how would you like to save hundreds of thousands of dollars potentially in taxes in retirement well these two strategies I'm going to go through today when combined together have the potential to do just that now if you don't qualify for net unrealized appreciation because you don't have company stock inside your 401k you can still qualify for zero percent taxes on your long-term capital gains and dividends so when we combine these strategies together it creates a very powerful tax and income planning tool that you can use for your retirement [Music] foreign as you can tell I'm pretty excited about this video because we're going to discuss two tax planning strategies the net unrealized appreciation which I've not yet done a video on the YouTube channel about and also the zero percent taxation for long-term capital gains and dividends and you're going to want to stick around until the end of the video where I incorporate these two strategies into a real life financial planning case now unless you've searched net unrealized appreciation to find this video there's a pretty good chance you've never heard of net unrealized appreciation so in its most basic form it's when you have company stock that's been issued inside your 401k you have the option of rolling that money outside of your 401k not into an IRA but rolling it out only paying income tax on the basis that's been distributed and potentially pay long-term capital gains tax on the appreciation so that appreciation from where it was issued to where it is whenever you roll it out and retire or sever from service or become 59 and a half that's what's called your net unrealized appreciation we're here in Houston Texas where we have a lot of client clients that worked at Exxon Mobil or Chevron or some of the other big oil and gas companies we also have clients from all over the country that work for other companies that can take advantage of this net unrealized depreciation strategy so I'm going to use Exxon because we come across this plan a lot we're very familiar with the Exxon retirement plan and I want to illustrate how this concept works and there's some nuances here and there's also some financial planning considerations and of course tax ramifications that we're going to go through but if I worked at Exxon let's say from 1995 to 2020 and as part of my compensation I receive shares of stock each year over the course of my employment so these numbers are not historically accurate but I want to convey the the principle here so in the beginning years if Exxon was trading at twenty dollars and I received a hundred shares and then next year maybe I received them at 22 dollars per share and twenty five dollars per share and over time as I've received more shares as part of my compensation package the value has typically increases the price at which you were issued those shares in the year you received them is what's called your cost basis so if we do this Nua rollout that's the amount that you'll have to pay income taxes on but it's a really cool opportunity here because over time most stocks appreciate in value Exxon today is at a hundred and sixteen dollars per share so the concept of Nua is if I was issued stock at twenty dollars a share and I keep it in the IRA and now it's at 116 dollars a share that's a massive amount of capital appreciation and if I roll it to an IRA and distribute it at that point or at some point in the future I'm going to income taxes and that can can lead to a pretty big tax liability now we're down the road when I need income but if stocks appreciate it over time we typically have a mixed cost basis when it comes to the amount of shares that we've received from the company so first thing to know here and first thing to ask your company is do you guys provide a breakdown of the cost basis on an annual reporting period or do you take the average cost basis so we come across some companies here that they will provide you the information of the exact cost basis and the amount of shares that you've received in each year in that case we can really cherry pick which shares we want to roll out and really take advantage of this strategy because typically we're going to take the lower cost basis ones some companies don't allow you to cherry pick based on the lower basis shares that were issued they calculate an average cost basis for all the shares issued so this is not nearly as advantageous as being able to cherry pick sometimes it can still make sense especially if it's an older 401k or if it's a stock that has really really appreciated since those shares were issued in the average cost basis is down so this video my primary purpose is to help educate you around the financial planning considerations of the Nua rollout so I'm not going to cover all the rules and reg surrounding it I'll do that in a later video though but a couple things you should know this becomes an opportunity whenever you sever from service or typically when you're entering retirement there are some other qualifications but we'll cover those later now if you sever from service prior to age 55 you will be subject to a 10 penalty on the amount you distribute so just be aware that if you're under the age of 55 you've severed from service you have company stock inside your 401k that that 10 penalty for early distribution still applies we have Exxon this 401K here so the total value is about 1.5 million in this hypothetical example the shares the tote in totality the shares have been issued over the course of the working career equals about a six hundred thousand dollar cost basis so I'm going to use the example here where we can cherry pick the individual shares so the next question becomes which shares should I consider doing the Nua rollout because I don't have to roll all six hundred thousand basis out in the real world typically this 1.5 million of fair market value may also be comprised of mutual funds such as growth funds income Etc within the 401K for the purpose of this example Exxon stock is valued at 1.5 million dollars the cost basis of those Exxon shares within the 401K is 600 000.
Just want to point out in the real world typically everyone does not have all their money invested in their company stock but I've I've absolutely seen that over the years so the question becomes which shares do we want to take advantage of the annual rollout with the general rule of thumb is the lower cost basis Shares are more attractive and that's determined by the the value of the stock today anything above 50 percent cost basis to fair market value typically we don't want to consider for Nua now there are some extenuating circumstances sometimes with financial planning considerations that it may make sense but when we do the math and we extrapolate out looking at the value that you would have in the ira versus paying taxes on the basis now annual taxation for growth dividends Etc the Breakeven point isn't that attractive when we look at these shares that are above 50 percent cost basis to fair market value I personally like to see them around 20 or 30 percent really tops so whenever you have shares that are 10 15 20 25 cost basis to fair market value those are typically very attractive opportunities and in some situations Thirty thirty five forty percent could possibly make sense it just depends on the overall financial plan that you're putting together in other circumstances so this is a tax analysis so you may want to reach out to your CPA for help or assistance in doing this or your financial advisor if they're qualified and skilled enough to help you make these determinations I want to run through some numbers now so let's assume for whatever reason this person decides to do the whole Nua rollout so just so we understand the how this functionally works the 600 000 rolls out of the 401K into a non-ira account income tax is due on that six hundred thousand dollars you're probably looking at about a 27 28 maybe 30 percent effective tax rate we'll go with 30.
So 100 eighty thousand dollars of income taxes would be due on the basis being rolled out but in this scenario you're not just rolling out 600 000 That's the basis you're actually rolling 1.5 million dollars out of the 401K and only paying income tax on the basis now if you sell it immediately the net unrealized appreciation is the difference between the basis and the fair market value so you have nine hundred thousand dollars of gain there so if you sell that nine hundred thousand you're looking at the more preferential long-term capital gains tax that would be a pretty big tax still so the question becomes the are what planning considerations should we hold on to this stock do we feel comfortable having this much in one company what is our other wealth what if we break it out over a few years so this is what we're really going to dive into now I just want you to understand how this actually works in regards to the functionality okay let's cover how this actually works so we take the Exxon stock the basis is 600 000 but the full value is 1.5 million so if in this example we decide we want to do it all we would roll the full 1.5 million out of the 401K it will go into a non-ira account but you only owe income taxes on the basis the 600 000.
