Category: Webinars Collection

Hello and good afternoon. I’m going to get started in just another minute or so. I just want to make sure people have a chance to get logged in. I will be right back with you. Thank you. Well, hello and good afternoon everybody. Thank you so much for joining me for planning for long-term care. Uh one of the many webinars that I do. I do these presentations every two weeks or so. uh unless there’s a vacation or a holiday. But uh so yeah, about every two weeks I do these on many different topics. Uh today we’re going to be touching on long-term care planning. My name is Joe Gaspari. I am one of the financial consultants here at Alliant uh with the Alliant Retirement and Investment Services team. I do offer uh full financial services from stocks, bonds, mutual funds, ETFs to whether it’s income planning, full retirement planning. That’s one of the biggest things that I do when someone says, “Here’s what I have. Here’s what I want. Am I on the right path? Am I doing the right things? Should I be saving more? Uh spending less, working longer, working shorter, all these different uh factors that might affect your retirement or whatever uh financial goal you’re you’re saving for. But uh again, one of the biggest things that I do is that retirement or financial plan. At the end of this presentation, I will be putting up a survey. I hope you will select yes on there. Uh especially if I haven’t met you already, that we could have a one-on-one conversation. Maybe it’s going to be specifically about long-term care. Maybe it’s about just future planning in general. Uh and we can work up a very comprehensive plan specifically for you. Uh but uh but today let’s just talk about some long-term care planning and learn a little bit about the strategies on what can this cost overtime and who needs long-term care, how many, you know, what percentage of people. So, we’re going to touch on a lot of things. If you do have any questions throughout the presentation, type in the Q&A box or the chat box, either one, and they will hold till the end of the presentation. That’s when I’ll be taking those questions. So if you think of a question, type away at any time. Those will save until the end. So I do want to let everyone know that we are not able to that’s one of the most common questions that we get every presentation is will there be a uh a video or anything like that available after. We are not able to record these for compliance uh purposes and we are not able to have these recorded by any listeners of these presentations. So they cannot be recorded or distributed. So uh thank you for in uh for your uh participation in that. But we cannot record these. Excuse me.

Sometimes you just got to sneeze in an unopportune time. So but again thank you for uh not recording these pres and distributing these presentations. I do have some upcoming presentations um is uh at uh for estate planning the important documents like powers of attorney uh for healthcare power of attorney for financial wills trust the difference between these what’s important for you to have many times just at least naming beneficiaries on your accounts um is certainly sufficient but uh but we can certainly uh you know learn a little bit about what does this all mean for estate planning as you’re looking to spend money in your retirement years. But what if stuff is left over? Hopefully, there’s stuff left over. Uh where does it go? How does it pass? What are the best strategies to get this to whoever your beneficiaries are, whether it’s spouse, whether it’s children, friends, relatives, anyone, charitable organizations, whoever that may be to make sure these pass seamlessly. After that, I do have on Wednesday the 29th, I have IRA planning, uh different types of IAS, whether things are pre-tax like traditional IAS or 401ks, things that are post tax like Roth IAS that grow tax-free uh for retirement. Uh taxable accounts each year like a brokerage or a savings, those things that you get 1099s on every year that you have to claim on your taxes. and what are the best ways to uh strategize on where money should be in the future to hopefully as you go through the different stages of taxes when you’re maybe working making more income than if you were not working whether that’s higher income or modest income what how do we manage your tax brackets going forward you do have access to to see what other webinars are coming up whether it’s from myself or one of my other 10 or 11 team members that do these presentations. We have people in LA, Denver, San Francisco, Houston, Utah, and here in Chicago. We are scattered around the country doing these presentations at different times, different days. We probably have anywhere from three to five presentations a week going on with at least one of us. myself. Again, I do these every two weeks, whether it’s a Tuesday or a Wednesday, maybe it’s a daytime, maybe it’s an evening. You also have access to the podcast. You can listen to our Aerys Alliant Retirement and Investment Services. That’s what Aerys stands for. We have our website and blog. You can check us out to see what who we are, what products and services we offer. I’ll be putting that up at the end of this presentation as well. So, our commitment is provide sound financial information, help you identify what’s important to you. Uh whether it’s uh you know, things like long-term care like this or just saving in general, investing, where what about the volatility in the markets at periods of time, where should you be putting things? This is all these are all the things that we would love to help you with. Uh we do offer which I will be saying again at the end of the presentation our complimentary no obligation consultation and in this consultation we can work up again here’s what you have here’s what you want are you on the right path and again that full financial plan that we do not charge for assessing the risk into getting into long-term care. uh people are turning 65 today have a nearly 70% chance of needing some type of care long-term care. Now this is very as we go through this this is very different. We are not talking about your uhiitei, you know, United Healthcare or Blue Cross Blue Shield or those types of things just for your normal health care uh whether it’s you’re on Medicare or whether you are working and have you know u some type of uh plan through work. This is very different. We are not talking about just going to the doctor periodically or maybe even a hospital visit for whatever reason. These are things of long-term that you need someone assisting in many of these different uh things that we’re going to talk about today. 20% of 65 year olds will need support uh for more than 5 years. Again, that’s one out of five, but that’s still a significant number. 8% of people ages 40 to 50 might have some type of disability or requirement for long-term care as well. What is long-term care? again, ongoing services and support needed because of a chronic health condition, disability, prolonged injury, illness, or cognitive impairment, uh, such as Alzheimer’s.

Levels of care. So, we’re going to discuss three levels. Skilled care is that round the clock you might be bedridden for whatever reason and you need health care, you need uh skilled uh skilled nursing or even potential doctors. Uh but again that you need long-term care with skilled labor. Uh intermediate care uh nursing or supportive care by professionals and or or uh custodial care which is basically maybe you need someone to help cook, clean, uh help transfer you from a bed to a chair, chair to a bed, uh bathroom, things like that. If you need any of the things listed here, that would be listed as custodial care or personal care. Where can you receive care? This comes up a lot with long-term care, uh even long-term care insurance situations of where can I get care? Uh do I have to be in a nursing home? Do I have to be in some type of assisted living? Can I get this care in my home? And many times the answer is yes. that you will still be able to have some type of an insurance and get someone maybe someone coming to you that you can be in the comfort of your own home and still get care. Uh adult daycare is certainly one of those other options where maybe you’re dropped off if you have family members that are working still and maybe that you’re dropped off during the day, picked up in the early evening uh just for an adult daycare. Common misconceptions. I’ll never need long-term care. It won’t be that expensive, which it is. Uh Medicare and Medicaid will cover the costs. Uh Medicare will cover for a very short period of time. Uh statistically, and Medicaid will, but we’ll talk about what the restrictions for Medicaid. Uh my family will take care of me. Some many times people will say, “Oh, I got adult children. They will they will take care of me.” Uh many times easier said than done. Maybe that is the case for some families, but I just can’t count on that for every family that someone can stop working to care for someone needing long-term care. Caregiving challenges. 41 million people provide unpaid care for a family member. 61% of caregivers are women and one-third 34% are a are in either in retirement or of retirement age 65 or over. Unpaid care uh caregivers spend an average almost a full-time job well close to 35 hours a week caring for someone in addition to their own jobs. Uh four in 10 caregivers consider their caregiving situation to be highly stressful. I am working with several people right now that could be maybe in uh with, you know, obtaining some type of long-term care insurance or that are caring for family members right now. And this is kind of hot and heavy. Uh very hard, you know, on on on their hearts right now of I should start be thinking for my own future as well. Um that being a caregiver for someone else and now I’m thinking is there someone going to be there for me? If not, how do we pay for this? Why is it important to have long-term care strategy? So, protecting your assets, uh it could be an asset depletter that if you let’s say you did need skilled nursing care uh for a period of time for a year or two or three or even up to 5 years, are there enough assets? Because that type of care can be very expensive. And how much assets are you willing to earmark for that? Or do you have enough assets to uh you know to even be paying other bills in addition to your own personal care? Uh maintain independence. uh preserve freedom to choose where your care is provided when you have that uh some type of coverage or that uh that peace of mind knowing that whatever it this is going to throw at you. Uh could you be in the comfort of your own home uh or wherever you uh would prefer to be not where you have to be? Avoid becoming a burden on someone else. Today’s focus we’re going to touch on these three things. The first one, potential costs of care in different settings. So, here’s one we’re going to look at. National median costs. These last numbers were updated in 2021, uh, updated every few years. So, hopefully we’ll get some updated numbers here soon, but still in 2021, just homemaker services. This might be, you could see at the very bottom, uh, it’s got the star there based on 44 hours per week. homemaker services. You need someone to help cook and clean and do things around the house for you. Again, maybe getting you out of a chair into a bed, a bed into a chair, something like that. Uh, but that is close to 5,000 a month or close to 60,000 a year just for that. Um, and that could be someone that is I’ll use the term unskilled labor for this and which could just be a family, a friend, a family member or a friend or someone that’s just assisting around the house. Home health aid, a little over 5,000 a month. Adult daycare, about this is the least expensive of these because it’s the least amount of time. And again, you’re dropping someone off at a a adult daycare and picking up typically in the evening. Uh private room and in assisted living, 4,500 per month. Now, we’re talking a little bit more expensive with the semi-private. in a nursing home almost 8,000 a month and over 9,000 a month if you need a private room in a nursing home. A little over 800,000 a year for something like that. So, someone says, “Hey, I have a $500,000 that I can earmark and I’ll just selffund my uh long-term care.” That is $500,000 that could go out if that was in a f for a five-year term of someone in some type of facility that either do you have enough assets to pay for that or that is 500,000 less that is going to your heirs uh because all the assets are being used up. annual cost of a nursing home care. Uh the national medium cost for a private room in a nursing home, 94,900 again in 2021. If we’re going to do this at a 4% annual increases uh over 20-year period of time, that’s over double 211,000 uh a year uh for uh for this type of care and a private room in a nursing home. So, we can just see escalating over time. Uh, typically health care costs and even long-term care costs are exceed inflation. Even if inflation were, let’s say, at a 3% average uh rate, we’re looking at much higher for health care. I’m going to just again throw a reminder. If you do have any questions, uh, go ahead. I know there’s some already, but type away in the Q&A box or the chat box and we’ll get to those questions at the end of the presentation. Uh costs vary depending where you live. This is pretty astounding when I look at Texas versus uh it’s the highest California on just the different costs just depending what state you live in. Uh so we’re seeing Texas is the lowest and again this is a private room in an assisted living. uh you know we’re so average cost uh for that 48,000 almost up to 63,000 when we look at for a semi-private room in a nursing home now now we’re talking New York 153,000 versus uh Texas at about 61,000 so will someone need to move to a different state to get the care that they need because it’s just not affordable in some other states

look to what uh for for um at a nursing home or other senior living facility. People ask uh ask people you trust and do you know anyone in this type of situation where where are they staying? Are they getting home care? Are they in a good facility? There are some sources medicare.gov gov through there where you can get some uh some resources on what trustworthy places that you can look at uh comparing different facilities and talk to the residents, talk to people that are going there if you’re allowed to. I know there’s privacy things that uh they don’t want people just walking into a facility and just start asking uh people questions, but uh um but again, you know, questions asked, you only get the answers if you ask the questions. So uh certainly you know reach out to some people to see where you know where what are the best places in certain areas. Uh focus number two is meth methods to pay for long-term care. Uh so lack of confidence and ability. So when we look at people working on the left side of this page versus retirees on the right side. Uh when we look at very confident to somewhat confident, if we add those up, we’re looking at about uh let’s say about 54% are somewhat confident plus uh that they’re going to have enough assets to fund their own long-term care. Uh but again, that’s a little under 50%, little under half are not feeling very confident on that. Uh same thing with retirees. The numbers are very similar. So people working and then retired. Uh, how many people are are are you comfortable with what assets you have? Can you be self-funded? And are you willing to use your own assets for this type of thing? Then looking at how expensive this potentially could be. How will you pay for the potential cost? Pay out of pocket. That’s number one. So, someone again might be self-funding their long-term care just from savings, investment accounts, retirement accounts, wherever those funds come from, but things that you’ve saved over time. You can rely on government programs such as Medicare or Medicaid. Um, again, Medicare is very short-term. We’re going to talk on about that in a couple of slides here on what does Medicare cover. Medicare is not long-term care. Medicare is a there’s a very short-term care, but it is not long-term care. Medicaid, we’ll talk about the restrictions of Medicaid because you cannot have assets if you go onto Medicaid. Uh purchasing long-term care insurance, we’re going to touch on as well. Add a long-term care rider to a life insurance or annuity. Uh that’s one of the most popular things that we do right now is more of a hybrid uh you know policy which is an annuity with long-term care rider or life insurance/l long-term care where whether you’re in a care situation and you can use some of that policy to pay for your care or if you what if you never even needed that care it’ll pay an enhanced death benefit. So someone is getting something out of those. uh this presentation doesn’t get too much into the individual policies. That’s what our conversation will be about. But I can tell you the the old school tw over 20 years ago when I when I would talk to long-term care, I was with a different firm back in the early 2000s and talking about long-term care. um long-term care policies at the time like GE or Genworth at the time was a very big player uh doing long-term care policies. John Hancock was the other really big one. And those were are the ones that you make a monthly premium or annual premium. And you’re paying, you’re paying, you’re paying. And I can tell you many times because the world has changed since the early 2000s. We’ve gone through many crisis times. We’ve gone through higher interest rates. We’ve gone through very low interest rates. And we’ve seen those types of policies where the premium goes up and the benefits go down or the benefits go down or a combination of both of those where I’m paying more for less benefits over to then what you signed up for 20 plus years ago. Uh those policies are still there, but they’re not very popular because they are still very expensive uh when you just pay that monthly premium. The hybrid policies are much more common now. uh and much more reasonable for because if you never go if you never go into a long-term care situation that these policies that you’ve been paying for 20 plus years, many of them many of them do not have a death benefit. Uh which means that if you never went into a long-term care situation of a policy that you’ve been paying 20 25 year years in and you passed away, it’s gone. It’s done. It’s over. No, nothing goes to anybody. So all the premiums you paid are just gone. So now as people want to make sure that if I’m paying for something, I need this to go to someone, whether it’s me for the long-term care purpose or if I pass away, maybe using none or some of the uh the long-term care uh claim, if not any of it, death benefit will go to someone taxfree. And by the way, it uh also with your if you are if you have a long-term care policy and you put money into this, whether it’s a lump sum or making premium payments and you go into a claim, which means you can’t do two of the six daily living activities, feed yourself, dress yourself, bathe yourself, and you’re getting payments now from this long-term care policy. Those are tax-free as well. Those are tax-free withdrawals. As long as it’s used for long-term care, you do not have to pay tax. So, if you’re putting a chunk in and you’re getting a big much bigger benefit now coming out, it’s taxfree. Same thing with the death benefit. Paying out of pocket or self-funding, you do have freedom. Uh you can choose your who where you are. If you’re paying for it, you can have someone come to you if you need to go to a facility. may be ideal if you can afford to pay for it, but you must be willing to liquidate your assets, may impact the ability to pass um assets to family or beneficiaries. If you run out of money, relying on family members or the government may be your only options using a reverse mortgage. This is kind of a controversial thing that you know it’s when people say, “Oh, it’s well worth it to do a reverse mortgage or never do a reverse mortgage.” some people might say, but basically it’s if you have a lot of equity in your home or maybe even no mortgage, you can do a reverse mortgage where instead of you making payments to pay back a loan, you get payments from that. So, you’re not you’re not paying anything upfront. Uh you’re well, besides fees and costs, but you’re getting money from this company who’s doing a lean on your home. This does need to be paid back, but it’s basically how do you get income from an asset like your home, and you’re able to do that through a reverse mortgage. You can borrow against your equity. You can uh use the proceeds to hire caregivers. There’s no mortgage payments. Again, loan must be repaid when you vacate your home. Whether you move, sell, if you pass away, the loan has to be paid back. Your beneficiaries or your heirs will need to pay this back. A reverse mortgage takes part of the equity in your home and converts it into payments made to you. You can use the payments you receive to pay for long-term care services you need so you can continue living in your home. Drawbacks uh may not be suitable if you remain in the home just for a short period of time. You’re not getting enough benefit out of it. Uh then uh loan must be repaid when you move out, sell or die. amount can be borrowed. It’s typically much less than than the actual value. If you have a $300,000 home, let’s say it’s even paid off, you will not get 300,000 worth of, you know, payments out of here. They will might do two or two maybe up to 250. They will do a percentage of that. They you cannot get the full value. Uh amount can be borrowed as uh involves substantial fees. there are a lot of fees and costs associated with doing a uh a reverse mortgage. Uh the the company doing this reverse mortgage uh they are looking they’re trying to make a profit and they’re not just you know being nice. Uh they’re absolutely a business making a profit. Uh interest is added to your balance and adds up over time. So, it’s kind of a big question mark and it might be a last resort for some people relying on government programs. Uh Medicare will cover your health care expenses in retirement. Uh again, Medicare for uh for your traditional doctor visits or maybe hospital visits. Medicare will, but Medicare will not cover your long-term care. And Medicare Medicaid will cover care in a nursing home potentially. We’ll talk about some amounts and what the availability is on for Medicaid. Uh Medicare is your your health insurance for 65 and over. Uh different parts you have Medicare part A which is your hospital coverage. So your hospital visits are through Medicare A. You do not have to pay for Medicare A if you are not on uh Medicare yet. Uh part B is your doctor visits, your doctor insurance, medical insurance, and that’s what you have to pay for. It’s 22 uh.90. $22.90 uh a month is what you are paying for Medicare Part B. If you opt for the Advantage plan, Medicare Part C, that’s uh you have to go through private insurance. you have to go through either Blue Cross, Blue Shield, United Healthcare, Etna, those types of comp uh companies to get a uh Medicare Part C. I would kind of say it’s similar to more of like an HMO plan uh where it could be a little bit less cost than A and B and but uh um it’s less there’s more restrictions on doctors and they have to be within the network and things like that. Medicare Part D is your prescription drug coverage. Medicare does not pay for personal care or custodial care. Home health uh benefits are limited. Uh Medicare for skilled nursing facility, we can see your first 20 days. This is the short-term care. Um and this is for skilled nursing. Uh this is not just for uh someone to come help cook and clean. This is for skilled nursing that Medicare will pay 100% for the first 20 days. They will pay partial for days 21 through 100. So those remaining 80 days. Um and you are on the hook for $200 a day. $200 a day times 80 days is $16,000 out of pocket. Um, and because and now if your care is much more than that, but they will pay partial partial and you are on the hook for $200 a day. Over a 100 days, Medicare does not pay anything. It’s all on you. That’s where whether it’s out of your assets or some type of insurance that you might have. Medicaid. Um, so this is a federal/state program. It could vary in every state on how much uh um you know benefits that you have through Medicaid. Um it’s meansbased uh which means if you have no assets, there is a restriction on how much assets you could have. I believe it’s on the next page here. uh but uh Medicaid is the biggest payer right now of uh long-term care, but you cannot have you can have very limited assets if you have a spousal situation. We’ll talk about that a little bit on the next slide. Uh each state establishes establishes its own eligibility rules. A few state Medicaid programs may uh programs may allow applicants to self-direct their own care. uh there’s some website sources uh for something like that. But again, Medicaid is if you don’t have assets, if you cannot afford to pay, that’s what Medicaid is all about. You will still get some type of care, but where, when, how, that’s up to uh facilities on what spaces they have available for Medicaid uh recipients. eligibility. In most states, an individual’s income must be less than the cost of care. Uh like social security typically or maybe there’s a pension. Uh the income gap uh applies in some states. Assets 2,000. You can have $2,000 in uh assets basically excluding some of these things on the bottom. Um but if you are married your healthy spouse can have assets but in your own name uh you cannot have assets. Um as you know when people ask questions about Medicaid many times this is uh you need to have a conversation with an elder attorney or some type of estate planning attorney on how to get qualified for uh Medicaid uh and legally start to give away assets or spend down your assets. But uh things that are not counted in that your home if your spouse is still living. If you are a single person, you cannot own the home. Only if your spouse is still living. You can have one car. Uh household and personal belongings. Term life insurance is acceptable to own. Medicaid compliant annuity if it’s something that you you’re getting guaranteed lifetime income from. Uh burial plots and funeral expenses. Uh strategies may include using assets that count, savings to purchase assets that don’t count, maybe using some uh savings to buy an insurance policy, a term insurance policy, transferring assets in an irrevocable trust. There is a big difference between a revocable trust, which is the standard trust that most people might have. Uh if it’s a family trust or a living trust, those are termed as a revocable trust. An irrevocable trust, you do not control your own assets. Someone else has to be the trustee of those assets. So, they are technically outside of your estate. Uh, and start to give away assets, start to gift to, um, family, friends, or whoever start to give, you know, uh, give money away. Distributing or protecting your assets in advance may help you qualify for Medicaid. So benefits are qualify for Medicaid as soon as possible, protect a healthy spouse, preserve assets for loved ones. The drawbacks ethically problematic for some. Some some people are saying that they don’t feel like they should uh need to somehow like hide their assets in some ways. For some people uh may require to give up the rights of your assets and Medicaid laws are pretty complex and again they vary per state. Another reminder that if you do have some questions, please type away in the chat box or the Q&A uh box and I will get to those at the end of the presentation.

