Plan With The Tax Man

The retirement planning world is filled with plenty of advice and suggestions, but there are critical questions lurking in the shadows – the unasked, the overlooked. These are the questions that can help define the comfort and security of your retirement future. On this episode, we unearth and tackle these hidden, but essential questions about retirement.

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

Call: 844-707-7381

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Transcript: 

Marc Killian  00:36

Hey, everybody, welcome into the podcast. Thanks for tuning in once again with Tony and myself as we talk investing finance and retirement here on plan with the tax man and Tony is the tax man at tax Doctor Inc, serving folks all around the area. So if you've got some questions, got some concerns, need some help? When it comes to all things with your retirement reached out to Tony, who is a CPA CFP and an EA of 27 plus years experience and a great resource for you to tap into it. You're planning proz.com? That's your planning proz.com? Tony, my friend what's going on, buddy? How are you?

Tony Mauro  01:08

I'm doing good. As we as we're taping this just kind of getting ready to wrap up the 2022 Filing Season, believe it or not so well upon the extension deadline.

Marc Killian  01:17

That's, that's so wild that is that that late, you know. Yeah. But hopefully you didn't have to struggle to hopefully, hopefully anyway.

Tony Mauro  01:25

Yeah, hopefully not. I mean, in, you know, a lot of people starting to think about, you know, you're in tax planning and next year. So this is a good, good time to talk about some of this stuff.

Marc Killian  01:34

Yeah. And, you know, I've got, we're kind of called this hidden questions or overlooked. And I think a lot of these that we're going to go through a couple of them here, Tony, I think people probably we all know a lot of this, but I think what happens is, we often tend to get our focus in one or two areas, sometimes when it comes to retirement planning, or whatever the case might be, we tend to often focus, you know, really on like this larger item, and then some of these smaller ones, while we are aware, they maybe don't get the attention that they should unless, of course, you're working with a financial professional. So let's talk about them a little bit, and just discuss it obviously, you know, as a tax practice, as that's a huge part of what you guys do as well, you know, a question might be eventually, hopefully, people realize, hey, you know, in the end, what's these tax deferred savings accounts going to actually cost me in taxes? Because at some point, you know, again, if you think about focus, it's easy to go, Well, hey, let's kick that tax burden down the road. So I don't get to deal with it for a while, but eventually, a while shows up, right? Eventually, you got to pay the piper. So

Tony Mauro  02:32

yeah, and, you know, this is the biggest question that we try to answer for people, and try to let them know that, you know, you have a partner it generally with with it with this handout, and I, you know, I we make fun of the government, because that's Uncle Sam, you know, so, you know, a lot of people don't realize that, you know, a part of this money you have, you have an IOU to the federal government. Well, in the States, maybe for that matter for

Marc Killian  02:56

this training, you know, and I think, Tony, I think we realize it, right, I think we just forget it, because if you spend 20 or 30 years, punting, you know, the tax ball, then you kind of go all the sudden one day you go, Ah, crap, right? Yeah, I forgot about then,

Tony Mauro  03:10

1. So what we try to do, though, is with our retirees, especially, is to let them know, if you do have tax money in tax deferred accounts, that there when you start pulling that money out, right, you know, some of it is going to be taxable. And what we try to work with them on is using other monies first, and then filling up the tax brackets that they're already in, and not jumping to the next one, because they've already got, you know, a tax issue. Let's not compound it and make it worse. And so I think that's important to work with your tax person or advisor, especially in retirement to make sure you're not just needlessly pulling money out. Yeah. So you can kind of control your tax bill a little bit, but there are, you know, for the younger people, the Roth and things like that Roth 401, K's where you're not going to have this issue, and so those will become attractive. But yeah, that's a whole nother conversation. Yeah,

Marc Killian  03:58

for sure. And, you know, if we kind of set this framework around the hypothetical numbers, we'll just go with the easy million dollar math, you know, million dollars in a 401. K, and we can kind of use this for a couple of these questions here. Yeah, you know, you sit there and say, and I get it, it's sexy. It's like, who I'm a millionaire, I can't wait to say that, or whatever. And you're not to your point, because you're really more like a 700,000 year or so. Because, you know, you gotta give Uncle Sam bell 30%, you know, or roughly right, depending on every situation can be different. So you don't really have the million and that leads to my second question, which is, you know, how much can I withdrawal from my savings each year? And if we're using that same million dollar analogy, Tony, a lot of people, they they hear the 4% rule, they think, Hey, that's a good place to start the conversation. And it can be it's a good place to start the chat. But that's, you know, if you go with 4%, you're talking about 40 grand a year off the million but as we just said, you may not have a full million because you got to still pay the taxes because you've been deferring. So now you got what 700 grand that's what 28,000 A year right. So I mean, it just starts To change all the numbers,

Tony Mauro  05:01

it does. And what we look at it when we're working with people is we either use the four, sometimes 5% rule, and just using the 40,000 a year because most people don't want to dip into their principal, they want to say, well, what can I earn? And, you know, if we if we get something conservative in urine and 4% of the 40? Well, we have to tell them again, you're not going to get 40, because we have to pay tax on that. And so it's going to be, you know, a little bit different. And that's when they get a little surprised. Like, what I didn't know that. And so we don't want what their first response is, is, like I said, they said, well, I'll just take out more say, Well, yeah, but then you're gonna have the next tax bracket potentially in kind of all kinds of issues. So it's important that where I think this is where the visor can really show their their value or worth is being able to work with this and keeping your taxes to a minimum.

Marc Killian  05:51

Yeah, I mean, because think about, you know, the future you right. So we often, you know, with these first two categories, Tony, we were kind of punting or wondering what we're going to do later on, don't forget that later, you is standing down the road somewhere waving at you going, hey, don't forget about me, you know, we got to be efficient with not only our spending and our budgeting and things of that nature, I know, everybody hates the B word, but still just having some sort of a, an incoming out, you know, outflow kind of projection is certainly important. So those are the first two. Number three is the life insurance question, right? So again, maybe not necessarily hidden. But if we've been trained, just like we have with the tax deferred accounts, to have life insurance, when we're in our 30s, or 40s. And our kids are younger, and, you know, case, something happens, income replacement, send

Tony Mauro  06:37

them to college, if I die, that kind of thing. We're trained on that we're also trained that, well, we probably don't need that when we're an older person, right, when we don't need it when we're over 70. But life insurance has changed so much that it could actually be a real swiss army knife for a lot of things. No, it could. And I think the question should be, you may not need the same type of insurance, that when you were young, but if you've got a policy that you know, you bought a long time ago, it's still viable, there may be some very useful uses for these policies. Because just because you have, like you said, everything paid off and kids out, you may still, like, in my own case, if my wife dies, you know, a big part of her retirement is IPERs. And which is a pension she can't outlive. But if she were to pre deceased me that I would get a payout on that. But that wouldn't really be enough to cover a lot of years in retirement for me. So for me life policy on her still makes sense. Even if she's retired, especially, you know, if I've got it, and it's doesn't cost a whole lot. Now, I think where people get a little confused is like, well, you know, I'm 65 years old or something, life's too expensive. It may be at that point. But we're talking more, you know, something you bought a while back. So I think in certain cases, again, another issue that you need to talk to your advisor about all of these, I think you should, but because it may not be Who've you just to cancel them all, especially depending on your situation. And then

Marc Killian  08:05

of course, if you if you did cancel something because you just under that old school mindset, and then you do need it, it's harder to get it back. Because your order and back. I mean, the insurance, right, we're all one blood test away from being uninsurable. Right. Yeah, exactly. Depending on what could happen there. And so lots of different ways to consider and again, I think, again, life insurance could be a real utility, Swiss Army Knife kind of thing for folks. There's the death benefits. Sure, there's still the living benefits, there's income replacement. I mean, you might still need income replacement in your seven you might Yeah, you know, tax free retirement, just lots of different things to at least have the conversation on. For sure. So number four, medical coverage. So a kind of a hidden question or might be alright, again, maybe not hidden, but just kind of we well, I got Medicare so groovy. I don't do any anything over and above that, though, in the answer is probably right. You're probably gonna need something. District Medicare. Yeah.

Tony Mauro  08:58

Yeah. I always tell clients Well, the short answer is yes. I said, but if you want to, don't want to take my word for it, let's the first time you're sick, wait till you get that bill, and watch what Medicare does not cover. So there's a lot of things. This is a whole profession. Now. I was gonna say to you and of itself. Yeah. Do you guys have somebody in house? Or do you refer people? A lot of advisors definitely suggest for folks to talk to Medicare specialists? Yes. I don't have anybody in house. I refer people out okay, to a local guy who's a Medicare specialist, you know, that can help them. Explain what Medicare covers and what it does and then all the different options they have because you can you can buy a lot of gap policies and supplements so that you can really feel good about okay, I'm pretty much covered for everything, but you obviously got to know the cost. Sure, because it does add up. Yeah, but yeah, I think Medicare for me, what I tell people is that's going to cover major things, and that's a good start. But, boy, if we're all living too long, we all hit you know, people start to get ailments. You're gonna We spend a lot of money quick on other types of medical care if you just have Medicare, so I strongly encourage them to visit with somebody.

Marc Killian  10:08

And if you think about, really what retirement can entail nowadays, depending on you know, the walk of life you're in or where you find yourself, you know, you almost really do truly need a team or a group of folks. You know, you need that financial professional, you need that CPA right. Now, if you're lucky, you might have somebody who's a CPA and a CFP on one like, Tony, right, but you need that tax person, you need that planning person. Elder Law, probably some sort of attorney. Yeah, right. And then maybe a Medicare specialist. So it's almost like, you know, it's part of the basketball, no pun here. But I was like the dream team, right? You need three or four players to help you out. You're the fifth, you go, that was four different categories. And we're the fifth. So there you go. There's our dream team. That's our basketball team. Alright, number five, how much am I really paying in those fees? And commissions? This is the only one probably that is truly a hidden question on this, that I think we, you know, most people just don't even realize how much stuff is actually hidden in the fine print. Because Tony, many people will go, Oh, my guy or gal charges me 1%. Right. And they think that's the end of it. So Tony charges me 1%. That's all I'm paying. Yeah, but what do you have? And what do those products have inside them?

Tony Mauro  11:19

That's right, because and we try to educate clients that Yeah, even though you're an advisor relationship with us, if we're managing assets for you, whether it's 1%, or three quarters of 1%, if you have funds or different things, outside of just plain old stocks, there are expenses inside those funds, you never see because they always, you know, basically take it off the return before anybody ever talks about returns. And so it's important to try to drill down and just make sure you understand, you know, all of the expenses you've got. And sometimes, you know, it's worth it. And sometimes it's not, we try to keep expenses low, because obviously at the end of the day, it cuts into your return, which means that, you know, less money for you. But at the same time, which I you know, I think we do a fairly good job of educating the client of, you know, nobody does anything for free, the mutual funds don't work for free, we don't work for free, right? Hopefully, you're getting some value out of this. But just so that they know, and the bad part is, is we have to re educate usually about every year, every other year, depending just to make sure that they haven't forgotten because they do they just they've completely started getting oblivious to it. Yeah, very true. Very true. But most of them, they always defer back and say, Well, you know, we just kind of hope you're gonna watch those fees for us, which we do. And we you know, but, you know, if you have concerns, I would definitely say, don't be afraid to ask your advisor, because if they're good, they're going to explain this to you and make sure that you understand how it works.

Marc Killian  12:52

Yeah, and have a fee analysis done, right. Because, you know, sometimes people will have that they get that delusion in their head, or whatever you want to call it, that they're paying, you know, the 1%. And, but then, you know, alright, I've got this, you know, Product X, and it's paying me, you know, 5%, and I'm only paying 1% to my guy or gal, so cool, I'm making four. And then you want to do an n Fe analysis and looking at what's inside that product X that you've got, and maybe there's another percent or percent in a quarter in there. And so now you're only making you know, 2.75, right, or something like that. So it which may be fine, but it may drive the vehicle, but it may not either, right? So find out and have that conversation. So that's why these are five questions that can get a little hidden or overlooked. You know, sometimes they straight up high. And other times, it's just we take our focus off of it. We take our focus off of the you know, the the money we've been saving for retirement if it's all tax deferred, because we forget, after so many years of doing it that eventually we got to pay Uncle Sam, we know it, but yet we tend to you know, look away from it. So lots of these reasons why these hidden questions can come back to bite us. And that's why it's important to talk with a qualified Pro. Like Tony, if you're not already working with him, or if you are and you've got somebody who might benefit from the podcast and maybe having a conversation. Often financial advisors do complimentary reviews and consultations just to see if it's the right fit. So reach out to get on his calendar. Have a conversation if you're planning proz.com It's your planning proz.com. And don't forget to subscribe to the podcast, very simple. Just hit the heart or the Follow button depending on what app you're using. Plan with the tax man is the name of it on all the major platforms Apple, Google Spotify, type that into the search box or just find that at Tony's website. You're planning proz.com Tony, my friend thanks for hanging out and breaking some of these questions down for me. All right, we'll

Tony Mauro  14:38

see you next time.

Marc Killian  14:39

I always appreciate you I know we're getting into the end of October here. So have yourself a happy and safe Halloween. And we will see you next time here on plan with taxpayer.

14:53

Securities offered through a van tax investment services SM Member FINRA SIPC investment advisory serve Risk is offered through a VAT tax advisory services insurance services offered through an event tax affiliated Insurance Agency

Dave Ramsey is well known for his no-nonsense approach to personal finance, particularly in the areas of budgeting, debt management, and wealth-building. He has gained a significant following through various media platforms, including books, radio shows, podcasts, live events, and more recently, Tik Tok. Tune in as we peel back the layers of Dave’s bite sized Tik Tok advice and share our thoughts beyond the clips.

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

Call: 844-707-7381

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Transcript: 

Marc Killian  0:01  

Announcer 2  0:27  

Marc Killian  0:44  

Tony Mauro  1:14  

Marc Killian  1:19  

Tony Mauro  1:23  

Marc Killian  1:28  

Tony Mauro  2:37  

Marc Killian  4:19  

Tony Mauro  4:34  

Marc Killian  5:31  

Tony Mauro  6:49  

Marc Killian  7:11  

Tony Mauro  8:32  

Marc Killian  8:53  

Tony Mauro  8:54  

Marc Killian  9:31  

Tony Mauro  10:17  

Marc Killian  10:37  

Tony Mauro  11:03  

Marc Killian  11:54  

Tony Mauro  12:20  

Marc Killian  12:59  

Tony Mauro  13:21  

Marc Killian  13:40  

Speaker 4  15:25  

Transcribed by https://otter.ai

Disclaimer: Securities offered through Avantax Investment ServicesSM. Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated in

Are we on the brink of a retirement renaissance or stormy seas ahead? On this episode, we jump into the pressing issues of Social Security, healthcare, taxes, stock market trends, and long-term care. Whether you're an eternal optimist or cautious pessimist, this episode will equip you with perspectives to plan your retirement years with confidence as we ask the longstanding question, “is the glass half full or half empty”.

Important Links: 

Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript: 

Marc:

Are we on the brink of a retirement renaissance or stormy seas ahead? On this episode, we jump into the pressing issues of Social Security, health care, taxes, stock market trends, and long-term care. Whether you're an eternal optimist or cautious pessimist, this episode will equip you with perspectives to plan your retirement years with confidence, as we ask the longstanding question: Is the glass half full or half empty?

