Retirement Tax Traps: How to Avoid Costly Mistakes

8.15.25: Audio automatically transcribed by Sonix

8.15.25: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
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.

Speaker2:
Welcome to Retirement Results, the national radio show and podcast for listeners like you who want to protect and grow their hard earned money. In a world filled with so much uncertainty and financial risk, we seek to cut through the noise and build successful plans for hardworking Americans on their road to financial freedom. Retirement results is powered by Active Wealth Management, a team of fiduciary advisors who always place your needs first and now your host. He's a registered social security analyst, member of the Forbes Finance Council, and author of multiple books on retirement planning. Here's your chief financial advisor, Ford Stokes.

Speaker3:
Welcome to retirement. Results. Result. Drivers on Ford Stokes, chief financial advisor. And we've got a special co-host today. We've got Matt McClure again for week two because Sam Davis decided he was going to go to Europe for two weeks. Here on the mic with me.

Speaker4:
Hello everybody, and welcome to the weekend. You know, I mean, I am just jealous of it's like the last two weeks have been all weekends for him.

Speaker3:
We've had some rain and stuff while he's been gone and it's humid. He needs to just come on back and enjoy the August weather with us instead.

Speaker4:
I know instead of being in Europe, you know, living living his best life.

Speaker3:
Yeah. Having like 60 degree weather and stuff. So whatever. So yeah, good for him but better for us that we're here on this show today. We're here to help you avoid those retirement tax traps. And we're going to go into all of that today. We're going to try to help you make sure you don't let your retirement savings fall into one of those common tax traps. Matt and I both want to thank everybody for making us the number one listen to radio show on Am 920. The answer on the weekends. Sam will be back next week, but it's always great to have our roving reporter here on with us too. And again, a reminder, you know, Matt has our office down in midtown. He also works quite a bit out of Hall County in Gwinnett County, and we're looking to add an office in Hall County in Gwinnett County. So you ought to give us a call at (770) 685-1777. Again, that number is (770) 685-1777 or visit retirement results.com. You can click that schedule a consultation button in the upper right corner, and you'll get booked directly into our calendars. And then one other way to get in touch with us you can go to Retirement results.com plan. That's retirement results.com. And we're happy to help. You also want to give a shout out to all the folks where Matt got his start up at WD one. Matt used to be on the radio at WD one, graduated up, and actually was the anchor on and the reporter on the floor of the New York Stock Exchange for about a year and a half to two years up there in New York for New York one, and came back down here with us as a licensed financial advisor. And it's just great to have somebody that's got all that media experience, but also really likes to help people.

Speaker4:
Yeah, no, just a great group of people. The folks at Jacobs Media are wonderful. And really. Let's see how old was I? I was 22 when I was when I was at DUI.

Speaker3:
A minute ago.

Speaker4:
Just a few years ago. A few gray hairs ago. Um, right. But, you know, I mean, but I look back on it with, with a lot of fondness and there are a lot of great people who are there who are still there all these many, many years later. Um, but no, it's a it's a great group. And we love the fact that, as you said, for they have really just welcomed us on and embraced the show and, you know, spreading the word about all of the things that we talk about. You know, how to protect and grow your hard earned money. How to make sure that you've got an income that you'll never outlive. Doing all of those things, being able to spread that to a new audience in Northeast Georgia is such a privilege. I think it's a great thing. And also, as you said, for me, it's all about just it's helping people. I love to to help people. And if I can help clear away cobwebs about issues that are confusing or seem overwhelming to folks. It's what I love to do. And I'm just glad that we're able to do it here on on the radio, not only on Am 920 the answer, but on one.

Speaker3:
Yeah, it's good stuff. You and I have been able to do some seminars over at Spout Springs Library, and we're going to get those cranking again here in the fall, so be on the lookout for those. But if you want to meet with Matt directly, I would encourage you to go ahead and reach out to us at (770) 685-1777. Also, I'll give you his email address as well. It's Matt at Wealth com and it is great to have somebody who's actually been on the floor of the New York Stock Exchange, who is a licensed financial advisor, who's kind of seen how it all works. And it also really does a great job at protecting, growing the hard earned and hard saved wealth of his clients. So go ahead and reach out to us, and we'll get you in touch with Matt or myself this week, for sure. Diane and her team are standing by on Saturday and Sunday to take your calls, so we're happy to do that. And we'll take your information and make sure that Matt get in touch with you on Sunday or Monday morning and we'll go from there. But, you know, there's lots of ways for people to see you out of Hall County, also out of Midtown and the Gwinnett area. You're kind of all over the place in Atlanta taking care of a lot of folks. So, um, it's really neat to kind of have somebody that that lives in their family home in Hall County, um, work so hard. And also, I know you you spent a lot of time in Midtown as well. Uh, you and Josh do a great job reaching out to everybody in midtown.

Speaker3:
Really excited about about this show and excited about having you on with us. But you guys reach out to Matt and let's get this thing going. And don't just be a long time listener and a no time call, or let's be that first time caller and go ahead and reach out to us. Um, but I'm going to give you an overview of today's show. And then, Matt, you're going to give us our financial wisdom quote of the week. So on today's show we're going to talk about navigating tax traps in retirement. We want to make sure you're not falling victim to these common tax traps that are many retirees are unaware of. Also. We're going to ask the question of is Social Security really tax free? We'll clear up the confusion and tell you what the big beautiful bill actually says. It does say that you get a $6,000 deduction for each of you in a marriage. So it would be 12,000 total. As an example, or a 6000 for an individual filer. Also we're going to talk about just helping you understand capital gains rates, different tax rates for capital gains that could affect your retirement more than you realize. And we'll also discuss some of the pitfalls that can happen with Roth conversions, and how doing too much in one year can actually backfire a little bit. We want to try to do Roth conversions over a 7 to 10 year period, not over a 2 to 3 year period as an example. Matt, why don't you go ahead and share this week's financial wisdom quote of the week.

