If most of your money is in a 401(k), how and when do you access it? Do you retire and start pulling money as you need it? Do you wait until the government says you have to take it? Two retirements and Social Security experts say that a customized tax strategy is very important and can reduce a couple’s tax liability by more than 300 thousand dollars. Is an income plan complete without a tax plan?
If most of your money is in a 401(k), how and when do you access it? Do you retire and start pulling money as you need it? Do you wait until the government says you have to take it? Two retirements and Social Security experts say that a customized tax strategy is very important and can reduce a couple’s tax liability by more than 300 thousand dollars. Is an income plan complete without a tax plan?
Welcome to your family your finances the podcast with John Markel of Rose, retirement get more details on the website at Rose retirement.com. John, I want to highlight you know, you hear for a second what our listeners to get to know you a little bit. Give me a little background on of course the name rose retirement and why is it so important to you and your family?
John Merkel - Senior Financial Advisor/Founder CEO of:Oh, that's good one. Well, Rose retirement, when my daughter was born, her middle name is coarse rose, her name is Lindy rose. And, you know, had a financial company. But the more you start talking to people and realizing the important things in life, it's leaving a legacy. You know, I have a lot of clients that come in our office, and that's their main thing is, hey, we've got all this money, but we're gonna leave it to the our kids eventually, what's the best way to do it? And I don't give a damn if it's 50,000 or 5 million, what's the best way to do it tax wise, all that good stuff. And so our motto is leaving a legacy starts today. And I got the idea for my daughter. We named the company after her. She may or may not take over it down the road. But like you said earlier, they're around her all the time. So she may just have to get stuck here doing a job whether she likes it or not.
Jessica:She might and I tell you what, she's a great kid. 13 going on 30 days, but I always say wise beyond her years. Yeah, baby, you'll see you know, Lindy rose, and of course, your wife all the events around the office. Again, it's a family environments, personal environments. And if you just want to stop by and say, Hey, more than welcome. It's located right behind Papa's seat as you can miss it a big, huge red letters, Rose retirement. Now, John, I want to talk about this. I think a lot of folks are wondering about it. If I have most of my money in a 401 K, how and when can I access it? Do you have to retire and start pulling the money as soon as you need it? Do you wait for the government to say that you have to take it? Well to retirement and social security experts, they say that a customized tax strategy is important and can reduce a couple's tax liability by more than $300,000. That's huge. So is an income plan really complete without a tax plan?
John Merkel - Senior Financial Advisor/Founder CEO of:Oh, it's so crucial. In fact, I talk about this all the time, especially when a client comes in. And I have our first meeting. We do kind of dip into this a little bit. I'll give an example. I had a client over in Tyler the other day, they had about 3.7 million in their retirement accounts. Okay, she was 58. And he was 62. The problem is they don't have a income problem, do they? They have what we call a tax problem. If those two were to pass away, you know, within a few weeks or a month or a year, they're gonna give that money to the kiddos. Right? So that's 3.7 million that has to be given away to the kids over a 10 year period. So that's what 370,000 A year for the next 10 years. Okay, without earning any interest. So what tax bracket that just pushed her kid into the higher one, right? Yeah. So they don't have an income problem. They have a huge tax problems. So what we are trying to do with that client now is figure out, how do we get them in lower tax bracket while they're receiving the income? Do we want to do it now while taxes are on sale? We call it or do we want to wait till the government says hey, like you said earlier, where you got to start pulling out income, whether you like it or not at age 72, it's called RMDs, required minimum distribution. So which is going to be a big number still. So they're gonna be in a high tax bracket, whether they like it or not. So we have these issues all the time. But if we can catch a client early enough, and teach them how to offset the government's taxes before retirement, that's where we want to get if they're like this client that's already retired and having to pull out money eventually anyways to live off of, we can still do some pretty cool things. It's just, there's gonna be some taxes involved, and a lot of people don't want to pay taxes, I get it. But if you don't plan accordingly, you're gonna be like this client. Yes, they have a lot of money, but they have a lot of tax issues as well.