Welcome this week to the podcast, folks. Thanks for tuning in with Tony Mauro and myself, here on Plan With The Tax Man. As we get into this week's conversation about the future of retirement America, is that glass half full or half empty? So we're going to dive into that with Tony this week. What's going on, my friend? How are you?

Tony Mauro:

I'm good. How are you?

Marc:

Doing pretty good. So did you like that little intro tease? That was pretty good, yeah?

Tony Mauro:

That's a good one.

Marc:

Yeah.

Tony Mauro:

Yeah, it's interesting because I tend to be on the more optimistic side, but I need to point out some of the other stuff too, today.

Marc:

Okay, well, I was getting ready to ask you. So yeah, I was going to say: Do you find yourself more of an optimist or a pessimist? And does it change on the topics? I think some of us can be optimistic about some things in life but pessimistic about others.

Tony Mauro:

True.

Marc:

So you never know, so yeah, I think that's a great point. Let's analyze both sides of it a little bit. I'll let you debate with me the pros and the cons or the hows and the whys or however we want to go, but we'll start with a biggie. The big ticket item that people often are concerned about, especially if you're getting near retirement age, and of course, our politicians and our lovely, lovely leaders do not do a whole lot to ease our woes about the stability of the Social Security program, right?

Tony Mauro:

Yes, as we're taping this, of course, the political season, it's going to be getting under way here in Iowa, I think, in January.

Marc:

It's under way.

Tony Mauro:

And so I'm sure this topic will come up, and it always does, and as it should, because the whole issue with Social Security is that it's slated to, depending on how you phrase it, run out of money or start paying more benefits than it's taking in at about, I think, 2033 or 5, somewhere right in there. So people are concerned that when they get to that point, "I keep paying in. Am I going to get any benefit out of this?"

Marc:

Yeah, for sure.

Tony Mauro:

And you ask the politicians. They tend to kick the can down the road.

Marc:

I was going to say, yeah, it's a hot potato they don't want to touch, right?

Tony Mauro:

No, they don't want to deal with it. Eventually, it will probably end up being like everything else they do, which is last-minute and patching.

Marc:

Of course.

Tony Mauro:

The optimistic view, in my view, is I don't see how they could let it fail. They may need to make some changes for the viability, because people are living longer, and we're all putting in the same, yes, but it isn't like there's the same amount that people that are drawing on it. But I believe that somehow they will end up with some kind of fix. Now, whether we're all happy with it or not, that's a different story.

Marc:

Yeah, of course, we're never going to all be happy with it, right?

Tony Mauro:

No.

Marc:

But I'm with you. I think the optimistic view is that they're not going to just let it die. They're going to keep it going in some fashion. I guess the pessimistic view would be that there's going to be changes, and what those changes look like could be different, depending on your age group. I feel fairly optimistic though, Tony, that people over 50, such as you and I, we're over that age group now, probably may not see any changes to it. They may grandfather that in, so to speak, but my daughter, at 25 or 26, the thing's going to change for those folks: 20s, 30s, 40s. Maybe they do something as simple as pushing it back. There's no early retirement at 62; they move it to 65. Who knows?

Tony Mauro:

Exactly, and there's a lot of studies and math going on out there, and by the way, I do think you're right, yes. My son is 27. It could look vastly different for them. I still don't think they'll take it away, but there's talk of, like you say, moving the retirement age, maybe either getting rid of that upper limit and/or that whole privatizing thing.

There's goods and bads to all of that, which is a whole five-hour debate on its own, but I think that they do have options to keep it going. But I think with again, people living as long as they are, to me, I think they need to start working on this now and start coming up with some solutions. We don't want to go down the politics road, but you know how it is. They tend to not do that.

Marc:

Indeed. Well, Tony, I sat in with a interview with David Walker, who was the former Comptroller of the United States back in the '80s and the early '90s, I believe, and he talked about that issue. He was like, "Look, many people don't know, but there was a really close right there in the late '80s." Somewhere, I don't remember the exact date, but where people weren't going to get Social Security checks. He's like, "We waited until the absolute ninth hour," however that saying goes, before they fixed things. He says, "Because that's just how they operate." And he's like, "So I feel fairly strongly that they'll do something similar again."

Now, granted, that was 35 years ago, so who knows how things change? But that points to that historical nature that they have, of the thing that they fear the most, they wait till the absolute last second to touch.

Tony Mauro:

Yeah, that's something, I mean, look at the debt ceiling talks every what, six months to 12 months? It's just crazy. How about we just figure something out?

Marc:

Stop spending.

Tony Mauro:

Again, yeah, stop spending. Do something.

Marc:

Put down the checkbook, man.

Tony Mauro:

And yeah, it's unfortunate they do that. It would be, I would think, better politics to tackle some of these problems, even if it takes them 12 years, 15 years.

Marc:

Just get started, like paying down your mortgage. Sometimes you think, "Boy, I wish I could pay this off sooner," and it's like, "Well, you can if you start applying yourself and putting a little bit more onto the mortgage and get it paid off sooner." But it's the principle of doing it, so it's hard, sometimes, to do that, and clearly, our government doesn't do a good job with that.

All right, so that was the first one. Let's go to healthcare affordability in the future. All right, you're an optimist here, Tony, you said. So what's a half-full take on healthcare?

Tony Mauro:

Well, I think the optimistic view, basically, is as we advance technology and things get better in that respect, I think there's more and more talk these days of people trying to remain healthy into their 80s and beyond. And more people are cognizant of that, with the whole internet thing, as opposed to maybe 20, 30 years ago.

Marc:

Thinking about that, Tony, let me ask you this question. My wife and I will have on old TV shows, old sitcoms or something like that, and we've been just enjoying watching old reruns of The Golden Girls, for example. And they're in their 50s in that show. They're in their late 50s in that show, but at the time, when I'm in my 20s or whatever, I'm like, "Now, these people are old. They're in their 60s or whatever the case is, and they look old." And I'm 52, which is the age of one of them on the show, and I'm like, "I do not look like that."

So what's that saying: 70 is the new 50, that kind of thing? So I think you're right. We are better, I think, societally. As we move through time, we tend to look younger and feel younger for longer.

Tony Mauro:

I think so, too. Looking at my own parents and my dad, who's now 82, who still is in pretty good shape.

Marc:

When he was 50, though, you thought he looked old, didn't you?

Tony Mauro:

Oh, yeah, yeah, he was old. So I think it's perspective. Now, to me, old is 90s, and I have an uncle who's still 92, and he's playing golf. So I think with what we're doing today, especially in the technological fields, we are, which I think is part of the negative, maybe living too long, and people are keeping us alive too long.

Marc:

That's true, yeah.

Tony Mauro:

If we can do it comfortably.

Marc:

Right, and that's definitely the half-empty side, is with living longer comes more healthcare costs.

Tony Mauro:

More healthcare, yeah.

Marc:

And it's not cheap.

Tony Mauro:

It's not cheap, and it seems like, again, pointing to my own father, it seems like he's in at the doctor literally non-stop. He's got to go in for a little hernia operation tomorrow, as a matter of fact, as we're taping this, yeah. It's supposed to be in and out, but it's just every five, six months, he's got some things.

Marc:

It seems like almost weekly. Yeah, my mom's like, "Well, going to another doctor appointment. Well, going to another doctor appointment." My brother goes, "Good Lord, how often do you go to the doctor?" She's like, "I'm 82. A lot."

Tony Mauro:

A lot, yeah. But my dad is getting to a point now where he thinks, and there might be a little bit of truth to this, but he is a pessimist, is they constantly just want to do stuff to him to make money.

Marc:

Oh, yeah, yeah, yeah. Let's test for this. Let's test for that. Yeah, I'm with you there, too.

Tony Mauro:

He's definitely a pessimist.

Marc:

That's okay. I'm with him on that one. I'm with you, Daddy Mauro.

So all right, how about tax rates in the next decade? I don't know if we can find an optimistic view here, but maybe we can. The pessimistic view clearly is that the 32-trillion-dollar deficit, that tax rates more than likely have to ... We all feel pretty strongly, I think, that tax rates have to go up at some point, just because we've got to be able to pay for these things. We just talked about Social Security a minute ago, but is there an optimistic view on taxes?

Tony Mauro:

I tend to lean a little more pessimistic on this. I would say the only thing, potentially, is there could be some reforms, and I think it is occurring more at the state levels, at least it is here in Iowa, to benefit retirees by lowering their state taxes.

Marc:

Oh, okay. Okay, well, that's good.

Tony Mauro:

Just to keep people in the states and some different things, but I find it hard to believe that we are not going to have to be taxed in some way, because like I say, we've got a lot of stuff to pay for that we haven't.

Marc:

A lot of stuff.

Tony Mauro:

And I don't see how things can continue to go down. There's an argument out there about, "Well, if the economy grows at a certain clip, that it's going to be less reliance on taxation," but I don't know if I totally buy that.

Marc:

Yeah, yeah. Well, I'm glad you found a positive, though, so that is something to hopefully keep an eye on, especially at the state level, some tax reforms, especially benefiting retirees. That would be fantastic. That would be the silver lining in what is ultimately not a very pretty cloud, right?

Tony Mauro:

Right.

Marc:

Okay, long-term care options, excuse me, for Baby Boomers in general. Like the healthcare, definitely technology's got to be on the forefront here of the optimism side, right?

Tony Mauro:

Yeah, I think with the technology the way it's going and more and more people becoming cognizant of, "Hey, I'm going to need some sort of care, long-term," it doesn't necessarily mean nursing home. The insurance companies and everybody else are coming up with a lot of home healthcare solutions, which people tend to like. A lot of the assisted living facilities are using those progressive types of deals, where you go into assisted living. You're totally on your own, and as you need more care, you could advance along.

But I think most people, most seniors, I know my dad's the same way. He wants to age in his home, and I think that with what he's got and what's available out there, a lot of these long-term care policies allow you to do that, as far as that goes.

I think a little bit in the half-empty. At least here in Iowa, I had to mention it, is there's a shortage of healthcare pros, if you will. And I'll tell you, a lot of our Iowa nursing homes are in the news a lot for poor care and fines and all kinds of things. And so I think maybe that's because of the shortage for healthcare professionals, especially in that area. Maybe they're just not getting the type of people they need. I don't know.

Marc:

Unfortunately, needing workers, sometimes you change the criteria, and maybe you don't always get the cream of the crop.

Tony Mauro:

That could be, but I do think, too, on the negative pessimist side, is I still think there are way too many people that are unprepared and have not talked about this issue with their advisor or anybody else. And I think that's a huge part of a potential problem.

Marc:

Yeah, a huge disservice to yourself and your loved ones, for sure.

All right, let's do the last one here, and we'll wrap it up, and we're doing, again, half-empty, half-full view on some of the big ticket items coming down the pike for us all as we get closer to retirement. The stock market over the next five or 10 years. It's certainly been tough to read it, Tony, because it's been all over the place, and there's historical trends, which I guess you could look at the full side of that, the half-full side of the glass over long periods of time. Again, tech here is probably also helpful, as well, but the market is still going to be what it is, which is volatile, and Lord knows the world is volatile right now.

Tony Mauro:

World's volatile, yeah, and I think I tend to take a little longer view. I am always an optimist when it comes to the market, long-term, and long-term for me is 10 and beyond. Over the five to 10, it is. It's going to be volatile. I think that this is where, especially as retirees need to have a plan, need to be working with an advisor, and discussing where they need to have their money. So based on whatever plan they have, they can earn a reasonable amount without too much risk and hopefully, tax efficiency, as well.

But I think still, the market over all, if it's done right over the long term, is your best bet, especially in retirement and maximizing your income. But there are some, based on their risk assessment and some other things, that they may not be ready for that. And certainly, with all the uncertainty in the world and the negative news, I've actually gone myself to not watching news. I want to read it.

Marc:

Only when you have to. You have to not watch.

Tony Mauro:

But even it's so funny. With the negativity in the news, if you go to a search, and we're getting off-topic, and whatever's on there, and you read that article, it's amazing how many other articles start popping up wherever you're at, online, with the same negative news. It's just like everybody's got their slant on it, and you can get overstimulated, maybe, with negativity.

Marc:

Well, it's not even just watching it on the news now, because it stalks you in your social media things, all this stuff on your phone in general. There's a term for it now. It's called doom scrolling.

Tony Mauro:

Doom scrolling?. I never heard of that.

Marc:

Yeah, if you hadn't heard of that, it's doom scrolling, where you basically just go down this spiral of continuously scrolling through stuff. So you can't get out of the spiral, and often, it's negative, which does not do well for the psyche, so not a good place to be.

So yeah, I think when it comes to the stock market, there's always going to be those pros and cons there. There's going to be bubbles. There's going to be over-valuations. There's going to be good periods, bad periods. So I think we got to take that with that grain of salt. And to your point, you got to work with a qualified professional to make sure that you're dealing with things as they come or as they're going to come, because there's a lot of things that happen to us all as we age, and we got to have a plan for that.

So that's why you need to Plan with The Tax Man, so get on Tony's calendar, if you haven't done so yet, you would like to talk with him. He's a CPA, a CFP, and an EA-enrolled agent for 27-plus years, helping families get to and through retirement and a great resource for you to tap into at Tax Doctor Inc.

You can find him online at yourplanningpros.com. That is yourplanningpros.com.

Tony, thanks for hanging out, my friend.

Tony Mauro:

All right, we'll see you next time.

Marc:

Yeah, appreciate you, and keep that optimistic view, because we need more of that in the world, that's for sure. We'll catch you later here on Plan with the Tax Man with Tony Mauro from Tax Doctor Inc.

Disclaimer: 

In this episode, we construct a helpful conversation about the role of real estate in a retirement strategy, exploring everything from rental income to reverse mortgages. Whether you're a pre-retiree with a portfolio of properties or just curious about leveraging your home equity, this discussion offers thoughtful insights for anyone navigating the crossroads of real estate and retirement.

Important Links: 

Website: http://www.yourplanningpros.com

Call: 844-707-7381

----more----

Transcript: 

Intro  0:00  

Marc Killian  0:17  

Tony Mauro  0:40  

Marc Killian  1:20  

Tony Mauro  1:47  

Marc Killian  2:24  

Tony Mauro  3:07  

Marc Killian  4:38  

Tony Mauro  4:53  

Marc Killian  5:46  

Tony Mauro  5:53  

Marc Killian  5:57  

Tony Mauro  6:01  

Marc Killian  6:03  

Tony Mauro  7:06  

Marc Killian  8:15  

Tony Mauro  8:22  

Marc Killian  9:15  

Tony Mauro  9:24  

Marc Killian  10:29  

Tony Mauro  11:21  

Marc Killian  12:18  

Tony Mauro  14:08  

Marc Killian  14:09  

Disclaimer: 

In this episode, we’re tackling some common complaints and fears that can arise during the retirement planning process. We'll discuss which concerns are well-founded, which are based on misconceptions, and offer insight on how retirees can best navigate their financial future.

Important Links: 

Website: http://www.yourplanningpros.com

Call: 844-707-7381

----more----

Transcript: 

Speaker 1:

Welcome in to another edition of the podcast. It's Plan With The Tax Man with Tony Mauro from Tax Doctor Inc. here to talk with me this week on the show. We're going to dive into exposing some retirement planning complaints, tackle some common complaints and fears people have about their financial situations during retirement, and which of these are kind of well-founded or maybe just full of misconceptions, things of that nature. So we'll have a good conversation with Tony this week on the podcast. Don't forget to subscribe to us at yourplanningpros.com. You can check out Tony's website at yourplanningpros.com, or type in Plan With The Tax Man in the search box of whatever podcasting app you like using like Apple, Google, or Spotify.

