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Step 1 The Retirement Success Process: Investment and Risk Management

foreign welcome back to the retired life income show I'' m Mark Elliott right here with the chief executive officer as well as founder of Oak Harvest Money group we'' re speaking concerning the retirement success strategy once it'' s in area it'' s refrained it ' s not finished it ' s always transforming and advancing with you and your life so it'' s really crucial to obtain this in position to have a plan give you much more confidence and as well as be a lot more comfortable in retirement with perhaps with any luck not so much stress and anxiety concerning where you are once more that number is 800-822-6434 to discover more 800-822-6434 Troy'' s damaging down what is specifically the retired life success plan so it starts with the financial investment strategy after that it'' s the earnings plan after that it'' s a tax obligation strategy then it ' s a health insurance and after that it is the estate plan so I intend to type of connection together why that sequence is is essential just quickly however if you don'' t understand if you wear ' t have a correct danger management framework in position certainly you open the potential for losses past your readiness to persevere now it'' s not just stay the training course with the Investments it ' s remain the training course with your retired life success strategy with your monetary strategy so we need to Define what those guard rails are initially this is the procedure of recognizing where your threat restrictions are so if you think of you'' re decreasing a highway as well as certainly you have guard rails on each side and if you go off the highway those guard rails exist to protect you from going into the opposing Direction on the freeway currently in retirement when we'' re discussing handling threat when we can recognize these psychological guardrails so are you going to see as well as I as well as I'' d like to Define threat in terms of bucks not percents and I'' ll inform you why soon but'allow ' s say you have a million bucks saved for retired life if all that money is in your 401k most importantly we have to realize that it'' s not truly a million dollars because every dollar in there is tax obligation deferred so we have to comprehend we'' re mosting likely to resolve that as part of this procedure however when we chat regarding risk we need to comprehend that not every one of those dollars are yours you have a junior companion on that account we want to maintain them a younger companion we wear'' t want Uncle Sam to come to be an elderly partner or a bulk share proprietor of your retirement account but simply recognizing that that not every one of that money is your own that you do have a jr companion in that account it connects right into this threat monitoring conversation a bit so when we talk regarding risk in terms of bucks are you happy to see your account go down 2 hundred thousand just an inquiry might be of course might be no it doesn'' t there is no right or incorrect answer however by asking these concerns we can begin to Define where your psychological guard rails are because the leading thing that you can do when it comes to spoiling a monetary strategy or a retirement is to have even more dangers so your accounts decrease greater than you can psychologically endure psychologically stand up to and afterwards you market get out being in cash for 2 or three years miss out on the rebound and currently you'' re you ' re in a you recognize you ' re in a bad negative negative spot'I can ' t inform you I mean we ' ve been with this a lot of times with customers and discussions regarding you recognize Troy I ' ve been seeing the information I believe we'' re going right into recession we require to leave the marketplace we require to do this or my accounts are down 10 or 20 or when covid hit we there'' s a prepare for for a correct strategy accounts for the marketplaces being down 20 or 30 percent so when we talk about risk administration as well as we'' re asking you these inquiries the reason that is since we'' re already preparing for recessions we'' re preparation for possible Market crashes this belongs to life all right we can not prevent these points unless we entirely stay in cash and if that'' s the instance you may too hide the cash in the backyard and just spend whatever you can and wish you don'' t run out and also eat rice as well as beans for for for retirement and that'' s not how the majority of our clients that ' s not how a lot of you desire to spend you understand after functioning for a whole job you wish to spend your life so are you fine with a 200 000 decrease by the way which is 20 as well as the reason I Specify it in regards to dollars is due to the fact that a long period of time ago I had actually a customer been available in well it was a potential client at the time and like the majority of economic consultants we would talk regarding it in regards to percentages and and we claimed are you fine with a 10 or 20 decrease he said you recognize what 20 is quite much my Max as well as he had around a million bucks so after that I I simply took place to place it in regards to bucks and also I stated okay so if your accounts go down 2 hundred thousand dollars you'' re alright with that and he said he claimed no Troy he said I would certainly fire you on the area therefore that you know for me it linked a Huge Dot It was type of a large development in my occupation when I was more youthful due to the fact that I understood I'' m an economic individual I do this each and every single day I believe in regards to percentages as well as stats and as well as yet the majority of people believe in terms of bucks so when we ask you that question you state yes I'' m all right with a 200 000 or 100 000 or perhaps it'' s not also near that or possibly it'' s much much much extra what that does for us is it helps to Define what sort of profile we require to create so emotionally there'' s a tiny possibility that it is mosting likely to hit your your disadvantage guard ramp and if we can go via retired life and never hit that disadvantage guard rail well there'' s an excellent opportunity from our experience that you'' re mosting likely to persevere you'' re mosting likely to stick with your plan and also if you can stick to your plan you have a much higher possibility of success in retirement this is why we call it the retired life success procedure this is why we call it a retired life success plan this is what we wish to supply to you so currently I claimed I wished to chat a bit about the series and why threat management in investment preparation precedes if we don'' t and in the majority of straightforward terms if if your money allow'' s claim you have a million bucks as well as you never ever needed to take anything out if you average four percent versus nine percent at greater prices of return you clearly can expect your accounts to expand to a bigger worth that indicates the income preparation is influenced that additionally means that currently your tax planning is influenced so we can'' t construct a revenue strategy or a tax obligation plan without initial understanding an approximated affordable expected return for a mix of Stocks inside a profile so step one needs to be this risk administration discussion which after that can lead us to the investment construction of your profile which after that gives us a pretty excellent suggestion of expected return benefit drawback discrepancy so we can now begin chatting regarding income planning we can actually project as well as do a sensitivity evaluation on tax planning based on various account levels allow me break that down for you before we enter into the tax preparation section later on the program if you have a million bucks in your IRA you are compelled to start taking a certain portion out it'' s around four percent at age 72 yet as you obtain to be 74 76 77 you'' re called for to distribute a larger as well as larger portion so if your million expands to 1.5 you take allow'' s claim four percent of that out that'' s a that ' s a number that is less than if your IRA expands to 2 million so the extra hostile your profile is or the higher expected return the more we need to prepare for that call for minimum circulation being a bigger number that rmd is the amount you'' re forced to obtain as well as pay taxes on we'' ve seen customers'I I ' d like to expression this for prospective clients since we resolve this with you as a client this belongs to the retirement success procedure and the retirement success strategy yet so usually when somebody comes in below and also they'' ve done a respectable job conserving they have eight hundred thousand they have a million they have two or three million when we start to do this analysis if you put on'' t address this tax obligation problem and it is a tax obligation problem it can be you know a tax obligation headache for a lot of you those rmds when we get out to be 75 and also 77 or 78 a hundred thousand hundred and also fifty thousand two hundred thousand now you'' re taking that cash out you'' re possibly not spending that much in addition to Social Protection in addition to any rental revenue or realty revenue or pension or returns or passion or any type of other earnings that you have beyond your pension and also we'' ve seen lots of people remain in a much greater tax obligation brace and also have much even more revenue in their 80s than they ever had throughout their whole life up to that point and also it'' s due to an absence of intending so that'' s what we ' re attempting to be successful of so we need to recognize the risk structure of our profile and exactly how we handle that threat so we can maintain you on training course we can keep you on timetable with your plan that after that gives us a suggestion of a range of expected returns based on fundamental monetary preparation Principles from there we can create that income strategy as well as earnings is not just Social Safety it'' s not simply just how much to secure wear'' t obtain me started on the 4 percent regulation however it is additionally where accounts as well as after that we enter the taxes so if you wear'' t have a retirement success strategy give us a phone call 1-800-822-6434 we ' re going to walk you with this process if you come to be a customer you will have this strategy in position that deals with risk Investments taxes income in addition to the remainder of the retired life success strategy 1-800-822-6434 Oak Harvest Financial Group examine out the site check out the YouTube network Oak Harvest Financial Team so we'' re discussing the retirement success plan Troy still obtained a great deal to reach remain with us we'' re back in one minute investment advising solutions offered with Oak Harvest Financial Team LLC Oak Harbor'' s Financial Group is an independent Financial Solutions company that assists individuals create retirement approaches using a range of insurance policy and financial investment products investing includes risk including the loss of principal any recommendations to security advantages or lifetime earnings generally refer to fixed Insurance policy products never ever Stocks or investment items insurance and also annuity product assurances are backed by the financial toughness and claims paying ability of the releasing insurer Oak Harbor'' s Financial Group LLC is not allowed to supply a No declaration made throughout this show will make up tax obligation or lawful guidance you should speak with a certified expert before making any type of decisions regarding your individual situation we are not associated with the United States federal government or any type of governmental company this radio program is a paid positioning international [Music]

