Plan With The Tax Man

It's spooky season. And while most people are thinking about haunted houses and horror movies, a lot of pre-retirees have scarier things on their minds: running out of money, or a market crash at exactly the wrong time. Today we're shining a flashlight on five of the biggest financial frights and how to prepare for them.

Important Links: Website: http://www.yourplanningpros.com

Call: 844-707-7381

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TRANSCRIPT: 

Marc Killian:

It's spooky season, and while most people are thinking about haunted houses or horror movies and candy, a lot of pre-retirees have scarier things on their mind like running out of money or a market downturn at exactly the wrong time. So today we're going to shine a light on five of the biggest financial frights and how to prepare for them. Hey everybody, welcome to the podcast. Thanks for hanging out with Tony and I here on Plan With The Tax Man. He's the tax man, Tony Mauro at Des Moines Professional Alternative Tax Doctor. And of course he helps clients all over the country as well. So if you're checking out this podcast, you got some questions, need some help, reach out to a qualified professional like Tony and his team at yourplanningpros.com. That's yourplanningpros.com. He's been doing this 30 plus years. He's a CPA, CFP and an EA. Got all the acronyms going on there, Tony. How you doing buddy?

Tony Mauro:

Yeah. I'm doing good. Rolling into October, one of my favorite times of year. I like Halloween.

Marc Killian:

Me too. Yeah, Halloween's... We were going to either do things that go bump in the retirement plan or five financial frights, some sort of little funny little tie into the spooky season, but we decided to go with the five financial frights. And these are pretty standard things, Tony, but certainly something that, again, the point being if it happens at the wrong time, it's never fun. It's never good obviously in many of these, but certainly at the wrong time, like AKA right at retirement's doorstep or maybe even in the first couple of years of retirement. So let's break them down. Let's get into them.

Tony Mauro:

Okay.

Marc Killian:

All right. Number one, pretty easy to figure this one out. Fright number one, running out of money. Take it away.

Tony Mauro:

Well, this is probably our number one thing that we talk about to everybody really, whether they're financial planning clients, tax clients or whatnot, especially this time of year. And we work a lot with our accounting clients. I'm always asking them, "What is your end goal", number one? "And are you going to be able to pay your bills when you're in retirement and live the life you want to live? And really what it starts out with is how much do you have right now? How much will you have when you want to retire? What are your monthly expenses roughly? And is that going to cover it?" And that's where, to me, a financial planner really is one area of great value because that's what you want to be working with them on, not just, "Hey, am I getting the best return that I can?" It's this. It's the number one thing that you're saving for. So I think it's the most important and I think you need to be talking to your advisor about it.

Marc Killian:

Yeah. And you start getting into the questions that you want to certainly digest, especially, Tony, right now while we've got a lot of friction going on and that really kind of will walk into the next couple of ones here in a second, but it's like how much can you safely spend each year? What are the expenses? And are you tweaking that year to year? Are you making little adjustments? A lot of times people, especially the last number of years have been doing the DIY thing and they've got a general plan and they're like, "Cool, I'm groovy. I've said it. I'm good to rock." And it's like, "Well, no, there's a lot of changes out there." So we want to be addressing those like for example, fright number two, a market downturn right before we retire. Look, we keep hearing it's going to drop any day now.

It still doesn't, but it doesn't mean that the risk is any less there because historical data is historical data. Now, ever since COVID, Tony, let's be honest, between pumping all the money in, the inflation problems it's created, the bond reversals that's happened, but yet the market continues to plug along. We've got this conflict after coming off the Ukraine thing, which is still going on. There's a lot of data that says the market should not be cruising yet it is. And that makes people think it's got to fall at some point, right?

Tony Mauro:

Yeah. And this is an important thing, I think in anybody's portfolio. Everybody always asks us that too, "What do you think the market's going to do?" And we always tell them the same thing is, "If we knew that, we would already be retired."

Marc Killian:

I was going to say, if you knew that, you wouldn't be helping others, you'd be sitting on your own island somewhere, right?

Tony Mauro:

Yeah. But I think it's important. This goes along the lines of whether a DIY or you're working with somebody is the old theory is you want to start at least preparing your portfolio to get a little more conservative as you get a little older and as you get a little nearer to retirement. So if we do have the unpredicted or predicted market reversal or a period of long term, basically zero to little gains, that you aren't going to be hit too badly with your portfolio decrease in value, let's say. And I mean, that's the biggest thing because none of us have the crystal ball.

You're just trying to hedge your bets a little bit when you get up there into your mid to late 50s because you're still in the accumulation stage, not in the distribution stage yet, but you want to, at least if you continue to invest very aggressively, let's say that you understand what could happen and that's a risk you accept. And for most, at least the people I talk to want to get a little more conservative. Therefore, a lot of times people I'm talking to in their 50s, they want a return, but they're no longer asking the question, "Well, where can I get the best return?" They want to throttle it back a bit and say, "Hey, look, I want a decent return better than I can get in a savings account, but I am not willing to put up that much risk when I've only got five, seven years left to return."

Marc Killian:

Well, that's a healthy place to be because it's hard because again, a lot of us see it continuing to rock and we're like, "I want to get on some of that." And we all do it. So if you can put yourself in that position where you're able to say that, you're certainly in a good, healthy place. I mean, year to date, Tony, right? So year to date at the time we're talking, the market's up 13 and a half percent. Given all the stuff that's happened, we're here in a fourth quarter and it's still up 13 and a half percent. So it could finish out the year again strongly as prior years have done.

So it's tough. It's tough to kind of... It's not the 20% of the last couple of years. It could be, we don't know, right before the year ends out. But either way, if five or six drives your plan plenty, fine when you're close to retirement on being in the market, getting a return, things of that nature, keeping up with inflation. If 5, 6, 7, 8% drives the plan, but it reduces the risk in case something does go south, then that's not a bad thing to think about.

Tony Mauro:

It's not a bad thing. And that's where your advisor should be helping you and we remind our clients as well because we have a plan with them because it is, like you say, people will come in at their quarterly meetings and say, "Gosh, the market's doing so well. Maybe we should..."

Marc Killian:

Maybe we think a little more.

Tony Mauro:

Yeah. And I have to remind them, "Well, that's really not our plan. If we want to change the plan, that's fine. But we have to weigh that with the risk and potential tax efficiency and things like that." So again, just another great talking point to be talking to your advisor about.

Marc Killian:

And that's a huge value add working with professionals because again, you do have somebody across the table and I love how you just said that. You're like, "Well, that's not the plan and it's probably not the best idea, but if you want to talk about doing the other thing, we can." You're not the money police, but it is your job to say, "Okay, here's pros and cons of what happens if we do A, here's what happens if we do B," that kind of thing. So I think that's a great, healthy way of looking at it too. So good stuff. All right. Fright number three, certainly a big fright. Rising healthcare costs, not going anywhere, ridiculous. I think I just saw some knuckleheads arguing here recently about how long it takes to get in to see a doctor here in the U.S. right now versus other places.

And it's still really short to get into a doctor versus other places, yet the cost is really crazy. So I get these arguments, but it is what it is. And especially if you're getting right at that retirement doorstep, Tony, maybe the employer coverage is going away, make sure that you're planning for that, right?

Tony Mauro:

Got to plan for that. I think with most people that being W-2'd most or all of their working careers, they have just been in a healthcare kind of mindset of set it and forget it. "I pay my premium out of my check, my employer picks up some, I know my coverages. I don't really have to navigate much other than going to the doctor," and that kind of thing. But when you get to retirement, there's all kinds of new things to navigate because when you leave that employer, now you've got to deal with, of course, Medicare.

We're talking big government now and there's premiums there, there is deductibles, there are different out-of-pocket costs along with you need a lot of supplements and a lot of would be close to be seniors don't understand all that. They don't understand what Medicare does cover and what gaps it has and they need to work with their advisor and their insurance agent to make sure they got the coverages that they need, but plan on it being expensive and from the financial end, you got to work that into the plan because it is a cost. I see it with my own father as he ages, his healthcare costs go up and up and up. So definitely something to think about in your plan.

Marc Killian:

Yeah, for sure. I mean, again, you've got to be having these conversations and really piggybacking into that, you could call it fright four, you could call it fright 3.5, three and a half. It's long-term care, that second piece of the healthcare chat.

Tony Mauro:

It's that second piece, and this piece really needs to be talked about. I think it needs to be talked about at a younger age, at least initially.

Marc Killian:

Yeah, I agree. But talking about Halloween, Tony, I mean, it's scary, right?

Tony Mauro:

It's scary.

Marc Killian:

Nobody wants to talk about the fact that they may be infirm or have some serious medical issues. I guess on the one hand, it could be the beauty of a long life, but on the other hand, it's scary so we just avoid it.

Tony Mauro:

They avoid it and it's no fun when you're 50-ish or just after when you can purchase some sorts of long-term care. Because people are telling me, "No, I don't want to do that. That's 6, $700 a month. I may never use it." And I always have to come back with a little bit smart-Alec answer of, "Well, you pay for car insurance every month and you hope you never use it. Same way with your home, but yet one in about three and a half people end up needing some sort of long-term care." They always equate that with the worst case, nursing home, full-fledged, but there's a lot of other things and it needs to be discussed with your advisor, if not when you first are available to, or eligible, I should say, to get it.

It needs to be discussed as you age. And if you decide not to use the old-fashioned insurance route, by the way, there are a lot of variations of that now, a lot of creative ways to cover that, you need at least be talking about, "Well, what will I do when I get older and I need some assistance?" Again, it's got to be somewhere on the plan. A lot of times, and I see this with an uncle of mine right now, his wife just had to go into a nursing home. He doesn't have any money. He's pretty much by himself. She's on Medicaid, so he's got one car, all the minimums of the house and things like that, but because they didn't plan, he's not in a very good spot for these last few years of his life, and it's sad. And once you're there, there's really no way out once you get up into your-

Marc Killian:

Yeah, that's a good point. Yeah, you kind of get stuck at that point, right? And that really walks us into fright number five, which is losing a spouse. You just mentioned that for that scenario. Obviously, it's one of the hardest scenarios we'll ever face, but it's the fact of life. So you've got to be having those conversations about the different things that will change for the remaining person.

Tony Mauro:

You do. And this is one thing I try to really hammer home as part of just kind of an annual checkup is have you, number one, got your life booked together? And do both spouses understand where everything is at and what to do after the whole emotional thing? This is just the financial thing. But I do find, and it's in my household too, I'm the one in my household that does all the money stuff. I have had a talk with my wife and we revisit it once a year of, "Okay, if something happens to me, let me see that you still know what you've got to do and where everything's at." And she does. She pulls it out and she says, "Here's what we've got to do," and that kind of thing. I've pretty much laid it out for her, but there's so many people that don't do anything like that. The spouse is just left just completely bewildered. Sometimes they don't even know where everything's at, which just makes it that much harder.

Marc Killian:

Yeah. And Tony, I mean, when you're trying to build that stuff out, again, people won't want to talk about the scary stuff, but hopefully the idea is that you can start to say, "Look, I know this isn't pleasant, but let's talk about the scenarios here. Let's have a few stress test plans in place." And I imagine that some couples are smart and wise about it and they say, "No, we're here to do the full planning, so let's do it. And then of course we can talk about the legacy part of that as well once we're gone." But ideally, I think hopefully spouses are being responsible to each other and saying, "Okay, look, I know one of us is going to pass, so what's happening for the other one?" And you get that stuff built in there. And typically us fellows, we pass first, we know that. So hopefully we're having those conversations.

Tony Mauro:

Yeah, very important.

Marc Killian:

Yeah, absolutely. Well, okay. I'll do a little bonus one here and then we'll wrap it up. Some of the scariest things out there you might not run into in these five that we did is the scam thing that is out of control and the frauds, the text, all these things. God, it's just crazy. It just seems like every year it gets worse and worse. So make sure you're doing simple things to protect yourself here too, Tony. I mean, two-step off of, what is that? Two-step verification on a lot of your apps and things. Yes, it's annoying to have them text you every time you want to go on and use something, but it can be very helpful and protective. So think about some of that stuff.

Tony Mauro:

I would definitely think about it. I worry about it with my own father, although he's doing pretty good at 85 on his own, but he is susceptible to some of the stuff. And of course they prey on retirees.

Marc Killian:

Absolutely.

Tony Mauro:

And with AI getting so good, I mean, they're talking about fake voices that sound just like your child and all kinds of things to scam you out of money. So the best thing I can say is if in doubt, just don't act. Just ask a friend, a relative, child, spouse before you act. And really, it's unfortunate that we have to go to all this trouble, but it's the reality of everything is out there in the internet, the cloud, whatever you are on. And it's amazing. Even my 85-year-old father, he knows how to surf the internet. And so he can get himself into trouble.

Marc Killian:

Yes, my mom's doing stuff all the time. I'm constantly having to check her. I'm like, "What are you doing?" And she's smart, but, Tony, she got Amazon. She got hit with an Amazon one where people, you got to watch that two-step thing. I made her put that on there because somehow somebody was able to replace her email with their email. And then of course, if she wanted to change her password, they would know that. So you got to be watching these things.

Tony Mauro:

Got to be watching because I mean, everybody is susceptible to it. I think the older generation really struggles with passwords and making them too easy and writing them down. How many of us have looked under their parents' laptop or something? They got all the little sticky notes with all their passwords, which happened to be just one number off the last one. And they don't understand the password keepers that are out there now and the sophistication. And you got to try to stay up on that and try to use some of that tech to help you.

Marc Killian:

Yeah, absolutely. It's a double-edged sword, right? Use the tech, be afraid of the tech, be leery of the tech, but need the tech, right?

Tony Mauro:

Yeah. It's crazy.

Marc Killian:

Having a family member certainly helps for us when you're a grandparent or whatever, having a 14, 15, 16-year-old could be right in your wheelhouse. You've got a modern day IT person to help you with some of that stuff. But then every situation's different, right? So just make sure you're talking with your family about getting help on some of that stuff, especially as the things continue to come down the pike and we're thinking, "God, what is this new piece of technology doing?" Be careful. Watch all that stuff so that you don't get into any frights, not only during the October month, but all year round. So of course, if you need help, reach out to Tony and the team because at the end of the day, what scares most people about retirement is not often the event itself.

It's what's happening next or not knowing what's happening next. So if you need some help, reach out to Tony and the team at yourplanningpros.com. That's yourplanningpros.com. And don't forget to subscribe to the podcast on Apple or Spotify or whatever app you enjoy using. That's going to do it for this week. For Tony Mauro, I'm your host, Marc Killian. We'll see you next time here on Plan With The Tax Man.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.

Being named the executor of someone's will can feel like an honor. It can also feel like a lot of pressure. It's more than handing out inheritances. It's paperwork, accounts, taxes, property, creditors, and sometimes family dynamics, stretched out over months or even years. A lot of clients end up in this role without ever planning to, and we're often the first call they make. Let's talk through how we help.

Important Links: Website: http://www.yourplanningpros.com

Call: 844-707-7381

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TRANSCRIPT: 

Speaker 1:

Being named the executor of someone's will can feel like an honor, and it can also feel like a lot of pressure. It's more than just handing out inheritances. It's paperwork, accounts, taxes, property, creditors, and sometimes unpleasant family dynamics. So this week on Plan with the Tax Man, let's talk about the honor and the headache of being an executor.

Hey, everybody. Welcome to the podcast. Thanks for hanging out with Tony and myself here as we talk about investing, finance, and retirement. And Tony, as I teed up in the teaser there, it's some things that maybe you don't know about being an executor, some of the headache sides of things. It's a nice honor that someone, your parent typically maybe names one of the children, for example, to do this. But it does come with pressure and some things that can catch you off guard. So I thought it'd be good today to highlight some of this stuff.

Tony Mauro:

I think it's a great topic, because it's relevant in my world because I have several clients going through it now, a couple of family members, and then one that is a friend of a client. They're both clients. One passed away and the friend is named executor, so he's in a whole new role dealing with family that is not his family.

Speaker 1:

Okay.

Tony Mauro:

It's a whole dynamic.

Speaker 1:

Whole dynamic. I do want to note here, Tony, that this episode is not about giving legal advice, you are not an estate attorney, but rather the role that advisors that you and your team play, and questions that you often get or hear when a client has become an executor. So we're going at it from that standpoint.

Tony Mauro:

Yeah. I think that that's good, because we work closely with the estate attorneys, and they're the ones directing the legal side. We try to help out the executor, as we'll go through here-

Speaker 1:

Sure.

Tony Mauro:

... on everything else.

Speaker 1:

Yeah, yeah. I just want to make sure we clarified that for folks listening.

Tony Mauro:

Yeah.

Speaker 1:

When a client finds out they have been named executor, Tony, what does that first conversation with them sound like from your end, or what are some bullet points here that folks might want to think about or need to know?

Tony Mauro:

Well, some of the things that we tell them right up front is, I ask them point-blank, "How much do you know, if anything, about being an executor?" Most don't know anything because most are surprised that they are, even sometimes kids. And so they really don't have any idea what's involved with it, even if it's a very simple, straightforward estate. It could go anything from very simple, all the way up to very complex. But I try to tell them, "This is going to be a time period. It's not going to happen in 30 days. Depending on how complex it is, it could be months to several years. There's going to be documents needed. There's probate. There's taxes." I try to lay all that out on a timeline so that I can get them thinking... "Don't get yourself overwhelmed. We'll help you. The estate attorneys will help you. You've just got to take one step at a time. Sometimes you hit roadblocks and you've got to move on." So that's the first thing we tell them.