Medicaid planning example. So, here’s an example of giving away assets. So, you transfer ownership of your house to your son. Uh the value of this home is 400,000. The average cost of a nursing home in in your area is 8,000 a month. So 400,000 value of the asset divided by 8,000 a month for this care. Uh Medicaid is saying you are not eligible for Medicaid for 50 months. 50 that maybe you should have sold the house and use those assets for care. Uh this so there are different ways or something like that. if you spoke to an attorney, how do I start to give away assets and qualify for Medicaid as soon as possible? I am uh working with a um very good client of mine actually uh out in New York and her sh her her husband is on Medicaid and now she has restructuring some of her assets working with an attorney so she can herself go on Medicaid and we’re going through some steps on all this and it’s been probably a little over a year that she’s been planning this for herself now. Um so in this case the ineligible uh ineligibility for Medicaid is a little over 4 years. So benefits of long-term care insurance. So different types of policies for long-term care. What are most people doing these days? So in exchange for a premium or a lumpsum that you might deposit into some policy. Uh there’s a contractual daily or monthly benefit that you will receive if you are in a claim for a long-term care. Especially valuable uh for middle inome Americans who want to preserve their financial independence and quality of life. Preserves freedom to choose where and when you receive this care. Uh helps protect accumulated assets. avoids the need to spend down your assets, especially if you already have um different types of policies. One of the things when I talk to people about planning, do you have other insurance policies, whether it’s life insurance or do you already have a long-term care policy? Is this still the best policy? Insurance reviews are a big part of this process as well. And are you in the right type of policy for whatever you’re trying to protect? Maybe you have family members, maybe a higher death benefit is most important to you. Maybe you don’t have uh maybe you’re unmarried or don’t have children and maybe the death benefit is not the mo most important thing. Can things be reallocated to put you in an appropriate policy? Uh so preserves the freedom to choose where you receive the care, helps protect the accumulated assets, and avoids the need to spend down your assets by having some type of insurance policy. How does long-term care insurance work? You must be in reasonably good health to get it. So when people say, “When do I get long-term care?” Basically, when you don’t need it. Um so if you are in a health situation right now whether it’s heart or lung or cognitive uh uh disabilities or something like that or some cancers or things that uh make make you not qualify, you need to get this insurance while you qualify. Uh so sooner than later to at least start investigating this. Maybe it’s something that you can afford to do. Maybe you feel you can’t afford to get some type of policy, but let’s certainly have the conversation to see if this is something that you should be planning for. Premium is based on again these are if you’re making monthly or annual premiums are based on your age and the features and benefits you choose. The younger you are, the more benefits you will get in this type of a policy. benefit is typically triggered when you become chronically ill or cognitively impaired or can’t do two of the six daily living. Feed yourself, dress yourself, bathe yourself, those types of things that if you are not able to do those, then you could be in a claim for your long-term sharing care insurance and get payments from that policy. Once the elimination period or the waiting period, typically it could be a 30-day, a 60-day, or even a 90day elimination period, which means if you are in a claim, doctor says you can’t do two or more of the six daily living things. If you are in a claim, the insurance company says, “All right, you were approved that you can start to get payments, but you have to wait this 30 days or 60 or 90 days.” So, you’ll always want to know, is there an elimination period for this? Five key features in long-term care insurance. The benefit, so the benefit is the amount that you will receive every month uh or annually to help pay for care if you are in claim. The benefit period is how long is that going to last? Is it 1 year? Is it 2 years, 3 years, 5 years? or even typically a lot of times it’s 6 years that you get this coverage for the elimination period is the waiting period to start getting the benefit 30 60 or 90 days. Uh location of care. Does this policy that you have allow you to get home care? Can you be in the comfort of your own home and have someone come to you? Maybe it’s family or friends that you’re able to pay. And maybe it’s uh someone like a company like Visiting Angels or something that will send someone to you. Uh professional um companies like that that will also uh do home care or do you need to be in a nursing home? Inflation protected? Is there increases? So, for example, if you’re buying a policy today and you’re young enough and healthy enough and you get this and let’s say your benefit is 4,000 a month, uh if you’re young enough, let’s say in 20 years, is 4,000 a month going to make a dent into that, how much is uh is care going to be in 20 years from now? So, are there some type of cost of living increases on this benefit? managing the cost of long-term care insurance. Uh the younger you are when you buy long-term care policy, the less expensive the premium. Make sure you can afford this uh premium now and in the future. Buy from a reputable company. There are many companies that we are able to use for this type of insurance. And of course, every company that we are able to even talk about are highly rated uh insurance companies. Make sure you can afford the premium now and in the future. Buy from a reputable company. Choose features and benefits wisely. Take advantage of tax incentives. So, typically if you’re making monthly premiums or annual premiums into these, many times it’s there’s some type of tax deduction. I do not have details of what is the specific situation. How much can I deduct? Talk to your qualified tax advisor if it comes to something like that. But there is a chart here based on your age on uh they it is age-based that uh on how much you can uh deduct and there are potentially some state deductions as well. Again, talk to your qualified tax advisor about how this can affect your taxes. Partnership policies that help you qualify for Medicaid. Uh key features to consider. What’s the benefit amount? The benefit period. Uh again, the amount, how much do you get every month? Uh as a benefit, how long do you have to uh how long does that last? 1 year, 2 years, up to 6 years. Benefit triggers, the two of the six daily. Many times that is the factor. If you can’t do two of those six daily living things, many times you’re in claim, and many times that’s a doctor note or something from your medical uh provider. Uh elimination period, how long do you have to wait to start getting the benefits? uh types of facilities included. Could it be home care? Could it be an assisted living? Does it need to be a nursing home? What type of uh location is this? Inflation protected. Will these premium uh the benefits increase over time? And the waiver premium. If you are making monthly premium payments into this policy and you’re in claim, many times that you don’t have to make those premium payments anymore. As long as you are in claim, you do not have to make payments. Sometimes that’s not the case. Sometimes there are you do have to continue making your payments but many times it is a waiver of premium and guaranteed renewable. Other insurance options there’s hybrid life insurance. So a combination that I said earlier a combination of life insurance and long-term care or a deferred annuity with a long-term care rider. And we’ll touch on both of these. So, a hybrid life insurance uh linked benefit long-term care rider uh chronic illness or critical illness acceleration rider. Here’s what all this uh means. There’s positives and negatives uh of of course, but uh if you are looking to get an insurance to cover two different events, a death benefit and a long-term care benefit, if you had one policy for a death benefit alone, and you had one policy for a long-term care benefit, that death benefit would be higher on that single policy and the long-term care benefit would be higher on that single policy. But if you have a hybrid, you’ll be covered on both, but it could be a little bit lower for uh for the benefits of both of those. But you are getting two uh cover coverages in there. And that something is going to someone. If you need it for long-term care, it’s available to you. If you never needed it for long-term care and you passed away, that benefit is going to someone for a tax-free lump sum death benefit. So the positives, the premium is guaranteed and won’t increase over time. Flexible premium uh payment options. Many times we do a lot of lumpsum things. Uh that they’re very common these days, especially if someone can afford if someone cannot afford that. Uh there are some monthly options, but again, typically I’m going to be looking at more hybrid options uh than your standard long-term care uh because they’re just more affordable and it make have a lot more benefits attached to those. Um maybe easier to qualify um for coverage than a traditional long-term care policy. Might allow for you uh for you to pay family members who cares for you. There’s a big difference on many different policies where it might be indemnity payments or reimbursement payments. Here’s the difference on that. Uh some policies offer indemnity payments. So let’s say hypothetically you’re getting 5,000 a month benefit that’s coming to you if you’re in claim. An indemnity payment means that you get 5,000 a month direct deposit tax-free if it’s for long-term care and you use it as you choose. If you want to have a family, friend, or someone, whoever, just to come to the home and help care for you, you can pay for them out of this 5,000 uh or if you for whatever purpose, maybe you need to get a wheelchair accessible vehicle and you’re going to make a monthly payment. Yeah, you can use this uh premium for something like that as well. You can use it for whatever you need. If it is a reimbursement payment, that means you pay let’s say the 5,000 a month that you’re that you need to pay for some care and you get reimbursed. You have to submit receipts and that means it cannot be family or friends. It has to be a reputable company uh that uh that does this and like you’re visiting angels or something like that or whether you’re in a nursing home but you are getting build you’re paying it you submit that receipt and you get reimbursed. So there’s a big difference whether it’s indemnity payments or reimbursement payments deferred long-term care annuity. So, there are uh you can kind of look down this list here, but basically what a long-term care annuity is. It’s a fixed annuity which earns a gu uh an interest rate uh for a period of time for as long as you own it. It’s just earning interest uh tax deferred interest and it’s growing growing growing over time and you have a long-term care writer. An example of one of the policies that I’m able to offer in this type of an annuity is it’s a lump sum deposit. In this specific case, let’s say a h 100,000 goes into this policy. It is immediately available if you qualify for 300,000 of long-term care coverage. So day one, you put a 100 in and it’s worth 300,000 of long-term care insurance. And year two, year three, let’s say it’s just growing over time. Let’s say some years down the road, let’s say your 100,000 has earned interest. Let’s say it’s worth 125,000 um in value. So, it’s because it’s been earning interest. Now, your long-term care benefit is still three times that, which would be 375,000 of long-term care coverage. And then that payment back to you is divided by 72 months, which is 6 years of coverage. And that would be how much you could receive in a monthly benefit from this policy. So you put money in, it earns an interest rate. Now, how how does this pay out? What if you don’t need it? So it pays out this uh I’ll even do a very quick calculation. Just if I said 375,000 divided by 72 payments is $5,28 a month. That’s what you would get from the insurance company. If you use that for six years, that’s what the coverage is for in this specific example. Um, you would have gotten 375,000 for long-term care coverage out of that for 6 years. What if you never needed that policy and you passed away? Uh, that let’s say that example of the balance was 125,000. If you passed away, someone’s getting the 125,000, whoever you name as the beneficiaries. So, um, but there is certainly money going to someone. Uh, but that’s basically what a, um, an annuity with a long-term care rider. I do those as well. Um, and I do the hybrid life insurance/long-TM care, many of those as well. Uh, tax-free HSA distributions. You’re able to use um, HSA health savings accounts for potential long-term care needs. uh withdrawals for long-term care. So, if you are if you have this money, if you have an HSA account available, maybe you have a high deductible health care plan, typically that’s why you would have an an health savings account is with a high deductible savings or a high deductible uh uh health care plan like we do here at Alliant. That’s what our company offers. It’s a high deductible, so I’m able to contribute to an HSA account. And if there are funds in my retirement down the road and I want to use those uh for some long-term care, uh I can certainly do that. And those are tax-free withdrawals. Begin planning today, whether you’re healthy uh while you’re healthy enough to take advantage of all the options. And again, if you and I do get together and have a discussion, we could certainly talk about your future plan. Maybe it’s for retirement, but what if uh what if you passed away? What’s the death benefit of all of your assets? And who are those going to? Is it going to be a spouse? Is it other children, family, friends, whoever those are? I want to make sure that whether you are here, you have enough assets to live on in retirement. If you’re not here, where does all that go? And how does it go? What are the best tax advantages for all of these things for beneficiaries? and what if you have health care needs like long-term care or not. And we’ll look at all of these different scenarios for this comp complimentary plan that I will offer you uh while you have enough time to plan for Medicaid and accumulate funds in your health savings account and to relieve your family of the burden of making these decisions. So, long-term care planning checklist, you can see here uh just again everything that we talked about here. I would love to have this one-on-one conversation. uh work with us, use us, we are a free source to you on doing financial planning. uh it is not an obligation uh as we get t you know if we do talk about what do we do that’s what this page has on here I am a full financial services uh advisor here with the credit union whether it’s looking at how do I invest where should I be should I be more aggressive should I be more conservative um and there’s many different types of uh investment options that we can select from uh every anything that is available I can offer full financial services, including all of this planning for whatever your life may uh throw at you. Uh I do life insurance, I do long-term care insurance, I do all of the protection things like that. Um and it’s all available to you. So hopefully you will say yes at the end of this presentation and have a one-on-one conversation. With that, I’m going to take some questions. I know I have a um a good number of them here right now. I’ll try to get hopefully to all of these uh before our time is up. But uh as I’m going through the questions, you have you can see on the screen there the QR code. If you have your phone handy and you want to hold that up to your camera up to that, just tap on the little yellow tab that comes up there and you will have access to my calendar and you can schedule a time and you can even do that right now if you so choose. I will be putting up the survey otherwise and just basically saying would you like to set up an appointment and with that uh um you know so if you say yes on there well of course I’ll reach out to you and we’ll get something on the calendar. Uh so I’m going to launch the poll here.

