This is the Truth Network. Um Welcome to Finishing Well, brought to you by CardinalGuide.com with certified financial planner Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAID, long-term care, life insurance, investments, and taxes.
Now, let's get started with Finishing Well. Welcome to Finishing Well with Certified Financial Planner Hans Scheil. And today's episode, long-awaited episode eight, the Income Tax Planning Financial Plan Series. And I think you'll see how all the plan comes together in this last episode of this. series that we have done from this couple of I've taken them through their whole financial plan.
And today, the last one is this tax planning idea, as it's fascinating. how all the different seven warriors the last one is taxes because it integrates the whole Idea, but we say kind of the best for last because we've kind of been talking about it all the way through. And the reason is, is because unfortunately a lot of people think That this Financial planning is all about tax planning, but it really is more about an integration. And when you think about the story of Joseph in the Bible, You know, Joseph. Uh, interpreted Pharaoh's dream, and he discerned that this gigantic famine was going to come to the nation of Egypt, actually, would come to the whole area.
And he helped the Pharaoh devise this unbelievable plan that would save his people.
Now At the end of the day, yes, that included taxes. I mean, you know, the 20% that he would collect, but it wasn't originally. A tax plan. It was a solve a food problem plan, and he used. Interestingly, seven ideas.
An investment strategy, which was they were going to store grain, risk management, which has a lot to do with investing, real estate, they had a lot of land that they had to farm properly, timing, government policy, long-term planning. But the last on the list, interestingly, was they had to collect these taxes in order to continue the process to save the people. And so, When you really think about what Joseph did, he didn't ask, you know, how can I collect the least amount of tax? What he actually asked was, how can we preserve the people? And so as we enter into this eighth episode, it's not just.
this idea of tax But actually, what is actually the goal of our financial plan, which I is to preserve our families? And then how does taxes fit into that equation? And so it all has to do, right, Hans, with asking the right questions.
Well, it does. And, you know. The whole process starts with people calling us. and asking us questions. They've listened to many people that are call us, have listened to 10.
20, 30. radio shows they've watched an equivalent amount of videos. They've watched a number of them. And they come to us. And they generally start with questions.
And what we've noticed with this series, I mean, we've got like 400 and some. Videos up there on YouTube, and we Got And equivalent actually more radio shows or podcasts. finishing well So I don't know if anybody's listened to all 400 of them, but this is the first time we've ever Had a sequence of them.
So we had eight videos. Eight radio shows. that went through The seven worries. or the seven elements of financial planning for retired people. for people getting ready to retire.
be retired and what I just find You know, fascinating is we're getting a number of people calling us now. Yeah. Art Like high in numbers. I mean, we're getting the same amount of people calling us, but the people that are calling have been watching for years, and they're just now calling. Because as a result of this series, It's kind of like now they get it.
is is that Social Security planning is related to Medicare planning, that's related to income planning. That's related to estate planning. And when you make a decision in one area, It affects the other areas, and then you got to go back and redo your decisions in the other area or modify them, which again goes back against, so it's this. It's this sequence. but getting it all working together for Good.
Okay, and to have a financial plan, as you said, to To save your family, to preserve your family. That's estate planning, which is near the end. Unfortunately, taxes have to be there. They just, they are. And so our part of the planning is we want to make the Taxes Um as little as we possibly can.
I mean so You know, we're representing you, not the government. Um But yet we want you to see how important Taxes are in making the whole system work. Yeah, it's absolutely beautiful.
So I'm sure you're going to be excited to hear. How this episode works and how connected it is to the overall financial plan of our couple. Yeah, so the reason I put taxes. At number seven. Yeah.
you know of all the things we do at cardinal Most of it we've just learned from somebody else. We're just taking. you know what what I've learned, what we've learned. And we're just repurposing it, redoing it, and. Showing it to you and teaching it to you.
But if there's something that we have that's unique to us, It's these seven worries, the order of them. how we put them in financial plans, the decisions we make, how it all plays out. And so I got the pleasure of laying this whole thing out myself. And the reason I put taxes at the very end is I have a number of people come into me. that have what I call tax breadth.
I mean, they're a new person, they've been listening for a while, or maybe they just got referred to me as a voice. You want to cut your taxes? Hans is the guy to call. Hans and Tom, I mean, you call them. They uh boy, they know how to, and so people come in.
And they're thinking, boy, this is my tax shelter guy. And all they want to talk about is taxes. And I won't talk to them about taxes in the beginning. What I'm going to talk to them is about what they want, where they want to get to. What they're having problems with, and I'm gonna go through these things.
What do they think about Social Security? What are they going to do about Medicare? You know, what's their position on long-term care? Did their parents? I mean, I'm going to go through all these other things.
with this person that only wants to talk about taxes. And I'm controlling the show here. I mean, we're not going to get to taxes to the very end. But then, when we get to taxes, people realize we've been talking about taxes all along. Right.
