Episode Transcript
[00:00:00] Speaker A: Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
[00:00:27] Speaker B: Welcome to retirement you way with Amerilife of Central Florida, the show that puts you in control of your financial future. Your hosts, Bradley and Madison Hardin, are a trusted husband and wife team dedicated to helping you design a retirement that fits your lifestyle, your goals, and your vision for the years ahead. From smart income strategies and Social Security planning to protecting your wealth and living life on your own terms, this is the place where financial clarity meets coastal confidence. Whether you're just entering the retirement red zone or already enjoying your golden years, Bradley and Madison are here to guide you every step of the way. This is retirement your way. Let's build the future you deserve.
[00:01:11] Speaker A: Hello, and welcome to retirement your way. I'm Matt McClure here with you. Really do appreciate you being a part of the show this time around. And I'm here, as always with Bradley and Madison Hardin from Amerilife of Central Florida. Hi. And thanks for being here again.
[00:01:25] Speaker C: Hi.
[00:01:25] Speaker D: Thank you.
[00:01:26] Speaker C: Hello, Matt. It's great to be with you.
[00:01:27] Speaker A: Great to have you as always, because we've got some great wisdom to share from you all. I'm just kind of here along for the ride, you know, I mean, you guys are the ones who are really sharing the wisdom with. With folks, and you talk about issues dealing with retirement on every episode of the show. But we do that because that's what you do each and every day. And if folks maybe have just joined us for the very first time and they said, you know what, what's going on with these people? Tell them about the work that you all do each and every day.
[00:01:58] Speaker D: We, we have A total of 17 years combined experience helping our clients safely navigate retirement. And so our main focus is Social Security, income planning, estate planning, financial tools and things of that nature.
[00:02:15] Speaker C: Yeah. And we really take an educational approach. You know, we want to make sure that we educate people about what could happen in retirement and. And ways to avoid common mistakes that we've seen in our time working with retirees.
[00:02:29] Speaker A: Yeah. And that is, I think, key because it's not just like you want to go in and meet with somebody who, if you're a retiree, pre retiree, go in and meet with someone who's just going to tell you what to do. This is what you have to do. No, you got to be on the same page. And the client needs to understand what is happening and what their options really are and be educated about it.
One of the big topics I know that a lot of people probably have questions about and concerns about would be taxes. I mean, that's the big topic on the show today. It's everybody's favorite topic after all, to talk about is taxes. But unfortunately, you know, people have a partner in retirement and that partner is the irs.
[00:03:13] Speaker C: Talk about that.
[00:03:14] Speaker A: Because I mean, I think a lot of people don't necessarily realize if you've got taxes that or if you've got accounts rather that you have not paid taxes on which a lot of things, your 401k, your IRA, whatever I be you're going to be taxed on that in retirement.
Especially something, you know, like one of Those, like a 401k for example, that money is all put in there pre tax.
So Uncle Sam has not, you know, dipped his, his hand into that pot of money just yet. So that's coming when retirement arrives.
[00:03:44] Speaker C: Right. And one of the jokes we like to make is, you know, when we sit down, how many children do you have? I've got three children. Well, I'm here to tell you today that you actually have four. Three, you birth and Uncle Sam.
So. And one of the things that we try to help our clients with is tax efficiency because you, it's not an idea of getting out of taxes, it's the idea of being more efficient with your planning. And, and we don't mind paying taxes. That's fine. That's how our economy grows and they build things. And, and so the theory is taxes are never going to go away. But is there a potential for me to be more tax efficient now?
And also if I'm interested in leaving a legacy, what are good ways to be tax efficient as I transfer my estate to my loved ones?
[00:04:31] Speaker A: Yeah. And it's about, you know, paying your fair share. Right. But not paying, not leaving Uncle Sam a tip in the meantime. I'm sure a lot of people probably will come in and don't even necessarily know the different mix of accounts that they have and what the sort of tax consequences are going to be. Right. And I mean even on something like Social Security, for example.