The other thing is if they've already got an estate tax attorney working on it, which they usually do.

Speaker 1:

Right.

Tony Mauro:

If not, we'll refer them. But we try to point out to them things... Because they get confused on what passes by will and what passes by what I call contract or outside of the will, in other words, goes directly to beneficiaries, and try to just have a conversation with them about that. That at least gets them going.

Speaker 1:

Okay. Yeah. And I imagine that a lot of times, Tony, as you've already alluded to with some different clients going through it, if a client's parent, which is usually the case, or family member has told them that they will be the executor someday, how do you prepare them for that now? Obviously, being told ahead of time does give you a little time to prepare, I would assume.

Tony Mauro:

Yes. It gives you some time. And really, we try to have the conversations about mostly of, okay, trying to get your parents or whoever you're the executor for to give you access, or at least let you know where documents are, what kind of accounts they have, what kind of assets they have, who the professionals they're working with right now are, just in case. If you can get that while they're still alive, along with helping the executor with some of the things that I just talked about, which they probably don't know, and just being ready to raise your hand and say, "Okay. I don't know this. Who do I ask when the time comes?" I think that basically is what we try to tell them.

We'll always try to be there for them. I tell them that. I tell them, "Let the attorneys do their thing. I'm not an attorney. But we will help you and we will work with them with you." They're usually more than willing to help, because they tend to not like anything tax and anything outside of really what they're good at.

Speaker 1:

Yeah.

Tony Mauro:

They being the attorneys.

Speaker 1:

Yeah. And helping a client think through those pieces, again, they're coming to you for financial advice typically anyway, so now it's like, "Hey, I've got this extra wrinkle here. Is that something you can help me with?" That's just a nice little added value-add that comes with that component-

Tony Mauro:

Yes.

Speaker 1:

... I guess, that legacy planning component, right?

Tony Mauro:

Yeah.

Speaker 1:

So once a client is actually now fully in that role, what do you guys do? You've touched on some of that already. But helping them get through it without, I guess, maybe that overwhelmed feeling, or even that rushed feeling if they found out maybe a bit late and it's like, "Hey, Tony, I just got named this. What do I do?" Right?

Tony Mauro:

Yeah.

Speaker 1:

"Where do I start?"

Tony Mauro:

Yeah. Where do you start? We go through the timeline with them. We have some templates that we show them, and we'll start putting the timeline for their situation through the template so they've got it and they can follow it, which is kind of nice. Then we will start helping them start to gather the financial pieces that are going to help the attorneys as far as that goes. Plus, we might need it for a final income tax return and we might need it for an estate tax return, not the kind where you pay taxes.

But a lot of us executors don't know that when someone dies, the attorneys will open up a legal entity called the estate, and assets get transferred into that estate before they get distributed, and if they're in there long enough and they earn some money, if they're investments, they have to file a tax return. The estate's an entity. And so letting them know what's coming there, and then what the attorney's going to be needing from them, and really then just being a point of contact and working through the timeline and having regular check-ins, kind of like you do with a financial plan, of where are we at in the process on all this, and just monitoring it until the whole thing closes out.

Speaker 1:

So Tony, you guys really do act as a steady point of contact then through this process. Is that fair?

Tony Mauro:

Yeah. I mean, that's what we do. And like I say, with the timelines that we put in front of them, they have access to on their portal, and then some regular check-ins at different times. Obviously, I just had a call today with the guy I was talking about earlier, his story is a little bit unique, because him and the deceased were both clients of mine, both financial clients, both accounting clients and tax clients. The deceased was worth, and he was a young guy when he died here at the end of last year, about 15 million. And so my buddy, who was named the executor, he's working through a fairly complex estate. And on top of that, he's got some dynamics, because as the executor, the deceased left some very pointed instructions, "Don't maybe agree with what the family has in mind," so there's a lot of butting heads already going on.

And just a general statement, I've seen it so many times, it's amazing what happens when people die and siblings or relatives are squabbling about money. It's crazy. It tears families apart, which is why I would say, and I know every attorney would agree, you need to have a will in your financial plan, because you don't want to have... I mean, this guy had an ironclad will, so even though they don't agree with some things, that's what's in the will and that's the legal document, you know?

Speaker 1:

Yeah.

Tony Mauro:

But it sometimes puts the executor in a tough spot, because in this case, the executor is also charged with the deceased had two sisters that he's left some money to, but he wanted it in a trust, and they can only take out income, not the principal. And of course, they are fighting that, they don't want that, but they really can't do anything about it.

Speaker 1:

Yeah. I was going to say, let's maybe clarify that too, right?

Tony Mauro:

Yeah.

Speaker 1:

So sometimes, I think when people get named executor, it doesn't mean you can just... You don't get to wholesale do what you want. You're not in charge of this whole dynamic, right? You don't get to just go, "Well, now, I have the power and I get to say who gets what," right?

Tony Mauro:

Right.

Speaker 1:

I mean, maybe a little bit, but for the most part, most of this stuff is usually spelled out. You're just making sure it all gets implemented. Is that correct?

Tony Mauro:

Yeah. You're just making sure that everything gets implemented. You actually have some legal responsibilities, because if you're named executor, you're supposed to perform some duties. But what you do get to... Like in the case I was talking about, the executor in this case does have the ability, if the girls come to him and say, "I have a real bad need," he does have the authority to take out some principal and let them have it. But if he doesn't think it's a need or if it's something that they want to go blow money on, he could actually say no, which again, puts him in kind of a weird spot. I think most of the time, what executors do if they're doing it even with family is it's like, "Look, guys and gals, this is what Mom or Dad wanted. I'm the executor."

Speaker 1:

Right.

Tony Mauro:

"I've got to make sure that we follow what the will says because that's my legal duty."

Speaker 1:

Yeah.

Tony Mauro:

"You guys may not like it, maybe I don't even like it, but this is what we've got to do."

Speaker 1:

Yeah. And this is where, Tony, conversations ahead of time before Mom or Dad or whoever passes ideally-

Tony Mauro:

Yeah.

Speaker 1:

... come into play, because hopefully you can smooth some of those waters. I was thinking about this whole conversation, and I was chatting with my family about stuff as we were putting show notes together, and my daughter was like, she was like, "Yeah. I can't wait to get into a knockdown drag-out with all my siblings over what's left." The joke there being because she doesn't have any, so she doesn't have that problem, right? But a lot of families, especially when things are... When you've got an odd number, like three kids or five kids or whatever, or even grandkids or whatever, where it starts to get sticky. So this is where you really want to have those family chats and dynamics to hopefully shore that up to take some pressure off the executor from that emotional side too.

Tony Mauro:

Yeah. From the emotional side, for sure. I'll tell you another area where families tend to squabble a little bit. Even if they can get through the will and they say, "Okay. We agree with all the money stuff coming out," is, "Okay, it's time to sell the house and the belongings."

Speaker 1:

Yeah.

Tony Mauro:

"Does anybody want anything?" And then there's really nothing in the will that generally says, "Hey, Susie gets my antique dishware," you know?

Speaker 1:

Right, right.

Tony Mauro:

So it's kind of up to a family agreement, and there can be squabbles over little things like that.

Speaker 1:

Yeah, yeah. I heard an interesting one about that the other day, Tony. Somebody said they do an imaginary auction with fake resources. Not an imaginary, I guess they do a real auction. But they allot all family members this arbitrary amount of not real money. Somebody even said grab some Monopoly money and divide it all up, and then you just go through and you bid on the things you actually want that weren't totally decided, to your point, like the china or something like that.

Tony Mauro:

Yeah.

Speaker 1:

And basically, everyone agrees, and then it's like, okay, you only have so much, so if there's an item you wanted later and you've already spent all your money on bidding on this, well, then you can't get upset about it when you don't get it. I thought that was an interesting way, if you've got a good family dynamic, maybe that helps cut through the tension, and maybe that also is a way to bring some levity to the loved one passing. They might enjoy the fact that you guys made a fun little family bonding moment out of it.

Tony Mauro:

The auction is an idea. We did something personally when my mom passed, she had some jewelry, and none of it was worth a whole lot.

Speaker 1:

Right.

Tony Mauro:

And I have two brothers, we weren't interested in it, but our wives and a few of the nieces wanted maybe something. So we said, "Look, we're not going to get into big arguments about this," because we all get along.

Speaker 1:

Right.

Tony Mauro:

What we did is everybody picked numbers, and they would pick a number. I think we had one through eight. And so whoever picked number one got their choice, and then number two gets next. So it goes up to eight-

Speaker 1:

Oh, okay. Yeah.

Tony Mauro:

... down to one, up to eight, till everything's gone. That way, listen, it's just random. If you picked and you wanted something that's already taken, tough luck. Everybody agreed to that. We had fun with it. It was actually kind of a little party. Even my father kind of enjoyed it, and nobody at least was complaining to everybody else at the time.

Speaker 1:

Yeah.

Tony Mauro:

Maybe somebody wa disappointed they didn't get something.

Speaker 1:

Yeah. And I'm glad to hear that, because obviously he's still around, he didn't take it as disrespectful to his-

Tony Mauro:

No.

Speaker 1:

... spouse who's gone, right? So it's just a way to say let's avoid that family bickering, because, I mean, this is my phrase that I've said for years, Tony, and I think it's so apropos, money makes people funny. I mean, flat out, right?

Tony Mauro:

[inaudible 00:14:12]

Speaker 1:

And when somebody passes, it can unfortunately sometimes bring out the knives, bring out the claws.

Tony Mauro:

It brings out some bad feelings-

Speaker 1:

Yeah.

Tony Mauro:

... and then all the grievances, whether it's with your own family that you've been holding in or talking about for years come up.

Speaker 1:

Right. Yeah, yeah.

Tony Mauro:

It just is a mess. So I would encourage-

Speaker 1:

And maybe not needed. Yeah.

Tony Mauro:

And not needed. Yeah. I would encourage everybody to, again, I think as a non-legal advisor in some of this to an executor, I try to encourage them and everybody on some of that. You're going to have a little bit of roughness, but you've got to stay true to the course and try to make it as smooth as possible.

Speaker 1:

Absolutely. Well, well said. Good stuff to cover here. Again, as we mentioned, if you need some help, definitely be checking with the qualified professionals and estate planning attorney, and sit down and talk with your advisor. A lot of times, if you don't have the attorney, they can recommend one, as Tony mentioned earlier. So if you need some help, find them online at yourplanningpros.com to start building this part of your strategy and legacy conversations as well, yourplanningpros.com. And don't forget to subscribe to us on Plan with the Tax Man on Apple or Spotify or whatever app you enjoy using. You can find all that information at the main website, and as well, get yourself some time onto the calendar. Tony, thanks for hanging out and breaking down this subject this week. I appreciate it.

Tony Mauro:

All right. We'll talk to you on the next episode.

Speaker 1:

Absolutely. We'll see you next time here on Plan with the Tax Man with Tony Mauro from Tax Doctor, Inc. And don't forget to reach out to them if you've got some questions at yourplanningpros.com. We'll see you next time.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.

Every October, hundreds of hot air balloons rise over Albuquerque for the largest balloon festival in the world. No two pilots fly the exact same path, and none of them can control the wind. Turns out, that's not a bad way to think about a financial plan either.

Important Links: Website: http://www.yourplanningpros.com

Call: 844-707-7381

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TRANSCRIPT: 

Speaker 1:

Every October, hundreds of hot air balloons rise above Albuquerque for the largest balloon festival in the world. No two pilots fly the exact same path and none of them can control the wind. Turns out that's not a bad way to think about your financial strategy either. Let's have some fun this week here on Plan with the Tax Man with you can't steer the wind, but you can steer your financial plan. Hey everybody, welcome into the podcast. This is Plan with the Tax Man with Tony Mauro and myself here to talk investing finance and retirement and going where the wind blows, so to speak. Tony is our conversation piece this week. How you doing, my friend?

Tony Mauro:

I've been fantastic. Kind of wrapping up the summer. Just got done with the fair here. And of course, as we're recording this, kids are back at school.

Speaker 1:

Okay. Okay.

Tony Mauro:

Yeah.

Speaker 1:

Hot as Haiti still at the time we're taping this, at least in my neck of the woods.

Tony Mauro:

Me too. Very hot here.

Speaker 1:

Yeah, it's a little toasty. I didn't know that little fun fact there that the Albuquerque International Balloon Fiesta draws hundreds of balloons and it's considered one of the most photographed events on earth. It's like a really big deal. I didn't realize that.

Tony Mauro:

It is a big deal. Well, and I picked this topic because we have a big balloon fest here. It's actually in a small town just south of us about 12 miles. It's called Indianola Balloon Fest. It has about 100, 150 balloon pilots. They get a lot of people.

Speaker 1:

Oh, wow. Okay.

Tony Mauro:

And the other thing is that I really respect balloon pilots because I'm a GA pilot myself, not of balloons, of airplanes. But these guys and gals are way better than us because-

Speaker 1:

Gotcha.

Tony Mauro:

... they don't have thrust. They can't turn. It's all about the wind. And so they're really good.

Speaker 1:

That's awesome. That's very cool. Well, good. Well, this will fun. We'll talk about this, tie this to your other passion.

Tony Mauro:

Yeah, that's right.

Speaker 1:

... the retirement thing. So speaking of the wind, even at different altitudes, it does not hold still. Been doing a little bit of research here. It can be calm at 500 feet and wicked and blowing completely different direction at 2000 feet. So it's impossible to control and accurately predict, certainly. Jet stream's going to do its thing. What are the things financially speaking we could tie into this that similarly we cannot control? I mean, obviously the big ticket is the market.

Tony Mauro:

That's right. The big ticket's the market. And just like the balloon pilots especially, obviously they can't control the wind, but if you've ever been to a balloon fest, most of the time they can't take off unless it's really calm on the ground. But however, just like us pilots, as soon as they get up in the air, the wind is way different and they try to find what's best for them as we do too. But it's similar in the financial lives really because there's so many things that are out of our control, the market volatility being one, what's going on politically, interest rates, oil prices. I mean, you name it, tax law changes, all kinds of things. You bring it down into your own world and it's unexpected expenses. It might be an untimely health scare, which I have a friend that's having that right now.

All kinds of things. And so the timing of those really adds to that, which is something we have to plan for and talk with your advisors about and let them know what your plans are. And they're going to tell you the same thing. Some of the stuff you can't control, you've got to just change your plan to work within it.

Speaker 1:

Well, and going to that point, since they can't fight it, they change altitude, right?

Tony Mauro:

That's right.

Speaker 1:

They go up or above, excuse me, up and above or below to find a current that's flowing and working for them better for what they're trying to accomplish. And clearly that's a nice little reasoning piece of logic to think about with our own finance. You're not abandoning what you're trying to do, you're just maybe trying to get some headwind.

Tony Mauro:

Yeah, trying to just get a little direction on where you're going, just like they are. Because as I said, they can't steer. All they can do is the way they steer is find the way the wind's blowing. And if that's the way they want to go, that's where they got to get to. And it's no different than our financial plans because all of this stuff and this noise that's going on on the side, we've got to adjust our plan, keep it flexible, change it, monitor it. Hopefully you're doing with your advisor on that so that you're not just letting your emotions run wild with some of the stuff that's going on here and in the world.

Speaker 1:

Yeah. Well, and I think that's obviously easy enough for us to do is let things run with us, which is why again, having a professional in your corner, a strategy and a plan kind of helps you recenter sometimes when you get a little blown off course. We'll stay with this analogy when you get blown off course. So Tony, from down on the ground, you can only see what's basically right in front of us, next street. I mean our sight line. Our sight line is reduced when we're on the ground. Anybody who's ever gone up any kind of height knows that. From altitude, everything looks a bit more connected. That's why we love looking at the horizon, how it just seems to fade off into forever. So why do we tend to ask money questions one at a time at that ground level, so to speak, instead of looking at it from that higher elevated path?

Tony Mauro:

That's a good question because we get that a lot. We get a lot of people asking just these one questions at a time. I just had a meeting yesterday with a gentleman, he's a tax client. He had a few questions about his retirement, but I tried to get him to see the bigger picture because what he wanted to know was the quintessential question is, "Am I going to run out of money when I retire?" But most people want to know, they're in the accumulation stage, "Should I be doing more? Should I pay off this debt? How long should I work?" All those types of questions. But they tend to come at us one at a time because I think they only seem to think about what's right in front of them and urgent right then. And I try to get them to kind of look at the whole picture of, "Okay, that's one of the questions in all of this, we'll answer that, but let's look at how it fits into everything and your overall financial picture." Because I think that's the best way to go with it.

Speaker 1:

Yeah. I mean, each question feels more urgent on its own, which is exactly why they maybe rarely get answers so well when we're looking at them from down at ground level. Every time there's a hiccup, it's dead in front of you. So it's the only thing you seem to be focused on versus... And this I think plays into taxation a lot, Tony, which obviously you're doing both pieces of this, you're doing the CPA side as well as the CFP side. This is where that higher elevation question really starts to pay off because you're not just looking at the immediate impact, you're looking at the future impact.

Tony Mauro:

You are.

Speaker 1:

Or we should be.