Tony, my friend, what's going on buddy? How are you?

Tony Mauro:

I'm good. As we're recording this it's state fair time here, which usually signals toward the end of the summer.

Speaker 1:

Well, it's-

Tony Mauro:

It's the last hurrah.

Speaker 1:

It's hot. It has been hot for sure.

Tony Mauro:

It's hot. Yeah, it's been hot here too.

Speaker 1:

Yeah, it was 98 like the last four days in a row, but they said it felt like 110 or something like that.

Tony Mauro:

Wow. Yeah. We got that coming again next week, so it'll be interesting.

Speaker 1:

Well drink plenty of water, right?

Tony Mauro:

Yeah. That's right.

Speaker 1:

So you don't overdo it, especially for a lot of our demographic that we talk to and listens to the show. Making sure that you have plenty of water and stay hydrated is important, that's for sure. My mom, she's 82, and she does these daily PSAs on Facebook. She's like, "Morning y'all, it's going to be real hot. Drink water."

Tony Mauro:

Uh-huh. Yeah. That's nice.

Speaker 1:

I'm like, "All right, well there you go." But anyway, we're going to talk about some retirement planning complaints this week. So I've got some pretty basic statements here that people say often, Tony. So we'll talk about whether, like I said, these are well-founded or just full of misconceptions and just offer some insight.

Tony Mauro:

Mm-hmm.

Speaker 1:

So let's start with the first one here. My advisor takes too much risk. Obviously this has been something that people have said for often when things are not going well you go, "Oh well my advisor takes too much risk." But I would challenge the question of why is that? Is that because they're taking the risk without talking to you? Or have you gone through some scenarios? What do you think?

Tony Mauro:

I hear this sometimes as well, and these first two couple topics here I can relate back to this last weekend when I was out visiting my son and my new daughter-in-law. And they're very young, 27, but she had made a comment like this, and so I asked her, "Well why? Why do you think that?" And the answer is what I get a lot, and that is, "Well it seems like my account's not going up." So I hear that a lot. I hear the fact that I'm not making as much as my neighbor, things like that. Or, like you say, when things are going down they think there's a lot of risk. And it might be the case, but it's not always. And I think, as I told her, "Well you just need to talk to them and explain what you think." And in her case, she's 27 years old, she's investing for retirement, long timeline.

Speaker 1:

She should be taking risks.

Tony Mauro:

[inaudible 00:02:58] a lot risk over the last few years. Yeah. And I looked at the funds that she's in and really they're actually very good funds, they just haven't done much the last year and a half. But I told her, I said, "That's not unusual in the market we're in." And she's not real risk averse, so I think that's one thing... I think if you just communicate with your advisor, talk about that kind of stuff. Or if-

Speaker 1:

If you're feeling like they're doing it right, you got to first of all find out why.

Tony Mauro:

Yeah.

Speaker 1:

Well, actually you mentioned account's not growing, so that's actually on my list, so I'm going to jump down to that one and pair these two together then.

Tony Mauro:

Okay. Yeah.

Speaker 1:

So they takes too much risk, or my accountant didn't grow much last year, and to me a lot of this seems like the same problem. And that problem is it's the highs and the lows. We all like the risk when it's up and nobody likes it when it's going down. And so last year obviously was a rough year '22, right? 2022 was a down year in the market. So this is probably your risk profile. To me this comes back to how are you allocated, right? So you hear somebody say, let's just make up a number, "The S&P was up 30%." All right?

Tony Mauro:

Mm-hmm.

Speaker 1:

And then you go, "But I only got 15, so my advisors not doing enough."

Tony Mauro:

Right.

Speaker 1:

Or then the inverse of that is, "The S&P was down 30%. Well phew, I only lost 15." Well, that's because of your risk portfolio, so you don't get all of it unless you're completely exposed.

Tony Mauro:

And that's true. And with the whole "My accountant didn't grow last year", I got the same thing out of her. And I asked her the very same questions is, "Well, which accounts are we talking about here?" And of course it was the retirement accounts, and I quickly pointed out that, "You've got maybe 35, 40 years before you need this money." So it's easy for us as advisors, and I told her to say, "Don't worry about it." But in reality, you got to take a longer time horizon. And with your risk profile, like you said, and hers as being somewhat on the aggressive side, you can't let it be your main focus. She's focused on the wrong things. I think us as advisors got to remind them.

Speaker 1:

Yeah, I was going to say, and like a quarterback on a football team you get all the credit or all the blame. Right?

Tony Mauro:

Mm-hmm.

Speaker 1:

So it's like, "Oh man, my advisor did a great job. I made a bunch of money this year", or something like that. Well because there was an up year on the market and your portfolio was allocated properly for your risk tolerance.

Tony Mauro:

Yeah.

Speaker 1:

Conversely, if that was the case and it was down, you'd also be happy because you didn't lose as much as your neighbor or whatever the case is.

Tony Mauro:

Exactly.

Speaker 1:

So it's all about that risk profile, making sure that you're taking the right amount for your situation versus the kind of generic common complaints.

All right, so that's two of them. So let's go to my fees are too high. And the statement here to me is always the same kind of thing. Nobody likes fees, we don't want to pay more than we have to. But what are you getting for the fees? Is that worth it?

Tony Mauro:

And that's the question you have to ask, and it should be addressed when you start the relationship with your advisor, is understand how he or she's being compensated. Most are going to just be flat out and tell you, "This is how we do it." Some are asset based, which is a fancy term for taking a small percentage of the account value every year. Some are just regular fee based. It's X amount for me to help you every year, like a consulting fee, coaching fee, whatever you'd like to call it. And so as long as you feel like you're getting value for that fee that you're paying, I wouldn't tie it to investment returns. This is the fee, just like you'd pay an attorney, an accountant, anybody else to do things for you and keep you on track.

But on the flip side of that, if you're paying fees and you're not getting anything... Because one of my daughter-in-law's complaints was, "He never calls me." And I said, "Well, what would he call you about all the time? What do he want to talk about? Because you're not a stock picker, what do you want to talk about?" She just felt like, "Well, I think I should be getting talked to all the time." And I said, "Well, have you addressed that with them?" And she hadn't. I said, "Well, then they may not know that you want to do that. So your whole little fee that you're paying might be misaligned."

Speaker 1:

Yeah.

Tony Mauro:

So I think it's communication, and I think that you have to understand what you're paying for. And then the services that are provided... I mean we try to list them out in exact number of calls and what you can expect and things like that, because that way there it lessens the chance of miscommunication.

Speaker 1:

Yeah, I think the first two to me are definitely misconceptions in how you're probably working with your advisor. And if they're not, they're just straight up taking too much risk or whatever the case is that we covered on that first part and not listening to you when you say you don't want to be that far into it, well then that's obviously a problem.

Tony Mauro:

Yeah.

Speaker 1:

With the fees are too high I feel like it's the same thing. It's probably based on misconceptions. It could be a little well-founded as well, but understanding what it is that you have, because certain products are going to have higher fees than others. So just making sure that you have that conversation point.

For the next one, social security won't be enough to cover my expenses. To me, this is totally a legitimate concern, because that's correct. It's not going to be enough to cover everything. It does a great job, but it's not everything.

Tony Mauro:

No, it's not everything. And it is, that's a legitimate concern. And the easy answer to that is that's exactly why you A, need to plan, B, save and take the time. Like I said, as I told her, I keep going back to her, "You've got a lot of time, you just need to keep saving. Because a lot of people think that social security, if they haven't looked at it, is going to be enough." And like you said, it's nowhere near enough. It's a good start, good safety net, but you definitely need to plan and save. Otherwise it's going to be pretty paltry by the time you get to the end.

Speaker 1:

Yeah. Yeah, for sure. And you've got to make sure that you realize that. And I think I've shared before my mom's in this situation where she's living on social security only and it's not the ideal situation that she wanted to find herself in. Through the course of decisions it's what's happened. So avoid that by doing some proper planning ahead of time and having the right pieces in the puzzle, and being aware that while it does a lot of things for you it's not going to cover everything. Now if you strategize right, maybe the social security is that income piece that takes care of the cost of living, let's say, and then you're pulling from your nest egg for the fun stuff. It just depends, right? It depends on how you structure your income strategy, and also depends on what you as a couple might be bringing in from that versus anything else.

Tony Mauro:

Right.

Speaker 1:

Yeah. Okay. I don't understand my financial plan. This one I think is a fairly well-founded concern because sometimes people just aren't getting it. And maybe they don't do themselves the advocacy service of saying, "Hey, you know what? I'm sorry, I know you explained this, but I'm just not getting it. Can you help me go through it again?"

Tony Mauro:

Yeah, I think you need to do that if you truly don't understand your plan. I also think that if you're in a relationship with an advisor and they are charging you fees, you should have a plan. In other words, it may not be on paper, but it should be in your portal or somewhere where you can access it. That's what we do, is we put the plan in the portal and it's all electronic. But the client can actually see, "Here are the major steps you said you wanted to tackle. First, second, third, and on and on and on. And here's what the whole plan looks like based on when we did it." And obviously then we change it over time and move goals around, but you should have that. And then it should be laid out in a way that it's not too complicated so that it's full of graphs and charts and things like that. It really should be more of, "Here are the goals, here's what we're going to do right now to try to achieve those goals", and then the progress towards those goals. And I think if you're having trouble with that then, again, requires a conversation. Ask them to explain it because it's your plan, you're paying for it. And so it's like anything else, you want to know what you've got.

Speaker 1:

Yeah. Yeah. An older gentleman, older advisor taught me this years ago. I thought it was funny, I may have shared it on here before or not. But he was like, "I like to subscribe to the rule of 11." And I was like, "I don't think I'm familiar with that one." The rule of four and rule of 72, all that kind of stuff. And he's like, "Yeah, if you get your financial plan and then you can't turn around and explain that plan to an 11-year-old, it's too complicated."

Tony Mauro:

I would agree with that.

Speaker 1:

And I love that, right? Because it's like you got to be able to re-talk it to someone else.

Tony Mauro:

Yeah. And you should be able to at least know what your major goals are and what you're doing to accomplish them. Do you need to know what the mutual fund and your retirement plan is doing and what investments they have? Maybe not, unless you're really into it. But yeah, you need to know the basics and you need to be able to explain it. Absolutely.

Speaker 1:

Yeah. Definitely. So I thought that was a cute saying. I definitely loved that one.

All right, last one here. I only hear from my advisor when they want me to buy or sell something, I don't really get advice on other things. Absolutely a legitimate concern here. But maybe you should ask yourself what kind of professional did you go to? Because they may just be doing what they do, they may not do these other pieces. And that's kind of on us, I think sometimes, by not vetting out or seeing the right kind of professional we should be working with for the time of life we're in.

Tony Mauro:

We should. And what that question is to me is saying the old days where everybody was considered a "broker". And you would see that. You'd see TV shows and movies about that kind of stuff too, but a lot of that's been moving away from transactional and more into an advisory role. And you do need to ask that question of if you've just got a broker... And some people want to do that. Although I don't know if it's as prevalent today, simply because there's so many ways to trade securities yourself now that you may or may not need that. But who knows, maybe you've got somebody that's like that. I think that that's, for most, not what you want. I think you might want more of an advisor, but you definitely should know who you're working with. And I think in our case, one of the things we do before we even take a client on is we sit them down and have them go through a questionnaire and they kind of score themselves.

But one of the landmines that I look for before working with a client is... And you can usually tell this by the way they're talking to you. Is if you just want to sit and trade stocks and have me give you recommendations and/or be the facilitator, I'm not your person because that's not what we do. You don't need us for that. You can go do that on your own. All you're going to end up doing is I think spending extra money. And then on top of that you're going to want us to give you recommendations, and then as soon as give them a bad one the blame game comes out.

Speaker 1:

Yeah.

Tony Mauro:

So I don't even engage in that. That's not what we do. There might be some advisors that do that, but I'm more focused on the long-term.

Speaker 1:

Well yeah, and to your point you're probably working with a broker only. You're working with someone who's a transactional based, commission based person. Now there's nothing wrong with that if you know what it is that you have and if that's what you're looking for. But part of this complaint is I don't get advice on other things, well then you're not probably working with an actual true planner and advisor that is talking about social security and taxation and legacy and so on and so forth. So again, part of that I think is legitimate, but I think it also is a misconception, or could be on our part, for just not finding the right professional to work with. Or not realizing that who we started with is maybe not who we need to end up with kind of thing.

Tony Mauro:

That's right. Yeah.

Speaker 1:

All right, well there you go. So that's our conversation and podcast this week with Tony Mauro on Plan With The Tax Man. Reach out to Tony if you've got some questions or concerns about your own situation and need to get down to the nitty-gritty and get on the right plan and strategy for yourself. Again, you can find him online at yourplanningpros.com for a consultation and review. Yourplanningpros.com. Tony, thanks for hanging out buddy.

Tony Mauro:

All right, well see you next time.

Speaker 1:

I'll see you next time right here on the show. This has been Plan With The Tax Man.

Disclaimer: Securities offered through Avantax Investment ServicesSM. Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency

Almost everyone has made investment mistakes at some point. In this episode, we’ll talk about how to bounce back from mistakes and avoid making them again in the future.

Important Links: 

Website: http://www.yourplanningpros.com

Call: 844-707-7381

----more----

Transcript: 

Speaker 1:

... Back here for another edition of Plan With The Tax Man, into the month of August here in 2023. And it's time to talk about overcoming investment setbacks, bouncing back really if we've had some issues in our financial lives. And that's what we're going to get into this episode and how to, hopefully, avoid some of these again in the future. Things happen, we all make missteps and mistakes, but there's no reason we can't try to correct those and course correct and keep ourselves on the right path to get to and through retirement. So we're going to have that chat with Tony this week here on the podcast. What is going on, my friend? How are you?

Tony:

I am good. Just still enjoying the summer. It's going to be over before we know it here.

Speaker 1:

Well, we're into August, so yes.

Tony:

It'll be state fair time.

Speaker 1:

There you go. Now I got a little weakness for the funnel cakes there, the elephant ears.

Tony:

For the [inaudible 00:00:48].

Speaker 1:

Yes, whatever you want to call them. Some places they call them elephant ears, someplace they call them funnel cakes. It's the same thing, but at least I think it is anyway. Now I'll tell you something though, I've never had one of these before and I didn't even realize it was a thing until I tried it. Have you ever had what they call the walking taco? I believe that's what they call it, where it's basically all the taco stuff inside a like Doritos bag or a Frito bag.

Tony:

A chip bag.

Speaker 1:

Yes, a chip bag.

Tony:

I have had it. I haven't had it at the fair, but I have had them. That's what they are.

Speaker 1:

I never saw one before until I saw one at the fair and I was like, "Ooh, this is calling my name. This is incredibly not good for me, but I don't care. I'm going to eat it ..." And it was fantastic.

Tony:

It is good, yes. Our fair is so big. It's a big highlight around here. And every year they put out what's new at the fair for the food list because everybody goes for the junk food.

Speaker 1:

Sure.

Tony:

And it's just incredible what we have. Just weird stuff, like everything's on a stick here.

Speaker 1:

All right.

Tony:

And it's fried and it's just crazy, the foods. But I don't know if you guys have a big state fair or not?-

Speaker 1:

Yes.

Tony:

... but ours is big and-

Speaker 1:

Interesting stuff.

