Smart Investing Strategies for Saving Money on Taxes
Active Wealth Show
Smart Investing Strategies for Saving Money on Taxes
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Ford and Sam discuss tax-efficient investing strategies, inflation and how you could be better prepared for your future in retirement. Would you like to create your own personal pension? Get in-touch with us and let’s start on a plan today.

Call Ford now at 770-685-1777

Book a no-obligation consultation at ActiveWealthShow.com 

AWS Full Show 7.28.mp3: Audio automatically transcribed by Sonix

AWS Full Show 7.28.mp3: 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 Act of Wealth Show with your host Ford. Stokes Ford is a fiduciary and licensed financial advisor who places your needs first. He’ll help you protect and grow your wealth. The Act 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 Stockton, chief financial advisor. I’m joined by Sam Davis, our executive producer and a licensed life insurance and health agent. Sam Elliott.

Sam Davis:
Welcome to the Weekend Activators. It’s a lovely summer weekend here in Atlanta, Georgia. I hope you’re staying cool, enjoying the outdoors. And we’re happy to be bringing you some important information on another episode of the Active Wealth Show.

Ford Stokes:
Yeah, it’s just great to have you on the show. Welcome everybody to the weekend. It’s always nice to have the weekend ambassador, but also somebody that can help with, you know, a sound retirement income plan. We’re going to talk about that today. So the theme of today is, is smart vision, smart tax and smart income. We’re going to talk about those three parts that fit into a smart retirement plan. Smart vision, smart tax and smart income are going to be the top topics of today. And I want to kind of go into a few things. One is, if you’re looking to get a plan and you don’t have a plan or you’ve just sort of been thinking about, I’ve lost money in the market, my 41k has gone down quite a bit. We’re going to talk about a problem solver regarding what to do about your foreign K and especially some of those old foreign cars are just sitting out there that you are with an old employer. You haven’t moved them. We’re going to give you a plan for that. We’re going to talk about a lot of those things today. This today is going to be all about kind of brinksmanship. You’re going to be able to apply this show today and take immediate action. But if you want to take immediate action, you want a free financial plan at no cost to you. All you got to do is visit active wealth dot com or active wealth show dot com. But we’ve got a schedule a consultation button in the upper right corner. You can also just pick up the phone and give us a call at 7706851777. Again, 7706851777. We’re happy to help you. But today I want to kind of talk through specifically smart vision, smart tax and smart income. But we’re going to give you first a market update.

Producer:
Your active wealth market update.

Ford Stokes:
So the Federal Reserve on Wednesday raised its benchmark interest rate by 75 basis points for the second straight month as it tries to bring scorching hot inflation under control, a move that threatens to slow US economic growth and exacerbate financial pressure on Americans. The three quarter percentage hikes in June and July the first since 1994, underscore just how serious Fed officials are about tackling the inflation crisis. After a string of alarming economic reports, policymakers voted unanimously to approve the latest super sized hike. The move puts the key benchmark federal funds rate at a range of 2.25% to 2.50%, the highest since the pandemic began two years ago. It marks the fourth consecutive rate increase this year, so there’s four consecutive rate increases this year. Policymakers signal the post-meeting statement that additional increases are likely on the in the coming months, as they remain strongly committed to returning inflation to its 2% objective. Chairman Powell. That’s what he said during his post-meeting press conference, that another 75 basis point hike could be appropriate in the future, but that ultimately hinges upon upcoming economic data. We’re still at historically low federal fund rates, but there’s also some good news here. When the Fed comes up with a ten year U.S. Treasury bond paying a higher rate. That’s basically the backbone of fixed indexed annuities. And therefore, you’re going to have higher interest rates that that annuity companies are taking. At the end of year one. And they’re then investing those higher interest rates into. That money is going into options. And like the S&P 500 or the Nasdaq 100 or the Credit Suisse Raven Pack or the Credit Suisse Momentum or the Jp morgan Cycle Index in a lot of different indices that are the market linked indexes that are part of fixed indexed annuity products that give you a higher rate of return.

