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One of the biggest retirement decisions people make doesn’t involve the stock market at all. It’s a choice hidden inside their pension paperwork.   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:  Speaker 1  00:00 Hey, time once again, to plan with the tax man, and we are going to talk about the biggest retirement decisions people make that doesn't involve the stock market or could make, right? So it's a choice hidden inside the pension paperwork. Let's get into it. Would you trade $600 a month to protect your spouse? Look up in the sky. It's a bird. It's a plane.   Speaker 2  00:21 No, it's the tax man. He may not be a superhero, but Tony Morrow has saved many retirement plans with his extreme knowledge of tax planning strategies. It's time for plan with the tax man.   Speaker 1  00:34 Welcome into the podcast, folks. This is another edition of plan with the tax man, with Tony Morrow from tax doctor. Inc, and you can find them [email protected] and again, yourplanningpros.com and Tony, this week, we've got a listener question, a variation. Anyway, I'll change it up just a little bit. And you've been getting some of these lately yourself as well. And so we want to talk about this, the pension trade off conversation. And so we'll, I'll just set it up. Let me read the email and then, and then we'll dive into it. All right, okay, all right. So with my pension, the person says I can get $3,500 a month, but the wife gets nothing when I die, or I can take 2900 a month and she'll continue to get all of it after I'm gone. As always, I'm wondering which is better and Tony. It seems cut and dried, like the spouse is sitting there, probably listening, going, duh, take the one where I get money after you die. But let's, at least, for the sake of the conversation, talk about, you know, the pros and cons of both ways. And I think that's what people need to think about when this situation comes up, right? It's not Yes, probably 80% of the time, it probably does make sense to take the spousal continuation, but maybe not always. So let's discuss it. How you doing?   Tony Mauro  01:47 I'm doing good. I've been doing good since first year. So getting ready to dwell into tax season. And we do get this question a lot. And you know what I find with tax clients is I find more of the clients that I've talked to, they actually take the higher amount not knowing. They don't read over their paperwork. Very, very well true. And you know, so I find that, you know, make sure you're before you even dwell into this read this paperwork, make sure you understand before you check boxes. And make sure that you get some advice you have any questions on it, yeah, because one can, you know, really devastate you if you pick the wrong one, but you're, you know, in this case, and this is a topic of mine, because as I get a little closer to the end, my wife has worked for the government for it'll be probably 47 years, but she goes, Oh, wow. And so we'll have this choice in our public retirement plan called IPERs, and, you know, so yeah, me, as a spouse, I'm just like you said, you know, let's take the lower amount, because I want to make sure you know that if something happens to you, that I've got this till I die, right? But the nice part about IPERs, in our case in Iowa, is, if I go first and we're at the lower amount, she can actually bump herself back up to the higher amount. Oh, it's rained or her life. So, yeah, you know, that works. But what a lot of people need to take a look at in this and make some decisions and talk to their advisors about is, you know, the very first thing is, what kind of longevity does the covered person, meaning the you know, person that's going to get this benefit, have within their lifetime? And you know, use that, you know, to make this decision, because obviously, you know, the higher payout shifts the risk to the surviving spouse, correct, and you know that that's kind of a risk. And so that's why we kind of titled this, you know, is this reduction or this $600 a month worth it? Because it does act like a little bit of insurance, you know,   Speaker 1  03:38 if, yeah, for sure, it's like a little insurance policy and that. And I guess we can skip around a little bit, because that really it's easy for us to walk to that conversation piece, because that's what a lot of people tend to think. They go, Well, why don't I take the bigger amount, the 3500 in this example, and invest that $600 difference, and I'll buy my own life insurance, right? And so that's certainly something that people think, and I in their statistics that show I can probably do better and leave some tax free money, because it'll be in a tax in a life insurance policy. And that's fine, that's totally possible, but you need to run the math first and see, and to your point about longevity, that's going to play into that. Because if you don't really have longevity on your side, and you go that route, you may not live long enough to fund that policy exactly. You may not live long enough, and you may not be healthy enough at 6570, they're even going to issue a policy another, I don't think, you know, 600 a month may not buy you a whole lot at that time, because you might, you know, hey, if you can get the policy, it's gonna be well more than that pending.   Tony Mauro  04:35 And, you know, you may not be even insurable. So again, conversation to have, but that is a that's an option, which is why you want to have these conversations, you know, which I think is good   Speaker 1  04:47 well, so you think about, Okay, a couple of different things, right? So let's just go with the standard statistics. Male passes first, the females right behind, typically goes, guys pass away first. So a couple things happen, right? So this, this the shift you talked about, the risk. Shifts to the spouse? Well, a couple of things big, big things happen right off the bat. One is you're going to higher tax bracket. You weren't expecting that, right? So you've got that. You're going to lose one social security, so you're going to go to the higher one. So if you don't have this spousal option checked in on, can you survive the lower income hit right? Depending on what your other assets and the other things you have in place. So talk a little bit about some of those things and how you've seen that. So again, this is it's case by case specific.   Tony Mauro  05:26 Case by case specific. Is exactly it, because you hit all the topics and it needs to be discussed. Because if you have the assets where none of that you just mentioned, it matters, and you still gonna have plenty of income and everything, well then maybe the higher amount, you know, is a better option for you, but more times than not, in our case, exactly what you said happens, expenses don't drop, income drops, and now all of a sudden you've got higher taxes, more you know, same expenses, less income. And you know, then you've underestimated the impact of all this, and by taking that higher amount, you still may not have enough to cover things, and then all of a sudden the whole retirement plan shifts and changes on you. And, you know, do you really want that? You know? And so that's why I think it needs to be discussed. Yeah.   Speaker 1  06:14 And there's a lot of little pieces to that, right? So there's those different pieces. And I think sometimes Tony people kind of fall into that factor of, well, they've heard it forever. Well, they're only going to need half the money coming in when one of us dies anyway, right? So, so we're good any if, even if we did take the bigger amount, because we've got plenty. But half is a misnomer. It's, it's not, it's more like 85% I   Tony Mauro  06:36 think it's, yeah, at least that. I don't. People always say that to me. I said I've never seen it happen. Expenses don't drop to half. Everybody that I've I've worked with, I haven't seen one yet at best, yeah, they dropped 10 to 15. I had one case dropped about 20, but not half. And luckily, in his case, everything else he had, it didn't really matter too much, because he was pretty well off. I mean, he had not only social security, but he had a big pension of his own and a big portfolio, you know, things like that. But I think all those other things you need to have the discussion to figure out where this fits in the rest of your overall plan, right? I mean, with everything else, because that's going to really guide you on what to take, well, you know, or which way to   Speaker 1  07:19 go, yeah, yeah, for sure. Well, how the pension fits in with the rest of the overall plan, right? I mean, that's really going to be a big key. So this is where, again, why not stress test the situation? If this is on your radar, if you're eligible for our pension, right? If you've got somebody in the in the family that's going to possibly be getting one, go sit down with somebody and say, let's look at the different options. Because Tony, just like Social Security, you well, actually, even worse than Social Security, they typically don't come with colas, and there's no do over there's   Tony Mauro  07:45 no do over on this, no. And I think a lot of us, as you get into retirement, I mean, for me personally, I like to, what I value is, I want to make sure that my and my wife's income, you know, it's monthly income, is the way I look at it, is not is going to be the same regardless of who dies first, and the remaining person can be here and have the same income coming in, you know, if one of us is gone. Now, I mean, yes, we've got the nest egg over here that's funding that income, and then Social Security and some other things. But to me that I want more certainty than, you know, a little bit higher monthly amount? Yeah, I mean that, like, say that's just me and for us, you know, I'm gonna assume I'm gonna die first,

A new government-backed savings account for kids is coming. On the surface, it sounds like a win. Free money for newborns, long-term investing, and a head start on adulthood. But once you look under the hood, Trump Accounts raise some real questions about taxes, flexibility, and whether they beat existing options. Today, we’re walking through the pros and cons and asking if this new account is worth the effort.   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:  00:00 A new government backed savings account for kids is coming. We've all heard about this, and on the surface it sounds like a win free money for newborns and long term investing and a head start on adulthood. But when you look under the hood, the Trump accounts raise some questions about taxes flexibility and whether they beat existing options. So this week on plan with the tax man, let's break it down. Look up in the sky. It's a bird. It's a plane. No, it's the tax man. He may not be a superhero, but Tony Morrow has saved many retirement plans with his extreme knowledge of tax planning strategies. It's time for plan with the tax man. Hey everybody, welcome to the podcast. This is planned with the tax man, with Tony Morrow from tax Dr Inc and Tony. Let's talk about the free money, or the future headache of the pros and cons of the new quote, unquote Trump accounts, and just kind of see if we can kind of give some, you know, back and forth, a little bit on some of these things, because there's a lot of interesting ideas, but there's also some conundrums as well. So we'll dive into that. How you doing? My friend, doing good. You know, New year, new goals. Hopefully everybody's got some new goals and feeling good. And so, yeah, we're looking forward to, course, tax season starting for us shortly as we as we're taping this right, right? So we've got that coming about. Get busy. Yeah, yeah, yeah. Well, so let's break into this. Let's chat on this conversation here a little bit. So I guess let's kind of start with big picture, right? So this was part of the Oba the one, and they launched this year. So this stuff, if it all goes through again, this would start this year in July of 2026 give us some some highlights here, some big picture. Yeah, so the big picture. And the reason I wanted to talk about this because we're starting to get some questions. Some questions from tax clients. I think they're hearing things, you know, out on the news and things in Google and whatnot, but I still think there's a lot of people that don't know anything about it. That's why I want to at least try to reach as many people as possible. But you know what they did? And you know, again, putting all politics aside whether this is right wrong, we have the money, but this is what's going on, and you got to decide whether or not you know you want, can take advantage of it. So what they did was they're basically saying that starting in July 26 children born between 25 and 28 so we're only talking 25 at the moment, 26 to be but they got to keep this in mind, the government's going to give each of these children, if they open up a Trump account, $1,000 free money, which, on the surface sounds good, and what happens is, is the child owns the account. The parent is the custodian, till they're 18, other people, like grandparents, parents, friends, all that contribute up to $5,000 a year to this account in total. And even employers could throw in 2500 but it's not, I don't know. See a whole lot of that happening, but who knows? Maybe. And then what they're going to do, what the federal government is going to do, is take this money invested in low cost US equity funds are probably going to be ETFs and index funds, things like that. It's very low cost. All of this interest in gain is going to grow tax deferred, and then when the child's 18, they do have the opportunity to withdraw this amount, but they don't have to any withdrawals. It's treated just like any other retirement account. It comes out taxed at ordinary income, and they could face penalties there and whatnot. That's kind of the big, big picture of that. And you know, we'll continue to move on, and I'll go over some numbers that I ran before we got this on here, and just to kind of give some people some numbers to put with it. But I think the big thing they're what they're looking at, in my opinion, is, again, I think a lot of times the government sometimes means, well, they rush things out, don't think it through. I think their big you know idea here is, let's start something for newborns, so that if they save this money and end up with it all the way till they retire, that maybe you know, if we don't have the programs we have now, that they're going to be okay, in other words, less reliant on the government. But that's my opinion of that, because I you know they know that not enough Americans are saving on the regular, and I think that's, that's their primary motivation, yeah. And I think there's two pieces to that, Tony, and thank you for breaking that down, good and concise, good stuff there. I think one is to get people saving. Or, I think these are really three. There's really threefold, really right? One is to get people saving from a young age, teach in the value or the power of compounding, as you know, is massive, right? Absolutely. And so I think that's one piece. I think another piece is get people making kids, because we're going to have a real shortage of workforce, not only our country, but a lot of countries. And I think, I think there's some of this is a leftover Elon kind of feel right with with Trump and with the administration, because he's a huge proponent of we are going to have major shortfalls in society, in the workplace in about 2025, 30 years, right? And so if you look at China, they're going to have huge workforce problems as well. So I think it's that and that, and then tax revenue. And the reason I say that about the tax revenue and I'm going to have you buy.   05:00 Break this down for us is because they're a little sticky, right? There's, there's some criticisms here about how it works. So why don't you break down some of the the cons, some of the negatives of this, some of the negatives really, you know is, and this is what, what I didn't even know until we started really dwelling into it, is, if somebody like me. So the reason this is near and dear to my heart because I had my first grandchild. First grandchild in 25 so, you know, I want my son to open up this account get the 3000 I'm gonna I'm planning on putting the $5,000 a year in for her, and we'll get back to that. But one of the cons is, is these contributions don't qualify for the annual gift tax exclusion. A lot of people don't know that when they give gifts away of cash and other things, there's an annual gift tax exclusion, and after that, you have to file a tax form using some of your lifetime exemption. These don't qualify for the exclusion. So therefore, when I do this, I'm going to have to file a gift tax return, which is a form 709, which is not terribly difficult, because obviously I know how to do them, but people that don't know how to do them are gonna have to go pay somebody two. To go pay somebody to do them, or they could get themselves in trouble, you know, with the IRS. The other thing too, is, and I just found this out before, well probably a couple weeks ago, is this is not supported this form by DIY tax software, you know, so half of America is using DIY tax software. You're going to need to pay someone like ourselves to do this for you, which just means a little more money out of your pocket. The other thing too is there's no tax deduction for these contributions, because it's not, you know, not a qualified charity or anything like that. Withdrawals are taxable, unlike Roth's and other types of things. And then there's limited flexibility, I feel like, for me personally, I don't mind assuming this all comes off like they talk about letting the government run the account until she's 18, but after that, if I were to convince her, if I'm still around, and not to let the government hold that, we move that into something, you know, a rollover IRA, something like that, that we can Control outside of the government hands. That's just me personally, but so I think there's some of those. Are some of the criticisms. I would say people have to watch out for some of the cons. But I think the pros, you know, really are number one. Government's handing out 3000 bucks right of a child you know, born between 25 and 28 you might as well take it if you have a child. But even if you don't do anything else, you might as well take the free money. Granted, we don't, maybe not have the money to do it, but they're going to hand it out. So, you know, why not take that? I think that's one. I think two, like you were talking about, really gives the child early on some sense of, you know, investing, using compounding things like that, the investments are going to be very low, and you don't have to make any decisions about them. It's just going to be invested in index types of funds. And I ran the numbers before we got on so you know, if you take advantage of this, if you have a child, and you just open one up and the government puts the 1000 bucks in you, nothing else, right? If you leave it like that, and let's say that these funds earn roughly 7% you know, not, not very high, but I they probably gonna do better than that over 18 years. But so you would have, for that child $3,379   08:15 you know, it's not a ton, but it's free money. I ran, I think I ran it Tony. And if you go out something crazy, like 40 years, just, just the I ran that one, right? Yeah. Did you run that one too? I ran that one. Go ahead. Took the same 1000 bucks and you left it so you're 3379 and 18. You took it out another 48 years till they were 65 that person would have an 81,250   08:3

