Episode Transcript
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Speaker 1 (00:00):
You worked hard for your money, but do you know
how to make it work hard for you. You need
a team with experience, vigilance, and a strategy to help
you live the retirement you deserve. Find your financial safe
haven with Haven Financial Group. Today you're listening to the
new and improved Haven Financial Group Radio Show, where we
bring you comprehensive weekly financial wisdom from the professionals. It's
(00:23):
all about helping you solve retirement problems so you can
make your nest egg last. Your tune to the Haven
Financial Group Radio Show with your host Larry Kolvig and
Kim Karrigan your guides to weekly retirement confidence. If you're
interested in protecting and growing what you have, let us
be your financial safe haven. The full nines are always
(00:43):
open at six point two, five oh four eighty four hundred.
Now get your financial questions ready because the Haven Financial
Group Radio Show starts now.
Speaker 2 (00:54):
Good morning and welcome to the Haven Financial Group Radio Show.
I'm Larry Kolviig, Founder and CEE you of the Haven
Financial Group. Thanks for listening. We got Kyle Thomas on
as well today, certified financial planner on the Haven Investment Team,
where every week we come to you and talk to
you about what's going on in the economy, retirement, does
and don'ts, and all kinds of great conversation. Kim right,
(01:16):
good to be with you again.
Speaker 3 (01:17):
It's great to be with you, and it's great to
have Kyle with us this morning as well. Yeah, each
week we talk about all kinds of things, and this
week we're going to talk about retirement and tax questions, taxes,
it's one of your favorite subjects, Larry, Well.
Speaker 2 (01:32):
It is, Well, it is not necessarily, but it is
because we find that people don't talk much about it
or plan much, and they miss opportunities that if they
had a discussion, they may have done things differently. And
we all know we work hard for every dollar that
we have, and most people don't want to give an
extra money to Uncle Sam and unless you really want to,
(01:53):
and I don't know many people that do.
Speaker 3 (01:54):
Right exactly, I think we can all find others other
uncles that we'd like to give money to. If we're
just giving money out, that is for certain. You know,
one of the misconceptions I think a lot of people
have before we get started here today is that when
you go into retirement, Larry, you don't pay as much taxes,
so you don't really need to worry about it, right, Yeah.
Speaker 2 (02:12):
That is so untrue because oftentimes, in retirement, taxes will
affect you more than ever before in your life. So
it's why it's so important to have these discussions. You know,
you know, planning for retirement can feel complicated and overwhelming.
But you know, if listeners would just have a partner
that they could lean on, like we talk about every week,
if somebody they can rely on, ask questions and go
(02:34):
to and they'll know that they're going to be there,
they could alleviate a lot of these stresses and concerns
that people have.
Speaker 4 (02:40):
Yeah.
Speaker 3 (02:41):
Absolutely, So we just want to remind everybody that, as
you listened this morning, if some of this rings true
for you, and if you have some questions and you
need them answered, maybe you're looking for that partner, give
them a call at Haven Financial. It's six one two
five zero four eight four zero zero. That's six one
two five zero four eighty four hundred. As we mentioned,
we're going to talk about retirement and taxes today. We're
(03:02):
going to get started with talking about the Federal Reserve
and some of the things that were said last month
in Jackson Hole during a big financial summit. There were
some things said there that really have impacted the economy,
and many experts anticipate will continue to impact and we're
going to kind of unpack that and talk about it
just a bit. Then we'll talk about strategies to manage
(03:25):
your taxes in retirement, why ore mds can be a
key piece of your retirement strategy, and if you're wondering
what our mds are, we're going to explain that as well.
And finally, will downsizing your home save you money when
you retire? Most specifically, will it save you tax money?
So we're going to talk about all of those subjects
(03:47):
this morning. Larry, let's get started though, talking about what
happened in Jackson Hole and what the Federal Reserve had
to say. And Kyle, maybe it's you who would want
to address what happened last month.
Speaker 5 (03:59):
Sure, Yeah, And so the Fed has, you know, meetings
almost every month every single year, and they have an
annual meeting at Jackson Hole and this is a big
meeting that people look forward to to get some guidance
and this meeting was very people were very anxious to
(04:21):
get the guidance from this one because we've had a
lot of interest rate conversations in the last couple of
years with the expectation of cuts and them then the
cut's not actually happening, and so now everyone is wanting
to know, is there going to be cuts this year? Well,
we all know the President is vying for that, but
(04:41):
the Fed has just had a little different opinion on those,
and the Fed itself has actually been they haven't been
in congruence with each other.
Speaker 6 (04:48):
But we did hear.
Speaker 5 (04:51):
From FED Chair Jerome Powell that a rate cut could
be coming in September. So he didn't commit to that,
but he did indicate that it could be coming. And
the reason that we're also thinking that is because the
job market it's stable, but there were some signs of
(05:12):
slowing demand and supply could quickly tip towards some weakness
on that side of it. And if we remember what
the FED is looking at, they're looking at the job
market and inflation. So if we see the if we
see the job market start to weaken a little bit,
it's probably a good indicator that we could have a
(05:33):
rate cut coming. And there is an eighty five percent
chance of an expected cut here in September.
Speaker 3 (05:38):
Yeah, well, and again we reiterate that a cut was
sort of expected, but maybe not the magnitude at which
we may see these cuts.
Speaker 5 (05:45):
Right, absolutely, yeah, we're we're thinking maybe a quarter percentage
cut here in September. You know, as we talked about
earlier here, the there was an expectation there would be
several cuts this year at the beginning of the year,
and you know, here we are just talking about a
couple for the year in total. So we're we're definitely
(06:08):
at a lesser degree than what we were anticipating. And uh,
you know, FED chair Powell's seat is up in May
as well, so we have to keep that in mind
with a policy change potentially coming when when his seat
is up.
Speaker 3 (06:24):
You mentioned the job market, and we have seen the
job market weaken a bit. How much influence might that
have once we learn more about the August job market.
Speaker 5 (06:34):
Well, the the way that the FED works is they're
they're data driven, right, so they're going to look at
whatever the data is. The the inflation part of their
their two legged approach to this with inflation and job market,
inflation is not quite at that two percent level that
they wanted to be at, and they said that they
were going to focus on the job piece of it
(06:56):
more so than the inflation numbers. And the job market
had been really good for a while here this year,
and if we see any signs of weakness, it could
propel some more cuts, maybe in December as well. But
they're going to be completely data driven on this, and
it's going to depend on what that following or that
(07:18):
previous month's numbers were for jobless claims and whatever the
market statistics are for that.
Speaker 3 (07:26):
So Larry circle this back for us, and let's talk
about how this impacts our listeners.
Speaker 2 (07:31):
Well it you know, it shouldn't really impact at all,
but it does because it creates worry and concern and
then questions and all of that uncertainty is not good
in retirement. But what it does is, you know, there
could be some interest rate changes. Those money market CDs
and high healed savings might not look look so good,
(07:53):
but loans could be good. Interest rates could be going down,
So maybe restructuring debt, consider refinance seeing that house if
you do have a mortgage still however, you know, we
like if anybody has the ability to not have a
mortgage in retirement, that's a better alternative. So by having
a plan, sticking to the plan. You know, these things
(08:13):
have These things have of repercussions for people. But if
you stick to the plan and don't deviate from it
and get all the worried and you know, get ready
to jump off a cliff because of all this activity,
that's it creates a lot more stability. So you know,
your retirement strategy is completely reliant on your situation. And
(08:34):
that's where Haven we sit down and we try to
figure out where are you at, what are you doing,
what aren't you doing? What should you be doing? And
then by doing that we can continue to modify that
and help people stay on track. It's why we're called
Haven Financial Group. It's a nautical theme, not all only
because we all love to be on the water in
the summertime, but we do. But if you get off
(08:56):
just a degree or two in retirement, you may up
in the wrong spot, in a spot that you weren't
planning on getting to. So you got to stay on track.
Speaker 3 (09:05):
Absolutely, Kyle. Let me go back to you for just
a second. If we would see some major cuts before
the year is out. And when I say major, you know,
I know we talked about a quarter percent. Now you
were talking. You know, there's been there's been speculation of
even more than that.
Speaker 4 (09:24):
Twice two times.
Speaker 3 (09:25):
So what kind of impact would that have on the economy,
you think as we headed back into January.
Speaker 5 (09:33):
Yeah, And it's hard to say for certain what that
impact would be, but we have a good indicator on
how the market would react to that, the stock market specifically,
because just on the talks of a potential cut, the
market jumped in a positive note, very very well. It
responded very positively to that, to that potential cut. So
(09:56):
if we have an actual cut and potentially more cuts,
I'm thinking that the stock market is going to respond
very nicely for people who are invested in the stock market. Now,
you know, we've been expecting that for the last few years,
So I don't want people to think that this is
a one hundred percent thing that it's going to happen, because
(10:20):
we've been everyone's been wrong a lot in the last
couple of years on expecting these So and on the
opposite side of that, if these rate cuts don't necessarily happen,
the market could respond poorly to that. So it's hard
to say exactly because we don't exactly know what all
is priced into the markets, but I would assume that
(10:44):
the stock market would have some positive days following any
rate cuts.
