Episode Transcript
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Live from the wgy iHeart Studios.Welcome to Retirement Ready with your host Dave
Kopek from the Retirement Ready Show.Every week, Dave and his team discuss
the ways they can help people makeinformed decisions about a wide array of retirement
planning information that can support you anddeveloping a more certain financial future for you
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and your family. Now it's timefor Dave Kopec, WGY's retirement Planning specialist,
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save nice good afternoons. Happy ninetiethI know, happy ninetieth birthday to
Frankie Valley. Hard to believe FrankieValley in the Four Seasons. I said
this morning on the Retirement Planning Showthat I saw Jersey Boys in New York
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City with my wife. Was oneof the greatest shows I've ever seen.
You left there hopping in a dancingand a big smile on your face.
So if you haven't seen The JerseyBoys yet, I'm not even too sure.
If it's still on Broadway, gosee it, even if it's a
regional theater, because it really isa pretty fun show. But I'm Dave
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Kopak. I am WGY's retirement planningspecialists. We have two shows here on
WGI that also broadcast nationally through iHeartRadio, Retirement Planning Show, and of course
this show Retirement Ready, which istopic specific. Anything that I'm talking about,
you can get a hold of usat rpg reti dot com. Rpgretire
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dot com. That's our website.And today's topic is something that I think
is pretty staggering. The largest wealthtransfer in the history of mankind is going
to start happening. Matter of fact'salready started happening, almost eighty five trillion
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with a t dollars in assets fromthe Baby Boom generation to younger generations primary
millennials and the gen Zers. Thistransfer is known as the Great Wealth Transfer
and aspects that take place over thenext twenty to thirty years. The transfer
is happening through wills, trusts,property purchases, gifts, a whole bunch
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of stuff. But I'm going tobe talking today about the problematic money,
problematic assets at death, things thatyou need to understand, because if you
don't, basically all you're doing isyet you're creating a large tax liability.
You're not leaving a legacy, youare leaving a tax liability. So with
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that being said, that's today's topic, the greatest transfer in the history of
mankind, estimated to be about eightyfive trillion dollars. Boy, when you
like your little piece of that.But let's take a phone call. We've
got Mike. How can I helpyou? Mike? Hi, I think
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I know what you're going to say. But okay, I'm going to run
something quick BYO. Retired sixty three, soon to be sixty four very soon.
Yep, six hundred thousand, deferredcomp, Social Security, and my
pension is about seven thousand dollars amonth. Uh, actually deposit into my
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account and seven thousand yes, yes, that is in insurance and everything.
I'm at seven thousand a month.That's pension and Social Security combined. And
once again, the only investments Ihave is the New York State deferred comp,
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which obviously I can't add to anymore. But here's the the danger for
me, I guess is I haveno planning. I don't have any retirement
planning. I don't have any protection. I should sit down with somebody,
right, Well, I mean that'syou're you already know the answer. You
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already know the I mean here here, here's my answer to that. No
plan, any destination will do gotcha. Yeah, I mean, h there's
you know. I've been doing itnow. This is my forty second year,
soon to be forty third, andI'll say this, the amount of
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options that are available to to individualsis huge, too many that to discuss
specifically, I will be talking aboutsome things that you should be at least
considering. Do you have a wifeand children and children? Single? Single?
No children, no debt? Sowhat's the destination of the assets?
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Well, which the home in mindinvestments. I'm thinking of starting to while
I'm reasonably healthy, start drawing downa nice chunk of money. Everyone.
Yeah, I figured, if Imake it a seventy five eighty, I
want to have everything that I wanted, and I might as well spending this
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money. I great train of thought. Do you have long term care insurance?
I don't have anything. Oh no, no, I just have regular
health insurance. Okay, so youdon't have long term care insurance. And
by the the income that you're generatingin the money that you set aside,
you might be actually in a positionwhere you can self ensure that risk.
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Because if you don't care where themoney goes when you pass away, then
you know you're probably a candidate toutilize your savings in order to give you
the quality of life that you're lookingfor. If you need to go into
a nursing facility. Okay, yeah, I got questions, but this isn't
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the time. I mean, Ican't got to come in and sit down.