Tony:

... I'm actually looking online here. I don't even know what some of this stuff is.

Speaker 1:

Like snicker bar on a stick?

Tony:

Yes, deep-fried sweet corn nugget. Sweet corn fried?-

Speaker 1:

The sweet corn and you deep-fry it. We'll-

Tony:

Deep-fry it.

Speaker 1:

Humans will deep-fry anything, I think

Tony:

I know it. We're Americans. Yes, we do a lot.

Speaker 1:

That's for sure. But anyway, well, hopefully you guys will enjoy and you don't get too crazy, make yourself sick to your stomach, but-

Tony:

We'll be bouncing back from fair.

Speaker 1:

You'll be bouncing back. There you go. Nice segue. I like it. I like that.

Tony:

That'd be a mistake.

Speaker 1:

That's right. Well, let's get into some of these financial bounce backs we might need to do. First thing you need to do, if you do have a financial misstep, Tony, is just obviously determine the cause, right?

Tony:

Yes.

Speaker 1:

So what's some bullet points here to think about how you got there in the first place?

Tony:

Well, most people are going to look at this and say, "Well, I mistimed some stock or some investment."

Speaker 1:

True.

Tony:

And most of the time what we see is the mistakes themselves are really not starting soon enough. And that means saving, and that's the biggest one of all. Yes, you can miss time and do that, but you shouldn't be trying to time anyway. But really what you got to do is, whatever the mistake is, whether it's that or just not starting soon enough or something else, is-

Speaker 1:

Bad luck, whatever.

Tony:

... Just figure out, say what caused it, what kind of spot I was in my life when it happened, what kind of information did I have available to me? Maybe you're one of those people that listened to everybody but the right people about everything.

Speaker 1:

I always refer to that as the cousin Eddie, if anybody who's ever-

Tony:

Cousin Eddie.

Speaker 1:

... Watched any of the vacation movies, right?

Tony:

Yes.

Speaker 1:

The cousin Eddie moments because he's always doing something goofy or wrong or whatever. He tells you advise and it's usually not good.

Tony:

It's usually not good. No. And we get that out on the tax side. Clients will call and say, "Well, I heard from such and such." And my first question is, "What does such and such do for a living?" And they'll say, "Well, he's a barber." And I say, "Well, I don't know that's really his realm to be giving that kind of advice."

Speaker 1:

To give you tax advice, right?

Tony:

Yes. So you get a lot of that and it's proliferated with the internet. You got to watch you listen to.

Speaker 1:

Oh, of course, yes. And that's usually the number one source of bad advice any more is the internet. Because it's-

Tony:

It is.

Speaker 1:

... Just so much on there.

Tony:

There is so much on there. It is. And so you got to watch what you're getting. That could be a whole conversation on its own. You Google a topic and you think it's right, and it may or may not be. There are probably elements that are correct.

Speaker 1:

Exactly.

Tony:

But it might not be all of that.

Speaker 1:

There's actually a whole industry, Tony sorry, wrapped around internet ads that are designed to look like news articles or news stories so that you feel like it has a bit more realism to it. "Oh, this is news related or newsworthy." But it really is just an ad. It's just a solicitation or a sales piece. So definitely easy. So determining the cause, I think, great place. You've got to figure that out. Did you get the right information? Did you get enough information? Was it just bad timing? It's okay, you've made the mistake. You mentioned savings, so now we need to make up that difference we've lost. So what are some things to do as far as increasing our savings rates?

Tony:

Well, once you've identified the mistake, and if you have lost some money, the easy thing is to increase the savings. That's really not really all that complex on how to do that, but it's easy to be able to increase it. Especially as you progress in life, some of your expenses start to decrease, and so you're going to have more disposable income that you can then take and increase the savings rate.

Speaker 1:

The government gives us some catch up contribution provisions in various different things. So there's some of that, right?

Tony:

Yes, you can do that. You pay off a car, continue making the payment, but make it to yourself and put it in your retirement account or your savings account.

Speaker 1:

As my dad used to call us, maybe get the little ankle biters off of your payroll. He used to call us ankle biters.

Tony:

When you were kids. Yes, you do. You get the kids out of the house and then all of a sudden you've got an instant raise. And so there's a lot of ways to increase the savings rate. I've seen people go get a second job and say they just want to save more [inaudible 00:06:09].

Speaker 1:

Depending on the kind of damage that you've had to the setback. And I think most of the time, if we've just made a mistake, Tony, it's usually not super detrimental, but you do want to recalibrate your goals or recalibrate your plan because maybe you did make a bad investment. Well, let's do something recent, maybe you got on the crypto train or something, and you were a crypto millionaire one week and you were crypto broke the next, whatever it might be. But that's when you say, "So now I've identified the problem. I know what I did wrong. Now we're working towards making that shortfall back up by increasing our savings contributions to paying our future self, AKA retirement fund. So now let's recalibrate that plan or recalibrate the goals." Right?

Tony:

Yes. And it's easy to do because, again, it doesn't take a lot, especially if you're talking through it with somebody who, well, and say, in my case, we visit with this clients all the time. It could be as easy as maybe delaying retirement for a year, could mean, hey, we just change our lifestyle a little bit and reduce our expenses. It's not going to be something drastic, and maybe you're in a giant home that you need to downsize and you could save some money there.

Speaker 1:

Sure.

Tony:

Maybe it's just watching things a little bit more until you feel more comfortable. I think-

Speaker 1:

You don't get the muscle car you've been wanting, or you don't get the-

Tony:

No.

Speaker 1:

Maybe you get the muscle car, but you just don't do all the remodel on it just yet. You don't do all the-

Tony:

Repairs.

Speaker 1:

... Repairs just yet, or... Little ways you can do stuff, right?

Tony:

Yes. I have a retiree client and she calls me, and really a lot of our conversations are based around, for lack of a better word, me talking her off the ledge because she likes to put money in her home, and she really likes to keep it spruced up and remodeled. And I'm there really more for the sounding board of, well... She's got plenty of money and she could do it, but it's like, "Well, do you really need it right now? Maybe you take it a little slower so it doesn't affect the other fun stuff you like to do." And many times listen to that and follow along on those lines. But I think if she was out on her own, she would probably be dipping into and probably taking much more than she needs.

Speaker 1:

A little more often.

Tony:

More often. And then I think she would be not happy with that because she does like to balance it and do other things in life. And-

Speaker 1:

That's a great point.

Tony:

Again, balance is the key because-

Speaker 1:

Well, to me, I don't know, Tony, with all the technology we have at our fingertips now, I think a big portion of what you guys do as financial professionals is what they call behavioral management, right?

Tony:

It is.

Speaker 1:

Because-

Tony:

And much more so than investment management, yes.

Speaker 1:

It can be, right? Because just about everybody's got the same software, just about everybody's got the same access to the various different things out there, depending on what kind of license that you have as a financial professional, but really it's relationship building and that behavioral management. To your point to that story you just told this client's comfortable calling you up and saying, "All right, I'm thinking about doing something silly. What do you think?" And then you talk through it and you go, "Based on where we're at, go ahead and go for it." Or "If you do, maybe we're going to make a change to that vacation that was planned for next year." Or something like that.

Tony:

Yes. And then that's all it comes down to is just some simple discussion.

Speaker 1:

And then rework the plan.

Tony:

And you got to rework the plan a little bit. It's funny because from our standpoint, we take a lot of notes so we can remind the clients like, "Well, last time we talked you said this, but you can change your mind. But that is what you said last time." It's a fun conversation. You can have fun with it. But it is interesting because I think clients, you could survive it, of course, yourself, but you may make bigger mistakes and take longer to recover-

Speaker 1:

Sure.

Tony:

... Without some advice of some kind.

Speaker 1:

Well, and I think that's when getting a real plan in place certainly comes into play. So maybe if you're in a situation, Tony, where you've made a financial mistake and you haven't started working with a professional yet, now is the time to really do it. And often, it's like going to the dentist, I hate to equate what you do with going to the dentist, but it's the same kind of feeling sometimes where we're like, I just know he's going to say or she's going to tell me something bad and it's going to cost me pain.

In this case, the dentist analogy, and then maybe you wind up going and it's not nearly as bad as you thought. And I think that's what happens with advisors a lot. People are like, "Oh no, I'm going to go in there and I'm going to have to tell them what I did, or I have to show them my stuff and it's going to be painful and they're going to tell me I can never retire." All those kinds of things.

Tony:

Oh, I know it.

Speaker 1:

And often it's not nearly as bad as we think that it is. I think as humans, we just do that naturally.

Tony:

We do. I've actually got a client, as you were saying, that in fact we're emailing back and forth this week, he's an accounting client, not a financial planning client. He's got an advisor. And I don't think the advisor's giving him bad advice, but what the client wants to do, and get this, he's about, I don't know 63, 64, he wants to pull a million dollars out of his retirement account because him and his wife found a little place and a little acreage, and they want to build a house on it. It's just south of where we're at. And he's a big outdoors guy. And so he's trying to rationalize this with me and his advisor as his tax account. And I'm saying, "Well, boy, you're going to owe a lot of tax on that. Maybe you want to split it up." The advisor's telling him, "Well, maybe you want to just go borrow because you're going to pull all this out, and then when you start to need this for income, it's tied up in your house." Which she's got a point too.

Speaker 1:

Well, she does have a point there, but borrowing right now, it is not a borrower's market.

Tony:

That's what the client's saying is, it's not a borrower's market. So we're trying to put some numbers together and say, well, if you borrowed, here's how much it's going to cost you, if you spread the tax out. And try to get the best scenario for him, and then he'll have to make that decision. But-

Speaker 1:

Exactly.

Tony:

And he's got me on the tax side, his advisor on the advisory side, both trying to help him make the right decision and whatnot.

Speaker 1:

And that's interesting.

Tony:

But that goes back to really maybe if he didn't have us, he would probably... Because what he wanted to do is just pull out all the money in one year and pay the taxes. And he thought that would be a better deal than spreading it out. And I said, "No. Here, here's the exact numbers because I've got them right off your tax check."

Speaker 1:

Going to kick you up a tax bracket and all sorts of stuff.

Tony:

It would've cost him like $75,000. And I said, at least spread it out to save 75,000. But it's just one of those things though, where even though he has a plan in place, he's changing his plan because he wants something in his life and hey, there's nothing wrong with it. But-

Speaker 1:

Exactly. They're modifying the plan, that's part of the process because they think life's going to happen, we're going to do different things. And me personally, I think kudos to you and him as well for doing that. But oftentimes many advisors, they struggle with that whole split thing where you're the tax person, the CPA, but you're also not doing the financial side because it is hard when you have two different people giving you, maybe, conflicting advice. So as the person in the middle, sometimes you wind up being in a tough spot, but at the same time, at least he does have those sounding boards. So I think-

Tony:

He's got that. And for me, if we have an accounting or tax relationship, if they've got an advisor-

Speaker 1:

Sure.

Tony:

... Of course that they like, I like to think we're on the same team. Unless the person was completely crazed and-

Speaker 1:

Bad advice.

Tony:

... Offering horrible advice, but try to be on the same team because-

Speaker 1:

Sure.

Tony:

... I don't want to interfere with that relationship and you just don't know. But some accountants don't like it, some advisors don't like it.

Speaker 1:

I was going to say, it just depends on the relationship and again, kudos to everybody from making that work. But that's a great illustration though of why even if you make a mistake or have a looming mistake, having a financial team to help you out can go a long way towards hopefully staving off a financial mistake or bouncing back from one. So that was a topic this week. Hopefully that helps out a little bit. And if you have made a mistake and you're worried about going and seeing a finance professional, don't. The longer you procrastinate, just like that tooth, that dentist analogy I was going with, it's only going to hurt worse. It's only going to get worse if you ignore it. And when you finally do go to the dentist and then you maybe have to have a root canal and then it's all more expensive and more painful.

So go find out what you need. Go get a plan together for where you're at in life, whether you've made any mistakes or not. And that way, even if the news is not great, at least you know what you now need to start doing in order to get yourself into that better spot. Sooner is always better than later.

So get yourself onto the calendar. Reach out to Tony and his team at yourplanningpros.com. That's your planningpros.com. He is a CPA, a CFP, an EA of 27 plus years experience. So get onto the calendar today at yourplanningpros.com

Tony, thanks for hanging out, buddy.

Tony:

We'll see you next time.

Speaker 1:

See you later on this month, in August, we'll be getting closer to football season for all you football bands. So we will catch you next time here on Plan With The Tax Man with Tony Mauro from Tax Doctor Inc. Don't forget to subscribe on Apple, Google, and Spotify.

Disclaimer: Securities offered through Avantax Investment ServicesSM. Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency.

Today's episode is all about understanding the crucial role of income analysis in retirement planning. We'll uncover the secrets of guaranteed income versus the uncertain stuff and shed light on the consequences of retiring without a clear income plan. Don't worry if you're feeling lost - we've got your back with practical solutions and expert guidance. Tune in and take charge of your retirement cash flow!

Important Links: 

Website: http://www.yourplanningpros.com

Call: 844-707-7381

----more----

Transcript: 

Speaker 1  0:00 

Welcome into another edition of the podcast. It's playing with the tax man with Tony Mauro and myself here to talk about mastering some retirement cash flow really kind of understanding income is going to be the topic conversation on the podcast this week with Tony. Who is de Moines professional alternative at tax Doctor Inc. And you can find them online at your planning proz.com at your planning proz.com What's going on, buddy? How are you?

Speaker 2  0:25 

I'm good enjoying the summer? How about you?

Speaker 1  0:27 

Yeah, pretty much the same. It's been a bit of wet one, though. It's been a lot of lot of rain. Yeah, down here where we're at. It's been a lot of rain. So

Speaker 2  0:32 

yeah, we have not had a lot of rain. And we just got some scoring well needed. Yeah, it's funny

Speaker 1  0:37 

how the country does that Right? Talk to several people all the time every week. And it's, it's always a little something different. And then whatever neck of the woods you happen to be in. So right here lately, it's just been been really wet. So our Fourth of July got kind of rained out. But that's okay. We still had a good time and with family and friends. And so everybody out for everybody else that as well. We are back here. This is for our our later July edition here. So this is our second half of July. So let's get into understanding some income. Because you know, cash is king. We've heard that Tony a million times. But in retirement incomes King right? Income is always King in retirement. Absolutely. Yeah. I mean, I guess it is all the time. But it's really, it's really more important, or certainly critically important in retirement. So what's kind of some scenarios that some issues that you can be looking at, if you don't really have a good clear picture of your retirement income?

Speaker 2  1:33 

If you're, you know, if you're kind of DIY, and you're thinking, well, I'll just figure it out when I get there. What are some of the issues you've seen people bump into, you know, I've seen, I've seen a lot of it up this way. And some of the people that own land, and farms and whatnot can probably relate to this. But I've seen, you know, retirees come in, and they'll say, you know, I'm ready to hang it up. But I've, I've got all this land, you know, but the land itself isn't really producing any income. So while they have a lot of assets, that that asset or assets isn't really throwing off any income? I see that a lot. Yeah, yeah, I see a lot of people trying to work their retirement income from a basket of, or a portfolio of securities that they had when they were younger, and trying to kind of make shift pull money out, you know, as they need it. Because they don't have a real clear picture. In other words, most of the time, it's, you know, not income generating stocks, and they're just going to wait for prices to go up. And, you know, hopefully sell and make gains and use that when that doesn't happen, or, or it takes longer than expected. They're stuck with out income. Well, I'd like to make life app,

Speaker 1  2:36 

I guess what we should do is maybe identify some potential sources of income that people might have as a retired person. So what are some examples of different places that you know, you might be able to draw income from depending on obviously your life? Right? Well,

Speaker 2  2:51 

I mean, the list is long, but the easy ones are, you know, your 401 K's pensions, if you have one, IRAs, of course, Social Security. Yeah, that's the big one. Everybody knows if you have some annuities, dividends and income and interest income from either investments, or bank accounts, CDs, things like that bonds, some of you could have some other type of income, you know, maybe you're working part time, maybe you are doing a little side hustle. And you've got some income coming from that. Yeah, yeah, sure. All of those things are potentials, but the three or four biggies prior Social Security, IRAs and 401 K's.

