8.25.22: Audio automatically transcribed by Sonix

8.25.22: 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 of 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 the act of well show activators I’m Ford Stokes chief financial advisor and I’m joined by Sam Davis, our executive producer, Sam Howard.

Sam Davis:
Everybody, welcome to the Weekend Activators and welcome to the Active Wealth Show. So happy to have you here for another episode here with Mr. Ford Stokes, your chief financial advisor.

Ford Stokes:
It’s always great to have that ambassador to the weekend who welcomes you to the weekend. That’s always great. We appreciate you, Sam. We’ve got Sam and I’ve got a pretty big show playing for you this week. We’re going to continue on our series talking about the Smart Retirement Plan. And we’re going to continue our series called The Smart Retirement Plan. And we’re going to talk about rules to follow this week, taxes and income streams. So we’ve got a significant amount of education and things that actually you need to take action on this week. I think you’re going to like it. But let me just kind of go through the whole show. One is we just want to say hi and we’re just so glad you’re with us. Two, we’re going to give you a brief kind of macro market update and also if you’re looking to consider. What’s going on with the markets? What do you need to do about your retirement? Let’s say you’re within 2 to 5 years of retirement or you’re already retired and you’re unhappy with the performance, especially of this year of your assets. And you want a second opinion. You want to figure out what’s going on with your your retirement account and your investment accounts. Then I would encourage you to go ahead and visit active wealth. That’s active wealth exactly as it sounds. And there’s a schedule a consultation button in the upper right corner. You can also just pick the phone up and give us a call at 7706851777. Again, 7706851777. And we’re happy to help you. And we give you a free financial consultation that includes a portfolio analysis one and two. We’ll give you a retirement income gap analysis. Three will give you a Social Security maximization report. Four. We’re going to give you a financial plan to your 95th birthday.

Ford Stokes:
Five will give you a financial plan, your 95th birthday with our recommended portfolios. Then the fourth one, we’ll actually do it with your current investments that have nothing to do with us. We’ll just analyze where you are and say, this is what it looks like. And then six, we’re going to give you a financial plan to your 95th birthday that also includes a Roth ladder conversion plan. If you haven’t thought about doing a Roth ladder conversion or you’ve been behind on that and you want to understand what you could do to save six figures during retirement, then I would encourage you to visit Active Wealth dot com and book a consultation directly with me. You won’t get put off to another adviser. We do have multiple advisors that work in the firm, but you get a chance to actually meet directly with me and we’ll take care of that. Also, if you’re wondering who in activator is, because we said that at the top of the show, an activator is somebody who wants to retire successfully, somebody who wants to build a tax efficient, fee efficient and market efficient portfolio. They’re also somebody who’s looking just to protect and grow their money and. They’re also somebody who listens to this show. So if you’re listening to the show, congratulations, you are an activator. And if you want more information about our show or you want to listen to any of our former episodes or previous episodes, then I would encourage you to visit Active Wealth Show. That’s active wealth show dot com. And there’s an episode button page in the top navigation bar there and you can click on that and listen to any of them. Sam, how many were you up to now?

Sam Davis:
I think we’ve got we’re maybe around 140 episodes of the active wealth show. So we’re getting up there.

Ford Stokes:
Yeah, it’s pretty good. So feel free to to check all that out. Also, we had a gentleman who called in Andrew is his name and Andrew and his wife Lynne. They’re great. And he called because he listened to my audiobook annuity 360. He didn’t want to have to read the book, so he just went on Audible or AC and and Amazon and bought the book, the audiobook and listen to the audiobook on Audible or on Amazon. And it was like I think $6.19, I think. And we’ve had hundreds of downloads of that audiobook, by the way, over the last year, and he really appreciated it. He said he felt like I didn’t sound like a jerk. He said, I sound like somebody who was going to care about him and his family and his wife. And he was nearing retirement and he wanted to talk with us and he wanted some sort of safe part of his portfolio. He’s most interested in a bond replacement, part of his portfolio. So that’s what he called us for and we’re working with him. And so want to give a shout out to Andy and his wife. And thanks for downloading the audio book of Annuity 360. We’re going to play a couple of chapters of Annuity 360 this on this show because it fits in with the rules to follow and with smart rules to follow and smart taxes and smart income. But let’s go straight into the market.

Producer:
Update your active wealth market update.