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Retire Rich: 2023 Ultimate Planning Guide (Step-by-Step)

– What's going on you guys. Welcome back to the channel. So in this video today, we're gonna be going over a ultimate guide to retirement planning in 2021. You already know I got my seltzer here. I gonna go ahead and
crack this bad boy open. And we're gonna get this
video started shortly. So at the end of the day, most
people do not want to spend the rest of their life working. And since your expenses don't
just magically disappear, when you turn 60 or 65 or
whatever that retirement age is you have to do things in order
to plan for your retirement. And so in this video, I'm
gonna go through exactly what you need to know to
start off this process of planning for retirement. This is going to include a
number of different topics. We're gonna talk about, how to tell when you can retire based on your level of income. We're gonna cover three primary ways that people derive
income during retirement, when to start saving for retirement, which is as soon as possible obviously, where to save for retirement? And we're also going to cover, how to make your retirement money last? Now real quick here, guys I just want to say thank
you to today's video sponsor which is T-Mobile.

We're gonna talk about
that more later on guys but I just wanna mention
here that T-Mobile offers their Essentials Unlimited 55 and up plan which is going to be
offering unlimited talk, text and data on two lines
at just $27.50 per line. It is a great option for people who are approaching retirement
age, who are looking to minimize those monthly recurring expenses. Compared to Verizon and AT&T
you can often save around 50% with T-Mobile. Not to mention guys, T-Mobile is the only wireless
company that offers a discount on the 55 and up plans regardless of what state you live in. Other companies like Verizon and AT&T only offer those discounted
plans in Florida. So you may wanna check that out. In addition, if you're thinking
about upgrading your phone and getting the latest 5G technology, 5G is included at no
extra cost with this plan. But more on that later. Now I'm definitely not looking
to waste your time here with this video guys. So I wanna go ahead and
identify who this video is for.

Well, mainly this video is geared towards people who are
approaching retirement age. You're probably not ready to retire but it's something that's on the horizon in the next 5 to 10 years. And you're wondering what things should you be aware of right now, and how can you get your ducks in a row for when you do approach
that retirement age. This video is also helpful
for those who are just looking to prepare for
retirement early on.

Even if you're in your
20s like me or your 30s, there's things you can start doing today that are gonna be relatively painless. And trust me, you're gonna
thank yourself later, when you have a lot of money set aside for your golden years. Now, many hours of research
did go into this video. So I just have three small
favors to ask you here, guys. First of all, if you are sitting there and watching this on your computer, go ahead and put your phone on silence and put it away for a little bit, because you wanna focus
all of your attention on this video, and not be distracted with all those social media apps, you can go back to those shortly. Also guys, make sure you pause the video and grab a pen and paper.

And if you need one, go ahead
and grab a beverage as well. We are gonna be here for a little bit but I promise to you that I'm gonna answer probably
every question you have about retirement planning in this video. So you're not gonna have to jump to like 10 different videos to get all
of your questions answered. Lastly guys, if you enjoy this video just go ahead and drop a like, it shows me that this
information was helpful and I'm not asking you
to like the video now but at some point, if you're
watching it and you say, "Hey, this was pretty helpful." That little thumbs up button
certainly does help out. Lastly, a few quick disclaimers
I have to make here.

I am not a financial advisor. This is not financial advice. You need to do your own research before investing in anything out there. Don't do what some guy on the
internet just tells you to do. I'm not here to sell you any products. I'm not selling any courses
or anything like that. And lastly, I have been
getting a lot of scam comments down below where people
are impersonating me. They're trying to get
people to send money. That is not me. I wanna put up two comments
on the screen here. This is a comment that's from me. And you can see the check mark and the different way that it looks versus this scam comment that
doesn't have those things. So if you're communicating with
someone down in the comments and it's me, make sure I
have that check mark in place otherwise you better
bet that is a scammer, and they're trying to take your money.

Hopefully YouTube does a
better job at policing this but for the time being, it
is utterly out of control. And I don't really know what else to do other than make this disclaimer
in every single video. That being said, guys,
let's get right into it and start off with when can you retire? And to be honest with you guys,
it's a pretty simple answer but the way of figuring this out is a little bit more complicated and we're going to cover that later.

But the truth is when
you're able to retire is when you no longer need
to rely on active income to pay for your expenses. So most people out there have a mortgage, they have car payments, they have different monthly expenses. And so in order to retire, you have to make sure that all
of those expenses added up, and even those unforeseen
expenses that you can plan for. Well, your level of income derived from your different investments needs to be enough to
cover those expenses. Otherwise you may have to go out there and get a different job to supplement your retirement income. And so for most people that may not be the ideal retirement scenario. So short answer here, guys, you can retire when your passive investment
income exceeds your expenses, but the longer answer is there's a calculation we're
gonna use to figure this out, that we'll discuss later in the video.

