Winning in Retirement

What is Your Tax Bracket

• Akers Financial Group

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Brian Akers and Paul Franco discuss strategies for reducing lifetime tax brackets on their radio podcast. They emphasize the importance of tax planning beyond just seeking the largest refund, as this can lead to higher future taxes. They explain the concept of marginal and effective tax rates, using 2026 tax brackets as an example. They highlight the significance of Roth conversions, effective tax rates, and the impact of the 2017 Tax Cuts and Jobs Act, which locked in current tax brackets until 2028. They also discuss the benefits of proper investment planning, such as using index funds to avoid unexpected dividends and capital gains.

Unknown:

The following is a pre recorded show, welcome to winning in retirement with your host, Brian AKERS, Certified Financial Planner, professional and founder of AKERS Financial Group, now helping you win in your retirement. Here's Brian AKERS, welcome to winning

BRIAN AKERS:

in retirement. This is Brian AKERS from AKERS finance group, and we welcome you to our radio podcast. Here with me today. Is Paul Franco, a financial advisor from AKERS Financial Group, and Paul, good morning. Good morning. Brian, how are you? I'm doing. All right. How are you today? I'm great. All right, so I don't know if I start out this show talking about your golf game or talk about a little bit later, but we're going to do our very best to keep information coming out, yep. And that information you might feel like we get real detailed, almost like in the

Paul Franco:

weeds, which I live in, in my

BRIAN AKERS:

golf game. Yes, I thought you always like playing the other fairways or the

Paul Franco:

or or somebody's backyard or a house or their house, Yeah, unfortunately.

BRIAN AKERS:

All right. So the show is called winning in retirement. The topics called reduce your lifetime tax bracket. And it sounds nerdy, right? Paul, it does. It does. But we got some basic things to do. We're gonna talk about getting too deep in the weeds, and we're gonna try not to be we're trying to keep it simple. Absolutely. I'm trying to hit it straight and understand it.

Paul Franco:

Stay right on the fairway, keep it simple.

BRIAN AKERS:

That's all the golf terms I got. I'm not much of a golfer, and I know you enjoy a little bit of golf, yeah,

Paul Franco:

not much. I I wish I was better, quite frankly, but

BRIAN AKERS:

that's golf is still a game of hide and go seek. To me, someday it'll change. All right, so at winning in retirement, we want you to win in your retirement years. What prevents winning, one of them is the fact that we got to keep paying taxes, and sometimes we pay tax more in retirement than we did during our lifetime because of the way our portfolios, the way we save what we've done. Sometimes people are so successful they trigger higher taxes in retirement. It's great to be successful. I don't mind paying tax, but if I can reduce it, why not?

Paul Franco:

And the surprise taxes, the ones that they didn't know were coming that, oh, I got a letter in the mail that I'm paying more, I have a higher tax now. You Oh, I could have avoided this years ago. There. That's the surprises. Is what? What I what I

BRIAN AKERS:

don't I'm glad the future doesn't call and say, Hey, Brian, what did you do to me 20 years ago? Because I can pay a lot of tax, you could have made a big change. And what we're trying to do on a radio show is tell you, you call it from your future self, what would we really want done in the future? And so we got to start with a bunch of things. We got to talk about the basic idea of tax law and how it works on the federal level. Then we got to talk about what planning does. And then we got talking about reducing your overall lifetime tax bracket. Taxes are a lifetime battle, not just, not just this current

Paul Franco:

year, right? Absolutely? Yeah, it's absolutely a lifetime battle. There's always tax planning that can be done regardless of your high income low income. Tax planning is critical for every single individual, yeah?

BRIAN AKERS:

So I a lot of tax companies that prepare what they try to do is give you the biggest refund. And everyone wants the biggest refund. And I'd like to caution against that, because sometimes the biggest refund today means you're gonna pay more tax later. Because a lot of times they'll say, hey, let's do a deductible IRA, right now, they'll lower your taxes and, oh, yeah, well, they'll save me some money, and that's a good thing to save and invest. And then later on, 2030, years from now, you see, oh, that's all taxable to me. Yeah, you took a small deduction back, back in that day, and now you got to pay the tax on it.

Paul Franco:

Absolutely. Yeah, the it's interesting, even the commercials now with some of the big tax preparers, and they are preaching the concept of just lowering your taxes now. Oh, meet with us. We'll get your taxes lower now. And it's all focused on right now, the

BRIAN AKERS:

biggest refund you ever had. Call us today.

Paul Franco:

Yeah, and it's almost, it's very salesy, you know, it's, it's got, like, it's, and it's, it's, it's fascinating, it's, it's a good concept, but is that really good tax planning? It?

BRIAN AKERS:

I believe you pay a fair share. I believe you should know what you what your income, where it comes from, know all your deductions. Take everything you possibly can. But there's certain decisions such as, Oh, should I contribute to a Roth IRA or pre tax? Pre tax lowers my current taxes. Roth lowers my lifetime taxes, right?

Paul Franco:

And we're worried about lifetime taxes, not taxes right now.

BRIAN AKERS:

And this reason is all because of July 4, 2025, what happened on that day, Paul?

Paul Franco:

That was the day of the one big, beautiful Bill act. I think I got, I think I got all my B's in there. You got triple B in there will be OB, B,

BRIAN AKERS:

ba, yes. I wish it just was called your tax brackets are locked in. The tax brackets are locked in. Is the big information now. Those tax brackets are the law right now and law to the future unless, basically an act of Congress votes and changes the tax brackets. I believe it'd be easier for Congress to add on. One and make additional tax changes rather than changing the brackets. But there'll be a day when they'll have they'll change the brackets based on necessity of issues going on with a national debt or the federal government need more money for something.

Paul Franco:

Well said, yeah, the idea of, ultimately, we know taxes are permanent in air quotes. I have air quotes now. You can't see

BRIAN AKERS:

them. I can feel it.