So hopefully you see that up on your screen right now. So select yes if you would like to have that conversation. Um and then uh while you’re doing that I will go through the questions that I have. Do the costs you are um presenting include meals? So, uh, possibly some, uh, have like it’s all-incclusive, which means your room and all the meals are, um, I can’t say that every service will include meals, but many of them, especially if you are in like a nursing home and you’re paying an 8 or 9,000 a month for some of these, yes, that would include the meals. I can’t say that for every facility, but many times, yes. Uh, who had the information to review insurance options? Um, not sure. I have your name on here. What what you’re asking here. Who had the information to review insurance options? I’m not sure what what that means. So, I have your information. I would I can certainly get some more clarification on that from you. Uh, please repeat the link for nursing home comparison. Uh if you don’t mind any everybody, I’m going to might make you a little dizzy here, but I’m going to go back to the screen uh with the the link. Let’s see if I can get to it. Sorry for the busy screen here.

soon as I get back to the Medicaid.

If you have your camera ready while I’m about to bring this up, you can take a screen a picture of the screen as soon as I get to it. And hopefully it’ll be here within the next page or two here. If it doesn’t pop up here, this might this is might be the one that you’re looking for. Uh so if you have your camera ready or I’ll just leave this up while I’m going through some questions here. So that is for the uh for comparisons.

Uh let’s see. At what age should one obtain long-term care insurance? Uh some will argue that if you’re in your you know even early 50s because it’s very inexpensive. It’s much less expensive the earlier you do it. Someone might say, “Well, I haven’t accumulated enough assets yet to do something like this.” And maybe, you know, the average is probably in the early 60s, sometimes a little higher. I could say that if you are 70 or older, you can still get this many times up to age 75, but insurance companies will start to dig a little deeper. uh if you are 70 or over they will do a cognitive call many times where someone will call you and do and check you out a little bit. They’ll ask you a bunch of questions like for example they will say um they will give you a list of 10 items and can you repeat the 10 items? Not necessarily that you have to remember all 10 of them. It’s did they even did you understand the questions that they were asking? So some they will do a cognitive call. So it is a little harder to get approved on some of these especially um if there’s a beginning of any any cognitive uh um areas there. But uh uh but you know as far as what ages typically in the early 60s might be the most common. Uh I’ve done many in the 50s as well and especially with people with assets. Um, the most common type of long-term care policies that we do, even though we do some with some type of monthly or annual payments, uh, we do a lot of lumpsum options, which means people might have enough assets to say, “All right, I have enough assets. I think I might be able to self-fund, but what if I earmarked a h 100,000 toward this long-term care policy? Still doing something, still working for you. Uh, but it might be earmarked for an enhanced benefit for long-term care or a life insurance. Uh, so we do a lot of those types of policies. Uh, what are the reasonings for having an elimination period? It could be because maybe you just had a short-term uh, issue. Maybe it was uh for example, sometimes people will go into a claim on a let’s say a hip replacement where they need some care. So let’s say that let you know if you did a hip replacement but it was let’s say magically better within a 60-day elimination period. 2 months later you’re okay. It will not pay out. Um, but if you had an issue where maybe it’s 6 months to a year or longer that you’re you need care, you can go on claim. You have to wait that 30 or 60 days, that elimination period, and then you get payments and if you suddenly are better, maybe that HIP is now improved or you’re able to do things on your own, you go off of claim and then funds are available to potentially go back on claim. So, you can go on claim getting money from the policy, go off claim because you’re better, and then potentially go back on claim if that happens. But the elimination period is to avoid any shortterm things that might have happened uh that the insurance company will have that period of time where okay, we know you’re in claim, but just in case you’re better in the next month or two. Typically, if it’s a long-term care situation, you’re probably not going to get better, but that’s the purpose of the elimination period. Uh, can I buy while living in one state? But what happens if I move? Yes, you can. Uh same thing with you know life insurance things are state um you know uh you know stateaterun especially when um uh you know if so someone buys life insurance I’m in Illinois if I’m doing a policy for someone that lives in Illinois I go by Illinois rules of buying a life insurance policy for someone um but if you move to another state absolutely it would still pay out a death benefit would still pay out for long-term care. Yes, you can move.

Oh, sorry that uh changed the screen there. Uh can I buy uh what happens if you move? Uh can you update uh the stats uh in your desk? For example, the 2026 uh HSA contributions have. Okay. All right. So, uh, yeah, I’ll have to look at the HSA contributions on there and see if we could have our our admin person change, uh, some of those numbers. So, I apologize on that. Uh, what’s on the screen is Medicaid, not the nursing home evaluation link. Uh, we’ll see if I could find that. I think I just have I’ll still try to do that. Let me see. I had a long question here. Uh when you say qualify for Medicaid as soon as possible, what do you mean by that? My grandfather is 80 years old and he wants to pass uh in his home pass in his home with care uh to in his home does uh he does does own his own home and from what you described he will have to give away the assets in order to qualify for Medicaid. uh since the spouse is disease his main asset is the home fully paid. I am his caretaker and he is still uh able to do a lot on his on this the right is this the right time to start planning for Medicaid. So there could be the reason I say as soon as possible is there could be a five-year look back for Medicaid. Uh so if you’re applying if all of a sudden uh someone applies and says I have no money, I have nothing. Um but uh you just gave everything away a month ago or 2 months ago. Um maybe that was legally maybe some people will do some things to hide assets. Uh so everything does have to be done correctly and but there could be a 5-year look back on these. as an example, if he assigned the home over to someone else. Remember when it said that 400,000 home because if care is average of 8,000 a month, that was 50 months that you would not qualify for Medicaid. So, that’s one of those you need to start planning that. And I would highly recommend an elder attorney or an estate attorney to figure out um how and when and where to uh where assets can be. Um I will have to get back to I’m going to make a lot of people dizzy as soon as I uh if I can get the nursing home evaluation link. I’m still looking for that one. Um but if not I can please reach out to me if I don’t have your information and I will get that information for you. Um other than that I think that is all. Uh can you go over the HSA process again? Uh so I cannot share the slides. Someone just asked if I can share slides. I am not able to. Um I’m looking for the nursing home comparison. I will try to find that. I have your information here. I will get back to you with the I can do a screenshot of a link and I can get that to you so you’re not waiting for me to find that page. Uh the HSA process is if you have a health savings account and you have funds in this that maybe it’s even invested or just earning an interest rate, you’re able to accumulate assets in an HSA account. And basically, for example, myself, I have an HSA account that I put this money in pre-tax. So, it comes out of my paycheck. And our company actually provides some of that, too. So, it’s all pre-tax going in as long as money is used for health care and long-term care is acceptable for this that you’re able to use assets from your HSA account and uh um and put money and use it for long-term care. Let’s see if there was anything else. Uh what’s on? It’s the Medicaid, not the nursing home. So again, I will get to you that information. Uh okay. So we’re just past 3 o’clock. I appreciate your time so much. Thank you. And I hope that we’re going to be having a one-on-one conversation soon. We’ll talk to you all soon. Have a great rest of the day.

Well, hi everybody. We’re going to go ahead and get started. Uh, my name is Kim Kennedy and with me today is Malcolm Horn and we are financial consultants with Alliant Credit Union. We get the question often, do we really work for the credit union and we absolutely do. We work in the Alliant Retirement and Investment Services division of Alliant. Both Malcolm and I are based in Denver. We have offices in the Denver Tech Center and also on the west side of town in Lakewood. Clearly, if you’re joining from another state, we can do virtual appointments or even within Colorado, we have a lot more people wanting to do Zooms instead of face to face. So, we get that. Um Malcolm is going to be walking you through the webinar today. So, thanks for spending some time to learn about taxes. At the end of the webinar, we’re going to answer all of your questions. So throughout, feel free to put your questions in the the chat or Q&A box at the bottom of your screen. You will get a follow-up contact from Malcolm or I after the webinar, usually within a week or two, just following up, making sure your questions got answered and seeing if you need any help with your retirement planning or tax planning. We have a couple webinars coming up and the first one is Thursday, July 16th. That’s going to be on Roth IRA conversions. This has been a really popular topic just like taxes. Everybody’s concerned about that going down the road. Uh not that a Roth conversion is appropriate for everybody, but we’ll walk you through the different scenarios and um let you let you see what you think. And then the next one is Thursday, July 23rd, and that one is IRA planning. Just the different types of IAS. How do you utilize those in retirement? And if you’re interested in either one of those, feel free to watch for those emails coming through and sign up for either of those. We also have some resources available to you.

Malcolm and I aren’t the only consultants doing webinars. Our colleagues across the country are also doing the same thing we are. So, if you go to our website, uh, aerys.alliancreditun.com alliancreditun.com and click on the events page. You can see all of the webinars that are occurring and you’re free to attend any of those. So, if there’s some topic you want to get smart on and you see an upcoming webinar, feel free to sign up. Same thing with our podcast. If you’re looking for a piece of information, we produce a podcast inhouse and we store all those historical ones on our podcast page. So, again, take a look there. And then lastly, both our website and blog contain just a barrage of information about various financial topics. So again, if you’re looking for a little more information or confirming what you thought on a specific talk topic, either any of these places are a great place to go. So with that, I’m going to turn you over to Malcolm and he’s going to walk you through taxes and thanks for spending part of your day with us.

Thank you. Thank you, Kim. All right. Well, let’s get started. And again, thanks for attending today’s webinar on taxes. And before we jump into taxes, I like to start with a a little bit of a brain teaser. So, you have Bill. He’s retired, 64, and he has taxable income of around 50 58,000, which puts him in a 22% tax bracket. that includes 45,000 that is taken from his IRA, 37,500 that is getting from social security. And he decides, hey, look, I’m retired. One of my favorite bands is playing and I’m going to take $1,000 out of my IRA to cover whatever expenses, the tickets, the gas, the food, whatever. And so he says, “Well, I’m in the 22% tax bracket, so I’m going to withhold 22% from that $1,000 that I take out of my IRA.” And so you would think, “Yeah, right. 20 You’re at 22% 22% of $1,000 is $220. That’s the amount of taxes that you would think you would pay on that.” Well, is that really true? And the reality of it, it’s wrong. He’s actually going to owe 40.7% tax rate on that $1,000 that he takes out of his IRA to go see a concert. We will discuss this later in today’s presentation and show you why it was 40%. So, whenever you’re dealing with taxes and you’re dealing with something very very specific regarding taxes, we always say please seek professional advice. And especially when you’re dealing with traditional IAS, money that’s in traditional IAS, whenever you take money out, you’re going to be paying taxes on it. Roth IAS, as long as you’ve had it for 5 years, you’re over 59 and a half, all interested and earnings is going to come out taxree. This presentation is going to be focused on federal taxes only. Some of you may have to pay state taxes, but just be aware of that. This presentation is purely federal. And so you might be, well, why are you doing a a tax presentation? Well, we do not do taxes, but we need to know the tax code to help people plan for the future, plan for retirement, plan for Roth conversions, plan for those capital gains that you might be faced with. And so today’s webinar is going to be purely educational and focus on things that we think are very important when it comes to your situation. And also in while you’re working, you’re in the we call it the accumulation phase. You’re working, you’re saving, but once you hit retirement, you’re in this distribution phase, which is a completely different tax code. Well, that tax code is the same, but you’re going to be faced with different kinds of taxes that you weren’t subject to while you worked. For example, in retirement, your children have probably moved out of the house. They’re independent. You don’t get to write them off anymore. Maybe you’ve paid off the house and you no longer get to deduct the mortgage interest. You no longer get to contribute to the 401k because you’re no longer working. So, that’s another way that reduces your taxable income. But in retirement, now you’re going to be faced with how’s my social security test? Oh, wait a minute. I’m going to be required to start taking money out of my retirement accounts and be subject to required minimum distributions. How do I pay for long-term care? Or what about health care expenses in retirement? So, you’re walking into this new complex world of taxes that you weren’t previously faced with while you’re working. So the problem that we run into is people often pay more taxes in retirement than expected because the system is confusing. There’s various types of income that you might be receiving, but then there’s also these hidden taxes and penalties that you need to be aware of in retirement. And so people just don’t understand these hidden taxes and penalties and they pay more taxes than they need to. So, we want to help you develop a solution. We want to help you kind of show you these these hidden taxes or penalties so you can come in and say, “Hey, we want to avoid paying these additional taxes in retirement.” So, and also there’s when we talk about taxes, we’re going to be talking about four different stages of retirement. First one is pre-retirement. you know, people between the age of 50 and 60, you’re still working, you’re still saving, but you’re on the brink of retirement. Early retirement, ages 60 to 70, it’s kind of your go- go years. You’ve retired, you’re active, you’re traveling more, doing more things. Middle retirement, 70, 80. It’s kind of the go slow years. You’re still travel, you’re still playing golf, but maybe not as active as you once were. And then late retirement is 80 plus. You you’ve done all your traveling. you may not be playing golf or pickle ball anymore. It’s kind of this late retirement. So, these four stages of retirement. And then also I also want to make sure that you’re aware of you could have the best retirement plan put in place, but there’s always going to be surprises along the way. For example, inflation. Cost of goods are going to increase and there’s nothing we can do about it. You know, longevity. You might live longer than you expect. My grand my wife’s grandfather lived to 99 and 9 months. His expectation was like, “Ha, I I I don’t expect to live till 70.” He lived to 99 and 9 months. Expenses, you might have high expenses in the first 5 10 years of retirement and then hopefully maybe they decrease, but there’s always going to be unexpected expenses that pop up. And then healthcare, you know, my wife’s wife’s dad worked till 70 and their plan was to travel the world and then a healthc care arose that the next two years all it was was doctor visits. So there’s always going to be surprises along the way when it comes to retirement. Okay. So what’s the first thing you need to understand about retirement and taxes? You have to know what your after tax retirement savings picture looks like before retiring. Well, what does that mean? Well, you save in the 401k. You put money into the 401k. And let’s say hypothetically you retire. You have 500,000 in the 40k. You’re like, “Awesome. I have $500,000.” But the reality of it is don’t forget you’ve been putting money in pre-t all these years. You’ve been putting money in pre-tax. When you start take that money out, you have to say, Uncle Sam says, “Hey, I’ve been giving that benefit to you. I want a piece of it.” And if you came in and took all that money out at once, you could be subject to a 35% tax or 37% tax rate. That just means that’s the highest tax rate that you could be possible up to. So be aware is that when you take money out, you’re going to pay taxes. Depending on what your taxable income is, depends on the taxes you pay. So maybe it’s saying, “Okay, I have $500,000, but I’m going to spread it out over 30 years. And maybe you’re able to spread it out and be in a 12% tax bracket or 22% tax bracket.” So just be aware the way you take money out of that that retirement plan determines what well it’s added to your taxable income for the year and depending on what your total taxable income is depends on the taxes you need to withhold from that. Now there was this thought in 2026 the taxes were going to go up um because the the TCGAA was going to expire. Well, they came in and permanently extended that. And permanent just means that, hey, there’s no expiration date on it, but Congress could still come in and decide, hey, in 4 years, 10 years, 15 years, decide to uh change the tax code. So, as of this point, for the next 3 years, we know what the tax code looks like in regards to taxes are not going to increase. We’re on the same tax brackets as we were the last 10 years. They also increased the standard deduction. So in 2026 as a single person your standard deduction is 16,100. As a married it’s 32,200. That just means that this is the amount of taxable income that you can have and none of it’s going to be taxable. So you can have for a single person you could have up to $16,000 $16,100 of taxable income and that standard deduction means that you don’t pay any taxes on that. But any additional income above that you would be paying taxes on it based on your brackets. Okay. Well, at least I still have social security to supplement my income and supplement my income and Medicare to pay my health care costs. And that’s true. But you need to be aware of some social security and Medicare traps, tax traps, and you need to plan for them. And what are they? Let’s first talk about social security. Remember that example where Bill went on that went to concert, he took $1,000 out. Let’s specifically look at that. So before the concert trip, he had $45,000 of taxable income or sorry, he had $45,000 he took out of the IRA. Now he took out 46,000. He took additional $1,000 out. So that’s the the only thing that increased. He he increased withdrawal from his IRA by $1,000. But because he took $1,000 out of his IRA, it caused 85 85 cents more of his social security to be subject to tax. So every dollar he took out actually a $1.85 was now added to his adjusted gross income. So that $1,000 increased his taxable income by $1,850 which that is where we’re getting this 40%. So this additional tax liability because now he’s paying more taxes on social security, we need to take into consideration on that when it comes to his tax liability. And that’s why if you single that $1,000 out where you come up with the 40%, it’s because there’s you have to pay they’re they’re collecting tax on that additional social security income that you’re receiving. So when you look at the tax brackets and if you’re married filing jointly, if your provisional income, which is your addressed gross income plus one half of your social security benefit and any tax exempt interest, if it’s over $44,000, that means that 85% of your social security is subject to taxes. Now, this is not a 50% or 85% tax. It just means that portion of your social security isn’t including your adjusted gross income. And depending on your adjusted gross income determines how much tax liability you pay on social security. The thing that sucks about this bracket is that you’re looking at something that’s over 40 years old that’s never increased. the first bracket of 50%. They started taxing social security in 1984 and then they added a second layer of tax liability in 1993. And this bracket has never increased for inflation. So every year it just catches more and more people because this has never been increased for inflation. Now, in this new tax bill that was signed last year, they did come in and say, “Hey, we’re going to add a bonus deduction for seniors over 65.” They spent it as, “Hey, we’re not going to tax you any of your social security.” Well, your social security is still subject to tax. They just came in and added a bonus deduction to help offset some of the taxable income that you might have. So, if you’re over 65, they’re giving you $6,000 per person. Now, there’s phase out limits. So, if you’re a single person and your income is over $175,000, you don’t receive any of the $6,000 the additional standard deduction. Joint, it’s 250,000 or more. So, if your income is over modified adjusted gross income is over $250,000, then you don’t receive any of this bonus deduction. But if your income as a single person is below 75,000 then you receive it. If you’re joint 150 below you receive 12,000 6,000 per person. This is a temporary bonus deduction. It does expire at the end of 2028.

