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2023 EP0304 | Financial Updates | 3 Ways to Maximize Your Retirement Income and Minimize Your Tax Bill

Planning Matters Radio / Peter Richon
The Truth Network Radio
March 4, 2023 10:00 am

2023 EP0304 | Financial Updates | 3 Ways to Maximize Your Retirement Income and Minimize Your Tax Bill

Planning Matters Radio / Peter Richon

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March 4, 2023 10:00 am

If you don't have a tax plan, you don't have a retirement plan. In retirement, you not only want to maximize your income, but you also want to minimize your tax bill. In this video, Peter Richon with Richon Planning and Erin Kennedy break down three strategies that will help you keep more money in your pocket, including:

  1. #Roth Conversions: take advantage of today's historically low tax rate
  2.  Have an #RMD Strategy: consider earlier distributions or Qualified Charitable Distributions
  3. Explore Health Savings Accounts: the only triple tax advantaged retirement account that can help with what's often your biggest expense in retirement, #healthcare

To talk through these strategies to see if they're right for you, please feel free to reach out to Peter, who can run a detailed analysis, specific to your unique financial goals, by calling (919) 801-7131 or by setting up a meeting at

#taxrate #RothConversions #qcds #taxes #HSA #retirement #wealthmanagement

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We want you to plan for success. Welcome to Planning Matters Radio.

Peter, it's really good to see you today. We're talking about three ways to maximize your retirement income and minimize your tax bill. If you don't have a tax plan, you do not have a retirement plan. And in retirement, you not only want to maximize your income, but of course, minimize your taxes as well. So if someone is nearing retirement age, we're breaking down a few strategies they should consider today. First, Roth conversions.

Why? Yeah, Roth conversions are a great opportunity. And Aaron, just backing up for a moment, the opportunities that we have right now for proactive tax planning is really probably the American's biggest financial opportunity that unfortunately, a lot of them are overlooking.

A lot of us are overlooking this opportunity. Sure, we can shoot for investment rate of returns and growth on our money, but if we are not strategically planning proactively on how to control and minimize the taxes on those dollars, man, are we missing the boat. So Roth conversions are a great opportunity. And if you look back in history, tax rates have been significantly higher than they are today. As things stand, tax rates are going to go up slightly in just a few short years, which gives us a window of opportunity that we know right now before we would be paying higher taxes on the same dollars. And the fear is, and most that I talk to share this fear, taxes could go up even more than what they're already slated to do at some point in time. That chart that you shared there, Aaron, you see back after World War Two, there was a 94 percent tax rate, ladies and gentlemen. So we are in a pretty historically attractive tax environment to go ahead and pay your taxes proactively, because what we're talking about here is the value of compounding interest.

Albert Einstein said it was the most powerful force on the planet and he helped to create new nuclear weapons. Right. So the atomic bomb, the IRS was listening and paying attention.

They said, this guy's onto something. Let's let them defer paying their taxes so we can collect that deferred compound interest grown tax bill in the future. But look, now is the time to go ahead and realize that and plan strategically on how to pay it.

There are a couple exceptions. If you are planning on using specific dollars within five years, then there are some restrictions you need to understand about Roth conversions. Also, if you convert over to a Roth, that does have the possibility of impacting your Social Security and or Medicare premiums. So there are some things to know there and you don't want to bump yourself into a significantly higher bracket. So you need to crunch the numbers on this and do it strategically and efficiently. But, Aaron, as many dollars as we can get for our clients moving over to those Roth accounts and as efficient as possible as we can be over the next few years, we are doing it. Right.

All right. Next here, you suggest to carefully plan your RMD strategy. You think that when you hit that RMD age, you just start taking them, but that can saddle you with quite the tax burden. Well, when you hit that RMD age, you better start taking them. But just because you can wait until that age doesn't necessarily mean that you should. And the IRS continues to push that age back. Right. It used to be 70 and a half and it moved to 72, then 73.

Eventually it'll be 75. We've done a whole different video, a couple videos on RMDs exclusively and specifically. And there's a lot that goes into these RMDs. But the message here is even if you can wait and the IRS says you're not required to take distributions yet. Well, those are additional dollars that you have the opportunity to do some proactive tax planning with. And if you are 70 and a half, which, by the way, that is no longer RMD age, but you can still do a QCD at 70 and a half, a qualified charitable distribution. So if you are charitably inclined, if you donate anything to churches, universities, organizations, 501C3s, nonprofits, what have you, and you would like to make larger gifts, you can do so through a QCD. That is one of just a few real opportunities in life for truly tax free money. You earned it.

You put it away. You got a deduction. It grew tax deferred and you can gift it to your charity tax free. Fantastic opportunity. And next, Peter, of course, health care is often the biggest expense in retirement, which is why you're suggesting everyone consider a health savings account now.

Yeah, absolutely. One of our other opportunities for truly tax free money in life. If you need those dollars for qualified medical expenses, well, you got to contribute them and you received a deduction. They grew tax deferred. And if you need to have them and spend them for qualified medical expenses, they come out tax free.

Now, here's here's kind of the pivot point, the the option, the audible, if you will. If you don't need those dollars for qualifying medical expenses, then at 65, you can roll them over to a traditional IRA. You lose the third of those three tax advantages. But essentially, this account is just like another opportunity to make even more IRA contributions at the very worst. And we all need the opportunity to save more, especially if we are an IRA saver or investor, because we all know that the limits on IRAs are not enough to build toward a stable, secure retirement. They keep increasing the limits on 401Ks to what I think is a more reasonable level, but they have been very slow to increase how much we can save as individuals.

So having another opportunity there in the form of an HSA, very attractive. I'm surprised you didn't say it, Peter. It's because this is one of my most favorite sayings of yours. It's not what you make. It's what you keep. Right. It's what you keep.

It's not what you have. It's what you get to keep out of it in retirement as well. And that doesn't stop when you stop making the money because now you've built up what you've made and you saved and invested. Well, that's a big that that's a big sum for most people. In fact, today that is surpassing the value of the house as most people's largest asset, what they've built up in their 401Ks. But it's not all yours. If it's tax deferred, there's a share that you've got to share with the IRS and paying Uncle Sam more than his fair share is not what anybody wants to do. We want to pay only our minimum required fair share. Exactly.

Exactly. Well, if somebody would like to talk about these strategies with you, what's the best way to reach you? You can give us a call in the office. Nine one nine three zero zero five eight eight six nine one nine three zero zero five eight eight six. By the way, we've got some fantastic software that basically compares and contrast what your balance and what your tax liability looks like.

If you defer to the IRS's plan versus if you are proactive in planning and identifying certain strategies, it is usually a significant difference in your advantage to be more proactive here, ladies and gentlemen. So give us a call. Nine one nine three zero zero five eight eight six. If you'd like to see that or email me, Peter at Rashan planning dot com or visit online. Rich on planning dot com. All right, Peter, thank you. Always a pleasure.

And thank you. This has been planning matters radio. The content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy. You are encouraged to seek investment tax or legal advice from an independent professional adviser. Any investments and or investment strategies mentioned involve risk, including the possible loss of principal advisory services offered through Brooks own capital management, a registered investment adviser. Fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker dealer services. Advisory clients are charged a quarterly fee for assets under management while insurance products pay a commission, which may result in a conflict of interest regarding compensation.
Whisper: medium.en / 2023-03-04 12:07:37 / 2023-03-04 12:11:20 / 4

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