Speaker 3 (10:49):
Well, one of the things we know, gentlemen, I think
both of you would agree, is that a lot of
times we just don't know what's coming.
Speaker 4 (10:54):
That's what we do know.
Speaker 3 (10:56):
And for that reason, I think it's really important for
people to have flexibility in their retirement plan and to
just be prepared for the ups and downs.
Speaker 2 (11:04):
Correct.
Speaker 5 (11:06):
Yeah, that's that's why it's so beneficial to be working
with an advisor and planners who encompass all of these things,
because once you have a plan that's built around all
these ups and downs and unknowns, you're going to be
in a good spot regardless of what happens. Absolutely, So
making sure that you have stress tested all of these
(11:28):
different scenarios and knowing that your outcome is unfazed by
all those scenarios, that's the best spot you can be
in because now you don't have to stress about it.
Speaker 3 (11:38):
So, if you're looking for a partner, can I suggest
that you give the folks here at even Financial Group
a call six one two, five zero four eighty four hundred.
That's the number you reach and tell them you heard
us here on the radio, and you'd like to come
in and sit down and.
Speaker 4 (11:51):
Talk about your portfolio.
Speaker 3 (11:53):
Maybe you don't have one, maybe you have one and
it needs a stress test. You know, during these uncertain times,
this is the time to certainly get a check up.
It's six one two five zero four eight four zero zero.
Cal Thomas, thanks so much. It was great to hear
your insight on what the FED is doing and what
they may do in the next couple of months.
Speaker 4 (12:13):
When we come back.
Speaker 3 (12:15):
Strategies to manage your taxes in retirement.
Speaker 4 (12:18):
This is the Haven Financial for Radio Show. Don't go
too far.
Speaker 1 (12:22):
We're gathering more important insights and retirement. Please governor the
Haven Financial Group Radio Show. We'll be right back. Stick around.
You've got questions, We've got answers. Your tune to the
Haven Financial Group Radio Show with your host Larry Kulvig
and Kim Karragan. Now back to the show.
Speaker 2 (12:42):
Good morning, and welcome again to the Haven Financial Group
Radio Show. I'm Larry Kolvig, founder and CEO of the
Haven Financial Group. Thanks for listening and feel free to
give us a call six one two five zero four
eighty four hundred or Havenfinancialgroup dot com all kinds of
retirement tools on there and events and educational events upcoming
(13:02):
as we head into the fall, which fall is here,
and Lance Lurson, our CPA, is going to be with
us talking about taxes and retirement. And again we always
talk about forward thinking tax planning, doing what we can
do now to minimize or reduce taxes later, and that's
so very important, So again, feel free to give us
a call six' one two five oh four eighty four.
Speaker 3 (13:25):
Hundred, well, gentlemen we were talking about this off at
the top of the show and we were saying that you,
know THINGS ebb and flow and you have to sort
of plan around. It but one thing is for, certain
taxes are always going to be, there and a lot
of people believe that in retirement their taxes will be,
lower and that's not necessarily the. Case you definitely need
(13:46):
a strategy for drawing your money in an effort to
protect your. Money so let's get right to this With.
Lance one of the most important Things, lance it seems
like to me you must sit down and talk to
people about is which money to draw win and that
will be a tax. Advantage that's certainly what you're looking.
Speaker 4 (14:06):
For, Exactly.
Speaker 6 (14:08):
Kim so when we look at the money that people have,
retirement we can kind of lump it into two different,
buckets either our pre tax dollars or some post tax.
Dollars the pre tax dollars would include YOUR ira four
oh ONE ks four three. B's people might be having
(14:30):
a simple, plan a set, plan all this all these
moneys have been funded with pre tax, money meaning that
there was a deduction when they first made the. Contributions
post tax money we're talking about like roth, iras non
qualified brokerage. Accounts this would also include savings, accounts checking,
(14:54):
accounts a very variety of other different accounts that were
funded with money that's after. Tax, Okay and so we
like to have these different buckets right there because they
have different tax implications when we pull that money.
Speaker 4 (15:11):
Out, sure, absolutely and so in.
Speaker 6 (15:14):
The retirement, years we definitely want to have our pre tax,
money use that to fill up our ten and twelve
percent tax brackets we have right, now that is the
absolutely cheapest money as far as tax, goes and then
if we need to have more, money then we start
looking at it doesn't make sense to keep pulling from
those pre tax, accounts or does it make sense to
(15:35):
start pulling from some of those post tax.
Speaker 3 (15:37):
Amounts, sure, again this is one of those things that
it's really terrific to have a partner who can look
at all of your investments and make determinations as to
which one is most advantageous to draw money from at certain.
Times let's talk ABOUT wroth and what that can do
to help you reduce.
Speaker 6 (15:55):
Taxes so with The wroth, accounts this is again money
that we've contributed with after tax, money and so THE
wroth the benefit of those ones is are that the
growth is going to be tax. Free there are a
couple of caveats that we have to adhere, to such
(16:17):
as The roth account has to be in existence for five.
Years we have the normal retirement factor that you have
to be over fifty nine and a half in order
to draw on those. Funds but it's something we meet
all these, criteria then The wroth accounts are going to
be a perfect place to pull from when we want
to have tax free.
Speaker 3 (16:35):
Money, okay all, right but you have to have some
flexibility there, obviously because you can't just sit waiting to
draw money for five.
Speaker 4 (16:44):
Years there's got to be other dollars somewhere.
Speaker 6 (16:47):
Exactly and so this is one of the things that
we like to do with the roth conversions in the
early part of retirement so we can start that five year.
Clock it's even better if we have clients that come
in that have already had A wroth account. Open and
this is also when we talk to clients too have
kids and grandkids that, say, hey let's get them to
(17:09):
start opening up A roth account for them as. Well
and so's we're just not working with clients today on their,
stuff we're also trying to help out their families and
the future generations as.
Speaker 3 (17:20):
Well, absolutely that sort of drove me to a state.
Planning that's an important part of.
Speaker 6 (17:24):
It it. Is and so with the state, planning when
we're thinking about leaving money for our loved ones, there
we want to put them in the best possible tax
situation that we. Can and so if we have the
choice to leave a traditional ira or to leave a
wroth ira to our, beneficiaries we prefer to leave that
(17:48):
wroth ira ten times out of.
Speaker 2 (17:50):
Ten. Kim IF i may add to, that roths are
typically the last thing people touch because it does have
a benefit of tax free to the. Beneficiaries because you,
know the baby boomber and generation and other generations have
oftentimes saved hopefully they've saved a decent amount a large
amount in pre tax, iras and that's, great but oftentimes
(18:14):
with the, beneficiaries maybe the, kids and oftentimes when the
kids do, inherit they may be at their peak earnings
years as, well and now they thanks mom And dad
for this pre TAX ira money that you've left, Us
but now they're in a high tax, bracket which ultimately
gets Tax SO roth is really where we want to get.
It and you, know we just now are In. September
(18:35):
we're not far off fourth, quarter and this is where
we're having these discussions with all of our clients and
folks that we sit down with because we want to
fill up that twelve percent tax bracket paid less taxes
now or future higher percent taxes in the. FUTURE i
think there's a pretty easy answer to. That so, again missed.
(18:55):
Opportunities just this last, WEEK i had a couple in
and they had the ability for the last two years
to do IRATOR roth. Conversions they have no, partner they
had no tax planning, discussions and they missed. It those
are the things we don't want to. Miss and you,
know we started the segment by, saying you, know where
do we draw, from you, know a pre tax A.
(19:17):
Roth this WEEK i had several couples and they think
of a couple From lakeville that has saved very very,
well sixty four years old both of, them and they're
approaching retirement and they again they've done a great job
saving in their four one, case but they looked at
their conversation was we have no idea where to start
or where to draw from when we, retire and we
(19:38):
realized we need some assistance and we need some. Help
we had lance, in we had an investment team, in
and you, know at the end of the, day that's
the attention people. Deserve they so they can avoid making
some of these commonplace mistakes that just shouldn't be Common.
Speaker 4 (19:54):
Sure, absolutely.
Speaker 3 (19:56):
YEAH i, mean so what you're saying is that the
couple that you mentioned, first they miss two years of
their five that they could have already had that money in.
Speaker 2 (20:02):
There they had the potential of converting about one hundred
grand in two years INTO roth at a low tax,
bracket and they had no. Idea and this, year we're
not going to miss that opportunity because now we've had
the conversation in fourth. Quarter that's when these, conversions that's
when we're going to initiate the conversations and take action
(20:24):
to make sure we don't miss. That because the deadline
on this is the end of the, year and we
don't wait till the end of the. Year we kind
of draw the line in the sand By december fifteenth
at the absolute, latest to make sure we get it
get it done by the end of the.