Ford Stokes:
And what we’ve seen is we’ve seen interest rates go up and illustrated rates go up with fixed indexed annuities as well. If you’re trying to build your own personal pension, now may be the perfect time to get in the water with a bond replacement strategy with fixed indexed annuities, this could be really the time to do that. So I would take advantage of some of these rate hikes. And also if bonds are decreasing because the bonds you used to hold are worth less and not as attractive to buyers when interest rates are going up, you’ve got that interest rate risk. What I would encourage you to do is consider, like, definitely consider. Implementing a bond replacement strategy. And we’re going to play a chapter from my book Annuity 360, and you can get that book at Annuity 360 dot net. That’s Annuity 360 net. All you’ve got to do is reach out to us at Annuity 360 dot net. Put your information in and we’ll give you a free copy of my book, Annuity 360. Learn All You Need to know about annuities, which ones to avoid and which one to buy for successful retirement. And you can get that absolutely at no cost to you. So, Sam, we’ve also got a financial wisdom quote of the week. You want to share that with the folks?

Sam Davis:
Yeah, I do. And if you haven’t seen the book Annuity 360 and if you haven’t visited annuity 360. Dot net, definitely check it out. And once you get your hands on that book or check out the website, you’re going to see Mr. Benjamin Franklin’s on the cover of that book. And Benjamin Franklin is actually the source of our Quote of the Week for this week. And we think this is very pertinent to what we’re talking about. And Benjamin Franklin said hundreds of years ago, waste neither time nor money, but make the best use of both. And I think that’s fantastic wisdom coming from Benjamin Franklin. You know, time and money, two of our most valuable resources that we have to use in life to accomplish whatever goals that we’re going after. And we want to make sure that all the activators out there are taking advantage of both their time and their money.

Ford Stokes:
Absolutely. And I think it’s a really good time to go ahead and start sharing some of the smart vision quotes that we were going to kind of work on some of the smart vision plans. So what I want you to do is I want you to kind of consider as you’re driving around, if you’re heading to Home Depot or Lowe’s today or you’re heading to Publix or Kroger or you’re going to a kid or grandkids if you’re going to their, you know, athletic event, if you guys are in travel, baseball, travel, soccer or travel softball. And I would just ask you to think about this when you’re retired, who are you with? What are you doing and how are you going to fund it? Who are you with? Your family members, things like that. What are you doing and how do you fund it? What’s interesting and I saw a really telling stat, I’ve got 15 year old twin girls, Sam, as you know. And the thing that was really scary to me is by the time they’re 18. The time that I would have spent with them is I will have used 93% of the time that I will have. Spent time with them. By the time they’re 18 and they’ve gone to college. 93%. So I’ve only got 7% left with my girls.

Ford Stokes:
That is so sad for me. It’s really sad. I was like, Man, that’s crazy. And so what I’ve got to do is do a great job at planning my retirement, you know, 20 years from now. And my plan is, is I’m going to be on Lake Martin probably, or Lake Lanier and and and or I’m going to be at 30 A and I’m going to be a destination. So they’ll come see me more. So they’ll bring the kids and all that kind of stuff. So I want to have some some type of water that attracts my kids to come around and see me. Now, granted, they’re 15 now, and hopefully we’re a long way away from grandkids, but it’s just something to think about. And I just want to do everything I can to. You know, help you figure out your vision for retirement. Like and also retirement doesn’t have to be just to withdraw. That’s what the definition of the Webster’s definition of retirement is. It really can be to relaunch. You can relaunch it if you want to build a nonprofit, if you want to help out your church, if you want to be all that stuff. So. You know, what would you do if every day was Saturday? Because that’s what retirement’s like.

Ford Stokes:
You’re on. You’re listening to our show on. On a Saturday or Sunday. What would you do if every day was like a Saturday or Sunday? And how would you feel at the time? It would it be difficult to fill the time? Sometimes it is. That’s why people pick up golf and and have that great, wonderful, frustrating game at times. I’ve been able to reduce my handicap quite a bit over the last six months because I joined the River Club and they’ve they’ve been helpful and helping me get better. And that was been a really rewarding experience and just great people. And I’m also on the tennis team there that other people are really nice shout out to the good folks over at the River Club and Swanee and we really appreciate you all and you all do a great job. But I would also just say, have a vision for retirement. And my vision for retirement is to be around some body of water so that my kids and grandkids will come see me. That’s my number one goal. And the way I’m going to fund it is make sure that my house is paid off so I can downsize into something like that and have a good nest egg to rely on. They can generate income, but I’m going to have an income plan and we’re going to talk about smart income in the next segment.