So next up, what are your different
options for retirement income? Well, this pretty much comes down to anything out there that
can make you money, but there's pretty much three main areas where people derive retirement income. The first one is your personal savings and your personal investments. So maybe you're somebody
who's worked a job for your entire life and you've been slowly
contributing to that 401(k). And then maybe you also
have some IRA accounts. Maybe you have a Roth
IRA or a traditional IRA.

And then beyond that, you might have a nest
egg with your savings. Maybe you have the taxable
brokerage account as well. And the goal is for
eventually all these things to be able to provide income for you to not have to work in
order to pay for your bills. Now, the second area
where people derive income for retirement is social security. However, we've certainly
heard a lot about this in recent years, and I don't
think it's such a safe thing especially for young people
to be reliant on that in the future because
social security is kind of in shambles right now
where we don't know how long it's going to last. However, if you are
approaching retirement age, that may be something you can count on for the time being is deriving income from social security. However, social security
alone, 90% of the time is not going to be enough
money to pay for your expenses unless you're living in like the smallest apartment in your entire city and you pinch every penny. And at least for me that's not my idea of a good retirement.

And just a couple of statistics I wanna share with you guys
here about social security, 40% of those who are 60
and above are 100% reliant on social security as a means of income. And so, like we said, here,
there's three different ways people typically derive income, but most people are just fully
reliant on social security which is something to be worried about. And if you're a younger
person watching this video, you don't want to put
yourself in that situation. Another surprising statistic here is that the social security trust fund based on the current rates is likely going to run out around 2035.

Now, are they gonna let
it run out entirely? Probably not. What they're gonna do is probably decrease payouts over time, which means that those who are reliant on that as income are gonna start making less and less money if they have to decrease those payouts. So that is why you really
don't wanna be in the situation where your reliant on this
social security income as a means to sustain yourself. And then lastly, the third source of retirement income for most people that's becoming less and less common is something called a pension.

Now pensions vary from company to company. In the past, it was
typically a percentage of your highest earning year
basically paid to you in perpetuity until you are passed away. But what they found is that these things are not very
profitable for companies. And it's very rare to
find any companies today that still offer this pension. But if you're an older
person watching this nearing retirement age, you may still have a pension plan to derive income during retirement.

So your best case scenario
here for retirement is that you're deriving income from these three different sources. Number one, personal savings
and personal investments. Number two, social security,
number three, your pension. That's like the perfect
scenario for retirement. However, unfortunately
only about 6.8% of people over age 60 are deriving retirement income from all three of those sources. So the vast majority of people
probably don't have pensions and some unfortunately don't
have any personal savings or personal investments. So that's the big picture right now. And that's why it's very
important to have your ducks in a row and start thinking
about this early on and planning that way. You can try to have a a
three-legged stool here where you're able to derive
income from multiple sources.

You don't want to be fully reliant on social security or fully
reliant on pension income or personal investments, personal savings. You wanna have different
things that are able to generate income for you
that way you're diversified. Because basically people
who are deriving income from one source are balancing
on a one-legged stool. It's not very stable. You wanna have multiple legs
to that stool, ideally three. And of course in that personal investments and personal savings
category, there's a lot of different things that
fit under this category. For most people, it's stocks and bonds but a lot of people also invest in things like real
estate or precious metals. And there's a lot of people who literally will
just put all their money in real estate, build up, you know a portfolio of 30 or 40 units. And then they live off of
that rental income cashflow. So there's many different
ways to skin a cat here, guys but just understand that
your goal here should be to derive money from
multiple different sources and have three legs to that stool. So next up here, guys, let's
answer the question of, when should you start
saving for retirement? Well, short answer as
soon as humanly possible.

Now, what I mean by this is when you're younger and
your expenses are lower. Let's say you're in
your 20s and early 30s. Maybe you don't have kids yet. Maybe you're still
living with your parents. This is your prime opportunity
to put as much money as you can into your 401(k), maxing out Roth IRA contributions, and basically holding onto
as much money as you can and putting it in
something that grows value. Because the main factor in how much money you have in retirement isn't based on how much
money that you invest.

It's how much time you
allow that money to grow. So even if you're in your
20s or 30s watching this, and you're thinking, "I don't really have a ton that I could set aside right now." It doesn't matter how much you put aside, the main factor is the amount of time that you allow that money to grow. So just for an example here, guys if you're looking to have $1
million in your retirement let's say your 401(k) for example you could invest just $300 per
month, over a 40 year period earning the average return
from the stock market. Or if you wanted to do it in 20 years, you would have to invest $1,750 per month. That's almost six times
more money to get you to the same result. So you can either invest
a smaller amount of money for a much longer time or you're going to have
to invest a lot of money for a shorter window of time. So the sooner you start,
the better off you are. And I highly encourage you to check out a compound interest calculator and play around with some of those numbers if you are a young person
watching this video.

If you're already close to retirement age and you didn't do these
things, don't worry. I still have more options for you that we're going
to discuss in a little bit. And again, it's important
to understand that truly it's never too late to start saving and investing for retirement. So even if you are in your
50 and you have no assets, you should still do something. You know, doing something is
better than doing nothing. It's gonna be a lot harder because you don't have that much
time to let your money grow, but it's never too late.

It's just important to
understand the sooner you start the better off you are. So now, let's talk about where you should be saving
money for retirement. And there's a pretty simple
process to follow here that most financial experts agree on and I'm going to teach
it to you right now. So the very first thing you should do before investing your
money in the stock market and opening up different
investment accounts is to set up an emergency fund. And this is just simply a liquid account. It sits there in a online savings account or a savings account at your bank or maybe a certificate of deposit. And so what you want
here is a rainy day fund. So what most experts
recommend is setting aside three to six months of
all of your expenses. So what you wanna do is sit
down on a piece of paper write down every one of your expenses, your car payment, your mortgage,
groceries, utility bills and come up with that figure. Let's say for most people maybe it's $3,000 per month
is their monthly expenses.

Well, I would encourage you to save up six times that expense
in a liquid emergency fund. So your very first step is to have let's say anywhere from
10,000 to $20,000 parked in a savings account
where it just sits there in case of emergency. And then you're not going
to invest that money. You just leave it sitting there. And if you end up taking
money out for an emergency like a car repair or a medical expense, you replenish that fund and
you keep that amount there. And of course, if your monthly expenses
are going up over time, you're going to want to
adjust your emergency fund accordingly to make sure you
keep enough money in there. So that's your very first
step is, begin saving up money for an emergency fund and
aim have three to six months of expenses sitting in a liquid account. The very next thing you should do after you have your emergency fund in place is to take advantage of any employer match with the 401(k).