Speaker 3 (20:37):
Year so you've answered my next, question which, was you,
know is this the best time of the year to
do it or can you do it at any point
in the.
Speaker 2 (20:44):
Year you can do it at any, point but we
want a good idea of what your current year's income
is going to be so we can actually do the
predicted projection as far as, okay you have this much
wiggle room to fill the bracket, up whether filing, single
head of house or married filing, jointly we have a
better indication fourth. Quarter so that's why we typically had that.
Speaker 3 (21:06):
Conversation, Then so if you're someone who doesn't want to
miss those, deadlines maybe you don't know about the. Deadlines
like the couple That larry was talking, About you certainly
don't want to miss two, years or if you have
other questions related to your taxes and how to draw
your money most tax, efficient give the folks At Haven
Financial group a. Call it's six one two five zero
(21:29):
four eight four zero. Zero again that's six one two
five zero four eighty four. Hundred tell them you heard
us here on the. Radio when we come, back we're
going to continue to talk about. Taxes this time we'll
talk about rmds and why they are a key part
of your tax. Strategy this is The Haven Financial Group Radio.
Speaker 1 (21:49):
Show ready to find your financial safe. Haven your dream
retirement is in, reach don't go. Away The Haven Financial
Group Radio show will be right. Back are you worried
that your financial strategy might be missing, Something well you're
in the right. Place Larry kolvig is back and ready
(22:09):
to help you find your financial safe.
Speaker 2 (22:11):
Haven good morning once, again and welcome to The Haven
Financial Group Radio. Show I'm Larry, kolvig founder AND ceo
of The Haven Financial. Group celebrating our tenure anniversary this. Year,
Kim we're pretty proud of. That and how fast ten years,
Ago well we all know how fast time. Flies But
havenfinancialgroup Dot com go to our website as. Well you
can see all the educational events that we're going to
(22:34):
have here for the rest of the, year and we
do offer a variety of those WITH r AND d
taxes and investment, classes social security and tax medicare Made, Simple, wills,
trust legacy, planning a, variety and of course our new
education center where we're going to be doing here real,
soon a fraud prevention by the local police department here
(22:56):
at the. Office so we're very big into education because
that's how we all, learn or at least we hope we, learn, Right.
Speaker 3 (23:03):
Kim, absolutely you bet, again That's evenfinancialgroup dot. Com we
want to say thank you so much To Lance larson
being HERE cpa there at Even Financial, group And lance
knows everything there is to know about, taxes and so
we're thrilled that he's here today because we are talking
about taxes and the impact they can have on your
retirement and what you need to know to make sure
(23:25):
that your your retirement is tax. Efficient you want to
make sure you don't want to be Paying Uncle sam extra,
dollars that is for. Sure in this, segment we thought
we would talk about rmds and let's just first get started.
Lance not everybody knows what rmds, are so let's start.
Speaker 6 (23:42):
THERE rmds is a fun acronym that we have during,
retirement which stands for required minimum. Distributions what this is
talking about is that during our working, years we have
been saving our dollars in four ONE k plans for
THREE b simple, sets all the pre tax retirement and
(24:05):
so we have not paid taxes on that money. Yet
and eventually the government gets tired of waiting for the
tax revenue of this one and they tell us it's
time to take that money, out and time to pay
the piper and give the tax dollars To Uncle. Sam
and so the fun question comes in is how much
is my r AND D, well it's going to be
(24:28):
based upon two, factors one the balance of your retirement
account and two what your age. Is THE irs employs
a bunch of v actuaries that goes through and calculates
the mortality of people and they figure that at this
at a certain, age that you have x amount of
years left to. Live so therefore they can figure out
(24:51):
a percentage of what you need to take out of
your retirement.
Speaker 4 (24:55):
Accounts, okay, boy those are fun people to be.
Speaker 3 (24:59):
Around, huh that's kind of a tough, deal that's for,
sure all.
Speaker 4 (25:05):
Right so what what typically is the? Age it's seventy
right now now.
Speaker 6 (25:09):
Seventy, Three so a little bit of. History it first
started out for seventy and a, half and that's where
a lot of people knew this, number and it was
around for a long. Time it's probably at least been
the last twenty to thirty years THAT i know, of
and so there's a lot of things that hit at
that seventy and a. Half then we had The Secure
(25:31):
act that actually changed it to seventy, two and then
about a year to year and a half later then
they passed The Secure act two point, two which then
changed it to seventy, three and then it will change
it to seventy five in about THE i want to,
say about eight years. Now so that's it's the age
is going to change a little bit based upon the
(25:53):
current tax. Law but as it stands for, today it's
going to be at seventy, three and then those years
later it's going to be again at seventy.
Speaker 4 (26:00):
Five so, lance when you hit that magic, number what.
Happens so what.
Speaker 6 (26:06):
THE irs is going to tell you is, that, hey
you need to take that out the year that you
turned seventy three or the year that you hit the ARM.
Ds that's actually not quite true the very first. Year
you have the option to make sure you take it
out By december thirty, first or you can actually delay
that Until april first of the following. Year, now we'd also,
(26:30):
want as we talked, about we do a lot of the,
planning we want to actually make sure if that plan
makes sense a lot of the, time you are going
to want to take THAT r AND d the year
that you reach that age and not wait till the following,
year because in the following year you'd have to actually
then take. Two you have to take THE r AND
d By april first for the prior, year plus you
(26:52):
have to take a second army for the next current.
Speaker 3 (26:55):
Year and what's the percentage of that you have to
take out right.
Speaker 6 (27:02):
Now it's seventy, three it's going to be three point
seven eight, percent and then it just kind of goes
up a good ballpark number for people to just kind
of keep in the back of their. Head if you
plan on about four, percent that will take you to
about age seventy eight right, Now so if you plan
on seventy three that you need to take out four
(27:22):
percent age seventy, four another four. Percent it's not going
to be, exact but it's going to give you a
good number for planning.
Speaker 4 (27:30):
Purposes, kim this is a big.
Speaker 2 (27:31):
Deal this required minium distribution for a lot of folks
that have built up these pre tax types of. Accounts
And i'll give you an. Example so this COUPLE i
was with last, week for their THEIR rmd is going
to be within the in the next couple of. Years
and for, them they've done a great job. Saving they
don't spend, much they're very, frugal they're very open with.
That and THEIR rmd is going to be eighty thousand
(27:53):
dollars a year of additional. Income i'll mind you this
is taxable. Income so for some people this can be
a very big. Amount so it's why we want to
do whatever we can in the earlier years of, retirement
like roth conversions or whatever we can do to minimize
the tax ramifications in those latter. Years and it's because
we Hit lance AND i hear this very. Often we
(28:16):
make more money now than we did when we were. Working,
now that's a great problem to. Have Great american, problem
but it can mean higher taxes and taxes you re
just truly don't want to.
Speaker 3 (28:27):
Pay, sure you, Know, lance it seems like to, me
a lot of people probably, believe, GOSH i should leave
all of my money in my four oh ONE k
Until i'm ready to, draw and that certainly doesn't seem
like a smart.
Speaker 6 (28:39):
Move Then, No unfortunately it's not people who miss their rm.
Ds THE Irs institute's a very hefty penalty on that.
One for the longest, time it was actually fifty percent
of THAT r AND. D so In larry's case right,
there if our new who clients came in had eighty
(29:01):
thousand dollars and they failed to take that, out they'd
have to be writing a Checked Uncle sam for forty thousand.
Dollars now The Secure act has made it a little less.
Punitive they dropped it from fifty to twenty five, percent
but still twenty five percent is really really. Harsh so
that's Where larry AND i will, say, yeah you're going
(29:22):
to take out your r and ds whether you want
it or. Not we just want to make sure that
we're planning for. That one of the other factors that
we're going to go into this besides just a tax
is then in retirement everyone's On. Medicare there's THAT, irma
the income Related Monthly adjustment amount that if we have
(29:44):
too much, income that Your medicare premiums are going to
have a forty to one hundred percent increase because you
have too much money coming.
Speaker 3 (29:54):
In SO i think what is very clear is that
it's important to know when your rmds come up and
that you're prepared to pay those are to take care
of those issues because they have such an impact on
your retirement. Lifestyle they're going to impact your tax, bill
(30:16):
they could be resolved in a, fine it could impact
Your medicare. PREMIUMS i, mean there's a lot going on
there and a lot to. Unpack so if you have
questions about, RMDS i, mean you, know maybe you're, wondering
AM i one of those people who falls in the
seventy three year old retiree? Category or WILL i AM
i young enough that at seventy five this will? Begin
(30:39):
these are all questions and so much more that they
can help you with their At Haven Financial. Group the
number six one two five zero four eighty four hundred
six one two five zero four eight fours zero, zero
give them a call and sit down With lance and
talk about your tax. Plan you don't want to just drop,
(30:59):
off As larry, says it's not advantageous to you to
just drop off your taxes and pick them. Up you
want to sit down and you want to put together
a strategy and a. Plan six one two five zero
four eight four zero Zero.