Speaker5:
And now for some financial wisdom. It's time for the quote of the week.

Speaker4:
It's from John Maynard Keynes, who you may or may know. That name sounds very familiar to anyone who knows anything about, uh, you know, sort of modern, uh, portfolio theory and, uh, just, you know, money in general these days. But I love this quote. And it says a lot for this week's topic as well. Kane said the avoidance of taxes is the only intellectual pursuit that still carries any reward. I love that.

Speaker3:
That is so great. I'm am a Keynesian and I really love following Art Laffer and Thomas Sowell and others. Um, but you know, I'm a supply sider for sure. And, uh, he's exactly right. If you can avoid the taxes, it's a it's a it's a guarantee. It's a guarantee that you're not going to pay the money if you're going to avoid them versus if you're investing in the market, it's not necessarily guaranteed. So it's kind of one of those deals there. So let's kind of talk through avoiding those common traps for smoother retirement journey. And and Matt why don't you give those to us one at a time. And I'll try to I'll try to give some color to each one.

Speaker4:
Yeah. Sure thing. I mean, and this is an important conversation to have, right? Because, you know, as you are approaching retirement or if you're already enjoying your retirement, you've got to manage your finances effectively. And that that becomes increasingly important. And a big aspect of it is taxes. I mean, retirement taxes can be very complicated and understanding and planning for that, doing that in a strategic sort of way for those tax implications can have a big impact on your financial comfort and your security in your golden years. So let's explore some of these strategies here. Number one, and we'll talk more in depth about this later in the show. But just to kind of hit the the topic, uh, first of all, in a, in a shallower way, and we'll do the deep dive in just a bit. But strategic Roth conversions, um, one way to to really effectively manage your taxes in retirement is through Roth conversions. But they've got to be done the right way, right. They it involves converting a portion of your traditional IRA or your 401 K into a Roth. And the big benefit there is yeah. You know, you're going to pay the taxes now on the converted amount upfront. But future withdrawals are tax free. So that means that the growth is going to be tax free. And then any withdrawals that you take out later on down the road, those are tax free as well. And that can really be a big deal if you anticipate being in a higher tax bracket later in retirement, or if you want to leave tax free assets to your heirs. I think that's also a good thing to to think about and plan for. Right.

Speaker3:
Yeah. One thing we want to do is we don't want to do conversions at 32%. So we want to try to stay below the $394,600 level. That's the start of the 32% tax bracket for married couples filing jointly. For individual filers, that starts at $197,300, which is exactly 50% of what it is for the joint returns. So let's do a really good job at trying to stay below the 32% level. We might be willing to do some conversions at 22 to 24%, but we're going to try to avoid doing them at 32%. You kind of want to stretch those out. One other big hint, and we'll do a deeper dive later in the show. But one big hint when you're moving money from your IRA, your Roth IRA, we like to move money dollar for dollar. So if you're taking if you're going to do a $100,000 conversion, which is a lot of money, it's a chunk. But if you want to do a $100,000 conversion for your IRA or Roth IRA, what we would like to do. Let's say you're in a 22% bracket. We'd like to take $22,000 on that $100,000 conversion, and take that from an investable account or an actual checking account, or, or invest in any type of account out there. If it's a collection of rental income and sitting in a savings account or whatever, we want to use the tax. Use that money to pay the taxes. We're using taxable money to pay the taxes on the tax deferred money that then ends up becoming tax free. So that way when our IRA is depleted by 100 grand, we're putting at least $100,000 into the Roth IRA plus the growth. So something to consider there.

Speaker4:
Exactly. And we've got more retirement pitfalls, tax traps that you could fall into to talk about when we come back on the other side of this break. You're listening to retirement results on Am 920. The answer and one.

Speaker2:
Call (770) 685-1777 to schedule your free, no obligation meeting with us today. You're listening to retirement results.

Speaker6:
For me, could never die.

Speaker2:
Schedule your free, no obligation consultation today by visiting retirement results. Com. Now back to the show.

Speaker3:
And welcome back. Result drivers to retirement results on Fort Stokes. Chief Financial advisor got Matt McClure filling in for Sam Davis today. He's Matt's one of our senior financial advisors as well. And a co-host and or our roving reporter on the show. You can usually hear his his stories each and every week here on retirement results. And it's also nice to have, Matt, we've talked about in the first segment. You know, Matt used to be a reporter on the floor of the New York Stock Exchange for New York. One. Um. On television. So it's always great to have him here. And he's a licensed financial advisor and licensed life and health agent as well. So he's here to help you just like I am. So we're happy to get going there. But we're talking about avoiding common traps for a smoother retirement journey. And specifically we're talking about some tax situations here. Matt, you were talking about tax diversification, making sure that people kind of have that right mix of account types. Let's go ahead and dive into tax diversification and spreading that financial risk across your portfolio.