Paul Franco:

You can feel it, but it's permanent until, like you said, Congress makes a change. So we do know what tax laws are, at least through 2028 Yeah, so

BRIAN AKERS:

you probably don't think about 2026 taxes. You can but you know about your 2025 taxes, you probably have your return. So on that tax return, if you ever want to re listen to this show, pull out your return, that'd be a fun game to play. And what we got to do is we got to sort of talk about tax brackets. And we got to talk about, when you look at your return, what does that all mean? Try to explain what a tax bracket is to me.

Paul Franco:

Paul, sure. Yeah. So, so the way I like to explain tax brackets, I like to explain it to the start of what your marginal tax bracket is. So what that is is to the highest level of income that you have, what tax bracket Do you fall in? So if your income, if you're for example, like if we look at the 2026, tax brackets, if you're married, and your income, say, is $150,000 you would fall under a marginal tax bracket of 22% okay, so what happens is that's not to the dollar when you pay tax, what all your money's taxed at, but that's your highest marginal tax bracket, and that's a little bit different than something called an effective tax bracket, or an effective tax rate, which is essentially taking a look at your income, tiering it under each of the brackets, and then ultimately finding okay to my to the dollar of taxable income. How much true tax do I pay? And that might be somebody who's at a 22% marginal tax bracket, but at a 16 or 17% effective tax rate. And so that's something that surprises some people. Brian, is that no, not if you have a bonus or you have income that puts you into a new marginal tax bracket. That doesn't mean that all your income is now taxed at that higher rate. It's only that income above that threshold that puts you into the next bracket, and that was a little bit to the through the weeds. I'm sorry, I

BRIAN AKERS:

believe you're in the fairway to the right side, all right. So that's a stupid question. Who cares? Like, why should we care?

Paul Franco:

Yeah, I think that's a great question. It's, it's the mathematical equation of tax planning means that we can sit down and actually lower your long

BRIAN AKERS:

term week. So the answer is, let us do it. We let us figure out the weeds. Let's figure out what, how it applies to you. Um, so the So, the idea is this, so imagine you're walking up steps, and those steps are tax brackets, and it's like, when we make a little bit income, it's 10% and 12 and then there's a big jump on that next step to 22 right? Like you have the jump up there, right? Huge jump, but that's just that extra dollar. And so if you can effectively stay in a 12% bracket, that's a good thing. So in planning, we try to find ways to do that. Now, in reality, you can't control all of your income. It comes and you end up being 2224 then there's a question of, do I jump to 32 and the question would be is, do you want to jump to 32 and we say, probably not. How can we change it? How can we address it? And there, how we invest our money is one of the biggest ways to control your taxes. Do you own mutual funds. Mutual funds, you can't control the taxation, because they throw out dividends, right? On 12, on 1231 right?

Paul Franco:

That's a perfect example of the

BRIAN AKERS:

surprise, right? Yeah. It's almost like Gomer Pyle. You know, Gomer pilots, yeah, what? What did he say? You go, you go, I can't really say it's what he say, surprise, surprise. And so he'll be genuinely say that, right? But the idea is that, is it really a surprise when we buy a mutual fund that does trading, and then when they gather all their accounting and throw out a dividend on the last day, and they do that every year? To you, is that really a surprise? And fundamentally, index funds are designed not to do that by the way they trade, the way they pull one stock in and one stock out, and not pick up a capital gain can cause us to have

Paul Franco:

lower taxes, right? And we're not asking every individual to be experts on that concept. That's what we are, Brian, meaning they come to us. Okay, here's my portfolio. Well, what can we do to help lower your tax bracket now and and with especially that, that sort of, that dividends, the capital gains that they don't even receive, those just kind of keep getting reinvested. Well, we can avoid some of that tax by just doing proper planning. Yeah.

BRIAN AKERS:

So the concept of this show is called, reduce your lifetime taxes. I was working with some of you. Kids and ones upset that they took taxes out of their their paycheck $1.51 or something came out of their paycheck. Like, where did that go? And where's that? How they spending my money? That's $1 and they're like, you're in the lowest brackets of your lifetime. Be grateful you pay taxes for us to get what the government provides. And so there is a fair share, I think we need to understand, but we don't pay more than that. We don't want to do things are not right. But generally, the concept of paying tax, no one wants to do that. But what happens in reality is we really need, sometimes to pay tax now and never again. Pay Tax now so that we're in a bracket, I'd rather concept of maximize, not minimize your taxes. Maximize the bracket.

Paul Franco:

Yeah, yeah. And believe it or not, that the government loves us paying more tax. Now, some people get surprised by that. They're like, why would why would they want you to do tax breaks? Now, if they're going to give tax free later, it's more money now. They're not running

BRIAN AKERS:

for office later. Yeah? Anything, any problem we can push to the future?

Unknown:

Why not? Right? Yeah, that's what we try to

BRIAN AKERS:

avoid, right? Yeah. So this first quarter is flying by. Our main thing we want to cover is this. We're going to talk about lifetime of tax brackets and how to effectively, Be Wise With Your Money, pay taxes at a rate that's going to be lower over a lifetime. Let's not fully fund the government with your income. Let's give them some but not more than we should by being almost like so tax conscious. Now we don't pay tax at all, and then later on, we get hit with a lot more tax Absolutely. So understanding all of this is a big piece of what we do at AKERS Financial Group, tax planning isn't a big chart. Isn't just one calculation. It's what are you doing? Where's your money at? Let's look at the last three returns, and let's figure out what to do, and we help figure it out for you. And say these are ways to effectively give you the best way to pay your tax now and even in the future. AKERS Financial Group. We're local. We're independent. We don't report to a big company on Wall Street. We report to you our client. We have offices in Forest Hill and Lutherville. Our clients all around the mid Atlantic region, some around the country and all around the country, and even a few around the world. It's so easy to begin winning in retirement, just give us a call and schedule your free meeting with one of our team of advisors by calling 833 when retire. That's 830 3w, I n, r, e, t, I R, E, we'll give you a call on Monday to schedule your free in person meeting. Go to AKERS Financial Group Comm, or call us at 833-946-7384 to start planning for your retirement now. What is your effective tax rate? We'll teach you how to calculate that and explain why it matters even more. In a moment,

Unknown:

you're listening to a pre recorded show, welcome back to winning in retirement. Call 833, win retire now to schedule a visit with Brian and his team and begin winning in retirement once again. Here's Brian AKERS,

BRIAN AKERS:

welcome back to winning in retirement. I'm Brian AKERS from AKERS Financial Group. I'm president, founder of AKERS Financial Group, and here with me today is a financial advisor from AKERS Financial Group. Paul Franco,

Paul Franco:

good morning. Good morning, Brian. This is, this is always fun. You love quarter. Was good. You like quarter better. Yeah, you know it's you get your you get your feet, you get your feet grounded a little bit, and now we get into some

BRIAN AKERS:

good stuff. So it's great. Press forward a little bit harder. That's right, all right. Today's show is called reduce your lifetime tax bracket. Sounds like a lot of fun, doesn't it?