Ford Stokes:
And also, I promised on this show this week, last week, I promised that we were going to talk about the two types of tax free investments out there that are truly tax free. I was also going to talk about the true definition of tax free investments. So we’re going to definitely talk through that, but we’re going to also detail what it’s like to come in to see us right at the beginning of the next segment. And we’ve got a great quote about inflation from Milton Friedman, which I think is very telling. We’ll talk about that right after the break as well. And we’re going to play right or wrong. Everybody seems to love right or wrong, so we’re going to play right or wrong in the next segment. You’re going to like that and we’re going to play that personal pension chapter from Annuity 360 and a whole lot more. And of course, we’ll recap the whole show with our always fun final Countdown segment. Those the active all show right here on AM 920. The answer, come right back. And you’re gonna learn a lot about smart tax and smart income solutions right here on the activation.

Never been dull for. The my back is broad, but it’s a pretty. I see you.

Producer:
Not affiliated with the United States government. The agent does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. AmeriLife assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness, or of the results obtained from the use of this information. 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 well show George Stokes your chief financial advisor. I’ve got Sam Davis, who’s my co-host and executive producer here on the show. And I wanted to just read this quote from Milton Friedman that we talked about right before the break. Milton said, Congress can raise taxes because it can persuade a sizable fraction of the populace that somebody else will pay. I think that is very telling. I’m getting head nods on active well showed in the video from Sam. Sam, your thoughts on what Milton had to say?

Sam Davis:
It makes me think of another quote that I saw may have also been a milton Friedman quote, but I can’t remember. But it went something like, thank goodness we’re not getting all the government we’re paying for. You know, as the years go by, our country grows, so does our government. Sometimes it grows in a positive way, and many times it grows in a not so positive way.

Ford Stokes:
Do everything you can to be a saver. Also, do everything you can to get more tax efficient. We’re going to talk about that right after we play. Right or wrong here as well, Sam, go ahead and play the right or wrong Sounder. And then I’m going to let you read all of the questions.

Producer:
Come on down as we test your financial knowledge in right or wrong?

Sam Davis:
All right. First statement here on this week’s episode of Right or Wrong, the rules of the game are very simple. I read a statement and you’re going to help me and the activators understand if that statement is right or wrong. So first one, you should keep working and stop contributing to your retirement accounts to maximize your Social Security benefit, right or wrong?

Ford Stokes:
Yeah, I would just say that that is incredibly wrong. Wrong and it’s a little bit subjective, but it is there’s also some objectivity to it as well. I don’t know if many of our listeners are completely familiar with the three bend points on Social Security. But just so you know, they’re not giving you all the money that you’ve put in to Social Security. I did see an article about basically most folks are putting in, you know, if you make over 100,000 a year, most people are putting in about 600,000 over their 40 plus year or at least 35 plus year career into Social Security. And if they were to have put that money in the market and grow it, it would have been over 1.9 million. And you could have generated at least 95,000 worth of income from that a year from that 1.95 million because you’re generating like almost 5% of withdrawal from that. And what’s interesting, especially if you do a fixed indexed annuity, you’re going to get at least that. What’s interesting is you’re only getting about 30 to 30, $33,000 from Social Security, so you’re getting a third of it. And so the government is taking a lot of money from you. And what else is crazy is they’re estimating that the current without changes, the current Social Security trust fund will run out of money by the end of 2034, which is 12 years from now or 12 and a half years from now, if you want to be detailed about it.

Ford Stokes:
That’s estimates from the CBO, the Congressional Budget Office. That’s not estimates for me. That’s not subjective for me. That’s that’s what they’re estimating. And that’s 12 and a half years. That’s scary. That is really scary. But I want to quickly go through and I’m taking a little bit of extra time on this answer, apologize saying but they give you 95, they give you 90% of the first $996 that you put in on a monthly basis. When they come up with your aim and your aim stands for average in indexed monthly earnings, average index monthly earnings is your aim and it helps them determine your primary insurance amount or your full retirement benefit amount from Social Security. Well, what’s interesting is they only give you 32% of the next $996 to $6002 of your average index monthly earnings. Because what they do is they’ll take your top 35 earning years, they’ll get an average of those. And let’s say it’s let’s say it’s 60,000. Well, they’ll divide that by 12 and that’s five grand that they are saying is your is your primary insurance amount per month. Well, they’re only giving you 32% of that.

