Plan With The Tax Man

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.

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

Call: 844-707-7381

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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.

For many business owners, retirement savings don’t show up neatly in a 401(k) or IRA. They’re tied up in the business itself. Today’s listener question comes from a couple facing a sudden transition from “almost nothing saved” to managing a large lump sum late in the game. And they’re wondering if it’s enough.

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

Call: 844-707-7381

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Transcript: 

Speaker 1  00:00

For many business owners, retirement savings doesn't show up neatly in a 401, K or an IRA. It's tied up in the business itself. Well, this week, we're going to tackle a question from a listener dealing with the possibility of selling a business and what that might look like for their retirement. Look up in the sky. It's a bird,

Nick  00:22

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  00:36

Hey, everybody. Welcome into the podcast. This is plan with the tax man, with Tony Morrow from tax, dr, Inc, find them online at your planning pros.com that's your planning pros.com where you can drop a line into the team and get yourself some time onto the calendar, and, you know, ask your questions, get some things answered. And we're going to take a listener question here this week on the program Tony, about selling a business. And I know you've as a business owner, you've also got a lot of business clients, and so a lot of people do find themselves in this position in America, a lot of small business owners. So we're going to tackle this here a second. But first, how you doing? I've been doing real well. You know, I like this topic because it's near and dear to my heart, and we have a lot of clients that I've seen experienced this exact thing we're going to talk about. So I'm excited to talk about that. And Spring is almost on us, so things are good, good. Well, yeah, let's dive in. Let's because there's quite a few additional pieces that is kind of a lot of lot to unpack here for if we want to dive in. And we'll try to keep this within our normal timeframe here, but see if we can help some folks out, if they might be in a similar situation. So here's the setup. The listener says, Look, I'm 60 years old. My husband's 58 we're definitely behind when it comes to retirement savings, because we have basically nothing saved, but we put it all into the business, and we're going to be selling our business soon for just under a million bucks. I'm very nervous about dealing with this large sum of money, since we don't have any investing experience. Wondering where should we start, and Will this be enough to retire? On any pointers you can help would be great. So I guess we can start with a couple of pieces of this Tony. So when you're, when you're selling a, you know, a business, and you've not saved anything, I mean, it is very it's awesome that the business is, first of all, I guess, sellable, enough that you're, they're selling it and making this money, right, right? That's the first step. I think for a lot of business owners, it's like realizing, hey, is this valuable? Is it sellable? You know, is there value there? And then, if you do sell it, now, what do you do? So what's some things to think about here?

Tony Mauro  02:27

Well, I think the first thing to think about is, and we see this a lot, is, I'll tell you, what they all say is, when we start talking about retirement and whatnot, they all that's what they say is, look, I'm not saying for retirement. My retirement my retirement is gonna be my business, and I'm putting all my money into the business. And so when we that's how the conversation starts. And then in this case, you know, I'd love to know more about it, but I'm gonna make an assumption here that they are gonna be at a million. I don't know what just under a million means. Yeah, let's, let's round it off for easy. Yeah. We'll just, yeah, we'll round it off. But what a lot of people don't realize is, if it's a service business like mine, or they don't owe anything on it, you sell a business for a million and you have no basis, which is kind of like, you know what you paid for your stock, then all of that potential money could be taxable, and if you're getting or giving up, say, 20% of it to the feds, another three or four to the state, you could end up with maybe 750,000 total after taxes. And then you also, you know, you got to factor in selling costs and things like that. So I'm just going to use 750,000 so it's not the million you think, because you're going to owe some taxes. Now, there's a lot that goes into that, because that capital gains, Tony, that's capital gains, yes, capital gains, taxes, and so you know, at first glance, you're 60 years old, and you've got 750,000 net to to, let's say, you know, save for retirement. Are you going to retire now or not? Or because I don't to me on the surface this probably, I don't know if it's enough or not. Depends a lot on their lifestyle and what they want out of life. Well, I don't know, yeah, what enough means?

Speaker 1  04:10

Let's break that down for a second. Okay, so based on your question, there is a million enough, or even 750,000 Well, first of all, the ages were 60 and 58 so you can't even access social security yet for either person, and you certainly can't access medical. So those are two pieces that certainly have to pop up, and if you've done no saving at all, then you're basically rocking this 750 grand for at minimum two years before the first person can turn it on for Social Security, Tony and and five for medical right? So that could be a huge problem. You know, in eating away that 750 may not last for someone's lifetime of 20 years more, I definitely don't think it'll last person's lifetime for sure, because if you know it just isn't going to work again, unless you're going to what you. Retirement to you is, you know, 3040, $50,000 a year total. But let's say, like you were saying, You got to go two or three years with spending, let's say 50,000 including, you know, paying for your for your medical and all of that. Well. Now you're down to, you know, 600,000

Tony Mauro  05:18

and you know, you're, yeah, or less. And you know that's not gonna last you 20 years. You know it just won't even at 50,000 a year. Even if you're earning, say, four to 6% on it, it's it's definitely not gonna be enough. I think it's good. You might know that now, yeah, and hopefully, if maybe the sale is not final, right now you're just thinking, maybe you keep it for a while and build it up and or save and then sell it later. That's a possibility. But I think let's say they're going to sell it now anyway. I think what you definitely need to do is get all these numbers with your advisor and start thinking about, you know, spending. I think you should think about, well, what are we going to do for the next 10 or 15 years? Because we really can't, other than this, we don't have any more income coming in. How are we going to save more?

Speaker 1  06:11

Because, yeah, you've got to get a plan together. I mean, you just mentioned, like, if you're making 4% off of the 750 that'd be the first question for someone like this, who doesn't know even where to start. Where do they park it? To get seven, you know, to get 4% right? So you want to get with an advisor. Are you looking at maybe some in an annuity? Are you putting some in the market, you know? Because you need to be a bit more aggressive, because you don't have any other money saved. I mean, there's a, this is where a financial strategy really comes in handy.

Tony Mauro  06:37

I think so. And I hit on a good point I was going to mention, is, I'm not a huge proponent of annuities, but they have their place, and this might be one of them, if, you know, you talk with your advisor and you figure out, I need an income I can't

Speaker 1  06:51

outlive, right? That's what I was thinking. Was the guaranteed income putting, you know, I don't know, you know, 200,000 or something of that into something that generates income. Yeah, it

Tony Mauro  07:00

generates income, and, you know, you can't outlive it, because I think that's the biggest fear with this couple, or biggest threat, I should say that they'll face is outliving this income. And if you've got nothing else coming in, eventually it's just gonna be down to Social Security, which is a meager existence, right?

Speaker 1  07:18

Yeah, so and that. So the whole question of what's Enough? Enough? Well, that's lifestyle. And, you know, all those pieces go into it. So, Tony, if you were, if you if this person came into your office and said, help us out, right? So you would start with, you start putting, kind of the, you know, the strategy together. Start putting an income piece and expenses right. Is, do they is, do they have a home? Is it paid for? That? That changes things, right? Changes things so there's a lot of data that would then go into hopefully helping somebody like this kind of see in black and white, are, where are we? Are you behind? Do you have a shortfall? And how much

Tony Mauro  07:52

exactly a client like this? This is why I love this topic. This is a very, I want to say, complex, but a very in depth conversation you need to have with somebody, with your advisor, because you have to lay all this out, and then you as the client got to be able to picture this. This is what it's going to look like. I've seen it before. And are you okay with that, or do you need to make us, you know, maybe make a change. But I think if you're going to go through it, that you really got to, you know, buckle it down. And, you know, figure this stuff out, the income needs, the expectations on longevity, all that kind of stuff. And so you are not going to get there. And because I've seen this happen too, where they didn't plan. And boy, are they really, I don't want to say upset, I guess the right word is disappointed that they worked all those years, sold the business. Of course, they didn't save anything, and they didn't plan, right? And then they're they're too old, they can't go back and

Speaker 1  08:50

go to work. Yeah, yeah. Well, so it's a temptation for folks like this could be as well, not everybody, but you haven't saved. Well, again, to this person's you know, question, you now have this big chunk of money, and we'll just call it the 750,000 the temptation could be, well, we're behind. Maybe we should go ahead and put a we should get aggressive with a bunch of it and swing for the fences right to make more money to get ready for retirement. So that could be a dangerous place to be, especially if you're not real savvy in what you want to do. Hopefully you don't take, you know, half a million dollars and go dump it into the market, you know, in in an aggressive, you know, portfolio,

Tony Mauro  09:27

yeah, I definitely think you need to start talking with your advisor and discuss the risks of that and diversification. And, you know, why that kind of strategy, you know, that's, that's risky. I mean, it's easy to see to say, you know, hey, these last few years in the market, especially saying, well, we dump 500,000 of this into the market, we get 20% back. That'd be great, yeah, and it would double itself, say, in even if we got 7% double itself in roughly about seven, seven and a half years. Okay, now we're. At a million. But what if that doesn't happen, and we go through a prolonged period of of downturn, even in just a few years, going to be devastating? And, you know, it's just, it would be a bad situation to go into that, if you're going to go into something like that, you better, better

Speaker 1  10:16

know all the Yeah, and that's kind of why I was asking, you know, that question earlier. You know, for somebody like this who's not real savvy, first of all, find an advisor, right? So I guess the first two things would be, take a step back, breathe like, let's Okay, let's, let's assume that deals going through, you're getting this money, you pay the taxes, whatever the case is, you know, don't rush to make an immediate decision, but certainly, take a little time. Do some, you know, do some vetting, and find a financial professional that you can talk to, go talk to a couple, right? Have those interviews and find out the right person for you, and then start discussing the strategy sessions of of what you know, what do I need to know, you know, and what would my Social Security look like when we do get there, like? Because that's going to factor into the strategy, right? So we don't know if they were paying them, if they had this business for 30 years, were they paying into Social Security properly? Is it going to be low numbers, mid numbers, high numbers, like all of those things, are going to factor in Tony to the overall next 25 year retirement strategy? Yeah.

Tony Mauro  11:13

I mean, all that's going to factor in. And I would say, On a different note, I was thinking about it when you were saying that is if we have younger business owners on this, the one thing I would say, and this little conversation frames it is the one thing our government does, I think, extremely well. I hate to even say that, but I'm gonna say it is, they have so many things for us, business owners to save for our retirement. I mean, from cash balance plans all the way down to Roth IRA 401, KS, everything in between. So if you're younger, try not to get to this point. I mean, in other words, you know, start saving through retirement.

Speaker 1  11:53

We talked about even a set, right, a simple anything, yeah, because

Tony Mauro  11:57

you could stash so much money in it and not have this. Then when you sell the business, then it's this million dollars less, less taxes, 750 is just an add on, and not your overall plan. But yeah, so, I mean, I it's not just for the for the people just getting ready to sell. I think it's younger people can have, have get some benefit out of this conversation.

Speaker 1  12:18

Tony, I tell me, if I'm wrong here, you know? I mean, I'm just the host, but, I mean, I've been talking about this stuff with advisors for 10 years. I feel like, you know, the first place that someone like this has to start, obviously, is, like we said, we'd have to, you have to find an advisor that you're comfortable talking to, that you get a good feeling about. And then you got to start asking, this is where the proper diversification is really going to come into play. How much should we put in the market? How much should we be a little bit aggressive with? How much should we have in safety and protection? How much should we set aside on an emergency fund? What you know, what's the House Situation look like, and then obviously dealing with the medical gap that's going to be coming up as well. Those, to me, those are all like the four or five main pillar pieces that I mean, honestly, that's the same for anybody, whether you worked for a company your whole life, or you worked for yourself in your own business, these are the standard pillars of retirement strategies.

Tony Mauro  13:08

That's it, I mean. And it would have to be the conversation with this couple, for sure, but anybody else, I mean, it's pretty much the same conversation we have, like you're saying, with all of our clients, because at the end of the day, that's what really matters. And I think if they're not looking at that and at least getting a big picture idea in which, I think is where the advisor can become valuable, is to kind of keep them grounded and on task. Yeah, there you go. You know, that's worth the fees that you pay, in my opinion. But certainly,

Speaker 1  13:38

yeah, that 58 and 60 they, you know, getting an advisor now and starting to help, you know, helping them work with this large sum of, sum of money. You know, there's a lot of those, lots of little moving parts and things they can help them with over time. To your point, I kind of getting started now, making tweaks along the way. You know, that's, that's a great point, right? So, yeah,

Tony Mauro  13:57

so I hopefully they'll, they'll sell it, you know, and, you know, live happily ever after and but they will need to do some planning, because if they just sit on it, it's definitely, in my opinion,

Speaker 1  14:09

not going to last. Yeah, you know, you just said that sell it made me think of, well, they're going to assume that they did this, Tony, but for those that are out there listening, that are, they're like, Hey, I've got a business. I'm con, you know, contemplating this, hopefully they went through like a business broker, right? You know? Because, I mean, you could sell your business just kind of like selling a house, where it's for sale by owner, and you might be fine, but there's a lot of nuance to selling a business. And do you find that, would you recommend people, if they're thinking about selling a business, to work with a licensed professional in that in that space?

Tony Mauro  14:39

You know, most of the time, I think so, unless you're selling it to an employee or, you know, something like that, like an insider or a family member, okay? Because I think they're gonna be able to bring you a lot of different, you know, options and whatnot, and they're gonna be realistic, as business owners tend to. And I do the same thing. A lot of us think our businesses are worth more than they are, and. A lot of times, you may get buyer, but they want to spread it out over time, which is not a bad tax strategy from a seller standpoint, but it does delay you getting all your money as well.

