Ford and Sam share the quote of the week and discuss the importance of taking action with regards to your financial future. Then, they explain how to defuse the retirement tax bomb inside your portfolio and detail how to convert money into tax-free accounts.
Do you have an income plan for your retirement?
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3.3.23: Audio automatically transcribed by Sonix
3.3.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
Producer:
Welcome to the Active Wealth Show with your host, Ford Stokes. Fort is a fiduciary and licensed financial advisor who places your needs first. He'll help you protect and grow your wealth. The Active Wealth Show has grown because activators like you want to activate their retirement planning with sound tax efficient investing. And now your host, Ford Stokes.
Ford Stokes:
And welcome to the Active Wealth Show Activators. I'm Ford Stokes, your chief financial officer and I've got Sam Davis with us. He's our executive producer. Sam, say hi to everybody.
Producer:
Welcome to the weekend activators. Thank you once again for tuning in to the Active Wealth Show. And if you missed last week's show, don't forget to find us wherever you listen to podcasts or you can always go online to Active Wealth show dot com.
Ford Stokes:
Show.com yeah, we've got a really big show today. So the title of this show is Do you have a Retirement tax bomb? We're working with a lot of folks that come to us in most of their money for their retirement. Money is in an IRA or it's in a 401. K or a 403 B or a 457 or in a SEP IRA or a simple IRA. And if that's you and a majority of your assets are in one of those qualified retirement accounts, then I would encourage you to reach out to us at Active Wealth.com or ActiveWealthShow.com Sam also tell them how they can get in touch with the show and how they can watch any of our episodes. Just let them know how they can always catch the Active Wealth Show even if they miss a radio time here on AM 920.
Producer:
The Answer I think the best way is to go over to ActiveWealthShow.com there you can check out past video episodes. So you're listening to this right now on AM 920. The Answer but you can actually watch the show if you head over to Active Wealth Show.com and check out our videos. Our podcast is available wherever you listen to podcasts. And what's great is once you're on ydl037stg.wpengine.com It's very convenient to go ahead and schedule an appointment, give forward a call and start asking your questions so we can start helping you with your specific situation.
Ford Stokes:
Yeah, we appreciate that. All you've got to do is click that schedule a consultation button or call us at (770) 685-1777. Again (770) 685-1777. Also just a shout out to the activators out there. We've got new data and it's great to see that. You know we continue to be the number one listened to radio show on AM 920. The Answer we thank. You as as an activator for listening to this show and looking to improve your situation, looking to improve your retirement plan. And also we just want to call out and just say, hey, if you're wondering who an activator is, it's somebody who listens to this show. It's somebody who is looking to build a safer and more sound retirement. It's also somebody who wants to build a tax efficient, fee efficient and market efficient portfolio so they can just have a lot more fun during retirement, have more peace of mind, spend more time with their family and friends. Again, we spell love on in our family and also on this show time. So we just want to help you spend more time with your family and friends and spend less time looking at the stock ticker, less time about worrying and wringing your hands. We've got a lot of good stories today to talk about and things you can learn from, but we're going to talk about do you have a retirement tax bomb? We're going to give you tips for diffusing and preventing taxation during retirement. And for our listeners out there, I want you to get in touch with us to get your free copy of our 23 retirement tax cutters for 2023.
Ford Stokes:
It's packed with ideas for hanging on to more of your hard earned and hard saved money. And let me give you the full overview of this week's show. So we're going to have our Quote of the week here right after this. This actual outline for the show, our financial wisdom quote of the week. We're also going to talk about on retirement things to know if you're thinking about going back to work. Also, then, financial help for business owners. If you're self-employed, stick around. We're going to help you if you're self employed, for sure. Diffusing retirement tax bombs. That's the primary focus of this week's show. And we're going to help you prevent future taxation on your hard earned and hard saved retirement dollars, the national debt and unfunded liabilities. A look at the current numbers. Us debt clock Aug and then forced to take a pension. You have options and we'd love to help you. And then also we are offering our free annuity x ray where we will review any annuity you have, even one that you're already taking income from that annuity. You've been taking out the 5 or 10% penalty free withdrawals. We're happy to help you understand how you can maximize your retirement income. You can also get a 10 to 20% bonus on that money and implement a 1035 tax free exchange. We'll talk more about that. Let's go ahead and go into the financial wisdom quote of the week. Sam, why don't you go ahead and share that with our listeners.
Producer:
And now for some financial wisdom, it's time for the Quote of the Week.