Speaker4:
Yeah you've got kind of three different buckets here in you know from a tax treatment standpoint. I always say my my favorite kind of money is free money. My second kind of favorite kind of money is tax free money. Right. So that's one of the buckets. There would be tax free. The other two are taxable and tax deferred. Now tax deferred would be like your traditional IRAs your 401 K's. Things like that. Tax free. That's going to be like your Roth IRAs, like we were talking about before the break. And we'll talk about more in just a little bit. So if you keep your mix of those different account types, that'll really help you manage that tax liability in retirement and being diversified in that way. You know, people often think, oh, well, I'm diversified. I have, you know, my my stocks in different asset classes or whatever. Well, this is a different kind of diversification. This is tax diversification. And that really gives you flexibility to manage your income and your taxes in your retirement years.

Speaker3:
Yeah. Like we said in the last segment, we like using taxable money to pay the taxes. When we're moving money from tax deferred to tax free. Let's try to do that. The more money you can get into that tax free bucket, the better off you're going to be. Um, also remember when you've got IRAs and four one K's and a lot of people, Matt, come to us and I just had a lady in her and her husband. He he flies for Delta and she actually is, uh, a medical, um, reimbursement specialist. And and she does all the accounts payable stuff for, um, a major, major, um, health system. And she just told me she's like, you know, I the one thing I wish we could have figured out is we had all of our money in IRAs and four one K's, and we haven't really built the investment stuff. We put a lot of money into our house. They're in a great house, you know, on the lake down there. Um, but they're they're just really concerned that they don't have the, the investment accounts. And also they don't have the Roth because they've make too much money and they're really got, you know, they really got a road to hoe a little bit when they're doing Roth conversions and they're in their early 50s. And so, uh, you know, just let's try to get to as, as close to Roth IRAs and the tax free buckets as we can. And remember, one of the nicest things you're going to be able to give your kids is an inherited Roth IRA versus an inherited IRA, but also when you're taking money out of a Roth IRA for that, for that Viking River cruise, let's say you're taking out $20,000. It's going to feel a lot better than if you're taking it out of an IRA, and you've got to pay the taxes on it.

Speaker4:
Yeah. For for sure that that's definitely going to be less of a, of a burden on you and less of a burden emotionally as well on you, a lot less stress. But yeah, I mean, you know, you've got to have that tax diversification there. And then number three on this list of potential tax pitfalls for you withdrawal sequencing, you got to do that right. And if you do that correctly you can minimize your tax burden. And it really has to do with the order that you withdraw from different accounts. It can significantly have an impact on your situation. A general rule of thumb. Now, obviously it could be a little bit different for your individual situation, and that's why you can go to retirement results and reach out, get that initial consultation set up because then we'll look at your individual situation, right. But a general rule of thumb here is to withdraw from those taxable accounts first. Then you follow that with those tax deferred accounts. So the 401 K the IRA and the like 403 B etc., etc. TSP if you're federal. And then finally the tax free account. So your Roths would be last. And that strategy actually does a couple of things that can help minimize taxes, potentially keep you in that lower tax bracket. And also it means that your tax free money has the longest amount of time to grow. And so you've got this bigger tax free bucket later on in your retirement years.

Speaker3:
Yeah. Also one thing we like to see is like if you can move some of your assets over from your tax deferred bucket into your tax free bucket and then use the taxable account money to to pay the taxes on it. But let's say the the market was down a little bit just like it happened in mid August. You could move those assets over in kind. And then when the market recovers you're paying the taxes on the, the the assets when they moved over and what the value was when they moved over. But when the market recovers, that's a good way to avoid some some additional taxes that you may have had to pay. So you may want to look at an in-kind, um, conversion as well. Um, and we can walk you through that. All you got to do is visit us at retirement results. Com forward slash plan. That's retirement results. Com for a n.

Speaker4:
Yeah. Easy as that. Uh, number four here is a QCD. That is something that we talk about and maybe not as often as some of these other concepts. So you say what's a QCD. Well it is a qualified charitable distribution. And it's a good way for you if you're very philanthropic as well, and you want to contribute to a cause. If you want to support a cause, or if you want to support your church, or if you want to support some organization, that means a lot to you. If you're 70.5 or older and make charitable donations, consider using qualified charitable distributions to allow you to donate money directly from your IRA to a qualified charity, and that'll satisfy your RMD. That required minimum distribution that you you would have without increasing your taxable income. And that can really be a big benefit for reducing your tax liability and supporting a cause that you really care about. Like I say, it can be, you know, your church. It can be whatever charity you want to support, as long as it is a, you know, a qualified charity, as long as it is a it is a properly licensed charity, then absolutely, you can do that and not have that tax burden. Um, and and feel good about it at the same time, because you know that the money's going somewhere that you're going to feel good about.

Speaker3:
Yeah, we have a lot of high net worth individuals that kind of utilize QCD, but they're the ones that really don't need a vast majority of their R&D where they would have reinvested it as well. And they've got a charitable goal that they want to make sure that they're investing in. Let's say it's a half a percent or something of what their distributions are or whatever that looks like. It could be what the charity needs for that year, just like a church may need. Um, you know, they may have a capital campaign, things like that, or, you know, other things like, you know, food kitchens and other things that can be out there to help. So, um, just QCD are a great way to, to try to really maximize the donation you're giving and also minimize, um, your taxable income. It also is going to help you with Irma as well and keep those Medicare surcharges down.

Speaker4:
Yes. Irma is not your friend. Um, and then number five tax trap here that we want to avoid. We're going to tell you about is don't don't miss time your Social security benefits. Make sure that you are doing it to maximize your Social Security benefits here. The timing of when you can actually claim Social Security benefits, or when you do claim Social Security can have a big tax implication, tell you why. So your benefits could be subject to income tax depending on your combined income, including tax exempt interest and delaying Social Security benefits can not only increase your monthly benefit. So if you wait all the way until age 70, you would receive a 124%, um, of the amount that you would receive at your full retirement age if it's 67. So, you know, delaying that can increase your monthly benefit amount, but it can also potentially reduce the tax burden on your benefits if you have other sources of income early on in your years of retirement.

