Wealth from Wisdom

Keep Your Money in Your Pocket

October 06, 2018
Wealth from Wisdom
Keep Your Money in Your Pocket
Chapters
Wealth from Wisdom
Keep Your Money in Your Pocket
Oct 06, 2018
Carson Wealth
Show Notes Transcript

On this episode, Paul West and Jim Caldwell discuss traps you need to avoid and techniques that can help save you money when it comes to paying taxes. Nobody likes paying more than they have to, so make sure you tune in and learn how to keep your money in your pocket.

Speaker 1:
0:00
Okay. And here's the legal Mumbo jumbo. The opinions voiced and and wisdom with Ron Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an SEC registered investment advisor.
Speaker 2:
0:31
It hit another all time. Records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 250 the skyrocketing cost of healthcare and retirement could now run 350,000 for retirement. Today is a whole new ballgame. It's loaded with challenges, obstacles, and trap doors that you can do this and we can be your guide. Welcome to wealth from wisdom with Barron's hall of fame advisor, Ron Carson, straightforward and objective advice and how you could make your money go further in retirement. And now here's your host, Ron Carson. If you hate
Speaker 3:
1:08
paying taxes now just imagine new turn, age 70. There's this little thing, but guess what? It's not little. It's actually really big and it's called an RMD. Uh, that's an acronym. We like to use those on the wealth and wisdom show. Hey, welcome back. I'm Paul West and you're listening to the wealth from wisdom radio network. My Co is today's wealth advisor, Jim Caldwell. Welcome Jim. Thanks Paul. Hey, so an RMD stands for a required minimum distribution. And what's interesting about this is this actually forces you, you have no choice. You're hands are tied behind your back. You got to do it, nothing about it. You got to sell some investments because guess what? The tax man wants to get paid here and you don't have any choice about it. So if you have money in an IRA, a four zero oneK or another retirement account, you better listen to this show because we're going to talk to you about what can happen and traps you need to avoid in techniques that can help save you money and whether you want to or not, you don't have a choice here, so you better plan for it and it can.
Speaker 3:
2:07
Worse yet, not only thinking about dollars coming out, but additional taxes. I hate paying more taxes than I have to Jim. There's everybody else. And so on. The from wisdom radio network, we want to help continue to give our listeners those tangible ideas that you can implement and make sure they're effective for your personal game plan for the future. We'll make sure they're easy to understand for you, but importantly, we don't want you to ignore these things. We're not up here to hear, listen to ourselves talk. We're here to share ideas. We're here to help give advice. We're here to help people learn. And that's what's important. I think really as you think about your life and what's transpired, when you understand something, you're confidence level goes up. When you don't understand something, what do we do? We run away, we avoid it, we get fearful, we get scared.
Speaker 3:
3:00
All of those things happen and what we don't want you to do is lose a big chunk of that harder money you've made in your life to the government. So we're going to talk about five common mistakes that really could cost you a fortune one about a new loophole in this 2018 tax plan that could actually be a windfall for you. Second, a tax trap that could cost you a fortune in three some. One of our critical timing strategies and Jim is we are prepping for today's show. You and I talked about this is actually one of our favorite subjects to have people because there are tangible numbers that you can show to people on the benefits they have versus the people that just sit around and wait. They're just hurting themselves in this situation.
Speaker 4:
3:47
Sure. We've seen, I can't, countless, countless situations of people that have come in here and they, they don't like RMDs or they don't need the RMD or they're not sure even what it is and how it works. They just know at 70 and a half they've got to pull a trigger and started taking money out. I've seen stories where people have said, well, I've got 10 traditional Iras, how much do I take out at each one? And obviously the strategy there that we've used is very simple. Uh, you take the money out of the least performing asset of people don't know that. They think they have to take it out of 10 different buckets. So you add it all up, figure out the RMD for that year. And then when you present that to them and give them options as to where that money would come from.
Speaker 3:
4:25
Yeah, I mean, or another strategies they could rebalance their portfolio, take out the one that's made the most, take some of those chips off the table. Another great example, pull that out. So let's really, I mean talk about this first technique, which is avoidance. And so what I mean by this is waiting too long to actually put together a strategy. So we already jumping in Jim to talk about some ideas, but when you withdraw this money in retirement that you're forced to at age 70 and a half, 70.5 and I was, we were to say birthdays, there's like a half birthday, right? Hey, by the way, when do you get too old to celebrate a happy half birthday? Uh, never in my opinion, ever. So you celebrated every year? Every year. I know Jamie, our producer does. So I mean all the time and I dunno, I, I think once you become a teenager maybe, but hey, if you want to keep celebrating all in whenever I can have cake and ice cream, sign me up.
