to to reach out because, you know, our expertise here uh is is a good resource. And so, you know, I have a team here uh at Alliant Retirement and Investment Services that that’s all we do is is planning for for our clients when it comes to retirement, investments, education, whatever it is. So, please take advantage.

All right, that looks about it for questions. Uh but again, if something comes up after uh our presentation today, please feel free to reach out to me. Uh I would love to talk to you and and answer those questions. But with that being said, again, I know your time is valuable and I appreciate you joining me this morning. Have a a fantastic rest of your day and a good upcoming weekend. Appreciate you all.

Hi everyone. Uh we still have it looks like two more minutes and it looks like people are still signing on. I hope y’all are having a fantastic day here in Houston. It is some blue sky which is always nice. Uh, and it’s only 89° with humidity feeling like 100, which is still better than 100 plus humidity. I’ll take 89 versus versus that. So, wherever you are joining us from, I hope everything is going great and I hope you are looking at blue skies.

So hopefully the uh skies are much brighter than the market today. Obviously we’re dealing with a little bit for those of you who follow. It’s a little bit of a turbulent time right now with everything going on. Interest rates got a little war going on overseas. Uh, we got another minute. We’ll give that another minute or two as people are still signing on.

We’ll save questions for the end.

If you have any questions, go ahead and pop those in the Q&A box or the chat. I will I will I plan on fielding those at the end. If it’s something that’s somewhat timesensitive, I’ll try to answer it then. It just kind of depends on where we’re at. Um ah nice in Florida. I bet that is in Palm Beach.

So I’m looking at 2:00 straight up. We’ll give it maybe one more minute.

and then we will start our uh today’s topic on social security.

It is good to see some familiar names and a lot of new names out there

as always. if this is so I know this is a webinar I I love the in person because it’s far more interactive so we’re going to do our best so if there’s any questions or comments hello to North Carolina um most of most of the attendees because we kind of handle the region is Texas obviously uh Louisiana North Carolina I think those are it an occasional one from California. We’ve had some folks up north, too. So, but it’s pretty much usually kind of the southeastish.

All right. So, with that said, I think we’re going to go ahead and and start. Uh again, formally welcome everyone. Uh thank you so much for joining me for this webinar, Social Security, Choice of a Lifetime. It’s always my pleasure to join you. on these webinars uh and share a little information on social security. I will tell you just a little bit of a caveat. This is on social security and income. But but I do want to say right when we look at social security we’re looking at it from just a social security perspective in a vacuum. There’s really a lot more things to consider right age difference. We’ll talk a little bit about that. also your cash flows, your need, your time, your life expectancy as well as maybe income tax now, maybe income tax later, right, for your legacy uh your Medicare impact on income. So, we’re going to talk about this, but but really it’s always good just to just to sit down with us if you’re not sitting down with anyone else and we can go over some of the well planning side so we can look at all of those moving parts that might impact it. Uh, someone already opened with a question and that actually will be something that we’re going to be talking about on a very high level. Um, so if you are here for the first time, an extra special welcome. For those of you who don’t know me, I’m Michael Marx, certified financial planner and a financial consultant with Alliant Retirement and Investment Services, or ARIS for short. I live right here in Houston, Texas. Uh, I’ve been doing this for over 30 years, and oh, we are fiduciaries. That is a question that someone asks inevitably. And uh for those of you who don’t know, my family has been tied to the credit union for longer than I’ve been alive since the 1960s uh through United. And for those of you who don’t know, this used to be or technically still is the credit union for United Airlines, but we’ve changed our name a while back because we deal with many companies now. So whether you have joined us through United or Continental or Google or Tesla CBS, Susie Orman, we’re happy you’re here.

And if I can get this slide to change. So before we dive in, uh just a quick housekeeping item. Oh, it has started. So can you not hear? Let’s see. Did I do something?

Can everybody else or can anyone else hear me? Someone said someone said they cannot hear me. Oh, perfect. Okay. So So the one who can’t hear me, you might want to um maybe log out, log back in. That that might help. Or maybe or maybe turn up the volume. That might be something. Sorry about this. You know, this technology and stuff sometimes gets the best of us. So um we’re going to move forward on that. So just a quick housekeeping uh item. Today’s session is for educational purposes. It includes proprietary materials, protects both the content and everyone’s privacy. So we ask that attendees do not record or capture the presentation whether that is by video, audio, screenshot, AI tools, any other method without prior consent. We appreciate your understanding and I am very much glad you are here. So I’m not sure what brought you to this webinar if you joined us via an email directly from us or if you uh signed up through alliance website directly. So let me just take a couple of minutes and talk to you about ARIS. So in addition to the weekly webinars that we host, we are a full-ervice wealth management investment planning division of the credit union. We offer a broad variety of investments planning strategies from fixed rate guaranteed to as aggressive as you want to be in the market. Uh maybe a little bit of life coaching always makes me laugh when it comes to your retirement years. Uh we’re actually a really good resource to utilize. So we offer multiple webinars throughout the week with different presenters. Each of us try to host twice a month. It changes a little bit right over the holidays. um ARIS were really focused on helping you understand the ins and outs of investing, saving for retirement, tax structures, tax strategies in retirement, legacy planning, etc. So, if you haven’t, I take a I I encourage you to take a look at our website and that’s uh a ris.creditun.com uh and you can see a list of our weekly webinars. you look at our podcast which is investsavvy our blog and other financial resources that are available to you. So speaking of webinars, uh my next webinar will be called anatomy of a recession and we’ll talk about recessions from a historical perspect perspective and and uh I’ll apply that to our current situation. Uh and I will sprinkle in some of the current events, you know, like we’re looking at Fed rate hikes, uh possibly a cut, but really not. We’re looking at hikes, tariff impacts, some of the geopolitical decisions, some of the wars that are going on, etc. So, that will be Tuesday, September 22nd at 6:00 p.m. Central, 700 p.m. Eastern. And then I’m back in the afternoon, Thursday, October 1st, and we’ll be talking about Roth conversions. This is a really a big one. it can greatly impact and save you a lot of taxes over the course of your life as well as income taxes uh to your children, grandchildren. So, we’ll talk a little bit about how that will be that should be at least part of your long-term retirement tax strategy,

how we can help, right? We do complimentary financial planning. Uh we are also the estate planning. We’ll have a slide later that we add trusts and wills, some of that basic planning. Obviously, we do the investment management since we’re an investment management firm. Uh really broad range of choices that we can do. And actually, we can do some things that are just outside of your traditional retail that uh breath of products out there and some of the advanced planning, right? Roth Roth conversion, tax planning, flow analysis. So, things like that. All right. So today’s presentation, we’re going to focus on how to maximize what is for many the single most importantly monthly paycheck that you’re going to receive in retirement, right? And that’s your social security benefits. So I I want you to come away knowing that social security benefits provide like a protected level of income, right? And they can’t be outlived. So that’s important. So before we get into some details, uh we’re going to talk about today we’re going to say that social security is complicated or at least it can be complicated. Uh you’re not alone if you feel this way. Many people do. So this is a great opportunity to work with a professional. Uh we can help you lay that solid foundation for the solution that works best for you in your personal circumstances. Right? Because it’s not just about maximizing social security. You also want to look at those decisions and how they impact other things, right? your cash flow, tax implications on your RMDs, etc.

So, this is not a recommendation for a buy or sell on any particular products. This is really just kind of general information. So, if we’re looking at a specific situation, it’s probably best to schedule an appointment and that opportunity will be later. So, and and we’ll talk a little bit about that. So, big thing, right? Um, in this assumption, assuming you earn 54,000 a year and your full retirement age is 67, which is probably, if you’re on this call, most of you, if you’re not already retired. So, the difference between an early retirement at 62, which is the earliest you can draw social security or claim social security, uh, is $1,465. If you waited until 6 until 70, you’re looking at 2634. So that’s a big difference, right? $1,200 a month, 14.5 a year, that’s quite a bit. Now, are you making more money from social security? Not necessarily, right? The theory behind that is assuming you live to a certain age, the reason why the check is lower at 62 than it is at 70 is that you’ll be getting checks for 8 years longer, 96 payments more than someone who started it at 70. So in theory, um you would receive the same total amount of money. Obviously, there is a tipping point and we’ll talk a little bit about that.

So this is our agenda, right? We’re going to talk about social security. We’re going to talk about social security basics and we’re going to give you some general guidance built for you

choice of a lifetime. So as a reminder, right, we can we can apply for social security as early as 62. Maximum amount received is age 70. a little background on the 63 to 65. So a fair a fair amount of people fall into this category, right? And they didn’t plan on retiring early. So if you look at this slide, there’s people who plan on retiring and then when they actually retired. So if you look at 62 and 63, you’ll find in these studies that a lot of people who wanted to retire at 66 or 67, which is your full retirement age, many people are forced to retire early. And a lot of that, a lot of that is due to health reasons, right? Either their own or a loved one. They have to look after a spouse. They have to look after parents or correction force where they got laid off and they’re having a difficult time finding new a new job. And I know agism is illegal. I know that can’t be held against you, but we know that happens every day and it is very difficult to prove. So what I would say is this is more of a cautionary tale when it comes to your retirement planning in the whatif scenarios because we do many what if scenarios, right? What if I retire at the wrong time? What if inflation is too high? What if the market um falls right when I’m retiring? The other what if is what if I’m forced out a couple years earlier than I had planned. So, always be aware that can happen. We live in the real world. Hopefully, it doesn’t happen to anyone on this call. But that’s a fair amount of number of people who actually retire earlier than full retirement age. So we’re going to use an example. I think there’s a couple of examples here. So we’re going to talk about Pat and Kelly. They’re a married couple. So what we’re going to talk about here is is so social security is not really black and white and we’re going to talk about FRA which is full retirement age right so you can see Pat and you can see Kelly Pat’s social security benefit at FRA which is full retirement age Kelly 61 Kelly social security benefit is full retirement age we’re going to talk a little bit about something about maximizing for survivor as well as you’re both alive. We’ll cover that. But again, there’s no oneizefits-all.

So, the formula that’s social security, there’s something called PIA, which is your primary insurance amount. And what they do is there’s there’s percentages under that for survivor. Let’s see if we have these. You know what we’re going to do? We’re going to just calculate this later. So, this will this will build this. So, what they’re doing if they both file as soon as possible, right, at 62 that their total benefit was going to be 1.5 million. If they optimized it, they would get just under 1.8. So, you can see that there’s a cumulative benefit loss by filing early. Now, when we look at these, I don’t want to just look at these in in a silo, right? Where it says, “Hey, you know what? I lost that benefit early, so that means I need to wait.” It depends on what you’re doing during those extra years, right? Are you saying, “Hey, I want to use this because I want to enjoy those things while I’m younger, right? I want to take that money now and do those those trips that I’ve always wanted to take while my health is there. There isn’t necessarily a right or wrong answer. Generally speaking, you really want to look at your particular situation. And that’s why working with someone, it gives you a little bit better idea and gives us a better idea on getting to know you, cash flow, come sources, tax impact, um, legacy planning, which is your beneficiaries, etc. So Mary, she’s approaching retirement, right? So she’s 60. Her social security benefit is just over $1,200 at her full retirement age of 67. So if she files early, her lifetime is 353. Hopefully you can see my cursor. If she waits until full retirement age is 430,000. If she waits until 70, it’s 478. So there’s a fairly big difference, right? Cumulative 79,000 versus 125,000 over that period. And and what happens is there’s a break even, right? If you remember me saying this, so if we only knew when we were going to die, this this this calculation would be so much easier. But as a general rule of thumb, if you are expected to live past 81 years of age, you are better off deferring social security until age 70 for more for total dollars. Now, obviously, there’s a lot of moving parts, right? Because you still have to get money from somewhere and that’s usually from your investments. Um, you’re talking about your quality of life. But again, just for this scenario, we’re talking about total dollars. And I can’t stress that enough because the calculators just look at total dollars. And I think that really misses the point of working your whole life and your quality of life and the things that you do in your retirement. So social security is like a major part of of a person’s total retirement income, right? So when you’re looking at those households 65 years and older, about half of them, you’re looking at social security is a primary part. Um if you are fortunate enough to have a pension, that’s a wonderful thing when you combine that to with your social security. We’re finding that is a dying breed um and a dying benefit in most because it’s really expensive for companies to do that. that is that’s being replaced by the incredibly expensive health care provision that they are now providing. But just like this, right, just like planning, this is a really good visual of how you want your retirement income to look, right? Social security is not everything. It’s just a part of your income. Now, I will tell you the more money you make, the smaller percentage that social security will uh will be for your retirement income if you plan properly.

So, some of the basics, let’s talk about the basics with a little history lesson. Find this interesting. So, what does it offer? Old age survivors and disability insurance, which is what it was originally called. So, it’s guaranteed income for your life. They index it for inflation. There are survivor benefits and there’s a preferential tax treatment on that. And we’ll talk about each one of those. So,

so because it’s guaranteed lifetime income, you know, they do index this for inflation. They call it a COLA ca, which is cost of living adjustment. I can tell you historically when you look over the decades it doesn’t quite keep up with historical inflation but you are still getting getting increases. So the preferential tax treatment is that social security is taxed not all of it is taxed. So you might be earning $1,000 but not not all $1,000 is actually taxed. So to give you an idea, if you’re single,

if you’re single and you make under 25,000, none of your social security is taxed. If it’s 25 to 34,000, half of that is taxable. Above that, 85. For married couples under 32 is zero. Above 44 is 85. For most people who’ve done any planning, you’re going to be taxed at well 85% of your social security will be taxed. And often people are really surprised about the fact that it’s taxed at all. But yes, it is. You pay social security tax into the system and then when you pull it out, you’ll pay income tax on that. Um, but here’s a funny thing though, right? Social Security wasn’t always around. So it’s actually less than 100 years old. And if you remember learning about the crash and the depression in 1929 that created a law that created social security. So this was 1935. Now it took 11 years for them to actually make this happen. So, you can’t see the amount on that check, but that check was $22.54, which in 1940, that was a decent amount of money. So, we had talked a little bit about PIA, or at least we had briefly touched on it, your primary insurance amount. And the way they calculate it is they look at your highest earnings for your last for your last 35 years. So, it doesn’t have to be consecutive 35 years. It’s just your highest years. And there’s a maximum earning as far as calculation. And for 2026, it’s 184,500. So, if you earn more than that, it doesn’t really matter because that’s the most you’re going to pay into social security. Uh there is a calculation on your social security, but but you don’t you only pay up to that threshold. So, if you look at your payub, we don’t really get payubs anymore, but if you look at your electronic payub, uh you’ll notice there’s something that’s called FICA, FICA, and and it’s a total of 15.3%. So, if you divide that by two, it’s 7.65, where your employer will pay half of that, 7.65%, and you pay the other half, 7.65, and that’s broken down. So, of that 7.65, 65 6.2 is for social security and the rest goes for uh Medicaid and Medicare. So,

so if you haven’t already done this, I encourage you to sign up for your Social Security account, right? That way you can see your benefits. Now, obviously you can go directly to the Social Security website. They have quick calculators in there to calculate what what roughly your benefit would expect it to be. But if you actually log into your account, it’ll have a history of your earnings and you can see exactly what what is being reported over your working life. It’s secure and it’s free to do. I encourage everyone to go out there and do that. They used to send out uh hard copy statements and then they kind of stopped doing that. So around around retirement age they send it and I think they send it out every 5 years now.

So if you’re under age 60, you have to look online.

At age 60, you’ll get them around your birthday. And that’s what this looks like. So, I don’t see on these cuz I haven’t gotten the statement yet, right? Cuz I’m not quite 60. Uh, but when they used to send these out, they had something called a break even where it was, hey, if you live to this age, you were expected to receive more more total benefits. So, just so you know, it’s about age 81.

So we talk about full retirement age or FR8 and you know we often say hey somewhere between 67 and 66 and the reason for that it depends on your birth year. So there’s a table on when you are eligible for your full retirement age and we’ll talk a little bit about what that means.

Please put the website for social security statement back up. Yes, I’ll go ahead here. Hang on. Someone asked about that. It’s um so it’s really ssa.gov. So, let me see if we can find that. Sorry about that. Yeah. So, ssa.gov and you can go ahead and log in, but it’s ssa.gov myac account, but ssa.gov and they’ll have the quick calculators and everything that go along with that. So just note where your full retirement age is. For most people it will probably be 67.

So early and delayed how that affects your monthly benefit. So this is an example if someone filed at age 70 which is your maximum benefit or age 62. So you remember in this case full retirement age is 67, right? And it’s $2,000. So if I retire early, I’m going to take a little bit of a haircut at 66, a 65, so on and so forth to a 70% of my full retirement age benefit if I return if I retire early. And just so you know, when you take that at 62, as you get older, that’s still there. Other than your cola benefit, which is your cost of living, that’s still there. So, it matters, right? This isn’t when you start and then as you get older, you keep getting closer and closer. Once you take it, it’s there. So, if you take it early, you’ve kind of limited yourself for the rest of your life. And that’s why we call it the choice of a lifetime. Conversely, if you say, “Hey, you know what? I’m still working or really don’t need the money um and I wait.” You get an 8% increase every year up until age 70, which is your maximum. So, there is no benefit of waiting past age 70 to take Social Security because then you’re just giving the government money.

Nobody wants to do that. So, binding rules for different situations. So, we’ll talk a little about this. Surviving spouses, spouses, divorced spouses, dependent children, um disabled individual and government employees. So, let’s take a look. So, we’re going to look at spousal filing rules. Now, you are eligible at age 62, right? As long as you’re married for at least one year. And the spouse has to file in order for you to claim your other benefits. So, this includes samesex couples. They same sex couples, sorry about that. They changed the laws a while back. And what your benefit is is you are eligible for up to 50% of your spouse’s PIA. Remember that your primary insurance amount. So, for example, if I am getting $2,000, my spouse would be eligible for either one half of mine, which is $1,000, or her own. She’ll get the higher of those two.

Now, for surviving benefits, now you have to be married for at least 9 months, unless it’s a death, right, by an accident or military. Uh, and if you are currently widowed, you can’t remarry unless you wait until after age 60. So,

so you’re actually, so, so here’s one of the things that matter, right? So, we talked to married couples when we look at these. So, your benefit is that you’re you’re eligible for up to 100% of your spouse’s PIA, right? So, this includes if they delay it. So if they if they were like, “Hey, look, you know, I’m going to wait until 70 to take mine.” And they pass away, your spouse actually gets that higher amount instead of versus if you had taken it at 67 or 65 or 62. So, and these benefits are actually independent of your own individual benefits.