Speaker3:
Yeah. Also, remember, there's a two year look back, um, on income for Medicare as well. So you do want to plan this out. We like to see people get to their full retirement age if they can at least get to 65. Let's don't take it at 62.5. Again, Matt and I are both registered social security analyst. That's for a reason. We're two of 24 registered social security analyst in the state of Georgia. Um, so we're almost 10% of the actual registered Social Security analysts, the state of Georgia on this radio show right now. So I would encourage you to reach out to us at (770) 685-1777. Matt and I love running RSA roadmaps. It's so fun. We plug in your XML files. You'll get that x ray Mary Lima file. It stands for XML. It's the link right below your PDF download link on the statement. And we'll get that, um, get those going to for you. And we'll give you four different options on when you can take Social Security for individual flowers, but also for couples. And there's a lot of things you can do with spousal benefits and survivor benefits and other things that you may not be aware of. And I would encourage you to reach out to us at (770) 685-1777, and we're happy to help you get going to maximize your Social Security income.

Speaker4:
Yeah. Absolutely. Right. And, you know, that's a great thing to mention just here as we are about ready to go to our break. Um, you know, reach out because a lot of people don't even realize how much the choices that they make on the Social Security timing, how big of a difference that can make for them, for their spouse, for their family, potentially like it is a big, big deal. So make sure and get that right, and we'll be happy to run that free, um, roadmap for you. That will show you what the best options are for you and your family. All right. Stick around. Much more retirement results to come right after this.

Speaker2:
We'll be back in just a moment to continue helping you navigate your financial journey. Stay tuned for more retirement results.

Speaker7:
So you ain't seen nothing more than to be changing in ways. Imagine me. I was a real young widow. Times I can reminisce. All the best things to love them with.

Speaker1:
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.

Speaker2:
Get started on your free portfolio analysis and financial plan right now by visiting Retirement results.com.

Speaker3:
And welcome back to Retirement Results with drivers. I'm Ford Stokes for chief financial Advisor. And I've got Matt McClure here with us as a co-host filling in for Sam Davis. Matt is our roving reporter. Um, he's also a guy that was on the floor of the New York Stock Exchange as an anchor for over a year and a half to two years with New York one and Matt. We're talking about Social Security, and there's a really big update with one big, beautiful bill and what it does for retirees and Social Security recipients and in the news. And you're really good at reading the news. We're going to let you read this one. Just talking about how have taxes on Social Security really been eliminated. And let's kind of go through what is going on with the big beautiful bill and what deductions people actually get.

Speaker4:
Yeah, absolutely. I mean, there has been a lot of buzz about this, a fair amount of confusion as well, about the new tax law recently signed into law by President Donald Trump, especially when it comes to Social Security. The headlines and official statements have been saying that, you know, seniors, at least some of the some of the headlines and some of the official statements have seen that seniors will no longer pay tax on their benefits. And that leaves a lot of people wondering if Social Security tax is gone first and if it's gone for good. Second. But the truth, as as usually is, is a bit more complicated. The law creates a temporary senior bonus deduction that's going to wipe out taxes on Social Security benefits for many retirees, but it really doesn't eliminate those taxes altogether. And the change is only a temporary one. It's not permanent. So today what we're going to do here is sort of break down what's really in the bill, who it helps, who it leaves out and why. Experts say it could have some long term implications for the Social Security system. So let's run down kind of what it does. That one big beautiful bill or the OB as some people are calling it, I guess, on Social Security and taxes. So we mentioned that temporary senior bonus deduction. So it's an extra $6,000 deduction for people aged 65 or older. And that's if you are a single filer. 12,000. For married couples, when each of you is 65 or older for tax years 2025 through 2028. That's kind of the first big thing that we're going to talk about here.

Speaker3:
Yeah. The other thing is look, taxation on Social Security started in 1983 when tip O'Neill kind of really twisted Ronald Reagan's arm behind his back and said, listen, this is how you're going to get the bill, the the budget through this year. And so they started taxing on Social Security, which is money you've already paid in, which I think is ridiculous. Starting in 1983. So we've had that taxation for a long time. Just like government programs don't go away. They only get bigger usually. And then also you see taxes don't go away. They only get bigger as well. So both of those are problems. And you know, as Thomas Sowell said, you know, and and also Milton Friedman said, inflation only comes from one place that's Washington, D.C., when they're printing money or. And also taxes as well. So the good news is at least we're starting in the right direction. We're getting a $6,000 deduction for folks 65 or older. Um, and 12,000 for married couples with each spouse for tax years 2025 through 2028. At least this gets us there. Um, and as you said, Matt, it doesn't eliminate Social Security taxes, but the bill doesn't repeal the existing tax rules on Social Security benefits. It simply gives eligible seniors a deduction that may cancel out what they owe. And you can go ahead and talk through the eligibility and phase out.