Speaker 3:
5:14
Alright. Uh, so when we think about money in our retirement, it really could be a fraction. I know we love to talk football on the show. It's a passion for both of us. Of course, it's fall season that really I, my equivalent penalty and football is the delay of gate. So what happens in delay a game is by not moving quick enough and not making a decision. So therefore you're in the huddle. You don't get the play called on time, you don't get it delivered on time, you don't get it snapped on time. So what happens? You got to move backwards. And so your likelihood, and I would love to have this statistic by the way, when a team has a delay of game penalty, how likely is it that they score on that possession is obviously less than normal because you're now you're behind the eight ball here in the same way.
Speaker 3:
6:02
I could look at putting together your strategy for your RMDs. If you wait until you're 70 it's too late. You got the delay game penalty gym because you're moving backwards, you're going to be forced in those first couple of years taking more taxes you want. So the question we get asked is when is a good time to start? Kind of like the play clock. When should I get the plan as quick as possible. So I have time to make adjustments, calls, all of those things. And so we tell everyone when really you get to past age 55 this is when you should start having the conversation with your advisors and planners and no, I don't mean go into your CPA and having this conversation because many of you use your CPA purely for tax prep. I'm going to change the p word here from prep to plan.
Speaker 3:
6:50
You got a plan for it going forward. So really once you get in your late fifties and early sixties this is the critical time. This is game time here for you. You gotta be getting this plan put together cause some techniques may take five years to get carried out and if you wait too long and they're never going to happen for Ya. Exactly. I mean it go back to your football analogy. I mean most coaches script the first 10 1520 plays of the game. It's no different when you look at Rmds, if you do it far enough in advance, you can script out over a period of time, what are my numbers going to be? How do I tie it in with social security? When might I take social security and then can I put that off to 70 or how do those numbers look? But, but a preplanned script, we'll avoid that quote, delay game penalty.
Speaker 3:
7:37
Yeah. You don't want any of that. I mean, so Jim, I had a really unique opportunity earlier this week. I had a chance to go have lunch with Peyton manning and it was just a super experience. And you know, of course I had to ask, we're from Nebraska, from Omaha, and was one of the most famous things he does Omaha, Omaha, Omaha, Omaha, right? Yeah, we've, we've heard it all the time. And of course we had to ask him how did this come about? That's interesting. You know, painting went first through and talked about the processes. And by the way, he is one of the most humble, genuine isn't an immense amount of humility people I've ever met. So it's just really fascinating and he's very grounded and think about how successful and how visible is. They also mentioned he pretty much can't go anywhere without being noticed.
Speaker 3:
8:27
So think about just going into a restaurant or a grocery store, you know, what his life is like. But one of the things he shared about the Omaha cadences is being able to get in the huddle, but then when they come up the line, there really wasn't any rhyme or reason why they chose the word Omaha. It was just the tag word, but it really meant to be partially to help his offense but partially to confuse the defense. And so, but it was all part of their plan they put together. But he said this all really even transpired because they wanted to improve the game of football. So they put those mikes on the field so you could pick up the cadences and it just happened when they went to the play call. Omaha is when it became of course really popular through all of that.
Speaker 3:
9:13
Great Story. Yeah. Um, it was actually, it was really funny. So when they are in that championship game and it was really visible, you know, another common company here in Omaha, Omaha steaks. Actually I love the uh, uh, head of business development there at that point in time. Put out a message on Twitter, a tweet there that said, hey, uh, Peyton, we got all of your orders last night. We're good. I love it. I love it. So, um, and I'll share some actually some more stories throughout today's show about some things that Peyton taught us about life. I mean it was really interesting that he got to share with the group of people, but he would agree with us that if you wait too long to put together a strategy, you're really making a mistake. Does it talk about lesson number two, taking your required minimum distribution at the wrong time.
Speaker 3:
9:57
It's like calling the wrong play. You're not going to call a hail Mary play when you got third and half a yard when you just need that half yard for a first down. So let's talk about this. One of the most important things to know is you hit age 70 and a half and if you fail to take this distribution, we're talking a 50% penalty. That's five zero not 50 cent, five zero 50% penalty. That could happen. So if your birthday is between January and June, you're going to turn 70 and a half in the same year. So you've got to take the distribution then, correct? Yup. But if your birthday is July through December, you actually can wait to the next year to take the distribution because of the 70 and a half year old. But, but the problem
Speaker 4:
10:42
Blair is if you wait till the following year, then you're going to have to take two distributions that year, which could push you into another tax bracket, which could affect your social security or Medicare and all those things. So here again, Paul, back to having a strategy, proper tax planning as you move closer to those years.