Now there are different approaches to retirement. Some people might say, “Hey, I’m going to completely retire altogether and not work.” Some people might come in and say, “Hey, I’m going to slowly go into retirement. I’m still going to work part-time, my current job, and then slowly pass out or kind of slowly exit out.” Some people might come in and say, “Hey, I’m just going to retire, but I’m going to do something that I love, that I’m passionate about, and it’s not based on whatever income I’m making.” Or you might just retire and volunteer altogether. So when you think about social security and you think about the good, the bad, and the ugly when it comes to social security and you kind of in these different retirement stages, let’s talk about social security. The good of social security, when it comes to determining your social security benefit, they look at the highest 35 years of earnings. So, if you’ve, you know, maybe you took some time off from working and you have zeros within your working career. If you work within retirement, you might be replacing some of those zeros, which might increase your social security benefit. That’s good. The bad is if you decide, hey, I’m going to work part-time. I’m going to decide I’m going to take social security early at 62. You there is something called an annual earnings test. And in 2026, you can make up to $24,480 before they start withholding some of your Social Security benefits. So for every $2 above that $24,000 amount, they’re going to withhold a dollar of your Social Security benefit, if you’ve taken Social Security early and you still have earned income. Now, they will recalculate your benefit depending on these earnings, and you might see an increase or not, depending on if it replaces any of your lower earning years. But just be aware of this. Now, once you hit full retirement age, this annual earning test goes away. So, again, just something to be aware of when it comes to, hey, if I’m going to take social security early and I’m going to work part-time, you’re going to be subject to this annual earnings test. The ugly to social security is that hey let’s say you’ve paid the max into social security for the last 35 years and you decide hey I’m going to work part-time you’re still going to pay into social security part-time but you’re not going to see any benefit to it because you’ve already paid the maxes to social security. So that earnings that’s being calculated within your benefit does not increase your social security benefit. So that is the ugly to this. So, if you’re self-employed and you’ve kind of paid yourself the max o over all these years, you might consider, hey, I’m self-employed. Why am I paying to social security if I’m not going to see my benefit increase? I know there’s a reasonable income that you have to pay yourself depending on what your position is, but it’s something to kind of talk to you about, talk to to your accountant about if you’re self-employed. All right, let’s talk about Medicare and taxes. So, watch out for something called the Medicare Irma cliff. And what is this? We actually do a full webinar on this app, but let’s use an example. Georgia Martha, they’re on Medicare. They’re they’re part B and part D. And in 2024, they had $342,000 of modified adjusted gross income. In 24, they also sold some stock for $1,000 gain. And capital gains tax is 15% because they were over 250, they were subject to additional 3.8% net investment income tax. So the tax rate on this $1,000 is 18.8%. Right? Well, if you look at the Irma brackets and Irma is based on Irma is tied to your Medicare Part B and Ded premiums based on the amount of income you make, your premium that you pay towards Medicare increases. So in this case, because their modified adjusted gross income went to $343,000, their part B premium increased from 405 to $527. Their Part D increased also. They went from 37.50 to $260 for Part D, which is prescription drugs. So, when you look at this, and remember, you sold $1,000 of stock that caused your your modified adjusted gross income to go into a higher Irma bracket, which caused your part B and D premiums to increase, and it’s per person. So, they saw an additional $3,470 increase on their Medicare Part B and D premiums. So when you add that plus the 18.8% tax, it triggered the real tax rate of 365,000 365% tax liability on that $1,000 that was made on that sale of the stock. So the the 188 plus the new Medicare increase for premium cost $3,658. Now, the hard thing about Irma is that it’s always a 2-year look back. So, right now, if you think about 26, they’re not going to look at your income until 28. So, with them, it was like, “Yeah, we did in 24, but now our premiums went up. Why?” Well, it was because of the stock sale you did in 24. It’s always a 2-year look. Now, I’m not going to get into a lot of this, but biggest thing to point out when it comes to Medicare, make sure you’re enrolling on time. understand when you need to enroll on Medicare because if you do not enroll on Medicare on time and you miss your window, they will come in and penalize you 10% of the base premium for life. So going back to this example of Jim and Nin, if they missed their Medicare enrollment and were like, “Oh my gosh, missed the Medicare enrollment.” they next year they signed up for it, Medicare’s going to come in and say, “Hey, you missed your enrollment period, so we’re going to subject a 10% penalty to the premium.” So, if you look at in 2026, if they miss the premium, that’s an additional $20 times 12 months times two people, that’s an additional $500 that they’re paying each year. That’s going to increase by inflation each year. It could be a lifetime over $10,000 mistake. So, make sure to enroll on Medicare on time. Understand when your windows are to enroll. What are the tax drops? This is a very common question we get a lot. How and when to use your taxable, tax deferred, and taxfree assets to manage your income and tax brackets efficiently. Very common question. Let’s use an example. So pick on Sam and Mary. They both have money in the IRA. They both have money in Roth and they have 300,000 in the savings. The conventional wisdom is, hey, I’m going to spend my cash out first and then spend my IRA and then spend my Roth if I need it. That’s the conventional wisdom. So when we run an analysis that showing them showing them spending their cash down, this is a projection of what their assets look like. And so it shows where the assets are and they’re going to continue to increase because they’re not spending they’re not really spending what they’re making on their assets. But let’s change it up. instead of spending your cash first, let’s actually spend your qualified money first and see if there’s any benefit to that. And there was there’s actually a benefit to them. Their net worth increases by over $200,000. So, there was a benefit to spend IRA down. And what probably one of the reasons is that if they’re spending IRA money first, it’s helping them reduce the future tax liability down the road. There’s been so many studies regarding this type of strategy. Do you do spend your cash first? Do you spend your IAS? So you can Google any of these studies and read this white page on what’s the best way to do this. Another alternative approach would be, hey, let’s spend your taxable money but also do Roth conversions at the same time. And if we do that, then we increase their net worth by almost $700,000. So there’s better strategies that are out there in regards to how to spend your money in retirement. And you say, “Well, wow, that’s 700,000 more. How’s that the case?” When you get into the weeds of this, when for their situation, if they’re spending their cash, they pay really no taxes at all that first like 10 years. But if we do a Roth conversions, yeah, you’re paying taxes up front. But the biggest benefit is when they’re in their 80s and if they just spend their cash first, their tax liability is almost $20,000. But by doing Roth conversions, their tax liability is $10,000. So you’re reducing your tax liability for future years down the road by doing those Roth Roth IAS, Roth IRA conversions, and creating this tax-free bucket. Now, everybody’s situation is completely different in regards to what they want to spend in retirement and what their they want their retirement to look like. So, it’s it’s a matter of what’s your goal when it comes to spending your money. Roth conversions is where taking money out of your IRA, you’re moving it over to a Roth IRA. You’re adding that tax your whatever you moved over is added to your taxable income for the year. So, again, example, Jill converts 100,000 from her IRA to Roth. 100 th000 100,000 is added to her taxable income for the year and she’s paying taxes based on whatever her tax rate is in that year. Another strategy that people talk about is filling up the bracket or filling up the bucket when you come in and say, “Hey, like I’m I’m in a 22% tax bracket, but I actually can convert about $50,000 and still stay within the same tax bracket.” That’s filling up the bracket. And here’s an example modeling what that looks like. So every line you see here represents a different tax bracket. So that yellow is saying this is the amount you can convert and still stay within a 22% or 24% tax bracket. So, we’re able to model that for people and say, “Hey, this is the amount you can convert and still stay within the same tax bracket and show what what is the benefit.” The benefit by doing conversions over the next 5 years. That’s $112,000 $112,000 that you are not giving to the IRS, not giving to the government. Also, you should look for low income years when it comes to Roth conversions. If you’re retired and you’ve decided, hey, I’m going to wait till age 70 to take my social security and my pensions, maybe that you have five years where you really don’t pay you pay very little taxes. Maybe those are good years to do conversions. Or you’re self-employed, you have a kind of a crabby year, low tax liability. Maybe those are good years to do Roth conversions. Or maybe you have high non-recurring medical bills. Let’s talk about that a little bit. you can you can deduct medical expenses above 7.5% of your adjusted gross income. So, let’s use an example. Let’s say your mom’s in the nursing home. She’s 80 years old and her out of pockets out of pocket expense is almost $10,000 a month. Her adjusted gross income right now is $60,000 and she has 500,000 in IRA. She has 500,000 in a non-qualified account or savings, CVs, whatever the case. Without doing a conversion, her income is 60,000. She’s able to deduct anything above 7.5% of that based on the medical expenses she has. So, if that’s the case, then her itemized deduction is $115,000. So, in this year, she pays no taxes. Well, let’s add a tax. Well, let’s do a conversion for her. If we come in and convert $60,000 converting, she still has access to the money. So, you’re not removing the money from her kind of assets to be able to use. So, now her taxable taxable income is of 120,000. She’s able to itemize 113,000 because of her medical expenses. So now her taxable income is $6700. That puts her in a 10% tax liability. So her tax liability is $670. That’s what you would pay taxes on a $60,000 conversion. She still has access to that money to be able to use. But if something happens to your mom, this is money that now gets passed on to you all taxfree. So, it’s another way to use the tax code to help reduce future taxes.

But you have to ask yourself, what’s the most what’s your goal? What’s your goal when it comes to doing Roth conversions? All all of this, everything we talk about, what is your specific goal? If you’re single, have no kids, and this money is going to go to charities anyways, like why do a Roth conversion? If you’re trying to pass on money to the kids as much as possible, maybe it makes sense for you to do a Roth conversion to pay less taxes than what your kids may pay. So, what is your goal when it comes to this money? Some there are some other possible approaches to managing tax brackets. You know, again, if you understand what your tax what your taxable income is and you need more money, maybe take money out of your Roth IAS. For example, if Bill took money out of or the the first example I use with the guy going to the concert, if he would have taken money out of his Roth IRA, he wouldn’t have had any tax liability and he would have saved over $400 in taxes.

selling highly appreciated stock for no capital gains tax. Yeah, I don’t know if you’re aware, but there is a way for you to sell appreciated stock and pay no taxes on it. Now, you have to be below a certain tax bracket. For a single, it’s 49,450 and for a married, it’s 98,900. Now, how this works is this. If you’re a married couple and your taxable income is $40,000, you can have up to $58,900 of capital gains and none of that be subject to capital gains tax. Now, once you go go over that $98,900 number, that’s when you would start paying capital gains tax. So again, going back to my example, if you’re a married couple, you have $40,000 and all of a sudden you sold a house and made $60,000 of gains, that puts you at $100,000. So $1,100 of that would be subject to a capital gains tax. So those are the numbers you need to stay below to have no capital no capital gains subject to taxes. Also, again, look at your tax brackets. And if you’re in a low tax bracket, maybe it makes sense to do a Roth conversion or take money out of your IAS and 401ks and pay less taxes on it than in the future.

If you’re still working and you have a health if you have access to a health savings account, highly encourage you to contribute to it. And the reason I say this is because the money go in the money that goes into a health savings account goes in pre-tax gross tax deferred and when you use that money for medical expenses it comes out tax-free. Huge benefit. Now let’s let’s move on to charitable giving and tax planning. So Albert and Shirley, they’re in a 24% tax bracket. They give $5,000 to charities. they have $15,000 of existing itemized deductions. Well, in 2026 there, for you to itemize, you need 47,500 to do so. So, this $5,000 that they’re giving to charities is not really giving them any benefit. Now, with them being over 70 and a half, there’s something called a qualified charitable distribution. You can give $111,000 out of your IRA directly to a charity counts towards an RMD if you’re RMDH and none of that is added to your taxable income for the year. So what’s the cost of doing a non QCD contribution? So charity gets $5,000. 5,000 is satisfies the RMD. 5,000 is reported as taxable income. And if you’re in a 24% tax bracket, that means you pay $1,200 in taxes. And so really the cost to give to a charity is $6,200 cuz the IRS took their 1,200. But if you come in and say, “Hey, I’m going to give this money directly to a charity.” Then the charity gets $5,000. The $5,000 satisfies RMD. It’s not included in your taxable income. So it’s excluded. So, your tax bill on this 5,000 you’re giving directly to the charity out of the IRA. That’s there’s no tax liability. So, the charity still gets the $5,000, but you just saved yourself $1,200 by doing a qualified charitable donation. So, again, this is another way to help reduce some of the tax liability that might have. Okay. Well, I hope to have assets to pass on to my family. How does retirement tax planning figure into this?

