Erick and Randy discuss tax strategies to consider when preparing for and entering retirement. They also reveal the most and least-affordable states for retirees. Happy Holidays from all of us at Take Point Wealth!

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12.24.22: Audio automatically transcribed by Sonix

12.24.22: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Take Point on Retirement with your host, Erick Arnett. Erick is a fiduciary and licensed financial advisor who always places your needs first. The experienced team at Tape Point Wealth Management takes pride in knowing they've helped so many pursue the financial future of their dreams. And they can help you too. And now let's start the show. Here's Erick Arnett.

Erick Arnett:
Hey, everybody. Welcome to Take Point on Retirement Radio. So great to have you here again today. Merry Christmas, Happy holidays and a happy New Year. So it's Christmas week. Super excited about that. And just so thankful and blessed and wanted to just maybe talk about sit back, relax and enjoy Christmas. And it's been a been a rough year and but let's count our blessings and and really remember the true meaning of Christmas and why we're so blessed. And anyways, just great to be here today. We're going to have Randy Woodruff, our CPA and tax tax extraordinaire here today. Of course, I've got Sam with us today, our deejay extraordinaire. Sam, how are you doing today? Doing well. Happy holidays to you as well, Erick and all of the listeners. And we know everybody's plans change around the holiday time. So if you miss part of today's show and you want to go back and check it out at another time, you can find take point on retirement wherever you listen to podcasts or you can just go online to the website at take point on retirement dot com. Yeah thanks I appreciate that and. I think we have a pretty good show today. Lots to talk about as we're winding down 2022 and looking forward to 2023. One thing's for sure is that this year, this past year has been, I would say, a volatile year, a time of a lot of changes.

Erick Arnett:
And so we're getting to a time where we can maybe sit back, enjoy the holiday season and just think about what our goals are going to be for 2023. And on today's show, we're going to talk a lot about required minimum distributions and the deadlines there and maybe doing some planning. If you didn't have time this year to plan, maybe you're going to plan a little bit better for next year. We can talk a little bit about that and and some of the strategies that we have with requirement of distributions. We're also going to talk about that straight 401k, those folks out there, if you've changed jobs a few times and you potentially have a41k that's just kind of out there and and you're not quite sure what to do with it, it's maybe losing money, it's maybe not making any money and you just don't know where to turn. We're going to talk about that today. We're going to talk about rebalancing your portfolio and making changes for 2023. You certainly can't just be static with your investments. We're in a constantly changing, evolving environment with the marketplace and the interest rate increases, the inflation, the Fed fighting inflation, a lot going on. We're also going to talk about how do you create a personal pension for yourself? And we've got Randy here today. Of course, Mr. Woodruff is going to talk a little bit about some changes that we've had in the tax brackets.

Erick Arnett:
We're going to put together a checklist for you to get you ready for 2023. And then, of course, remember throughout the show, if you would like to have us get a hold of you and build you out a completely complimentary freedom red zone retirement plan to get you to that stress free retirement. If anything makes sense today and you have questions or concerns, please reach out to us and you can also go to my website take TakePointWealth.com and in the upper right hand corner you'll see where you just click and get right on my calendar. And we can certainly get together as soon as possible and get you started on the track, right track for you for 2023 and for your retirement. So with that all being said, let's get into some of the material here. But Randy, how are you doing today? We haven't had you on the show in a while. I know you've been a busy man with all the tax deadlines and tax filings and corporate filings and real estate and all kinds of good stuff. So how are you doing today? I'm doing great. Thank you for asking. It has been a busy end of the year. A lot of people looking to make some last minute tax decisions or business decisions that will impact their taxes. And as you mentioned, real estate.

Erick Arnett:
Real estate is slowed down quite a bit in terms of people looking to buy with interest rates basically going up at historically fast. It definitely has definitely slowed down the housing market. But I think there are still some opportunities out there for people that are looking, looking to buy. There's of course, it has fewer buyers, there's more inventory now. And let's say six, eight months ago, if you wanted to buy a home, you had to have a very strong offer with basically no contingencies or all cash offer. But that's changed, changed rapidly. So inventory is definitely shot up from what it was 6 to 8 months ago. And we think there's going to be some more inventory coming on the market. Of course, there is some coming off the market because people have realized that the what's happening the first four or five, six months of the year, people were putting their houses on the market and they were getting listed home for 400. They were getting cash offers of 424, 40, four, 60, sometimes more than that, even because there was such a lack of supply and such a demand to get down to the moon or get to Florida, because, as you know, Florida's been open for business even through the pandemic for the most part. So we had a lot of people moving to Florida. And interesting analysis I did a few months, couple couple months ago, I took a look at the Electoral College map from 1984 and then looked at it, looked at it this year.

Erick Arnett:
And you can definitely take a look and see what's happening with the off site migration of the population south, the Electoral College votes that Florida and a bunch of other southern states had. And I say so that I mean across the entire US, not just southeast. Look at the number of Electoral College votes we had back in 1984 where it's had a big shift of the population south. And so we don't expect that to change, especially for our retirement orders out there. You know, I like to say when you get old, you don't want to be cold. And so it's nice to be here in Florida, a southern area, so you can enjoy the great outdoors as you retire. And and we have that here in Florida. So welcome to the show, everyone. And we'll be talking I'll be chiming in with Erik in a few minutes. Well, that's interesting that you bring that up. That was one of the things on our outline. So we'll just jump right to it today. But sorry. Go on. Going out of order? No, that's okay. You're all right. We can we can adjust fire here. But one of the cool things that we had on our outline that Mr. Sam puts together for us here, interesting to me is how many years would $1 million in retirement savings lasts? And we've got a chart here that says the top ten states where your money is going to go the furthest.