Speaker 3:
11:00
Yeah, no, I mean, and by the way Jim, I know we just had our medicare event the other day that if you think about this, not only did two RMDs create an impact, but also it now can put you in the next category in the next amount that charges you monthly for your Medicare premium and I mean that's just like compounding upon compounding upon compounding for people, so that's why you have to start planning ahead of time. You may say to yourself, Paul, I don't want to pay taxes to the government until the absolute positively last possible moment, but if you look at it and you actually pay them less by taking your distribution that first year, you may be making the best decision to ultimately pay the least amount of taxes. Then almost sounds a little bit counterintuitive like, wait a minute. You want me to pay right away versus waiting? Well, yeah, if it's going to save you thousands of of dollars,
Speaker 5:
11:54
then we're going to go through the show today, Jim, and share some real life stories with real numbers on how that's actually it happened for many of our listeners and have you think about it. I mean, I've, I'm sitting in Uncle Sam shoes, they're, they're licking their chops, right? They know everybody's going to keep progressing in life and at age 70 and a half, they're going to get their money. They're going to be going to get it. And most people don't plan. So what happens? They just wandering aimlessly and you know, I got to do it so I'm going to pay it and they don't think about how to plan it. So if you have an IRA, a four zero one k a pension or any retirement account, you better start putting a plan together. If you'd like our help, give us a call. (888) 419-8513 remember, we're a fiduciary. We will give you honest advice on what is best for you. (888) 419-8513 that's (888) 419-8513 you're listening to Wellframe wisdom. Yeah,
Speaker 2:
12:48
trust, transparency, accountability. These are the values that drive Ron Carson and Carson wealth. You're listening to wealth from wisdom with Baron Hall of Fame Advisor, Ron Carson. He's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more. Now back to well from wisdom with Barron's hall of Fame Advisor Ron Carson. The next time you check your account balance on your Ira, your 401k, you really have to ask
Speaker 3:
13:16
yourself a question, how much of this money is actually mine and how much of it will actually have to fork over to Uncle Sam? Hey, welcome back to wealth and wisdom on Paul West. I'm with my cohost Jim Caldwell and today we're revealing how you can avoid five very common mistakes people make with their required minimum distributions that we call RMDs. There could needlessly, I mean, I truly mean this needlessly cost you more money in taxes and you could never imagine. And in this segment we're going to talk about one of the most common mistakes that we see out there and we want to help you avoid it. Stop paying more money than you have to. Jim, I think about this all the time is, you know, when I was mentioning, you know, when you log in to look at your 401k balance, your IRA balance, and you're looking in there to say, Hey, what's the net amount?
Speaker 3:
14:03
Are you just looking in there to see what the total is? Just the total most people do total. Yeah. Here's actually interesting. So if you logged in this morning or this afternoon now and you looked at your balance, what are you really looking for when you log in? Just one number. What's it worth? What's it worth right at this exact moment, right? That's what people want to know and it's interesting to me. I actually think Jim, from a behavioral perspective, and actually I asked a group of people this recently, we're seeing around the room and asked how many people logged in today? And it was about four out of 10 people in the room had been five. Um, and I asked them, why did you log in? And they said, number one reason is to check my balance. But I said, what are you checking it for? Are you checking it for growth?
Speaker 3:
14:52
They said, no. I said, okay, well I'm, I'm, I'm intrigued. Why are you logging in? They said, we're logging in to make sure everything looks normal. Madoff or, okay. Yeah, no, I mean really, I think you're right, Jim. I think it's people are logging in to make sure that somebody hasn't swiped their information. And that's sad to me actually, that that's the first reason why, but I understand it, you know, with identity theft, with those things, I mean candidly gym, that's why I log in. I want to make sure there's not some erroneous transaction that's costing me money. So think about that. We're proactive as human beings to go do that because we're fearful of somebody else taking what we believe is rightfully ours yet. Well when it comes to a required minimum distributions money that is rightfully ours, we won't spend a half hour of time with a financial advisor or financial planner to plan that out to really save ourselves tens or hundreds of thousands of dollars of taxes.
Speaker 3:
15:57
That's crazy to me. Yet we're going to say then about how much time we spend in our lifetime logging into our bank account or investment account or IRA account or 401k account with a lot. You look stunning by here, by all those comments. A story that I ran across two weeks ago, I mean I'm, you know, I'm a big Disney guy. I love going there for all the right reasons, the value, the experience, but I read something where it said that more people spend time online on the Disney site planning their next family vacation. They're comparing resorts. What rides are going to be on, where they're going to eat their meals and all that versus spending time on planning for their financial future. Yeah, I think it's right Jim. I mean, well, I think about vacations I go on, do I enjoy the vacation more or the enjoyment?