So, if you inherit an IRA, you used to be able to stretch it over your lifetime. That is no longer the case. If you’re a non-spouse beneficiary and you inherit an IRA, you have to take it out over a 10-year period. So, you let’s use an example. Pam, 65, has son 40 years old. Pam dies, leaves her son, 100% of her IRA, it’s $400,000. If we use the 6% average rate of return on this again, if he comes in and says, “Hey, I’m going to take it out annually over a 10-year period,” that means he needs to take about $55,000 out of that IRA each year for that IRA to be completely liquidated. or he comes in and says, “Hey, I’m just going to take the minimum years 1 through 9 and then in my 10th year, I’m going to completely liquidate it.” Well, in the 10th year, it’s going to have to take over $700,000 out, which would automatically put him into the highest tax bracket. So, taking the money out, spreading it out over 10 years, would probably be a more beneficial way than coming in and saying, “Hey, I’m just going to take it all out in the 10th year.

Now, let’s talk about taxes and long-term care. If you have a traditional long-term care premium, uh, sorry, if you have a traditional long-term care policy, the premiums that you pay might be deductible, and any income you receive from those policies are going to come to you taxree. But the traditional loan to care path is more like car insurance. If you don’t use it, well, the insurance kept your money. We’re seeing more and more these hybrid policies. The hybrid policies are more like permanent life insurance. You pay into it. If you never use it, this money goes to a beneficiary all taxree. But let’s use an example of Florence. She qualifies for long-term care. She receives 60,000 a year in inhome care benefits. She has 20,000 from social security. She has 400,000 in IRA. And then she has a life insurance policy that has um 500 thou a $500,000 life insurance policy with long-term care rider that gives her $10,000 a month. So, so scenario one, she comes in and says, “Hey, I’m going to use my IRA to pay for these costs.” And when she passes away, the beneficiaries So, I’m going to sorry, sorry, I’m going to use my long-term care policy to pay for my care. So that means that when she passes away over a 5-year period, her daughter will inherit a tax-free life insurance of $200,000, but then she will also inherit this IRA of 400,000 that’s going to be all taxable to her that she’s going to have to spread out over a 10-year period. A second scenario would be, hey, instead of using a life in the long-term care policy, let’s use your IRA to pay for this care. Because of her cost to care, we’re able to, for the most part, take this money out and pay very little income tax on this distribution. So now when Florence passes away, she will inherit her daughter will inherit a tax-free life insurance policy of 500,000 and she’ll receive $100,000 that’s remaining in her IRA. So again, I don’t know what the kids tax rates are, but when you start thinking about when someone inherits money, do I want to give them something that’s going to be taxable? Maybe they have to pay more taxes than I would or would I rather them pass receive money that’s going to be all tax-free. Now, of course, this money is there for her to use. So, if she lived in a if she was in long-term care much longer, then you’re using this money for all that care. So, if you spent through the IRA and spent through the life insurance, that’s all there for use. But at some point, everyone’s going to die at some point. So when she passes on this money, whatever is remaining, it’s maybe more tax beneficial to the beneficiaries. All right, how do we manage all this? Kind of a review of what we talked about pre-retirement. Know your after tax savings before retirement. Understand what do you think your tax liability is going to be in retirement. Does it make sense to fund Roth IRA or should I be putting more money into pre-tax accounts? early retirement. Understand how social security and Medicare are going to be taxed. Maybe fill tax brackets in low income years. If you are going to come in and delay social security till 70, maybe it’s a way for you to to reduce some of the future tax liability you’re going to have down the road. Middle retirement, understand what your RMDs are going to be, your required minimum distributions, because this is money that you have to take out and it’s going to be added to your taxable income. How does that what kind of impact will that have on in retirement late retirement? Organize your assets for a taxefficient way to pass this money on to the beneficiaries. You might come in and say, “Yeah, this is money I’m never going to use. So, let’s figure out a way for this money to be passed on to kids more tax efficient.

Taxes are going to cons continually changing. The current tax code we know is good to the end of 28. After that point, who knows? I mean, come midterms, we might have a better idea of what could change, but in the next four years, 10 years, taxes are going to definitely change. And so, it’s making sure we understand taxes every single year. And one way that we do that, this is some of the planning that Kim and I do. So, Richard and Richard and Deborah came and saw us. They’re both 62. Richard is going to work till 67. Deborah’s going to retire at 65. Richard had some health issues. So, we using a life expectancy of 85 for him. Deborra’s going to have long life expectancy in 95. They have money in savings. They have money in 401ks. Their house is completely paid off. So, this is just a net worth statement. They have this is their incomes while they’re working. Their social security is 6765 amount. They want to spend $5,000 a month. We’re using $500 a person for health care. They want to travel for the next 10 years once they hit richer hits retirement. And we’re looking at federal and state taxes for their situation. They’re both contributing to the 401k maxing uh maxing that out and contributing 3 receiving a 3% match. So the first thing we do is just put these pieces together and understand what the picture looks like. While they’re working, which is the blue, blue is them working, their income. The red line represents what they’re going to spend. The dark blue represents the social security they’re going to be receiving. The dark orange is the required minimum distribution. Anything above that red line is just excess income that’s coming in that they either they turn around and save. You see a drop off when Richard’s 85. You lose the social security benefit, but even at this point based on the required minimum distributions coming in, you know, Deborah’s good all the way out to age 95 and as you can see her remaining assets. This is what their tax liability looks like. So again, every line represents a different tax bracket. So right now they’re hovering around that that 24% line. Um in retirement they pay very little taxes at all. RMDs kick in. They’re pushed at 12% tax bracket. Richtor passes away. Deborah’s going to be in a 22% tax liability at that point. So we said, “Okay, let’s consider doing Roth conversions when you retire.” We’re able to model that and say, “Hey, let’s stay in a 12% tax bracket.” Is there any benefit to doing that? And when you look at that and model that 12% staying within a 12% tax liability with doing Roth conversions, it comes in and says, “Hey, we’re able to save $145,000 in taxes.” Again, that $145,000 is money that you’re not giving to the IRS, Uncle Sam, the government. this is money you get to keep in your own pocket which is helping increase your net worth. So we’re able to model this and say yeah does make sense or not. So again, retirement when you think about it, think of retirement as kind of climb the mountain. You climb the mountain, climb the mountain, you get to the top, you’re like, “Yes, I did it. I did it.” But sometimes going down the mountain is the most dangerous. And think about retirement. You might hit retirement and now in retirement, you’re going to be subject to different taxes you weren’t aware of. There’s all these different things that you didn’t even think about. sequence of return risk, you know, health care, interest rates, market timing, you name it. These are things that you necessarily don’t think about in retirement. While you’re accumulated, it’s work, save, work, save, work, save. And retirement is a different thing to kind of think about. So, in the end, Kim and I are here to help you. We’re part of the retirement investment services division. We do comprehensive planning to be able to answer a lot of the financial questions you might have. You know, what’s a good withdrawal strategy? Do I use my IRA money, diverse social security? What about Roth conversions? How do I maximize my rate of return but also reduce your risk? You know, help sure help ensure money passes on to the right beneficiaries. So, we’re full full comprehensive. we can do the full comprehensive plan and help you with all these different aspects. So, I know there’s a lot of information in this presentation, this webinar, but we can answer any questions that you might have regarding your situation. So, let’s see what we have here. We got Let’s see. So again, please put your questions in the Q&A or the chat. We’ll answer them from there. I almost I am also going to launch a poll. If you’d like to set up a meeting with one of us and run a plan for your specific situation, we’re happy to do that. There is no cost, no obligation. It’s services that we provide to members of the credit union. Well, somebody asked if we could give the out copies of the slides, and no, we’re not allowed to do that for compliance purposes. They don’t allow that. Uh, let’s see if there’s no open questions. I’m sure you guys have more questions. Yeah, there’s probably some questions. Let’s Let’s just give it a minute. We’ll give it a minute. Yeah, that’s a lot of information that Malcolm presented. All really good and a lot to think about, not only for your retirement, but for your heirs. Um, let’s see. It looks like something popped in. How do trusts change retirement planning? How do trusts change retirement planning? Oh, you know, when it comes to a trust, it’s what are you using the trust for is the biggest question. I don’t think it really changes retirement planning because the trust is a vehicle that you can use to make sure this this money bypasses probate, goes directly to whoever you name as beneficiaries. I mean, some people put up a put a trust in place um to make sure money stays within the bloodline. Maybe they don’t like the the the husband their daughter’s married to and they don’t want that that person to get any money if they get divorced. So, it just depends on what you’re looking what you’re what the trust is doing for you. In a lot of cases, it’s just set up as maybe as a beneficiary or a secondary beneficiary. If it’s a non-retirement account, usually the trust owns it, but for our purposes, that’s that’s what we use it for in terms of differentiating on account types. um to meet for a personal session. Is there really no charge? Yeah, we don’t charge. So, right now, we do not charge a financial planning fee to meet with us. If you want to meet with us, we’re happy to do so. There is no cost. You’re members of the credit union and this is a service that we’re providing. Well, and here’s the other thing I would add on to that. You know, we’re asking people to sit down with us and talk to us about their life savings and hopefully make a decision to work with us in some way, shape, or form. So, we really believe that the planning process is your opportunity to get to know us and see if you really think we know what we’re talking about or you could actually trust us. So, yeah, we do not charge a fee for that. Okay. I may have missed it. Did you mention if someone misses their first required RMD? Yeah. So, when it comes to the first required RMD amount, you actually have So, let’s let’s use an example. Let’s say you turn 73 this year, you you actually have up to April of 2027 to satisfy your RMD for 26. Now, the downside of doing that is that in 27 you have to double up for 26 and 27. So, depending on what that means could put you into a higher tax bracket. But, h excuse me. But if you do come in and miss your RMD, the IRS could penalize you 25% of whatever that amount is. So, if your RMD was $10,000, they could come in and say, “We’re going to assess a $2,500 penalty to do so.” Now, I would suggest if you miss your RMD to talk to your tax accountant and say, “Hey, is there a way to somehow wave this penalty?” Because missing your R&D is a common mistake that we do come across. Yeah. Typically, we just tell people, you know, let’s assume it wasn’t with us, of course, that we’ve discovered they’ve missed an RMD, and that’s usually the case. if you rectify it as soon as you become aware of the situation and then as Malcolm said talk to your accountant and there there’s a waiver of penalty form they can file but the big key is to fix it as soon as you you know reasonably find out about it. Um, another person asks if there’s a fee for services. Malcolm, I mean, yeah, at the at the end of the day, like if you go through our planning process and we determine, hey, this is a fit and you want us to help you with your investments, there might be fees associated with managing money, but then there’s also vehicles that we we put people in that have no fees. So, you know, at the end of the day, like if you if we all decide, hey, this is a good fit for us, we are going to be full, you know, full disclosure of this is what your fee is when it comes to our recommendations for your situation.

My husband turned 65 in October this year, but he’s going to keep working full-time. I understand he should file for social security and Medicare regardless of him working or not. Is this correct?

So when it comes to No, I mean yeah. So yeah. No, if you know if you have credible coverage, no matter how old you are, if you have credible coverage, you do not sign up for Medicare. Now, some people might come in and say, “Well, you turn 65, turn on sign up for part A, so you have this additional hospital coverage, but also at the same time, you necessarily don’t need to. And if you are contributing to an HSA, you definitely don’t want to because once you turn on Medicare Part A, like you are not going to be able to contribute to an HSA anymore.” So, no, it’s yeah, it’s the other thing I think the myth out there is sometimes people marry the two together. They think if they turn on Medicare and Social Security, they have to be done at the same time. And that’s not true at all. And in fact, turning on Social Security at 65 is going to cause your husband’s Social Security to be less. So, handle them separate. If you’re working beyond 65, as Malcolm mentioned, there’s an issue with, you know, part A and a HSA account, we usually tell people to talk to the HR department um and see what they say about it. Seems like the tax liability can be quite convoluted when it comes to RMDs and how that impacts Medicare, Plan B, and D premiums. Was this Congress’s attempt to generate more revenue for the less savvy taxpayer? Absolutely. I mean, at the end of the day, absolutely. I’ll say it. I’ll say it. And if you think about this 10-year rule, it’s another way for the government to uh increase tax liability because you used to be able to inherit an IRA and spread it over your life at time and keep you keep that money, keep the withdrawals at a very minimum amount to pay very little taxes on it. For them to come in and be like, “Okay, now we’re going to change rules and you have to take 10 take that money out over 10 years.” you know, there are going to be a lot of people that say, “Oh, just just give it all to me.” And they’re going to be paying a lot more taxes. So, absolutely. This is a way for the government to come in and people that are not tax heavy have to pay more taxes. So, yeah, absolutely. Definitely requires you to plan. I mean, the tradeoff of that 10 year was an extension on when our MDs start, right? I also think the theory of all this pre-tax deferral was that when we got in retirement, our tax rates were going to be a lot lower, and that hasn’t necessarily turned out to be the case. Uh, what non-t taxable income is included to determine your total taxable income as far as it relates to tax on social security? Yeah. So, they look at provisional income. Provisional income is your adjusted gross income plus half of your social security benefits plus any tax exempt interest that determines the provisional income which determines how much of your social security is subject to tax. So the non-t taxable income is the municipal interest or tax exempt interest mun bots. Yep. Is there a guideline for what percentage of your retirement fund should be in a taxable retirement account and how much should be in a Roth? I’ve heard 50% each. No, there’s no guideline. I mean, it’s all comes down to everybody’s situation is completely different. I mean, so there’s no guideline. I mean, in theory, in theory, if you could get all of your money in a Roth and go into retirement with a big fat Roth IRA and social security, your taxes in retirement would be zero, which sounds great, but it’s not that easy to get it all moved over either. Yeah. Uh followup. Is a Roth distribution counted as income? As of right now, no, it is not counted as income. So, what determines the amount of an RMD, a percentage or what? Yeah. So, when it comes to RMD, they look at the previous year’s balances. So, they look at So, like if again, if you’re 73 this year, they’re looking at the ending balances on December 31st of 2025. And then they use a life expectancy number. The life expectancy number for someone that’s 73 is 26.5. And then they take that those ending values divide it by 26.5 and then that’s going to give you your the amount that you have to take out. The first year it’s about 3.77% and then every year that percentage goes up because your life expectancy number goes down. You get older and so you get older the percentage increases and the balance of your accounts is going to change too, right? Yeah. Uh let’s see. That’s another RMD. I just covered that. If I already have an investment management company, i.e. Fisher Investments, will you be able to work with firms like these? When you say work with them, I’m not sure exactly. Um, you know, ultimately we with people that work with Fiser, we come in and say, “Hey, we’ll help you do the planning aspect of it and then we’ll analyze what Fiser is doing.” What we find with Fiser is they’re taking on a lot of risk for very little return. So then it’s a question of well if that’s the case why wouldn’t you get the same amount of return for less risk. So again we we’re not going to be able to go to a Fiser and be like hey change this model because we don’t manage Fisher’s models. I mean, and yeah, that’s what would come. Well, and I think what usually happens to add on to what Malcolm said is if somebody says, “Well, yeah, I really like the aggressiveness of Fiser and how that’s done, but maybe I don’t want to bet the whole farm on something that aggressive. So maybe a piece of the money comes over to us at Allian and we end up being the conservative piece. I mean, we clearly have aggressive pieces as well. Uh, generally we also have fee than Fiser. I know they’ve worked on their fees somewhat, but I bet we’re still cheaper. Okay, next question. Roth five-year rule. Could you explain the five-year rule on Roth? Does each contribution have its own five-year calendar? And what calendar is the earned interest on? Yeah. So, when it comes to the five-year rule, it’s 5 years or 59 a half. So when it comes to contributions like you so your first contribution starts the clock so it doesn’t so if you think about it let’s see okay we’re in 2026 so let’s say you’re 60 years old in 2021 you were 60 years old you made your first contribution to the Roth come 2026 come 2027 you’re over 59 and a2 half you’re over 5 years from the start of that Roth. So even though you made a contribution in 24, all earnings and interest are still going to come out tax-free for you for that Roth. It’s not it’s not a rolling contribution 5-year clock. It’s your first kind of clock start of the Roth. You want to say it a different way for me. So, as long as you’re 59 and a half and you’ve had a Roth IRA account open for at least 5 years, whether it was contributions, conversions, moved from a Roth 401k to a Roth IRA, that is the initial date that’s stamped for your Roth clock. So, if you’re over 59 and a half and you’ve got 5 years in a Wroth anywhere, you’re good to go. And if you’re not, then let’s say you open a Wroth today and you convert $100,000. Your 5-year clock starts today on the earnings. The money you converted, you’ve already paid tax on. So, you can pull that out anytime you want. So, I always tell people, look, you’re not going to if you converted 100 grand, you’re not going to spend 100 grand in five years. So, by the time you get to that fiveyear clock, then your earnings are able to come out taxree. Also, um let’s see, somebody’s asking, “Will you review what I have invested in already?” Yes, we do that. Yes. I just started receiving social security but still am working and have contributions going into a Roth 401k and pre-tax 401k. Can I still do this? Mhm. Sure. Yep. You still contribute to the Roth. The nice thing about the Roth 401k is there’s no income limit in regards to putting money into the Roth. When it comes to Roth IRA, there is the income limits they look at. So your in earn income plus your social security might push you above the limit for you to be able to contribute to a Roth IRA, right? IRA Roth IRA. But when it comes to a Roth 401k, yeah, you can still do that. But there’s no connection between working contributing to a 401k pre-tax or Roth and taking social security. They’re separate. So you can contribute to either of those accounts as long as you’re working and then social security is a separate decision. All right. I think I got them all. Oh, here’s a few more. Oh, we just talked about the time rule on the Ross. Okay. We have accounts with Alliant and my husband’s 401k and stock through his last employer with another investment firm. Do we need to work with you and then do we need to work with you and then separately manage each account? I’m not exactly sure what the question’s asking, but you know, obviously we’d love to have the whole relationship come over to us, but sometimes that’s not the case. Uh, clearly we can do the planning for you and see where it goes and see what makes sense. If there’s something you’re really dead set on keeping, then we want to build an investment strategy around that. But we clear we have separately managed accounts as well. Not sure if I got the exact essence of your question, Dan. If you want to come back to me if I didn’t. Um, I think that’s it, Malcolm. Awesome. Again, thanks for all the questions. Yeah, great questions. We appreciate that. Again, there’s a lot of information when it comes to taxes. We don’t cover all of it, but um yeah, I think this will be a high level taxes that people should be aware. Okay, thanks everybody and hope you have a nice happy safe 4th of July and we look forward to talking with you all real soon. Thanks. Thanks. Bye.

