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Every week Jeff Vogan comments on the state of the market and economy as well as gives advice on retirement planning and wealth management.
When it comes to investing, retirement legacy planning, taxes, your health care the decisions you make today can greatly impact the quality of life for you and your loved ones tomorrow. What you need is straight and unbiased information on the most important issues you'll face when planning for your retirement and financial future. Good news, you found a premier retirement radio show with Jeff Bogan. Jeff is the founder of Premier retirement planning and wealth management. And he's been guiding people financially and to retirement for 30 years. So get ready for an hour of the most comprehensive financial information on the radio premier retirement with Jeff Hogan. And now here's Jeff Hogan, with Jeff shade. Thank you so much, and welcome to premier retirement with Jeff Hogan, the show that gives you the straight talk and honest answers you need to help sustain yourself and your wealth for 30 plus years. On today's show, we're going to be talking about a retirement roadmap, what this plan looks like going from the accumulation phase to the D accumulation phase and mechanics of that and how you get paid. Also, we're gonna be talking about how to tackle inflation in retirement and what you need to know if you plan to work part time in retirement. My name is Jeff shade, and I'm just here to ask the questions. But of course, the words of wisdom and solid advice come from Jeff Hogan, CEO and President of Premier retirement planning and wealth management. Jeff, how you doing today? Doing great, how are you doing? I am doing fantastic, Jeff, we're gonna start with the basics on today's show. And really, I was thinking about this, I think a lot of listeners would like to know how the procedure works at Premier retirement. Let's say that I'm just picking age, I'm 65 years of age, I've decided to then I'm getting ready to retire, I want to retire in let's say a year. Now I don't know if that's enough lead time for you or not. But let's say for the sake of argument that I've come to you a year before I desire to retire. And I say Jeff, I have this money in stocks, I have money in bonds, I have money in mutual funds. I've got it in cash and cash equivalents. I've got a 401 K. And you know, just a little here and there. And let's say for the sake of argument that I've accumulated approximately $2 million in my accumulation phase of working now it's time to D cumulate. This and turn this into cash flow. What are the first steps that you take here? And I guess the big question I want you to talk about is how do you turn this income? And what products would you use to ensure that I get a paycheck every couple of weeks or every month for the rest of my life? Well, I'm I'm assuming based on this conversation, if we're looking at really the income play, I'm guessing that other than Social Security, you don't have any pension income or any guaranteed income other than Social Security, perhaps that is Ryan dollars. That's a nice little chunk to turn into some cash flow, I also would have to ask, you know, what is your monthly need for income? What is your desired income? How much is your guaranteed income from Social Security? If you're married? What is that? How old? Are you? You want to throw me out some hypothetical there? Yeah, yeah, exactly. Well, I'm 65 years of age, I plan to retire at age 66. My Social Security is going to amount to about $36,000 a year right now on a you know, just a basic living standard, it's going to take about, I would say $100,000 are more, you know, that is net assets in order to maintain the quality of life that we have now. And as I said, I am 65. So you know, and being that I've done a little longevity test, I expect to live to probably middle 80s to around 90 years of age. Okay, that's good information. Now, the other would be how much you have in Roth IRAs. How much you have in regular IRAs, and how much you have in non qualified, right. And I don't know the answer to that question offhand, for this example, but Okay, okay, let me just, I'll just give you a hypothetical $2 million. asset base is very common. I had a single person just come in this week had just shy of $2 million, a little bit from an inherited IRA, some from her own IRAs and contributions to Roth and 401, K's about 200,000 in a trust, most of it qualified most of it Ira stuff. So and her question was, I don't really need a lot of income. But I know that RMD times coming in, it's going to be harsh. Also, I have this inherited IRA inherited three or four years ago, and the guys over at my brokerage firm, one of the big mutual fund companies say that it'd be smarter for me just to hold on to it and wait the whole 10 years and then take it all out at that particular time. Okay, so that's $600,000. First of all, let me just say, we don't just look at income, we look at the tax program, right, but look at what your tax problems are going to be and so forth. What I did is I put a program together a plan together, I delivered that plan this week. And she's, you know, coming up with our questions for our next meeting. So we've had two meetings together so far. So plan basically showed us the divvying up the money into a managed Roth IRA of the inherited money, a managed non IRA, we have hedge fund managers and hands on managers tactical management that allocates assets and manages money fee based stuff. And we have one IRA in a fixed index annuity with an income rider, another IRA, Roth IRA, that's not an inherited IRA, one that she's at for about $300,000 that is in investments, but she explained to me that she doesn't like all the risk that
She has and she's really unnerved about the fact that she lost over $400,000 last year in the market, and then told her brokers, hey, I don't want to have all this risk. So they went conservative, and she hasn't made any of it back on the market rebound and hasn't really had any direction or any choices to make. So once we got allocated once this allocation showed basically, about a third of her money would end up in managed accounts, a third of her money would end up in indexed annuities, part of which would guarantee income, and some of her trust money would be in an index annuity that was just totally tax deferred that doesn't guarantee income, but doesn't generate a tax bill every year. And the other third would be an A ulurp Life Insurance retirement plan. Now she's pushing 70 years old, she doesn't need life insurance anymore, she needs a hole in her head. But as far as this from the standpoint of needing a death benefit, but wait, what are some of the advantages of life insurance programs? Well, if you stuffed the life insurance indexed universal life totally full of cash and buy a teeny bit of death benefit, the cost of the death benefit isn't very much. And you can generate tax free stealth income from that. So third of our income is going to come in actually, more than a third of our income is going to come in stuff. So here's basically the