Speaker 3:
16:40
I get from planning the vacation and thinking about all of the things I'm going to do. The planning parts, the best part, I mean you get your juices flowing and you see all the great opportunities in everything and once you get there, it's a little chaotic. But hopefully it works out well and, and don't have buyer's remorse either. Once you make your decision, go forward with it. Exactly is you're not, but you don't get a second chance on your RMDs. No, you don't. No. Mulligans no. By the way, it can be tricky. There are formulas. So let me just give you an example here. So let's say you've saved $600,000 and you are 72 years old. What does this mean? Your dollar amount you need to take for your distribution is $23,000 400 and choosing me $23,437 and 50 cents or 50 cents for our produce, 4% so $23,437 if you had 600,000 so imagine you have that.
Speaker 3:
17:38
And imagine you're getting $1,500 a month in social security. Guess what now happens? So that's 18,000 plus 20 3002 things. One, your social is now taxable, right? And you've now moved into the 22% tax bracket. Yup. All because of these things. Wow. Now all of a sudden I'm like, oh, that's not that much money. And now think about it. So now take your account balance and multiply it by 20% just illustratively. That's what's disappearing. And going away, if you're in an IRA or a four o one k plan, that's not a Roth Ira or Roth is another part of our conversation. We'll get to in a little bit that, think about that. And by the way, if you have an IRA, a sep, a simple, you've actually got to aggregate all of those in the values to figure out what you actually owe. So think about how similar was, if you had 600,000 which many of you, and we hear this and say if you're age 65 or 67 you're probably not even gonna retire on 600,000 because depending on how you want to live your lifestyle, so now if you're taking away 20% of that, that that's a significant dollar amount.
Speaker 3:
18:47
Jim, let me think about it. $23,000 $23,437 and 50 cents 72 years old. Now it gets taxed and all these things, and that sounds like a dangerous compounding effect that could happen, but also don't make a huge, huge mistake. So if you're married, your IRA and your spouse's IRA are not interchangeable. You both, yes, both of you must actually take that RMD. And we see this mistake made all the time, Jim, is people think you can just sum it all up together. And unfortunately that doesn't happen.
Speaker 4:
19:21
Actually Paul, we had a list or come in, it's been now about six weeks and met with them and when we got down to the fact that we're going to move forward, we had analyzed their Iras and they were actually taking distributions where they just some Al ballparked what the two of them needed combined and then divided it by two. Now the good news is when it doesn't work at all, and I mean I'm losing sleep over this, like we got to fix this. So the good news is they allowed us to work with them from a stand point. We had four more months left in this year and we were able to tweak it so we could take the right percentages out and there'll be a happy ending at the end of the year.
Speaker 5:
19:59
Yeah, that, that's cool. I mean, and I think what you have to be able to differentiate that, I mean I think about family, I talked about this on the show. Um, fortunately I have three wonderful children. I have a set of twins. And one of the important things I always say about being a family man with them is, is I never want to directly compare them is they're their own individual people and that needs to happen. It was actually interesting. I know I shared in the earlier segment and had the opportunity to have lunch with Peyton manning earlier this week is just, you know, really phenomenal experience to get to learn from him. And um, it was fun actually share with him. So he is boy girl twins also like ideal but they're younger, they're in second grade and it was a chance to share what we both learned in working with our family members on making sure we don't compare them but giving them their own voice, their own opinion.
Speaker 5:
20:47
And actually it was fun. We got to talk about, actually it was fun when you're talking about, I asked him where he hasn't gone on vacation yet, that he'd still like to go and he rattled off a few places or things he wants to do. But what do you just said Jim? He actually even echoed, and I feel the same way. The planning for the trips is just as much fun if not more fun than actually going on the trip. But life is full of what we call life's experiences. Those times and moments you get with your family and friends are the most valuable things you get. And it doesn't have to be on a trip. Like you said, going to Disney, maybe something as simple as going and grabbing a doughnut with your grandkid and just sitting there in that 30 minutes watching them just spilled the sprinkles all over the floor and knock over their chocolate milk and their orange juice or hit your hot coffee over your lap and you're in pain.
Speaker 5:
21:34
So all of those things, I do that at my age. So what? Eat a lot of donuts or spill. Spill every vote. Okay. Yeah, I'm not, I'm not surprised, but there's probably cause you're tired. I mean if you don't know Jim, he is adamant workout person. I mean, he was just telling me earlier today how much he loves working out and you know, how he can notice transformations and other people and when they work out and how healthy they get and how their body changes. Yeah. We had a great workout this morning with a couple of people, stakeholders here from the firm and you could just see in a two week period the hard work they've put in and how things are changing for the better. But it goes back to planning because part of that workout, it's not just the hour you spent sweating, it's the meal planning that goes with that throughout the week and how you can put it on an app and categorize it and all that cool stuff.