Speaker 4 (31:11):
When we come.
Speaker 3 (31:12):
Back should you, downsize should you get rid of your?
House and will that help your tax? Burden we'll talk
about that right here on The Haven Financial Group Radio.
Speaker 4 (31:20):
Show don't go too.
Speaker 1 (31:22):
Far we're gathering more important insights and retirement Ways devin
The Haven Financial Group Radio. Show we'll be right. Back stick.
Around you've got, Questions we've got. Answers your tune to
The Haven Financial Group Radio show with your Host Larry
kulvig And Kim. Karagan no back to the.
Speaker 4 (31:41):
Show welcome, back, Listeners thanks for listening this.
Speaker 2 (31:45):
Morning my Name's Larry kolvig with The Haven Financial group
and you're listening to The Haven Financial Group Radio. Show
we also Have Lance LARSON cpa on The haven. Team
we're talking. Taxes, yeah it doesn't get any better than
this on A sunday morning can, taxes taxes and more.
Taxes how about?
Speaker 4 (32:02):
It, WELL i.
Speaker 3 (32:05):
Think it really is good because we're not necessarily talking
about how to tax you, more but we're trying to
talk about how to minimize your taxes and to make
you comfortable during your retirement.
Speaker 4 (32:14):
Age you, know you your your retirement.
Speaker 3 (32:17):
Years rather you, know you may think to, yourself, WELL
i think now That i'm, RETIRED i won't have to
Pay Uncle sam so. Much and you, know but that's
not necessarily the. Case we want to make sure, though
that you're not paying him too. Much we've been chatting
With lance about taxes and tax, strategy and you, Know,
lance one of the biggest TAXES i know we have
in our life is our you, know our home and
(32:39):
our personal property. Tax AND i think that is probably
for a lot of, people and a lot of people
think maybe this is my time to, downsize and there
are some advantages to maybe considering that once you hit.
Speaker 4 (32:52):
Retirement.
Speaker 6 (32:52):
Correct, yeah so with your primary. Residents most of the
time that when we're growing with our, families we want
to have a little bit of a bigger. Space and
then the kids, leave we become empty, nesters and then
we realize that we have more house than we absolutely,
need it's harder to. Maintain then we're, also, hey we're
(33:17):
going to go on, Vacation we're going to go tour the,
world we have fun plans. Retirement do we really want
to have all this house? Maintenance and that's kind of
what starts triggering these thoughts of what to do with
our house?
Speaker 3 (33:29):
Now so let's talk about those options when people are
considering maybe downsizing and getting rid of the.
Speaker 6 (33:35):
House so kim coming ABOUT i normally talk with clients
about three major options of when they're trying to look
at the downsides in the. House first is actually just
straight up selling and walking away from the. House typically
that it triggers the discussion on capital, gains and THEN
(33:57):
i get the happy report that, hey, hey because of
the primary home, exclusion we can exclude up to five
hundred thousand dollars of capital gains for a marriage finally joint,
couple or two hundred and fifty thousand for the. Singles
so we look at that and we run through the.
Numbers they, say, hey what do we sell in the house?
For what'd you buy it? For, hey that capital gain
(34:20):
is usually, less and then we get to, say, hey
you're not going to pay anything for taxes on selling your.
House the second option a lot of people talk about, is,
hey what happens if we turn our house into a rental. Property,
well that's also a great option that we're going to
make that house turn into an income. Stream they're going
(34:43):
to most of the time clients want to do that
with their house because they're going to move to a
different state and have a different house over. There they
may want to be able to keep some roots. Here
a lot of different personal reasons why this might be
a viable option for. Them if we go down that,
path it does raise a lot more future tax, consequences
(35:06):
such as the income stream from renting out the. House
we have to deal with the taxes for. That then
we start dealing with depreciation on the, house and then
what do we do if we eventually sell the house
after it's become a business use. Property so we discuss
all those options, there and then the last one, is,
(35:27):
Well i'm just going to give it to the. Kids
that's a very understandable scenario right. There from a tax,
perspective all we're really doing is going to be kicking
the can down the road and letting the kids deal
with the taxes in the, future and it actually probably
would be a more tax disadvantageous way of doing.
Speaker 3 (35:52):
It, Okay so in the, end BECAUSE i realized we
have all of these, options and obviously this is you,
know per, Individual but is selling the house you, know
advantageous when it comes to, taxes or you, know is
it better if people try to find other?
Speaker 4 (36:10):
Ways most of the.
Speaker 6 (36:12):
Time it is going to be advantageous because of that
primary residence exemption that we have that where we can
exclude up to that five hundred thousand dollars of capital.
Gains and so for people who are looking for tax
free money out of their, house this is the way to.
Speaker 3 (36:28):
Go, okay what do you do you have to reinvest
that money or do you have to start to pay
on that eventually when it's.
Speaker 6 (36:35):
Your primary, residence you do not have to reinvest that.
Money you can just take that money and. Run but
then the fun QUESTION i always ask afterwards is, well
where are you living after you sell this? House if
you decide to turn it into a rental, property then
there's some options. There, one you can just sell it
(36:56):
and have the capital, gains pay the, taxes and then
you can take the money in run or there's an
tax code out there called the ten thirty one which
allows us to exchange the rental property for a different rental.
Property so you're living in here In, minnesota and we
(37:18):
decide to rent out the house here and then we're, like,
hey we don't want to Have minnesota more because we've
moved out of. State then we can sell the rental
property on a ten thirty one. Exchange then we take
the proceeds and then those ones we do have to
reinvest into a new. One and if we do everything,
correctly then there's no capital gains that we have to
(37:40):
recognize when we sell This minnesota rental property and then
purchase a new rental.
Speaker 3 (37:46):
Property so, sorry go, Ahead i'm sorry you.
Speaker 1 (37:50):
GUYS i was going to, say.
Speaker 6 (37:52):
With the ten thirty, one you will want to work
with a realtor somebody who knows about ten thirty one
exchanges because there are a lot of, caveats a lot
of rules that we have to follow with the ten
thirty one exchange in order to not pay any capital
gains on.
Speaker 3 (38:10):
That, Okay so WHAT i was going to say, there
And i'm sorry THAT i erupted You, lance but.
Speaker 4 (38:16):
It seems to me that these are.
Speaker 3 (38:18):
Decisions, now maybe it's a decision that's made once you
get into retirement and you make the decision that the
house is too expensive in the taxes are too, high
but these are also possibly decisions that could be made
prior to, retirement so that you have sort of an
idea of where you're headed.
Speaker 6 (38:33):
Exactly this is not just make a decision once you're.
Retired it's something to have your eyes open as you're
heading into. Retirement this is a pre retirement planning idea right,
there because you actually can get a really good. Offer
we can have a few years ago when the housing
market was just really red, hot if we made the
(38:57):
decision to sell the house before before we are ready for,
retirement we could have made a big dollar amount just
might have been able to help reduce the amount of time.
Retirement so it's, like we do want to be cognizant
of everything that's going on around in the, world such
as the housing market that can help impact your retirement.
Speaker 2 (39:21):
Life so as we're talking about taxes, today you know
you can't steer the entire, economy but you can steer
your own tax outcome in, retirement whether it's selling your
home and the tax implications of, that whether if they're
taking advantage of tax advantage tools that can work for,
you can reduce your annual tax. Burden all these tax
discussions come with the planning, phase and that's what people
(39:44):
fail to, do is is the failure to have these
tax discussions and they miss. Opportunities so again RM, ds
we touched on in the show all of these, things
But i'm going to leave you with. This the reality,
is do you have all the retirement puzzle piece in?
Retirement do you know how much risk you're taking in your?
Portfolio medicare life insurance, review an annuity, exam long term,
(40:08):
care estate, planning all these retirement puzzle. Pieces they're so,
very very, important not because they're, exciting but they can
really really have an effect on the long term effects
of your. Retirement so we appreciate you listening this Week
Haven Financial. Group we look forward to joining you next.
Week feel free to give us a call six', one
two five zero four eighty four hundred. Or, Four again
(40:30):
Havenfinancialgroup dot com have a blessed week and we look
forward to seeing you.
Speaker 4 (40:35):
Next time.
Speaker 7 (40:37):
Investment advisory service is Offered Through Guardian WELL, Strategies Llc
Haven financial Group And Guardian WELL strategies llc are not,
affiliated companies and investments, involve, risk and unless, otherwise stated are.
Not guaranteed please consult with the qualified financial advisor and
or tax professional before implementing any strategy discussed herein and
comments regarding as safe and secure investments and guaranteed income
(40:59):
streams only they refer to fixed. Insurance products they do
not refer in any way to securities or investment. Advisory
products fixed insurance and annuity product guarantees are subject to
the claims paying ability of the.