Ford Stokes:
And then they’re going to give you only 15% of any amount over $6,002. So if you made if you’re making over ten grand in and your average indexed monthly earnings, you’re only getting $0.15 on the dollar above 6000. Per month that you’ve put into or that you’ve actually earned. And that’s really scary. And and so I would just say. Try to do everything you can, put money aside into a Roth IRA or IRA or both separate of your 41k, and that will be something that will help you protect and grow your money. Also, you can do the the catch up provision. If you’re over 50 years old, you can put an extra $1,000 into your IRA or your Roth IRA or both. If you’re making under 196 to 206000 a year as a married couple filing jointly. So you can put 7000 a month into each person’s I mean, a year into each person’s IRA or Roth IRA. And so the answer to that is wrong. Do everything you can to depend on yourself and not depend on the government giving you portions of the money back. And I realize it’s a very long answer, but I felt like it was an important answer and I needed to give you guys and gals a lot of detail.

Sam Davis:
All right, second statement on right or wrong, there is no way to grow your money tax free in an IRA. Right or wrong.

Ford Stokes:
That’s wrong, because Roth IRAs allow you to pay taxes, pay the taxes up front. You can pay after tax money into a Roth IRA and let that grow tax free. You have a five year waiting period and there’s no RMDs with a Roth IRA or a regular IRA. You there, you’re putting your money in pre-tax. And so they’re going to tax you when you’re taking money out. And if you think taxes are going to go up in the future, then I strongly encourage you to try to implement a Roth ladder conversion to convert money from your IRA to your Roth IRA. That would be very helpful and important, I would think. And and we’ll talk through that probably in the next segment. But that is an incredibly important point. It is wrong. Roth IRAs do allow you to pay taxes up front. There is a five year waiting period from the time you open up the Roth IRA account or from the time you do any large Roth ladder conversion from your IRA to your Roth IRA, you’ve got to wait five years from each one of those conversions, and that’s the only medicine. So you want to try to plan that. Kind of in your forties and fifties and at least five years before you retire, you should start figuring out what you’re doing about a Roth strategy.

Sam Davis:
All right. Just a few minutes left here in our second segment, but we’ve got time for one more, right or wrong. And here it is, a 6040 portfolio with 60% stocks and 40% bonds is a tried and true method and is still the best way to construct a portfolio for retirement. Is that right or wrong?

Ford Stokes:
I would say it’s wrong. Wrong. A 6040 portfolio is a tried and true when I would agree. That’s right. But the second part, just blanket state stating that it’s the best way to construct a retirement portfolio is is absolutely wrong. And there’s new ways in different ways to construct that 6040 portfolio. As we talked about, Harry Markowitz was given credit for being the founder of Modern Portfolio Theory that basically stated if you put 60% stocks and 40% bonds, both of those are negatively correlated or at least non correlated, and they’re also traded on the same markets. Then you should be able to withstand market downturns and not overly see your your assets go down. What’s been really pervasive and really a big problem that we’ve seen is that folks are. We are seeing, you know, 10 to 13 plus percent losses in the bond side of the portfolio and they are seeing 20 plus percent losses in their falling case on the stock side of the portfolio, that’s adding up to literally 25 to 30 plus percent losses overall in for one case this year. And that is a remarkable even with where we’ve seen a rebound of 8.4% since June 16 with the S&P 500 is an example. And the bond the bond portion of the market has come back a little bit.

Ford Stokes:
But with this new rate hike, they’re going to take another hit because people want to see they want the higher paying interest rate bonds. And when you’re going up three quarters of a point, the you know, the new bonds are paying more money. I mean, the new ten year Treasury is going to pay more money. So it’s just those are just facts. So I’d say it’s wrong. What I would encourage you to do is consider replacing the bonds in your portfolio with fixed indexed annuities, get market like gains, consider even a structured note ladder if you want to a lot of different ideas to get that income portion. And also, let me just ask you, why are you paying money for your income portion when you’re not trying to get growth? Why are you paying advisory fees and portfolio fees on income portion? You should just delete those and go with a fixed index annuity portion of your bonds and replace the 40% with annuities. And we’re going to talk more about that in segment three. We’ve got like just under a minute left here in segment two, and we’re going to talk in detail at the next segment we’re going to talk about.