[00:04:52] Speaker D: Right. And like when people are still working and also drawing Social Security, it's going to make a difference on what sort of taxes are owed or taxes on your pension, taxes on your deferred retirement accounts. These are all things that can vary state by state and depend on how much income you're bringing in how much of your benefit is going to be taxable.
[00:05:15] Speaker A: Yeah. And that really does hone in on, you know, the whole point of things today really, is that if you are one of those people who, you know, you have questions about what is. Are going to be the, maybe the tax consequences of certain moves that you could make, or if you just don't really even know where to begin with a plan, for example, and you're worried about taxes, as we all kind of should be for the reasons that we've been mentioning here and more, that you got to work with a professional, you've got to know what is what in. In the future and, and what the consequences are going to potentially be, and then you can work together with that professional to make a plan. You know, as you were saying, it's all about education, and then after that, it's all about working together.
[00:05:58] Speaker C: Right, right. And because sitting with somebody that has a holistic approach can give you advice on things that you may not have been aware of. For example, you know, part of being tax efficient is what if you're drawing too much income that is taxable, that could very well make your health care more expensive, and you had no idea that having a higher income was going to make your health care cost you more. So that's one of the things that we see and we'll explore more as we meet.
[00:06:24] Speaker A: Yeah. And that, you know, talking about health care, health care is going to be one of the, if not the biggest expense in retirement that people will have to deal with. So it's already a heavy burden. You don't want to make it more expensive.
So as we say a lot, all of these different things that seem like they're sort of separate, like aspects of your financial life that shouldn't have an effect on each other, really do. You know, they're all like this. They're all intertwined and really do have a big effect on each other as you go along. All right, so as we go along, we're talking a lot about, as I facetiously said earlier, everybody's favorite subject, taxes.
But we've been talking in the first kind of part of the show here, we were talking about, you know, the different sort of potential ways that taxes could be a burden on us in retirement, especially if we're overpaying. We don't necessarily understand the tax consequences of the different types of accounts that we have and all of that, you know, how much of your, even your Social Security is subject to tax kind of touched on that a little bit. Let's spend this next chunk of the show though, making people smile a little bit more, I feel like, because we're going to be talking here about the two types of tax free investments that people can take advantage of. The first we'll go through here is a Roth account, let's say like a Roth ira, for example. That is, you know, something that we're very glad that Uncle Sam has given us the opportunity to take advantage of. Right?
[00:07:52] Speaker C: Absolutely. Yeah. And what we see there is, and if you don't know what that is, it's simply an IRA account that you can open that you put money that has already been taxed into that plan.
So yes, you don't get that initial tax savings during the year that you contribute. However, all of the growth and all of that money grows tax free.
So when you're eligible or when you would like to start taking distribution from that, you don't have to pay any taxes. And so what people like there is that, yes, my money is going in that I've already paid taxes on. But what we see a lot of people have happen to them is they're paying taxes on the gains.
And so if you position it correctly, and you can really have that Roth IRA grow over the length of getting ready to retire as you start drawing that income out. There's no taxes on that. And it also doesn't have what we consider in the industry or what you may know of as a required minimum distribution.
So the other accounts, whether the 401 IRAs, 403BS, Uncle Sam has told you once you reach a certain age, you're going to have to start taking money from those accounts. And the money that you do take, you owe taxes on. So as we ponder, are taxes going up or going down as we age and we get through retirement?
[00:09:13] Speaker A: Yeah, and that's the thing too. I mean, a lot of economists out there say that overall our taxes, just because of there's, you know, national debt considerations and all that taxes are going to have to go up in the future. So would you rather pay taxes at a lower rate now? Actually, the taxes are really at historically low rates now. As we look back at the, at the numbers over the decades, they're historically low numbers. So would you rather pay taxes now at that lower rate or would you rather pay taxes later at potentially higher rates and who knows how much higher? My crystal ball is broken, so I don't know.
But it could be significantly higher. So would you rather pay now or later? I think that a lot of people would probably rather pay it now if they knew that the likelihood of taxes.