Speaker 1  15:11

Well, that's a good point too, right? So are you doing owner financing for this deal, or are you just hoping for that one big fat check, because you kind of need that, right? So that plays into all that as well. So lots of stuff to unpack and deal with when you're thinking about selling a business. And to me, I feel like that's where there's so many little places you could step in it and mess up that, you know, certainly seek the guidance of some professionals in that space. You know, with financial like I said, a business broker certainly finding a financial advisor, maybe even if you don't have one, get one before you sell a business. I don't know if this couple here, they may already be in the in the weeds on that, but certainly get a financial professional before you sell your business. So they can kind of start giving you some things to be on the lookout for as well. So I would agree,

Tony Mauro  15:53

and I would say the last person in there sometimes too is an attorney to look over the deal. Oh yeah, definitely. You know, just, just to make sure that it, you know, you're not missing something on a legal standpoint, especially if you're if you're doing some financing, yeah,

Speaker 1  16:07

great point. Yep. You need a team. You need a financial team, for sure, when you're going through this. I mean, we need it in in everyday life. When you work for somebody for 40 years, you need it when you own business, too. So it's the world we created. It is what it is. But better to make the pay the it's worth it. I think the money to pay those little extra pieces to make sure you're, you're doing the CYA, right? You got everything covered, all right? Well, good stuff. Thank you so much for breaking it down, Tony. We appreciate it. Thank you for the question as well. Folks. Good luck to you. Of course, Tony's teams reaching out to them anyway to ask if they need some further in depth questions and things answered. But if you're thinking about selling a business or a home, or, you know, got an inheritance coming your way, or you just need a strategy in general for retirement. Get with Tony and his team at your planning pros.com today and start talking about how to plan with the tax man. You can subscribe to the podcast on Apple or Spotify or whatever app you like, and we certainly appreciate it, and hopefully you enjoy the content and catch some useful nuggets along the way. And with that, we will see you next time here on the program for Tony Morrow, I'm your host. Mark Killian, we'll see you next time.

Walter Storholt  17:13

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

Everyone’s got an opinion about money (especially the people with a book deal or a TV show). Some of that advice is useful. Some of it sounds better on a stage than it works in real life. Let’s break it down.

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

Call: 844-707-7381

----more----

Transcript: 

Marc:

Everyone has got an opinion about money, especially people pushing a book deal or a TV show. And sometimes maybe that advice is useful and sometimes it's not, it works better on a sound stage than in real life. Let's break it down and have Tony react to some controversial financial takes here on Plan With The Tax Man.

Hey, everybody. Welcome into the podcast. This is Plan With The Tax Man with Tony Mauro, here in Des Moines professional alternative at Tax Doctor, Inc. Hanging out with me to do a little reaction type podcast this week, Tony, we'll get your take on some interesting hot takes from some financial talking heads out there and see what you think about it and practice in the real world. Because you see clients and help people every day and of course are governed and have rules that you have to follow where a lot of these talking heads don't, they can say whatever they want. We'll talk about that a little bit this week.

How are you doing, buddy?

Tony Mauro:

I've been doing good. As were taping this, we're getting into our tax season so getting busy with a lot of new tax changes and whatnot that's hitting everybody.

Marc:

Yeah, a lot of changes with the OBBBA. You got to be on your toes, right?

Tony Mauro:

Mm-hmm.

Marc:

And we talked a lot about that on some of the prior podcasts.

Tony Mauro:

We did, yeah.

Marc:

Yeah. If you guys aren't a little sure about some of those things, make sure you go check those out and you can find us at whatever podcasting app you like, Plan With The Tax Man. Just type that in the search box or just go to yourplanningpros.com. But if you need some help, of course, reach out to Tony as tax season is upon us again at yourplanningpros.com.

All right. My friend, let's dive in and have some fun with these.

Tony Mauro:

Sure.

Marc:

All right. You're probably familiar, maybe a lot of our listening audience is with Robert Kiyosaki. A number of years back, he wrote Rich Dad, Poor Dad. Really good book, actually. Quite helpful.

Tony Mauro:

[inaudible 00:01:51] yes.

Marc:

Yeah, quite helpful for a lot of people. But he's since gotten a lot more aggressive and interesting in some of his stances and takes. And again, a lot of that is the demographic I think he's marketing himself to and pushing and things of that nature. But let's talk about this take here more recently. He said people shouldn't work for a company and save in that retirement plan, instead should launch their own startups or maybe buy gold, silver, and Bitcoin, or all of the above. At the time we're talking, Tony, it's early February and gold and silver and Bitcoin, we're doing pretty good last year and earlier into the year this year, but not so great right this minute. At the time we're talking, there was a recent 30% downturn in gold and silver so that didn't age so well.

Tony Mauro:

No. And I think it's interesting you pick this one because I have read his books and I think by and large the Rich Dad, Poor Dad, especially the Rich Dad, Poor Dad Cashflow Quadrant are great books for people. And this strikes me because... Don't get me wrong, I like people being in business for themselves. We serve a lot of those businesses.

Marc:

Absolutely.

Tony Mauro:

And the tax planning and accounting capacity and the financial end as well.

Marc:

But I bet they got their own SEPs and things, they've got their own retirement accounts they're doing.

Tony Mauro:

We've got them in almost anybody that will listen and take us up on it, whether it's through us or somebody else. Yes, they have their own retirement plan of some kind.

Marc:

Yeah. Not saving in a retirement plan just seems crazy, especially if you are working for somebody else, Tony. Because if nothing else, take the free money.

Tony Mauro:

It's free money. And that's exactly it, it's free money if you're working for somebody else. I think depending on who he's trying to market this measures to, not everybody is cut out for having a business for themselves. They may be good at it but they don't... A lot of them tend to get themselves into trouble, whether it's tax-wise or lack of planning, lack of cash flow, that kind of thing, let alone the headaches. Again, I love small business. It's my favorite thing so it's somewhere deep in me. I say, I get it. I get what you're saying. Yeah, I think everybody should work for themselves but not...

Marc:

Everybody doesn't have the right temperament though.

Tony Mauro:

They don't. They don't. They don't have the right temperament. And I definitely think if they're working for themselves or if they're working for a company, they should be in a retirement plan of some kind.

Marc:

Yeah. And to just invest in gold, silver, and Bitcoin, come on, that's crazy. Have some if you want but...

Tony Mauro:

I agree. That goes against every financial prudent planning aspect that I know of, that's some diversification...

Marc:

150 years?

Tony Mauro:

Yeah.

Marc:

Right.

Tony Mauro:

Like you say, you can have some but I think you've got to have some diversification, you got to have a plan. I'd love to hear what his rationale for that.

Marc:

Well, I've watched some shorts and some reels he's had out there recently. And I do think he's targeting the younger generation right now, this kind of mindset of we're not going to work 50 years for somebody and then retire, we want to make all our money in our 20s by being aggressive in technology and this, that, and the other. I think he's pandering a little bit to that crowd. Maybe not. Maybe he's totally on board with it. But it just seems like a big departure from some of his previous stuff.

Tony Mauro:

It does. Yeah, it's a real departure from his books.

Marc:

Yeah. Anyway, interesting hot take there. Look, if you want some gold and some silver and some Bitcoin, hey, cool. Talk with your advisor about that, make sure being prudent though to Tony's point. Don't get crazy.

We were joking the other day. I was talking with an advisor, Tony. The Dow just hit 50,000 at the end of last week at the time we're taping this for the first time ever, right? And the comment was, "Hey, the Dow hit 50,000." And somebody goes, "Yeah, so did Bitcoin." Of course, it started at 100,000.

Tony Mauro:

Right. Right.

Marc:

Because it's not had a very good couple of weeks.

Tony Mauro:

No. And that just goes to show you the volatility there.

Marc:

Massive, yeah.

Tony Mauro:

Yeah. Having all your eggs in those three baskets, definitely very aggressive.

Marc:

It could be, for sure. Yeah. All right. Let's go to a different take here from Suze Orman, host of Women and Money, recently suggested and this is... If Robert was getting a little crazy and aggressive, Suze is maybe getting a little too conservative. Tell me what you think about this, Tony. She suggests retirees set aside three to five years worth of living expenses. Not six months, right? Not three to five months. Just in case bank accounts crash or stock market crashes, things of that nature. Three to five years, a little too conservative? What do you think?

Tony Mauro:

In my opinion, yes. I think that's far, far too conservative because assuming, again, if you're a retiree and you have a diversified portfolio, hopefully if you are in stocks that are high yielding, good quality individual companies. But most people don't have that, they have mutual funds and a variety of things. And even in a market downturn, if you look at 3, 5, 10-year periods, there's not very many that last very long. And if you take it in 10-year periods, there never is over the entire period so that seems very, very conservative.

And who in their right mind is going to take a large chunk of their portfolio and stick it in a 2%, 3% yielding vehicle when they're trying to live off of the income? I don't know where she's coming from with that at all. And again, these people sell a lot of books and whatnot. But keep in mind, I always like to point out that... And they have a lot of followers, they've made a lot of money. But sometimes if you're listening to some of this stuff, you might want to bounce it off your financial advisor as well, just see what they think because I don't agree with that one at all.

Marc:

Yeah, it's a little too... And again, if you got... I don't know. I guess if you're worth $100 million, putting aside three years worth of money is a little easier than most folks, right?

Tony Mauro:

Right. Right.

Marc:

It's three years. I can hardly put side six or eight months, let alone three years worth. And again, interesting takes. And of course, these folks are talking heads out there in the landscape and pushing their books or their programs or things. And while technically, Tony, doing a podcast makes us a talking head, we're a smaller talking head.

Tony Mauro:

True.

Marc:

But again, you're in the trenches. You're a CPA, a CFP, an EA, you work with clients day in and day out. These folks don't do that so that's a little different there.

Tony Mauro:

No. Yeah.

Marc:

Kevin O'Leary and his amazing suits, his very colorful, interesting suits he wears. This one might be the most realistic, Tony, of everything on my list today. And this one is still a little bit too much, I think. But what do you think? He insists that if you don't know your net worth at all times, you're being irresponsible with money. He promotes constant tracking, optimization, and performance measurement.

Tony Mauro:

Somewhat I agree with him because I do think you need to know your net worth.

Marc:

Indeed.

Tony Mauro:

Now, at all times and if you don't know it, you're irresponsible.

Marc:

Constant?

Tony Mauro:

I think that's a little extreme.

Marc:

A little much. Yeah.

Tony Mauro:

Yeah. But I think the point he's trying to make, if I'm reading it right, is you need to track your spending and what you own and what you owe so you do know your net worth because it is an important number. I wouldn't get so hung up on it day to day because you're just not going to be able to make significant changes to it. I think it's worth looking at with your financial advisor to see where it's headed on a yearly basis for sure. We do it with our clients. Every one of our clients, we go over that net worth. Did we grow it? Did it go backwards and why? And it's good to have that because at the end of the day, a large portion of that net worth is going to be your retirement portfolio, your investments. And so that's going to be what we're focusing on mostly.

But also in that net worth, we see a lot of times where we start to become almost a financial personal coach in that, "Hey, your net worth is not growing because you're spending more than you're making." That kind of thing. I think he has some good points there but I wouldn't focus on it. I would focus more with your advisor on the month to month, the bigger plan, and I think you'd be fine.

Marc:

Yeah. And I think a lot of times people do hire a professional, Tony, because they don't want to track it every day and keep an eye on it and it stresses them out. But I think most people, we should know our baseline numbers, we should have a good idea of what's going on, our total net worth, what's coming in, what's going out. You want a good understanding. Even if you do have a financial professional in your pocket helping you out, you still want to have a good... What is it? A 10,000-foot view kind of thing. But I think micromanaging it down to that small of a level, maybe at some point in life. But I think as we get a little older, we're like, "Okay, I need to turn this over to somebody else to handle this because it's too stressful."

Tony Mauro:

Right. Agreed.

Marc:

All right. I got two more I'm going to do and it would not be complete doing this list without old Dave Ramsey. Dave is not shy and no stranger to controversial takes like cutting up credit cards or paying exclusively in cash. And obviously, Dave has got a huge empire, helps a lot of people, and actually has a lot of good things that do seem to work on the debt side. However, on this side, Tony, this might be a little crazy. He's challenging the rule of thumb, the 4% rule. He's advocating for 8% annual withdrawal for retirees who invest 100% in the market. If over time the S&P 500 yields a 10% rate of return, he says the money should then last you throughout retirement. And while on the surface, that makes sense, 100% in stocks for retirees alone just seems like way more nausea and sleepless nights than most people probably want.

Tony Mauro:

I would agree with you. I've read Dave Ramsey's books, I think one of his best is the Total Money Makeover. As far as getting yourself started with planning, I think that's a great book for everybody.

Marc:

And the snowball thing works great.

Tony Mauro:

It works great. This, I would agree with you too. I don't agree with him at all there. I do like a little bit more aggressive withdrawal percentage than 4%, I like to use 5% with most of my clients unless they're very conservative. But 8% and all in stocks, that would be... I think as a fiduciary, that would just be wrong of us to even assume that unless the client comes and says, "This is what I want. I want nothing else." And it's up to us to say, "Wait a minute, that's too much." Because what he doesn't say here is, yes, over time it yields 10%. I would agree with that but that time period is a long time period. What happens if you've got all of your retirement portfolio, S&P 500 index, let's say, and we have an eight-year prolonged downturn? Will you run out of money? Probably not, but you will have significantly less. And if you're living off the income, well, then you either have to take less or get into the principal.

Marc:

And he doesn't really talk about, "Hey, are you willing to cut that back on the down years and things of that nature?" Because adding a little context to that, Tony, to your point, somebody could be listening and go, "Hey, man, the market last year finished at 18%. The year before that, 20 something. The year before that, 20 something. The year before that, 20 something. Making 10 back and only pulling out 8 totally seems doable the last four or five years. Why not?" Sure, you're right. But what about the 10 years where we made nothing? What about a few decades back when there was what? 15 or 18 years where it made nothing, right?

Tony Mauro:

Made nothing, right. I remember through 2000 to 2000 almost 10.

Marc:

Oh, the lost decade. Yeah.

Tony Mauro:

Oh, just a whole decade was gone. Let's say you were following this strategy then and that wouldn't have been too good for you.

Marc:

You're pulling 8% out of a million dollars, you're pulling 80 grand out year over year, and it's not making anything back. Again, it's a little too much, I think.

Tony Mauro:

I think so too. I think he might be just trying to generate a conversation there but I think he definitely got to put some context to that.

Marc:

Yeah, for sure. And again, while technically the numbers technically do make sense, can you sleep at night with that much risk? And it flies in the face of everything for people... And again, the fact that he even mentioned it for retirees is what kind of... If he would have said people in their 30s or 40s, I could have maybe rolled with that. But people in their 60s up, that's a little too crazy.

Tony Mauro:

I agree.

