Welcome to Retire Smart Austin. My name is Cynthia De Fazio and I’m joined today by Phil Capriatti, Senior, He is founder and president of Empower Wealth and Tax. We’re going to talk to you today about some very exciting things. We’re going to talk about tax free investing, and wealth preservation. Wow, everyone wants to know about that. Phil, how are you today?
I’m doing wonderful. It’s good to be back in the studio with you, Cynthia,
it’s so good to see you, Phil, I love our time together, like I mentioned in the prior episode, because there’s always so much energy, you bring the information with a level of fun, it’s interesting, it’s engaging, it pulls people in, and we all learn something myself included every single week.
Thank you, thank you very much. I appreciate that. Of course, learning and teaching, it’s all part of, well, it’s all part of experience, right? The older you get, the more knowledge you should possess. And you should never stop learning. So, you know, I’m in my 60s, and I do a lot of continuing education, always learning new strategies. If you’re not constantly learning in our business, you’re losing as far as I’m concerned, because you really had to bring that degree of knowledge to your clients, and help them stay engaged, as well as help them learning as well.
Sure, it’s very, very important. Well, obviously, the two words that we started that show with today, tax free investing, that’s always something that people love to learn, especially when you say tax free, and you’re passionate about that.
So, here’s what when I look at tax free investing, we’re talking, we’re talking really about the trifecta here. It’s tax-free investing, to achieve wealth preservation, and also to make sure that my estate plan is fully functional. So, I really want to put the three of these together. It’s not just about tax free, it’s not one dimensional. They all fit together, and they all fit together in a plan. So, first of all, when we look at it, the one thing that I want to do and is, is with tax free investing is I want to accomplish wealth preservation. So, I don’t want to be redundant. So, here’s what the less I pay, the smaller the check is that I write to the IRS. At the end of my year, first year in retirement, 20th year in retirement, the more of my wealth I’ve preserved, okay. Okay. So, two people are going to spend it either myself, My Bride, my children and grandchildren wealth preservation, or I’m gonna give it to the IRS and let them do the spending and either one’s fine. But without tax planning and tax reinvesting guess what normally happens, government takes it. Yeah. And, and this way, the way the tax code is set up, especially if we have 401, Ks and IRAs that were forced to take required minimum distributions for why because we simply didn’t do enough tax planning. Yeah. Okay. So, they have a big ol’ bullseye on these 401. K plans. Comptroller General is telling us once we hit that $40 trillion in debt, tax rates will have to go up, regardless of who’s running the country. Okay, so we want to prepare for that. So sure. I absolutely like that. So, the very first thing when we talk about tax free investing in wealth preservation, is how tax efficient is your income plan?
All right, great question. Yeah.
So, folks say well, what do you mean my income plan? Well, what is your income plan? So? So, number one, did you file for Social Security early? Are you getting ready to retire and really not sure what your Social Security claiming strategy is going to be? Because no one with the intelligence enough to sit down with you explained the differences. So, so when we take a look at it, remember and please understand if you have not filed for Social Security yet, it’s important to call our office come in and let us do a Social Security Maximization and tax-free planning interview with you. Here’s the here are the facts, folks, the more you receive in Social Security, the larger your Social Security check is, the more tax efficient it is. Okay, and I’ll give you an example. Let’s assume that you have a $75,000 retirement income goal. And let’s assume you filed early file Social Security early, maybe you’re only getting 25,000 or so and Social Security, okay, but you want 75,000? Well, that’s Social Security that you’re receiving 25 or 30,000. From now, you’re forced to take income from other taxable accounts, whether it’s interest on taxable investments, or IRA distributions. Hopefully, it’s a Roth IRA distribution as well. Well, the more resources you take from your IRA and your taxable account, the more your Social Security is taxable because it’s based on this provisional income formula. Okay? All right. So, at most only 85% of your Social Security considered taxable income, if you’re pulling and so half of your social security goes into that provisional income formula. So, if I’m getting 40, or $50,000, from Social Security, only half goes into the provisional income formula. If I keep my provisional income under $32,000, none of my Social Security is taxable. If I’m file filing joint, okay, okay, between that 32 and 44,000. Okay, only 50% of my Social Security is taxable, anything over that 40 to 44 range. 