Ford Stokes:
So the US economy shrank at a slower pace in the second quarter than previously reported, but continued to meet the criteria for a so called technical recession. And in my opinion that means it is a recession. As raging inflation and higher interest rates weighed on spending, gross domestic product, the broadest measure of goods and services produced across the economy, shrank by 0.6% on an annualized basis in the second quarter, the Commerce Department said in its second reading of the data on Thursday that is below the initially reported 0.9% decline. Gdp already contracted by 1.6% in the period from January to March, the worst performance since the spring of 2020, when the economy was deep in the throes of the COVID induced recession. Recessions are technically defined by two consecutive quarters of negative economic growth and are characterized by high unemployment, low or negative GDP growth, falling income and slowing retail sales, according to the National Bureau of Economic Research, NBER, which tracks downturns. Here are some tips also for navigating the recession with back to back declines in the economy. You know, it meets the technical criteria for a recession like we talked about, which requires a significant decline in economic activity that is spread across the economy and that lasts more than a few months. Still, the NBER, the semi-official arbiter, may not confirm it immediately, as it typically waits up to a year to call it. The NBR also stressed that it relies more on more than data from the GDP in determining whether there is a recession such as unemployment, consumer spending, which remains strong in the first six months of the year.

Ford Stokes:
It also takes into consideration the depth of any decline in economic activity. Thus, the real GDP could decline by relatively small amounts in two consecutive quarters without warranting the determination that a peak had occurred. The latest downturn stems from a number of factors, including declines in private inventories, residential, non-residential investment, government spending at the federal, state and local levels. Those decreases were offset by increases in net exports. The difference between the US exports and what it imports as well as consumer spending, which accounts for two thirds of the GDP. The report showed that consumers are spending far less than they were in the winter, with personal consumption expenditures climbing by just 1%. Which is interesting to me, Sam. When you look at everybody’s traveling for the summer and things like that, it’s interesting that the consumer expenditures still continue to decline for the period as high inflation persisted and eroded American purchasing power. We deal with a lot of retirees and a lot of retirees are getting or feeling the hit from this, both in their their gasoline purchases at the gas pump but also. What they’re dealing with at the grocery store. They’re also eating out less. And you need to kind of plan for some of that. The report will fuel a growing political crisis for for President Biden, who has seen approval rating collapse in conjunction with a faltering economy and could complicate the Federal Reserve’s policy trajectory as it weighs how quickly to raise interest rates in order to tame inflation without crushing economic growth, central bank policymakers raise the benchmark interest rate by 75 basis points in June and July for the first time since 1994.

Ford Stokes:
Folks, they signal that another increase of that magnitude is possible in September, depending on forthcoming economic data. And. And so also what Jerome Powell said, he said, I do not think the US is currently in a recession and the reason is there are too many areas of the economy that are performing too well. It’s a very strong labor market. It doesn’t make sense that the economy would be in recession with this kind of thing happening. I disagree with him. I think he’s just trying to toe the political line because he he falls in the left hand side of the aisle. He’s a liberal and I just disagree with him wholeheartedly. That’s just my own personal opinion. But it is what it is. And then also when we come back from the break, we’re going to talk about we’re going to share our financial wisdom quote of the week. We’re going to talk more about the rules to follow. And we’re going to dive into smart tax because we’re going to finish up with smart tax because a lot of people wanted more information about taxes and I wanted to at least share this. Listen, if you want to get smarter in taxes, there are only two types of tax free investments out there.

Ford Stokes:
Number one is life insurance. And we like and we recommend investing in indexed universal life insurance policies. Number two is and we think this is a big deal as well, is Roth IRAs. Those are the only two financial products out there or insurance products. Life insurance is an insurance product, obviously. And then Roth IRAs, those are the only two types of truly tax free investments out there that won’t contribute to additional taxation on Social Security income benefit. It also will not result in higher Medicare surcharges in Irma, and it also won’t contribute to taxes on your principal or your gains. That’s the true definition of a truly tax free investment. You know, municipal bonds, unfortunately, those do contribute to additional taxation under Social Security, income benefit and also to additional Medicare surcharges. So. If you want to get smarter and diversify your tax buckets, then I would encourage you to do one thing and that’s invest in one of those two products or both one of those two types of things. So when we come back from the break, we’re going to give you our financial quote of the week. This one comes from P.T. Barnum. I think you’re really going to like this one. And then we’re also going to talk more about smart taxes and smart rules to follow for your smart retirement plan and smart income, all on this week’s show of the active wealth show right here on AM 920.

I’ll never be your biggest burden. My best friend only ends up. I seem to.