Tony Mauro:

We should be. Yeah. But I tell a lot of people that I can't really answer this question by itself because it opens up so many other questions. Just like when you go to your regular doctor and you say you've got a sore throat, they're asking you all kinds of questions because they can't really prescribe anything or help you until they really know your entire situation. So it's no different than that in finances as well. I try to hold a meeting with somebody because somebody will send me a question through their portal to say it's a tax client and they think it's a 5-minute answer when really it's, well, there's a lot of what ifs. This is a 45-minute discussion. We better have a meeting.

Speaker 1:

Yeah. That makes sense. That makes sense. Well, so Tony, thinking about this and kind of closing this down a bit here, the balloon pilot isn't just flying the balloon. Most of the times, now maybe in this particular event or whatever, but a lot of times you go on one of these rides, they're narrating, right? The flight for the passenger. Yeah. They're doing some cool stuff there. They're educating you on whatever. For those who don't, same kind of thing as like a pilot pilot. You don't know what you're looking at per se. They're pointing out interesting locations. They're teaching you how the thing works. All that stuff. And I mean, come on, that's like a perfect metaphor for what you do. It's not just that you're building the plan, you're also narrating things.

Tony Mauro:

We're narrating things. The technical side is building the plan. And then the narrative really is one, explaining the plan in some terms that they can understand rather than just a lot of technical jargon because they don't need to master that technical side. That's what they're paying us to do.

Speaker 1:

They need a navigator, if you will.

Tony Mauro:

Yeah, they need a navigator. And a lot of times for us, just like the pilot, is you want to point out to them in their financial lives what's worth paying attention to and what's maybe not. In other words, I always tell them, "Rate of return is important, but not the most important. That is not what we're going to focus on all the time. We're going to focus on getting you to your goal. And we'll talk about returns and whatnot, but we can't just be stressed out and focused always on that." And I think a lot of times a lot of advisors, what they do is they recommend a lot of things and they don't really explain why. And I think as a client should ask the question why if you don't understand, if it's not explained to you, make sure you understand why we're doing what we're doing because that's the most important thing. So I think it all kind of fits into why you're paying an advisor for both of those.

Speaker 1:

Yeah. I think that was really well said there. And I mean, this is a fun little, nice little analogy to tie back in really well to what you guys do and to things that you enjoy. And it's a fun little topic because at the end of the day nobody gets to control the wind. We just have to ride the wind as the saying goes. But the pilots who fly year after year, they know how to work it. They know how to work with it, against it, all that kind of stuff. Good financial plan, good financial strategist does the same thing. So Tony, at the end of the day, I mean, that's what it's all about, getting somebody that you can relate to that can help you navigate the wind.

Tony Mauro:

Navigate the wind. I encourage anybody that's not scared of heights, if they ever get the opportunity to go up in a balloon, whether it's on a vacation or even in your hometown, because it's fabulous. It's so quiet, so cool up there. And it's amazing how they can make... These guys and gals are really good. I mean, they can go up and land. I mean, that's what they do at some of these things. They land on a target.

Speaker 1:

Yeah, precision. Yeah.

Tony Mauro:

But it's a lot of fun and I encourage everybody to try it if they so choose.

Speaker 1:

Awesome. Well, great topic this week. Thanks so much for hanging out with us here on the podcast, Playing with the Tax Man, short and sweet and to the point. And if you need some help with whatever it might be on your radar, then get yourself on the calendar. As I mentioned earlier, Tony is a CPA, CFP, and an EA of 30 plus years in the industry. So reach out to he and the team at yourplanningpros.com. There'll be links in the description. Yourplanningpros.com. You can find us on Apple or Spotify as far as the podcast goes. And of course you can find them online to get yourself some time onto the calendar at Tax Doctor, Inc. And again, don't forget to subscribe to us on whatever app you enjoy using. Plan with the Tax Man, and we'll see you next time here on the program. Thanks, Tony.

Tony Mauro:

Thanks.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.

More people in their 60s and 70s are staying on the job than ever before, and it's not always about the money. Let's dig into the real reasons retirees keep showing up to work.

Important Links: Website: http://www.yourplanningpros.com

Call: 844-707-7381

----more----

TRANSCRIPT: 

Speaker 1:

More and more people are retiring in their 60s and 70s and staying on the job than ever before 'cause it's not always about the money. So this week on the podcast, let's dig into some of the reasons people keep showing up to work, even in retirement.

Hey, everybody. Welcome into the podcast. This is Plan With The Tax Man with Tony Mauro from Des Moines Professional Alternative Tax Doctor Inc. Serving you all around obviously the Des Moines area and the Iowa area, but all over the country. Tony's got clients, he helps all over the place. So if you got some questions, need some help, and you're checking out this podcast, and you'd like to get a little more info or just chat about some things, he's a CPA, and a CFP, and an EA with 30-plus years in the industry and a great resource for you to tap into at yourplanningpros.com. That is yourplanningpros.com. And Tony, how you doing my friend? You doing all right?

Tony Mauro:

I'm doing good. Yeah. Summer is in full force here, and enjoying it as much as I can.

Speaker 1:

Nice. Yeah. So you're obviously still plugging away. I'm still plugging away. Now we're not at that age yet. We're in our mid-50s, but I'm sure you're seeing this with a lot of your clients as well, people that are into retirement, they've maybe got their strategy or they're playing with you guys, but are still working. And it could be for reasons other than the money, but I want to talk about both sets of those today, right?

Tony Mauro:

Yeah.

Speaker 1:

So let's dive into the first one, and we'll just start with social connections, for example. So this is not money-related. This just might be simply, "I like the people I work with, and it gets me out of the house, and it gets me some human interaction," especially, unfortunately, if you are a retiree who maybe has lost your spouse. Maybe this is a great reason to keep moving, and going to work, and doing things.

Tony Mauro:

And I see a lot of clients that want this because... And I fall into this category myself, I think, is when I go to retire, I want a little social, like you say, connectivity. And with a lot of people, what I find with them is because they've been working for so long, they miss that. And they come back and tell me six months to a year into retirement that, "There's only so much golf I can do. There's only so much putts at around the house that I can do."

Speaker 1:

Did you really just say that?

Tony Mauro:

Yeah. And I would agree with that to an extent, and a lot of them like to go back to work. Generally, they'll go back and get something that they're not really concerned as much, especially if they don't need the money, about what it pays, other than they don't want generally tons of responsibility, or being able to set their own hours, or work part-time. But a lot of them for the social connection, they really enjoy it. And so I'm always good with that if they're asking me what do I think. And I think it can contribute to a longer life, frankly, especially like you said, if a spouse is gone.

Speaker 1:

Yeah, definitely. I think a lot of people certainly continue to want to work just for that social connection alone, and that's totally fine. And I think the takeaway here, Tony, is going to be work optional, right? There's-

Tony Mauro:

Yeah.

Speaker 1:

... reasons why you go to work because in retirement, and it's because it's an option, because you're choosing to versus not, because you're not choosing to, or you have to go for the money reason. And I'm going to skip around on the list. We'll get to the money one here in just a minute, but I want to do another one from the home standpoint. And that's just changes in the home. So not that there's much of a silver lining to think about with COVID, but certainly during that time period, a lot of people got a dry run of what it would look like to get into retirement with their loved one being at home together 24/7. And so maybe that was a little bit of a wake-up call. And I know, Tony, I've got advisors all over the country I talk to, like yourself. And all of you guys and gals have stories where one spouse or the other looks at the advisor and says, "Get them out of the house. They're driving you nuts."

Tony Mauro:

That's right. Yeah. "I want to kill them."

Speaker 1:

Right?

Tony Mauro:

Yeah.

Speaker 1:

So that could be a big thing to think about too, "I want to keep that sanctity of the home, so one of us is going to keep going to work because it gives us the social connections, but it also gives us a relief from the spouse."

Tony Mauro:

Yeah. And I think this one I will struggle with because for a lot of people, you've been going to work for so long that it's hard to change your routine.

Speaker 1:

Indeed.

Tony Mauro:

And then you find out that you've been going to work, your spouse been going to work for so long, and you see each other at night on the weekends. Yeah, that 24/7 thing drives a lot of spouses on both sides crazy. And I think it's something that you have to at least take into account, especially if you're young enough and don't need the money to get out and make that happen.

Speaker 1:

Yeah. And I think routines change, right? There's just various different things that just cause that uneasiness. And again, maybe it's not work, maybe it's something else. Maybe it's book clubs, or volunteering, or whatever the case might be. But I think that could be a reason people just go, "Well, you know what? I'll just go back to work because it gives me some social time with other folks. It gets me away from the spouse for a little while so we're not at each other all the time. And I make a little extra money because it helps with some of the money woes." Right? And so-

Tony Mauro:

Yeah.

Speaker 1:

... that'll walk us into the money woes conversation, Tony, because some studies have shown that nearly half of retirement age folks who are still working do so out of financial necessity or financial stress. And I think this is where you've got to have that strategy and plan in place, because if you absolutely have to work for the money, no shame, it is what it is. But if you're stressed about it when you don't need to be, that's kind of silly. Find out. Go to work because you want to, not 'cause you have to.

Tony Mauro:

By far, yeah. This is the biggest conversation to have with your advisor. And we do it a lot with people before they retire on... What it comes down to is a couple things. You get to that 65, 67, and say you just haven't followed good advice, and you miss the mark, and it's a little late to save. You've got to go to work because you have to. And like I say, there's nothing wrong with that. You have to do it, depending on what kind of lifestyle you want. And that's one thing. But the other thing is a lot of people tend to just go to work because they... And they really don't have to. And again, if they want to just because they don't have to, that's great. But they continue working because they're worried about running out of money when, really, they do have a good plan, and they won't run out of money.

So make a decision based on that. I think that's where the advisor, beforehand, needs to talk to them. I just had a conversation with a client, he's only 43, making some good money, but he has not done much for retirement. He just refuses to do it. And I had the conversation with him, and I told him, "Look, I'm going to pull your social security statements for you and your wife's balance from her 401(k). I'm going to extrapolate that out. So if you continue down this path, here's where you're going to be at about 67." And he was floored because he says, "That's not the money I'm making now. I won't have any money." I said, "Exactly. So you've got money worries, so you've got to start now." Not too late for him, but you need to have these conversations, especially when you're, I think, in your 40s and 50s, with your advisor, 'cause that's the whole reason you're paying us, is to say, "Am I going to be okay at retirement or not?" And I can make these easy decisions, I think.

Speaker 1:

Yeah. And I think this is where the final piece of this, Tony, is if you're doubting your strategy or your plan, or you don't even have one, clearly, then this is where you got to get one, 'cause even after years of working towards the goal of retirement... And a lot of people, Tony, when they come in for those initial consultations, they're in better shape than they realize, but they still think, "I'm going to have to work. I'm never going to be able to retire." So if you've got any doubt at all, this is why it's so important to just go get a strategy. Go out and talk with one, two, three different advisors, find the one that you like, have those consultations, those reviews, see who you resonate with, do your homework, check and see if they're properly licensed and all that good stuff, and get started, because that'll help you alleviate... Then the other things we talked about today come back into play just because you want to.

Tony Mauro:

That's right. And most people, I think, want peace of mind when they get to that retirement... I know I do. My big peace of mind thing right now is, "Am I going to be able to go somewhere warm for all four months of the winter when I retire?" And I've done my calculations, and I think I'm going to be in really good shape for that. And so again, peace of mind, "Okay, I can do that." But if you're at all in doubt of your plan, or if you don't have a plan, now's the time to start working. It's never too late. We always preach that.

And I think that's the goal and that carrot hanging out there when you work with your advisor, that he or she's going to keep reminding you, "Okay, here's the plan. This is what you told us. You're on track to hit that." And they could constantly keep giving you peace of mind because a lot of people that go at it on their own, they don't have the peace of mind. They're constantly worried. They're constantly making decisions probably at the wrong time and the wrong way. And so I think that's one of the reasons why you pay an advisor, is to get that.

Speaker 1:

Yeah, absolutely. I think you've got to have that in place. Working longer isn't automatically the wrong decision, Tony, or the wrong-

Tony Mauro:

No.

Speaker 1:

... right?

Tony Mauro:

Absolutely not.

Speaker 1:

Sometimes it's exactly right. I guess the real question is, is it a choice or is it a fallback? So find out those answers, and get some details put in place, and retire... And again, work optional. Go to work 'cause you want to and be retired because that's what you want to do. So I think that's where most people are trying to get to nowadays. And of course, we didn't talk about health and all that stuff. That could force you out of working years. But again, the idea here was why are you still clocking in if you are retirement age? And for a lot of people, they just like it. And that's okay too.

Tony Mauro:

Yeah, that's okay too. And you could keep working as long as you're able.

Speaker 1:

Yeah.

Tony Mauro:

And I know that it's fun to daydream, especially if you've got your plan in place about, "Well, if I just didn't have to work, what would I do for work?" In other words, is it something you've always wanted to go enjoy even though it doesn't pay a lot? Maybe it's volunteering, maybe it's something else, but explore that. That's the whole fun of it, is being able to be in that position.

Speaker 1:

Absolutely. Well, if you need some help deciding where you're at getting that strategy in place, because maybe you are doubting the one you have or you don't have one at all, as I said earlier, Tony and the team are here to help. All you got to do is reach out to them at yourplanningpros.com. That is yourplanningpros.com, to get started today. And there's no cost or obligation, so why would you not reach out and see if they're a good fit for you and have those conversations for yourself? So again, find them online at yourplanningpros.com, and don't forget to subscribe to us on Apple, Spotify, or whatever podcasting app you enjoy using. This is Plan With The Tax Man with Tony Mauro from Tax Doctor Inc. Tony, thanks for hanging out, buddy. I'll see you next time.

Tony Mauro:

I'll see you next time. Thank you.

Speaker 1:

Have a great week.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.

There's an entire television network dedicated to doing things yourself — home renovation, landscaping, interior design, all of it. And the DIY mentality is genuinely admirable. But when it comes to retirement planning, the stakes of a bad install are a little higher than a crooked backsplash. Let's talk about what DIY planning actually looks like in practice.

Important Links: Website: http://www.yourplanningpros.com

Call: 844-707-7381

----more----

TRANSCRIPT: 

Speaker 1:

We've created an entire television network dedicated to doing things yourself. Everywhere you turn, it's DIY, this and that, home renovation, landscaping, interior design, all of it. And the DIY mentality is genuinely admirable. But when it comes to retirement planning, the stakes of a bad install are a little higher than just a messed up backsplash in your kitchen. So let's talk about that this week, the DIY movement in retirement planning and what that looks like actually in practice.

Hey everybody, welcome into the podcast. This is Plan With The Tax Man with Tony Mauro. And we're going DIY this week, Tony, little pitfalls of doing things yourself. Everybody does it to a certain degree in many walks of life. You and I both have done a lot of DIY things ourselves, but certainly when it comes to the financials, this is maybe room to pause and think about this.

Technology, Tony, has changed. It's super easy to do a lot more things. Absolutely. I'll agree with that. I'm sure you will too. But the complication of preservation and distribution, AKA retirement, is vastly different than accumulation. So let's talk about that this week a little bit.

How are you doing, my friend?

Tony Mauro:

I'm doing good. [inaudible 00:01:36].

Speaker 1:

Do you agree with my statement there?

Tony Mauro:

I agree with your statement. Yeah. And I love this topic for a lot of reasons because I think as we... Well, in the world we live in, especially with the AI advancements and whatnot, it's just getting worse and worse. Everybody wants to do everything themselves. And I think a lot of times, and I'm one of them too-

Speaker 1:

Sure.

Tony Mauro:

... I used to love doing home renovations because I enjoyed it. But now that I'm a little older and I try to preach this to my son and whoever will listen, is you need to outsource everything that you're not good at or you don't enjoy because that's going to free you up to do what you do enjoy and/or make money. And we do it at our business here. I mean, I don't touch the IT. I don't touch the phones. Now, could I, and try all that? Yeah, sure.

Speaker 1:

Sure.

Tony Mauro:

It clutters up my life too much. And I want to give it to the guys that are good at it. And so yeah, I agree with your statement wholeheartedly.

Speaker 1:

And it's one of those things where we certainly know in this world it's been more and more difficult, especially post-COVID, to get people to show up and maybe do quality jobs in different aspects of things.

Tony Mauro:

Sure. Yeah.

Speaker 1:

And so everybody feels like, "I'm just going to take on this." What's the old saying? If you want it done, right, do it yourself?

Tony Mauro:

Right. Do it yourself.

Speaker 1:

And that could be true. But I mean, my brother and I are fairly handy and we built some things around my property, Tony, but when it came time for a complete overhaul of the back deck and building a roof on it and all this kind of other stuff, I just did not feel comfortable in our skillset, so I farmed it out. Did it cost me more? Yeah, probably. But then again, maybe not because how many times might I had to double back and fix something that I didn't do right the first time because I don't have the skillset or the longevity of doing these things.

So financially speaking, I think that same thing happens. There's so many tools out there now. And growing the money... I mean, Tony, check this out. So you might know this off the top of your head, but if you don't, don't look it up. Just give me a quick educated guess. At the time we're recording right now, how much do you think the S&P 500 is up the last five years?

Tony Mauro:

Cumulative?

Speaker 1:

Yeah. Cumulative. Give me an idea. What do you think? Five years.

Tony Mauro:

Five years, I'm going to say 45%.

Speaker 1:

Okay. How blown away are you that it's 75?

Tony Mauro:

That doesn't blow me away.

Speaker 1:

Okay.