Marc:

All right. Final one. You might have thought that might have been the wildest take but I'll save this one for last. The world's richest man, Mr. Musk, predicts that advances in AI, energy, and robotics will generate such an abundance of resources, Tony, that all individual retirement savings will become irrelevant in the future. On a recent podcast, he said, "Don't worry about squirreling away money for retirement. In another 10 or 20 years, it won't matter anyway." There's going to be this boom that is going to just bring riches to everyone and the thing is I actually think he believes it. I will give him the credit and the benefit of the doubt saying I think that he thinks these things are true, that he can make these things happen or they're going to happen or whatever. And kudos for feeling about that. But man, there is so many holes I can punch into this. First of all, Tony, what is your thought on will it even generate that sort of money? And then who allocates it? Who doles it out?

Tony Mauro:

Well, that's what I was just thinking [inaudible 00:15:10]

Marc:

And who do you trust to make sure they don't take it and give it to you?

Tony Mauro:

Yeah, this is nirvana. I'm thinking, "Well, boy, if that's the case, sign me up."

Marc:

Heck, yeah, sign us all up.

Tony Mauro:

[inaudible 00:15:21]

Marc:

But the history of human beings have... Is there any company, person, government, anything that you would trust to say, "Oh, send me my universal check every month so I don't have to do anything." I know that's the world keeps thinking we're moving towards that but we have to be on it. Who is going to really trust someone to do that first and foremost, right?

Tony Mauro:

I agree. I just think that's... I didn't even know where he's coming from with that. I do think he believes it because I heard...

Marc:

I do. I really do. Yeah.

Tony Mauro:

But I just don't see how that's possible. Everybody that either... Let's say AI and energy and robotics have taken over everything, those are the people that are going to have... Who create that I would think are going to have the money and I don't know how that's going to be doled out to the rest of the people and why.

Marc:

Well, you're talking about what? They've been kicking around that universal income for everyone kind of thing, right?

Tony Mauro:

Yeah.

Marc:

And if you're having a computer, if you're having AI dole out the money where so therefore humans aren't touching it, therefore it's deemed fair. I guess you could make those arguments. But at some point, it just seems... All right, 20 years from now he's talking. If you're 60 years old right now listening to this and you stop, right? You stop, saying, "You know what? Elon is totally right. He's going to pull this off. This is going to happen. I'm 60. I'm not going to save another dime for retirement for the next 20 years." And 20 years comes by and you're 80 and none of this came to fruition. Well, you're screwed.

Tony Mauro:

You're screwed. Yeah, you're in real trouble.

Marc:

And he's not on the hook for it.

Tony Mauro:

No. I would say to everybody, you keep doing what you're doing, you plan like we're in this world right now.

Marc:

Exactly.

Tony Mauro:

And if something like this in your lifetime ever comes to happen, well then all the better. But I wouldn't bank anything on something like this.

Marc:

And that's where I think the questions and the interesting thing comes into the speculation of investing, right Tony? That's where it comes back to, "Hey, look, if you want to get in crypto, if you want to have some AI properties, if you want to do some of these different things because you believe in this interesting future possibility. Cool, do that. But don't risk the tried and true things that have also worked for 150 years just in case you're wrong because there's you, there's your spouse, there's your heirs to think about." And so I think that's where we... We're in this interesting space where it's like, "I want to take some chances maybe." Or, "I want to be on some cutting edges." But let's still keep it within that speculative portion I guess, Tony, of our finances.

Tony Mauro:

Yeah, very small. Very small speculative portion because that's exactly what it is. And you certainly don't want to, just like you said, risk your future on some of the speculation. Because some of it is out there and...

Marc:

And it may be possible. It may absolutely be possible but it also may not.

Tony Mauro:

It may be possible.

Marc:

[inaudible 00:18:16] I'm still waiting on my flying car. I ain't got it yet.

Tony Mauro:

I've got a client here locally, tax only, that has... He's the same way. He is invested in some Iraqi Dinari that he keeps saying that it's going to take off, it's going to be... He's been telling me this for 20 years and it's basically worth 3/10 of one cent. You don't want to get into that. I think it was a little flyer for him, I don't even know. But anyway, please consult with advisors before you do any of these kind of things and [inaudible 00:18:53]

Marc:

And again, it's easy for the world's richest man to be like, "Well, if it doesn't work, well, whatever."

Tony Mauro:

Yeah, whatever.

Marc:

Well, he's going to fly off to Mars and not be responsible anyway.

Tony Mauro:

That's right.

Marc:

But look, good stuff, fun for conversation. And I think that's a piece too, I think as humans, we're always looking to try to move forward and do some things. And of course, sometimes we're trying to sell some stuff. And of course, even in Elon's case, he's trying to promote his robotics and his AI and get people on board. And the more people that are interested and on board, the better the chances of things happening and generating.

You always have to take stuff with a grain of salt and you could simply say, "Well, Mark, you're constantly saying, Hey, call Tony." Yeah, I am. I'm saying call Tony to get a strategy and a plan in place that works for your situation based on the things you've got going on in your life, and also they're backed by years of research and data. And there's no plan that's perfect but having a plan is better than having no plan.

Tony Mauro:

That's right. I agree totally.

Marc:

Yeah. Get yourself onto the calendar, have a consultation and a conversation with licensed professionals, CPA, CFP, EA. It's what Tony is for 30 plus years. If you need some help, find him online at yourplanningpros.com. That's your planningpros.com. We're going to wrap it up this week so thanks for hanging out with us here on Plan With The Tax Man, with Tony Mauro.

Tony, thanks for engaging and having some fun with me on this.

Tony Mauro:

All right. We'll see you next time.

Marc:

We'll see you next time here on the podcast.

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.

One of the biggest retirement decisions people make doesn’t involve the stock market at all. It’s a choice hidden inside their pension paperwork.

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

Call: 844-707-7381

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Transcript: 

Speaker 1  00:00

Hey, time once again, to plan with the tax man, and we are going to talk about the biggest retirement decisions people make that doesn't involve the stock market or could make, right? So it's a choice hidden inside the pension paperwork. Let's get into it. Would you trade $600 a month to protect your spouse? Look up in the sky. It's a bird. It's a plane.

Speaker 2  00:21

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  00:34

Welcome into the podcast, folks. This is another edition of plan with the tax man, with Tony Morrow from tax doctor. Inc, and you can find them [email protected] and again, yourplanningpros.com and Tony, this week, we've got a listener question, a variation. Anyway, I'll change it up just a little bit. And you've been getting some of these lately yourself as well. And so we want to talk about this, the pension trade off conversation. And so we'll, I'll just set it up. Let me read the email and then, and then we'll dive into it. All right, okay, all right. So with my pension, the person says I can get $3,500 a month, but the wife gets nothing when I die, or I can take 2900 a month and she'll continue to get all of it after I'm gone. As always, I'm wondering which is better and Tony. It seems cut and dried, like the spouse is sitting there, probably listening, going, duh, take the one where I get money after you die. But let's, at least, for the sake of the conversation, talk about, you know, the pros and cons of both ways. And I think that's what people need to think about when this situation comes up, right? It's not Yes, probably 80% of the time, it probably does make sense to take the spousal continuation, but maybe not always. So let's discuss it. How you doing?

Tony Mauro  01:47

I'm doing good. I've been doing good since first year. So getting ready to dwell into tax season. And we do get this question a lot. And you know what I find with tax clients is I find more of the clients that I've talked to, they actually take the higher amount not knowing. They don't read over their paperwork. Very, very well true. And you know, so I find that, you know, make sure you're before you even dwell into this read this paperwork, make sure you understand before you check boxes. And make sure that you get some advice you have any questions on it, yeah, because one can, you know, really devastate you if you pick the wrong one, but you're, you know, in this case, and this is a topic of mine, because as I get a little closer to the end, my wife has worked for the government for it'll be probably 47 years, but she goes, Oh, wow. And so we'll have this choice in our public retirement plan called IPERs, and, you know, so yeah, me, as a spouse, I'm just like you said, you know, let's take the lower amount, because I want to make sure you know that if something happens to you, that I've got this till I die, right? But the nice part about IPERs, in our case in Iowa, is, if I go first and we're at the lower amount, she can actually bump herself back up to the higher amount. Oh, it's rained or her life. So, yeah, you know, that works. But what a lot of people need to take a look at in this and make some decisions and talk to their advisors about is, you know, the very first thing is, what kind of longevity does the covered person, meaning the you know, person that's going to get this benefit, have within their lifetime? And you know, use that, you know, to make this decision, because obviously, you know, the higher payout shifts the risk to the surviving spouse, correct, and you know that that's kind of a risk. And so that's why we kind of titled this, you know, is this reduction or this $600 a month worth it? Because it does act like a little bit of insurance, you know,

Speaker 1  03:38

if, yeah, for sure, it's like a little insurance policy and that. And I guess we can skip around a little bit, because that really it's easy for us to walk to that conversation piece, because that's what a lot of people tend to think. They go, Well, why don't I take the bigger amount, the 3500 in this example, and invest that $600 difference, and I'll buy my own life insurance, right? And so that's certainly something that people think, and I in their statistics that show I can probably do better and leave some tax free money, because it'll be in a tax in a life insurance policy. And that's fine, that's totally possible, but you need to run the math first and see, and to your point about longevity, that's going to play into that. Because if you don't really have longevity on your side, and you go that route, you may not live long enough to fund that policy exactly. You may not live long enough, and you may not be healthy enough at 6570, they're even going to issue a policy another, I don't think, you know, 600 a month may not buy you a whole lot at that time, because you might, you know, hey, if you can get the policy, it's gonna be well more than that pending.

Tony Mauro  04:35

And, you know, you may not be even insurable. So again, conversation to have, but that is a that's an option, which is why you want to have these conversations, you know, which I think is good

Speaker 1  04:47

well, so you think about, Okay, a couple of different things, right? So let's just go with the standard statistics. Male passes first, the females right behind, typically goes, guys pass away first. So a couple things happen, right? So this, this the shift you talked about, the risk. Shifts to the spouse? Well, a couple of things big, big things happen right off the bat. One is you're going to higher tax bracket. You weren't expecting that, right? So you've got that. You're going to lose one social security, so you're going to go to the higher one. So if you don't have this spousal option checked in on, can you survive the lower income hit right? Depending on what your other assets and the other things you have in place. So talk a little bit about some of those things and how you've seen that. So again, this is it's case by case specific.

Tony Mauro  05:26

Case by case specific. Is exactly it, because you hit all the topics and it needs to be discussed. Because if you have the assets where none of that you just mentioned, it matters, and you still gonna have plenty of income and everything, well then maybe the higher amount, you know, is a better option for you, but more times than not, in our case, exactly what you said happens, expenses don't drop, income drops, and now all of a sudden you've got higher taxes, more you know, same expenses, less income. And you know, then you've underestimated the impact of all this, and by taking that higher amount, you still may not have enough to cover things, and then all of a sudden the whole retirement plan shifts and changes on you. And, you know, do you really want that? You know? And so that's why I think it needs to be discussed. Yeah.

Speaker 1  06:14

And there's a lot of little pieces to that, right? So there's those different pieces. And I think sometimes Tony people kind of fall into that factor of, well, they've heard it forever. Well, they're only going to need half the money coming in when one of us dies anyway, right? So, so we're good any if, even if we did take the bigger amount, because we've got plenty. But half is a misnomer. It's, it's not, it's more like 85% I

Tony Mauro  06:36

think it's, yeah, at least that. I don't. People always say that to me. I said I've never seen it happen. Expenses don't drop to half. Everybody that I've I've worked with, I haven't seen one yet at best, yeah, they dropped 10 to 15. I had one case dropped about 20, but not half. And luckily, in his case, everything else he had, it didn't really matter too much, because he was pretty well off. I mean, he had not only social security, but he had a big pension of his own and a big portfolio, you know, things like that. But I think all those other things you need to have the discussion to figure out where this fits in the rest of your overall plan, right? I mean, with everything else, because that's going to really guide you on what to take, well, you know, or which way to

Speaker 1  07:19

go, yeah, yeah, for sure. Well, how the pension fits in with the rest of the overall plan, right? I mean, that's really going to be a big key. So this is where, again, why not stress test the situation? If this is on your radar, if you're eligible for our pension, right? If you've got somebody in the in the family that's going to possibly be getting one, go sit down with somebody and say, let's look at the different options. Because Tony, just like Social Security, you well, actually, even worse than Social Security, they typically don't come with colas, and there's no do over there's

Tony Mauro  07:45

no do over on this, no. And I think a lot of us, as you get into retirement, I mean, for me personally, I like to, what I value is, I want to make sure that my and my wife's income, you know, it's monthly income, is the way I look at it, is not is going to be the same regardless of who dies first, and the remaining person can be here and have the same income coming in, you know, if one of us is gone. Now, I mean, yes, we've got the nest egg over here that's funding that income, and then Social Security and some other things. But to me that I want more certainty than, you know, a little bit higher monthly amount? Yeah, I mean that, like, say that's just me and for us, you know, I'm gonna assume I'm gonna die first, and if she can go back and get the higher benefit that for her rest of her days, my decisions made already, because, you know, we'll take the lower amount. And if she ends up living me 10 years, well, then she'll she can go back and get that higher amount for all those 10 years, which I think

Speaker 1  08:39

is good. And Tony, what if you already have, like, life insurance in place, right? So again, running these numbers because maybe it makes sense to take the higher amount because you don't need it. You've ran the portfolio, you've ran the Social Security maximizations, you've ran all these things, and you guys are going to be sitting pretty without taking the spousal option. Then fine, right? I mean, what else could you do with it? Right? Can you could spend it, I guess, however you want, while the initial person is here, yeah, and depending, life insurance is a big part of it. Now, what I find in reality,

Tony Mauro  09:11

most clients, generally don't have the life insurance. Toward the end, they usually have all this term, and it starts to run out about 65 you know. So they're past their their bill paying years and debts, and so they don't have it. But if you do, and have some big permanent policy, you know, say you're out there with, you know, 2, $3 million worth, total of permanent life that you can't outlive, meaning that as long as you pay the premiums, they're going to pay out somebody, and if that goes to the spouse when you kick off early, then you know, you could take that $3 million invest it, and probably, you know, get your 3500 a month. So, yeah, it makes some sense to take a look at

Speaker 1  09:47

that as well. Yeah, so we're talking peace of mind versus maximum income. I guess