That's exactly right. Yeah, it has an element.
So what we're doing in this final series. And specifically for the video that we made.
Okay, and it's about writing and creating and delivering Tom and Susan's. Plan is The almost 68-year-old dude and his wife, who's 67, and he's a doctor. We were retiring and we went through all seven things. And so we're at the last episode. And so now we're taxes.
which is the seventh worry. And so what we did in the video which you can get on YouTube. You can go there. You can get it at our website, cardinaldad.com. If you're listening to that, I encourage you to go do that.
But what you're going to get is we're just going to go through all seven worries. And we're going to talk about how what an effect taxes is.
Sound good? Perfect. Yeah, I know where's one.
Okay, so with Social Security... The first thing you gotta know is where taxes come in. is since 1983.
Social Secur your Social Security check is partially taxable. And when I say partially, It means it's either going to have no tax. It's going to have 50% of it's going to be taxed, or up to 50%, and as much as 85% of it is taxed. We're not going to get into the formulas for all that today, but just to understand. If you have no other income besides Social Security, you're not going to pay any federal income tax.
on your social security. Probably not going to pay any state tax either. And if you have a little bit of income other than Social Security. you're probably still not going to pay any tax. But as your other income rises, As you get to people with more and more income.
Besides Social Security, they use that rising other income. to come back and tax the Social Security.
Okay. Yeah. It doesn't really matter whether we like it or not. It's just a fact. And so when we're go ahead.
I was just going to say That when we use the term income You know, that's greatly different. you know, from what I would have thought before I started with finishing well. In other words, when somebody said income to me, I assume that's investment income, that's from my job, et cetera, et cetera. And what we're learning is a big part of what you're teaching is that, yeah, if you know what I work at Truth Broadcasting, that's income. But if I had stuff in a Roth IRA and there was income coming off of that that I already paid taxes on, that isn't.
income from a standpoint of of what we're talking about right now.
Well, that's exactly right. I mean, you get that money and you get to spend it that's coming out of a raw. But it doesn't. serve to raise your income taxes on your Social Security. Right.
And we're going to get up to that point.
So just understand your Social Security is taxable. But When in retirement, you're going to have some element of control. over what your other income is. That's where we're going to write the rest of the plan.
So, and just a note to self, a note to everybody, is the taxes that the government collects. off of social security checks. goes right back into the trust fund. It doesn't go into the federal budget. That money goes right back.
to pay future Social Security checks.
Okay. Um so it it anyhow So that always made me feel good, by the way. I'm like, yeah. That's great news from my perspective to know. That yes, I'm paying tax because I do have income from Truth Broadcasting.
And as a pastor, I have an income from that. And that money goes towards what I pay taxes on.
Well, that tax goes right back into securing that trust fund, which when you do that show this year, we'll see again how that affects that wonderful. Yeah, it's come up soon.
So there's a whole episode of the Social Security Trust Fund.
So absolutely. Absolutely great. And I should point out at this moment, it'd be a good time to say that this show is brought to you by Cardinal Guide, CardinalGuide.com. Uh, you know. The neat thing is, if you go to cardinalguy.com, the seven worries we're talking about, which are, you know, social security, Medicare, et cetera, that we're going to go through today, those are all there at cardinalguy.com.
Including taxes, like what we're talking about today. And if you go to that tax worry, there is this eighth episode on the video series that you can watch with show notes. It's got beautiful illustrations of the tax plans that they did for this couple. It's all there at cardinalguy.com, as well as, of course, Hans's book, The Complete Cardinal Guide: The Planning for and Living in Retirement, the workbook that goes with that, and the ever-famous, you know, from my perspective, easiest thing to do, ask Hans or Tom. And now in the next episode, we're going to be talking about a new guy that we can ask.
It's pretty fun. And it's all there at cardinalguide.com.
So we're going to be right back with a whole lot more income tax planning, this financial series, episode eight. Investment advisory services offered through Brookstone Capital Management LLC, abbreviated BCM. a registered investment advisor. BCM and Cardinal Advisors are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents.
Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency.
So welcome back to Finishing Well with Certified Financial Planner Hans Scheil and today's show Income Tax Planning Financial Plan Series Episode 8. And so we've been talking about taxes on Social Security. I'm going to guess Medicare is number two. Medicare is number two. How do income taxes play out?
The Social Security well aren't Irma. Income. Excuse me. How do you tax payer with Medicare.
So Yeah. Irma is income related. Monthly Adjustment amount, I-R-M-A-A.