Producer:
Remember all of Ford’s listeners receive a free financial consultation just for listening to the show. Visit active Health.com to learn more and schedule an appointment. Thanks for listening to the Active Welsh show and subscribing wherever you listen to podcasts.

Ford Stokes:
And welcome back Activators, the active ball show on Ford Stokes, your chief financial advisor. And I’m joined by Sam Davis, our executive producer. And here’s your financial quote of the week. And it’s a good one.

Producer:
And now for some financial wisdom, it’s time for the Quote of the Week.

Ford Stokes:
This comes from P.T. Barnum. Money is a terrible master, but an excellent servant. So you want to try to make money? Be your servant, not your master. Phineas Taylor Barnum, American author, philanthropist and founder of Barnum and Bailey Circus. Became one of the America’s first millionaires. His quote illustrates the importance of making your money work for you. That’s exactly what we try to do here on the active wealth show and also with active wealth management. If all you do is work for money, it essentially becomes your master. But if you put your money to work, paying bills for life’s necessities, purchasing assets and other investments, money will serve you. Strive to be the master of your own destiny by making sure you’re the master of your money. And that also includes tax planning to. And. You know, if you think taxes are going to go up in the future, then you need to do something. You need to do something different. Also, if you’re tired of having poor return on your money and you’re tired of seeing the gains you made last year erode this year, then maybe you ought to reach out to us. And I think we can help you. Also, we work increasingly, fortunately and unfortunately, we’re working increasingly with with more and more folks who are already retired, who can’t go back to work. They’re in their seventies and even early eighties. Because they’ve seen significant losses this year. And if that’s you, then I would encourage you to pick the phone up and give us a call at 7706851777.

Ford Stokes:
Again, 7706851777. But. What we’re going to talk about in these next segments is we’re going to talk about smart tax. Getting your money work, working for you, just like P.T. Barnum said. But we’re also going to talk about income and also really important rules to follow. We’ve shared them on the show before, but I want to make sure that we share all those today. But let me just first dive into smart tax, because most people that come into our office, they’ve got the IRS as their partner in retirement. They haven’t divested the IRS out of being their part of retirement. And in my opinion, that’s a mistake. And they need to do a better job at getting their money into different tax buckets, whether it’s a little bit of money into life insurance and index universal life insurance policies where they can get market like gains without market risk and also have a death benefit protection and also have generate tax free retirement income as loans against the policy that is part of the IRS code rules. 7702. Or they actually implement a conversion from their IRA to their Roth IRA. We’re going to talk about that in depth here. Everybody wanted to. We’d covered some stuff with Smart Tax last week as part of our Smart Retirement Plan series. It’s going to go all the way through Labor Day weekend. But we’re going to dive into this. So did you know that different investment accounts are taxed differently? By understanding how different accounts are taxed, you can ensure your money is working, how you need it to, and when you need it to work for you.

Ford Stokes:
Before to discuss the type of retirement accounts, there are two terms that you should be familiar with. Number one is tax exempt. A tax exempt account is taxed when you contribute, but not when you withdraw the money. There’s a greater benefit in retirement because you don’t have to worry about being in a different tax bracket than when you contribute it. And tax deferred is another term we want you to be familiar with. A tax deferred account gives you the tax benefits up front. You won’t pay taxes when you contribute, but you will pay taxes on any distributions. Let’s start by looking at the two most popular retirement accounts. Number one is a traditional IRA. Traditional IRAs are tax deferred. This means that you’ll have to pay taxes when you withdraw money from these accounts. You have no way of knowing for sure what tax bracket you will be in when you start withdrawing funds from the traditional IRA. Also if you think taxes are going to go up in the future. And here’s a little tidbit I’ve shared on the show many times, but I’m going to share it now again. So from 1960 to 1963, during the Kennedy years, the current 24% tax bracket that we enjoy now. Was actually 56%. That is 8% higher. I’m holding up two hands that have four figure four fingers on them.