Producer:
All right. Ford Normally, our quotes of the week have quite famous authors, but this one is actually unknown. But I think it's a pretty good one. And the quote is be decisive. The road of life is paved with flat squirrels who couldn't make a decision. Definitely paints a picture. And I think that touches on a point that we're constantly trying to make here on the Active Wealth Show. And I've heard you say this so many times before, you really haven't made a decision until you've taken action. And we like to present so much good information to folks here on the Active Wealth Show and help them make a decision which starts with taking action and giving us a call.
Ford Stokes:
Yeah, absolutely. So again, I would encourage you to reach out to us at Active Wealth.com. That's Active Wealth dot com. There's a schedule a consultation button in the upper right corner and we're happy to meet with you. You'll get you'll get the chance to meet with me directly. You won't get passed off to any other advisors that work with Active Wealth. You'll work with me directly. And let me just tell you what you get when you meet with us. So number one is we'll provide a comprehensive consultation at no cost to you, our Active Wealth Show listeners, our activators out there, and it's also no obligation as well. You only work with us and if it's best for you. So we try to give you that $1,500 value absolutely up front at no cost to you. So you can make an informed financial decision about your retirement future. And also, just even if it's your pre retirement future, we also will help you analyze your financial situation. We'll give you a portfolio analysis to understand the risks you're taking, the fees you're paying. Also literally define it in real numbers and real metrics. You'll get an understanding of what your expense ratio is within your portfolio. If you don't know what your expense ratio is within your portfolio, you should visit Active Wealth.com and click that schedule a consult button and we'll go ahead and and meet with you.
Ford Stokes:
No problem. One on one, you'll meet with me directly. Also we'll give you a retirement income gap analysis whether you have a positive income surplus for retirement or you have a negative income gap that you need to fill. Number three is we'll give you a financial plan to your 95th birthday with your current plan that has nothing to do with us and see if that looks like it's going to be successful or not. Number four is we're going to give you a financial plan to your 95th birthday with our recommended portfolios. And number five is we're going to give you a financial plan, your 95th birthday with our recommended portfolios and a an optional Roth ladder conversion plan to kick the IRS out of being your partner in retirement. And you get all five of those things and we give you a bonus. Six The sixth bonus thing that we're going to give you is a Social Security income maximization report, where we take your top 35 earning years and we do the analysis and we give you what if scenarios and when is a good time to turn on your Social Security income benefit plan for you based on your assets, your income, your expenses and your Social Security income benefit amount. And we also help you maximize as a married couple what kind of money you could be making with your Social Security income benefit if you plan correctly.
Ford Stokes:
So I would encourage you to reach out to us at Active Wealth.com. Click that schedule a console button. One of the most important decisions you can make during retirement is when to turn on Social Security. So I would encourage you to reach out to us and don't just make that decision based on you being tired or having fatigue on the subject, or whether you think Social Security is going to be around or not in the future, go ahead and reach out to us. Just on that alone will really help you and save you thousands of dollars in income or lost income. We're going to try to avoid that lost income for you if we can. Now, when we come back from the break, we're going to talk about all this tax bomb issue, like how can we help defuse the tax bomb? You have also, if you're heading back to work, we're going to talk about three important things to know before you retire. You listen to the Active Wealth Show right here on AM 9 to 1 the Answer and come back to learn how you can defuse the tax bomb that's sitting in your IRA. You're listening to Active Wealth Show right here on AM 920. The Answer What's the matter with the clothes I'm wearing?
Producer:
With age comes wisdom and senior discounts. I'm Matt McClure with the Retirement.Radio Network. Powered by AmeriLife. As the old saying goes, everything gets better with age. It's true of a fine wine, a happy marriage and opportunities to save money. People of a certain age can get discounts ranging from 5 or 10% to 25% or more at restaurants, shops and other businesses. Many times they'll promote those extra savings. But Jim Miller, senior editor of Savvy, told Oklahoma's News four, Sometimes you have to be proactive. So the first thing.
Jim Miller:
Is, is you always need to ask, because a lot of businesses and organizations offer senior discounts, but they don't advertise them. So don't be shy about asking to save time.
Producer:
You can search online for lists of up to date senior deals at large retailers like Amazon, Kohl's and more. If you're willing to dive a little deeper, you can find more discounts in a variety of other places. And if you're looking to stay healthy, Silver Sneakers is a program that provides fitness classes for those on Medicare at no cost. That's right. You don't get a bigger discount than free. So are you taking advantage of the big senior discounts you're eligible for? That's a key question to consider. And it's one of the 23 retirement cost cutters for 2023 with the Retirement.Radio Network powered by AmeriLife. I'm Matt McClure to get.