So if you're not familiar, the 401(k) is an employer
sponsored retirement plan which allows you to take money pre-tax and put it away for retirement. And it also gives you
a pretty nice write-off on your tax return, which is
something else to consider. Now, I don't recommend
putting all of your money into the 401(k) because
it's hard to access it and you'd have to pay taxes and penalties to get that money out. However, if your employer
is offering a company match, you should maximize whatever
they're offering you because that's literally free money. So back before I was a
full-time YouTuber guys, I used to work for a utility company and they didn't have a
pension or anything like that, but they did have a employer match. So every dollar I would put in, they would match me with an
additional 50 cents up to 6%. So what I would do is I put 6% of my paycheck into my 401(k)
and then they matched me 50%. So I got another 3% for free. So, effectively 9% of my total pay was going into my 401(k) every
single week automatically.

So after you have your
emergency fund established, or at least started. You don't have to have
all that money there before you move to step two. You just want to kind of start that and begin putting a little bit over there every single week to build up that fund. The next thing is to take advantage of those employer 401(k) matches. After that, if you have any
high-interest debt, you know like personal loans, credit
card debt, things like that. You wanna pay that debt off next, because the average
return you're gonna see from the stock market is somewhere
around 8 to 10% per year. And so if you have high-interest debt, like let's say you have a
credit card with 25% interest, the most wise move you can
make financially is to pay off that debt because you're
paying way more in interest than you're gonna earn as a return. If you had $1000 invested and you're gonna make 10% in one year, you're going to make $100.

If you have a $1000 on a credit card at 25% interest over
the course of one year you'd pay like 250 in interest. So even though you could invest
that $1,000 and make $100 you're still paying 250 in interest. So overall it's a net loss. So if you have high-interest debt, you got to get that paid down first before you begin investing in other stuff, just because that's your
wisest move financially. So after you have your
emergency fund in place and after you maximize your employer match and then you pay off your
high-interest debt, if applicable the next thing to consider is an IRA.

And in particular, I like the Roth IRA. Assuming you're able to contribute to this based on your level of income. Now I'm not gonna get into
a whole thing here guys on Roth IRA versus traditional IRA. I could probably spend 30 minutes on an entire video talking about that. So for now, we're just gonna
cover some very basic stuff about the Roth IRA. With your 401(k) as mentioned, you're contributing pre-tax income and you get the write-off. However, down the line when
you draw out of that account that is when you pay taxes. With the Roth IRA, you're actually contributing
post tax income. So you've already paid taxes on it, meaning you don't get any write-off. However, if you follow
the rules and you know you start drawing from
that by a certain age you don't actually have to pay taxes on the growth of your money.

So it's a very powerful account and it allows you to grow
your wealth tax free. The other advantage of the Roth IRA is you can pull out your
contributions at any time. So if you were putting a $2,000
per year of contributions into that Roth IRA, every single year, you can pull out those
contributions at any time, tax free, penalty free. You just can't touch the earnings or the growth of your money. So let's say you're putting
money into a Roth IRA. And then 10 years later, you decide that you want to invest in a
business or something. You can pull that money out
and pull your contributions out and not have to worry
about penalties and taxes.

So I liked the Roth because it's flexible, you can choose where you put that money. You can put it in stocks,
bonds, precious metals there's all kinds of different Roth IRAs. And you have access to that money where you can take out your contributions, if you do need to access it. So now assuming that you have
the emergency fund in place, you're maxing out your 401(k), you've paid off high-interest debt, you've maxed out Roth IRA
contributions for the year. After that, that's when
I would put that money into a taxable brokerage account where you're able to invest that money, you're able to touch it
you're able to access it.

The only thing is you pay
taxes on your dividends and taxes on those capital gains. But for the most part, that is the generally agreed upon plan for where you should save
money for retirement, is in these different things
that you have control of. And this is all within that category of your personal savings
and personal investments. As far as your pension goes that's all based on your employer, most of them are not
offering any pensions today. However, if they offer it and it's something you
have to contribute towards, if you expect to stay with
that employer for a long time and make a career out of it,
that is definitely a wise move.

And then you automatically pay into social security if
you are a W2 employee. So that's not really something
you have any choice over. So now let's go ahead
and cover how much money that you're going to
need in order to retire. Well, it's kind of a moving target and it's going to change
based on your lifestyle. I mean, are you looking to live in a one bedroom apartment and
drive a ten-year-old vehicle and you know, eat canned
beans for a living? Or do you want to retire
on a beach in Miami? So it all depends based on your lifestyle.

But there is again, another
generally accepted calculation that financial experts use, to calculate necessary retirement income. And it's something called the 4% rule that I'm gonna teach you right now. Also guys, just a quick reminder, I know I mentioned this earlier, but if you have found any
value in this video so far, a like would certainly be appreciated. It helps this video to be
shared with more people. And if you have any thoughts or questions leave me a comment down below. But anyways let's talk
about this 4% rule now.

Now, as far as the math behind this goes, I'm not going to get into it. If you wanna watch,
there's plenty of videos about the 4% rule that we'll
go into a lot more detail but essentially it's a
very simple calculation. What you're going to do,
is you're going to multiply your desired retirement income by 25. So let's say for example you wanna have $40,000 per
year of income in retirement. If that's how much money you want, you want to multiply that by 25. And that will tell you a rough idea of how much money you should have in your savings and your investments in your personal investment
and savings accounts. So for example, if you
wanted $40,000 per year, you would multiply that by 25 and you would come to the conclusion that you're going to want
to have $1 million saved and invested in these different accounts in order to sustainably derive $40,000 per year from that account
without running out of money.

Now, if you wanna be a
little bit more conservative, there is the 3% rule which
is going to be a multiple of around 33, but anywhere
between 25 to 33 times, your desired annual retirement income is how much money you
should have set aside saved and invested for retirement. So obviously guys, the main thing here is the
less money that you need per month based on your lifestyle, the less money you need saved and invested and the sooner you can retire. That's where that whole
FIRE movement comes from or Financially Independent Retire Early, that's people who live off of
as little money as possible. They save as much as possible and they aim to be retired in their 30s. And they're able to accomplish that by living off of as
little money as possible. I did a whole video on this
called how to retire by 30. If you guys wanna check it out at the end I will include a link down below. So now what I want to
cover here is what to do, if you're somebody who
doesn't have 25 to 33 times their desired annual income in a savings or retirement account.

Maybe you're already in
your 50s or early 60s. And you're saying, "What am I gonna do? I don't have money that's just going to fall out of thin air to put in this account,
what options do I have?" Well, let's cover those right now. The main things that you can do are surrounded by things
that you can control. And the main thing you can
control is how much money you're actually spending
during your retirement. So essentially you have two options.