Ford Stokes:
So I’ve got 8% higher than two X than two times what the current 24% bracket is. Also, with this runaway spending and all the crazy stuff that Biden decided to do on with student loans this week, and we’re going to I’m going to read what Dave Ramsey has to say about it here in the next segment. But it’s just unconscionable to me. But. You’ve got to make sure you’re doing everything you can to plan for in case taxes go up in the future. So you could be looking at a reduced payout if you’re in a higher tax bracket. Here’s a fact, folks. And we’re trying to help you. And again, if you want more help and you want a free financial consultation, all you got to do is reach out to us at Active Wealth. What? We’re trying to help you. Here’s the deal. And it’s a big deal. If you think taxes are going to go up in the future and you’ve got 100% of your money of all of your retirement money into a traditional IRA that you rolled over your 41k into that. Guess what? The IRS is your partner in retirement. Not all that money is yours. And believe it or not, Uncle Sam is ready to collect. They are ready to collect their part of your money. That’s why they have required minimum distributions at age 72. They’re going to force you to start taking 4.1, 4% and more each year from your IRA. And then they’re going to end up taxing that money on your ordinary income tax rate.

Ford Stokes:
Now, you may think, hey, I’m not working anymore. Forwards to my. You know, so I should be fine. And I’m going to be in a lower tax bracket. Well, not necessarily, because. If taxes are going to go up in the future, one, you’re going to be paying more taxes based on whatever your ordering income tax account is, tax rate is. But here’s the other thing. You’ve got Social Security, let’s say you’re making. 45,000 into the household or 40,000 or whatever it is. Let’s say the husbands get making 30,000 a year and the wife stayed home and she ended up, you know, working harder than the husband by raising the kids and get an amen as you’re driving around. Right, ladies? And she’s making 50% of his. So that’s. That’s 15 grand. So 30 plus 15 is 45,000. So you have 45,000 coming to the household and let’s say you’re taking out, you know. 55,000 a year, you get 200 grand and let’s say that’s what you made. When you’re working. A year. Guess what? You’re in the same tax bracket. And what happens if taxes go up in the future during your retirement with 30 plus trillion dollars in US national debt? There’s no way for them to do anything other than to collect a higher tax rate to even be able to keep the same programs going. It’s a big deal. So that’s traditional. Ira. The other type of retirement account is the second most popular is a Roth IRA.

Ford Stokes:
And if you can move your money from your IRA into your Roth IRA, you’re going to be better off. The other hint here and something to write down or something to remember is you have let’s say you have a taxable investment account. A lot of folks have car funds. And, you know, my office manager has Deborah has a car fund and she uses that money to pay for the next car. And and she saves the money she would have paid in her car payment into a fund. Well, she’s used that car fund to pay the taxes as she’s doing her her traditional Roth ladder conversion. She’s moving money from, you know, about 100 grand a year into her Roth IRA. After each year, she’s taking out the taxes, the 15 to 20 grand she’s paying in taxes. From that. But. But her money is moving. Dollar for dollar. She’s taking 100 grand out of her IRA, and she’s moving it into a Roth IRA. Dollar for dollar. She’s using the taxable money to pay the taxes on that conversion because you owe the taxes on the amount of money you’re going to convert. The other medicine here is you have to wait five years from to access. That conversion money to access the principle in the gains absolutely tax free. But once that five years is over, you’re done. So let’s say you start converting at age 60 years old. You’ve got 12 years to get out all the way out of your IRA.

Ford Stokes:
So that’s a good thing to do. And also married couples filing jointly right now, you can go all the way up to $340,100. And convert. So let’s say you’re making 200 grand. You could convert $140,100 each year, pay the taxes on that, and then you’re done over a 12 year period, let’s say, if you’ve got 1.2 million in your IRA account. You can actually make this thing happen. And we can help you do that. All you’ve got to do is pick the phone up and give us a call at 7706851777. Again, 7706851777. Or just visit active Qualcomm and click that schedule an appointment button. When we come back, we’re going to talk more about smart tax. We’re going to go all the way in depth on smart tax with Roth IRAs and life insurance and set the table there. And then we’re also going to talk about our problem solver for the week. I think you’re going to really like that during other parts of the show. And we’re going to talk more about the rules you should be following. The financial rules you should be following and. This is all part of our Smart Retirement Plan series. And again, we encourage you to visit Active Wealth dot com so you can meet with us and absolutely for free. So you make an informed financial decision about your financial future. You’re listening active wealth show right here on AM nine one. The answer. Come right back.

Speaker5:
Fly me to the. Let me play among the stars and let me see what spring is like on a Jupiter and Mars. In other words.

Hold my hand.

Speaker5:
In other words, baby, kiss me.

Producer:
We are Ford Stokes, 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..

Producer:
Thanks for listening to the Active Wealth Show. If you like what you’re hearing, make sure to rate our show on Spotify or wherever you listen to podcasts.

