Welcome to Retire Smart Austin. My name is Cynthia De Fazio and I’m joined today by Phil Capriatti, senior He is CEO and founder of Empower Wealth and Tax to our viewers at home a very special show we have for you today we’re talking about a written tax free retirement plan. But first, I have a very special question for Phil. Actually, a couple questions. So first one, how are you today? That’s the most important.
Thanks for asking. I feel great. And it’s so good again to be with you. On set. And nice, bright and early on a beautiful morning.
Beautiful morning, crystal clear outside beautiful new year.
01:05
It’s been a very exciting new year, have we been busier than how did my dad’s say a one armed paper hanger?
I love that saying I say that all the time. Yeah. Well, you know, you have a lot of viewers, obviously, the Austin area. And we always have questions from viewers. But I picked a very special one for you today. Because I think that this question is a little unique, not because of the topic, but because of who this question is from. Phil, are you ready? I’m ready. This is Brad. Brad is a local adviser in your area, what he would like to know is Phil, I would very much like to know, what is your professional opinion on how to recommend that a client create the perfect written tax-free retirement plan? What is your advice for me? Again, I am a local advisor in your area.
Hey, Brad, first of all, give us a call. I’ll actually love to meet with you in person. We’re actually hiring local advisors to be quite honest with you that want to be completed advisors. But thank you very much for the question. I appreciate that. First of all, okay, when you are constructing and the perfect, in my opinion, the perfect tax-free retirement income plan, the very first thing you want to do is start with tax advantaged accounts. Now you as a financial advisor, understand what they are. So, we’re talking about your Roth IRAs, we’re talking about your Roth 401 K’s, we’re talking about retirement accounts, where we pay the taxes when we place them into the account, and then receive distributions tax free. For years and years and years, actually, it’s probably one of the best tools that an individual can use while they’re working and after they retire, to accomplish a tax-free status and retirement. So that’s number one. Okay, and please give me a call. I’d love to meet you. It took a lot of guts to call in with that question. I’m pretty sure I appreciate that. I do.
I do too, because it shows me that obviously, you’re such a wealth of knowledge, Phil, you’re not only touching people out there that are going to be clients of yours down the road. But you’re also reaching people that are in the same profession, local advisors are asking you for your guidance.
Well, I kind of like this, because a lot of the local advisors aren’t allowed to touch the tax issue within their firms. You know, they work with broker dealers who actually pay their paycheck and they don’t want them to talk about taxes. They’re concerned about maybe their lack of knowledge. And they’re also concerned about potential lawsuits, or what have you, they just don’t want to walk down that road. However, we’ve discussed this topic many times, we not only believe we know taxes are going up in the future because of this. Ever increasing debt. I mean, there’s just no getting away from it. So, the other thing, Brad is you want to you want to isolate all of your income sources. So, number one, you’re going to want to get your client you’re going to want to talk about and get a copy of their earnings record to help them understand how to maximize their social security. Now, it’s kind of like a puzzle, right? You know, it’s like one of these 500-piece puzzles. So, what you want to do is you want to take a look at where the client’s financial resources are. Maybe they have a pension, maybe they retired early, maybe they’re still working. We want to weigh all of these variables. But what’s key in my professional opinion, is to maximize your client’s Social Security. Get as much out of social Security as you possibly can, based on the amount that you’ve paid into Social Security, everyone’s Social Security check is different. It depends on number one when you filed if you filed at 62, and only took 70 or 75 cents on the dollar, or whether you filed at 6970 and built delayed retirement credits that have increased your Social Security check to 125, I’m sorry, 120, 432% of what you would have normally received at full retirement, they call that primary insurance amount. So, look at the income sources and make sure that you diversify the income sources. We don’t want to have a client that has a situation where they own a pension, they have other assets, they have maybe income from other, you know, like rentals, oil and gas income. They may have income coming from tax free muni bonds, so diversify the sources, they may own annuities. If you have a client that does own an annuity and has not turned the annuity on, talk to them about converting that annuity, if it’s in an IRA, to a tax-free annuity, in other words, pay the taxes on the on the deferred amount, you know, whatever it is, if it’s 100,200, and turn it into a tax-free annuity. So that’s number two, you really want to diversify your income sources. The next thing is asset allocation. So, we want to develop a well-balanced investment portfolio that helps most folks reduce their risk without