85% of my Social Security is taxable. So, stretch structuring a tax official retirement income plan starts with Social Security. And if your parent advisor last week, we talked about breaking up with our advisor and how hard it is, if they’re not talking to you about the tax efficiency of your retirement income plan, it’s really time to get a second opinion, it’s actually time to get a second opinion from our firm. And you can dial that number think there’s a QR code at the bottom, but it’s 888-818-6557. The other thing is how do I structure capital gains? So, we’re talking about when we’re talking about tax efficiency? Well, one of the services we just implemented and I’m so excited to bring this to you. One of the services we just implemented for our clients is tax harvesting. Okay, so people say off Phil yet tax Rs, my guide does that my gal does that. We now have sophisticated software that allows us to do PACs gain and loss harvesting monthly, okay. Now, why is that important? Because I want to be able to balance create balance, I want to be able to sell and buy tax efficiently. But I do not want a negative or I do not want to have to have a large capital gain at the end of the year. So now I can buy and sell in these taxable accounts. And by using tax harvesting monthly. Okay, I’m doing it 12 times a year instead of one. What does it equate to? It equates to a much more tax efficient retirement income plan. So, this is what I’m talking about education, staying current, staying current with new technology, staying current with your retirement income plan. So, if your current advisor is not doing this, maybe it’s time to get a second opinion, tax free withdrawals? Well, I can take tax free withdrawals from my Roth, which I know for those folks have been watching us for the last four years, they have already started their Roth accounts and Earth Roth conversion strategies. I want to measure where do I want to take income from each year to make sure my Social Security is not taxed, or not taxed to the highest amount? Personally, I believe after paying into Social Security for the last 4050 Some of the 60 years, none of your Social Security benefits should be taxable. But if you’re not careful and structure, a tax efficient retirement income plan 85% of it could be taxable. So, I want to pull those tax-free withdrawals at him,
I was just gonna say Phil, this is the perfect time for us to take a very short commercial break. Would you agree? I would agree. To our viewers at home, there’s a number to call on your screen 888-818-6557 We know that you’re in the viewing audience today and that you’re listening to everything that Phil is sharing with you about building your own tax-free investing and wealth preservation process for your retirement. If you would like to take advantage of learning more and having a complimentary consultation with Phil. He has five spots available this week. All you have to do is call in 888-818-6557. If you don’t have a pen, that’s okay, 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, we do have to take a very short commercial break, don’t miss the opportunity to call in and gain one of those five spots for your complimentary consultation. Don’t go anywhere we have more with Phil when we return.
My personal feeling is that no one who has worked in this country and paid taxes for 50 years, or 55 years should ever have to pay taxes in retirement if you put a plan together, that is tax efficient, so that when you retire, receiving money from Social Security should be tax free. receiving money from your pension should be tax free and receiving money for maybe life insurance policies are tax free. If you put together the right combination. What you can find is you can structure a tax-free retirement plan for just about anyone to accomplish any retirement income goal. I now currently have clients that want $120,000 A year 10,000 a month. And I have clients that we’ve worked with for the last 10 years that pay zero taxes on that income.
Welcome back to retire smart Austin. My name is Cynthia De Fazio joined today by Phil Capriatti, senior He is CEO and President of Empower Wealth and Tax. We’re talking about tax free investing and wealth preservation. So, Phil, I want to talk to you about something very important. Let’s talk a little bit about tax diversification. Can you dive into that for a little bit?
Yeah, let’s go ahead and do that. So, tax diversification is really a simply put is having resources or retirement funds in multiple different accounts. We’re not just talking about tax on municipal bonds that are tax free on a federal basis, we want to create several different sources of income. So, for instance, I want X amount of my resources in in taxable accounts. If I’m going to be charged, if I’m going to get a 1099 for dividends from my taxable account, chances are I want to be spending them, if I’m going to be taxed on it if they’re not tax deferred. If they’re taxable, I want to put that into my equation. Social Security we talked about earlier, I want to make sure I get that Social Security tax free or as tax efficient as possible. So, by doing that, I’m going to want to take a certain amount of money from my IRA, I’m going to want to take a certain amount of from my Roth IRA, I’m going to want to take a certain amount from dividends and interest. We’re going to take certain amount from Social Security and maybe I have a pension or other income. But what I want to do is I want to put an income plan that diversifies at that diversifies My, my, my tax strategies. What do I Why do I want to do it? What’s the bottom line, I don’t want to write another check to the IRS if I don’t have to. So, when we start looking at cost tax harvesting monthly, when we start looking at okay, I receive 5000 in dividends since I’m paying taxes on it, I want to include that in my retirement income plan. Each year we put together and structure a retirement income plan. So that number one goal, I’m not paying that Social Security back. The other thing that we want