[00:09:58] Speaker D: Right. And I think that's why the Roth IRA conversions and things have become so much more popular right now. And we're seeing a lot of our clients really take advantage of that. Although there is a limit as to how much you can contribute. And there is some theories out there that they may potentially reduce that in the future. We haven't seen that yet. So we've seen a lot of money going into those sorts of accounts.
[00:10:20] Speaker A: Yeah. And so that is another example of why you need to talk to the people who are the professionals in this particular arena of your life. Right. I mean, if it's difficult for you, like if you're sitting there saying, okay, there's a lot that goes into this. Yeah, there is a lot. And you probably need a helping hand along the way. So take out your phone, either call the number that's on your screen, go to the website that's listed there on the screen, or scan the QR code and you can take advantage of a free consultation, free of any cost, any obligation. Bradley Madison will be glad to sit with you and help you out with coming up with a plan that's going to be more tax efficient, among many other things, for your retirement years.
The other type, so we talk about Roths. The other type of tax free investment that Americans can take advantage of now is, wait for it folks, life insurance, believe it or not.
And people might say, okay, well I thought life insurance was just for the death benefit. Like and, which is not a bad thing at all. Like, and you get tax free death benefit for my beneficiaries after I'm gone. Great, they're taken care of.
But at the same time, there are actually advantages to certain types of life insurance that you can take advantage of while you are still alive.
[00:11:37] Speaker C: Right. And one of the most common, you know, life insurance strategies we see that for people looking for tax free income in retirement are called indexed universal life policies.
And what that means is, you know, with a life insurance, number one, most importantly is if you pass away at any time, that death benefit is payable to your beneficiaries tax free.
The other part of a universal life or index, universal life is cash value.
And so as you contribute to the plan, you know, a different way to look at it is instead of paying a premium, which is the old school, it's I'm making a contribution into my index universal life.
As that money grows, it's tied to an index similar like the S&P 500. So not only are you providing a guarantee that if you were to pass away, your beneficiaries receive an inheritance. Secondly, you're able to grow a tax free bucket of cash that you can then use in retirement to live on.
[00:12:40] Speaker A: Yeah, and as they say, you know, the best kind of money is free money. The second best kind of money is tax free money.
So that is what we have given you a glimpse of Today, folks, the two kinds of tax free investments, Roths, particularly Roth IRAs we're talking about and life insurance and those policies that we were just addressing here. As always, you can give Bradley and Madison a call, 386-977-9684. That's 386-977-9684. You can also visit plan retirement your way.com that's plan retirement your way.com. much more of retirement your way still to come.
[00:13:19] Speaker B: Hang tight. Bradley and Madison will be back in just a minute to help you keep that retirement plan on track.
[00:13:26] Speaker E: I'm Jim Taraboki here for the Retirement RAD Network powered by Amerilife. Most people spend decades saving for retirement, but far fewer spend time planning how they'll spend in retirement. According to a recent study by CNBC, 64% of Americans are more worried about running out of money in retirement than they are of actually dying. Andrew Big, senior fellow at the American Enterprise Institute, tells CNBC that growing fears about retirement finances are pushing more Americans to keep working later in life.
[00:13:56] Speaker A: We have more options for extended work lives today than we've ever had before and Americans are taking advantage of them.
[00:14:01] Speaker E: Without a clear retirement budget, it's easy to go off track, either by spending too much too soon or holding back out of fear and missing out on the freedom you've earned. At a recent TED Talk, award winning financial planner Amir Roche Lima revealed how true freedom and retirement budgeting go hand in hand.
[00:14:17] Speaker C: Yes, you need to know your numbers, but knowing how much you need to ensure your dream retirement becomes a reality is completely intertwined with knowing what your dream retirement looks like in the first place.
[00:14:31] Speaker E: To help keep your retirement years both secure and fulfilling, here are four tips for navigating your budget. First, get clear on your monthly must haves. We're talking about essentials, Housing, health care, groceries, transportation. Next, think about what makes retirement meaningful for you. Travel, picking up a new hobby, helping the grandkids with college.