Turning 62 might not feel like a milestone birthday… until you realize the Social Security clock just started ticking. Filing now could put money in your pocket sooner or cost you tens of thousands over a lifetime. How do you pick the right strategy? Let’s break down how to think through one of the biggest retirement decisions you’ll ever make.   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:  Speaker 1: Turning 62 might not feel like a milestone birthday until you realize the social security clock just started ticking. Filing now could put money in your pocket sooner or cost you tens of thousands over your lifetime. So which is the right strategy? Let's break it down.   Hey everybody, welcome to the podcast. This is Plan with the Tax Man, with Tony Mauro and myself to talk, "Hey, I'm 62. Should I file or wait?" That's the big conversation, Tony, that happens all the time. I imagine you probably have this chat with new prospects virtually every single time you meet with somebody.   Speaker 2: Every time. Yes. And I picked this topic this week because I've been getting a lot of questions on it. There's been a lot of chatter on social media about it. So I wanted to address it again because it is important.   Speaker 1: And it's complicated for people, but you could talk big money here. So I mean, why do it? Why file at 62? There's a plethora of reasons. If you take out the just actual need it, okay, it's like I ran the numbers and we actually do need to turn it on. Oftentimes it's things like, "Well, it's mine. I want it back." Or whatever. Understandable, but what's some other things you've heard?   Speaker 2: Well, I hear things such as, "My parents didn't live very long, so therefore I want to collect it while I still got some time." Okay. And by the way, as we talk about this, we could sit, if I had 10 listeners on the podcast as a call in, we would all have different opinions. And you could get into some serious arguments about this. So a lot of this depends upon each individual situation, like most things financial planning do. But that being said, besides worried about longevity, they want to basically take the money and invest it in themselves. Some want to give it to their heirs a little earlier.   Some are, of course, like you said, they're just ready to get out. They've worked for somebody else forever. They want to retire now and they need the income now is always the biggest one, but there are some drawbacks to that, which we'll get to. But those are the things I find most people want to take it early. And most people, when they want to take it early, they've given it no though other than those things. They haven't run any projections. They haven't done any type of planning for this, which we'll talk about here in a second.   Speaker 1: Okay. Well, why wait until FRA, full retirement age? So there's some compelling reasons to do so. First, it's what, about 6% annually. If you were to do the numbers from 62 every year you're waiting, it's about 6% up to full retirement age. Yeah?   Speaker 2: It is. So when you take it early, of course, you have to take a reduction in benefits.   Speaker 1: Yeah, like 30%.   Speaker 2: Yeah. And there's a cap on how much you can earn if you're still wanting to go out and do some work. Now, if you wait till full retirement age, not only is your benefit higher, but you can go out and earn as much as you want and they won't reduce your social security benefit. Yeah, you're still taxed on it and all of that. But that's one of the reasons why people might want to wait. They want the higher benefit. They might want to use some sophisticated planning and coordinate with spouse benefits and maybe have the lower amount or the lower earning person take theirs earlier and the higher earning take theirs later. And then of course, like I said, maybe-   Speaker 1: You should definitely think about doing that, right?   Speaker 2: Absolutely.   Speaker 1: Yeah.   Speaker 2: I mean, that's one of the biggest ones. And a lot of times you get this full retirement age statistically showing both men and women, if your health is fairly decent, you plan on living quite a bit longer up to at least the averages. At least that's, again, that's an assumption. But those are some reasons why. And if you start running some numbers and you take a look at, I ran my own before we got on the podcast. And if I took mine at 62 versus 67 is my full retirement age, by the time that I, if I lived, I used both scenarios. This is just for example, and this is what the planning software can do for you. If I lived until 83, if I waited until 67 versus 62, I would've collected $72,700 more if I waited. And so you have to decide and you should run some of these numbers.   And I also would say to all the listeners, you at very least should be out and have yourself a login and username to the social security website so you can see your reports and look at some of this stuff. It's free. They've actually done a nice job with it. So the question becomes like, in my case, is it important enough for me to delay? Because I could die between 62 and 67. Who knows?   Speaker 1: Sure, yeah.   Speaker 2: But do I want to take that chance and maybe get 72, $73,000 more I live in the same amount of time? And I think that is what the real planning stage is. And there's really no right or wrong answer because for some people, yes, maybe they do need it at 62, but for a lot of us, if you don't need the income, it generally is better to wait.   Speaker 1: Yeah. I mean, think about it. 6% from 62 to 67 is... And it's a safer investment because somebody would say, to one of the arguments, "Well, I want to just take it now and I'll reinvest that money." Especially if the argument is that, "I'm doing it, I'm turning it on, but I don't actually need the income." So let's just take, I need the income off the table because if you need it, you need it. But if you're turning it on because you just want to turn it on for whatever other reason, and you're saying, "Well, I can invest in myself." Okay, maybe you're going to get a guaranteed 6% year over year with very little risk. That's one piece. Now you might look at the market right now year to date, the S&P, Tony, while we're talking is like up 16%. Somebody said, "Well, yeah, I could get 16%." Well, fine, but that's 100% at risk.   Speaker 2: That's 100% at risk. I just saw not too long ago, which led me to even pick this topic this week is somebody on Facebook sent me a clip of what appeared to be a financial advisor or some annuity person talking about it's never better to wait. Always take it at 62. And I listened to it and I would love to debate that with a gentleman, at least for every case. I mean, he does make some compelling arguments as to why some people should take it at 62, but most of what he was talking about was, "Well, they need the income now and they can reinvest it." Well, okay, yes, that is right, but you can't just sit there and tell everybody never to wait because there are some compelling arguments in some cases to wait.   Speaker 1: Yeah, yeah. And to your point. So you ran those numbers at $70,000 or whatever. Did you think about the spousal piece? Sometimes people, they don't necessarily do that. It's like, okay, don't forget, the higher of the two is what the person that's left behind is going to get. So you mentioned earlier doing that option. So if you're in a situation where one member of the family, one of the couple there is making more and you want to turn the lower one on at 62, that's a fine strategy for many people still run the numbers first to see. But again, you got to kind of factor all that stuff in there. You can't just claim it without some intentionality in there.   Speaker 2: No, you do need to be intentional with it. You do need to talk to your advisor about it because that's one thing that we use a lot is we have the lower earning spouse, if they do want some money now, okay, let's claim that now, but let's let the higher earning spouses ride a little bit and then that way you've got kind of a little bit of best of both worlds. You're getting some money now because that's what you said you wanted, but you want to get some higher benefits and generally the women live longer and if the man dies, then she can reclaim and get his higher benefit, which will benefit her later by him waiting. And so I think that's one thing that we generally try to do as far as that goes. But we use some good software just like most advisors have to be able to at least show people and run a lot of different scenarios very quickly so they can at least have all of the facts to make the best decision for them.   Speaker 1: And you know, Tony, it can go the other way too. I was just talking with another advisor earlier and he was sharing an interesting story that he had some new clients that were in prior, right before Thanksgiving, saying that they were in, they were starting to do the preliminaries and everything and they were like, "No, no, we've already identified a lot of stuff and we're going to both wait until we're 70." They wanted to do the total maximization. And he said, "Cool, but let's go through the exercise of running stuff and just see what those," Like you kind of did, "What some of those projections lay out." And he was able to show them for a myriad of reasons why, and again, he's like, "It's not my job. If you want to go 70, we'll go 70. But if we turn it on, in your case, specifically both of you at 67, you're actually going to fare better." So there is times when it can go one way or the other, but you don't know that until you get into the math of it.   Speaker 2: You don't. And that advisor probably showed them something they probably never had dreamed of and probably going to-  

Nothing will mess with your financial confidence faster than comparing your savings to your brother, your coworkers, or that guy on YouTube who claims he retired at 38. Your retirement number isn’t a competition. Let’s talk about what really matters when you’re trying to figure out if you’re behind on your savings goals…and what to do if you actually are.   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:  Speaker 1: Nothing will mess with your financial confidence faster than comparing yourselves to your brother, your coworkers, or that guy on YouTube that claims he retired at 38. Your retirement number isn't a competition, so let's talk about what really matters this week on the podcast.   Hey everybody, welcome into Plan With The Tax Man, with Tony Mauro and myself to talk investing, finance, and retirement. And am I behind in my retirement savings and what to do if you are, that's the topic of conversation this week. Tony, my friend, what's going on, buddy? How are you?   Tony Mauro: I'm doing well. And just back from the Thanksgiving break, trying to get reignited for this last month of the year.   Speaker 1: Yeah, it's upon us and always fast and furious, always something going on, right?   Tony Mauro: Yeah.   Speaker 1: So we got to dive in and tackle the work, get it done, especially right after holiday break. It seems like everybody's always like, "Oh my God, I'm so overloaded."   Tony Mauro: That's right. Everybody's got a ton of stuff to do.   Speaker 1: Yeah, got to catch up from the half the week you're off or whatever. So listen, we got an email question in. And so it kind of sparked the conversation here, Tony. So we'll throw this up here. I'll state it for the listeners and then let's just kind of break it down a little bit. So the person says, "Look, I thought I did a good job saving over the years, but it seems as though I'm behind. My brother's got nearly two million saved and it seems that a lot of my colleagues or coworkers are in that similar kind of stratosphere. The husband and I barely have over a million bucks and now we're in our early 60s and wondering what do we got to do to get caught up?"   So it's kind of like, well, is a million not enough? With all these conversations period, so whatever the number, forget the number for a second, what to do if you're feeling behind, period. So where do we start with this? How do we identify the real issue, Tony?   Tony Mauro: Well, I think the real issue, and this is a good topic for this time of year, because I think everybody, at least the clients that we serve and prospective clients are all looking at their financial situation. Another year's gone by, another year older and people start to ask these questions. And so I think some of the real issues here probably in this writer's email is basically they're trying to, just like you said, they're trying to compare themselves in a number to other people. And you don't want to do that. You want to get with your advisor and really talk about where you're at with your plan because just because... Well, I guess I can back it up and say, somebody's always going to have more than you, whether it's money, whether it's this, that, things, you've got to really hone in on the real issue of, in your situation, are you going to be ready?   And you got to... I mean, the number is important, yes, but it's not the primary factor, I don't think. A lot of times, because, for example, client A might be very happy and very well off with a million dollars, client B, not so much, which I think we're going to talk about a little bit more in depth here. So really the only benchmark is what you're doing with your plan and what it requires and try to figure out then from there, is what you have enough?   Speaker 1: Great point. So you've got to really kind of break each of those pieces down and look at all of them and get the numbers. I mean, ultimately, you've got to have this conversation based on numbers and not how you feel about it, and we'll talk about that in just a second. But if you're reframing the conversation, so what is enough, Tony? What's enough for you? Everybody's different.   Tony Mauro: Everybody's different, so you really have to, again, get with your advisor. I think I've said it before, it's where an advisor lends a lot of value is to take you through these exercises for answering what's enough for you. It really is dependent a lot on type of lifestyle that you want to lead, what your monthly expenses are going to be in retirement, do you have any outstanding debts and other commitments, things like that. You also got to think about too, how long you're going to live. Obviously nobody knows that for sure, but you can kind of make some estimated guesses based on your family heritage and whatnot, who's still maybe alive. And then I think lastly, when it's all over, what kind of legacy do you want to leave? When it's your turn, I think all of these things have to come into play to answer what's enough for you. Because again, what might be enough for one person is definitely not enough for another and not enough for another. So this is where you got to have some good conversations.   Speaker 1: Well, again, so are you behind or are you assuming you are? So to this person's question, they didn't really state, "We're probably behind," is one of the words that was used. We're barely over the million dollar mark and probably behind. So have you truly run your projections out? And this goes for anybody listening, how do you know if you're behind if you don't truly know where you stand, period?   Tony Mauro: I agree. And I think that a lot of people fixate on that big number of the nest egg. But what the writer didn't tell us is, they assume they're behind, but a lot of times we find out when clients tell us this is that, "Well, let's say you may only have a million dollars saved," but, "Oh, by the way, you've got this pension that you can't outlive over here," and they don't factor that in, but that's a monthly income that you can't outlive, so that's very much a factor in, do you have enough to retire? So I like to focus on not the number at the end, but what's your monthly expenses? How much do you want to have to not only pay that, but still be able to go out and have fun? That's the number we're looking at. Now then we have to back into, okay, do we have enough over here with all sources of income coming in, including Social Security and pensions and our investments to figure that out?   Speaker 1: Yeah. Yeah, so I mean, find those targets, get those numbers specifically and then talk about lifestyle, fixed expenses, those financial commitments, the longevity, all those pieces that we talk about often and then you've got a much better piece of black and white right in front of you, so you kind of know what's going on.   But let's just assume, Tony, for the sake of the argument that you are behind. Well, now, so what's some catch up strategies? What's some things to be thinking about when it comes to how to tackle these and how to maybe shorten that gap? So obviously we should start with you're over 50, most likely, because we're talking about retirement, this listener was in their 60s, so take advantage of the opportunities there, max out.   Tony Mauro: Yeah, you want to max out things like if you've got a 401k at work, if you don't have that, or even if you do, IRAs, got your HSAs in there, you certainly could, and this all comes down to planning, of course, you don't want to just, throwing these out there, you've got to get with your advisor and check some of this stuff out. But you may want to say, "Well, okay, based on the amount I can safely set aside every month with what I have," maybe you need to delay retirement a little bit. Maybe we just need to move it back a bit to even things out. Maybe it's a fact of we do all of the above and we start cutting back just a little bit, we reduce some things to maybe save more. I mean, without feeling like your retirement savings poor. Maybe we need to reassess our risk. Maybe we need to maybe invest a little more aggressively than you have been depending on how things are looking if you're behind.   Speaker 1: That's a good point. Now as the advisor, okay, if you have to say that-   Tony Mauro: [inaudible 00:07:35] to say.   Speaker 1: Yeah. Well, so if you're the advisor and you say, "Okay, look, you are behind. You want to make up this ground, whatever. One of these places is that you have been very conservative with your portfolio." You don't just move to the higher risk if you're behind because you need to take into account not only as the end user, the client, but also as the advisor, how are they going to feel about this, can they stomach taking that extra risk?   Tony Mauro: Yeah, can they stomach it and how much will that risk tend to be? How much longer do we really have, because that plays into it as well. But it's weird for an advisor to say, "Well, you might need to take on a little more risk." Most of the time we're saying, "Nah, maybe take a little less," especially towards retirement. But it's an option that you might want to consider if you're getting close and you're behind.   And then the last one is, and I think a lot of people don't give this enough merit is maybe you just take on some part-time work, some mindless type work in your retirement to help fund things with not too much stress, maybe not full-time. And maybe you can pick up 20, $30,000 a year extra just doing that and you might have to find something you really like to do.   Speaker 1: Yeah, I think ultimately, if you got to do some catch up things, there's these pieces. Obviously we got the catch-up contributions, Tony. Now if you are 60 to 63, you've got this new little funky window that they've added.  

