Welcome to Retire Smart Austin. My name is Cynthia De Fazio and I’m joined today by Phil Capriatti Sr of Empower Wealth and Tax to our viewers at home. We’re talking about significant birthdays when it comes to your retirement planning. That’s our episode today. Phil, how are you?
Wonderful. How you doing today?
I am fantastic. Thank you so much for asking. I love that combination that you have on green is my favorite color. And your jacket and shirt are just beautiful.
Thank you. I appreciate that. Yeah, my tailor. He’s very creative. Yeah, he’s the I think what he’s trying to do is he’s trying to attempt to make me look younger. I love it.
It ties into our episode today talking about significant birthdays and milestones. When it comes to retirement. You know, obviously, you think about things with aging, like, your back hurts your knees crack, right. It’s a little harder to get comfortable. But it actually more correlates with retirement planning as well. One birthday in particular, Phil, let’s jump right in age 50.
Yeah. You know, we’ve never done a show like this. And I really liked the fact that we’re changing up content, as sometimes it seems like we talked about the same thing. So repetitively that it kind of it kind of gets stale. So yeah, this is great. So, for those of you are watching at home, this is going to be a pretty unique show much different than most of the ones that we do. So, age 50, at age 50. And again, we’re talking about with respect to retirement planning, this is the first age that you can start to make catch up contributions. So, if you have a 401 K, at work that you’re actively participating in, you can, you can contribute an additional $6,500 a year, okay, okay. And that means you can contribute an extra $6,500 A year into the Roth 401 K as well. For those of you who’ve been watching our show, if you’re not making all or most of your contributions into the Roth 401 K, I think many tears are going to come later on as they increase taxes on these retirement plans. So that’s number one. Now, if you have an IR a, your additional ketchup contribution is an additional $1,000 per year. One other thing I’d like to add to this, let’s assume for a moment you have a spouse that is not employed, not working, not receiving earned income. Remember, many of the folks we run into are not making contributions for their spouse, you only need one spouse to be working in order for both spouses to contribute to the IRA catch up contributions as long as you’re within the income limits. So, so for instance, my beautiful spouse is retired. Okay, so with that being said, we have my head with the 401 K, but we contribute up to $7,500 per year into her Roth IRA even though she does not have earned income. So, for those of you who are still working, whether you have another 1020 years to continue to work, or if you’re in that retirement red zone, you know, within the last few years, take advantage of contributions. Number one, the ketchup contribution and number two, the contribution for spouses who are not gainfully employed,
Phil, could that also reduce the years taxable income if you take advantage of that?
It can. So, if you’re if you’re contributing to the traditional 401 K, or traditional IRA, yes, you’re going to get a deduction. If part of it is going into the Roth, the part that goes into the Roth either 401 k or IRA. There’s no tax deduction on the contribution. However, you no longer have to take RMDs from these Roth’s and also it gets to grow tax free for three generations. Wonderful.
Yes. Awesome. Phil let’s talk a little bit about half birthdays. Obviously, little kids get so excited when they’re telling people I’m six and a half. I’m eight and a half 10 and a half. It shows that they’re halfway to that next mark. We stopped doing that though, right, Phil? We don’t do that anymore. I mean, I don’t like guess what, I’m half.
Stop that. As a matter of fact. I had a disagreement with my mom, and God rest her soul. And, you know, when I would have my let’s say, 16th Birthday Hmm, she would say, yes, you’re starting your 16th year and I’m like, No, Mom, I’m ending my 16th year. I’m starting my 17th year. And she’s like, No, that’s not right. I said, Mom, when I was one year old, did I live one year? To the day she passed away, she still would not admit to that. Okay. In her mind, she says, Stop trying to make me feel older. I love it. That is brilliant. You have a sense of humor. But at any rate, yep, we don’t we, we no longer care about the halves, except, except, except the retirement one time,
here we go. Let’s talk about at age 59 and a half. That’s a biggie, let’s talk about why it is.