significantly reducing their return. Okay. Okay. So, they’re actually Brad is pretty intelligent question. There are so many different variables that go into it. And I don’t know, maybe that’s why a lot of retirement or investment advisors really don’t specialize in talking about retirement planning or social security planning. It’s a lot. Also, you want to diversify not just between stocks and bonds, but you want to look at real estate and other asset classes as well. When I say diversified. I’m not just talking about a stock and bond ETF and mutual fund portfolio, we want to look at REITs, we want to look at real estate, we want to look at other income, okay? Okay. Next thing is, after you put the plan together, you want to help determine how tax efficient is. Now I’m going to be more specific, Brad, and we’re going to give you some key instruction. And for you of clients out there, or folks who are watching, I want you to understand, it’s extremely important to develop a required minimum distribution schedule an RMD report, you need to look at what type of return you can expect from your investments. You want to look at how much you could possibly lose during a market turned down. And you want to estimate what are your required minimum distributions going to be at each and every age 7375 80. It’s important to look at that because most folks, the biggest mistake that folks make in not creating a tax efficient retirement income plan is they forget to worry to, to structure your RMD distributions. And what happens is they put these plans together. And they’re great until the government says hey, you have to start taking distributions from that 500,000 million, 2 million $3 million IRA or 401 K. So, this is one of the other variables. Now there are a bunch of other variables we’re going to go into. But I believe we’re coming up on a hard break.
Here we are, Phil, unfortunately, we’re going to have to take a commercial break. But there’s a special offer you’d like to present to the viewers in Austin. Let’s talk.
Yes, not just you, Brad. But everyone who’s watching today, give us a call. Let us help you develop a written tax efficient retirement income plan. We want to run a Morningstar report on your portfolio to help determine how much risk is in your portfolio. What are the internal and external fees. And then in addition to that, we want to take a look at how much market volatility is in it. And then we’ll construct your written retirement income plan that is extremely tax efficient.
Phil, thank you so much to our viewers at home. That number to call is 888-818-6557. We know that you’re wondering about how to design your own tax-free written retirement income plan. Phil is giving you that opportunity today to learn exactly how to do that. At, 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 with Phil accordingly. We have to take a very short commercial break, but don’t go anywhere. We have so much more with Phil when we return on retire smart Austin about how to build your perfect tax-free written income retirement plan. Stay tuned.
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 from 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 founder and CEO of Empower Wealth and Tax and we’re talking about building a written tax-free retirement income plan on today’s show. Phil, this is a topic that people are just really dialing into, because obviously they love those two words, tax free. Yeah, you know, truly, because obviously, people never want to pay more than what they should. And you’re very passionate about making sure that you can strategically put them in the right position so that taxes are minimal, or tax free.
Yeah, most folks do not take a couple of variables. In fact, most advisors from my experience, they don’t look at inflation, and they live in the present day, they don’t look at what taxes could be what they were in the past as high as 70%, actually higher back into 30s and 40s. And they don’t take into account the hidden tax, which is inflation. Now over the last couple of years, due to policies that were implemented, we’ve seen runaway inflation, and now they’re dialing it down by raising interest rates. But again, all of this is needless harm. But it all affects your retirement income plan. Because many times most folks do not have a pension that gives them increases in income to account for inflation. But Brad, getting back to your original question, let’s dig a little further. And folks, feel free to take notes on this because it really is an important topic. The next thing that we want to take advantage of when we’re looking at a tax-free retirement income plan, or at least a very tax efficient retirement income plan is potential health care costs. So, when we look at this, we want to take a look at considering number one, if you’re not 65 yet, have you been taking advantage of a health savings account? Have you been putting as much money into that health savings account as you possibly can? So that you’re able to take tax free withdraws whenever you have deductibles or CO payments, or unreimbursed medical bills that may not be covered by your Medicare Advantage plan or Medicare A and B. So I would recommend, consider health care costs. And consider HSA accounts. The next thing that I find very rare, but you do find it. I’ll have I’ve had a couple of folks come into my office. They’re 6263 hate their job. Okay, they have modest retirements, they’ve