Producer:
Your free copy of 23 retirement cost cutters for 2023, give four to call today at (770) 685-1777 or go online to Active Wealth.com Charlie.
Charlie Kirk:
Charlie Kirk here If you're concerned about your investments rising taxes from the Biden administration then I encourage you to listen to the Active Wealth Show hosted by my good friend Ford Stokes right here on AM 920. The Answer Listen to the Active Wealth Show Saturdays at noon and Sundays at 11 a.m. The Active Wealth Show right here on AM 920. The Answer.
Producer:
Investment Advisory.Services offered through Brookstone Capital Management, LLC, BCM, a registered investment advisor, not an actual client of Active Wealth management.
Ford Stokes:
And welcome back to the Active Wealth Show for segment two of the Active Wealth Show here on AM. 920 The Answer I'm Ford Stokes, your host and chief financial advisor, got Sam Davis with us, our executive producer. And we're talking about do you have a retirement tax bomb? And we've got some tips for defusing and disarming that tax bomb.
Producer:
It's time for an act of wealth.
Ford Stokes:
Roth Converter Because they offer tax free qualified withdrawals. Roth IRAs and Roth conversions can be a critical strategy for diffusing the retirement tax bond that traditional IRAs 401. Ks four three BS 457 and other pre tax savings accounts can set you up for in retirement. Why does this matter? I mean, you may be asking yourself that question as you're driving around heading to Home Depot or Lowes or Publix or Kroger or you're going to a kids or grandkids sporting event today or you're just heading to the golf course, you're asking, hey, you know, why does this really matter for it? Well, it can protect you from future tax increases by the federal government. We've got closing in on $33 trillion in US national debt, according to US debt clock. Question Do you think taxes are going to go up in the future? I do. Sam does. I don't usually speak for Sam, but on this case. In this case, I will. Um. You know, with 30 with head and with over $32 trillion in US national debt, I would encourage you to consider that they're going to have to tax us more to. Help pay for that debt or at least pay for the interest on the debt. There's also unfunded liabilities of $182 trillion according to US debt clock. Org. So that's a lot of money and we've got to do everything we can to. Protect and try to kick the IRS out of being our partner in retirement.
Ford Stokes:
So there's three windows for Roth conversions. The first window for a Roth conversion is the years before enrolling in Medicare. But recall that Medicare means testing has a two year look back. So your income at age 63 determines your Medicare Part B and Part D premiums when you're 65 years young. A prime window for Roth conversions is between retirement and age 62. If you end up triggering Medicare means testing for a year or two while you do Roth conversions, you may find it still worthwhile and you may be able to appeal a medicare. Means testing surcharges through the IRS form SSA Dash 44. Again, that IRS form is SSA. Dash 44. The second window for Roth conversion is between retirement and when you start taking Social Security or pension income. At which your income may be significantly higher and you may want to do smaller Roth conversions. This is an additional argument for deferring Social Security benefits for several years now. We don't want you to put. Extra pressure. And downward pressure on your portfolio with exorbitant. Withdrawal requirements. Again, we want you to try to stay within that 4% rule. If you take no more than 4% of your assets out in a given year, more than likely you won't run out of money. That's kind of the 4% rule. The third window lasts until required minimum distributions or RMDs that begin at age 73. Now it's the Secure Act 2.0 that was signed into law on the 29th of December by the president.
Ford Stokes:
And he is not my president. I'm just going to tell you, not a fan of President Joe Biden, but they did sign that into law on December 29th of 2022, taking up for 2023 the RMD age at 73 years old. If you're still sitting on a retirement tax bomb at that point, the conversion window has probably closed because what you're doing, your Roth conversions that you're taking from your IRA and moving to your Roth IRA do not count as your RMDs. Then you have to take, let's say at age 72, it starts at 4.14% of your assets. You have to take out of your IRA and and and take possession of those assets. You can reinvest part of it, but you've got to pay taxes on that 4.14%. And then you have to do that at your effective tax rate. And what we like to do is do conversions at basically 22% and lower. But you can go all the way up to $364,200 for married filing jointly. And you can go up to $182,100 for a single filer. And so let's say you're making $100,000 a year as a single filer, you can still start converting $82,100 a year. And you can do it at a at a 24% or lower tax bracket. In our progressive tax system, you're going to be converting it like 20.5, 8% on average. I think if you're going all the way up to the top end of the 24% bracket because you're not charged a 24% from dollar one.