Yeah, but I would say toit. We've put two persons on
the phone, you know what Imean. We've got we've got five locations
in New York. So if youwant to have a chat, let us
go to our website or give usa call. Your office at five one
eight fighting zero one nine to ninewill be more than happy to sit down
with you. Mike. Is thisthe one where David works at? Yeah,
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you're talking to the Dave. Ohokay, I talked to you a
while ago. Oh my god,I haven't come in yet. I'm sorry
you backfired on them. I will. You won't remember you talked to a
million people a day. But Iwill set up an appointment to come in
and sity and be honest with you, to be honest, to be honest
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with you, Mike, I dorecognize your voice, and I also recognize
your your your format here a littlebit, because you basically said the same
thing the last time you called in. Yeah, I know, and and
I need I need that little pushto say, you know, this could
be wiped out in just a matterof a year or two, all that
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I've worked out. Hear you saythat, you know that, you know?
Why why not protect what you workedall your life for? And uh,
that just rings my you know,the bells in my head, and
it's like, why am I notjust at least sitting down with them.
You know. I don't want toget into cost or anything. That's not
a factor obviously, but I dowant to. I do need some directions,
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okay, and I know it maycost some money to protect things.
I get it. So I'll giveyou a call and can I talk with
you though when I make an appointment, can you Yeah, just specifically ask
just ask for me and I'll bethere. Okay, awesome, Thank you
so much. Tall you something aboutyour character, your demeanor that just I
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trust you and I don't even knowyou. Well, I appreciate that.
God bless and have a great weekendand give me a call on Monday.
Same to you. Thank you somuch. Okay, Mike, have a
good day, all right. Sothat was a good question not uncommon.
We go through a lot of differentscenarios with existing clients and perspective clients.
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He's in a very fortunate position.He's got great pension of Social Security,
He's got a nice little nest eggthere with the New York State deferred compensation.
But as I just stated, whatour topic is today is the greatest
transfer in the history of mankind isgoing to happen here over the next twenty
to thirty years. And it's aquestion what kind of assets are you leaving
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to the next generation. Are youleaving a tax liability or are you leaving
a legacy? And for a lotof people when they transfer assets to the
next generation, there's over forty ofthat eighty five trillion that we're talking about,
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forty trillion of it is in qualifiedplans iras four O one k's TSP,
New York State deferred compensation. Youcan go through the whole laundry list
of qualified accounts and those are assets. There's really three assets at death that
are very problematic, very problematic,and those three assets will talk in great
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greater detail when we came back frombreak. But remember, you know,
like Mike said, I've got togive you a call, or I need
to pick up the phone. Youknow, the best laid plans are the
ones that you actually implement, notthe ones that you think about. So
it's easy to procrastinate. It's easyto sit on the fence. It's easy
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to basically say, you know,I'll get to it tomorrow, and then
tomorrow comes and you got another listof stuff that you got to do.
So you have to make this important. It's gonna be out at the top
of your list. So we'll talkeda little bit about that too. Why
it's procrastination, especially as you age, is not a good decision to make.
So I'm Dave opec I am wg wi's retirement planning specialists. We
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had a workshop not too long ago. We had about one hundred and fifty
people there. It went absolutely fantastic. We had a great, great participation,
great people. We're starting to seesome of those individuals right now that
as always, we offer a complementaryconsultation to all the listeners, whether you
at ten workshops or any of ouryou know what I call our dog and
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pony shows, We're more than happyto sit down with you at one of
our five offices here in New YorkState and give us a call at five
eight, five eight to zero onenine one nine, and remember today's topic,
greatest transfer of wealth and hit inthe history of mankind? How are
you going to deal with it?We'll be right back the eighty six percenters.
Do you know that eighty six percentof the population has no defined benefit
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pension plan? For most of us, we have to take our life savings
and create a paycheck for the restof our lives in retirement. What is
your plan for retirement income distribution?How you manage your assets during the most
critical years of your lifetime. NobelPrize winning economist William Sharp has called retirement
income distribution the nastiest, hardest problemin finance. He points out that investment,
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uncertainty, and mortality can derail themost careful laid out retirement income plan.
Call our offices today to start theprocess of building a retirement income distribution
plan. After forty one years ofbeing in the financial services business, you
need to start taking action to startbuilding your own personal retirement income distribution plan.