Speaker4:
Yeah. So then the deduction will phase out for higher income earners. So this is something that that many listeners might be interested to hear if you're an individual. So if you're a single filer, if you have an adjusted gross income over $75,000, that's when it starts to phase out and it phases out entirely by $175,000 per year for married couples. It essentially doubles that right. So if married couples, if you have an adjusted gross income of 150,000 or more, that's when the deduction will start to phase out. And it phases out entirely by $250,000. And then, you know, there is concern. You know, we talk a lot about the Social Security trust fund, right. Because the trust funds are, you know, running out of money. And it is this is one of the ways that Social Security is funded. You've got the trust funds and you've got taxes currently being paid in by people who are working and paying those payroll taxes. Well, by reducing the taxable Social Security income, the deduction is going to reduce revenue flowing into the trust funds because you pay taxes on your Social Security. And that's where it goes. It goes into the trust funds. And that, you know, could mean that Social Security trust funds are insolvent sooner, meaning that they won't be able to pay out full benefits because of the Social Security trust funds running out of money. But you know, they'll have to reduce benefits if nothing else is done. I would say that I believe something will have to be done because talk about political suicide. If anybody if you know.

Speaker3:
They're not going to be around if you don't vote for Social Security, right.

Speaker4:
That's what Social Security, that's one good way.

Speaker3:
Yeah. You're not going to be around the next the next election cycle. I will say this. They've been kicking the can down the street for a long time, and both sides of the aisle are to blame, in my opinion. All the way since the last time they dealt with this was Reagan years. I mean, it's been since 1980 something, and we're we're in 40 year territory here where they haven't done anything. And so hopefully they're going to finally get there because they're going to have to, um, it's due to kind of be depleted by 2033, 2034, 2035, depending on who you listen to. Um, but that would only mean a 23% across the board cut. But it is good to be able to get some relief for these seniors at 6012 thousand. I think also with what Trump's doing to with tariffs and trying to grow the economy and specifically grow the the US economy and bring jobs back here, he's trying to get more workers as well. That will also help fortify those coffers with Social Security, too, and the Social Security Trust fund. So that's a big deal. Um, and also, let's kind of talk through the the rationale behind the their tax claim.

Speaker4:
Yeah. The white House touts the deduction is effectively meaning that there's no tax on Social Security for most seniors. Tax and financial experts though, caution that the deductions are temporary. They apply only under those certain conditions that we've been talking about. It's estimated that 88% of seniors will effectively pay no federal tax on their benefits due to the deduction and its existing thresholds and that's up from about 64%. So 64% used to effectively pay no taxes on Social Security. That'll go up to around 88% they say. But again it's also not a permanent change. So you know, I mean it's going to mean that a lot of seniors will see little or no federal tax on their Social Security benefits over the next few years. Again, it's not a permanent fix. It doesn't eliminate the tax for everyone. The rules still.

Speaker3:
Have the votes to get it done. They just didn't have the votes because the other side of the aisle didn't help them.

Speaker4:
But was such a razor, razor thin margin there, they sort of had to do what they had to do, you know?

Speaker3:
Yeah, I agree. And I think it's it's just really positive that 88% of seniors will effectively pay no federal income tax. I mean, I think that's fantastic. The good the but the better news to your point would be if they were permanent and and we'll try to get going on that. I mean, obviously we're going to be advocates for seniors. And I do like the fact that the current administration and the people that might, you know, whether it's JD Vance or Marco Rubio, they're also advocates for seniors, so I'm happy for that. Um, I don't like it, which just advocates for taxes. And and both sides of the aisle are guilty of this, in my opinion. And so, you know, we just we got to take care of the people that went before us. I mean, should we take care of the people that kept us free? And also the Vietnam veterans like my uncle, who is a Bronze Star and your your dad, um, was in the military as well, was in the Navy. And I, you know, I feel like we need to take care of those folks that that kept us free, you know?

Speaker4:
Yeah. Absolutely. Right. I mean, they've they've done so much to take care of us, literally. And, uh, you know, just over the years and sacrificed so much, we got to take care of them. And so that's that's what it is. It is all about, um, you know, when it comes to just everything that that we work for every day. I feel like, you know, we. We work with people who are either planning for retirement already in retirement. And one of the reasons that I do what I do and that I love doing what I do, is that very thing is that, you know, people who have been there, done that, they got the t shirt or they got the, the, you know, the Bronze Star or the Purple Heart or the whatever. You know, we can help them maximize what they have and know the ins and outs of everything so that they can have a better retirement and enjoy the rest of their life because it's, um, they've they've done so much for us. And so, folks, I would I would just take the opportunity to encourage you go to retirement results.com. And you can sign up for your free consultation. You can actually go to retirement Results comm.

Speaker4:
You could do that. Get that initial consultation which is free of any cost or any obligation. We'd love to to sit down with you. We can sit down with you at our the main office there in Alpharetta. It's just on the Forsyth County side of the line. Still in Alpharetta. Alpharetta address but Anthracite County. Kind of a thing, but that's where the main office is. We also have the office in Midtown is right there at Colony Square, and we will, you know, meet you via zoom. If that's something that you want to do or anything. You know, we'll meet you at a coffee shop if you want. Sure. You know, we'll send a carrier pigeon, for crying out loud. You can also give a call. 770685 1777. And we would absolutely love to meet with you. Um, I'm just about to wrap it up here for this segment. We got one more segment to go of the show, and when we come back, we'll talk about some Roth conversion mistakes and how to avoid them. And we'll have a little bit more. So stick around. You've got much more of retirement results to come right here on Am 920. The answer and WD one.

Speaker2:
Don't go away. Retirement results will be right back to schedule your free no obligation consultation visit retirement results.

Speaker8:
You know where I live. Working on the promises and songs of yesteryear.