Speaker 5:
22:20
So, but you're also plan out your day. You're really saying, Hey, today's a Saturday. Um, I want to get things done. I gotta get the gutters worked on, or I've got to get the lawn taken care of, or I need to go to the target to get some things done. Or I've got to go brave the lines at Costco on a Saturday and fear it tough enough there. So, but if that whole plan you put together, so there's other things that I want you to understand that if you miss this RMD we've been talking about that penalty is 50% so I mean now we're talking 50% penalty. You were talking to income tax. I mean Jim, we've, we've seen this, I, somebody brought one of these to us about a little over a year ago here from the show and then we calculated the mistake they made, it was going to cost them 82% so think about this $10,000 because of the penalties and the taxes and them being, I hate to say this, but lazy and not getting this done or not planning appropriately.
Speaker 5:
23:15
$10,000 turned into about $1,800 ouch. Yeah, I wouldn't be happy. I got one for you. This, this is right there. This was like, I couldn't believe this was happening. So we have a household who the husband's kind of like me, wants to work forever. So he's in his seventies and they're taking RMDs out of their traditional IRA like they're supposed to. So he's got a four o one k still where he works because he's still working. And he was advised by the Custodian who, I won't name Merrill Lynch over the radio, but they told him he had to take an RMD out of
Speaker 4:
23:46
there, which is totally wrong as long as he is still working, he didn't have to. So by pointing that out to him, we saved him $10,300 tax bill. Wow, that's big money.
Speaker 5:
23:59
Yeah. Well, and I'm sure for him, peace of mind
Speaker 4:
24:02
mine and the trust factor there, how he now continues to trust the advice that we give to he and his wife.
Speaker 5:
24:08
Yeah. And I probably Belabor this point on the show. I'm Jim. But I mean it's so important. I mean, people need to work with a trusted advisor, a fiduciary. Let me give you an example. If you're a listener right now and you have a professional doing a bond portfolio, ask them the following question. What is the markup on my bonds actually just saw one gym the other day. This person has a $500,000 bond portfolio and they think it's essentially free. What they don't see or what they haven't learned or understood on their statement is that there's actually a 1.8% charge on that and this person's getting assessed almost $10,000 crazy. But they don't understand it. So figure that out. I mean, but the RMDS to take a little bit time, they can be complicated and gym. That's why we here at the Carson Group and it's why we're in the barons hall of fame again here in 2018 we may made the Barron's list for top advisers. Um, and, and we, we have a three step plan to help this happen. Everything has a plan and we want to help you avoid those mistakes. (888) 419-8513 to learn a few qualifying when you should start this, give us a call. (888) 419-8513 this is the welfare wisdom radio network and we want to help you out.
Speaker 2:
25:21
He seemed good times and bad times and he's got the gray hair to prove it. You're listening to wealth from wisdom with there and tell the same advisor Ron Carson, he's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more. Now back to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. If you hate paying taxes now, just wait. Wait
Speaker 3:
25:44
until you turn age 70 you see the little things called required. Minimum distributions are what we like to call RMDs for short. It's good force you to sell your investments and withdraw money from Your Ira, your 401k I, any other retirement account and by the way, whether you want to or not. Hey, welcome back to wealth and wisdom on Paul West, my co host, today's Jim Caldwell. Then today we're revealing five common mistakes that people needlessly make that shouldn't cost them a fortune in taxes, but they do because they don't pay attention. It just irritates me. Sorry, I almost cussed there. But it was just like, it just is one of those things that like if you look at your to do list or what does that phrase, oh, your honey do list or whatever else, those things are, write it down and get it done. You're going to feel this sense of financial independence.
Speaker 3:
26:31
You're gonna feel empowered on your life. And I mean, Jim, I think back like we all have those projects on our plate that we don't like to do and we write them down and what happens? They get pushed to the next day and the next day and the next, and eventually they fall off our list or we just never do. Um, but those ones, and sometimes you know, I coach people on this is move that task. You don't want to do up to the top of your list and get it done first. That way you're not dreading it all day or thinking about it or keep kicking that can down the road. And we see this with RMD. So let's talk about a way that actually people are kicking is down the road and they shouldn't be because right now in 2018 there's a good opportunity for you for our next advice piece here is, is take advantage of a Roth conversion.
Speaker 3:
27:19
So this may not be appropriate for everyone, but you need your individual numbers looked at that because really as part of the Trump tax plan here is you can actually move a portion, some or all to a Roth to help save you money. And by the way, Roth Ira, well it doesn't allow tax free contributions. It does allow you to pay zero zero zero zero tax when you withdraw money and retirement and you don't have to deal with RMDS. So if you need 10,001 year, but 25,002 years later, that's fine. You don't have to keep taking out. Like I shared earlier that $23,437 per year. Essentially, if you're 72 years old with 600,000 so key number here, the number five, not high five, Jim, just the number five here is you must have the money in the Roth for five years before you take it out.