Then take a close look at your income sources, Social Security, pensions, investment withdrawals. And finally, check in with your budget. Every year, life changes. Your priorities might too. A little regular review can go a long way in keeping you confident and in control. Retirement budgeting isn't a set it and forget it moment. No, it's a new chapter. And like any good story, it needs a solid outline. For the Retirement Radio Network, powered by Amerilife, I'm Jim Tarabokia.
[00:15:21] Speaker A: Welcome back to Retirement your way. I'm Matt McCl here alongside Bradley and Madison Harden with the Marilife of Central Florida. It is game time.
[00:15:33] Speaker B: Come on down as we test your financial knowledge in Right or Wrong.
[00:15:48] Speaker A: And I know you've got your game faces on. Oh, you can tell it's right or wrong. That's the name of the game this time around. And it's actually our favorite financial game because I get to test their financial knowledge and yours at the same time. I'm going to present a statement here of, you know, something of a financial nature and they're going to tell me whether that statement is right or wrong. You do the same as you play along. We'll see if you've been paying attention this time around. All right, so this episode of course, all about taxes. So let's get to the tax edition of Right or Wrong. With this first statement, you can structure your retirement accounts to deliver tax free income during retirement.
[00:16:30] Speaker C: That is right. So there are two vehicles that exist that will allow you to make withdrawals on a tax free basis. The most common would be a Roth ira. So with the Roth IRA you contribute post tax dollars, so dollars that have already been taxed.
And the benefit is all of the growth inside that investment is non taxable. So when you're in those retirement years, you can withdraw from those accounts and owe no taxes.
The second vehicle would be through life insurance, surprisingly enough.
And a product called Indexed Universal Life will allow you to make contributions.
That contribution will be invested based on the stock market, so for example, the s and P500.
And when you're ready, you can actually distribute that cash value back to yourself as tax free income in retirement.
[00:17:21] Speaker A: Yeah. And that's again one of those things that people might be finding very eye opening and saying that, oh, life insurance and retirement. Yeah, it can actually be a thing that can be beneficial to you there. All right. Number two, there are currently no taxes on your Social Security benefits.
[00:17:41] Speaker D: That is wrong. So depending on your other sources of income, up to 50% of your benefit can be subject to tax.
[00:17:48] Speaker C: Right. And then that legislation was passed in 1983 and then in 1994 they increased that up to 85% of your Social Security benefit can be taxed again like masses had based on your other income sources.
[00:18:04] Speaker D: So it's really just specific to each individual and couple. And that's something that we take a deep dive into when we're doing our planning.
[00:18:11] Speaker A: Yeah, because you don't want to be, you know, setting up a part of the plan. We've talked about this before, how everything is related. Like you don't want to set up one part of the plan and that's going to have negative tax consequences on another portion of it. You've got to look at it in the big picture.
[00:18:25] Speaker D: It's very personalized if you're still employed, but you're also drawing it's going to differ from someone who's full retirement age and so on.
[00:18:32] Speaker A: Yeah, yeah. All right. And that's the importance of doing that customization as you're talking about. All right, so here we go with our next statement.
Pre retirees ages 50 and older can contribute more to a Roth IRA each year, allowing them to catch up and increase their retirement savings.
[00:18:51] Speaker C: That is right. And so if you're over the age of 50 this year, you're allowed to contribute up to $8,000 into your Roth IRA to help get that jump start on your retirement. So therefore you can then distribute those funds back to yourself tax free in retirement.
[00:19:08] Speaker A: And a good thing to do for people who might feel like they're maybe a bit behind, you know, on, on their retirement plan, being able to do those sort of catch up contributions and contribute more than just your average, your average person out there who might be slightly younger and, and have time more on their side. If you want to do, you know, contribute those extra dollars, then those can just grow and grow for you and you'll be better off right in your retirement years with tax free income.