Tony Mauro:

I was thinking a little higher, but no, it doesn't blow me away.

Speaker 1:

Okay. 75. Crazy, right?

Tony Mauro:

Yeah.

Speaker 1:

Five years cumulatively, the S&P 500 is up 75%. The Dow up 50 over that same period. So it's easy for people to go, "Oh man, you can be an idiot and throw a dart at something and do well." But when it comes time for the... As we get closer to financial or retirement, excuse me, distribution, there's a lot more at stake. And I think this is where people start to find themselves at a crossroads. And do you find that? Do you have people coming in that are like, "I've been doing it myself, Tony, but there's a lot I don't know and I'm getting a little nervous. I want to make sure I don't screw this up because this is my forever money"?

Tony Mauro:

They do. And that's how a lot of people come to us. And if they've been doing things themselves, we certainly don't tear apart what they're doing, but we just try to ask a lot of questions and make sure that not only... Because a lot of people come in, "Well, I've been doing this myself and I've been averaging 10% a year or I've been beating the S&P 500."

Speaker 1:

Sure.

Tony Mauro:

And I say, "Well, okay. We really have you... Let's see, but that's good." And then the first question as I ask is, "What do you have for an emergency fund?" And they have a strange look on their face. And we start talking about that. I said, "Well, what about you... Tell me about your assets and things. And then we'll get to the part of, well, what do you have for life insurance?" And so some of that stuff they don't think about. All they're thinking about, "I throw my dart at the board. I'm investing in this. It's growing. I should be okay." And that may be the case, but there's more to a comprehensive, keyword, financial plan.

Speaker 1:

And you may be doing well, right. So think about my analogy a second ago about what the numbers have done. So let's say you had a million bucks [inaudible 00:05:37] on the S&P 500, you're up half a million dollars over five years. And you're thinking, "Man, I got this thing figured out." Great. Okay. So now you got a 1.5 million sitting in this account, you're getting close to retirement and you got to start pulling this money out. And now you don't realize the things that you're triggering. So your income strategy is going to affect some other things. It's going to affect your Medicaid or your Medicare, excuse me. So you're going to get those issues. You got to start dealing with the IRMAA situation. That catches people off guard. The taxation of the whole thing, Tony, is what catches a lot of people off guard. That's where a lot of people are going, "Okay, this is why I definitely need help. How can I be more efficient here?" And with you being a CPA and a CFP, you're thinking about the tax situation, but as well as the future planning.

Tony Mauro:

That's right. And some of those triggers you're talking about are exactly what I think a lot of people miss really with a good advisor. With us, we're looking always at, we know you want to get the most money, especially around retirement.

Speaker 1:

Sure.

Tony Mauro:

We got to do it tax efficiently because we don't want to give the feds any more than you have to. So let's think about it. And let's take everything into account, Social Security and everything else you might have coming in, to make sure that that's the case, that we're always on track with that. And don't miss that by too much because it's just ineffective. And at the end of the day, you bleed money and you don't even know it.

Speaker 1:

Yeah. I mean, I can see somebody coming in DIY or they've done well. Let's just go with a million bucks, Tony, because it's easy. They've got a million dollars in their portfolio. And they come in and they're like, "Hey, I heard Ramsey talking about taking 8%. I've done the math. I'm going to pull 80 grand out a year, blah, blah, blah. I should be good to go, right?" You know what I mean? And it's like, that's a quick back of the napkin thing. It's like, "Well, all right, the 4% rule is half of that. The guy who created the 4% rules moved it to 4.7."

But for easy math, Tony, you could sit there and go, "Well, does 40,000, if we go with the 4% rule, does it get it done? Does it drive the plan?" Because Ramsey's thing is, "Well, if the market averages 10% year over year at minimum, why not take 8%?" But of course, the downside of that, Tony, is that to make that happen, you're 100% invested in the market. And I think again, as we age, we're not really comfortable taking that amount of risk.

Tony Mauro:

No, no. And I think that's one of the flaws that a lot of DIYers end up with is they'll come in with some... We use that example.

Speaker 1:

Rule of thumb. Yeah.

Tony Mauro:

Just that rule of thumb, yeah. And when we sit down and start putting some numbers to that and their situation, most of the time... And I like Dave Ramsey's stuff about getting out of debt, staying out of debt, saving and whatnot. I don't agree with the 8% year-over-year. I think that's too aggressive based on things that happen not only in the market, because he's assuming it earns 10% every year. We know it does not, even though lately it's been way up. But what if you go through a stint right when you retire that it goes up 10% one year? And then we have a situation like from '04 through '08 where the market did nothing and go down. Each year you're drawing that same amount out on a lesser principle. You start going downhill very quickly. I think something like that is unsustainable long term. And you don't want to get into that doing it yourself and then be 75, 80 and out of money and scratching your head saying, "Man, where did I go wrong? This was supposed to work."

I think that's where a planner can lend some value. I'm not saying that...

Speaker 1:

Do you-

Tony Mauro:

Go ahead.

Speaker 1:

I was just going to... No, finish your thought, please.

Tony Mauro:

I was just going to say, I'm not saying you may not do that, but I think you should do some sort of hybrid of that. If you want a little more money out, maybe not take it out maybe in the good years. In the bad years, no. It should be 4, 4.5.

Speaker 1:

Well, that's a great point, right? So you can do the back of the napkin thing and say, "Okay, yeah, 4% might make it work." But you're going to have some lean years, you're going to have some better years, right? So it's got to be able to continue to shift and change. And that's what a good strategy and working with a financial professional does because you guys are going to do these reviews, you're going to make tweaks along the way. And sometimes people I think get hung up in the fact too, Tony, that they see these rules of thumb or whatever, like the rule of a hundred or something. They'll look that up, they'll read that and they'll go, "Oh, okay. So it says take my age and that should be safe. So I'm 60, so 60% of my portfolio should be in safe, 40% at risk."

Okay. Yeah, that's a great place to maybe start. But when you guys start diving in and really dissecting the individual or the couple, oftentimes you find that that's not good for both people. And that's another piece of this too. The DIY thing, are you taking into account both people? And does the second person share your DIY enjoyment? Because what happens when you die if you're the person doing it all and they don't want to do it and they don't know anything about it? And now you've left them behind the eight ball too. So that's something-

Tony Mauro:

You've left them a mess.

Speaker 1:

Yeah.

Tony Mauro:

We encounter that a lot because the DIYers, and I think that's one of the mistakes that they make, is the DIYer really loves to do it, for example. And the spouse does not.

Speaker 1:

Sure. Yeah. Nothing wrong with that, right?

Tony Mauro:

Nope. And then what happens is when the DIYer goes and they haven't talked about it, the spouse, you've left them with a complete disarray mess and they have no idea where to turn to. And they're trying to deal with all of this. We just talked about it on the last episode about leaving people with a mess, is you don't want to do that. So I think that's one of the mistakes that people make there for sure.

I think another one really is that they tend to get so fixated, especially when things are going good, to chasing the highest return. They always find it funny when I say, "Look, return is important, but it's not the only driver." And they look at me kind of funny like, "Well, you're a planner. You're supposed to be... I'm paying you to get me the best return."

Speaker 1:

"I want all the money, man. I want all the money. I want to stick it in my ears and go blah, blah, blah." Yeah. But that's a great point, Tony, because okay, let's say you're chasing this aggressive return because the market has been on a tear and you want this higher return. And you go through, you have the planning process with someone like yourself, Tony, and you find out that 5 or 6% return gets it done. Drives your plan, gives you more than you need because maybe you got a pension. Maybe there's two pensions in your family plus Social Security.

So you find out you really only need to be... Your risk level could be much lower and still really drive your plan effectively. But you're taking way too much risk because you want to max it out. And then what happens? Inevitably, Murphy's going to strike. We're going to have a prolonged downturn because we haven't had one really in about 17 years. So we're way overdue for a prolonged. Not a little downturn for three months here, four months there, but like a prolonged downturn. And now you're really kind of screwed. That's the concern.

Tony Mauro:

That's the big concern, is right there because it's easy when things are going good and they have been for a long time. Where I think the financial planner really shows their value... I mean, I think we should try to show value all the time, but it's when things aren't going good, you can point to, we're fine. We're still earning a good rate. And if we are down a little bit, we're not down as much as the market. And you're still on track to win your game. Don't focus on the day-to-day returns. Just, "Here's our plan. If we know we can get there and maybe even a little more, we're fine."

Speaker 1:

Well, the diversification thing I think bites a lot of DIYers in the tush too, right?

Tony Mauro:

It does. That's another one.

Speaker 1:

Yeah. So using the rule of thumbs that are out there and then the diversification thing. "Well, I know I'm diversified. I know that's important. So I've got a bunch of stocks. I've got my Schwab account and I've got a bunch of stocks and I've got five mutual funds and I bought them from different companies just so that I'm well diversified." And it's like, yeah. And most of the time you guys go through training and do your forensic analysis. And it's like, "Congratulations. You got a whole lot of large cap in these mutual funds."

Tony Mauro:

[inaudible 00:13:50].

Speaker 1:

And you got also high fees with these mutual funds. So there's just a lot we don't know when we don't do this every day.

Tony Mauro:

You don't. You don't. And just like every DIYer, I mean, every time I do a DIY, especially if it involves any type of real artistry, the pro always does it better because they're doing it all the time.

Speaker 1:

Right. Right.

Tony Mauro:

But I just had a guy come in last week and he was a tax guy and he was just kind of spouting off. He says, "You know what? I've got a couple of mutual funds." And he says, "I've been doing really well." He said, "But I'm very well diversified." Because I asked him, "How's your diversification?"

"Oh, I'm diversified. I got two funds."

And I said," Well, what are they?" And he gave them to me. Well, they're both small cap world funds that hold very aggressive stocks. I mean, they're from different parts of the world. But I said, "You're really not that diversified. First of all, it's foreign, which has a place in everybody's portfolio, but you have no large cap. You have no conservative. You have no nothing." I said," Do you have a financial plan?"

"No, I just have these funds."

I said, "Well..."

Speaker 1:

That's interesting, right? Because a lot of times we do see my analogy, which was a lot of times we see people come in and they've got a bunch of large cap because it's just-

Tony Mauro:

Large cap.

Speaker 1:

Yeah. They've got small caps.

Tony Mauro:

That's [inaudible 00:14:59] here.

Speaker 1:

Microsoft and Coke and so on and so forth. And you have four or five of those and they all have about 70% of the same exact thing in them.

Tony Mauro:

Same exact thing. Yeah.

Speaker 1:

 And if it's all tech-heavy, well, what happens when tech takes a beating? Which obviously everything right now is tech heavy. So yeah, it's just, you're not as diversified as you think you are. And it's not just the portfolio, Tony, you started this earlier as well, and we'll finish with this. Part of the DIY thing that most of us just are terrified of and don't want to mess with, and this is I think probably what brings a lot of people to the door, is diversification of the portfolio and the income stream is one thing. Tax diversification is another, because that's an animal that... We're all terrified of the IRS.

Tony Mauro:

Yeah. I mean, at the end of the day, that is the truth. And I'm a big believer. I'm not anti-government, but I don't want to give them any more than we have to legally. So if we've got the opportunity within the rules that they set, let's make sure we're not doing that.

Speaker 1:

And tax diversification is a thing. Don't have it all just in the 401(k). So we've talked about this about a million times, right? So you need different kinds of tax buckets.

Tony Mauro:

You do. You need a lot of different tax buckets. And to make sure you're pulling money out, especially in retirement, as efficiently as possible, meaning trying to minimize your taxes. We've had people come in and they're just pulling money out of pre-tax money out of 401(k)s just because they didn't know any better when they have all this after tax cash sitting over here. Let's draw on that first and let's keep this other stuff growing. So it's just little things like that I think advisors lend a lot of value in this area.

Speaker 1:

Any final thoughts for the DIYers out there? Things that you've seen in your firm, people come in that maybe is the biggest kind of pain point for driving them in to see you or have we kind of covered them?

Tony Mauro:

Well, I think we've kind of covered, most of them, the pain points. I would just tell anybody out there that is starting to get nervous, if you've been doing things yourself and you're starting to feel whatever, anything, get with a planner. If anything else, and you're worried about, "Oh, well, I don't want to do it because I'm not going to use a planner," well, go in and have them charge you just a one-time fee. Have them take a look at what you've got and give you some advice. It might be worth whatever they're going to charge you to do that. And at least then you've got at least some objective opinions about what you're doing.

And who knows, maybe you want to say it, you're getting to the point where it's like, "You know what? I'm done doing this myself. I want to be involved, but I want a planner. I want somebody to help me, especially in the distribution phase to make sure that things are going good." That would be my advice.

Speaker 1:

All right. Well, good stuff today here on the podcast. Look, there's nothing wrong with doing the DIY thing. It has its place in all walks of life and even financially. But some projects are a little worth calling a professional for, especially when the mistakes can really throw you into a real tizzy for the next 30 years.

So if you've been handling your retirement on your own, a second set of eyes, a second opinion is certainly important. Tony and his team are here for just that. You may find that you've been doing a bang up awesome job, but you also may get educated, as Tony said, on some things you just didn't know about or see coming. And so it's worthwhile to have that conversation with yourself. Again, Tony's a CPA and a CFP, an EA of 30 plus years in the industry. So a great resource for you to tap into, not only in Iowa, but he's got clients all over the country as well. He's licensed to work in different states.

So if you need some help, you're checking out the podcast, reach out to him, yourplanningpros.com. That's yourplanningpros.com for some time onto the calendar. Check out the tools and resources there. Subscribe to the podcast. Plan With The Tax Man on Apple or Spotify or whatever app you enjoy using, but certainly get yourself some professional help and advice.

Tony, thanks for breaking it down, my friend, as always.

Tony Mauro:

All right. We'll talk to you on the next show.

Speaker 1:

We'll see you next time. Have yourself a great week. And thank you for some time here on Plan With The Tax Man with Tony Mauro from Tax Doctor, Inc.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.

Whether you're visiting one of the 63 national parks this summer or just hitting a local trail, a lot of the best practices for a great hike apply just as well to your retirement plan. Let's “walk” through a few.

Important Links: Website: http://www.yourplanningpros.com

Call: 844-707-7381

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TRANSCRIPT: 

Marc:

This week on Plan with the Tax Man, maybe you're visiting one of our national parks this summer or just out hitting the local trail. And if you are, we have some best practices for a great hike that apply just as well to your retirement plan. So let's walk through a few of these with Tony Mauro. Hey everybody. Welcome into the podcast. This is Plan with the Tax Man, with my friend Tony Mauro. How you doing buddy?

Tony Mauro:

I'm doing good.

Marc:

Yeah?

Tony Mauro:

Midst of summer.

Marc:

Yeah.

Tony Mauro:

It's all good.

Marc:

I'm telling you what, it's been crazy, incredible hot. Look folks, little FYI out there. If your AC unit fails you during the really hot months, be very, very careful because apparently mold can build in the ducts quickly when the humidity is high and the AC's not working, go figure, even though the AC's not working because the water and condensation that sits in there while waiting to get it repaired apparently turns to mold. So a little FYI because it's expensive to fix it.

Tony Mauro:

Yeah.

Marc:

And that might be a retirement expense, Tony, that you just didn't see coming, right?

Tony Mauro:

You didn't see coming. You better have to depend on the emergency fund.

Marc:

Exactly. Right. So we're always trying to provide useful nuggets of information on this podcast. But we're going to have some fun this week. Tony, I know you like to travel. I know you like to go a lot of places. Do you visit the national parks? Do you do some of that stuff?

Tony Mauro:

The reason that I want to talk about this, because I was just out in a couple of them last week.

Marc:

Oh.

Tony Mauro:

I had to go out to South Dakota for a wedding, and so we stopped at the Badlands National Park.

Marc:

Nice.

Tony Mauro:

And it wasn't really a park, but Mount Rushmore. But I have been to other national parks out. I've been of course to Yellowstone and a couple of others. A lot of them I still want to see, and they're very interesting. I will say-

Marc:

You have been at Yellowstone or not? I though you had.

Tony Mauro:

I have been to Yellowstone.

Marc:

Oh okay.

Tony Mauro:

Yeah.

Marc:

Yeah. Okay.

Tony Mauro:

I still have a few on my list. Zion and Bryce And some of those, but I do like to hike. I'm an amateur.

Marc:

Yeah. I want to go to Denali. That'd be cool.

Tony Mauro:

Yeah, Denali.

Marc:

Yeah. Or McKinley, whatever it used to be called, either way. So look, do you know how many national parks we have, by the way? There's a lot.

Tony Mauro:

I don't.

Marc:

There's a lot. 63.

Tony Mauro:

Is that how many? 63 national parks.

Marc:

Yeah. 63 national parks. Some are really big, obviously, and some are really small. I think Hawaii's got a couple. I think California's got like six, but yeah. So there's different sizes and stuff out there. So anyway, a lot of people like to visit these things as a summer thing with the kids or grandkids maybe. So we'll talk a little bit about some analogies. I'll let you spin some financial wisdom to my setup for the park conversation. So we'll start with a map. Don't leave home without a map. I know we got these cell phones and that we're attached to them now, Tony, but you might not get signal in some of these bigger parks. And if you think about it, a lot of the gates when you go into some of these national parks, the first thing a ranger does is tell you a couple things and they hand you a map.

Tony Mauro:

That's what they did to me. Yeah.