Tony Mauro  09:51

I think at the end of the day, that's really what it is, is peace of mind, knowing that the living spouse is still going to have something I know again I keep talking to. Out my own situation, but I know, in my wife's case, you know, her hyper is going to be fairly large now. I mean, you know, if something happened to her and we took the wrong and we took the one where it ends when she dies, I'm going to be okay, but, boy, I could be a heck of a lot better, you know, if I continued to get that until, until I died, yeah, but yeah, it for me, it's peace of mind over a little bit bigger benefit. I actually had an uncle. He has now passed where he wasn't he chose the wrong one. He didn't even know he did it. And then it happens. That happens a lot, doesn't it? It happens a lot. He went back and tried to fight him on it, saying, oh, you know, no, you got to give me the one that covers my spouse. And they legally, they would not do it. And he lost that case and and then it ended when he died, which is about two years ago, a spouse still living, and he's got nothing. She got no benefit from that. So real life, real life decisions, and it does happen,

Speaker 1  10:53

yeah, for sure. Well, look, neither choice is wrong, but it does need to align with the overall values and the reality of whatever your financial situation is this decision is about deciding what kind of protection matters most in your retirement strategy, right? So you got to understand the trade off so that you can find the right answer, right? And I think that's where people make to your point about the uncle, you know, if this is something on the radar, make sure, before you elect or ignore that you run a complete, you know, breakdown and scenario to see what's going to be beneficial. Because I'm quite sure, if you go with the title that we used here, Tony for this episode, would you trade $600 a month to protect your spouse? Your spouse is probably looking at you, going, you're better. Yeah, that's right. So no matter which side it goes, whether it's male, female, whatever, but make sure that you're covering your loved one, but again, do the right thing too, because you could find it could be a better solution to go the other way, but you don't know till you run that math right. Any final

Tony Mauro  11:49

thoughts, my friend, no, I would say, as I generally do, this is an important, important decision. And make sure, especially retirees, you know, they're not sure when they read this paperwork. Get advice. You know, if you don't have an advisor, ask one of your children, but, but get with an advisor or somebody before you check the wrong box,

Speaker 1  12:07

yeah, and then make a big mistake. So indeed, well, good stuff, good conversation. And again, topical this month with our chats, because Tony's been getting questions about both of the podcasts we dropped this month. And as always, to you know, learn more, stay abreast of things, or just, you know, get some of the information you need, subscribe to the podcast, or at least, consider it, maybe share it with others who might benefit from the message as well. You can find plan with the tax man on all the major podcasting apps. All you got to do is type that into the search box, plan with the tax man, or just go to Tony's website. Your planning pros.com that's your planning pros.com lots of good tools, tips and resources there as well. Get some time on the calendar and all that good stuff. So Tony, thanks for breaking it down and being with us. We always appreciate your time, and we will see you next time here on plan with the tax man,

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A new government-backed savings account for kids is coming. On the surface, it sounds like a win. Free money for newborns, long-term investing, and a head start on adulthood. But once you look under the hood, Trump Accounts raise some real questions about taxes, flexibility, and whether they beat existing options. Today, we’re walking through the pros and cons and asking if this new account is worth the effort.

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

Call: 844-707-7381

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Transcript: 

00:00

A new government backed savings account for kids is coming. We've all heard about this, and on the surface it sounds like a win free money for newborns and long term investing and a head start on adulthood. But when you look under the hood, the Trump accounts raise some questions about taxes flexibility and whether they beat existing options. So this week on plan with the tax man, let's break it down. Look up in the sky. It's a bird. 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. Hey everybody, welcome to the podcast. This is planned with the tax man, with Tony Morrow from tax Dr Inc and Tony. Let's talk about the free money, or the future headache of the pros and cons of the new quote, unquote Trump accounts, and just kind of see if we can kind of give some, you know, back and forth, a little bit on some of these things, because there's a lot of interesting ideas, but there's also some conundrums as well. So we'll dive into that. How you doing? My friend, doing good. You know, New year, new goals. Hopefully everybody's got some new goals and feeling good. And so, yeah, we're looking forward to, course, tax season starting for us shortly as we as we're taping this right, right? So we've got that coming about. Get busy. Yeah, yeah, yeah. Well, so let's break into this. Let's chat on this conversation here a little bit. So I guess let's kind of start with big picture, right? So this was part of the Oba the one, and they launched this year. So this stuff, if it all goes through again, this would start this year in July of 2026 give us some some highlights here, some big picture. Yeah, so the big picture. And the reason I wanted to talk about this because we're starting to get some questions. Some questions from tax clients. I think they're hearing things, you know, out on the news and things in Google and whatnot, but I still think there's a lot of people that don't know anything about it. That's why I want to at least try to reach as many people as possible. But you know what they did? And you know, again, putting all politics aside whether this is right wrong, we have the money, but this is what's going on, and you got to decide whether or not you know you want, can take advantage of it. So what they did was they're basically saying that starting in July 26 children born between 25 and 28 so we're only talking 25 at the moment, 26 to be but they got to keep this in mind, the government's going to give each of these children, if they open up a Trump account, $1,000 free money, which, on the surface sounds good, and what happens is, is the child owns the account. The parent is the custodian, till they're 18, other people, like grandparents, parents, friends, all that contribute up to $5,000 a year to this account in total. And even employers could throw in 2500 but it's not, I don't know. See a whole lot of that happening, but who knows? Maybe. And then what they're going to do, what the federal government is going to do, is take this money invested in low cost US equity funds are probably going to be ETFs and index funds, things like that. It's very low cost. All of this interest in gain is going to grow tax deferred, and then when the child's 18, they do have the opportunity to withdraw this amount, but they don't have to any withdrawals. It's treated just like any other retirement account. It comes out taxed at ordinary income, and they could face penalties there and whatnot. That's kind of the big, big picture of that. And you know, we'll continue to move on, and I'll go over some numbers that I ran before we got this on here, and just to kind of give some people some numbers to put with it. But I think the big thing they're what they're looking at, in my opinion, is, again, I think a lot of times the government sometimes means, well, they rush things out, don't think it through. I think their big you know idea here is, let's start something for newborns, so that if they save this money and end up with it all the way till they retire, that maybe you know, if we don't have the programs we have now, that they're going to be okay, in other words, less reliant on the government. But that's my opinion of that, because I you know they know that not enough Americans are saving on the regular, and I think that's, that's their primary motivation, yeah. And I think there's two pieces to that, Tony, and thank you for breaking that down, good and concise, good stuff there. I think one is to get people saving. Or, I think these are really three. There's really threefold, really right? One is to get people saving from a young age, teach in the value or the power of compounding, as you know, is massive, right? Absolutely. And so I think that's one piece. I think another piece is get people making kids, because we're going to have a real shortage of workforce, not only our country, but a lot of countries. And I think, I think there's some of this is a leftover Elon kind of feel right with with Trump and with the administration, because he's a huge proponent of we are going to have major shortfalls in society, in the workplace in about 2025, 30 years, right? And so if you look at China, they're going to have huge workforce problems as well. So I think it's that and that, and then tax revenue. And the reason I say that about the tax revenue and I'm going to have you buy.

05:00

Break this down for us is because they're a little sticky, right? There's, there's some criticisms here about how it works. So why don't you break down some of the the cons, some of the negatives of this, some of the negatives really, you know is, and this is what, what I didn't even know until we started really dwelling into it, is, if somebody like me. So the reason this is near and dear to my heart because I had my first grandchild. First grandchild in 25 so, you know, I want my son to open up this account get the 3000 I'm gonna I'm planning on putting the $5,000 a year in for her, and we'll get back to that. But one of the cons is, is these contributions don't qualify for the annual gift tax exclusion. A lot of people don't know that when they give gifts away of cash and other things, there's an annual gift tax exclusion, and after that, you have to file a tax form using some of your lifetime exemption. These don't qualify for the exclusion. So therefore, when I do this, I'm going to have to file a gift tax return, which is a form 709, which is not terribly difficult, because obviously I know how to do them, but people that don't know how to do them are gonna have to go pay somebody two. To go pay somebody to do them, or they could get themselves in trouble, you know, with the IRS. The other thing too, is, and I just found this out before, well probably a couple weeks ago, is this is not supported this form by DIY tax software, you know, so half of America is using DIY tax software. You're going to need to pay someone like ourselves to do this for you, which just means a little more money out of your pocket. The other thing too is there's no tax deduction for these contributions, because it's not, you know, not a qualified charity or anything like that. Withdrawals are taxable, unlike Roth's and other types of things. And then there's limited flexibility, I feel like, for me personally, I don't mind assuming this all comes off like they talk about letting the government run the account until she's 18, but after that, if I were to convince her, if I'm still around, and not to let the government hold that, we move that into something, you know, a rollover IRA, something like that, that we can Control outside of the government hands. That's just me personally, but so I think there's some of those. Are some of the criticisms. I would say people have to watch out for some of the cons. But I think the pros, you know, really are number one. Government's handing out 3000 bucks right of a child you know, born between 25 and 28 you might as well take it if you have a child. But even if you don't do anything else, you might as well take the free money. Granted, we don't, maybe not have the money to do it, but they're going to hand it out. So, you know, why not take that? I think that's one. I think two, like you were talking about, really gives the child early on some sense of, you know, investing, using compounding things like that, the investments are going to be very low, and you don't have to make any decisions about them. It's just going to be invested in index types of funds. And I ran the numbers before we got on so you know, if you take advantage of this, if you have a child, and you just open one up and the government puts the 1000 bucks in you, nothing else, right? If you leave it like that, and let's say that these funds earn roughly 7% you know, not, not very high, but I they probably gonna do better than that over 18 years. But so you would have, for that child $3,379

08:15

you know, it's not a ton, but it's free money. I ran, I think I ran it Tony. And if you go out something crazy, like 40 years, just, just the I ran that one, right? Yeah. Did you run that one too? I ran that one. Go ahead. Took the same 1000 bucks and you left it so you're 3379 and 18. You took it out another 48 years till they were 65 that person would have an 81,250

08:38

bucks. If you did nothing, you did zero, right? So, like, if you do nothing and you leave it alone, and again, there's that limitation, right? You got to have a kid born this year for right now, but that's 85 grand at retirement that you didn't have before, and you did nothing, did nothing, that's not that's not terrible, that's not terrible. So I think the Pro, in my mind, pros outweigh the cons. Yeah, especially if you, if you, you know, take control of it after 18. Yeah, maybe help them, not just go out and spend it. I had, I had done that Tony with and added $1,000 annually, right? So, just saying, okay, like life gets in the way, whether, you know, whether it's family or whatever, adding $1,000 while the kid is young, up to a, you know, 18, and then they've got a job, and then you've, you've taught them, you've educated and you've got them set they're going to put $1,000 in every year like clockwork until they're 65 and it was over half a million. Yeah, right. Well, I ran the numbers for my own granddaughter, and if I, if I open one, or my son will open it, but Right? And so the free 1000, if I put in $5,000 a year for her till she's 18, and stop at 18, she'll have $173,000

09:50

in that account. Wow. Imagine that. That's amazing. If she left that till she was 65 and did zero, you know, nothing else for retirement, she would have 4.4

10:00

Million dollars. Holy moly. So granddad would have funded her retirement up till she was 18, and she just didn't touch it again. Now that again, to your point, this is assuming 7% year over year. 7% things can happen, right? But, yeah, and who knows, you know, if people are going to have the wherewithal to set it aside, but it would be kind of in my own, my own situation. For me, it's like, you know, maybe that would be something kind of, you know, for my legacy, you know, even so if something happens to me or when I'm gone, right, she can say, hey. I mean, 4.4 may not buy as much as it does today, but it's still, I gotta think $4.4 million 60 years from now, still got to be nice. Yeah, you know, it's gonna be nice. So interesting, yeah, interesting, yeah. Well, let me so let's, let's play devil's advocate, right? So you've talked about some of the criticism, you've talked about some of the pros. How do they stack up against the things that are already out there, right? So, is it the best fit? Is it, are you still better off doing, you know, like, a 529, or a custodial account? Like, what's some thoughts? That's good thought. I would say this where hopefully you're working with your advisor to talk to them and go over that. I think I hate to give away free money, especially when the government's given it. So I would at least take advantage of 1000 bucks, right? And but as I did the numbers and I compared it, you know, to say, if I put for my own situation, I put in $5,000 into a 529, plan for her, and she didn't use it for college, and we rolled it to, you know, an IRA, assuming that rule is still in effect, it's going to be close. She'd actually probably have a little more in that if she took it all the way out to 65 simply because the investment flexibility and whatnot. But when you take away some of the, you know, the manager fees and something like that. It starts getting down fairly close to it. But again, it depends on what clients want to use this money for. Maybe some are just saving for the 18 and using it for college and calling that good. I know in Iowa you can get a, you know, a deduction for your 529, contributions. So in Iowa, if you're using it for college, it might not make as much sense to do the Trump account versus an Iowa 529 plan, but different. You know, people in different parts of the country might find it different. So my my takeaway there for everybody would be, make sure you run some numbers with your advisor and what you're wanting maybe to use this for, because Roths and 529, may be still a better option. They're not getting the the headlines like this, but, you know, they still may be better options for you. All right. So final thoughts, my final thoughts, basically, are, you know, with the state of the government right now, I don't, I don't want to get into all that. I say, you know, if you've got a child being born, go ahead and take the money, at least, take the free 1000, then work it into your plan and see where that takes you. I will say in closing on this topic, for 2025

12:52

there's actually a form that you can fill out and submit with your tax return, and they will open it up automatically for you in 26 and beyond. Right now they're saying you've got to go out on your own and open up the account. I don't know if that'll be the case once they get the 26 forms and everything done, but for those born in 25 which my granddaughter was, it's very easy to get at least get the account open, rather than going through a lot of bureaucratic, bureaucratic BS. But I hope that they can do this, and they can continue to do it for these three or four years here, where this, I don't know, I'm hearing all kinds of things. I'm hearing some of its federal money, some of it, Michael Dell, or somebody's done, yeah, they did, like, 6 billion, I think, to this fund, yeah. So, you know, there's some money out there, and, you know, it's, I think it's worth a look anyway. Don't, don't just pass it up because it's a government thing. It's funny. People are like, Oh, they just did that because they're, you know, if you're, if you're getting political, well, they're cronies and all that kind of stuff. It's like, it's also a tax write off for the Dell corporation or Dell person, whatever the case is, right? And who cares, right? I was like, sometimes people get so, they get so wrapped up in political minutia that it's like, Look, if it's $6 billion it's coming from a private individual to fund something that may help, you know, another generation save some money, and yes, there'll be tax revenue generated for it. Let's be honest. It's not, and it's not, yeah, it's not just Trump's administration that needs tax revenue. It's our country, right? It's our government. So whether taxes, you know, taxes are probably still going up. Tony, I mean, you know, they passed the extension of the tcja, right with the over but we're in there. We're in our low tax, you know, brackets now for another few years. But let's be honest, at $38 trillion we need tax revenue. We need tax revenue. And I would agree with you. You know, as much as political things are going on the country right now, you can't let political things drive, you know, every single like, motivation about everything, right? Yeah, that's, I mean, because, from a from a truly tax guy standpoint, me saying, the government, hey, you guys spend way more than you you take in. Why are you doing this? We don't have the money. Blah, blah, blah, but Right? I mean, as a user of the system, hey, if you're gonna hand out money, I think I should Right, exactly, take it exactly. It's.

