Cynthia de Fazio 00:00
Welcome to Retire Smart Austin. My name is Cynthia de Fazio, joined today by Phil Capriotti Senior of Empower Wealth and tax to our viewers at home. We know that you could be in the viewing audience today and you’re asking yourself, well, I am a high net worth individual. I’ve worked my entire life to get to the top of my career, but why do I need to work with a Retirement Planning Specialist? Can I do it myself? Can I be a DIY? Er, well, today’s show is just for you. If you’re on the fence and you’re not sure, we’re going to do a deep dive into how there is a benefit to working with a Retirement Planning Specialist. Phil, how are you today?
Philip Capriotti 01:03
Good morning. One absolutely wonderful, and yourself just blessed and happy to be with you. Thank you. You know, a couple shows ago I mentioned that I’m going to start taking some golf lessons. Yes, I believe I’m slow, slowly starting to improve. Yeah, through the grace of God here so and you know how I noticed that I’m keeping the ball more in the center of the fairway, I’m putting less, but most of all, I lose less balls each round I play.
Cynthia de Fazio 01:33
Well, there you go. That’s always a good sign. I love that. So, with working on your golf game, what would you say needed the most tweaking is it, would it be your driving? Would it be your putting? What do you think?
Philip Capriotti 01:45
See, golf is a- it’s a sport for an intelligent individual, you have to think of everything. You have to keep your head down. You have to keep your eye on the ball. You have to follow through. Every stroke has to be the same. And so, what happens is, what you might do is you want to look up to see where the ball went right and do that, and all of a sudden, a perfect swing, horrible ball. Okay? The other thing is you have to have a complete swing. It has to be finished. Just like your retirement plan has to be complete. You have to follow through. You have to bring that club all the way around. The other thing I was doing is I was rushing my swing. I was like, could wait to get you have to take your time when you bring it back and keep all of these things, and then you have to do it about 120 times a game. It’s incredible. So, every single- so, there’s so much room for error, one little mistake changes a beautiful shot into a chili (indistinct).
Cynthia de Fazio 02:49
Yes, you know what? That’s true. And I have found with me, if I overthink it, if I’m really, really thinking about it too hard, it ruins the whole game for me, right? So, I just kind of go out there with the attitude to have fun, right? And then I just kind of relax a little bit. But that would be my one mistake. I do have a tendency of looking up too fast.
Philip Capriotti 03:06
Yeah, I do that too. I want to, you know. So, the ball is going to be, if you keep it all together, okay, every single swing you’re going to find the ball straight ahead, and it’s going to be somewhere around the middle of the fairway. You’re going to be okay. So, with all of that being said, Yeah, I’m starting to enjoy the game. I most of all, I love the exercise. And you know, I started, I’m just a grip it and rip it, kind of guy, as far as he used to when I was younger. But it’s all good. I’m having a lot of fun. I’m meeting a lot of wonderful people. And speaking of the people, many of them are high net worth, which is our topic today, on, Do high net worth folks need to work with a retirement income planning specialist? And I thought it was a great topic. You came up with it. And I’m like, That’s a great topic, let’s do it.
Cynthia de Fazio 03:57
I think so, because the one thing that you mentioned, obviously, was that you knew that there was a time where you needed to seek a professional. Well, I think if there’s anyone that’s in the viewing audience today and they’re wondering, do I need to seek a professional I’ve amassed all of this wealth, the answer is yes, because there are some common mistakes, actually, that we found that a lot of people are making without working with a retirement specialist. And Phil, I know this next one is going to blow your mind. You’re going to be like, what? That’s not right, tax planning mistakes. Are you surprised?
Philip Capriotti 04:28
No, I’m not. And again, which is simply amazes me. Well, we don’t do taxes. We just do your investment portfolios, not just nonsense. So, we came up with more than 30 different mistakes, and you know you would think as a high net worth individual, you worked hard, you spent a lot of time, probably in college or in your business or in your career. So, with that being said, that being said, most of us are alphas in a way that we have control over everything, and we want to keep control or semblance of control, failing to not do tax planning. Now, incorporated in that item is number one, not executing a Roth conversion strategy yearly. Yes, so I’m just going to say right here your high net worth. Congratulations. Welcome to the club. It’s wonderful. How much of it do you want to give back to the government? And how quick so every single year, you file your taxes if you’re not, if you are not executing a Roth conversion strategy and taking every little piece and moving it into judiciously, into the Roth. That’s mistake number one.