So, at age 59 and a half, there’s several different things that can go on. First of all, you can take withdrawals from your 401 K, Ira, Roth 401 K and a qualified account, you can now take withdraws without experiencing a 10% withdrawal penalty. So, we’re legal, whether you are still working or not, you do not have to be you don’t have to be a worry about being employed. Also, just a side note, folks, if you retired at 55, I’m going to throw another year in there the age 55. Okay, you are allowed to take withdraws from the 401k company that you that you’ve retired from just that 401k and escape the 10% withholding penalty, or early withdrawal penalty, not withholding penalty. So, 59 and a half for all of you. There’s one other thing I’d like to mention, many of you folks, when you come in to see us, you’re, you’re concerned that your 401 K’s have limited choices. And with those limited choices, one of the other things that you can do it 59 and a half for 99% of the plans is you can do in-service transfers, okay. So that means you can continue to work, you can now take any amount from the 401k, move it over to a private wealth manager like myself or many others. And let us professionally manage it, it does not have to remain in the 401k it does not affect any of the matching that the company provides to you. So many of our clients are like we want you to manage it, you get better returns, we’re more concerned with downside risks. So once a year, many folks they’ll work they’ll can contribute. They’ll add the match for the employer, and then they’ll move that money over to have it perfect. Okay, so this is a huge, yeah, I mean, this is something that many advisors actually even folks at Social Security, don’t even talk about it. That’s one of the benefits of working with a licensed tax advisor as well.
Well, there are so many benefits of working with you, Phil and your team and I know how busy you are. But you have managed to set aside a certain number of spots this week for your new viewers to the show. Let’s talk about what that is before we take our first commercial break.
Okay, so for the first five callers, or cute What is it QR code QR, little that little looks like a maze kind of looks like a maze, right? Dial 888-818-6557. Tell the operator that you want to come in. And you want to talk about two things you want to talk about structuring a tax efficient retirement income plan with a Social Security distribution strategy, as well as a complete portfolio Morningstar report at Portfolio observation review. There’s no obligation to work with us. This is our way of giving back to the community. We want to make sure that whether you work with us or not, you are educated. We put you through the education to help you understand how to make your retirement income plan, tax free, or at the very least tax efficient.
Phil, thank you so much to our viewers at home. That number to call is on your screen. 888-818-6557 We know you’re in the viewing audience. Stan, you’re asking yourself Do I have the proper strategy for my Retirement, am I really ready for when it’s time for me to say goodbye to my job if you’re unsure of that, this opportunity is for you 888-818-6557. Or if you don’t have your pen handy, you can always grab your smartphone, click on the QR code at the bottom corner of your screen that will take you right to Empower Wealth and Tax landing page, and you can claim your spot by doing so, we’re going to take a very short commercial break for the viewers at home. I know you’re following along with us; we’ve already covered the age 50s Now we’re going into the 60s. Stay tuned, we’ll be right back after this very short commercial break.
I watched my parents work, work themselves really to the bone. I saw my father retire at 63 and pass away. Six months later, once he had stopped work and my mom looked at me and she said, You better be an accountant. You better learn the tax law. I went to a private school, got a great education, lived in the library and graduated without any debt. I realized the benefit of being debt free at a very young age. And I also realized the benefit of educating and speaking to people and I liked working with folks who actually needed help. I started my company 17 years ago, and now we employ two CPAs and two licensed tax professionals. We have a legal arm that helps folks design trusts as well as wills. We have an insurance and that offers property casualty insurance, we sell health insurance, Medicare Supplements, long term care life insurance annuities, and we have wealth management that I started to work with Ed Slott looking at tax efficient ways to have retirees or soon to be retirees retired tax free. If your accountant or CPA is not also your financial advisor, you really have a conflict of interest.
Welcome back to Retire Smart Austin. My name is Cynthia De Fazio joined today by P Phil Capriatti Sr of Empower Wealth and Tax and we are talking about important birthdays. When you’re entering the retirement years. We are now going to jump in. You’re in your 60s, you got some milestones there. Phil, I’m going to ask you a question What is so important about age 62? When it comes to birthdays in retirement?
Well, prior to prior to President Bush, we were talking about the senior we could not receive Social Security benefits. We had to wait until we were age 65. Okay. And what they did back then is they realized that the average age life expectancy of a male was 63 or 63 and a half. Okay, so waiting to 65. This was before spousal benefits and all of this so, so waiting to 65 It almost was looking like a type of a Ponzi scheme. Okay, right. Yeah, you can go ahead, excuse me and contribute. And then at 65, you can retire? Well, you know, a large percentage of the male population was dead before they reach 65. So, thank goodness, what they did was they change age 62 is the first year you become eligible to receive Social Security benefits. If you have paid in your 40 quarters, and you’re eligible for Social Security, certain folks are not eligible for Social Security. That would be Railroad Retirement employees, they have their own separate retirement plan. But at any rate, for those of us at age 62, you can start receiving Social Security. So let me be completely frank and transparent. If you were born 1954 or earlier, your full retirement age is 66. So, we’re going to have an analogy here. If you file is 62, but your full retirement age is 66. You only receive 75% of your eligible Social Security benefit. Wow, okay, 63, you get 80 cents on the dollar at 64, you get 86 and two thirds’ cents on $1.85 93 And a third at 66. This is considered full retirement age; you get 100% of your Social Security benefit for many of us who have other resources and also are maybe executing a Roth conversion plan as 6768 69 and 70. You can grow your Social Security an additional 8% per year 108% of your benefit at 60 716% at 68 and so forth. Wow. Now, if you’re born in 1960, your full retirement age is 67. And if you file is 62. You get 70 cents on the dollar. They’re already starting to trim so secure at 63, you get 80 cents of 75 cents on the dollar and 6480 cents on the dollar and so forth. And so far, okay, now once you reach full retirement age, if you were born 1960, okay, or early or later, you can build a percent delayed retirement credits as 6869 and 70. But the maximum you can build your social security up is 124. You must call our office and come in and have us run a Social Security Maximization report to see what’s the best strategy to for you to claim your social security based on your birthdate.