Ford Stokes:
You know, really the only two types of tax free investments out there, which are Roth IRAs and life insurance. I’ll go ahead and give you the spoiler alert on that. I think you’re going to like what we have to share on what you can and cannot do to minimize the taxes going forward in your portfolio. And we’re also going to play that personal pension chapter as well. And and also kind of why people need a comprehensive retirement plan. I think you’re going to like all this stuff. All these things you can apply to your plans now. And remember, as an activator, you’re somebody who wants a tax efficient, fee efficient and market efficient portfolio, and you want to build a successful retirement for the future so it can benefit you and your heirs. And we’re here to help you do that on the active. Well, sure. We’re so glad you’re with us here, Sam, and I really appreciate you being with us here this weekend on the Active Wealth Show and come right back so we can talk about the only two types of tax free investments, Roth IRAs and life insurance right here on AM nine one. And the answer on the active wealth show.

Producer:
Thanks so much for listening to the active wealth show. Make sure to rate us everywhere you listen to podcasts, including Spotify.

music:
Nibbling on sponge cake. Watching the sun bake.

Ford Stokes:
And welcome back activators the active well Sean Ford chief financial advisor and joined by Sam Davis our executive producer. And I want to kind of talk about why people really need a comprehensive retirement plan, why they need that smart vision for retirement as we go into the smart tax portion and smart income portion of the show this week, number one is we find that too many people think retirement planning is about rate of return, but they have no income plan. And you really do need to come into our office at Active Wealth or on the 29th floor of the King and Queen Building. We’re in the King Building overlooking Perimeter Mall right there. And we’re looking out over 402 85 and Perimeter Mall. And one of one neat thing that Sam and I noticed when we’re in our office recording the show is that Atlanta really was built in a forest. We can just see nothing but trees here. So when you come in, though, we’re going to help you see the entire forest and the trees. We’re going to give you specific detail specifically on getting a retirement income gap plan and see if you’ve got a positive or negative retirement income gap plan if you don’t know, or the retirement income gap plan is and you don’t know whether you’ve got a positive or a negative income gap for retirement, I would encourage you to visit Active Wealth, that’s active wealth and click that set an appointment button in the upper right corner. And Sam, you’ve got some thoughts there as well, right?

Sam Davis:
Yeah, something else that you notice if you book an appointment with us at Active Wealth and meet with us here at the King Building on the 29th floor. I’m not from Atlanta originally, but I realized working up here why a couple of Atlanta’s major sports teams are named after Birds of Prey, because we see some big Atlanta Hawks and some big Atlanta Falcons flying around here.

Ford Stokes:
Yeah, we’ve got pictures of them, actually. It’s pretty neat. And so we’ll share those pictures when you come into the office. And who knows, maybe one of our Atlanta Hawk friends will will come up and and roost right here underneath our our office, because we’re our offices on the 29th floor. We’ve kind of telescoped in our floor is about half the size of what the normal floors are below us. And there’s a railing that a lot of a lot of birds of prey will roost on and wait to go down and go get their prey. It’s kind of cool. And then number two is of why people need a comprehensive retirement plan. We find that too many people have no clue about their bonds, and in many cases, bonds are over 40% of their portfolio. You know, I had a couple that are 80 and 81 years old that came into my office last week, and they came in again yesterday. And because they’re starting they’re starting to work with us and they’ve got 80% of their portfolios in bonds and they’re down over 24% this year. And it is frightening to them because they don’t want to have to go back to work. And he used to be a business owner and she was a stay at home mom and raised the kids and all that kind of stuff. So I would encourage you to consider having at least what to do about bonds in your portfolio.

Ford Stokes:
And also, why wouldn’t you just delete the advisory fee in the portfolio fee with the income portion of your portfolio as well? So now let’s let’s talk about how to take advantage of the only two types of tax free investments out there. And but first, what we’re going to do is talk about smart income and we’re going to go ahead and play the personal pension chapter from Annuity 360. And we’re super excited to play this for you. We want to make sure that you understand that you can generate your own personal pension. You absolutely can. Sam, go ahead and play chapter nine of my book, Annuity 360 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 an 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.

Ford Stokes:
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. 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 annuities in your annuity without receiving a single benefit for that annual fee. This income rider fee will also draw down your account value or principle, 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.

Ford Stokes:
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 payment. 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. 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.

Ford Stokes:
Be aware of the annuity you are buying and choose an annuity that works best for you. They 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 and one half percent 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. 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’re 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. So it may be surprising to a lot of you to know that you can actually generate your own personal pension, especially with less than only 14% of Fortune 500 companies still offer a personal pension. And pensions are really important. And one one thing that I saw recently is like, if you don’t think pensions are a big deal, try taking pensions away from somebody.