You can try to make more money or you can try to spend less money. Now I'm more of a fan of
the offensive approach here which is figuring out
how to make more money. And so let's talk about that now. The first thing you could
do is figure out some kind of side hustle that you wanna
start maybe in retirement or maybe you wanna do this
before retirement and save up extra money and take all
that money and invest it. I've done a lot of videos
about side hustles. We're not going to get into them here but just understand that
this right here, this laptop this provides a lot of
opportunities to make money.

And it's certainly not rocket science, and I know a lot of people who in their later years have started
YouTube channels and blogs and these different things that allow them to make extra money on the side. So the first thing you wanna consider is, "Hey, let me look into
starting a side hustle." Second of all, pretty simple, spend less money now, pre-retirement. That way you can save
more money to invest. So if you're in your 40s
or 50s, and let's say for example, you're driving
a brand new luxury car and you're watching this
video and you're realizing, "Oh crap, I'm not
preparing for retirement." Maybe you make some
small sacrifices today, that allow you to save
and invest more money. So maybe you trade that car in and you get an economy vehicle and you take that difference
in your monthly payment, and you put that into your
Roth or your 401(k) instead. Another option, pretty simple, spend less money in retirement. We're gonna cover that
more in a little bit. I'm gonna give you guys some
tips on how you can do that.

And then lastly, option number four not the best one, which
is delaying retirement. Maybe you wanna push it
until age 70, age 75, which will allow you
to stay working longer. It will allow you to contribute money towards retirement accounts
and investment accounts longer and allow that money to
have more time to grow before you have to start drawing. So now what I wanna cover
here is a rough idea of how long your retirement
money is going to last. And I don't wanna sound morbid here guys but the truth is, you want
your retirement money to last until you pass away. And then you also wanna make
sure you have enough money sitting there to cover medical bills, funeral costs, and things like that because most people just
don't wanna be a burden on their family when they pass away.

Where they're out of
assets, they're in debt and then their family
has to scrape together 10 or 20 grand for a funeral. So it's not something that
we like to think about or really talk about but it is something that's important to prepare for. And so your goal here should
be to have enough money that you can have your money outlive you and cover some of those costs and maybe have a little
bit of money to pass on to your family as well,
maybe towards, you know college expenses or things like that. But anyway, let me give you
a couple of pointers here on, how long that money will last in a couple of different
factors to consider. Well, first of all how
long your money will last is going to largely depend
on your investments. Some of them are lower risk and some of them are higher risk. And so if you're investing
in higher risk assets, they may be more volatile but you may also see greater returns. On the other hand, if
you're super conservative and let's say you only put your money in fixed income assets, you may find that you're not taking on enough
risk, and you could find that your money doesn't last
as long as you need it to.

So, one of the main things
you have to understand with retirement is that asset mix. And for most people, it's a
split between stocks and bonds. And so that's the main
thing you wanna focus on is that allocation. If you'll have too much money in stocks and not enough in bonds, you might be taking on too much risk and your portfolio could be very volatile, going up and down in value all
the time, stressing you out. If you're too low-risk you might not be growing
your money fast enough and it might run out too soon. So figuring out that asset
mix is very important. Now as far as that number goes, there's a couple of different
rules of thumb out there, but one that most people agree upon is the 110 or the 120 rule. And it's based on your life expectancy. So, I actually am a fan of the 120 rule, which basically means
you take your current age and subtract it from 120. And that tells you how
much money you should have in stocks and the rest should be in bonds.

So for example, I am 25 years old, I would take 120 minus 25,
and that leaves me with 95. That tells me that 95% of my money should be in stocks and
only 5% should be in bonds. Whereas if we take a 70
year old, for example we would take 120 minus 70,
and that leaves us with 50. And that tells us that
50% should be in stocks, 50% should be in bonds. Now, of course, guys that
is a very basic example and it doesn't take into account your unique personal situation. So for exact numbers I
would actually recommend speaking with a financial
advisor and you don't necessarily have to have them manage your money, you can pay them for a
one-time consultation where you're basically saying,
"Hey I want you to tell me what my allocation should be, and help me understand how
that changes over time." But by far that's one of
the most important factors to consider is your asset
mix or asset allocation? Now in general guys, that 4%
rule that we discussed earlier has been pretty successful,
and most people have found that it lasts them around 30 years, which is a pretty long retirement.

That's about how long most
people expect to be around once they retire. However, the success of that
4% rule is largely dependent on that asset allocation we discussed. Because if you're not
taking on enough risk, and you're only earning
a very small return, you're going to dwindle
that money a lot sooner. Another important factor
to consider is taxation. And this varies based on the types of accounts that you have. As mentioned earlier, the Roth IRA is an account
where you put your money in and you pay taxes on the way in. But when you draw from that account you don't pay any taxes. Whereas with the 401(k)
it's tax-free going in but when you come out, you're
actually going to pay taxes.

So this tax situation
is largely dependent on your own investment accounts. Maybe one person has all
of their money in a Roth and somebody else has all
of their money in a 401(k). Those are vastly different tax situations. And this is a scenario again
where a financial advisor can look at this for you, and help you with some tax planning. And you can understand what
are the tax implications associated with your
different investments. So now that you have a
general idea of the factors that will tell you how
long your money will last, let's talk about some different ways to make your retirement money last longer. So the first thing you can do to make your money last longer, which is getting more and more popular is something called downsizing. So most people end up having a home where they raise their kids. And let's say that you're still
together with your spouse. You may now be in this situation where you have this three or four bedroom house, you're paying to heat all those bedrooms.

And you're maintaining this big house, when you're only utilizing
like 25% of that space. Even if your mortgage is paid off, you're still paying for
utilities and landscaping and things that on a much
larger property than you need. So you could downsize into an apartment or downsize into a smaller house. That's becoming more and more popular with the goal of reducing
your fixed monthly expenses. Another option, going back
to the side hustle idea, maybe you Airbnb, a part of your home or you do one of your bedrooms
or something like that, to figure out how to generate
income from that unused space.

But downsizing is a very popular option. Another one is reducing
your fixed expenses like your car payment, as
well as things like your utility payment and things
like your phone bill. So this is where I wanna
talk more about our sponsor for today's video, which is T-Mobile, because they have specific wireless plans designed for people in
retirement to save you money on those fixed monthly costs. So, 55 and up customers who live anywhere in the United States, not just Florida are able to get two lines
of unlimited talk, text and data on T-Mobile's network,
starting at under $30 each.