Phil, thank you so much. Another big birthday, age 65. Why is this important? Age 65, full retirement age?
Well, if you turn age 65 And you’re still alive, you are now eligible. If you’re not on disability, you’re eligible for Social for Medicare. Okay. All right. So, with Medicare, this is very confusing. We have our own Medicare department, if you’re getting close to 65, or just turned 65. Again, snap the QR code or give us a call at the number that you see. As 65, you have two choices, you can go Original Medicare, which is a Medicare A and B that’s hospital and doctor and then Medicare D, which is medical, which is prescription drug, okay? With this plan, you can go to any doctor, any hospital across the country, you know, you don’t have to be in any type of a regional, okay, you don’t need a referral. So many of you will need a Medicare Supplement, we have a complete Medicare supplement, it gives you the freedom to choose any doctor, whether it’s in Houston, California, where have you, okay, the other part is you become Medicare, you become eligible for the Medicare Advantage program that’s known as Medicare Part C. These are normally HMOs or P POS, you have to get a referral to go to a doctor, it has to be approved. And with all of the new citizens that are coming into our country who are on these plans, they’re getting signed up for these plans many times. And for some folks, you may have to wait a month, two months, three, four months to even get in to see a doctor. My recommendation if you have the resources, Original Medicare, and a Medicare supplement to go along with it.
Okay, okay, perfect. Phil, thank you so much. Another question. I have obviously ages 66 and 67. Wow, 66, 67. What’s going on when we turn that number?
Well, again, as I mentioned earlier, okay, if you were born 1954, 55, 56, up to age 60. At age 66, you can receive 100% of your primary insurance amount, that means 100% of the Social Security that you paid in, you get 100% of your, you’re paying at 67. If you’re 1960 and older, you have to wait to 67 to get full Social Security retirement benefits. Okay, so they’re the two ages they are 66 and 67. Okay, we understand some of the talk that we’re hearing in Congress is that social security is going to change significantly for folks born 1970. And on that’s going to probably be the very next change. We just can’t wait to see how they’re going to reduce benefits for those folks.
Gosh, I know, right? That’s scary. When you think about it, Phil, you just never know. But my question then would be people that are in the viewing audience today, these milestone birthdays that we’ve spoken of, how can you help design a plan that’s going to offset any anxiety when it comes to turning any of these agencies?
This is the, you know, this is what happens once you hit 62 and 65. And 66 is kind of all jumbled up? Yeah, you really need professional counseling. And the reason is not only do we have the experience, but we’ve counseled literally, without exaggeration, 1000s of individuals and couples on the proper claiming strategy, if you do not get your claiming strategy, perfect for you and your specific situation. Most of the time, in fact, I would venture to say more than 80% of the time, you’re going to have a retirement, you’re going to have a retirement plan that’s riddled with, with excess taxation. Okay. Wow. So, you have to come in, you have to know you have to understand what your claiming strategy is. Why it is before you even walk into Social Security. You need to know more than the person sitting across the desk from you at the Social Security Administration Office. And when we’re finished counseling, you will.
And Phil you set aside how many spots this week to our new viewers.
We have five a week. Yeah, we do five a week. So, pick up the phone and dial 888-818-6557 tell the operator that answers you want to come in you saw the show you want to talk about tax efficient retirement income planning. You also want to talk about possibly having your 401 K managed professionally with many options instead of just one hit the QR code or dial 888. Our spots go fast. We’re normally getting per week about eight to 10 callers. So, it’d be one of the first.