Ford Stokes:
Try taking Social Security away from somebody. It’s people are always worried about that. But what’s even better is you can generate your own. You can actually build your own personal pension. We think that’s a good idea. And so I would encourage you to give our office a call if you want your own personal pension plan that you can make your own decisions on, I would encourage you to go ahead and and visit Annuity 360 dot net just to get the book. You’ve got a chance to go figure out how to do that. You can read it for yourself right there. My book has been in pretty good demand and we’ve get a lot of downloads of our audiobook on Amazon and Audible. And we’re I mean, I think we’re sending out like hundreds of books a month these days. So if you want your own copy of Annuity 360, it’s a hard copy book. We mail it to you. Absolutely. At no cost to you. I’d encourage you to visit Annuity 368. And then now I want to kind of dive straight into how to take advantage of the only types of tax free investments out there. There’s only two of them. And the definition of truly tax free investments is one, it doesn’t you don’t have any taxes on your principal and the gains.

Ford Stokes:
And two, is it also doesn’t result in additional taxation on your Social Security income benefit. And number three is it does not contribute to additional Medicare surcharges. Those are those are really the three areas of the definition of a truly tax free investment out there. Municipal bonds are not truly tax free because interest generated from municipal bonds still contribute to your Social Security income benefit being taxed at a higher rate because that interest from that contributes, they will factor that in. And then the other is it’ll also factor into a higher Medicare surcharge that income will be included and so or that interest will be included as income for those two calculations and so by the US Government. And so I would say be careful on investing in things that you think are truly tax free and they’re really not. But if you want a truly tax free consultation so you can understand how to get some of your money or all of your money, your retirement money put into a. Retirement account that is going to generate distributions that are truly tax free that you don’t have to pay taxes on. And when you distribute from those accounts. I would encourage you to visit active wealth. That’s active wealth dot com. And there’s a schedule of consultation. But in the upper right corner you can also call us Deborah and her team are available and standing by. You can they can just you can pick the phone up and call Deborah now at 7706851777.

Ford Stokes:
And one of her team will will answer the phone on the weekends, and we’ll get you scheduled on my calendar, into my calendar, and you’ll meet directly with me. And then the other is Roth IRA and Life Insurance. We’ll talk about that when we come back from the break. We’ve only got less than a minute left in this segment, but I want to just kind of talk through what it’s like to get tax free money. It’s literally like getting another 20 to 30 plus percent. Back to you. And you don’t you also don’t have to take as much money out. So you’d much rather have all of your money in a Roth IRA, or you’d much rather be taking money coming back out of indexed universal life insurance policy. That’s tax free because you’re not going to need as much to you not to withdraw as much. So we’re talk more about that Roth IRAs and life insurance. And also we’re going to talk through the full problem solver this week as well when we come back to segment four. So glad we listened to us here on AM 920. The Answer and be right back come right back to talk about some of the problems we’re solving and also how you can minimize taxes that you’re going to pay during your 30 plus.

music:
We get it almost every night. And when that. That’s a big and bright. It’s supernatural delight. Everybody was dancing in the moon.

Producer:
We have Ford Stoke’s, author of two important personal finance books, Annuity 360 and taxes are on sale here on AM 920. The answer, as the host of the active wealth show Saturdays at 12 noon and Sundays at 11 a.m.. Why? Born.

Sitting in the mall.

Ford Stokes:
And welcome back activators the active well show on fourth sector chief financial advisor. And I’m joined by Sam Davis, our executive producer. And we’re talking about tax free investments out there and Roth IRAs and life insurance are really the only two with Roth IRAs. We’re going to pay the taxes up front. It allows your money to grow tax free and you can take tax free distributions. Also, there’s no required minimum distributions either with a Roth IRA, and it also includes a tax free benefit to your beneficiaries because they’re going to inherit a Roth IRA, not an inherited IRA, and they won’t have to take that money during their prime earning years out over a ten year period. Life insurance indexed universal life insurance policies. What we like the best. Because you can take tax free loans against your policy. Your money is protected and tied to an index for beneficial market like growth, and it allows you to take tax free loans from the cash value of the policy. And that leads to our problem solver.

Producer:
It’s time for this.