Ford Stokes:
And welcome back Activators, the active ball show on Fort Stokes, your chief financial advisor. I’m joined by Sam Davis, our executive producer. And we’re going to go ahead and play Chapter 17 for my book Annuity 360. Also, if you’re wondering how you can get a copy of my book Annuity 360, you can visit Annuity 360 net and we’ll send you a free hard copy. That’s Annuity 360 net. What we’ve seen is increasingly more and more people are going on Audible and Amazon and getting the audio book. So and it’s like $6.19. I would encourage you to go ahead and and try to get the audio book if you want to do that. And it’s either on Amazon or Audible, and we’ve got hundreds of people who’ve downloaded that book. The other is I want to go ahead and play this Chapter 17, because I want to talk through how you can actually invest Roth IRA money into a fixed indexed annuity that is part of that bond replacement strategy. I don’t want to confuse you here, but I think it’s important for you to know that you can implement a Roth ladder conversion within a fixed indexed annuity. You can also. Invest Roth dollars into a fixed indexed annuity and still have your money come out absolutely tax free. Chapter 17. You can buy an annuity with your Roth IRA account. Big idea.

Ford Stokes:
Many people don’t know this, but there are at least five annuity carriers who allow you to invest your Roth IRA account into a fixed indexed annuity, and many others are beginning to follow suit. A Roth IRA is an individual retirement account. Ira, under United States law that is generally not taxed upon distribution provided certain conditions are met. The principal difference between Roth IRAs and most other tax advantaged retirement plans, like IRAs for one case, for three B’s, for 57 Sep IRAs. Et cetera. Is that contributions into the Roth IRA are invested with after tax dollars and qualify withdrawals from the Roth IRA plan are tax free, and growth within the account is also tax free. The Roth IRA was introduced as part of the Taxpayer Relief Act of 1997 and is named for Senator William Roth, who introduced and sponsored the legislation. This may surprise you, but you can actually invest your Roth IRA account into a fixed indexed annuity. As of the printing of this book, there are five annuity carriers that will easily accept a full Roth IRA conversion from your IRA. There are only three annuity carriers that can handle partial conversions, but more carriers are adjusting their business operations and illustration software to accommodate Roth IRA investments into their annuity products. The largest annuity carrier in the United States allows for Roth IRA investment into their annuities.

Ford Stokes:
They allow Roth IRAs in all of their current fixed indexed annuities, full and partial with some parameters, including number one. Roth conversions will create new policy numbers, so they will show in separate accounts. But this does not change any product feature or the surrender schedule with the annuity product. Number two, conversions must be at least the product minimum premium between 10,020 thousand each. Therefore, you cannot implement a Roth conversion that is less than 10 to 20000, depending on the annuity product. The title of my next book is Taxes Are On Sale. I will cover all the aspects of Roth IRAs, Roth IRA conversions and why now may be the best time to kick the IRS out of your retirement account with a Roth IRA conversion? I believe that taxes will likely increase in the future, so a strategic Roth ladder conversion will help reduce your future tax risk and save you six figures in taxes paid during your 30 plus year retirement. Please do not let your current Roth IRA account or your desire to convert your IRA to a Roth IRA impede you from investing into a fixed indexed annuity. You now learn that you can actually implement a Roth IRA within a fixed indexed annuity product, and we work with several carriers are very good at it. The other is now let’s talk about life insurance. And by the way, an annuity is a life insurance product.

Ford Stokes:
It’s basically insuring you from living too long. And life insurance is about insuring you for living too short. So therefore, there’s a death benefit there to help cover the family in the event that the primary breadwinner passes away. So let’s talk about life insurance as a asset class that is a truly tax free. Investment product or life insurance product. As an asset class, it’s important to know what types of life insurance policies are available and which policy is right for you. Life insurance will help support your family when you pass away, and it can help cover the cost of final expenses as well. Depending on what type of life insurance you choose. It can also give you extra income in your retirement. What is life insurance? Life insurance is a contract between an insurer, typically a company and you the policyholder. This contract solidifies a promise to pay a death benefit to your designated beneficiary when you pass away term life insurance versus permanent life insurance. There are two types of life insurance differentiated by how long you want or need the policy to last. If you only need your policy for a short term amount of time, you might choose term life insurance. This is a type of life insurance that lasts for a set number of years. Usually ten or 20 years are commonly used for term life insurance.