Jessica:Right? Yeah. The left hand is going to know what the right hand is doing, basically, yeah, you gotta have both things. They work in tandem. And that is all part of that conversation. Right? This is not something that that our listeners have to figure out. John, this is something that you do all the heavy lifting.
John Merkel - Senior Financial Advisor/Founder CEO of:Oh, yeah. Without a doubt. And, you know, we'd like to make it fun as well. Yes, there's some education and yes, you're gonna learn, but let's make it fun. Let's not be all stressed out and worried about anything. And like I said, I don't care if you've got 3.7 million or 330 1000. You know, we've got to get you to a point where you want to be and get you comfortable being where you're going to be okay, so we got to come with a game plan. And that's my job. And let me like you said, do the heavy lifting. You just sit back. Absorb all the information I'm giving you and let's have some fun.
Jessica:John, think about this here. How long has it been since you cleaned out your fridge?
John Merkel - Senior Financial Advisor/Founder CEO of:Well, since we moved recently, it's been pretty recent.
Jessica:That is true. Yeah. So you started moving so you've been cleaning out but this a survey commissioned by Rubbermaid found that the Average refrigerator has five food items that are expired and probably should be thrown out. So is it too much of a stretch here to kind of compare the refrigerator with our retirement portfolio? Right? So could that also benefit from a little reorganizing and cleaning out a little bit?
John Merkel - Senior Financial Advisor/Founder CEO of:Oh, without a doubt, in fact, the last couple I was talking about that 3.7 million, she had about 400,000, in an IRA with 80 different accounts in that IRA. So you think about it, that's like your frigerator, you got 80 different food items in that in that fridge? Well, you know, some of them, and they're just been in there rotten. You know what I mean? Yeah, so we've got to look at stuff like that. So if you've got ad accounts in a$400,000, Ira, there's some of that stuff that's just dragging your money down and not earning anything or just doing nothing. So yeah, we've got to look at stuff like that. And also fees, you know, fees, eat away a lot of clients retirements, we've got looking to do like a fee check. Also, you'd be surprised what people being charged just to have the money sit in that account, basically doing nothing. So that's when you say, you know, we will do an x ray for the client's portfolio. That's the kind of stuff we look at, you know, what's bad? What's kind of holding your retirement down? tax wise and interest wise? And also, what fees? Are you paying to have that service for you? And so we look at all that stuff. And at the end, we kind of get a game plan and say, hey, if this were my money, this is what I would do. And you know, hand it to the client say, it's up to you. But this is what we would do. And you know, yes, no, or need more information. That's all we did.
Jessica:Exactly. Yeah, I like the idea of, you know, the idea of cleaning out your refrigerator is related to your portfolio, getting rid of the bad, you know, putting the good back in, but also finding different ways to reorganize it. I was looking at something the other day, you know, how many shows on TV are basically just about reorganizing People's Pantry, or closets, or whatever it is toy rooms, and people pay so much money for that, right? Well, why not pay that much attention to your retirement plan, right, you might need to reorganize, rebalance and just kind of get things back in order. And I think that's important to do a check in, I think, John, do you suggest at least once, maybe twice a year to kind of do a little portfolio review?
John Merkel - Senior Financial Advisor/Founder CEO of:Oh, without a doubt. And you know, you mentioned the house, if that's one of your biggest retirement, or biggest expenditures, and an asset slash investment, your retirement needs to be that big, if not bigger, you know, because you've got to live 3040 years on no income. So that's what we have to kind of as Americans get more behind doing retirement and we're doing retirement planning. I honestly don't know why, you know, during high school and college and when you're supposed to be learning stuff, why they don't teach this more. But we've got to get to a society where we're more, hey, if I'm not gonna work 30 or 40 years, where's this money coming from? We've got to figure that out for each person coming in our office and kind of show them what to do and how to do it. But we've got to get serious about that. And yes, we can make it fun. But I think overall, as Americans, we need to get more serious on retirement so that we do retire. There'll be a lot more educated people and people won't be getting taken advantage of or scammed and all that crazy stuff, too. So I just think more education for all Americans is a good thing. You've been
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