Erick Arnett:
And then we have the top ten states where your money won't go so far. And what's interesting is the big dispersions between states. But however, what's interesting to me what caught me off guard here is I always thought that Florida was one of the most valuable places for retirees to move to as far as low cost of living. And but this here says $1 million goes the furthest in Mississippi is number one at 25.3 years. You got Oklahoma at 24.8 years. Kansas City, Alabama, Iowa, Georgia, Indiana, Tennessee and Arkansas, all within that, 23 and one half to 24 year time frame where $1 million or less. Now, no surprises on the other side of the equation where 1 million won't go so far, the top state is Hawaii. Your million dollars will only go 10.9 years versus Mississippi, 25.3 years. So if you're thinking about moving to Hawaii, you need to call me because we need to earn some good returns on your retirement funds if you want to check out Hawaii. But then New York was number two, most expensive place to retire. And you've got California. Massachusetts looks like Alaska, Maryland, Oregon, Connecticut, and New Hampshire. Not a big surprise there on those states, but was very surprising to me that Florida didn't make the list.

Erick Arnett:
I always thought that Florida was the cheapest place to move. That's why everybody was coming down here. But I guess it's just the sunshine. Exactly. I'm impressed that you knew all the state abbreviations. So you did awesome with that. Hey, so pop quiz there. I got a lot of gold stars when I was in elementary school. You know, I was very competitive. I did not like people getting those gold stars. I wanted all. I wanted them all. You did well, But no, that's pretty interesting. But, you know. Getting back to the real estate, where are people going? So like OC? Well, you know, just a few months ago, there was no inventory. Right? And everybody's moving to Florida. So now why is there a more homes for sale? I thought we had an influx of people and people are coming to Florida. These people. What are you seeing? These people that are selling homes or having the homes on the market, where are they going? What are they doing? Why are they selling at this point? Is it are they completely relocating out of Florida or are they building a different home downsizing? What are you kind of seeing? I think all good that we're seeing a lot of all those things. You know, we are we do have a lot of people that are downsizing that have probably been in their home for a while and and probably need to downsize.

Erick Arnett:
And with the prices being as high as they are there, now's a great time to do that. One of the challenges with that, though, is some of my home, where am I going to go because the inventory is so low and so that's a challenge. But if you've got if you already get a place picked out or a place in mind, some folks are been in the process of building a house to living in the one they own, so they're going from one to the other. But we are seeing a lot of people downsizing. A lot of people want I'll say a you call that no maintenance lifestyle. So I've seen a lot of those communities pop up across Florida, more and more of those. And so that's that's being. Some folks are retirees that are well beyond retirement. Well in their retirement years. And they're having to sell them because their health and moving back in with family that may be outside of Florida. We are seeing some people moving out of Florida just for whatever reason. But by far, we have a much greater influx of influx of folks coming in. They're leaving. You know, I think that as I lived here my whole life in Florida, especially on on the West Coast here, and I'm. This is just an opinion. It can't be verified because you can't document this kind of stuff.

Erick Arnett:
But I think there are a lot of people in Florida living with relatives, family, other friends that are looking. They wanted to get here and stay with someone until they actually find a place to live. As you drive around, our streets are crowded. They're not just snowbird. Our streets are crowded. Everywhere you go, places are packed. And so I think there's a lot of folks living here that haven't bought their house yet. So I think once interest rates settle down and mortgage interest rates settle down, demand is going to pick back up again aggressively, especially once we get past the holidays and get into the first quarter of next year. And we're going to see housing demand pick up here. Again, we keep having interest rates hike. That will interest rates hike up. That will have an impact on it and continue to impact on it. But I think we will see. 152 5350 400,000 range. Those houses are moving well. But if you've got a. A larger home on acreage. I'm not saying you won't find a buyer, but those that market has definitely seen fewer buyers and fewer less interest in the smaller, more affordable homes are. So depending on what kind of product you're looking to buy or sell, there may be more or less inventory in that in that price range. But to your point, we are still seeing a lot more people move into Florida than out.

Erick Arnett:
And I. I think it's going to be a phenomenon that continues for quite a while. Yeah. I mean, perhaps to what we're seeing on a national level is that. Real estate has pulled back and is slowing down quite a bit in other markets throughout the country. And I know I've heard you say this before in the past. Real estate will continue to be strong here in Florida. However. We will see things slow down because it's. If someone's in California, for instance, and they can't sell their home and they want to move to Florida or they're in New York or they're up there and, you know, Massachusetts or New Hampshire and the markets all slow down up there, If they can't sell their home, then they can't come down here and buy the home down here. So maybe that's what's affecting it as well. Things are slowing down in other parts of the country. And also it's wintertime. I mean, probably not in Christmas and the holidays. I mean, probably not a lot of people, you know, hopping in their car, coming to Florida right now, looking for property. Maybe I'm right, maybe I'm wrong. And then, of course, you know, if we know that our friend, Mr. Powell, the Fed chairman, has been actively flexing his muscle and continues to increase interest rates, the latest interest rate increase just came last Wednesday. They raise another half point.