Speaker 1  3:29 

So you know, we talk often about being diversified Tony in the realm of investments. And I think that's where people's mind goes to, okay, I need to be diversified and not have too much in large cap or, you know, or something like that. But you really also want diversification of income sources. So you're not relying overly heavily on just one. And obviously, the big one here to think about is if you've not done any planning, or you've not done any savings properly, or some things happen in your own social security, either completely, or it's making most of what you need to live on. And I'll throw my mom under the bus with this, because unfortunately, that's where she's at in her life in her 80s. Now, I help her out. But you know, from her own potential standpoint, that's where she got she lost just about everything in the Oh, eight downturn, and in addition to some bad choices and things of that nature. She's on Social Security only. And that is clearly not where we want to be.

Speaker 2  4:23 

That's definitely not really where you want to be. And I've seen that too. And I've seen tax clients that get to the end. And that's really it. Because at that point, you are, it's impossible to try to generate other sources of income, you know, because your timetable it's got Yeah, it's just too late, you know, and so most of these sources need to be thought out along the way. And so which, again, begs the question of, you got to you got to get a plan and you got to work the plan, which we're always talking about. And, you know, that

Speaker 1  4:52 

importance of saving, you know, paying your future self right, Exactly.

Speaker 2  4:57 

Yeah, I mean, that's what it isn't, you know, it's hard for to take Get a 65 year old and even if they've got a large portfolio, say of of stocks or bonds or something like that and say, well, let's, let's let's diversify a little bit and go out and buy for rentals, you know, that might not be the wisest move, because, you know, they take, even though they could throw off some income, for example, well, you know, that's actually work, you know, and they may not be the wisest of choices. But you know, for a guy that's had rentals for a long time and wants to continue to have them in retirement, you know, it's a great another source. But I do think you're right, we're really trying to aim for before we even talk about what types of earnings you're getting on them or what the income is, but the different sources, the I think the more you different sources you have the more potential to really live the retirement you want.

Speaker 1  5:43 

Exactly. And that way, you're not overly reliant on any one thing, which again, is that diversification key. So let's talk about the two kinds of income in the way that most advisors, I think, probably categorize this or people have heard it, which is going to be what, what are the two kind of ways we would think about income? Well, a lot of times people think about it as guaranteed versus not guaranteed. Right. And, you know, I like to phrase it a you know, on the guaranteed side is guaranteed for as long as you live. So security first. Yeah, that's the first security.

Speaker 2  6:19 

yeah. If you have an annuity and you annuitize it, you know, it kind of becomes like a social security payment. It's annuitize.

Speaker 1  6:26 

So security check even say annuity on the top of it, I think. I think it does, yeah, anyway.

Speaker 2  6:31 

So those are the two, you know, and if you do and are lucky enough to have an old fashioned pension that works the same way, you know, it's a monthly income stream for life. So if you've got those, those are kind of, you can't make changes to them. You know, I mean, you get x and that's it. It's over when generally,

Speaker 1  6:49 

yeah, whatever you like, whenever you turn on your Social Security, you know, that's your that's what you're locked into that kind of, that's what you're like, yeah, and you're not guaranteed is that's going to be the that's gonna be our personal stuff, right?

Speaker 2  7:00 

As we all have personal stuff, your IRAs 401 K savings, you know, pretty much everything else that you're kind of hoping to use in retirement, and I say non guaranteed, because it you know, you have to initiate, I mean, even if the IRA or 401 K or your investments, you know, fully invested, you got to initiate Okay, and figure out how much is it going to earn? And how much can I take, and so in that could fluctuate a little bit. And that's why most advisors when they start talking about retirement, you know, and you hear a lot about, well, what's the sustainable rate? You know, is it 4%? Is it 3% 5% That I can take out month in month out every year, you know, and maybe not use my principal, or maybe some of my principal, but because retirees, you know, we're, again, we're thinking about that income of how much do I need every month? And then how much you know, above that? Do I do I want?

Speaker 1  7:52 

Well, so if we're thinking about guaranteed versus non guaranteed now, balance was where I was going to go with this, I got ahead of myself. So you know, somebody might say, well, what's the proper balance? Like, I want more of the guaranteed many of us would just say that, because we feel like, okay, great, that means that we're covered. But often if you're thinking about this, okay, so if that's where the strategizing comes in, because let's say you've got your, your assets that you've built up of, let's just keep it an easy number, a million dollars, right? And a 401k, or whatever, you know, various different sources like that. And then you got your Social Security, your polling, and the balance that comes into play, Tony, when you're trying to figure out how much you need to pull from what place at what time to create that difference of that shortfall, but also not cause yourself taxation issues, correct?

Speaker 2  8:36 

Correct. Yeah. And that's where the good planning comes in more for retirees. I think that even people, you know, just trying to get to the end, right. They're working because, yeah, yeah, in the working years, but it really comes down to, you know, sitting down and trying to analyze what your expenses are, so you can figure out what is covered what isn't, I think a lot of times, people don't realize that, even on the non guaranteed side, once you get this number, or your shortfall number. And depending on what you have, you know, it's fairly easily to predict, especially with today's software, where you can take a person's, let's say, let's say they had a million dollars, and we were going to assume a 4% withdrawal rate you can easily see based on different investments scenarios, how much predictability or what percentage of the time if they live to say 95 to 100? Would they absolutely run out of money and, and so then they could sit there and say, okay, so you know, there's a, for example, a 95% chance, if I have x amount of my guaranteed side, and I take my Million Dollar Portfolio invested in such a way that it's going to throw off X that I'm never going to run out of money and I I've already got everything covered, plus what I want to do and then they can feel good about that, you know, and that's, that's where the numbers come in.

Speaker 1  9:55 

Well, now many of us have heard the term paycheck and play check. And if not, I think that was actually coined by Tom hegner, I believe, financial professional as well, you know, so typically, we might think of, okay, well, I need that guaranteed money. That's my quote unquote, paycheck, right? That's covering my must haves and must haves, or you know, the house, rent, or mortgage or food, right? You know, the things we have to have. And then the paycheck side, often people say, well, that's gonna be the non guaranteed and that's the fun stuff in retirement. Do you see that as kind of accurate? Or is that still a really is there other strategizing to where maybe we want to try to pay for everything out of those paychecks and then let the paychecks grow or be really special.

Speaker 2  10:40 

you know, a one off kind of deals, I suggest that to some people that are in in the position where they're guaranteed side can cover everything. Right, you know, I don't have any clients right now that have taken me up on that, you know, that say, I want my my stash my paycheck side to just sit and grow for legacy for right. Yeah,

Unknown Speaker  11:00 

I guess it depends on your what you want. Right? Legacy is a great, yeah.

Speaker 2  11:03 

Yeah. But it is it is a point to consider. I mean, most of the people that we work with, even their you know, without increasing their, their lifestyle, the guaranteed side, the paycheck side is not generally fully covered by guaranteed stuff. Right. And so we all right, yeah, it's a shortfall. Yeah. And so we're kind of dipping into and then we got to show them. Well, you know, but you know, that shortfall could easily be covered by the other side of things. Yeah, the

Speaker 1  11:31 

million bucks put away. Let's say that was the exam. Yeah. And that's I think that's where most of us go right, Tony, I mean, because unless you're lucky enough to have a pension. And so because, like the like the milking stool philosophy, right, the analogy, excuse me, were the three legs of a milking stool, right you so if you've got a pension and Social Security, usually a fairly modest or even or a good, you know, nest egg built of your own, you may not have to touch that nest egg very often, because the Social Security in the pension covers it. But most of us are not in that boat. So Right. So that shortfall is a little bigger, because we don't have that quote unquote, pension leg. That's true. Yes. And even,

Speaker 2  12:06 

I mean, it's hard to to find these days, where they've got that, you know, because most people aren't in, you know, a place for 3540 years, most places don't have pensions, like government, right, or stay at, let's say, government. And so there is that shortfall. Now, in my own personal situation, my wife happens to be in a government spot. She's been there for 35 years. And so she has our IPERs, which, even though it's extremely good, you know, it doesn't replace 100% of her salary, but it replaces about 70%. And so the

Speaker 1  12:38 

shortfall, you gotta kind of you may have to look at like your own personal nest egg, correct my own

Speaker 2  12:42 

personal essay, and then she's gonna have Social Security on top of that. So I think with, like, in her case, about 80% of her pre retirement income is going to be covered. And so that's pretty pretty darn close, you know, and then with the other investments, you know, we have and whatnot that that's our play, check slash, fill in the gap money. And that's what you go with, you know, when you got to get engineering

Speaker 1  13:08 

well, so and this is where I guess the strategizing of maximization for your income streams or sources, comes into play, right? So having a good conversation, having a good strategy, put together with an advisor, like yourself, so we can it cuz we hear like terms like, hey, get us Social Security Maximization, right? For example. What's the strategy for doing that? And that's really where working with a Pro comes into place is we talk all the time, Tony about the DIY movement of the last number of years has been very easy. It's in it's been easy for quite a while, let's be honest, to accumulate money, right? So if you do the basics, you can probably save, you know, for your future self. But the retirement aspect, that preservation distribution, and the little funky nuances of how to maximize this, what's the best strategy for that? How's it gonna affect tax aid, you know, taxation by taking this money out at this time, and so on. And so that's where the nitty gritty gets really tough for folks. And that's where, obviously, you know, folks like you come in

Speaker 2  14:05 

it is and even with a Social Security, you know, planning for because everybody's got the question, Well, should I take it early? Or? I'm gonna take it a second I, you know, I for retirement benefits they owe me it's mine. Right? Yeah, it's mine, you know, and so I tried to talk to him about well, but if we do this, based on what you have, it might be better to wait, you know, type of thing. And I know, and big money that we're talking to, can be big money, big money. And in my own case, again, back to my wife's pension, you know, the, one of the decisions we'll have to make is, well, do we want to just take the straight pension and then when she dies, if she dies before me, I'm out, or do we want to make sure it takes a little less and so you know, if she dies before me, I've still got it till I die, you know, and then run that it's over. So it's those kinds of little decisions you got to put a pencil to and try to figure out what's best for your own situation.

Speaker 1  14:57 

Yeah, and often you definitely want to make sure you're making the right one there. or because, depending again on the strategy, because some people might say, well, we're gonna take the bigger dollar option, which does eliminate the spousal often, right. And so if you do that you better have that backup plan in place to know that the spouse is still covered, once that pension runs out, so or the exactly person passes away prematurely, or, you know, whatever the case might be. So there's a lot of little nuances to that. So understanding your income is really important. So this is kind of a quick rundown of some of some different categories you might find. And, again, the guaranteed versus the non guaranteed and how they kind of all play together. And that's why it's important to get a plan and a strategy. So if you need some help, and you're not already working with Tony, reach out to him and have a conversation, hopefully this kind of sparked some interest for you to start thinking about, Yeah, where is my income sources coming from? Or how do I make my 401 K and income source, things like that? Reach out to Tony and his team at tax Doctor Inc. find them online at your planning proz.com That's you're planning proz.com or call him at 844-707-7381. And don't forget to subscribe to the podcast playing with the tax man on Apple, Google or Spotify. Alright, Tony, thanks for hanging out, buddy. I appreciate it.

Unknown Speaker  16:06 

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

Speaker 1  16:07 

I'll see you in a couple of weeks and we'll be back in August with a new episode here on plan with the tax man

Disclaimer:

Securities offered through Avantax Investment ServicesSM. Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency.

On this week's show, we'll answer some mailbag questions that have come in. We'll discuss if you should pay off your house, financially support adult children, and how often you should communicate with your advisor.

Important Links: 

Website: http://www.yourplanningpros.com

Call: 844-707-7381

----more----

Transcript: 

Speaker 1:

Back for another edition of Plan With The Tax Man, with Tony Mauro, from Tax Doctor Inc. We're going to talk, well, actually, email questions this week. We haven't done an email show for a while, so we're going to take some questions from folks that have sent stuff into the office, or the website at yourplanningpros.com. That's yourplanningpros.com. You can get your questions asked and answered, and get yourself some time on Tony's calendar to sit down and talk about your retirement situation, or your tax situation.

Tony is a CPA, CFP and EA of over 27 years experience, and a great resource for you to tap into here. Well, he's got clients all over the place, but his office is in Des Moines, so reach out to him online at yourplanningpros.com. What's going on, my friend? How are you?

Tony :

I'm good. Enjoying the summer. How about you?

Speaker 1:

Doing the same. Hanging in there, rocking and rolling. Well, actually, about the time we're going to drop this, it's going to be probably right after 4th of July, so I hope that you had a good 4th of July. We're taping it ahead of 4th of July, but we're dropping it after, so hopefully you have a good one.

Tony :

Yeah, yeah. Hopefully everybody out there is going to get out and get a chance to enjoy the summertime. I like the summers the best.

Speaker 1:

Any 4th of July plans, both since we're ahead of time?

Tony :

Not much for us this year. Probably just relaxing around home a little bit. Maybe playing a little golf, and watch fireworks. Yeah.

Speaker 1:

There you go. Sounds like a plan. Yeah, we got some family coming in. We'll be around the pool, hot dogs and burgers, and all that good stuff. Classic 4th of July for us. Anyway, hope everybody has a good one, and had a good one, I should say by the time you're catching this podcast. But let's go ahead and take some email questions, Tony, from around the area, we'll have a fairly short podcast this week, but we'll see if we can help some folks out. We got an email from Tony, and it was not you.

Tony :

Yep.

Speaker 1:

But Tony did say, "Hey, Tony, I'm hesitant to pay off my house, because I don't have many other tax deductions at this point, but I do have a hundred grand on the bank, and only owe 45 grand on the house, so I'm really tempted to pay it off. What's your thoughts?"

Tony :

I'd tell Tony to pay it off.

Speaker 1:

Yeah?

Tony :

I'll tell you why. A lot of people get hung up on, "I don't have any other tax deductions," and they don't realize how, especially with only a $45,000 mortgage, how little their tax deduction really is, if even they can use it on the federal side, because they don't have a lot of other deductions. This particular deduction goes on a schedule A, and there's a threshold you have to get over, which is, for singles $12,000 and some change. If you don't have other deductions to get you over that, you won't even be able to use it.

I would say that even if, let's say your mortgage interest, for example, is $2,000, $3,000 a year on that, probably even be [inaudible 00:02:37] by now, your tax savings, if you're in a 20% bracket, maybe $600 versus, I don't know how much you're spending on the mortgage, but let's say your mortgage payment's $800 a month, times 12, that's $9,600 a year. I'd rather have that in my cash flow, and build that a hundred thousand back up. Then keep letting that money grow.

Speaker 1:

Yeah.