Paul Franco:

Paul, for us, yes, for the listener, maybe.

BRIAN AKERS:

But we add value, a lot of value, by actually doing this and implementing these things that you can pay less in taxes now and to the future, and even your family can pay less taxes if we can do certain things.

Paul Franco:

I Brian, it's so interesting, especially over the past few months, past few years, a big concern that the vast majority of people have that come into our meetings is about taxes. It's, Hey, am I going to have a tax problem? Do I need tax planning? It's that's a big concern that a lot of people have, that I'm sure that are listening to the show right now. Have it's, well, how are taxes going to

BRIAN AKERS:

affect me? If 401, K, millionaires, they see that count go from half a million to a million, million to two, two to four, and all sudden, like, Oh, I gotta take that out sometime. Oh, I'm gonna be forced to take it out at 73 or 75 What am I going to do? I've it was all deferred. Now I'm in trouble. Are you really in trouble? And my thing is, well, if we plan ahead and try to level lies. We can make it all work a little bit. What better? But not gonna be perfect. It's better to be more proactive and sort of pay tax now on purpose and get it. Get ahead of the game. Yeah, sure. Is All right. So this topic in this quarter is about talking about effective tax rate. This is not the tax brackets. The shows the tax brackets. That's what's a. IRS posts. So if you go on the internet, on the internet, and you type out 2025 income tax brackets, they'll tie into the return you just you filed, and then 2026 be with the tax year we're in, and looking at the brackets for this year, and it changes just a little bit. But the brackets are permanent, not the income numbers. Those change every year by indexing, yep, all right, effective tax rate. Let me just walk you through. If you get your tax return out and you look at how much tax you paid on the second Pay Page of the federal total tax paid, you write that number down, then you flip back to the front page and you look for adjusted gross income. You take that number, that adjusted gross income is adjusted gross income. It's not truly gross income, things such as Social Security, that's in the let in the middle of the return, and then on the right is where only 85% is taxable. For this calculation, we're going to that difference, or that delta. You got to add that into the Adjusted Gross. So you get to gross. You also got to look at tax exempt income. You got to look at anything you gave to qualified charitable distributions. You add all those things in, and you get a true gross income. And you take the taxes divided by that, and you see what you're really paying tax on average. Yeah, I use this a lot when someone owes money, and like, I got an example of a couple where the husband's like, Oh, she needs to take more of her paycheck. And I look at it, and I I take their on their w2 federal divided by gross income, and she was paying 14% you see whose fault it really was. And then I said, Can I have your w2 and he's at 9% I'm like, it looks like she's paying, she's paying the right map, 14% you need Up yours back. 350 a month. Yeah, and not, not the wife, but you,

Paul Franco:

yeah, I'm sure that was a fun conversation. And he's

BRIAN AKERS:

like, like, it doesn't matter, right? We either have, of course, it doesn't matter. But you asked first, yes, yes, but the idea is effective. So if, if our, if their brackets 22 that means we're early in in the 22 brackets, and most of it's 12, or we hit all the 12, and then every dollar above is 22 that's why the marginal, or the marginal tax rate of 22 isn't your tax rate on the whole thing, your overall rates lower. Now, as we build up in a bracket, then I'll send our average rate, which is what effective rate is, jumps up. Yep, I now, I just went into the weeds.

Paul Franco:

You did that's really good. And for some people, they probably, they love that. And so the some people,

BRIAN AKERS:

but not, not all the people, but some people want us to know it, and they don't want to know it exactly. Just want to know hey, I don't want to owe on my return. And we're like, hey, we want to hit zero, or we want you to write a check for $1 or they to write you a check for $1 but that's it. Let us figure out. Let's go dirt. We get all the dirt down. We'll figure it out. But like, when people start stacking income, like, let's say they had two or three jobs, and then, oh, why do I owe all the time? Well, you stack your income, you start pushing brackets. You take a husband and wife that are part time or reasonable pay, you put them together, stack up, boom. You pop up to another bracket. All sudden, no one paid in enough, and you owe. So why do we owe? Sometimes we owe because you have your money in the bank earning interest. Now you start buying all the CDs. You get 10,000 20,000 40,000 a year of income, they don't withhold tax on that, right? There's always a reason.

Paul Franco:

And if you with that, with the multiple jobs, if you don't tell each employer through the w4 form to

BRIAN AKERS:

take the tax, I like that form. It's like a but how many pages? 100 like it?