From the Macy’s parade to carving the turkey, Thanksgiving traditions can teach us a lot about what makes a great financial plan. Let’s match some of the most loved parts of the holiday with the money lessons they represent.   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:  Speaker 1: From the Macy's Parade to carving the turkey, Thanksgiving traditions can teach us a lot about what makes a great financial plan. So let's have some fun this week here on Plan with the Tax Man.   Hey everybody, welcome to the podcast. It is Thanksgiving week that we are putting this one out. So maybe you're catching it before or after Thanksgiving. Hopefully you had a good holiday. And we're going to talk about what Thanksgiving traditions, how they might mirror smart financial planning. Have a little bit of fun here with Tony Mauro, who is the Des Moines professional alternative. And at Tax Doctor Inc., he is the tax man. So we're going to have that conversation, my friend. What is going on? How are you doing?   Tony Mauro: I'm doing great. Getting ready for Thanksgiving. One of my favorite holidays of the year.   Speaker 1: You and me both.   Tony Mauro: Yeah. The staff's getting excited too. They get a little time off around Christmas, so it's all good.   Speaker 1: Yeah. Favorite dish?   Tony Mauro: At Thanksgiving, I'm still a traditional turkey guy, but my favorite at Thanksgiving is probably the pumpkin pie with a lot of whipped cream.   Speaker 1: Okay. All right.   Tony Mauro: How about you?   Speaker 1: Mashed potatoes. My wife's mashed potatoes are killer.   Tony Mauro: Oh yeah.   Speaker 1: They're killer. That's probably why I have heart problems, but they're good. Well, let's have some fun. We'll talk about these traditions. We'll kind go through the day. We'll kind of run through the day a little bit and see if you can spin a financial yarn to some of these items.   So I don't know about at your house, Tony, but she starts working on all the stuff in the morning. It's her and my daughter have this tradition of doing all these things together, even though the kid's in her late 20s now, they really enjoy kind of working through the process together. That's a tradition in and of itself. But she has to have the Macy's Parade on in the background as they're prepping and whatnot. So what kind of analogy can we make to the prepping of the parade and the financial prepping and planning?   Tony Mauro: Well, the parade, I used to watch it, I haven't watched it in several years, but it always does come off, just like every other giant event, as fairly flawless and looks like it's effortless. Just like I always use the golf analogies. Those guys make it look so easy. But what everybody doesn't see is everything that goes into the setup and the organization of that parade.   And really, no different in your financial life, whether it's your retirement plan or any other plan that you have that you're saving for. You do have to do some work behind the scenes. You've got to get your plan in place. You've got to understand what's going on, have communication with your advisor, and really monitor that plan in order for it to later, on when you're out bragging to your friends that, hey, I'm retiring at this age, or whatever, and telling them you're going to do all these fun things, to them it looks like, boy, somehow you made it so easy, but they don't understand the things that go into it. But you do need to do that with your financial plan.   Speaker 1: That's a good way of thinking about that, right? The choreography, if you will, of the planning and of the parade as well as your retirement is pretty important. So, all right, so you're watching the parade, you got that going on, you start cooking the feast. So when it comes to obviously getting the turkey in, timing's got to matter here.   Tony Mauro: Got to matter. I'm not a good cook, so I would probably be burning it. So I leave that to my wife. But I know that there's been several years that in the past, actually, it used to be my mom, she would put it in too late or cook it too long and it would burn. So the whole thing was kind of ruined. And so in your planning life, I never think it's too late to start, but obviously the sooner you start, you don't have to rush or you don't have to feel as much pain of saving because you're starting on time, you're doing it for a long time. And just like cooking the turkey, you want to make sure you're monitoring it while it's in the oven, or in this case, while your money is being invested. So that, again, just like I said before, at the end of the day, your plan is going to look like and feel like a real success.   Speaker 1: Yeah. You don't want to rush it, especially if you're doing that deep fried thing. Because I guess that's where they explode is when it's still somewhat frozen and you drop it in there, and I guess that's when the problem happens. So timing is important.   Tony Mauro: Timing is an issue. Yes.   Speaker 1: In both things, right? For sure. All right. Well, the turkeys cooking, stuff's being made, and you're probably part of the family is probably watching some football games going back and forth. So this one should be a pretty easy one for you here, Tony, to give us an analogy. But my beloved Lions, I am a long suffering Lions fan. Yes, we've got a good team last couple of years, but they still seem to lose on Thanksgiving Day. So that's a tradition I could get rid of. But anyway, what do you got?   Tony Mauro: Well, I think with the football games, I mean, we're all sitting there watching them in some form or fashion. Obviously, we see both the offense and the defense on the field at different times. It's really just very similar to your financial plan. I mean, sometimes you're playing offense, and that's the proactive, what I call saving and monitoring for the future and saving for those goals. But you also need to, and this is where I think a lot of people miss, they don't play defense enough in their financial lives.   In other words, they don't carry the proper insurance, they don't watch that enough. And I'm not just talking life and disability and things. I'm talking about home, auto, things like that, that they do need to protect the assets they have. So I kind of equate that to a little bit of a defense because you have to spend money on that stuff. It's not sexy at all. You don't like it. You only get a return is if something bad happens. And so a lot of people put that off. But I do think both of those are important, just like they are in football.   Speaker 1: Yeah, great analogy for sure. And sometimes, yeah, my Lions do not play defense enough or not well enough. And any of the guys who are listening, I'm sorry, but you know it's true. So we got a great offense right now, but sometimes the defense is a little suspect. So that's a great analogy. All right. Food's done, ready to get rocking and rolling. Got to cut that turkey, man. Got to slice that joker up. What are we doing from a retirement analogy?   Tony Mauro: Well, I think it's similar to the turkey is we all have different plans. We all have different needs and wants, very similar to the size of the turkey. So when we're talking about distributions and getting income from what we have saved, it's important to be strategic about what we're doing and how we're divvying that up. Because obviously in retirement planning, it's how long is it going to last? If you're cutting the turkey, it's like, okay, there's an end because somebody's going to eat the last bite. But in retirement, hopefully we're not taking the last bite because then that means we're out of money and that's the last thing we want to have happen.   Speaker 1: We don't want to do that, right?   Tony Mauro: No.   Speaker 1: So yeah, so you want to be strategic about how you slice up your retirement income so you can plan it out, stretch it out. Because we want to have that longevity piece covered as well. Even if you don't think longevity is on your side, you still want to plan for it in case you're wrong. So family table conversations, that'll be next. So everybody's sitting there to eat. You've cut up the turkey, you're chowing down. Lots of conversations happen over Thanksgiving and sometimes they're not always super comfortable. Hopefully everyone's keeping the political stuff at bay the last couple of years. But what's that financial correlation?   Tony Mauro: Well, I think the financial correlation, and I think you're right, I mean, I've been in a few of those awkward conversations over the years at Thanksgiving, which is very uncomfortable. It used to happen at my wife's mom and dad's house. It's very similar, because at least with us as advisors, we want to take some time to talk about some uncomfortable things that people don't like to talk about, which is the end, the death, the planning after you're gone, what's that going to look like? And it's uncomfortable, but if we can take that and maybe make it less uncomfortable and get people to talk about that, generally they feel better afterwards, that they've got that part of life handled and they can enjoy the rest of their lives knowing that that's in place.   Speaker 1: Yeah. The family's together. My mom was kind of funny, I think it was last year or the year before. She's like, I'm in my 80s, I'm going to die in a few years. What are we doing? She just kind of dropped it out blunt like that.   Tony Mauro: Yeah, that's one way to do it.   Speaker 1: Yeah, exactly. So have those chats.   Tony Mauro: [inaudible 00:08:37].   Speaker 1: But she kind of made it silly a little bit, which took the edge off. But you got to have those conversations talking about money, legacy, all that good stuff while everybody's together. The future ve

How do you know if your financial advisor is a bad fit for you? What about an advisor that you’re thinking about working with? What red flags should you be looking out for?   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:  Marc Killian: How do you know if your financial advisor is a bad fit for you? What about an advisor that you're thinking about working with? Are there some red flags to be on the lookout for this week on Plan With The Tax Man? We'll highlight five of those to keep an eye on.   Hey everybody, welcome into the podcast Plan With The Tax Man here with Tony Mauro and myself, Mark Killian, to talk about some red flags to hopefully you're not ignoring or at least be aware of. And we'll dive into that this week here, Tony, as we're getting pretty close to Thanksgiving. How you doing, my friend?   Tony Mauro: I'm doing good. Getting ready for the holidays myself and getting ready, well with the staff, for the year-end.   Marc Killian: Okay. Yeah, well, I mean, it is a busy time of the year for everybody. And so maybe if you are shopping or thinking about doing something, making a change, some red flags to maybe be aware of. So we'll run through a few of these for folks, see if we can help them out. Let's start with the whole cookie cutter conversation, the one size fits all approach. Obviously at this point it's become cliche. Every advisor says you need a specific strategy for your situation, but it really is true because there are still some of those big box places out there that just try to jam everybody into the same kind of thing.   Tony Mauro: There is. I have more and more conversations with clients about this, and you're right. All of us advisors, everybody knows that we all do the same thing. But I think too many of us, if they're going with this one size fits all approach, I think we're doing a disservice to the clients. So I think if you are a person out there looking for an advisor, you want to ask about what is your approach for your clients and what do you do with them and how do you do it a little bit?   Because for us, we like to start, and I just had a conversation with a tax client yesterday about we don't want you to come to us just for us to have you do say a Roth IRA. And we just manage the money. You're paying us, so we want to provide some value. We want to get to know you, we want to develop a plan and help you through the plan. So I would definitely ask those questions and don't be afraid to do that because that's what's going to determine if they're a good fit for you or not.   Marc Killian: Yeah, exactly. And every situation's a little bit different, certainly. And there's certainly universal things that do affect us all. But just kind of trying to jam everything into one style that 20 people walk in the door and they try to put them all in the same overall portfolio and approach. And maybe that's the key word right there, Tony, is that a lot of times these big box places, they're really talking more about the portfolio management and things of that nature versus a holistic retirement strategy.   Tony Mauro: They are. And we don't spend a lot of time on that because I don't want to say we don't feel it's important because it is. But that's secondary to really what you want to do and where you want to get to because we can figure out that part of it later. And there are so many choices that we'll find something there. I don't like to lead with that and talk about performance and this and that because I don't think that that is the first thing we should be doing.   Marc Killian: Yeah, you're talking about relationship and life planning, if you will, a little bit, more than just portfolio building at that point. Most of us have built one. Sure, we still want to manage things and then stay ahead of the inflation and keep going, but you're talking taxation and social security optimization, there's just all these other pieces that go into it. So that's where the customization truly does come into play. All right. That's the first one, Tony. How about the communication aspect? So also sometimes a knock on some of those places is, well, okay, they got me set up and I never hear from them after that.   Tony Mauro: Yeah, I hear that a lot. I really do from clients, and sometimes it can go several years. And to me, I always ask them, well then they're not really, in my opinion, your advisor. There's somebody that is maybe managing your money or at least supposed to be watching it, but most fiduciaries, we have an obligation to at least meet with you once a year. But we try to do that more than once a year, even if it's just a phone call or a Zoom call, something like that. Because we do want to communicate with you and we don't want to just talk about how the market's doing and what's going on in the latest rally, or decline, or political situation, things like that.   We want to talk about what's changed in your life and if some of your goals have moved and things like that, we'll touch on some of that current event stuff. But I think it's important to just keep in communication to let you know that we are still looking after things and monitoring your plan, even though you don't hear from us. Because a lot of people, if we don't communicate with you, you probably start scratching your head saying, well, why am I paying these people and what am I paying them to do for me if I'd ever hear from them?   Marc Killian: Yeah, yeah, exactly. So communication is certainly a big key. And transparency also a big key, Tony. If you can't tell how somebody's getting paid, that's a serious concern. That's a big red flag. And transparency not only in the fees you're paying, but fees you're paying for your products and just across the board. That should just be a must. Transparency across the board.   Tony Mauro: I think it is. I think it should be one of the first things that are talked about. We talk about it with our clients and prospective clients right up front. And we tell them just like when we do your tax return or your accounting, we're paid pros. And as long as you understand that, here's the value we're going to deliver, here's what you can get for the money you're paying for us. And it's up to you then to decide if you think that there's enough value to pay that fee. But we definitely don't want to hide behind that. And I definitely wouldn't be afraid for all of you out there to ask your advisor that. And just so you know, you're not really questioning that they should be getting paid more of how and what motivates them. And I think more of the truer measure, I'm one of those fee for planning types of guys or asset-based management. I don't really like commissions and things like that. I do think that skews some things and can lead some people to do things that aren't in their clients best interest.   Marc Killian: Yeah, again, you're talking about relationship building. So why would you not want to have that transparency anyway on all facets of things? So it just totally makes sense. Okay. Tax strategy, so well, Plan With The Tax Man, right?   Tony Mauro: That's right. My favorite.   Marc Killian: Exactly. So I mean obviously if you're working with somebody who is, again, the focus is primarily on the accumulation and you don't really touch on some of the other pieces of the long-term aspect of retirement, getting into retirement, all that kind of stuff, then you're certainly a red flag because you got to have a tax strategy, Tony, you know this as a CPA, the prior year information is fine and good, you're handling all that, doing the annual taxes. But you really want to be thinking about future taxes as well, forward-looking. And someone like yourself who does multiple sides of the coin, you're a CFP as well as a CPA, you're looking at both of those.   Tony Mauro: Trying to always look at both of those, especially with a financial plan planning client because you know what they say. Taxes, they're with us till the day we die. It touches pretty much everything. It's one of the biggest expenses over our lifetime. Why would you plan your future without taking that into consideration. And it's bad. And I don't know what the best word is here to say. I better leave it alone. I don't want to talk about the government. We're coming off to shut down and everything else. But as bad as they are, sometimes the tax code is full of things that we can do legally to help cut our taxes.   And a lot of people aren't familiar with them or haven't taken advantage of that. And it's certainly true with retirement, but there's also some things you can do in retirement to cut your taxes now, but then you've got to deal with it later. You've got basically a payable to Uncle Sam. So it's important to factor that in when you're planning, I think. It's my number one favorite and my number one biggest reason why I think people should use somebody that has a tax background when they're planning.   Marc Killian: And again, nothing wrong with your CPA looking at the prior year, that's their job, right?   Tony Mauro: Right.   Marc Killian: But working with someone who has, I guess the mindset to do both sides of the aisle if you want to stick with the political conversation, sort of is a great way to go about that. And of course doesn't mean that you can't have your own CPA and work with people as well, but just again, make sure you're having that tax strategy conversation and working with a financial professional who is thinking about the tax simplifications of the moves you're making because they will be there. They're not going anywhere to your point. And I guess Tony, that really just brings it back home to the final piece for, so we talk about five today, and that's just not a lot of information gathering.   Look, you've been doing this 30 plus years. It's pro