to look at is how will distributions from my IRA cause my Medicare premiums, my Part B and Part D premiums to increase? It’s called the Irma tax er ma Okay, many folks don’t really get introduced to the ERM attacks until the death of a spouse. Wow. Okay. Yeah. And what happens there and it’s amazing, but not many advisors structure a planning for the survival of the first spouse or death of the first spouse. So, what we’re talking about is when you’re married, and the majority of us are note, of course, we have single folks as well, different types of tax planning, but same idea. So, let’s assume you’re married, and you’re receiving two social security checks, and you may be receiving a pension or maybe not, and you’re taking distributions from multiple accounts. When as far as the tax code is concerned, when you file your taxes, you’re married filing joint, right at the death of the first spouse, you’re now filing a single return your tax brackets doubled. You go from jumping into that 25% tax bracket at 125,000 to jumping into it at 60,000. So many times, what happens in the older we get the larger the required minimum distribution Mission is many, many advisors pay no attention to this. And so, what we want to do is we want to structure a an RMD distribution plan that doesn’t supersede what our actual retirement income goal is. Make it tax efficient. So, this is extremely important. Also, we talked about the Security Maximization, but how about return reducing your taxable income? How many of you folks out there right now listening to me feel as though you’re paying too much in taxes? Better yet? How many of you folks listening to me feel as though over the last 4050 years, you and your bride if you’re married, had paid more than your fair share in taxes? One other question, how many of you folks out there getting ready to approach retirement or are in retirement believed that you should be in a 0% tax bracket? Well, if you answered yes to these questions, okay, you should be making that call. You should be picking up the phone, come into our office, let’s have a conversation. Let’s see how your retirement how tax efficient and your retirement income plan is.
Absolutely.
We really enjoy doing it. Each one is like a project, which is really kind of cool. You probably know I have a complete Tax Practice, right inside of my firm. We have three tax specialists that are licensed, we have a CPA that runs it. But the fact of the matter is, if you’re not achieving tax efficiency, currently, we’re don’t believe you’re going to be achieving tax efficiency and attach tax efficiency in the future. Please make the phone call. Let us help you remember, the more you get to keep the better off your retirement income plan is.
that is very true. Phil, let me ask you about legacy planning. Can we talk about that before our next commercial break?
I think so. Yes.
Let’s talk about how that fits into someone’s overall retirement planning process. And we’re talking about wealth preservation. Let’s talk about legacy planning how it ties into family members?
Well, first of all, in every retirement income plan, we really need to hedge against inflation. So, we need to have a certain group of assets that make sure that we don’t reduce the purchasing power of our retirement income plan. So, we use wealth strategies that such as investing in real estates, REITs and other types of other types of investments, that hedge against inflation. The next thing is the big killer in any retirement plan is risk mitigation. Okay. Okay. The more we gamble in the, we’ll call it, Wall Street casino, the more we gamble, eventually, it’s not all roses, and it’s not all lollipops and unicorns, many times, we’re going to see a correction. Like this year, for instance, we’re expecting to see quite a correction. So, risk mitigation, make sure that your portfolio is structured in a way that reduces your risk or market volatility to no more than a certain percentage. I like to have that conversation. If the market drops 30%, Are you okay with your portfolio dropping 30% And then quantify it. So, what we normally like to see in retirement, and again, depending on the size of the portfolio, but when I’m looking at the income portion of your portfolio, I really don’t want to see any more than about 10% market volatility. Some folks will say five, some will go to 15. When we run those Morningstar reports, many times we see drawdown or market volatility of 3035 40%. And clients are unaware of it, you know, when you become aware of it when you see a major downturn or correction, or some sort of major trauma hit, hit the economy or the market. So, we want to make sure that the risk mitigation is included. I can’t begin to tell you; we need a break. I can’t begin to tell you how many folks have not, have not looked at long term care home health care. Many clients say Hey, it’s okay. I’ll just pull it from this account or that account. I don’t need long term care. And they might be right. But many times, pulling from the wrong account can cause an even bigger tax problem. Sure, if you have too much money in an IRA, I had a client that about 15 years ago, ran into the situation, didn’t want long term care, had all their money in their 401 K and had to go into a nursing facility had a stroke. And they basically were there for five and a half years, spent down close to $1.5 million and left their spouse with religion. really next to nothing, she had to sell the house to retain that liquidity. So long term care planning, it should be in your retirement income. And it really is part of your wealth preservation.