If you sell the stock immediately you will owe long-term capital gains tax which is a more preferential rate than income taxes at this level of income on the difference between the basis and the fair market value or nine hundred thousand there but you don't have to sell it right away if you don't sell it right away and then you sell it six months later you'll be subject to short-term capital gains tax because you're holding period rules take take into a place or taken to effect if you don't sell it immediately but if you wait 12 months after the distribution date 12 months in one day then you qualify for long-term capital gains tax treatment so some of the financial planning considerations are now what are the income taxes due what is my income and tax plan year one year two year three of retirement how does this fit into that overall tax and income plan and how do we optimize how do we reduce the total taxes we pay while maximizing the value that we retain if we have to pay income taxes on six hundred thousand dollars you're looking at an effective tax rate there of about 27 28 maybe 30 percent so 30 on 600 is a hundred and eighty Grand so you'd write that check to Uncle Sam and you would have 1.5 million outside of the 401K in the more preferential tax environment of long-term capital gains and dividends now you would have annual taxation on these dividends so that's something else we need to consider and we also need to consider future tax rates and make assumptions with what do we think income tax rates are going to be in the future long-term capital gains and dividend rates all of these things go into the analysis but for now this is the logistics of how it works we roll it all out pay income taxes on the basis we can either sell it immediately and pay long-term capital gains on the differential or we can hold it and if we hold it past the distribution date sell it within 12 months short-term capital gains sell it post 12 months long-term capital gains okay so I want to dive deeper into the two options we have just high level so option A is We Roll everything to the IRA we do not take advantage of the Nua rollout eligibility things that we have to consider here is future tax rates rmds other income sources and the secure act now this is not an exhaustive list this is just some of the big ones we have to take and consider future tax rates because when everything is inside that tax infested Ira when you distribute it in the future you have to pay income taxes you've given up the ability to take advantage of long-term capital gains and dividend taxes which are typically a preferential rate rmds Force distributions from your retirement account and when added with other income we oftentimes see people who did not plan for this have 150 200 250 even more of income because of required minimum distributions and their other income so when doing this analysis we have to extrapolate out and look at these factors to help make the decision today secure act I threw this in here because it forces distribution of your retirement accounts if they go to a non-spouse beneficiary that's more than 10 years younger than you full distribution of the retirement account within 10 years so if you have kids and it's important to leave this money to your children if they have income and they're working and now your retirement account has to be fully distributed within 10 years that could be a massive amount of income going on top of their income which now 30 40 50 60 potentially of your retirement account has gone to Uncle Sam if you live in a state with income taxes that could be an issue as well inheritance taxes so a lot of issues here rolling everything into the IRA you can be hit with um pretty big income taxes down the road option b is we do take advantage of the Nua rollout either wholly or in a partial Nua rollout how that works is we would take the shares that we do decide to take advantage of this strategy and we roll them into the non-ira account some things to consider there is that what are long-term capital gain rates now what are they possibly going to be in the future but also we have annual taxation of the dividends and if we're buying and selling inside that account whatever we do not roll into the non-ira account with the strategy the rest of the funds from your 401k go into the IRA and then of course whatever's left here we have the same considerations that I went through over here so now there are financial planning considerations here let's say I was at 35 cost basis to fair market value so I'm kind of right there where mathematically it may not make sense but how much non-qualified money do I have how much essentially I'm saying how much do you have outside of your retirement accounts because if you're entering retirement and all that money is inside that tax infested 401K then you don't have any ability to manipulate what goes on your 1040 your tax return by manipulate I mean we determine which accounts were withdrawing income from to manage our taxable income that we report to the IRS if we pull from our non-qualified accounts think your bank account well you don't have to report that so if you need a hundred thousand a year we pull 50 from your bank and 50 from your IRA you get your 100 000 but only fifty thousand goes on the tax return that's how we can manipulate that so how much non-qualified money do you have if you don't have much we may want to consider doing a little bit higher Nua rollout because even mathematically it may not make sense when we just compare that decision in isolation to do or not to do the Nua rollout but when we now look at the other benefits that we're receiving such as the ability to do Roth conversions the ability to manipulate what goes on our 1040 the ability to possibly qualify for a health care subsidy if you retire before the age of 65 by managing the reportable or taxable income that's reportable we can qualify for a subsidy so this is why we're so big on financial planning because as you can see it's not just about Investment Management in retirement that's important absolutely but when we tie in financial planning with Investment Management we can create some really optimal scenarios where we're creating a ton of value and helping you have more income pay less tax and ultimately have more value throughout the course of your retirement okay this is the part that I mentioned in the beginning of the video where we're going to tie into kind of a real world plan planning case so we laid the groundwork for what Nua is and some of the considerations that you have to make in order to determine if it makes sense for you to do the Nua rollout so what I want to point out here is the tax and income plan for retirement years one two and three for someone who takes advantage of the Nua rollout because the question becomes when do we sell that stock if we have 30 40 50 percent of our entire net worth in our company stock it's pretty risky to hold on to that position just so we don't pay more in taxes so here's where we're going to tie the financial planning considerations of the real world application and decisions we have to make on the Nua rollout with years one two and three of someone just entering retirement one of the big risks is if we roll it out the company's stock and we decide not to sell it because we don't want to pay the long-term capital gains immediately if we hold on to that that concentrated Equity position we have increased our risk now there are investment strategies that can be used such as buying a put option or what we call an Equity caller but I want to just talk about the tax and income plan here so in this scenario client rolls out the annual way so they have a large concentrated Equity position and they've paid income tax on the basis but do not want to sell the company stock yet so as part of the tax and income plan what I want to show you is we could break this up so year two year three and even year four possibly depending on the size of the concentrated Equity position Company stock where zero percent taxes essentially so we have total income here of a hundred and twenty thousand so what this is the tax and income strategy where we're generating income year two of retirement not year one because in year one you've done the the Nua rollout you have a big tax liability from paying income taxes on the cost basis of that company stock so here's your two so year two the the tax and income strategy is don't take anything out of the 401K no Roth conversions we're going to sell the company stock that we previously rolled out take advantage of Nua and we can have a hundred and twenty thousand dollars of income here as long as it's all capital gains and dividends your total tax liability 458 dollars now what I've done here is assumed twenty thousand dollars of dividends because if you have company stock and you roll it out it probably paid some dividends so 20K there and a hundred thousand of long-term capital gains we're realizing we're recognizing so this is darn near zero percent on a hundred and twenty thousand dollars of retirement income and we're divesting from that company stock now again some risk management strategies we could have an equity caller or put option helping to support downside volatility of that concentrated position but just taxing in complaining wise I want to show you how how this can work out so here now I've added 125 000 of long-term capital gains with twenty thousand dollars of dividends total AGI 145 000 the total tax 4208 on 145k of income 2.9 percent so again we've divested so maybe this is year two of retirement or year three we've divested from the company stock we've reduced our risk we've provided the income that we needed for retirement and we've done so in a way that's tax advantaged same thing goes on now I wanted to point this one out because I've here I've thrown in the same 20 000 of dividends 125 000 of long-term capital gains so we're selling the stock again but now we also take advantage of a twenty thousand dollar Ira distribution so this is which accounts do we pull income from in retirement how do we generate income what's the tax plan total AGI comes up to 165 the total tax is 7208 but here's the cool part the IRS ordering rules for how you pay tax on income based on where that income is generated the distribution from the IRA is actually tax-free but what happens is when you take money out of the IRA it brings some of those long-term capital gains into taxation so I did a video not too long ago where we talked about adjustments and Social Security and IRA distributions and wealth conversion taxes the tax code is filled with these where if we we take one more dollar of income it brings one other item into now a taxable State such as Social Security or long-term capital gains or dividends so just just be aware of that I guess 165 000 of income seven thousand two hundred and eight dollars in income taxes representing a four point four percent tax rate so now one two three four years into retirement we've divested the uh concentrated stock risk we provided income and a very tax advantaged manner we still have that Ira with a lot of money in it to deal with but once this is done we would probably at that point start down the Roth conversion path now every situation is different but hopefully these topics and ideas and and considerations when it comes to risk management income planning tax planning and retirement will help you have a better retirement if you want to learn in more detail how to potentially pay zero percent in long-term capital gains and on your dividends click this video right here I did a couple years ago where we do a deeper dive into the special tax advantage [Music] thank youRead More
sometimes I feel like I've lived through my 60s and 70s thousands of times sitting with people in retirement or those that are entering retirement we come across a lot of the same fears negative thoughts and feelings that really hold people back from having a happier retirement now we try to address those through retirement strategy and implementing plans but in today's video instead of talking about strategy I want to talk to you about how we look at retirement so you can hopefully look at retirement through a different lens and I believe this will help you have a happier retirement foreign [Music] Happy Gilmore recently and there's this place that he goes to and he calls it his happy place and if you remember the movie the lead actress she's sitting there by like a fountain of beer with pictures and Happy's grandmothers there and it's just his happy place and this helps Happy Gilmore putt a little bit better to find your happy place in retirement I want you to shift your focus away from simply trying to maximize return in retirement it's not about growing Your Nest Egg anymore what we want to do is have an acceptable level of risk something that when the market goes down we can still stay invested we can stay committed to that plan but at the same time for that level of risk we have an expected return that can help make sure that you don't run out of money and generate enough growth to provide the income that you need to maintain your standard of living so here is one of the tools that we use to help understand your willingness to take risk so risk tolerance really has two components it has a capacity component meaning given a certain level of income that you desire from your portfolio can your portfolio withstand a certain level of risk and still provide that income so that's what we call risk capacity but then you have your willingness to stay invested in a down market so when we look here this is a standard 60 40 portfolio 600 000 stocks 400 000 in bonds has a risk number on a scale of 1 to 99 of 54.