Oh, you know what? So, let me just add this because this isn’t part of it. So they changed the law as of went to effect as of June of this year. So they eliminated and it’s it’s really impacting a not a huge amount of people but but a fair amount but I think I should mention it. So, so if you are on something that is a uh like some kind of government pension like you were a police officer or a teacher uh or worked for the federal government and you did not pay into social security before there was there was an elimination provision where it just said, “Oh, hey, your spouse died and you wanted to claim their social security. Well, what we’re going to do is we’re looking at the pension you get and then we’re going to reduce that benefit that social security benefit as far as what you’re eligible for.” And it could be reduced down to zero. So they changed that law uh which was a good thing. So now that that has actually been uh eliminated. So if you are receiving TRS here in Texas or some kind of government pension your spouse and someone passed away, you’re still eligible. So that’s a big one that made a huge difference in people’s lives. So for divorce spouses, so you have to be married for at least 10 years, right? And you have to be currently unmarried. So now the expouse doesn’t have to file for you to be eligible for this. So you’re eligible for your spousal benefits and then survivor benefits if they pass away. There’s no impact on the expouse’s benefit and you’re not subject to this family maximum. So I’ll give you an example. So let’s say I met the love of my life in high school and we married at age 17 and we were married for 10 years and then at age 27 we divorced because I met the new love of my life at 27 and I lived and I married that person and we were married for 10 years and then we divorced because I met the new love of my life at age 37 and so on and forth so forth. So 47, 57, 67. Now, as long as none of those spouses remarried, they could all claim my spousal social security benefit and subsequently that benefit too. Um, and it would not impact me. It would not impact my current love of my life. So, you know, you could have, let me see, 17, 27, 37, 47, 57, 67, and currently married. You could have seven spouses claiming claiming uh a spousal benefit. That’d be a lot, but that’s true. Just a side note, there’s a George Straight song that all my exes live in Texas. So, if you had a bunch of them, that could be it. I could imagine what his social security would look like. So, um, just as a reminder, if you’re subject to a reduction in benefit, right, they calculate a loss. And what this means, so for those of you who are thinking about retiring early, 62, 63, 64, 65, whatever that is, you have an earnings cap. Um, it’s not much, 24,000 or 25,000. I don’t remember what that is. Um, so if you are retiring, oh yeah, there we go. It’s $24,000. So for every dollar you make over that, your social security is going to be reduced for every $2 you make. They’ll reduce it by $1. Now what happens there is it’s not fully lost. So when you get to full retirement age, they will recalculate your benefit to include those loss benefits. So, it would it wouldn’t be for not, but it’s more of a an FYI because if you’re planning on taking that and if working is still part of your plan, you need to be aware of your earnings. And earnings are your earnings, right? Or or net profit if you’re self-employed. It doesn’t include annuity benefits or investment benefits or interest or dividends or any of those things. It’s just working income um or self-employed income. So now the year you hit full retirement age. So if I’m born in November for example uh and I decide to retire early in January, that is the age of my full retirement. That’s the year of my full retirement age. So the limit is higher. So just in case you’re like, “Hey, I’m close. I’m just going to walk away.” The limit goes from 24,000 to 65,000 what I could still earn. Um, and also it’s every $3 above that limit. So the reductions later. Now full retirement age is important because at that point there’s no earnings limit. You can make a million dollars a year and you’re and you are still eligible for your social security and we don’t have time. We’re doing fine here. Um, guidance built for you. Let’s just talk about some filing strategies. And again, this is optimizing like for early filing versus like a hybrid filing versus waiting till the till the end. Part of that is about your lifetime, your life expectancy. So,

so what they do is they just really look at like the best outcome given a set of mortality assumptions, which is basically when you’re going to die. So, I always I always look at this with I always take this with a grain of salt, right? Because the reality is we generally speaking we don’t know when we’re going to die. But as a general rule when we are doing question I’ll ask is hey let’s talk about longevity in your family and they might say oh you know what everybody in my family lives into their 90s or the reverse is nobody in my family has made it to 70 right that can impact the decision because there’s assumptions on how long you are going to live. So take that into account when we’re talking about optimal social security strategy planning. And again, I can’t stress this enough. This is done in conjunction with looking at how your impact on on Medicare, right? Social Security is going to is going to is going to impact you. Uh look at taxation for income tax over the course of your life and afterward, right? To your beneficiaries. So if you’re filing in this scenario, Pat waits until 70. He would maximize his social security. Now Kelly waits at till 66. That benefit is 1744. So if they did it this way, they would get just over a million. Now there are income gaps. So there’s a couple things on income gaps that I always think is Oops. bear with me.

We had an update and my system wanted to restart. Um, and so, right, if if if this is for like a survivor or something like that where there’s like this widow income, you go through these blackout periods. Um, so we want to look at those things if something like that happens. But frankly, there’s also income gaps when you’re through your retirement planning, right? Which is all your expenses. Then you look at your social security. um you have to fill those gaps. So this is really just looked about looked at like the blackout period your earned income social security and then if you wait what do you do in that in between right I need x amount of income and that’s usually where your planning is and what order you take that your brokerage accounts your savings accounts your Roth IAS versus your regular IAS that depends on the individual. So what they do is they look at this and what happens is is this scenario where you can see that big blue box where Pat passes away and Kelly begins her her survivor benefit right so what happens we’re looking at the 1.3 because she continues on with that benefit they’re looking at 1.6 6 million. It is not uncommon for women to outlive men. As a general rule, that is the case. So, you want to look at the income gap when your spouse passes away and how that impacts your your your uh income taxes as well, right? Because when you’re married, you’re filing jointly. When someone passs away, you’re filing as an individual and your tax bracket changes as oftentimes, not all the time, but oftentimes. So, you want to look at that, right? You want to look at your own health, your life expectancy, create that strategy, look at taxability.

So, when you file, obviously, it’s an important decision. Now, you want to learn how you can make those claims, right? To maximize that with you and your spouse, right? You want to look at your income, and we can help you with that, by the way. But one of the other things that I think are really, really important is all of those other things that we had talked about, right? Your life expectancy, social security being taxed, conversions, right? Is there a better way to pay the government less? Um, is there a better way to pass this on to your beneficiaries? And I will tell you this, and I can’t stress this enough. I’ve had people say, they say, “Well, you know what? That’s a great idea as far as the beneficiaries or my children go, but whatever I get, they get.” And I say, “That is true. Except taxes will have to be paid.” So the choice will ultimately be, do you want that to be given to the federal government or would you rather have that given to your children? So at the end of the day, it’s your money and you always have that option. But I can say, look, at the end of the day, there’s a lot of issues when you build your retirement income plan and it takes all hands, right? Both yours, your advisor, your spouse, your whole family, anybody’s that included on this. Um, you want to protect and you want to manage that savings and subsequently that income that it produces. So when you look at planning and visualizing your future in retirement, right? How do you want to how you want to live is very important. Um and some of the things you might not even thought about it yourself, right? It affect but it affects your next 30 years. So as you move into retirement, these are the questions that you’ll want to talk about. So our job is to get you thinking on about the kind of life that you want to lead in retirement, right? because the kind of life you want to lead will translate into the cash flow that’s necessary, which translates into how you structure that and what’s the most tax effective way to get you there. Um, so if you need help budgeting or something like that, we can help you.

If you’re looking at how you manage it, rollovers, conversions, that withdrawal plan, maybe looking at your RMDs, right? How do you imp how do you reduce that impact of your required minimum distributions? For most of us, it’ll be 75 years old. Um, but the obvious thing that we do is a portfolio management. And all of those other things are things that we take into account as far as when you’re managing your portfolio. If we’re doing something a certain way, you want to talk about how that impacts you, how we think that’ll impact you. It’s really not just about, hey, this is what the expected return is. Yes, it did this percentage. Great. how does it impact you later because that’s really part of the holistic planning. That’s what we do here. Um, one of the things that I briefly said that we had added is that our trust and wills we had a lot of we had a lot of inquiries about this. So what we do is we work with our third party right through our broker dealer and we do some of that basic stuff. So it’s your wills, trust, power of attorney, living will, uh your advanced medical directive, etc. If you need help with that, we can help you. uh if you’re if you’re clients of AIS then it’s it’s at a no cost. If you are not then it’s at a reduced cost but you really should have a lot of these things in place already and I hopefully you do. With that we’ve come to our Q&A and we do have some questions. Uh now what I’m going to do is while we’re fielding these questions and if you have any questions go ahead and please add those. I’m going to put up a survey if you want to schedule a meeting uh for us to look at your plan in specifics, right? Your cash flows, budgeting, taxation, forecasts, things like that. Again, we’re actually a full service wealth management division here and we are fiduciary, so we do have to work in your interest. Let me see what questions we have while we put that question up. All right. So, first question. You’re going to be 67 in December. Try and decide if you should start taking security social security in January or you should tap your 401k. That is a great question. That one actually came in really early. So, hopefully we know the answer to that by the webinar, right? It’s going to depend. It’s going to depend on a few different things. It’s going to depend on your cash flow. It’s going to depend on the available sources that you have, whether you’re single, whether you’re married. What I would tell you in that scenario is the ideal situation is why you meet with us so we can go through look at your situation and say, “Hey, you know what? You’re probably better off waiting um taking it early, taking it now, waiting until age 70, see where your spouse is.” Um and it’s part of the budget. If you don’t have the budget from us, we can send that out to you because it really gives you an idea of your cash flow. Um, and we really kind of maybe it jogs your memory on like something like, oh, you know, I hadn’t even considered that as far as retirement in my cash flow budget. Let’s see. Is there a benefit to taking social security at 62? If you’re going to be making more than the limit, it can be, but it depends. It depends on how much over the limit you are making, right? So, so that would be a question. Again, give me a call on that because it’s a very specific situation. So, what we would look at age, what’s your estimated social security, what’s your estimated earnings and what you’re going to be using those earnings for, right? Is it something you’re like, “Hey, I just want to retire early. I want to work part-time or something, um, but I want to travel.” And that would be very difficult to do while you’re working. So that is part of the overall plan. When we look at that and we look at cash flow, these are great questions. They’re very specific questions. So um let’s see what else we have here. Uh credit union member uh fees to work on this. So our planning is actually complimentary. Uh and many of the and frankly many of the the investment products that we have out there uh are are no fees on those and then we’ll do everything like the manage money or it’s percentage of assets to just traditional transaction. Again, we’re fiduciaries so we will we do have to work in your best interest on that. I can tell you we are pretty competitive with everybody else out there. Oftentimes a little less expensive because we can blend in some of those things that we don’t have to charge you. Um,

if I choose to retire after age 67 and keep working, how does that affect my social security? Uh, it doesn’t. So, if you wait until your full retirement age and let’s say it’s 67, you’re like, “Look, I love my job. Um, I want to keep working.” You can make a million dollars and it will not impact how much social security rece you receive. it could impact how much social security is taxed. Um, but as far as your benefit that you receive, there wouldn’t be any different. Uh, let’s see if we have another question here.

How early can you apply? Um, so the earliest you can draw is 62. So you can apply four months prior to that. So 61 and 9 months. So as soon as you hit that 62, your your benefit starts,

let’s see.

Should I worry about social security? Um, oh, that’s a loaded question. Okay, but that’s a great question. I hear that a lot. So as part of planning, the question would be is, hey, do we include social security? Personally, I would. However, at the and I can tell you why. So, at the end of the day, everything that we see social security is going to run out is true, but that’s if nothing’s done. So, if you remember how FICA is calculated, if they increase that just a little bit, if they do that in conjunction with maybe pushing out retirement ages, right? If if when social security first started,

mortality was like 59 or 60. So if you actually made it to 65 years old, you were kind of on borrowed time at that point where now you could effectively live in your 80s. So they never made that adjustment, right, for longevity. So, I I’m not advocating for them to go from, you know, like 67 or 70 all the way to age 80 for you to get that, but but there is and those little adjustments are already ch making those changes from 65 to 66 to 67. Um, and they’ll probably continue doing that. Um, additionally, if they make changes to some of the amount of social security tax that we pay, because they are pre-tax, it would be a it would generally speaking be a pretty small difference to your um to your actual paycheck, right? Because it comes out before taxes. So, and I understand things are tight and things are expensive, but I know the fear-mongering out that they’re like, “Hey, it’s going to be a 25% pay cut to social security.” And that could very well be. But I can tell you, and I mean this to any politicians out there, if your family’s a politician, this is a joke, but once you get elected, what’s the most important job of a politician? And that’s to get reelected. So, if that is the case and that is our premise, right? If you are the person responsible for cutting social security benefits by 22% or having social security fail completely on your watch, that doesn’t bode well for you. That certainly doesn’t bode well for your party. So, there’s really a lot of things that can be done to shore up social security and it doesn’t have to be as draconian um as as what they’re looking at. They’re looking at extremes if nothing is done. And I know Congress is notorious for doing nothing, but oftentimes they wait until the last minute. Hopefully, they don’t this time. So, I wouldn’t worry about it. We can exclude it if you like. I actually had one member say they just don’t believe in it. They want to exclude it. I’m like, that’s fine. Uh, so let’s see. All right, we have some questions.

Please put that legal resident that started late in the US seven years now. How’s that going to affect my retirement? Oh, so the way that is, you remember, they look at your last 35 years. So, I don’t know how old you are. Um, but what they’ll do is they’ll look at your last 35 years. Now, if you don’t have 35 years, you don’t need 35 years to be eligible for you only need 10 years to be eligible for social security. What will happen though is that if you don’t have 35 years, let’s say you only have 20, what you’ll do, I mean what they’re going to do is those those other 15 years are just going to go she zero earnings. So it will reduce that. Um someone had sent me it and then lost the zoom. Uh if you would be so kind to resend that because I didn’t get the question, my apologies. Um so you are 61. So you um on that seven years, so your full retirement age, you’re looking at another six more years. You could work until 70 without knowing what you do. I’m just talking about in general. Um but you can look at social security. If you continue working to your full retirement age, you’ll be eligible for social security because you’ll have enough credits. You need 40 quarterly credits to be eligible for social security. Um, I would I would recommend you look into that social security account and and calculate that benefit for you. Um, Laura, if you’d resend that question, cuz I cannot find it. Um, let’s see.

If I retire in 57 and wait until 67, will I get the full amount? If I had gotten if I worked until 67. So along those very same lines with the other question that was asked, um the answer is no because remember they look at your highest 35 years. So the reality is you would most likely um be earning more, right? We we we tend to earn more until we retire, maybe in the last couple years, something happens. Um but but you tend to work more. So, if you retire 10 years, like the peak of your earnings, you’re going to show zeros there. So, they’re going to have to go backward 10 years, you know, when you were in your 20s, um maybe not making as much as you were in your 30s or 40s or 50s. So, your social security would be reduced based on based on those years of zero earnings. I think that is it. Uh Laura, I didn’t see your question. I’m sorry if you do resend that. But I think we are coming to the end. I think that was all the questions. Those are fantastic questions. Uh thank you so much to everyone who participated in the questions. Um with that, you can access my information through that QR code. It’ll give you access directly to my calendar. Um, whoops. Did we get Oh, I’m sorry. There’s the question. All right, one more. I’ll be 67 in December. I’m trying to decide if I should start social security in January or if I should pull it from my 401k. If you haven’t, that’s exactly the scenario that we were talking about. We could run both of those scenarios based on the cash flow you need. Uh, I can tell you there’s a strategy where sometimes you want to wait and delay it because uh for Roth conversions, right? It’s a way to do a spend down against your required minimum distributions. It’ll save you some tax money over your lifetime. Uh but if you haven’t, go ahead and either click yes or schedule some time. You can use that QR code. Um if you need to meet outside of regular business hours, let me know. I’ll always do my best to accommodate. There’s my phone number. There’s my email. I want to thank everybody for attending. Uh, it’s always been wonderful. It’s always a good time. I wish everybody a wonderful rest of your day. Be safe and we’ll see you on the next webinar. Take care. Thank you so much.