Ford Stokes:
Also, there are standard deductions as well for 2023 as there is every year. And those keep going up a little bit because of inflation. And we kind of want to do a listener call out here, you know, are you being forced to take a pension? As you're driving around, are you literally or you're listening to us on Active Wealth Show.com or on our podcast on Google Play or iTunes. If you're current or former employer is requiring you to start taking a pension, we can help you reinvest the monthly income in a tax efficient manner. You have more options than you think and we want to help you make the most of it. If this one sounds like you, let's say you're working for. Ups or or Georgia Pacific or others, and they're not allowing you to take your pension in a lump sum. And they're saying, hey, you need to take the income. Then I would encourage you to get in touch with us at Active Wealth.com or Active Wealth Show.com and let us talk to you about an index universal life insurance policy. It's one of only two tax free investments out there. There's Roth IRAs and life insurance. Those are the only two tax free investment options for you as an American. And they can provide a death benefit to protect your spouse and family should you pass away.
Ford Stokes:
And you also can build cash value that can later become a valuable tax free retirement income stream. And this is for folks that can't take the lump sum. These are folks that, hey, you've got to take this this pension income. Well, instead of taking the 50% survivorship, you know, you're taking less money from your pension. And by the way, they're using a single premium, immediate annuity to to basically fund and implement that pension for you. I would encourage you to take the difference. Let's say it's. 1800 to $2000. Lower that you would get if you have to put your spouse on your pension and it would pay out her, pay her out only 50% of what you're getting now. I would encourage you to just take that 2000 bucks and invest it into an index universal life policy, and then you can build up the cash value and tax free income as well. Or you can put the additional money and start funding a fixed indexed annuity as well. So we can help you either way there. And it's also in guaranteed safe dollars because we don't want you to go to at risk dollars with that money. We want to make sure you have peace of mind and a guarantee in that. So there's a lot of folks that we work with that are being forced to take the pension and they're not they don't have that lump sum capability.
Ford Stokes:
Also, if you are able to take a lump sum, I think AT&T allows you to take a lump sum. We have a lot of folks that work for AT&T here in Atlanta. You can get 10 to 20% on your money. Day one is an immediate bonus that these fixed indexed annuity carriers will give you. Also, we work with triple B plus and above carriers. We work with a plus carriers like nationwide, and they're going to give you a 20% bonus on some of their specific products. And we have access to and I would encourage you to do everything you can to start building that mailbox money. We want our clients to have more mailbox money, paychecks and paychecks that they can count on each and every month to enjoy the retirement lifestyle they've always imagined. Contact us today at Active Wealth.com or Active Wealth Show.com and let's work together to meet your goals. Click that schedule a consult button and we will do everything we can to help you meet your financial goals. It's a it's a really fun process too, because it's something you've worked hard for to build that pension. And wouldn't it be great if that money could last and also be passed on to your heirs? We can help you do that. Also, if you've built a personal pension with an annuity, a fixed indexed annuity, and let's say you bought it 5 or 10 years ago, if you purchased an annuity in the last few years, let's say it's 2 or 3 years or longer and you've got questions about it, you need to give us a call or schedule an appointment with us online at Active Wealth or Active Wealth, show.com so you can receive your free complimentary annuity x ray.
Ford Stokes:
Many annuities allow penalty free withdrawals after two years. Let us also take a look under the hood of your annuity, see what changes could improve your situation. If you haven't seen much growth over the last few years of your annuity, which a lot of people have not, we would love to help you get more out of those funds and so I would encourage you to reach out to us at (770) 685-1777 and I think you're really going to like that annuity x ray and what you can learn. So again, if you listen to our show for six months to two years or three years plus and you've never called us, I would encourage you to go ahead and call us this week. Call us on Monday at (770) 685-1777. Or you can call now. Diane and our team are standing by to take your calls. No problem there. We've got a lot of great information for those business owners out there right here on the Active Wealth Show. Come right back to learn more about how to diffuse that retirement tax bomb you could be sitting on.
Charlie Kirk:
Charlie Kirk here to tell you about Ford Stokes, founder and CEO of Active Wealth Management. Right now, for a limited time, Active Wealth is offering a financial consultation to AM 980. The Answer listeners. Absolutely free. That's a $1,500 value at no cost to you. Active Wealth will show you the hidden fees you're paying. How to potentially save six figures by deleting taxes on your IRA during retirement Visit Active Wealth.com Today Investment.