Speaker 3:
28:17
So don't think like, Hey, I can go convert it right now in 2018 and get the tax free benefit to go along with it. You do need to wait those five years. So that's why getting started now, what was the advice I gave everyone Jim in the last segment about when should you start actual your tax planning? Yeah, 55 plus here. So again, if you're gonna do a Roth, you need the five years, you better start now. If you're waiting till age 68 69 you might be too late to take advantage of this really cool technique. And what's important though is, is understanding how to really put all of this together for yourself.
Speaker 4:
28:54
Well. And also by converting to a Roth, you have an opportunity to transfer wealth to other generations tax free. That's a big thing with higher net worth people also that they say, well I'd probably never going to need this money to live on and spend on, but to be able to transfer down to kids, grandchildren and other generations.
Speaker 3:
29:13
Yeah. And why? If you want to Roth review, just give us a call. (888) 419-8513 it's so personal gym. I mean we're not going to be labor this point so much on the radio here today, but I just reminder a last minute conversion doesn't save you from taking an RMD is a huge mistake that we see so many people make a, so I know we don't spend a ton of time talking about the market, but I do want to talk about this for a moment, Jim. So something big happened is a lot of people didn't even realize it or pay attention. And really what happened is there was a big change in the s and p 500 related to how all of the different sectors. So you think about it, there's the financial sector, there's the technology sector, there's the communication sector, and on September 21st so just very recently, the change when in a place moving some key companies from one sector to the other.
Speaker 3:
30:05
So if you had these in your portfolio, while you didn't have any tax adjustments in your portfolio, you did have potentially some changes to what you held. So for example, many of you own alphabet or Google, whatever you call it, or your own Facebook. Well that has actually moved. There was a new sector created is called the communication sector. So these actually moved from the technology sector into the new communication sector. Big, big deal. So if you said, oh, I'm gonna own technology and I own alphabet and Facebook, guess what? You don't want any more. Did you do, oh no, you don't even know it. Yeah. Now he still has some juggernauts in there. So of course Microsoft is in their apples in there. Um, you know, the, now they're a bigger, bigger percentage of that specific sector. So one of the reasons why they did this is just as time evolves and lapses, the market changes. I mean, I it with Jimmy, I'm curious, I'd love to ask you how many people ask you how the Dow 30 years
Speaker 5:
31:05
doing zero. Zero. Zero. Okay. So that's not greater than one zero. Zero. People don't ask that anymore. Why the top 30 companies in the Dow isn't how people look at their baseline. So it was probably the most common benchmark. You see people use SNP 500 probably the most or the Dow Jones. Yeah. I would say Dow Jones ranks for s and p 500 goes second.
Speaker 3:
31:31
I'm going to disagree with you. I think it's the s and p hands down. Okay. That's my personal belief. And you, you work with different people than I do. Um, so, but I mean I
Speaker 5:
31:39
think because people see the s and p is the most visible on CNBC or it's easier for them to understand. But what's interesting is the s and p 500 is so heavily weighted with those top performing companies at the very well that are doing good. And I just heard this stat earlier today, so if not early to excuse me earlier this week, um, from Brett Carson, one of our managers here is that over 10% of companies now are trading at 10 times revenue multiple. And that's scares the heck out of me. And even if you don't know what the heck I just said, I'm sorry for the confusion, but basically one out of 10 companies being traded is getting traded at 10 times the revenue, not cashflow, but the revenue. And we haven't seen that since the year 2000. Why? What happened then? Dot Com bubble. Yup. So that's the little bit of concerning.
Speaker 5:
32:38
And now don't get me wrong, there's a lotta good things happening in the market in terms of growth and the tax benefit and all these things that are happening, but you better start paying attention. And so why I share that technology sector ETF and the change with the communications. Did that just completely go past your newsreel or your news feed and your advisor talked to you about it? Was it inside of their weekly market commentaries? So Jim, I think about it, we send weekly market commentaries out to all of our clients every Monday what's happening, and it's always done in short blurbs because the likelihood of you as a listener use a client working with advisor going and reading a three page white paper on why the technology sector changed. I'd say less than 10% of the year, it's not zero, but it's not very many. So I want you to be able to understand and educated on how those things work.
Speaker 4:
33:36
And I want to add to that about, you know, did your advisor proactively reach out with some of these new offense? And I kind of put together a little list of some things that we feel like you should be able to see from your advisor. Like have you talked about RMDs? Have you talked about Roth? How about charitable contributions this time a year, talking about those possibly for the higher net worth people looking at estimated taxes for this year. Um, those are just some things that we think are very important that we're going to be sharing with our households. And you out there as listeners should be also.