uh doing everything from these webinars which is a a complimentary source uh for you to learn about various topics tonight about tax planning in retirement and uh but you know other than that what I do I am full financial services investment advisor uh so if it’s something that you’re interested to learn about what investment products and services are out there these days that’s certainly something that I do um I will be putting up a survey at the end of this presentation. Uh the survey is basically would you like to set up an appointment and hopefully you will select yes on there just to talk a little bit about uh so you and I can have a one-on-one conversation about what is important to you with taxes, retirement, Medicare, Social Security, how all of this stuff ties in together in your retirement. And it’s certainly something that we do uh and it’s uh one of the biggest things that I do with that is the full financial plan or retirement plan. It’s a very comprehensive uh tool that we uh that we use to dig into. Many people will ask and say, “Joe, here’s what I have. Here’s what I want. Am I on the right path? Am I doing the right things? Am I saving uh enough? Uh how much is my social security? How, you know, once I have those numbers, maybe you have a pension, too? uh do I have enough to that I want to spend a little bit more? Am I going to be drawing too much of my assets? And come up with an income plan, investment plan for you so you know that you’re going to have that comfortable retirement hopefully that you are that you desire. So with that again, that’ll be at the end of the presentation. I’ll put up that survey. So hopefully you will select yes on that. I’ll put a couple up a couple of reminders on there. Uh before I do get started on the presentation, I do want to let you know that I do have uh that I am actually not able to uh record these. One of the biggest questions that we get in um and is you know can we get a copy of the deck? Can I get a recording of this? Unfortunately, we are not able to do that. Uh so we cannot record it. We cannot have these recorded by listeners as well. So thank you so much for uh your cooperation with that. I do uh have a couple of uh other webinars coming up. Uh the home stretch, the seven things to do before you retire, September 23rd, that’ll be at 2 p.m. Central time. And then after that, I have planning for long-term care. Uh that’ll be October 6, another evening, 6:00 p.m. Central. Uh for that, uh you do have access to some resources through Alliant. you can see what other webinars, what other topics are being discussed or presented that you would like to listen in on. Uh, Invest Savvy podcast and our Aerys Aerys meaning Alliant Retirement and Investment Services, our website and blog and all those are available to you. I will be taking questions at the end of the presentation. So, if you think of a question at any time, you do uh you just type away and those will hold in the chat box or the Q&A box, the question and answer box. If you think of a question, go ahead and type away at any time in during the presentation and I will get to those at the end. Uh very quickly, I do know there’s one, how much is a one-on-one uh meeting? Uh complimentary. We do not charge for uh you know as far as the service of getting to know know you a little bit one-on-one meeting. If you would like to do that full retirement plan that we do offer that is also complimentary. Uh yes I do investments and I do uh manage a lot of investments here as well as our team. uh that’s certainly something that will be presented to you but that is not mandatory if you would like to go through that retirement planning and it there is no obligation for you it is complimentary you do not have to pay one dime for that so as we get going toward the presentation here’s a list of products and services that I do uh the financial plan complimentary financial plan advanced planning once we start to get into Roth conversion versions. And uh again, we’re going to touch on some of that tonight about tax planning in retirement, estate planning. I am not an attorney that can draw up documents for you like powers of attorney, wills, and trusts and all those important documents. Uh but we do presentations on these. It’s certainly something that part of our conversation is should you speak to an attorney? How complicated is your estate? Maybe there’s some future um legal advice that you might need on that. But we can certainly have that initial conversation. Investment management like I said and comprehensive range of investment choices. You can see a little bit uh you know with stocks, bonds, mutual funds, annuities, all the different um products and services that are available uh are certainly available through us here. Uh so before as we get started, a little brain teaser. Bill is retired and has taxable income of $58,688. He is in the 22% bracket where you could see that on the right between 50,41 and 105,700. So his 58,688 taxable income is in that range. He is in the 22% bracket. This includes 45,000 of IRA income. IRA, traditional IRA withdrawals that he’s taking out, plus $37,500 in social security, and he taps into his IRA for an extra $1,000 for a concert road trip. How much does he owe uh taxes on that extra,000? Now, we could see that if at that um 58,000 688 is in the uh 22% bracket, but if he takes an extra,000 out, he’s still in that 22% bracket, but uh there’s a we would think he is in the 22% bracket, so he should owe $220 on that, right? But wrong. He owes $47 and a 40% tax rate on that extra $1,000. So, there’s uh going to be some things coming up, but we’re going to get back to this. Uh we’re going to go through a little bit and then I will get back to what uh what this plan on going to this concert and taking this extra $1,000 out, what this really means in some of these. You might hear this term a couple of times, but tax traps you. So certain things on withdrawals and what you might be doing could certainly affect other things in your um tax, you know, situation. So um but some of these different things, we’re going to see a couple of examples of some of these tax traps. So let’s dig into how tax planning changes through the four stages of retirement. Seek professional tax guidance. Traditional IAS uh as we talk about different types of IAS are pre-tax. It’s money that has never been taxed going into a a traditional IRA, but every dime is taxable coming out of a traditional IRA. So, you get tax benefits by putting money into a 401k or a traditional IRA if you get a deduction on those. But just know that when you start to take money out of those accounts, that’s when you have to pay the taxes. A Roth IRA is there’s no tax benefit putting into a Roth IRA, but the big benefit is when you take out of a Roth IRA down the road. It is all 100% taxfree. So traditional IRA, you get the tax benefit putting it in. You get the deductions, the write offs for that, but it’s taxable later. a Roth IRA, no tax benefit upfront, but the tax benefit comes later. So, do you want the benefit now? Do you want it later? Do you want a combination of both? And if you are eligible to contribute to regular traditional and Roth or and or Roth IAS, uh we can certainly talk about that in our one-on-one conversation. State taxes could also apply. This presentation digs into mostly on federal taxes. Certain things could be have additional state taxes. As an example, traditional IRA withdrawals. I am in the state of Illinois. And if someone does a traditional IRA withdrawal or even a required mandatory distribution from their IRA, those are federally taxed, but in the state of Illinois, they are not state taxed. There is a handful of states that do. I could say Indiana is one of those states that taxes IRA withdrawals and there are some a handful of other ones. A new complex world for retirement planning taxes in the accumulation phase when you’re saving money versus taxes in distribution phase when you’re spending money. uh no more. So, if you’re retired and you’re not getting any child tax credits, maybe your mortgage is paid off and you’re not deducting uh any interest off of that on your taxes. Uh tax-free employer uh medical insurance uh or contributions to 401ks or similar have stopped as well when you are retired. uh new social security, required minimum distributions, that’s what the RMD stands for, paying for Medicare, and long-term care. So, these are the things that will be coming if you are not retired yet and you’re looking forward to that. So, Social Security, required distributions, Medicare, long-term care, and again, pretty much all of these topics, I do separate uh presentations on these as well. But again, our one-on-one conversation can we can tackle all of these for you. People often pay more taxes in retirement than expected because of a confusing system, treats various income types differently, and contains hidden taxes and penalties. again those tax traps. Develop a solution because your tax exposure uh will change throughout the four stages of retirement. You’ll need a strategy that anticipates both traditional uh taxes and possible taxes, sir charges, and penalties related to social security, Medicare, or other income. So, here’s our four stages, our pre-retirement. So, if you’re in that 50 to 60 range and you’re starting to think a little bit about retirement, you’re in the accumulation phase, you’re working in your saving years. early retirement if you’re going to retire in that 60 to 70 age range. Um, and those are your what they like to call the go- go years. Maybe you’re traveling more, you’re more active, uh, versus the middle retirement, your 70 to 80 age range when the slowgo years, you maybe not as doing as much traveling at this time. Um, but um, you know, but maybe a little slower in retirement. and then late retirement as we start to get 80 plus uh calling the no-go years. Uh but basically now you’re starting to maintain um health care and things like that, maybe long-term care. So again, the four stages of your retirement, retirement surprises, looking at inflation, longevity, how long are you going to live in retirement? Uh expenses, how much do you plan on spending? again taking inflation into account on that health care uh if you’re going to retire before the age of 65 when Medicare starts are you going to be able to afford that uh insurance on your own you have to go out in the marketplace and shop your own insurance before Medicare starts and that could be pretty costly especially if there’s pre-existing conditions uh I’ve talked to many people that as an individual maybe you’re going to pay 7 or 800 a month maybe you’re going to pay more closer to a,000 or 1,200 a month uh for your health care coverage and then the taxes that we’re going to touch on as well. So where what’s the first thing I need to understand about retirement and taxes? Uh start with the end in mind. You need to know what your after tax retirement savings picture looks like like before retiring. So you know what what is the spending that you would like to have? Where are your assets? is are your a lot of your assets in savings, a lot of your assets um spendable assets in 401ks, Roth IAS, what are the tax consequences of taking money out? So, here’s an example. If you have a $500,000 uh 401k or traditional IRA, it’s not really $500,000 in your pocket when you start to take that money out. If you are married, filing joint and your 500,000 could actually be 390,000 if you’re in the 22% bracket, 380,000 if you’re in the 24% bracket. So, if you’re going to be in a tax bracket and you’re going to be taking money out of your traditional IAS, you need to know those are taxable. And depending on what your your overall tax bracket is, which includes any other income, maybe you’re working part-time in retirement, maybe you have a pension, your social security coming in, maybe there’s a lot of savings that you’re getting, 1099s on on interest earned or dividends from brokerage accounts. All of this stuff is all totaled to get your total tax bracket. And if you’re going to be in that 22 or 24%, just know you don’t get all 500,000 out of here. So, and after tax is what you would be getting. In addition, you must take required minimum distributions starting at the age of 73. If you were born 1959 or earlier, if you were born 1960 or later, then your required minimum distribution age is 75. So, here’s just a little chart to show that if you were in in a zero tax rate, uh, hypothetically on here, or if you’re in the 12% bracket or even the 33% tax bracket, this is just a simple chart to show the higher your taxes are, the less that goes in your pocket. And we could see the higher tax rate is the the greenish line. Um, and that obviously higher taxes mean there’s less in your pocket there. So, we want to get as close to the top at the top line or at least that red line to minimize the amount of taxes that you’re paying in retirement. And what kind of withdrawal strategy can you do so you don’t start to jump up into higher brackets? Okay. But at least I have social security to supplement income and Medicare to pay your health care costs. uh social security and Medicare again have their own tax traps again uh that need to plan for those as well. Social Security and taxes. So, let’s look at Bill. So, we’re going to talk go back to this $1,000 withdrawal to uh to go to a concert for this concert trip. So, Bill again has 45,000 of IRA income, 37,500 of social security. He has an adjusted gross income of 74,788. Uh his taxable income after his deductions is 58,668 and his income tax how much he has to pay 7600 7,623. So concert trip happens and he takes an additional,000 out. So now he has IRA withdrawal of 46,000 instead of 45,000. He has the same social security. We could see his adjusted gross income goes up. His taxable income is higher and uh income taxes at 8,30. So he took out this extra,000. And we’re going to start to dig into what happened here. So we could see his adjusted gross income went up. So he took a,000 more out, but his adjusted gross income went up more than a,000. uh we could see his taxable income went up more than a,000 almost 2,000. Uh it went up. So it actually went out up $1,850 higher. So we took out a,000. Why did his taxable income go up $1850? What’s basically happening on here is that um once you hit certain levels of income, your social security, if you have extreme low income, you might not pay any taxes on your social security income. If you have more modest income, up to 50% of your social security can be taxed. If you have higher income, up to 85% of your social security is taxed. Um, the good way to say it, 15% of your social security is guarant guaranteed to be taxfree. But basically what happened here is that that extra,000 put him just above a threshold where he had to pay a little bit more taxes on his social security. So when that which put him instead of $220 at the 22% bracket on his um on that $1,000 withdrawal, it put him at $47 that he had to pay. So and kind of a net um tax rate of $40.7% his effective marginal tax rate. So again, these are those things that we don’t think of all the time of just because I took an extra thousand out jumped him up on how much taxes he has to pay on his social security income and we didn’t even know about that. different retirement approaches. Retire completely, semi-retire with fewer hours in your existing job, maybe semi-retire with more of a passion-driven job, something that you want to do versus something that you have to do or retire and volunteer. So, are you planning on having any income in retirement? Any type of part-time or some income coming in working in social security the good. So social security uh benefit is calculated on your highest 35 years of earning calculated at your age 62. So if you still work be so at 62 that’s when your full uh retirement income for from social security is calculated. If you choose to work beyond 62 at 63, 64, 65 up to 67, your full retirement age, uh then uh that can increase your income. But if you have no income after 62, your social security income will not decrease, but it can increase if higher numbers uh knock off some lower numbers. So again, it is based on your highest 35 years of working. Just so you know that if you do happen to have um uh 30 years of working, not 35, you have 30 numbers and five zeros that bring your average down. If you work a 31st year, a number goes on and a zero falls off. So, um but it’s calculated on the highest 35 and zeros count in that 35 if you don’t have a 35 full years of working. If you take social security early, so if your full social security age is age 67, let’s say, and you decide to retire at 65, maybe Medicare kicks in at age 65, but uh now you want to take your social security early, which you can take it as early as 62 if you choose. But if you do take it before your full retirement age, in this example, age 65, and you make more than $24,480 for the year, $1 of benefits withheld for every $2 earned over that $24,480. So, if you make more than that amount, you’re starting to put money back into your it’s taken from your benefit um and goes back into the social security uh at your full retirement age at age 67, you are recalculated and your number can be adjusted from all that money that you put back in. You can start to get that back in a little bit higher benefit. Uh but just know that if you do take social security before your full retirement age and choose to work, let’s say full-time or more than $24,480, you’re putting $1 of every two that you get back in. So you have to be very cautious if you’re taking it early how much money you plan on earning. You still pay social security taxes, too. If you do decide to uh work, you’re on social security, but you’re still working, making some income, and and even though you’re on social security already, 6.2% of your paychecks from your job will go to pay into social security. Again, uh so just know that even though you’re on social security, if you’re working, you are still paying into social security. Now it’s potentially it can increase your income. I’ll say potentially because you that current income in retirement needs to be one of your top 35 years uh of income to increase your your benefit. If it is not uh in the top 35 years then your benefit will not increase over time. So Medicare and taxes. So how what how does Medicare come into this play? So, we’re going to look at George and Martha in this example. Uh, George and Martha, they’re they are in Medicare part A, part B, and part D for their prescription coverage. So, they have traditional Medicare. And now we start to look at watch out for the Medicare Irma, IRMA, Cliff, income related monthly adjustment amount, Irma. I get these questions all the time and many times when I’m doing these, someone will say, “How does how is Irma affected? Irma. Irma. I talk about Irma quite a bit on these presentations.” But here’s what’s going on with George and Martha. They’re on Medicare B and D, which you have to pay for. If you are not familiar with this Medicare Part A, you do not have to pay for. It is part of what you’ve paid into Social Security over all the years. So Medicare A is covered. You do not have to pay for that in retirement. But Medicare B, which is your doctor visits, Medicare A is your hospital coverage. Medicare B is your just your medical insurance, doctor visits, things like that. And D is your prescription drug coverage, which you also have to pay for. So you’re paying for B, you’re paying for D. And in this example now, we have um modified adjusted gross income of $342,000 for their adjusted gross income in 2024. Uh they sell a stock with $1,000 gain on top of that $342,000. So, they sell this stock and we’re thinking, well, they, you know, owe $188. Uh, $150 for taxes and $38 for uh what’s called a net investment income. If you have extreme high income, you pay an additional $3.8% in taxes on income related investments. So, you’d be thinking they would pay 18.8% 8% which the selling a stock at a capital gain the tax rate on capital gains is 15%. But plus the 3.8 puts them at 18.8% taxes, right? But no, what happened is that their Medicare part B. So that was very uh you know I’m going to go back one screen here. Bear with me when I see that remember they had 342,000 of income plus the $1,000 gain which puts their modified adjusted gross income at 343,000 which is just a hair above the threshold of the 342,000 which means when you have income related uh adjustments because you make too much money the government says you’re going to pay higher Medicare costs. So, we could see the initial or um base pay is $22.90. That’s what uh what Medicare is now. In the next month or month and a half or so, they’re going to be announcing how much that uh premium is going to be in 2027, which typically it’s possible could be the same. It won’t go down, but it could potentially go up. So 2290 is the base, but if uh if a married filing joint, if they make between 218,000 and 274,000, that premium jumps up to 284. If it’s 274 to 342, which George and Martha would have been in that range, uh they would be paying $45.80 for their Medicare premium. But because they sold the stock and it jumped them above, now they have to pay in 2026. Remember this happened in 2024. And now because you earn the income in 2024, you file everything in 2025, February, March, April, long as it’s done by April 15th, and IRS sees it, Medicare sees it, it’s all known, and then your prem, your premium is adjusted in 2026. So, their additional income in 2024 means they now have to pay $52,7.50 50 cents a month for at least that 12 months every month for that year um for each of their Medicare. And then now we’re looking at the you know that’s an increase of $32460.

So then we look at also with uh part D your prescription drug coverage. uh the base, call it about46 a month for Medicare Part D on average. And I have to say on average because you go out and shop that through United Healthcare, you know, uh you know, u uh Blue Cross Blue Shield, you know, or Etna, you’re going to be looking to see what these uh average prices are. call it $46 a month, but because their income was high, now they’re going to pay $60.40 a month just because they had high income. So, your Medicare Part B and your Part D premiums will go up if you have high income in retirement. And what is a big part of that? IRA withdrawals. It’s the biggest uh withdrawals that most people make, 401k withdrawals or IRA withdrawals in retirement, especially if you have significant IRA savings and you reach the age of 73 or 75 uh depending on your birth year for required minimum distributions. If you might be taking out 50,000 a year, 70,000 a year, 80,000 a year, depending on how much you have in retirement accounts will determine how much you have to take out. And those bigger withdrawals could jump you up brackets. It could make make your premiums on these go up as well. So with that, when we look at the uh the sir charges that they’re paying an extra for George, extra B, a part B is $121.70. His part D goes up $22.90. And the same thing happens with Martha. They are married filing joint. So those increases go up for both of them. And we’re talking for a combined annual total $3,470.440

because they sold that stock and it jumped them up another um level for their Irma, their in um income related monthly adjustment amounts. So the stuff does get very confusing. So now we look at uh that uh extra $1,000 capital gain cost them $3,65840

in call it taxes for their Medicare for that year. I’ll throw out another reminder that if you do have some questions, go ahead and type away at any time and again I will get to those at the end of the presentation. Example number three, Medicare enrollment coverage gaps. when you have to sign up for Medicare typically age 65 uh that you have to sign up uh for Medicare um A and B and your prescription part D but there’s some exceptions for that if you’re working or if you’re you know uh if you are working at 65 66 67 there are ways to delay it but let’s look at the ex example of Jim and an Jim and an are 68 Jim retired at 65 and one year later uh and retires at age 66. Uh they get coverage through Ann’s employer who offer retirey health insurance. So now neither of them are working at age 66. Uh they’re currently age 68 and they didn’t sign up for Medicare uh typically when they were supposed to when she stopped working. Uh but even though she had this employer retirey health insurance, even though she was not working anymore, remember? So let’s look at what happened here. You can’t get Medicare coverage instantly. U they missed their enrollment. There is a 10% of the base premium for life penalty. So for 2026, their 2020 is an extra $2029 each. uh $24348* 2 per year. So $486.96 for the couple in penalties and this will happen every year. So the premiums tend to increase each year. So do the penalties. Uh could translate to a lifetime of $10,000 mistake. So, if you are working, check with your uh your your human resources or your benefits uh department to see should I be signing up for Medicare A or B or D or prescription? Because if you retire, even though you have some type of coverage for health insurance in retirement, uh if you are not working, you have to sign up for Medicare A, B, and D. You have to sign up for those because your retiree health coverage is secondary to Medicare. Unless you’re working full-time and have a qualified plan, the B and D can be delayed. But in this case, it was retirey healthcare and you do have to sign up for Medicare.

Okay. Are there any other tax traps we uh that we’ll face in retirement? You must plan how and when you will use your taxable, tax deferred, and tax-free assets to manage your income and tax brackets efficiently. So, if someone has savings, you have a traditional IRA, you have Roth IAS, what do you draw from first and how do how do you manage these taxes throughout retirement? So, here’s uh you know what to spend. Example number four. So, now we’re going to look at Sam and Mary. They each have a $450,000 traditional IRA and then they each have a 60,000 Roth IRA each. So 120,000 in Roth and 900,000 in traditional IAS and they have a joint savings of 300,000. Conventional wisdom says spend your savings money first, then spend your uh tax deferred stuff, your traditional IAS second, then spend the tax-free later. Now your plan might be a little bit different and there might be some reasons why you would or would not take maybe out of Roth first but you know certainly something when I do the retirement plan that uh we can certainly talk about what this all means to you specifically. Uh an alternative approach is spend your savings first and then start to talk about converting from a traditional to a Roth IRA if you have very low income years and you want to start converting. If you’re not f you’re quite sure what that means, it’s basically you’re taking money from your traditional IRA, you take it out of that to put into a Roth IRA, which again that grows taxfree from that point on, but you have to pay the taxes to get it out of the traditional IRA to a Roth IRA. So that is a taxable event. And again, we have to remember all the tax straps because all these IRA withdrawals that you’re taking out of there to either spend or convert it to a Roth. It’s all taxable and we have to keep all that in check to make sure you’re not jumping up too high in brackets. Is your Medicare premiums going to go up because you took out too much and all these different things. So, uh, typically when I talk about Roth conversions for people, it’s, uh, it’s one of those that we just start to do late October, early November, we start to get a feel of where’s your income this year, how much interest or dividends have you received for, you know, so far throughout the year, and we can start to get a gauge of how much to convert in a given year without jumping up to the next tax bracket. So, considering Roth conversions, here’s an example of Jill converts a H 100,000 from her traditional IRA to a Roth IRA. Jill Jill adds 100,000 to her income and the conversion income is taxed at Jill’s tax rate. So, the more you take out, the more income, the higher bracket you could potentially go uh into. Filling up the bracket or filling up the bucket. uh we we like to call so Roth conversion strategy. So if someone is you have ranges of the 10% bracket is a range of income. Uh the 12% is another higher range of income. The 22 is another higher range of income. But if you’re you know comfortably let’s say in the middle of that 22% bracket and you want to take a little bit more out to not jump to the 24% but fill up the bucket of the 22. So, how much can you convert in a given year to not to max out that 22% bracket, but not jump up to the 24% bracket? That’s where we start to have those toward the end of the year conversations of how much can someone convert without going to that next bracket. Low income uh years are good for Roth conversions. So, if you were a business owner, maybe you had very low sales in a given year or high expenses, a lot of deductions, uh high non-recurring medical bills after retirement, but before receiving Social Security benefits, some people will actually do that if someone retires, let’s say at age 66, but they say, “I don’t want to take out my uh I don’t want to take Social Security yet. I’m going to I don’t even want my pension yet. I’m just going to start to live off of my own assets at very low income years and start to take money out of traditional IAS to spend or even converting to Roth IAS. Um those are great years. So B some people will defer social security and other retirement income like pensions simply to start withdrawing from IAS or converting to Roth IAS strategically especially if you have high IRA balances starting to get those down before you turn the age of 73 or 75 for your required minimum distribution years. You want to start to get those balances down if you can. Uh so again that’s certainly a strategy that you and I would work together with on important guiding questions. What’s the goal? You must know whether you’re trying to keep income low or income below a bracket threshold to avoid bumping up to the next highest bracket um or whether you’re trying to increase income to fill up a bracket and take advantage of that tax rate. So again, October, November is when I start to have most of these conversations.