[00:19:34] Speaker D: Right. It's never too late to start or to catch up, rather.
[00:19:37] Speaker A: Exactly, exactly. It' too late, never too early to get a plan in place. There are options for everybody out there. All right, here we go. If I have a 401k or an IRA, that is the same thing as having a retirement plan in writing.
[00:19:54] Speaker D: That is wrong.
So a 401k is a great thing to have as sort of your nest egg for saving, but it's not going to be your whole retirement plan. And it doesn't exactly outline what your income is going to be able to be once you're no longer working or in any way should be a full plan for your retirement.
[00:20:15] Speaker C: Right. And there's many aspects to a retirement plan. So yes, that is an instrument within the plan. But a plan speaks More to what's going to be my income? What are my expenses? If something happens to me and I pass away too soon, who's going to inherit these accounts? So while, yes, it is a retirement vehicle, it is not an actual retirement plan.
[00:20:37] Speaker A: Yeah. And then on the like, kind of the flip side of that sort of illustration, you were just mentioning, if I live longer than I think I'm going to, am I going to have enough income to last me entirely? You know, if I'm 120, you know that, am I going to have income for that entire time?
And you can't just leave something like that up to chance.
You need to actually have a plan. Wishing, hoping, thinking all of that is not a plan. Just like having a 401k or an IRA is not a plan, it's part of it, but you've actually got to have the details in writing. I would say also, you need to work with some professionals who really know their stuff, like these two.
And so you can get that retirement your way. Right.
[00:21:20] Speaker C: Right.
[00:21:21] Speaker A: It's the name of the show, folks. All right, one more here in Retirement yout Ways edition of Tax edition of Right or Wrong this time around, it is a financial professional is just after my money and won't be focused on what's best for me.
[00:21:37] Speaker C: That is wrong. So we have a fiduciary responsibility to our clients to act in their best interest, not ours. So when we sit down and when we meet again, it's a very customized educational approach of what's your income? What are your expenses? What do you want your retirement to look like? Because, again, it should be your way.
[00:21:57] Speaker A: Yeah, it's definitely not a situation where you're just trying to sell something. You know, step right up and get your snake oil, folks. No, that's not, that's not it. And you are really and truly taking people's individual situations into account and doing what is best for those particular situations. And if you folks watching today would like to get a plan in place for yourself, you can give them a call at 386-977-9684, or you can visit planretirementyourway.com that's planretirementyourway.com or 386-977-9684. This is retirement your way with AmeriLife of Central Florida. Thank you so much for being a part of the show throughout the show today. Really do appreciate your time because we know how valuable it is after all. I'm Matt McClure here alongside Bradley and Madison Hardin With a maral life of Central Florida. And you know, we've covered a lot of territory talking about taxes today. Everybody's favorite subject to talk about, especially though today really, because we've been talking about how to be more tax efficient in your retirement years.
What's one big kind of takeaway here from this episode and this topic that we've been discussing?
[00:23:11] Speaker C: One big takeaway I would say, is there are types of accounts that you can contribute to as you get ready for retirement that can provide you tax free income. So everybody does know about a 401k, 403b which will eventually become an IRA, that money is all tax deferred, meaning you have not paid taxes on it. And so as you start to draw that out, that's going to be counted in your income, which could very potentially make your Social Security benefit be taxed up to 85%.
Now the two types of tax free investments that you can contribute to are Roth IRAs and permanent life insurance.
[00:23:53] Speaker A: Yeah. And that's, I think one of the biggest surprises probably for a lot of our viewers from this episode is that, wait, I can use life insurance for something else besides a death benefit? That's kind of crazy talk, right?
[00:24:04] Speaker C: Yeah. And most people say, you know, it's death insurance. Well, actually it's been redesigned to not only provide a death benefit, but to provide the person that's making those contributions have some tax free benefits in retirement as well.
[00:24:20] Speaker A: Yeah. And that's very, you know, I think eye opening, as we say, for a lot of people, that there is more than one use for a lot of these things. And, and as a matter of fact, I think that is true of a lot of the different concepts that we talk about on the show.