Hi everyone, this is Mike. Uh just wanted to say thanks for uh logging in and joining me on the web webinar. We still have it looks like about seven or eight minutes. So just letting you know you’re in the right place and I’ll I’ll be back uh in a few minutes. Thank you again. Evening everyone. Uh, looks like we still have a couple of minutes and it looks like we’re still having folks join. Hope everyone’s having a good evening.

I’m not sure what part of the country you’re joining me from, but wherever it is, I’m hoping it’s cooler than it is here in Houston, Texas,

which it feels like it’s about 200° and uh about 10,000% humidity.

Oh, Tampa, I don’t think your weather’s any better in Miami. At least you have a much nicer beast beach than we do here in uh in Houston. Your uh your water color is the correct color.

If anyone’s ever been to Houston or Galveistston since we have still a couple of minutes, so when I first moved here a million years ago, like hey, I’m going to go down to Galveston Bay, which is, you know, about an hour away from where I’m at. I’m like, it’s going to be the Gulf and it’s going to be amazing. My family’s originally from Hawaii and I grew up in Southern California, but I’ve been here a very long time. Everyone goes, it’s not it might not be what you expect when you’re thinking the Gulf. And I’m like, really? So I go down there and if you’ve never been, Galveastston is on the west side of the Mississippi River. So the tides, so the the the tides actually bring the silt of the Mississippi. So, our Gulf Beach is not clear water. It is a silty brown water. Uh, but occasionally we get a storm that comes in and shifts the tide and then for a day or two we have like out of a postcard crystal clear water. But it is a rare sight to see. So, yeah, Miami Beach, you definitely have us beat in about a million ways in that respect. Um, all right. I have six o’clock straight up. Looks like some folks are still joining. I’m going to give it maybe one more minute and then we’re going to start. Um, kind of in the interest of time. We want to leave plenty of time for questions at the end. So, um, I think we’re going to go ahead and start. So officially, welcome to Roth IRA Convergence. Uh I appreciate you joining me this evening. If you’re joining for the first time, uh extra special welcome. I’m Michael Marx, certified financial planner and financial consultant with Alliant Retirement and Investment Services, or Aerys for short, A R I S. I live here, as I said earlier, uh right here in Houston, Texas, and I’ve been doing this for I don’t know over 30 years now. Uh so my family’s been tied to Alliant. I tell this story every time. I’ they’ve been tied to Alliant longer than I’ve been alive. So most of my family has worked for either United or Continental since the 1960s. And if you didn’t know, Alliant was originally United Airlines Credit Union before we changed our name. Um and they’ve been around for over 90 years. So, um, I realize you may have found us through different channels. So, whether you’re joining us from United or Continental or Alphabet/Google or Tesla, CVS, Susie Orman, welcome everyone. I’m glad you’re here.

Before I can get the slide to change, before we dive in, I want to share a quick housekeeping item. Today’s session is for educational purposes and includes proprietary materials. So to protect both the content and everyone’s privacy, we ask that attendees please do not record or capture the presentation whether that be by video, audio, screen sharing, AI tools without any prior consent. Thank you so much for your cooperation and understanding. So with that um again if this is your first webinar or your 10th webinar you would know this but we offer multiple webinars on various topics throughout the week with different presenters. Uh you can find a list of the upcoming webinar uh on our website. So that would be a creditcredit.comvents and we actually have a wealth of information there right. So, I encourage you to take a look. You’ll see our our InvestSavvy podcast. We have our blogs. Uh, and you can find that through our website directly or you can just find this on the Alliant Credit Union homepage, the website there and in the upper right hand corner there is a tab that says retire and invest and that is us.

So, we normally do two a month. We have different presenters. I try to do one in the evening such as this and then one in the afternoon. So, my next webinar will be in the afternoon and that’ll be Wednesday, July 15th. Um, that is 2:00 p.m. Central, 3:00 p.m. Eastern. Uh, and it’s trusts just aren’t for millionaires. Uh, so it’s about some uh higher level estate planning. We’ll go over trusts, wills, the importance of POA documents, etc. It’s some of the fundamental estate management. Um the one after that, I’ll be back in the evening. So, we’ll be planning for long-term care as a family. That is at the end of July. So, it’ll be July 28th on a Tuesday, such as this at 6:00 Central, 700 p.m. Eastern. And and frankly, so I do think long-term care. So, our primary focus and our primary line of business is actually wealth management. We handle investments. the webinars and things are just something that we do as kind of a I don’t know a courtesy, right? Uh it’s a service for our members here. But I will tell you in the world of things that could happen to to derail a retirement plan, it’s really something happening in the realm of, you know, where you would need long-term care and might not have it or something. So, we’ve seen this happen. you know, everyone usually knows somebody, a family member or a friend of a family member or a friend that that their health deteriorated and they they went into that, but it’s it’s a good high level if you haven’t or if you’re not familiar with it. Um, so and I’m not sure if you joined us via web via email directly from us or if you signed up on the credit union’s website. So I just want to take a few minutes and talk about ARIS uh because in addition to the weekly webinars that we host we are a fullervice wealth management division of the credit union um and investment planning. So we’re financial planners, we’re fiduciaries and we have a broad range of the investment options out there from everything from fixed rate guaranteed to as aggressive as you want to be. Uh, as you can see, the estate planning, we’ll talk about that later, that we added some of the things like um like trusts, basic trusts, basic wills, power of attorney, things like that. We’ve had enough people asking about that. Uh, so let’s start. So, with the future of the tax environment and how budget deficits and titlements and taxation can affect Roths and why they might be something that you want to consider. So this our current national debt, right? So that’s 36 trillion with a T.

Hopefully it gets smaller, but we’ll see. Um, so obviously the other thing too is our budget def deficits have been increasing, right? So it dipped a little bit. So So if you look at that big dip, I’m hoping you can see my cursor here. Right here. So this is right around 2020 with COVID, right? So all of a sudden we go from trillion to what you see happen virtually overnight, right? And that’s 2021. So the deficit spikes up and so far it hasn’t really come back down. It’s come back some. Um so maintaining that debt right when interest rates are low are one thing. However, the carrying costs become more of a burden as the new treasuries are issued at higher interest rates and the older debt at lower interest rates are retired or mature. So, we’re going to take this just to kind of give you an idea. We’re going to take this from a perspective on the case that even though we don’t know where taxes are going, there’s probably going to be a good case that down the road taxes will be higher. But to skip to the punch line, I’ll give you a little bit on that is even if they aren’t, there’s still a reason to consider doing conversions as part of your retirement strategy. And and I’ll go over the other reasons why. So let’s let’s take a look at at how this affects entitlements, right? You have social security, you have Medicare, you have Medicaid, as well as the interest payments on those current debts, right? So that consumes all of the tax revenue that you have coming in. So according to the CBO, which is the Congressional Budget Office, this is going to happen in 2035, right? Where where you’re crossing that line, social security, you run out and it’s a concern. So and that leaves kind of nothing else. So like your health and human services, highways, defense, and all those other things. So if you’re the government, there’s really only two ways that you can counteract that problem, right? Number one, you can cut spending. Now, one of the ways to cut spending is just be more to be smarter and a better steward of how we spend, right? There’s there’s so many things and laws and lobbyists and things like that that that we could change that would save the government some money. So and there is a lot of overlap and there is a lot of bloat in the government when you look at it you know from a hundred years ago not the size of it but the percentage of the government versus the size of the economy. You would expect the government to grow but unfortunately the pace at which it had grown kind of lends to some of the bureaucracy at this point. So with that said so you can either cut spending or increase taxes. So, and maybe the answer is somewhere in between, but what we’re more likely to see is taxes being raised. Now, the belief is somewhere and the talk out there on Capitol Hill is that they’re going to target households of 400,000 and up. The reality though is that the expectation is that we’ll probably trickle down to some of the lower income households, right? Not necessarily low income, but lower. One of the things that they can do, and we’ll talk about this a little bit later, is even if they keep the tax brackets the same, they might expand the brackets where if you made a certain level of income, you would normally be in the 12%. But now with that same level of income, you’re in the 22. So they didn’t change the tax bracket, but your tax your taxes could be increased. So we do expect at some point even though if they focus on the higher income earners you know not necessarily the millionaires the billionaires or now the trillionaire um but we really see this kind of impacting some of the middle and middle high income people we expect them to start feeling the income or impact now with that said right so we talk about tax rates throughout history so historically and if you go back you know to the early teens 1913 you’ll see that the t highest tax bracket was high 70 77 78%. Now, what we generally did, right, we raised income taxes. That would be World War I. And then it came down and then it went back up when we look through the depression, right? We had the crash, we had the depression, they needed to raise revenue where they could. Um, and then we didn’t come back down until well after World War II. So you started going into the 70s, we had inflationary periods and then we kind of settled down and stabilized into the early mid 80s. Um, and then we kind of go from there. So based on that chart alone, we say, well, when you’re looking at deficits, and I know they’re talking about people paying taxes, you have one side saying, hey, we want to cut taxes and one side that we need to raise taxes. Again, you have income, you have outflow. We don’t know where it’s going to be for sure, but if we’re betting, we see an increase. So, um, so there’s a couple of ways taxation can be diversified, right? So, it’s a tax now, tax later or tax never. So, the tax now or just like your current brokerage accounts where you have index funds or you hold individual stocks or your savings accounts or CDs where you’re getting that $1099 every year on the interest earned. So, some of the tax later things are tax deferred as we would know them. That would be things like your IAS, um your 401ks, any annuities that you may have. And what that does is it says, “Hey, look, as I’m earning interest on this, nothing. I’m not getting any 1099s, but when I take money out later, I’ll pay taxes off and recognize that on my uh on my income taxes for that year.” And then we have the tax never, right? And those are things like your Roth IAS, which is kind of what we’re talking about as far as Roth conversions, the municipal bonds, and your health savings accounts, your HSAs. So, those are a few different ways that we can do this. So, this is going to be our agenda for today, right? We’re going to talk a little bit about the Roth conversion, what’s behind it, uh consideration for the original owner of the Roth IRA or the surviving spouse, um and then beneficiaries, and we’ll talk a little bit about some of those impacts. So, let’s get started with the basics, right? So, you probably know that there’s another type of IRA called the Roth IRA. So, Roths are similar traditional IAS in many ways, but there’s some key differences. And frankly, it’s one key difference. So, you don’t get the tax deduction when you make a Roth contribution. And there’s many people who make IRA contributions, traditional IRA contributions, that they make too much money that they do not get that deduction anyway. So, but here’s the thing though. Once your money goes into that IRA, a Roth IRA, it grows tax deferred, right? So, there’s no there’s no 1099s, but once you take it out, it’s taxfree. So, that is the biggest difference right there. Um, so now you’ve had to have you’ve had to have an A- Roth, not just a particular Roth, but your your your Roth will have to be either 5 years or 59 and a half, whichever is a greater period of time um to avoid the to have a qualified distribution, which means that the earnings are taxfree. So now with that said though, even if you need to take money prior to that, you can always take out your original contribution and that is tax and penalty-free because it’s your money back. So now you must have compensation right in quotes or earned income. So for 2026, these are your contribution limits. So it’s 7500 a year uh if you’re under age 50, 8,600 if you are over 50. Um and they have a catch-up provision uh of of 1,100. So now there’s no age limit. All right. There are some income limitations as though if you earn a certain amount of money or over you are ineligible to make a Roth contribution. There are some back clauses that allow you to do that. We talk about that. Companies are now offering Roth 401k contributions with higher limits, right? You can do you can do up to 24 5,000 for this year. Then you have a catch up provision of 8,000 if you’re over age 50 to 59 and then over age 64 and that that weird window they have that super catch up for a couple of years where it’s uh instead of the 8,000 you can do 11,250 and that is from um ages 60 to 63. So if you’re in that age this is a temporary thing. Hopefully they make it permanent. But that’s kind of where we’re at right now. Oh, also if you have any questions because we will leave time at the end to answer questions, uh, go ahead and enter that right into the chat or into the Q&A um box and we’ll field those at the end. So look, while some of the baby boomer couples retire at the same time, one spouse usually retires before the other, right? So in in such case you can take advantage of the the spousal IRA which allows a a working spouse to still contribute on behalf of their non-working spouse. So even if one spouse does quit working if they’re retired or they’re a non-working spouse that working spouse still has still has that option. So conversions. So in short, the way the way a conversion works is you would take money from your traditional IRA, right, the one you’ve been converting to, and move sed funds into a Roth IRA. And what happens is, however much money you convert, it’s recognized in the year of the conversion. So, and partial conversions are are are permitted, right? So, let’s say you have half a million dollars, easy math, in an IRA because you rolled it over from another firm. Um, and I want to convert a h 100,000. This would be Jill. So, what she’s going to do is she’s going to have to add she’s going to move that h 100,000 to her Roth and then she’s going to add $100,000 to her income and she’ll pay it at whatever tax bracket she falls in. But from that point on, whatever that $100,000 into a Roth grows to, it will become taxfree when she takes it out. So again, I just mentioned, but this is kind of visually. So the 59 and a half, right? After 59 and a half, as long as you’ve held it for more than five years, any withdrawals on the earnings are taxed and penalty-free.