Which if you have an existing phone plan you have a general idea
of what you're paying, and I can tell you guys right now I'm paying a heck of a lot
more than $30 per line. Now you might be wondering if you're getting some really
cheap plan in the process and the answer is no. In fact, it comes with a lot
of different bells and whistles and extra perks. For example, it comes with the industry's best scam protection, unlimited
3G mobile hotspot data, international texting, no
annual service contracts, your very own dedicated
customer service team, as well as additional
free items here and there and discounts every single
week through T-Mobile Tuesdays. So oftentimes if you
switch from a carrier like, AT&T or Verizon, over to
T-Mobile with this plan, you could save upwards of
50% every single month. And while it may not sound
like a lot of money upfront when you factor in that cost
over the next 20 or 30 years, these little things you
can do to save money on those monthly expenses
really are going to add up. So if you are interested
in those 55 plus plans through T-Mobile, switching
carriers is very easy.

If you're ready to make the switch, you just have to stop
into a T-Mobile store, or you can call 1800 T-Mobile or visit, and I'll go ahead and
include links to all of that as well as the phone number down below, if you guys wanna go
ahead and take advantage of those discounted plans. Now another thing you can do
to make your retirement money last longer is falling
into that category of delaying your retirement. You can also delay taking social security, and this can lead to you having
a larger monthly benefit. So for every year that you wait, you're going to get an
additional 8% in social security, every single month. And if you wait until age 70
to start taking social security you can get up to 24%
more every single month. So if you can delay retirement, and delay taking your
social security benefit, that can result in
additional monthly income. Another great strategy is exactly what we're talking about here, which is having a retirement spending plan before you stop working.

So you do things in advance
to get your ducks in a row. You cut down on recurring monthly expenses like your phone bill,
maybe you take advantage of something like
T-Mobile's 55 and up plans. Maybe you downsize, or you
decide to Airbnb a spare room as us as a side hustle. You just start planning early on before you hit retirement
age, and then you think, "Okay, I haven't planned for this at all. Let's get something going." You're better off to plan in the beginning and get your ducks in the row early. Another suggestion that I have is utilizing credit card reward
points, because a lot of people in their later years want
to travel during retirement. We're in a unique situation right now with the global pandemic,
but once it's safe to travel, that's a popular thing
in your retirement age is seeing the world.

Well, if you're able to
effectively use credit cards and get free points for
travel or free miles, that's another way to get
more bang for your buck. And as long as you're not paying interest on those credit cards and you're paying them
off every single month, I would highly recommend utilizing
credit card reward points and bonuses for travel. Lastly, one of the
things that you can do is make investments in your health to make sure that you're
not having a lot of medical stuff coming up in retirement.

Hopefully you have some
plan for health insurance. So let's say now that worst case scenario, you're somebody who is
in retirement right now and you're slowly realizing that you're going to run out of money. You don't have enough for that 4% rule and maybe you only have
one leg to your stool, which is social security. What options do you have available to you, if you know, you're going to fall short? First of all, as covered
earlier, you can reduce expenses or pick up a part-time job or side hustle.

A lot of people in
retirement end up working 10 or 15 hours per week on the side. Number one for something to do, and number two, just to
have extra spending money. Another option is to tap
into the value of your home with a home equity line of
credit or a reverse mortgage. That's pretty complicated, not gonna get into that
too much in this video, but if you want to hear more about that leave me a comment down below, and maybe I'll do a whole video talking about the reverse mortgage. Another option that you may explore is, if you have a life insurance policy, you may be able to tap into the value of your life insurance policy and get something called the cash value, if you draw on that early. Again, complicated subject
maybe a topic for another video but if you have a life insurance policy, you should sit down
with a financial planner or financial advisor and ask
them about those options.

And one thing I want to mention here is, if you're somebody who's in retirement and you know that your
money supplies dwindling, don't ignore this problem. There are things that you can do. The longer you wait the
worst it's going to be. So I would start addressing
these issues now. So just to wrap up here guys, one of the main things
that I want to recommend as a call to action is it
may be worthwhile to sit down with a fee only certified
financial planner.

It's gonna cost you a couple
of $100 out of pocket, but they're going to be
able to help you answer a lot of questions you may have, such as asset mix, asset allocation. There'll be able to look at your different retirement accounts
and help you understand the tax implications,
because on the surface retirement planning is pretty simple. It comes down to your
expenses, your income, your lifestyle needs, and basically what you're looking to get
out of your retirement. But when you look into
the individual details that each person has with
their different accounts, that's where it becomes more personalized and more complicated. So I think you're going
to get a lot of value out of a fee only
certified financial planner that you pay an hourly rate to, that way you can get unique information about your personal financial situation. At the end of the day here guys, if you fail to plan, you're
essentially planning to fail.

And I want to discourage
you from doing that. This isn't the most exciting topic and it's certainly not on
the top of my to-do list but retirement planning is very important. So I encourage you to take
action on this advice today. I thank you so much for
watching this video. I hope you've got a
lot of value out of it.

Let me know down in the
comment section below what your thoughts are on this. And if you made it to the
very end, let me know too because I'm always curious
how many people stick around for full videos. Lastly, one last, thank
you here to T-Mobile for sponsoring this video. I have a link down below, if you wanna check out
T-Mobile's essentials, 55 and up plan, which is a great option to minimize your monthly recurring
expenses in retirement, to make sure that money lasts longer. If this is your first time
seeing me make sure you subscribe and hit that bell for
future notifications, and on that I hope to see
you in the next video.

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2 Retirement Tax Planning Strategies To Save THOUSANDS In Your Retirement Portfolio!