Other possible approaches to managing tax brackets, withdrawing tax-free money from life insurance policies to keep income low. If you do have cash value in life insurance, uh sometimes if you actually make a withdrawal or if you surrender a policy, close out a policy, you could have some taxable gains in there. But one of the advantages of life insurance cash value is you can borrow. And this is what a lot of wealthy do when they build up cash value in accounts. They don’t do withdrawals from the uh that cash value in a life insurance. They actually borrow the money from there. And there’s some strategies that we can certainly talk about if you have high cash value in life insurance policies. Selling high appreciated stocks for a low or no capital gains. uh taking distributions from IRA or 401ks to take advantage of a lower tax rate. So again, each year when I start to look at people’s uh with you know where they are income-wise so we can start to strateg uh strategize withdrawals or conversions. Two other pre-retirement strategies, if you qualify, use a health savings account uh strategically. So, if you have a high deductible uh health uh health plan and you’re able to contribute to an HSA or health savings account, uh certainly some tax advantages there. Or if you are a business owner, speak to your qualified tax advisor maybe about some qualified business income deduction after funding a company pension. Uh that starts to get into you might need uh to have an accountant to assist with some of those charitable giving and tax planning. So, here’s one we’re uh with Albert and Shirley. Uh Albert and Shirley uh are charitable. They want to give $5,000 to a charity. They’re in the 24% bracket, so they’re got some higher income in retirement. And they have 15,000 existing itemized deductions. 2026 standard deduction is actually 32,200. So, if you are not familiar with this, many people are, but you do one or the other. You either itemize or take the standard deduction. In this case, Albert and Shirley only have 15,000 of itemized deductions. So, they’re not going to itemize anything. They’ll just take the standard deduction of 32,200. So, 18,100 per person. I’m sorry, 16,100 per person. Um, and now they want to do this five $5,000 donation, which is typically something that you would, you know, write off on your taxes. So, in this case, they have 15,000 of itemized deductions, and then they want to donate this 5,000 to a charity, which puts them at 20,000 uh in uh itemized deductions, which is still again less than the standard deduction of 32,200. So they can give that money, but they don’t get the benefit of deducting it because they’re better off just taking the standard deduction. So they can do what’s called a qualified charitable distribution, a QCD. And I do quite a bit of these with clients that I work with as well. So if you’re at 70 and a half or older, you’re able to do this up to 111,000 per person. So, if you’re married filing joint, you can give 222,000 uh for a married filing joint couple. It goes directly to the charity. So, basically what happens is that if you have uh Boys and Girls Club of America and you want to donate 5,000 to them, you can take it directly from your traditional IRA. You don’t withdraw it. You give it directly from your IRA. A check is made payable to the Boys and Girls Club. and uh that is part of it qualifies as your um required distribution. So if you had to take out 5,000 and you typically you might have to take it out and pay taxes on it, but in this case you can take out the 5,000 you don’t have to pay taxes on it because you donated it immediately from your IRA. It is called a qualified charitable distribution. Uh it’s a great strategy. If you are a charitable person and you give uh and you’re not able to deduct it, do it directly from your traditional IRA. So, here’s one of the options that they could do is they can uh charity, they want to give 5,000. So, they take money and option one here, which is the one I don’t want you to do, is you take out 5,000 to satisfy your required minimum distribution and it’s reported as taxable income and you pay taxes. Again, we said they were in the 24% bracket. They have to pay $720 in taxes. And now, um, they had to, you know, give the 5,000, but they had to pay those taxes out of pocket. So five that 5,000 charitable uh contribution they wanted to do is uh now they have to take out you know it’s 5,720 cost to them to do this because they took it out paid taxes put it in their checking account and then gave to the charity. Instead what you’re going to do is a qualified charitable distribution. they have to take out the 5,000 and the the charity a check is made payable directly to the Boys and Girls Club like I the example and it is not taxable to them because it was gifted to the charity. It counts that they had to take it out. They had to take out 5,000. It still counts. They satisfied the required distribution and now they just save $720 in taxes on that by just giving directly to the charity from your IRA qualified charitable distributions. If you have more questions on that, please say yes at the end of the presentation and we can certainly talk about how you can give in retirement and make it uh tax benefit to you. Uh, I hope to have assets to pass to my family. How does t retirement tax planning figure in? Organize your assets for your family’s benefit. Estate planning still matters. So, now we’re going to look at an example of um a stepped up basis strategy. So, we have this is an unfortunate uh example here, but we have Phil and Mary. They hold a taxable investment account in a uh a joint joint tenants with rights of survivorship JTW writ,000

and they have long-term capital gains in there. Of that of that 120,000, Phil is diagnosed with a terminal illness with 18 months to live. So how what tax strategies can they do for this estate planning? So if they do nothing after the diagnosis, a joint tenant with rights of survivorship rules are 50% of the money is Phil’s 50% of the money is Mary’s. So the step up in uh basis eliminates a capital gain on Phil’s 60,000. So Phil passes away. the money that is um is Mary’s, that’s already technically hers, but she still has capital gains. She still has gains in that, but when she when he passes away, she inherits his 60,000 at what’s called a stepped up basis. What does that mean? Let’s say you have a stock or someone has a stock that was purchased many years ago. Uh let’s say it was some old oil stock BP that was purchased years ago. Let’s say it was purchased for $50,000 and now that stock is worth $150,000. If you are living and you sell that stock, you will have a $100,000 capital gain that you will have to pay taxes on. If someone has that account and passes away and they have beneficiaries named, the beneficiaries get that $150,000 stock and the basis now instead of being the initial purchase price of 50, it actually jumps up to 150, the current price at the time of death. And if they sell that stock immediately for 150,000, there are no taxes uh paid on that. It’s called a stepped up cost basis. Um, so if she sold all the investments, she would have to pay taxes on her own gains. Even though the portion she got from Phil, the 60,000 from Phil, that was a step up on that, but she has to pay taxes on her own gains if she if they did nothing. The other strategy is after diagnosis, put the whole account in Phil’s name and make Mary the beneficiary. Phil passes away. Mary is now the beneficiary of this full account. All 120,000 steps up to 120,000 cost basis. She can sell everything immediately and not pay any taxes. This is the same for real estate, too. We had this example for when my mother passed away. I’m one of five kids. We were beneficiaries. We were in her will and everything goes to the five kids. And when they bought their house years ago, I’ll use an example. They bought it, say they bought it for 135,000 and at the time of death, we got an appraisal, let’s say 220,000. And so we sell the house and now because we inherited this house, it is now an investment property for us kids as the beneficiaries even though it was owner occupied by my mother, my father and mother at the time. And so now both parents are passed away and we get the house, we get an appraisal, step up at 220,000, sell the house, sell the condo at 220,000. We didn’t have to pay any taxes. So that same stepped up cost basis happens even on real estate as well. Uh so when you go to sell investments, would you rather owe tax on 60,000 or no tax at all? uh inheriting an IRA as we start to get uh toward the end of the presentation here. Again, I know there are some questions here now, but is if you’re thinking of any question, go ahead and type it in. I’ll be getting to those very shortly here. Uh an example of inheriting an IRA. So, now we have a mother and a son. Pamela is 65 years old and Kyle is 40. Pamela dies and leaves 100% of her IRA to son Kyle and a balance of 400,000. It’s got, let’s say, it’s got a average 6% rate of return just invested in something. Uh, so Kyle takes distributions over 10 years to minimize tax. So that’s the IRS rule. If a mother passes away, IRA goes to son uh he has to liquidate that account within 10 years. He has 10 years to zero that out. If uh he took all 10 years and uh let’s say that money was invested still growing, he has to take out an average of about $54,347 each year for 10 years. And that is added to Kyle’s income. he has to pay taxes on his own tax bracket. Uh so it is taxable to him and these are mandatory that he has to zero this out in 10 years. This first example is if he just spreads it out takes withdrawals over 10 years fairly even. Now someone might say I want to take 50,000 year 1 and I’ll take 20,000 year 2. I’ll take 80,000 year three. You can take it as long as it’s a zero balance by the end of 10 years, you can take it out any way you want. Here’s another example scenario number two that Kyle does nothing for year 1 2 3 all the way through year 9, he doesn’t take a dime out of this account. But now year 10 because it was growing at an average of about 6%. Now that value of that account is 716,000 plus and he’s going to cash that out. He has to within that 10th year and it’s all taxable. Now he just jumped up to the highest tax brackets. So he can legally do it. Is that advisable to do something like that? Most likely not to defer everything and then take it all in one year at the end. But just know now um let’s say it’s a spousal situation. If a husband passes away and the a wife is the beneficiary in this example um that he has an IRA and she inherits that the wife inherits she can just add it to her own IRA is as long as it’s like as if it was always hers. She will have to take required distributions and spread it out over her lifetime. But that is a spousal benefit. There’s a few other things if it’s minor children or if it’s a sibling based on the year the age gap uh between the deceased and the beneficiary. There’s a few other twists and turns. So, if you do have one of those situations that you might be curious about, please say yes at the end and we we can have that one-on-one conversation. How in the world do we manage all this? So pre-retirement, early retirement, middle retirement and then late retirement. All these four different stages of income coming in maybe or the tax traps of Medicare and social security. You want to do withdrawals over time. How do we manage this? Uh because your tax exposure will change throughout retirement. You need a strategy um that understands ranges of taxes, anticipates how and when you tap assets to cover your personal expenses, manage your action actions so you pay the lowest tax rate possible. Uh preparing for retirement and taxes when you’re going to be taking money out. Managing taxes happens throughout retirement. Mistakes can be costly. Again, that was that Medicare not signing up for Medicare on time. uh thinking about all of these different things. Retirement can be difficult uh for many people when there’s so much to think about. Education planning advice needed request uh a taxes and retirement planning overview meeting. Again, I’ll be putting up that survey here in just a moment. Uh please say yes and we can have that one-on-one conversation. Again, a complimentary conversation. Here’s again a list of all the different type uh products and services that I do offer. Uh again that top left complimentary foundational financial plan, retirement plan, however you want to call that. It’s uh it’s a it’s complimentary free source that we can dig into. Here’s what you have. Here’s what you want. Are you on the right path? So here’s my contact information up on the screen. Uh, as I go through the questions and I put up the survey, please say yes if you would like to have that one-on-one conversation. If you think you would like to have that conversation and you want to book that right now, put your phone, get your camera on your phone and hover that over the QR code that’s up on the screen and you click on tap the little yellow thing that comes up there and you’ll have access to my calendar. You can do that right now if you would like or simply just say yes on when I put the survey up and I am doing that right now. So, you should hopefully see that up on your screen. If you would like to have a one-on-one conversation, please say yes. Or if you’re not um ready for that yet. So, I’m going to go through all the questions here. Uh so, how much is a one-on-one meeting? Uh we covered that. That is a complimentary uh service that we do offer. Uh we’ve been making Roth conversions for the past two years. Uh if we plan to retire in two years, uh should we stop the um conversions temporarily to avoid Irma sir charges? Depending on how much you do, yes, but sometimes if you’re going to stop working, then you’re going to be in a lower bracket. I would say maybe that’s a good year. So we would need to absolutely go through some numbers of where is your other income, when do you plan on stopping work and should we keep doing conversions. Most of the conversions that I do for people are when they stop working, their income goes down and sometimes people will like I said even defer social security so they can do as many you know as much of conversions before jumping up to a higher bracket before Irma um you know penalties kick in. Uh but uh retiring might be great years to do that. Can you convert a 401k to a Roth or is it different from a uh from a 403b? Sometimes within a plan you you might be able to 401k 403b uh convert within the plan from uh regular 401k to Roth 401k. Another option is that if you’re eligible to roll over to a 401k or 403b would roll over to a traditional IRA and then convert to a Roth from the traditional. So that might be an option too. Uh but you can potentially convert within your 401k or 403b plan. Check with your provider if that’s available in there. Uh can RMD withdrawals be rolled into a Roth IRA account? So IRA uh so if you’re doing the withdrawals which you still have to do uh that can’t cannot be rolled into a Roth. Basically if you have earned income like any job income you would have to then do a uh contra um uh uh you know the a contribution to a Roth IRA. Um, so but if you are even if you want to do Roth conversions and you’re in the age of required distributions, you still have to take out your your required distribution first. And if you want to convert on top of that after the uh the distribution that you did, you are able to do conversion still, but you have to do the withdrawal of the required distribution. that cannot just go to a Roth unless you have some earned income in retirement that you are eligible to con contribute to a Roth IRA. And I have your information here. Hopefully, you’re you’re a yes on there. I would love to dig into what that means to you. Uh let’s see if there’s uh only first meeting is complimentary, right? What is the fear for the rest? So uh we do have even though I do investments so um when I do a full retirement plan so the initial you know consultation uh we can get all the information do the retirement plan maybe in meeting two we’re going over a retirement plan you’re not paying a dime for any of this. Um even if you’re doing investments with me we have investment accounts that have no fees at all. We do have advisory accounts that you might pay the let’s say the the 1% or plus or minus depending on an account balance, but there could be some fee on some type of an investment. But if it’s not an investment, you’re not paying anything. You’re not paying for any consultation. I’ve had two, three meetings with people of before they even start to bring assets over to for me to manage uh that uh you know, you’re not paying you’re not paying for the consultations. um anytime even if I’m holding accounts for you and re still in the future reviewing your retirement plan or making changes to the plan based on years going by, you’re not paying for any of that. Uh so, um and again, hopefully you and I can have that one-on-one uh conversation about what you would like to accomplish. Uh again, my goal is that hopefully we’re going to work together on some things and get your retirement on track. Uh but uh I do have the poll uh completed here. I think that is all the questions. We are right at uh 6:59 and we did it right within an hour. Thank you all so much for your time and attention tonight. I thank you and hopefully we’ll be having a one-on-one conversation here very soon. Thanks. Have a great night.

So, I just made some hot tea probably 20 minutes ago, and I put it

in my cup, but it’s one of those travel cups.

And I usually put ice in there because right now it is like sipping lava. I forgot. So, what sign do we have? Do we have time for ice? No. I think I’m just going to endure it. Uh,

so hopefully everybody’s having great weather where we’re at right here in Houston. I assume Florida’s the same thing. This is the dog days of summer. It is about a million degrees right now and it is about a million% humidity. So, um, I got to tell you, September can’t come quick enough. So,

these uh these webinars, they’re always more fun. So, I had to go back to the home office last week to do in person for Align Credit Union’s employees, right? Talk about 401ks and the importance of it and and just some just general retirement planning and why you should do it. It’s always nice to meet in person. You know, it’s a lot more interactive. It’s a lot more personal, but these are fun, too.

So, I have one minute till two. It looks like some folks are still joining. So, we’re going to give it another minute or two.

It is good to see some familiar names.

There are a lot of names that I that I’m not familiar with.

Right. I’m thinking let’s see time do we have here

all right I think in the interest of time and we should have plenty of time we’ll go ahead and start because we have to do the housekeeping stuff anyway place as people join. Um, oh, Pennsylvania. I think that’s as far north as I’ve had anyone join. So, we have someone from Pennsylvania. So, I got a sister from Pennsylvania. She lives in uh well, I have nieces and nephews, too. She lives in Lancaster in uh Amish in Amish land. And uh I have nieces and nephews in Philadelphia. So, all right. So um so officially welcome everyone. I appreciate you joining me this evening. It is my pleasure to host these and we’re going to talk a little bit life about life after work and how we create that good life in retirement. Um if you’re joining us for the first time, extra special welcome. I’m Michael Marx, certified financial planner and financial consultant with Alliant Retirement and Investment Services or AIS for short. Stay tuned. And I think we’re doing a rebrand and we might be changing our name. Credit Union is going through a rebrand. Uh we’re going to be changing I think we’re changing our colors, but the logo will still be the same. Uh I live right here in Houston, Texas, and I’ve been doing this for over 30 years. People usually ask if I’m a fiduciary. Yes, I am a fiduciary. Uh my family has been tied to Alliant since the 60s. For those of you that don’t know, it was originally the United Airlines Credit Union uh when we’re here in Houston, so it’s Continental as well. Um so I realize there’s many different channels that some have joined us through. So whether it is through United or Continental, Google, Tesla, CVS, Susie Orman, welcome to you all. Just a bit of housekeeping before we dive in. Uh today’s session is for educational purposes and includes proprietary material to protect both the content and everyone’s privacy. So we ask that attendees please do not record or capture the presentation whether it be by video, audio, screen sharing or AI tools without prior consent. Thank you so much for your understanding.

Again, I am not sure if you joined this webinar via an email directly from us or if you signed up directly on Alliant Credit Union’s website. So, I just want to take a couple of minutes to talk about Aerys. Uh in addition to these weekly webinars that we host, we are a we are the a we’re the full-ervice wealth management and investment planning division of the credit union with a broad variety of investment options and planning strategies and maybe even a little bit of life coaching in there when it comes to your retirement years. Speaking of webinars, we offer multiple webinars throughout the week with different presenters. Each of us usually hosts twice a month. Um, we are very focused on helping you understand the ins and outs of investing, saving for retirement, some strategies, some tax planning, etc. If you have not, I encourage you to take a look at our website. It is a ris.aligncreditun.com.