15:00

Interesting, yeah, yeah, we just can't get so politically polarized, you know, we can't see that. But so, yeah, I think, I think that they're a worthwhile take a look at deal, right? Okay, well, overall, they're not inherently bad, but they're not automatically better either, right? But the money is real, and so are the trade offs. So like most financial tools, Tony, all financial tools, their value depends on the family, the goals and the other situations that are already in play or could be in place. So sit down with a qualified Pro and see if it's you know, right for you. And again, you have to even fall in line with this if you're having a child or your child's having a child with this past year, right? So it's a very limited option for people right this minute, but if it's something that does pique your interest, and as Tony said, he's had a lot of calls and emails about it here recently, then reach out to him and have more in depth conversations at your planning pros.com that's your planning pros.com or call 844-707-7381,

15:56

we'll have a link in the show descriptions so that you can click on there and get in touch with With Tony, but don't forget to subscribe to us on Apple or Spotify or whatever podcasting app you enjoy, and for that, we'll see you next time here on plan with the tax man. Tony. Thanks for breaking it down. All right. Well, take care. We'll see you next time. We'll see on the next episode.

16:17

Right here Securities offered through a van tax investment services. SM, Member FINRA, SIPC, investment advisory services offered through avantax advisory services, insurance services offered through an event tax, 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.

Turning 62 might not feel like a milestone birthday… until you realize the Social Security clock just started ticking. Filing now could put money in your pocket sooner or cost you tens of thousands over a lifetime. How do you pick the right strategy? Let’s break down how to think through one of the biggest retirement decisions you’ll ever make.

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

Call: 844-707-7381

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Transcript: 

Speaker 1:

Turning 62 might not feel like a milestone birthday until you realize the social security clock just started ticking. Filing now could put money in your pocket sooner or cost you tens of thousands over your lifetime. So which is the right strategy? Let's break it down.

Hey everybody, welcome to the podcast. This is Plan with the Tax Man, with Tony Mauro and myself to talk, "Hey, I'm 62. Should I file or wait?" That's the big conversation, Tony, that happens all the time. I imagine you probably have this chat with new prospects virtually every single time you meet with somebody.

Speaker 2:

Every time. Yes. And I picked this topic this week because I've been getting a lot of questions on it. There's been a lot of chatter on social media about it. So I wanted to address it again because it is important.

Speaker 1:

And it's complicated for people, but you could talk big money here. So I mean, why do it? Why file at 62? There's a plethora of reasons. If you take out the just actual need it, okay, it's like I ran the numbers and we actually do need to turn it on. Oftentimes it's things like, "Well, it's mine. I want it back." Or whatever. Understandable, but what's some other things you've heard?

Speaker 2:

Well, I hear things such as, "My parents didn't live very long, so therefore I want to collect it while I still got some time." Okay. And by the way, as we talk about this, we could sit, if I had 10 listeners on the podcast as a call in, we would all have different opinions. And you could get into some serious arguments about this. So a lot of this depends upon each individual situation, like most things financial planning do. But that being said, besides worried about longevity, they want to basically take the money and invest it in themselves. Some want to give it to their heirs a little earlier.

Some are, of course, like you said, they're just ready to get out. They've worked for somebody else forever. They want to retire now and they need the income now is always the biggest one, but there are some drawbacks to that, which we'll get to. But those are the things I find most people want to take it early. And most people, when they want to take it early, they've given it no though other than those things. They haven't run any projections. They haven't done any type of planning for this, which we'll talk about here in a second.

Speaker 1:

Okay. Well, why wait until FRA, full retirement age? So there's some compelling reasons to do so. First, it's what, about 6% annually. If you were to do the numbers from 62 every year you're waiting, it's about 6% up to full retirement age. Yeah?

Speaker 2:

It is. So when you take it early, of course, you have to take a reduction in benefits.

Speaker 1:

Yeah, like 30%.

Speaker 2:

Yeah. And there's a cap on how much you can earn if you're still wanting to go out and do some work. Now, if you wait till full retirement age, not only is your benefit higher, but you can go out and earn as much as you want and they won't reduce your social security benefit. Yeah, you're still taxed on it and all of that. But that's one of the reasons why people might want to wait. They want the higher benefit. They might want to use some sophisticated planning and coordinate with spouse benefits and maybe have the lower amount or the lower earning person take theirs earlier and the higher earning take theirs later. And then of course, like I said, maybe-

Speaker 1:

You should definitely think about doing that, right?

Speaker 2:

Absolutely.

Speaker 1:

Yeah.

Speaker 2:

I mean, that's one of the biggest ones. And a lot of times you get this full retirement age statistically showing both men and women, if your health is fairly decent, you plan on living quite a bit longer up to at least the averages. At least that's, again, that's an assumption. But those are some reasons why. And if you start running some numbers and you take a look at, I ran my own before we got on the podcast. And if I took mine at 62 versus 67 is my full retirement age, by the time that I, if I lived, I used both scenarios. This is just for example, and this is what the planning software can do for you. If I lived until 83, if I waited until 67 versus 62, I would've collected $72,700 more if I waited. And so you have to decide and you should run some of these numbers.

And I also would say to all the listeners, you at very least should be out and have yourself a login and username to the social security website so you can see your reports and look at some of this stuff. It's free. They've actually done a nice job with it. So the question becomes like, in my case, is it important enough for me to delay? Because I could die between 62 and 67. Who knows?

Speaker 1:

Sure, yeah.

Speaker 2:

But do I want to take that chance and maybe get 72, $73,000 more I live in the same amount of time? And I think that is what the real planning stage is. And there's really no right or wrong answer because for some people, yes, maybe they do need it at 62, but for a lot of us, if you don't need the income, it generally is better to wait.

Speaker 1:

Yeah. I mean, think about it. 6% from 62 to 67 is... And it's a safer investment because somebody would say, to one of the arguments, "Well, I want to just take it now and I'll reinvest that money." Especially if the argument is that, "I'm doing it, I'm turning it on, but I don't actually need the income." So let's just take, I need the income off the table because if you need it, you need it. But if you're turning it on because you just want to turn it on for whatever other reason, and you're saying, "Well, I can invest in myself." Okay, maybe you're going to get a guaranteed 6% year over year with very little risk. That's one piece. Now you might look at the market right now year to date, the S&P, Tony, while we're talking is like up 16%. Somebody said, "Well, yeah, I could get 16%." Well, fine, but that's 100% at risk.

Speaker 2:

That's 100% at risk. I just saw not too long ago, which led me to even pick this topic this week is somebody on Facebook sent me a clip of what appeared to be a financial advisor or some annuity person talking about it's never better to wait. Always take it at 62. And I listened to it and I would love to debate that with a gentleman, at least for every case. I mean, he does make some compelling arguments as to why some people should take it at 62, but most of what he was talking about was, "Well, they need the income now and they can reinvest it." Well, okay, yes, that is right, but you can't just sit there and tell everybody never to wait because there are some compelling arguments in some cases to wait.

Speaker 1:

Yeah, yeah. And to your point. So you ran those numbers at $70,000 or whatever. Did you think about the spousal piece? Sometimes people, they don't necessarily do that. It's like, okay, don't forget, the higher of the two is what the person that's left behind is going to get. So you mentioned earlier doing that option. So if you're in a situation where one member of the family, one of the couple there is making more and you want to turn the lower one on at 62, that's a fine strategy for many people still run the numbers first to see. But again, you got to kind of factor all that stuff in there. You can't just claim it without some intentionality in there.

Speaker 2:

No, you do need to be intentional with it. You do need to talk to your advisor about it because that's one thing that we use a lot is we have the lower earning spouse, if they do want some money now, okay, let's claim that now, but let's let the higher earning spouses ride a little bit and then that way you've got kind of a little bit of best of both worlds. You're getting some money now because that's what you said you wanted, but you want to get some higher benefits and generally the women live longer and if the man dies, then she can reclaim and get his higher benefit, which will benefit her later by him waiting. And so I think that's one thing that we generally try to do as far as that goes. But we use some good software just like most advisors have to be able to at least show people and run a lot of different scenarios very quickly so they can at least have all of the facts to make the best decision for them.

Speaker 1:

And you know, Tony, it can go the other way too. I was just talking with another advisor earlier and he was sharing an interesting story that he had some new clients that were in prior, right before Thanksgiving, saying that they were in, they were starting to do the preliminaries and everything and they were like, "No, no, we've already identified a lot of stuff and we're going to both wait until we're 70." They wanted to do the total maximization. And he said, "Cool, but let's go through the exercise of running stuff and just see what those," Like you kind of did, "What some of those projections lay out." And he was able to show them for a myriad of reasons why, and again, he's like, "It's not my job. If you want to go 70, we'll go 70. But if we turn it on, in your case, specifically both of you at 67, you're actually going to fare better." So there is times when it can go one way or the other, but you don't know that until you get into the math of it.

Speaker 2:

You don't. And that advisor probably showed them something they probably never had dreamed of and probably going to-

Speaker 1:

They were shocked, yeah.

Speaker 2:

Get more money over their lifetimes.

Speaker 1:

They were, actually. And then you started thinking about IRMAA and you start thinking about the taxational. That's the other piece, how much of your social security is going to get taxed? In this situation where we were talking about today or our topic point, if you're turning it on at 62, but you don't need the income, you are probably going to wind up paying the max tax on this too. So not only are you taking a 30% haircut, but you're probably paying up to the 85% as taxable.

Speaker 2:

It's going to be taxable. And depending on your tax bracket, it could increase that haircut by quite a bit, which is why you need to think about some of this stuff before you do it.

Speaker 1:

Now you got a buzz cut.

Speaker 2:

Yeah. The other thing too is I always ask people, well, if you take it 62, especially the single people, what are you going to do for health insurance until you're 65? Because Medicare doesn't kick in. And so there's some things to think about there. And if you just blindly go into this and quit your job or whatever, you probably aren't going to be able to go back and now you could be stuck with some real unfavorable circumstances.

Speaker 1:

Yeah, yeah. We all know that age discrimination is not supposed to be a thing, but we also know it's a thing. So it's like trying to be 70 and find a job or the job you had before, the odds aren't great.

Speaker 2:

Not great.

Speaker 1:

No. So at the end of the day, look, it's a huge, huge decision, Tony. I mean, you can truly be talking tens of thousands of bucks here.

Speaker 2:

You can. I mean, at the end of the day, as I say, and on most of them, and of course, we're tooting our own horn here with, you need your advisors and help to make sure that your decisions work with your plan, your health, your long-term goals. And once you do that, then at least you could feel good about what you chose. But like I say, I would caution you to just blindly do it without running the numbers because they are big. And in fact, back to my case as we close is, my plan personally is we're probably going to wait at least until we are full retirement age, if not 70, because I'm going to want that extra 70,000. I mean, that's just my psyche. But I have run the numbers and we might do a spouse claiming early, but it probably won't be 62. It might be 64 or 65.

Speaker 1:

And that's true. That's true. The reason we hear things like, "Oh, there's 6,000 claiming options." Or whatever they claim there is that's because every day after 62 that you delay and turn it on, could change something, whether it's 63-

Speaker 2:

Two pennies.

Speaker 1:

Yeah. 63 in two weeks or 64 in three months or whatever it might be. So it all changes that number a little bit. Again, about 6% roughly from 62 to 67 is the growth. And then from 67 to 70, it's what about 8%.

Speaker 2:

It's about 8%, yeah. It really goes up during those last couple, two or three years.

Speaker 1:

So something to think about. So the right social security decision depends on your income needs, work plans, health and long-term goals, but before you file, make sure you're choosing that path that supports your retirement, not necessarily just some other reason that you've got in your head. And if you need some help with that, to Tony's point, tooting the own horn, yes, but the social security office folks, they do a fine job, but they're not allowed to help you go through the... They're going to tell you your options and then you pick. They're not going to ask you about your tax implifications. They're not going to ask you about your IRAs and how much you have in your income so that you're making the right decision based on all that.

So get with a financial professional before you take this action and have those chats. And if you need Tony's help, yourplanningpros.com is where you find them online, yourplanningpros.com. Don't forget to subscribe to the podcast on Apple or Spotify and also share with others that might benefit from the message as well and maybe enjoy the content. Maybe they'll need some information that might help them along their path. Again, yourplanningpros.com. Tony, thanks for hanging out, my friend. It's the end of the year, so have yourself a great holiday season, my friend.

Speaker 2:

You do the same, and I wish everybody out there a great and safe holiday season as well.

Speaker 1:

Yeah. And we'll see you in 2026. Ugh, sounds weird already, but we'll see on the other side here with Tony Mauro from Tax Doctor, Inc. 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.

Nothing will mess with your financial confidence faster than comparing your savings to your brother, your coworkers, or that guy on YouTube who claims he retired at 38. Your retirement number isn’t a competition. Let’s talk about what really matters when you’re trying to figure out if you’re behind on your savings goals…and what to do if you actually are.

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

Call: 844-707-7381

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Transcript: 

Speaker 1:

Nothing will mess with your financial confidence faster than comparing yourselves to your brother, your coworkers, or that guy on YouTube that claims he retired at 38. Your retirement number isn't a competition, so let's talk about what really matters this week on the podcast.

Hey everybody, welcome into Plan With The Tax Man, with Tony Mauro and myself to talk investing, finance, and retirement. And am I behind in my retirement savings and what to do if you are, that's the topic of conversation this week. Tony, my friend, what's going on, buddy? How are you?

Tony Mauro:

I'm doing well. And just back from the Thanksgiving break, trying to get reignited for this last month of the year.

Speaker 1:

Yeah, it's upon us and always fast and furious, always something going on, right?