How do you do that? Totake action? Five one eight five
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eight zero one nine nine. That'sfive one eight, five eight zero one
nine one nine or RPG retire onthe web. Don't procrastinate, motivate to
start building your retirement income distribution planfive win eight five eight zero one nine
one nine. Will you run outof money in retirement? Will your investments
provide income for possibly decades? Howdo you navigate the two greatest risk in
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retirement sequence of returns in longevity?At the Retirement Planning Group, our Bucket
of Money approach addresses these concerns andwe offer a complimentary consultation to discuss this
with you. Call our office todayfor a free complimentary consultation to develop your
own personal retirement income distribution plan atfive eight five EID zero one nine nine.
That's five eight five EAD zero onenine one nine. You're just too
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good to be true. I can'ttake my all right. Happy birthday Frankie
Valley number ninety ninety nine to Ohwhat a group? Great music brings me
back to my youth. You know, there's a thing in wealth transfer that
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we try to avoid as much aswe possibly can. For some of us,
it's going to be impossible. Forsome they know nothing about it.
But I'm going to educate you onthree investments that are very problematic, and
there's trillions with a team of dollarsin these types of investments. The first,
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of course is an IRA. Whetheryou spend the money your wife,
your husband, your children, yourgrandchildren, pre tax money is always a
tax liability. When you pass iton to the next generation, there's no
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more stretch IRA. It's now tenyears a non spouse beneficiary has in order
for that money to come out.Now they want to change it again,
they want to make it five years. If that is the case, you're
going to have a huge tax liabilitywhen you least want it. Because statistically,
because of people living longer, childrenwill receive these assets or grandchildren when
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they're in their fifties sixties, whenthey're in the prime of their life.
They're receiving probably the maximum amount ofincome. And now they have to take
these distributions, not because they wantthem, but they're forced to take them.
So I raise number two non qualifiedannuities. You know, annuities when
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I first got in the business werepaying eight, ten, twelve percent guaranteed
guaranteed. This is during the eightieswhen it was the go go years,
eighties and nineties when interest rates werethrough the roof, and you put in
fifty thousand dollars, and now you'vegot two hundred and fifty thousand dollars in
the annuity. Kept on growing andgrowing and growan He never used it.
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You were just looking at that bigpile of cash. Hopefully you'll spend that
money. You never spend it.Now you pass away. You pass that
money on to a child, aloved one, whatever it may be.
Tax liabuilding. Anything over the fiftythousand dollars is now a tax liability is
ordinary income. Whoever's receiving the assets. There is no step up in basis
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on iras non qualified annuities. Nowhere's one that will resonate with the older
people out there. Maybe some ofthe younger people, but most of the
older people, A lot of olderpeople through payroll through their employer, through
the local bank. Series E bonds, Series E bonds, Right, you
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don't pay the tax while the moneyis accruing, accruing. You put in
you know, let's say one thousanddollars. Now it's worth nine thousand dollars
that you have in Series E bonds, you have an eight thousand dollars ordinary
income tax liability. Same as IRAsame as non qualified annuities now Series E
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bonds. So what are you sending. You're sending a tax obligation. You're
not sending a legacy to the nextgeneration. This is what we call a
death I R d IRD Yeah,IRD, Income and Respect of a decendan
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IRS Rule and income and respect witha decene refers to untaxed income that a
decenant had earned or had a rightto receive during their lifetime that now they
passed on to a beneficiary inherits thatmoney, and the beneficiary now has to
declare that income depending on when theyget the distribution and how they get the
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distribution, and most of it,of course, will be taxed as ordinary
income. So you need to understandexactly what you've created for your beneficiaries,
because beneficiaries are responsible for paying thetaxes on all these trillions of dollars that
are out there. And it's goingto be a huge bonanza for our friends
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down in Washington, d C.Now, I had a guy call me
the other day and he said,you know, I've got this large IRA
and like the guy Mike, theyjust called it. Got this large deferred
compensation six hundred thousand dollars really don'tneed any more additional income from it,
right, So what am I gonnado with it? Am I just gonna
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sit on the fence and I'm goingto wait and see what happens. Allow
the money to keep on growing.Then you have what we call RMD required
minimum distributions at age seventy three,where the government forces you to liquidate that.
Now you're on the government plan,you're not on your plan. So
with these trillions of dollars that arebeing passed down to the generations, the
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boomers have to make some decisions here, and those decisions are pretty simple.