So who can do a Roth conversion? Anyone. Anyone who’s eligible, there’s no age limits. There’s no income limits. You don’t have to be working to do your conversion. And that’s kind of one of the nice things.

Ah yes. So there was a question on the back door. Uh we will we’ll field that at the end.

So the tax cuts and jobs act right. So that eliminated so a reccharacterization. So so the reason why they say you’re stuck with all your Roth conversions. Prior to 2018, what you could do is you could convert to a Roth, but you had the option to change your mind. You say, “Oh man, I converted too much or something like that, and I want to change my mind.” And bring it back from a Roth to a regular IRA. And that was called reccharacterization. So after 2018, that’s done. It is a one-way street on your con on your conversion. When you convert, it’s there. So kind of make sure you want to do this when you’re doing it.

So, one of the nice things and this is one of the reasons as far as the strategy goes is that your Roth IRA, they have no required minimum distributions. So, no RMDs, right? So, you can decide when to take it. Um, it allows your accounts to grow in uninterrupted for life and when you pass away, your heirs receive that taxfree. So, for those of you who may or may not do, when you um when you pass away with like an old 401k or an IRA or something like that, your beneficiaries, if it’s not your spouse, your beneficiaries have to take the money and distribute it out within 10 years. So, your spouse has the ability just to take that over and when they pass away, then their beneficiaries will have that 10-year clock and start counting. Um, so why does that matter and why is that such a big deal? So

you it allows you to take as much or as little as you want, right? And it becomes a factor for like major purchases like, oh my god, I need a new roof or I want to do this cruise around the world or whatever that might be, right? Because that can change your income for that year if you take it out of a regular IRA because uh easy math. I have to replace my roof and it’s going to cost me $30,000. Well, in order for me to net $30,000, I might have to take $40,000 distribution out of my IRA, have mold out 25%. I get my 30,000, pay for my roof, your total income when you’re retired and you’re on Medicare, right? You have that Irma, which is that income related monthly adjusted amount, the IRMA. We hear about it, they talk about it. So, that might impact you on the penalty because you’ve earned too much and you might have to owe more money on your Social Security or on your Medicare. And we’ll talk a little bit about that later. I think there’s some slides on that. Um, and those are tax cliffs. So, you do want to stay in control of it. The other aspect is that uh I think we’ll talk about this later too is how this goes to beneficiaries, right? And how this goes to your spouse. So being able to control your income that you are forced to take is important, right? So this is a way to reduce the risk of rising tax rates. Do we know tax rates are going to go up? No. No, we don’t. Right. But we do think there’s a pretty good chance because historically we’re in a relatively low tax period even though it doesn’t feel like it. So it does provide you with some additional benefits as a hedge against rising tax rates in the future, right? Most of most of which we just don’t have control over, right? What will that tax rate be? We don’t know. Will it change at all? We don’t know. But we do know that if we have some money that’s tax-free, we can control to where hey, you know, we’re going to take some from taxable um some from our tax deferred accounts and maybe a mix of Roths. You know, I’ I’ve read this and I’ve heard this people ask which order should you take money from? And this general school of thought is you take it from taxable accounts and then tax deferred and then Roth or your tax-free account. And that is true at a very high level. But I would tell you this is something you should probably or like we talked to this um with our with our clients and the members here to say hey you know it depends on what your spending habs are going to be. It might be a mix uh and it might be greater on one than the other. Just depends on what you’re trying to do and maybe those tax impact uh on some of your income. So you’re right at that bottom one your social security benefits which are your Medicare part B. So it matters and your social security benefits to a degree, right? Because there’s three tiers of how much of your social security is taxed. Whether it’s none of it, half of it, or 85% of it is taxed at whatever tax bracket you are. The reality is is most people, if you are on here, you are probably going to have 85% of your social security tax. And yes, for those of you who might be railing against that statement, that is probably close to a double taxation because you’re already paying to it now. So, Social Security and Medicare, right? So, 100% taxable and 100% is included in your provisional income. Um, and it’s included in your Maggie for Medicare pricing, right? And that’s where your Irma comes in. So,

let’s see how that showed up. So where your Roth it’s not taxable at that time of distribution.

So yes an IRA is taxable and a 401k distribution is also taxable at regular at your regular tax rate is taxed as regular income. Um but it is not included in your provisional income. Right? So, if you have a h 100,000, but you take 20,000 out of your Roth, you’re really only showing $100,000 on your income. Though, that 20,000 is not included in for Medicare pricing or for federal income tax. So, there’s some advantages there. So, I’m going to show you this. So, and and and I think this is a really good example, but there’s something that that I would tell you some caveats to this. So, it’s it’s a visual. I think it’s a great visual. So, if you look at this, it shows a $10,000 IRA, right? So, if I don’t convert it and 10 years down the road, assuming we’re earning 5% a year on this, right? So, 10 years down the road, my my $10,000 IRA grows to $16,289.

I’m going to make the assumption that 10 years down the road, I was in a 12% bracket now, but that bracket creeped and now my same income is putting me in a 24% tax bracket. So now my 16,000 after tax is 12,380. Whereas if I converted some of it now, right? So I converted $10,000 and I paid that 12% tax, I got 8,800 bucks. Um so 10 years down the road it’s 14,3334 sorry but it’s taxree when I take it out I owe the government zero on that. So, that’s a little food for thought, right? That because it’s not well, it does matter on how much you make, but it also matters on how much you keep, right? Because this is one of the things that we look at. I have clients call me this all the time like, I don’t want to pay taxes. What can we do to save taxes? And I’m like, well, we can do some things, but you don’t want to be so obsessed with saving taxes, right? What you want to do is what nets you. If I can get a 4% tax-free, but I get a 7% taxable, even if I pay taxes on it, if I’m still netting more money in my pocket and it doesn’t impact me negatively on those other things, you do it. And that’s one of the things that we talk to the clients about. Um, and that is a conversation we have a lot more often than one would think. Um, so, so that extra 1,900 bucks in your pocket, that’s like almost 16% more in your pocket just because you did a conversion 10 years prior, right? So, this is the can the reality of it is this isn’t something that you would really see the benefit from today. As a matter of fact, you’d see you’d experience a little heartburn and a little sadness today because you’d have to recognize it and pay taxes on that income. So here’s a chart that I think visually is a good idea to look at and explain that what that on the on on the left it’s right it’s your tax rate at your withdrawal and the top part is your tax rate at your conversion. So you start at the top and you say well look I’m in a 12% tax bracket and I think taxes will be higher. I think it’ll be 22. And if you follow that down, you’ll see that 12.82. And what that basically says is you’d have 12.82% more money, right? So there’s your 12. Now, if you earn 24, as this example says, you will have made you will have ended up with about 15.79. We’re going to round that to 15.8% more money in your pocket, right? Take home. So the moral of the story without getting too tied up in this chart, the higher bracket you are in later, the bigger your savings are. So a quick strategy from that respect is that anything that you do convert, one of the ways that you can look at this is say, okay, I’m not going to have everything in my Roth, but you know what I can do? If I have to just I’m going to use this example. I’m going to do a 6040 stock tobond portfolio. Do you know where I want to hold more of my stocks? In the Roth side because it gives me a much better chance at growth over those 5, 10, 15 years. So, your growth grows larger quicker, god willing, and the remainder part like that fixed income, your more conservative place, it grows at a slower rate, which starts impacting your RMD, right? So, it’s a lower RMD. So, it’s these type of subtle strategies as part of your allocation can then help you maybe mitigate some of those taxes down the road. So, that’s the savings. So, one of the things when we do on the planning tools when we’re working with our our clients here, excuse me, is that we look about look at like maybe some effective tax rates at specific periods of time, right? So, there’s federal income tax at your green barn, then your other income tax. capital gains, um just some of your gross income and and this is something you want to start doing candidly before you retire, not in a huge amount, right? So depending on how much you’re earning, this is one of the things we look at and how much your income will be at retirement and how much you’re actually going to need on your cash flow, right? So, it’s a great time to maybe utilize some of that lower tax bracket to do some conversion to put yourself in a much better position down the road. So, these are the things that we look at, right? Your future tax situation without that conversion, today’s tax situation with the conversion, right? I’m going to have to pay Uncle Sam right now. And how this affects your income taxes, those Medicare premiums, that Irma, right? And there’s that 3.8 8 net investment income tax. Um, which for households it’s uh if you’re over 250 on your income. Um, and one more thing that’s not on this slide, it’s your single versus married tax rate, right? And I’ll show you an example of that, but if you’re married, unless you’re fortunate enough to die at the same time or at least in the same tax year, one of you will continue on in a single tax bracket, right? you will end up being in a higher tax bracket most likely just because you’re single. And I’ll show you that example. So, how much income before the next tax bracket? So, income, our income brackets aren’t retroactive, right? They’re progressive in that the more you make, the higher tax rate you pay. Now, an example of that, so like standard deduction, this is the 2025 tax brackets, right? So you get your standard deduction. So in at 10% you know that 23,850. You can earn another 50 grand more and still be in the next bracket before you jump into the 22 and you can earn that 109 and so on and so forth. Let me show you the next slide which I think gives you a really cool example of this. Right? So you can earn that much and still be in the 10 in 10% bracket. you can be in that much and still be in the 12. So on and so forth. The neat thing about this, because I’ve heard folks say this, they’re saying, “Oh, you know what? I don’t want to work part-time. I really love it, but I have to watch how much I make because I’m worried about income tax.” Well, I’m going to go back a million years to my my accounting my accounting professor back in college. And he’s like, “Look, if you make 130,150, right, and you make that $1 more into that 22% bracket, you’re only paying the 22% on the extra dollar. It doesn’t go back to dollar one. So, if it’s something you need or something you want to do, um, frankly, do it. Earn it because it’s still putting more money in your pocket.” But I would say this, and to give you an example of this, remember when I talked about, oh, I have to fix my roof, right? If you have to take a vacation and you need that $30,000 because you want to go on a big fancy cruise, at least it’s something you’re enjoying. If it’s something that you have bumped into another tax bracket because you have to fix your roof, that’s just like insult to injury at that point, right? You got to pay taxes. It bumped you into another bracket and you have to fix a roof, which nobody says, “Oh, this is a joy.” or here in Houston, fix your foundation because it cracked. Um, so being able to utilize that conversion, we call it filling the bucket. So, as you can see before your conversion, right, part of that is you filled up the 10% with your income and then that next bucket of income, you’re paying 12%. And then the next bucket of income, you’re paying 22, but you didn’t quite fill that bucket. So, you’re like, you know what? I can convert some of this money now. I’ll do enough to fill that 22% bucket. So, I’ll pay it now and then later hopefully I’ll be able to save something later on some taxfree growth. So, it’s called filling the bucket. I will tell you filling the bucket. There’s some cases on filling the bucket and maybe the next bucket depending on what the next bucket is. Visually, since I have this up, it’s a really easy example. Going from 10 to 12 isn’t that big of a jump. Going from 12 to 22 kind of matters. 22 to 24 isn’t that big of a jump, but going from 24 to 32 is a big jump. So, we always want to be cognizant of how much we’re going to be converting. And really, that I would say is a discussion that you have in the very beginning of the year. So, you say, “Hey, this is what we’re planning on doing. Maybe we got a remodel coming up. Maybe we have a a vacation coming up. Maybe we want to buy some property and we need a down payment.” Whatever that is. But discussing your cash flow with your advisor and maybe bringing that up with your CPA is not a terrible idea. Um, so this is something that I talked about your Medicare, right? Um, and this is the Irma, the IRMMA. So for those of you who are already retired,

uh, so someone asked about the conversion date. So that is um calendar year. So uh December 31st. So this is for Medicare. So if you don’t already know because you’re not retired yet, when you retire or turn 65 because you you should sign up before so you don’t pay the penalty for that. Um even if you’re still working, you’ll pay for Medicare, right? Your part B. Your part A is free, your part B that you have to pay for. And that is $22 at least today. That is $22.90. So, and that’s assuming you make under$ 109,000 if you’re single, 218 if you’re married filing jointly. Right now, if you go over by $1, you are welcome into the next bracket. So, if I make $109,000, I’m fine. I’m at the 20290. If I make $19,01 now my monthly premiums for that year go up $228410.

If you make the $137, right? And now I make 137 and $1, my 284 goes to 405. So you can see it’s quite the penalty depending on how much your income is. Now, don’t get me wrong. If you need the income, you need the income. But one of the things on RMDs is that IRA starts getting larger and larger. And I can’t tell you how many clients I’ve said, well, I’ I’ve heard say, “Man, you know what? We need some of this, but we didn’t need as much. We didn’t start converting. Got them later.” So, this isn’t right or wrong. I would say if there’s a glass half full, it is one of the uh problems of having money, right? Um, but you can maybe mitigate some of that and being aware of that is being able to control how much your taxable income is down the road. Um, bigger Roth conversions in years with an unusually low income could be beneficial. So, if you’re a business owner, so this is kind of a smaller niche, right? So, business owners that have really big expenses, uh, some a year where you’re low on sales, uh, we have some losses that you can write off or some high medical bills. That’s kind of a time where you say, “Hey, let’s convert a little bit more because I’m in a lower bracket.” Or, you know, after retirement, but before you receive your social security benefits, right? So, so for example, you might say, look, I’m going to retire at 65 or 66, but I’m not going to take my social security until 67 or 68 or 69 or 70. Um, maybe I’d like to utilize that time to maybe do a little larger con conversion, but these are just some of those scenarios. So, the original owner, right? Moving on to the original owner here. Um, your minimum distributions for IRA are at 73 unless you’re born age 60 or later or I’m sorry, born in 1960 or later, uh, then it’s going to be 75. So, now this is important, right? Because if you don’t take your RMD, you can take a penalty of 25% on that. So, oddly enough, it’s actually lower because it used to be 50% a few years ago, but still a 25% penalty for that is pretty hefty. You’ll still want to do that. Um, and as far as your RMDs go, we’ll give you kind of an idea of what that RMD looks like. So, if you are 73, uh, easy math, and you have a million dollar in that retirement account that you have to take out, that’s about 37,800. So, kind of as a general rule, you’re going to look at like 38 to 38 to 40 or yeah, on a million, 38 to $40,000 on your first year. Obviously, if you have half of that, like a half a million, then it would be half of that. if you have 100,000 etc etc but it’s somewhere around 4% for your first year just to give you an idea and as that keeps growing right if you were fortunate enough to have invested prudently along the way if that outpaces inflation right guess what your RMD is going to continue to go up because it’s a larger percentage as you can see the older you get the larger percentage you have to take and these tax tables go up to like 110 10 115. So you’re not going to outlive the uh RMD tables. So So be careful about your maximum deferral. And I would say I’m not sure about this one, but I mean this isn’t a vacuum, but they’re just saying, “Hey, you know, if you’re going to defer into your IRA or your 401ks, your 401ks and your IAS, you just do that traditional deferral because because I’ve talked to accountants are like, “Hey, you know, it’s going to reduce my taxes now.” I’m like, “Yeah, let’s talk about how this impacts you later.” And they’re like, “Oh, um, so that becomes a problem, right? It becomes a problem down the road. So you kind of want to get ahead of that. Maybe it’s a mix of some traditional 401k, some some Roth 401k if your company offers that. Yes, you’ll pay taxes now, but you remember that growth becomes taxfree later. Um, and this is this is one of the concerns. This is kind of what I talked about, but I think the illustration because a picture’s worth a thousand words. And basically it says this look, you have an IRA balance of a million dollars. I’m going to use a million dollars because that is easy math. Hopefully many of you are there um at age 73 and it it’s going to earn 5% a year but the inflation is 2 and a half percent. So when you look at that RMD that’s taken out, right? Two things. One, your growth is outpacing inflation and that’s how they kind of look at RMDs too, right? So what’s going to happen is you’re going to have that balance start increasing. So your amount that you’re going to have to draw is higher and the percentage that you have to draw is higher. So way again to mitigate that is start doing some conversions earlier, right? And what you can do is that’ll it’ll help minimize pushing you up into that force tax bracket. So R&D amounts, right? So, this graph that I’m going to show you in a little bit, um, it talks about your distributions being too high, right? Which is a great problem to have. I will always say this, and I’m I’m not I’m not going to say this is a negative. Nobody enjoys paying taxes, but you know, candidly, successful people pay taxes, right? So, if you’ve worked your whole life, but maybe there’s a way that we can kind of reduce some of that tax uh burden. So, let’s look at this. So, so illustration wise, right? So, this blue, the dark blue is is Bob and Mary. They’re taking their social security. So, this is a scenario where they have social security and pensions, which I understand pensions are becoming less common. I would almost say they’re at a point where they’re relatively rare now. I would say the vast majority of people do not have pensions with their current employer. So, but bear with me. So, they’re retired. Everything’s going great. It’s rainbows and bunnies. The red line is what their total expenses are. So, they’re chugging along. Their expenses are covered by their social security and then they have their pension. So, it gives employ money and then they have to start taking their RMDs, which they don’t necessarily need. So your expenses go up because now you have to pay taxes on those expenses, right? And as you can see, your expenses continue to go up because that RMD continues to get larger and then it adds to your taxable income. Now this is that example, right? So one of the things they can do is they’re looking at cumulative taxes over that period of their lifetime. Um and this is one of the things, right? We make these assumptions. are like what would taxes probably be or even based on current tax brackets. Now, if you base it on current tax brackets and the tax brackets go up, it’ll be a higher savings. If they go down, the savings will be less. So, that’s why we look at it. For some folks, we’ve looked at it. We’re like, “Hey, look, I don’t think it’s a great idea to um to do any conversions and kind of this is where the reason is. You’re not really looking at the savings.” Um but it depends and it won’t impact your Irma. So, one of the calculations that we run as part of our planning are Roth conversions, right? So, you might say, “Hey, look, you know what? I want to convert 60,000 over the next eight years. Um, and let’s see what that looks like, right? So, in the very beginning, you’re going to be paying taxes on those conversions, right, over the next eight years. Um, but then you and you start looking at your income tax and then you start looking at the reduction in taxes. And what happens there is because that Roth keeps growing. So it reduces what might have been your taxable income on your RMDs. So based on those base facts, right, it reduced your taxes on that same scenario 140,000 almost 141,000 over the course of their lifetime, right? Um, and the assets themselves because of their taxation, the overall assets are about 800,000 more. Now, this is really obviously if they passed away, it’s not really going to benefit them much, but it’ll benefit their beneficiaries. And if you have a choice of do I want to give this to my beneficiaries or do I want to give this to the IRS, more often than not, most people would rather give this to the IRS. I will tell you additionally when you’re talking about beneficiaries, um we’re going to talk about surviving spouse here because this will matter too, but beneficiaries later is that there’s a very good chance that our kids are in a better in a higher tax bracket than we are when we’re retired. But moving on to the spouse. So this is Adam and they file jointly, right? So they’re married and filing jointly. So their total income is they have IRA pension income 58,841. Ann’s getting her social security. She’s getting 30,000 a year. Adam also gets that. So they have to pay taxes a little over 8,800. Now their access after tax income is 110,000 just like magic, right? It worked out really easy for illustration. So that puts them at a 12% tax bracket. So this is where Roth conversions kind of matter. So, Adam passes away. So, and