Producer:
Advisory services offered through Brookstone Capital Management, LLC BCM a registered investment advisor, not an actual client of Active Wealth management.
Producer:
Listen to the number one show on the weekends on AM 980. The Answer to Protect and Grow Your Hard Earned Money. The Act of Wealth show with Ford Stokes, your chief financial advisor Saturdays at 12 noon and Sundays at 11 a.m..
Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy. Thanks so much for listening to the Active Wealth Show. Make sure to rate us everywhere you listen to podcasts, including Spotify.
Ford Stokes:
And welcome back Activators, the Active Wealth Show on Ford Stokes, your chief financial advisor joined by Sam Davis. And we were just talking about the annuity x ray and and then what we offer to people. But I wanted to just give you a quick story. So we had a listener. His name is David. He's married to a really neat lady named Judy, and they have an annuity that's three years old and they got a nice 15% bonus three years ago on that annuity. And it hasn't done much other than the bonus because of what happened in 2022 and timing wise and everything else. They just felt like and also COVID 19 because they bought it basically in January 3rd years ago. And there's an opportunity for them to take 20% out because they haven't taken any withdrawals over the three years. And so they're going to take 125 grand and out of their annuity and they're going to put it into a new annuity and they're going to go from a participation rate in a Janus Fund index that's only 35%. The annuity company had reduced the participation rate to 35% of how that Janus Fund does. And because the US Treasuries have gone up so much, they're going to be able to put it into a new product with nationwide that's going to give them a 20% bonus. And then and they're they're taking a 20% surrender from this large policy. They've got like 660 plus thousand dollars in this policy, and they're going to end up placing it into this new nationwide.
Ford Stokes:
They're going to take 20% of it. So 125 grand plus. And they're going to put it in this new nationwide product. They're going to get a 20% bonus, but they're going to have a 345% participation rate in the BNP Paribas Global Factor Index. And that Global H factor index actually follows global health care, which if you think about it, is a really good index to follow if you're a retiree and to be invested in because if if you're going gonna have to pay more money for health care as you're getting older it'd be really good for your investments to keep pace with that with health care And so they're super excited about that and they're just taking one fifth of their of their annuity and the value of it. And they're doing a 1035 exchange, which is a tax free exchange. So there's no tax event there. And then they can then invest it into this new nationwide product. I would encourage you, if you're listening to this out of my voice and you're driving around Atlanta or you're listening to us on our podcast, I would encourage you to go ahead and call us at (770) 685-1777. Again (770) 685-1777. Or visit Active Wealth.com and click that schedule a consultation button in the upper right corner and we will work with you directly on an annuity x ray to dive into your annuities and see what the situation is. So I hope that helps explain what kind of happens with annuity x ray. We'll look at the value of your of your annuity. We'll look at what kind of penalty free withdrawal we can take.
Ford Stokes:
And we'll also try to maximize what that looks like going forward for you and give you different options. David and Judy were able to look at three different options they really liked and and they went with the one that had the highest participation rate and the highest bonus because they felt like that was a good thing to do. And they're going to make $24,000 more than what they would have had they not moved it. So. Go ahead and give us a call at (770) 685-1777 for your free annuity x ray. Also, let's talk about heading back to work. Some folks are heading back to work because of market downturns or whatever's happened. And there's three important things to know before you retire. And this kind of comes from cnbc.com. That's our source for this information. But for some retirees heading back to work is emerged as an aspiration. Roughly 1 in 6 retired Americans say they are mulling over whether to get a job, according to a recent study from Paychex. The top reasons cited by people surveyed for the report were personal reasons. 57% needing more money was 53% getting bored again, 52% of the respondents said they were getting bored. Feeling lonely was 45% and inflation was 45%. Obviously these are different studies and whatever, but I thought it was really interesting. Tip one if you don't need the income, consider a low stress job. If your reasons for considering work are non financial, you're not alone. If you're seeking work for fulfillment, it's worth considering a job that is low stress and provides some flexibility whether you need the income or not.
Ford Stokes:
It's also important to know the impact it can have on other parts of your financial picture. Tip two Extra pay can shrink Social Security income for early claimers. If you tap Social Security early and are not yet at your full retirement age or FRA, as they call it, at Social Security Administration. As defined by the government. Wage income could temporarily reduce your benefits, at least until you reach that age, which is either 66 or 67. For our listeners here, depending on your birth year. If you were born after 1960, your full retirement age is 67 years old. Or a little bit, maybe 67in a month or two. While delaying Social Security for as long as possible means a higher monthly check. So the longer you wait, the more you're going to make. Also, just. Keep in mind out there, you get an 8% roll up every year. You wait after your full retirement age. So let's say your full retirement age was 67 years old. You wait another year to 68. Your Social Security income benefit check is going to be 8% higher. So the longer you wait, the more you're going to make from Social Security. But. You want to be careful you're not exceeding that 4% withdrawal rate. Many people take Social Security as soon as they can, usually at age 62.5 or soon thereafter. If you do start getting those monthly checks in early. There's a limit on how much you can earn from working without your benefits being affected.