Speaker 5:
34:11
Yeah. Well Jim, you just jumped right in the next one, so I'm glad you're reading ahead. Well, well done there, but I mean a great technique is called a qualified charitable distribution. So you actually have the ability for your RMD. Think about this. If you give money to whatever your favorite charity is, your church and you have to take a distribution, why wouldn't you want to take it directly out of your IRA so you don't have to pay taxes? So that's called the QCD. If your advisor doesn't know about it, you better get a new advisor. But a QCD qualified charitable distribution. So if I have money and I'm 72 years old and I give $5,000 to my church every year, why wouldn't I take it out of my required minimum distribution? So I don't have to pay taxes on that. You can do that up to $100,000 per year.
Speaker 5:
34:58
You can separate it. It doesn't have to be just a one charity. You can do multiple, you know as obviously you got to be an accredited organization that you have the ability to do that with. But that's a powerful technique that a lot of people don't take advantage of. So there's one QCD if you need help on that, you can give us a call. So if you want or that it's three, if you, and I know we brought up a little bit ago, but I can't tell you enough, just somebody to run your analysis. Don't just go do to calculator on your own on Google. You're just stuck with whatever the CALC is telling you. You need somebody to actually apply some art with the science you're trying to calculate. Give us a call. (888) 419-8513 there's nothing that's going to cost you here so you really, you've got nothing. Lose (888) 419-8513 a second opinion on a Roth conversion can be very impactful for you, your life and paying less taxes. Give us a call. (888) 419-8513 on Paul West and you're listening to wealth from wisdom.
Speaker 2:
35:52
How could you make your money go further in retirement? Learn how next unwell from wisdom with Barron's hall of Fame Advisor Ron Carson. Is it possible you could pay fewer taxes in retirement and keep this money for yourself? You could learn right here and right now. Unwelcome wisdom with Barron's hall of Fame Advisor Ron Carson. You may not realize this,
Speaker 5:
36:15
but you can have more control over how much you pay in taxes in your retirement than any other time of your life. Welcome back. This is well from wisdom. I'm Paul West, your host. Today I'm joined by my cohost, Jim Caldwell and Jim. Today we've been revealing five common mistakes people make with taxes and especially with their retire, excuse me, required minimum distributions and coming up in our final segment, we're going to talk about the timing of social security. How this can impact you, the RMDS and really breaking some of your conventional wisdom. I know we also want to share stories. To get one more story about my meeting in an encounter with Peyton manning earlier this week, that was just fantastic this year. I'm also got a story about how traditional Wall Street based firms are still not doing what's in the client's best interest. And so that's really, I mean, Jim, think that's okay by you. Let's move into what RMDs and social security and how they impact everything here.
Speaker 4:
37:12
And before we get into that, um, I just want to, you know, make it clear again. You know, Paul, I'm so proud of you because you were named the top hundred visors in the country and I've actually the number one advisor in the state of Nebraska and I know you're going to say yes, the team team team. And we do have a great deep bench here, but I just think that's incredible achievement on your part. Well,
Speaker 5:
37:33
what is the team? So I'm going to say exactly what you know, and I thank you Jim. I mean, I appreciate it and I just, the reason why, um, if you can't hear and our voices and if you haven't medicine person is, is we're truly passionate about just wanting to help people. There's many people that have come in and met with us or talked with us that we've told them they're on the right path and they feel good and they don't feel like we're going to sell them or do something that is not in their best interest. And just, we have a wonderful team and we certainly respect the barons ranking, the forms, all of those that go with it. Let me tell you a story why we do what we do. So we have an advisor in our network, um, that, you know, is very philanthropic in nature and just a wonderful human being and he's been working with this family, but what happened was many, many years ago, I'm talking 20 years ago, they didn't really want to do much with them except for purchase insurance.
Speaker 5:
38:27
And so that's what they did. But where they do, they went to a national firm, I think Wall Street. So fill in the UBS, Merrill Lynch, Morgan Stanley, whoever you want to fill in all and then that Isaiah broker in a brokerage relationship. So in working with them, what was scary is his, and he's now getting to work with them as their advisor because they see the depth of the relationship and how much he cares for them and that he is a fiduciary one. They were putting a markup on every single bond they had, so 1.8% they had a bond portfolio at 500,000 they've been doing that every single year. Something that they've been charging them a commission, basically every bond turned over every year. That is crazy to me. Certainly not in that client's best interest at all. They had an allocation that didn't make a lot of sense. This person needed a financial plan and financial investment advice, not commission based products, but here's what was really fascinating to me.
Speaker 5:
39:26
The gym last week, they're walk, they're leaving, and they have the paperwork ready to go and process to transfer from to that advisor here in the Carson Network and the advisor at their form of, excuse me, not advisor, broker, definitely be for a broker at this wirehouse, call them up and said, hey, because of all of the changes from that technology sector, the communication sector, I need to do some trades for you right away. And so of course they called us and said, hey, can you look at this? Does this make sense? No, it didn't make sense. It was one last ditch effort, by the way. We saw it was going to create a $10,200 commission for that broker trying to get one last chunk out of this person before they leave. And that just drives me batty because I don't understand why you just don't do what's in someone's best interest to help them out.