You can see a list of our weekly webinar topics. You can also access our podcast which is invests savvy um our blog and some other financial resources that are available to you but I would say the best resource that is available to you are the advisors here. Um, you can also find us right on the Alliant. I also

can find us right on the Alliant Credit Union website on the tap on the tab in the upper right hand corner. Retire and Invest. I’m sorry. Someone I just someone just pinged me and said, “Hey.” So, I I grabbed that. Is that okay? That was pretty funny. Thank you for the levity there. Uh so my next so I usually do one webinar in the afternoon and I’ll do one in the evening. So my next webinar will be in the afternoon that is going to be Wednesday September 9th that’ll be uh midday 2:00 central 3:00 Eastern and that is social security a choice of a lifetime. So, we’ll talk about, you know, some eligibility, benefit calculations, spousal survivor benefits, things like that. How claiming ages can impact your uh payments. Uh so, it’s really high level, but I I really think it’s it’s helpful if if you aren’t familiar with that. Uh and even if you are a little bit, you might you might learn a little bit as far as the timing, which is one of the things that you really should look at when you’re doing retirement planning. Um, so the back in the evening will be anatomy of a recession. So that is going to be September 22nd, 6:00 p.m. 700 p.m. Eastern. And we’ll talk about uh well the recession from a historical perspective. Um, and they how they apply to current situation, right? I mean, we have tariffs and lawsuits and midterm elections and wars. Uh we’ll talk a little bit about Fed rate cuts or non-cuts depending on what’s going on. Fed’s going to be meeting soon. Uh some of the impacts on, you know, some of the geopolitical decisions that are going on. Uh not a political commentary, just more matterof fact on that. So today’s agenda, if you’re here, it means you’re probably thinking ahead to retirement and wondering how you’re going to be able to replace that income once your paychecks start coming. So you know, you spent your whole lifetime trying to amass a sizable nest egg, right? Yet there’s still worry that your savings and investments are not enough to support you through the golden years. I can tell you that is the number one worry of retirees. Do I have enough? And really, will I run out of money? Right? That is the biggest thing. So, in the next 30 minutes or so, we’re going to talk about how you manage your piggy banks um to generate that retirement income that you’ll need. And I think this is vital cuz most of us think about our retirement in terms of a nest egg, right? This this big this big account and not as income. So there’s a lot of difficulty when you retire psychologically to say, man, you know, I don’t I don’t I don’t want to take money out. I’m worried that if I take too much money out, um I can outlive my money. And that is a concern. Uh so we’ll talk a little bit about that. Uh so this webinar is titled uh life after work because retirement income really is all about creating a good life for you after you leave your primary job. And it doesn’t mean you won’t necessarily work, right? Uh I would say, well, there’s a little stat there later that many people are planning to continue working in some capacity after they leave their main job, but hopefully the work that you do won’t feel like work, right? The work thing or the retirement thing is getting away from work, right? Life is what you’re moving toward. So, we will talk about, you know, retirement planning. We’ll talk a little bit about some general statistics on where people are. Um you imagine your life in retirement, maybe look at some withdrawal strategies, talk a little about taxes, and then how we get started. Um so I would say if there’s ever a time to plan, you know, retirement, it’s the time right now. So once you leave your primary occupation and you start depending on multiple sources of income, you want to make sure that that income lasts, right? Because nobody wants to go back to work at 80 because they didn’t plan right. So it’s really important to have a plan and retirement income helps you determine how much you’ll need and where that income comes from. Maybe your timing on your social security, whether you want to work or not, whether you can work or not. uh how you time your withdrawals uh and you’ll cover it. You want to make sure that income outlasts your life. Uh and and you know, we plan retirement savings over a 30-year period. I mean, realistically, that depends on the individual. These are really really just general general numbers. And yes, people do live to be 100 or more. The reality is most people do not. Um, so the question is, you know, will you have enough funny? Right. So, I love this piggy bank. Hopefully you can see my cursor. It’s it’s kind of like it’s kind of like parts of an animal, you know, where you would eat or not eat. But, um, but let’s look at this, right? So, our income sources. So, I thought this is really interesting. So, there’s really just a couple that I really want to point out. So, you can see the blue bar. So the dark blue bar is there was a uh a survey right on where they think their income sources will be from. So the dark blue the one above is people who are working and then the lighter blue uh is for retirees and obviously social security is a big one. So if you’ll notice for the most part the workers and retirees are pretty much in line. The two that I want to point out is down here to work for pay. So if you look about three quarters and that is up a few points plan to work in retirement. But of retirees only about a quarter end up doing that. So I think that’s important. So, if retirement, if working in retirement is part of your retirement plan, I think that’s great and I think that’s reasonable. But you want to do stress tests on what happens if you can’t work, right? If all those employers didn’t get the memo and they hire you, whether that’s part-time or whether your health doesn’t allow you to do that. So, so a bit of caution there. Um, the other thing that I thought was really interesting is a product that guarantees monthly income for life, right? You look at workers about 54, retirees, it’s about 28. And and we’ll touch on this for a little bit, but those types of things, you know, are are your social security, they’re your pension, uh maybe you have an annuity out there. So, it is a lot lower for retirees than than what folks had planned. So, just a few headlines. uh how does your retirement plan measure up? So, I’m just going to measure uh talk a little bit about few a few statistics with you out there. So, a little over a quarter of workers have no retirement savings at all. Zip. Um and I assume if you were on this webinar candidly most of these headlines will not apply to you. If they do, hey, we’re here to help. So only a little over a third of American households even have an IRA

and about 16% of Americans age 50 and up actually take advantage of those catchup contributions. We’ll talk a little bit about that. Um so just as you know for your 401k for example for 2026 you can do $24,500. Um, if you are 50 to 59 or age 64 and up, I know that’s a weird one. There is a catchup provision. You can do 8,000 more on top of that. And they added something called a super catchup. Uh, and that is for age 60 to 63 where instead of 8,000 you can do 11,250. So hopefully you are taking advantage of that if you need to. Um, and yes, there is there is saving too much money, you know, especially if it is at the expense of not being able to do some of those things that you would like to do before retirement while your health is maybe a little bit better. So, that’s all part of the planning process, right? It’s easy just to say save, save, save, save, save, but there is really a balance of life. So only 41% of Americans 60 and up think their retirement savings is on track.

For those ages 50 to 59, it’s less. It’s only it’s it’s only 34%. So a little bit over a third there. Now I don’t know if you fall in that category, but I think I think most of us worry about that. So that is the reason why we do why we plan. Um and only about a third of households have more than 250,000 in retirement savings. Is that good or bad? I don’t know. It depends on your goals. It depends on your expenses. It depends on whatever your your income needs actually are. Right? So given all these stats, right? What I would say is are you feeling more maybe less prepared for retirement? Well, that’s what we’re here for today. So, to make you feel more prepared and to show you what you need to do to get ready for retirement. So, imagine your life in retirement. So, we need to take a step back here and visualize what we want our new life to be, right? And I think this is something that you really start looking at seriously. Um 5 years out um depending on the complexity of your retirement, but usually 5 years is good. Even if you want to live overseas, you can start making those plans now. Um if you don’t know where and it’s not wherever you’re living now or wherever you’re joining from, it might be sooner than that. Uh how long will you live? Obviously, nobody knows that, but there are some rules of thumb and you can look at your family, right? If you have those and these are in these are discussions that we have with the members or non-members uh as far as when we do retirement planning. So, some of the things where you want to live. I live here in Texas. I plan to stay here in Texas. Um, if I move, as I tell my better half, the only way I’m moving is if it’s someplace to Montana where we can live on a nice river or creek or something and I can spend my days fishing in quiet and solitude. That would be pretty awesome. Um, but for right now, I’ll just fly to those places. So, uh, now, where do you want to live? So, this is actually really something, right? So, this is something that might take a little bit of planning. So for pre-retirees, the first consideration is where you want to live. And not everybody changes a residence, at least here. Most don’t. They’re about where they want to live. So if you’re not tied to a job though, right, you’re free to live anywhere. Perhaps you want to live close to your children, your grandchildren, or other family members. Or maybe you want to get away from family members. Uh I don’t know. There’s no right or wrong. Um, oftent times if you have, you know, you’re an empty neester now, the kids are older, you might want to downsize, right? And not necessarily just that is a true statement. Someone said, “If I stay in Houston, I’m going to need good healthcare.” Very true. Um, I would argue if we stay anywhere, we’re going to need good healthcare. But with that said, though, um, you might think about, you know, if you want to work, right, then those things matter, right? your employment. Uh if you might have health issues or if that’s a concern, you might might want to be near a major city where you’re near uh major hospitals, something like that, right? You don’t want to be an hour and a half away from something big if if you have regular health issues. So, you plan to do a lot of travel. Maybe you want to live near an airport, right? So, or a major hub. So, again, there’s really no right or wrong, right? look at climate, you look at culture, you look at recreational opportunities. Um, are you an outdoors person? Maybe, maybe not. So, we’ve included this chart that just says, hey, the these are some of the criteria that people who are were retiring, these are the things that they considered. Obviously, this goes back a few years because because the lower risk of COVID was included in this survey.

So, how much home will you need? So, will you downsize? Should you rent? So, this is actually a thing, right, where where folks are saying, “Hey, you know what? I don’t want to I don’t want to live where I’m at. Maybe I want to downsize. Maybe I want to go to a maybe I want to go to a condo. Maybe I want to go to one of those 55 and up retirement communities where all I have to do is sit around, shoot the bull, maybe barbecue, chitchat with people, do some water aerobics, um play dominoes, whatever that might be. Uh, oddly enough, I had a friend who who is early 60s and he’s still working full everything and he moved into a 55 up community and and he said, “Well, one, I’m the youngest person there and it was awesome.” But, um, he’s like, “It is it’s amazing. It’s it’s the things that they do and have everything planned.” So, is it right for him? Yes. Is it right for everyone? No. But, you know, if you’re if you’re kind of unclear about things, what I would say is talk to your friends who are retired. Um, talk to family who’s retired, talk to us. We can tell you what a lot of folks are doing out there. Um, as far as your home, right, there’s a lot of home equity. The average person has over 300,000 in home equity. So, that is another resource that is available to them. So what will you do in that all that free time? Right? Most hobbies cost us money but some can make us money. So if you’re not working anymore, how do you fill your time? Right? So from a financial perspective, right, this is something really important to look at. Is it something like travel? Travel can be really expensive and that’s probably one of the more expensive hobbies out there. Um but even things like golfing or uh I think a more expensive hobby than that but the point is there are and there are other things that are income generating right you might want to start your own business uh that’s a possibility to generate some income maybe you have like a side hobby or you know I make furniture um maybe I could sell that so it’s a hobby and if I can generate some income how great would that be to be able to spend my days getting paid for what I want to do. So, kind of as a rule of thumb,

people can spend almost as much money in retirement as when they worked, right? Because they have those big ticket items or some people, right? They have those big ticket items. So it’s expected to spend about 70% of in your retirement is that when you were working because you don’t have to well you don’t have to save for retirement first and foremost and you don’t have those other things like eating out to lunch, you don’t have to dress, right? We don’t have work clothes, we don’t have commute, all of those things. Um, but I would say the biggest reason why people are retiring and they’re spending their time is spending more time with family and friends and then hobbies and traveling. So, and as you can see, this goes down whether they’re volunteering, caring for a loved one, and that is a whole different webinar in itself and it’s incredibly stressful.

So, how long will you live if we only knew? But here’s some I think this is really interesting though. So these are your average life expectancy, right? So what you can see is most of these is what I always want to point out is when when we’re looking at, hey, we’re planning to 90 or 93 or 95. The reality is that most people do not get there. So, I’m not saying not plan, especially if you have longevity in your family, but I think that calculator that living to 100.com is actually pretty cool. It’s been a while since I did mine. Um, and they say ensure that your money lasts to age 95 or 100. So the risk on that is that if you’re planning for that, right, you have to a lot more money toward that and then you may not be able to do all of those things that you wanted to do in your peak years, right, for health. But that’s one of the things that we account for in our strategy when we plan here at Aerys. What what surprises does life hold? If we knew it wouldn’t be surprises but usually it is health either your own or a family member or some hardship that maybe happens with a family member and then you have to step in uh obviously the economy the market or major disasters. I can tell you probably the biggest one out there is is health right where nursing care or something like that. Um, so Fidelity did this did this uh this study that they say over the average retirement you’ll spend $250,000 in health care. Now for you, but but your insurance and most of that happens in your last two to three years of life. So look, surprises are out there. You can’t plan for everything, but you can plan for a lot of things and flexibility is important, right? Stock market fluctuations happen. We certainly see that this year. We certainly saw that a few years ago. And obviously the major disasters, you know, it seems I’m going to jokingly say this, the world ends, right, with floods and earthquakes and tsunamis and fires. You want to make sure that your insurance is paid up and covered. And I know for those folks in well in Texas and Florida, property insurance, your homeowners insurance is brutal because of all those storms in the past. So this is something how much income will you need? If you haven’t done this, this is actually a good a good thing to do. And the lazy answer is 70 80 to 80% of your current living. Right? So

thinking about how you spend your free time. So so what I would do is is when I tell members when we start working on their weld plan, I have them run a budget worksheet. If you need that, just let me know. We can send that to you. Uh but you want two numbers, right? You want to you want to go, hey, this is about what I’m spending in these categories. And right next to it, if that number is different, write write the different number. For example, um the obvious one is travel, right? If travel’s one of your goals, you know, right now you might say, “Well, you know, I get uh the typical two weeks vacation. We usually don’t do anything big, but when I retire, we’re talking some bigger cruises, maybe some longer trips, maybe 30 days in Europe, maybe one of those river cruises, maybe a cruise around the world, um maybe go live overseas.” So, that might be a little bit more expensive, right? since you have to come back and forth. There isn’t a right answer. This is your answer. And the the nice thing about this budget worksheet is it maybe even if you have a budget in your mind, right? It maybe has it maybe allows you to look at things that you’re like, “Ah, you know, I didn’t even think about that. I forgot about my vehicle that even though I don’t have a car payment, I’m still going to need a new car every 5, 10, 15 years, however often you get a vehicle.” So what we would do is you’d look at those potential sources of income once you get your expenses done, right? And for most of us, our baseline and possibly only line for guaranteed income is social security, right? If you and your spouse are eligible for social security, you want to consider how you claim it, when you claim it, the timing, right? How you maximize your benefits. Do you take it early? Do you take it later? What’s the impact of doing that? Um the second one is pensions if you’re fortunate enough to have one. You have some elections to make. Uh the third, it could be an annuity contract if you have one. Now, these are actually pretty interesting because they provide living living benefit guarantees and they provide you and your spouse some guaranteed withdrawals for life or at least they can depending on what you have. And you know we had talked about this maybe some part-time work assuming you can uh the other thing we had actually talked to someone about this one too just uh rental income right via your investment property. So these are great but one of the things when we do the planning right does that fall into guaranteed incomeish right you have to depend on having a renter in there you have and having a good renter in there. So do they damage the property? If they’re damaging the property and they leave, then you might be out a few months of income and you still have to pay for that expense. So again, we kind of look at those scenarios and say, “Hey, do you want to consider this or the likelihood? How close is this? How much of how much of this is needed? Baseline income.” We help we help rearrange those and take a look at that. Some business interest if you’re selling a business. So let’s talk a little bit about each one of those, right? Because most sources have have pluses and minuses to them. So social security that is our baseline for most the more that you earn the smaller percentage that social security will be you know like if you earn 20,000 a year versus a 100,000 the social security for that 100,000 will not be five times more. So the more income you get the less percentage wise for social security you get. Um, now they do inflation adjusted for income and it is guaranteed for life which is very nice. I will tell you though over decades historically social security does not keep up with cost of living right it does not keep up with inflation. Pensions fixed income guaranteed for life. Oftent times that’s a static payment. So, you know, what looks good at 65 or 67, that same income at 75 or 80 might not be buying as much earnings from work. They’re great if you can get it. They’re not permanent, right? Because they can cease with ill health or just being too old or lack of interest in that. Annuities, you have to manage those for sustainability. There’s different types. And then you know the other things your investment property business interest the rest of it and most of it for many now but there’ll be a little stat that’s really surprising uh usually come from your IAS 401ks 403bs brokerage accounts etc savings accounts I think this is really interesting though so where do retirees say most of their income’s coming from right so social security is hands down the largest The average retiree makes about 50,000 a year. Uh a fair share of that comes from your social security. Now I would say the pensions and as we continue 5 10 15 years down the road that number will probably be smaller and smaller as pensions are going away. I think this is a really interesting number. Right. So, so the 401k, it’s only 10%. So, the question is, is it because they didn’t need it? Is it because they didn’t fund it? Is it because a lot of the folks who who are um being pulled come from a time where pensions were still pretty common. So, you have a pension and your social security. So, that provides a pretty good living in itself. I know a lot of us are retired from Continental or working for United um formerly Continental people. Uh there’s pensions there. So that’s nice. Or you work for the government. So I will I would expect that again as pensions get smaller I would imagine the 401k bar or graph would get larger. So social security. So, the cost of living adjustments average about 2.8%. And if you have not, by the way, if you haven’t determined or done an estimate on social security, you really should. There’s a quick calculator. You can just put SSA quick calculator in Google search and it’ll bring it up. But if you haven’t logged in and created an account with Social Security, you really should. It’s safe. It’s free. And once you log in and create an account, they actually have your reported earnings by year. And they can give you a much much much better estimate of what your social security would be expected at, you know, retiring early or at full retirement age, which would be between 66 and 67 depending on when you were born. So it gives you a really good idea and it really helps you, you can optimize your benefits from there um and come up with a strategy and it gives you a little better idea on that. So pensions, will you get one? Most people would say no, but for those of you who do, that is awesome. So they generate that monthly income for life. But how much would it be? And what are your distribution options? Now, I would say if you’re younger watching this, because we don’t know how old folks, you know, the age of people who are actually watching this, you should always be careful of planning on a pension if you’re younger, right? Because employers can can do away with pensions where they freeze it. So what you’ve earned you get. But if you’re planning on, hey, I’m ex getting this amount, but I’m still 20 years from retirement that this amount might be shrunk to this amount if your company decides to suspend it. Um, if you’re a little bit closer, obviously that risk becomes less earnings from work. So

what I would say on this is what will you do full-time, part-time, what’s that transition? Most people work because it gives them a sense of purpose and a reason to get out of bed. And many of us it defines who we are, right? Not what we do. Uh that is a whole another webinar by the way. But how long can you expect to work? I think is realistic. It’s a realistic question. Oh. Um, the SSA calculator site is is all you have to do is in Google just put SSA quick calculator.

So, look, once you leave your main job, right, there’s a lot of work options that might be available to you. Some become consultants, right? They go to their employer and say, “Hey, can I just maybe reduce my hours and still work right now?” Now, obviously, agism, yes, I know it’s illegal, but it is it’s a thing, right, that companies will eliminate your position, but magically there’s a position that’s pretty similar and someone who is younger. But I do, but what they’re showing now is employers are starting to realize the importance of retirees, right, and the shortage of that. And there’s still some work ethic there. Not that there’s not work ethic with the younger generation because they work hard. It’s a difficult time. Annuities. So, do you have an existing annuity? So, these are actually really good. So, um you’re looking to replace your income. So, these are the options you want to look at if you already have one or if you don’t have one, right? You look at the living benefit writers, how’s that guaranteed income, obviously the fees are associated to it, surrender charges, um and your tax implications. And I would say this, I I alluded to it earlier. So, one of the biggest biggest concerns when you’re retired is, am I going to run out of money? Do I have enough money? And really, do I have enough money is really, am I going to run out of money? Um,

using an annuity is a really, really good way to supplement some of that income. you can you can put that risk off to an insurance company instead of having to manage it yourself because you run the risk of what happens if we have a 2000 followed by a 2001 or a 2002 or a 2008 right there’s something there’s something called um sequence of returns right it is and and I will tell you this so when we do our planning for the members that we work with we stress test portfolios so what happens s if I retire at the wrong time. For the most part, we know when we want to retire within a year or two, right? But we don’t know what the market’s going to look like during that time. Maybe they didn’t get the memo, right? Maybe we have a 2008. It’s rare, but it happens. Are you prepared for it? That’s part of the retirement planning. So these are your sources, right, for your different piggy banks that you stuff with money for different reasons. Some like retirement accounts, some are non-retirement accounts. Um, I would say it’s very nice to have a mix of those, right? Whether you have your tax deferred like those traditional IAS or your 401ks, whether you have tax-free with your Roth IRA or your Roth 401k if your company offers that. Um, and then some of those things that are just taxable, whether it’s a brokerage account or their CDs or savings accounts, they all have a purpose. I would probably say they’re not better or worse. Maybe consider them well, not better or worse. You can actually say good or bad, I would say, would be a better description, right? They’re really purposeful. Some other income sources, right? if you have real estate investments or if you need to tap into your home equity. Now, that is a slippery slope, so I’d always say so some caution to that if you’re thinking about doing that, give us a call. We can talk you through that. Um, fortunately, maybe you’re you’re looking at a a nice sizable inheritance, uh, or maybe you have a trust available to you. Let’s talk a little bit about strategies. So, there are a few different strategies, and I would tell you it might be a combination of them. the um there’s the live off the interest, the 4% rule, the bucket strategy, and then we look at mandatory versus discretionary uh expenses. So, let’s talk a little bit about that.