Here on the show, we often talk about what it’s like to become a client. But what about what it's like to be a client of a financial advisor? Tune in for a behind-the-scenes look at what it looks like to be a client at Tax Doctor Inc.    Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:  Walter Storholt: Well, here on the show, we often talk about what it's like to become a client, but today we're going to talk about what it's like to be a client. On Plan with the Tax Man, what's it really like to be a client of a financial advisor, we'll give you all the details coming up. I'll grab Tony and we'll get started. It's another episode of Plan with the Tax Man, I'm Walter Storholt filling in for Mark Killian, but as always, joined by Tony Mauro, a certified financial planner and CPA with more than 30 years of financial planning experience. Find us at Yourplanningpros.com. Based out of the Des Moines area in central Iowa, serving everyone throughout the community there, you can find him certainly via the phone as well, 844-707-7381, all the contact information for Tony is in the description of today's show. Tony, before we dive into the topic today, everything going okay with you?   Tony Mauro: It's going good for us, just got back into town from a family wedding, and yeah, still tackling fall, so everything's good.   Walter Storholt: Nice. Where was the wedding?   Tony Mauro: It's actually over in Chicago.   Walter Storholt: Nice. Good trip to the city?   Tony Mauro: It was. I don't get over there very much for as close as we are, but there's a lot of stuff to do, a lot of stuff to eat, and all that, so yeah, it's always a good time.   Walter Storholt: Did you get down to the riverfront or down to the lakefront at all?   Tony Mauro: We did, we went down to, familiar with the Navy Pier area.   Walter Storholt: Yeah.   Tony Mauro: We were there a little bit, and then kind of walked around downtown a little bit. It's spent a long time since I had a good old-fashioned deep dish pizzas, so we had a little of that.   Walter Storholt: I was going to say. Who did you use, was it Lou Malnati's or what's the other one-   Tony Mauro: Yes, it was whatever that one is. It was highly ranked, so we thought, well, we'll go try it, and it was very good.   Walter Storholt: Yeah, it's hard to beat a meat pie, right?   Tony Mauro: That's right.   Walter Storholt: Pretty good stuff. One of my favorite things ever was doing the river tour, the riverboat tour in Chicago, just the architecture tour from the boats, I think it's just one of the-   Tony Mauro: I've never done that. Yeah, but that sounds good.   Walter Storholt: Oh, you got to do it. Next time you're in the city, just do the riverboat tour, the architecture tour, and they take you all up through the river, and they point out all of this just fascinating information, all about the architecture of all the buildings right there along the river front. And it's a fun ride, they put on a great show, lots of amazing information. Every time I've gone to Chicago, I've done the tour, so.   Tony Mauro: I'll have to do that. Yeah.   Walter Storholt: It's really cool. I think you can pick it up right there from Navy Pier too, so you hop on the boats that are right there, they take you right through, and just easy.   Tony Mauro: Cool.   Walter Storholt: Very cool.   Tony Mauro: Yeah.   Walter Storholt: I would do it when the weather is warm. It'd probably be a little brutal in the colder temperatures, but good summer activity for sure. Well, let's dive into our conversation today, Tony, what it's really like to be a client of a financial advisor. So, again, a lot of our focus is on becoming a client, but let's talk about once we've turned that page and we are a client, set some expectations for folks, what's that relationship then going to look like beyond just the first couple of visits and meetings? So, when somebody's been a client for many years and they already have a solid retirement plan in place, what are your discussions look like when you get together for periodic reviews, and how often do those happen? Take us under the hood, if you will.   Tony Mauro: Sure. Well, normally, depending on the client's situation, how complex it is, and really whether they're in the... I try to divide it up into two main areas. You're either in the accumulation stage or the distribution stage, that's what our clients are in. So, that number one depends on how many times a year we get together. It's anywhere from one to four times that we'll get together, because some clients will say, believe it or not, hey, I think four is too much, I don't really want to get together that often. And some really like it. So, everybody's different there, but once we get a plan in place... And for us, a plan isn't just lip service and talking, we actually use, and I think a lot of advisors do today, some sort of formal financial planning software that they can take and develop a plan for the client, top to bottom. Everything they own, everything they owe, what their goals are, everything from retirement, to college planning, and everything in between.   And basically, kind of function off that plan as their financial quarterback, and make sure that plan, we're progressing, number one, and then number two is in the reviews that we've had with clients who've been with us a long time, it's really reviewing the plan, are the goals still the same? Anything drastic happen in your life? And just talk about that. And then, we'll touch on investment performance and how things have done over the last quarter, last year, two, three years, that kind of thing. Obviously that's important too, but that's really not why we meet, just to go over, hey, your returns this quarter were this much or this little type of thing, it's much more than that.   And as you get into understanding what the client's about and wants to achieve, the more we know about them, the more we are involved with their life, at least on the financial side. So, a lot of them have been with us for a long time, we know everything about them, we try to get their children involved, if they're adults, especially in the distribution stage, because we talk about end of life and what's going to go on there, so that's kind of our reviews process in a nutshell.   Walter Storholt: Makes sense, and I think helpful to get that peak. Can you go over a little bit more of how often you meet with your current clients to review their situations? Is it always in person? Do you have remote meetings? Sometimes? What's usually the right mix for folks?   Tony Mauro: Yeah, it's totally client-dependent, it used to be everything, of course, was in person, now more and more of them want the video call, they're comfortable enough with that, they've done them enough that they don't have to come to the office. Obviously people that live a long way away, they love that. And so, I would say probably right now for us, I give the client the choice, but we probably do 60, 70% of our meetings virtually now. We hop on, we could see each other, and we talk through it just like you and I are doing, except you could see our faces. And then, once in a while they'll come in, if we've got some things to do that way, but like I said, most of the time we're generally two to four times a year, depending on the client.   In between that, of course, if they call or email or things like that, we certainly want them to reach out if they've got questions about anything they've seen or heard. And if you listen to our last podcast about some of the funnies that we did, we get a lot of calls about that kind of stuff about, hey, I heard this, what do you think? Type of thing. And we can address those things, just one-off off the cuff type of things.   Walter Storholt: Yeah. Those are some pretty good examples of things that are from outside what somebody would think of as probably the normal services of a financial advisor, I would think. Like, calling you up and being like, hey, is this a scam email? That's not what I would write down is usually in the description of a financial advisor, but it's outside of that realm of just helping you with your portfolio.   Tony Mauro: It is, and we get a lot of that, we get a lot of people asking tax questions, obviously we've always prepared tax returns, and so they look to us, many of them, we do their taxes-   Walter Storholt: That's something that not every financial advisor does though, right? That's sort of unique for you guys.   Tony Mauro: Right, Yeah. So, we can kind of take the tax angle perspective as well to work that into the plan, and let them know, hey, not only are we trying to achieve your goals, but we're trying to do it in this much of a tax-efficient manner versus other things. But beside that, the clients will call up and they're changing jobs, they're doing this, they're doing that in their lives, and so they generally have a lot of tax questions that we'll answer for them. And a lot of them, of course, as they get a little older, they're asking about Social Security, and when to take that, and again, we can certainly help them with that. That's in the scope of the financial services, but kind of outside of it. But the bigger ones really are, they'll ask us a lot about passing money on, end of life, things like that, that we've really tried to help them with in addition to just keeping the plan in progress.   Walter Storholt: Yeah, makes a lot of sense. I'm curious if you can maybe share with us some memorable victories or happy occasions that you've been able to celebrate with your clients over the years, since you're describing a relationship that then stays in place throughout their retirement.   Tony Mauro: Yeah. Well, we track every goal that they

We all know there are things in life you probably shouldn’t trust — like gas station sushi or an email from a Nigerian prince. But the same principle applies in retirement planning. Sometimes what looks safe, easy, or even “guaranteed” isn’t so trustworthy when you peel back the layers.   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:  Walter Storholt: Well, we all know that there are things in life you probably shouldn't trust, like gas station sushi or that email from a Nigerian prince trying to send you some money and get you to send them money. But the same principle applies in retirement planning. Sometimes what looks safe or easy or even that dreaded word, guaranteed, isn't so trustworthy when you peel back the layers. So on today's show, we're going to talk about the things that if you trust it, you might go broke and how to avoid it.   Hey everybody and welcome to another edition of Plan with the Tax Man. I'm Walter Storholt filling in for Mark Killian on today's episode, but as always, joined by Tony Mauro, Des Moines professional alternative for the Tax Doctor Inc. in central Iowa, office right in Des Moines. You can find Tony online at yourplanningpros.com.   Tony, great to be with you on today's episode. How's life treating you?   Tony Mauro: It's good. Fall's upon us. Everybody's talking football of course, and now it's starting to get serious about planning, so it will be busy coming up.   Walter Storholt: You get kind of a second hit in the tax calendar this time of year. Most people think of taxes as just being something you worry about at the last minute in April, but you get a little bit of a second wind as we head toward October, right?   Tony Mauro: We do. As we're taping this, we're coming up on a due date the IRS puts on us for corporate extensions, which is the 15th, and then in another month, October 15th, everybody that we have on extensions and everybody out there have got to get those tax returns in, especially if they owe to avoid some big penalties. So most of our clients, though, are not the procrastinators or the ones that are on extension. We got them done long ago, but we still have a few that we're always pushing to get over that hurdle.   Walter Storholt: That's right. Yeah. And it's not like corporate returns are easier than personal returns, right? A few more layers and moving parts to worry about there?   Tony Mauro: It is. With the corps, it's not near as straightforward of just getting documents and getting them into the software. A lot of moving parts usually, and of course business owners by and large usually don't want to talk about taxes and they tend to put it off. So half the battle is getting them to communicate and get some of that stuff done.   Walter Storholt: Yeah, absolutely. Well, good luck wrapping those things up so that you can enjoy the changing of the fall weather and football season and all that other good stuff. Well, here's how today's episode's going to work, folks. We're going to talk about the things that you trust might make you go broke and we're going to talk about some real world things and then some financial sides of the equation as well. So we'll kind of bounce back and forth between the two.   So first of all, Tony, I like throwing this one out there. Gas station sushi. Is that something that you think you would trust?   Tony Mauro: I would never trust that. In fact, I notice even in some airports now, kind of like sushi to go and fast food sushi.   Walter Storholt: Oh, sure.   Tony Mauro: I would never do that, and I do like sushi, but that kind of stuff, especially at a gas station, I wouldn't [inaudible 00:03:21].   Walter Storholt: Yeah. I might do the airport sushi if it was a sushi restaurant in the gas station, but when it's just kind of in those grab and go sections, I don't know if I want that going wrong right before a flight, right?   Tony Mauro: Right before a flight. I agree.   Walter Storholt: The risk there is not worth it.   Tony Mauro: Yeah, yeah.   Walter Storholt: I did, I thought gas station sushi was sort of a made up thing and then one day I did actually see sushi in the gas station.   Tony Mauro: Wow.   Walter Storholt: It was not appetizing.   Tony Mauro: I've seen it in some small supermarkets and whatnot, but it just looks like, how long has that been there?   Walter Storholt: Sure.   Tony Mauro: I don't know if I want to try that, but I'm like you, I'd rather just have them cook it for me. That's the only way I'm eating it.   Walter Storholt: Yeah, it's the same thing with raw oysters. I got to trust the place I'm getting my raw oysters from.   Tony Mauro: Exactly.   Walter Storholt: Otherwise I'm not eating it. All right, so let's look at a more realistic real world thing here from the financial perspective would be people who say they've developed a system for timing the stock market. That sounds a lot like gas station sushi in my mind.   Tony Mauro: Well, it sure does. I think a lot of what we'll talk about today is stuff people are seeing online and how they need to vet that a little bit on who's writing that. But I've even seen it just scrolling through Facebook, you see the things that look like a post that are really an ad and I see a lot of these about people being able to time the market and to beat the market, so to say. And from a financial planner's perspective, any one of us is going to tell you that's been in the business for a while that even the best of the best can't really do it on a consistent basis.   So what makes whomever out there online think that they've done it? What a lot of times they'll do is, that I've seen, is they'll point to some freak kind of abnormal result that they've achieved over the short term and they've never really tested it over the long term, but even if they can long term, it's all going to even out, so I really advise people not to fall for that kind of stuff just because of that.   Walter Storholt: Yeah. I mean, anything that kind of sounds too good to be true, we can file this one under that probably is category.   Tony Mauro: That's right. Yeah.   Walter Storholt: Yeah. All right. Other things that can cause you to have some trouble in the real world is when we use WebMD to diagnose ourselves, right? Although today's version of that, it seems to be AI, right? I go into AI now and I'm like, "Hey, I got this thing going on." So either one, a little questionable there.   