Erick Arnett:
So the prime rate is around seven and one half percent now. So now you're seeing 30 year mortgages, probably close to 8%. If they come down, they come down a little bit. So but that people might still have sticker shock if they're looking at a home a year ago, like, oh, I can get 3% and all of a sudden it's 6% or 7% or whatever it is in that range. They're probably getting sticker shock like, holy cow. So Mr. Powell and what he's doing with raising interest rates is doing exactly what he wanted it to do. And there's no secret he comes right out and says the housing market was way too hot. You know, the job market is way too high. Wages were increasing at a rapid rate because the job market is so tight. You know, we were still spending a ton of money. People are out spending, spending, spending. Credit card levels are going through the roof. So the consumer, the AmErickan consumer is is more resilient probably than any other consumer. And they're still out spending, spending, spending even in the face of higher and higher costs and inflation. And so they're really what, Mr. Chairman, Mr. Powell said was even though we raised rates a half point as opposed to 75 basis points, we're still looking at raising rates even more here in the 2023 until they see I think the word was a substantial contraction and some of the areas that they're looking for.

Erick Arnett:
So we've definitely seen in the numbers and the PPI numbers, the producer price index, the CPI, the Consumer Price index, wholesale prices, we have seen those pull back a bit. Instead of running at nine 8%, they're running at about 7% in that area. So but still not at the level that they would like to see year over year prices. So I think that potentially we're in for continued volatility in the stock market, probably well into the first quarter and going into the second quarter, I think it's going to be very similar to what we experienced last year. A lot of volatility, big up days, big down days, the market moving around, just still trying to really gauge what Mr. Powell is going to do. And and one thing that I wanted to make sure people keep in mind is, is that the market itself interest. And when I say the market, I mean the markets know certainly if you come to work, come to come to take wealth management and we work for you and manage your portfolios, your retirement plan, you know, we're not just putting all your money in the stock market anyway. We use multiple markets, multiple strategies, multiple asset allocation and diversification strategies. So but, you know, people need to really delineate the economy from the markets. And I try to do this in every meeting with my clients.

Erick Arnett:
You know, people get so focused on, well, what's happening right now, the stock market is down today. It's down it's been down a week, the last week. And and the Fed chairman's raising rates. And, you know, the economy is going to crash. It's bad, bad, bad. But you know what? What people need to remember and let's put this into perspective. And I use 2020 as an example when I'm speaking with when I'm sitting down with people in 2020, the economy was in complete shambles, right, Because we're in the midst of COVID. But the stock market was really pretty strong and pretty decent know. So there was a disconnect right there. Right. The economy was was in shambles. Nobody was working. You know, the economies were shut down, yet the stock market was still doing really well. Right. So you would think that the stock market would have done poorly during that time frame. But 2020 was actually a pretty good year for the stock market because the market is always looking forward. It's looking a year out, six months. I was trying to predict and forecast earnings, corporate earnings. And so they was looking the market was looking into the future and saying, you know what, I think earnings are still going to be good and the market and the market was correct even though in 2020 things were in shambles, things were shut down massive on.

Erick Arnett:
Employment. The earnings coming out of corporations, we're still very good, very strong. So. And then this year, in a stark contrast, in 2022, we've had a horrible year in the stock market, one of the worst years in the market in history. Double digit negative returns. The earnings have been actually pretty good. The economy's been strong, yet the market's not showing us that. So that's because the market is looking forward. It's trying to predict and there's a 5050 chance or a 60% chance now that we will go into a recession of some type. We don't know how it's going to be a deep recession. We still don't know if it's going to be a mild soft landing. We don't know just yet. No one has a crystal ball. But the important thing to take away from here is by the time we get the bad economic data, once we get that bad economic data, guess what? The markets are going to be looking forward and probably going upward because now they're going to be anticipating that the Fed is going to start cutting rates to throw some juice and some fuel back on the fire. So the reason that I say all this is just kind of try to keep things in perspective, folks, when you're listening to this stuff, I know a lot of times it gets confusing, but the market isn't really worried or focused on what's happening right now today, or even in this corner.

Erick Arnett:
It's trying to look at what's going to happen in the next two, three, four or five quarters. So even there was a chart that I saw the other day, even if we go into a recession, we might even be in the midst of a recession right now. We won't know until we can look back on it six months from now. But let's say we're in a recession for a whole year. The stock market historically has already starts to recover and grind grinds higher six months into that, about halfway through it. So be patient, folks. I know this is painful. I know that the volatility is a little scary. I know if you're listening to the news every day and the rhetoric out there and you have a lot of your doomsayers, you know, you got your bears and you got your bulls, right. But if you're truly investing for the long term and you're truly investing and you have a solid retirement plan in place that will weather all storms, then you just you have to be careful. Don't make any big knee jerk reactions here. Sell out of the market or go into the market or you know, But anyways, going back to real estate too, I want I know you've got a question now, but I want you to follow up with this, too. I want you to kind of give us an idea of do you think it's a good time to be selling right now? So I want to just comment on you mentioned that it feels like it's the markets or the markets are going down.

Erick Arnett:
And you said the markets always forward looking. And it's so true. And you may have heard those listening may have heard the term contrarian. I like that term. I like to be in that group because I like to be because when when things are at their worst, that's when you have the most opportunity. And so I think it's good for us to tune out the noise of the radio and the TV and the news and all that noise and talk to Erick, talk to myself and people that have been in this in the market, not just the stock market, but but the real estate market, the commodities market and understanding how the markets move. Erick is right. This as basically things are sounding like they're going to get really bad, you know, from the listen to certain people and they might who knows but it's it's it's the markets are forward looking. And so typically the people that are getting back in the markets where people are going, oh my God, you're getting it now. Those are the ones that typically win big. And I've done that in the past with real estate and the stock market. I'm sure Erick cashed with our clients.