Tony Mauro:

Yeah.

Speaker 1:

So we got to dive in and tackle the work, get it done, especially right after holiday break. It seems like everybody's always like, "Oh my God, I'm so overloaded."

Tony Mauro:

That's right. Everybody's got a ton of stuff to do.

Speaker 1:

Yeah, got to catch up from the half the week you're off or whatever. So listen, we got an email question in. And so it kind of sparked the conversation here, Tony. So we'll throw this up here. I'll state it for the listeners and then let's just kind of break it down a little bit. So the person says, "Look, I thought I did a good job saving over the years, but it seems as though I'm behind. My brother's got nearly two million saved and it seems that a lot of my colleagues or coworkers are in that similar kind of stratosphere. The husband and I barely have over a million bucks and now we're in our early 60s and wondering what do we got to do to get caught up?"

So it's kind of like, well, is a million not enough? With all these conversations period, so whatever the number, forget the number for a second, what to do if you're feeling behind, period. So where do we start with this? How do we identify the real issue, Tony?

Tony Mauro:

Well, I think the real issue, and this is a good topic for this time of year, because I think everybody, at least the clients that we serve and prospective clients are all looking at their financial situation. Another year's gone by, another year older and people start to ask these questions. And so I think some of the real issues here probably in this writer's email is basically they're trying to, just like you said, they're trying to compare themselves in a number to other people. And you don't want to do that. You want to get with your advisor and really talk about where you're at with your plan because just because... Well, I guess I can back it up and say, somebody's always going to have more than you, whether it's money, whether it's this, that, things, you've got to really hone in on the real issue of, in your situation, are you going to be ready?

And you got to... I mean, the number is important, yes, but it's not the primary factor, I don't think. A lot of times, because, for example, client A might be very happy and very well off with a million dollars, client B, not so much, which I think we're going to talk about a little bit more in depth here. So really the only benchmark is what you're doing with your plan and what it requires and try to figure out then from there, is what you have enough?

Speaker 1:

Great point. So you've got to really kind of break each of those pieces down and look at all of them and get the numbers. I mean, ultimately, you've got to have this conversation based on numbers and not how you feel about it, and we'll talk about that in just a second. But if you're reframing the conversation, so what is enough, Tony? What's enough for you? Everybody's different.

Tony Mauro:

Everybody's different, so you really have to, again, get with your advisor. I think I've said it before, it's where an advisor lends a lot of value is to take you through these exercises for answering what's enough for you. It really is dependent a lot on type of lifestyle that you want to lead, what your monthly expenses are going to be in retirement, do you have any outstanding debts and other commitments, things like that. You also got to think about too, how long you're going to live. Obviously nobody knows that for sure, but you can kind of make some estimated guesses based on your family heritage and whatnot, who's still maybe alive. And then I think lastly, when it's all over, what kind of legacy do you want to leave? When it's your turn, I think all of these things have to come into play to answer what's enough for you. Because again, what might be enough for one person is definitely not enough for another and not enough for another. So this is where you got to have some good conversations.

Speaker 1:

Well, again, so are you behind or are you assuming you are? So to this person's question, they didn't really state, "We're probably behind," is one of the words that was used. We're barely over the million dollar mark and probably behind. So have you truly run your projections out? And this goes for anybody listening, how do you know if you're behind if you don't truly know where you stand, period?

Tony Mauro:

I agree. And I think that a lot of people fixate on that big number of the nest egg. But what the writer didn't tell us is, they assume they're behind, but a lot of times we find out when clients tell us this is that, "Well, let's say you may only have a million dollars saved," but, "Oh, by the way, you've got this pension that you can't outlive over here," and they don't factor that in, but that's a monthly income that you can't outlive, so that's very much a factor in, do you have enough to retire? So I like to focus on not the number at the end, but what's your monthly expenses? How much do you want to have to not only pay that, but still be able to go out and have fun? That's the number we're looking at. Now then we have to back into, okay, do we have enough over here with all sources of income coming in, including Social Security and pensions and our investments to figure that out?

Speaker 1:

Yeah. Yeah, so I mean, find those targets, get those numbers specifically and then talk about lifestyle, fixed expenses, those financial commitments, the longevity, all those pieces that we talk about often and then you've got a much better piece of black and white right in front of you, so you kind of know what's going on.

But let's just assume, Tony, for the sake of the argument that you are behind. Well, now, so what's some catch up strategies? What's some things to be thinking about when it comes to how to tackle these and how to maybe shorten that gap? So obviously we should start with you're over 50, most likely, because we're talking about retirement, this listener was in their 60s, so take advantage of the opportunities there, max out.

Tony Mauro:

Yeah, you want to max out things like if you've got a 401k at work, if you don't have that, or even if you do, IRAs, got your HSAs in there, you certainly could, and this all comes down to planning, of course, you don't want to just, throwing these out there, you've got to get with your advisor and check some of this stuff out. But you may want to say, "Well, okay, based on the amount I can safely set aside every month with what I have," maybe you need to delay retirement a little bit. Maybe we just need to move it back a bit to even things out. Maybe it's a fact of we do all of the above and we start cutting back just a little bit, we reduce some things to maybe save more. I mean, without feeling like your retirement savings poor. Maybe we need to reassess our risk. Maybe we need to maybe invest a little more aggressively than you have been depending on how things are looking if you're behind.

Speaker 1:

That's a good point. Now as the advisor, okay, if you have to say that-

Tony Mauro:

[inaudible 00:07:35] to say.

Speaker 1:

Yeah. Well, so if you're the advisor and you say, "Okay, look, you are behind. You want to make up this ground, whatever. One of these places is that you have been very conservative with your portfolio." You don't just move to the higher risk if you're behind because you need to take into account not only as the end user, the client, but also as the advisor, how are they going to feel about this, can they stomach taking that extra risk?

Tony Mauro:

Yeah, can they stomach it and how much will that risk tend to be? How much longer do we really have, because that plays into it as well. But it's weird for an advisor to say, "Well, you might need to take on a little more risk." Most of the time we're saying, "Nah, maybe take a little less," especially towards retirement. But it's an option that you might want to consider if you're getting close and you're behind.

And then the last one is, and I think a lot of people don't give this enough merit is maybe you just take on some part-time work, some mindless type work in your retirement to help fund things with not too much stress, maybe not full-time. And maybe you can pick up 20, $30,000 a year extra just doing that and you might have to find something you really like to do.

Speaker 1:

Yeah, I think ultimately, if you got to do some catch up things, there's these pieces. Obviously we got the catch-up contributions, Tony. Now if you are 60 to 63, you've got this new little funky window that they've added.

Tony Mauro:

A little bit more you could put in.

Speaker 1:

A little bit more, so you could pile it away a little bit and really just kind of close that gap should it actually be there. But if you don't identify the lifestyle and the projections, and granted, I know things change, but if you don't do that, you're really just kind of taking a random shot in the dark at stuff. It's like the people who say, "Hey, we are currently living off $5,000 a month and we know we're close to retirement and we just want to pull the trigger and get into retirement, so if we go ahead and live off of 3,500, we could make our numbers last for our projected lifetime." Well, did you try living off the 3,500 first of all to see if that actually works? And I feel like that's the same kind of thing sometimes when people go, "Well, the million's not enough. I got to push to two million." It's the opposite conversation. What if the million does get it done and you just don't know because you just didn't run the numbers.

Tony Mauro:

You didn't run the numbers. Yeah, and we like to do that exercise with pre-retirees before they even retire and get our plan mapped out and say, "Let's try this kind of fake, if you will." I mean, we make them go through it, but they just kind of report back that, "Hey, we were able to do this on this and we don't think this is going to be a problem." Or sometimes they say, "Oh boy, I want a lot more than this. I can't do it." And then you got to adjust. But again, that's, I believe where advisors lend their most value, especially pre-retiree and during retirement is making sure that, and I would advise all the listeners to, if you have an advisor, especially in retirement, make sure you're talking to them about this kind of stuff. You don't want to go in and just talk about numbers all the time. You want to talk about, is retirement working for you and what do you see as your problems? And maybe they can help you make some adjustments there.

Speaker 1:

Yeah, very true. And don't forget too, there's a whole nother piece of this conversation, like if you... Okay, so this person says her brother's got two million. Well, do you or your husband have a pension, and they don't, right? That's another piece of the animal. What if both couples have good Social Security and good pensions? You might not even need a half a million dollars, right? I mean-

Tony Mauro:

Might need a half. How about another one is, maybe you know that you are going to be inheriting quite a bit of money, you just don't have it yet, but you know it's coming. That could be in play too.

Speaker 1:

Yeah, there you go.

Tony Mauro:

All that kind of stuff.

Speaker 1:

Although don't count on that though, right?

Tony Mauro:

No, don't count on it. But like you say, it's important to get that out on the table that you think that's going to happen.

Speaker 1:

Yeah, exactly. So at the end of the day, do you need the two million? Do you need the one million? Look, Tony, I've been talking about this all week, people have known and said for years, Warren Buffett's famously said things like, retirement planning and all that kind of stuff, it's not sexy work, it should be boring. I mean, in a way it should be boring because if you're too emotionally involved and charged up, you make those rash decisions. It's very much like you just get swayed very easily because we get so worked up about our money. But if it's going well, it's probably boring. But news media of any kind, financial of any kind, can't sell boring.

Tony Mauro:

Nope, can't sell boring, that's why they've got to put some stuff in [inaudible 00:12:11].

Speaker 1:

So it's got to be, "It's a million now. Now it's two million. Oh no, the market's plummeted," when it went down like a half a percent. Things like that. So get the numbers, get the concrete data, and then just make sure that you're making decisions from a place of information, not just emotion. Then you can bring the emotion into it, absolutely. But start with the data. So good stuff, man. Well, thanks for breaking that down this week as we talk about it. Always good stuff. Any final thoughts?

Tony Mauro:

Well, I would just say, I mean, my final thought really is keep on it, keep at it. We get a lot of questions from people in their 50s, and the one thing I don't like to hear people say is, "Well, I'm 50-something, it's too late." I don't think it's ever too late. I think if you sit down and iron out a good plan, it might not be your dream plan that you had maybe when you were young, but I think you can craft a good plan. And I think you should stop, it's hard, stop comparing yourself to others, start getting your plan together and I think you can live a, most people, a very good retirement in America these days.

Speaker 1:

Very true. All right, well, thank you so much for your time. And if you've got some questions, you need some help, as always, reach out to Tony and his team at Tax Doctor Inc. Find them online at yourplanningpros.com. That's your planningpros.com or call 844-707-7381. We'll have links in the descriptions below. Tony's been doing this for 30 plus years, he's a CPA, CFP and an EA, so a great resource for you to tap into again at yourplanningpros.com. And subscribe to the podcast on whatever app you enjoy using. 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.

From the Macy’s parade to carving the turkey, Thanksgiving traditions can teach us a lot about what makes a great financial plan. Let’s match some of the most loved parts of the holiday with the money lessons they represent.

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

Call: 844-707-7381

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Transcript: 

Speaker 1:

From the Macy's Parade to carving the turkey, Thanksgiving traditions can teach us a lot about what makes a great financial plan. So let's have some fun this week here on Plan with the Tax Man.

Hey everybody, welcome to the podcast. It is Thanksgiving week that we are putting this one out. So maybe you're catching it before or after Thanksgiving. Hopefully you had a good holiday. And we're going to talk about what Thanksgiving traditions, how they might mirror smart financial planning. Have a little bit of fun here with Tony Mauro, who is the Des Moines professional alternative. And at Tax Doctor Inc., he is the tax man. So we're going to have that conversation, my friend. What is going on? How are you doing?

Tony Mauro:

I'm doing great. Getting ready for Thanksgiving. One of my favorite holidays of the year.

Speaker 1:

You and me both.

Tony Mauro:

Yeah. The staff's getting excited too. They get a little time off around Christmas, so it's all good.

Speaker 1:

Yeah. Favorite dish?

Tony Mauro:

At Thanksgiving, I'm still a traditional turkey guy, but my favorite at Thanksgiving is probably the pumpkin pie with a lot of whipped cream.

Speaker 1:

Okay. All right.

Tony Mauro:

How about you?

Speaker 1:

Mashed potatoes. My wife's mashed potatoes are killer.

Tony Mauro:

Oh yeah.

Speaker 1:

They're killer. That's probably why I have heart problems, but they're good. Well, let's have some fun. We'll talk about these traditions. We'll kind go through the day. We'll kind of run through the day a little bit and see if you can spin a financial yarn to some of these items.

So I don't know about at your house, Tony, but she starts working on all the stuff in the morning. It's her and my daughter have this tradition of doing all these things together, even though the kid's in her late 20s now, they really enjoy kind of working through the process together. That's a tradition in and of itself. But she has to have the Macy's Parade on in the background as they're prepping and whatnot. So what kind of analogy can we make to the prepping of the parade and the financial prepping and planning?

Tony Mauro:

Well, the parade, I used to watch it, I haven't watched it in several years, but it always does come off, just like every other giant event, as fairly flawless and looks like it's effortless. Just like I always use the golf analogies. Those guys make it look so easy. But what everybody doesn't see is everything that goes into the setup and the organization of that parade.

And really, no different in your financial life, whether it's your retirement plan or any other plan that you have that you're saving for. You do have to do some work behind the scenes. You've got to get your plan in place. You've got to understand what's going on, have communication with your advisor, and really monitor that plan in order for it to later, on when you're out bragging to your friends that, hey, I'm retiring at this age, or whatever, and telling them you're going to do all these fun things, to them it looks like, boy, somehow you made it so easy, but they don't understand the things that go into it. But you do need to do that with your financial plan.

Speaker 1:

That's a good way of thinking about that, right? The choreography, if you will, of the planning and of the parade as well as your retirement is pretty important. So, all right, so you're watching the parade, you got that going on, you start cooking the feast. So when it comes to obviously getting the turkey in, timing's got to matter here.

Tony Mauro:

Got to matter. I'm not a good cook, so I would probably be burning it. So I leave that to my wife. But I know that there's been several years that in the past, actually, it used to be my mom, she would put it in too late or cook it too long and it would burn. So the whole thing was kind of ruined. And so in your planning life, I never think it's too late to start, but obviously the sooner you start, you don't have to rush or you don't have to feel as much pain of saving because you're starting on time, you're doing it for a long time. And just like cooking the turkey, you want to make sure you're monitoring it while it's in the oven, or in this case, while your money is being invested. So that, again, just like I said before, at the end of the day, your plan is going to look like and feel like a real success.