Tony Mauro: And even in the financial world, robo-advisors and AI, it certainly is going to play a role in everything that we do I think going forward. However, I think just like in medicine and even in taxes is AI can't make the critical decisions, I don't think, at least at this point, in a person's portfolio, and not everybody is the same. There needs to be a human element in there because really, a lot about goals and emotions, how you feel about things, and AI can't pick that up, at least yet. And a lot of people I think use WebMD and some other things kind of basically just for a quick hitter and there's nothing wrong with that, gathering some information, but I would say confirm that with an advisor to make sure it's really true.   Walter Storholt: I like your perspective on that, and it's kind of funny, I used AI to kind of analyze some test results recently on my ankle. I had an MRI done on a heel Achilles injury, but I didn't know what I was reading, right? All these big fancy words, and it was kind of hard to sort through it all with the way that it was laid out in the test results, and my follow-up appointment wasn't going to be for a couple of days and I kind of wanted to know what was going on a little bit more from what the techs found. And so I took all of that gibberish and threw it into AI and it was able to kind of at least give me an idea of what I was facing. So it set some expectations for then that visit to the doctor.   I wasn't trying to make it fix my ankle, but to say, "Okay, so what am I looking at? What are my options? What's the good? What's the bad here?" That was kind of helpful and kind of nice. I could see that helping a lot in the financial realm too, maybe using AI to maybe make certain parts of the process easier, but man, I'm still going to go to that doctor, I'm still going to go to that advisor and get that interpretation, that guidance. And then like you said, the decision-making, the critical choices got to still happen from the human, at least at this point.   What about advisors who say there are no fees in your portfolio? Is that a trust this, go broke kind of thing?   Tony Mauro: Well, I would be very leery of that because in everything we're doing in the financial world, even if you don't have an advisor and you're doing it yourself, almost every investment has some fees of some kind, unless you just flat own individual stocks and/or bonds. You do pay a fee when you buy and sell, but I think what this is referring to more so is people saying that they're going to be able to advise you for absolutely no fees. There are always fees, you just have to look for them.   What we do with our clients is in everything that we're doing for them. I mean, we're fee only. So yeah, there's going to be a fee to be the financial quarterback, but we want to disclose that and make sure that the client knows what they're paying us and what they're paying us for, what the kind of value we're going to deliver for that. And then also any types of investments that we're choosing, we want to let them know what type of fees are hidden in there because fees can add up, obviously. More in fees you pay, the less return you're going to have, and that will affect your goals a little bit. But yeah, be very leery of that. If somebody's saying there's absolutely no fees,

Most people don’t feel wealthy. But what if your day-to-day habits are quietly building serious financial strength? A recent article from Kiplinger outlined five surprising signs that you might be richer than you think. And none of them involve yachts or private jets… Let’s analyze the habits that signal real, lasting wealth and what to do if you are (or aren’t) on the right track.   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:  Marc: Most people don't feel wealthy. But what if your day-to-day habits are quietly building serious financial strength? Well, a recent article from Kiplinger outlined five surprising signs you might be in better shape than you realize. So let's talk about that this week, here on Plan with the Tax Man.   Welcome into the podcast, folks, as we break things down with Tony Mauro from Tax Doctor Inc., and this week, five signs that you're richer than you think, or at least, I don't know, that's the term it used in this article. I'm going to call it better off, Tony, than we maybe think. I've been talking to advisors like yourself for years, and more times than not, I'd say most advisors say usually about seven out of 10 times, and I'm going to give, maybe not so super specific, but people come in looking at that initial consultation wondering, am I okay? Right? That's the big question. And more times than not, advisors say people are in better shape than they realize. Is that what you see as well in your practice?   Tony Mauro: I'd say generally that, yes. They're not, I believe, where they want to be.   Marc: Sure.   Tony Mauro: Because obviously, they wouldn't be in there, but they're better off than they think. We seldom see somebody that's so far behind that it's impossible to...   Marc: Right, right. And I think that's the catch, right? It's kind of like going to the dentist. We all kind of go... Not to equate your stuff to the dentist, but unfortunately, it's a good analogy. People go, "I need to go, but I don't want to go, because I really don't like it." And then you wait until you've got a real problem and then it's a bigger pain. And so I think a lot of times people think, "Ah, I need to go see a financial professional, but I don't want to because going to give me bad news." And more times than not, again, people are in better shape than they realize.   So, let's run through this report. We'll put a link in the show description here for folks if they want to check it out. And we'll just do a real simple of these five signs. Where are you at? How are you guys doing with this stuff? So number one, Tony, is emergency fund. Have you prepared one? And I think COVID certainly highlighted the need for this for many people, when you were losing jobs, or not being allowed to come in, and weren't getting paid, or reduced pay, maybe put a squeeze on you if you didn't have that emergency fund.   Tony Mauro: Yeah, and this is the first question we ask clients when we're data gathering and whatnot, is to, if they have this. And most don't. Most don't. Most have heard about it, they've never done it, or they've tried it and just basically robbed it and never went back to it. But obviously, most of this types of advice, most planners are going to give you the same thing. You've got to get something like this in place before you can start investing for the future, because of things like job losses, everything that related with COVID, somebody's sick, that kind of thing. So, once you get that kind of stability, then we can kind of move on. Now, we don't have to make you wait to start doing planning until you have six months of expenses saved up.   Marc: Right. Great point. Yeah. Yeah.   Tony Mauro: It can take several years. But we got to get you at least working on it, even if it's $50, $100 bucks a month, to get money in there. And then the other thing is, I ask them, I said, "Do you even know what a month or two of expenses are?" Or do you just look at that checkbook and say, "Oh, well, we've got a little more money this month, we can spend it, and then we got to quit spending." And that goes to just personal finance there. But you've got to know those two things, and you got to get along that path.   Marc: I think the article goes on to say that the average American has about $1000 saved.   Tony Mauro: $1000 bucks.   Marc: Yeah. That's probably not going to get it done. So you got to work your way, like you said, into some sort of a groove there. And I know there's some debate back and forth about once you're retired, do you really need emergency fund? Because you are not working, so therefore you're 401 and all your different nest egg is really the emergency fund, I suppose. But while you're building up to retirement, you certainly want to have that emergency fund there.   Tony Mauro: Yes.   Marc: All right, number two on the list was, you live below your means. I'll throw in, you live within your means. I think below or within, especially in today's environment. If you can do within your means, I think again, these are steps, signs that you're doing pretty good.   Tony Mauro: And this is right out of probably the Millionaire Next Door book, or a chapter of it, is you must know, in my mind, of course, what you got coming in for your income, and then of course, a good idea of what your monthly outflows, are or your expenses. That's what we're talking about here, is living within or below your means. You still have money left at the end of every month, or at least at zero, and you're not going into the negative.   And this assumes that nothing bad or unusual is happening, but if you're in a negative every month, that means you have a spending problem, and you are not living within your means. And that's something we got to curtail, because there's no way you're going to be able to save. You come into us and say, "Hey, I've got to start saving for retirement," and we look at that and you're in a negative pretty much every month, we've got to make some changes immediately before we can start saving, because you don't even have any money to pay your bills, let alone if you get behind, which we just talked about, lose a job. How are you going to invest for retirement?   But yeah, it is definitely something that if you are living within your means, or even better, below, then you are going to be in great... I don't want to say great shape, to automatically have a great retirement. You still got to save.   Marc: Right. It's a big help, though. It's a big help.   Tony Mauro: Yeah, it's a big, big help.   Marc: Because lifestyle creep is a thing. I mean, as we make more money, we kind of want a few more things, and it's totally understandable. You work hard, blah, blah, blah, but you got to be careful not to get out of control. I was just reading something the other day, Tony, I'm not sure if you're a Gen X-er like me. I think you are. But it says Gen X-ers are most in debt right now, on an average of about $157,000, with vehicle debt being a big piece of it. That wasn't even including the house. So you got to get that stuff under control, and living within your means or below it, either way, is a good milestone there, a good marker for financial health.   Tony Mauro: I agree. I think before we leave that topic, it amazes me how many clients that they'll shop around and really feel good about trying to find whatever they're buying at the lowest price, and then they'll put it on a credit card, and they don't pay the credit card off. And I say, "But let me ask you, if you went into that same thing, just going to buy it and you're going to pay three times what they're asking for, would you do it?" And they say, "Absolutely not."   Marc: You wouldn't do it. Absolutely not.   Tony Mauro: "Absolutely not. I'm not doing that. I shopped for deals." I said, "But you really aren't getting any deal, because who knows how long you're going to take?"   Marc: You're just not paying the retail place or whatever the money because you got it cheaper, but you're paying the credit card company money.   Tony Mauro: You're paying the credit card company. So we find a lot of people with a lot of debt because of that.   Marc: That's a great point.   Tony Mauro: It just kind of goes along about that. You got to pay cash for things if possible, except for the few big things in life, because otherwise, generally that's a problem.   Marc: That's a fantastic point. It's very simple to overlook. You think, well, I kind of need to get this new... My computer's acting up for work, or whatever, and I got to get this new computer, and I need to finance it, but I'm going to shop around for the best deal. And maybe that's a higher dollar amount. Maybe you do need to finance it, but if you could save for it and just pay cash, you're just better off. You're just saving money. To your point, yeah, house, car, really big stuff makes sense, you may have to finance.   Tony Mauro: Big stuff, yeah.   Marc: Yeah. All right, number three, you invest strategically. Whether it's your workplace plan or whatever, you got a strategy, versus just, well, I threw it in the 2040 fund because my year to retire.   Tony Mauro: And I think people that, they have a head start when they come in and they say, look, I've got... Even if they've got three or four 401Ks from different employers, they're constantly investing in their current employers, whatever they have. Some of them are doing a Roth on their own, which is fantastic. It doesn't even, to us, matter as much of what they have it invested in, unless it's just all cash and they're really young or something like that, obviously we're going to advise them. But if they're already doing that strategically, they're well ahead of the game because putting money away, and if we can solve those first two problem

The kids may be heading back to class, but it’s not a bad time for adults to hit the books too, especially when it comes to retirement. So, let’s test your knowledge with a quick financial pop quiz and see how ready you really are.   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:  Marc: The kids may be heading back to class, but it's not a bad time for us adults to maybe hit the books too, especially when it comes to our retirement strategies. So let's test our knowledge this week on the podcast and play a quick financial pop quiz with Tony here on Plan With The Tax Man.   Welcome into the podcast folks. Thanks for hanging out with Tony Mauro and myself. Tony, of course, is here to answer all the questions and give us some insights as he is a CPA, CFP, and an EA of 30 plus years in the industry and over there at Tax Doctor Inc, helping folks get to and through retirement. And Tony, I want to send you to school today, my friend. How you doing?   Tony Mauro: I'm doing well. Enjoying the summer. It's fair time here.   Marc: Good. Good, good.   Tony Mauro: And kids here are heading back to school.   Marc: Yeah. Are you a good test taker?   Tony Mauro: I used to be. I've taken a lot of them, so I've had a lot of practice, but back in school, I wasn't all that great.   Marc: Got you. Got you.   Tony Mauro: Especially in grade school.   Marc: Well, this will be pretty easy for you, but I thought it'd be fun for our listeners to play along as well. And feel free, Tony, once we go through this, it's multiple choice, so it's pretty easy. I'll give you the question, possible answers and then you give us the correct answer or the answer you think, and then maybe just share a client story or elaborate on the answer a little bit, wherever you want to go with that.   Tony Mauro: Mm-hmm.   Marc: But we'll let folks play along as well, see how they do. So, ready for it? You ready to get started?   Tony Mauro: I'm ready.   Marc: All right, here we go. Question number one, what age can you receive full social security benefits if you were born after 1960? Is it A; 59 and a half, B; 62, C; 65 or D; 67?   Tony Mauro: Well, for this one, since I'm in this group, I know this one, it's D for 67.   Marc: Okay. And the trick is the 60, isn't it? The 1960?   Tony Mauro: It's the 1960 and a lot of people still have, in their mind the magical retirement age is 65 and that's still theoretically true, but what they started doing was moving up the age that we can receive full benefits when the trust fund started seeping out more money than it was taking in. And so that's what they did as a step back from that. But a lot of people still think 65, the 62 answer is, you could take it as early as 62, but for us after 1960, it's 67.   Marc: Right, for that full retirement age. And it's always, what is it, like 66 and some months or something? I think my brother was one of those, he was 66 and seven months or something like that. But we'll see what happens if they change it. But a lot of times people wonder is it worthwhile to extend it to 70 and all that stuff. But this was again, just when you can do the full and of course the caveat there being Tony, if you don't do the full, if you go early, there are income limitations.   Tony Mauro: There are a lot of income limitations, yeah, if you take early because if you take it at 62, you can go out and earn income, but they're going to reduce your social security. And this is all the way up to full retirement age, a dollar for every, I believe it's $2 that you earn. And so, the whole idea, I believe, of probably this question is you need to work with somebody and try to figure out what's the optimal age for you depending on your situation.   Marc: Correct.   Tony Mauro: Because everybody's going to be a little bit different there.   Marc: Yeah. Yeah, exactly. And of course, once you get to 67, you can make all the money you want in the world and go from there. But yeah, so there you go. Good job. So good job with this first one. All right, so how'd you guys do? Did you get the question correct? And most people, I think, probably know that one, but again, you might not be aware that depending on when you were born, it could affect your social security or when you turn it on. All right, number two, what is the maximum annual contribution limit for a traditional or a Roth IRA for individuals that are age 50 and older as of 2025? Is it $6,000 a year you can put into that account, B; $7,000 a year, C; $8,000 a year, or D; $9,000 a year?   Tony Mauro: That's another one of those questions that I think for most people, they've got the general idea, they've probably lost track unless you're like us and live it every day. But the correct answer is C; $8,000 in my mind because... And the reason I say that people get lost is they know it's around anywhere from, I get answers from about $5,000 to $8,000, but they've done a lot for people over 50 now as a catch-up provision. So they give you a little chance to put extra in if you're over 50, which is a great deal.   