now in isolation that means absolutely nothing to you but when we start to break it down into percentages and also or I should say more importantly dollars over a six month period your standard 60 40 portfolio has the potential to lose a hundred thousand dollars with a million invested this is a statistical quantitative analysis of volatility of this portfolio going back many years now over a 12-month period that means you could lose two hundred and twelve thousand dollars mathematically speaking is that a comfortable level of risk for you if you have a million dollars it's not for me to answer that's for you to answer that's your willingness to take risk so over a 12-month period mathematically you should expect to lose at some point in time up to twenty percent you could lose more of course this is a 95 probability or what we call two standard deviations but we have what we want to achieve here is a more optimal level of risk for an expected return so we have asymmetry here where the possible upside mathematically speaking is 15.92 percent over a six month period so we do have some asymmetry here but when we look a little bit deeper the annual range midpoint is 5.27 so this would be the expected return kind of moving forward with a two percent dividend this GPA this is a pretty cool feature of this software it's designed to help you understand what we call risk adjusted returns and this is this concept is kind of what I'm talking about here they've developed this GPA and a 4.3 would be most Optimum now not every portfolio that fits your particular needs is going to be a 4.3 we're not necessarily trying to achieve that but the higher we can get to that it means we have more expected return for the For Less risk so the question really becomes are you comfortable with this range of expected outcome if not this is too aggressive of a portfolio for you but instead of just focusing on like most people do the upside we need to focus more on this downside in having a plan that is optimized or having an investment strategy that's optimized for your happy place number two I want you to start to look at all of your investment choices in retirement for what they actually are now this is much different than in the accumulation phase in the retirement phase your financial investments all the various choices out there they're really nothing more than tools tools that are used to accomplish a certain objective similar to ingredients in a recipe if you have too much sugar or too much salt or not enough herbs or spices is it may not come out the way you want it to taste we want to use the appropriate tools to accomplish the objectives that you have in retirement stocks for example they aren't used to accumulate anymore stocks are designed to help keep you ahead of inflation so you can generate income that lasts as long as you do now in the accumulation phase that's exactly what stocks are designed to do they're designed to give you the best opportunity historically speaking to accumulate a larger and larger Nest Egg of course that assumes that you save enough money but in retirement you are no longer accumulating you are Distributing so stocks are used to help keep you ahead of inflation now the downside to stocks you could lose a lot of money especially if you get too aggressive or if you invest in things that don't perform well now does that make stocks bad because you could lose a whole bunch of money no they're just a tool and once you understand how to use that tool in conjunction with other tools now you can actually construct whatever project that you're building or have a retirement plan that provides you the income you need to maintain your standard of living the number three key for a happier retirement I want you to accept that you're in the distribution phase don't expect your accounts to continue to grow each and every single year this may seem like common sense but in reality and in practice it's much harder for many people to do now you've seen your accounts hopefully grow grow grow you've been putting money in the market has performed well over most years in the past even when the market performed poorly you are still putting money into your 401k getting that match hopefully saving money elsewhere now that you're in the retirement phase you're putting a lot of stress on your portfolio through distributions now I'm not saying your accounts can't still continue to accumulate especially if we have consecutive years in the market that that does really really well but what I'm saying is don't expect it you are in the distribution phase that means you're probably taking three percent four percent five percent out when we have years where the market is also down your portfolio is down you're digging a bigger hole than you were in the accumulation phase that means that hole is harder and harder to climb out of this is why the allocation of your Investments is so important and not taking too much risk you don't want to dig such a big hole that you can never get out but at the same time you need a certain level of risk to achieve a return that can give you a Secure Retirement so mentally let's not look at our accounts every single year and say oh man they're not going up they're not increasing in value I'm going to run out I need to stop spending my money now actually if you look at it appropriately you should not expect your accounts to continue to appreciate every single year in retirement that very May well happen but if it doesn't if you're just staying level or even going down a little bit it's okay you just need to have a plan monitor your progress with respect to your goals and stay on top of it number four I want you to understand the value of secure income in retirement the more secure income you have the less you have to withdraw from your portfolio and the less emotionally you're impacted by the stock market ups and downs by political goings on by economic slow Downs if you don't have to withdraw large percentages from your Investments because you're living on passive income from Real Estate from Social Security from annuities from a pension but the point is the more income you have coming in from multiple different places that is independent of the stock market going up typically the happier you'll be in retirement also I don't want you to underestimate the power of Social Security as part of your overall retirement income plan now I hear a lot of people making comments on some of the Social Security videos that we do and also just day to day having conversations with clients that Social Security seems to be an extremely underestimated part of retirement many people want to take it early and that may be the case maybe it makes sense for you to take it early but if a husband and wife have combined Social Security of 60 000 a year and you live let's say 25 years that's 600 000 1.2 1.5 million dollars of retirement income and for many of you watch watching this your Social Security is going to be a lot more than sixty thousand dollars per year so we're talking anywhere from one million to possibly over three million dollars of retirement income for a married couple for someone who's single Social Security you can just basically cut that in half so it's a significant part don't underestimate the power of secure sources of income in retirement and also don't underestimate how valuable deferring Social Security could potentially be if you're going to live past age 80 81 or so number five I would like you to stop looking at short-term outcomes whether your portfolio is up or down whether you pull too much out whether you had an unforeseen expense and you had to spend x amount of dollars I'd like you to start looking at these short-term outcomes of things that happen to you or decisions that you've made as nothing more than bumps in the road don't get too high don't get too low retirement is a very long and windy and arduous Journey this is why it's so important to have a plan and stay connected to that because when you have visibility into the future and you're looking at things not in the short term lens but over a 20 25 30 year time frame you can see a lot of times how actually unimportant these short-term events are so don't get too high don't get too low understand that these are bumps in the road in the short term but if you have a plan these bumps in the road have been accounted for next time the Market's down and your portfolio is down 10 or 12 or 15 or more say you know what I have a plan I expected this to happen this is not a surprise and retirement is a very long journey this is nothing more than a bump in the road the number six key to a happier retirement and I know this is going to be virtually impossible for many of you watching but the number six key probably the number one is to not look at your accounts more than once a month I would prefer it once a quarter so I know some of you right now are saying Troy that's impossible I look at it every single day I need to know what my stocks are doing what my accounts are doing how am I ever going to know if I'm going to be okay well there are numerous studies on this I encourage you to look some of them up the more frequently you look at your accounts typically the worst performance you'll have over long periods of time but the person who looks at it every single day over a long period of time I think it's 25 or 30 years averages somewhere around two to three percent per year the person who looks at it once a month averages somewhere around four to five the person who looks at it once a year averages somewhere around six to seven and the person who never looks at it has averaged around 10 or 11 percent and it makes sense because we are emotional beings when we see that something isn't going right we want to Tinker we want to make adjustments this typically leads to holding on to bad Investments maybe a little bit too long or getting rid of good Investments that just haven't really had the Catalyst that maybe you were expecting and selling them too soon or we're selling our winners and cutting our losers without giving them a chance to really perform well whatever the situation may be Studies have proven this over and over again the more frequently you look at your portfolio the worse you should expect to do so instead of discussing strategy and execution in today's video hopefully today's content helps shift your perspective just a little bit with the goal of helping you to have a happier retirement [Music] foreign [Music]Read More