Ford Stokes:
Week’s Problem Solver. So I had a divorce. Female She had basically $600,000 that came from the proceeds of the sale of her home. And she had only basically $200,000. And that was half of her husband’s four, one K or IRA, and he had $400,000 total. And she’s right at 50 years old, she was concerned about the taxes and she makes 200,000 a year as a marketing executive. And she decided that she was going to take a because she wasn’t well diversified from a tax perspective. She was going to take 2000 a month and a ten pay over over her fifties. She’s going to take $2,000 a month and she’s going to pay that into over the next ten years to 24,000 a year, $240,000 total. And she’s going to generate $42,414, according to the illustration on that index, universal life policy. And she can get that tax free and that’s greater than what her Social Security income payments going to be. And it’s getting she’s going to get that completely tax free. This allows her to take loans against the policy tax free. This is a legal and ethical strategy for protecting and growing her money. Absolutely. Tax free. And she’s super excited about it. She’s a very young grandmother. She’s 50 years old and she’s got a grandchild and a daughter and her two daughters. And she’s trying to help them as well. And she wanted to make sure that she was taken care of. And she’s taking care of herself by taking $2,000 a month after tax and putting it into the life insurance policy. So we think that’s a really good idea.

Producer:
Ready to save some money? Here’s our retirement cost cutter of the week.

Ford Stokes:
So we want to shop and save at the grocery store, but we want to shop in bulk. Whether we’re going to a discount place like Costco or Sam’s. We want to shop during senior hours as well at grocery stores and at stores that offer senior and military discounts. Also by shopping, if you if you shop at a convenience store for some of your items, when you’re going to the grocery store, you’re going to pay 80% higher for peanut butter. You’re going to save 75%. You’re going to you’re going to pay 75% higher for milk and you’re paying 53% higher for bananas. I mean, you got they got bananas right next to the cashier station. You’re paying 53% more for bananas. So don’t do that. Also, try to avoid paying for coffee, but let’s definitely try to shop at senior hours and at stores that offer senior and or military discounts. Sam, any thoughts on that?

Sam Davis:
Yeah, I think coffee’s a big one. So many people that I know, coffee. I mean, they’re almost putting it down as much as they drink water. So, you know, based on the latest Bureau of Labor Statistics report, coffee’s up 15% as it is. That’s if you’re making it at home and if you’re paying for Starbucks or Duncan or Tim Hortons or whatever you’re buying every day, you’re going to be paying a lot more. So definitely make your coffee at home and and you’re going to pay for the convenience if you shop at a convenience store.

Producer:
Want to know where your hard earned money is going. It’s time for an inflation demonstration.

Ford Stokes:
Ground beef. In the last 12 months, ground beef has been up 9.7%. Pork this is according to the Bureau of Labor Statistics. Pork is up 9%, but crazy poultry is up 17.3%. They’ve had to euthanize because of of bird flu and stuff. They’ve had to euthanize a lot of a lot of chickens and to make sure that they cut that off. And and that’s driving up the price of chicken. Fish is up 11%. Eggs are up 33%, which obviously ties back to the chicken situation. Milk is up 16.4%. That’s because of having to feed the milk cows and the cost of feed milk is baby food is up 14%. Unbelievable. Butter is up 21.3%. Another cow based milk product, sugar is up 11.4%. Apples are up 6%. Oranges are up 10.9%. Coffee is Sam talked about is up 15.8%. Pet supplies are up 9.7%. All of us love our pets. That’s part of our retirement plan as well. Who are we with or with our pets as well? Electricity’s up 13.7%. Used cars are up 7.1%. We’re trying to get used cars and not pay the retail ring on the on a brand new car. Regular gasoline is up. Get this, folks, 61.1% according to the Bureau of Labor Statistics. Airline fares are up 34.1% and hotels are up 11.5. All of that affects your vision for retirement. If you had a vision for travel in retirement, guess what? It’s costing more. If you have a vision for staying home and cooking and hanging out with your family and doing all that stuff, guess what? That’s costing you more as well. We’ve only got 5 minutes left in this show, but how does inflation affect retirees? Inflation affects everybody, but you can especially be much more vulnerable if you’re retired. Inflation harms retirees as they generally live on fixed income comprised of Social Security, pensions and withdrawals from their retirement portfolios. Sustained inflation over a number of years can drastically reduce your buying power, especially without cost of living adjustments and pension payments or strong investment markets that would grow your retirement accounts. So be careful about all of that. That’s why you need a real plan here.

Producer:
It’s This Week in History.

Sam Davis:
This Week in History. In the year 1971, Apollo astronauts James Irwin and David Scott first used the lunar roving vehicle on the moon. And so that was 51 years ago this week. It was a battery powered, four wheeled rover. It was used in three missions of the American Apollo program during 1971 and 1972. You may have heard them be called Moon Buggies. That’s their nickname. And the vehicle and test models were built by Boeing actually at the cost of $38 million, and that equates roughly to 285 million of today’s currency. But I think this is.