Speaker 1:

Yeah. You don't want to rush it, especially if you're doing that deep fried thing. Because I guess that's where they explode is when it's still somewhat frozen and you drop it in there, and I guess that's when the problem happens. So timing is important.

Tony Mauro:

Timing is an issue. Yes.

Speaker 1:

In both things, right? For sure. All right. Well, the turkeys cooking, stuff's being made, and you're probably part of the family is probably watching some football games going back and forth. So this one should be a pretty easy one for you here, Tony, to give us an analogy. But my beloved Lions, I am a long suffering Lions fan. Yes, we've got a good team last couple of years, but they still seem to lose on Thanksgiving Day. So that's a tradition I could get rid of. But anyway, what do you got?

Tony Mauro:

Well, I think with the football games, I mean, we're all sitting there watching them in some form or fashion. Obviously, we see both the offense and the defense on the field at different times. It's really just very similar to your financial plan. I mean, sometimes you're playing offense, and that's the proactive, what I call saving and monitoring for the future and saving for those goals. But you also need to, and this is where I think a lot of people miss, they don't play defense enough in their financial lives.

In other words, they don't carry the proper insurance, they don't watch that enough. And I'm not just talking life and disability and things. I'm talking about home, auto, things like that, that they do need to protect the assets they have. So I kind of equate that to a little bit of a defense because you have to spend money on that stuff. It's not sexy at all. You don't like it. You only get a return is if something bad happens. And so a lot of people put that off. But I do think both of those are important, just like they are in football.

Speaker 1:

Yeah, great analogy for sure. And sometimes, yeah, my Lions do not play defense enough or not well enough. And any of the guys who are listening, I'm sorry, but you know it's true. So we got a great offense right now, but sometimes the defense is a little suspect. So that's a great analogy. All right. Food's done, ready to get rocking and rolling. Got to cut that turkey, man. Got to slice that joker up. What are we doing from a retirement analogy?

Tony Mauro:

Well, I think it's similar to the turkey is we all have different plans. We all have different needs and wants, very similar to the size of the turkey. So when we're talking about distributions and getting income from what we have saved, it's important to be strategic about what we're doing and how we're divvying that up. Because obviously in retirement planning, it's how long is it going to last? If you're cutting the turkey, it's like, okay, there's an end because somebody's going to eat the last bite. But in retirement, hopefully we're not taking the last bite because then that means we're out of money and that's the last thing we want to have happen.

Speaker 1:

We don't want to do that, right?

Tony Mauro:

No.

Speaker 1:

So yeah, so you want to be strategic about how you slice up your retirement income so you can plan it out, stretch it out. Because we want to have that longevity piece covered as well. Even if you don't think longevity is on your side, you still want to plan for it in case you're wrong. So family table conversations, that'll be next. So everybody's sitting there to eat. You've cut up the turkey, you're chowing down. Lots of conversations happen over Thanksgiving and sometimes they're not always super comfortable. Hopefully everyone's keeping the political stuff at bay the last couple of years. But what's that financial correlation?

Tony Mauro:

Well, I think the financial correlation, and I think you're right, I mean, I've been in a few of those awkward conversations over the years at Thanksgiving, which is very uncomfortable. It used to happen at my wife's mom and dad's house. It's very similar, because at least with us as advisors, we want to take some time to talk about some uncomfortable things that people don't like to talk about, which is the end, the death, the planning after you're gone, what's that going to look like? And it's uncomfortable, but if we can take that and maybe make it less uncomfortable and get people to talk about that, generally they feel better afterwards, that they've got that part of life handled and they can enjoy the rest of their lives knowing that that's in place.

Speaker 1:

Yeah. The family's together. My mom was kind of funny, I think it was last year or the year before. She's like, I'm in my 80s, I'm going to die in a few years. What are we doing? She just kind of dropped it out blunt like that.

Tony Mauro:

Yeah, that's one way to do it.

Speaker 1:

Yeah, exactly. So have those chats.

Tony Mauro:

[inaudible 00:08:37].

Speaker 1:

But she kind of made it silly a little bit, which took the edge off. But you got to have those conversations talking about money, legacy, all that good stuff while everybody's together. The future versions of your family will thank you for that. All right. Leftovers, Tony. Time to start putting stuff away. Some people might say this, the best part of it is having leftovers.

Tony Mauro:

It's my favorite for sure. I think in the financial realm, really the leftovers for me really are living within your means. In other words, creating a budget and sticking to it as best you can. And then of course my favorite tax strategies, because a lot of people don't think about these things, and these little leftovers can add up to a lot of dollars over years. If you could live within your means, save the excess, and use that excess to invest strategically the best you can tax wise, you're really going to be able to add a lot of extra dollars to your end game, which is your retirement income.

Speaker 1:

Yeah, you got to stretch it. And that's where maybe there's tax strategies. We often talk about with you being the tax man and all, I mean there's all those other facets to just the retirement versus just the income, which we were talking about before, is you want have all those good pieces in place. And I know sometimes we often talk about the budgeting word, and people hate that word in retirement. They think they're going to have to live on a strict plan. But that's not really what you're talking about. I mean, it's really just making sure you got everything kind of checked, the boxes checked, so that you've got plenty of leftovers for the next 30 years.

Tony Mauro:

That's right. And yeah, my clients don't like that budgeting term either. And it's really not. I try not to phrase it like that, but I like to say living within your means. Knowing what you have coming in, what you have going out, and making smart decisions that way. Because if you can do that, that's a lot of the battle right there.

Speaker 1:

Yeah. We'll call it a spending plan, right?

Tony Mauro:

Spending plan is a good one. Yeah.

Speaker 1:

Yeah. That way you can just do that and then say that and that makes you feel better. All right. Now, somewhere along the way from me growing up, it seemed like the oldest person in the house was the first person responsible for the post meal nap.

Tony Mauro:

Oh yeah. I think that still happens.

Speaker 1:

Yeah. Now a lot of people fall asleep for sure, but I feel like it seemed like it was always the oldest person in the room that was the first one to kind of kick off. But you've earned it. And I mean, look, this is pretty easy. This is what retirement is. It's the post meal relaxing time after the Thanksgiving feast.

Tony Mauro:

It is. And it's the reward for hopefully your preparation and saving for all these years. And hopefully you've got enough health to be able to get out and enjoy it. And those that don't, enjoy what you can because, in the end, we will all have an end. And so it is your reward, and hopefully you can take it easy and do what you want, which is, in my opinion, the whole reason why we are trying to help you with financial planning in the first place is that.

Speaker 1:

Yeah, exactly, right? Whether it's your portfolio or Tony's favorite pumpkin pie, everything turns out better when you plan ahead, share wisely, and savor those results. So that's going to be our fun little podcast leading into Thanksgiving. Tony, I hope you and the family have a fantastic holiday.

Tony Mauro:

You do the same. And hopefully everybody out there has a great holiday as well.

Speaker 1:

Yeah, absolutely. For all of our listeners out there, thank you so much. Don't forget to share the podcast and subscribe if you haven't done so. Certainly supports the channel and just helps us keep knowing that we should put out some information for folks to hopefully consume. I'll keep doing these food jokes. And that way you can digest what's the right thing for you in your retirement. So reach out to Tony and his team if you need help today, yourplanningpros.com, that's yourplanningpros.com. This is Plan with the Tax Man. Subscribe to us on your favorite podcasting app, and you can find that stuff at the website as well. And we'll see you next time here on the show.

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.

How do you know if your financial advisor is a bad fit for you? What about an advisor that you’re thinking about working with? What red flags should you be looking out for?

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

Call: 844-707-7381

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Transcript: 

Marc Killian:

How do you know if your financial advisor is a bad fit for you? What about an advisor that you're thinking about working with? Are there some red flags to be on the lookout for this week on Plan With The Tax Man? We'll highlight five of those to keep an eye on.

Hey everybody, welcome into the podcast Plan With The Tax Man here with Tony Mauro and myself, Mark Killian, to talk about some red flags to hopefully you're not ignoring or at least be aware of. And we'll dive into that this week here, Tony, as we're getting pretty close to Thanksgiving. How you doing, my friend?

Tony Mauro:

I'm doing good. Getting ready for the holidays myself and getting ready, well with the staff, for the year-end.

Marc Killian:

Okay. Yeah, well, I mean, it is a busy time of the year for everybody. And so maybe if you are shopping or thinking about doing something, making a change, some red flags to maybe be aware of. So we'll run through a few of these for folks, see if we can help them out. Let's start with the whole cookie cutter conversation, the one size fits all approach. Obviously at this point it's become cliche. Every advisor says you need a specific strategy for your situation, but it really is true because there are still some of those big box places out there that just try to jam everybody into the same kind of thing.

Tony Mauro:

There is. I have more and more conversations with clients about this, and you're right. All of us advisors, everybody knows that we all do the same thing. But I think too many of us, if they're going with this one size fits all approach, I think we're doing a disservice to the clients. So I think if you are a person out there looking for an advisor, you want to ask about what is your approach for your clients and what do you do with them and how do you do it a little bit?

Because for us, we like to start, and I just had a conversation with a tax client yesterday about we don't want you to come to us just for us to have you do say a Roth IRA. And we just manage the money. You're paying us, so we want to provide some value. We want to get to know you, we want to develop a plan and help you through the plan. So I would definitely ask those questions and don't be afraid to do that because that's what's going to determine if they're a good fit for you or not.

Marc Killian:

Yeah, exactly. And every situation's a little bit different, certainly. And there's certainly universal things that do affect us all. But just kind of trying to jam everything into one style that 20 people walk in the door and they try to put them all in the same overall portfolio and approach. And maybe that's the key word right there, Tony, is that a lot of times these big box places, they're really talking more about the portfolio management and things of that nature versus a holistic retirement strategy.

Tony Mauro:

They are. And we don't spend a lot of time on that because I don't want to say we don't feel it's important because it is. But that's secondary to really what you want to do and where you want to get to because we can figure out that part of it later. And there are so many choices that we'll find something there. I don't like to lead with that and talk about performance and this and that because I don't think that that is the first thing we should be doing.

Marc Killian:

Yeah, you're talking about relationship and life planning, if you will, a little bit, more than just portfolio building at that point. Most of us have built one. Sure, we still want to manage things and then stay ahead of the inflation and keep going, but you're talking taxation and social security optimization, there's just all these other pieces that go into it. So that's where the customization truly does come into play. All right. That's the first one, Tony. How about the communication aspect? So also sometimes a knock on some of those places is, well, okay, they got me set up and I never hear from them after that.

Tony Mauro:

Yeah, I hear that a lot. I really do from clients, and sometimes it can go several years. And to me, I always ask them, well then they're not really, in my opinion, your advisor. There's somebody that is maybe managing your money or at least supposed to be watching it, but most fiduciaries, we have an obligation to at least meet with you once a year. But we try to do that more than once a year, even if it's just a phone call or a Zoom call, something like that. Because we do want to communicate with you and we don't want to just talk about how the market's doing and what's going on in the latest rally, or decline, or political situation, things like that.

We want to talk about what's changed in your life and if some of your goals have moved and things like that, we'll touch on some of that current event stuff. But I think it's important to just keep in communication to let you know that we are still looking after things and monitoring your plan, even though you don't hear from us. Because a lot of people, if we don't communicate with you, you probably start scratching your head saying, well, why am I paying these people and what am I paying them to do for me if I'd ever hear from them?

Marc Killian:

Yeah, yeah, exactly. So communication is certainly a big key. And transparency also a big key, Tony. If you can't tell how somebody's getting paid, that's a serious concern. That's a big red flag. And transparency not only in the fees you're paying, but fees you're paying for your products and just across the board. That should just be a must. Transparency across the board.

Tony Mauro:

I think it is. I think it should be one of the first things that are talked about. We talk about it with our clients and prospective clients right up front. And we tell them just like when we do your tax return or your accounting, we're paid pros. And as long as you understand that, here's the value we're going to deliver, here's what you can get for the money you're paying for us. And it's up to you then to decide if you think that there's enough value to pay that fee. But we definitely don't want to hide behind that. And I definitely wouldn't be afraid for all of you out there to ask your advisor that. And just so you know, you're not really questioning that they should be getting paid more of how and what motivates them. And I think more of the truer measure, I'm one of those fee for planning types of guys or asset-based management. I don't really like commissions and things like that. I do think that skews some things and can lead some people to do things that aren't in their clients best interest.

Marc Killian:

Yeah, again, you're talking about relationship building. So why would you not want to have that transparency anyway on all facets of things? So it just totally makes sense. Okay. Tax strategy, so well, Plan With The Tax Man, right?

Tony Mauro:

That's right. My favorite.

Marc Killian:

Exactly. So I mean obviously if you're working with somebody who is, again, the focus is primarily on the accumulation and you don't really touch on some of the other pieces of the long-term aspect of retirement, getting into retirement, all that kind of stuff, then you're certainly a red flag because you got to have a tax strategy, Tony, you know this as a CPA, the prior year information is fine and good, you're handling all that, doing the annual taxes. But you really want to be thinking about future taxes as well, forward-looking. And someone like yourself who does multiple sides of the coin, you're a CFP as well as a CPA, you're looking at both of those.

Tony Mauro:

Trying to always look at both of those, especially with a financial plan planning client because you know what they say. Taxes, they're with us till the day we die. It touches pretty much everything. It's one of the biggest expenses over our lifetime. Why would you plan your future without taking that into consideration. And it's bad. And I don't know what the best word is here to say. I better leave it alone. I don't want to talk about the government. We're coming off to shut down and everything else. But as bad as they are, sometimes the tax code is full of things that we can do legally to help cut our taxes.

And a lot of people aren't familiar with them or haven't taken advantage of that. And it's certainly true with retirement, but there's also some things you can do in retirement to cut your taxes now, but then you've got to deal with it later. You've got basically a payable to Uncle Sam. So it's important to factor that in when you're planning, I think. It's my number one favorite and my number one biggest reason why I think people should use somebody that has a tax background when they're planning.

Marc Killian:

And again, nothing wrong with your CPA looking at the prior year, that's their job, right?

Tony Mauro:

Right.