my grandparents sold their home in business for a couple million dollars they were very simple people didn't have a ton of savings before this but within five weeks of retirement my grandfather had two aortic aneurysms the next few years went to health care costs long-term care costs a downturn in economic conditions caused some of the high interest rate paying vehicles that they were relying on to drop the interest rates so their income was more than cut in half this experience led me to become a retirement planner someone focused on financial advising but with the specialty in the retirement Arena I've sat with thousands and thousands of families over the course of my career and that experience combined with what happened to my grandparents led to the creation of what we call the retirement success plan here at Oak Harvest Financial Group foreign success plan or RSP as we call it is a structured process that results in a final retirement plan that's customized to your particular retirement needs and concerns it covers five key areas which we're going to get into in today's video of what's important to be successful in our opinion when it comes to retirement planning it's built by a team of advisors that you have at your disposal and works in conjunction with the investment strategy by your in-house investment team here at Oak Harvest Financial Group what this means for you is that you have checked off the important boxes that we've learned over our years of experience are most critical to retirement success and it's also a timeline for execution and a way to monitor progress so we can make adjustments in real time to make sure you're staying on track for your retirement one of the big Concepts to understand about retirement planning is that every single decision you make is interconnected when you take Social Security how much you spend in retirement from which accounts you withdraw from all of these impact your account balances all of these impact how long your money will last and how much income you'll have to spend these are the big questions that we have in retirement do I have enough how long will my money last if something happens to me will my family be okay how do I pay less tax all of these things are interconnected so a lot of times we see people come in for the first time and they're one year two year three years into retirement and things are going swell and they feel like they're okay and a lot of the times that is true but what's happening is they're setting down a particular path every decision that you make sets you on a certain trajectory oftentimes in the first couple years of retirement we don't have enough visibility into how the decisions we're making today are impacting the trajectory of our expected account balances things oftentimes can feel like they're going well but we don't have that visibility to quite see hey am I on the right path or could I be making better decisions that puts me onto a better trajectory let me show you what I mean foreign so we see here this is a plan as it currently stands is at 81 percent probability of success now 81 isn't a bad number can it be improved most likely but we see in the beginning years here 2023 through 2025 all of these trajectories and we see the dispersion here they're all very closely concentrated together so the first two three four five years of retirement we do not know which one that we're on and that can lead us into a sense of complacency or a false sense of security that says hey you know what I'm doing good I'm doing great I'm on the right path because I'm three years into retirement and I still have about the same money that I started with well as you can see some of these paths ultimately diverge into the red which is not good that means you're running out of money or you've run out of money and others diverge into a much more comfortable and secure range here we see 2.5 million 1.9 million 4.7 million these are all different possible paths that the decisions you're making today and over the next several years could potentially put you on the purpose of the retirement success plan is to one identify who you are what's important to you and how do we determine what success means for you then we have a structure process that's based on your investment allocation generating income reducing taxes looking out for health care and then estate planning the retirement success plan isn't just an initial plan that set it and forget it it's a timeline for execution of the key components and also a process to continue to Monitor and make adjustments on the fly when necessary as long as we have visibility into how the decisions we're making today are impacting our future security what we find is you tend to live a more comfortable retirement and that means Comfort around the level of income that you're receiving and how much you're spending not to mention what we're doing from a tax perspective to make sure you don't carry a ton of risk and potentially pay too much tax down the road there are five key areas we feel are important to have a plan for leading into retirement at retirement and then post retirement that we continue to Monitor and adjust as needed monitor entering is an extremely critical part of the retirement success plan because again we don't really know where we're at on this trajectory in years one two three four or five it's about a relationship a partnership moving forward that allows us to have visibility into how the decisions we're making are impacting our trajectory and also allow us to change in real time when circumstances require now external events like the stock market crashing or the economy going into the tank or internal decisions such as how much we're spending or if we want to buy that vacation home or maybe we want a gift to the kids or grandkids these are all decisions that impact their trajectory that we're on so having that relationship and having that visibility is what allows us to be at peace and know hey we can do this or we can't do this or these are the parameters that we should operate in to make sure that we continue on the path that we we feel comfortable with step one of the rrsp is what we call the allocation this is a very critical step because after we've learned who you are how you define retirement success and what your goal Czar we make a recommendation of how you should spread your money across different asset classes so think stocks and other low-risk Securities one way to think about the allocation and why it's so important is if you think about ingredients in a recipe so if you have too much sugar or maybe too much salt you're not going to have something that's tasty that you nor anyone else really wants to eat but with the allocation in your retirement we're not talking about a bad pot roast that you can just redo you have plenty of time maybe next weekend we're talking about your retirement and with the wrong ingredients or the wrong allocation you could possibly run out of money maybe you have to go back to work maybe you don't have enough money to help pay for health care expenses for you or your spouse maybe there's not enough to take care of your surviving spouse so this is a very critical step in the process and that's why it's step one the framework that we use to build your allocation is what we call the core four so we have the Peace of Mind pillar we have multiple streams of income we have the growth pillar and then we have the defense or alternative pillar some of our clients have money spread across all of the core for and for other clients it makes sense to just have two or maybe three pieces of the core four but that's the framework that we use based on your goals and your circumstances to build out the allocation for your retirement step two of the RSP is the income planning process so we want to see multiple streams of income in retirement we'd like to live off interest as much as possible not get into that principle but we also want to know where our income is coming from is it coming from the retirement accounts is it coming from the non-retirement accounts because in retirement where you withdraw your income from determines how much tax you pay and also instead of having just a static four percent rule we want to have a more Dynamic plan a plan that adjusts our income either up or down based on their trajectory of our plan step three of the RSP is tax planning so tax planning is an extremely critical part of this overall process but the reason it's step three is because if we don't know what the allocation is or how much income we're getting and when we're getting that income we can't possibly do a tax analysis instead of telling you to go see your CPA to develop a tax strategy we build that in-house as part of your customized RSP here at Oak Harvest Financial Group now the reason we do that is because we believe to truly be a fiduciary and provide recommendations and advice in your best interest you must look at taxes and the impact taxes have on the amount of income you actually get to keep so a tax plan is an extremely critical part of the retirement success plan step four of the process is Health Care planning so this is one area where my grandparents and their advisors failed to get the job done and this costs them well over a half a million dollars within the first few years of retirement I don't want that to happen to you so we've built that in to the RSP if you retire prior to 65 we have to figure out health insurance many of you have concerns about end of life care or later in life care is long-term care an appropriate solution for you how do we not have premiums that continue to go up throughout retirement addressing the potential costs of Health Care in retirement is a critical step because one mistake here can cause everything else to blow up step five of the RSP is the estate planning side now a big mistake that we see clients make all the time is they go to their attorney they get the estate documents and then they never tell us so what we've done is we've built this estate planning into the financial process so first and foremost your financial planner should be the quarterback of this overall estate planning process this way assets that need to get retitled to either go into trust or other entities we make sure that gets done beneficiaries that need to be changed we make sure that gets done but also having a conversation with you about the disposition of your estate we don't want your money going to your children and then half of that going to your children's future ex-spouse so there's a lot of aspects Beyond just having a will maybe a living trust and your medical directives that we need to address and we build that into the RSP those are the five steps of our retirement success plan that we customize for you not only are these actionable items that we feel can improve your overall retirement providing better peace of mind more visibility into the future or transparency and Clarity around some of the items that are important in retirement it's also a timeline for execution of these specific items it's also a structure in a framework that allows us to continue to monitor your retirement to make sure that your plan is on the correct trajectory and that you have a successful retirement we're always producing more content to help you go more in depth with retirement success plan and the overall process to continue that Journey you'll want to click right here to learn more about what the RSP means for you and your family [Music]Read More