Speaker2:
At Active Wealth Management. We know you've worked hard for your money and you've worked even harder to save it. When it comes to wealth management and planning for retirement, Ford Stokes of Retirement Results is passionate about helping people protect and grow their wealth while educating them on all their options so they can choose what's right for them. Visit Retirement results to schedule your no obligation consultation today, it's a $1,500 value provided at no cost to you. Book yours now at retirement results.com mis. Part of today's show retirement results is available wherever you listen to podcasts and online at retirement results. Dot com.

Speaker3:
Welcome back result drivers to retirement results on Fort Stokes for chief financial advisor. Got Matt McClure here with us. Is our co-host filling in for Sam Davis. Matt usually is our roving reporter giving us great articles and things like that. Um, a couple minutes at a time. But now we've got him for the full 48 today, so we're excited and ready to get going here. So Matt, you and I kind of talked about we wanted to showcase two different bond replacement products. And we'll let you go ahead and share the first one.

Speaker4:
Yeah. So you know we talk about this quite a bit. And you know we'll talk about it a little bit in in the abstract. And we'll talk generally about a fixed indexed annuity as a bond replacement. Today we want to highlight a couple of these products just to let you sort of know what's out there and what some of the different, um, you know, advantages could potentially be for this strategy. So I'm going to talk about one here just quickly from American National. It's the Smart Start accumulator and there are actually a couple of them. So it's technically the Smart Start Accumulator series. But um, it's funny. They had uh, they I saw a little bit of a marketing thing that they did with, uh, where they made a cereal box that says Smart Start on it. And it was just kind of a funny thing because like a part of a balanced breakfast, it's the smart start accumulator. But, um, basically what this is, is it's a fixed indexed annuity. Right. And so you talk about that as a bond replacement because they've grow with a market index. They track a market index. But you take the market risk off the table because they're not actually invested in that index or in that in a market.

Speaker3:
Just the interest from the ten year U.S. treasuries invested into options in that index. Yeah. So your principal is 100% invested in the ten year U.S. Treasury. So you can't lose your principal. You can only lose the interest that's generated. So if the market has a bad year, zero is your hero and you don't lose any money.

Speaker4:
And one of the things that I like about this. You know, smart start accumulator from American National is something called the best entry window. And it's a really kind of a cool and pretty unique feature that this has. So and it's included. But so basically you you purchase this annuity. Let's say you want to take a certain amount of money that you have invested in bonds currently. You put that into this annuity. And what they'll do is if that index value that you want to do, you want your money to track. Basically, if that index value drops at any point within the first 90 days, it's going to readjust to that lower value. So that gives you a lot more room to grow, right? So that's why it's the best entry that give you the best possible point that you are going to have the most growth from. Right? So let's say if you're earlier this year, you know, late March and into April, we saw a big dip in the market. Let's say you purchased this annuity in early March. Well, in, you know, a few weeks it would readjust to that much lower value because markets did take a pretty big hit. Then of course, they've since bounced back and then some. But um, it would choose that lower value. So then you've got much more room to grow and really just get the most for your money. So that's one of the things that I really do like.

Speaker3:
Well, a lot of people say you really can't time the market well with this product. You actually can. You really can. You really can look at it and say, okay, I really want to get the lowest possible point in the first 90 days without American national product. It's a really good product, and we've got a lot of people that diversify their fixed index annuities. And also they may invest in structured ladders or they may invest in brokerage CDs with us. And this is another one of those options. So if you're one of those folks who listen to us and invest with us and all that stuff, go ahead and reach out to Matt and me. We'll help you get started there. The other product we want to talk about, we talk about quite a bit on the show, but I want to review it because they've had an increase in. The bonus is the nationwide peak. Ten is now 25% bonus. I think you hear it in some of our commercials as well, but they're giving you 25% immediate bonus into the income and benefits base. So if you're going to get paid money from the annuity and actually take it during retirement, you've got another 5% to start with on the on the front end, which is fantastic. They're also giving you 8% guaranteed interest into the income benefit base. Every year you decide to wait and take withdrawals. So as long as you don't take withdrawals, you're getting 8% guaranteed interest every year into the income benefit base, which is a lot better than what you see in in bank CD rates at four and a quarter or whatever that looks like, but 8% is more.

Speaker3:
Um, again, that's in the income base, not the account value, but then the account value side, they're giving you 310% of how the BNP Paribas Global H factor index performs. So if the index goes up 5% a year over the next, I mean, the next two years, that's 10% total. That would be a 31% growth, less than 1% spread rate at a 30% total growth on that. That's just a hypothetical. We're seeing really big numbers on these. I just spoke with a 50 year old lady who's going to put in $345,000 into the nationwide peak ten, and she is looking at getting a $111,000 a year. On the illustration, it's estimated that she's getting $111,000 a year from her original $345,000 investment at age 65. So 15 years later, she's getting all that, and the account value was estimated to be at 1.287 million as well, which is another fantastic situation because you got account value and income coming in without income is closing in on 33% of her original principal every single year, because she's able to afford to be able to defer it for 15 years. But if you can, if you can, even if you can just defer 2 to 4 years, it's really going to help you grow that account value and the income value.