Marc Killian:

But working with someone who has, I guess the mindset to do both sides of the aisle if you want to stick with the political conversation, sort of is a great way to go about that. And of course doesn't mean that you can't have your own CPA and work with people as well, but just again, make sure you're having that tax strategy conversation and working with a financial professional who is thinking about the tax simplifications of the moves you're making because they will be there. They're not going anywhere to your point. And I guess Tony, that really just brings it back home to the final piece for, so we talk about five today, and that's just not a lot of information gathering.

Look, you've been doing this 30 plus years. It's probably very fair to say if a brand new prospects walk walks into your door and sits down with you in that hour consultation, you probably, if you've got their information, you're looking at it, you probably could give them recommendations right then and there, right? Because you've been doing it long enough. You've seen it enough time. It's like mechanic says, "Oh, yep, I know exactly what's wrong with your car." However you want the diagnostic fully done to make sure that it's not something else or that all the different pieces. And that's where, again, the communication, the information gathering, taking the time to learn about the client is crucial when working with a professional. So if you're not getting that, that's a red flag.

Tony Mauro:

That's a huge red flag because yes, you're right. Somebody walked in my door hypothetically and said, "Look, I want to open up a Roth IRA. Just tell me what fund to put my money into and I'm going to go do it." Yeah, I could give them a number of funds or stocks or whatever else they want, but that's not really what I'm being paid to do. And I do have a duty to make sure that what I'm saying fits them. The only way that I can make a good recommendation, whether it's a plan or a specific investment, is to know a lot about what they want, what they have, where they're going. And so I generally gather a lot of information.

Now we use some tools technologically, we use Asset Map for us. It makes it very easy for the client to get it started without having to feel like they're getting the third degree interrogation, trying to get every last piece of their financial advice or a life. But we try to make it fun for them. But in the end, and they help construct that. They tell us really everything they have and where they want to go and everything. And then we have it, like I say. We take their assets and kind of throw it on a map and rearrange it and come up with a plan.

Marc Killian:

And that's why it's Plan With The Tax Man.

Tony Mauro:

That's why it's was plan. You got to be able to plan.

Marc Killian:

You got to be able to plan. So look, a great financial advisor will build a relationship with you. If something feels off, listen to your gut. We have those things for a reason. A lot of times they're right. And their right advisor hopefully is not making you feel like you're in the dark or are not understanding or whatever the case is. And so if you're already working with somebody and you feel like you've got some red flags, and you're not getting answers to the questions and you're shopping around, or you're just shopping around for their first advisor, take the time to find the right fit for you. That's why they all offer those complimentary reviews and consultations. That's why the podcast, just about everybody has a podcast and video channels and stuff like that. It's a great way to learn more about them and that their philosophy is a good fit for you.

Then you go in for the consultation and so on and so forth, and you see if it's a home run or not. So that's going to do it for this week here on Plan With The Tax Man. Don't forget to subscribe to us on Apple, Spotify or whatever podcasting app you like using, and you can find all that information at yourplanningpros.com, as well as get on Tony's calendar there and his radar for a consultation at yourplanningpros.com. With that, we're going to say we'll see you next... Well, right before Thanksgiving probably. So have yourself a great week and Tony, I'll talk to you soon.

Tony Mauro:

All right, thanks.

Marc Killian:

We'll catch you later 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.

Here on the show, we often talk about what it’s like to become a client. But what about what it's like to be a client of a financial advisor? Tune in for a behind-the-scenes look at what it looks like to be a client at Tax Doctor Inc. 

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

Call: 844-707-7381

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Transcript: 

Walter Storholt:

Well, here on the show, we often talk about what it's like to become a client, but today we're going to talk about what it's like to be a client. On Plan with the Tax Man, what's it really like to be a client of a financial advisor, we'll give you all the details coming up. I'll grab Tony and we'll get started. It's another episode of Plan with the Tax Man, I'm Walter Storholt filling in for Mark Killian, but as always, joined by Tony Mauro, a certified financial planner and CPA with more than 30 years of financial planning experience. Find us at Yourplanningpros.com. Based out of the Des Moines area in central Iowa, serving everyone throughout the community there, you can find him certainly via the phone as well, 844-707-7381, all the contact information for Tony is in the description of today's show. Tony, before we dive into the topic today, everything going okay with you?

Tony Mauro:

It's going good for us, just got back into town from a family wedding, and yeah, still tackling fall, so everything's good.

Walter Storholt:

Nice. Where was the wedding?

Tony Mauro:

It's actually over in Chicago.

Walter Storholt:

Nice. Good trip to the city?

Tony Mauro:

It was. I don't get over there very much for as close as we are, but there's a lot of stuff to do, a lot of stuff to eat, and all that, so yeah, it's always a good time.

Walter Storholt:

Did you get down to the riverfront or down to the lakefront at all?

Tony Mauro:

We did, we went down to, familiar with the Navy Pier area.

Walter Storholt:

Yeah.

Tony Mauro:

We were there a little bit, and then kind of walked around downtown a little bit. It's spent a long time since I had a good old-fashioned deep dish pizzas, so we had a little of that.

Walter Storholt:

I was going to say. Who did you use, was it Lou Malnati's or what's the other one-

Tony Mauro:

Yes, it was whatever that one is. It was highly ranked, so we thought, well, we'll go try it, and it was very good.

Walter Storholt:

Yeah, it's hard to beat a meat pie, right?

Tony Mauro:

That's right.

Walter Storholt:

Pretty good stuff. One of my favorite things ever was doing the river tour, the riverboat tour in Chicago, just the architecture tour from the boats, I think it's just one of the-

Tony Mauro:

I've never done that. Yeah, but that sounds good.

Walter Storholt:

Oh, you got to do it. Next time you're in the city, just do the riverboat tour, the architecture tour, and they take you all up through the river, and they point out all of this just fascinating information, all about the architecture of all the buildings right there along the river front. And it's a fun ride, they put on a great show, lots of amazing information. Every time I've gone to Chicago, I've done the tour, so.

Tony Mauro:

I'll have to do that. Yeah.

Walter Storholt:

It's really cool. I think you can pick it up right there from Navy Pier too, so you hop on the boats that are right there, they take you right through, and just easy.

Tony Mauro:

Cool.

Walter Storholt:

Very cool.

Tony Mauro:

Yeah.

Walter Storholt:

I would do it when the weather is warm. It'd probably be a little brutal in the colder temperatures, but good summer activity for sure. Well, let's dive into our conversation today, Tony, what it's really like to be a client of a financial advisor. So, again, a lot of our focus is on becoming a client, but let's talk about once we've turned that page and we are a client, set some expectations for folks, what's that relationship then going to look like beyond just the first couple of visits and meetings? So, when somebody's been a client for many years and they already have a solid retirement plan in place, what are your discussions look like when you get together for periodic reviews, and how often do those happen? Take us under the hood, if you will.

Tony Mauro:

Sure. Well, normally, depending on the client's situation, how complex it is, and really whether they're in the... I try to divide it up into two main areas. You're either in the accumulation stage or the distribution stage, that's what our clients are in. So, that number one depends on how many times a year we get together. It's anywhere from one to four times that we'll get together, because some clients will say, believe it or not, hey, I think four is too much, I don't really want to get together that often. And some really like it. So, everybody's different there, but once we get a plan in place... And for us, a plan isn't just lip service and talking, we actually use, and I think a lot of advisors do today, some sort of formal financial planning software that they can take and develop a plan for the client, top to bottom. Everything they own, everything they owe, what their goals are, everything from retirement, to college planning, and everything in between.

And basically, kind of function off that plan as their financial quarterback, and make sure that plan, we're progressing, number one, and then number two is in the reviews that we've had with clients who've been with us a long time, it's really reviewing the plan, are the goals still the same? Anything drastic happen in your life? And just talk about that. And then, we'll touch on investment performance and how things have done over the last quarter, last year, two, three years, that kind of thing. Obviously that's important too, but that's really not why we meet, just to go over, hey, your returns this quarter were this much or this little type of thing, it's much more than that.

And as you get into understanding what the client's about and wants to achieve, the more we know about them, the more we are involved with their life, at least on the financial side. So, a lot of them have been with us for a long time, we know everything about them, we try to get their children involved, if they're adults, especially in the distribution stage, because we talk about end of life and what's going to go on there, so that's kind of our reviews process in a nutshell.

Walter Storholt:

Makes sense, and I think helpful to get that peak. Can you go over a little bit more of how often you meet with your current clients to review their situations? Is it always in person? Do you have remote meetings? Sometimes? What's usually the right mix for folks?

Tony Mauro:

Yeah, it's totally client-dependent, it used to be everything, of course, was in person, now more and more of them want the video call, they're comfortable enough with that, they've done them enough that they don't have to come to the office. Obviously people that live a long way away, they love that. And so, I would say probably right now for us, I give the client the choice, but we probably do 60, 70% of our meetings virtually now. We hop on, we could see each other, and we talk through it just like you and I are doing, except you could see our faces. And then, once in a while they'll come in, if we've got some things to do that way, but like I said, most of the time we're generally two to four times a year, depending on the client.

In between that, of course, if they call or email or things like that, we certainly want them to reach out if they've got questions about anything they've seen or heard. And if you listen to our last podcast about some of the funnies that we did, we get a lot of calls about that kind of stuff about, hey, I heard this, what do you think? Type of thing. And we can address those things, just one-off off the cuff type of things.

Walter Storholt:

Yeah. Those are some pretty good examples of things that are from outside what somebody would think of as probably the normal services of a financial advisor, I would think. Like, calling you up and being like, hey, is this a scam email? That's not what I would write down is usually in the description of a financial advisor, but it's outside of that realm of just helping you with your portfolio.

Tony Mauro:

It is, and we get a lot of that, we get a lot of people asking tax questions, obviously we've always prepared tax returns, and so they look to us, many of them, we do their taxes-

Walter Storholt:

That's something that not every financial advisor does though, right? That's sort of unique for you guys.

Tony Mauro:

Right, Yeah. So, we can kind of take the tax angle perspective as well to work that into the plan, and let them know, hey, not only are we trying to achieve your goals, but we're trying to do it in this much of a tax-efficient manner versus other things. But beside that, the clients will call up and they're changing jobs, they're doing this, they're doing that in their lives, and so they generally have a lot of tax questions that we'll answer for them. And a lot of them, of course, as they get a little older, they're asking about Social Security, and when to take that, and again, we can certainly help them with that. That's in the scope of the financial services, but kind of outside of it. But the bigger ones really are, they'll ask us a lot about passing money on, end of life, things like that, that we've really tried to help them with in addition to just keeping the plan in progress.

Walter Storholt:

Yeah, makes a lot of sense. I'm curious if you can maybe share with us some memorable victories or happy occasions that you've been able to celebrate with your clients over the years, since you're describing a relationship that then stays in place throughout their retirement.

Tony Mauro:

Yeah. Well, we track every goal that they give us, and we sometimes have to push them a little bit and make sure it's still an important goal. But it's always great to see when they hit their goals, as small or as big as are, we actually celebrate it with them. If it's a big goal, we'll actually send them things. If it's a small goal, we'll call them up or send them a pre-recorded video, and congratulate them, and have some fun with it. But it's anything... Some of the biggest ones, obviously if you were working with a client a long time and they get to the end, and we've monitored the plan a long time and they're where they want to be. They're so excited to retire, and have the kind of life they thought they could have, and when they tell you they never really dreamt that this was possible, and really it just was a matter of them taking our advice, and actually executing, which really on their end generally means you got to save some money, you got to postpone spending to accomplish these goals.

And sometimes I think we act more as a coach/consultant, that, hey, okay, you got to stay on goal here type of thing, those are the happiest really occasions. Even, I met with a lady yesterday, we just started a new goal, she needs some [inaudible 00:10:01]... She's retired, but she says, "I need to reside my house, it's just getting old, it's falling apart." And we said, "All right, well, let's set a goal, and how long do you think you want to take to save for it?" And she told me, and so we'll celebrate that, even though that's a small non-financial goal, it's one of her goals. And so, I believe our job is to help them try to achieve those goals even outside of the planning realm a little bit.

Walter Storholt:

Yeah, makes a lot of sense. And those are some good stories when you get to track those goals and see them succeed in those goals throughout their financial life, and through their retirements. Can you maybe describe for us, one more story since we've slipped into a storytelling mode here, maybe a time when something in life happened to drastically change a client's financial situation for the worst, and how you were able to help?

Tony Mauro:

Sure. There's a lot of these as well, and most of them occur around a couple of things in our realm, it's either a loss of a job or loss of a loved one. And I can think of one in particular where, lady lost her husband, they were relatively young, a drastic change in their life, they had two young kids at the time, these stories are all over. But luckily she came in to see us, he did have some life insurance, which was great, so she was able to, with our assistance, take that and invest it, get totally debt-free, and invest the course of the rest. And she just retired about a year and a half ago, she's still with us. And now she's enjoying her retirement, as happy as she can be, obviously she lost a husband, it was 18 years ago, but I like those kinds of stories because people can continue on and, at least on the financial side, be able to reach their goals.

And it's almost like, obviously nobody ever thinks they're going to be in that situation where you lose a loved one early, and it drastically changes your life. And on the flip side of that, if you don't reach out and try to get some help, it could go the exact other way. So, there's all kinds of things in all of our lives that happen that we didn't plan for, and better to have a plan and try to work that plan as those things come at you.

Walter Storholt:

Absolutely true about that, Tony, and I appreciate you sharing that story with us. Sometimes it looks hopeless or you can't see that light through the end of the tunnel, and you guys help people plan for the opportunity to see that hope, to see that potential future in front of them. It's an example of how money matters change over time, but hopefully over the last couple of minutes you've been able to see that the value of a real relationship with an advisor, someone who knows your story, cares about your outcomes, tracks your goals, that never goes away, that never lessens in importance and value.

And so if that's the kind of relationship that you're looking for as you plan for your financial future and for retirement, all you have to do to get in touch with Tony, to have a conversation and get a review of your financial status and look at what you need to do to plan for the future, all you have to do is give him a call, at 844-707-7381, or you can go online to yourplanningpros.com. Tony is a CPA and a certified financial planner, and you can again find all of his contact information simply in the description of today's show. We try to make that easy on you there. Tony, thanks for all the help once again on the program today, great catching up with you, and we'll look forward to chatting with you again soon.

Tony Mauro:

All right, well, thank you, and we'll talk to everybody on the next one.

Walter Storholt:

See you again 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.