Speaker 1 (41:09):
Issuing company
You worked hard for your money, but do you know
how to make it work hard for you. You need
a team with experience, vigilance, and a strategy to help
you live the retirement you deserve. Find your financial safe
haven with Haven Financial Group. Today you're listening to the
new and improved Haven Financial Group Radio Show, where we
bring you comprehensive weekly financial wisdom from the professionals. It's
(00:23):
all about helping you solve retirement problems so you can
make your nest egg last. Your tune to the Haven
Financial Group Radio Show with your host Larry Kolvig and
Kim Karrigan your guides to weekly retirement confidence. If you're
interested in protecting and growing what you have, let us
be your financial safe haven. The full nines are always
(00:43):
open at six point two, five oh four eighty four hundred.
Now get your financial questions ready because the Haven Financial
Group Radio Show starts now.
Speaker 2 (00:54):
Good morning and welcome to the Haven Financial Group Radio Show.
I'm Larry Kolviig, Founder and CEE you of the Haven
Financial Group. Thanks for listening. We got Kyle Thomas on
as well today, certified financial planner on the Haven Investment Team,
where every week we come to you and talk to
you about what's going on in the economy, retirement, does
and don'ts, and all kinds of great conversation. Kim right,
(01:16):
good to be with you again.
Speaker 3 (01:17):
It's great to be with you, and it's great to
have Kyle with us this morning as well. Yeah, each
week we talk about all kinds of things, and this
week we're going to talk about retirement and tax questions, taxes,
it's one of your favorite subjects, Larry, Well.
Speaker 2 (01:32):
It is, Well, it is not necessarily, but it is
because we find that people don't talk much about it
or plan much, and they miss opportunities that if they
had a discussion, they may have done things differently. And
we all know we work hard for every dollar that
we have, and most people don't want to give an
extra money to Uncle Sam and unless you really want to,
(01:53):
and I don't know many people that do.
Speaker 3 (01:54):
Right exactly, I think we can all find others other
uncles that we'd like to give money to. If we're
just giving money out, that is for certain. You know,
one of the misconceptions I think a lot of people
have before we get started here today is that when
you go into retirement, Larry, you don't pay as much taxes,
so you don't really need to worry about it, right, Yeah.
Speaker 2 (02:12):
That is so untrue because oftentimes, in retirement, taxes will
affect you more than ever before in your life. So
it's why it's so important to have these discussions. You know,
you know, planning for retirement can feel complicated and overwhelming.
But you know, if listeners would just have a partner
that they could lean on, like we talk about every week,
if somebody they can rely on, ask questions and go
(02:34):
to and they'll know that they're going to be there,
they could alleviate a lot of these stresses and concerns
that people have.
Speaker 4 (02:40):
Yeah.
Speaker 3 (02:41):
Absolutely, So we just want to remind everybody that, as
you listened this morning, if some of this rings true
for you, and if you have some questions and you
need them answered, maybe you're looking for that partner, give
them a call at Haven Financial. It's six one two
five zero four eight four zero zero. That's six one
two five zero four eighty four hundred. As we mentioned,
we're going to talk about retirement and taxes today. We're
(03:02):
going to get started with talking about the Federal Reserve
and some of the things that were said last month
in Jackson Hole during a big financial summit. There were
some things said there that really have impacted the economy,
and many experts anticipate will continue to impact and we're
going to kind of unpack that and talk about it
just a bit. Then we'll talk about strategies to manage
(03:25):
your taxes in retirement, why ore mds can be a
key piece of your retirement strategy, and if you're wondering
what our mds are, we're going to explain that as well.
And finally, will downsizing your home save you money when
you retire? Most specifically, will it save you tax money?
So we're going to talk about all of those subjects
(03:47):
this morning. Larry, let's get started though, talking about what
happened in Jackson Hole and what the Federal Reserve had
to say. And Kyle, maybe it's you who would want
to address what happened last month.
Speaker 5 (03:59):
Sure, Yeah, And so the Fed has, you know, meetings
almost every month every single year, and they have an
annual meeting at Jackson Hole and this is a big
meeting that people look forward to to get some guidance
and this meeting was very people were very anxious to
(04:21):
get the guidance from this one because we've had a
lot of interest rate conversations in the last couple of
years with the expectation of cuts and them then the
cut's not actually happening, and so now everyone is wanting
to know, is there going to be cuts this year? Well,
we all know the President is vying for that, but
(04:41):
the Fed has just had a little different opinion on those,
and the Fed itself has actually been they haven't been
in congruence with each other.
Speaker 6 (04:48):
But we did hear.
Speaker 5 (04:51):
From FED Chair Jerome Powell that a rate cut could
be coming in September. So he didn't commit to that,
but he did indicate that it could be coming. And
the reason that we're also thinking that is because the
job market it's stable, but there were some signs of
(05:12):
slowing demand and supply could quickly tip towards some weakness
on that side of it. And if we remember what
the FED is looking at, they're looking at the job
market and inflation. So if we see the if we
see the job market start to weaken a little bit,
it's probably a good indicator that we could have a
(05:33):
rate cut coming. And there is an eighty five percent
chance of an expected cut here in September.
Speaker 3 (05:38):
Yeah, well, and again we reiterate that a cut was
sort of expected, but maybe not the magnitude at which
we may see these cuts.
Speaker 5 (05:45):
Right, absolutely, yeah, we're we're thinking maybe a quarter percentage
cut here in September. You know, as we talked about
earlier here, the there was an expectation there would be
several cuts this year at the beginning of the year,
and you know, here we are just talking about a
couple for the year in total. So we're we're definitely
(06:08):
at a lesser degree than what we were anticipating. And uh,
you know, FED chair Powell's seat is up in May
as well, so we have to keep that in mind
with a policy change potentially coming when when his seat
is up.
Speaker 3 (06:24):
You mentioned the job market, and we have seen the
job market weaken a bit. How much influence might that
have once we learn more about the August job market.
Speaker 5 (06:34):
Well, the the way that the FED works is they're
they're data driven, right, so they're going to look at
whatever the data is. The the inflation part of their
their two legged approach to this with inflation and job market,
inflation is not quite at that two percent level that
they wanted to be at, and they said that they
were going to focus on the job piece of it
(06:56):
more so than the inflation numbers. And the job market
had been really good for a while here this year,
and if we see any signs of weakness, it could
propel some more cuts, maybe in December as well. But
they're going to be completely data driven on this, and
it's going to depend on what that following or that
(07:18):
previous month's numbers were for jobless claims and whatever the
market statistics are for that.
Speaker 3 (07:26):
So Larry circle this back for us, and let's talk
about how this impacts our listeners.
Speaker 2 (07:31):
Well it you know, it shouldn't really impact at all,
but it does because it creates worry and concern and
then questions and all of that uncertainty is not good
in retirement. But what it does is, you know, there
could be some interest rate changes. Those money market CDs
and high healed savings might not look look so good,
(07:53):
but loans could be good. Interest rates could be going down,
So maybe restructuring debt, consider refinance seeing that house if
you do have a mortgage still however, you know, we
like if anybody has the ability to not have a
mortgage in retirement, that's a better alternative. So by having
a plan, sticking to the plan. You know, these things
(08:13):
have These things have of repercussions for people. But if
you stick to the plan and don't deviate from it
and get all the worried and you know, get ready
to jump off a cliff because of all this activity,
that's it creates a lot more stability. So you know,
your retirement strategy is completely reliant on your situation. And
(08:34):
that's where Haven we sit down and we try to
figure out where are you at, what are you doing,
what aren't you doing? What should you be doing? And
then by doing that we can continue to modify that
and help people stay on track. It's why we're called
Haven Financial Group. It's a nautical theme, not all only
because we all love to be on the water in
the summertime, but we do. But if you get off
(08:56):
just a degree or two in retirement, you may up
in the wrong spot, in a spot that you weren't
planning on getting to. So you got to stay on track.
Speaker 3 (09:05):
Absolutely, Kyle. Let me go back to you for just
a second. If we would see some major cuts before
the year is out. And when I say major, you know,
I know we talked about a quarter percent. Now you
were talking. You know, there's been there's been speculation of
even more than that.
Speaker 4 (09:24):
Twice two times.
Speaker 3 (09:25):
So what kind of impact would that have on the economy,
you think as we headed back into January.
Speaker 5 (09:33):
Yeah, And it's hard to say for certain what that
impact would be, but we have a good indicator on
how the market would react to that, the stock market specifically,
because just on the talks of a potential cut, the
market jumped in a positive note, very very well. It
responded very positively to that, to that potential cut. So
(09:56):
if we have an actual cut and potentially more cuts,
I'm thinking that the stock market is going to respond
very nicely for people who are invested in the stock market. Now,
you know, we've been expecting that for the last few years,
So I don't want people to think that this is
a one hundred percent thing that it's going to happen, because
(10:20):
we've been everyone's been wrong a lot in the last
couple of years on expecting these So and on the
opposite side of that, if these rate cuts don't necessarily happen,
the market could respond poorly to that. So it's hard
to say exactly because we don't exactly know what all
is priced into the markets, but I would assume that
(10:44):
the stock market would have some positive days following any
rate cuts.