Okay, and we have other shows on that. We're not going to get into detail today. But if you have a high income. in retirement. Your Rheumatic care is going to cost you more.
through what we call the Medicare tags in IRMA. And a high income is defined in 2026. is if your income is 109,000 or more. as a single. or as a married couple, it's 218,000 or more.
Thank you. Government is going to come back and charge you more for your Medicare Part B. In part D. And it's a surtax, a hidden tax. But again, it's something that can be managed.
I mean it because Right now, in 2026, I just gave you the thresholds. And if you're just over the threshold, the tax isn't too much. but if you make substantial income or maybe you sell your house or you And you make a big profit or you sell a rental house or a vacation house. or in retirement, you get some. We're at retirement, you cancel some stock options, you pull a whole bunch of money, whatever created a big spike in income in 2026.
That's not gonna affect your Irma.
So 2028.
So it has this delayed effect. or another way to look at it. If you're already on Medicare, your 2026 Irma. is determined by your 2024 income.
So Um Just want to make the point: this is something we can manage. You also have. a thing called BERMA Apollos. Again, we have other videos, other shows. You can call us.
if this irma if you're just hearing about irma for the first time And you want to get into some details, just give us a call or go to our website. You can educate yourself on it. Um It's it's the Medicare tax.
So The other thing that's next. is the long-term care.
So how do taxes affect How do income taxes affect long-term care and long-term care insurance?
Well, for starters, the benefits that come out of a long-term care policy. are tax-free. up to $12,000 a month.
So you buy a long-term care policy. And then you're down the road, you're using it. And the policy's paying out. Like seven grand a month, eight grand a month, whatever the benefits are on the policy. To you to pay your assisted living bill or your home health care bill.
that money comes to you tax-free.
Okay, and that's very important because especially for the self-insured people. People say, I have enough money, I'll just pay for it myself. I'm not going to buy this long-term care insurance.
Well, you're going to have to pay taxes on money. That you liquidate in your IRA or capital gains. I don't wanna get too much into the planning, but how do taxes affect long-term care? There's another place that they come in. He is you can actually Deduct some of the long-term care premiums if you meet certain thresholds.
I'm not going to get into the details of that today. But just understand that.
So Next subject.
Next worry is 401k IRA and we give 401k and IRA money, its own category, its own worry. And then we're going to later move that money into the fifth worry b with all your money.
So, if you have IRA money, which a lot of people do, and especially when they're facing retirement, or they have 401k money, it's money you haven't paid taxes on. Yeah. You you've gotta when you're getting to retirement. You've got to look at several things. Number one is you may need some of this money to live off of.
I mean, that's most people, is it's like, okay, I got my social security check. And then, what else am I going to live on to replace?
Well, for a lot of those people, that's withdrawals from their IRA.
Okay. Um For the people that don't do that at 65 or 68 or 62 or 70. that they don't take withdrawals or they don't take much. and they just live off their social security and their other savings. And a lot of people do this because they don't want to pay taxes of pulling money out of their IRA.
When they hit 73 or 75, they're going to have this thing called RMDs are required minimum distributions. Again, we have a whole bunch of other videos on those. but within the financial plan. We're going to in this fourth quarry, we're going to. Show you what RMDs look like at required minimum distributions, what they're going to be for you, and what they're going to be over your lifetime.
We're also going to sit down and say do you really want to wait for the government to tell you how to withdraw money out of your IRA or do you want to formulate your own plan?
so that you meet those criteria, but Again, you're taking the money out over what's best for you instead of what's best for the government.
So that's where the plan comes in.
Okay. I mean, I'll stop for a second. Do you have any comments or questions there, Robbie? No, but once again. You know, it's always a little confusing to me.
Because when you say IRA. for the most part you're talking about a traditional irr that you haven't paid taxes on people that have a Roth IRA. you know those things don't apply like RMDs don't apply. And Again, you've paid tax on it, so now you have income that you can access that is not taxable. And so that's a big part of the IRA strategy.
From my standpoint, is oh, well, good news on the other side. If you have Roth IRA money, that isn't. taxable.
Well, and that's exactly what we deal with in the planning: a lot of people come to us with a whole bunch of money in traditional. Little or nothing in rough. And they say, how do I get more Roth? And you do that through Roth conversion.
Well now we've got a bunch of videos on that where and radio shows where we we start getting into the nuts and bolts of that. But it's right for some people, it's not right for other people, and then the amounts that you do every year. From now till 80 or so. Are really going to be up to your situation, your preferences, the amount of tax it creates. where you there's a whole bunch of variables but What you just brought up is that People can quickly see that it's going to be to their benefit to start doing Roth conversions.
And then the question is going to be how much. and where are they going to get the money to pay the tax. either out of the converted money. Or Out of some other money that they have on the sidelines.
So we've got to. Just kind of put that off. Until later. But that's the whole area of why we treat IRA money separately. Right.