breakdown, came up with a plan where about $350,000 of her money is going into an index annuity so that when she's 73 years old, after about three years of deferral, roughly, she's going to have a guaranteed income of 32,000 a year that's about a 9% rate of return as far as from her initial investment, that is a guaranteed payout based on an A plus rated company that hasn't defaulted or missed anything that probably one of the top five, not 5%, but probably one of the top five strongest insurance companies on the planet as far as ratings go across the board. So again, she's got really good stability, she's got this guaranteed income, her Social Security is roughly $30,000. She has nothing other than that, from the standpoint of income. So then she's got another 32,000 going to come in a few years and her lurk if she puts $150,000 of the 2 million total that she has. Now don't jump to conclusions before I explain how this is gonna work. She's gonna put $150,000 into the loop for the next six years that comes out to 900,000 Sounds like a little bit more than a third. But wait on the alert because you're funding a life insurance retirement plan, you can actually borrow against the tax free death benefit as early as the second year. So as early as the second year, she's going to be pulling out roughly $60,000 per year starting in year two, while she's putting 150,000 of new money into the account to fund the cash value, but she's borrowing 60 of it back so that means really your out of pocket is net of $90,000 from year two through six. Bottom line is she's really going to be putting out over the next six years she's gonna be moving 600,000 net, which is roughly more in that third range into her life insurance retirement plan. However, her net out of pocket in six years is $600,000. Yet she's going to continue to get $60,000 per year tax free income as just basically premium of her death benefit. Now she did have a program with Genworth and I'll call out the company who I just found out isn't been dropped to a C plus rated company used to be a Genworth part of GE Capital where well she was hailed as this guru of you know, businessman but unfortunately, in my opinion has lost every bit of credibility and the fact that he ruined GE and created these companies that can't survive. Bottom line is GE Capital is going out of business or Genworth at least his she's got this long term care policy that keeps on raising the rates. I said, you don't need long term care. She's well how come? I suppose because the death benefit on the life insurance retirement plan is available to you should you become terminally ill or get chronically ill? So in other words, that four or $500,000 Extra that's in the death benefit is still going to be available to you in a lump sum or an accelerated payout? Should you need it for you know, health reasons to still have it. Well, that's great. You mean I can drop this, you know, $8,000 a year premium on my health care shorts. Yes. So now we're up to 60,000 tax free $30,000 in Social Security, which is partly tax free, mostly tax mobile, partly tax free. It's got a standard deduction of about $14,000. And then she's got this guaranteed Ira income of about $32,000. Starting in three years. Meantime, she's got about $150,000 in cash, she's gonna live on some of that and her income, although she said she needed about $100,000 to live on is going to be somewhere around 125 230,000. Net, that's after paying taxes. Now. I told you she inherited an IRA she has to pull that money out within the next 10 years and her present brokers have told her Don't worry, just wait, wait, wait, there's only one person that that plan serves and that is the person getting fees on that account. Because if she waits to pull $600,000 out of that IRA in year 10, she's going to have a tax bill of $600,000 which means she's going to be as a single person way into the top tax bracket and at that point, it will be you know, 42 to 45% combined state and federal on about 600
$1,000, roughly half or more of that is going to be taxed at that higher rate. So she's gonna get killed in taxes, or she can do what I suggested. And that is take the next six years that she has to deplete those assets and deplete that $600,000 $100,000 A year right now and put it into the loop along with some of the Roth money that is also inherited IRA that has to be pulled out in the next six years. Because she inherited this four years ago, she only has 10 years, or roughly three years, she's in her fourth year. So from now she's got roughly six years to deplete both accounts, she's going to use those accounts to move to the ulurp so that she never has to pay taxes again, gets out of the tax liability 160 at a time, and yes, her taxes are going to be between 17 and $20,000 per year for the next six years. And then after that her tax is going to be only be about five to 7000 per year for the rest of her life. So given that scenario, we've just developed a plan that involves index annuities with income riders index annuities that have tax deferred growth ulurp That provides tax free income and a Roth that she doesn't have to touch that starts out at $400,000 is probably going to grow to two or $3 million. By the time she dies, and replace all the income she spends down all the while having an actual 30 year tax rate of about 5.7% 5.7% of all the income that she pulls her bank account is going to be taxed 5%, not 25, not 30, not 40. So a good tax plan by paying a little bit more upfront and using the right tools can go a long way when the standpoint of income. And by the way, that's predictable, almost as good as guaranteed income about 120 230 spendable without having to touch Roth money. That is a great illustration, Jeff, I'm glad that we did this little experiment here. And you know, your client was very close to you know, what I was throwing out to you as a sample client really answered all the questions I was going to ask you about how to pay for health care expenses and taxes. But you've covered that now, you mentioned the IUL, the indexed universal life policy. And I want to talk a little bit more about that in paying for long term care and just the mechanics of how I get a check from you. But in the meantime, and before we get going, Jeff, I want to take this moment and remind our listeners to give us a call and request their premier retirement roadmap, the sort of roadmap that we've just talked about, so that they can plan proactively for their future with a cost of living adjustment to help offset inflation. If you're listening right now. And you want this premier retirement roadmap, very simple to get at no cost, no obligation, call 520-782-9059 520-780-9059 for your premier retirement roadmap. Again, it's not going to cost you a dime. But it could be just what you need to help achieve your financial goals. Again, 5207809 at 59 To request your premier retirement roadmap, the sort that Jeff has just talked about, you could also request it online at Prem ret.com. That is p r e m r e t.com. Jeff, let's get back to our discussion here about this sample client, which very close to actually what I was