So,

living off the interest. So, that’s pretty easy, right? So those are accounts like individual bonds or I guess even bond funds um some dividend paying stocks some of the limited partnerships uh even CDs right where your principal remains untouched. So if I have a million dollar and I’m earning 4% I will get $40,000 a year and then as long as that interest rate stays that at that rate I won’t touch my principal. So the second one and this is pretty common for folks uh if you read out there like hey how much should I take out of my nest egg sake right because we’re not looking at his income I said that’s kind of a paradigm shift where it’s like hey this 4% rule um so assets are invested for your total return right so you’ll have stocks bonds not everything does has a dividend to it um there’s actually a stat I want to look at that that I want to read to you because I thought this was really interesting. Um, see if I can find that. I can’t. There we go. Um, so they they there were some studies, right? So, so if you have a million dollars, I’ll use a million dollars because it’s easy math that what you do, I have a million dollar at retirement. I’m going to take 4% of that amount, which is $40,000, and that is going to be my baseline income. And then every year, regardless of what the account makes up or down, I take the 40,000 plus an inflation adjustment every year, so on so forth. Statistically, it should last 30 years, right? Until it doesn’t. This does not guarantee success. The assumption is 50/50 stocks to bonds. This was a formula that came about or at least a strategy came about in the 90s. Uh what I would tell you there are some cautions to that right there might be retire at the wrong time like a 2008 or a 2000 that can impact or even a 2022 where the market was down 15%. This can happen. So I would tell you there’s critics to this. Uh some say that it doesn’t let you spend enough, right? The number now they think is probably closer to five, four and a half, 4.7 because the reality is most people don’t live 30 years. Uh I will tell you statistically the the older you get, I know this sounds really weird, but like at 80 versus 85 versus 90, the chance of running out of money is like 5% and then 10% and then 12%. That’s what I was looking for to see if I can find it. And it was a it was a high enough number that that I’m not really sure anyone was comfortable with that. H you may all have that next time. Um but there are some strategies to that. So the second strategy because this isn’t an all or nothing and this is what I would say this is really really important. The bucket strategy right? So instead of percentage what you do is you think about it in time frames about money to spend. So you have your shorter bucket from 0 to 5 years and then that intermediate bucket 5 to 10 years and then the the long-term bucket which is 10 plus years. And what you do is you live out of the 0 to 5 years. And then as that gets depleted, you take money from the 5 to 10 year bucket and you replace that money into the 0 to 5 years and once the 5 to 10 years, you know, you’re taking money out of there. So you replace that with the 10 plus years. And the reason why that is, I would say, actually pretty effective strategy as a general rule is because you can invest those differently, right? short-term money, bad things can happen in the short term. So, they tend to be on the more conservative, more liquid, but really the range between zero and five years and and the investment range as far as risk is still really really broad. So, so there’s a lot of latitude and a lot of flexibility on on how you manage that 0 to 5 bucket. The 5 to 10 and the 10 plus, there’s a lot of similarities to that. that becomes like a tax efficiency side.

So don’t forget taxes because this is important. Um taxes are a very real part and not just income taxes that I would say, right? So you still have other things like you still have to pay for your Medicare. Uh depending on how much income you make that that amount can change, right? you can get hit with Irma, which is the income related monthly adjusted amount. I always have to look that up, but basically if you make over a certain amount, there is a Medicare penalty and you get to pay more. Um, and it’s not like like income tax, right? If you go a dollar over that 24% or the 32%, it doesn’t go taxes don’t go back to dollar one. You just pay taxes on that extra dollar over. With Medicare, that is not the case. If you go over $1, you’re in for a penny, in for a pound. So, that part of the planning that we do, you know, as far as structuring out goes, when you’re when you’re 5 years plus out, we say, “Hey, you know, these are potential concerns because of RMDs, your required minimum distribution. This is part of your tax strategy and planning or how does that money pass on?” So, we’ll talk a little bit about how retirement income is taxed. For this, we really look at social security. This is kind of a shocker to some that yes, you still have to pay taxes on social security. It’s a bummer. I know you paid into it your whole life, your whole working life, but that’s the brakes. So, most everybody will start will be paying some on your social security. It’s it’s up to 85% of those benefits taxed at your regular tax rate. So if you’re making $1,000 a year, you have to report $850 of that as taxable income. So pensions generally taxable as regular income. Work obviously is ordinary income. Investment income depending on how it’s structured, it can be taxfree in a Roth. It can be taxable only as you take it out as in an IRA, 401k. Um and then like brokerage accounts and things like that, it can be taxed at different brackets. you know, whether it’s a qualified dividend or whether it’s long-term capital gains, those are taxed at lower tax brackets.

So, with all that said, what’s the next step? So, I would recommend an action plan, right? That’s that’s your first and foremost. So

I I recommend that you get some books on like the softer side of retirement planning. Talk to the people about what you want to do for the rest of your life, right? Not so much the financial side of it, but but how do you define the next 20 plus years of your life? Because you can reverse into that, right? I I want to play golf every day. I have a client who actually has a tea time every day, seven days a week, and that’s what he does. As long as it’s not raining. So, by figuring out what your passion is, you can start putting a price to that retirement, right? So, you can buy your retirement. Um, that was one of the things that we had talked about, right? Investing for your retirement. You’re really purchasing your retirement. It’s a big purchase like a house or a car. It’s a major purchase. So purchasing the retirement plan that you want. So the next thing you want to do is is once you do that, then you start getting your resources together. The next thing you’ll do is get your financial information. You want to make sure all of your documents are in order, right? Do you have that AMD, the advanced medical directive? Do you have a power of attorney? Do you have a will? Do you have a trust? Do you need a trust? Um, all of those things can matter, right? Does your family know what your plan is? uh how do you look at downside? What happens if the market happens? What happens if my health is is bad or my spouse is bad and we have to go into a facility or we need help at home? All of these things matter. Again, just a reminder that social securitys.gov is a good resource for that baseline social security to have an idea of what you need for your baseline. And then what we do is it’s called an income gap. You figure out your expenses, you figure out your income, and then that gap is what you need to solve for. And that gap is not always the same, by the way. Um, for example, certain things you will always need, right? Shelter, food, um, utilities, things like that. Um, things that healthcare, things that will change like travel, uh, some of your hobbies. You probably might not do that till the day you die. Travel, you might not do that till the day you die. If you’re spending time with grandkids, they’re eventually going to get older and find you less interesting because they’re too cool. I’m joking about that. I mean, I’m really not, but hopefully I’m joking about that. And hopefully they love you all the way through all the way even through their teen years. Um, and you make a list of questions and any concerns and you write them down, right? Then you can focus more on that over time as far as the solve. And that’s some of the things that we can help you do. So, how we can help, right? We do the complimentary financial planning. So, that’s usually a question comes up. So, we’ll just get ahead of this. So, the two questions that almost always come up is do we charge for the plan? We don’t. It’s just one of the things that we do here as part of a for the members. Um,

am I fiduciary? Yes, I am. I’m a certified financial planner. Some of the advanced planning. So, I think this is really cool too, right? So 5 years out or less, look at how that income is going to be. Come up with a strategy. We can help you through that. I will tell you two of our biggest things that we help on how we help solving for that income gap. We have a very different strategy that can reduce your stress tremendously and reduce some of your taxes. Uh also when we can help with Roth conversions and the timing of your social security and when you should take that. But the Roth conversion can make a huge difference, especially if you have children that are going to inherit money. Um, you know, because there’s two, right? How much taxes we pay and how much taxes are our children, grandchildren pay. Uh, how much those beneficiaries pay. Are things titled correctly? uh briefly

um briefly so we just added this so trust and will services so this is digital uh it’s one of those things that we can offer through erys uh at a discounted rate pricing is pretty good if you’re for our clients who we handle that it’s actually complimentary so it’s like the will trust private attorney some of the basic foundation which really covers most people. Um, you start off doing a little more complex depending on on your net worth or if you have like a special needs uh child or grandchild that you’re really looking after. Um, things like that. Or if you have, and I’m going to jokingly say this, irresponsible children that you just don’t trust handing them over a bunch of money and you’re like, maybe why don’t we just call that a spend thrift provision uh in that if if you think that has to happen over time. So, with that, we’ve come to the end of our presentation. Uh, if you have any questions, I know we have some questions right now. Go ahead and type that into the chat or the Q&A box and we’ll address those. So, while we’re doing that, I’m going to put up a one question poll if you want to schedule some time to see me and talk about your specific situations or specific questions that apply to just you or planning questions or something like that. You can either do that through the poll that I’ll put up um or there’s my contact information or you can that QR code on the right hand side will take you directly to my calendar. Uh, my calendar is regular business hours, but if you do need to meet outside of business hours, just let me know. I’ll do my best to accommodate. Uh, there we go. Let’s see what questions we have. So, I have a friend who is 96 and is running out of money. She owns her own house, is thinking about a reverse mortgage. Uh, what are your thoughts on that? I actually think reverse mortgages can be good. You just have to be careful about those. So, um, if you want, we can kind of look at some of those things, but but you want to be careful, um, as far as what the charge is for that. Like, shop that around a little bit. Uh, and and what they’re expecting, what they’re getting on on the pricing on that and what’s the impact, how long is that for, because the devil’s in the details on that. Um, we can help. And this is a great example of someone who lived in ’96, right? We don’t we don’t plan to live that. But sometimes God has a different plan for us. So hope for the best, right? I would say plan for the worst. But I used I used to say planning is um you plan for rainy days, not floods. But I live here in Houston and we flood a lot. So sometimes you do have to plan for floods. But I mean that metaphorically. So let’s see what other questions we have. Um, if I’m nearing retirement, is there a general guideline on how I should be invested? There there there is on that. Um, so as a general rule of thumb, right, you will re you will invest more conservatively as you get closer to retirement. The caution is, and I’m going to jokingly say this tongue and cheek, you don’t want to become recklessly conservative in your retirement because what can happen is that is that your money does not grow and it does not outpace inflation and then you lose purchasing power over time.

Let’s see what else. You have an old 401k. Should you be paying attention to how those are invested? Absolutely. Especially if it’s an old 401k, right? If you had an old 401k when you were in your 30s and now you’re in your 60s, that probably doesn’t match your risk tolerance. So, that’s important to look at that and update that as a whole. That’s one of the things that we look at. We look at your investments whether we’re managing them or not, right? The part that we’re not, we still take that into account from a holistic side.

65 want to retire in the next two years. Is there a general guideline on how it should be invested? There is. So here’s your general guideline. Again, as I said earlier, the closer you get to retirement, right? We look at the buckets. But the other thing is it depends on your needs, right? So one of the things that you run and we could do this if you want just we can schedule some time and we can look at your cash flow, right? Look at your budget, look at your income sources, look at those expenses and solve for that gap. And and that’s kind of where you would say. So your rule of thumb is take as little risk as you need to to still hit your goals. So not necessarily what earns me the most, right? If a portfolio if portfolio A earns me this much or expected to earn me, portfolio B earns me this much, is this one necessarily better? Well, the problem is is that as you know, the more you can earn potentially, the more chance of something going wrong. So, you want to be cognizant of that, right? So, make sure your risk matches and your downsides protected. How do I know if my annuity is worth keeping? We can take a look at it for you. That’s not a problem. We I’ll take a look at it, see what it is, if it makes sense. We’re futures. I’ll tell you yes, no. Um, keep it. Some of the older ones are actually pretty cool though. They they have some benefits that a lot of them don’t have anymore. So, uh, if I’m close to retirement, is it worth Oh, this is a good one because this is all the rage now, right? Roth conversion. If I’m close to retirement, is it worth doing a Roth conversion or is it too late to make an impact on my financial plan? I would say it’s rarely ever too late to consider that. Now, the difference is the later you are in life or if you’re already retiring, you’re close to retirement. So, we would look at that, right? We’d look at your tax savings and how that would impact um the end of life, right, for your legacy. If you are already deep into retirement, then Roth conversion still might be an option, but it would be more for a legacy plan, right? How how it goes to your beneficiaries versus tax savings because you probably depending on where you are, you might not have that many tax savings years available to you. Uh maybe one more.

What happens social security if you decide to work part-time after full-time and already receiving social security? Uh that’s actually a good question. So social security if you’re still working part-time. Um a couple of things on that, right? It still counts toward your income, but the reality is they look at your last 35 years of of income and they take your highest one. So, if you’re working part-time, depending on how much you’re making part-time, it’s unlikely that it’s it’s really going to make a difference. And and if you are retiring at 57, does that impact it? Yes, it does. Um because they calculated up to 65. So, from 57 to 65, if you stop working, those would be zeros. Uh so, that’s where social security would matter on when you’re going to take that. We can calculate that. That’s one of the things that we calculate if you’re thinking about retiring early. I think that’s Oh, one more here. Is the market overvalued with the recent highs? Um, that’s a trillion dollar question right there. I would say, as a general rule, no. Compared to other times in our history, I I wouldn’t I wouldn’t concern myself as much with the market being at a new high, right? Because there’s always new highs to be made. the market doesn’t move straight up. It’ll move up, it’ll pull back, it’ll move up, it’ll recover, but over time, the trend is up. So, that would be it. Thank you very much for the compliment. If there are any questions, please reach out to me. Other than that, I think we have answered all the questions. I wish everybody a very wonderful rest of their evening and rest of their week. I hope to see you on future webinars. Until then, thank you so much and be safe. Take care. Bye now.

All right, we can go ahead and get started now. It’s two minutes after the hour and I’d like to just point out my voice is a little raspy today. Forgive me. I uh was blessed to be invited to my younger cousin’s bachelor party this weekend. So, I had to herd cats basically this entire past weekend. Um, all in all, a good time. But, let’s begin. If you can’t hear me, if I might have uh said something you didn’t understand, pop it into the chat or the Q&A section. I’ll try to catch it and go back. But I’ll do my best. I’ve been trying to save up my voice all week for today’s webinar. But anyway, good afternoon everyone. Hey, my name is Baptiste Brunner. I’m a Texas-based financial consultant with Allion. I cover the Gulf Coast in the southeastern parts of the country and just part of a team of with the credit union of financial professionals who give regular educational webinars. Again, I’d like to just start by thanking all of you for taking the time to learn about, you know, your IRA and retirement planning, how to get that maximum benefit from your IRA or your retirement accounts in general. Find ways to save you some money in taxes. avoid some potential costly mistakes that are common. You we’ll cover them today. You want to learn more, ask us questions. We’re here to help. Uh presentation be probably about 4550 minutes long. And as always, we’re going to reserve time at the end to answer any questions you might have. When that time comes, mentioned them already, but go ahead and identify the Q&A as well as the chat section. I’ll be sure to get to those questions. Little bit of housekeeping, though. Please don’t throw an AI notetaker in here. Not allowed to do that. Um, if you want to take photos, I can’t stop you from doing that, but we’re not allowed to have any AI note takers in here. Uh, my next webinar’s coming up. I love doing them on Saturdays. Our members seem to really like doing it on Saturdays, too. So, uh, this one will be on the tax planning changes, some other tax planning as well, but just, you know, four stages of retirement with tax planning. It’s going to be Saturday, September 19th at 10 a.m. Central, that’s a really important one. I’d say this is a top three webinar if I had to put that, you know, up there along with um couple other ones, but tax planning, very important. And also another one in estate planning, you know, principles of preserving your wealth, wanting to make sure all your ducks are in a row in case anything were to happen to you. You know that you can sleep well at night because you have your state matters taken care of. That’s going to be next month, Wednesday, October 7th, at 2 central, 3 Eastern. And of course, our team at Alliant Retirement Investment Services. We’re focused on helping you, our members, understand the ins and outs of investing, saving for retirement, and of course, much more than that. But go ahead and take a look at our website, Aerys AI.creditun.com.

Put a slashevents in there to find our webinar schedule. I’m not the only one that does webinars, but got plenty of other folks that do. Team of 10 guys that do. We also have our podcast, and we also have just a really good resource center. Go ahead and check it out. Feel free to take a photo of this slide, but these are some of the resources available to you just for being a member with the credit union.

All right, so again, today we’re going to talk about savvy IRA planning. And it’s not necessarily for baby boomers. Those who are really retiring aren’t necessarily in that generation anymore. But savvy IRA planning for retirees, let’s call it. And you know, a lot of people have a plan for accumulating money for retirement, but far too often that’s just where the planning stops. And that’s not good enough. And the reality is that a sound distribution strategy, in other words, a plan for taking money out of your retirement accounts is just as important, if not more so. And when it comes to your IAS and other retirement accounts, you probably have a lot of questions like, “How much are my withdrawals taxed? When do I need to begin taking withdrawals? How much will I have to take? What happens to my IRA when I pass away? And perhaps most importantly, how can I minimize my taxes so I can spend more of my hard-earned money?” And you know, years ago, life was simpler in many ways. Retirement was really no different. Many people went to work and then when they retired they collected a pension and social security benefits. There wasn’t as much needed in the way of planning and people weren’t all that concerned about running out of money since they had all this income from between their pension and their social security benefits. You those were generally guaranteed and for most people that along with whatever else they had managed to save along the road was enough. Today though things are different. companies and other organizations. They’ve abandoned pensions in mass numbers and instead they’ve turned to 401ks and similar plans. That’s shifting many of the risks they once shouldered onto the backs of employees and their families. Retirees are now responsible for making more of the critical decisions that will determine how successful they are in retirement. And that includes keeping up with changes to the law. You know, that just happens all the time. For instance, the law known as Secure Act 2.0 made nearly 100 changes to the rules for retirement accounts, some of which we’re going to cover today. But the bottom line of all this though is that today, more than ever, when it comes to retirement, you’re on your own. On top of that, your retirement savings may have to last you a lot longer than you think. You know, according to many studies, over 40% of retirees underestimate their life expectancy by five plus years. So, take a look at this chart to see what I mean. If you’re a man and you’re 65, you have a pretty good chance of living to at least 85. If you’re a woman and you’re 65, you have a really good chance of living past 85 than you do dying before it. And if you’re married, both you and your spouse are 65. There’s a very strong chance that at least one of you will live to be at least 90. In fact, there’s about a 33% chance that at least one of you will live to be 95. And that means your retirement savings could easily have to last you 20 to 30 years or even longer than you expected. And that’s probably much longer than a lot of you even considered. And put all of this together and makes having a plan all that much more important.