Marc: Yeah, I mean, it's not the most massive amount. Sometimes people might hear, oh, $8,000. Because you get what, $7,000 normally and if you're over 50 you get that extra thousand, right?   Tony Mauro: Extra thou, yeah.   Marc: But I mean-   Tony Mauro: That's not a lot.   Marc: Yeah, but I mean, 8 grand, Tony, if you're 50 and you're not retiring until, see the prior question, 67, that's 17 years at $8,000 a year. I mean, that's not chump change either.   Tony Mauro: And you got to think, at least I think in my opinion, and even with now what they've done with the recent retirement changes for these 401K's and whatnot, they're really trying to make it known, I don't think they'd do a good enough job, because they don't want us really relying on what we're talking about in the first question, and that's social security. Even though I believe it'll be there, but they're trying to say, "Hey look, we're going to give you every break that we can to try to stock money away so that you're not just dependent on social security." That's my theory.   Marc: Okay. Yeah. And again, if you're over 50, you get those catch-up contributions and that's just the traditional in the Roth. Then there's the company sponsor plans, which is obviously quite a bit more so the government, every once in a while they do something that makes sense and the catch-up contributions over 50 is definitely helpful for a lot of people. So that's a good place to... Especially for folks who feel like they're behind, which many people who first start thinking about getting into retirement when they get into their 50's are like, "Ah, man, I'm not in good shape." So this is a great way to shore that up. All right, number three, which type of retirement account, Tony, requires you to take the RMD, the required minimum distribution? Is it A; a brokerage account, B; a 401K, C; an HSA or D; a Roth 401K?   Tony Mauro: Another tough one. This one is the 401K, letter B because it is a qualified retirement account. And so what the IRS basically, unless it's a Roth 401K, that's different, but 401Ks, keep in mind, if you've been putting money in tax deferred for however many years, that's basically a deal with the IRS that basically said, "Hey, we're going to let you tax deferral on this money, but hey, by the way, when you start taking it out, we are going to require taxes to be paid."   But they got smart enough to say, "Well, you know what? Some of these people will never take it out and then we're going to escape. We're not going to get our tax money. So they came up with this required minimum distributions rule of, well, once you become a certain age, we're going to require you to take it out whether you like it or not, and you're going to pay taxes at that time, and that's what that RMD means. And they have an age, brackets now, they have raised those a little bit because people are living longer, but the other ones, your Roth, your HSA, and these other ones, you don't have to take money out of those at any time. You can die with whatever you want in those accounts, but the government is crafty that way because they can say they want their tax money.   Marc: I don't know if I've ever ever heard anybody say the government's crafty that way, but there you go.   Tony Mauro: Yeah, some of this stuff they think of it's just, you think they're not very smart and then you think, yeah, that's pretty crafty of them to do that. I get it.   Marc: Sometimes you shake your head though. You do sit there and go, "What in the world are they thinking?" So good stuff. All right, number four here, Tony, what does the 4% rule refer to? Many people have heard this and most people probably know what it is, but in retirement planning, what does the 4% rule refer to? Is it A; the maximum percentage you can contribute to a 401K, is it B; a tax on high income retirees, C; a suggested annual withdrawal rate from your portfolio or D; the penalty for early withdrawal from a Roth IRA?   Tony Mauro: Yeah, I would think most people would probably get this one, but the answer is C, it's the suggested withdrawal rate from your retirement portfolio. And we've talked about this before, several episodes back about that. That's the theory these days that if you can take 4% out of your retirement plan and you can stress test it and tell people, "Hey, if you do this, you can't outlive your money. But I don't really like as a one size fits all for everything. I like to work with clients basically anywhere from 4-6% based on what they have and what they want to do. As long as you can stress test the portfolio and show them that, hey, even if you live till you're 95 or 100, in your instance, with what you want to do, you will

The new tax bill just passed, but will it actually help you? Let’s look at who stands to benefit, strategic moves to consider now while the rules are fresh, and answer a few true or false questions about the law.    Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:  Marc: This week on Plan With the Tax Man, let's revisit the Big Beautiful Bill conversation. But this time let's look at who it helps and maybe who it doesn't help as we digest more of the Big Beautiful Bill.   Welcome in to Plan With the Tax Man with Tony Mauro and myself as we talk investing, finance, and retirement. What's going on, my friend? How you doing?   Tony Mauro: I've been doing well. How about you?   Marc: Hanging in there. We are firmly into August already. Man, the year is just like, "Shoo," just flying by. So I hope everybody's doing well. We're on the back half of the year and we wanted to just readdress a little bit more the Big Beautiful Bill conversation. We talked two weeks ago, Tony, about some of the nuance, some of the numbers, things of that nature, but let's talk about who's benefiting and maybe who isn't, just depending on where you're at. And we'll just kind of refresh some of the rules in the conversation as we're moving along. So in your mind as a planner, as someone who helps people with their business, with their personal, not only taxes, but also financial strategies, things of that nature, who do you see benefiting from this passing law?   Tony Mauro: Well, I think there's a little bit for almost everyone in varying degrees. So I hate to say that there's no real losers, I don't think. Some people might benefit more than others, but I think that anybody could take some of this, especially with the tax rates and use it to their advantage for a while. It doesn't matter what your income is, it matters of how much that you can do to save for some things. So while I think it's a good attempt to maybe provide some tax relief all up and down the board, yeah, I mean it depends on who you listen to. High income earners are the winners because the greater tax cuts for businesses and the lower income households are losing way more than they're getting. We don't want to get into all that, but we want to at least hopefully explain a few things about this of how you can win on this.   Marc: And we talked about that a couple of weeks ago. I mean, I think retirees and pre-retirees, certainly with the expanded standard of deduction, see benefit 65 plus, right? So that's a big piece. Some above the line items we talked about for charitable people, that's definitely beneficial. I think married couples that are, I guess middle/upper I guess maybe might be the ones losing out. I think married couples between basically $250,000 of income coming into the house and down. There's quite a few benefits for those folks, right? 250 and up, I think you're not going to see some of that.   Tony Mauro: Not going to see some of that, especially if you're one of those people and you're both W2 and you don't have businesses or rentals or some things like that. And it depends on some of where you live, but there is some things in there that you might be able to take advantage of. Depending on what state you're living in with the whole SALT cap thing, you might be able to itemize where before you could not. But yeah, I think you're right with the things above 10 or 200, some of that stuff's going to phase out and you might feel like, "Well, I didn't get much out of this," but nevertheless, the tax rates are still relatively low. You still can convert Roth IRAs and do some things for retirement and things that will help you.   Marc: Clients with no business or rental exposures. They're going to miss that. A little bit, like you said, some of the lower states with the SALT, but I feel like there's a lot of strategy in here for people. So if you're being proactive, which we hope that you are, what strategic moves should savers be looking at?   Tony Mauro: Well, I think the big one would be, I'm a big Roth guy if you can do it, because way back Congress made a deal, what I call, with the devil, because they allowed these Roths, even though I think it kills them in the end because they can't get any tax on it. But they did set some limits in, but Roth conversions are big because they still allow you to convert from a tax deferred to a Roth, and you can even still do a backdoor Roth. It doesn't matter even what tax bracket you're in. And so even high income owners can start getting that money from the IOU to Uncle Sam to tax-free later on. So I think that's a huge one no matter what bracket you're in, that's the big one. Higher income earners and wealthier people, they did raise the estate and gifting strategies, but you're talking really high net worth up there, so that's not going to affect most of our clients.   Marc: Right. At least they went to an even number, what was it, 13? It was like $13 million 999 before or whatever. Now they made it $15 million, so it's like-   Tony Mauro: $15 million.   Marc: Yeah, thanks for making it simple.   Tony Mauro: And if you think about that, and if you double that, if you're for joint, you've got $30 million roughly before you have to start paying some of those taxes. I can remember in my lifetime when that exemption was like a million dollars and boy, if today it was that low, everybody would be getting snagged with that one.   Marc: Yeah, I mean that's a good thing, right? Because I mean just the home values right now would send most people over. Even I think there was talk about before this even went through of them removing that $13 million down to back down there like six or seven or somewhere in that neighborhood even that would've been easy to hit for a lot of people with some of the housing prices.   Tony Mauro: Especially in these total estates.   Marc: Yeah, so I think again, charitable deduction, charitable contributions being effective there is certainly going to benefit a lot of people. And when it comes to the estate side, you definitely want to make sure you're still talking with your strategist and hopefully an attorney and you're putting those pieces together anyway, because a lot of people just don't even bother. They hear that number and they go, "Oh, well, I'm never going to touch that, so I don't need an estate plan." It's like, well, no, everybody needs an estate plan. It's just a matter of the estate tax conversation.   Tony Mauro: Yeah, and the complexity of it. I believe everybody needs an estate plan and some of the basics. Obviously if you get up there to those numbers, then it's more complex and you really do have to do some planning to avoid those nasty taxes, but it's possible to do it.   Marc: Yeah. Well, what else might trip people up on the new landscape, Tony?   Tony Mauro: Some things would be implementation windows. Check with your advisor. I mean, we're sending out newsletters, so hopefully our clients are reading those about some of these weird start dates, so you don't do something and miss it and be mad that you don't get that particular deduction. There's that. And then I think too, I think you should check with your advisor to see overall, just you're just your tax advisor and/or your tax and or planning advisor, is, "What can I do? How can this help me?" So you don't go out and do something that you shouldn't, so you don't make a mistake.   And I'll give you an example. The car interest deduction, it's basically for lower to middle income people. It does phase out. It would be a mistake to go out and buy a car that doesn't qualify for that. And so that would really make you mad if you went out and bought a new car. Maybe you got yourself into a loan and with the hope of getting the interest deduction, you don't get it.   The other one is too though, with that one, you have to be careful, and maybe this would be more of a planning situation, is don't go out and buy a new car, maybe just for a deduction if you don't need it. Now, that's going against probably what Congress's intent is, but from a planning standpoint, as an advisor, we want you to stay out of debt as much as possible. But if you're in the market for a new car and need it, do it and maybe you can get a tax deduction that lowers the overall cost a little bit. But again, I think the big takeaway there is really check with your advisor before you implement some things. Let's put it this way, before spending money on things.   Marc: Yeah, very true. All right, well let's wrap up the program here, Tony, with just a quick true or false on some of the Big Beautiful Bill myths out there. True or false? Social security is no longer taxed.   Tony Mauro: That is false.   Marc: Okay.   Tony Mauro: They're still subject to the income tax depending on your total income, so that's not true. People are getting that confused with the extra deduction or-   Marc: Yeah, the senior deduction.   Tony Mauro: Yeah, the senior deduction. Yeah.   Marc: Well that's my next one, so that's false. Okay. True or false? The new law means tax cuts for everybody.   Tony Mauro: Yeah, not really because some of it, like the $6,000, I mean really is only for 65 plus and that does phase out if your income is too high. And then the SALT deduction really is going to help mostly people in the higher tax states.   Marc: Yeah, for sure. True or false? The tax brackets are permanent now, so I don't need to worry.   Tony Mauro: That's definitely false. You know nothing is permanent in Washington and it only means they're not set to expire. That doesn't mean the next Congress or president couldn't come in and rewrite everything, so absolutely not.   Marc: Yeah. Okay. The $15 million estate tax exemption means estate tax or estate planning won't really matter to me be

A new tax bill has officially passed (you’ve probably heard it mentioned as the “Big Beautiful Bill”). And while most headlines are focused on politics, we’re focused on what it means for your retirement. The choices you make in the next year or two could have a significant impact on how much you keep and how much goes to Uncle Sam.   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:    Marc: This week on Plan With the Tax Man, let's talk about the Big, Beautiful Bill and what it means for your retirement. We'll stay away from the politics as much as humanly possible and just focus on what it might mean in the choices that you may make in the next couple of years. Let's get into it.   Hey everybody, welcome into the podcast. This is Plan With the Tax Man with Tony Morrow and myself to talk investing, finance and a retirement with Tony, who is Des Moines Professional Alternative at Tax Doctor Inc. He's a CPA, CFP and an EA of 30 years plus in the industry, and a great resource for you to tap into.   And Tony, this week we're going to talk about... It's been a couple of weeks now and we're going to talk about the BBB or the OBBBB as the One Big Beautiful Bill. But you know, it's kind of funny. I think at first when we heard that, I think we thought that was just like the media name, but that's actually the bill's name. I was expecting it to be like OBB753624, some crazy number or whatever. But nope, it's One Big Beautiful Bill. So how you doing, buddy?   Tony: I've been good. Wrapping up the summer and hot here and here, we're getting ready for the state fair. So that's a big thing around here.   Marc: Yeah.   Tony: Yeah. Things are going good.   Marc: Well, good. Well, let's talk about this. Like I said, we'll try to stay off of the political stuff as much as we can. I mean, unfortunately, everything is trying to frame every piece of a conversation with some sort of a slant. And I will say, the only piece I'll say about this is that there's a lot of this helps billionaires and blah, blah, blah. And when you really look at some of the stuff we're going to cover today, it really doesn't. It's actually really kind of low and middle income families who actually get some of this extended stuff, at least a lot of the things that are going to affect most people. Right?   Tony: That's right. Yeah.   Marc: So we'll just dive into it. We'll kind of get started. So first of all, the tax brackets, which is the big piece, have been extended. You and I have been talking about that for a couple months now. When you're talking about planning and strategizing, we were waiting to see would the TCJA, the Tax Cuts and Jobs Act from 2017, expire or would they get extended? Well, they got extended.   Tony: They got extended and they are supposedly... And we have to address this because you're going to hear a lot of stuff in the news and whatnot about this and that tax cut or brackets being now permanent, and hopefully, everybody knows that permanent only means that they just won't expire. But-   Marc: Right. In Washington-   Tony: Congress can change them.   Marc: Yeah. In Washington, permanent is not an actual word I don't think. Yeah.   