Erick Arnett:
And and so again, it's good to understand how the markets work. You know, the data that we're looking at today is is data that we're getting that's been happening over the last month, one month, two months, three months, and that's history. And so if you want to make make your decisions based on history, what you're going to do in the future, I'm not saying you shouldn't use history as a guide, but if you understand how the markets work and you understand that when things look like they're not really good, that can typically be a good time to buy in or take advantage of some buying opportunities. You definitely want to hear again, talk to an advisor who knows what they're doing has been through these bear markets, bull markets several times, understands how the markets work and how money moves and best advice and how you can take advantage of these buying opportunities. Back to your question about real estate. Is it a time to buy or sell? I mean, so if you're if you're a retirement retiree out there listening right now and you're thinking, should I put my house on the market right now, should I wait a little bit? Could it go down further? Might it go higher? Know I know that folks are out there listening and probably thinking I. In my retirement plan in the next year or so. I do want to downsize or I want to make that move or make that change.

Erick Arnett:
Is it a good time to do that? So if you wanted the big, big money, the crazy money, the mad money that was probably six months ago was the time to do that because prices are so listing, prices are actually coming down. But sales prices and this is this this date is about a month or a month and a half old. So it's said sales prices haven't changed or gone down near as much as listing prices have come down. So because some of the list prices were just way too much, they weren't they weren't even they were unrealistic. They were looking for people that were. So I'll give you I give you a perfect example. I had to spec homes. I put on the market probably back in June, and I just missed the talent market. I put my spec homes on the market for 445,000. I was probably 60 plus thousand over what the real value was. And if I could have got my homes on the market two months earlier, I could maybe caught that that wave. I missed it. I couldn't get the homes in in time. So I experienced that missing the wave that just sold these spec homes for about 50 to 65000 less than that overinflated price. And I'm selling the homes for a realistic a good number. So so is now a good time? Good time to buy, a good time to sell? It still is.

Erick Arnett:
There's still people buying. Not as if you got your price, if you got your home price to sell, giving it away, but you got your home priced in where there's comp to support it, yield that you will sell your house may take a little longer than it did six months ago for sure, but you will sell your house. The challenge is you want to make sure you got a place to go. The other thing too, is when we talk about timing on things, sometimes it's just got to be about what's right for you and not, am I catching the perfect price or am I not catching the perfect price? Am I? You know, and don't beat yourself up. Oh, I missed it. I didn't sell six months ago when I should have. Because guess what? That was really overinflated prices. I mean, those were like the feeding frenzy. Just things were just overvalued. So maybe now things are just settling back to kind of what they should be a more normalized value. But we still had a very nice price appreciation and still have really good demand for homes in the state of Florida. So I think that should we should be okay. So but you got to do what's right for you at the right time and that's why we're here for you folks. Take point is always ready to build that stress free retirement plan for you.

Producer:
Where is the best place to hang your hat when you retire? I'm Matt McClure with the Retirement dot Radio Network. Powered by AmeriLife. Whether retirement is just around the corner or several years away. Time is ticking on planning not only your finances for your later years, but where you want to live out your post-retirement life. Personal finance website wallethub recently released its list of best states to retire in 2022.

Jill Gonzalez:
Florida, unsurprisingly ranked number one, followed by Virginia, Colorado, Delaware and Minnesota.

Producer:
Wallethub analyst Jill Gonzalez.

Jill Gonzalez:
The top ten continues with North Dakota, Montana, Utah, Arizona and New Hampshire.

Producer:
So what makes a state one of the best to retire in?

Jill Gonzalez:
The study was based on 47 metrics, including tax friendliness, the elderly population, golf courses per capita and shoreline mileage.

Producer:
As for Florida, which landed the top spot this year.

Jill Gonzalez:
Florida excelled in tax friendliness, fellow retirees and things to do, but could use improvement with home health aides per capita.

Producer:
Even though the Sunshine State is number one overall, if finances are your primary concern, you might want to consider a move to Mississippi. It ranked as the state with the lowest overall cost of living. As for tax friendliness, Alaska jumps to the top of the list. But what if you want some culture in your retirement years? New York ranks as the number one state when it comes to the number of museums per capita. The trade off there is naturally, the Empire State is one of the most expensive in the country. So where do you want to spend most of your time in retirement? And what factors are most important to you when considering a potential move? Those are key questions to consider as you plan for the future. With the Retirement dot Radio Network powered by AmeriLife, I'm Matt McClure.

Producer:
At Take Point Wealth Management, we know you've worked hard to earn your money and you've worked even harder to save it when it comes to planning for your financial future. Trust Erick Arnett and his team of experts who have been helping individuals, families and business owners find financial freedom at their veteran-owned firm for more than 20 years. Let us help you protect and grow what you've worked so hard for. Schedule a free no obligation consultation now at TakePointWealth.com.

Erick Arnett:
So hey everybody welcome back to Take point on retirement radio. So glad you're here with us today. Merry Christmas and a happy New Year. Man, I can't believe that it's already here. This is crazy. I was sitting there last night thinking about it now, and I felt like I was remembering something that I did last year at this time. And I was like, Holy cow. It seems like yesterday was January, literally. I mean, that's how fast this year went by. So hopefully you guys out there listening, we'll have a merry, Merry Christmas and a happy New Year. And let's put 2022 behind us and let's get focused on 2023. And with that being said, we got some good info here with our tax extraordinaire, Mr. Randy Woodruff. We want to talk a little bit about some obviously, it's probably a little bit late to do that year end tax planning. I know we already had our clients and started in October, November, December. We've met with all of our clients. And that's the thing too. I'd like to point out for you listeners out there is that if you don't have a team that's surrounding you, a professional team, like an investment advisor that's been in the industry for 25 years, and also like a CPA that's been in the industry for almost almost 30 years. So I think that, you know, not to sit here and toot our own horn, but I do think that we offer a lot of value for our listeners and our clients out there.

