What Rich People Are Doing – Show 31

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I recently had an occasion to go to north Georgia twice. Google maps gave me two route options. I could go the southern route and cut over, or I could go the northern route cut over.


The first time I took the southern route that Google said was a few minutes faster. I went down Interstate 85 through Greenville to Clemson. If you’ve driven this way lately you may know how congested and hectic that stretch of Interstate 85 can be. When I got to Clemson, I cut over to Georgia by taking back country roads. The roads were bumpy and the scenery left a little to be desired. But I got to my destination.


The next time I went back to Georgia I took the northern route up to Asheville, and cut over on Interstate 40, and then took some beautiful smooth scenic roads. It was a night and day difference. This route took a little longer but it was well worth it. The roads were smooth and the scenery was beautiful! We even stopped to take pictures of the view.

Retirement planning is similar. There’s more than one route to get to your financial destination. As an advisor, my desire is to help you take the best, most efficient, and most pleasant route as possible.


One way I help my clients have a more pleasant time in retirement is by educating them on where tax rates are likely to be during their retirement.


Bloomberg recently ran an article that read, Rich Americans Who Fear Higher Taxes Hurry to Move Money Now.

I started recording extended audio versions of our newsletter back in May, and as of this week we’ve recorded 31 podcast shows. You can see all of our shows at ClientsExcel.com/podcasts.


The show with the most downloads (has generated the most listeners) has been the one we titled Should you convert to a Roth IRA.


If you are like many people you may be worried about the prospects of a rising tax rate environment. I believe we should all be planning and expecting to pay more taxes in the future regardless of which party controls government.


From the Social Security Administration’s website, “Currently, the Social Security Board of Trustees projects program costs to rise by 2035 so that taxes will be enough to pay for only 75% of scheduled benefits. This increase in cost results from population aging, not because we are living longer, but because birth rates dropped from three to two children per woman.”


From NPR article in July of this year, “Most of those who watch Medicare finances agree that the larger problem right now is how much money is being collected for the trust fund. That money largely comes from the 1.45% payroll tax paid by employees and employers. With so many people out of work because of pandemic-related shutdowns, cash flowing in has dropped dramatically.”


There are projections that Medicare Part A, which typically covers 80% of your impatient healthcare expense for people over 65, will only be able to pay 90% of what it pays now. You would be responsible for 30% instead of your healthcare expenses instead of the 20% you’re responsible for now. Some projections say this will happen in 2022. Others state 2026.


I could write a book on why taxes are going to go up, but I think you’re probably convinced if you’re still reading. I never like to share a problem with you without sharing a solution also.


Staging a transition from tax-deferred savings vehicles like 401Ks and IRAs to tax-free savings vehicles like Roth IRAs and other strategies may be essential to you being able to maintain your quality of life in retirement.


When you are able to generate tax-free income in retirement, I believe you’ll be in a much stronger position to have as much financial freedom as you are able to afford.


Sometimes this is a hard pill to swallow, but what I want you to understand is that we can stage this transition over several years so that you don’t have to bite the tax bullet all in one year. The key will be acting now before Congress and the President decide to change things.


Who does this make sense for? Let’s find out. We have software that we can run an analysis on to see if it makes sense for you from a financial standpoint. You don’t have to depend on “hope so” or “maybe so.” Let’s control what we can control and take charge of our destiny.


Click here to schedule a 15-minute call with me to get started on your complimentary tax analysis on your accounts.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program. Roth IRAs offer tax free income if distributions are taken after age 59-1/2 and the account has been open for at least 5 years. When converting funds to a Roth IRA, ordinary income taxes are due on the amount converted in the same year, and ideally should be paid with funds outside of the retirement plan.

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