Tony :

That's my philosophy. I'm not a big debt guy. Especially, I like to not have a lot of debt, and I advise people not to carry a lot of debt.

Speaker 1:

Now, the tax deduction-

Tony :

Obviously... Oh, go ahead.

Speaker 1:

Sorry, I didn't mean to cut you off there. The tax deduction part of this question is a moot point right now, correct?

Tony :

It is.

Speaker 1:

Yeah.

Tony :

Yeah, it is a moot point. I think that you're better off long-term, is snowballing your cash flow, and it won't take you long to recoup the money, the $45,000. Then it's just all gravy from there, and you're out of that debt. But obviously, you can't do that if you're a young person going out, and just buying their first home, generally.

Speaker 1:

Right, right.

Tony :

But you could try to pay it off early.

Speaker 1:

Well, this is always an interesting question, when we get something like this, Tony, because first of all, okay, he's probably still sitting on a pretty nice rate, right?

Tony :

Sure.

Speaker 1:

He's got a $100,000 in the bank, he owes $45,000, he's probably paying like 3%, is my guess. He's probably had this mortgage for a while. It's probably before the rates started going back up. Many people do find themselves wondering, "Well okay, right now, even at in a CD I could get 5%, is it worth doing a short-term CD, or something, and getting more than I'm losing on the house?

But to your point, there's the emotional factor, and he's so close that it's like, "Well, all right, maybe this difference is not that massive," that it's not draining you down too much. I think that's always the math. Then you do all the math, and then you add in the tummy factor to go, "Just how much better would I feel not having the mortgage on my head?"

Tony :

That's right.

Speaker 1:

Yeah.

Tony :

That's right, and multiply that out over the number of years. But at the end of the day, yeah, it's the math, and it's pretty easy math to do, you just got to lay it all out.

Speaker 1:

Yeah, very true. All right, well great question, Tony. Thank you so much for listening to the podcast, and congratulations on being in such great shape as well. $45,000 on the house is, obviously, awfully fantastic. Whatever you do there, certainly kudos for that. Of course the team's going to reach out to you anyway, since you've submitted the email and has.

But for other folks who are in a similar situation, that's why we share these emails, because if it's happening for one person, it's probably happening to another somewhere. That way, if you've got a similar question, you can run the numbers specifically for yourself by reaching out to Tony and his team at Tax Doctor Inc. You can find them online at yourplanningpros.com.

All right, let's go to David. David says, "Tony, I'm positive that I have more than enough money saved to last the rest of my life. There's just no way I could spend it all. I'm not bragging, I just find myself to be in a blessed position. Is there any advice you'd give to someone like me, or can I just coast, financially speaking?"

Tony :

Yeah, I would say to David, not knowing any more than what you've submitted, I would say, and this is a little bit of a fun response, but prove it. What I mean by that is, congrats on the fact that you think you've saved enough, but maybe get some advice from your advisor, or someone else, put in some numbers to it just to see. Because one person might say, "I have enough to for the rest of my life," and that could be a million. Another person, it may take 10 million.

You just don't know, because it depends on your spending habits, and what some of the things you want to do are. Then of course your longevity, and everything else. I would just maybe double check it. Get an opinion, and then if that verifies it, then I would say work the plan you've got, and then you could be, quote, on Easy Street the rest of your life. But maybe you might find something that you didn't think of, and you might have to rethink a couple of things there.

Speaker 1:

When it comes to situations like David's, always good just to find out for sure. He says he knows, and he's not bragging. I guess my first question, when I see stuff like this, Tony, is, well, how do you know for sure? Is it because you've done the math, and you've run it out? He may be right. Is it because you've sat down and talked with a professional, and you have a written plan and a strategy that you know you're fine? Or are you back of the napkin this? Now granted, I don't know David. If you're sitting on $40 million, you probably are good.

Tony :

Absolutely, yeah.

Speaker 1:

But if it's the age-old question of, "Hey, I've got 2 million bucks," or, "I've got a million bucks," or whatever, "I'm in great shape." Maybe, right?

Tony :

Maybe.

Speaker 1:

There's so many variables. I hope that you are in a great shape, and I would say, to find out if you could coast, just sit down and have a complimentary review done, and find out. Run the numbers, make sure. Stress test it for multiple scenarios, whether if you check out our prior podcast, whether something comes up like a medical issue, or something. There's just lots of things that could come up and derail you. Just have them stress test it, Tony. That's one of the things you guys do. You can run various scenarios in case he is incorrect or correct.

Tony :

We can, yeah. With today's software, on the financial planning side, you can easily take a portfolio, and run run the numbers, ask him a few easy questions on how long would you like to run this for, and your life expectancy type thing. Give me a rate, a good conservative rate, and the software is going to spit out and say, "Your chances of outliving your money are only 5%, or maybe it's 0%." In other words, you've got enough money, based on what you've told it, you are right, or maybe you aren't as as you thought.

Speaker 1:

Yeah, very true. Especially when it's complimentary, and it's easy to do, no reason not to get a second opinion on the strategy you have in place. Great question. Thanks so much for listening to the podcast. We certainly appreciate it. All right, let's go to Kate. Kate's got a tough one here. She says, "Tony, my son's 27 years old, hasn't landed a legitimate job since he finished college four years ago. We've been supporting him, car insurance, cell phone, that kind of thing. I'm not going to be able to continue to do this much longer; in a couple of years I plan to retire. How do I cut him off without making this a big problem?" That's a tough one, right, Tony? Because there's a fine line between helping and enabling.

Tony :

There is. That that's a tough one, and it comes a lot down to how you think. My personal opinion would be, well, a couple of things, I guess, is if he's 27, he's been out for four years. I don't know what legitimate job means. Is he working at all? But let's say that he is, or if he isn't, well then that that's a different problem, then you probably are enabling him, and not forcing him to find something.

But if he just is working, and maybe not making the money he thought he was going to, or whatnot, then I think by helping him, maybe you're not enabling him, but at some point you have to have a tough conversation. Just explain it to him that we need to start weaning you off, or cutting this back. Maybe you do it in steps to help him out, rather than just pulling the rug out from under him. There are things that people can do. I tell my own son this is, there's easy ways to go make more money. One is just go work more, trade your time for money. If you have to do it to pay your bills, you'll find a way, generally. That's a little bit more of the tough love, I guess you could say.

Speaker 1:

I agree, Tony, and I think a lot of times, what happens to people in this situation is some people will come in to see you, and sit down for a planning process. They'll say, "Hey, we want to enjoy our retirement. Whatever's left over, the kids get." I think, to me, that's the healthiest approach. Others will say, "We want to leave them a bunch," and others will say, "We're doing something like Kate's doing, and we're doing a ton of helping." But at some point, you start to sacrifice your own retirement, and the success of your retirement plan.

Maybe Kate's plan has gone from all this helping, has gone from 100% surety for her own retirement, her and maybe her spouse, down to 80%. Is 80% good enough for you? If you keep helping him, if it goes down to 70% chance that you're going to be okay in retirement, is that acceptable? At some point, we have to not help our kids to the detriment of our own life. Because what's going to happen is, Kate, you're going to end up on his couch at some point. It's going to flip. [inaudible 00:11:18] Right?

Tony :

Yeah, it's going to flip.

Speaker 1:

Then neither one of you're going to be happy. It's tough.

Tony :

It is. I've seen it. That happens, and I don't understand it. I see it with clients, and even some family members, that are still helping their kids, and they're 30 years old and married, and they both have jobs. It isn't like they're destitute. I could see if your child, and I would help my kid as well.

Speaker 1:

Yeah, we all-

Tony :

He falls on hard times, everybody's going to help him, but with some constraints, and some, maybe, rules, and whatnot. I don't think you want to let them get to a point where they know that, or maybe they don't know, but they just feel like, "Well, Mom and Dad's always going to be there, no matter what." Which we are, but most of us probably want to stay in the background, only help if you really fall on tough times.

I think some of these young people, I don't know, I just feel like they're just freewheeling. I think they need to do a little bit more to help themselves. If, truly, he's in a profession, he's not making the money he wants. He's young enough, he certainly can go out and find something new, and maybe even retrain, go take some classes.

Speaker 1:

Yeah, and to your point, you started to touch on something there, and we'll move on to the next one. But also, does he know how badly he's affecting your retirement, Kate? If you're not being honest with him either, and you're just helping him, and not saying, "Hey, listen, we need to have a chat, because this is what it's doing to us." He may be, like, "Oh crap, I didn't mean to do that. Let's make some changes."

Tony :

Absolutely.

Speaker 1:

It's got to be communication in there, as well. Lots of things to think about. Great question. Tough spot to be in, Kate, but I think you're probably doing yourself, and him, a service by starting to cut this off, in some form or fashion. But anyway, always talk with the professional, make sure, also, again, another reason to run the review, Tony, to make sure that Kate's own retirement is not in bad peril from the help itself.

Tony :

Exactly. Yeah.

Speaker 1:

All right, final one this week. Laura says, "Tony, I like my financial advisor. I enjoy the podcast, so I've been listening. It's nice to listen to you guys. I'm reaching out because, well, they're hard to get in touch with. I rarely get phone calls returned, and I just wonder if my account is not large enough for him to pay attention to me. I've got about $350,000 with him, and I believe most of his clients are doing considerably better than I am. Is this a common problem within the industry?"

Tony :

In some cases it might be, but to dissect it a little bit for Laura, it depends on how much, since I don't know how much you're trying to get ahold of him, because some clients tend to think, in his corner on this, defending him a little bit. But just basically, if a client thinks that they need a call every week, every two weeks, just to discuss market conditions, that might be, and hopefully you're not that way, but generally, then they get mad when the advisor won't call them back.

Speaker 1:

Sure, that's a little unreasonable, because you've got tons of clients, but-

Tony :

It's unreasonable, yeah. But at the same time, he or she should, when you decide to work with them, be very upfront about the communication, how much of it is going to happen, and how often, because often that way everybody's on the same page.

Speaker 1:

How often you [inaudible 00:14:45] meetings and stuff like that, right?

Tony :

Yeah. You're just setting expectations.

Speaker 1:

Yup.

Tony :

If they haven't done that with you, or even if they have, and you're just talking about what I would consider probably once a quarter type of call, when you're getting together and reviewing things, even if it's every other quarter, so twice a year, then I think that they should at least be cordial, and prompt enough to, if not return the call, get your questions answered somehow, whether it be a quick Zoom call or email.

Speaker 1:

I would think, Tony, in a situation where, maybe the client's being a little unreasonable, and again, we don't know that Laura is, we're just talking speculation, but if a client is being unreasonable, someone on the staff is probably going to be reaching out anyway saying, "Look, we've addressed this conversation, or whatever. We just don't have the manpower, or whatever, to every single time. That's what the plan is for. We got to stick with the plan." If you want to schedule a review, that's a different conversation, I guess.

But yeah, I think a lot of people find themselves in this situation with advisors, or they've been with a firm for a while, and unfortunately I think there is some truth to the size of the account. Sometimes it's not a big enough account for them to jump up when, maybe, a random call does come in, versus a scheduled one. Think about the size of the firm, Tony, you guys are what I would call a boutique firm, versus-

Tony :

I would say we're boutique firm.

Speaker 1:

Yeah, versus a giant big box with 35 advisors in a building, four story building, or something like that. Because that's what you choose. You want a small boutique firm. Some clients are looking for that, because there they do feel like they're a name, not a number. Maybe Laura's working at a firm where she feels more like a number. I don't know.

Tony :

She could be. If the financial advisor's doing, what I feel like they should be doing, is that when a client calls in, they may not be able to jump right on the call, but-

Speaker 1:

Of course not. Right. Yeah.

Tony :

But they should have a staff in place to say, "Okay, well, let's schedule a call for this date, and then let me know what we're going to be talking about." Then we jump on a call, and we do it. But I think some advisors, it is true out there, where they institute minimums, because it is a business at the end of the day. Some advisors have this stigma of, "I can't really make any legitimate living unless my clients have X with me."

Speaker 1:

Right.

Tony :

That, I think, is to the detriment of everybody. But I understand, because there are people out there that, and there's nothing wrong with it, because you got to start somewhere that, I want to open up a $2,000 IRA this year, and I want weekly meetings, and we want to discuss. Most advisors are going to say, "Well, that's just not profitable for me.

Speaker 1:

Yeah, that's not the right business model for-

Tony :

... at the end of the day.

Speaker 1:

Yeah.

Tony :

Yeah.

Speaker 1:

That's the other piece of it too. That's the expectation conversation you brought up.

Tony :

Yes.

Speaker 1:

Not only when you go to sit down with someone is the expectations about the meetings, and how often you're getting together and discussing things, and the strategy and the plan, but also, is it a worthwhile business venture for both? I think a lot of times people are auditioning an advisor, they don't realize the advisor is auditioning them right back. It's got to be a good relationship both ways.

Tony :

It really does. When we interview clients, we basically, we'll sit them down in a room, by themselves, with a sheet of paper. It's got about 10 or 12 questions on it, and they'll just rate themselves, and we say, "We'll be back in 20 minutes." Then we come in, and start discussing, and I'm auditioning them as well. I'm looking for landmines.

Speaker 1:

Yeah.

Tony :

I'm looking for, "Do they really have some pain that they need help with, or want help versus I just want somebody to talk to, type of thing?"

Speaker 1:

Yeah. Yeah. Because at the end of the day, you can't help, literally, every person.

Tony :

You can't.

Speaker 1:

You'd love to, but at the same time, your business model is that boutique firm. There's only so many hours in a day that you can see people.

Tony :

That you can do it, yeah.

Speaker 1:

But I would say with Laura, $350,000 is not $3,500.

Tony :

No, not at all.

Speaker 1:

I would say it's a substantial amount of money, I think, to anybody. They should at least be getting back in touch with you somehow, and scheduling calls.

Tony :

Yeah.

Speaker 1:

Because I don't think that would be right. Okay. All right. Well, great questions and of course, obviously, Tony and his team are going to reach out to everyone, and have reached out to folks that sent these emails in. But if you've got similar questions, or you feel like you're in a similar boat, reach out to Tony and his staff, and have a conversation for yourself. Get set up with a time to come in for a complimentary review with the team at Tax Doctor Inc.

You can find them online at yourplanningpros.com. Don't forget to subscribe to the podcast on Apple, Google, or Spotify, which you can find at the website as well. Again, it's yourplanningpros.com, and you can drop an email if you'd like as well. We take some from time to time, and ask him here on the show. But either way, reach out to a qualified professional, like Tony, he's been helping families for many, many, many years. He's a CPA, CFP, and an EA, and he's here to help. Tony, thanks for hanging out, buddy, and answering these questions. I always appreciate your time.

Tony :

All right, we'll see you next time.

Speaker 1:

Yep, absolutely. We'll see you a little later on, in July. In the meantime, enjoy the summer, and we'll catch you later on Plan With The Tax Man.

Disclaimer: Securities offered through Avantax Investment ServicesSM. Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency.

Are you ready to take control of your finances during life's most pivotal moments? In this episode, we dive into the complex world of financial decision-making during key life events. From the excitement of marriage and the joy of welcoming a new child to the challenges of divorce and the loss of a loved one, we'll provide practical tips and guidance to help you make informed decisions and maintain financial stability.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

----more----

Transcript Of Today's Show:

Speaker 1:

Welcome into this week's edition of the podcast folks. Thanks for tuning in to Plan With The Tax Man. Always glad to have you here as Tony and I talk investing, finance and retirement, and we're going to talk about some key financial decisions during major life events. So I've got several of these. We'll try to get to as many as we can, but it's always important to kind of try to keep a level head through major life events, and we know that's usually not possible in many cases. So that's where I think having an advisor in your corner, having a quality professional there can help you when dealing with some of these things. So we'll have Tony highlight some areas to think about from that financial standpoint during these. Tony, what's going on buddy? How are you?