Cynthia de Fazio 05:44
Absolutely, absolutely. Something else that I think is really interesting Phil is failing to create a withdrawal strategy. Now that’s interesting to me. Talk a little bit about that failing to create a withdrawal strategy. Does that mean which account to pull from, and when?
Philip Capriotti 06:01
It does. So, if you filed for Social Security, let’s say you’re in your late 60s, 70s, you already filed for Social Security, you need to take a look until they pass, and hopefully they’ll get this bill passed where we have no tax on Social Security. But even if they do, another administration down the road might change taxing Social Security, right? You know, whoever’s running the country kind of has their way. So, one of the, one of the ways that you can save a lot of money in taxes is to actually have a withdraw strategy yearly. And we should talk about that when we do your tax return. How much is going to come to the RMD? Okay, so if you have an RMD, how much will you take possession of? How much of it will you divert to a charity, so it escapes your income tax? It’s the difference between being in a 12 or 22% bracket and being in a 24 and 32% bracket. Absolutely. It really makes a big difference. And then the other thing so this is, how much do I need to take from my Roth? How much do I need to take from other income, dividends, interest? Am I rebalancing tax harvesting my taxable accounts? And so, the bottom line is, we want to pick withdrawals from each account to make sure not only that our Social Security is tax free, or at least tax efficient, but our whole retirement income withdrawal strategy is the lowest tax- we’re in the lowest tax bracket possible. Yes, so that comes into withdrawal strategies. How many of you folks out there that are high net worth? Think about it. Many folks that I that I know, they just, you know, they don’t think about it. I got money here. I’ll just take it out of this. I’ll take it out of the savings and so many times it’s not a good idea to take it out of the savings. Many times, it’s better to use that money in the savings to pay the tax on a Roth contribution or Roth conversion, and then take money from the Roth, absolutely okay. So, with that, once we put that strategy together, the light will go off. And if you want, if you’re high net worth, we want you to be, we want you to continue to be high net worth throughout your whole lifetime.
Cynthia de Fazio 08:17
Sure, sure. It makes perfect sense. Because honestly, people that are taking taxes or taking withdrawals, I should say, from the wrong accounts. Your tax implications can be through the ceiling, so they need your guidance bill. You can’t do it on your own, not when you get to that level.
Philip Capriotti 08:31
Well, you can, but you’re going to be given a lot more of your hard-earned nest egg back to the government. I mean, it’s way, it’s the way that the game was designed. Yes, okay, it really, it really is one of the other top 10 or top 30 is not coordinating your Social Security timing. I’m still seeing I have folks coming into my office and I’m like, Why did you file for Social Security at 65, you know what’s going to run out I, you know, I have a lot of other money. I figured I’d get something out of Social Security, and I tell them, you know, and they might be collecting Social Security for more than a year. And so, they think that it’s over. So even if a client, if you have filed early for Social Security, you can defer your Social Security payments. You can suspend checks, and if you suspend your social security checks, you’ll now start to continue to build delayed retirement credits, so your Social Security will continue to grow at another 8% a year. So, it’s not over with. But again, if you don’t know- you don’t know what you don’t know.
Cynthia de Fazio 09:38
That is true. Yeah. So, one thing I do know it’s time to open up the phones, and I know that you have a very special offer to our viewers at home. Phil, let’s talk about what that is.
Philip Capriotti 09:48
You know, we love the QR code. In fact, I’m going to, I’m thinking about just getting rid of the phone number. Folks, we’ve had more folks that QR code, and they’re doing the fast track. They’re really loving it. However. Okay, just for old time sakes, dial 888-818-6557, tell the operator you want to get a fast track. You want to come in, and you want to take a look at your tax situation, your retirement tax situation, and structure an RMD distribution plan and run that Morning Star Report. Let’s see what your internal fees look like or click the QR code go to empowertaxbill.com, that’s empowertaxbill.com, and fast track based on what your net worth is, what your portfolio is, we will assign you to one of our licensed fiduciaries, who is also a tax expert as well. I train them all, and if they have any questions, we pull in our CPA or pull in our tax department, which is right there, right on site.