Ford Stokes:
Permanent life insurance lasts the entirety of the policyholders life. Unless you stop paying premiums, these plans are typically more expensive. Here’s a types of permanent life insurance whole life. This is the type of insurance you will accumulate cash value over time, but that’s usually going to be done at like 3% rates, kind of like a bank CD, almost universal life or similar whole life. This type of insurance accumulates cash value over time. The big difference the cash value will earn interest, and you can also get flexible premiums during the lifetime of the policy. And then the type of life insurance we like the best is an index, universal life policy or an IUL again indexed universal life insurance policy or IUL another type of insurance that earns cash value indexed universal life policies give the policyholder the chance to earn a fixed or equity indexed rate of return that is linked to a market index like, you know, the S&P 500 or the NASDAQ 100, the Russell 2000, or the Credit Suisse Raven PAC or the Credit Suisse Momentum or the Jp morgan Cycle Index, or there’s all kinds of different indices out there that are linked to indexed universal life policies. So here’s how you can kind of choose what policy is right for you. You can ask yourself the following questions How much do I need? And also what? Do I plan to use the life insurance policy money for most people when we’re working with them? They want they want it for two things.

Ford Stokes:
Number one is a death benefit protection for their spouse and their and their kids. And the other is because they want to generate tax free. Retirement income. That’s right, folks. Tax free retirement income. And we need to do everything we can. To try to get to some sort of tax free income, whether it’s withdrawals from our Roth IRA accounts later in life during our 35 plus retirement years, because guess what? You’re going to probably live during retirement almost as long as you worked. We’re all living longer, even despite COVID and everything else. You know, the CDC says that you’ve got literally. You’ve got, you know, over a 50% chance that one of you is going to live to be over 90 years old if both spouses live to be 65 years old. So we want to make sure we’re doing everything we can to plan for that. We also want to divest the IRS from your retirement accounts with indexed universal life insurance or also with Roth IRAs. Also, one thing true. It is true that I want to make sure you guys are guys and gals are aware of. If you have a current hole life policy or a universal life insurance policy, or even an index universal life insurance policy.

Ford Stokes:
Did you know that we can help you implement a 1035 tax free exchange of cash value of the life insurance into an index, universal life insurance policy, and likely get you a better rate of return. We’ll have to analyze it, but we’ll actually do a life insurance policy x ray of. Your policy. Also, if you have a variable annuity and you want to start eliminating the fees that are associated with the variable annuity, we can do a 1035 exchange into a fixed indexed annuity and also get you a 10% bonus on your money. So those are two different really cool x ray reports that we can do for you. And all you’ve got to do is visit active wealth dot com and schedule a consultation. There’s a button that says schedule a consultation in the upper right corner and we’re happy to help you. And. This stuff matters. You know, Tony Robbins says that if you haven’t actually taken action, you haven’t made a decision and we want to help you make a decision. Listen, at least do everything you can to try to get your portfolio analyzed for smart tax solutions. You know, are you on the right path to have a smart tax retirement plan? I don’t know if you are and you may not know if you are, but if you come in and talk to us, I guarantee you we’re going to help you understand for certain.

Ford Stokes:
And you want to try to get your money out of just having just your money into an IRA. You want to actually diversify those tax buckets. Have a Roth IRA. Try to move the money from your your IRA to your Roth IRA in a systematic way and then over over multiple years. Then also consider if you’re in your forties or fifties, you ought to consider investing in an index, universal life insurance policy, for sure. And if you’re in your thirties, all the better. Also, if you’ve got a bunch of we’ve got a bunch of grandparents around out there. Go ahead and. Share it with your kids and we’re happy to help them as well. So your kids and your grandkids, we’re happy to help you. But when we come back from a break, we’re going to talk about smart rule following as a part of that smart retirement plan. I hope you’ve enjoyed this detailed these detailed segments on smart tax investing with Roth IRAs and life insurance. You’ll see the active wealth show right here on AM nine two. And the answer. Come back to hear about three really important rules that we think are really smart rules for a smart retirement plan.

Producer:
And 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 zation 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.

Ford Stokes:
And welcome back activators the active well Sharon Ford Stoke chief financial adviser. We’ve got a lot to pack into this segment for so and we’re not going to get all of it in, but we’re going to do our level best to try. So first of all, I want to let’s sit on with the beating bank CD. Sam.

Producer:
Need a higher rate of return from your safe money. Listen up, it’s time to beat the bank CD rates.