asking you. And let's go back to the IUL, the indexed universal life policy, you mentioned that you can take an advance on your death benefits. How does that work? I mean, is that the two of six activities of daily living thing, as far as the chronic illness benefit? Yeah, it is. It's basically if you can't, if you have a chronic illness, that means that you can't clothe yourself, bathe yourself, go places, drive yourself, transport from bed, to toilet, whatever, cook for yourself, those things that are necessities to somebody making it through a day and continue to live with a reasonable state of being as soon as you can do two out of six of those, and you would qualify for a chronic illness, acceleration of your death benefit. So you'd be able to take roughly 24% Over the next four years of the death benefit. So let's say you had a million dollars death benefit, you'd borrowed roughly 600,000 of it and you had 400,000 left, we're just using round numbers. It's not really exactly how it works. But just play along here that $400,000 would be available $100,000 A year towards your long term care benefit. Of course, when you died, you'd have already spent it, there's probably going to only be about 5% of that death benefit left. And then upon death, they would pay the rest off and basically wipe you out of all the loans and interest that you already used. And you know that death benefit that they already paid to the nursing home would come out of whatever the death benefit ended up being at that time. So yeah, it's just basically using a pure death benefit early. I mean, you can borrow money from it to live on while you're having fun and you can borrow essentially borrow the death benefit to pay for your health care while you're sick. Now, Jeff, as I said, you know, retiring at age 66. I'm 65. Now as your sample client here, and I've been driving this old car, I've always wanted a Cadillac Escalade, and I come to you and I say, Jeff, I need to buy this Escalade. And while I don't, I guess need it, but I really want to buy this Escalade, and it's going to be Oh, pretty close to pushing $100,000 have you incorporated into my plan, that sort of cash in terms of liquidity that I could pull it out and do this? Should I pay for cash for a big expense like this or should you finance it at a very low interest rate? What's your opinion on that? How do you handle that question? Well, I know there's a pure irony, but the woman I'm talking about actually drives a Cadillac. You're kidding says
A little too small in my one another car.
She's got that little car actress. Yeah, I know what it is. I know less. Evie. I know the one. Yeah, yeah. So you've much funny you mentioned the Cadillac Escalade, my wife drives that and she loves that just a bigger car. And it's a little more powerful. Right? So I'm with you on that, man. I'd love to help you. So anyway, it just she asked me the same questions is like, what if I want a new car? I'm not really that happy with this Cadillac, I was really excited to get it, but I don't really like it. I said, Well, remember though, 125,000 You still have in cash, that's for everything from Rainy Day expenses to whatever, she's what what if I want to buy another car in 10 years, I said, well, all this money you're taking out of IRAs. I mean, you told me you live on about 100, I've created 130,000. Net, spendable as a where's that money gonna go? If it's not going to charities or Disneyland trips with the grandkids or, you know, finding new ways to spend, it is going to end up in your savings account, am I right? So that every few years, you're going to replenish that 60 or 80, or $100,000, and buy yourself a new Cadillac Escalade, or fix the house or remodel your kitchen or bathroom or whatever. So the excess always ends up in your savings account to kind of rebuild that. And here's the other thing, there's still hundreds of 1000s of dollars of Roth money that we haven't even spoken to that probably is going to end up going to her daughter and grandkids that she doesn't have to use, you can always pull that money out, it's not going to throw you into a new tax bracket. So if you don't have the cash, or you end up spending this cash flow that we've already set up, and you don't take money out of those accounts, then you've got the Roth money to use and, you know, barring any super high risk investments that could lose money. And we typically don't put Roth's in a highly risky accounts, some people think that that's the only way they should put them. Well, I would hate to pay tax on $400,000 moving, let's say you move $100,000 A year over from your regular IRA to a Roth Yeah, 4000. And then the market crashes goes to 200, you just pay taxes on $400,000. I don't like the backwards potential of risky investments. So I like nice, high return, little safer plays with that maybe mix of private equity and some index annuities that don't have riders fees and stuff attached with them that have some really good growth potential. So in other words, that Ross is gonna grow, let's say in 10 years, the 400,000 or Roth is now 800,000, because it averaged 7%, which is very reasonable in a safe investment in a reasonably safe low risk investment. Well shoot, pull out what you want, how much you need for that escalate 80,000 bucks, oh, wait, you got to trade in, right? Probably get 30 or 40. For your trade, you might only need $50,000. So pull it out of that shoot you made 400,000 last 10 years, you're still way ahead of the game. So yeah, there's always liquidity. I've never seen anybody and 30 years of doing plans for people, even when I was stupid and naive and really didn't know how these plans would work, I think we've always left a way more liquid money available that is needed, I really have not seen somebody get pinched on liquidity needs just really haven't, there's always a cash account, we always leave a chunk in there. And there's always access even to annuities, you can you know, take money out and ulurp You don't have to just be stuck with 60,000 a year if she wants to take, you know, 40,000 a year out his income. And then every few years take that extra 60 or 80, that, you know, she didn't take out in income that would otherwise be available, at least, you know, we're illustrating and we're projecting that that's kind of a good safe rate of withdrawal for her. So maybe she goes really safe and takes a lot less out so that she has that extra money that she can borrow against the loop in order to buy her cars by the Disneyland trips by the you know, house remodels or whatever. So again, you have like three or four different accounts that you can kind of consider your personal bank accounts to get access to those assets. Jeff, I'm really loving what I'm hearing with this plan that you're designing for him. He is a sample client here and I hope that a lot of our listeners can relate to this but let's talk about taxes. You talked about tax optimization in the plan that you're designing for me, you know with all of these investments it seems that doing the tax return may be a little complex for me as a client a premier retirement How do I handle doing the proper tax return or returns Well I'd say a turbo taxes you know, I am not an h&r block fan. And I know some listeners probably use them but you know their attacks house and you never even know half the time who you're getting if you're getting the same guys last year they're enrolled agents sometimes they have really good skill sometimes they don't you never ever really know. And they're not really that thorough. So people get frustrated paying four or $500 for a tax return that seems like something they can do they get Turbo Tax and then Turbo Tax doesn't understand everything and they don't just expose you to all the deductions I've had a lot of people really don't get a lot out of TurboTax unless they have a super simple situation. But you know, once you're doing tax planning with loops, I mean shoot if you accidentally put your loop income as taxable income as income because you know, you saw it come to you and the TurboTax does understand that slurp life insurance retirement plan because it doesn't ask you the question because it just takes income as income, you might end up paying tax on that or you know, certain distributions that you get a 1099 sometimes you get a 1099 and it says this is the amount distributed to you but if you look in the taxable amount box, it's blank, do you think is taxable income? It's really easy for the Layperson. And I'm not saying everybody's too stupid to do TurboTax but often we miss stuff. I will tell you that if you're going to CPA and you bring my investment plan or you don't bring my
So we're playing with you, and you say, hey, yeah, my new financial guy just said that I'm moving $180,000 of my IRA money to ulurp into some Roth, and I have to pay tax on that he's gonna like, might say, crap, are you kidding me? Do you know your advisor just cost you $50,000? Well, not really, I had to pay $50,000. Now, instead of $150,000 over the course of your retirement life, so it might be smart to do that in order to make three or four times the money tax free, especially if we think rates are gonna go up. So, again, don't let your accountant freak out because we're doing a tax plan. And again, TurboTax isn't gonna care, it's gonna tell you what taxes you're gonna know, then you're gonna freak out. Go, Jeff, why are we doing this again? Right, right? Well, look at the plan. We're doing this now, because we're gonna pay more taxes now. So we pay a lot less taxes later, and our tax bracket isn't 20 plus percent, our actual tax payout is gonna be more like eight to 10 or 12, or 15, not 20 or 30. So you know, sometimes people's accounts, get him in trouble or make them think they made a bad decision on doing a tax plan. Because most of us just want to get them all the benefit of every tax write off, they can this year, and worry about it next year and go year to year. Thankfully, I met a an accountant that came out of KPMG out of one of the big four companies, she worked on the US Airways account before they merged with American Airlines. Actually, her name's Pearson Gardner, and she, she's our CPA, she works with us all our clients, I helped set her up a business, I was working with a CPA firm that, you know, understood tax planning a little bit, didn't ask a lot of questions didn't make people feel bad about doing Roth conversions. But they made a lot of mistakes. And you could have done better on TurboTax. But once we got Kyrsten, who was you know, a very thorough, very intelligent person that can work at a big four firm, she took personal tax returns very seriously. She also understands Payless now, so we don't have to pay more later on more money make sense. So she also is in line. So if you need an accountant that thinks the same language as you do if you become a client of us, because you will think our language once you see how the plans work, and not have to re explain to your accountant or TurboTax what you're doing and you know what exemption you don't get, we do have in house tax return available here. And we have very high end tax strategy consulting through advanced tax strategies through a group that I belong to the base in Kansas that does a really good job at really higher end tax strategies and stuff if you need to get that deep into the woods but you don't have to take it on your own. If you do business here you can do everything here you can do your Medicare here, you can do your mortgages here you can do your you know long term care alternative to pay as you go here with through the loops. You can do income planning here. And tax planning can even do estate planning here. We do wills and trusts, we take care of you from A to Z. Now we don't we're not everything to everybody. But we're everything to the people that we serve, meaning that we're comprehensive, but we typically deal with the affluent retiree who as a tax problem and has multiple facets of retirement planning that they need. We're not just a portfolio manager I hate when people who are in this business that claim to be fiduciaries only do stock investments for long term planning. Well, what about your cashflow? What about next week's bills? What about the fact that you've worked really hard for the last 40 years? You don't want to lose any money? Why aren't you using principle protected accounts? What about tax cash flow? Why aren't you using loops and broths? Why are you not converting now at lower rates, while the tax codes better? I mean, there's just so much that's left on the table with most firms out there. And it's frustrating. But for those people that end up being way under serve, which happens to be more of the affluent retiree, find a really happy home here. And Jeff, for our listeners who have been intrigued by our conversation here, and they're really looking for a financial planning firm that really does have a robust bundle of services. Again, we recommend premier retirement planning and wealth management in Tucson also with an office up in Mesa. Now if you'd like to get in and sit down with Jeff and ask your questions just like I have as a sample client here. You can do it by scheduling your no cost, no obligation, no judgment, Premier retirement roadmap meeting, it'll only take about an hour, but it could be the best time investment that you will make this year that number to call to get yours 520-780-9059 It's 5200780 9059 You can call this weekend if you want and leave your information. Shelley give me a call back on Monday and find a place in the calendar for you again 520-782-9059. You can also request your retirement roadmap online at Prem read.com. That's p r e m r e t.com. Jeff time for a break and we come back we've got listener questions and more when premier retirement continues here on 790 K in St. Tucsonans most stimulating talk
Welcome back to premier retirement with Jeff Hogan, founder and president of Premier retirement planning and wealth management in Tucson and also up in Mesa. Glad you could join us again this week. Once again. I want to remind you as we did last week, we are now a podcast so if you've missed any part of the program today or you want to hear it all over again, you can hear this show and others by going to wherever you get your podcast, you know places like Amazon music and we've got it on
audible and I heart and all the different platforms, you will find premier retirement with Jeff Hogan right there. You can also if you just want to make it simple, just simply Google premier retirement podcast, Jeff Vogon. And it'll come up there any number of places, it's a great way to spend about 15 minutes or so, or an hour in your car driving from here to there, learning a little something and being educated and informed. So once again, it is a podcast if you want, you can also go to the website, which is Prem red.com prmret.com. And you can hear the show there, Jeff is you know, and our listeners know, every week we do listener questions this week, no different we'll kick it off this week with Len in Rancho visto Su and he writes, I have six separate IRA accounts created over the years in two different banks, I would like to consolidate these all into one IRA. But I heard something about the one year rule and I didn't want to make any mistakes. I went to the IRS site and the description says that you can't do two rollovers from the same IRA in the same year, which rather implies that more than one IRA would be okay, but right after that, it says you can do only one regardless of how many IRAs you have. So is it gonna take me six years to consolidate all these accounts? Or am I misunderstanding something here? Yes, you are. First of all, it is good that you check the rules, because a lot of people make that mistake and find out the hard way that they just made a big error. There is a big misunderstanding in what a rollover is, and a trustee to trustee transfer or what's called a direct transfer, the rollover implies that you actually take custody or control of the account. In other words, you would take an IRA out and have them write you a check you'd deposit at a bank and look for another IRA to put it into, you can do that one time a year, no matter how many accounts you have. So pick one, or better yet, just do trustee to trustee rollover. So now there is not rollovers but trustee direct trustee direct transfers, the company would then for example, if you have a an IRA at fidelity, and you're going to move it to Vanguard, I'll just use two companies wouldn't necessarily move it there, whatever. But you open an IRA at Vanguard say you want to open it up, let's just say you want to we use fidelity. So let's say you have an IRA at Vanguard, you have an IRA at Schwab, you have an IRA, you know, at some other bank credit union, and you want to move all the fidelity IRA that we set you up, you just have to do either a transfer form from the new IRA that says, hey, send us the money. Here's your client signature that says he wants you to send the money in his account to his new account, and you just write the check to Fidelity FBO or for benefit of Len, so it goes into lends account as long as you don't actually have constructive or actual receipt of those funds. In other words, if you don't receive a check with your name on it payable to you and deposit double into any of your own accounts, if it's payable only to the institution, then you never take actual possession, you can do that as many times as you want. So it's very common here. We do this all the time we consolidate we think consolidation is smart, we typically do consolidate all the 401, K's IRAs, everything is qualified in a non or in a traditional IRA type of account that's qualified, we would put into one IRA, just to start, we would take all your Roth IRAs combined, those of you have several of them could be a Roth 401 K, or a couple of Roth IRAs, we combine them into a new Roth account. And from there, we might want to reposition some of those assets. And just some manage money, maybe some private equity funds, maybe some real estate stuff, maybe even a precious metals trust, or maybe you convert some of that from the IRA to a Roth in order to pay some taxes or even move some to live on or to convert to ulurp life insurance type retirement plan, we may also set up some of that, let's just say these six accounts add up to a million dollars, you know, maybe we'll put 300 of it into an account that'll generate you two to $3,000 a month in income to supplement the two to 3000 you're already getting from Social Security. So do you have your absolute minimum net of you know, 6000 a month that you have to have to live on? Guaranteed, depending on what your goals are and how you want to set it up, we can consolidate those accounts, and then reposition them from one IRA into new IRAs. So you can do this multiple times. We do it all the time. We like the consolidation, at least to start off with and then we unconsolidated, I don't think we would move it back into six different IRAs, but we might move it into a principal protected account and a managed account in the Roth and a principal protected account and a managed account in the IRA. So maybe you have four accounts, whereas now you have six or eight accounts, depending on where your money scattered around. But I hope that answered your question. And once again, if you have questions you have Jeff, simply give him a call 5207809 59 Thank you for sending in that question. We will send you out Jeff's book retirement the road ahead. And if our listeners want to get a hold of that maybe they want to read that this weekend, you can go to Prem ret.com. Go to the Resources tab there and click on that you'll find a downloadable link to retirement the roadie had very very good reading our next question Jeff is going to be Janet listening to us and Catalina Janet says I'm 62 My husband is 64 and we plan to retire in three
Three years, we have $550,000. In retirement plans, Social Security will cover our minimum dignity floor in retirement. So my question is about a pension I have, the lump sum would be about $280,000. And the monthly lifetime benefit would be around $1,300 a month. So should I take the lump sum option for my pension or the lifetime benefit? What's your opinion? Well, at that payout, that seems like a ridiculously low payout, it's not even 5%. Typically, you get a six or 7% payout on most pensions. And here's the rub that I really hate about these lump sum pensions that get turned into a lifetime annuity at 1300 a month, if you get hit by a truck in year five, you don't get that money anymore. Now, I'm guessing that based on how low that number is, you'd probably be taking a joint payout. But let's say you both get hit by a truck five or 10 years down the road, you don't even get your money back, you'd have to live 20 years just to break even or a little bit more than that just breakeven on the 280. That's assuming it doesn't even make any money. So my opinion is that's a horrible payout. Number one second of all, you lose control of the principle, what if you moved it out to your own lifetime income plan with a an A plus rated company that manages tons of pensions to actually manage his pensions for first responders and government entities, but they are an insurance company that can offer you a personal pension plan as well. Here's the cool thing, you move the 280 over there, they're gonna give you a 20% bonus in income value just to calculate your income, you wait three years, and your benefits going to be somewhere in the doo doo doo doo doo doo doo, let's say be about 20, roughly 20,000 or more per year, probably 22 to 24,000 a year. And if you ever needed to cash in the 280 Plus its growth because you get sick or you just need extra benefits. And you know, you're not gonna live long enough to where that $20,000 A year income makes a difference anyway, you can just blow out of it and spend the money. So you have the best of both worlds, you still have access to the lump sum, you may take a penalty if you do it too early if you blow out of it too early, but you can get that guaranteed income for the rest of your life. And again, on a single life payout to be 22. I am guessing somewhere between 20 to $24,000 a year on a joint payout probably 18 to $20,000 a year. So you're already getting about a 50% upgrade in payout and you don't lose access to the benefits. Oh heck yeah, you should shop that I would not keep that pension where it is. And by the way, the numbers I'm using is based on history I have with one particular company I really like for income, I've got probably six or eight companies that give a pretty good income payout. If you just want a guaranteed income that could be a little more than that even but you would still lose the principle. But that's the best of both worlds kind of the cake and eat too in alternative to a lump sum payout. And based on the numbers, you're telling me you could do a lot better love to talk to you more about it and help you out. Janet, that number 5207809 at 59 If you want to talk to Jeff about making this decision, and it is a decision that a lot of people need to make not so much for younger people because of course these days pensions don't exist like they used to. But still there are a lot of post baby boomers out there who may have pensions we appreciate you listening to the program they're in Catalina next question is Ira listening to us and Sabino Canyon, an IRA says, I've heard you talk about the different stages of retirement the gogo years, the slow go years and the no go years. What are some cash withdrawal strategies for the gogo years should I take money from pre tax or retail accounts? It depends. You know, let's put it out on a spreadsheet. Let's put the next 30 years out on a spreadsheet and see how much you need to take. Now earlier I was talking about a person that had $2 million that was trying to reposition assets, so they could be in a low tax bracket down the road. The way we did it was we never wanted her to go into a higher than a 25% tax bracket marginal ever. Now what that required was that we had to start taking withdrawals from the Roth IRA right away, not forever, because we funded ulurp. And then after that, we could take less money out of the Roth and let that just continue to grow. Then we take money from the Lipsitz stealth and non reportable income and tax free and everything else that would make up a lot of the difference. But she was kept as a single person in the 25% or lower tax bracket for the rest of her life had she just waited and spent all our cash now let the tax deferred, which a lot of accountants and financial advisors would say all this stuff that they're making their money on the fees on everything, just leave it just leave it defer kick the can down the road, just spend all your cash and let this grow. Because it's tax free, you won't pay any taxes, you'll be in a zero tax bracket for the next three or four years. Or right now the tax brackets are lower than they have been in years and years with the Trump tax cuts. And you should be paying tax on as much money as you can right now at 22 and 24%. Instead of what's going to be 25% in three years. So pay as low taxes as you can on as much money as you can now and not pay taxes later. So what we do is we build a plan and we say Oh looks like for the next three years, you're going to take twice as much out of your IRA as the Roth. After that you're going to take twice as much out of the Roth in the loop than you are out of your IRA and your overall tax bill is going to be less than 10% of your total income between now and the time you die. You just have to
spend this money now in the Go Go years and spend that money later in the in the slow go years. But it's not rocket science but it is scientific in the fact that you really do have a good question and that there is a rationale behind when you take certain amounts of money out of certain types of accounts. And it's all based honestly, your cashflow really should be based on your tax bracket not based on just some sort of a general idea of some value system that grandpa and somebody else put in your head. So I think I think you just need to look at the whole picture, whatever makes you keep the most in your pocket overall, and that you send the least amount to the IRS I think is the best play we can do for you, Ira, thanks so much for that question. We appreciate your listening to us in Sabino Canyon. And again, you will get a hard copy of Jeff's book retirement the road ahead, if you'd like us to answer a question on the air for you, you can send it to us by going to Perimeter net.com Going to the contact page there and emailing it to us from there. And once again, if we use your question on the air, we'll send you a hard copy of retirement the road ahead. And again, if you'd like to read that book this weekend, you can download it in digital form or by going to premier att.com. And clicking on the resources tab there. It's very simple to do it's Prem red.com. Jeff, before we go any further here, I once again want to remind our listeners that if you'd like to get in and sit down with Jeff for his premiere retirement roadmap, no cost no obligation, no judgment, call 520 7290 59 to schedule your place on Jeff's calendar, Shelly has got it right in front of her and she'll find the appropriate slot for you shall take some basic information. And if you want to call this weekend, you can do that simply leave your information and someone will get back to you again, it's Prem rat.com prmret.com. Or if you want you can call 520-780-9059 520-780-9059. Jeff, according to go back rates 20% of Americans are delaying their retirement because of inflation, do you think it really makes sense to delay retirement because of recent inflation? Unfortunately, I in some cases, it's the only way you can retire on the level or the income level that you need. I mean, keep keep in mind, inflation has gone up over 20% overall. And if you look at gas and food and utilities and housing prices, if you're renting, or even some municipalities are raising taxes and things like that, to where you know, even the fixed costs, or those things that you thought were fixed, aren't fixed anymore, they still go up. So if you're paying 20% more, let's say you plan on retiring, and it takes $100,000 to live and you had enough to basically make those ends meet, let's say you had a million and a half dollars, and that would give you that $100,000 a year you needed total. And now your needs are 120, probably going up to 125 or 130. By the time this inflation cycle gets under control, maybe even more than that, you're gonna end up needing 20 to 30% more in assets, given the similar returns going forward. And keep in mind, we just had a setback in prices and valuations on the stock market. I mean, the NASDAQ although it's on a tear still isn't back to where it was before it started crashing s&p and Dow either. So you know, we've still got a little ways to wait before markets get out of Taragan, I still think we're going to look at a recessionary period where there might be another last sell off before the markets get to a better place to start buying in again. So yeah, I think we're in right now if you're on the cusp of retirement, I think working through this, what might become a recession and adding a little bit of income and extra 401k contributions to that account, if that is what you want to retire on may be necessary. Now, on the flip side, if you've got so many assets, that you're going to have triple the income of what you're used to spending right now then who cares if you retire, you're now instead of having triple the income you need, you only got double the income you need, what do you do? That's still more than you need. But for many retirees, I think the middle class retire and even the what we would call a mass of fluent retiree, those people between say one and $5 million in retirement assets, some of them aren't gonna hit the numbers, maybe the two to 5 million range, but the one to 2 million range especially that doesn't go as far as people think people that have one to $2 million in retirement savings have probably been making between one and $200,000 a year over the last five years, they're probably used to spend the most of that. So if you want to keep that same type of, you know, retirement plan, and if you're in the stock market and bond market, you know, the old 4% rule doesn't even work anymore. 4% of a million and a half is 60,000 bucks, if you can make up the other 40 or so in Social Security, you still only had 100 Well, if 100,000 used to get it but 130 is where you need to be now. Well, you either need to rethink that 4% rule or rethink repositioning blurps and index annuities and maybe getting that income up to the 120 or 130 amount. Interestingly, this plan I'm gonna go back to that same plan because it's pretty fresh on my mind. It was just this week few days ago, that's you know, the single woman, you know, saved a lot. She's working with some people that just do stocks, bonds and cash portfolio management only they call themselves fiduciary. He's just like the guys on TV columns as fiduciaries, but only do one thing for everybody. I don't understand how you can be
A fiduciary and retirement planning, if you're not doing the whole retirement plan are doing a comprehensive job of it, looking at cash flow taxes, guarantees, principal protection, all those things the client actually wants, if you're a fiduciary, you should do what the client wants. If she says she doesn't want to lose any money, then you should put most of the money in places he can't lose money, or at least have all those things that are guaranteed needs. So she needs to live on $100,000, she's got the potential, she would have to live on $100,000, keeping a portfolio that is based on a 4% rule type of a rate of return. And hopefully, she'll still have a couple million dollars when she dies, when we put the plan together that included LARPs included index annuities, and income for life guaranteed to start at age 73 to three years after three years of deferral. And in other words, in year four and take income off of the loop, even starting as early as year two, that income went from $100,000 to $130,000, on average, mostly because of tax 10, or 15 of that was just tax savings, the other was guaranteed income on principle protected assets, you take volatility and the market risk out of the equation, your money will last longer period. And in a more predictable sure way. And if you don't have a big stomach for risk and gut checks, when the market goes up and down, and you're just now getting into retirement, consider you're gonna have probably three, four, maybe even five of these big 20% Plus market corrections between now and the time you're done retiring. In other words, time you're done, your time is out, right. So get used to it, this is not just the one time and then it's all off to the races and back in the business, again, might be in the back in the business, getting back to even over the next five years spending some money down and the next time it crashes, you're so far underwater, and you're so far from retirement, you can't go back to work, then you're going to be digging yourself a big hole. So again, if you can go more conservative, use some tax planning and incorporate principal protection and some ulurp type programs and strategies, you might be able to bump your income 20 or 30%. And maybe you can still hit those goals and be prepared for the future market corrections and not be in the market. You know, with the hold and hope method and everything dangling out there at risk your entire retirement sanity, and financial survivability is based on the stock market that you and I can't control that is that basically changes at the whim of whoever's in the White House and what policies might be driving the Fed or whatever. So again, you know, if you want to leave your retirement to chance, just keep doing what you're doing that got you there. If you want to leave your retirement in a more predictable way and find out if you can retire, then consider moving out of where you're at and into a different strategy. And you might find out you can't actually retire early, but it will take a different strategy, what you're doing, Jeff, getting back to the original question, and I want to preface it by saying this, you know, right now inflation is around 4%. But who knows, I mean, it could be going down to 2%. Again, and another year, nobody really knows that. So considering that it sounds like your recommendation is that you could retire right now. But if you wait, your retirement could be even better. What I'm saying is, even though inflation goes back to 2%, if they do get it under control, it doesn't get rid of the 20, we've already experienced that 20 or 30, that's going to take place between now and the time inflation actually gets back to the more manageable rate of two is still there. So if you're going to keep doing what you're doing and take a lot of risks, then you're going to have to keep working and have a lot more padding and buffer in a retirement plan. So I think the people that are just doing 401k is they're looking at volatility and their financial well being know that they have to continue to work in order to make sure that they have enough buffer in their retirement plan. However, so yes, the answer is if you do it right, you may find that as long as inflation kind of stays at four and kind of retracts a little bit. Even with that prior 2025 or 30% bump in prices of everything if you can create an income plan that generates 20 to 30% more income and part of that being less taxes, then maybe you can go ahead and retire anyway. So again, it will take a different strategy than what you're probably using those people that are continuing to work no they're either underwater now if they've already been here I have clients that have come and done their best but they still want to live it a little bit higher lifestyle than they can and so they're still working just because they want to hit certain numbers but they've already preserved at least x amount of income and predictability in their plans up to now and they know what that gap is and they know how many years it'll take them to fill it it's unfortunate for so many that come in and they have no idea how long they're going to work because they have no idea what the markets gonna do they have no income generating assets that guarantee anything other than Social Security. And in my opinion, you need a lot bigger buffer and you're probably gonna have to work longer in that scenario than you would in a scenario like we use Jeff for a lot of people retirement includes a part time job now more so than ever What should people know if they're considering a part time job in retirement? Well, I know sometimes that part time job is for the money and sometimes it's just to get out of the house you don't have to do honey dues all day you know I get that so whatever it is, whether it's for income or whether it's just to get out it dues, yeah whatever your reason for working is your reason for working. However, keep in mind that if you are not f
retirement age, social security can be withheld if your incomes you know, over roughly that 20,000 range. So they will actually withhold a certain amount like $1. For every $2, you make that withhold $1 of Social Security. Now, you'll get that back, but they amortize that over the next 30 years of your expected life expectancy. So it's not just a complete reimbursement of a lump sum of you know, what you get back at full retirement age, because you deferred some of it, it actually gets amortized back into the amount that you get for life, that might not be a bad thing. I mean, shoot, if you make more money, you don't need your social security might as well let it you know, increase your future incomes when you start taking Social Security again, but keep in mind, if you are trying to deplete your share of the Social Security Trust Fund as fast as you can, you may not be able to do it, if you get that part time job prior to full retirement age. Other things is this, you know, keep in mind what it does to your tax bracket. You know, if you're bumping right up on the edge of a 25% tax bracket, maybe you're making $100,000 a year being taxed on about 75 of it, which puts you in that 15% tax bracket, but pretty close to the max after the Trump tax cuts go away, that's gonna be what's going to be in 2026. And going forward, every dollar you make, even in a part time job, you make $20,000 in a part time job 5000 of its go into the government plus, you still have to put into Social Security and Medicare stuff like that. So you're gonna be probably losing seven or $8,000 of a $20,000 part time job income. If you go into that tax bracket, is it worth it? I don't know. Maybe it is. Maybe it isn't. Maybe it's just the extra money you need to go see the kids in Florida every year or to go on that European cruise that you want it to go on the Rhine River next year. Maybe that's why you want the thing and it's okay to pay taxes because, hey, you want it bad enough. Whatever your reason to work is your reason to work. But keep in mind taxes should be taken into consideration and possible reductions in payouts on Social Security and maybe even pensions depending on how your pension is designed. great information on today's show. Jeff, I want to thank you for your time and once again remind listeners if you missed the show today, or you want to hear it all over again, where a podcast simply go to wherever you get your podcast and search for Jeff Bogan premier retirement. We got a number of shows right there. Jeff, we are out of time for this week. I want to thank you for your time I want our listeners to remember if you'd like to get your premier retirement roadmap, it's 5207809 at 59 No cost no obligation 520-780-9059 or online at Prem red.com. Have a great weekend for Jeff. Oh god. I'm Jeff shade. We'll talk to you again next week with another edition of Premier retirement right here on 790 K St. Tucsonans. Most stimulating talk investment advisory services provided through premier Wealth Advisors LLC and Arizona state registered investment advisor. securities transactions are placed through TD Ameritrade insurance and annuity products are offered through premier advantage Inc. DBA. Premier retirement planning and wealth management investing involves risks including the potential loss of principal any reference to protection, safety or lifetime income generally referred to fixed insurance products insurance guarantees are backed by the financial strength and claims paying abilities of the insurance carrier. This show is intended for informational purposes only not to be construed as advice or recommendations to show format accuracy and completeness cannot be guaranteed by Premier courier and its representatives do not provide legal or tax advice and may only conduct business with residents of states and jurisdictions where they're properly registered.
If you have a pension, are you aware of the new risks that threaten your payout? Hi, this is Jeff Vogan at Premier retirement planning and wealth management. If you're nearing retirement and are deciding between taking your pension in a lump sum or in an annuity, you should know how increase interest rates and inflation could burden your total payout. For answers on how to address this risk. Call us at Premier wealth 5207 at 9059 or visit us online at Premier net.com. There are risks involved with any financial decision and it's not easy to manage those risks alone at Premier we have the tools and experience to make the most of your pension that you work so hard to save for in these uncertain times. It's more important than ever to learn how to maximize your retirement and make it last the rest of your life. So if you want to make the most of it, give us a call at 520-780-9059 or visit us at Prem red.com that's 520-780-9059 or prem or e t.com. Investment Advisory services offered by Premier Wealth Advisors LLC and Arizona state registered investment advisor. If you're at or near retirement, a sound strategy and a trusted tea by your side could mean hundreds of 1000s of dollars or more in your retirement plan over your lifetime. Jeff Hogan, president and founder of Premier Wealth Advisors has been helping retirees through changing times like these for more than 20 years. And if you call right now Jeff will meet with you personally to review your current plan call 5207809 e 59. But Spaces are limited so call now. 5207809 e 59. Investment Advisory services offered through premier Wealth Advisors LLC, a state of Arizona registered investment advisor