how would you like to save hundreds of thousands of dollars potentially in taxes in retirement well these two strategies I'm going to go through today when combined together have the potential to do just that now if you don't qualify for net unrealized appreciation because you don't have company stock inside your 401k you can still qualify for zero percent taxes on your long-term capital gains and dividends so when we combine these strategies together it creates a very powerful tax and income planning tool that you can use for your retirement [Music] foreign as you can tell I'm pretty excited about this video because we're going to discuss two tax planning strategies the net unrealized appreciation which I've not yet done a video on the YouTube channel about and also the zero percent taxation for long-term capital gains and dividends and you're going to want to stick around until the end of the video where I incorporate these two strategies into a real life financial planning case now unless you've searched net unrealized appreciation to find this video there's a pretty good chance you've never heard of net unrealized appreciation so in its most basic form it's when you have company stock that's been issued inside your 401k you have the option of rolling that money outside of your 401k not into an IRA but rolling it out only paying income tax on the basis that's been distributed and potentially pay long-term capital gains tax on the appreciation so that appreciation from where it was issued to where it is whenever you roll it out and retire or sever from service or become 59 and a half that's what's called your net unrealized appreciation we're here in Houston Texas where we have a lot of client clients that worked at Exxon Mobil or Chevron or some of the other big oil and gas companies we also have clients from all over the country that work for other companies that can take advantage of this net unrealized depreciation strategy so I'm going to use Exxon because we come across this plan a lot we're very familiar with the Exxon retirement plan and I want to illustrate how this concept works and there's some nuances here and there's also some financial planning considerations and of course tax ramifications that we're going to go through but if I worked at Exxon let's say from 1995 to 2020 and as part of my compensation I receive shares of stock each year over the course of my employment so these numbers are not historically accurate but I want to convey the the principle here so in the beginning years if Exxon was trading at twenty dollars and I received a hundred shares and then next year maybe I received them at 22 dollars per share and twenty five dollars per share and over time as I've received more shares as part of my compensation package the value has typically increases the price at which you were issued those shares in the year you received them is what's called your cost basis so if we do this Nua rollout that's the amount that you'll have to pay income taxes on but it's a really cool opportunity here because over time most stocks appreciate in value Exxon today is at a hundred and sixteen dollars per share so the concept of Nua is if I was issued stock at twenty dollars a share and I keep it in the IRA and now it's at 116 dollars a share that's a massive amount of capital appreciation and if I roll it to an IRA and distribute it at that point or at some point in the future I'm going to income taxes and that can can lead to a pretty big tax liability now we're down the road when I need income but if stocks appreciate it over time we typically have a mixed cost basis when it comes to the amount of shares that we've received from the company so first thing to know here and first thing to ask your company is do you guys provide a breakdown of the cost basis on an annual reporting period or do you take the average cost basis so we come across some companies here that they will provide you the information of the exact cost basis and the amount of shares that you've received in each year in that case we can really cherry pick which shares we want to roll out and really take advantage of this strategy because typically we're going to take the lower cost basis ones some companies don't allow you to cherry pick based on the lower basis shares that were issued they calculate an average cost basis for all the shares issued so this is not nearly as advantageous as being able to cherry pick sometimes it can still make sense especially if it's an older 401k or if it's a stock that has really really appreciated since those shares were issued in the average cost basis is down so this video my primary purpose is to help educate you around the financial planning considerations of the Nua rollout so I'm not going to cover all the rules and reg surrounding it I'll do that in a later video though but a couple things you should know this becomes an opportunity whenever you sever from service or typically when you're entering retirement there are some other qualifications but we'll cover those later now if you sever from service prior to age 55 you will be subject to a 10 penalty on the amount you distribute so just be aware that if you're under the age of 55 you've severed from service you have company stock inside your 401k that that 10 penalty for early distribution still applies we have Exxon this 401K here so the total value is about 1.5 million in this hypothetical example the shares the tote in totality the shares have been issued over the course of the working career equals about a six hundred thousand dollar cost basis so I'm going to use the example here where we can cherry pick the individual shares so the next question becomes which shares should I consider doing the Nua rollout because I don't have to roll all six hundred thousand basis out in the real world typically this 1.5 million of fair market value may also be comprised of mutual funds such as growth funds income Etc within the 401K for the purpose of this example Exxon stock is valued at 1.5 million dollars the cost basis of those Exxon shares within the 401K is 600 000.

Just want to point out in the real world typically everyone does not have all their money invested in their company stock but I've I've absolutely seen that over the years so the question becomes which shares do we want to take advantage of the annual rollout with the general rule of thumb is the lower cost basis Shares are more attractive and that's determined by the the value of the stock today anything above 50 percent cost basis to fair market value typically we don't want to consider for Nua now there are some extenuating circumstances sometimes with financial planning considerations that it may make sense but when we do the math and we extrapolate out looking at the value that you would have in the ira versus paying taxes on the basis now annual taxation for growth dividends Etc the Breakeven point isn't that attractive when we look at these shares that are above 50 percent cost basis to fair market value I personally like to see them around 20 or 30 percent really tops so whenever you have shares that are 10 15 20 25 cost basis to fair market value those are typically very attractive opportunities and in some situations Thirty thirty five forty percent could possibly make sense it just depends on the overall financial plan that you're putting together in other circumstances so this is a tax analysis so you may want to reach out to your CPA for help or assistance in doing this or your financial advisor if they're qualified and skilled enough to help you make these determinations I want to run through some numbers now so let's assume for whatever reason this person decides to do the whole Nua rollout so just so we understand the how this functionally works the 600 000 rolls out of the 401K into a non-ira account income tax is due on that six hundred thousand dollars you're probably looking at about a 27 28 maybe 30 percent effective tax rate we'll go with 30.

So 100 eighty thousand dollars of income taxes would be due on the basis being rolled out but in this scenario you're not just rolling out 600 000 That's the basis you're actually rolling 1.5 million dollars out of the 401K and only paying income tax on the basis now if you sell it immediately the net unrealized appreciation is the difference between the basis and the fair market value so you have nine hundred thousand dollars of gain there so if you sell that nine hundred thousand you're looking at the more preferential long-term capital gains tax that would be a pretty big tax still so the question becomes the are what planning considerations should we hold on to this stock do we feel comfortable having this much in one company what is our other wealth what if we break it out over a few years so this is what we're really going to dive into now I just want you to understand how this actually works in regards to the functionality okay let's cover how this actually works so we take the Exxon stock the basis is 600 000 but the full value is 1.5 million so if in this example we decide we want to do it all we would roll the full 1.5 million out of the 401K it will go into a non-ira account but you only owe income taxes on the basis the 600 000.