Tony Mauro:

I'm doing well, thank you. Summers in full swing and trying to enjoy it. Weather's good.

Speaker 1:

Yeah, there you go. Exactly. I know that you've been doing this obviously a long time and you've seen lots of different scenarios and situations, so it'll work pretty well I think for you to kind of give us some things to think about, whether they're positives or negatives, right, some of these life events here, some are positives, some are negative, and just some financial highlights to make sure that we're thinking about should one of these things happen to us, because many of these on this list are going to happen to probably all of us along the way somewhere. And some of them hopefully will not, but it's possible. So let's go through and have you give us some highlights, shall we?

Tony Mauro:

Okay. Sounds good.

Speaker 1:

All right, let's jump in here. We'll start with me. I know you primarily are listening audiences, retirees, pre-retirees but you do have some younger clients as well, and so maybe it's a first marriage. Right. So let's start with marriage and just say there's definitely things you want to consider and think about when you're younger, even if you got married later in life. I was 33 before I got married, the first, well, I've only been married the one time, but started to say the first time, it's only been the one time, but I was 33. Right. So I was already fairly established. So there's things to think about whenever you're jumping into that.

Tony Mauro:

There is. And marriage for a lot of us is, it is eyeopening, like you said, in a lot of ways and some of this financial stuff, nobody really talks to you about. And so I'm glad we starting with this one because my own son got married last year at 26,

Speaker 1:

Okay.

Tony Mauro:

And so he's had to go through some of the stuff and we had kind of some of the same conversations because there isn't just some book out there, you could just go read and have it all down, and none of this really is necessarily black and white, right or wrong. It's just different ways to do things. But one of the biggest ones, and one of the first ones is, is now you've got generally, especially if you're younger, you've got two people working. So you've got two sources of income. So it's all about the finances and what are you going to do. Now you've got one set of bills, who's going to pay them?

Are we combining our money and paying everything out and then we spend the rest, or that's what I get a lot. Others come to me and say, well, he's going to pay these bills, I'm going to pay these bills, and then the rest we'll decide what we want to do. So I think that's a big thing because that's hard for a lot of people whether you're going to, especially if you've, maybe you are a little older and you used to living on your own and just paying all your own bills.

Speaker 1:

Yeah. Yep.

Tony Mauro:

And do we have a joint account? Do we have two separate accounts? I think that's key. If you say, well, what's your opinion? If you asking me my opinion,

Speaker 1:

Right.

Tony Mauro:

I tend to lean towards the joint account because I think now you're one team, you're one. Right. And everybody needs to be involved. It's not like the old days where all the guys paid all the bills and the women stayed home and cooked type of thing. I mean,

Speaker 1:

Yeah.

Tony Mauro:

Both people are usually working.

Speaker 1:

Yeah. They definitely are. I think the modern era too, though, it's definitely, so my wife an I, Tony, we are completely separate on everything. Now, both of our names are on the house, but I pay the mortgage, but she pays all the utilities and she pays the insurance. So I think you can do the, and again, I was 33. Right. And she was already 30. Right. So we had been paying our own bills and having our own life. So I think it's either scenario, if you're a younger couple, maybe the joint thing is probably the way to go because you're definitely combining, probably not making as much and so on and so forth. But I think as long as you're honest and talk with each other, you can find a balance with either system, but make sure you do find the one that's right for you. Right. So because we all know marriage is the number one, or I mean, money is the number one fight in a marriage, right?

Tony Mauro:

It is.

Speaker 1:

Yeah.

Tony Mauro:

It is. And I'm not saying one's right or wrong.

Speaker 1:

No, no, not at all. Just point counterpoint. Yeah.

Tony Mauro:

Yeah. Yeah. And I think with either way you go after the bills are paid, however you're going to pay them, I still think it needs to be a team effort of sitting down saying, okay, hopefully you've got some left at the end of every month,

Speaker 1:

Right.

Tony Mauro:

You've got some positive cash flow.

Speaker 1:

Yeah, exactly.

Tony Mauro:

And then you both decide what to do with it rather than, and I've had a few couples fighting in my office through at tax time that don't do it that way.

Speaker 1:

Yeah. Yeah.

Tony Mauro:

That the guy makes a lot more than his wife and she wants stuff and he's saying, well, I already pay my share of the bills. That's your problem.

Speaker 1:

Yeah, that's a tougher, yeah, that's a tougher road. Yeah.

Tony Mauro:

Yeah. That's not the team approach. So,

Speaker 1:

No.

Tony Mauro:

Again, it takes some discussions, some maybe compromise and come up with something for you both because at the end of the day when we get back, because we've been talking a lot about retirement planning lately and decided to mix it up today.

Speaker 1:

Sure. Yeah.

Tony Mauro:

Hopefully you've got some money left. And so both can save for your goals I think.

Speaker 1:

Yeah, and I think even for our strategy, we had those conversations going into it ahead of time, and we both for a while she made more than me. And then in the last 15 years we've pretty much just been right there neck and neck. One will go up a little bit, the next one will go up a little bit. So I think that can certainly lend a hand to that lack of frustration as well. But as long as you have those conversations that are honest with each other ahead of time, then hopefully you can work your way through that. And actually we'll go right into the second one because it's remarriage. Okay. So a lot of our audience is older, maybe retirees or pre-retirees and gray divorces have been a huge thing. So maybe you're getting remarried at a later stage in life. Certainly more challenges here because you do have more things to try to combine.

Tony Mauro:

You do. There's a lot of big challenges here, unlike the first marriage with the younger people, so to speak. But just like you're saying, many of these people that are getting remarried have families, they have other concerns, especially the kids. And they've been through this before and now all of a sudden their needs are a little more, what I find with people coming in for remarriage is a little more self-focused, self-centered, if you will. It's like, well, my money's my money. We're getting remarried, but you have kids, maybe I have kids and I need to take care of these guys first and kind of then us. And so I think a lot of discussion needs to be made there about whose valuing what and how. And,

Speaker 1:

Yep, great point.

Tony Mauro:

Yeah. What kind of things you're bringing into the marriage too. A lot of people bring old tax debts into marriages, and so I think that needs to be discussed because obviously an innocent spouse may not want to be drug into a prior tax situation and have some of their money maybe taken for that.

Speaker 1:

Especially if you didn't disclose it. Right.

Tony Mauro:

If you didn't disclose it.

Speaker 1:

That's not good.

Tony Mauro:

That's not good. No. That's never a good recipe.

Speaker 1:

That's right.

Tony Mauro:

But there's things too, now you've got, again, second marriage, you definitely have to take a look at your own retirement plan. You might have two separate ones, beneficiaries, making sure those are updated, making sure insurance policies are updated properly. And then of course, the last thing is at the end with estate planning, which I've seen a lot of families get into huge fights about estates and whatnot. And potentially, for example, a gentleman that came in a couple years ago, he had remarried. His former wife died, remarried, but he was going to leave all his money to his new wife and the kids were just absolutely out of their minds with that. And,

Speaker 1:

Yeah, that's tough.

Tony Mauro:

Really caused a lot of animosity.

Speaker 1:

Oh, yeah. It'll fractures some things, that's for sure.

Tony Mauro:

Yes.

Speaker 1:

So.

Tony Mauro:

Yeah.

Speaker 1:

There's some definitely good things to consider. Maybe a prenup is something that's worth having a conversation on either situation of those. And again, it's all about having those chats before you go through these major life events. So since we're in this realm, let's just go ahead and go with divorce next. As I mentioned, gray divorces, especially for our demographic is higher and higher on the rise, which is just kind of mind-boggling to me. But people over 50 are getting divorces more. And so what's some things to think of here? You touched on a couple, but give us some things to think about from a financial standpoint.

Tony Mauro:

I think the one thing is, is in most states you're going to be dividing up your assets. And so that's a source of real contention in a lot of cases on how that's going to be done. And again, with divorce, I'd say with all of these, you should talk to some advisor. Divorce, obviously,

Speaker 1:

You need a lawyer as well.

Tony Mauro:

Yeah. You need an attorney,

Speaker 1:

Yeah.

Tony Mauro:

To protect your interests and then maybe your financial advisor. But in our realm on the financial side,

Speaker 1:

I was going to say Tony, that's a good point though with the financial side too. Right. People might think about a divorce and they think, well, I just need a lawyer, right? Well, no, especially if you're older because now you're talking about dividing possibly retirement accounts, a 401ks, the home. I mean, maybe there's rental property. I mean, there's lots of stuff to have to divide.

Tony Mauro:

There is. And on the finance area with us, a lot of people will say, well, since I'm getting the home, I had to give my now ex-spouse half of my retirement. Well, that comes back into our room a little bit. It's like, okay.

Speaker 1:

Sure.

Tony Mauro:

Well now you just half your retirement left. Yeah, you have a home, but you're going to have to live in that. That's not going to throw off any income. What are we going to do? How's our plan changed now going forward? And so you have to re kind of engineer the financial plan and maybe your goals need to be readjusted as well.

Speaker 1:

Indeed. Yeah, I mean, because you're going to have to reset this up, you're going to have to look at, okay, what's the shortfall now that you've lost maybe half or whatever the case is, especially if you're getting closer to retirement so. And you'll want to make sure, just kind of like with the other one, you want to make sure that you've updated any kind of documents and paperwork that you need to do as well. Not leaving off, removing the old spouse or updating all the documents, powers of attorney, all that stuff. Right.

Tony Mauro:

All that stuff. Yeah.

Speaker 1:

Okay.

Tony Mauro:

And again, a good attorney and your advisor's going to be able to help you a lot there.

Speaker 1:

Yeah, definitely. All right, so let's go to a job change. How about this for a major life event, right, especially if we're getting closer to retirement and whether we are asked to step away, whether the job change is not our doing or it is our doing, give us some big things to think about here. And obviously a lot of this is going to come back to possibly being laid off or downsizing. This is the kind of thing that you guys typically see as financial professionals is in that scenario where someone's on that cusp of retirement and they're maybe looking at being laid off. And now they got to figure out, well, okay, should I just go into retirement early or do I need to find another job?

Tony Mauro:

Right. And today, so many people don't stay like the old days, 30, 40 years at the same position. Everybody's moving around and the bigger companies consolidate so much that it's not uncommon. You're here one day and the next day ask you to leave just through cutting or whatever they're doing. But I think that on the financial side, a couple of things. One is if you're departing and getting a severance or some other large sum of money, how is that going to play out for taxes, number one.

And then how is your financial plan going to be affected by that? In other words, if you're out of work for a long time, do you have the necessarily emergency fund or you're going to have to use the severance for that? A lot of times people, and I've just had this with a friend of mine who he was actually asked to leave after many years and they gave him a huge severance, like $800,000, but he is mid 50s and he's scratching his head saying, well, I don't really want to retire, but I don't think I can go make the money I was making in my 50s.

Speaker 1:

Right. Yeah.

Tony Mauro:

And so he's kind of, well, what am I going to do with myself and what am I going to do for new opportunities type of thing. And so he's struggling a little bit with that and what he wants to do there. And then really too, the next one really is now you've got retirement accounts potentially at the old employer. What are you going to do with those? You're going to leave them. Maybe they'll force you to take them elsewhere. Talk to your advisor about that because you definitely want to explore that. And then I think that the toughest one, and I get this all the time as well, like you were saying earlier, I'll think I'll just call it quits now.

Speaker 1:

Right.

Tony Mauro:

I just had one of my business owners in last week and he's young, he's 51 and he thinks he can retire. And I said, well, let's look at the numbers because I said, I frankly, I don't think you can. I said, I do your finances. Unless you're thinking of maybe really cutting back, I think you're going to run out of money probably by the age of 75. And I don't think I've convinced him yet.

Speaker 1:

Well, but that's a great point though, Tony. And that's what an advisor brings to the table. Right. So this is the guy's wish, this is his wants, he's on this cusp here, and it's your job to be that sounding board to go, okay, let's run these numbers and see. And I'm not going to sugar sugarcoat it. I don't think you're going to make it. So let's look at, we got to make some tweaks.

Tony Mauro:

I got to make some tweaks. And I told him, you're going to have make some tweaks to your spending. And he is conservative, so I said, you probably can do it, but you've got to understand what you're going to have to cut and know that you may run out of money, which it doesn't seem to bother him. I like, well, I'll just go do some work. Okay, I'll run out of, if I do I do.

Speaker 1:

That's a tough one though. Right. Because it's like, okay, I'm going to cut some things to make these numbers work to get into retirement early, and are you really going to be, like that feels like a shortsighted goal, right?

Tony Mauro:

It does, yes.

Speaker 1:

The first five years you might be totally like yes, I made the right decision, this is great, but as your quality of life stays diminished or you're not able to do some of the things you want to do, then now you've regretted this decision and you aren't, look like it or not, ageism happens out there in the workforce. Right. It's not supposed to, but it does. And it's going to be harder to get back in and maybe do the same exact thing or whatever. And I think you said he's self-employed. So maybe there's a difference there, but still.

Tony Mauro:

Well, I think in his case, because he's self-employed the conversation I had with him is, if you have to go back to work, what are you going to be skilled enough to do at that point?

Speaker 1:

Yeah. Unless it's the exact same thing he's doing now, right.

Tony Mauro:

Yeah. Which I don't think he could do. And I just said, you got to think about these things.

Speaker 1:

That's true.

Tony Mauro:

And understand what you're getting yourself into.

Speaker 1:

Well, and then medical. I'm 51 as well. I'm with him. I'd like, okay, cool. Let's do it.

Tony Mauro:

You would like to retire, right?

Speaker 1:

Yeah. But I mean, I've gotten some medical issues and that's 14 years before I can, is that right? 14 years before I can turn on social or,

Tony Mauro:

Yeah, or Medicare.

Speaker 1:

Medicare. Yeah. Right. So that's a big chunk of change too. Now maybe he's got a spouse that's going to have him covered, which this is my scenario as well. I'm covered by my wife's because I'm self-employed also, but still, that's something to consider. Right. How are you shoring up that gap medically?

Tony Mauro:

Yep. Yep.

Speaker 1:

Yeah.

Tony Mauro:

I'm trying to talk to him a little bit about just maybe doing something, even if it's just for some mad money and doing something part-time and he's entertaining that.

Speaker 1:

Pad the stats, so to speak. Yeah.

Tony Mauro:

Yeah. Yeah.

Speaker 1:

Well actually, speaking of medical, let's go to our next one then with that, Tony. And that's maybe a major life event, unfortunately, like a big medical issue or a disability. Right. So I had open heart surgery at 41. I mean, that could have gone a different way and I may have not been able to work ever again. Now luckily I've been able to. Right. But you just never know. Something could come back around or you never know what could happen, right? And so what are some things to think about if you get hit with a big medical issue or even a disability?

Tony Mauro:

Well, on the financial side, it's one of the hugest issues, is really making sure that you've got to have your situation and enough control I guess I should say that if something major medical happens, number one, how's it going to impact your financial situation and what's your insurance going to pay, what's it not. If it's going to be something long term, how's it going to impact your daily life? Even your life expectancy could be cut well short if, depending on what it is. And you've got to have some plans in case that happens, and even some contingency plans in there in case you start going down a little bit more.