Speaker 3 (10:49):
Well, one of the things we know, gentlemen, I think
both of you would agree, is that a lot of
times we just don't know what's coming.
Speaker 4 (10:54):
That's what we do know.
Speaker 3 (10:56):
And for that reason, I think it's really important for
people to have flexibility in their retirement plan and to
just be prepared for the ups and downs.
Speaker 2 (11:04):
Correct.
Speaker 5 (11:06):
Yeah, that's that's why it's so beneficial to be working
with an advisor and planners who encompass all of these things,
because once you have a plan that's built around all
these ups and downs and unknowns, you're going to be
in a good spot regardless of what happens. Absolutely, So
making sure that you have stress tested all of these
(11:28):
different scenarios and knowing that your outcome is unfazed by
all those scenarios, that's the best spot you can be
in because now you don't have to stress about it.
Speaker 3 (11:38):
So, if you're looking for a partner, can I suggest
that you give the folks here at even Financial Group
a call six one two, five zero four eighty four hundred.
That's the number you reach and tell them you heard
us here on the radio, and you'd like to come
in and sit down and.
Speaker 4 (11:51):
Talk about your portfolio.
Speaker 3 (11:53):
Maybe you don't have one, maybe you have one and
it needs a stress test. You know, during these uncertain times,
this is the time to certainly get a check up.
It's six one two five zero four eight four zero zero.
Cal Thomas, thanks so much. It was great to hear
your insight on what the FED is doing and what
they may do in the next couple of months.
Speaker 4 (12:13):
When we come back.
Speaker 3 (12:15):
Strategies to manage your taxes in retirement.
Speaker 4 (12:18):
This is the Haven Financial for Radio Show. Don't go
too far.
Speaker 1 (12:22):
We're gathering more important insights and retirement. Please governor the
Haven Financial Group Radio Show. We'll be right back. Stick around.
You've got questions, We've got answers. Your tune to the
Haven Financial Group Radio Show with your host Larry Kulvig
and Kim Karragan. Now back to the show.
Speaker 2 (12:42):
Good morning, and welcome again to the Haven Financial Group
Radio Show. I'm Larry Kolvig, founder and CEO of the
Haven Financial Group. Thanks for listening and feel free to
give us a call six one two five zero four
eighty four hundred or Havenfinancialgroup dot com all kinds of
retirement tools on there and events and educational events upcoming
(13:02):
as we head into the fall, which fall is here,
and Lance Lurson, our CPA, is going to be with
us talking about taxes and retirement. And again we always
talk about forward thinking tax planning, doing what we can
do now to minimize or reduce taxes later, and that's
so very important, So again, feel free to give us
a call six' one two five oh four eighty four.
Speaker 3 (13:25):
Hundred, well, gentlemen we were talking about this off at
the top of the show and we were saying that you,
know THINGS ebb and flow and you have to sort
of plan around. It but one thing is for, certain
taxes are always going to be, there and a lot
of people believe that in retirement their taxes will be,
lower and that's not necessarily the. Case you definitely need
(13:46):
a strategy for drawing your money in an effort to
protect your. Money so let's get right to this With.
Lance one of the most important Things, lance it seems
like to me you must sit down and talk to
people about is which money to draw win and that
will be a tax. Advantage that's certainly what you're looking.
Speaker 4 (14:06):
For, Exactly.
Speaker 6 (14:08):
Kim so when we look at the money that people have,
retirement we can kind of lump it into two different,
buckets either our pre tax dollars or some post tax.
Dollars the pre tax dollars would include YOUR ira four
oh ONE ks four three. B's people might be having
(14:30):
a simple, plan a set, plan all this all these
moneys have been funded with pre tax, money meaning that
there was a deduction when they first made the. Contributions
post tax money we're talking about like roth, iras non
qualified brokerage. Accounts this would also include savings, accounts checking,
(14:54):
accounts a very variety of other different accounts that were
funded with money that's after. Tax, Okay and so we
like to have these different buckets right there because they
have different tax implications when we pull that money.
Speaker 4 (15:11):
Out, sure, absolutely and so in.
Speaker 6 (15:14):
The retirement, years we definitely want to have our pre tax,
money use that to fill up our ten and twelve
percent tax brackets we have right, now that is the
absolutely cheapest money as far as tax, goes and then
if we need to have more, money then we start
looking at it doesn't make sense to keep pulling from
those pre tax, accounts or does it make sense to
(15:35):
start pulling from some of those post tax.
Speaker 3 (15:37):
Amounts, sure, again this is one of those things that
it's really terrific to have a partner who can look
at all of your investments and make determinations as to
which one is most advantageous to draw money from at certain.
Times let's talk ABOUT wroth and what that can do
to help you reduce.
Speaker 6 (15:55):
Taxes so with The wroth, accounts this is again money
that we've contributed with after tax, money and so THE
wroth the benefit of those ones is are that the
growth is going to be tax. Free there are a
couple of caveats that we have to adhere, to such
(16:17):
as The roth account has to be in existence for five.
Years we have the normal retirement factor that you have
to be over fifty nine and a half in order
to draw on those. Funds but it's something we meet
all these, criteria then The wroth accounts are going to
be a perfect place to pull from when we want
to have tax free.
Speaker 3 (16:35):
Money, okay all, right but you have to have some
flexibility there, obviously because you can't just sit waiting to
draw money for five.
Speaker 4 (16:44):
Years there's got to be other dollars somewhere.
Speaker 6 (16:47):
Exactly and so this is one of the things that
we like to do with the roth conversions in the
early part of retirement so we can start that five year.
Clock it's even better if we have clients that come
in that have already had A wroth account. Open and
this is also when we talk to clients too have
kids and grandkids that, say, hey let's get them to
(17:09):
start opening up A roth account for them as. Well
and so's we're just not working with clients today on their,
stuff we're also trying to help out their families and
the future generations as.
Speaker 3 (17:20):
Well, absolutely that sort of drove me to a state.
Planning that's an important part of.
Speaker 6 (17:24):
It it. Is and so with the state, planning when
we're thinking about leaving money for our loved ones, there
we want to put them in the best possible tax
situation that we. Can and so if we have the
choice to leave a traditional ira or to leave a
wroth ira to our, beneficiaries we prefer to leave that
(17:48):
wroth ira ten times out of.
Speaker 2 (17:50):
Ten. Kim IF i may add to, that roths are
typically the last thing people touch because it does have
a benefit of tax free to the. Beneficiaries because you,
know the baby boomber and generation and other generations have
oftentimes saved hopefully they've saved a decent amount a large
amount in pre tax, iras and that's, great but oftentimes
(18:14):
with the, beneficiaries maybe the, kids and oftentimes when the
kids do, inherit they may be at their peak earnings
years as, well and now they thanks mom And dad
for this pre TAX ira money that you've left, Us
but now they're in a high tax, bracket which ultimately
gets Tax SO roth is really where we want to get.
It and you, know we just now are In. September
(18:35):
we're not far off fourth, quarter and this is where
we're having these discussions with all of our clients and
folks that we sit down with because we want to
fill up that twelve percent tax bracket paid less taxes
now or future higher percent taxes in the. FUTURE i
think there's a pretty easy answer to. That so, again missed.
(18:55):
Opportunities just this last, WEEK i had a couple in
and they had the ability for the last two years
to do IRATOR roth. Conversions they have no, partner they
had no tax planning, discussions and they missed. It those
are the things we don't want to. Miss and you,
know we started the segment by, saying you, know where
do we draw, from you, know a pre tax A.
(19:17):
Roth this WEEK i had several couples and they think
of a couple From lakeville that has saved very very,
well sixty four years old both of, them and they're
approaching retirement and they again they've done a great job
saving in their four one, case but they looked at
their conversation was we have no idea where to start
or where to draw from when we, retire and we
(19:38):
realized we need some assistance and we need some. Help
we had lance, in we had an investment team, in
and you, know at the end of the, day that's
the attention people. Deserve they so they can avoid making
some of these commonplace mistakes that just shouldn't be Common.
Speaker 4 (19:54):
Sure, absolutely.
Speaker 3 (19:56):
YEAH i, mean so what you're saying is that the
couple that you mentioned, first they miss two years of
their five that they could have already had that money in.
Speaker 2 (20:02):
There they had the potential of converting about one hundred
grand in two years INTO roth at a low tax,
bracket and they had no. Idea and this, year we're
not going to miss that opportunity because now we've had
the conversation in fourth. Quarter that's when these, conversions that's
when we're going to initiate the conversations and take action
(20:24):
to make sure we don't miss. That because the deadline
on this is the end of the, year and we
don't wait till the end of the. Year we kind
of draw the line in the sand By december fifteenth
at the absolute, latest to make sure we get it
get it done by the end of the.