Erick Arnett:
And, you know, I think it's important and what's what makes us a little bit different different is, is that we do, no matter what size relationship we have, we don't treat anybody differently. You know, if you've got 50,000 in your retirement plan versus 50 million, you're going to get the same treatment and same attention across the board. That's just how we operate here. But, you know, we you deserve you should have had and you deserve a year end planning, tax planning and financial planning review to talk about all the different strategies that changes the tax changes. Have you taken your required minimum distributions? You know, have you done your Roth conversions? What can we do? Let's look at your taxes and your projected taxes for 2023 and how they are going to affect your retirement and your portfolio. Are you taking Social Security, all these different impacts? Folks, we go through it A through Z and all of our year end reviews with our clients and we start those in October, November, December timeframe. And you really owe it to yourself. You deserve that kind of service. And like I said, I don't really care what size relationship it is. That's why we created Take Point Wealth Management is that Randy and I have a background of working with high net worth clients and, and years ago we came together and we thought, you know, because the big institutions, the big banks out there, we're not going to name any names, but in all the big brokerage houses and they kind of went to these minimums, you know, if you don't have $1,000,000 account, they just don't give you any attention.

Erick Arnett:
They give you a kind of a one 800 number. And you talk to some kid on the phone and they say, oh, yeah, you know, based on your age and fill out this questionnaire, you should be in this portfolio and they just stick you over in this mutual fund portfolio and said you should be good to go. You're you're you're 5560 years old moderate portfolio for you. So it's like it's just this blanket approach across the board and I hate that that drove me crazy. And I was even stuck in that system years and years ago before we created Take Point Wealth Management. And I'm just here to say that that's why we created this. You deserve that high net worth touch. You deserve, that, that full planning that we can bring to the table for you. So I just wanted to put that out there and and that's why we created take point was we thought that everybody out there, no matter the size of the relationship, you know, Mrs. Smith from Main Street deserve the same treatment that the Rockefellers get in Wall Street. I mean, really, that's what we're trying to deliver here.

Erick Arnett:
So if that makes sense to you folks, please give us a call. Reach out to us at 352 616 0511. We're on the phones today standing by to talk to you and to get an understanding of what your concerns are. Do you have a good plan in place? Maybe you have a plan in place. We'll test that plan for you. We'll take a look at it. We'll evaluate it, we'll test it. We'll stress-test it and see how it's going to hold up over time. If you don't really have a plan, you know, you just kind of been winging it in a sense. And now you're all of a sudden, oh, man, I'm a couple of years away from retirement or in retirement. I really need to get my ducks in a row. Then let's put a plan together for you. Give us a call and we'll do that. 352 616 0511. You can also just go to take TakePointWealth.com in the upper right-hand corner you can click and get on our calendar instantly and we can set up a chat session for 15 to 20 minutes just to get to know each other and see if it makes sense for us to move forward. So with all that being said. Randy. One of the big things I think that folks may or may not know, and I know we've talked a little bit about on on this show and this required minimum distribution that Uncle Sam makes us take every year, this pesky pain in the butt.

Erick Arnett:
You know, let's talk a little bit about that. And one I know for sure you've got to take your RMD by the end of the year, right? December 31st. So are there any exceptions to that?

Randy Woodruff:
We talk about on this show. Having a Roth IRA is exceptional that we promote Roth almost every show we have. But one of the things you want to be careful to is if you're listening, we've had clients that in the past have been have not been really using a financial advisor, and they didn't have somebody taking a look at their RMDs and how much they had to take out, or if they have multiple financial advisors, they don't have someone taking a step back and looking at everything they have they have to take advantage of or be responsible for. So sometimes these RMDs get missed and it can be a very severe penalty if you miss your RMD or don't take out the right amount or it can be half the penalty from the IRS can be half of that year's RMD up to that amount. Now we have had clients in the past that had did not take out their RMDs timely or missed them for a year or two, and we actually wrote letters and got them out of the penalties.

Randy Woodruff:
But you don't want to have to rely upon the IRS giving you the relieving the penalty. You want to make sure you work with the financial advisor, make sure you have somebody on your team that if you have a couple of different advisors, somebody taking a look at everything they've got, they're looking at everything to make sure that that for one, you're properly invested in and you're not overly weighted in one or more sectors that you that you think you have diversification don't. But also on the RMD conversation, making sure that if you have multiple IRAs or retirement accounts that someone is calculating all of those, take all those others into consideration, that R&B calculation is made.

Erick Arnett:
Yeah, so here's my little plug, folks. If you're listening out there, it's great to have Randy from Suncoast CPA Group here today, and he's our very important partner here at Take Point Wealth. And and I have a little confession to make, so I know I meet and talk to hundreds of people a year and most a lot of people I sit down and talk to. I just ask them, who's doing your taxes is I'm looking through things. I'm seeing little mistakes being made and well, I'm doing I do them myself. And I'm like, why do you do it? Well, it's simple. It's easier to go on TurboTax, you know, and boom, I knock it out myself. I don't need a CPA.