I don't care if you have $500,000 or a 100 million this video can help you I'm going to give you six reasons of why you may want to consider a trust as part of your retirement plan and exactly how it can benefit you and your family I'm not a lawyer and thank goodness for that but everything we're going to talk about today is to help you understand how trust can benefit you from a financial planning perspective we want to help you protect your assets pay less taxes and make sure there's more money left for those that you love and if you have a worth of 5 million and above stick around to the end of this video because I have a special bonus for you all right let's jump right to it so high level we have two types of trusts we have a revocable trust and an irrevocable trust now in reality there are hundreds of different types of trusts possibly thousands of them the concept of a trust goes back thousands of years but high level without getting into the legal definitions and boring you with some of the granularities of what a trust actually is and the different types and the definitions we want to keep this high level and make sure you can apply it to your particular situation so revocable trusts are money that you can access you have no creditor protection and they are inside of your estate then you have the irrevocable trust which is outside of your estate so when you put money into an irrevocable trust you have to gift it into that trust you lose control over those assets but by losing control it is now out of your estate you do have creditor protection because you no longer own that asset so we're going to talk a little bit more about this as the video goes along but understand high level there are revocable trusts no creditor protection you can access this money but the primary purpose is this helps to avoid probate irrevocable trusts are money that's outside of your estate you'll pay no estate taxes but you cannot access this money the trustee that you assign upon creation of the trust is the person who manages those assets can make distributions to whomever you've named as the beneficiary of the trust okay so I promise you I'm not going to get too deep here I just want to go over this concept because it will apply when we go through the benefits that we're about to get into some of you may have seen this but this is the national debt Clock we are spending $2 billion on interest on the national debt every single day in this country we're adding about $800 million per hour to the national debt so how does this impact you well right now per person in this country you can die with about $12.92 million before you pay any estate tax that's about 2584 million per couple but I want to take you on a little journey through history going back to the year 2000 you could die with $676,000 and that 1,000 above 675 you would actually owe 55% estate tax on so think about this if you died with $2 million everything above 675 you would owe 55% on now what if some of that money is Ira well then you also owe income tax on that money and if you pass it on to a grandchild you could very possibly ow generation skipping transfer taxes on that money you're talking 80 90% possibly even more completely gone of everything you've left now our estate taxes going back to the 2000 levels I don't know but my point here is we're paying $2 billion a day in interest we're adding 800 million per hour to the national debt at some point it's likely that politicians are going to come after the people that have money increasing the estate tax is one way they may do that so the information that we're sharing today for some of you out there that have accumulated very uh large amounts of wealth or own businesses it may absolutely apply to you right now in 2026 the estate state tax thresholds are coming down they're being cut in half essentially so you can die in 2026 with $5 million per person which is adjusted for inflation it's going to be probably somewhere around 6.2 or 6.3 as a married couple you're looking at about 12 12.5 somewhere in that range anything above that 40% goes to the government so the first reason why you may want to consider a trust for your family for the wealth that you've created is if estate taxes come down to a level of wealth that you exceed or if currently exceed the thresholds for the estate tax to be applied the government may take 40 50 60% whatever they deem is inappropriate estate tax rate from your estate in addition to that there are 13 states that impose an additional estate tax so the one I'm talking about is at the federal level but there are 13 states that also impose their own estate tax so you need to speak to a lawyer you need to include your financial planner but this is where the irrevocable trust comes in handy there's a lot lot of ways to do this a lot of times people use life insurance or they make gifts into the irrevocable trust to buy life insurance to leverage those dollars or we just start on a gifting strategy over time to get money out of the estate so this is why the irrevocable trust is out of your estate because once that money is gifted it can no longer be taxed at estate tax levels either at the federal level or the state level so one of the big reasons people use irrevocable trust is to get money outside of their estate so the government cannot tax it but also to create creditor protection the second reason to consider a trust applies to almost everyone to avoid probate so probate is the process where the court follows your wishes if you have a will and distributes your assets if you don't have a will you die what we call intestate and then the Court decides without your wishes being known where your assets are to be distributed so if you die right now and you do not have assets inside of a living trust or any type of trust let's talk about your home for example then that is part of the public record your investment accounts uh your bank accounts your jewelry everything that you own except for IAS because they bypass the probate process they have designated beneficiaries but anything that goes through the court system becomes public record anyone can look it up see exactly what your house is worth what your investment accounts were worth how much you had in the bank and then they know how much money your children have inherited the third reason to consider a trust is to protect your children we live in a country where we have a divorce rate of about 50% if you pass money on to the kids everything may be fine in the marriage right now but down the road they get a divorce it's possible that half of your money will go to your child's future ex spouse if you don't want that to happen a trust could have Provisions in it that protects your child from divorce and his or her spouse receiving half of your money along the same theme of a divorce it could be creditors that are coming after your child because possibly there's a judgment against them they've been sued well without a proper trust in place with the protections the provisions written into that trust then your children could lose that money to some type of judgment could be a car accident could be a bad business decision could be uh something that they've done where they are personally liable those creditors could come after their assets and if that money is in their bank account it could be subject to complete loss the next reason is to actually protect your kids not from creditors or divorce but to protect them possibly from themselves even your spouse may fall into this category so you can have Provisions built into that trust that say an annual income of x% must be provided or they're not able to access the entire Corpus of the trust or principle that has been deposited into that trust until a certain age you can even name a co-trustee along with one of your children to make sure that there's some oversight with the decisions that are being made now if you don't care if your kids go out and buy Lamborghinis and throw wild parties then don't consider this a a good reason but if you do and you think it may be wise to have some Provisions in there at least to a certain age a trust is an excellent tool to accomplish that work the next reason is for your retirement accounts so inherited IAS don't have the same level of creditor protection that traditional IAS do or rollover iaas do now Ira protection from creditors varies by state so you want to make sure you understand what level of protection you have in your state for your IRA and that they may be different for your traditional IRA that you open and contributed to as well as it may be different for the 401K that has gone into what we call a rollover Ira but when IAS are inherited for the most part you lose creditor protection there may be some variances across states make sure to look into this but if you want your inherited IRA that you receive or you give to your children or possibly that you're going to receive from your parents you should look into a very specific trust that is designed to house IR IRAs you want to make sure it has specific language in this you want to work with an attorney who has drafted these trusts before and understand the correct wording because since the secure Act passed if you do not have the correct wording an institution can refuse to roll the money into that inherited IRA or to accept that Ira into that trust I've seen it happen with a client who did his own trust trying to save a little bit of money the language wasn't in there correctly he passed away money tried to go into the inherited IRA when the daughters accepted it and and it was rejected hundreds of thousands of dollars in taxes were due the last reason a trust could benefit you and your family and this is not an all-encompassing list there are plenty of other benefits and things to consider when it comes to placing a trust as part of your retirement plan but it's to create generational wealth usually a dynasty trust is created for this and I mentioned earlier in this video The Generation skipping transfer tax so when money goes to a skip person which is two generations