Cynthia de Fazio 10:48
All right, Phil, thank you so much to our viewers at home. As Phil mentioned, the number is on the top of your screen, 888-818-6557, 888-818-6557, to be even faster, go ahead, grab your smartphone, click on that QR code at the bottom corner of your screen. That’ll take you right to the landing page. You can claim your spot accordingly, and you can also figure out what your current tax liability could be today and what it will be if you make some changes again. It’s empowertaxbill.com. Snap on the QR code. We’re going to take a very short commercial break. We’re talking about some common mistakes that high end individuals can make without working with the right guidance, the right advisor. We’ll be right back momentarily.
Philip Capriotti 11:30
Hello. My name is Philip Capriotti, if you’ve already filed for Social Security and would like us to fast track you straight to a licensed fiduciary to create your tax efficient retirement income plan, we’ll be happy to accommodate you. You know, one of the most important priorities to ensure that you do not become tax poor in retirement is to, number one, structure a tax efficient retirement income plan as well as a comprehensive Morningstar report. This will ensure that you understand three major variables. Number one, how much risk are you taking? Number two, how much return Are you receiving? And number three, how much are your internal and external fees to fast track your meeting with one of our licensed and experienced team members, just click on the link below, complete the form attached so we can provide you with an accurate and detailed plan. Let’s start empowering your retirement right now.
Cynthia de Fazio 12:37
Welcome back to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti Senior of Empower Wealth and tax and we’re talking all about some common mistakes that high net worth individuals can make if they’re not working with a Retirement Planning Specialist, especially in their retirement years. Phil, in the commercial break, we were talking about something that’s very important to bring up, because this happens a lot the widow tax people not planning for that. Please explain what that is to the viewers at home.
Philip Capriotti 13:06
I want to ask you, folks out there, how many of you have thought about the death of the first spouse, and I don’t care how much money you have again, I want to keep it all. It’s just the way I feel about it. So, this is called the widow’s tax trap. And for many folks that come into our office, they don’t even think about it. So let me explain what it is, just briefly. I won’t spend a lot of time on it. At the death of the first spouse, the way the IRS is structured, it you go from married filing joint, which is the best tax bracket, to filing as a single individual. Now, with many situations, this will normally happen late 70s, mid to late 80s, maybe early 90s, where first spouse passes away. Well, the year following that, the death of the first spouse, you were able to file that year, the year the death joint, married filing. Joint, okay, the following year, your widow was found as a single Yikes, the tax bracket doubles. And what happens is, the surviving spouse is now forced to take these many times huge RMDs, especially if you haven’t structured a Roth conversion plan. So now what happens is, you’re in your late 70s, late 80s, and your wife’s taxes have doubled, and, in some cases, tripled, because you have not planned for it. So, I’ll put it to you, how many of you, how many of our high-net-worth clients, potential clients, and you folks out there watching, have you planned for it? And I would say, if you haven’t planned for it, click the QR code, come on into the office and let’s talk about it. And whether you work with us or you don’t, let’s help you plan for this, because this is strategic. One of the other issues is not planning for Part B. Irma charges, okay, talk about that. Yeah. So. So if you pull too much out of certain accounts, you may trip what’s called the Irma tax. The Irma tax i r, M, a, a, and basically what that means is you make too much money, so you get to pay more of your Part B premium. You see your Part B standard premium right now is $185 and change per month. But you can pay based on what type of withdrawals, what type of income you have and what type of withdrawals you take from your IRA, you can pay upwards of over $700 a month for that part b premium. Okay, so by not structuring a district tax efficient distribution plan, your Part B premium can also go up. And if your Part B premium goes up, folks, your Part D premium goes up as well. Wow, once you get back on track, it takes two years to bring it down, back to normal. So, and they always look two years back. So, the Irma tax is designed on income you had two years ago. So, you may take too much out of your IRA this year. You won’t have a tax increase next year, but the following year. Kabam, wow. So not looking at that, and a lot of our high-net-worth folks run right into that, right? I’ll tell you the biggest one. How many of you folks out there don’t have a written plan? Ooh, it’s up here. Good. No requests, no written plan. Yes. Okay, so I would say again, if you do not have a written plan, I don’t mean to hog up all the air, but if you don’t have a written plan, you need to click that QR code and come on in for a complimentary consultation. Let us show you how to construct a tax efficient written plan, and then how to make adjustments each year to keep you and your spouse and your family in that lowest possible tax bracket.
