Saving on Taxes in Retirement and an alternative LTC option

Welcome to the Excel in Retirement Show. I am David Treece and I’ll be your host. Thank you for tuning in! My goal is to distill a couple financial planning ideas that could help you excel in retirement.

I am a Financial Adviser and the President of Clients Excel. Please check out to learn more or you can welcome to call us 864.618.4800

In today’s show we’ll cover two topics. First one topic we’ll discuss is taxes ,and the second is an alternative way to obtain LTC insurance.

Do you think taxes will go up? There are a lot of reasons to believe they will. If we truly believe in our heart taxes are going that should inform our financial planning decisions.

If you’re like many of our clients, you contributed to a 401k or some type of tax-deferred account when the highest marginal tax rate was higher than it is today.

Few people actually pay the highest marginal tax rate of 37%, but we talk about it because it’s a bell-weather for what happens with the lower tax-brackets. When the highest rate goes up the lowest rate typically increases as well. Which means our effective tax rate will go up.

So, you contributed to a tax-deferred account and got a tax break in the year you contributed, which was great for you then!

Now you have a window of opportunity to potentially save more in taxes later down the road, because we believe tax rates are likely to be higher.

But you have to get moving on your plan soon. The tax breaks Congress passed in 2017 sunset in 2026, and it takes several years to properly transition your retirement savings to tax-free.

The longer you wait to begin, the more you risk you assume of not being able to transition all of your money to tax-free.

We do not recommend paying all the tax in your tax-deferred account in one year and moving it to a tax-free vehicle. We don’t want to double your taxes now to avoid your taxes potentially doubling the future.

But this is all useless info if you are not convinced tax rates will go up in the near future. Do you believe taxes are likely to go up in the near future?

Our goal is to help you transition your assets where you will have 4 to 6 streams of tax-free income. But the cost of admission is paying some tax today.

There is even more urgency to begin this process now, because you will experience more value when the stock market is down.

If you have less money because of market losses then there will be less money to pay tax on.

We know the market will eventually come back. Why would you want to begin the transition to moving money to tax-free vehicles when the market is up and pay more tax to convert?

One Way To Have Long-Term Care Coverage

Traditionally how the LTC coverage is obtained is buying a LTC insurance policy that may have a monthly benefit. For example, a person may say, “I’d like to have a $5,000 per month benefit.” Should you need LTC, the insurance company would send you a check for $5,000 per month, typically for a certain period.

The problem is, if you die peacefully in your sleep typically all your money you put into the policy is gone. There’s got to be another way, right?

We all want to believe we won’t need LTC, but what if we do? I got a wake-up call a couple years ago when my mom was diagnosed with dementia when she was 63-years-old. Her health-care expenses have been extraordinary.

I had to find a way to help my clients have LTC coverage without the potential to lose the premium they put into their policy. So, here’s a possible solution.

Some permanent life insurance policies provide several living benefits. One of which is LTC coverage through the addition of a rider benefit. Life insurance like most anything has evolved over the years.

Think about smart phones. Its primary purpose often times isn’t the telephone function. I use my iPhone to take pics, send emails, listen to music and the list goes on. In some ways, life insurance is similar.

How the LTC part of some life insurance policies works is, if you are unable to perform 2 of the 7 activities of daily living (ADLs), the life insurance would give you 20% to 25% of your death benefit tax-free while you are alive to pay for LTC.

And you don’t have to be confined to a nursing home. ADLs are eating, bathing, getting dressed, toileting, transferring, and continence. So, if you had a policy with a $400,000 death benefit. The life insurance company would give you approximately $100,000 of your death benefit tax-free per year for four years to pay for LTC.

AND what I believe is one of the best parts…

If you never need the coverage and die peacefully in your sleep, your beneficiaries could receive the $400,000 (typically tax-free).


Investment advisory services offered 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. Insurance and investment products may be offered at this event. Life insurance riders may be available for an additional annual premium; riders may not be available in all states. If properly structured, proceeds from life insurance are generally income tax free. Income and growth on accumulated cash values is generally taxable only upon withdrawal. Adverse tax consequences may result if withdrawals exceed premiums paid into the policy. Withdrawals or surrenders made during a surrender charge period will be subject to surrender charges and may reduce the ultimate death benefit and cash value. Clients Excel is not permitted to offer tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. Our firm is not affiliated with the US government or any government agency. Guarantees and protections provided by insurance products, including annuities, are backed by the financial strength and claims-paying ability of the issuing insurance carrier.

As always, I am grateful that you took a few minutes of time to listen. We can be reached by calling 864.618.4800 or you can email be at

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