Paul Franco:

I used to like it, the new one. I don't love

BRIAN AKERS:

30, a couple pages, though it is, yeah, but the idea is that generally, the average tax rate based on gross and what you really pay is a good way of judging what you got to withhold, right? So that's, that's how I use it. I also use this when it comes to, hey, I want to pay more tax now. And, like, I bring up that concept to a client you're going to I want you to pay more now. And they're like, what, I don't wanna do that. And I'm like, Well, we're we have more room in the 12% bracket, especially people in their 60s, if they have money saved and Roth and pre tax and money in cash. And I can say, let's get some more to Roth. I love to do that through using the effective average tax rate, staying in the same bracket, watching the Irma a little bit depending on

Paul Franco:

where we are. And this is, this is what we love to do, is for people that we can ultimately show you, and we guide you. And we don't just give, you know, a generic sort of tax plan, sort of idea. It's we're running the numbers. We're doing spreadsheets. We have tax estimates that we run, yeah, that we are very specific, I say to the dollar of how much we can owe to a certain degree, because we try to, we can only estimate so much

BRIAN AKERS:

estimates, and estimate means not quite a guesstimate. We're not doing guessing. We're trying to take the real numbers we like to do in the fall of each year so we can take what year to date looks like. We found that when. You retire, there's about two years where you got to be real careful on what income is popping in here. Are they taking withholding? Are they withholding enough and getting it right? And then you got to decide, do I take federal out of my Social Security or not? I've heard that under the one big, beautiful bill, there's no more tax on Social Security. So why should I withhold? Is that true? Brian, well, it's true to 86% of people. But the problem is that the Officially, the one big, beautiful bill, set it up so that we get a tax deduction if you're over 65 I use the word we meaning someone else, 6000 per person under certain income, like 150 and then 250 it fades away, yep. But it doesn't really mean Social Security is totally tax free. Right? Exactly, right. It's not for everybody. It is for a lot of Americans, but 86% but sometimes people are paying tax.

Paul Franco:

You know, it's funny. I actually met with a wonderful client of mine yesterday, and she's a longtime radio show listener, and she's and her and her husband having a very successful business, and they are in there. They turned 62 this year, turning 63 next year. And I said, Wow, this is a really good year to do more tax planning. And they go, What? What do you mean? We we want to pay more tax now. There's they have successful income that comes from from real estate and from their business that. Again, I don't want to go too with far in the weeds, but we mentioned it at the beginning. But when they take Medicare at 65 and they have to pay more Medicare premium because of something called Irma at 63 meaning the income that starts next year, when, when we kind of ran the numbers, and we talked through the concept of, okay, let's run tax tax estimates towards the end of this year. Let's figure out how much we can fill up your bracket and ultimately get your taxable income higher this year, but get your lifetime taxes down in the future. That's saving, that's saving that particular client 10s of 1000s of dollars in taxes over their lifetime. And an Irma, which is not really a tax, but we can kind of call it a tax, is it's an additional premium that you could avoid just by doing proper planning, right?

BRIAN AKERS:

So you have that kind of planning where you can plan and watch the brackets, then there's some planning where the client brings in so much money that's coming in and can't stop and don't want to stop it, that they're at the highest brackets, yep. And my thing is, those highest brackets are the best. Highest brackets. We've had highest brackets ever. What was that? Then back in the World War One, World War Two, I think, was in 90

Paul Franco:

some percent for Yeah, World War Two was highest. Marginal rate was 94%

BRIAN AKERS:

something like that. And then in the just the 70s, the highest, the highest, Breck, the highest possible 70 some percent, yeah. And Reagan came in, started dropping them down. And then they've been working with them. And then last year, under the one big, beautiful Bill act, what they did is they locked in the bracket, top brackets, 37% now, yes, right? Yep, sure. It used to be, I'm 39.6 Yep. 37 doesn't mean that's all your federal tax. There's some other ones, Affordable Care Act, and oh, nine threw in a 3.8% investment tax, yeah, Medicare adds extra taxes. There's a few other other items in there.

Paul Franco:

Yeah, but like you say, if you go through history, you end you end up finding out that the tax rates we have now are really still kind of on sale, like historically, we have pretty reasonable tax brackets that we can do proper tax planning. Because what happens if taxes go up in the future to a more normalized rate, we're going to wish we would have paid some more tax now.

BRIAN AKERS:

So we are making informed, long term decisions for you, your family and your legacy by knowing the taxes, knowing how to apply it to how you invest and grow your money. How you invest and grow your money will ultimately dictate taxation in the future. If you do it sort of whimsical and not care about it, you're going to care some day, and that day you can't fix it. Yeah, we have,

Paul Franco:

I have examples of that. I know you do too.

BRIAN AKERS:

Oh, yeah. And non qualified annuities is a big one with that bothers me selling a second home or a rental home without thinking and planning, with a 1031 exchange has been a big place to save money. Having CD income instead of treasury bill income, you pay more in your state that you live in, mutual funds versus ETFs. These are just some of the ways that we try to do it. It all racks up, sure. Now what we've talking about is your taxes and how to control them. This is what Paul and I with the advisor, the AKERS Financial Group. We do for a living, so you don't have to, is the main idea. So you don't have to figure this all out. We help you. We love doing this. You love this ball. I sure do. Alrighty, love it. I'm glad you do, because planning for lifetime of taxes may not be your favorite thing to do, and we know that that is what we do. We want to make this as easy and as comfortable for you as possible, so that as we meet with you and put a plan together, it includes that it's taken care of, it's planned for, and then when it happens, you're like, we plan for this. We're okay, perhaps you've been sold. Something, regardless of whether or not you needed it. A knotted AKERS Financial Group with us, your retirement money follows your financial fingerprint. It's a retirement plan based on your unique fingerprint that determines where your money goes. It's not about us, it's about you. Give us a call at 833, when retire and schedule an in person meeting with one of our team of advisors. That's 830 3w, I n, r, e, t, I R, E, that's 833-946-7384, or visit our website at AKERS, financial group.com scroll down to the bottom or home page. Schedule a meeting right there. Tell us what station listen to. Also, that's a lot of fun. Call us again at 833 when retire, or go to our website, AKERS, financial group.com now that you know what an effective tax rate is, what is your retirement tax bracket? We'll explain this in a moment.

Unknown:

You're listening to a pre recorded show, welcome back to winning in retirement. Call 833 win retire now to schedule a visit with Brian and his team and begin winning in retirement. Once again. Here's Brian AKERS. Welcome back

BRIAN AKERS:

to winning in retirement. I'm Brian AKERS. I'm here with Paul Franco. We're financial advisors from AKERS Financial Group. What we do at AKERS Financial Group is we are a fee and or commission financial advisors for our clients, we guide them from where they are to where they need to be through listening and understanding and reading and getting information and building a written plan, a written Things To Do list, and then we build and work on that over the years. Yeah, that's basically the idea, right?