Marc:

Exactly. And that's the same thing. It's to help keep you oriented. Same thing with a financial strategy. It's to help to keep you oriented and focused.

Tony Mauro:

It is. I mean, the financial plan, if you have a formal one, I mean, that's your backbone. That's the map itself. And just like when I was... We did a little hike in the Badlands on our own and they gave us a map to make sure we stayed on the trails and stayed on... I equate that to just like in the financial planning world, stay on track and make sure that you're following your map as best you can. So out there in the Badlands, if you get off the trails, a lot of bad things can happen quickly.

Marc:

Yeah.

Tony Mauro:

In the financial world, it's going to be a slow burn if you get off track, but over time you get off track too much, and what's going to happen is you get to the end and you are not going to be where you though you were going to be.

Marc:

Mm-hmm. Yeah.

Tony Mauro:

And so with this plan, as it changes and whatnot, it's not like a static map that you'd be holding in your hand with hiking.

Marc:

Sure. But if you get a little off course, it might help you get back on. Or even those reviews serves as almost like a check-in spot. Maybe you're going on a really long trail through the parks and it's like, "Hey, we're going to stop at this little whatever this thing is." And there's a map there because maybe they've made some changes or who knows?

Tony Mauro:

Yeah. In our annual reviews, I mean normally the plan changes a little bit every year, if nothing else, just with a little bit of goal modifications and things like that. And then of course, maybe even rebalancing.

Marc:

Well, life's going to throw something at you.

Tony Mauro:

Life's going to throw something at you. I was just telling you before this call, life threw something at one of our clients. They've got parents going into, one's got dementia and had got to go in a nursing home with no plan. And boom, all of a sudden life changes quickly.

Marc:

Yep.

Tony Mauro:

All the better to have a map and to be following it.

Marc:

For sure. For sure. Well, and unfortunately, Tony, one of the problems that we run into often when we go to these lovely, beautiful national parks because our country is full of amazing locations, is unfortunately there's other people. And people don't do the best job of always picking up after themselves. So when you go to just about every national park, there's signs everywhere. "Please do not leave your garbage. Please do not do the..." Like at Yellowstone, we were just talking about that. At the sulfur pools, "Don't throw cans in the sulfur pools," things like that. Just crazy stuff that you think, hello, common sense. We should not do this. Ultimately, the message is don't leave a mess behind. And financially, same kind of thing. I mean, when we're no longer here, are we leaving a mess for our family?

Tony Mauro:

Yeah. And that's what I was just on the call with is that this family's mother and father are going to leave them a mess, and they didn't plan for it. And you don't want to leave your loved ones when you're gone. I'm already talking. I'm working through it myself with my wife at our life list. Something happens to one of us, we don't want to leave a mess for our son. And that means knowing where everything's at and how to close things out and what's going to go where.

It's hard enough for loved ones when you're gone dealing with all the emotions. You don't want to leave them with a financial mess. And that goes from everything from no will to outdated wills, no beneficiaries on certain things, keeping all your stuff secret. I think you need to be more transparent with your heirs to make sure that you don't leave them with this and let them know what the plans are. You don't have to share every detail of every cent that you have, but I think you should leave something for them to help them when the inevitable happens. And then you're not going to be blindsided.

Marc:

Yeah. Yeah. I mean, and sometimes there's a lot of little things too. Unfortunately, big situations like the one you're currently dealing with there, but there's the little things people can do to not leave a mess. I mean, even something as simple as your TODs or PODs on some of your different accounts. A lot of times people don't even think about that. They got a bank account, maybe they got 50, 60, 70 grand sitting there and they forgot to put transfer on death to their spouse or whatever. So just a mess. Just make it easy when we pass on, because we're all going to pass on. Try to make it as easy as possible and leave no mess behind.

The scenic route. A lot of times we go to these national parks, we love to do the scenic route. Lots of things can get in the way. It's fun to do the scenic route, but sometimes you're just tired. You want to take the quickest route too. And I think when you're thinking about retirement, sometimes it's easy, Tony, to be like, oh man, what's the fastest way to get me some more income or take advantage of this crazy market run that we've been on or whatever. So the scenic route could be the way to go. Sometimes the faster way is the way to go. It just depends.

Tony Mauro:

It does depend. And it depends on going back to the first thing we talked about is your map and really what's going on. What we see mostly is clients wanting the fastest way. And you hit it on the head is what's the fastest way I can get to X amount because they think that's... And what they end up doing is, without a good plan, they could end up taking a lot of risk. They could end up really shooting themselves in the foot a little bit because there's all kinds of things out there. Anything from the volatility in the markets, what's going on in the world politically. And then of course dumbing it down a little bit, just not dumbing it down, but shrinking it down to what's going on in their personal lives. You're going to have things that pop up at you that scenic route may be the better route.

Our jobs as advisors is trying to mesh the scenic route with the fastest route and get the best of both of them according to whatever that person is after. Because most of the time patience and the discipline win the race rather than trying to shortcut and use time to market, for example. And then the next thing you know, you've lost a lot of money.

Marc:

Yeah. I mean, patience and discipline right there. Whether you're hiking and out in nature or dealing with your finances, it's important. You get too ahead of yourself out on the trail or you get too irresponsible, you could come across some wildlife that's not happy to see you, you could lose your footing and tumble down a hill or whatever. So certainly want to be careful there. And pack light, Tony, where you can whenever you're hiking. Anybody who's ever gone hiking or whatever knows that the more you weigh yourself down, the slower it's going to be, the more tired you are. So you keep the clutter to a minimum. And as we age financially, we start, I think not only just financially, but in every aspect we're like, "Ugh, we got too much crap. Let's start getting rid of some of it." And I think financially that happens too, right? Maybe consolidation becomes a higher priority and whatnot.

Tony Mauro:

I think so. I think as you get closer to retirement, you definitely want to start packing a little lighter. And it's funny because we were just out on, like I said, when we hiked last week, and I'm an amateur hiker. We don't do anything too strenuous, but we're still up on some rocks and things. I'm thinking to myself, I'm getting older. I need to slow down a little bit, make sure I assess these risks because I'm not 25 anymore.

Marc:

My wife would love to hear you say that. She does risk assessment for a living. Anytime someone says, "I got to assess some risks," she's very, very happy. So kudos to you.

Tony Mauro:

Yeah. And we're just looking at each other, it's like we're off the edge of a cliff here. And if we were to loose rocks or something, then we have an emergency.

Marc:

Yeah. Or it's over.

Tony Mauro:

Yeah, or it's over.

Marc:

Right.

Tony Mauro:

But I do like, when I hike, I do like to pack light. And I would say getting that over to the financial arena really is, as you age, get a little closer, it's a good thing to work with your advisor to consolidate accounts. Obviously try to get rid of all high interest debt if you can. I like to say to people, "You want to be debt-free by 65. Maybe you've got some old policies just like you got some old subscriptions that everybody always talks about that you're paying for that are no longer a use to you." All these exercises to clean up your financial life and make it as simple as possible when you retire so you know where everything's at, income's coming in predictably, and you don't have to stress out about it.

Marc:

Yeah. There you go. God stuff for sure. So consolidation and pack light financially is certainly a good idea. The final piece of this conversation, Tony, is that sometimes people will say, "Look, you just said there's 63 of these things. And if you've seen one of them, you've seen them all." Yosemite and Denali are completely different, right? Acadia and Zion, so on and so forth. And the itinerary outlined on the travel books, it may work for one park, but not for another or one family and not for another. And that's a super easy way to do a comparison to retirement. Tony, you've helped a lot of people retire and you could probably easily say, "If I've built one retirement strategy, I've built them all. They're all the same," but they're not because everybody's totally different. Yeah, taxation. Yeah, social security. Yeah. Income. There's the big ticket items you got to certainly do in every plan, but how you do it and in the ways that you do it is unique from person to person, just like a park.

Tony Mauro:

Just like a park. I mean, for those that say, "Well, we're going to use a robo-advisor or just pick some things out." Well, that's just generic. And will that work? Potentially, yes, but you really don't know if it will. And I believe that there's still a human touch in all of this. And what works for somebody on one end may be completely different for somebody else because, A, they may not have the same resources and income and assets, and maybe they don't even want all that. Somebody else might want something totally different. So I think that's where the planner can be of some value and that's why you're paying them is to lend that kind of thing and really create a plan for you rather than just everything's the same. Because I've only been to a few national parks and I can tell anybody that hasn't been, outside of, make sure you visit a few, they're completely different.

Marc:

Yeah.

Tony Mauro:

And they're completely unique. And I usually don't plug the federal government, but I will say that the parks that I've been to, including this one, are extremely well ran, extremely clean, and extremely just organized. And so why wouldn't we want to have that in our financial life as well? We've been talking about it for this whole call. I mean, that's what it's all about.

Marc:

Yeah, here, here. Well, look, the people who get the most out of their vacations, their national park trips, whatever it might be, aren't the ones that show up and figure it out the gate. Maybe. And maybe that just like retirement, it's such easy to make these analogies. You might, "Hey, we're going to go to the national park and just wing it today." And if you're 25, you can probably pull that off with ease. But when you're 65, you do not do that, right?

Tony Mauro:

No.

Marc:

You've probably done the research, mapped the trails, or at least know what you're going to be getting into before you get there. And retirement clearly, again, works the same way. A little prep goes a long way to making sure that you get the things out of it that you were hoping to get out of it. And that could not be more true when it comes to a financial strategy.

So as always, if you need help folks, reach out to qualified professionals like Tony. He's a CPA and a CFP and an EA of 30 plus years in the industry. He helps clients all over the place, not just in Iowa. He helps clients all over. He's got clients in different states as well. So if you're checking out the podcast and you need to have a conversation for yourself, reach out to him, have a chat, see if he's a good fit for you and vice versa. You can find him at 844-707-7381, 844-707-7381, or go to yourplanningpros.com. That is yourplanningpros.com. Lots of good tools, tips, and resources there. And don't forget to subscribe to the podcast, Plan with the Tax Man. Lots of podcasts out there, but we try to hopefully provide you with some fun, a little bit of humor, a little bit of educational content, some nuggets of good information to help you get along your way towards retirement.

And with that, Tony, thanks for hanging out, brother, and breaking it down as always.

Tony Mauro:

You bet. We'll see you on the next one.

Marc:

We'll see you on the next time here on The Plan with the Tax Man with Mr. Tony Mauro, Des Moines Professional Alternative at Tax Doctor Inc. We'll catch you next time.

Securities offered through Avantax Investment Services SM Member M FINRA SIPC Investment advisory services offered through Avantax Advisory Services Insurance services offered through an Avantax affiliated insurance agency Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.

Over the past year, one retirement video on YouTube pulled in 3.7 million views. The title: "Sell These 5 Things Before You Retire." We thought it was worth a conversation — not to tear it apart, but to react honestly. Do we agree? How often do we actually see this play out with real clients? Let's get into it.

Important Links: Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript: 

Marc:

Over the past year, one retirement video on YouTube pulled in 3.7 million views, the title, Sell These Five Things Before You Retire. We thought we would talk about those five things this week here on the podcast and break it down a little bit with Tony here on Plan With the Tax Man.

Welcome into the podcast, folks. Thanks for hanging out with Tony Mauro and myself, as we talk investing finance and retirement. And yeah, the top video of 2025 for retirement was 3.7 million views, Tony, and it's Sell These Five Things Before You Retire. So, we'll keep that in mind as we're breaking these down. I want to get your take on each of these, and does it make sense to you? Do you see that often? Just let us in on your insights as a planner who's been doing this for many years. So, this should be fun. How you doing, my friend?

Tony Mauro:

Yeah, I've been doing good, been doing good. This is a good topic because I think we as planners get asked these things a lot. This was a really good video. And I did view it, I agree with most of it.

Marc:

Yeah, I do too, yeah.

Tony Mauro:

We'll break it down a little bit and have some fun.

Marc:

Yeah. Well, let's start with the biggie. The oversized house. I think this is a huge question for obviously many, many people. Obviously, it resonated with lots of folks because yeah, I mean, it could maybe free up some significant money. Now, however, depending on what you want to do, housing prices are still pretty high. So, but I do agree overall with this concept. If it's this big place that the two of you don't need anymore, well, that's something to consider.

Tony Mauro:

It is, and all of these topics really I would preface with saying it begs the question to at least discuss with your planner, because they're selling... In the video they're saying, "Okay, yeah, do this, this, and this." I don't agree with it all the time, but at least you're asking the question. But the theory here is, is obviously if you've got a big house, only two of you in it, no mortgage, maybe don't want to take care of it anymore, have had it a long time. Could sell the house, take the tax-free gain most of the time, and then either downsize and possibly have more money in your pocket to do something else with.

Now, where I disagree with this a little bit is because housing is the way it is, it seems like a lot of times when people go to sell property, at least in the Midwest, down the coast, maybe if you can make a lot of money that's a different story. But they find out, well, I make two or 300,000 on it, and then I go to find something even though it's smaller and I got to invest all of my proceeds plus the gain because things are up from when I bought, and they don't really get as far as they thought they would. But the theory is good because if you're, like in my own case, I have a fairly large yard and I talk with my wife right now. I was like, "As we age, do we really want to take care of this?" And we own the house already and it's too big just for the two of us, but I don't know. I don't know if I want to leave. So, it's a good question to talk about with your advisor, for sure.

Marc:

Yeah. I mean, and it could, to your point, I mean, obviously add some significant capital to a retirement plan depending on, again, what you were going to do. Are you going to just maybe rent? Were you going to get a condo or a townhouse? But those have gotten really pricey lately too. So, it's a worthwhile exercise for sure to see what it could-

Tony Mauro:

That's right.

Marc:

... do to your overall retirement plan.

 Number two on that list, Tony, was supporting or financially supporting the adult children, sell this item. I absolutely agree with this one, me personally. But I mean, and it's hard for parents to go against the instinct of helping, but you can't finance retirement, Tony.

Tony Mauro:

You can't, and I agree with you and with this point too. It is hard, I go through it with my own kids. Now I have a grandchild, and that's although I'm going to do whatever I want with her, but... And there's books been written about it about the... And I think it was from The Millionaire Next Door, I think it was from the book, but somebody was saying that that's economic triage. And then what happens is if you start supporting them, then they expect it. And like you said, they're going to have to go out and build their own [inaudible 00:04:29]-

Marc:

And they've got decades still to do it, you don't.

Tony Mauro:

They've got a lot of time, yeah. And you're running out of time. And so, I would limit this if you're going to do it at all, and try not to do it. Just for nothing else, hopefully they can figure things out on their own and become their own financially responsible adults, but obviously we're there as parents if they really fall, but I strongly urge my clients, yeah, not to do this.

Marc:

Yeah. You made an interesting point too, if they really fall, yes. But I mean, look, at the same time, no, because you're going to have to sometimes, you got to rein it in, especially if your plan is just barely getting you the retirement that you needed or not even the dream retirement but just getting you into it and through it, allowing you to stop working or whatever, every situations are different, you can't sacrifice that to help them. I mean, I know it's tough, but sometimes you just got to bite that bullet or they've got to bite that bullet. But isn't it funny though how like throughout time it's some weird thing like, "Oh, well this is the grandkid and the grandkid is now more important than you. Sorry, bye."

Tony Mauro:

I tell you what, it's hard. It really is, because you get like... I never thought I would be like that, but yeah, and you want to ensure their future. I don't know why.

Marc:

Well, maybe because they're little and it's like it takes you back to when yours were little. And of course, we're typically in a better position when we have the grandkids to help them out. So, that probably has something to do with it too.

Tony Mauro:

That has something to do with it, exactly.

Marc:

Yeah, yeah. Good stuff. All right. Number three, expensive toys that become expensive burdens. Some of us spend a lot of years, Tony, the 30s to mid 50s collecting those toys and doing things that we like. And then you just one day go, that's a lot of crap.

Tony Mauro:

It is, and I admit it.

Marc:

Do I want it? Do I need it? Right?

Tony Mauro:

Yeah. And we've all been guilty of it, whether it's a boat, you name it, a classic car.

Marc:

Yeah, a travel trailer, whatever.

Tony Mauro:

If you've got money, yeah, airplane, something like that. If you're not using this stuff and really don't enjoy it, you do have to start asking yourself is, do the cost of these things sitting around actually match what the enjoyment that I get out of them? For me, a lot of things is not. Things don't interest me as much as they did when I was younger. And now that you, most of the time you get a little closer to retirement, in retirement, you have the money to pay for them. But it's like, yeah, just because I can do it, I don't really necessarily get enough enjoyment out of it to just have it sitting around. Then I've got maintenance and everything else and it just freaks me out. But this is something to talk about with your advisor, especially, if you're looking at all of your assets, which your advisors should know about, not just your investments. He or she should know about everything you have.

Marc:

Good point, yeah.

Tony Mauro:

They may be able to advise you, "Hey, do you still enjoy this? If so, let's keep it in. If not, well, what can we do with that money to get you more enjoyment?"

Marc:

Good point. And in that list, and you could have maybe put point number four here in point number three, but maybe not. I get where they're going from this, but I have a real hard time with this one, Tony. So, this will be fun to-

Tony Mauro:

I do too.