So with that in mind, one of the best things that you can do as you approach retirement, if you’re not already there, is to beef up your retirement savings by contributing as much as possible to tax favored retirement accounts. So although contributing at younger ages is more powerful because it gives your contributions more time to compound, you may have been unable to save as much as you wanted to because you were bogged down by mortgage payments. You know, maybe you were saving for a child’s education. you just had other expenses. Chances are you no longer have those expenses in retirement or you know they’ll be ending soon once you finally do retire. But as a result, you may have finally you might pardon me, you may finally have discretionary income that can be used to fund your retirement accounts. So just how much can you contribute? And that depends on the type of retirement account as well as a number of other factors like your age. But let’s begin with traditional IAS. traditional IRA or an individual retirement account is a personal retirement account that offers certain tax benefits and contributions may be taxdeductible and while your money is inside the IRA it grows tax deferred ultimately when you take money out of your IRA the amount you take out is generally then added to your income we’ll talk about that more later also but in 2026 the maximum that you can contribute to a traditional IRA is 7500 if you’re 50 or older by the end of that year. Uh then you have a catchup which brings you up to 8,600 a year. You can’t always make a traditional IRA contribution though. You know, for instance, to make a traditional IRA contribution, you must have what the tax code refers to as compensation. And for most people, compensation is just earned income. But it also includes a number of other types of income such as taxable alimony. does not however include things like interest payments, dividends, capital gains, social security, or unemployment compensation. So essentially, if you are fully retired and living off of your retirement plan and your social security, you can’t do an IRA contribution. You can move money into it. You can’t put new money into it, though, basically. But in the past, age was also a barrier that prevented some people from making traditional IRA contributions. That hasn’t been the case since 2019, though. And traditional IRA contributions are deductible unless you or your spouse are active participants in an employee sponsored retirement plan and your income exceeds an applicable threshold amount. And those limits depend on your filing status and who’s contributing to employer sponsored plan. And many of you probably know that there is another type of IRA. It’s called a Roth IRA. And Roths are similar to traditional IAS, but there’s some key differences. And I love Roths. Talk about them on many of my webinars. But one of those differences is that you don’t get a tax deduction when you make a Roth IRA contribution. But once your money is in there, it grows tax deferred and then you get to take out that money tax-free down the road. you paid the taxes off early, you take everything out including the gains tax-free generally speaking. So that’s the big benefit is that the Roth IRA distributions can be tax-free in retirement. So, if you’ve had any Roth IRA though for more than 5 years, aside from this, if you’ve had any Roth IRA for more than 5 years and you’re over 59 and a half, then all of your withdrawals from any of your Roth IAS will be tax and penalty-free as part of what’s known as a qualified distribution. So even if you need to take the withdrawal sooner though, you can always take out your Roth IRA contributions, not earnings, but you can always take out your Roth IRA contributions tax and penaltyree. And same some of the same contribution rules that apply to traditional IAS also apply to Roth IAS. For instance, that same contribution rate, $7,500 plus an additional $1,100 a year if you’re ow 50 and up. But those Roth IRA contributions are also subject to the same compensation rules as traditional IRA contributions. Now, if you have sufficient compensation, then the only thing that could prevent you from making a Roth IRA contribution is having too much income. And you can see the income limits up here on the screen. Just note that if you’re a single filer, as long as your income is under 168K, you can make a full Roth IRA contribution. uh if you’re married doing a joint return, it’s $252,000.

Now, while some while some of our future retirees and current retirees, you know, those couples, they like to retire at the same time. Often times though, one spouse retires before the other. And in such cases, you may be able to take advantage of spousal IRA and/or Roth IRA contributions. And these are special contributions that allow a spouse with compensation to make a contribution to the traditional IRA or the Roth IRA of the non-working spouse. So in essence, the non-working spouse can use the working spouse’s compensation as their own to declare that they’ve made an income allowing them to contribute to their IRA. And you might also be asking yourself, well, can $8,000 contribution really make a difference when it comes to my retirement? And the answer is absolutely. So, here’s just a quick example. Suppose you’re 55 now and you plan to retire at 65 in 10 years. Kids are out of the house. They’ve flown the coupe already. You finally have a chance to focus on saving for your retirement so you can make a full $8,000 Roth IRA contribution annually until you retire. And let’s just say for making consistencies with this argument, you you’re going to have a 6% earnings per year, which is conservative compared to the most recent times. Still good earnings. So 6% per year. By the time you retire in 10 years, you’d have come up with more than $10,000 or more than $100,000 that at that rate. But remember, we’re planning for you to live until you’re 90 95. So, let’s say that you leave that account alone and it continues to earn 6% per year. You’re using the funds from your 401k and the money that you started saving when you were 20 to 65. These are funds that we’re putting towards the back half of retirement. So, let’s say that you leave that account alone and it continues to earn 6% per year. By the time you reach 85, even if you never put another dollar in after the first 10 years, you’d then have earned up to and turned it into an account of more than $350,000. Plus, pardon me, since you made your contribution to a Roth, that entire amount would be taxree. Be nice to have 350K that’s 100% taxree, wouldn’t it?

still think just $8,000 a year can’t make a difference. If you’re still thinking that, I hope this changes your mind. So, just think if you’re married though and you’re able to make that $8,000 contribution to both yours and your spouse’s IRA, well, now you have twice as much. This example uses an $8,000 annual contribution just for simplicity. Remember, it’s 8,600 right now. That number is probably only going to go up as years go by. So, if you’re still working, you have access to one or more plans throughout your current employer, you might be able to do even better. While the limits on contributions can vary depending on the type of plan, you know, 401ks, 403bs, 457s, simple IAS, SE IAS, they allow you to contribute much, much more than just regular IAS. And that secure act that we mentioned earlier introduced a new special ketchup. Remember, you get a catch-up starting at 50, but from the years of 60 to 63. For these kind of plans, it’s an additional 11,250 as opposed to an additional $8,000. So, it’s 24,500 as your contribution limit. When you’re 49 and younger when you’re 50, it goes up to 325, but once you’re 60 and 63, there’s that special catchup down here at the bottom. Now, you can contribute 35750 a year. But again, depends on your plans provisions. you can be eligible to receive employer contributions such as a company match or profit sharing that’s separate from your contributions. The real number if you’re doing your contributions plus your matches somewhere around 74 $75,000 a year. Now, of course, at some point, you’re likely to retire, and when you do, you’ll be faced with one of your first major retirement decisions. And what to do with the money that you’ve accumulated in your employer sponsored retirement plan. You know, in many cases, people choose to roll those funds over to a traditional IRA or a Roth IRA because they tend to offer greater control over one’s retirement funds. They’re not the only options, though, and such rollovers are not always the best move. And believe it or not, you may have as much as six different options for your employer sponsored retirement plans funds for whenever you leave work. And you can see them here on the screen. Each of these potential alternatives, they offer unique benefits and drawbacks. So, it’s usually a good idea to discuss your options with a financial professional. That way, you can make those savvy decisions that are best for you and your family.

All right. So getting money into your retirement accounts is only the first half of the story. Coming up with an efficient way of taking those funds out and avoiding costly mistakes is the other half. And this is far easier said than done, particularly when it comes to your traditional IAS, 401ks, 403bs, etc. In general, withdrawals from these accounts are taxed at ordinary income rates. Just like interest, your withdrawals are added to your income and taxed at whatever tax bracket you happen to find yourself in. And if your overall income is relatively low, you might have a low tax rate for your withdrawal. On the other hand, if your overall income is higher than when you were working, your tax rate will be higher and more of your IRA withdrawal will end up in Uncle Sam’s hands. Nobody wants that. But here’s a quick look at the tax brackets for single and joint filers for 2026. These numbers change every year with inflation, but you can find these online as well. One of the troubling aspects of IRA planning is that the tax rate in your future distributions, it’s unknown. Even if you can project your income with relative confidence, there’s no guarantee that tax rates will remain the same. And while it’s hard to find someone who doesn’t think that they paid too much in taxes, now the reality is that the top tax rates today are pretty low in historical context. So, take a look at this chart. See what I mean? When the income tax was first introduced in 1913, something that should have been eradicated in 1914, but I digress. The top rate was only 7%. But within just a few years, top rate had already skyrocketed to over 70%. Dropped back down to as low as 25 after World War after World War I. Then that top rate jumped to 63% in 1932. And from there wasn’t until more than 50 years had passed where in 1987 top tax rate finally dropped back below 50%. But he knows in the top bracket keep more of their income and they were forced to give over to Uncle Sam. Now of course not everyone pays that top rate. In fact it’s only very small percentage of taxpayers that do but it still affected median households because the second highest third and fourth were also much higher than they are today. That said, though, with our national debt currently at an all-time high, a budget that hasn’t been balanced since, I think, the Clinton administration, and fiscal troubles for many of our entitlement programs like Social Security, Medicare, it’s possible that tax rates could go up across the board. That makes coming up with that right plan even more important. So, to make matters even worse, if I haven’t scared you already, your IRA withdrawals can cost you in a lot more ways than just adding to your income. They can also cause you to be phased out of itemized deductions, personal exemptions, and various tax credits as well. They can increase your exposure to that 3.8% net investment income tax. If you take an IRA withdrawal, you might have to include more of your social security benefits and income and then causing your social securityities now to be taxed and your Medicare Part B premiums can increase. And if you haven’t heard of Irma yet, IR Ma, that will be your Medicare cost one day. And those grow dependent on how much money you live off of in retirement essentially. That’s just the beginning. But if you want to try to avoid these issues, you need to make a plan. And one way to minimize the tax impact of retirement account withdrawals is to avoid taking withdrawals altogether. That allows your retirement money to grow tax deferred and keeps that nasty taxable income off of your tax return for as long as possible. You can’t put off taking withdrawals forever, though, because once you reach a certain age, the law will require you to begin taking what are known as required minimum distributions or RMDs for short. So, if you have a pre-tax 401k or a pre-tax IRA, Uncle Sam is going to say, “Well, now that you’re 73 or 75, it depends on when you were born, but now you’re this age, you’ve had these funds in this account pre-tax all these years, and you haven’t paid me yet. I’m now going to require you to take money out of these accounts.” It’s not fun. A lot of people don’t know about these ear early enough, and that’s why there’s some other things to do. But if you were born before 1960, you have to take it at 73. If you’re born after 1960, you don’t have to start taking them until 75.

But a final thought before we move on. If you don’t take out the right amount of your minimum required minimum distribution, the IRS will penalize you 25% of the amount that you did not take out. So, if you were supposed to take out 10 grand and you didn’t take out 10 grand at all, the IRS will penalize you 2500 bucks.

So, to calculate your RMD, they have these tables. Tables change every year. Let’s make it simple. If you just turned 75 this year, I’m sorry, 73 this year because it’s still the 73 folks. If you haven’t taken it out, you haven’t heard of R&Ds yet. Easy to find out. You find the uniform life expectancy table. It’s on their website. All you do is you take your December 31st balance from the end of 2025 and divide it by 26.5. That’s your amount you’re supposed to take out this year. For next year, for 2027, you base it off of your remaining balance from 2026 and so on and so forth. But the number changes every year. They change the numbers in these tables, but it also changes each year that you go. If you have more questions about it, just give me a ring. Happy to help. Of course, most people just don’t think about things in terms of factors or life expectancy. So, just here’s a chart. Think you’ll help find this one helpful. It shows the approximate percentage you need to take out of your IRA from 73 to 90 just in order to steer clear of that 50% penalty. But if you look, you’ll see that each year the percentage you need to take out does increase. That doesn’t necessarily mean you need to take out more money each year than the last though, as that also depends on how much your IRA gains or loses. So if it gains more, you got to take out more. If it goes down, you got to take out less. But RMDs can actually get much more complicated. And as we’ve already discussed, the penalties for making a mistake can be pretty severe. And with that in mind, let me tell you about three of the most common R&D mistakes people make so you can avoid making them. Just remember part of any savvy IRA plan is just minimizing these cost and mistakes. So one common RMD mistake people make is incorrectly aggregating their RMDs between different types of retirement accounts. For example, suppose you have a 401k and an IRA. After calculating your RMDs from each account comes out to 4,000 and 3,000 respectively for a total of $7,000. Now imagine your IRA over here is earning a higher rate of return than your 401k. might be tempted to just pull all that seven out 7,000 from your 401k, leave your IRA alone and just call it a day. After all, what’s the difference? They’re both retirement accounts and whether you take 7K from just your 401k or 4,000 from your 401k, 3,000, it’s the same impact in your tax return, right? That’s logical thinking. Federal government doesn’t really think all that logically most of the time. So, the tax rules are anything but logical and they specifically prohibit you from doing that. An RMD for one type of retirement account like an IRA can never be taken from an RMD of another account like a 401k. Another common RMD mistake is aggregating your RMDs between spouses. Same thing as the first example. Husband can’t take out the RMDs all out of his account or all out of the wife’s account and say that that’s good for the husband and the other spouse. You both have to do it. But a third common R&D mistake is forgetting to take an R&D altogether. Just remember, it’s a 25% penalty on the amount you weren’t supposed to take out on the amount you’re supposed to take out. If you’re supposed to take out 10 grand and you don’t take it out at all, you owe Uncle Sam $2,500. I don’t like it any more than you guys. Just the rules. Let’s vote against these next time. Now, one strategy to minimize the impact of taxes on your retirement savings is to avoid taking distributions from your IRA for as long as possible. And this allows your retirement money to enjoy its favorable tax deferred status for as long as possible. It also helps to keep income off of your return, which as you’ve already learned, not only helps keep your income tax bill lower, but can also help prevent increases in other costs tied to your income. There are some major downsides to this approach, though. Most notably, as your IRA gets bigger, so does your problem. You know, think about it. If your tax bracket remains about the same, your IRA grows, so does the amount that you’re eventually going to be required to take out by Uncle Sam later, you’re going to have more RMDs and be thrown in bigger tax brackets. So, it’s much different from other things you may be used to. So, imagine you buy a house for 200K and have a $50,000 mortgage. If the house doubles in value to 400K, does your mortgage increase to 100K? Of course not. But you get to reap all the benefits of that appreciation. But that’s not the way it works with IRA and retirement accounts like 401ks. If those accounts double in value, you don’t get to keep all the gains. Uncle Sam is well, he feels he’s entitled to his share. Plus, by waiting to take distributions for as long as possible, the required minimum distributions later on will be larger, and this could increase the impact of some of those side effects we’ve talked about. Thankfully, there are ways to fix this. So, that to go back to the mortgage analogy for a moment, you can own your IRA free and clear so that only you benefit from future appreciation, and it’s called a Roth IRA conversion. Many of you may have heard of this before from some of our other webinars, but it’s our next savvy IRA planning strategy. So, a Roth IRA conversion is the name given to a special type of transaction where you can move money from your pre-tax retirement account to a Roth IRA. When you make a Roth conversion, the amount of money you convert is just added to your tax return for the year. It’s taxable whatever income tax bracket you’re you happen to be in. But here, let’s take Jill. Jill has 100K in a traditional IRA. Like to convert it to a Roth. We’ll talk more about why she might not want to do that in a moment. But if Jill moves forward with her 100K Roth IRA conversion, she’ll have to add 100K of income to her tax return for that year, which will be taxable at whatever rate Jill happens to be be. Because this is a big decision and can have a significant impact in your taxes, it is always best to discuss this option with both both your CPA, tax repairer, whichever on your tax side, and your financial professional as well. But why would you voluntarily choose to make one of these Roth IRA conversions and pay taxes before you have to? Well, there’s in fact a lot of reasons. Perhaps the most common reason is one we’ve already discussed and it’s just to pay off Uncle Sam now so that you own your retirement account free and clear for life. Just remember with the Roth IRA, you have the potential for future tax-free withdrawals of everything in your account. So, right now, we have the lowest tax rates in quite some time. and we’re scared, we’re all kind of worried that they might go up one day considering our current balance sheets in this country. So, if they have to go up later, let’s say you convert it to 12% now, but that 12% bracket goes up to 18. Wow, you just saved a lot of money in taxes. But remember, if you’re over 59 and a half and you’ve ever had any Roth IRA for more than five years, then all those withdrawals from those Roth IAS will be tax and penaltyfree for a while. Something else to keep in mind is that unlike Roth IRA contributions, there are no restrictions on who can make Roth IRA conversions. You can be you can’t be too old, you can’t be too young, you can be working, you can be retired. There are no minimum amounts of incomes or maximum amount of incomes you can have. You understand what I mean? If you want to convert your IRA or 401k to a Roth IRA, there’s nothing in the tax rules that will stop you from doing so. This is very pertinent. Most people are good candidates for a Roth conversion. I would say of the folks that I meet with, nine out of 10 folks are good are good candidates for a Roth conversion to some degree.

Now, the potential tax-free nature of the Roth IRA may also provide you with additional benefits such as a hedge against tax rates rising in the future. As we mentioned, you know, when it comes to retirement, there are a lot of unknowns. So, what will the market do? What will inflation be like? what will your tax rate be and so on and so forth. But the last one, taxes, is a major concern for many retirees and one we’ve been talking about throughout this webinar, but a Roth IRA conversion can help manage that risk by paying taxes at today’s known rates. If tax rates rise in the future, tax-free distributions from Roth IAS will be even more valuable. Of course, if you think your tax rate will be lower in retirement, then that’s something that should be covered and considered when having that run in a financial plan. Also, since Roth IRA distributions in retirement are generally tax-free, they typically don’t impact the other things tied to your income that we discussed earlier. So, if we’re trying to keep our social security fully tax-free, having a nice chunk of taxfree money that won’t be added to your income really helps you hedge right there. Another big benefit of the Roth IRA and one that many retirees do find attractive is that Roth IAS also have no RMDs associated with them. So remember all that bad talk we were having with the RMDs and required minimum distributions. Uncle Sam wants this cut, you already paid them. There’s no RMDs on a Roth IRA. So for good legacy planning purposes or wanting to leave a good amount of money to your spouse should anything happen to you first Roth conversions they get to inherit this and they have no RMDs on their inheritance in this case they get to take those funds on tax-free and it can be passed down generations and generations and never be touched

in the tax cuts and jobs act however it does eliminate the reccharacterization option. This really isn’t a big deal, but for it eliminates the recarerization option for conversions made in 2018 and later. So, if you convert your Roth IRA now or in the future, you’re stuck with that decision. But if you are going to make the decision to convert to a Roth IRA, you’re more than likely fully in and committed to it. It’s not that big of a deal here. But even if your tax bill is higher than you thought or if the conversion accidentally phased you out of a credit or if your investments dropped in value, no matter the reason, you just can’t reccharacterize them. But with that in mind, it’s very important that you are sure you want to convert as mentioned your Roth IRA before doing so. So here’s three questions to ask yourself before converting. Do you have a rough idea the conversion’s impacting your tax bill? Financial planning can help you out with that. Do you have a a plan to pay those resulting taxes? Another thing that a financial plan can help you with. And do you have a reasonable expectation that the benefits of prepaying your taxes like this make sense in your overall plan? A financial plan can help you with that. But to do a Roth conversion, your answer should be yes to all these questions. And one savvy conversion strategy might be helpful called filling up a bracket. So look, if you are in the lower end of the 22% bracket and you have all this space to go until you hit 24, fill up that 22% bracket. Don’t you, if you’re at the 24% bracket level and you want to convert a lot of money, well, you might be reaching into the 32% bracket. Doesn’t make a lot of sense to pay 8 points more on top of what you’re already being taxed. Just stay within your bracket. A lot of times a fixed rate works as well. It’s a fixed amount that you come up with your financial professional, but filling up the bracket allows you to stay within your tax bracket while converting and just filling up that amount. And that generally is working with a team between your tax preparer, CPA, as well as your financial advisor.