Tony: It isn't. So I wish they wouldn't throw that around. But from this standpoint right now, they're not going to expire until Congress changes them.   Marc: A future Congress would have to pass a bill, basically.   Tony: Yeah. So you have to do that. But it is good news because now people from all income aspects can kind of plan. Obviously, the higher income is probably more concerned because they can do maybe a little more, but this is going to benefit people because all across the board, we're not going to have to worry about tax rates going up for right now.   Marc: Yeah. The seven brackets, Tony, they're staying the same through at least probably 2028, right?   Tony: At least. Yeah. At least.   Marc: Right. So we got what? 10, 12, 22, 24, 32, 35, and 37. Those are the tax brackets.   Tony: That is correct. Yeah. I always have to look them up now. Because there's so many, and they're constantly adjusting them a little bit for inflation. But I think that as far as how you can take advantage of that any more than you already have is we always try to get our clients to use up the bracket that they're in. It's important that they know what bracket they're in, which is their marginal bracket, because that is the bracket that the last dollar of income that's going to be taxed on. So anything we can do to fill up that bracket-   Marc: Can you explain that a little bit? Because I think people get confused by that, right? So they think, okay, let's say I'm in the 22, and so I'm afraid I'm going to do this or this and I'm going to move to the 24. But when you get moved up a bracket, it doesn't mean every dollar that came in moves to the 24, correct?   Tony: That's correct. Yeah. And a lot of people tend to forget when we'll pull out the brackets and the ranges that this is a progressive tax system. Certain amounts of income are starting out taxed at 10 and then the next is 12 and on and on and on. We talk about marginal bracket because if you're in the... Let's say I spout out, you're in the 22% bracket, that means any more of your income that you bring in that year over a certain amount is going to be taxed at 22%, but the first parts weren't taxed at 22%.   Marc: Correct.   Tony: Just the latest. And so it's really a good tactic for using Roth IRAs or Roth conversions-   Marc: And we'll talk about that yeah, a little bit later too. Yeah. But that's a good piece of that. I mean, overall extending this, from a planner's standpoint, which obviously you're a planner, that's useful. Yeah?   Tony: I think it's useful because now we can go with people and we can, I think with more accuracy, determine what their future taxes are going to be on some of this stuff and how we want them to take advantage of that and invest for retirement. I mean-   Marc: Yeah, for sure.   Tony: On a nation standpoint, well, again, we don't want to get into politics and all that as far as spending and cutting and this and that. But all we can do is take advantage of what they give us regardless of who's in there.   Marc: Yeah, true. And so probably up until '28 we'll have this in place, and some of these pieces that they passed also do have time expirations on them as well, and we'll talk more about that here in just a second. But again, there seems to be a lot of confusion around it. So that's the first big takeaway is that, hey, we are at historically low tax rates. So that's a win for most people. We'll see how it plays out in the long run, but for right now, that's the advantage we can take from it.   The standard deduction was also "made permanent" right, Tony? And honestly, it's pretty hefty. Check this out. I was going to run this past you, see what you thought. If you kind of break this down a little bit, Tony, so it's what? The standard deduction is... Let just find my note here. Where'd it go? Okay, so the standard deduction for a married couple, it's 31,500 base for 2025. That's pretty hefty.   Tony: That's hefty. And a lot of clients, that at least we see, may not be able to have enough itemized deductions to get over that, but at least it is. It's hefty. So you're not being penalized what I would say so much, but it is making it a little bit simpler for some Americans to just take the standard deduction. However, I think what we're going to talk about next will come into play this year where it hasn't come into play and that's the SALT cap because some people might be able to itemize now. But again, it's important to make that distinction.   Marc: Yeah, for sure. Well, I'll tell you what. I'm going to move it around a little bit. Let's talk about the SALT cap after we talk about some of the other deductions that kind of go along with the standard. Okay? So we got the standard deduction. It's 15,750 for a single person, single filer. 31,500 for a married couple.   Now, what they did for a lot of our listening audiences is the whole conversation and the kerfluffle around no tax on Social Security. That didn't happen. They did their bartering and all that stuff and people wanted to get this, and some people wanted to get that. And what they settled on, Tony, was this additional $6,000 per person over the age of 65.   Now, here's where I think people get confused. So the existing law gives you that additional standard deduction of $2,000 per person if you're over 65. Then this new temporary, from 2025 to 2028, senior deduction they're calling it is another 6,000 for single filers or 12,000 for married couples. So if you add these together, the 31,500... Let's say you're a married couple. 31,500 base deduction, the 3,200 age-based existing law deduction for married couples, plus the $12,000 bonus that's temporary through 2028, that's $46,700 of deductions can be pretty hard to itemize.   Tony: It's going to be pretty hard to itemize for seniors. Yes.   Marc: That's pretty great.   Tony: For sure. I mean, that is good.   Marc: 65 and over again, right?   Tony: Yeah, 65 and over. Now, what you got to remember though is that it's not... And I've already started to hear it. They're not eliminating taxes on Social Security.   Marc: Correct.   Tony: You still are paying taxes on your Social Security. It's just that they're extending a deduction. So it's in the ballpark. I mean, your taxes will be cut by whatever tax rate you're in with this deduction. And so-   Marc: It's kind of like a semantic word. It's almost a semantic math problem. Now, there are income limitations on this, we should say. For some people, it is like you're not going to be paying the tax on your Social Security, but not

The 4% rule gets talked about like gospel in retirement planning. But let’s be honest, it’s always been more of a rough guess than a golden rule. Now, its original creator is revising it to 4.7%. So, does that mean your retirement paycheck just got a raise, or is this just another headline that oversimplifies a complex decision?   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:    Marc: The 4% rule gets a makeover. Let's talk this week here on Plan With The Tax Man about the change in the 4% rule by the guy who created it. It's pretty much the gospel in retirement planning, so what does that mean for us? Let's get into it with Tony. Hey everybody, welcome to the podcast. Thanks for hanging out with Tony Mauro and myself as we talk investing, finance, retirement, and the 4% rule getting a makeover is the big topic this week, Tony. I want to dive into this conversation just a little bit, but first, how are you, my friend?   Tony Mauro: I'm doing very good, how are you?   Marc: I'm doing very well. Have you seen this? I'm sure you have-   Tony Mauro: I have seen it.   Marc: About the move to 4.7%. Doesn't have the same ring as the 4% rule, but it's being bumped up to 4.7%. And so I want to talk about this a little bit because this thing really, truly has... The guy who made this, and I'll let you give us a little back story here in a second, I wonder if he thought that this thing was going to be like the golden rule gospel of retirement planning when he made this thing 30 some odd years ago, right?   Tony Mauro: Yeah. Well, I don't know if he did and it's been around for what, since the '90s I believe?   Marc: Yeah, early '90s.   Tony Mauro: Basically what he came out with, and there's been books written about it and everything else, and so it's very popular that what he came out with was retirees should basically, if you're going to live off of the income, you should take out 4% or right around there just for inflation. So for basically over your retirement lifetime, which at then was 20, 30 years, you wouldn't run out of money.   Marc: Yeah, and it was like a 50/50 split too, right? I think it was instead of the 60/40, it was 50/50. And to make it easy, Tony, I guess we can say, look, you got $1 million, and it feels like everybody, even people who aren't in the financial industry have heard of this 4% rule. If you're getting close to retirement, you've probably heard it. And so it's like, okay, you got $1 million, take out 4%, it's $40,000 a year. Nice and easy, right?   Tony Mauro: Right. And then it would continue to grow, you could continue to do that and you wouldn't run out of money.   Marc: That's your safe withdrawal rate, right?   Tony Mauro: Yeah, safe withdrawal rate. Now, in a person's overall financial plan, I like to go against the grain on this a little bit. I think when we talk about this at the distribution stage, I try to get them to buy into the fact that we want to do a hybrid type of take on this. Number one, we want to start out, because I think in today's, depending on their appetite for volatility, I think you can get closer to 5% easy. You have to cut back your bonds a little bit.   Marc: Interesting. Well, and that's kind of what Bill's saying. And by the way, his name was Bill Bingen for folks who were-   Tony Mauro: Yep, Bill Bingen.   Marc: Who are listening. He's saying 4.7%, so you're saying maybe even 5%.   Tony Mauro: I like to suggest 5% and I've been doing it with my own father for years and several others that like that. Now, if their propensity, they don't want to see any of their portfolio when they look at a statement or something and see it bouncing around, I try to get them, "Let's not worry about that, it's going to go up and down." But the income, we can get 5% easy, but I try to get them to buy into the fact, is let's say that we base it on 5%. Yeah, if we have a bad market, let's bump our distribution rate down a little bit to 4% or 4.5%. And if we have a good market, well, then let's bump it up a little bit in that year.   So we kind of get a little more activity, because I think the one thing I don't like about this rule is a lot of people think, "Well, I've got to leave all my money to whomever," and whatnot. I think the number one thing that we need to think about is, the first thing is you need to make sure that the rest of your life is stable and you have enough money. Then if there's money left, you can leave it to heirs. But I think too many of us get wrapped up in, "I don't want to take any money out." And I think it depends again, what you want to do in life, but they kind of shortchange a good retirement when they have money that they could do it with.   Marc: Yeah. Okay, so looking at what Bill has done here, he's changed a couple of things. His 2025 update, Tony, is now 55% stock and 45% on the bond side. So he's kind of acknowledged that over the last couple of years, the bond market has not been so great, so he's kind of peeled that back a little bit, bumped it up to this 4.7%. And I think if people who see this, sometimes I kind of wonder, do they feel like that gives them a green light to, "Hey, I'm getting a raise in retirement?" Maybe, but maybe not.   Because for a long time, Tony, I've been talking with advisors for 10 years now and the 4% rule constantly gets brought up and people would say, "Well, it's really more like the 3.2% rule because we can't really pull that out," because interest rates were terrible. Zero on bonds and stuff for a long time, so it gets confusing for folks. They think, "Is it lower than 4% or is it higher than 4%?" Here, you're saying maybe up to 5%. So is it a green light to spend or is it a green light to say, "Let's rerun some numbers, re-analyze?"   Tony Mauro: I think just like I said, it's a green light to re-analyze year after year and say it depends. It's definitely not an increase just to go spend more, but with bond yields as they've been over the last many years, the whole 50/50 split doesn't work. Even 55/45 is not going to quite get you 4.7%. It might if the stock side is doing okay, but in those years that we might have a down year, it certainly is not going to. I believe that, like I say, if we have a running range and depending on how things went, then that is what you're spending for the following year should be, and then you stick to that and then reassess. Your advisor's going to help you with this, so-   Marc: Hopefully.   Tony Mauro: It's not hard to... Yeah, hopefully. It's not hard to do, but definitely not a green light to just go spend more.   Marc: Well, okay, so here's my thought on this and you tell me, because obviously you've been doing this for 30 plus years and I've just been talking with advisors for 10 years. But I think what sometimes happens, and this doesn't mean the 4% rule is wrong, by the way.   Tony Mauro: Nope.   Marc: I think it's like any rule of thumb, Tony. It's a conversation starting point. We'll go back to that $1 million account, 4% is $40,000 a year. If you're trying to figure out what do you need to pull from your assets to help your shortfall, because you're going to have your social security, maybe a pension, whatever. Do you have $1 million, I guess would be the first question. What kind of account is it? Because you might not have $1 million in it. It might be $1 million, but you may owe Uncle Sam $300,000, so now you got $700,000. Well, 4% on that's what, $28,000 a year? So does that fix your shortfall or does that leave you in the hole? This is where the strategy has come into play versus just a general rule of thumb.   Tony Mauro: It is. And I think like you say, rule of thumb is a starting point. With your advisor every year, you need to be trying to figure that out because it really evolves as you age and what your, of course, needs and wants are.   Marc: Right.   Tony Mauro: And then of course, you may start out in retirement saying, "I'm going to go spend all this money." Health of a spouse, something else gets in the way and then all of a sudden your goals change, and so your plan needs to change, too. So keep in mind, it's a great place to start. We generally will start with that, but we like to plan from there and that's where the advisor is really going to prove their value to you being able to adjust this on the run.   Marc: Well, Tony, what factors matter more than just the percentage you withdraw? I mean, I think that's got to be a question that people ask themselves. What other things matter, like market sequence of return risk? I mean, that's timing, taxes. I mean, these different pieces.   Tony Mauro: Taxes, all that. I mean, how long are you going to live? What type of things you want to do. You got to factor in if you've got a spouse or significant other, what you want to do there. It also factors in, is how much if any, do you want to leave heirs? Maybe they're taken care of and that's not even an issue for you. For somebody else, that's goal number one. All of that needs to be factored in, so we have to allow for adjustments in that, all while providing you the retirement that you want. It's not all just about leaving it. One thing I notice with a lot of clients, my father included, is as we age, we've talked about this before, I think, is people don't want to spend any money. And I'm not saying run out and just blow all of your money.   Marc: Right, but enjoy it.   Tony Mauro: Yeah. And if we've planned and we try to hold them to it, because ask them a lot of questions. And we put it in the plan as, "Here's what you told us that you wanted to do, are you really doing that? I mean, are you really doing the part-time job you always wanted to do or starting that foreign language that you always wanted to do? And if not, why?" I mean, maybe your plans