Phil, thank you so much to our viewers at home that number to call 888-818-6557. This is your opportunity to claim one of those five spots that are available this week. And as you can see from our show today, there are different milestones that are going to come along in your life once you hit 50 and beyond. You want to be ready for those you want to plan that’s going to absorb any of the shock that you may feel when you’re going through your navigation towards retirement. That number again at 888-818-6557. We’re going to take a very short commercial break when we come in, we’re going to dive into the ages of 70 and beyond. Stay tuned we’ll be right back momentarily.
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 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. And 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 Capriatti Sr of Empower Wealth and Tax and we’re talking all about some milestone birthdays that are going to come your way. When you hit 50. and beyond. Phil, it’s time for us to giant dive into the 70s Wow, here we go. What happens when someone turns 70 in the retirement years?
Well, first of all, they have to get over the sticker shock of being 70. And by the way, 70 To be honest with you, folks, 70 is really the new I’m going to say 45, 50.
I agree with that.
Yeah, there’s no doubt about it. You know, when I was younger, I thought to myself, who am I? When I’m 70 Will I be able to do all of the activities that I love to do now? And so, I went and counseled with my dad, I said, Dad, you know, you’re in your 70s How does this work? How does that work? And he’s like, Oh, don’t worry, Sonny goes when you hit your 70s everything by then you should know everything you need to know and things will work. Oh, okay, you make less mistakes. I love it. Okay, in once you reach age 70 If you have not filed for Social Security folks, this is the year you’ve maximized your Social Security check or your maximum, your social security, it’s called P I A primary insurance amount. And all p IA means is the that’s the maximum amount you can receive from Social Security based on all of the payments you made into Social Security throughout the years. Okay. So again, if you were born 1954, up to age 1960. And you fought and you’ve delayed Social Security, you will receive 132% of your Social Security benefits at when you bid by building delayed retirement credits, that’s what they’re known as. Now, for those who are born 1960 61 and on up to age 70. Your age, that’s when you receive your maximum. Now, instead of receiving 132% of your primary insurance amount or the amount you paid in Social Security, you receive 124% of it. Okay, they’ve kind of trim that down. Remember this, the more you the longer you delay to receive Social Security benefits, the more tax efficient your retirement income plan will be.
Okay, Phil, let’s talk a little bit about age 73 in something known as RMDs. Can we talk about that a little bit?
Yeah, let’s do that. So insecure act 1.0. They kind of did a little bait and switch on us in a way. What they did was they changed the RMD required minimum distribution age from 70 and a half to 72. That was the first. Now the good news here. The, and that was good news. We could delay taking required minimum distributions, they also made some other changes, if you didn’t take an RMD, you receive a 50% penalty plus had to pay the tax on the distribution. So, they’ve trimmed that down. Now, if you do not take your required minimum distribution in a timely manner, you only receive a 25% excise tax or penalty. Okay, with secure 2.0, they changed that RMD age to 7373 74 and 75, depending on the year you’re born, okay, so they’re kind of three years. One of the benefits to us is we it’s allowed us to delay taking RMDs until that age, so it allows us to do more Roth conversions at a more tax efficient rate. Because you can’t convert an RMD to a Roth IRA or Roth 401 K, it must be taken, you have to take taxes. Now, you can do a Roth conversion, but amount in an amount above the RMD. So, you have to take the RMD first, that’s taxable income. Now do the Roth conversion. Many folks what we do, when we reach this age, folks are confused. They’re like Phil, you know, I haven’t really started my Roth conversion, I really was listening to another advisor. And they said delay taking distributions from your 401k as long as possible. And they told me not to bother with Roth conversions, because the numbers didn’t add up. Now, I realized that they do. One of the benefits here with folks who have to take an RMD, but don’t need the money, is you can take the RMD. And we do this a lot with many of our clients pay the tax on that RMD and then use the leftover money to pay the tax on a Roth conversion. Wow. Okay, so that what happens as each year once you start taking in R&D, you have to take a larger and larger and larger percentage, because your life expectancy is decreasing by a year each and every year. So, this is still a good time to do Roth conversions using RMD income, because many folks are not taking distributions from these IRAs.
Amazing. And Phil, how do you help keep all of this in harmony? We’ve talked about over 20 years of different birthday milestones. How can you give peace of mind we only have about 30 seconds left? I know it’s a tough question.
Everyone in my office is licensed and a complete professional and they specialize in each and every area since we have executed 1000s of retirement income plans. It’s like ABCs to us,
Phil, thank you so much and tough question due to the time that was left in the show not due to this gentleman’s knowledge. I assure you that number to call is 888-818-6557. We know that you have a lot of questions for Phil Don’t miss this opportunity to claim your spot today. Be safe be happy be blessed. We’ll see you back one week from today on retire smart Austin. Take care.
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