Ford Stokes:
So bank CDs right now you know to your bank CD is paying you know between 0.030.05 all the way up to 0.6, almost 1%. If you go with an Internet bank, even as high as maybe 1.6%. But did you know there’s another product out there that you can you can get that pays a much higher rate of return. You can actually get a MIGA, a multi year guaranteed annuity that can pay you up to 3.6%. This we’ve got different companies that are that are offering that that’s a great way to beat the bank CDs and don’t put your money in into a bricks and mortar bank CD for two years because they’re just paying so such a paltry low rate that it’s just a melting ice cube strategy. And let’s don’t do that. Let’s try to get a higher rate of return. All you’ve got to do is visit active wealth. That’s active wealth. And we will walk you through your different options. We also have a fixed indexed annuity that only has a five year rate of five year surrender period that if you could tie up your money for five years, you could you would be surprised. We’ve got one gentleman who’s investing into a total of six years. He’s got two, three year protection periods. And this product is actually illustrating incredibly well. It shows that he’s investing 500,000, not 500,000. At the end of year six, he’s going to be able to cash out full surrender that policy and take that money and put it in something else.

Ford Stokes:
But it’s illustrating that it’s going to show an accumulation with $1.19 Million in six years. So it more than doubles his 500,000 in six years and his money is not invested in the market. Now, obviously, that’s not a guarantee. That’s where that money is going to be. But that is nice to see that illustrated rate based on the last ten year rate of return. And your money’s not at risk in the market and its accumulation base. Now, you can’t take out any money over that six year period, but that’s still nice to know that that’s that’s the option out there. And so it’s something to consider. So now let’s talk about smart rule following. There’s really three rules that we’ve talked about quite a bit here on this show. I don’t want to go through these quickly. Planning for retirement can feel a little bit overwhelming because, you know, there are many different things you have to consider. Luckily, there are a few rules that could help you build a solid foundation for your money and your retirement. And here they are, rule 100, the 4% rule and rule of 72, the rule of 100 states that your portfolio should contain a risk percentage equal to minus equal to 100, minus your age. So let’s say you’re 60 years old.

Ford Stokes:
You take you subtract 60 from 100 and you’ve got 40 left over. That means that 40% of your portfolio should be at risk in your mark in the market. If you’re 70 years old, that means that only 30% of your portfolio should be at risk in the market. So people are living longer and they’re spending more years in retirement. The old rules may not always provide you with enough money to maintain your current standard of living core expenses. Here you’re talking about food, clothing, shelter, discretionary expenses, etc., eating out entertainment wants. And then also you’ve got guaranteed income sources with pensions, Social Security, and that can actually give you additional money here. But you’ve got to make sure that you are not taking too much risk with your money. You really shouldn’t. You’ve got to be very careful how much you are risking in the market. You know, if you’ve got 80% in stocks right now without a bond replacement strategy, with fixed indexed annuity or getting life insurance for income that supplements also your Social Security income, then you may not be doing it right. And it’s also really concerning. You can’t afford to take 20 and 30% losses that we’ve seen some people take this year. When you’re in your seventies and eighties, you just can’t do it. The next rule is a 4% rule. You want to make sure that your money outlives you, not that you outlive your money.

Ford Stokes:
The 4% rule says that retirees can withdraw an amount equal to 4% of their savings in their first year of retirement, which are all percentages in every subsequent year, would then be adjusted for inflation. As with any rule, there are exceptions, depending on the situation. Some experts suggest abiding by a 3.2% rule to help with protection and growth. But I would encourage you to consider not withdrawing more than 4% of your assets in any year during retirement. If you do that, it’s likely that your money is going to outlive you and you’ll be able to pass on some of your money to your heirs. Rule 72 is just a great way to estimate how quickly your investments will double. Given a fixed interest rate, investors can divide 72 by the annual rate of return. So an example here, take 72. Let’s say you’re getting an 8% return. Your money is going to double in nine years. That’s just rule 72. It’s simple and we’ll move on. But but take that rule of 72. It also works with credit card debt to the other way. So be careful and make sure that you’re getting your money working for you. As P.T. Barnum said to us at the beginning in his financial wisdom quote of the week that we used his quote this week. So now let’s get into our problem solver.

Producer:
It’s time for this week’s. Problem solver.