Speaker4:
Yeah. Absolutely. Right. And one thing that I want to get to before, of course, we got in a few minutes here to get to the final countdown, but we promised. So we're going to deliver. We talked about Roth a little bit earlier in the show, and we've got a list of seven common Roth conversion mistakes and how to avoid them. Number one, ignoring the tax implications. Right. So one of the most significant mistakes that people make when converting to a Roth is just underestimating or ignoring tax implications. The you're essentially converting pre-tax dollars to after tax dollars. And so that means the amount converted is considered taxable income in the year of the conversion. So failing to plan for that, as for was saying earlier, can lead to unexpected tax liabilities. Number two converting too much or converting too little. You got to work with a professional. Work with a financial advisor. We can help you out with that at Active Wealth Management. The good folks here with retirement results on converting the right amount each year. What is right for you? Right? It's not one size fits all. Number three here is not considering the five year rule. So the five year rule critical aspect of Roth conversions that's often overlooked.

Speaker4:
And to avoid penalties and taxes on earnings, you got to wait five years from the date of the conversion or until you're 59.5, whichever is later, to withdraw. Those converted funds don't get penalized for doing otherwise. Number four overlooking the impact on Medicare premiums and Social Security benefits, increased income from a conversion can lead to higher Medicare premiums, potentially triggering taxes on Social Security benefits as well, and is crucial to factor those in. Number five failing to re characterize when necessary. This is one of those things that people haven't talked about in a few years, probably, but prior to 2018, you could re characterize a Roth IRA conversion if it didn't work out as planned. Essentially undoing that conversion. And so if you had a conversion made before 2018. Failing to re characterize that when necessary could result in missed opportunities to mitigate your tax liabilities and maybe some other negative consequences. Also not reviewing your beneficiary designations. They provide an opportunity when you do a Roth conversion to review and update those, and failing to do so can lead to unintended consequences, such as leaving the account to the wrong people. You don't want to do that.

Speaker3:
Just don't.

Speaker4:
Do that. Number seven and the very last one, just before the final countdown, here is one of the most significant mistakes that people make when doing a Roth conversion is doing it without a clear strategy. And I would say that to avoid that mistake, get a comprehensive plan and get one together with us. Go to retirement results plan.

Speaker3:
Yeah, let's do that for sure. And now the final countdown.

Speaker8:
It's the final countdown.

Speaker2:
So let's recap what you may have missed. It's the final countdown.

Speaker9:
The final countdown.

Speaker3:
I'm so glad we were able to put £20 of sugar in a £5 bag on this. On this segment there, Matt. But we talked about retirement tax traps and how to avoid them. We discussed navigating tax traps in retirement and how to not fall victim to common tax traps. We also discussed at in detail, um, is Social Security really tax free and what's going on with a big, beautiful bill? Uh, specifically the $6,000 deduction that each one of you get and and what that means, uh, to Social Security as a whole. And hopefully you'll enjoy that tax deduction as well. And we've talked about Roth conversions and and just seven pitfalls to try to avoid as well. And Matt gave us the quote of the week which is the avoidance of taxes is the only intellectual pursuit that still carries any reward from John Maynard Keynes. So we thought that was a great quote as well. And we hope you've enjoyed this show with Matt myself. If you want to get going on your smart, safe, smart risk and smart tax plan to build that smart retirement plan, I would encourage you to reach out to us at Retirement Results plan or just visit retirement results.com. Call the phone number on there or just click the schedule consultation button in the upper right corner. Diane and her team are standing by to take your call this weekend. We look forward to talking to you on Monday and try not to be a long time listener and not a caller. Go ahead and be that first time call this week. Reach out to us and give us a call and we'll talk more about smart, safe and smart risk decisions and choices you can make to build your own successful retirement. Here on the retirement results show next week. Have a great week everybody.

Speaker2:
Thanks for listening to retirement results. You deserve to work with an independent team of fiduciary advisors that will strategically work to protect and grow your hard earned assets. To schedule your complimentary financial consultation. Call us now at (770) 685-1777. That's (770) 685-1777. To connect with a qualified advisor. To learn more about our mission and our team, visit retirement results investment advisory services offer through Brookstone Capital Management, LLC, 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.

Speaker1:
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 interest of our clients, and to make full disclosures of any conflicts of interest. Please refer to our firm brochure, the ADV 2 a.m. four for additional information. I'm speaking.

Speaker4:
With Brent.

Speaker1:
Soriano, director of.

Speaker4:
Private wealth at Synovus Bank.

Speaker1:
Brent, thanks so much for taking a few minutes for me. Appreciate your.

Speaker4:
Time.

Speaker10:
No, it's my pleasure. Good morning. Thank you.

Speaker4:
Well, you know, a lot of folks have been kind of scared to look at the, you know, 401 K's or their IRAs and any investments that they might have here since just about a little after the beginning of the year, things have been really, really volatile. And people might say, well, okay, well that's because of tariffs or that's because of this, that or the other. From your perspective there. Why have we seen so much volatility in these recent months. And is it going to continue into as we come up here, you know kind of on the second half of the year?

Speaker10:
Yeah, it's a great question. And obviously it's on everyone's everyone's mind. I think, you know 2025 is unique in a sense to where I think there's three factors that are really sort of kind of creating this uncertainty in the equity markets. And as we both know you know. Equity markets like certainty right. Unless the market volatility is not a new thing. It just depends on sort of. What these external factors tend to happen. And in this year, you know I look at it from sort of a three approaches. You know number one you look at Liberation Day, you know, back in February. You know, even though tariffs are on a new thing, Trump administration really put forth kind of a shock in the markets with the size of the tariffs that they were throwing out there which caused some uncertainty. You know from you know businesses and reciprocal tariffs and what you know the costs is going to look like. And so that kind of created some uncertainty early on this year. Now of course you look where we are now. We've sort of kind of brought some of that back with some countries coming to the table and some negotiations, you know, starting to happen, but still, you know, kind of the first part of that is that kind of created some uncertainty. When you look at number two. You know, it's really we've been kind of stuck in this interest rate environment.