Paul Franco:

Paul, through planning, not product sales or anything like that, through planning.

BRIAN AKERS:

Now we believe planning leads to being implement, implementing. So implementing means there might, there will be investments, portfolios we manage. We actively manage. We've done them. We try to do our very best for our clients. We have a certain mindset. We like to take the reasonable route, amount of risk to reach the goal. We also build insurance, some ideas and answers based on what's needed, not what might be sold to you. Yep, sorry, you're exactly right, trying to hold back judgmental comments. All right, so what happens in financial planning is you get clients that come in and they were sold something, and you look at it, you go, why? And you're like, Well, how can I get them out of it? And that's tough. Now, it's nothing doing the talk show today, but the idea of lifetime of taxes, you know, there's some things where people take just a concept of tax planning and then they sell a product based on it, and it's really maybe too many fees to really save you any money. And so we found that in the cases that we've seen out there, yeah,

Paul Franco:

and how can you do a really good tax plan without, with, unless you really know where tax rates are in the future, which nobody does, it has to be adjusted. It has to be tailored to you every year. One of the big

BRIAN AKERS:

things out there, if in social media or whatever, you'll find they're saying, Don't Roth convert. Do a Roth withdraw. And then they say, there's a magical account to put into, and they won't tell you, well, they're trying to put in life insurance. Now, if you're Roth converting, most likely you're retired, most likely older age, most likely, maybe not, uninsurable. Insurable. Yep, some cases you might need life insurance. There's a need, and there is a use of life insurance that could work. But Roth conversions is math. It's investing. It's growing the stock market with a lot if you believe you have a life span that's beyond 8085, 90, and as you grow longer, I believe investing is better. The life insurance angle would be, as you say, you're going to die next year. And if the insurance going to cover you, life insurance probably would win. But so there's running

Paul Franco:

that company that's going to cover you

BRIAN AKERS:

for that, right? Well, people think it in reality might not be unhealthy. So they got to find, people find a reasonable idea. So the hardest part in planning is you do have to do a plan driven based on the client, not of all the product. That's a big deal. In this quarter, we're trying to talk about taxes, reducing your lifetime tax bracket. And the topic this quarter is your retirement tax bracket. Now some people will some advisors and agents and investment reps, though, basically try to push certain product products telling you that it's tax free in the future and but you have to pay a lot for it because of being a life insurance vehicle in it, right? And that's because they push, let's make your retirement zero tax something like

Paul Franco:

that, yeah? Which there's, there's books out there on that concept of 0% tax bracket. But quite frankly, I kind of disagree with that.

BRIAN AKERS:

Meaning, yeah, well, they go, they go all in 100% into one idea, which I don't believe that's right in any time Absolutely,

Paul Franco:

because you have to know the client. You have to know the individual, or are they charitably inclined? Are there any other ways that we know we're going to get tax breaks down the road with taxable money when we can, we can plan for that.

BRIAN AKERS:

That's the idea. The concept is, pay all your tax now, then retire with no taxes. And the problem. There is not what we're talking about today, which is your lifetime taxes. If I pay extra or bump up brackets, is that really wise? Now, if you're already in the highest bracket, I think it's wise. I just not the biggest fan of how do you how do you say it nicely? Paying too much tax? Yeah, I don't get more money. I'm more than more the higher percentage, and that's where the brackets come into it. So if you're in a 1222, 24% bracket, and you're going to jump into the 30% because you you convert it half a million dollars, I would say, why not do that over three years? Yeah, spread it out. This tax law is permanent. With a one big, beautiful bill, the tax brackets are permanent. Why not? Let's plan out over time.

Paul Franco:

Yeah. I love to ask people, when's the best time to pay tax? Is it never? Is it at its highest, or is it at its lowest? You know what? I get a lot of Brian, never,

BRIAN AKERS:

well, never, is the concept that's nice, and then a Roth IRA, you can actually pay tax now in the contribution. So it's not truly, never, exactly. And that's the thing, is the growth, yeah,

Paul Franco:

that's true. That's true. You could all the growth is not tax free, but the idea is that it's very hard to ever, oh, that's a fun one. Ever, to ever, never, never pay taxes, meaning we want to do planning to pay them when they're at their lowest, not when

BRIAN AKERS:

they're at their highest. Instead of Disney and me says, Neverland. Neverland sounds a good place to be like, I'm gonna go to tax, tax. Neverland sounds great. Never pay tax. That's a childhood, childhood dream, right? Sure is investment vehicles that provide that. We believe the Roth structure is a big deal, and you need to use it within reason, based on you. And that's the whole idea of planning. Is planning is based on you, and you got to take some, take your time and make sure you handle it. I do believe that Roth planning you got to have enough cash, other money, to pay the tax and to work it out?

Paul Franco:

Yeah, instead of taking it from the investments and, and, and really, the idea of Roth versus pre tax is still not an across the board recommendation. You know, it's very specific to the individual. There are certain circumstances where we really want to get taxable income lower in one given year, just if you have additional income from selling a property, selling a business, if we can get you into a lower tax bracket. There are circumstances where we want to take a look and say, Well, do we? Do we adjust our contribution in our 401 K to pre tax instead of adjusting it, you know, keeping it as Roth, there are certain circumstances like that.

BRIAN AKERS:

I would say what we got to explain to people is, this is how we do it. We do it. That's the first thing. We need information. We need the last three tax three years of tax returns. We need to know how your money's invested. We need to know your net worth. You can gather that with information. Get that to us in many different ways. You can give it through our websites. We have secure vault websites. We also have secure email encrypted we have offices you walk into and you can give it to them. So we do a lot of this to really, truly plan out what is best tax wise, we want to make sure that you, you are the beneficiary of hand less tax, not that you have to build it in the plan. We will make you sign things to make it work, and we will walk you through it, and you can know as much about the why as you like, absolutely.