Cynthia de Fazio 16:50
Absolutely. And then Phil, switching gears just a little bit. There’s actually some investment mistakes that high end clients can make as well. Number one, staying too aggressive or too conservative with their investment strategy. So, let’s talk a little bit about that. How many people don’t think to rebalance or to do- you’ve talked about this before, the importance of tax loss, harvesting, all of these things kind of work together. Talk a little bit about being too aggressive too-
Philip Capriotti 17:18
It’s actually more folks than you think of okay, and again, regardless of how many millions you have, it’s irrelevant to me you should have, and some folks call it buckets. I don’t, I don’t think your money is in a bucket. I think you put water in a bucket. I think I’d like to refer to it as accounts. Okay, you should have specific accounts. So, earmark, you know, 20% of my account, I’m going to be really aggressive. You know, 20, 25% I want strictly for tax efficient income, you know. So, what we want to do is we want to make sure that your portfolio doesn’t get clobbered. You know, many times an individual comes in, we’ll run a Morning Star Report, and after we’re finished with the portfolio, observation, clients didn’t realize they have 40% market risk in their portfolio because they’re too aggressive. Wow, they’re managing their portfolio like they did 1520, years ago. Now that’s okay, but it’s the old saying a high tide floats all boats. Right, so when the market is doing well, we love those 20, 30, 40% returns, but the last thing we want in retirement is a 20, 30, 40% reduction in our overall portfolio, because we haven’t segmented it in accounts managed differently based, again, on a risk tolerance. One of the other things is not planning for continuation income for my spouse. A lot of the do it yourselfers, I ask them point blank, oh, you’ve been doing a great job managing your portfolio. Let’s assume, God forbid, you pass away before your wife, your spouse, is he or she capable of handling this? And you know what, 90%, nine out of 10? No, yeah. So, like make a provision for that, and we see that a lot with high net worth is also one of the other mistakes.
Cynthia de Fazio 19:13
Well, Phil, we have to take another commercial break, but again, there’s a very special offer you’d like to present before we continue on to some of these other common mistakes.
Philip Capriotti 19:21
Yeah, folks, I think it’s time that if you haven’t picked up the phone and you’ve been watching us for the last five years, trust me, we don’t bite. We have a whole lot of fun in our office. I like to make it fun, because if it’s not fun, it’s not worth doing. But it’s also going to be informative. Dial our phone number, 888-818-6557, come in for a tax efficient retirement income plan. We’ll also run you through the Morning Star Report. Let’s make sure that you have a written retirement income plan that take taxes into account and also continuation benefits for your surviving spouse. We need to look down the road also, if you feel. As though you’re paying too much in taxes, or you want to avoid being overtaxed in retirement. Click the empowertaxbill.com, click that QR code. It’s empowertaxbill.com. Click the QR code and hit the fast track so you can get right into seeming or one of our other advisors, depending on, you know, your- what type of tax issue you’re facing.
Cynthia de Fazio 20:24
Phil, thank you so much to our viewers at home. The number to call is 888-818-6557, 888-818-6557, call in and schedule your complimentary tax analysis, if you will, with Phil or one of the team members. Better still, for quicker service, quicker response. Grab your smartphone, click on that QR code at the bottom corner of your screen. That’ll take you right to empowertaxbill.com you can put in a little information about yourself, and it’s going to put you on the fast track to get a call back sooner. We’re talking a lot about some mistakes that people make when they’re high-end clients, not working with the right financial retirement specialist. We’ll be right back momentarily with some more of these mistakes and how you can avoid them.
Speaker 1 21:07
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.
Speaker 2 21:15
My investments are tanking. My 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?
Speaker 1 21:24
This was the fourth worst contraction in history.
Philip Capriotti 21:29
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.