Ford Stokes:
Just one expensive.

Sam Davis:
Car. Oh, yeah. I think this is just shows the the incredible power of American ingenuity and what we what we can do as a country when we set our mind to something. I mean, the Ford model A came out right at the turn of the century in the early 1900s. And 70 years later, we’re driving on the moon. So keep it up, America. Very cool accomplishment. 51 years ago, it’s the final.

Producer:
Countdown. So let’s recap what you may have missed. It’s the final countdown.

Ford Stokes:
So on today’s show, we kind of talked about smart vision, smart tax and smart income. We talked about generating your own personal pension. We also with smart vision, we talked about what are you doing? Who are you with and how are you going to fund it? What are you doing? Who are you with and how are you going to fund your retirement? Also, we talked about one of the strategies to build a great retirement where your kids are going to spend more time with you is to put your house on a body of water so they’ll come see you on Memorial Day, July 4th, and Labor Day versus just coming to see you on Thanksgiving and Christmas. It’s also pretty depressing for me to understand that by the time my girls are 18 years old that I will have spent 93% of the time I would spent with them and 7%. I’m going to I’m going to miss them like crazy. I’m only got 7% more with them. It’s unbelievable to me. But next is we talked about smart income. We talked about how you can generate your own personal pension. We also talked about replacing your bonds. We played the chapter How to Build Your Own Personal Pension from chapter nine in my book, Annuity 360. And we encourage you to go ahead and pick up the phone and book an appointment with us, or at least visit annuity 360 net. That’s Annuity 360 dot net so that Deborah can get a free copy of my book out to you.

Ford Stokes:
And we’ll sign I’ll sign that book and get it to you. Absolutely no cost to you. And then we talked about smart income and all the smart tax side of it, not just the personal pension, but the smart tax between Roth IRAs and life insurance and will help you with a Roth ladder conversion. Absolutely. At no cost to you and how you can move money a little bit at a time each year and minimize the taxes you’re going to pay over time and also delete the IRS from being your partner in retirement. We think that’s a really good idea. We think that’s the right thing to do. Also, one trick on a Roth IRA that I didn’t talk about on this show, but I have before is you want to use taxable accounts. Let’s say you’ve got money in a taxable investment account on a brokerage account or into a savings account. We want to use that money to pay the taxes. When you’re converting, let’s say you’re going to convert 100,000 and you’re at effective tax rate of 20%. So what we would do is take 20 grand from the investment account and pay the taxes, but move 100,000 from your IRA to your Roth IRA. And therefore, you’re you’re increasing the Roth IRA amount, dollar for dollar at the same time as you’re decreasing the IRA. So you’re moving the 100 grand. So you’re taking taxable money and paying the taxes on moving money from tax deferred buckets to your tax free bucket. We think that’s a big deal.

Ford Stokes:
So you’ve learned a lot today. You’ve learned a lot that you can apply. But I would say you haven’t made a decision until you’ve taken action. And the best way to do that is take action and visit active wealth dot com. Click that schedule a consultation button in the upper right corner or call us at 7706851777. Again 7706851777. And we’re so glad you’ve been with us here on the Active Well show. Sam and I are always appreciative of our activators on this weekend. Every weekend when you show up and try to learn new things, we try to educate you and RMU so that you can build a tax efficient, fee efficient and market efficient portfolio. Absolutely. At no cost to you just by meeting with us. And all you have to do is give us a call at 7706851777 or visit active wealth dot com. Next week, we’re going to talk about more aspects of how to build a smart retirement plan. I’m here’s a hint I’m actually a little a little news. I’m writing a new book called The Smart Retirement Plan Book. And we’re talking about different aspects of that book on our shows between now and Labor Day. So we can’t wait for you to come back next week to be on and listen to us talk about more different aspects of how to build a smart retirement plan that hopefully is going to help you build a sound retirement plan and help you protect and grow your wealth.

Producer:
Thanks for listening to the Act of 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 Forward Stokes at 7706851777 or visit Active Wealth Investment Advisory Services offered through Brookstone Capital Management LLC. Become a registered investment advisor. Bcm and Active Wealth Management are independent of each other. Insurance products and services are not offered through BC but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed. Past performance can be used as an indicator to determine future results.

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