Paul Franco:

Yeah, we love to educate people on it. But at the same time, some people are like, I don't want to be overwhelmed by it. I trust you to do it. And so let's we help work through that. Yes.

BRIAN AKERS:

Do you have anyone recently got a chance to do this

Paul Franco:

with well, so again, like you said, we love to do our tax estimates sort of towards the end of the year. Yeah, I have a few examples. I one good one from end of last year was woman whose husband passed away back in 2024, where we had a pretty decent tax year, quite frankly, which is unfortunate, because he passed away that year, but it was the last year she was going to be able to file jointly.

BRIAN AKERS:

So decent. Mean, you took income. We took more

Paul Franco:

income in that year that he passed away, correct?

BRIAN AKERS:

Which is truly a wise thing to do, because it's the last year as joint, exactly.

Paul Franco:

But this year, this year, after which was 2025, she was at a she was at a higher tax bracket because she was now single, yeah, and that's a surprise for a lot of people, it's like, You're kidding me, my my spouse passed away, and now I'm paying more tax. Yeah, it is, it's, it is that way for a lot of people,

BRIAN AKERS:

that's a big deal.

Paul Franco:

And so we ended up doing the tax estimate in October, and she has a farm that she was going to take a loss on, and she has a CPA she works with that that sort of helped coordinate this through the tax estimate, which was wonderful for us on our side, but we were able to do Roth conversions for her and do it in a 0% tax bracket because of the losses

BRIAN AKERS:

on the farm and the losses on

Paul Franco:

the farm, wow, yeah, and it was really going to be this year that it was going to be really the only year she was going to show the losses Well, right? We hope. We want it to be successful. But we were able to do a Roth conversion last year, 25,025 28,000 whatever it ended up being. You. Where she paid no tax on that conversion, right? Just by doing the tax estimate, this is how much room we have in the 0% tax bracket, yeah. And that's, that's, that's a fun conversation to have. And they go, they say, that sounds too good to be true. No, with planning, that is exactly what you can do, yeah.

BRIAN AKERS:

So we did so many calculated partial Roth conversions during the fall, and we do that every year based on where we were sitting. The biggest problem would be is the fact that we've taught people how to maximize their money in the bank, how to get more interest all taxable. Yeah, we're teaching them a few other ways to do it, but it's hard. And then you want to start Roth converting, and then you got to say, Well, what else is going on this year. So we had one case where we're Roth converting every year, and then we got this year, and then all sudden, we're talking about any other income. Then they say, Oh, I got inheritance, and then they just paid it out. I said what it was in a retirement account. They just paid it out, dumped it on them, and all sudden, they're at a higher bracket, and we can't Roth convert at all because of basically, the the inheritance was, was basically worked on by like a relative and turning and they just decided, for them, we're going to pay you out. And they hardest part there was, we could have done a 10 year payout on inheritance and made it wiser, and it played with it better. That is such a that's

Paul Franco:

a that's a brutal case. But yeah, that's a perfect example of where, when you get inheritance, a lot of times people think, just take the distribution, keep it simple, take the money out, right? But yeah, is that really the best option?

BRIAN AKERS:

So as we're playing and playing around and working on the numbers, I go playing. It's fun. And so what happens is, you you think about retirement, and you got to look at what income is going to come in. Is it taxable? And that's account by account. Is it taxable, and how much going to show up? Then, when your required minimum distribution years pop in at 7375 how much is going to be required to take out? What if we grow it? What if we do well with it? All sudden, your income levels are jumping higher and higher, and higher, and that's where we say, Well, hey, can we smooth this out now you're gonna pay more tax now than maybe you want to, and then we level it and you pay a lot less tax. Now, sometimes we use Irma as our guideline, income related monthly account amount adjustment, amount, and we try to use that income jointly. Is like 218, 222, right? And we try to stay under that. These are all ways to use retirement and taking that future bracket and smoothing you back out. More successful you are, the more you need to do this absolutely, and the more and more successful we are. We say, Let's pay all the tax we can now. Yeah, all right, this is all flying by. We all know we enjoy retirement because the best part of retirement is getting your time back. Of course, I love the balance of life. You want to get some of your time now while you're working, but when you retire, you get to decide how to use it. Before retirement, your time is tied up with other commitments, you know, mainly your job. A lot of that goes away in retirement, your time is now consumed by things that you want to do. It's so easy to begin winning a retirement go to our website at AKERS financial group.com scroll to the schedule meeting section and let us know you'd like to schedule your free consultation with one of our team of advisors. That's AKERS financial group.com or you can call us at 833, win retire. That's a three, 3w, I n, r, e, t, I R, E, we'll give you a call on Monday to schedule that free in person meeting. So go to AKERS financial group.com or call us at 833-946-7384, to start planning for your retirement. Now. What does leveling out your tax rate mean? Or we'll talk about this in a moment.

Unknown:

You're listening to a pre recorded Show. Welcome back to winning in retirement. Call 833, win retire now to schedule a visit with Brian and his team and begin winning in retirement once again. Here's Brian AKERS indeed.

BRIAN AKERS:

Welcome back to winning in retirement. I'm Brian AKERS from AKERS finance group. Here with me today is I'm financial advisor Paul Franco, good morning and welcome to the fourth quarter. We love

Unknown:

the fourth quarter. It's clutch time, Brian, it's

BRIAN AKERS:

winning time. I love fourth quarters. I love having a lead go in the fourth quarter. But I'm not afraid of being behind by a little bit. Yeah. How do you feel we are when it comes to this show about reducing lifetime tax brackets? Are we a little behind? Or how you feel?

Paul Franco:

I hope. I hope not. I think we might. I hope we're a little we might be a little bit ahead.