Ford Stokes:
For 2023, that cap is $21,240. For every $2 over the limit, $1 is withheld from your benefits. Now, when you get past your full retirement age for every $3 over the limit, one is withheld from benefits. So you've got a much better situation there if you're going to work after that. Tip three Medicare premiums could be affected in addition to extra income from a job potentially pushing you into a higher tax bracket. It could also trigger additional costs for Medicare. Basically, higher earners pay a premium surcharge for Medicare Part B, which is the outpatient physician coverage. Part D, which is the prescription drug coverage, which is the only thing that makes sense with Medicare, by the way. Part D does make sense that it is for drug coverage. The extra charges start at income above 97,000 for individuals and 194,000 for married couples who file joint returns. If you get health insurance through your job as a retiree, you may be able to drop Medicare if it makes sense to do so, depending on the specifics of your situation, a lot of people let Medicare Part A. Be the primary and Medicare Part B. Medicare would then be the secondary and the and the company would be the primary on the Medicare Part B and sometimes on the Medicare Part D, just for in-network use and also make sure that their drugs are on formulary at their local pharmacy as well. And they feel like they get better coverage. And and the company has helped funding the burden.
Ford Stokes:
And when we come back from the break, we're going to talk about how we can help business owners and the self-employed. We're going to talk about financial consultations that we give to business owners and the self-employed. I'll just tell you that we work with pre-retirees, retirees, business owners, widows. You know, single females, married couples looking to retire or are already retired. And they all have one thing in common. They all have one check to last them the rest of their lives. And we want to do everything we can to protect and grow the money that is in their nest egg that's with that one check. And so we'll talk more about how we can help with financial consults, but also. You know, with that annuity x ray, we've got more information about how we can help you build your own personal pension because we're going to play a chapter from my book, Annuity 360 How to Build Your Own Personal Pension. In Segment four, you're going to come back and learn about that and also how to improve. If you've already got an annuity, you're already building your own personal pension. I would encourage you to listen to Segment four and come back for Segment four because you're going to hear about how you can build your own personal pension in a tax efficient, fee efficient and market efficient way. Using the Active Wealth Show right here on AM 920. The Answer Come right back to learn how you can build your own personal pension.
Producer:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer. When it comes to saving for retirement, who is winning the battle of the Sexes? I'm Matt McClure with the Retirement.Radio Network Powered by Emperor Life. The gender gap is a real thing in the US, with women making less money on average compared to men. Congress passed the landmark Title nine law more than 50 years ago prohibiting gender based discrimination in education, and that resulted in women pursuing careers that had previously been considered off limits. And while females have made strides over the years when it comes to finances, a new study from TIAA shows it's men who are setting aside more money for retirement, 27% more, to be specific. And while that number is better than in years past, it's still a significant gap.
Stephanie Asympko:
And in the past year, 78% of men have increased their retirement portfolios through stocks, compared with 51% of females. And now this imbalance really underscores not only the gender wage gap, but it also has really far reaching implications for long term retirement security.
Producer:
Stephanie Asymco is with Yahoo! Finance, recently reported on the gender gap in retirement savings.
Stephanie Asympko:
When stretched over the course of a career. A woman's lower wages really directly impact her ability to save for that nest egg and then live comfortably in retirement.
Producer:
And she says the pandemic surely didn't help the situation. In fact, it got worse.
Stephanie Asympko:
Because of the pandemic. A preponderance of women have downshifted, taking time away from work to really concentrate on, you know, these pandemic measures of supervising remote schooling for children or caring for aging parents.
Producer:
The TIAA study also showed women have some catching up to do when it comes to financial literacy. When asked financial questions in a survey, women got 45% of them right, compared to 55% for men. Ann Olin with TIAA told CNBC that all of this underscores the need to equalize financial education among the sexes. So women, do you have a sound retirement plan in place? That's a key question to consider as all of our retirement years draw closer with the Retirement.Radio Network powered by Amara Life. I'm Matt McClure.