Speaker 1:

Right.

Tony Mauro:

And then on top of that, you've got the mental side and the fact you've got to update policies and documents. And I think sometimes when people get hit with this, they seem real rushed. And I think there should be some urgency,

Speaker 1:

Sure. Yeah.

Tony Mauro:

To get some of this done. But make sure that you're methodically going through it. Make sure you get some advice from your advisor and then your significant other or others to come up with the best plan to make your life as good as possible for while you're here.

Speaker 1:

Yeah, definitely.

Tony Mauro:

Which is hell, what we all want to do, right? I mean, medical issues or no medical issues.

Speaker 1:

Right. And we got to definitely plan for this because like you said, there's lots of things. There's deterioration of the condition, there's updating the documents, there's even taking the time to see what kind of benefits or programs or assistance is out there to possibly help you. So lots of points to think about there, should you be going through a major life event is that. And let's do our last one, Tony. We'll wrap it up with just plain old retirement. It's like people sometimes I think forget and depending on how they're viewing it, we're so busy accumulating money to get to retirement. We forget that retirement in and of itself is a major life event. It's a total change.

Tony Mauro:

It is. And my sister-in-law's going through it right now, we're helping her. And her last day of teaching was last Friday. And so all of a sudden she's entering this new phase, and when I saw her a couple weeks ago, she happened to say, I'm not going to have any money in June. And I said, you have a lot of money, you just don't have any money coming in from work. So you got to change your mindset a little bit. So she's coming in. We're developing an income plan for her so that she's got to develop this mindset of here's how much income I've got, just like a W2, but it's just coming from different places.

Speaker 1:

Right.

Tony Mauro:

And we've got to change her strategies a little bit. So it's much more income oriented. And then work with her budget. She's conservative as well. So she knows exactly how much she's spending on everything, but you've got to understand what your monthly bills are so you can make sure you have enough for them. And then she's got some health issues too. She's got lupus fairly badly and her life expectancy probably isn't all that long. And she knows that and she understands that. She wants to make sure everything is taken care of. And we just kind of talked about that in case her health goes bad, but it is a big mental change along with the financial change.

Speaker 1:

Yeah. For sure. Yeah, I mean, there's.

Tony Mauro:

So I think you got to think about it.

Speaker 1:

Yeah, you definitely have to check all those things because it's a big gear shift. Right. So there's tons of stuff that you've got to go through when there's a major life event involved, and that's why having a qualified professional in your corner can certainly help you. So if you have not considered doing so, reach out to Tony and have a conversation about some things and get some stuff, some planning processes going with Your Planning Pros. You can find them online at yourplanningpros.com. It's yourplanningpros.com. Don't forget to subscribe to the podcast, Plan With The Tax Man. It's on Apple, Google, Spotify, all that good stuff. So you can simply type that into the search box of those apps, or again, find it at Tony's website, yourplanningpros.com. All right, my friend, thanks for breaking this down for me this week. I appreciate it. As always, have yourself a great week, and I'll see you soon.

Tony Mauro:

All right, see you soon. Thanks.

Speaker 1:

Thanks folks for listening. We appreciate your time here on the podcast. We'll catch you next time here on Plan With The Tax Man with Tony Mauro.

Disclaimer: Securities offered through Avantax Investment ServicesSM. Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency.

In today’s episode, we’re going to focus on the three categories that many clients fall into when starting their retirement planning journey: The unsure, the confident, and the certain. Whether you have no idea whether you can retire or if you’re positive that you have sufficient funds to retire, we’ll cover some critical areas of retirement planning that you need to pay attention to.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript Of Today's Show:

Speaker 1:

Time for another edition of Plan With The Tax Man, with Tony Mauro and myself, to talk about being unsure, confident, or certain in retirement. And really it's retirement planning next steps if you find yourself in one of these three big categories. These are pretty wide, and obviously, you can apply many of the things to all three, but we'll go through and look at some bullet points for items if you find yourself, again, in the unsure category or the confident category. So we're going to break that down a little bit here with Tony this week on the podcast. Tony, what's going on, my friend? How are you?

Tony Mauro:

Doing well, how about you?

Speaker 1:

Doing pretty good. We are right here at the end of May, very beginning of June, so looking forward to the summer months being upon us and enjoying some sunshine and all that good stuff.

Tony Mauro:

Yeah, summer of course, I think, like everybody, it's my favorite time. You get outside and doesn't rain, stops raining, I guess, around here. It gets hot and humid, but most people around here like it.

Speaker 1:

Yeah, yeah. For sure. So it's that good time of the year. So let's keep this one short and sweet this week on the podcast. I got these three blanket categories, Tony, and just give me some bullet points, give some folks some bullet points to think about. If you find yourself, let's say, in this first category, which is, I have no idea if I can retire category, which probably if you say a hundred people are going to come in and see you, I would say, this is my guess. I'd say probably 35% probably fall into this category. Probably 60% will fall into our middle category, and then probably 5% into our last one. And we'll talk about that in a minute. But we'll see.

Tony Mauro:

Interesting.

Speaker 1:

How you feel about it. But anyway, the I have no idea?

Tony Mauro:

Yeah, so in my practice, at least tax clients, I would say the percentages over a long time that I've seen is probably higher in this first category.

Speaker 1:

Really? Okay.

Tony Mauro:

I have no idea. I would say for our clients here, I'd say it's probably 50.

Speaker 1:

Wow. Okay.

Tony Mauro:

Percent. Yeah.

Speaker 1:

People come in for the first time, they're just like, hey, I got no clue. Can I?

Tony Mauro:

No, they used to come in for taxes. And of course, you could see what they've got and you could eyeball what they have for retirement and things and what's coming in for investment income, if anything.

Speaker 1:

Right.

Tony Mauro:

But you can very easily look at their W2s and see that they're not putting anything through their 401k. And so we would ask them, is when are you going to retire and start conversations? And they would say, "I have no idea."

Speaker 1:

Okay.

Tony Mauro:

And so when you fall into this category, obviously, you don't want to be in this category. You've got to get something else, and it's going to take a little work.

Speaker 1:

Sure.

Tony Mauro:

It's going to take some planning either with an advisor or on your own. But really, you have to start with just a few questions of, one would be, well, when do you want to retire? What do you want to do when you retire? In other words, what's it going to look like to you?

Speaker 1:

Right. The lifestyle, right?

Tony Mauro:

Yeah, it's just the lifestyle.

Speaker 1:

Yeah. Do you want to sit on the porch or do you want to go whale watching? I know you and your wife are going to do some whale watching later this year.

Tony Mauro:

Yeah.

Speaker 1:

What kind of lifestyle are you looking at?

Tony Mauro:

That kind of stuff, yeah. And then once they start talking about that and you get an idea, even if you're just talking to them about it is, well, with all that you want to do, and if all you have is social security, and of course, you start asking, well, what else do you have? And many times it's, well, I just have social security. And that's a real eye-opener for them when you just say something like, well, do you know how much your social security benefit is going to be because it's not going to be very much.

Speaker 1:

Yeah.

Tony Mauro:

And then the light starts to go on a little bit that, hey, maybe I need to start thinking about this because you don't want to be here at 65 or ... You know?

Speaker 1:

What are my income streams and is it only social security ... that definitely there's problems. Right? So ...

Tony Mauro:

There's problems. Yeah. So hopefully, you can get to this before you get too far or too close to retirement, so you've got time to fix it.

Speaker 1:

Okay. All right. How about category number two here? And really, I'm surprised, but I guess every situation or every advisor is a little different depending on where they're at in the country. But I would think that most people fall into this category, which is, I think I have enough, but I'm really not sure because ... I think if most of us, if we go to work and we do the basics of ... If you just do the, it's not that hard to save for retirement, Tony, if you start working when you're in your 20s and you're working at a job and you are putting in the minimum into the 401k, even the two or 3% or whatever it might be, and you get that free money from the company match, and you do that for 40 years, you're probably in better shape than you realize. But again, people hear, well, I need a million dollars, or I need $2 million. And so they think: Do I have enough money to retire?

Tony Mauro:

Yeah. And I would say for us, this is probably a close second. I'd say 40% of our clients.

Speaker 1:

Okay, okay.

Tony Mauro:

Probably are in this. But they think they do. And then we always ask them, "Well, what makes you think that?" Give me some reasons why. And if they can't tell us with any certainty, some of the things you just mentioned, then we start asking them some questions, basically is like, well, okay, what do you have? What are going to be your income sources? Where's this going to come from, type of thing? What rate of return are you going to be able to earn when you're in retirement?

Speaker 1:

To make it go, right? To make the whole retirement ...

Tony Mauro:

To make it go. And if they can't quite give us any types of answers, then we start to say, "Well, you really don't know if you have enough." You probably are closer than most, but you might need some help with really trying to put a plan together and making sure that you know you have enough with the time you have left.

Speaker 1:

Yeah. I think more often than not, people are pleasantly surprised when they come in to see a financial advisor to find out ... Whether you don't have an idea if you can retire or you think you're close or whatever, I think most of the time people are pleasantly surprised to find out that they're in better shape than they realized. We tend to be more negative about it than we give ourselves credit for, I suppose, right? It's like going to the dentist. You don't go to the, you're like, oh, I know he is going to tell me bad news. I just know it. And then you get there and you're like, oh, it wasn't as bad as I thought, kind of thing.

Tony Mauro:

Yeah, I think, with a lot of clients for us, they do. They're very negative. And once we run through numbers, we tell them, "Well, it's not that bad." You're going to be able to, for example, live on, you're going to have about 60, 70% of the income you have now. And while that's not a hundred percent, depending on what you want to do and other parts of the plan, you're going to have money to ... worst case scenario, to live the rest of your life and you're not going to have to worry about ...

Speaker 1:

Well, and I think the great news about that, so if you say, okay, 60, 70%, you can go, okay, well cool. What tweaks do we need to make while we're still working? Or I'll work a few more years. I'm okay with doing a few more years if we can make some tweaks and get this up to 90, right, or whatever.

Tony Mauro:

That's what makes it fun is when they know that and they say, well, gosh, that sounds all right, but I want to be at at a hundred percent.

Speaker 1:

Yeah, let's make some changes.

Tony Mauro:

We need a little more. What do we need to do?

Speaker 1:

Yeah, exactly.

Tony Mauro:

That's what a plan will help you with.

Speaker 1:

Yeah. And that's a great point that you made. What kind of rates of return do you need to make it work? Do you have that emergency fund? Is it proper for the time of life that you're in? Lots of little things that you can start to tweak upon if you're in this category. And then we'll finally, we'll just go to that last broad one, and this is the person that's like, I know I have enough money to retire. Clearly, it's pretty obvious. They're confident. They know that they've got enough, but they're still looking for some extra help. They're still looking for, okay, how can I be even more efficient? Maybe they are already in that 90% category of my lifestyle's funded. I'm lucky enough to have two pensions, the wife and I, plus social security, plus we've saved a decent amount, that kind of thing, Tony, but they're looking for some extra icing on the cake, if you will.

Tony Mauro:

Yeah. A lot of things will have them contemplate if they are in this area once we really verify that we think they do. We agree with that.

Speaker 1:

Right, you know for certain, right.

Tony Mauro:

We know for sure. But then we start if they want help, a lot of it has to do with tax planning as rates.

Speaker 1:

That's big one.

Tony Mauro:

Might fluctuate.

Speaker 1:

Yeah. Yeah.

Tony Mauro:

That's a biggie. Is the returns you're earning now or want to earn in retirement going to keep up or be a little ahead of inflation? And I think the biggest one that most clients would love to do if they're able is can they ... especially if they want to leave money for family, do they have enough to hit their goals and only live on the income sources and maybe not the principle?

Speaker 1:

And then that way that's going to the legacy?

Tony Mauro:

And that's going to the legacy because then that's the best of both worlds. But I'll get clients say, that's not important to me-

Speaker 1:

Sure.

Tony Mauro:

And I do want to spend some of my principle and that's fine too.

Speaker 1:

I want to buy all the Tonka toys.

Tony Mauro:

Yeah, yeah.

Speaker 1:

I want the RV and the boat and whatever. Right?

Tony Mauro:

Yeah. And really at that point, with any of them, we try to use, again, some modeling software based on what they have now, some reasonable rates of return, and then longevity so that we can give them those percentages of, if you lived to 95, you've got a 90%, a hundred percent, whatever that percentage is, chance of not running out of money. And if you can get that into the 90s, people feel very confident and secure that, okay, I'm all right now. And it's been explained to me, and as long as I keep on the plan and keep doing what I'm doing and make tweaks along the way, I'm going to be set.

Speaker 1:

That's a good point. And no matter where you're at from a financial number, whether you are like, I've got 500,000 saved and I don't think that's enough, or I've got a million saved and I wonder if that's enough, or I've got $10 million and I know it's enough. Well, your lifestyle will also ... could put you into any of these categories. So that's why you need a strategy because you might have $10 million and somebody would say, 'Well, there's no way you couldn't enjoy retirement." But if your lifestyle is really extravagant, well, maybe $10 million is a problem.

Tony Mauro:

It is. I actually have a client like that.

Speaker 1:

Well, there you go.

Tony Mauro:

The lifestyle is so extravagant. He's going to end up having about $20 million, but we really have to tone him down because if left to his own devices, he would go through it and then some.

Speaker 1:

Yeah.

Tony Mauro:

Which is ... And so yeah, it does depend on lifestyle. Yeah.

Speaker 1:

Absolutely.

Tony Mauro:

Because most of us, oh boy, you have $10 million, you could get ...

Speaker 1:

Oh, if I, yeah, I'd be set, I'd be right as rain.

Tony Mauro:

Yeah.

Speaker 1:

But my lifestyle's pretty easy, right? So if ...

Tony Mauro:

Yeah, your lifestyle's a lot different.

Speaker 1:

Right. And there's nothing wrong with whatever category you find yourself in. It's just a matter of, okay, so once we've identified it, now let's get a good strategy in place to make sure that we lock it in, right? So if you're in the I have no idea, let's find out, let's run the strategy, and then let's get you to the I know I can retire, right? And if you're in the I think I have enough category, then let's just find out, make certain, so that we're putting, tweak and making some tweaks to guarantee that you have the lifestyle that you want through retirement. And then, of course, again, if you're in that I know I have enough, well, then let's just figure out how we can do the icing on the cake.

And maybe that's leaving a bigger legacy or leaving something to your community, charity, whatever the case might be. Lots of different options, whether you're unsure, confident or certain. It's always good to sit down with a qualified professional like the team at Tax Doctor Inc., Tony Mauro and his team, and get started with some of those conversations. So reach out to him. Your planningpros.com. Your planningpros.com. You can subscribe to us on Apple, Google, Spotify, or whatever platform you like using. Just hit the heart button, I believe, on most of those, and that way you catch future episodes as well as you could check out some past episodes. And Tony's been helping families get through retirement for 27-plus years. He's a CPA, a CFP and an EA. Tony, thanks for hanging out with me, buddy. I appreciate it.

Tony Mauro:

All right, we'll see you next time.

Speaker 1:

Yeah, I always appreciate your time, my friend, and have yourself a great couple of weeks. I'll see you a little later in June, and we'll catch you next time here.

Tony Mauro:

Yes.

Speaker 1:

On Plan With The Tax Man.

Disclaimer: Securities offered through Avantax Investment ServicesSM. Member FINRA, S.I.P.C. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency.