Welcome to Retire Smart Austin. My name is Cynthia De Fazio, joined today by Phil Capriotti, senior of Empower Wealth and Tax and to our viewers at home, are you asking yourself a very important question, what happens if taxes go up, what if they are increasing, and what about inflation? How does that overall impact your retirement plan? We’re going to ask the expert, Phil Capriotti today. Phil, how are you?
I am wonderful. So good to see you. Cynthia, boy, this topic just never goes away. No, and you know, we talked about taxes, but inflation wasn’t a big variable. Prior to 2020. It seemed like, well, it didn’t seem it was under control. It was under 2% we saw real growth. We didn’t really see we saw stable prices. So, we’re going to talk today about an extremely important topic, I think one of the most important topics, and that’s the hidden tax inflation and how it reflects and how it intersects with an individual’s retirement plan. And I’ll give you one small example. Okay, you know these inflation numbers that we see, we saw Social Security got a 3.2% increase to help offset inflation, not so much. We saw them the pre prior year, 8.7% increase to help circumvent or account for inflation. Not really. It didn’t really do that very, very small drop in a bucket. When we look at inflation, all you have to do is stop and take a look at and I’m going to give a few examples that aren’t discussed. How about your homeowner’s insurance? Let’s just take that for instance. Okay, forget the prices in the store. Forget the prices at the pump right now, let’s look at homeowners’ insurance. You’re right. Okay, I have never made a claim on my thank God. Never made a claim on bike homeowners’ insurance. I saw my homeowner’s insurance on the lake house go up, literally, $1,600 for one year, no, yeah. And I call, and the deductible doubled. Oh my gosh. So, I called, I called him up, and, you know, we’re in the insurance business. We do that. And I looked at it and the agent, who I’m very good friends with, they said, Well, Phil, it is what it is. And basically, what we’re seeing is everything cost more to fix. Absolutely, when you have an event where maybe there’s a fire or something of that nature, it now costs so much to fix, we needed to increase the deductibles so that that increase wasn’t safe, 75-80% so now when we take a look at that, is that particular variable factored into the government’s count on inflation? No. So when you take a look at how did your auto insurance go up? Well, you never had an accident, but my auto insurance went up several $100 I like to put a percentage, it went up. 22% never had a ticket, never had an accident, but it’s gone up. Why? Well, we’re seeing a lot of car theft, yeah, but that’s not my fault, yeah, but it all goes into the pot. Same thing with the homeowners. So, when we start to look at not just food and not just rent, we’re looking at taxes, we’re looking at homeowners, we’re looking at everything, everything, so it affects everything. So again, when we structure a comprehensive, written retirement plan, that’s bulletproof, meaning inflation proof and in a and tax proof. Okay, now we have a little extra peace of mind. How many of you folks out there are talking with financial advisors that are talking to you about structuring your retirement income plan, not only in a tax-free method, but also to be able to keep pace with the rising increases in inflation? If your current position is not accounting for that. It’s important that you give us a call, click the QR code, but call us at 888-818-6557, be one of the first five callers, and let’s sit down and have an intelligent conversation that’s all encompassing
Absolutely. Phil, because obviously when you think about that, when you think about inflation being on the. Rise coupled with taxes overall, doesn’t that really impact someone’s purchasing power in retirement. It seems like a double-edged sword there.
It is. So not all you’re seeing increased prices, really across the board, but as government continues to print money, it reduces the purchasing power of the dollar. And unfortunately, these folks nowadays, there’s no limit to what they’ll print until they cut, they have to, you know, like back in the day, I had a very good friend of mine, Kenny, and unfortunately, he had a bride that liked to spend credit cards max amount, and she would come quick get the credit card bill. Now we’re going back, like 40 years before, so he didn’t even know it. So, all of a sudden, he has four different credit cards. They’re all maxed out over 20 grand. And that was a big, big number back then. And so eventually, what he did was he, he actually, he had to do a credit check, find out all the credit cards, and then cut them all up with the scissors. No more credit cards for you. Same thing with the government. Unfortunately, the credit card, they don’t have to pay, we do, and that comes in a form of increased taxes. Okay, okay, so it’s real, if you do not get a handle on government spending, government does not create jobs. It does not. It basically regulates. So, when you have more jobs, I was like, we had 81,000 new jobs. Well, 81,000 government jobs, all right? Well, who pays the government the tax dollars? So basically, they take from you. So, this isn’t really true growth in the sense of the system that we have grown to not only love and cherish, but we want to, we want to also make sure that we can sustain it for our kids and grandkids. So, reducing purchasing power the dollar is another problem we need to deal with. It has to be implemented in your retirement plan. Absolutely.
Phil and also, what about the increased tax burden overall on the retirees? I know we’re looking at an unknown amount right now. It’s projected that, of course, that taxes will increase, but let’s talk about how that impacts your retiree.
You have two types of citizens in this country. You have taxpayers and you have tax recipients. It’s just as simple. Taxpayers have to be concerned with taxes going up. Tax recipients do not when I say they do not, because they don’t pay taxes, they receive taxes. Now, benefits may drop somewhat, but we don’t see it because the current powers that be simply don’t have the stomach to cut benefits, with respect to non-taxpayer funded entities. Why? Because it affects them at the voting box, unfortunately, but when we take a look at it, one of the big targets or bullseyes on our back is your retirement plan, your 401 K, your 403 B, your IRA, if you have not converted all or part of that to a tax free plan, meaning a raw plan, Look out below, because these are the plans that have over $40 trillion in it. These are the government plans my partner. My partner is Uncle Sam and Aunt Samantha. They can raise taxes on distributions at any time, and folks they are going to there’s no doubt about it. It’s simple math. Debt keeps growing. We will not default on the debt, and we have to be prepared for tax efficient retirement plan by creating balance in these plans, many of the folks come into our office, Cynthia, all of their money, when I say all of it, 90% of their liquid wealth is in, is in a taxable plan. And I’m like, How do you like having a partner the government in there that can raise taxes? And most folks don’t realize it that way, because many advisers don’t want to talk about it, but we will. We talk about it at nauseum. Sometimes it’s a great thing though that you do well, we have to prepare, because here’s I want you all to be on the receiving end of a tax-free retirement plan, and what that means is we start to do the heavy lifting. Heavy Lifting now, many of our clients are already tax free. We have over 200 clients that are living tax free retirement because we’ve done the heavy lifting over the last 12, 1314, 567, years. If you haven’t started that plan, give us a call. Dial 880-880-1865, 57 come in and let’s talk about how we can take increasing taxes out of your retirement income plan.
Phil, how many spots do you have open this week?
Just have five.
We have five to our viewers at home. You heard the gentleman, only five spots this week. That number to call is 888-818-6557, if you’re in the viewing audience today and you’re concerned about the. Pact of inflation and increasing taxes. How that will impact your retirement. This is the perfect opportunity for you to take advantage. To have peace of mind just call-in claim one of those five spots with Phil and his team, 888186557, if you are running out the door and you don’t have a pen, that’s okay. Better still grab your smartphone. You can click on that QR code at the bottom corner of your screen that will take you right to Empower Wealth and Tax landing page, and you can schedule your time accordingly with Phil and the team, we’re going to take a very short commercial break. Don’t go anywhere. We’re talking all about how inflation and increasing taxes will impact your retirement planning. Stay tuned.
Our office is in cedar park. We employ 14 people. We have experts and professionals. Everyone’s license, if you fit into our company, you love people, you care people, you’re service oriented. So that’s our home office. We just opened a satellite office in Horseshoe Bay. Within the next 12 to 15 months, we’re opening up another satellite office in Sun City, in Georgetown. I told my wife. I said, we open up. She said What? Open up another office? When are you going to retire? I said: Honey, I am retired. This is what retirement looks like to us, and you better- Might as well hold on to your hold on your skirt, honey, because we’re probably going to open one up in Dripping Springs. To my son, Philip, he and his wife is also involved. Erica, she’s wonderful, will probably end up running Cedar Park office. My son Parker, he may run the Horseshoe Bay office. My daughter Lisa is going to be running the Sun City office, and I guess I’m going to need a grandchild to run the other dripping spring office. But at any rate, I was really blessed in that out of my five children, three are in the industry. Two directly work for us. This is really their legacy as well.
And welcome back to Retire Smart Austin. My name is Cynthia De Fazio, and I’m joined today by Phil Capriotti, senior of Empower Wealth and Tax. And we’re talking all about how the taxes being higher and inflation overall being greater, how that’s going to impact your retirement plan, Phil, staying in that same vein. I know you’re laughing because of our commercial break.
We were watching the commercial, and I was thinking, you never know what’s going to come out of my mouth at any given time. Unbelievable. Anyway, that’s cute, so I hope it is. Oh, it’s wonderful, honey. I hope you were watching that. It was pretty good. I referenced you in something about a skirt. But at any rate, it’s adorable. Speaking about taxes, okay, and inflation, and talking about the impact of one of the things we have to be cognizant of is the fact of what we call sequence of returns. And so how does spending? Let me explain something. Let’s get right down to the basics. Let’s assume I want to spend $100,000 per year, spend $100,000 per year, and let’s assume that I’m in a 20% tax bracket. Let’s just make that assumption. Okay, I have to pull $122,000 dollars out of my retirement account. I have to send 22,000 to the government to be able to spend one. Okay, we have that. We understand that. Absolutely. Let’s assume for a moment I am enjoying tax efficiency in retirement. I want to spend that same $100,000. I take $100,000 from my Roth to spend. I sent zero to the government. Zero. So, start to count the dollars. So, when we start to look at that, it’s extremely important to manage your portfolio tactically, especially when we’ve done Roth conversions, because we do not want excessive market volatility to come in and snatch some of that extra money, absolutely. So basically, we want to seek something like and somewhere between a seven to 11% annual return in that range, and we want to make sure we measure our drawdown or risk management to no more than about 10% now it could be seven, it could be 14. Every client is different. The point that I’m making is we don’t want to see the market take 20, 25, 30, 35% of your Roth. So, it’s extremely important to take a look at the impact of not tactically use in using investment options in your portfolio. So, it’s taxes, it’s inflation, it’s also returns of investments. So, as you retire, give you an example. You stop working. You no longer have your paycheck coming in, and that year that you. Stop, start retiring. All of a sudden, the market takes a 2008 I like this refer to that financial crisis, 100% not only are you pulling resources out to live on the market pulled maybe 3040, 50% of your entire portfolio. Now, if 90% of your wealth is sitting in a government account, and you’ve lost that with respect to percentages. This is how the impact of not properly managing the reinvestments return, along with drawdown or market volatility can affect your retirement. It can decimate it, and it did decimate many who retired back in 2008 because they weren’t paying attention. Never realized that we could see a financial collapse. Yep, people weren’t expecting that. Yeah. So, one of the other advantages are disadvantages, depending on whether you plan for it or did not plan for it, is changes in government benefits. We’re going to see changes in those government benefits, and unfortunately, folks for tax paying citizens, we’re not going to see increases in government benefits decrease in all probability will be seeing decreases. And I’m sure we’ll hear a story similar to, you need to pay your fair share. After all, don’t you want to help out someone who is more needy than you, and of course, we do because we’re generous people, but when it comes to inflation, it comes to taxes, it comes to sequence of returns, and it comes from cutting benefits, the retirement income plan must have built in it provisions to accommodate for those changes, buffers, if you will, exactly like that buffer. So, if your portfolio does not have built in buffers, or this is a conversation that you never really had with your financial advisor, pick up the phone. Give us a call. Let’s come on in. I want to meet you. I want to talk with you about some intelligent topics, about structuring your retirement income plan and making it bulletproof, so to speak. We want to have it tax proof, inflation proof, market proof, and if we see a cut in benefits, we want to see a reduction in benefits. Make sure that that’s accommodated as well.
Phil, your locations now, let’s talk about those before we open the phone lines. Where can people find you?
Well, our home, our local offices in cedar park, we employ about 14-15, employees there. They’re all partners, as you probably heard me talk about it. My children are actively involved. My son, Parker works in our home office in Phoenix. He’s been out there for over two years. He does training. He’s learning the business from the ground up. My son, Philip, my eldest son, has worked with me now for over a decade. In all probability, he’ll be running Cedar Park office. He’s really starting to show not only level of intelligence, but he’s very, very dependable. He’s pretty sharp, wonderful. Many times, I sit back and on. I’m like, wow, I just learned something from my son. I love it. So, you can come in either the Cedar Park office, my favorite office are really both, but the Horseshoe Bay office is great, because not only have we seen a major influx of new clients from Marble Falls, Horseshoe Bay and burn it, and all of the surrounding areas, Johnson City, Spicewood and the like. But we’re having fun because I’m meeting a lot of folks playing golf. I’m getting in better shape, and I’m hitting the ball just a little straighter. Now, one of the nice things about our horses Bay office, Cynthia is we’re right on 2147 and right across the street is slick route Golf Course, which I’m a member of. So that’s a lateral move right there. That’s like going to the gym, honey. I have to go to the gym. I’ll talk with you later on or come on out. So, I love both offices, and we’re open five days a week. Normally, our staff is in there eight to 10 hours a day. They can accommodate any time for you, so just pick up the phone and dial up and let’s make sure that your retirement income plan is again as the saying goes, bulletproof.
absolutely. Phil, thank you so much to our viewers at home. That number to call is on your screen, 888-818-6557, as you can see, you need to have a plan that’s going to be able to weather any storm that may come your way. Phil and his team are offering you that opportunity. Today. You can simply pick up your smartphone, click on that QR code at the bottom corner of your screen that will also take you empower to Empower Wealth and Tax landing page, and you can claim your spot accordingly. Don’t go anywhere. We’re talking all about how raising taxes and inflation will impact your retirement plan. Stay tuned.
We know the market is going to get worse from here. This is the biggest monthly decline in 10 years. People’s 401 case took a major hit.
My investments are tanking. My retirement. Isn’t going as planned. Can’t believe I let my kid talk me into buying crypto. I mean, what is that anyway?
This was the fourth worst contraction in history.
So how are you two doing?
Your financial future doesn’t have to be uncertain. I’m Philip Capriotti, CEO of Empower Wealth and Tax. If you amass the nest egg, it’s time for a financial advisor to help you reach your retirement goals. This is one of the greatest tax windows in history. Now is the time to take advantage of this tax discount while we can, we specialize in retirement income planning, tax mitigation, estate planning and so much more. So, plan your retirement right Call now for your own complimentary portfolio review and tax analysis.
Welcome back to Retire Smart Austin. My name is Cynthia De Fazio, joined today by Phil Capriotti senior of Empower Wealth and Tax, and we’re talking all about how tax is raising in the future and also inflation, how that’s going to impact your retirement overall. Phil, this next one. What about portfolio adjustments? What’s going to happen with portfolios?
See one of the disadvantages I see with many of the so-called broker dealers or financial advisors is, I hate to say it, but you y’all are lazy. And what I mean by that is I don’t, for many of the folks that come in, I ask lots of questions, and we have done over 1200 Morningstar reports. That means I visited personally with over 1200 folks who have other advisors, okay? And so, I get a good feel of how they move in and out of their portfolios. And there’s not really much movement, all in all. So, with that being said, yeah, there has to be a plan put in place. It’s not just simply a 60/40 portfolio or a 50/50, you know, 50 equities, 50 fixed income. You need to make tactical changes along the way. So, with that being said, many folks, when I see no significant changes with their portfolio, I’ve actually had folks come in where we’ve run a morning star report on their portfolio two years ago, and they weren’t really ready to move at that time. They were still working now, getting ready to retire. We they came back in. I ran a second Morningstar report portfolio analysis. There was no change in the portfolio from two years ago, from 2022 when interest rates were going up, they still had 40% in bonds, and they got clobbered in bonds. Their bonds lost over 20% because of interest rate risk. Wow. And their chain, and they have not changed. And here in 2024 so when I take a look at it, I just kind of, I shake my head in disbelief, because we do things totally different, yes, so we’re actually we look at moving in and out of different sectors and asset classes that are doing well during the current environment. So, for instance, if an individual is was heavy in real estate, I’m talking about equities and or even bonds. Real Estate bonds, if they were heavy in that back in 2020, when at 2019, and 2018 when real estate was booming, and it was during low inflation and low mortgage rates, okay, and they’re still in the same positions now, when real estate is stagnant, when it when, when mortgage rates are approaching seven and a half and God knows where they’re going to go, we’re seeing, we’re not seeing major changes in the portfolio. So, this really brings us right to the point we need to actively or tactically change your positions based on economic conditions, geopolitical conditions, current events, and using in part of that portfolio, sector rotations move into sectors that are doing well. So, for instance, five, six years ago, the financial sector wasn’t really doing well. But now, with inflation and interest rates going through the roof, the financial sector is doing great. We have about 13, 14% of our positions in Financials, you know, meaning Chase and different credit cards and things of that nature. But so, where as before, it was a lagging sector, maybe 6, 7, 8, years ago. So, if your portfolio is not being tactically or actively or strategically managed by taking into consideration certain sectors. This is another hindrance to your retirement plan, because you’re not getting the best return you can, in my professional opinion, for the least amount of risk. That makes sense. Yeah, it’s common sense. Really.
Absolutely. One more thing I want to tap on before we close longevity risk. We’ve talked about that a little bit in the past, but obviously, with your taxes going up and inflation and you’re living longer, perfect storm.
Yeah, it is. So, Longevity Risk: Running Out Of Money Before You Run Out Of Life due to excessive taxes, not you haven’t done adequate tax planning. And by the way, folks tax planning, adequate tax planning is not doing your tax returns with your CPA every year, tax planning is implementing tax strategies to specifically and significantly reduce your taxes. In retirement, I want to move into different accounts. I want to be able to know how much can I take out of my Roth this year that allows my Social Security to not be taxable or to be taxed at the lowest rate. You see when we receive these government benefits, if we’re not cognizant of where we’re taking other funds from through retirement, how it’s going to affect I received this as Social Security, and then I got to give it. I got 60 grand in Social Security, and I’m given 15,000 of it back in taxes. Well, that’s $15,000 I need to take from other areas. So, this tax planning, it leads right into our strength and our strategy of helping you determine, Phil, what account should I take from to make sure my Social Security is tax efficiently received? Yes, 100% Yeah. So, it’s so this is what I mean. It’s kind of like putting a puzzle together. You know? It’s like your tax puzzle in retirement. I want to take certain amount from here. How much do you want to spend? Well, I want to spend 100,000 this year. Okay, let’s take a look at your accounts. Okay, we’re going to get this much from Social Security, maybe that much from a pension. We’re going to take this from your Roth this year, because maybe your accounts are either up or down, depending on the situation. But if I take it from my Roth, this is what I don’t have to pay in taxes on Social Security. If I take it from the IRA, this is what it’s going to cost me in taxes by taxing Social Security folks. Don’t you want to know that absolutely don’t you want to get that Social Security benefit and keep all of it we’ve worked hard for it. And my position is, yes, I think originally, when Social Security was designed, it was tax free. We can make it tax free once again, by structuring comprehensive retirement income planning.
Phil, thank you so very much for an amazing episode this week to our viewers at home. You heard, Phil, you’ve worked very hard to get to the retirement years. You deserve to have everything in place for you, including Social Security tax planning, all of it that’s going to be your encompassed holistic retirement plan. Again, that number 888-818-6557, or grab your smartphone, click on that QR code at the bottom corner of your screen that will take you right to Empower Wealth and Tax landing page. Be safe, be happy and be blessed. We’ll see you back one week from today. Take care now.
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