Ford Stokes:
And welcome back. Activators the Active Wealth Show. I'm Ford Stokes your chief financial advisor got Sam Davis here on the board as our executive producer. So we're going to talk about how to build a personal pension. We're going to play the chapter on how to build your personal pension. From my book, Annuity 360. All you have to do to get this book is to visit annuity 360.net. That's annuity 360.net and you're going to be able to. Learn all you need to know about annuities, which ones to avoid and which one to buy for successful retirement. And I think you're really going to like this. What's great about building your own personal pension with a fixed indexed annuity? It's superior to what you've got with a CPA or a single premium immediate annuity, which is what a lot of the companies are using to implement their regular pension that they offer to employees. There's less than 16% of all S&P 500 companies still offer a pension. Everything's kind of moved to the 401. K, but if you've still got a pension, you've got an opportunity to take a lump sum and also get a 10 to 20% bonus on it and also get market like gains without market risk and eliminate any advisory fees and portfolio fees all at the same time with one product. So I would encourage you to give us a call at (770) 685-1777. Again, that's (770) 685-1777. In case you're curious about an annuity x ray, you're curious about building your own personal pension. Also, you want a tactically managed portfolio with tactical asset allocation.
Ford Stokes:
We offer that. We do that with a majority of the assets we work with, but we also offer some smart, safe money with fixed indexed annuities as well. And we encourage you to go ahead and reach out to us at Active Wealth.com and click that schedule a consult button. So Sam, let's go ahead and play my chapter on how to build your own personal pension. Chapter nine. You can create your own personal pension. Big idea. Using an annuity to create a personal pension helps you create a lifetime income stream, but it also helps you leave a legacy for your beneficiaries. All annuities can create annuity income to supplement the income you need before or during retirement. Those who are approaching retirement are afraid that they will run out of money. But an annuity can help make sure you have income you can never outlive. An annuity can be a great investment for your portfolio, but I encourage you to be careful that you don't overpay for your annuity. When you put your money into an annuity, the annuity company will pay you your money back at a date. You specify you don't want an annuity company to charge you too much to simply pay your money back to you. I'm confident that leaving a remarkable family legacy is important to you. You likely want to have money left over when you pass away to leave your beneficiary. The goal of a personal pension is to generate lifetime income with no risk that grows your money and allows penalty free withdrawals.
Ford Stokes:
An annuity can create a lifetime income with market like gains and no market risk, while also allowing you to build enough wealth to leave for your beneficiaries when you pass away. Don't give the annuity company fees for doing nothing. We prefer fixed indexed annuities for our clients that do not have an income rider fee. But you can still create a personal pension without an income rider on your annuity. If you get an annuity with an income rider, but don't utilize the features of that income rider, then you are not getting what you paid for. You are literally just paying the annuity company 1 to 2% each year. You defer annuity paying your annuity without receiving a single benefit for that annual fee. This income rider fee will also draw down your account value or principal, depending on how that index is performing. The growth on your entire account value could be significantly and negatively impacted. Some accumulation focused annuities are built to deliver increasing payments. Without an income rider, you should consider the features your income rider is providing you before deciding to purchase it. As an add on. Make sure you utilize the features you are paying for more ways to get the most out of your annuity. The longer you wait to turn on the annuity, the more you'll receive an annual payments. This is because your annuity will spend a longer time in the accumulation phase, meaning it will spend more time building up your account value. Your annual payments will grow as your account value grows.
Ford Stokes:
Believe it or not, you can generate your own personal pension by distributing no more than 5% a year with penalty free withdrawals from your accumulation based annuity policy. Many accumulation annuities are set up to be RMD friendly so you won't suffer a penalty when you have to take your RMD. It would be silly for you to be penalized for something you are required to do. Annuity companies take this into account by creating products that make taking your RMDs easier. Inspect what you expect with any annuity. Don't just go with what the annuity agent or advisor tells you. Read it for yourself Specifically, you should read the annuity illustration guaranteed and non-guaranteed tables included within the annuity illustration. Also, please remember that annuity policy is a contract between you and the annuity company. So caveat emptor or buyer beware applies here. Be aware of the annuity you are buying and choose an annuity that works best for you that will help you build a successful retirement and they'll offer you peace of mind. Whether you choose to generate income through penalty free withdrawals or invest annually in an income rider. Know the. Consequences of both. This is a decision you will make at the beginning of the investment process. One poor decision here can cost you 1 to 1.5% of annual growth over a 30 year retirement. This could come out to be a significant loss. Educate yourself on your options and the specifics of each option you are considering. Making the right decision up front will save you a lot of frustration in the long run.