spent saving for retirement, but they have debt. Yeah, they have debt, they still have mortgages to pay off. They have credit card debt. They’re paying for Chuck for their kids’ student loans, just to give you an idea. So, with that being said, in order to have a tax efficient retirement plan, folks and Brad you need to make sure that these clients are debt free. We want to be totally debt free. Okay, and as we get ready for retirement, we’re approaching debt free. So, debt management is extremely important in retirement. We do not want to overspend Yeah, I’ll have a client come in, we’ll put together a retirement income plan. And this is very rare, but we see it and, and they want to spend $9,000. Just give you an example. $9,000 A month after taxes. All right, so we’re talking about $120,000 after taxes. And they may have bought a Social Security, maybe 40 $45,000. But they have a retirement account with 600,000 in it. So automatically, this client either has to curtail their spending, reduce it, or get a higher return, or they’re simply going to run out of money. So, when we put it into our software, this client is going to be broke within 11 years. And that’s receiving a seven and a half to a 9% in that range return. So, debt management extremely important. The next thing is we want to look at our tax bracket management. Okay. So, what are you talking about? Phil? Well, Brad, what I’m talking about is we want to make sure that our client has several different accounts to draw from. And each year, what I like to do is I like to in the beginning of the year, we like to review last year’s tax return, of course, we’re doing their tax return. But we want to make sure they don’t take too much out of the IRA, we want to make sure they don’t take too much, or they’re paying taxes on dividends and interest but not spending it. So, what we want to do is we want to make sure that their Social Security is structured in a way that they’re receiving it either tax free, or tax efficiently. So given the example, we do a lot of workshops in the local libraries, community centers, and some of the retirement centers as well. The idea is we want to take as much from Social Security or receive as much from Social Security as we possibly can. But many folks pull too much money from their IRA, the more money they pull from the IRA, and not the Roth IRA or other sources of income, causes their Social Security to be taxed, all have folks that have $25,000 a year in Social Security, but because they’re, they’re pulling more income than necessary from qualified accounts, up to 15 $16,000 of the Social Security is taxable. I have folks that have received $50,000 of Social Security, and they’re only paying taxes on $4,000 of their social security. So, we want to make sure that we use tax bracket management. And if you’re unclear exactly what that is, pick up the phone, give us a call. And let’s talk about it. Okay. Don’t forget a state planning, we’re actually going to do a really nice show next week on estate planning, and who needs an estate plan, but develop a comprehensive estate plan, make sure that you are minimizing or eliminating potential estate taxes that will come to roost in the future, when this estate tax code changes in the next three years, okay, they want to revert it back to 1995 levels, which could be devastating for a lot of us. So, take a look at that. And I’m going to give us one more before we go to break. And that’s long-term care planning. evaluate what your long-term care needs are. Please do not depend on your children to provide you with long term care. I have folks that will say well, you know, my daughter’s a nurse and she’s going to want to be here. And I’ll ask, Is your daughter married? Do they have children? Do you think they’re going to have grandchildren? Okay, so the point is, I do not want to depend on my children for anything. This is a personal, just a personal feeling. I want my children to be there for me, don’t get me wrong, but I don’t want it to be, so they have to be there. So, develop a long-term, long-term care plan, not necessarily an insurance plan, but what resources what assets will you pull from if you need home health care if you can’t, if you can’t do two of six daily living activities, you have problems with dressing, eating, bathing, this type of thing. And if God forbid, you need to go into a facility. What group of assets are you going to use? Or what type of insurance do you have in place? So Long Term Care is also in a tax efficient retirement income plan bread.
Bill, thank you so much. It’s time for our second commercial break. But wow, this is just a plethora of information. We want to thank you Brad for calling in with that question because obviously you’ve given us a lot to talk about today, all surrounding how you can build a tax-free written retirement income plan. I know you at home want to take advantage of this offer that Phil has for you. This is your opportunity to call in to gain one of the complimentary consultations. To learn how to build your very own plan with Phil are a member of his team. That number again is 888-818-6557 If you don’t have a pen handy, 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’re gonna take a very short commercial break here on retire smart Austin, but don’t go anywhere. We’re talking all about building your very own written tax-free retirement income plan. We have more with Phil in just a moment.