Then we move to the next section, which is income and investment, or the next worry. Worry number five. And at the crux of this is building an income plan. That's what we did for Tom and Susan. And we build our income plans at Cardinal from the bottom up.
In other words, we're going to sit down with you. You and your spouse. And we're going to have you put up how much money do you need? Need it. to pay your bills.
Every month. I mean, your bills that happen, it's based upon need.
So we're going to come up with a number. Maybe that's 4,000 a month, 5,000 a month, 6,000, but whatever the number is. 3,000 a month. You know, people come up with a need. Then what we're going to stack on top of need.
is one. Me. Then now we got our needs met. And that's not necessarily what we're retiring, what we work forever for.
Now we're going to put once, and we're not going to get into whether this is good or bad or right or wrong. We're just going to. end up at a number of How much do you want to spend? Um on things like giving giving to your kids, giving to charity, giving to the church. How much do you want to spend on vacations?
How much do you want to spend on leisure activities? I don't know, it's whatever you want.
So this is once, and then we're going to come up with a number. Maybe that number is $7,000 or $8,000 a month. Maybe it was 4,000 of need. 2,000 of want, that's 6,000 a month. We're going to play with all this, and taxes are nowhere in here.
Okay. We're just trying to come up because you can't spend taxes. When I ask people coming in the door a lot of times. How much do you need in retirement? People say, oh, I need $100,000 a year.
Need 80,000 here. And they just throw it off the cuff and I'm saying, you know, okay. And I started, and I was that four taxes or after tax. Uh Hadn't really thought about that.
Well.
So let's just start over. We're going to build the income plan. from the bottom up. The end. Then we're going to take that Plug it in there.
This is how much they want. And now we're going to see if you've got enough money to do it. I mean, now we're going to see if we can support that. And with a lot of people, we can't, because people take this process real seriously. But we got to add taxes.
On top of that, you know, if the number was 6,000 a month. then we got to see to be able to spend 6,000 a month. we maybe need to make eight or nine thousand a month. Um Or more. Um And then that's where we come in is those taxes.
We view taxes as a... As a variable expense or a a kind of thing that especially in the later years you can you know you're in control of those by where you pull money from so Like I said, I want to get into the details of how we do this, but we build an income plan for you and then we validate it. We validate it with both of you already living all the way to 95.
Okay, and that's what we did for Tom and Susan. That's in the video. in that video. Uh which would be number six. Uh And we got to kind of move quickly here.
And so, the last, the second of the last section, estate planning, how do taxes affect that?
Well, number one is the widow tax. Which is when a married couple files, married filing jointly for their taxes. One of them dies, the other one lives on and they're a single tax filer. And that goes back to R ⁇ Ds. is you don't want to Just live off of RMDs, and then one of you dies, and now the other one has the same RMDs, but they're paying.
Higher taxes. because they're a single file.
So that's not a very good gift to hand to the widow or widower. But then You know, if I could jump in there, the acquired minimum distribution, the RMDs that you're talking about. That They grow. You know, you can start with a small. And so, by the time, you know, unfortunately, the husband dies off or the whatever, then all of a sudden you're into the big category.
And so that when you talk about the widow tax, you think, well, my RMDs are a little bitty.
Well, they won't be by the time this thing kicks in. And that's the scary part of. You know, making sure you plan around that. This show is brought to you by Cardinal Guide. If you go to cardinalguide.com, then again, there's the seven worries.
Today's being the taxes. And if you click on that, you're going to see this video that we've talked about throughout the show that shows all this information. It is an amazing thing, or all the other episodes based on the worry that you may be concerned about. And of course, there's always Hans's book, The Cardinal, Complete Gardinal Guide: The Planning Foreign Living and Retirement. And again, to get this custom-made for you, which is not expensive, you charge $1,000, am I right?
thereabouts to do a financial plan. And oh my goodness, that could be the best thousand dollars you ever spent in the history of the world. You know, I can imagine for all sorts of reasons, because again, they're not looking at this with a question: how can I pay the least amount of taxes? What they're looking at is how can we best finish well as far as health care, as far as long-term care, all these things are figured into the equation and so helpful. All there at the Asked Hans and Tom page, cardinalguide.com.
Great show, Hans. Thank you and God bless you. The opinions expressed by Hans Schil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice.
Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation.
Finishing Well is designed to provide accurate and authoritative information with regard to the subject covered. Investment advisory services offered through Brookstrone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency.
We hope you enjoyed Finishing Well, brought to you by CardinalGuide.com. Visit CardinalGuide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Han's best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement and the Workbook. Once again, for dozens of free resources, past shows, or to get Han's book, go to CardinalGuide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word. Once again, that's CardinalGuide.com.
CardinalGuide.com.