Speaker 3 (20:37):
Year so you've answered my next, question which, was you,
know is this the best time of the year to
do it or can you do it at any point
in the.
Speaker 2 (20:44):
Year you can do it at any, point but we
want a good idea of what your current year's income
is going to be so we can actually do the
predicted projection as far as, okay you have this much
wiggle room to fill the bracket, up whether filing, single
head of house or married filing, jointly we have a
better indication fourth. Quarter so that's why we typically had that.
Speaker 3 (21:06):
Conversation, Then so if you're someone who doesn't want to
miss those, deadlines maybe you don't know about the. Deadlines
like the couple That larry was talking, About you certainly
don't want to miss two, years or if you have
other questions related to your taxes and how to draw
your money most tax, efficient give the folks At Haven
Financial group a. Call it's six one two five zero
(21:29):
four eight four zero. Zero again that's six one two
five zero four eighty four. Hundred tell them you heard
us here on the. Radio when we come, back we're
going to continue to talk about. Taxes this time we'll
talk about rmds and why they are a key part
of your tax. Strategy this is The Haven Financial Group Radio.
Speaker 1 (21:49):
Show ready to find your financial safe. Haven your dream
retirement is in, reach don't go. Away The Haven Financial
Group Radio show will be right. Back are you worried
that your financial strategy might be missing, Something well you're
in the right. Place Larry kolvig is back and ready
(22:09):
to help you find your financial safe.
Speaker 2 (22:11):
Haven good morning once, again and welcome to The Haven
Financial Group Radio. Show I'm Larry, kolvig founder AND ceo
of The Haven Financial. Group celebrating our tenure anniversary this. Year,
Kim we're pretty proud of. That and how fast ten years,
Ago well we all know how fast time. Flies But
havenfinancialgroup Dot com go to our website as. Well you
can see all the educational events that we're going to
(22:34):
have here for the rest of the, year and we
do offer a variety of those WITH r AND d
taxes and investment, classes social security and tax medicare Made, Simple, wills,
trust legacy, planning a, variety and of course our new
education center where we're going to be doing here real,
soon a fraud prevention by the local police department here
(22:56):
at the. Office so we're very big into education because
that's how we all, learn or at least we hope we, learn, Right.
Speaker 3 (23:03):
Kim, absolutely you bet, again That's evenfinancialgroup dot. Com we
want to say thank you so much To Lance larson
being HERE cpa there at Even Financial, group And lance
knows everything there is to know about, taxes and so
we're thrilled that he's here today because we are talking
about taxes and the impact they can have on your
retirement and what you need to know to make sure
(23:25):
that your your retirement is tax. Efficient you want to
make sure you don't want to be Paying Uncle sam extra,
dollars that is for. Sure in this, segment we thought
we would talk about rmds and let's just first get started.
Lance not everybody knows what rmds, are so let's start.
Speaker 6 (23:42):
THERE rmds is a fun acronym that we have during,
retirement which stands for required minimum. Distributions what this is
talking about is that during our working, years we have
been saving our dollars in four ONE k plans for
THREE b simple, sets all the pre tax retirement and
(24:05):
so we have not paid taxes on that money. Yet
and eventually the government gets tired of waiting for the
tax revenue of this one and they tell us it's
time to take that money, out and time to pay
the piper and give the tax dollars To Uncle. Sam
and so the fun question comes in is how much
is my r AND D, well it's going to be
(24:28):
based upon two, factors one the balance of your retirement
account and two what your age. Is THE irs employs
a bunch of v actuaries that goes through and calculates
the mortality of people and they figure that at this
at a certain, age that you have x amount of
years left to. Live so therefore they can figure out
(24:51):
a percentage of what you need to take out of
your retirement.
Speaker 4 (24:55):
Accounts, okay, boy those are fun people to be.
Speaker 3 (24:59):
Around, huh that's kind of a tough, deal that's for,
sure all.
Speaker 4 (25:05):
Right so what what typically is the? Age it's seventy
right now now.
Speaker 6 (25:09):
Seventy, Three so a little bit of. History it first
started out for seventy and a, half and that's where
a lot of people knew this, number and it was
around for a long. Time it's probably at least been
the last twenty to thirty years THAT i know, of
and so there's a lot of things that hit at
that seventy and a. Half then we had The Secure
(25:31):
act that actually changed it to seventy, two and then
about a year to year and a half later then
they passed The Secure act two point, two which then
changed it to seventy, three and then it will change
it to seventy five in about THE i want to,
say about eight years. Now so that's it's the age
is going to change a little bit based upon the
(25:53):
current tax. Law but as it stands for, today it's
going to be at seventy, three and then those years
later it's going to be again at seventy.
Speaker 4 (26:00):
Five so, lance when you hit that magic, number what.
Happens so what.
Speaker 6 (26:06):
THE irs is going to tell you is, that, hey
you need to take that out the year that you
turned seventy three or the year that you hit the ARM.
Ds that's actually not quite true the very first. Year
you have the option to make sure you take it
out By december thirty, first or you can actually delay
that Until april first of the following. Year, now we'd also,
(26:30):
want as we talked, about we do a lot of the,
planning we want to actually make sure if that plan
makes sense a lot of the, time you are going
to want to take THAT r AND d the year
that you reach that age and not wait till the following,
year because in the following year you'd have to actually
then take. Two you have to take THE r AND
d By april first for the prior, year plus you
(26:52):
have to take a second army for the next current.
Speaker 3 (26:55):
Year and what's the percentage of that you have to
take out right.
Speaker 6 (27:02):
Now it's seventy, three it's going to be three point
seven eight, percent and then it just kind of goes
up a good ballpark number for people to just kind
of keep in the back of their. Head if you
plan on about four, percent that will take you to
about age seventy eight right, Now so if you plan
on seventy three that you need to take out four
(27:22):
percent age seventy, four another four. Percent it's not going
to be, exact but it's going to give you a
good number for planning.
Speaker 4 (27:30):
Purposes, kim this is a big.
Speaker 2 (27:31):
Deal this required minium distribution for a lot of folks
that have built up these pre tax types of. Accounts
And i'll give you an. Example so this COUPLE i
was with last, week for their THEIR rmd is going
to be within the in the next couple of. Years
and for, them they've done a great job. Saving they
don't spend, much they're very, frugal they're very open with.
That and THEIR rmd is going to be eighty thousand
(27:53):
dollars a year of additional. Income i'll mind you this
is taxable. Income so for some people this can be
a very big. Amount so it's why we want to
do whatever we can in the earlier years of, retirement
like roth conversions or whatever we can do to minimize
the tax ramifications in those latter. Years and it's because
we Hit lance AND i hear this very. Often we
(28:16):
make more money now than we did when we were. Working,
now that's a great problem to. Have Great american, problem
but it can mean higher taxes and taxes you re
just truly don't want to.
Speaker 3 (28:27):
Pay, sure you, Know, lance it seems like to, me
a lot of people probably, believe, GOSH i should leave
all of my money in my four oh ONE k
Until i'm ready to, draw and that certainly doesn't seem
like a smart.
Speaker 6 (28:39):
Move Then, No unfortunately it's not people who miss their rm.
Ds THE Irs institute's a very hefty penalty on that.
One for the longest, time it was actually fifty percent
of THAT r AND. D so In larry's case right,
there if our new who clients came in had eighty
(29:01):
thousand dollars and they failed to take that, out they'd
have to be writing a Checked Uncle sam for forty thousand.
Dollars now The Secure act has made it a little less.
Punitive they dropped it from fifty to twenty five, percent
but still twenty five percent is really really. Harsh so
that's Where larry AND i will, say, yeah you're going
(29:22):
to take out your r and ds whether you want
it or. Not we just want to make sure that
we're planning for. That one of the other factors that
we're going to go into this besides just a tax
is then in retirement everyone's On. Medicare there's THAT, irma
the income Related Monthly adjustment amount that if we have
(29:44):
too much, income that Your medicare premiums are going to
have a forty to one hundred percent increase because you
have too much money coming.
Speaker 3 (29:54):
In SO i think what is very clear is that
it's important to know when your rmds come up and
that you're prepared to pay those are to take care
of those issues because they have such an impact on
your retirement. Lifestyle they're going to impact your tax, bill
(30:16):
they could be resolved in a, fine it could impact
Your medicare. PREMIUMS i, mean there's a lot going on
there and a lot to. Unpack so if you have
questions about, RMDS i, mean you, know maybe you're, wondering
AM i one of those people who falls in the
seventy three year old retiree? Category or WILL i AM
i young enough that at seventy five this will? Begin
(30:39):
these are all questions and so much more that they
can help you with their At Haven Financial. Group the
number six one two five zero four eighty four hundred
six one two five zero four eight fours zero, zero
give them a call and sit down With lance and
talk about your tax. Plan you don't want to just drop,
(30:59):
off As larry, says it's not advantageous to you to
just drop off your taxes and pick them. Up you
want to sit down and you want to put together
a strategy and a. Plan six one two five zero
four eight four zero Zero.