Erick Arnett:
I don't need anybody. And I can say that I had that same attitude probably about ten years ago. You were not doing my taxes. And I was like, Hi, I'm a financial advisor. I can do my own taxes. And so I was doing my own taxes. And sure enough, I made some mistakes. And yes, I got audited. And Randy, I went immediately to Randy at that point because I was like, Oh, I need help. I need help. You're kind of like the police. The police, you know, it's like, we don't want to pay you anything. We don't need your help until we make a mistake. We have a problem, then we come running to you like help me out. Right? You get that all the time, I'm sure. But, you know, you may pay a little bit more, no doubt about it. You know, TurboTax is probably 100 bucks now. I don't even know what the heck it is if you're doing your own taxes. But you may you may pay a couple hundred bucks more to have a CPA do it. But I'm just here to urge folks that it's worth it. It's worth it because you have saved me personally so much money over the years by utilizing your services. And and I love the fact that we sit down every year and we go through my individual returns, my corporate returns, we go through my portfolios. And, you know, having your knowledge and experience to say, hey, you know, what about this? What about that? And that's really what it's about having a team that you can bounce ideas off of and catch problems.

Erick Arnett:
And and I can honestly say this, almost 95% of the folks that I bring in here that we meet with and I set set them up with you, you find something always and you saved them money. And and yes, you know what? You're a CPA and you're going to charge them a little bit more than TurboTax. And I get that. And and I pay more now. I pay you quite a I pay some good fees to do my returns and to keep me on track. And guess what? The IRS isn't bothering me anymore. And I love that. And I know that I'm not making those mistakes. And and so, you know, I just urge people, if you're listening out there, please give us a shout, because it's so, so important to get that right. I mean, the first thing that we gather when we sit down with somebody when we're doing a retirement plan for them is they're the last two years of tax returns. And how many times have we gone back and done amendments?

Randy Woodruff:
Many times. And it's it's it's amazing. How do your point people can they think they can do their own financial advising, they can do their own taxes. And, you know, if you have a simple tax return, a W-2 and interest statement, you probably can do your own taxes.

Randy Woodruff:
Just just, just like if you've got if you're working at an employer and your in your contributing to the 41k plan, you probably still should have a financial advisor because usually when you're working somewhere they have a say, a41k trustee and HR department gives you ten or 15 mutual funds to pick from and you're really getting advice. So even if you are working somewhere and you're coming to your 41k, it's still good to understand what's going on with your finances. And we've been you see that you said something earlier about talking to the big banks and big institutions. Just you've got less than $1,000,000. They give you a robo advisor somewhere and we hear it take point, give out customized advice for financial advice or tax advice at Suncoast CPA Group. And quite often clients ask us questions. What? Depends? Depends on lots of different factors. And so we don't just give you cookie cutter answers. We want to dig into your personal situation, find out what's going on in your life, where you want to go in life and give you answers that not only solve your problem today, but create opportunities for tomorrow and actually probably alleviate problems for tomorrow, too. So is Derek's point. I mean, if you if you're doing your own taxes and they're getting more and more complicated. You know Erick's point, we have many, many occasions gone back and then amended returns and either saved clients money or corrected positions that are going to save them some money in the future.

Erick Arnett:
So please come and see us here at Suncoast CPA Group and take point to help out with your taxes for sure. Yeah. So just to kind of review that requirement distributions, make sure you're taking those prior to the 31st if you're 72 and older and remember that those distributions are taxable. So don't take more than you need to if you don't need to take more than that required distribution. There's one exception. You know, you have to take your RMD by December 31st. However, when you turn 72, you have until April 1st of the following year to take your RMD and pay taxes on it. So that's kind of key there. And it used to be you had to take your RMD at 70, right. 70 and one half the year in which you turn seven now. So we got a little bit of a reprieve. They bumped it up to 72 which is nice and hopefully Congress will continue to move that up. But you know years ago they determined that it would give people they would give people a three month grace period on their first RMD. But you'll also have to make another RMD by December 31st of that same year. So in effect, so making two RMDs in one year possibly pushing you into a higher tax bracket.

Erick Arnett:
So be careful of that folks. Be mindful of that. And the big thing is, is what we're talking about here is that take point wealth as the advisor investment advisors and then Suncoast CPA Group and Randy as our CPA, we're going to help you manage those distributions in the most efficient way. And so just little things like we've we've sat down with people and they may or may not have known that, hey, you're taking your RMDs every year, but we also notice you're making charitable contributions to your church or some or some kind of charity. And guess what, folks, you can actually use your RMD to make that charitable contribution. Donate that to your church. Hey folks, the church need needs it bad. So you know, because of the decrease in follower people going to church these days and COVID really set them back. So but if you don't need the RMD but you have to take it anyway and you're already making these charitable contributions over here, all that change with the standard deduction stuff, you know, you have to have a lot of deductions in order to make that charitable contribution actually tax deductible. So you can just use your RMD. We can set it up folks, where we can send your RMD directly to your charity and that's a non taxable event. You're going to you're not going to get taxed for that RMD distribution.

Randy Woodruff:
Plus, if your income is at such a level where you're having to pay tax on your Social Security. So let's just say your RMD was 10,000, that 10,000 is not part of your taxable income anymore and that could result depending upon your income, other income that could result in your Social Security becoming less taxable or not taxable at all. So it could save you. It could here in the 10,000 would not be taxable. And then some or some or all your Social Security cannot be taxable too. So really, really big benefit. I'm glad you brought that up. And so many people don't know about that. Don't take advantage of that.