It's not something that is just going to say, okay, I just want to take care of the income side of my retirement, I just want to take care of the accumulation side. Or I just want to make sure that I have a plan for long term care, any of those things, or tax efficiency. I want to make sure that all of these things are taken care of. And that really is what you all do on a daily basis. Right. Is look at the picture holistic way.
[00:25:01] Speaker D: And we try to just help our clients understand what their tax implications are going to be now, but then also in the future how that may change. And like Bradley said about your needing to take required minimum distributions in the future, how that's going to affect your overall picture as well.
[00:25:20] Speaker C: Right. And we see that, you know, there's a potential where if you start drawing and having a really high income, your healthcare that the government provides for you could go up as well. So we try to anticipate those future expenses and create a plan to be as efficient with taxes as possible and to make sure that you have retirement your way.
[00:25:41] Speaker A: Yeah, efficiency is key, especially when it comes to taxes in retirement, when it comes to the fees that you're paying, which a lot of people don't even know how much they're paying in fees for their plan. And so that's where you guys come in. And really, I mean, in all of those different aspects that we've been discussing, not just the tax efficiency side, not just the fee efficiency side, not just the income, not just the accumulation, but as I say, all these aspects. So if someone reaches out, let's say they scan the QR code that's there on the screen right now, or call the number or go to the website and request that initial meeting. What's the process like after that?
[00:26:18] Speaker D: Our initial meetings are very informal. It's a lot of questions, lots of answers, sort of just getting on the same page with our clients and trying to build that relationship from a personal level. As we are both local native Floridians, we grew up here, we understand what retirement looks like for our clients. And so we just try to get face to face with people initially and you know, kind of take the pressure off. It's not intimidating meeting with us at all. We just try to be that one phone call away, insurance representative, an agent, financial professional, all those things in one that can sort of help our clients from a holistic angle.
[00:26:59] Speaker A: Yeah, all encompassing. And of course working with people to come up with a plan that that's right for them because it is customizable. Right. It's not. That's not a one size fits all thing at all.
[00:27:09] Speaker C: Right. And as you said, if it was one size fit all, it probably wouldn't fit either way. So again, depending on your vision for your retirement, and from our expertise meeting with pre retirees and retirees for over 17 years, we're able to give you a little bit of peace of mind to make sure that your course is set to the direction you want it to go.
[00:27:29] Speaker A: Yeah. And that is really what it is all about, getting a retirement your way.
That's why the show is called what it is. So if folks, if that sounds like it's something that is good for you, that you need a second set of eyes on your plan, if you're concerned about the amount of taxes you might be paying in your retirement years or any of the different topics we've been discussing here on the show. And give Bradley and Madison A Call 386-977-9684. That's 386-977-9684. You can also visit planretirement your way.com that's plan retirement your way.com well, Bradley, Madison, thank you again for being here and sharing your expertise with us. Really do appreciate it.
[00:28:10] Speaker D: Thank you Matt.
[00:28:10] Speaker C: Thank you Matt.
[00:28:11] Speaker A: Thank you. And we'll see you again next time for another edition of Retirement your Way.
[00:28:16] Speaker B: Thanks for joining us for Retirement your way with AmeriLife of Central Florida. Our goal is to bring clarity and confidence to your retirement journey. Remember, Bradley and Madison Hardin are here to help you create a personalized plan for the future you deserve. If you'd like to schedule a no cost, no obligation consultation, give the team a call at 386-977-9684 or visit planretirementyourway.com and don't forget to tune in next week, same time, same place for more strategies, insights and support to help you live retirement your way. Investment Advisory Services offer through Brookstone Capital Management, llc, a registered investment advisor. BCM and Amerilife are separate companies but are affiliated through Common Ownership Insurance. Products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents not affiliated with the United States Government. Bradley and Madison Hardin do not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended to predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. AmeriLife assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness, or the results obtained from the use of this information.