Speaker 5:
40:18
So don't let these happen. And I believe the barons and other, you know, or as a receiver because we behave that way for people. So let's go into this big thing we want to talk about, which is making sure this double duo, this combination, this Batman and Robin have RMDs and social securities that it doesn't double hit you then. This is huge. I mean, huge, huge, huge misstep for many retirees. I'm not going to do my impersonation of the word huge that you hear on TV all the time. Um, but basically people have no idea how it hurts you. I'm just going to give you a number. 85% 85% of your social security benefits can become taxable. You throw an RMD on top of that. And actually CNBC, I know many of our listeners, so they coined this phrase and I like it and I'm going to use it and I'll certainly credit them for it. They called this the tax torpedo Jim tax. Torpedo. Torpedo. Yeah. Why? Because if you don't take action many years in advance to set up your income stream efficiently, you're torpedo in yourself in. The problem is, is this strategy can really take more taxable income away from you. So you have to structure your withdrawals and away. So that way you can keep the most from their social security rather than the least amount.
Speaker 4:
41:34
Sure. And I mean if you look at it from a, we love our football analogies, right? We do that combination or those solutions for, so security in RMD planning, they're unique to everybody. Not, there's not cookie cutter out there. It's no different than if I'm taking over a football team and I'm trying to determine what offends to run. I'm not going to take just a scheme and shove it into the players and expect him to be able to execute. I'm going to determine, hey, what am I players do? What's unique about them? Where are their talents and characteristics? And then I'm going to blend a scheme to fit what they're able to do.
Speaker 5:
42:10
Yeah, no, you, I mean you have to, I mean again, I'll go back to you. I'm afternoon. I have lunch with paid manager. This week is like talking about schemes on offense. Um, either way I couldn't help myself. Actually, the irony of the night before are supposed to go see him. I was watching the big 10 network. Could I flip through the channels? And they had the 1998 orange bowl between Tennessee and Nebraska. Great. And it interesting is like watching, okay one side you got Peyton Manning, you know, commanding the offense there at Tennessee on the other side you've got Scott Frost. So now think about where we are in the world of 2080, Liz Scott Coaching Nebraska, Peyton obviously having just a mega successful. And when I say not only, um, football career, but really life, career. Let me think about Saturday night live. You know, he's pretty darn funny on the, uh, these nationwide commercials.
Speaker 5:
42:56
I think people really enjoy, especially this most recent one from Brad Paisley. I think my daughter says it all the time there. And by the way, he was asking him about, you know, what he enjoyed? He said, Paul, Saturday night live is just to treat you gotta be around all these amazing people who are super fascinating and they're all trying to get better and better. Um, and he reminded me, I completely forgot about it. They did a parody about him being very evil and with the United way. And if you haven't seen it, Google it, you have, it is a super funny, but it was, you know, learning from him about that life experience. But you know, back to our topic here of RMD and social securities, it was just like him. The prep for the game was the most important. Sure. The on the field decisions that they made and the audibles Omaha, Omaha, and those types of things that happened were super important.
Speaker 5:
43:47
But if they weren't prepped and they didn't have the right game plan in place, it didn't matter. They, they, they, they made mistakes that happen. So if you're over the age 70 right now and you're listening, there's ways we can help. But I'm going to tell you, we've already got a delay game penalty. So the good news is that still recoverable, the game's not over. It's not canceled. You're not kicked off the field. But now we just gotta we gotta, we gotta move up Hill a little bit, but that's okay. We can try to help you or explain what to do. And if, if you're in your 50s and 60s now is the time to begin. The conversation. It doesn't mean you have to do something immediately, but you got to get the analysis done. And if you want that analysis done, be one of our first college to get this free customized FivePoint analysis.
Speaker 5:
44:32
(888) 419-8513 that's (888) 419-8513 hey Jim, I really enjoyed today's show. I love thinking through how we can help people avoid taxes. None of us, none of us want to pay more taxes. We no, not at all are you? You've yet to find someone. I know Jamie, our producer definitely doesn't want to find any more taxes to have to pay, but you got to make a movement on it now and make the right decision you can avoid. If you wanna send an email that's easier for you, you don't want to call info@carsonwealth.com easy way. Send us information. We'll help you out with that. (888) 419-8513 really enjoyed talking with everybody. They hope you have an awesome day and we'll see you again next week.
Speaker 2:
45:16
Risks, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson.
Speaker 1:
45:29
Okay. And here's the legal Mumbo jumbo. The opinions voiced and from wisdom with Rod Carson or for general information only, and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged, I mean not be invested into directly investing involves risk, including possible loss of principle. No strategy assure success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through Cwm, l l an SEC, registered investment advisor.