it’s unlikely that your your expenses are going to cut exactly in half, right? So, we’re going to assume the income needs are about the same or even if they go down a little bit, they’re not going to go down by half. So in this scenario, what we say is, well, Anel gets her social security, but she doesn’t get Adam’s social security. Now, there’s a calculation where she will get some survivors benefit, but this makes it much easier just as an illustration. So, she’s going to have to take more money out of her IRA to make up for that income shortfall, right? So, what happens here is her tax burden went from 8,800 to almost 19,000, right? for that same after tax income. Now, that tax bracket went from 12 to 24 because she’s filing single now. Same income but a whole lot more taxes. So, one of the things that we can do is if you’re married, you start looking at Roth conversions earlier so your tax burden doesn’t pass on to whomever the surviving spouse is. So, when they’re filing single,

this is a really good way of viewing it in that if you look at this top one here, it’s your married filing jointly. This is what tax brackets look like. Single filing jointly. So, I’ll use the blue because it’s kind of easier. If your income is here, you’re 10 to 12, but you’re married right there. All right. And then if you go here to here, so if you’re making about this income, right? And then you have to go here and you’re making pretty similar income, you could be in a little higher bracket. So, you always want to be careful or at least mindful if if you’re married. This is something you definitely want to look at. This is something you definitely definitely want to look at if your spouse is considerably younger. Even if you’re the same age, women traditionally live longer than men. Um, beneficiaries. So, moving on to beneficiaries. And we’re still on time, so we’re okay. We’re going to go through this kind of give you an idea. So, some of the stretch modifications. So, she has taxable income, right? You inherit an IRA, you have to take that out over 10 years. And what does that do to your income? Because the old stretch rules, you can’t do it over your lifetime. You have to do it over 10 years. So, you get to add 123,000 to your income. So, you can’t take it out over your life expectancy. You have 10 years. So, your tax bracket changed dramatically. And you remember this, right? So the beneficiary is assuming your children. Hopefully your children are more successful. That’s what we always wish for our children. So they are making more money than you are. So they are in a higher tax bracket. And with that said, now they get hit for more of a tax bracket. And I have had customers say this. They say whatever. It’s still free money. And I’m like, you’re right. It is free money. But the choice is this. Do you want them to have that money or do you want to give the IRS that money? And there is no right answer, frankly, because it’s a preference. But I have I’m not a huge fan of the IRS. So, if we don’t have to pay taxes or I’d rather see my beneficiaries get that, I’d rather them get it than the IRS. And I would not consider myself unpatriotic because I do a lot for charity and I love this country, but don’t love the IRS. So, one of those things it can do is it can change their bracket and bump them up. And that is one of the concerns, right? So, you always want to be mindful of even if your spouses are the same age, do you have beneficiaries that are not charities, right? Because if it’s charities, that won’t matter. But if your kids, even though they might feel like a charity sometimes, you don’t get the tax deduction on them as adults. So, so the taxes on that $1 million inherited works out to an extra $311,000 in taxes just because of what it did to the tax brackets.

So, one of the things that you can do and one of the things that we do for our clients is we say, “Okay, hey, you’re a lower tax bracket. Let’s talk about your kids. They’re successful. They’re a doctor. They’re an engineer. You know, they’re an oil and gas. I’m here in Houston, so a lot of people are in oil and gas here or on the medical side. um we’re in a lower tax bracket, you know, so let’s do some conversions. Let’s do some conversions out of our traditional IRA. So when they inherit it, they’ll get a smaller amount, but they’ll also get it in the Roth. So I paid those taxes at a 12% bracket or whatever bracket I’m at. So when my child, son, says son here, but my daughter, son, daughter, whomever, when they get it, they’re in a higher tax bracket, but they owe zero because it was a wroth. So, so this kind of gives you like liquidity values on beneficiaries if they converted, right? And then you come over here and you’re like, well, how about if we did some conversions? The further you go out, the moral of the story is the further you go out, the greater the tax savings when it’s passed on to your beneficiaries. So, obviously, it doesn’t reduce liquidity, right? you’re still there, but you know, there’s this break even side. Um, the longer you go out, the bigger the benefit. So, the moral of the story is you have really successful kids, do it earlier. And frankly, if you don’t want to pay the taxes, ask them if they want to help you pay the taxes, right? They can gift you some money to help offset that because that’s going to be their legacy later and they can get that tax free. Um, so again, Roth conversions, this is an area we’re like, hey, you know, let’s do some money at over a certain period of time. And that’s the filling up the bucket. And what does that look like? You’re in this tax bracket, right? Where where you’re in that, oh, what would that be? The 10, 12, like the 22% bracket. So for the first few years, what does that look like? Those are taxes right there. the red, nobody loves that. But if you see down the road, you look at the reduction in taxes down the road. And this actually does not even include the reduction in taxes to whomever your beneficiaries are, right? Because they would actually most likely be paying at a higher tax bracket than you are at that point. So with that said, quick summary. So gives us a few minutes to uh ask any questions or talk about kind of what’s going on out there. What future tax environment, it’s uncertain, right? But it points to higher taxes. But I can tell you spouses, right, go into a single tax bracket. Your children, if you have children, they’re probably in a higher tax bracket than you are. So Roth IAS are certainly the most taxefficient asset you can leave to your heirs and you can become a little more aggressive if you know that’s going to be down the road. Look, we’re here to help. We can answer your important questions. We can help you come up with a withdrawal strategy and we can decide throughout, you know, whether you use your IRA, whether you use social security. This is part of our planning. We are fiduciaries. I’m a certified financial planner. Um, evaluate your employer plan and kind of see where you’re at and maybe we can look at some uh Roth conversions and just kind of help you pass some of that money to your beneficiaries.

So, these are some of the things that we can do, right? We obviously can help through some of those questions that are answered, right? You don’t know what you don’t know. You know, taxes, cash flow, maybe we can ask a question. You’re like, gosh, I never even knew I needed to a ask that. Um, some of the estate planning coordination. We have no fee products out there. Um, we have regular retirement strategies as well. Um, lifetime income strategies, some dividend portfolios. So, we actually have some very lowcost passive portfolios. But I would tell you, you wouldn’t come here just because it’s cheaper, right? Our strategies and we have things that you can do that you normally can’t do in the retail side. I mentioned this if if you need some basic estate planning. If we’re managing uh some of these for our customers here, we have some of the basic planning that we do that without cost. Um even if you’re not, we actually have some that the costs are actually still less expensive than you do this than you doing this through an attorney out there. It’s one of our third parties. Um, so look, I want to thank everybody for attending. So, we’ve come to our Q&A part. We have some questions out there already. So, I’m going to put up a one question survey on whether you actually want to have a call from me to talk about a specific situation um or if you just have a general question or you want to schedule some time to maybe look at some actual well planning if you haven’t done it. We are a vastly underutilized resource here at the credit union. You can access my calendar directly to that um through that QR code. Let me put up the poll and then we’ll get to the Q&A. So, some of the questions out here. So, you rolled over prior a prior 403b to a traditional IRA. You’re over the Roth income limit. Would a traditional IRA prevent me from doing a backdoor Roth? No, it doesn’t. And someone else had a question. Um, and someone else had a question on what that actually looks like. So, essentially a backdoor Roth is you would contribute to an IRA because there’s no income limits on the contribution comport portion of it, right? It’s just the deductibility. So, easy math. I put in $8,000 into my IRA and then I do a conversion immediately into a Roth. So, what’ll happen is I will get a $1099 later that said, “Oh, okay. You did an $8,000 conversion.” But since I didn’t get the deduction on that, I or my CPA will file an 8606. And I’ve had push backs from accountants that did not know this that I just explained it to them and said, “Hey, nope. This is what I do every year. You just file the 8606,” which basically means I had a non-deductible IRA that earned me $0. So, that is how you do the backdoor Roth. uh in short uh but hopefully candidly if you have if you’re still working and you have an employer ask them if there’s a Roth option that’s an easy way to do it because you don’t have income limits on that and you can put away more money so you still pay taxes on it so that part’s kind of a bummer this year but remember you’re actually doing this as a long-term strategy down the road uh let me see let me couple here I am 60 years old and not working I’m currently withdrawing money out of my IRA to live. Does it make financial sense to do a Roth conversion? Maybe. Um, so what we would do is what we would do is we would take a look at your cash flow. So if you are not one of the yeses, go ahead and change that to a yes or take that QR code and just schedule time and we’ll take a look at your specific situation, right? Because again, the importance is how much you need, how much you’re taking and how much you need, right? Um, you still want to be able to live your life because you’ve worked your entire life for that. But by all means, you certainly want to do that. Um, we can we discuss about charitable gifts. Yes, we could, but there’s not enough time. I am sorry about that. But in short, there are some things that you could use for some charitable gifting to reduce your income even in your RMDs. Uh, you can do a direct contribution so it satisfies that RMD without having without having to take a hit on that. Uh, what else do we have?

I think that covers it. You guys had some great questions. Thank you so much for your participation. This always makes this a lot more fun for me. Um, I’ll stick around for a couple of minutes after after we sign this off. So, if you have some questions still in the chat, I’ll still be around for a couple of minutes. But again, thank you so much. I hope everybody has a happy and safe Fourth of July. If you are into World Cup, go USA. Uh, and we will see you on future webs webinars. Take care and be safe. Bye now. Oh, hey, just quickly. So, it looks like I’m sorry, there are a couple of questions. We have some folks still hanging out here. Uh, it look like Judy, it looks like you’re still on. So, there was a question on some emergency savings and you have to do a new roof. Is it better to do a Roth conversion first? No, not if it’s an emergency savings. So, I can tell you I’ll give you an example of what I’ve done. So, I’m going to need a new roof in the next few years. So, I’m probably going to try and pay that before do that before I retire just out of my cash, right? The emergency part. Um, but but the short answer is depends on how much of an emergency savings you have in your cash flow. If you’re not one of the yeses, go ahead and change it and we can look at your specific scenario to say yes, how much is that roof cost? How much you have because you don’t want to take your emergency savings because you might need an you might have an emergency, right? So, we can talk a little bit about that. um

uh a couple 401ks. Again, we can look at your cash flow, right? And what kind of impact your age, what kind of impact that might be have on your tax bracket. Let’s see.

Is he still on here? He is. Oh, he is. So, Gary, um so there’s a question on having money with Schwab. Uh, I would say that look, you can always work with a pro. Look, we would love to earn your business here at at the credit union and Aerys. We’re a division of that. We are the financial division. I’m a fiduciary. The end of the day, I’ve been doing this 30 years. Um, it would be up to you. Whatever you’re you’re more comfortable with. I can tell you that uh they’re not necessarily mutual exclusive. You can go ahead and ask us about it and see what we would look at and then you kind of go from there. But we would love to earn your business, but if you haven’t figured out, we’re pretty low-key about stuff. So, because we’re all members of the same credit union here. So, I think

yes, we do handle couples who are thinking about filing separately. Um.

Ah, yeah. No, that makes sense. Yes, we do handle that. And as a matter of fact, when we do our planning, right, we look at that. So, oddly enough, you would be surprised how common it is, and I think it’s more common now than it used to be, where there is a ours, there’s ours, and individually, right? It’s a mine, yours, and ours. So, we even run plans separately. Uh, so it’s one of those things. I don’t know if it’s cynical. I just say it’s more pragmatic. So that way you don’t have to decide what each person is doing. You’re saying, “Hey, look, this is my goal.” Um, I think it’s a very pragmatic way of looking at it. So yes, actually that’s how my assets are run together. Um, it’s ours, but she has power of attorney and everything else. So with that said, it allows me the flexibility to do whatever I am as far as how I’m structured. And you are retired on that. So yes, we could still take a look at that. Even if you’re retired, we’ll still look at your cash flow and your tax bracket. how much how much room you have in your bucket, right? Whether you’re going in the 12 to the 22 or the 22 to the 24. All right, I’m trying to see if there’s any questions. I love the questions. This makes so much easier so you don’t have to hear me just drone on and on.

Oh, okay. So, this is one. Um, if my spouse retires in January and you exceed the 218, I understand that I have to pay Irma in 2028. That is correct. Caveat, look back. Okay. So, yes. So, there’s a question. So, we didn’t talk about this on the Irma, but as far as your Medicare calculation, they use your income from two years prior. So there is not a guarantee but you can request a recalculation or you can and and um or a concession um in that you’re saying hey look I know this is my income but I am retired would you please use this current income instead so that’s actually an option out there uh and yes that made that made sense that was actually a really good question I should actually add that as a slide for future uh because it’s not necessarily stuck that you are that you have to go from two years ago if if there’s something significant change like you’re not working your job has changed or you retired um you look at that I think all right I think I covered the questions and they were great questions

all right I think I got them All thank you for your patience um and thank you for attending. So everyone have a great night and we’ll see you on future webinars. Take care. Bye now.