Bill, thank you so much to our viewers at home. As Phil mentioned, it is time for us to take a very short commercial break. If you have your phone handy, go ahead, grab it, click on that QR code at the bottom corner of your screen or if you have your pen, the number to call in is 888-818-6557. What we’re talking about today is building your own tax-free investing strategy as well as with wealth preservation. And as you can tell, Phil is very passionate about helping people get to that level of having a tax-free retirement, don’t miss the opportunity to, to grab one of these complimentary appointments with him or a member of his team that number again, 888-818-6557 and we’re going to take a very short commercial break. Don’t go anywhere. I have so much more with Phil when we return.
You know, going back to work after retiring is not ideal. I’m Philip Capriatti, 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’s 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 Capriatti, senior founder and CEO of Empower Wealth and Tax and we’re talking about tax free investing and wealth preservation. So, this is a very important topic, Phil, a lot of people are taking notes in the viewing audience. And I love that because they are tuning in to everything that you say about this very important topic. Let’s keep going down that list. What about so security optimization? That’s a question that a lot of people have for a variety of reasons right now how that ties into a tax free retirement plan.
You know, one of the misconceptions about Social Security and we have been programmed and almost brainwashed that Social Security is going bankrupt. And Social Security is in the red. And quite simply, folks, if you were one of those individuals that was tucked into filing Social Security early, before full retirement, and taking 70 cents on the dollar 75 cents on the dollar, you’ve had a, a large disservice done to you. One of the things about Social Security is each year, it always gets a cola 90% of the time, and the average cola last year was 8.6% increase this year, it’s 3.2%. Not maximizing what you paid into Social Security, in my professional opinion, is just something that should not be tolerated. So, the very first thing that you want to accomplish is you want your financial adviser, your licensed fiduciary to run your own personal Social Security Maximization report. What is included in that is knowing how much can I get from Social Security at each age from 62 to 70, and then weigh it with your other assets. You see, folks, your Social Security will automatically increase 8% per year, every year, you delay. Okay, the larger your Social Security check, the more tax efficient your retirement income plan is going to be. So, with that being said, if you paid into Social Security for 35, 40, 50 years, and now we’re tucked into filing at 62 or 64, 65, you’re literally collecting pennies on the dollar, you’re losing a lot. And the more you get from Social Security and the more tax efficient it is, the less you have to take from other resources. So that’s extremely important. I tell clients if your financial advisor has not schooled you and educated you on the benefits, advantages and disadvantages of structuring a social security plan that fits a new retirement income plan, you’re with the wrong individual. The other thing that’s really big is and it’s amazing. No one talks about this are very few family wealth education. You know, and we’re starting to gain a lot of new clients in our new office in Horseshoe Bay. And, and you know, one of the questions that I’m getting a lot of and here’s why I wanted to put a segment of the show on it is, do you work with children? Will you work with my children? And I tell them? Absolutely. Now normally we work with high wealth individuals, but I work with all of our clients’ children. But the first thing I want to do with your children is I want to educate them. So, when you have a child who’s in their 20s, or 30s, the very first thing if they’re working for a company, are they taking advantage of their 401 K at work? And most importantly, are they taken advantage of opening a Roth 401 K and making are asking the employer to match that in a Roth by doing that, you can actually help your children to become financially independent and tax free without having to worry about going through the Roth conversion strategies. So, we want to start right off. I mean, just the way we train them as they were kids growing up, you know, right from wrong manners. Okay, spirituality, all of the different values we instill in our children. We really need to look at family wealth, education, how are these children going to react when they impose potentially inherit your wealth?
Yes, very, very.
Okay. So, this is another part of wealth preservation and legacy planning. And one of my favorites is charitable giving. I’m a firm believer, the more you give, the more you receive, not necessarily monetarily, but just in in grace, it just in that good feeling that you feel inside by doing something nice and charitable for someone. So, I want to include that. And this is one of the reasons Cynthia that we offer these complimentary reviews with folks. It’s not just all about working with clients. There are many folks that come in, they have a brother-in-law or sister-in-law, they’re happy with their advisor, but they really that advisor really doesn’t know or the advisors getting wet ready to retire. So, what we want to do is we want to educate you we want to educate your children. And remember, if you think you’ve paid more than your fair share over the last 40 or 50 years of retirement, get ready taxes are about to go up.
Phil thank you for another amazing episode this week just chock full of great information. Thank you to our viewers at home most specifically thank you for spending time with us today on Retire Smart Austin, we know you have a lot of questions for Phil. That number to call in once again is 888-818-6557 or go ahead grab your smartphone, click on that QR code at the bottom corner of your screen. Be safe. Be happy, be blessed. We’ll see you back one week from today. Take care now.
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