And Roth IRA conversions can be especially helpful and useful if you’ve had a low income year. And for example, if you’re a business owner with unusually low sales one year, um you’re paying high non-recurring medical bills. So now you have that big tax deduction. Or maybe you’re retired but not yet receiving social security benefits or a pension or an IRA distribution yet. These are questions to ask to see if a Roth conversion is a good move for you. And again, our planning software can help you figure all of this out. But of course, these strategies aren’t for everyone. As you can see, there’s no guarantee that the conversion will achieve the intended result. This is a disclaimer, but again, nine out of 10 folks are good candidates for this. And does a full conversion always make sense? No. But having a nice pool of tax-free money, boom, money that you can reach into whenever you need tax-free. You’re not jumping tax brackets now. you can avoid jumping a bracket from reaching into an IRA more by reaching into your Roth IRA. It offers you a lot more flexibility. You’ve now had another basket to put some eggs in. And there’s a good chance that at some point during your life, you’re going to want to move around some of your retirement money. Maybe it’ll be done as part of a Roth conversion. Maybe it’ll be to make a new investment. Maybe to work with a new adviser. Whatever the reason, you should be aware of how to move retirement money so that you don’t make costly mistakes that could completely derail your retirement. In general, there are two ways you can move retirement money. You can either move it directly or indirectly.

Moving money directly though is usually the savvy choice. So, look, all it is is you’re moving money from a 401k to an IRA or from an IRA to another IRA. If you’re doing it directly, let’s say you have an account with Fidelity and you want to move it to Alliant Retirement Investment Services, you have Fidelity, make the check out to the new custodian for your benefit. No problems. Everything goes into your new IRA. No penalties or issues. However, when you do a direct one, they’re going to make the check out to you, and it’s on you to then move it over. But if you don’t do it within 60 days, you’re going to have to claim everything as income of the year. So if you’re moving over $500,000 from your 401k to your IRA, if you do it directly, there’s no chance of anything bad happening. If you do it indirectly where they send it to you and then you send it to the other folks, Uncle Sam is not that nice to say, “Hey, even if you lost the check, sorry, 60-day rule. You can have the new check issued, but I hope you get it in before the 60-day deadline, or else I’m adding half a million dollars to your income for the year.” And now whatever income you had that year has half a million dollars added on to it and you’re paying at the 36% tax bracket rather than the 12.

This is what it looks like whenever I say doing the direct one. New custodian for your benefit though. But another essential component of any savvy IRA plan is just making sure that you coordinate your IRA planning with your overall retirement, estate, tax, education, and financial plans. And your IRA and other retirement accounts can impact each of these areas. It’s just important to factor those things into your planning. And some of you may have all of your savings in retirement accounts, but many of you probably have some of your savings in IRA, 401ks, and you know, with other savings in a non-retirement account. And if that’s the case for you, one savvy strategy you may want to consider is coordinating your IRA with your overall plan and carefully selecting which of your investments are purchased with IRA money and which investments are purchased with non-retirement account money as well. But doing so could help you meaningfully lower your tax bill. We can show you how that’s done, too. But here’s an example of what I mean. Let’s imagine that you have 100K in an IRA and 100K in a nonIRRA account like a brokerage. Let’s also imagine that you want to purchase 100K of bonds with a hypothetical interest rate of 4% and $100,000 of stock that will pay hypothetical qualified dividends of 4%. Also assume that you plan to live off of that income in these brackets and that you’re in the 24% range. So in the first scenario, you see all the stocks are purchased inside the IRA account and generate 4 grand of qualified dividends. And in general, qualified dividends receive special tax treatment and are taxed at a long-term capital gains rate. These rates are lower than ordinary income tax rates, generally about 15%. However, because this investment was made inside an IRA and all withdrawals from an IRA are taxed at ordinary income tax rates, if you take a withdrawal of that 4,000 of qualified dividends, there will be tax at your hypothetical 24% ordinary rate resulting in a bill of $960. But in the same scenario, you have 100k of the bonds that also generate 4 grand. Bond interest is tax at ordinary income, too. So that means that you’ll owe another $960 of tax in that income, bring your total bill to $1,920.

But in this second scenario, bonds purchased or made inside an IRA, they generate the same 4 grand. Everything is the same, but different story because now we’re going to be taxed at capital gains here because we put it in the correct account. It’s saving you 360 bucks. You just lowered your tax bill by 24% just now. We went from 1920 to$,560. It’s all about the right placement, too. So, make sure that you’re making informed decisions with all of the right information. Don’t make any impulsive decisions here. Use a professional.

And of course, you should be aware that anytime you’re dealing with investments, there’s no guarantee there’s they’re going to perform as expected. Well, I don’t anticipate that special tax rate for long-term capital gains to be eliminated anytime soon. There’s no crystal ball to predict with what Congress will do in the future. And if there was that crystal ball, and if I had it, um, I’d be in a much taller building right now. Now, another way for your IRA planning needs to be coordinated with your overall retirement plan is your social security claiming strategy. The decision of when to file for social security is one that far too many retirees make without thoroughly evaluating their options first. My last webinar was on this. Do not make that decision lightly. Have a plan made before you do that. You could make a very costly mistake depending on when you take your social security. It’s a major mistake and one that in some cases can cost you six figures plus of income over the course of your retirement. Now, the decision of when to claim social security is a very personal decision and one that varies significantly from person to person, couple to couple. That said, many retirement experts today believe that too many people claim social security way too soon. Remember, social security benefits are guaranteed to last your entire lifetime, no matter how long you live. Benefits are generally increased from one year to the next through cost of living adjustments. But additionally, delaying receiving Social Security benefits past what’s called your full retirement age, 66 or 67 for most of you, can allow you to earn an additional 8% increase in payments each year until you turn 70 through what are known as deferred credits. And for these reasons and more, it can be beneficial to claim Social Security benefits later than you initially planned for.

but you have to eat in the meantime. And that might require you to pull money from your IRA in the interimm to help cover your current living expenses. And retirees sometimes opt not to do this because they say, “Well, what if I die early? I’ve spent my IRA money, which takes away from my heirs and I’ve gotten little or nothing for it.” And while that’s certainly something to consider, here are two reasons you may want to give that approach a second thought. um you know a report from 2012 concluded that social security is the cheapest if uh one of the cheapest if not the cheapest annuities available and that might sound a little funny after all you don’t buy social security in a way though you kind of do if you use IRA money to hold off on claiming social security for say a year that’s kind of the price you pay to get that higher benefit and if you compare that price and increased benefit to what you can get from commercial annuity providers it’s almost always cheaper But another reason it can make sense to draw from your IRA in order to help delay claiming social security benefits is that social security benefits are generally more tax efficient than IRA withdrawals. So remember when you take money from an IRA, the entire amount is generally added to your income and taxed at whatever rate you might be at the time. But in contrast, social security benefits are different. They may be anywhere from 15% tax-free all the way up to 100% of them are taxfree. So, the key point for you here is that trading a dollar of IRA income on your tax return for a dollar of social security income or social security benefits will almost always leave you with a lower tax bill, more money to spend. But let me just make that point again. Social Security is taxed differently. To learn more, you can just reach out. Be happy to go over that with you. All right, time to move on to the next point and that’s coordinating your IRA planning with your estate planning. And in most estate plans, there are really two primary goals. First is to make sure that your assets passed to your tenant beneficiaries. And secondly, that they are passed to them as efficient as possible. And when it comes to IRA, 401ks, and other retirement accounts, that’s done with one form in particular, your beneficiary form. And I really can’t emphasize how important this form is. Again, time and time again, people fail to update these forms after major life events such as births, deaths, marriages, and divorces. Many times, people think that because they’ve updated their will, everything is taken care of. But that’s not so. So, for example, if you have your ex-wife or ex-husband named on your IRA beneficiary form, but your will has been updated to say all your assets go to your children or your current wife upon or husband upon your death. Guess who’s getting your IRA? That’s right, your ex. And I can’t tell you how often this happens to people. That’s why it’s so important to keep updated copies of your beneficiary forms with all of your other important estate planning documents. And we’ll cover this again in the next webinar about estate planning in October. But some of you might have five, six, seven different 401ks out there. And some are from different jobs from the 80s and 70s. um you might have been married to a different person then or your feelings for whoever your beneficiary for back then your beneficiary back then was those feelings might have changed. Check up on all those accounts. Sometimes it makes sense to start consolidating in that case.

All right. So there’s a couple different types of IRA beneficiaries. Last time I did this webinar it we just covered way too long. So, I’m going to go through it pretty quickly here cuz we’re already at 13 minutes to the hour. But if you give it to your wife or if you give your if you pass away and you give everything to your spouse, they get to take it on as if they were you. Um there’s no problem there. They just take it on. They continue your RMDs or they just get to inherit that Roth altogether. If they’re eligible, you don’t want them to be eligible. Eligible means that or I’m sorry, let me just do this one then. Non-eligible designated beneficiaries are your children or your nieces and nephews. They have to take out those account those funds if they’re pre-tax like an IRA or 401k. They have to take that out over a 10-year period. Well, it’s not that bad. It is though. More than likely, they’re in their prime earning years. They’re in a 24% tax bracket. They take it on and now they have to take the 100 grand plus out a year for over 10 years. Now they’re paying tax 32% bracket. And great, yes, they got free money, but your money that you gave them is now being t of it is being taken away by Uncle Sam where you could have converted it at the 12% rate and they could have had it in a Roth IRA and kept it forever. Well, this eligible and then next we have the eligible designated beneficiary. They get the same treatment as a spouse essentially. You might think, well, I’ll just make my kids that and that’s not how it works. Um, eligible designated beneficiaries essentially means if you have a disabled child or someone who’s chronically ill as your beneficiary, then they get to have better treatment than healthy children in that case. If you want to learn more about that, talk to me. Um, but again, your spouse gets to take it on as if it was always theirs. your children have to take everything out or your nieces and nephews have to take everything out over 10 years, probably in their prime earning years, and they’re going to be paying a lot of taxes on that inheritance. And if they’re eligible designated beneficiaries, uh they’re a minor. More than likely, they’re either a minor, disabled, or chronically ill, they get to have better tax treatment.

All right, we’re just going to click through these because this one just does take a while, though.

Yeah, one question many boomers do ask is whether or not they should leave their IAS to a trust. And trusts are certainly good at providing post-death control, and if that’s a major concern for you, it’s certainly something to consider. However, naming a trust as your IRA beneficiary adds considerable complexity to your estate plan and if drafted properly, trusts can be treated as designated beneficiaries and preserve the stretch IRA. So, all too often, however, they do not meet the specific requirements outlined by the IRS and they still end up having to follow those less favorable rules that are mentioned earlier. So, just because you’re throwing it all in a trust doesn’t mean you’re avoiding that 10-year RMD.

And so again, back to the spouses, many name their spouse the beneficiary. If your spouse is your sole IRA beneficiary, then he or she will generally have several options after inheriting that, but they include choosing your main as a beneficiary of your account as well as making what is known as a spousal rollover. We’ll talk about that. We already covered it.

So with that, we’ve come to our last savvy IRA planning strategy. It’s off topic. It is important though. It’s one that you should all know, but for whatever reason, it’s still an industry, so it’s still there. People seem to forget. That’s to always do your homework before making any decisions with your IRA, especially when it comes to investments. IAS are often the target of schemes and scams because hey, let’s face it, that’s where a lot of people’s savings are. Your house and your retirement funds are going to be the largest part of your estate more than likely. And I know it and you know it, but you know who else knows that? It’s the scammers. So, in recent years, SEC’s always issued a lot of alerts warning certain IRA owners. They may be the target of scams. and the IRS has even put out publications with it. But the IRS does not approve IRA investments and respon that’s was made in response to many fraudulent promoters claiming that their IRA investments were somehow given the green light by the IRS. It’s BS. Just reach out to us. We’ll help you through that. If you see anything that is questionable coming across your email or anything you have questions about, whether it be with Fidelity, Vanguard, somebody that’s not us, we’re here to help you. You’re our members. you own this place, just give us a call. We’re here to help.

So, we’ve certainly covered a lot of ground today and you should have plenty of food for thought. As you probably realize by this point, IRA planning is a lot more complicated than most people realize. Let’s face it, deciding what strategies are best for your IRA crosses into just about every area of planning, from tax planning to investment planning to estate planning. and few retirees are aware of just how critical IRA planning is and even fewer have taken the time to truly evaluate all the issues and develop a comprehensive solution. So hopefully we’ve helped answer some questions for you today, but chances are you still have questions to um some other questions and that’s okay. You know, we’re here to help. So I’m sending out a poll right now. Say yes, no, maybe. So um it says Malcolm on there, but my name is Baptiste. Pleasure. Um, I’ll get that fixed. But look, please answer the poll. We’re here to help. It’s just a no cost, no obligation. Here to help our members, not here to sell you anything. We’re here to help our members make sure they can cross that finish line. I know your big bank’s not doing this for you. We know your other credit unions aren’t here to help you out with this as much. We are. Please let us know how we can do be of assistance. More than likely, do a financial plan. See if a Roth conversion is there to assist you. Find ways to fill in your income gaps. But let’s help you maximize your IRA. These are funds that you have been working on and saving up tirelessly all these years. You’ve been saying, “I can’t do this this month because I still need to put 2,3 $400 a month away to this IRA, this 401k.” You’re coming to the finish line. Let’s make sure that you’re all polished up and spruced up to retire and live to be 95 and 100. So, uh, everybody, we have about 60% have answered. If the other 40%, go ahead and answer. Again, you’re not going to hurt my feelings if you say no or not at this time. You will hurt my feelings if you do not answer the poll, though, just because that’s what makes me look so good with my boss with my great presentation skills. Um, we’re going to get into questions here in a second, folks. Tax planning. Taxes are going to be one of your biggest expenses, if not your biggest expense, especially if the house is paid off. Taxes will be your biggest expense in retirement. Join me for my next one on tax planning in a couple weeks. And then estate planning. If we’re all at this point of coming up in retirement, you’re past the point of needing to get your estate done. So, if you haven’t gotten everything in order, come give us a holler. We’re here to help. We even have tools to where you basically get to use a robo lawyer to create your trust and your will and it’s free to use if you’re a client of ours. So with that, I will start taking some questions. Please look at the Q&A or the chat section. Uh about 10% more to go to answer the poll. If you can’t find it, it might be behind some of your popups or might be behind the presentation. Sometimes that happens, but please answer the poll. I’d really appreciate that.

Well, here’s a good one. 85% of social security is taxed, but is 85 or 100% of social security used to calculate Irma? Fantastic question. Two different things. Up to 85% of your social security can be taxed as mentioned earlier. It can be nothing. Depends on how much you’re taking out outside of your um social security. So, it’s your provisional income is what social security is measuring. And if your provisional income is below X threshold, none of your social security is going to be taxed. If it’s to the next threshold, then up to 50% of it can be taxed. And if it’s above that, 85% of your social security can be taxed based off of provisional income. When it comes to calculating Irma, that is based off of your modified adjusted gross income, which I’m not the tax pro here or tax preparer here. I do a lot of tax planning. We can cover that. But if you’re modified adjusted gross income, I think it’s for this year, it’s 109 for single or 216 or 218 for joint. If you’re below that, you’re in the lowest bracket. You pay nothing for part D and I think you’re paying 200 bucks a month for your Medicare and it only goes up from there. So find ways and we can help you find that. We’ll help you find ways to stay in that 22 24% bracket while still staying in the lowest Irma bracket because Irma gets expensive. Medicare gets very expensive as you go. um if the first bracket and the second bracket difference is about a h 100red bucks per person per month but the third bracket is about double of the first to where you’ll be paying about $400 plus dollars a month and so in Medicare um probably more than you’re paying right now your workplace retirement plan by a lot so consider that folks if you don’t mind let’s just need three more people to answer the poll and I will be looking good here any other questions to ask please go ahead and do that go ahead and identify the Q&A in the chat section.

You mentioned nine out of 10 people

You mentioned nine out of 10 people might be candidates for Roth. Yeah, about about 90% of the time I make um hundreds of financial plans a year, if not a thousand. Um, whenever I do a financial plan, I will show people a Roth conversion optimization strategy that comes after having a discussion with somebody, finding out what they’re comfortable with converting, finding out how much they convert. We’ll find out what the max is without jumping certain brackets, finding out what they’re really comfortable with and paying additionally in taxes where you’ve pulled that money. I like to just do that as a full comprehensive financial planning. and just an added feature I’ll throw in there, but we’ll come up with a personalized plan on whatever you’re most comfortable with and seeing if that works. And then our strategy tool will show you, hey, you can convert this amount at this amount, you’ll grow your account value by that much more, and you’ll save this much in taxes. Because once you convert money to tax-free and you’re getting 8% per year, you get to have that full 8% in gain to yourself. Whereas in your pre-tax funds, that 8% growth, well, quarter of it’s going to Uncle Sam still. So that’s how Roth can outpace a traditional in value. And then again, it’s a great legacy planning tool because whoever you give it to, they don’t have to touch it. They don’t have to pull RMDs from it, and they’ll never have to pay taxes on it. So learn more. Let me know, folks. One more person needs to answer the poll. If you just walked away to go grab water, it’s okay. I’ll forgive you. I still had better numbers than the rest of the folks in my team. Um, guys, thank you very much for joining today. Look, I’ll stick back for another minute. Uh, answer anybody else’s questions in case anybody got shy. Um, but I’m here to answer any questions, but join me for my next webinar and the one after that. If you’re coming up on retirement, please reach out. I didn’t even put this terrible photo up yet, but here’s my um that photo is from 60 pounds ago, but here’s my information. Uh, I have a different phone number, but if you call it, I’ll try to answer. Best way to get in touch with me is via email right there. And if you’d like to schedule an appointment with me, there’s a QR code. Feel free to take a photo of this right now. My educational background, I studied I’ve been in finance my entire career, but I studied international trade and finance in college. So I I studied macro and microlevel economics at international level as well as local.

That’s a good question. I’ve actually never had anybody ask me about my educational background.

I also speak Spanish as a second language, too. I don’t know if that’s really impressive or not. I do live in Texas. That does come with it. But, um, I minored in Spanish while I also studied international trade and finance.

I also add to it that I double mate minored in political science as well, but that’s not that impressive.

All right, folks. Well, those are all that’s all the questions today. Man, I usually get about 20 of them. Well, look, thank you guys all again. Looking forward to seeing y’all soon. Please join me for my next webinar. Have a wonderful day. Happy Labor Day. I know we’re all amped up. You guys enjoy it. I’m glad. No, webinars are not recorded. I apologize. That’s a compliance thing. You know, whenever you’re handling other people’s money, there’s a lot of regulation, which is good. Wolf Wall Street days are over with. Um, but we’re very highly regulated. We have some webinars that are recorded, but those are our SEG ones that we give to the uh company partners. You know, we used to be United Airlines Credit Union solely, but now we’re open to the public. as well as we’ll have certain groups called SEGs that are companies that we have good relationships with like we we do Tesla now. Tesla is one of our SEGs as well as United. There’s a lot of them in there but we only have recorded webinars for our SEGs but you can find those on YouTube I believe.

And hey, if there was something you missed from today, if you joined late, if there’s somebody else that you want to see this information, member or not, send them my way using this information. I’ll go through this info with them. Be happy to. Part of my job. All right, folks. Signing off. Happy Labor Day. Thank you all very much. Be safe this weekend.