Marc:

Yeah, this will be a fun debate here. It's the second car. Now the argument is without the commute, two cars sitting in the garage maybe costing more than they're worth in insurance, maintenance, and so on and so forth. And granted, at a certain age, maybe this becomes more realistic, right? But you think about retirement, people are more active, they're more healthy in early days of retirement. The loss of freedom to an American is a huge deal. I mean, think about our country, our identity for, God, since the '50s has been tied up in the car, right? When we built the interstate system and all the vehicles and everything, I mean, this is a big country. And when you want to jump in the car and go someplace, even if it's down the street to the store, you want to be able to have the freedom to do that, right?

Tony Mauro:

You do. And I don't have many clients, they talked about it on the video. It might be from a strict, strict planning standpoint, might be something to consider. And again, I maybe asked the question, but you hit it on the head with the word freedom, is that less Americans, at least me I know and almost everybody I know, do not want to give up that freedom of I can go, like you said, get in it and go wherever I want.

Marc:

Yeah. Well, Tony, you travel a lot to Europe, right? You were just talking about that on our last podcast, right? Europe is designed differently. They walk everywhere.

Tony Mauro:

They're different.

Marc:

Right.

Tony Mauro:

They walk everywhere and they have trains, like high speed trains. So over there, yeah, the whole culture is different, and maybe there it might make some sense.

Marc:

And depending on where you live here, if you're in a larger metropolis, sure, walking might make more sense, but I'm sure where you're at, where I'm at, it's five miles to the nearest little convenience, like the little convenience store. I'm not walking five miles in 99 degree weather.

Tony Mauro:

Yeah, [inaudible 00:09:21].

Marc:

I'm taking a car, right? So this one's tough for a lot of people, I think.

Tony Mauro:

Yeah, I think it's tough. I've only known one person and she actually worked for me, my admin person, she was about 70 and now she lived close to the office, but they got rid of one of their cars and it was her car, and she always told me, "I just feel like I walk home from work," because she lived real close, "And then I'm stuck there unless I take an Uber or something," and so she never did. And I was always like, "Why did you guys do this?" And of course, that was their rationale. "Well, our plan was real tight and we felt like we didn't need that car and it's saving us some monthly cash flow." And [inaudible 00:10:02].

Marc:

Yeah. I mean, I guess depending on the car and... I mean, there's so many factors to this one too, Tony, right? If your vision's starting to go, and granted, that happens when we get older and reflexes, I could see where for some couples it makes sense. Maybe not the financial sense, because I don't think a second car nowadays should probably going to make or break things for a lot of people, but I mean, unless you're talking about a really expensive, nice car or something. But yeah, I think there's certainly mitigating circumstances.

Tony Mauro:

I think there are. And I think if you own it outright, why not keep [inaudible 00:10:34]?

Marc:

Yeah, how much is it costing you, really? Yeah.

Tony Mauro:

Yeah. I mean, it's minimal after that, so.

Marc:

Yeah. I guess if it's still a six, $700 a month payment, you got two of those, right? You're spending like almost two grand a month or 18, 16, 17, $1,800 a month on car payments and you're not really using it a lot, then I could see that argument too, so.

Tony Mauro:

Yeah, yeah. There's a little bit of an argument in there. Yeah.

Marc:

Okay. All right. Well, this last one, Tony, you can't sell it on eBay or any of the sites that are out there now, right? So this one's a little different, and it's the work identity. And you and I talk about this often anyway, and so I certainly agree with this. The argument is that sense of self once you no longer have that professional title or whatever. I mean, whether you were working an auto line or you're a doctor or whatever you might be, so many people tie their identity up in what they've done for 30 years. So who am I now, kind of thing.

Tony Mauro:

Yeah, and I struggle with this one because I'm in that category of, for me, you work all these years getting, in my case, financial designations. And it's like it's part of who you are and you've had to take and spend tons of time at CE, which is continuing ed, and trying to hone what you know. It's going to be hard for me when you say, "Okay, enough's enough. Why do I want to spend the money to keep these active?" But the biggest thing is the time factor of continuing ed with all that time when you don't have much time left and you're not even earning any money from it. And so, but there's a part of me, I got to admit it, that I don't want to give them up.

Marc:

Well, you're the Tax Man.

Tony Mauro:

Yeah, I know. And someday I'm going to think, "Gosh, what am I, really?" I tell clients, "Don't do this," and here I am, clinging to these things that I don't need anymore. But so it is hard, but I think the video's point was when you retire, whether you're a doctor or whatnot, and you got to keep some of this stuff up, and then there might be even insurance if you're going to do something for anybody, E&O and malpractice stuff and all that, is you got to let it go and it is difficult for people.

Marc:

Or just build a new identity, right?

Tony Mauro:

Or build a new one.

Marc:

If you're walking away from whatever, we've said many times, walk towards something else because humans need something else. Right?

Tony Mauro:

You need something, yeah. You can't just sit. But for me, it's probably going to be continuing to... Well, I like wine and learning about that. So I like online stuff with that, I'm not looking for designations or to make money, but that's what interests me. That, flying, golf, and a little bit of travel. So, everybody's different. Somebody might be, I don't know, crafts, somebody might be working on cars. Who knows?

Marc:

Yeah, yeah. Well, I like, we're going to steal from their framework here, their questions. They had a couple questions at the end. And I'm really going to just wrap both of them up into one that I think were most pertinent. And I like the way they put this and just put, if you're thinking about any of these five points, ask yourself, does this still serve my new life? Does it serve my new life, or does it serve my old life? And if I do let this go, what becomes possible? I think those are really good ways of thinking about that.

Tony Mauro:

Those are the best two lines out of the whole video, and that's why I wanted to go over this topic because if you just use that, that's going to guide you in a lot of decisions [inaudible 00:13:57].

Marc:

No matter what in retirement, right?

Tony Mauro:

Yeah, no matter what.

Marc:

Like you could just say to yourself, "Does this serve my retirement or does this serve my old me?" Right?

Tony Mauro:

Yeah, yep. Exactly it.

Marc:

And that's a struggle I imagine for most people.

Tony Mauro:

It's a struggle. I know it's a struggle for me because you just get set in your ways, but I think the video really, if you haven't watched it, you should go out and watch it, because I do think-

Marc:

We'll put a link by the way in the show descriptions for folks so they can check it. Yeah.

Tony Mauro:

Yeah, because it is good, it's done well. It touches something that what I feel is real. And I think that we're all going to face these decisions, so start wrapping your head around it a little bit.

Marc:

Yeah. I mean, 3.7 million people watched it for a reason, right? So it's not just about the things we accumulate, sometimes it's about also what we're willing to let go of. I think many of us, when you get over 50, we start to feel a little bit of a pull towards declutter. Maybe some people are, they like to hoard the things and some people like to let them go, right? So, it starts to shift a little bit as you get older, but I think it's worth the thought exercise certainly and talking with your loved ones about that as well.

So again, we'll put a link in the descriptions, but if you'd like to go check it out on YouTube again, it's just called Sell These Five Things Before You Retire. Just search that.

Tony Mauro:

You'll find it.

Marc:

Yeah, and you'll find it.

So Tony, thanks for hanging out as always and breaking it down, we always appreciate you. Folks, thanks for being here and if you need Tony's help when it comes to adding these things to your list of conversations or any others when it comes to building your strategy, they are here to help at yourplanningpros.com. That's yourplanningpros.com. And with that, we will see you next time here on Plan With the Tax Man. Thanks, Tony.

Tony Mauro:

All right, we'll see you on the next one.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.

Summer's here. And somewhere between the excitement of planning a big trip and the anxiety of what it costs, a lot of retirees end up doing something that surprises us… they feel guilty about it. They worked hard, they saved, they planned for decades, and then they second-guess a beach vacation. Today, let's talk about how travel fits into a real retirement plan and how to enjoy it without guilt.

Important Links: Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript: 

Marc:

Summer's here and somewhere between the excitement of planning a big trip and the anxiety of what it costs, a lot of retirees end up doing something that surprises many. They feel guilty about it. So today let's talk about how travel fits into a real retirement strategy and how to enjoy it without all that guilt.

Hey everybody, welcome into the podcast. It's another edition of Plan with the Tax Man. Tony and I are back for more content as we talk about investing finance and retirement. And we are going to talk about, again, that guilt-free vacation, planning, strategizing ahead of time so that you can enjoy some of the things that you really worked towards in your retirement years. And Tony, this works out well because you've had a bit of travel yourself, took a couple of vacations. And how you doing, my friend?

Tony:

I'm doing wonderful. Yeah, I'm back from vacations and I like this topic because it is as people get closer to retirement, I think about a lot of these things too, so I'm anxious to talk about it.

Marc:

Well, I think a lot of people have heard and probably know and admit, Tony, that most people will spend more time planning a vacation than they do their retirement. That's pretty common in this field. But when you're thinking about what you guys do, strategizing, putting these plans together, when you're building those out for people, is travel and vacation something that actually makes it into the plan? I know some advisors do, some don't. I feel like it's something that you've got to take into account and be budgeting for. And I'm sure that you guys do. What are some reasons why and how does that help the end user?

Tony:

Yeah. For a lot of our clients, it's one of the first questions I asked when we get to the point of, okay, what do you want to do in retirement? And if I don't hear, I mean, for a lot of people they say, "Well, I want to travel." But then we try to get a lot more specific with that. But if I don't hear it, I'll ask it. But what a lot of people do is the ones that don't think about it, they plan for everything else and they don't really plan for fun because once we get through everything, it's like, okay, what do you want to do that's fun? Because that's the whole reason for retiring and enjoying the last part of the game of your life.

And so that's one thing I ask them and see if travel comes in there. And I think some people, they feel like they've never traveled a lot in their life so they don't feel like,... They want to do it, but they don't feel almost like they're worthy of it, like they haven't earned it yet, which I think is a mistake because obviously you have.

And if they haven't planned for it, a lot of times then it gets kind of stressful and that's what leads us to, well, let's start planning for it. I mean, everybody's got different budgets and different thoughts about what their travel is. So what's great for me is not going to be great for a client or somebody else, but they just need to get it in their plan and obviously we can throw it out later or we can massage it, do whatever we want. But I definitely think that if it's important to them, we got to get it detailed.

Marc:

Well, and I think that some people probably seeing it on paper in their plan makes them feel like, "Okay, yes, I can spend this." Because like you said, they're so busy thinking, "Do I have enough to survive? Do I have enough to live on? Am I going to run out of money?" The classic things there. And it's like, no. And even with the vacation spending in your plan, you're not going to run out of money. I think that gives people that ability to do that more guilt-free.

Tony:

Absolutely. That does. And once they know that, yeah, they can ease up a little bit and feel a little more calm about talking about it and actually trying to plan something. It's fun to see when people haven't traveled a lot and they get to do some stuff that they never dreamt they would do.

Marc:

And I imagine that budget would change over the years. Like maybe you're budgeting 20,000 or 25,000 over the early couple years and then that tapers down a little bit because I'm assuming that there's a natural rhythm to how retirees spend. And we've all heard the terms about the go go and so like that. So obviously early on, most people are probably wanting to do more because A, free from work, I'm free from the time clock. But also B, I'm feeling good enough to go do it.

Tony:

Yes. And I used to think that too. I used to think that my retirement was going to be just the same from the beginning till the day you die. And as I've watched people over the years, that's so far from the truth because you're exactly right. Most of the time, as soon as people retire, they want to hit the travel and hit the stuff on the big bucket list as soon as they can for the reasons you mentioned. And then we see about 75-ish and beyond, things slow down. Your body isn't moving quite as fast. The mind isn't working quite as fast. And so they don't want to be so far from home in case something happens. And so it really starts to slow down. And then you get over most of the clients I see anyway, over 80, 82 years old, it's really gone to where those days are over.

It's really just visiting family and trying to stay closer to home. So your travel budget does, it starts out high and then it starts going down, which even I think is more of a comfort to people to get them to take and do things while they're a little bit younger in retirement because you're not going to do this forever.

Marc:

Right, right. Yeah. And everybody, again, situation is going to be a little bit different. I imagine you often have to, and we've talked about this many times in other aspects of the retirement strategies, you have to put on that therapy hat, for lack of a better term, because I imagine there's many couples that don't see eye to eye on travel spending, right?

Tony:

There's a lot. Yeah.

Marc:

You got to balance some of that. What are some things to think about there?

Tony:

Well, generally, if we're on that page and somebody they can't come to an agreement, we definitely try to talk it out with both spouses usually and let them know that they are going to have the money to do it. Now, if there's some other reason that they don't want to go, then we can get that out in the open. But really we just try to convince them that you are going to have the money and you don't have to worry about that. Now, if you're averse to travel planes or something like that, I can't really help them with that, but it's really not the trip itself. It's just really kind of talking through, seeing on paper, reassuring them that, "Hey, this is able to be done." And see what they do. Sometimes they compromise, sometimes they don't. It's kind of funny to watch, but it's kind of interesting.

I only had one couple where, and that's a real trouble where one of the spouses, she just didn't want to travel at all. I mean, it doesn't matter what the other spouse or I said. They had plenty of money and so he ended up kind of doing some things by himself and she was okay with it, but that was a rare instance. Most of the time they come up with something.

Marc:

Yeah. And again, how you've lived leading into that, my wife travels a lot for work so I know that she's going to want to do a little less than... And I don't travel. I don't leave the house at all very much because I can work from my home. So like a lot of people have done, so I imagine that adds an interesting dynamic too where one wants to go, one doesn't want to go. So you got to kind of find that balance. One wants to spend, one doesn't want to spend. So finding that balance. And a good way of thinking about this, Tony, is the plan itself might become the referee, right? Because then when it's in the plan and it's structured out and you go, look, you can see it. And then it maybe diffuses some of those arguments.

Tony:

It does. Yeah. Because once that time period comes up in the plan, everybody's ready for it. There's not any real surprises and they know they have the money. And yeah, it does ease the stress of it again.

Marc:

The tensions a little bit. Yeah. Yeah. Do most people think far enough ahead when it comes to planning for travel? I mean, I imagine most don't, right? I mean, there might be somebody who's a bit of a big planner, "Hey, I want to take this really big family trip three or four or five years out." But I imagine most people probably don't do that.

Tony:

They don't. I see this so often that they want to travel and then it's like, well, let's do something in six months. And then, okay, you could do that, but I think you need to focus on, especially in retirement, come up with a plan. I get a friend of mine because he always laughs at me because I do plan three, four, five years out even now for travel. I've got it already down for the next four years. At least what we think we want to do, obviously you can change it.

Marc:

Yeah, but it gives you time to kind of build in the funds and kind of see what you're going to do. I mean, things pop up like a popup wedding destination or something like that, sure, but a little bit of structure could help.

Tony:

It certainly can help. And I tell you, the shorter term planning, to me, I don't like surprises and most people don't. And I think some of that time leads to surprises, if you will, in stuff you didn't think about. And for me, I don't really care about that or I shouldn't say that I don't care about it. I don't care to think about it like that. And I don't know, for me, I try to get them to plan, let's just put a big picture out there, let's put it on a piece of paper. It's just garbage anyway, you don't have to do it and let's see what happens.

Marc:

I'd imagine you could also, maybe for the saver in the situation to our prior point, you could kind of say, "Hey, look, by doing this ahead of time as well, well ahead in advance, we could probably save some money because I mean think about the closer you get to a timeframe, the more the airfare goes up." So if you book something like two years out, it's going to be much cheaper, I would assume.

Tony:

It'd be much cheaper. Especially if you're doing tours and things across the continents and whatnot, they always have things that go on sales, you got to keep your eyes open so at least have the plan so if something you want to do pops up, you can save some money, you can get on or at least put a deposit down.

Marc:

Yeah. Yeah. And it got me thinking a minute ago when we were talking about the first point, you mentioned something about sometimes people get worried as they're aging, something might happen when they're traveling. And so I was going to ask you, what are some travel costs that tend to catch people off guard? That's a fantastic one. I mean healthcare, right? Medicare doesn't... Most people don't realize this, but it's not like Medicare follows you wherever you go.

Tony:

It doesn't follow you where you go and I think that's a big issue as people get older and older is they're worried about something happening when they're on vacation. I typically recommend some sort of travel insurance. I personally use a policy that I renew every year, just like my auto and home.

Marc:

So you've seen that be very, very helpful then?

Tony:

Extremely helpful. And if you're traveling a lot, it's a lot less expensive to just do the yearly policy than one by one because I think they overprice those a little bit. I've got a 24-hour line and I don't feel if something happened abroad, they're going to ship me home right away, but that's something to plan into the plan, number one, because if you do have something bad happen, which I had a friend who got sick down in Cabo and it was life-threatening and she was not able to get back. She almost died down there and it's just a mess and just a mess and then it ended up costing them a fortune to get her out of there. And if she just would have had travel insurance, that would have solved all of that. I think that's one issue. The other issue is, and I try to budget this even when we go on our trips is how much are we going to spend when we're there because you know you're going to do something.

Marc:

And then double it.

Tony:

Yeah. And then add some percentage points because stuff comes up that you see that you want or go to some... Whatever it's a show or something else. So that has to be planned in. And then other than that, really, as I age, now that I have my first grandchild, I'm longing for the years where I can go somewhere in the winter, maybe she can come visit me. And obviously I'll pay for that, so that has to be factored in as well. So all that kind of thing I think are some of the hidden costs people don't think about unless they're having some talks.