Ford Stokes:
Also, please remember that if you withdraw too much annually, say 10%, you will run out of money in 10 to 12 years. Make sure that you are working with an advisor who can help you choose the appropriate withdrawal amount so that your money lasts for your entire lifetime. As discussed above, we recommend no more than 5% be withdrawn each year from your account. Now let's talk about what we can do for business owners. So we do give financial consults for business owners in the self-employed. One thing as a business owner, I would encourage you to do is do everything that you can to pay yourself first. Get a sep Ira. If you've got an LLC or an S Corp or a C corp. I would encourage you to do everything you can to establish a Sep IRA, which is a simplified employee pension, individual retirement account. That's what those six letters stand for. Sep Space. Ira. A Sep. Ira. And pay yourself first. Pay yourself 25%, the first 25% of every dollar you make up to. $63,000 a year, you get to do 25% or up to $63,000. You can set money away and you're going to be so much better off because you're going to have a plan. And we we work with a lot of business owners. I just talked to a construction contractor who's been putting so much of his money back into his business for the last 30 years. But his wife's got a pension.
Ford Stokes:
She's been working. I mean, she's got a 401. K, she's been working for a long time. And thank God she did because he didn't have a Sep IRA for the last 30 years. And it's one of his biggest regrets. And I would encourage you to learn from his mistake and go ahead and try to get your own SEP Ira. But if you're self-employed and have a stack of 1090 nines and other tax documents this time of year, don't look past the importance of working with a financial planner like myself. I'm a fiduciary. I'm going to put your needs ahead of my own. Also, advisors and financial professionals can help you navigate the unique challenges of being a business owner and take advantage of retirement savings strategies that are specifically made for you. Again, that's SEP Ira. If this sounds like you, we recommend forming your own LLC and and paying for yourself first each month while also making regular contributions to the right tax advantaged retirement plans. Here's another tip Make your retirement savings contributions monthly rather than all at once. To reduce and manage your risk. You're going to have dollar cost averaging where you put a little bit money in every single month and you'll reduce your risk. The bottom line is if you're a business owner, you need to begin by consulting with a financial professional or advisor. Operating your own business is challenging enough. Let us help you chart a course for your retirement and start setting up your own retirement income plan. It's the final.
Producer:
Countdown. So let's recap what you may have missed. It's the final..
Ford Stokes:
On this week's show, we talked about diffusing that retirement tax bomb with a Roth IRA conversion or life insurance or other things. If a majority of your money is sitting in a retirement account in a 401. K. 403 B Ira. 457 Simple. Ira Sep. Ira, We can help you diffuse that tax bomb by implementing a Roth ladder conversion in three different phases of your life, starting even in your 50s. We can help you with that. Thanks so much for listening to the Active Wealth Show. Have a great week, everybody. We're going to talk about how to maximize your 549 accounts with your kids for their college funding on next week's show. Have a great week, everybody.
Producer:
Thanks for listening to the Active Wealth Show. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets. To schedule your free consultation, call your Chief financial advisor, Ford Stokes at (770) 685-1777 or visit Active Wealth.com.
Producer:
Investment Advisory services offered through Brookstone Capital Management, LLC BCM a registered investment Advisor. Bcm and Active Wealth Management are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results.
Producer:
Registered Investment Advisors and Investment Advisor Representatives act as fiduciaries for all of our investment management clients, we have an obligation to act in the best interests of our clients and to make full disclosures of any conflicts of interest. If any exist. Refer to our firm brochure the ADV to a page four for additional information. Any comments regarding safe and secure products and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company and are not offered by BWR.
Producer:
Are you concerned about US tax rates being raised by the Biden administration and how that will affect your retirement? Tune in to the Active Wealth Show with Ford Stokes, your chief financial advisor, to learn how you can reduce the taxes you pay before and during retirement. The Active Wealth Show Saturdays at noon and Sundays at 11 a.m..
Charlie Kirk:
It's more important than ever for conservatives to stick together. That's why I recommend you to reach out to a fellow conservative Ford Stokes of Active Wealth Management. Active Wealth is offering listeners a free financial consultation worth over $1,500. This free report will show you the fees you're paying, the risks you're taking with your current portfolio and can help you maximize Social Security benefits. Visit Active Wealth.com today.
Producer:
Investment Advisory Services offered through Brookstone Capital Management, LLC BCM a registered investment advisor, not an actual client of Active Wealth management.
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