Cynthia de Fazio 22:06
Welcome back to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti Senior of Empower Wealth and tax and we’re talking about some common mistakes that high end individuals can make if they’re not working with a Retirement Planning Specialist in their retirement years, Phil, I love today’s topic, because obviously so many people in today’s day and age try to be di wires, right? You could do it yourself, but these are some very important points that we need to touch on, because they’re costly mistakes. The next one failing to account for sequence of return risk and talk about that, especially with the stock market being so volatile.
Philip Capriotti 22:44
So, this happened a lot in it got a lot of notoriety back in 2008 you’re getting ready to retire. You know, you have a seven-digit retirement account. You’re over aggressively invested, because, again, you’ve been doing so well, and you love those 20, 30% annual returns. And what happens is, you get rid of- retire, you get ready to retire, you stop working, you no longer have your full-time income, and now you go into distribution mode. And what happens is, what does the market do? It does what it did back in what was it? April 8, okay, or maybe it was April 4 or fifth, okay? We see one day the market dropped 1600 points. This is how quickly it can happen. The next day it drops 2200 points. Okay, all of a sudden you saw your portfolio drop 15 to 20% within a seven-to-10-day sequence. Now, in many cases, when we’re still in accumulation mode and we’re still getting our income, and this is why, folks, you need to not only have your income plan set with Social Security, but you also need to have guaranteed income set up as well. A portion of your retirement should be earmarked specifically for your guaranteed income for you and your spouse. Okay, but what happens is now, let’s say you retired a year ago or two years ago, and all of a sudden your let’s say $1 million of IRA is now 700,000 or 650 in 2008 I saw folks go from 1.2 million down to 600,000 when the S&P500 dropped 52% and I’ll tell you what happens. You go back to work, because that’s what a lot of folks did. They went back to work. So not working when you’re high net worth, whether it’s 1 million, 2 million, 10 million or above, okay, the percentages are still realistic. The more we make, the more we spend. Yes, okay, the more we make. You have a million or 1.5 for retirement, you’re spending x amount. When you have four or 5 million, you’re spending double that amount. I know because I’ve done hundreds of these. Uh, retirement income plan. So not planning for sequence of returns, meaning not planning for a downturn and within a year or two after you retire, or during retirement and ending up on the short end of the stick, because the more money you take out of your retirement savings out of the market, the less, the less you have to invest to recover. The other thing that we’ve seen, is not accounting for inflation. Wow. And retirement as far as I’m concerned, inflation and taxes are the same. If your retirement income plan is planning for taxes, so you executed a Roth conversion strategy. Wonderful. Now, how are you planning for inflation? What we normally do is, when we put our written plan together, Cynthia, for our clients, is we factor in a 3% compound inflation, increase in retirement income every year through age 100 Wow, just in case you become a centennial. So, with that being said, if that’s not in your plan, good idea to make a phone call. The other thing that we’re seeing a lot of is, I have a lot of high-net-worth clients that come in to talk to us. They don’t have an estate plan.
Cynthia de Fazio 26:20
I know I was going to ask you about that, because that’s on my list as well. They don’t have a trust or proper estate documents. That’s scary. I know we only have a minute and a half left, but it was kind of surprising to me.
Philip Capriotti 26:31
Well, what happens is, many folks say, Well, I have a will, I’m okay. And I said, but do you understand if you don’t have a trust? Okay? There’s a couple things that happen when you have a will, all of your assets, all of your laundry, is in the public domain. Now, yes, so as you will, you pass away, and you pass on assets to your spouse or to your children, and you do not have the proper trust set up. Now it becomes public knowledge. If you have a trust, you keep all of your assets private. You keep your family private, so not using trust effectively and not realizing what types of trust they should have. The last but not least is an improper transfer of wealth to your beneficiaries. If you’re a high net worth individual, do you have that set in stone? If the answer is no, click the QR code.
Cynthia de Fazio 27:24
Phil, thank you so much to our viewers at home. Thank you for spending time with us today. On Retire Smart Austin, we don’t want you to have some of these common mistakes that high end worth and high net worth clients can make. We want you to take action today. Call in for your written plan, 888-818-6557, or grab your smartphone, click on the QR code at the bottom corner of your screen and empowertaxbill.com. Be safe. Be happy, be blessed. We’ll see you back one week from today on Retire Smart Austin with Phil Capriotti Senior.