Speaker 4 (31:11):
When we come.
Speaker 3 (31:12):
Back should you, downsize should you get rid of your?
House and will that help your tax? Burden we'll talk
about that right here on The Haven Financial Group Radio.
Speaker 4 (31:20):
Show don't go too.
Speaker 1 (31:22):
Far we're gathering more important insights and retirement Ways devin
The Haven Financial Group Radio. Show we'll be right. Back stick.
Around you've got, Questions we've got. Answers your tune to
The Haven Financial Group Radio show with your Host Larry
kulvig And Kim. Karagan no back to the.
Speaker 4 (31:41):
Show welcome, back, Listeners thanks for listening this.
Speaker 2 (31:45):
Morning my Name's Larry kolvig with The Haven Financial group
and you're listening to The Haven Financial Group Radio. Show
we also Have Lance LARSON cpa on The haven. Team
we're talking. Taxes, yeah it doesn't get any better than
this on A sunday morning can, taxes taxes and more.
Taxes how about?
Speaker 4 (32:02):
It, WELL i.
Speaker 3 (32:05):
Think it really is good because we're not necessarily talking
about how to tax you, more but we're trying to
talk about how to minimize your taxes and to make
you comfortable during your retirement.
Speaker 4 (32:14):
Age you, know you your your retirement.
Speaker 3 (32:17):
Years rather you, know you may think to, yourself, WELL
i think now That i'm, RETIRED i won't have to
Pay Uncle sam so. Much and you, know but that's
not necessarily the. Case we want to make sure, though
that you're not paying him too. Much we've been chatting
With lance about taxes and tax, strategy and you, Know,
lance one of the biggest TAXES i know we have
in our life is our you, know our home and
(32:39):
our personal property. Tax AND i think that is probably
for a lot of, people and a lot of people
think maybe this is my time to, downsize and there
are some advantages to maybe considering that once you hit.
Speaker 4 (32:52):
Retirement.
Speaker 6 (32:52):
Correct, yeah so with your primary. Residents most of the
time that when we're growing with our, families we want
to have a little bit of a bigger. Space and
then the kids, leave we become empty, nesters and then
we realize that we have more house than we absolutely,
need it's harder to. Maintain then we're, also, hey we're
(33:17):
going to go on, Vacation we're going to go tour the,
world we have fun plans. Retirement do we really want
to have all this house? Maintenance and that's kind of
what starts triggering these thoughts of what to do with
our house?
Speaker 3 (33:29):
Now so let's talk about those options when people are
considering maybe downsizing and getting rid of the.
Speaker 6 (33:35):
House so kim coming ABOUT i normally talk with clients
about three major options of when they're trying to look
at the downsides in the. House first is actually just
straight up selling and walking away from the. House typically
that it triggers the discussion on capital, gains and THEN
(33:57):
i get the happy report that, hey, hey because of
the primary home, exclusion we can exclude up to five
hundred thousand dollars of capital gains for a marriage finally joint,
couple or two hundred and fifty thousand for the. Singles
so we look at that and we run through the.
Numbers they, say, hey what do we sell in the house?
For what'd you buy it? For, hey that capital gain
(34:20):
is usually, less and then we get to, say, hey
you're not going to pay anything for taxes on selling your.
House the second option a lot of people talk about, is,
hey what happens if we turn our house into a rental. Property,
well that's also a great option that we're going to
make that house turn into an income. Stream they're going
(34:43):
to most of the time clients want to do that
with their house because they're going to move to a
different state and have a different house over. There they
may want to be able to keep some roots. Here
a lot of different personal reasons why this might be
a viable option for. Them if we go down that,
path it does raise a lot more future tax, consequences
(35:06):
such as the income stream from renting out the. House
we have to deal with the taxes for. That then
we start dealing with depreciation on the, house and then
what do we do if we eventually sell the house
after it's become a business use. Property so we discuss
all those options, there and then the last one, is,
(35:27):
Well i'm just going to give it to the. Kids
that's a very understandable scenario right. There from a tax,
perspective all we're really doing is going to be kicking
the can down the road and letting the kids deal
with the taxes in the, future and it actually probably
would be a more tax disadvantageous way of doing.
Speaker 3 (35:52):
It, Okay so in the, end BECAUSE i realized we
have all of these, options and obviously this is you,
know per, Individual but is selling the house you, know
advantageous when it comes to, taxes or you, know is
it better if people try to find other?
Speaker 4 (36:10):
Ways most of the.
Speaker 6 (36:12):
Time it is going to be advantageous because of that
primary residence exemption that we have that where we can
exclude up to that five hundred thousand dollars of capital.
Gains and so for people who are looking for tax
free money out of their, house this is the way to.
Speaker 3 (36:28):
Go, okay what do you do you have to reinvest
that money or do you have to start to pay
on that eventually when it's.
Speaker 6 (36:35):
Your primary, residence you do not have to reinvest that.
Money you can just take that money and. Run but
then the fun QUESTION i always ask afterwards is, well
where are you living after you sell this? House if
you decide to turn it into a rental, property then
there's some options. There, one you can just sell it
(36:56):
and have the capital, gains pay the, taxes and then
you can take the money in run or there's an
tax code out there called the ten thirty one which
allows us to exchange the rental property for a different rental.
Property so you're living in here In, minnesota and we
(37:18):
decide to rent out the house here and then we're, like,
hey we don't want to Have minnesota more because we've
moved out of. State then we can sell the rental
property on a ten thirty one. Exchange then we take
the proceeds and then those ones we do have to
reinvest into a new. One and if we do everything,
correctly then there's no capital gains that we have to
(37:40):
recognize when we sell This minnesota rental property and then
purchase a new rental.
Speaker 3 (37:46):
Property so, sorry go, Ahead i'm sorry you.
Speaker 1 (37:50):
GUYS i was going to, say.
Speaker 6 (37:52):
With the ten thirty, one you will want to work
with a realtor somebody who knows about ten thirty one
exchanges because there are a lot of, caveats a lot
of rules that we have to follow with the ten
thirty one exchange in order to not pay any capital
gains on.
Speaker 3 (38:10):
That, Okay so WHAT i was going to say, there
And i'm sorry THAT i erupted You, lance but.
Speaker 4 (38:16):
It seems to me that these are.
Speaker 3 (38:18):
Decisions, now maybe it's a decision that's made once you
get into retirement and you make the decision that the
house is too expensive in the taxes are too, high
but these are also possibly decisions that could be made
prior to, retirement so that you have sort of an
idea of where you're headed.
Speaker 6 (38:33):
Exactly this is not just make a decision once you're.
Retired it's something to have your eyes open as you're
heading into. Retirement this is a pre retirement planning idea right,
there because you actually can get a really good. Offer
we can have a few years ago when the housing
market was just really red, hot if we made the
(38:57):
decision to sell the house before before we are ready for,
retirement we could have made a big dollar amount just
might have been able to help reduce the amount of time.
Retirement so it's, like we do want to be cognizant
of everything that's going on around in the, world such
as the housing market that can help impact your retirement.
Speaker 2 (39:21):
Life so as we're talking about taxes, today you know
you can't steer the entire, economy but you can steer
your own tax outcome in, retirement whether it's selling your
home and the tax implications of, that whether if they're
taking advantage of tax advantage tools that can work for,
you can reduce your annual tax. Burden all these tax
discussions come with the planning, phase and that's what people
(39:44):
fail to, do is is the failure to have these
tax discussions and they miss. Opportunities so again RM, ds
we touched on in the show all of these, things
But i'm going to leave you with. This the reality,
is do you have all the retirement puzzle piece in?
Retirement do you know how much risk you're taking in your?
Portfolio medicare life insurance, review an annuity, exam long term,
(40:08):
care estate, planning all these retirement puzzle. Pieces they're so,
very very, important not because they're, exciting but they can
really really have an effect on the long term effects
of your. Retirement so we appreciate you listening this Week
Haven Financial. Group we look forward to joining you next.
Week feel free to give us a call six', one
two five zero four eighty four hundred. Or, Four again
(40:30):
Havenfinancialgroup dot com have a blessed week and we look
forward to seeing you.
Speaker 4 (40:35):
Next time.
Speaker 7 (40:37):
Investment advisory service is Offered Through Guardian WELL, Strategies Llc
Haven financial Group And Guardian WELL strategies llc are not,
affiliated companies and investments, involve, risk and unless, otherwise stated are.
Not guaranteed please consult with the qualified financial advisor and
or tax professional before implementing any strategy discussed herein and
comments regarding as safe and secure investments and guaranteed income
(40:59):
streams only they refer to fixed. Insurance products they do
not refer in any way to securities or investment. Advisory
products fixed insurance and annuity product guarantees are subject to
the claims paying ability of the.
Speaker 1 (41:09):
Issuing company
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