Do I pay the tax? DoI reposition this wealth so it's more tax
efficiently passed on to our loved ones? And my answer to you on that
is that that's a personal decision.That's really a personal decision. We also
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have a question right now, whereis our state tax going? Okay,
because all states don't mirror federal Sonot only is the federal and jeopardy right
now because it's supposed to end intwo thousand and twenty five, So not
only could you possibly have what wecall the triple tax, triple tax,
what the heck's the triple tax day. Well, you've got state income tax,
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you got federal income tax, andyou could possibly, depending on the
size of your estate wherever it goes. Now the end of twenty and twenty
five have an estate tax liability.So with trillions of dollars in jeopardy right
now as far as huge tax liabilities, I'm going to be talking in the
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second half hour of today's Retirement Readyshow actions you can take to eliminate some
of this tax liability in your lifetime. So you're passing on assets monies to
the next generation that they're reaching thebucket, and it's tax preference money.
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What I mean by tax preference moneymoney that a good portion about, if
not all of it is tax free. Tax free, you've already paid the
tax. You want to have ittaxed again and again and again and again.
Well, there are ways that youcan basically reposition some of this wall
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not only during your accumulation years,but also in your retirement years in order
for you to facilitate what you're tryingto do in your estate planning process.
You know, we talked a littlebit about how irais are very problematic.
Not only are iras problematic during yourtransfer of wealth. But they're also problematic
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as you age, especially if youdon't have long term care insurance or you
haven't had the ability to purchase someform of long term care or reposition somebody
to your wealth. Iras will currentlyin New York State are aggressively being attacked
by the counties in order to payfor long term care. So when you
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hear some of the messaging out therethat iras are protected from a Medicaid spend
down as long as you're taking periodicpayments, that is not the case anymore.
I can speak from experience what thecounties are doing now. They're aggressively
going after those irays and they're makingyou spend that money down based off of
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life expectancy, not off of periodicpayments or what we call required minimum distributions.
So we'll talk a little bit aboutinherited diarrays. What you need to
know if you have established diarrays,you have large pools of money. Some
of the tax consequences that you mightwant to consider in your lifetime in order
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to make it less burdensome. Talka little bit about non qualified annuities.
Those are assets that you've put intoa tax deferred investment money just kept on
growing and growing and growing. Oneof the huge advantages of an annuity,
which almost ninety over ninety percent ofthe people never take advantage of, is
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called annuitization. What makes a newitizationso good because when you get that payout,
they do a formula, actual aerialformula, and a good percentage of
that assets depending on how much youput in and what the growth was exempt.
It's called the exclusion ratio. Isexempt for tax purposes because IRS considers
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it to be a part of returnof your principle. So people that have
large non qualified annuities a lot oftimes if they're looking to reposition that wealth,
we'll put it into what we calla payment status or a payout status
under annuitization, So they get thattax preference and now you can reposition some
of that wealth. Yes, you'regoing to have some tax liability, but
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nowhere near what the tax liability wouldhave been if you just let it keep
on growing and growing and growing andsending a tax liability to our children,
grandchildren, friends, whatever it maybe. So we talked about three problematic
assets. We'll talk some more.Series E bonds, IRA accounts, non
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qualified annuities. Those three assets,which there's trillions of dollars in never receive
a step up and basis always atax liability is ordinary income, never any
tax preference unless you the non qualifiedannuity. You do what we considered to
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be one of the best things todo if you're looking to reposition that wealth
is to turn that over into whatwe call a payment status or annuitization in
order to get some of that taxpreference in your lifetime. Any of these
topics that we're talking about today,we would love to have the opportunity to
sit down with you have a chatabout the retirement Planning Group. All of
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our assets are held at Fidelity.We're an independent financial advisory firm here in
the Capitol District region. We're intwenty eight states. We have five locations
down in New York State, soona new location in Florida and Sarasota.
So if you would like to sitdown with us have a chat, whether
zoom, face to face, justa telephone call. I'll give you our
telephone number at the office. It'sfive one eight five eight zero one nine
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one nine. That's five one eightfive eight zero one nine one nine,
and you just say listen. Ilistened to Dave on the radio. I
heard Retirement Ready. He was talkingabout the largest transfer in the history of
mankind. Give me a call.I'd be more than happy to sit down
with you, have a chat andsee if we can facilitate what you're looking
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for and what you're trying to accomplishwith your overall estate plan. Our telephone
number again five one eight, fiveeight zero one nine one nine. That's
five one eight five eight zero onenine. When when I'm away from you,
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I know what to send. Allright, we are back Dave Kopek
WG Wise retirement planning specialists. Gladyou're with us for another Retirement Ready show.