Target-date funds just passed $4 trillion in assets. They’re now the default investment in many 401(k)s, and millions of Americans are using them without really understanding how they work. So, are they a smart choice… or just the easiest one?   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:    Marc: Target-date funds just passed $4 trillion in assets. They're now the default investment in many 401Ks for millions of Americans, who are using them without really understanding how they work. So this week on Plan With The Tax Man, let's talk target-date funds.   Hey, everybody. Welcome to the podcast with Tony Mauro and myself as we talk investing, finance and retirement. Of course, Tony is the Tax Man, and if you've got questions or concerns or need some help when it comes to today's topic, or any other, make sure you're talking with a qualified professional like Tony and his team at Tax Doctor Inc. You can find them online at yourplanningpros.com. That's yourplanningpros.com. Tony's got 30 plus years of experience as a CPA, CFP, and an EA, so a great resource for you to tap into.   Tony, my friend. What's going on buddy? How are you?   Tony Mauro: I'm well. Enjoying the summer so far, and as we're recording, that's getting closer to the July 4th holiday, so things are good.   Marc: That's true.We'll drop this one this week about two weeks early, and then we'll drop another one, probably right around there.   So what do you think about that? 4 trillion bucks, man, in target-date funds? That's a lot of dough.   Tony Mauro: That's a lot of money. It seems that clients are starting to ask about them more. Basically, what is it? Do you think it's a good idea?   Which is why I wanted to talk about it a little bit just to shed some light on all this.   Marc: Because the question is, Tony, is it the smart choice or is it the easy choice?   So they were created for that purpose, to be easy, I think. I think that's part of it because... Well, we give some back history here, just a little teeny bit. Again, according to Morningstar, hit $4 trillion in assets. In fact, it says eight out of every 10 Vanguard 401k investors hold one today. So start at the beginning a little bit. What exactly is a target-date fund? Give us just a quick breakdown.   Tony Mauro: It's as the name implies, is basically they set a date, and they have all these different funds. So for example, if you're 50 years old, and they have a fund that they put a date on it, so 15 years from now they'll call it the 2040 fund, and then the '45 and on and on and on.   Marc: Which we're used to seeing, right?   Tony Mauro: That's what you see. And really what they're designed to do, is based on your age, they basically take a portfolio growth-oriented as you're younger, if you've got a lot of time left, and then as you age, it becomes more and more conservative, and shifts on its own to more and more conservative funds. With the theory that is that as you get closer to retirement, you want to take less risk, and you want to make sure that a down little blip in the market two to five years is not going to kill you as far as that goes.   So, it makes it really appealing to a lot of investors with this whole thing. Talk about set it and forget it. This fund is that exactly.   Marc: It's definitely that. So they call it the glide path, so it's designed. But I think there's some misnomers in there. So part of that, but based on what you were just saying, sometimes people say... Okay, well let's just go with an easy number here, Tony. We'll just say the 2050 fund. So it's 25 years from now, so I've got 25 years before I'm going to retire. I'm set to retire in 2050. So that'll work great, I'll just do that. Again, if you're doing nothing, I think these target-date funds can be cool, but some of the downside is that risk tolerance you were just talking about.   First of all, they don't go all the way down to zero. So I think some people feel like there's this, "Oh, well, if they're reducing my risk as I get closer to my target-date, I'll be really, really no risk by the time I get there."   And that's not usually the case. Usually, what? It's about 50/50 I think is about where they stop at.   Tony Mauro: That's usually what it is, what I see, even in the most conservative, say the last two to five years. And I do think people, because they're marketed as the set it and forget it, they don't really look at some of that stuff.   So, while they offer the simplicity and the chance to rebalance, I don't think they're all the same. And I think this is where, rather than... It's better than doing absolutely nothing. Let's get that on the table. But if you're going to use one of those, as many people do, I think you should work with your advisor to make sure that this is something you really want. You need to look at the fee structure you need to look at...   Marc: That's another great point.   Tony Mauro: ... The asset mix as you get a little closer to retirement, is that maybe it's too conservative? Maybe it's too aggressive.   To me, with our clients, I like to have a little bit more, I don't want to say control, but yet...   Marc: Well, that's what it is though, right? Well, so all right, so you're thinking about... You just mentioned...   Okay, a couple of positives, let's do that. So it's very easy if finance isn't your thing, you just want to pick something, and so you can roll, and that way you're putting in your 401k at work, and you're getting the match, and blah, blah, blah, and you're earning something for retirement, great. Okay, very easy. Good to do.   The auto rebalancing, again, another benefit. So that makes it easy. You don't have to worry about that too much, because they auto due, but you just mentioned the fees. These are managed and so they come with fees, correct? Higher fees, sometimes.   Tony Mauro: Sometimes they come with higher fees, because based on how the fund is structured, and what their fund is supposed to do, they may be moving in and out of securities more often than not.   And I think the other thing, too, is a lot of people don't really look at how long the fund's been around some of the maybe longer-term performance. Just even as the managers, because you certainly don't want to buy a real laggard=type of target-date fund if they don't have a good record as managers. But most of them are going to be okay to a little above average.   But the point is to take a look and delve into some of this stuff, because it's something you got to watch out for.   Marc: Definitely.So you've got the fee structures conversation, does it actually fit your needs? So I think that's part of it.   So let me rephrase it this way, Tony, you've been doing this for 30 plus years as I mentioned earlier, I think if you're a younger person, if you're in your twenties, thirties, maybe even your forties, and you've taken a new role, new gig someplace, and you're setting up the account, and as I mentioned, more and more companies now are automatically... You have to check to opt out of a target-date fund. So check that whenever you're setting up with HR and all that stuff.   I think they can be useful. You're getting it going. You're busy, you've picked the target-date fund for the year that you're going to turn 65, but I think as you get closer, and you mentioned this a minute ago about your clients, I think once we get to 50 plus, maybe there's better options out there for us to be looking at doing it. Is that fair?   Tony Mauro: I think that's fair. And I think it's especially prevalent, and we have cases like this all the time. If a person is maybe behind, in other words, we do a plan, and we figure out where they want to be and figure out that they don't have enough to get to that goal, we may need to change up some things, assuming the risk tolerance and everything else aligns with that. And the target-date fund wouldn't be a fit for that at all. We wouldn't be able to get to where we're going.   But in all of our meetings, as we're setting up the investments part, we do talk about target funds. And I don't mind using them for a small portion of the portfolio to start, just as a little bit of a buffer as the set it and forget it part. So there is a fit. So I'm not come off totally against them,   But I think in most cases, especially above 50, especially when you get to the distribution stage, we certainly don't want to leave our money in the target-date funds, because most of the time you're looking for as much yield as you can get for that income distribution. So I think they have their fit.   I think too many people are just like you say, just saying, "You know what? I don't know anything about any of this. I'm just going to throw my money in that."   That's not a bad option. I think the better option is to talk to somebody and to work with your advisor to see if that is the best fit for you and diversify even more.   Marc: And I had just seen not long ago, and I was trying to find it so that I could cite the place that it came from, but it said over the last five years that more and more target-date funds are automatically shifting to a higher aggressive stance to begin with. Probably because the market had been doing well, plus with the bond trouble that bonds had been experiencing for a couple of years.   So again, to your point about allocation, and about risk tolerance, and all that stuff, that's where some of the misnomer comes in. People feel like, okay, this is going to be probably a fairly safe bet. It's going to be a 60/40, it's going to stay that way, 60/40 split's going to stay that way. And then as I get closer to retirement, it's going to drop down to 70/30, 70 being safer. And that's just not always the case.   So you really want to talk with

A little hope is good for the soul, but when it comes to retirement planning, wishful thinking can lead to serious financial mistakes. Today, we’re walking through five common examples of wishful thinking that can quietly damage your retirement and how you can build a plan that protects your future instead of relying on luck.   Important Links: Website: http://www.yourplanningpros.com Call: 844-707-7381   ----more---- Transcript:    Marc: A little hope is good for the soul, but when it comes to retirement planning, wishful thinking can lead to some serious financial mistakes. So we want to talk about a few ways wishful thinking could possibly damage our retirement this week on Plan with the Taxman.   What's going on, everybody? Welcome into the podcast. Thanks for hanging out with Tony Mauro and myself as we talk invest and finance in retirement. Tony is a CPA, CFP, and an EA with 30-plus years of experience, and he is the Tax Doctor at Tax Doctor Inc., serving you all around the, well, Iowa and other areas as well. He's got clients all over the place. But we appreciate your time here on the podcast. And this week, we got a few wishful ways that, wishful thinking ways, I guess, that maybe could damage us, Tony. And there's nothing wrong with being optimistic and hopeful. Well, that's all good stuff. But you want to not kind of carry that so far, I guess, that it clouds your judgment and costs you in the end, right?   Tony Mauro: That's right.   Marc: Yeah.   Tony Mauro: Some of these topics are some we hear all the time.   Marc: All the time? Well, we'll try to tackle some of the biggest ones for you.   Tony Mauro: Yeah.   Marc: You doing all right this week?   Tony Mauro: I'm doing good. Yeah. I mean, we're getting ready to spend a little more time outside, although the weather here is cool.   Marc: I think it's cool across the country, actually, a little bit.   Tony Mauro: Yeah.   Marc: In some places.   Tony Mauro: A lot of rain and stuff.   Marc: Yeah.   Tony Mauro: Hoping for something warmer.   Marc: Yeah. Yeah, for sure. Well, that's wishful thinking, right?   Tony Mauro: That's wishful thinking on my part. Yep.   Marc: Well, let's get into a couple of these and talk about it. We got to go with a standard classic, really, financial myth, I think, and that's the wishful thinking thought of, "I'll be in a lower tax bracket once I retire, so that's going to help me out from my cost savings standpoint," or whatever. And Tony, I've been talking with you for years and lots of other financial professionals, and they all tell me the same thing, that more times than not, people are in the same tax bracket when they retire, not a lower one. What's your thoughts?   Tony Mauro: That's correct. Yeah, we find that too. It's the same or sometimes even higher depending on what they have coming in and how that is going to be taxed. And I mean, the traditional thinking is that, "Hey, my expenses are going to go way down, my income is going to go way down, and so therefore my bracket will go way down." But a lot has changed even with the brackets. There's not as big of a spread in each one, so they don't go down by that much. But a lot of times, people that have definitely planned and saved and are bringing in money, passive income from retirement sources, that a lot of times is the same or higher income than when they were working, which is a great thing, but they don't drop tax brackets, so we got to be very efficient about taking it out.   Marc: Yeah. Okay. And that's the point. So it's the income strategy, where you're pulling it from and at what time, that's going to kind of dictate this a little bit, right?   Tony Mauro: Yes.   Marc: So that's when you start getting into the, which horse are you riding? The Social Security horse or your own, the 401(k)'s over here that you have or what on pulling out the income gap, kind of shoring up that income gap. Because they don't just, getting to Medicare, when you're 65, they give you Medicare. It'd be cool if they said, "Hey, you're 65. You're automatically in a lower tax bracket." But you don't get it as a retirement bonus. So if you want to be in a lower bracket, you have to strategize for it.   Tony Mauro: You got to strategize, and you got to pull money out of the right buckets at the right time which I think is where a planner, if you're working with one, is going to really help you in that regard besides just trying to get the most return for whatever you're doing, whether you're taking some of the principal or just interest or whatever.   Marc: What's the culprit that keeps us in that tax bracket the same? Is it typically the RMD withdrawals?   Tony Mauro: I find it's the RMD withdrawals and then other income. People will go back and work a little bit. And then what they don't realize is that sneaky Social Security being taxed is that they bring in this income from other sources. And oh, by the way, now all of a sudden, a lot of my Social Security is taxed, and they weren't ready for that. They thought they were going down in income, which they are a little bit, but then that Social Security creeps back in for taxation purposes, and it screws up a lot. I just saw a lot of it this year. We had a lot of retirees that went out and had RMDs, and then they were also, a lot of them went back to work. You could look at their comparisons on their tax returns, and last year, hardly any of their Social Security was taxable. This year it was the full max, 85% of it, and all of a-   Marc: Because of the income pullout.   Tony Mauro: Yeah. Because of the income pullout.   Marc: Yeah.   Tony Mauro: And so you got to watch that. And you can plan some of that away a little bit, but that's the culprit that I saw this year with the Social Security.   Marc: And that's where, again, some of that strategy comes in. And then when you do bump that income up higher, also with the Social Security, that then also affects the IRMAA conversation, right, the IRMAA penalty.   Tony Mauro: Yeah. Yeah, it affects that. And then that obviously affects the tax bracket. And it's very sneaky because the clients, like I say, none of them realize that about the Social Security.   Marc: Well, you kind of mentioned it, so we won't dive into it, but another one that was on my list was I'll spend less money when I retire because I'm no longer going to work and stuff. But I mean, you kind of touched on that. I think I sum it up all the time with the way my dad said it to me many, many years ago, which I've shared on this podcast before. And he was like, "Hey, retirement's great. I'm digging it. Every day's a weekend." I was like, "Awesome." He's like, "Yeah, but I spend all the money on the weekends." Right?   Tony Mauro: Yeah. That's right. Yep.   Marc: So you just got to be careful. Right?   Tony Mauro: That's a good saying. Yeah, I like that.   Marc: Yeah. And he, unfortunately, passed away, wasn't retired for very long. But it's always stuck with me because I was 15 or 16, something like that. I was like, "Okay, well, every day in retirement's a weekend, and you spend a lot of money on weekends, so be careful." So don't assume that that's, and again, wishful thinking, being well, like this next one, "Well, as long as I keep getting this good return, Tony, that I've had for the last, let's say 10 years, then my plan will work." Well, that's wishful thinking. I mean, as we saw this year, obviously, we had a new administration, we had the tariffs come in, made things pretty rocky. Now it's smoothed out there. We're almost back to all-time highs, but still, don't go into things with the assumption that every single year the market's going to give you 20% returns or 12% returns or whatever.   Tony Mauro: Yeah. And I think most retirees shouldn't be looking at that like that anyway, because it's time to be more conservative. And if you're banking on that, and we have a prolonged, we haven't had a lot of it in the last, what, prolonged 15 years?   Marc: 17 years?   Tony Mauro: Yeah, 15 years. Yeah. We've had little blips, yes, and some months of-   Marc: I mean big blips, but they didn't last long, right?   Tony Mauro: No, it didn't last long. And if you're not prepared for that or worse, you're not diversified, and you've got a lot of stuff, meaning your retirement income or not income, but your nest egg in something a little more aggressive, and that particular sector has a bad three to five years, that's going to blow that whole thing right up. You won't be just fine.   Marc: Yeah. And so the wishful thinking, again, being, "As long as this and this and this happen, I'm good." Right?   Tony Mauro: You're right.   Marc: Well, you can't control this and this and this, so get a good strategy to hopefully retire in any economy. And maybe what you were talking about there a little bit, right, is sequence of risk return, right? Or sequence of return risk. Because if you literally retired in the down market, and it lasted for a couple years, obviously those accounts are going smaller, and you're pulling money out. That's what you're talking about, right?   Tony Mauro: That's what I'm talking about. As I always preach to people, I can't control what the market does. Nobody can. All we can do is make sure we're invested in the right things that, over time and depending on what your plan is, that's going to get you to where you need to go. But I definitely would not, say somebody comes in and says that to me, it's like, "Whoa, we got to change your thinking real fast here because that's going to get you into some trouble."   Marc: Yeah. Yeah, for sure. All right, so let's see. What else have we got on this list? Well, okay, let's piggyback off of that one. "Well, if things go south, I'll just keep working." The wishful thin