If you sell the stock immediately you will owe long-term capital gains tax which is a more preferential rate than income taxes at this level of income on the difference between the basis and the fair market value or nine hundred thousand there but you don't have to sell it right away if you don't sell it right away and then you sell it six months later you'll be subject to short-term capital gains tax because you're holding period rules take take into a place or taken to effect if you don't sell it immediately but if you wait 12 months after the distribution date 12 months in one day then you qualify for long-term capital gains tax treatment so some of the financial planning considerations are now what are the income taxes due what is my income and tax plan year one year two year three of retirement how does this fit into that overall tax and income plan and how do we optimize how do we reduce the total taxes we pay while maximizing the value that we retain if we have to pay income taxes on six hundred thousand dollars you're looking at an effective tax rate there of about 27 28 maybe 30 percent so 30 on 600 is a hundred and eighty Grand so you'd write that check to Uncle Sam and you would have 1.5 million outside of the 401K in the more preferential tax environment of long-term capital gains and dividends now you would have annual taxation on these dividends so that's something else we need to consider and we also need to consider future tax rates and make assumptions with what do we think income tax rates are going to be in the future long-term capital gains and dividend rates all of these things go into the analysis but for now this is the logistics of how it works we roll it all out pay income taxes on the basis we can either sell it immediately and pay long-term capital gains on the differential or we can hold it and if we hold it past the distribution date sell it within 12 months short-term capital gains sell it post 12 months long-term capital gains okay so I want to dive deeper into the two options we have just high level so option A is We Roll everything to the IRA we do not take advantage of the Nua rollout eligibility things that we have to consider here is future tax rates rmds other income sources and the secure act now this is not an exhaustive list this is just some of the big ones we have to take and consider future tax rates because when everything is inside that tax infested Ira when you distribute it in the future you have to pay income taxes you've given up the ability to take advantage of long-term capital gains and dividend taxes which are typically a preferential rate rmds Force distributions from your retirement account and when added with other income we oftentimes see people who did not plan for this have 150 200 250 even more of income because of required minimum distributions and their other income so when doing this analysis we have to extrapolate out and look at these factors to help make the decision today secure act I threw this in here because it forces distribution of your retirement accounts if they go to a non-spouse beneficiary that's more than 10 years younger than you full distribution of the retirement account within 10 years so if you have kids and it's important to leave this money to your children if they have income and they're working and now your retirement account has to be fully distributed within 10 years that could be a massive amount of income going on top of their income which now 30 40 50 60 potentially of your retirement account has gone to Uncle Sam if you live in a state with income taxes that could be an issue as well inheritance taxes so a lot of issues here rolling everything into the IRA you can be hit with um pretty big income taxes down the road option b is we do take advantage of the Nua rollout either wholly or in a partial Nua rollout how that works is we would take the shares that we do decide to take advantage of this strategy and we roll them into the non-ira account some things to consider there is that what are long-term capital gain rates now what are they possibly going to be in the future but also we have annual taxation of the dividends and if we're buying and selling inside that account whatever we do not roll into the non-ira account with the strategy the rest of the funds from your 401k go into the IRA and then of course whatever's left here we have the same considerations that I went through over here so now there are financial planning considerations here let's say I was at 35 cost basis to fair market value so I'm kind of right there where mathematically it may not make sense but how much non-qualified money do I have how much essentially I'm saying how much do you have outside of your retirement accounts because if you're entering retirement and all that money is inside that tax infested 401K then you don't have any ability to manipulate what goes on your 1040 your tax return by manipulate I mean we determine which accounts were withdrawing income from to manage our taxable income that we report to the IRS if we pull from our non-qualified accounts think your bank account well you don't have to report that so if you need a hundred thousand a year we pull 50 from your bank and 50 from your IRA you get your 100 000 but only fifty thousand goes on the tax return that's how we can manipulate that so how much non-qualified money do you have if you don't have much we may want to consider doing a little bit higher Nua rollout because even mathematically it may not make sense when we just compare that decision in isolation to do or not to do the Nua rollout but when we now look at the other benefits that we're receiving such as the ability to do Roth conversions the ability to manipulate what goes on our 1040 the ability to possibly qualify for a health care subsidy if you retire before the age of 65 by managing the reportable or taxable income that's reportable we can qualify for a subsidy so this is why we're so big on financial planning because as you can see it's not just about Investment Management in retirement that's important absolutely but when we tie in financial planning with Investment Management we can create some really optimal scenarios where we're creating a ton of value and helping you have more income pay less tax and ultimately have more value throughout the course of your retirement okay this is the part that I mentioned in the beginning of the video where we're going to tie into kind of a real world plan planning case so we laid the groundwork for what Nua is and some of the considerations that you have to make in order to determine if it makes sense for you to do the Nua rollout so what I want to point out here is the tax and income plan for retirement years one two and three for someone who takes advantage of the Nua rollout because the question becomes when do we sell that stock if we have 30 40 50 percent of our entire net worth in our company stock it's pretty risky to hold on to that position just so we don't pay more in taxes so here's where we're going to tie the financial planning considerations of the real world application and decisions we have to make on the Nua rollout with years one two and three of someone just entering retirement one of the big risks is if we roll it out the company's stock and we decide not to sell it because we don't want to pay the long-term capital gains immediately if we hold on to that that concentrated Equity position we have increased our risk now there are investment strategies that can be used such as buying a put option or what we call an Equity caller but I want to just talk about the tax and income plan here so in this scenario client rolls out the annual way so they have a large concentrated Equity position and they've paid income tax on the basis but do not want to sell the company stock yet so as part of the tax and income plan what I want to show you is we could break this up so year two year three and even year four possibly depending on the size of the concentrated Equity position Company stock where zero percent taxes essentially so we have total income here of a hundred and twenty thousand so what this is the tax and income strategy where we're generating income year two of retirement not year one because in year one you've done the the Nua rollout you have a big tax liability from paying income taxes on the cost basis of that company stock so here's your two so year two the the tax and income strategy is don't take anything out of the 401K no Roth conversions we're going to sell the company stock that we previously rolled out take advantage of Nua and we can have a hundred and twenty thousand dollars of income here as long as it's all capital gains and dividends your total tax liability 458 dollars now what I've done here is assumed twenty thousand dollars of dividends because if you have company stock and you roll it out it probably paid some dividends so 20K there and a hundred thousand of long-term capital gains we're realizing we're recognizing so this is darn near zero percent on a hundred and twenty thousand dollars of retirement income and we're divesting from that company stock now again some risk management strategies we could have an equity caller or put option helping to support downside volatility of that concentrated position but just taxing in complaining wise I want to show you how how this can work out so here now I've added 125 000 of long-term capital gains with twenty thousand dollars of dividends total AGI 145 000 the total tax 4208 on 145k of income 2.9 percent so again we've divested so maybe this is year two of retirement or year three we've divested from the company stock we've reduced our risk we've provided the income that we needed for retirement and we've done so in a way that's tax advantaged same thing goes on now I wanted to point this one out because I've here I've thrown in the same 20 000 of dividends 125 000 of long-term capital gains so we're selling the stock again but now we also take advantage of a twenty thousand dollar Ira distribution so this is which accounts do we pull income from in retirement how do we generate income what's the tax plan total AGI comes up to 165 the total tax is 7208 but here's the cool part the IRS ordering rules for how you pay tax on income based on where that income is generated the distribution from the IRA is actually tax-free but what happens is when you take money out of the IRA it brings some of those long-term capital gains into taxation so I did a video not too long ago where we talked about adjustments and Social Security and IRA distributions and wealth conversion taxes the tax code is filled with these where if we we take one more dollar of income it brings one other item into now a taxable State such as Social Security or long-term capital gains or dividends so just just be aware of that I guess 165 000 of income seven thousand two hundred and eight dollars in income taxes representing a four point four percent tax rate so now one two three four years into retirement we've divested the uh concentrated stock risk we provided income and a very tax advantaged manner we still have that Ira with a lot of money in it to deal with but once this is done we would probably at that point start down the Roth conversion path now every situation is different but hopefully these topics and ideas and and considerations when it comes to risk management income planning tax planning and retirement will help you have a better retirement if you want to learn in more detail how to potentially pay zero percent in long-term capital gains and on your dividends click this video right here I did a couple years ago where we do a deeper dive into the special tax advantage [Music] thank you

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