BRIAN AKERS:

I feel sometimes when you're doing a show, did we explain it like too detailed, too much information. Our big thing today is this. We love helping you. We talk about lifetime tax brackets. It's almost like you should say, hey, I need that. Not sure what that was, but sure sounds like it's I needed it

Paul Franco:

reviewed Exactly. And this is what we do. We're not asking anybody to be experts on it. We are the experts on that. And bring bring it here. We can help

BRIAN AKERS:

with that. We need information, the real information, not a little spreadsheet, but the real information, so we can guide you through it. So let's talk about this in the fourth quarter, or we're talking about leveling out. Your tax bracket. Make sure you understand what that is. All right, Paul, I know you work for a pizza place. I did. Did you make the pizza with the sauce? I wish you never got to, never got that far up. Never got that far up. So you never had was such a fun time, though. You never had to level eyes, that Level, Level eyes, your pizza sauce. Did you I didn't. Did were you able? I was a pizza guy too in college. Yep. So you are delivering. Yes, did you ever, did you make a pizza

Paul Franco:

at all? Never, never did. All right, so Well, Brian, at home, my wife and I will make pizza at home. That's about as far as I'll get.

BRIAN AKERS:

Are you okay leveling the sauce out, or do you get a little thin some areas and thick some areas, I try to

Paul Franco:

levelize it, but yes, well, it's hard.

BRIAN AKERS:

It's hard. Same thing with taxes. It's hard. There's years you can control it, other years you can't control it. You think about it in January, whoops, too late. Yeah.

Paul Franco:

You know what's harder? It's the cheese. Oh, cheese. Too much cheese on one side, too little on another. You got

BRIAN AKERS:

to start on the outside edges and then not, don't fill the middle too much, because it's all milk going to the middle. Yeah, yes. I worked the dominoes down at Virginia Tech for about three years. One of my what it was a feels, a great job. I really loved it, and I enjoyed so much because the dominoes you got raises if you learned how to make pizza. And so I kept that learning, then it's sped up. They give you a raise. So, oh, that's that. But the pizza leveling out, that sauce is a talent, is a technique, and that's what levelize Your taxes is a talent is going to be something where someone needs to look at the taxes. Too many times we have people come in and they're like, Hey, I got kicked with I got kicked out this big capital gain last year. Could something have been done? And answer is, yes, your investment person needs to have cared about your taxes. They were caring about the investment decision. And sometimes you do need to take them pay a gain and get out of a stock and sometimes you got to pay the tax and understand it is what it is. Capital gains rates are good. The problem with capital gain rate, if you have a lot of other income, it's going to push that to higher and higher brackets, like we tried to explain earlier, how brackets move up if capital gain fills up the 12% bracket and pushes the 2224 you better have enough withholding, yeah, now you're paying 15% on your capital gain. Yeah, yeah. So everything is plan what we can. Plan everything we can, but we can't plan everything. That's right, and so we just did the best. Now, your problem with cheese, I guess the problem you just throw

Paul Franco:

it on, yeah. You know, I

BRIAN AKERS:

fill the edges. Fill the edges. I love I love cheese.

Paul Franco:

I'll take the side that's heavier on the cheese anyway.

BRIAN AKERS:

So one side's heavy and the other not quite

Paul Franco:

like the margarita pizza. That's the only sauce. Put a little mozzarella on it,

BRIAN AKERS:

but a piece of it. You know what? I mean? I understand. There's so many good pieces out there. It's fun to talk about All right. So as we're talking about financial planning, we're talking about levelizing taxes. The other thing you can think about is the concrete person, doing your patio, doing the sidewalk. They have to levelize. They actually have a guide. They put a level out there. They have boards they put on both sides, and they level out and they slowly work it. That's exactly planning. We have to slowly work it, get it ready, get it organized. In retirement, we found that it takes almost two years to get your flow down, what you need, your taxes down, make it all work out. One of the biggest things we have are clients that worked with a company a long time. They bought company stock, and we do something called an Nua on retirement. It's one of the most sophisticated deals we do, and what we end up doing is bringing over and paying tax on a cost basis of a stock into an account, yeah, and then we can use capital gains in the future.

Paul Franco:

Yeah, it's one of my favorite tax planning concepts, because it saves so much money. But it's rare

BRIAN AKERS:

to do nowadays. It's rare for us to have people that bought that much company stock and held it for that long to get a massive gain. But if that's your situation, Nua is a very nice topic to talk about, how to pay less taxes and then in retirement we got to then where do we draw from the rest of the IRA? Or do we take money on capital gain? We do a little bit of both. Yeah, it's great, and I like the

Paul Franco:

capital gain part, yeah. But if somebody, if somebody is in that case, come in and talk to us, let us help make sure you guide you to do it correctly, because if you do it incorrectly, it can be costly. I had a great

BRIAN AKERS:

one, great one. They retired early 60s, and what happened was that we moved the stock over in anyway we had enough money, and they wanted to give the charity. And I'm like, Oh, you're not old enough to give it out of the IRA side, the pre tax side. What happens is, we got to find something else to give the charity. That Nua stock, with a low cost basis, became the perfect gift to charity. I said, instead of giving monthly to your your church, 1000 bucks a month, let's get 12,000 of that stock once. Yeah, we called the church, we set an account move the stock over, the goal was met and the least amount of tax was paid. That was one of my one of my favorites recently. That's awesome. In UA with the charitable gift of a cup of appreciated stock,

Paul Franco:

you save that client so much money in taxes just by doing that that I

BRIAN AKERS:

think it was just a wonderful long term move for them. Them in their planning. One of the issues we've had recently was a client came in with all this money in stock, all of it, we hate seeing that.

Paul Franco:

Yeah, it's to overly concentrate. It's never a good thing.

BRIAN AKERS:

So the card part was, is the hard part was, really, do you pay tax now? Do you keep Do you sell the stock before you do an Innu and you a or after? Is a little difficult. Yeah, what we did in that case is we kept it all the stock in, did the full in UA, yep. And so the only tax we pay is capital gain. Yeah, I thought that was good. That's awesome. But we had so we did it in the fourth quarter of the year, so that in that fourth quarter we can then sell by January, 1, our second, third, right in the beginning. So we got money, and that money helped us pay the fourth quarter, because the income was in the fourth quarter. We took the money out in the fourth quarter from the stock sale. So and then this current year, we have the capital gain to look at. That's awesome.

Paul Franco:

So you push it right into the into the next tax year. But got it done before the 15th.