Beyond you so your grandchildren your great-grandchildren the government imposes a generation skipping transfer tax which is an addition to the estate tax on the transfer of those funds so using your GST generation skipping transfer tax exemption as part of an overall Dynasty trust can help reduce or eliminate the impact of that tax now the law is very muddy here um you want to work with a qualified professional to help implement the right tools so you have the right language and the right tax returns are filed to make sure that you are in complete compliance with the law because there is a higher possibility when you have this type of wealth to be audited so make sure you're working with people who know what they're doing and again make sure to include the financial planner because after all the legal work is done there are still administrative items that need to take place there are financial planning considerations and if you have these different professionals not working together with one another you have a huge potential hole in your retirement plan all of this is step five of what we call the retirement success plan where we work with you and your attorneys to help build the financial plan they draft the documents we execute the financial plan so we have more videos on the channel about step five estate planning as part of our retirement success plan and now on to the bonus so if you have a net worth of over $5 million I'm sure you've heard of the certified financial planner professional but what you may not have heard of is the cpwa the certified private wealth adviser professional profal so this is a designation that myself has completed and also Ed Rossy here at our firm Ed and I both completed this program through the Yale School of Management and the designation is overseen by the investments in wealth Institute and the curriculum is designed specifically for those with 5 million and above so if you think of the cfp designation it's a very broad range of topics very very valuable but it goes very shallow on all of these different topics for the most part or at least compared to the cpwa the CP wa goes tremendously deep on a more narrow set of curriculum but it's designed specifically for those who have net worths of 5 million and above so if you go to the cpwa website you can probably find one in your area if you can't do that or you want to give us a call we're here to help but for this type of planning I would recommend working with a cpwa professional if you have a net worth of over 5 million is opposed to a cfp [Music] professional [Music]Read More
my grandparents offered their residence in service for a pair million bucks they were very straightforward individuals didn'' t have a bunch of cost savings prior to this but within five weeks of retirement my grandpa had two aortic aneurysms the following couple of years went to health care expenses long-lasting treatment expenses a recession in economic problems created several of the high rates of interest paying lorries that they were relying upon to drop the rate of interest so their earnings was greater than halved this experience led me to come to be a retired life organizer someone concentrated on economic advising however with the specialized in the retirement Arena I'' ve rested with thousands as well as thousands of families over the program of my occupation and also that experience incorporated with what took place to my grandparents resulted in the production of what we call the retired life success strategy here at Oak Harvest Financial Group foreign success plan or RSP as we call it is an organized process that leads to a final retirement that'' s customized to your specific retirement demands as well as worries it covers 5 essential areas which we'' re going to get into in today ' s video of what ' s crucial to be successful in our point of view when it involves retired life planning it'' s built by a group of advisors that you contend your disposal as well as works in conjunction with the financial investment method by your in-house investment group below at Oak Harvest Financial Group what this suggests for you is that you have marked off the crucial boxes that we'' ve learned over our years of experience are most vital to retired life success as well as it'' s likewise a timeline for implementation as well as a method to keep an eye on development so we can make changes in real time to make certain you'' re staying on course for your retired life among the large Concepts to comprehend concerning retired life planning is that every solitary choice you make is adjoined when you take Social Safety just how much you spend in retirement from which accounts you take out from every one of these effect your account balances all of these effect how much time your cash will last and how much earnings you'' ll have to invest these are the big inquiries that we have in retirement do I have sufficient how long will certainly my cash last if something occurs to me will my family members be fine exactly how do I pay much less tax obligation all of these points are interconnected so a great deal of times we see people come in for the initial time and also they'' re one year two year 3 years into retired life and also points are going swell and also they really feel like they'' re alright and a great deal of the moments that holds true however what'' s happening is they ' re putting down a particular path every decision that you make sets you on a particular trajectory usually in the very first pair years of retirement we don'' t have sufficient visibility into how the choices we'' re making today are affecting the trajectory of our anticipated account balances things sometimes can feel like they'' re working out yet we wear'' t have that exposure to fairly see hey am I on the appropriate path or could I be making far better decisions that places me onto a much better trajectory allow me reveal you what I mean international so we see right here this is a plan as it currently stands is at 81 percent likelihood of success currently 81 isn'' t a negative number can it be improved probably but we see in the starting years below 2023 via 2025 all of these trajectories as well as we see the dispersion below they'' re all extremely carefully focused together so the first two three 4 5 years of retirement we do not recognize which one that we'' re on which can lead us into a sense of complacency or an incorrect complacency that claims hey you know what I'' m doing great I'' m doing great I ' m on the ideal path because I ' m 3 years into retired life and also I still have regarding the very same money that I began with well as you can see a few of these courses eventually diverge into the red which is not excellent that indicates you'' re running out of cash or you'' ve run out of cash as well as others diverge right into a a lot more comfy as well as protected range right here we see 2.5 million 1.9 million 4.7 million these are all different feasible courses that the decisions you'' re making today and over the following numerous years might possibly put you on the function of the retired life success strategy is to one determine that you are what'' s vital to you and exactly how do we determine what success indicates for you then we have a framework procedure that'' s based on your financial investment allocation producing earnings lowering tax obligations watching out for healthcare and afterwards estate preparing the retired life success plan isn'' t simply a first strategy that set it and also forget it it ' s a timeline for execution of the crucial elements as well as additionally a procedure to remain to Monitor and also make adjustments on the fly when needed as long as we have exposure into how the choices we'' re making today are affecting our future safety and security what we find is you often tend to live a more comfortable retirement and that indicates Convenience around the degree of revenue that you'' re getting and also exactly how much you'' re spending as well as what we'' re doing from a tax point of view to make sure you don'' t bring a load of threat as well as potentially pay as well much tax obligation down the road there are five vital locations we really feel are very important to have a strategy for leading right into retired life at retirement and afterwards post retired life that we remain to Display and also adjust as needed monitor entering is an incredibly important component of the retirement success plan because again we don'' t truly know where we ' re at on this trajectory in years one 2 three four or five it'' s concerning a partnership a collaboration moving forward that enables us to have exposure into exactly how the choices we'' re production are influencing our trajectory as well as additionally permit us to transform in genuine time when situations require now outside occasions like the stock exchange collapsing or the economic situation entering into the storage tank or internal choices such as just how much we'' re investing or if we intend to acquire that holiday residence or perhaps we desire a present to the children or grandkids these are all decisions that impact their trajectory that we'' re on so having that connection as well as having that presence is what allows us to be tranquil and know hey we can'do this or we can ' t do this or these are the criteria that we should operate in to make certain that we continue the path that we we feel comfortable with action one of the rrsp is what we call the allotment this is a very vital action due to the fact that after we'' ve discovered who you are just how you specify retired life success and also what your goal Czar we make a referral of exactly how you need to spread your money across different possession courses so assume stocks as well as other low-risk Securities one method to assume about the allocation and also why it'' s so essential is if you assume about ingredients in a recipe so if you have as well much sugar or possibly way too much salt you'' re not going to have something that'' s delicious that you neither anyone else actually desires to consume yet with the allotment in your retirement we'' re not speaking about a poor pot roast that you can just redesign you have lots of time possibly next weekend break we'' re speaking concerning your retirement and also with the incorrect ingredients or the wrong allotment you can potentially lack cash maybe you have to go back to work maybe you wear'' t have sufficient cash to help pay for health treatment expenses for you or your spouse possibly there ' s inadequate to care for your making it through spouse so this is a really important action in the procedure which'' s why it ' s tip one the structure that we make use of to build your appropriation is what we call the core 4 so we have the Satisfaction column we have several streams of revenue we have the growth column and after that we have the defense or alternative column some of our customers have cash spread throughout every one of the core for and also for various other clients it makes good sense to just have 2 or possibly three items of the core 4 but that'' s the structure that we utilize based on your goals and also your circumstances to construct out the allowance for your retirement step 2 of the RSP is the revenue planning procedure so we desire to see numerous streams of earnings in retirement we'' d like to live off passion as long as possible not get involved in that principle however we also need to know where our revenue is originating from is it originating from the pension is it coming from the non-retirement accounts because in retirement where you withdraw your income from figures out just how much tax obligation you pay as well as also as opposed to having just a fixed four percent rule we intend to have a more Dynamic plan a strategy that changes our earnings either up or down based upon their trajectory of our plan action three of the RSP is tax preparation so tax obligation preparation is an incredibly vital part of this overall process however the reason it'' s tip 3 is because if we don ' t understand what the appropriation is or how much earnings we'' re obtaining and also when we'' re obtaining that income we can'' t potentially do a tax obligation analysis instead of telling you to go see your certified public accountant to create a tax obligation technique we develop that in-house as part of your tailored RSP right here at Oak Harvest Financial Group now the reason we do that is because we think to absolutely be a fiduciary and also give referrals as well as advice in your finest interest you need to consider taxes and also the impact taxes carry the amount of earnings you actually get to keep so a tax obligation strategy is an extremely important component of the retired life success strategy tip 4 of the process is Wellness Treatment preparing so this is one area where my grandparents and also their consultants failed to obtain the job done and this costs them well over a fifty percent a million dollars within the initial couple of years of retired life I put on'' t desire that to occur to you so we'' ve developed that in to the RSP if you retire prior to 65 we have to find out health and wellness insurance numerous of you have problems concerning end of life care or later on in life treatment is long-lasting care a suitable option for you just how do we not have costs that remain to go up throughout retirement attending to the possible prices of Healthcare in retirement is a critical step since one mistake right here can cause every little thing else to explode step five of the RSP is the estate preparation side now a large error that we see customers make all the time is they go to their lawyer they get the estate records and afterwards they never inform us so what we'' ve done is we ' ve developed this estate preparation right into the monetary procedure so most importantly your monetary planner ought to be the quarterback of this overall estate planning process by doing this possessions that require to obtain retitled to either go into trust or various other entities we make sure that obtains done beneficiaries that require to be altered we make sure that gets done but likewise having a conversation with you regarding the disposition of your estate we don'' t desire your cash going to your kids and afterwards fifty percent of that mosting likely to your children'' s future ex-spouse so there'' s a great deal of elements Beyond simply having a will certainly maybe a living trust as well as your medical directives that we need to attend to and also we build that into the RSP those are the 5 actions of our retired life success plan that we tailor for you not only are these workable items that we feel can improve your general retirement offering better peace of mind more exposure right into the future or transparency and Clarity around a few of the items that are necessary in retired life it'' s likewise a timeline for implementation of these certain products it'' s also a framework in a structure that permits us to continue to monitor your retired life to see to it that your strategy gets on the proper trajectory which you have an effective retired life we'' re constantly producing even more content to assist you go a lot more detailed with retired life success plan as well as the general procedure to continue that Journey you'' ll intend to click right below to get more information concerning what the RSP suggests for you and also your household [Music]Read More
Hey just a short Disturbance here to ask you to subscribe to the network now what that does for you is that puts us Oak Harvest Financial Team as well as all the web content we create in your little TV Overview so you have a much less complicated method to come back and locate it later share this video with a good friend or household participant as well as also comment down below I enjoy to react to the remarks currently if you have any questions about your particular circumstance or you'' d like to take into consideration ending up being a customer of Oak Harvest really feel cost-free to get to out to us there'' s a link in the description below but you can always reach out to us and also provide us a telephone call and have a conversation to see if we might be a great fit for each other James informs us that given that he wants to retire as quickly as possible he he thinks it makes sense to take Social Protection the first time available so claiming at 62 a little bit more than two thousand bucks a month at twenty 5 thousand bucks per year he additionally has that nine hundred thousand bucks damaged out to four 401K money of 700 Grand then 200 000 in a taxable account or what we call non-qualified outside of the retirement account very important to aim out right here that the tax obligation attribute of these two accounts as well as the Investments inside them and the interest as well as returns and also the withdrawals from them are exhausted in a different way so that'' s part of a total tax obligation strategy currently James likewise has a residence that ' s completely paid for and also worth six hundred thousand bucks however he'' s informed me that I don'' t desire to utilize this to fund any of my retirement objectives I'' ve lived in this home for a long time I want to remain in the home but we recognize from a preparation point of view that we do have that in our back pocket if it'' s required down the roadway so James'' s total internet well worth right here is about 1.5 million looking at the paid off home of 6 hundred thousand the 700 Grand inside the 401K and also the 200 000 of non-qualified or taxed account properties now as component of the process to recognize where someone is as well as where they'' re attempting to get to we have to comprehend just how is the portfolio currently assigned so James tells us that Troy I understand I'' ve wanted to retire so I'' ve been spending boldy and trying to obtain in advance of the video game however here we are in 2022 and the markets have pulled back some so that double-edged sword is beginning to kind of rear its rear its head yet we see James'' s 93 supply so one of the questions that we have from an internal planning viewpoint is if we maintain this exact same level of risk while we retire and begin taking revenue out of the profile what does that do for what we call the risk capability or the portfolio'' s capability to take on threat while Distributing earnings in the retired life stage so we have to look at the guard rails and guard rails are essentially a statistical estimation of likelihoods of the portfolio returning this much on the high side as well as a good year as well as this much on the downside in a negative year if these guard rails are as well far apart and we'' re taking in earnings out if we run right into a bad couple of years that bump up versus that bottom guardrail however we considerably increase the danger of running out of cash so part of the evaluation of the preparation is is this a suitable guard rail for this type of profile given the desired revenue degree so with every little thing we'' ve looked at so much the inquiry is if James proceeds doing what he'' s presently doing and also retires with the wanted costs level the possessions that he'' s built up living up until age 90 what is the chance that he has success well it comes in at concerning 61 so that'' s probably not a great retirement number it'' s something we want to see if we can work to enhance so I ' m going to pull up the what if evaluation here and start to look at some of these different choices that we can make and also see if we can get this chance to raise alright so currently we have the what if analysis where we have two various columns up right here on the board right now they'' re identical we ' re going to keep this one the same as the base instance whatever that we simply went with but currently we'' re going to begin to transform some of these variables to see what the impact those decisions have on the total retired life strategy and also this is a lot even more of an art at this stage than it is a scientific research because we want to start to discover different scenarios as well as after that see what is most comfy for you when you understand the effect of these various choices you can take some time to kind of way think concerning them evaluate the the pros and disadvantages and now we'' re starting to function together to craft you a retirement plan that offers us raised probabilities of success but additionally something that you feel very extremely comfy with so the initial couple of options we have which are the most easy as well as usually have the greatest effect on the plan is that we can either function much longer or spend much less so James claims no I wear'' t desire to invest less I have a details plan I want to get my Motor home I want to take a trip the nation I want to play some golf I'' ve done my budget I need to invest that 70 000 for the first 10 years so the first point we'' ll look at is the impact of working an additional pair of years so I'' ve altered the age here to 63 as far as Retired life the only variable we'' re going to change at this time I wear'' t want to change also lots of variables at once I want to see the influence of different decisions just how they influence the total strategy all right so that offers