Learn about some of the common parallels between football and investing. Learn how to save on taxes and not negate your retirement gains with a big tax hit. We also talk about bonds.

 

Main Questions Asked:

How do I avoid getting hit with a big tax bill after retirement?

What is the difference between bonds and bond funds?

Are bonds really a safe investment?

Should I take extra risk to make up for lost savings?

 

Key Lessons Learned:

Parallels Between the Game of Football and Retirement Planning

• The red zone. The red zone is the last 20 yards before a team gets into the end zone. In retirement planning, the red zone is the last 5 to 10 years before you retire. Mistakes are much costlier during this time. It's so important that you make the right decisions during this critical time.
• The hurry up offense. This is where they have no huddle and just go fast, fast, fast. This is something they do when they are behind. This strategy doesn't work in retirement planning. If you are behind, it's very tempting to take more risk but it's not a good idea.
• Victory formation. When you have a win in your grasp, sometimes all you have to do is avoid fumbling the ball. Once you've won the game, why keep playing? This applies to financial planning. If you met your goal, don't continue to play the game if there's a chance you could lose. Take the risk out of your portfolio.
• A good coach can change the game. Build a great system and you don't have to find the superstars. Great teams have great coaches, and this also applies to financial planning. Most people need a good coach or advisor to do proper financial planning.

 

How Bonds Work

• With stocks you own a piece of the actual company. If you own a bond, it means you have loaned the company’s money. Bonds are safer than stocks from a legal standpoint, a company must give you your money plus interest when a bond matures.
• Bond funds are different. They never mature. There are pros and cons of owning a bond fund. You need to sit down with a financial advisor and decide if a bond fund or individual bonds are best for you.
• Misconception. Bonds are always safer than stocks. Interest rates are going up right now so use bond alternatives. There are much better alternatives for safety and reasonable interest.

 

How to Save Money in Taxes

• Your taxes in retirement will probably be higher. Tax rates not only go up, but people have saved more money than they thought. Deferred taxes can also be taxed time bombs.
• When one spouse passes away, the income may drop a little bit, but the surviving spouse has the file as single.
• Freeze the growth of your IRA. Sometimes this money should be taken out first and other investments should be left alone. A lot of people get taxes wrong. They think they should defer as long as possible, but when we do the math, there are other strategies that would be better.
• Invest in a Roth IRA. Earnings are tax-free. You have a lot of control and flexibility with this investment.

 

Links To Resources Mentioned

Money Map Retirement Review

1-800-757-0436

Thank you for listening!