Speaker10:
What's the fed going to do. You know, you know going into 2025 there was talk around 5 or 6 rate cuts. Now we're probably looking more to two, if any, really kind of depend on what side of the balance sheet the Fed's going to play on from job stability and growth to inflation. But again, still creates a little uncertainty for higher interest rates for longer, which does have an impact on consumers and small businesses as that kind of plays out. And when you kind of tackle all that with higher rates for longer with, you know, an increase in a debt of around 36 trillion, you know, can the United States sustain that longer term? Does that kind of create uncertainty in point number two? Then the final point really comes down to the administration's tax and budget proposal. You know, known as the big beautiful bill, so to speak. And, you know, I think if, you know, obviously you're passing the House now to the Senate, there's probably some version that will get done. But I think the administration is targeting July 4th. So when you add kind of the uncertainty of what the tax landscape for individuals may or may not happen going into next year, you had all three of those together. And we're kind of this whole perfect storm of just uncertainty. And we're seeing the market kind of react on a day to day basis.

Speaker4:
Yeah, it's kind of what it.

Speaker1:
All boils.

Speaker4:
Down to. Yeah.

Speaker10:
Yeah. On the second half of the year, you know, if you're talking like we're in now. Listen, if we get some good news with, you know, the tax and budget proposal going through, we get some more countries come to the table with, you know, putting together some, some tariff plans. We get a little more certainty towards the back half on what the rate environment will look like. You know, with the economy going, going the way it is and companies still having some fairly good earnings, I think we're we're primed for a good second half. We just need some stuff, some wind in the sails with some of these things we just talked about.

Speaker4:
Yeah. Yeah. That need to be, uh, catching catching that wind in the sails. Definitely. And, you know, I mean, all of this, as you said, you know, a minute ago, it boils down to the uncertainty all around. And the same is true for for individual investors as well. Those people who I spoke about scared to look at their 401 K's and everything. I mean, how do you approach helping people, encouraging people to, um, not necessarily stay the course, obviously, but make some make some smart adjustments, perhaps, but not to freak out. And, and you know, if the market has a really bad day, pull everything out and go to cash and put money under the mattress. You know, they've got to have a plan, right? And a long term plan that doesn't have really emotions involved in it.

Speaker10:
Yeah, exactly. I mean, there really has to be a disciplined approach when it comes to intermediate and longer term financial planning. And really that that approach kind of starts with each individual investor and their families defining what that long term goal is. When you write those goals out of what you're trying to achieve from a financial perspective, whether that's a certain lifestyle or income or education or, you know, philanthropic giving, your your North Star is always going to be trying to achieve those end goals and the intermediary ups and downs of the market. That's all that is versus taking your financial plan, which, by the way, it's not a static instrument. A financial plan is a tactical living and adjustable breathing document that as our personal lives unfold and external dynamic forces come into play, and that changes in your own personal life. The financial plan should adjust accordingly as well. And so when you kind of put a framework in place of what you're trying to accomplish, I think it allows us to shoulder some of the emotional turmoil we might go over because we because we always can reference back to, am I on pace to achieve these qualitative results that I want to accomplish for me and my family? And I always make kind of like a joke, like, you know, in most cases, nobody gets injured on a roller coaster unless you jump off midway. Right. And so you kind of kind of take it to the end and to find that, that, that track.

Speaker4:
That's very good. That's the first time I've heard that one. I like that a lot. Um, and so just not a whole lot of time left here, Brent. But I just wanted to ask, you know, what is the. Is the best advice that you would have for folks going forward here? I mean, any closing sort of thoughts or something that you haven't touched on that that comes to mind that you'd like to mention?

Speaker10:
Yeah, I would just say stay discipline to your plan. You know, if you don't have a plan to find a plan, if you're not working with an individual or a group of other wealth professionals to help you manage some of the behavioral reactions that we tend to have as human beings. Partner with the team. Align your philosophies, your level of service. Define the plan, and just make sure you're updating or reviewing that plan at a minimum on an annual basis and adjusting accordingly. And in the long run, I think you'll find that, uh, you'll get there where you want, what you want to achieve, essentially.

Speaker4:
Very good. Well, Brent Soriano is director of private wealth at.

Speaker1:
Synovus.

Speaker4:
Bank.

Speaker1:
Brent, thank you so much. Really do appreciate your time, sir.

Speaker10:
Thanks so much. It's great being here.

Speaker2:
Are you concerned about rising taxes and how that could affect you and your family during retirement? If you have an IRA balance over $400,000, you could save six figures in retirement taxes than you would be paying during a 35 year retirement. Find out how much you could save today by scheduling your no obligation Roth conversion consultation with Fort Stokes of retirement results. Learn more and schedule an appointment at retirement results. Investment advisory services offer through Brookstone Capital Management LLC, a registered investment advisor. Visit retirement.com for more information.

Speaker1:
Any bonuses mentioned may be subject to additional restrictions and regulations based on the offering annuity company. You may not receive the bonuses if the contract is fully surrendered, or if traditional annuity payments are taken, and if the policy is partially surrendered, it could result in a partial loss of bonuses. Because these are bonus annuities, they may include higher surrender charges, longer surrender charge periods, lower caps, higher spreads, or other restrictions that are not included in similar annuities that don't offer a bonus feature.

Speaker11:
Indexed or fixed annuities are not designed for short term investments and may be subject to caps, 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.

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