Erick Arnett:
Yeah. And then if you here's another great example. We were sitting down. With with a client here a few months ago and and she was having to take her first RMD and she's like, oh my gosh, it's like I don't need this money. It was like an $18,000 RMD, which is substantial, you know? And she's like, man, this is going to go now. Now it's going to go on top. My Social Security is going to create higher taxes because I can't stand these RMDs. And so I said to her, well, based on what we're seeing is I'll see you make charitable contributions in the past. And she says, Yeah, yeah, I make a I'd write a check to my church.

Erick Arnett:
I said, Look, we can just do that right from your RMD, that's going to reduce your taxes. We still have to take some RMD. But guess what we did folks? We bought her a universal indexed life insurance policy, so we use that RMD to pay the premium on the life insurance. The life insurance is giving her an instant death benefit, which is much higher than almost what her actual portfolio is that she's drawing from. So now we just increased her net worth because she wants to leave a legacy to her children by just so now we're really utilizing, although we had to pay money on tax on that, now we put it into a tax free vehicle, that money grows tax free inside the whole life and then you can pull it out in the future tax free. And it also goes to your heirs tax free. So great way to combat that RMD and to keep your estate and your overall wealth and your portfolio moving forward and growing even though you're having it stinks that you've got to draw that out, right? And you got to pay tax. So we just we just decreased your what, your wealth, your portfolio. Right. But if we can take it and funnel it over here and still maintain your wealth and still increase your estate, then we're really what we've created like an RMD buster strategy where we don't have to see our estate and our retirement dwindle, we can actually increase it.

Erick Arnett:
And so just little tidbits there, folks. And that's why working with TakePointWealthManagement, working with a team, it's going to surround you with tax advisors, certified financial planners. We have CFAs, we have advisors standing by with a great amount of experience that are ready to help you today. And and of course, we love, love, love, love, which you talked about earlier. You can we can actually say goodbye to the RMD completely. If we can get that. Let's get the IRS out of your life as much as possible and divest the IRS from your retirement plan. Because if you if you're still in a for one K or you're still in a traditional IRA, you're are going to be required to make those distributions. You're going to pay the tax. It's going to kick out on your return. It's going to increase your Social Security, taxation, create, create all kinds of problems. So let's let's get that over into a Roth as fast as we can. Let's do those conversions, pay the taxes now, because guess what, folks? Once you're in a Roth, you don't have to take the RMD anymore. And guess what? When you do take those withdrawals in the future, they're tax free as well. And so imagine having the flexibility to say, hey, now I'm back in control of my money long term in my future and I can alleviate that long term tax burden.

Erick Arnett:
Because guess what, folks? $35 trillion in debt taxes are going up. In fact, we're going to talk a little bit about that here real quick. The tax brackets actually did move up for 2023, in a sense.

Randy Woodruff:
Yeah, they did the tax bracket. So the tax rate stayed the same. Back in 2018, Congress and the White House passed some tax reforms. One of the things they did is they lowered the tax rates for all AmErickans across the board. So no matter how low, make it 10,000 or $10 Million, your overall tax rates went down. Even the top tax rate went from 39.6% down to 37%. So but every year the IRS adjusts the tax brackets, if you will, due to inflation. In the last couple years, we've had some nice rates, especially this coming year. So what are the tax what does that mean, the tax brackets? So as I mentioned, there are seven tax rates. And so if you're married filing joint, I'm looking at the 2021 tax bracket here. So if you're married, filing joint, roughly the first 20,000 of your income was taxed at 10% different, 20,081 was taxed at 12%. So the new tax brackets, you know, that that 20 0 to 20000 trigger is going to go up and then to close to almost 20 to 23000 in that second trigger, if you will, going into the next tax brackets going to be close to 90 grand.

Randy Woodruff:
So all these brackets are going up. So what does that mean? Again, the tax rates, the tax rate is not going to change, but the dollar amount that triggers you going into the next higher bracket went up. So basically your income is you're going to be paying. I'll say lower tax rates on more of your income because the tax brackets went up. Which which which which is a good thing. It's good. It's going to benefit all of us. But here again, a lot of our incomes are shot up because of inflation. So this is basically just inflation adjusting these tables to take to reflect what's going on in the economy. So one of the things that we've talked about on this show a couple of times before that the IRS hasn't adjusted in at least 30 years is when your Social Security becomes taxable. So it's great that they're adjusting these brackets up to recognize that people's incomes are going up because of inflation. And so triggering that higher tax bracket now happens at a higher earnings rate. But one thing they haven't done for all of our retirees out there is they have not adjusted the base amount of when your Social Security becomes taxable for at least 30 years. So for all you seniors out there that have not been paying Social Security on your taxes or been paying or been paying taxes on your Social Security or been paying very low tax on your Social Security, you're getting your last two years.

Randy Woodruff:
You've got some significant increases, COLA increases in your Social Security and all the other incomes have gone up. Don't be surprised if if you're now paying more and more taxes on your Social Security. Again, they haven't adjusted that number up, that base number up for inflation for 30 years at least when the income trigger, that begins to trigger taxation of Social Security. So if you have some if you if you're part of one of these big AARP and other organizations, I recommend or recommend you write to them and make them aware of that. Let's apply some pressure in Washington to to help our seniors out and recognize that they need to have that adjusted for inflation also. Yeah, I mean, we get I get questions all the time and I'm not a tax professional, so I have to always, you know, say, hey, consult your CPA, your tax advisor. But that's what's nice about being at TakePointWealthManagement. We have you right here on staff and that's pretty awesome for me and for our clients because I have a quick answer for everybody. So but yeah, I mean, one of the things that I'm hearing all the time too, and what I'm hearing you say is it could potentially it's kind of like a shell game, almost like, yeah, they're giving us an increase in Social Security with the COLA, but yet the brackets have moved a little bit to where the taxes you might pop you up into a higher rate and they're going to get more back from you anyways in taxes.