Marc:

Yeah. No, that's some good thoughts right there. Yeah, I mean things can always get... And it's not even just like the spending that gets more when you go someplace, taking in a show or some bigger items. The little stuff will nickel and dime you to death too. I was talking with somebody a couple years ago and they text me and they're like, "Worst mistake ever at a Hawaii resort, no sunscreen, had to buy it from the resort." And he was like, "It was like 40 bucks for like this bottle of sunscreen." He's like, "You've got to be kidding me." But they got you. They've got you by the you know what, right? You're not going anywhere.

Tony:

Oh, you do.

Marc:

You spend the money, right? So little things like that can just sneak up and granted, not that 40 bucks should make or break a trip, but it's just the idea that everything can get out of control if you're not careful.

Tony:

It is. When I was just on vacation and we went to France and I'd been there before and so I knew this, but the first time I went, I was unaware. This time I was a little more prepared because what they don't do is when you're tipping them, they don't put it on the credit card like we do here. And so I had euros. I usually don't travel with a lot of cash. I think that's a whole nother topic, but I did have some euros because I wanted to be able to tip in the way they wanted it and it's just again, one of those little things that make it a little less stressful.

Marc:

Yeah, that's a good point. And circling back real fast, we're going to wrap it up here, but another little thing I think when you're talking about the getting out and doing things and traveling while you're still feeling good enough to do it, especially if you're thinking about doing some of those countries and some of the European stuff like you were just talking about, it's a lot more walking than I think people realize and there's no AC and not the AC anyway like there is here.

Tony:

It doesn't work quite the same. Yeah.

Marc:

It doesn't work quite the same. So keep that in mind. Yeah.

Tony:

There's all kinds of loads of little weird things you could talk about. Yeah. It's just different cultures and so it would behoove you to learn a little bit about that just so you're not shocked with different ways people live.

Marc:

I can't tell you that how many times I've talked to somebody who's gone to like Italy or something in the summer and they're like, "Oh my God, there's no AC." And it's not like they don't have it, but they don't have it everywhere like we do, right?

Tony:

No, and then they're used to it. So it doesn't bother them.

Marc:

Exactly. That's the point, right? So anyway, so look, you didn't save for decades so you could sit at home and do nothing unless that was the plan. And if that's what you want to do, then that's okay too. But a good plan for travel makes things a little easier, a little more worthwhile, saves maybe some arguments and some headaches. So make sure you're talking with your advisor about putting that and strategizing that into your overall plan because I think that, again, seeing it in black and white gives people the freedom to feel like, "Hey, I can do this comfortably without the guilt." It serves as that good referee between you and the significant other so you're not jaw-jacking back and forth and making each other mad about piddly things. So it just kind of comes down to just put it in the plan, strategize it out and work with your advisor on doing that.

Get a little ahead of the game and I think that'll serve you very well. So thanks for hanging out with us here this week on Plan with the Tax Man with Tony Morrow. Of course his team's here to help you if you need that help, yourplanningpros.com is where you can find them online, yourplanningpros.com. Again, your planningpros.com. Subscribe to the podcast on Apple or Spotify or whatever app you enjoy using. This is Plan With the Tax Man with Tony Morrow. Tony, my friend, I'll see you next time.

Tony:

All right. We'll see you next time. Have a good one.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.

Quick question before we get started... which Easter candy are you most looking forward to this year? Whatever your answer is, we're going to use it. Because today we're building a financial Easter basket and matching some of your favorite candies to the products and tools that belong in a solid retirement plan.

Important Links: Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript: 

Speaker 1  00:00

Quick question before we get started, which Easter candy are you most looking forward to? Yeah, that's my opener for the podcast this week, because we're going to talk about financial Easter baskets. So we're going to talk about candy and what they might say about you here this week on plan with the tax man. You

Speaker 1  00:35

everybody. Welcome into the podcast. This is plan with the tax man with Tony Morrow from tax Doctor Inc, at your planning pros.com that's where you can find them, online. Your planning pros.com, and Tony, we're gonna talk candy, because you and I are in our 50s and we love candy, but it don't love us as much anymore.

Tony Mauro  00:53

That's right. And I grew up eating candy and all these things, although my favorite Easter candy is not on there.

Speaker 1  01:00

Okay, we'll add that. Get to that at the end. Yeah, we'll add that in. So what are we going to do here? Is, I want to give you some, some, you know, Easter candy in lieu of the, you know, the end of the month here and Easter upon us. And we'll do a little financial Easter basket, and let you kind of give me some sort of, we'll do some sort of an analogy. I'll set you up with something, and I'll let you kind of talk about it, so we'll have a little bit of fun. So, are you a jelly bean kind of guy? Easter time? Do you like some jelly beans? You know? I like the kind of, what I would call those artisan jelly beans that they now have come out with, you know? So I do like them. But we always used to get just to run the mill stuff. Oh, yeah. Like, like, you know, I don't know Apple Cinnamon, or, you know, I don't know pumpkin spice or something, yes, although they probably do make a pumpkin spice Jelly Bean. And people are probably like, no pumpkins for October, not for, you know, April, but so, all right, the Jelly Bean, so, lots of colors, lots of combinations, right? And so maybe you're, maybe the analogy here is the 401 k right? Maybe, maybe some combinations, or some, some different things, some variety, potentially, yeah.

Tony Mauro  02:08

I think the biggest thing for, you know, the anchor of most retirement plans is either, you know, 401 K Sep, simple, you know, you name it as the anchor for what you're trying to do as you get toward the end.

Speaker 1  02:23

True and jelly beans are probably a good staple, a good anchor in the basket, if you will.

Tony Mauro  02:27

Yeah, you know, good anchor in the basket, you know. And you find them in every basket. If you don't have this, you know, you need to be starting it. Most employers are offering something these days, and you need to get started. I can't. We're in the midst of tax season, and I'll say this as a public service announcement, I and I've been doing taxes for 30 years. Is I always when I'm reviewing a return, look at somebody's w2 and look in box 12 and see what they're contributing or not contributing to their retirement plan. And many times I see the box check that they the company offers one, I see nothing being contributed, or I see a little bit, which is better than nothing, yeah, but you got to get it going, because it's one of the best deals on the street. It's usually some free money in there. And I think you need to start those early, the use time and compounding and everything else, so that you've got this anchor for when you you know, are at the end,

Speaker 1  03:22

yeah, I don't know why. I just got hit with it. You're talking about, you know, out there on the street, I'm thinking jelly beans in the street. And also I'm like, could you imagine a funny little world where we're out there dealing jelly beans on the corner? Hey, man, right, I got some, I got some pinks. I got some yellows. I got some of those, those terrible black ones. They're those are never very good. I'm not a big fan of, maybe it's just the, maybe it's just the, like black liquors, not very good

Tony Mauro  03:47

to me. I never did like the black ones. But I think, though, to your point, with the different colors, once you start contributing to one of these, then you need to have some diversification. Most, most retirement plans will offer you, you know, an array of different choices, which is, you know, probably behooves you to work with your advisor and come up with a strategy as to what those choices should be.

Speaker 1  04:09

Now, the Jelly Bean choices in the 401 k are, it's not crazy assortment of colors, right? So, like an IRA, you're going to have a lot more to choose from, you know, because you're kind of stuck with whatever they you know, the company goes within those 401 K options. So some people, Tony, often think about, hey, look, from a workplace plan, get that match, get that free money. But then maybe let's do some contributing to an individual account or something we set up so we have more control or more options. How do you feel about that strategy as well?

Tony Mauro  04:39

I like that strategy a lot. Well, that's what we generally will say, is, is somebody comes in, we tell them to start with their 401, K, get that company match. You could certainly continue to max that out if you want. Yeah, absolutely. And then one. Once you get to that point, then you've got to turn to outside. It might be a Roth, might be a traditional something like that. But yeah, if at least get the match. And then if you want more control, total control, then you have to go to an IRA or Roth. The only, the only drawback is, is you are limited on your contribution. So if you want to do more, you got to stay in that retirement plan with some of that. But yeah, they're all three are good ideas.

Speaker 1  05:17

Okay, all right, so moving on here with our Easter basket analogy, things you might find on the Easter basket and the candy, and then how that, you know, might correlate to something. Let's talk about peeps that teach the nasty. And if you like peeps, don't yell at me yet. I'm gonna give you I'm gonna do pros and cons here. But, you know, look, when you're a kid, man, they're colorful, they're fluffy. They're marshmallowy. A lot of kids like peeps, right? They're just kind of fun. You're kind of play with them. You stretch them out a little bit, you chomp on them. They're sticky on your fingers. But as you get a little older, I don't know, they're kind of nasty, right? And they're kind of a pain a little bit. But, you know, some people grow up and they still really love them. And this, to me, is got to be life insurance, right? Because it's kind of like when you're younger, you kind of dig it, right? And then you get older, you think, why do I like this? Or why do I do I even need this anymore?

Tony Mauro  06:08

Yeah, and, and just like peeps, and I don't like peeps anymore. I used to like them, right? Just like you life insurance generally, when we start talking about planning, is not very well, I would say, understood number one or used. So it's not everybody's first choice, that's for sure. And when we start talking to them about it, you know, everybody you know is going to die. And when you're younger, obviously, you know, especially today, term insurance is peanuts to get and protect your family. My son, who's 30, you know, got a new daughter. And, you know, home, and, you know, start accumulating debt, because they're just getting started, it's important that they have coverage. Yeah, for the family, in case one of them, you know, goes down. And yes, you can get some coverage through your employer, which obviously you want to take advantage of that. But it generally is not near enough to what you need, especially as you are younger now, as we age, we get in their 50s, like me, and I'm looking at my life insurance, and as some of this kind of is set to expire in the next five or 10 years, I don't need this much anymore, because I'm, you know, I'm closer to the end, all my bills are paid off, you know, it's in my other financial You know, situation is intact. So you may not need that. Now, some people say, Well, you know what, I don't care if I don't need it. I want it. I want to know if i i think a perfect scenario is I'm at retirement. This is me talking personally. I know that if I pass away, I can, I can, while I'm living, enjoy some of my money I've worked so hard for and I know that, okay, my son, if I'm going to pass money on to him, is gonna be taken care of through life insurance. And some people like, like, like, that angle as well,

Speaker 1  07:49

just like peeps, right? I mean, in some people love it, and it's not everyone. Some it's not everyone's first choice sometimes, right? So, but it could be a useful tool, right? As far as the life insurance thing, right, to pass on that wealth. So at least consider the conversation, have a chat and discuss it, because, again, life insurance is one of those pieces of the retirement strategy that, you know, it's, it's, there's some more wiggle room in there, but there it could be, or life insurance products in general, there could be some aspects of those tools that can be beneficial. So again, talk with your financial professional about that. And of course, Tony's here to help if you've got those questions as well. All right, inside the financial Easter basket, diving back in. Here we go. Here, robin's eggs. Okay, now, we didn't get these often, but occasionally we did. We get these interesting little candy, right? Kind of a divisive candy. Some love them. Some can't stand them. Kind of like peeps, really hard shell the speckled colors, right? Designed to look like a robin's egg. Some people just, my mom just used to use them for decorating. She'd be like, yeah, don't, you guys don't eat those, right? But maybe this is an emergency fund. Maybe this is kind of the analogy there, right? Where some people kind of feel like, you know, they don't really necessarily need it, and other advisors are like, it's a mandatory, you know, pillar of the retirement strategy?

Tony Mauro  09:01

Yeah, and I'm of the camp of, it's a required pillar of the strategy, because, and I think everybody should have one. You know, we tell our individual clients the goal is three to six months of income that you kind of hear that out on the streets in our business, with our business clients, we do accounting for, we're constantly harping on them for cash flow purposes is that you need to have 10% of your gross in your operating or OPEX account, yeah, generally at all times. And it's if it's not there yet. It's a goal. You work towards it. But everybody needs to have it. Because what happens when you have this emergency funding, whether you're individual or business, is it prevents small problems from becoming large problems. And in both cases, you know, on the individual side, you could lose your job, at least you've got a cushion till you find something else in business, you know, a product section or big client leaves, you've got a cushion until you build it back up. So I. Think you really take a big risk by not having one. And I think, as financial advisors, you know, we're trying to mitigate your risks, and so we, you work with me, you'll hear us harping on that that doesn't have to be go into the poor house until you get it built up. No, we're not saying that. But, you know, we want, we want a little bit of money going into that until we reach our goal. Yeah, it's very important.

Speaker 1  10:22

Yeah, you know, this is a little cheesy, but, I mean, it's kind of fun, right? So we're talking about this robin's egg thing, right? And some people, like, I said, just use them for decorating. You don't really eat them and emergency fun, right? You know, whether you love the idea or not, like the idea is that you hope that it just sits there and looks pretty. It's an account you never really have to crack into. Sorry, it

Tony Mauro  10:45

does work. And you know, I've had an emergency fund for, gosh, probably 24 or five years now, and it sat there. And I really it's at the point where I'm not, I'm not adding anymore, but I'm kind of starting to look at it and saying, Well, I wonder if I never use that, I get to retirement, right? Maybe I'll take it out and use it for a vacation fund or do something with it. But, yeah, you hope you never use it along

Speaker 1  11:06

the way. But that's a great point, though, Tony, because there is that argument, switch of the emergency fund once you are retired and you're not doing that, replacing, you know, expenses. Should you lose your job? What do you do? You even need an emergency fund when you are fully retired because you're just pulling, you know, you know, the money from the accounts and the strategy that you set up. So what do you do with that emergency fund that's, that's a great point. It is, you know, I mean, for me, I'm not going to exhaust it, because I still like to have, you know, and everybody's different, a little bit of that cushion. And, you know, just for in case something happens, right? Roof, Roof flies off, and insurance only pays a certain portion, or whatever,

Tony Mauro  11:43

right, you know, just so we've got it. Not that I couldn't take it out of, you know, my retirement income, but Right, right? I want that to be a certain level, but I, you know, the excess. I certainly plan on doing something else with it, for sure. And yes, so it's kind of a little bit of incentive that, man, all these years just sitting there, hopefully I'll, you know, I can have a chance to use some of that.

Speaker 1  12:02

Yeah, well, and of course, that's always brings back the debate too, of how much is sitting there. Let's make sure it's not being too much do this. It's being too lazy, because you're not going to get that much from the bank. So again, just kind of managing the the robin's egg, aka emergency fund, isn't something important to do. And forgive me my for my cheesy puns there. But all right, let's do one more. Then. I want you to tell me your favorite Easter candy. We're gonna do the classic chocolate bunny almost always in a basket, right, in some form or fashion, right? So, and it's the financial plan, right? It's got to be the, you know, it's the, the main staple.

Tony Mauro  12:36

Yeah, it's the main staple, because it wraps up everything we've just kind of talked about, you know, in the basket. And, you know, I think everybody needs a plan, whether you know or not, you're trying to go at it on your own or paying somebody to help you with it, yeah, I definitely think that a detailed plan that's a working, living document that changes all the time. Yeah, make it your own. You got to be your own, right? Yeah, it's got to be your own. It's got, you know, you've got to have it. That's where an advisor comes in. So you can help customize it, let them kind of keep track of you know, and coach you through you know where you're at along the journey, and making sure that you know it's going to be what your future. You know what you want for your future and what you think is your future at age 30 might be way different by the time you get to 40 and 50, and so you want to be able to change that plan. That's why I say it's always a working document. And you know, just as you go, so that you understand, you know your financial well being at all times, even if you've got assistance coming, you know, from an advisor. I've actually read a few articles lately that actually paying an advisor adds X amount of percentages over time to people's returns. And it's not by, you know, getting them better investments. It's, you know, that's not it. It's really just coaching them and keeping them invested when things are bad, not doing, you know, crazily, what I would call not your best financial decisions, uh, talking them out of some things and allows, you know, their money to work harder and longer for them. So, yeah, interesting. Behavioral management is what we're talking about, yeah, as we're talking about more than investment management, because you literally don't need us for that. There's so many options, right? And we don't have any secret sauce? I mean, you know, yes, there's some strategies and things, but it's really, it's the

Speaker 1  14:24

experience though, right? It's the it's the accumulated experience, same. I mean, it's coaching. I mean, it really is coaching. It is right? I mean, you know, I mean, after a number of years, you know, does the professional athlete still really need you know someone to tell them how, you know, did Tom Brady or Peyton Manning, need, you know, someone to coach them on how to throw the ball. No, right? They know what they're doing, but they were still coaching there to talk to them about, hey, this is this play you ran, you you kind of went off script a little bit. And here's, you know, here's probably what you didn't see and why it went, you know, belly up, you know, or whatever the case is, right? So, you know, coaching is still an important facet to. To anything and, you know, just like your chocolate bunny and your financial plan, like you said, having it being, you know, customized and built to your own, whether you eat the ears first or eat the feet first, or whatever your approach is to eat your chocolate bunny, you know, your financial strategy, you know, same thing, manageable bites, right? Is how you want to handle it, and working with an advisor who helps you, kind of, you know, dissect that and work on all the moving parts, because it's also Tony how they interrelate to each other. Like you said, there's a lot of tools out there now, but having the experience to understand that when you pull this lever, it affects six more things down the way, is also an important thing that's different in retirement than it isn't just the accumulation phase.

Tony Mauro  15:38

Yeah, it is. And I think with with an advisor. There's so much propensity today, with so much information in our fingertips, to that we're just going to do everything ourself. And then you start getting a little more, earning a little more, a little more money. It's like, I just want to pay somebody else to do this, because I don't want to take every minute of my time to say I'm going to research this and this and this. And it takes, it takes forever. You can't be an expert on everything. And so, like I tell all my business owners, and what I try to do my own business is anything that I'm not good at, I farm out and hire out, because I don't want to be an expert in that. Could I Yes, but yeah, I don't want to do that anymore.