us a little bit of a rise yet the following point I want to look at right here is social safety so Social Safety and security is a really valuable source of assured lifetime earnings first it'' s an increasing stream of income it raises with rising cost of living yet two no matter what occurs with the supply market that revenue is always going to be coming in so instead of taking the 62 and also having a considerable reduction in the lifetime revenue that we obtain since I don'' t want to alter spending we still have the 50 and also 20 in right here I want to alter the Social Safety and security from taking it a 62 to taking it at complete retirement age all right so changing the Social Security political election day gets us up to 76 we'' re definitely moving in the ideal instructions right here after a discussion with James as well as he recognizing that you understand what I do feel truly safe and secure with that raised social safety and security income since if the market doesn'' t coordinate I'recognize I ' m still going to have that a lot greater revenue later on in life so that would lead us down the roadway to say alright let'' s look at including much more guaranteed life time revenue if we can obtain your Standard earnings to cover a majority of your costs requires then we don'' t need the market to perform always as well later on in life so now we desire to look at the impact of including more guaranteed earnings to the plan which has the result of giving more protection later in life since if the markets wear'' t coordinate we know we have a specific degree of earnings being deposited every single month no issue how long we live so if you go to our internet site here it'' s Oak harvestfinancialgroup.com com we have up leading a revenue author quote where this is regularly searching for the highest amounts of guaranteed life time revenue that are readily available in the market merely input the variables here so in Texas age 60 Individual retirement account money revenue starts we ' re going to begin looking at 7 years below as well as I know the buck quantity I would desire to place in 300 000. I want to look at one more variable below due to the fact that you might want to get a part-time task James may want to be a starter at a golf training course perhaps he wants to function in the church and he can get 10 thousand or fifteen thousand dollars a year perhaps just desires to work 2 three months out of the year so the next thing I desire to look at is if we ' ve done all this currently what happens if throughout this initial 10 years of retired life he chooses he desires to work three months out of the year or perhaps just a part-time task and job one or two days a week so instead of requiring twenty thousand bucks per year we simply need an additional 10 thousand allowed ' s state from the portfolio so actually that ' s only earning ten thousand bucks extra in retired life income you can do that driving Uber several different choices there you know what I ' m just going to lower this no I ' ll leave it there currently with James determining to perhaps work part-time here to reduce that investing demand in the very first 10 years allow ' s see if we can likewise obtain them retired at 61. We'' re going to alter this back to his original objective 61 determine all scenarios and currently this obtains us up to 94 so we began at 61 if where James was initially at whenever he came in if he maintained doing whatever he was currently doing we got him up to 94 percent below fine I desire to take a minute prior to we finish the last Principle in this video clip to go over some of the changes we ' ve made so far to get James from 61 to 94 so initial as well as primary we changed the Social Protection election strategy second of all we included that deferred revenue annuity finally James has actually decided to function part-time to produce ten thousand dollars per year in those beginning years to assist lower the problem of taking out an extra twenty thousand dollars of retirement income and also then lastly we ' ve brought the guardrails in on the Investment Profile which aids to get rid of really bad results that can happen with his initial 93 appropriation to stocks we haven ' t completely went to bonds or money we ' ve just brought those guard rails in by minimizing our Equity direct exposure in the beginning years of retirement we can always readjust that later now last thing I desire to do is look at what we call the consolidated details all of these things with each other in a spreadsheet just so we'can see just how these various pieces are functioning with each other and also then look at what we call different Monte Carlo examines so currently I desire to share with you some of the private trial analysis that we run simply like we would for a regular client to aid recognize not just where the weak spots are in the portfolio however just how these different choices that we ' re making impact the total client balance and it ' s not simply looking at what we call a typical rate of return it ' s looking at a thousand various simulations we ' re going to look at a pair right here as well as the Order of the return so check out the video if you desire to understand more'regarding this idea you can click the web link up above and also the title of the video clip is just how eleven percent typical returns can damage your retirement and also that ' ll really get residence that principle of it ' s not about what you balance yet it ' s regarding the order in which you understand returns over the program of your retirement throughout the day circulation phase so below we have this individual trial and also we ' re gon na it ' s the mean situation out of a thousand different scenarios so I just want to go'through this relatively promptly with you and also based on some of the changes to the profile we see the financial investment return column below so all of this I assume averaged out to I believe it was regarding 4 and also a half percent gross returns I can go'back and double examine that in a 2nd yet you see it ' s it ' s never four four four 4 four 4 4 4 or six 6 6 six this is what it looks like in the real globe so James retires basically the beginning of 2023 we have the Deferred income annuity clicking on here we ' ve transformed Social Protection to click on right here so if we include these two together come heck or high water there'will'be minimally 74 000 practically 75 000 deposited into his financial institution account every solitary year now if we look at the retired life need it ' s about sixty one thousand bucks plus the discretionary Go-Go costs is about twelve thousand 2 ninety nine so concerning seventy three thousand bucks yet what this does is since we ' re getting so much from these 2 resources it actually lowers the need for the portfolio to do as well as if we kind of go out go on out through retired life you see Social Protection isn ' t boosting income so later on in life currently we ' re up to regarding 89 virtually 90 000 of revenue and also our ninety thousand bucks inflation modified retired life revenue demand is covered by the amount of guaranteed lifetime earnings that we have in the profile which then permits our portfolio equilibriums to support due to the fact that we ' re not needing it to sustain our lifestyle later in life so this is simply one instance right here yet we see the finishing portfolio worth also though it invests down a little bit in the beginning years okay it starts to support due to the fact that the income offered from the decisions that we ' ve made put us in a situation where we put on ' t have to withdraw so much from the portfolio Okay so now I desire to look at a different trial and just to verify here the 500th circumstance was an average of 4.6 but you saw the different order of those returns and just how we really obtained to 4.6 okay so if we glide this up right here allow ' s think it ' s a pretty negative situation this is going to allow me change it below discover a worse return okay so this brings the standard down to 3.05 as well as we still see in bar graph form right here that the portfolio value still is supported and it ' s primarily since that modification in the Social Safety and security decision and adding the Deferred revenue annuity it still places us right into that setting to where if the market doesn ' t do we have enough earnings from ensured sources'that we ' re not reliant on the stock market to give us revenue in retired life especially later in life when we commonly are extra traditional as well as many people that I ' ve worked with don ' t have the same stomach at 80 or 82 to stay spent in Big Market pullbacks as they did when they were 52 or 62.Read More
This is over a 6 month duration so we extrapolate that out over 12 months it'' s minus 18 for plus 30.Read More
does saving over 350 000 in potential taxes audio great to you in retirement I'' m going to show you how swiftly we can obtain that done so this is the pair that concerned see us and they needed to know do I have enough can I retire how do I pay less tax after experiencing the situation we struck the switch ends up that they only have concerning a 65 probability of success our task is to obtain this number up means more than 65 percent so we can obtain you retired as well as most of the moment that indicates overlaying a tax strategy creating a new income plan altering exactly how the Financial investment Profile is structured and also all of this together is what we call your retired life success plan so when we check out the tax strategy if we proceed down the standard knowledge it'' s a projected 550 000 of taxes however if we check out a recommended tax obligation strategy to conserve that approximated 350 000 we obtain the tax obligations down to regarding 173 throughout retirement along with that we have an estimated finishing balance of concerning 2.5 versus 1.7 by implementing the tax obligation plan as well as adjusting when they intend on taking social security as well as producing an actual earnings strategy so they recognize when where and just how much revenue to withdraw in addition to modifying the portfolio to see to it the quantity of threat in there as well as the anticipated growth equals with their capability to remain in the we do all that which'' s what we call the retired life success plan and also that obtains them up to a 99 possibility of success to get going with your really own tailored retirement success plan click the web link in the summary listed below to schedule a visit with one of our consultants that has a fiduciary responsibility to place your rate of interests initially thanks [Songs]Read More