Topic specific. Today's topic is thelargest wealth transfer in the history of
mankind, estimated to be approximately eightyfive trillion dollars in assets over the next
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twenty to thirty years. It's astaggering figure. Not only is it staggering,
but a lot of that wealth isgoing to be problematic because it's ird
income or respect to a deecedent.So you're not sending a legacy, You're
sending a tax liability to the nextgeneration. A lot of this planning in
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order to reposition wealth is going tobe done by the boomers, because once
the horse is out of the barn, once the assets have been transferred,
you've lost the opportunity to give ittax preference. With possibly with the exception
of the annuity. Every annuity isa little bit different. Every annuity,
every annuity company has different payout structures. So not only is it important for
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you to look at those values,but also what happens something happens to you.
What is your spouse or non spousebeneficiaries? What are they going to
have to do with the non qualifiedannuity. So I'm going to give you
some ideas and concepts to think aboutin this half hour and some of the
things that you might want to consideras far as transferring that wealth tax efficiently.
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We'll start with the non qualified annuities. Non qualified annuities have been around
most of the time, and Isay non qualified annuities. These are what
we call MYGAS multi year GIAR guaranteedannuities. There are the annuities that you
bought years ago guaranteed rates. There'sstill guaranteed rates right now with an MYGA
get over five percent guaranteed for threeor five years, depending on how far
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you want to extend yourself out.A lot of people use them as an
alternative to a certificate a depositive treasury, because what because the money grows on
a tax deferred basis, you haveno tax liability until you withdraw the money.
And then when you withdraw the money, you have two options. You
can either take the interest out oryou can do annuitization, which gives you
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some tax preference, meaning a portionof the income is going to be exempt
from taxation. So the non qualifiedannuities give you more opportunities as far as
transferring some of that income or someof that wealth with tax preference. Some
clients have elected to turn it intoa guaranteed income stream for a certain period
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of time. So if you doit for fifteen or twenty years, you
got a five year life expectancy,your errors would receive that tax preference and
the money would transfer even though it'sno longer with you, it's with the
insurance company. There are named beneficiariesfor what we call period certain annuities,
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so that might be something to do. The one other thing that we've done
with non qualified annuities is that wehave turned that income stream into an alternative
asset, meaning life insurance. Andwhen I talk about life insurance, life
insurance from day one, dollar onegives you maximum velocity on those dollars.
And it's pretty staggering the amount ofmoney that you can create in life insurance
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when you do one of these paymentstructures, especially if you have hundreds of
thousands of dollars in that annuity.I've been flabbergasted with the amount of wealth
transferred. We're in a situation rightnow which i'll highlight one more time.
I know I talked about this before, but we had clients in Florida.
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They had about three hundred and fiftythousand dollars inside of a tiakref annuity.
That annuity, I asked them whatwas it set up for? Was it
going to be for wealth replacement?And the husband said, no, it's
going to be there for income thatwas going to be necessary for us to
have long term care. And Iasked him, I said, would you
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be receptive to another idea or conceptand he said absolutely, So I showed
them Care Matters, which is aninsurance contract through Nationwide, and we took
that annuity and we're having it paidout over the next ten years. Over
the next ten years, it's goingto generate about forty two thousand dollars of
income. That income is now goingto purchase what we call care Matters contract.
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It's universal life insurance of long termcare. As long as he makes
those ten payments, it's guaranteed forlife. And that is now going to
create over a million dollars day one, dollar one of long term care coverage,
which two spouses can utilize, bothhusband and wife. It's not just
specific to one. And if theydon't use it, there's a death benefit.
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If they do use it'll be thebest money they've ever spent in their
lifetime. So three hundred and fiftythousand dollars became a million dollars day day
one, dollar one, and itwill grow to about one point four to
one point five million dollars over thenext fifteen to twenty years. As far
as the adjustment that it has,as far as the rider on it that
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gives them purchasing power, additional purchasingpower. So all of these concepts and
ideas, like the gentleman that calledin earlier and he said, what should
I do with that money? Well, it's really specific to you. It's
specific to you as far as whatyou want, what ultimately do you want
your money to do for you?How important it is it for you in
order to create not only create wealth, but how important is it for you
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to protect your wealth and also thelife you see that you wish to leave
your loved ones. So there isone way just by simply repositioning some of
that what I call lazy money.And when I say lazy money, it
was sitting there. It was setaside. There was no guarantee that it
was going to be utilized for longterm care. Excuse me, because no
one has a crystal ball that they'regoing to go into a long term care
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facility. Healthy sixty five year oldcouple, statistically one of you will go
into a nursing home. So there'sone idea, one concept out of many
iras, you can do the samething. It doesn't have to be the
entire IRA. You can be aportion of your IA. We call it
what we call it the retirement PlanningGroup, and they do across the board
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of the industry is call it carbout. Just say keep it. Use the
same example carbo off three hundred andfifty thousand dollars you pay it out over
the next ten years. There's arider on the insurance that basically said,
as long as you make the tenpayments, we'll see is guaranteed for life.