Speaker 1  16:17

And life is, life is complicated. There's so much stuff now, and yes, and unfortunately, getting quality people to help you with things. I mean, you know, I own a bit of land. I might, you know, I've got six acres here that my house is on. And every time I try to get a contractor with something, if you kind of feel like, you know, you're not getting good service, and then you wind up, I'll just learn how to do it myself, and I'll just handle it myself. You know, the old adage, if I want anything done, you want something done, right? You have to do it yourself. Do it yourself. Do it yourself. But I think there's a few areas where, if you haven't spent the time on it to understand it and learn it, you got to be careful, right? Because you're asking for to maybe get hurt, and certainly financially speaking, I don't want to make those mistakes when I'm 55 and having issues, or 60 or 65 and got some health issues, and, you know, I don't want to, I don't have the time, or maybe the physical, you know, or mental capacity to go deal with fixing those mistakes, right? So turning to a professional in that regard makes a lot of sense. And I can build my own house at 65 right? Because I don't know enough about house building.

Tony Mauro  17:16

So no, I tell people, you know, this isn't a dress rehearsal. We only got one shot at this, right? And you know, we're not getting out of here alive. So we, you know, especially in the financial planning area, you don't have a lot of second chances, maybe a few,

Speaker 1  17:29

but maybe a few, right? But they get thinner and thinner quickly. So yeah, yeah, for sure. All right, down to it. What's your favorite candy? My favorite Easter candy I could eat a whole bag of is actually, it's just really a Reese's Peanut Butter Cup, but they shape them in eggs. You know, it looks like an egg, yeah? And, I mean, that could be the chocolate bunny equivalent. I think, because they don't, don't, they make a chocolate bunny as well. That's a Reese's. I think they do, yeah, they may, now, yeah.

Tony Mauro  17:53

And I may, I may have, what a nice, big one, because I do like chocolate

Speaker 1  17:58

peanut butter, yes, yeah. Reese's have become a staple, I would say for sure. And it could be the Reese's Pieces too, Reese's Pieces. And sometimes Reese's Pieces replaces the jelly beans in the in the bag for the color and different things. So whatever your candy is, though, right? You know, good Easter basket has a little bit of everything. And that is my analogy to, you know, just retirement strategy. You know, your retirement Easter basket, if you will, should have a little bit of everything, right? We talked about diversification Tony. It's portfolio diversification, it's tax diversification, it's maybe insurance products diversification, right? So there's a lot of pieces you can be diversified in.

Tony Mauro  18:35

There is, and I think, you know, you just want to make sure that, I would say your goal is to make sure that you're well diversified, and that you are covering all the aspects of planning, maybe not just one or two, just like you would with a good Easter basket. You got a bunch of candy in there. You don't want just one of just the Reese's. You want a little everything, especially as a kid. That's right, the more you had, the better.

Speaker 1  18:59

That's right. You want that basket stocked, and so should your retirement strategy be as well as gonna do it this week, hopefully you had a little fun with us along the way, and maybe enjoy just a little bit of Easter candy. As I joked earlier, when we get older, it's like, Man, I'd love to have some more of this, but I just don't know that my stomach will allow me to anymore, or my waistline, but whatever your case is, have a Happy Easter, and we will see you next time here on plan with the tax man. Don't forget to subscribe to us on Apple Spotify, or whatever podcasting app you enjoy using, find all the information you need to talk with Tony or to subscribe to the show or just whatever at your planning pros.com. That's your planning pros.com. And we'll see you next time. Thank you, my friend.

Tony Mauro  19:40

All right, thanks. We'll see you next time.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.

Nobody likes tax season. But for new retirees, it can come with a few unwelcome surprises. The rules have changed, the income sources have shifted, and strategies that made sense during your working years may no longer apply. Today, we're looking at some of the biggest tax mistakes retirees make, as discussed in a recent Kiplinger article, and whether these match what we see in the real world.

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Transcript: 

Speaker 1  00:01

Nobody likes tax season, and certainly not even Tony Morrow here on playing with the tax man. But for new retirees, it can also come with a few unwelcome surprises. So this week on the podcast, let's talk about tax mistakes new retirees make. Look up in the sky. It's a bird.

Nick  00:17

It's a plane. No, it's the tax man. He may not be a superhero, but Tony Morrow has saved many retirement plans with his extreme knowledge of tax planning strategies. It's time for plan with the tax man.

Speaker 1  00:32

Everybody welcome into the podcast. Thanks for playing tour. Thanks for hanging out with us here on plan with the tax man. If I can get my thoughts together, Tony, it is tax season. And I made the joke there in the intro that not even you like taxes, even though it is obviously something you've been doing for a long time as a CPA and a CFP and an EA of 30 plus years. But it is a it is a hectic, confusing time, for sure, every year, isn't it? It really is. And as we're taping this, we're right in the midst of it. And it seems to me, you know, I mean, we like helping clients, but this truly is, you know, compliance season, you know, and the tax planning has to go on before after this. And so what I find, ever since covid, it seems like taxpayers, our clients anyway, tend to really just kind of put it off. And, you know, we're down to kind of where we prepare tax. Most of our tax returns is March and April. It used to be kind of from mid January on, but yeah, stuff gets out later and everything's slower, yeah,

Tony Mauro  01:31

yep, yeah. So it is a hectic time. And I understand, from a taxpayer standpoint, nobody likes to gather all their stuff and they put it off and yeah, you know,

Speaker 1  01:40

yeah, yeah. So yeah. But we were just talking before we started the podcast, folks, and I was saying, I got to get my stuff over to my CPA. And of course, you know, he was like, Well, why isn't toning your CPA? Well, we're in two different parts of the country, so that's the beauty of the internet. But, but, and he's, you know, he's like, look, my public service announcement to everybody out there is, get them this information as soon as possible, so they have time. And I was like, Okay, I'll get it over there. So I got scolded. So not that, not that we, all, you know, don't do it right from time to time, Tony, but yeah, the sooner we can get it in, the better, right? But it is. Let's talk about tax mistakes for new retirees, specifically on this week's podcast. Okay, because there's a recent article from Kiplinger, we'll put a link into it there, talking about big mistakes that tax retiree new retirees make. And so we'll focus on some of those comments there, and just kind of get your thoughts on it and see how it matches up with what you see, you know, in the real world, right, from just you know, from just an author as an article standpoint, versus what you see in the trenches. So starting the conversation with ignoring the upcoming RMDs, especially if it's your first one, right? Yeah, so you got to be careful here. So talk to me a little bit about that, and some of the stuff you

Tony Mauro  02:49

see, well, some of the stuff we see, and we, you know, base what we see, because a lot of our retail tax clients are retirees or nearing retirement, and so we do see a lot of these things come up, rather than, you know, working with the younger crowd who don't have these problems yet, but they will. But yeah, ignoring the RMDs. I mean, RMD is required minimum distribution, you know, for those that are unaware. And so you you may have an IOU to the government for these, and they're going to come knocking and say, hey, look, once you reach a certain age, at 73 now and 75 for people like me, born after 1960 you need to start taking money out of your tax deferred accounts, because the government says you have to, because they want their their tax. They want their cut. That's right, they want their cut. So it's important that you work with your advisor or figure this out, because there is a large penalty if you delay this past the date you're supposed to do it, so you don't want to get in that situation, and then you have to start taking this money out every year, which creates a little bit of a tax problem, because you're going to, you're going to have some taxes due on this and whatnot. But the kind of, the hidden problem is, is the government will allow you to defer this a little bit past your full retirement age or your RMD age, but you got to be careful, because then you could end up taking two in one year if you wait till the last minute. So you want to plan this carefully,

Speaker 1  04:08

and you can do that the first time, right. Tony, you can push it back on that first one, but to your point, you'd have to take two, and that could cause you to bump a tax bracket if you're not careful, right? If you're

Tony Mauro  04:20

not careful, depending on how much you have to take out, you hate to go into the next tax bracket and pay some extra tax needlessly, when just a little bit of planning could have saved you. That Gotcha. So I would stay, you know, stay ahead of that and work with your advisor. So, you know, these important dates coming up and your options, yeah, you know.

Speaker 1  04:37

And of course, we're off conversion conversations, and are going to can fall into there. And, you know, just again, getting efficient with it and getting handled is just gonna remove some of that stress. And people are always the question always comes back, I don't need it. Why do I gotta take it? Well, we said it a minute ago. The government wants their cut, right, right? They want their cut. There's no way around it. People often ask that question to Tony. They're. Like, how do I get out of the RMDs? It's like, well, you don't, well, I heard a Roth conversion gets me out of it. No, you're just convert. You're still paying the taxes. You're just moving it to an account that you want, that your heirs won't have to deal with, or, you know, later on,

Tony Mauro  05:12

that's right. And Roth conversions really can be a really powerful tool. We use them all throughout the age brackets, depending on your stance on, you know, if you want it, you know, tax free forever, or tax deferred, and worry about it later. But Roth conversions, if done correctly, you know, and you gradually do them over, you know, especially your early retirement years. So really, what that means is, all you're doing is taking money out before your RMD, paying taxes on it now, no penalties, right? And filling up the tax bracket you're in not going into the next one, so you're not paying tax needlessly. And then you got, you've got that money out of Uncle Sam's crosshairs for the tax IOU, because it's, it's now tax free forever, the earnings, and, of course, the principal,

Speaker 1  05:57

yeah, and keep So, yeah, yeah. And definitely keep in mind, I say, like the state you're in, right, their state, lower tax, state issues. You know, people often think about moving as part of that equation when thinking about Roth's right, or the Social Security factors, Irma right, triggering the Irma cost. So just make sure that if you are considering a conversion, you're doing it correctly.

Tony Mauro  06:16

Yeah, and all of those points are good points, because all that stuff comes into play. I get a lot of seniors. Do they get tripped up on the higher Medicare costs, because all of a sudden, you know, their income is way high, and then they get a bigger Medicare bill. Course, it's coming out of their Social Security. And then they're mad. You could file some forms and do some things there to get it back lowered, but it's just more work and more, you know, and it's tricky too, Tony, because it's a two year. Look back. Two year, look back. Yeah, so it's, again, a little planning goes a long way in this area, you know, going back to my first point, all of these require some planning, but it's not difficult. It's just you got to have the conversations.

Speaker 1  06:54

Well, you and I were chatting when we first kicked things off that people are owing a bit this year. You're doing some returns, and people are, you know, and you know, and you were kind of surprised to see a few more people owing, which is interesting, because, you know, we were seeing a lot of reports in February that, you know, with the new tax law changes and things that they expect more people to get, you know, returns and so some confusion, again, around the whole social security piece. So again, as a new retiree, that's our conversation point today, getting blindsided by Social Security taxes is a thing, and unfortunately, the confusion around what happened with the passing of the Oba is still tripping some people up. Right? They did not remove taxation on Social Security. They added a senior deduction, right? Added a senior

Tony Mauro  07:39

deduction, which is helpful for the seniors who don't have a lot of other income outside of Social Security and a few other sources, but it's not as helpful to the higher income retirees, because it does get phased out. They don't mention that. And what happens? What I've been seeing this year as we were talking is I see a lot of people that are at their full retirement age or beyond, and starting to take out and spend some of their money, which is great, sure, but what they're getting tripped up on is, like you said, Social Security is not tax free. It's partially taxable with other income sources. So what's happening is is their their income they're taking from their 401, k's and everything else and their investments is now causing more of their Social Security to be taxed. And generally, people don't have taxes withheld from their social security so that their tax bill goes up. So yeah, again, I think with some planning and some coordination, you can pull money from different accounts in a particular order so you don't have that and,

Speaker 1  08:37

yeah, that's a great point. People, yeah, right. How are you pulling it, and where and when are you pulling it, to avoid those little, I guess, those little tax traps, right? Yeah, these little snafus, you know? And so, yeah, that's a big one as well. Start putting some of these things together, if you you know, if all three of them are happening, correct? And, you know, all of a sudden you got a pretty big, pretty big, good increase in there. Like, What the Hey, it just what happened here? Yeah, exactly. So, all right, and then another one that trips people up, and we'll do one more point here is forgetting to plan for the spouse or The Heirs I mentioned earlier, right? Your heirs might appreciate, you know, you leaving them money, you know, tax efficiently, right? You might think, well, that's their problem. I'm gone. I don't care. They can deal with it. But you might not feel that impact, Tony, but of course, again, like I said, Your loved ones will. And certainly, I think most people, if we're in a position to be more tax efficient with with the legacy, why not do it right? But talk to me about some of the different things dealing with, you know, when planning for the spouse or The Heirs?

Tony Mauro  09:36

Yeah, when, when you have a one of the spouses passing, a lot of people don't think about how this shifts so quickly. Why would you right? 40 years you're finally married filing jointly, all of a sudden, yeah, boom, you know, now you're filing single, which is a different and generally higher tax rate on the same income. Your Medicare thresholds drop. One of your social securities goes bye, bye, and disappear. Years. Now you can file on the higher one, but you're not going to get two. You're going to get one, possibly a pension too. Goes bye, bye, if you didn't select the option right and select the option, we see a lot of people not knowing their options. When they select an option and they hire, they choose the highest option, and then they're dumbfounded when the spouse dies and it goes away, you know, and then really just kind of becomes, you know, more of a burden, I think, if that starts happening, adding to the other you know, things we just talked about with this increased in tax so even though you're gone, you know, your your loved ones might be filling a tax bill, but they probably gonna have the money to do it. But again, they're needlessly wasting money, and all it would take is just a little bit of planning. And most of this stuff isn't going to cost you a dime. Might cost you a little tax if you do Roth conversions, but hopefully you're minimizing that, and you can really save a lot of money, even trickling down to your heirs if you if you pass away.

Speaker 1  10:57

Yeah, and I think again, tax efficiency comes into the conversation. You know, we talked many times here on the podcast about the removal of the stretch IRA, right? So when leaving money, if you've got that IRA, you gotta, you know, we'll just make it easy. Math here, you got that million bucks, then an IRA, and you want to leave it to whomever, unless it's going to the spouse that's going to have to be taken out in 10 years. Now, because they got rid of the stretch Ira used to could go to the kids, and the kids could stretch it out over their lifetime. They can't do that anymore, right? But if it goes to the spouse, right? It becomes basically their own IRA. So in that regard, that's still fine.

Tony Mauro  11:30

That's still fine, yeah, and at least you can, you know, stretch it out a little bit, type of thing. But like in, in my father's case, he's still living. He's got a rollover IRA, and his spouse is gone. My mom is gone, and so we will, you know, if he's got any left in that, we'll have to take that out over the next 10 years, right? And pay our taxes.

Speaker 1  11:47

Finally, speaking of the government finally gave you guys guidelines on that, right? They put that into play, what, five years ago, and they're just now, you know, the last, last maybe year and year and a half, they're going, Okay, here's what we meant,

Tony Mauro  12:00

yeah, I think the whole covid thing affected a lot of that, you know, and they're just kind of starting to get back on their feet a little bit with that. And, you know, yeah, we're just now getting guidance on that. So it's still kind of a weird area, murky

Speaker 1  12:12

waters, yeah, yeah. So again, there's lots of different things you need to think about when leaving, you know, planning for a spouse. And again, we're talking about taxation today, obviously leaving a legacy. In general, there's a lot of things to think about, but just tax mistakes, new retires. New retirees can sometimes trip up on the big one being ignoring those RMDs that we talked about, Roth conversions not done at all or done wrong, and, of course, getting blindsided by Social Security. So if any of those things are pain points that you're concerned about make sure you're having a conversation tax mistakes and retirement are rarely about being careless Tony. They're just usually about not knowing what you didn't know, right?

Tony Mauro  12:49

Not knowing what you didn't know. And yes, and I would you know, strongly suggest now you do have a little bit of information those that are listening, but it's one of the things that an advisor who's a tax guy or gal has to talk about, versus maybe, you know, someone that doesn't, is the tax efficiency of how you're going to plan and, you know, take money from your retirement.

Speaker 1  13:12

Yeah, a lot of financial professionals are like, Hey, let's make sure you consult with your CPA. You know, whenever you're, you know, whatever these things that we're doing. And don't get me wrong, a lot of financial advisors have a lot of tax knowledge, they do, but you have both, because your CPA and CFP, right? So, you know, that's you kind of have everything under one roof there. So if you need some help, you know, again, get some help. Because the good news about all of this, right? Is a lot of this stuff is avoidable. With a little planning and a little bit of guidance, you can kind of knock some of this stuff out. So if you need some help, reach out to Tony and his team at your planning pros.com that's your planning pros.com he's got 30 years of experience plus helping people with all of this stuff. So you know, start planning with the tax man today at your planning pros.com and don't forget to subscribe to us on Apple or Spotify or whatever podcasting app you like using. Just type that into the search box, plan with the tax man, or just again, go to his website. Your planning pros.com. Tony, thanks for hanging out. Breaking it down. I will let you dive back into your stack of taxes to work on, and we will see you next time, my friend. All right, we'll

Tony Mauro  14:14

see you next time. Thanks.

Walter Storholt  14:21

Securities offered through avantax investment services. SM Member FINRA, SIPC investment advisory services offered through avantax advisory services, insurance services offered through an avantax affiliated Insurance Agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.