We know the market is going to get worse from here. This is the biggest monthly decline in 10 years, people’s 401 K’s took a major hit.
My investments are tanking retirement isn’t going as planned. I 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 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 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 and I’m joined today by Phil Capriatti, senior He is founder and CEO of Empower Wealth and Tax. So, this is a great show we’re having today talking about obviously the question that Brad called in with how to design that tax free written,
It’s actually pretty neat, because it also gives our clients and viewers an idea of all of the different variables that must be included. I mean, you think our tax-free retirement plan. Yeah, yeah, yeah, that’s pretty easy. But it’s really a lot of different variables. And really, it’s actually a couple dozen different variables. And this is what, why it’s so important to work within a registered investment advisor that understands and has the expertise, the licenses and the talent to be able to construct it without going and searching for individual, individual individuals who are not part of your overall team. So, the next thing, I really don’t want to leave this out, it’s tax harvesting. So, we have now developed software normally, Brad and I know you probably do tax loss harvesting. Many clients do it themselves. Many clients totally missed the boat and don’t do it at all. Especially folks that really aren’t thinking about taxes that much. But tax loss harvesting, we now develop software, where instead of doing tax loss harvesting once a year, or twice a year or quarterly, we actually do tax loss harvesting monthly. Wow. Yeah. So, this is new technology we’re using. We started it we tested it at about a year ago. And it’s just been amazing. It’s amazing how when you’re rebalancing your portfolio, especially when we see a lot of volatility in the market, we can do a lot of buying and selling at a 0% tax rate. We’re selling gains, were selling losses for a net 0% tax get tax gains. So, tax loss, harvesting extremely important. Folks, I can’t even begin to tell you enough maximizing your Social Security and for all of you folks I play golf with who are not on Social Security yet. I have no idea why you would not call my office or at least talk to me. Let us look at your Social Security and develop a strategy for you. At the very most only 85% of your Social Security can be considered taxable income. If you really maximize that Social Security, especially for most of my friends who are like in their mid to late 50s. Early 60s, they’re retired. All right. It’s not a matter of income anymore, but they’re not thinking ahead with Social Security they may not have many folks don’t think so security is that important. Or they think that Social Security is not going to be there. We have a solution for that as well. But maximum Eyes this social security should be your number one step in developing a tax efficient retirement income plan. For folks who are on a limited income, you it’s extremely important that you have an emergency fund. Absolutely. Okay. Now, I see folks that have 300, 400, 500,000 sitting in their checking account, bank account, or even in a CD, nothing wrong with CDs, the only problem is, it’s not tax efficient. Because every single year, the interest that you earn in the CD, many folks do not spend that interest, they just continue to roll the CDs. But if you’re making 50, 10, 30, 40,000, and a CD, that’s counted as income. So, when it hits our tax return, it can really, it can, it can really hurt a tax efficient retirement income plan. So, with respect to an emergency fund, cash that’s not being used in a tax efficient manner, really, you should only have more than no more than six months in the fun. And then as you spend the emergency fund, we want to reimburse it from your investment accounts to always keep six to nine months in that emergency fund. This also is a variable that we use in a tax efficient retirement income plan. Big thing very, very, very big thing market conditions. You know, I see, many folks are worried about the market. But many advisors say don’t worry about it, it’ll you have to stay fully invested, it’ll eventually come back. The only problem is, we call it sequence of returns. And what that means is when you retire if your advisor or even if you are chasing returns by adding excess risk into this portfolio, when we see the next financial crisis, and we normally see them once every 10 to 15 years they happen. The market just doesn’t continue to increase and go to heaven, it eventually will correct. What you need to do is you need to have an active or tactical management so that you have limit the drawdown or limit the market volatility in that retirement plan. So, it’s important to have that in as well. Thanks for the question, Brad.
Phil, thank you so much for an amazing episode again. Thank you, Brad, for that incredible question. We love answering it for you. That number is 888-818-6557 If you have questions for Phil about how to build your very own written tax-free retirement income plan don’t miss this opportunity. Thank you for spending time with us today on Retire Smart Austin. Be safe, be happy, be blessed. We’ll see you back here again one week from today. Take care.
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