BRIAN AKERS:

I could use the money from the capital gain. It's great. That is example of how to levelize taxes by basically lowering the entire future tax bracket by accepting it as capital gain versus versus ordinary income. Yeah, not everyone has that. It's very

Paul Franco:

rare, yeah, but you said it even in the last quarter, that concept of levelizing your taxes is smoothing out your taxes. We don't want those big, big jumps in any given year in your retirement. We want to smooth them out over your lifetime. That's the idea.

BRIAN AKERS:

There's not the easiest, not the easiest thing, to just wake up one morning and say, let's dive into the taxes. We got to listen. We got to meet multiple meetings, usually to hear all the stories so that we can come back with the right answer. All right, so we're talking about level izing taxes. That means you might have to fight with your CPA and pay more tax. They might say, Oh, look, all the taxes you're paying this year. And you say, Yeah, I know, and I'll never pay tax again. Yep. And that's an idea of putting into a Roth is to pay tax now, never again. But making level is taking withdrawals and handling things best you can. Yeah, I mean that

Paul Franco:

perfect example, that is the 73 or 75 RMD time, where we could have smoothed out the taxes those years prior so that you didn't have that huge balloon RMD come 73 or 65 depending on your age. And we could have done planning to smooth that out over multiple years so that when RMDs come, it stays just as smooth. It goes. It doesn't make a big jump up then go back down. It stays smooth the whole way throughout

BRIAN AKERS:

all right. So we get younger clients. They call from the radio shows. They say, Oh, I got an IRA. I got, like, I put 7000 in. I did it at the bank at the last minute. It's all pre tax. What should I do with it? And then the idea there is, we walk them through about Roth,

Paul Franco:

that's right, yeah. I mean, the idea would be, for somebody especially younger, is the concept of more time in the market, more time for that money to grow. So if we do something like a Roth conversion for$7,000 of a bank IRA, that, quite frankly, is probably still worth $7,000 because they don't pay much interest, 7000 at one.

BRIAN AKERS:

So that's right, but the idea is, when you see a younger person with one IRA, and it's small, we jump at Roth conversions, absolutely

Paul Franco:

jump at Roth conversions, and then jump at contributing to that Roth IRA, yeah, doing

BRIAN AKERS:

a combination of both, putting both together. It's a good idea. So you're listening to the show. Oh, it doesn't apply to me. I'm too young. It does apply to you. Let's not make the mistakes of having too much pre tax in that that you're going to have this problem of, hey, where? What do I do now? Because I have too much pre tax, let's not have too much pre

Paul Franco:

tax, absolutely. And I'd also on the flip side of that, if somebody's listening and it's like, well, I should have didn't this. Should have did this 1520, years ago. It's also not too late. Well, the fact

BRIAN AKERS:

is, we can't go backwards too much and fix things. We can do what we can now, yep, and make things better to the future apply everywhere we can to make sure that the things work out well for you. What we want is a winning situation for you now, perfectly winning, my opinion, is doing the best we can with what you have. Yeah, the earlier and the younger Some people start, the better we can make it I have some situations where we've done so much Roth that it's like, painful to take it out. It's like, I like, well, you want some money? I can send you 20,000 other other

Paul Franco:

Roth, right now, are you telling me, Brian, I don't have to pay tax on that at all? Oh, that is a great conversation. And nothing like, that's

BRIAN AKERS:

gonna affect my bracket. How they gonna get me? They're not, they're not.

Paul Franco:

You already paid the tax upfront.

BRIAN AKERS:

Yeah. It's like, you paid at the board. You paid when you did it. It's tough.

Paul Franco:

That's awesome. And then that, yeah, like you said, it doesn't affect their Social Security. Tax doesn't affect anything. It's just truly tax free

BRIAN AKERS:

income, yeah? So we're just giving you some examples of what to do. The hardest thing is that when you think about reducing your lifetime tax bracket, there is a pain. The pain. Is you got to pay the tax. And paying the tax is something where, if we can design it properly, you pay tax now, never again. But overall, you just want to try to do wise things so you pay less tax in a lifetime. That's the goal. Absolutely. All right, so Paul, I appreciate all your time talk covering this. And is it true? You like this.

Paul Franco:

I love it. Tax Planning is such a fun part and exciting part of what we do to run those numbers. And we get excited about it. I get excited about it.

BRIAN AKERS:

And so Paul's busy doing this rather than his golf game, and that's why, when we got we got into the weeds. Today, we are truly talking about the weeds of too much detail, unfortunately, not the rough of golf. That's right, all right. So everybody. Thank you very much for listening to our show today. We did cover a lifetime, reducing your lifetime tax bracket, and a little bit about tax brackets and some things you can do. The general idea is give us a call so we can help you. We do look forward to that meeting with you. We want you to win in your retirement by taking advantage of this opportunity to begin planning with us at AKERS Financial Group, to schedule a free meeting with one of our team of advisors. Go to our website at AKERS, financial group.com scroll to the schedule meeting section and let us know you'd like to schedule your free meeting right there. That's a k, e, r, s, financial group.com or you can call us at 833 when retire. That's 830 3w, I n, r, e, t, I R, E, we'll give you a call on Monday to schedule a free in person meeting with one of our team of advisors start planning for your retirement now. Go to our website or call us at 833-946-7384, thank you for listening. I'm Brian AKERS from AKERS Financial Group, and we want you to be winning in retirement.

Unknown:

You've been listening to winning in retirement with your host, Brian AKERS of AKERS Financial Group. AKERS Financial Group offers securities through arcadios capital, an SIPC and FINRA member firm. Advisory services are provided through arcadios wealth. AKERS Financial Group and arcadios do not share any common ownership. Neither arcadios nor AKERS Financial Group provides tax or legal advice. Advice given on winning in retirement is general in nature, and one should seek further advice from their financial advisor, broker, attorney andor tax accountant before investing, be sure to read each prospectus carefully to understand all the risks associated with each investment. Examples and scenarios shared are meant to be for illustrative purposes only past performance is not indicative of future results.