Erick Arnett:
So it's like we're going to give you more over here, but we're going to take it back over here and it's like a smoking mirrors type thing. So that's why I think it's so, so important to get that consultation with a CPA, with a real good, strong experience tax advisor, someone that's just not just using some piece of software to plug things in for you. That's called a data entry clerk. You really need a CPA professional to review everything. I mean, I'm just thinking like little things. Like I had a gentleman call me the other day and he was like, Hey, my wife and I are on Social Security. You know, how much money can I make before Social Security's going to start getting hit with taxes? And so, you know, that's also changing in 2023. But we were able to give him that information to kind of help him strategize. And and that's one thing that we love, love, love and why we want to get you to the Roth. And if you're out there listening today, please give us a call. We want to get you to the Roth as fast as possible. 352 616 0511. So we can do that Roth planning with you because in that Roth, it must be nice when you get you're sitting down with somebody and you're doing their returns and you're like, Oh, you've got all this money in.

Erick Arnett:
Roth Well, we don't have to take it from here. We can take it from there, you know, and it's not going to go to your bottom line. I'm not going to kick you up into another tax margin or tax bracket. So having that flexibility of the Roth in the future for future tax planning, it's got to be pretty tremendous. And I'm sure you get pretty excited about that when you see it. Yeah, I do. One of the other things that's great about a Roth IRA is and you mentioned this earlier, it's a great point, is that you don't have to take any distributions out of your Roth IRA. So the entire time you're in retirement, you can not take any money out of the Roth IRA if you want to. And we have some of our clients that want to, as you mentioned, leave a legacy to their family. And that's the nice thing about a Roth IRA is when the person that has the Roth IRA passes away, they can leave this to their beneficiaries, their kids, and then they get. So if you had your money in the Roth, all that money grows tax free as well. So if you have significant amount of money in a Roth IRA and you pass that on to your kids, as long as they're so until they get to where they can take money out of the Roth that continues to grow tax free.

Erick Arnett:
So you can really leave a legacy to your children all that grows tax free when they pull out tax free for them as well. And so that's one of the great things about Roth In retirement, if you need the money, it's tax free. But then if you are fortunate enough to have enough wealth, excess wealth that you don't need to pull from your Roth, you can leave that whole thing to your kids. It's a great asset to leave to your kids. And again, it grows tax free for them as well. So. If you if you convert to the Roth today and you say you're 70 years old, and then by the time you pass away, your kids may have another 25, 30 years from April from. And so you've got all that time for that wealth accumulation to grow tax free. So it's a really, really good, good tool to use both while you're alive and in retirement and when you pass away from your kids as well. So, Randy, it's Christmas time, and I don't mean to put you on the spot, but I'm in the gift giving mood and I'm hoping you are too. So I just have a suggestion or recommendation. You can say yay or nay, but this just popped into my head on the fly.

Erick Arnett:
Like everything in my life, I just kind of roll with this stuff, you know? And. And. But we don't even rehearse for this show. We just go for it, right? And so we offer at Take point wealth. If our listeners call in, we offer them a free evaluation of their current retirement plan, or we'll even build you a retirement plan completely free of charge because you're calling in off the radio show. And that's our gift to you. So Merry Christmas, folks. Take advantage of it. But how about this? All those people out there that are doing their taxes on their own or they maybe have their next door neighbor who's, you know, just a tax advisor or data entry clerk or whatever it is? I don't mean to beat anybody up, but how about if folks got a hold of us and asked us to do just a free tax review? Is that something you'd be willing to do? 100%. Be very happy to do that. Please come see us and we'll be happy to sit down with you and bring us two or three years of taxes. We can go through them and look for things that may not have been taken advantage of or some things that you can take advantage of in the future, some changes you can make to. I spoke with someone yesterday and they had an HSA plan for a few years and they basically quit contributing to it.

Erick Arnett:
They have a high deductible health insurance plan. So I asked them, why aren't you doing the HSA? They think we needed to. So if you're spending money, that's just one thing. If you're spending money on health care bills anyhow and you have a high deductible plan, you're coming out of pocket for all that money, you might as well put the money in the HSA plan, spend the money out of the plan and get tax deduction for the HSA contributions. So people you heard it here. Mr. Woodruff is going to give us a free tax evaluation for Christmas. Give us a call right now. 352 616 0511 or go to my website take TakePointWealth.com click on that upper right hand corner schedule an appointment with me Now let's get those returns scanned in and get them over to me. I'll get them to Randy. We'll do a free tax evaluation because you might be thinking, Hey, I haven't done any tax planning this year and it's a little bit too late for me. But hey, let's get let's get on track for 20, 23 and let's do it. Do it the right way in 2023. So thank you for that. Merry Christmas, everybody. I know we're running out of time here. I hope you have just a blessed, blessed Christmas and a happy New Year. And Randy, wrap it up for us. Yes, sir. Merry Christmas, everyone. Happy New Year. Look forward to seeing you in the New Year and many happy returns.

Producer:
Thanks for listening. To Take Point on Retirement. You deserve to work with a private wealth management firm that will strategically work to protect your hard-earned assets to schedule your free no obligation consultation visit TakePointonRetirement.com Or pick up the phone and call 352 616 0511.

Producer:
Investment Advisory Services offered through Brookstone Capital Management LLC BCM a registered Investment advisor BCM and Take Point Wealth Management are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results.