Ford Stokes:
Here’s this week’s Problem Solver, a married couple. And they’re preparing for retirement. They’re both 60 years young. The husband owns his own business and the wife works with him in the accounting and bookkeeping side. They have 3 million saved in investment and retirement accounts and another 3 million in real estate with two different homes. They’ve got a lake home and their primary residence. They have no Ros and no life insurance. Everything is taxable or tax deferred. As they prepare to retire, they’re concerned about the future market losses because they don’t want to they don’t want to earn money and they just see it waste away and market downturn and taxes and and also the volatility their estimated expenses in retirement about 10,000 a month. They’re not overspending by any means because they do have a significant amount of total net worth. And the solution is they invested $1.1 million into fixed index annuities to help protect a portion of their savings for market loss. And those were non qualified, non qualified money and they’re super excited about that. They did one that was a, you know, a 14 year product and they got a 10% bonus on that for over 500,000. And then one they invested they invested 600,000 into a six year product. The husband also plans to move $1.2 million from a SEP IRA to a Roth IRA starting in 2024. And and he’s going to keep that going throughout retirement and try to at least get all the way out and move all of his money from his $1.2 million from his SEP IRA to his Roth IRA before he turns 72 years old.

Ford Stokes:
They like to wait until they both turn 67 to begin taking Social Security. They feel like they deserve more than $0.75 on the dollar on their contributions to Social Security as hardworking blue collar business owners. The wife runs the bookkeeping for the business. They employ more than a dozen people. They will start to divest the IRS out in their retirement accounts and enjoy the life they worked so hard to build at their primary residence and also in their lake home. This is a really good, sound strategy. They’re not employing life insurance because they felt like life insurance was a little bit too expensive at their age because they were in their sixties. But they could have because they were at least in their early sixties or in their early sixties, but they at least wanted to make sure they’re growing part of their money tax deferred with fixed indexed annuities instead of taxable accounts because they had a lot of money in taxable income that came directly from their business. And then the second is they’re going to implement this SEP IRA, this Roth ladder conversion from his SEP IRA into a Roth IRA, which we think is a sound strategy. So they’ve got tax deferred money and they’ve got tax free money going as part of their strategy. So we think that’s a really good idea. It’s the final.

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

Ford Stokes:
So in this week’s show, we’ve talked about smart tax solutions. We talked a lot about smart tax. We talked about life insurance and Roth IRAs being the only two truly tax free investments out there. We also debunked that municipal bonds are not also tax free because they they still interest from municipal bonds still contribute to additional Social Security taxation and also additional Medicare surcharges. And then we talked about, hey, here’s a really good strategy to how to implement a Roth ladder conversion. You take money from your taxable account or your savings account and pay the taxes on the money. You’re moving from your IRA to your Roth IRA so you can move money from your IRA to your Roth IRA. Dollar for dollar. So if you if you convert 100,000 from your IRA into your Roth IRA, that means $100,000 should go into your Roth IRA and you take the let’s say you have 20% in taxes on that. You should take 20,000 bucks and pay the taxes and you take that $20,000 out of your investment account or your savings account or checking account, and you pay the taxes on that on those dollars. So therefore, your Roth IRA is growing as much as your IRA is is decreasing when you’re doing the conversion. We also talked about the three rules, three smart financial rules for investing. One was the rule of 100, where you take your age and subtract it. And that’s what the amount of percentage that should be at risk in the market. So if you’re 70 years old and you take you subtract 70 from 100, that means only 30% of your portfolio should be at risk in the market. You ought to consider a bond replacement strategy and invest in fixed indexed annuities.

Ford Stokes:
We talked about the 4% rule. Don’t spend more than 4% of your assets each year and therefore your money will outlive you and the rule of 72. It’s just a great way to understand how you can double your how fast your money will double. So if you’re getting an 8% return, you divide 72 by eight and that equals nine. So that means your money is doubling every nine years. We went through a lot. We also talked about it in depth problem solver in this last segment. We’re so glad you’ve been with us here on the Active Wealth Show. And next week we’re going to talk a lot about smart income and smart care for smart health care. We’re hoping to have Bonnie Dobbs on the show next week, and she’s going to talk about Medicare and health care planning during retirement. So glad you’ve been with us. Make sure you listen to the active all show on active all show dot com. And also you can schedule a free financial consultation at Active Wealth. Thanks for being with us. Remember when ever you’re trying to seek financial information and knowledge about your own retirement? If you’re going to be a bear, be a grizzly, be as aggressive as you can to try to understand all the opportunities that are available to you, specifically the smart tax solutions out there. And be sure to go ahead and call us at 7706851777. Again, 7706851777. Or visit active Walt. Have a great week, everybody. We’re coming back next week to talk about smart income and smart health care during retirement. You’re listening to Wall Street right here on and 920. The answer. Have a great week.

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 adviser. 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 cannot be used as an indicator to determine future results.

Producer:
Fixed annuities, including multi year 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.

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