So you pay it for ten years. You got a million dollars of
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assets life insurance. Let's just sayit's not the long term care. This
is all hypothetical, but probably it'sabout correct. The number would be somewhere
in that neighborhood. Now, yougot one million dollars at tax three dollars.
Typically we have the insurance owned bya trust because we don't want it
to be affected by creditors or predatorsor evil son and laws and daughter in
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laws. You want to make surethat the legacy follows the blood, what
we call per sturpees. Another option, series E bonds. What's the problem
with Series E bonds. I gotall this money grammy, Grammy left me
all this money. Well, that'sgreat, glad that grammy left you all
the money. But you realize thatyou've got a huge tax liability. Now
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that's all ordinary income from the daythat she purchased it until the value of
that bond right now, and forsome people it's thousands and thousands and thousands
of dollars of tax liability. Sohow do you handle that. Well,
a lot of times when people havea lot of money in Series E bonds,
what we do is what we callis a structured payout, meaning that
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we have those bonds paid out overthe next three to five years. We
don't want to do bracket creep,but we want to basically want to reposition
that wealth allocated into something that ismore preferenced for you at your lifetime and
reposition those assets over a period oftime. So it's not such a hit,
it's such a short period of time. So, as I said,
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the Baby Boom generation will be bequestinga lot of money. It is the
greatest wealth transfer in the history ofmankind. And one of the things you
got to start thinking about, isthis important to you? Is this something
that you would like to handle withyour own person situation. As far as
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how I'm going to transfer my wealthto the next generation, it's based on
you, your values, how importantit is for you to leave assets to
your children. I know, personallymy wife and I we prefer to leave
assets to our kids that have taxfree money, not taxable money or money
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that's forced liquidation or money that's inthe form of an IRA. So there's
really what I considered to be threeprimary areas right that you got to start
thinking about. And I'm going totalk about that when we come back from
break, and I'll highlight them brieflyhere. The first is is the family
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conversation. You know, I thinksome kids are going to be shocked.
Some children are going to be shockedwith the wealth that mom and dad have
created over their lifetime. I hada very successful couple in my office this
week. He's an attorney. Shehad a great job locally here with one
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of the financial institutions, and theyhave created fairly vast amount of wealth.
One of the first questions that Isaid to them is your partner for success.
David Kopik, heir WG WISE retirementPlanning specialists the Retirement Planning Group.
(36:28):
We understand that retirees face many importantdecisions that can affect their long term financial
success. Some of these decisions revolvearound making investments that will help create a
hedge against outliving their assets, theimpact of inflation, taxation, and rising
healthcare quests. Most of our clientslike the time, the desire, or
(36:49):
the experience to manage their own investmentportfolios. We consider it to be an
honor and a privilege to help ourclients make sound investment decisions though contribute to
a secure financial future for them.Because over ninety percent of our clients or
retirees with similar concerns, we arein the best position to approach such challenges
with experience and skill. Give usa call today at five one eight,
(37:13):
five eight zero one nine one ninefive one eight five eight zero one nine
one nine or RPG retire on theweb. The greatest risk in retirement most
of us have no plan for We'reinsurance to cover the expense. A long
term care event can impoverish a spouse, drain your life savings, and cost
stress and anxiety on your family.What is your plan and how will you
(37:34):
pay for a long term care event? Call the Retirement Planning Group today discuss
options you should consider to protect yourestate and have choices and independence. Take
action call today five one eight fiveEID zero one nine one nine or RPG
retire on the web. There ain'tno good, no good five true.
(38:01):
Love's a lot of try. Icry deep deep that cannot see what we
(38:35):
got. You say you're gonna gocall quits. Don't chump take all the
break to bits bread. I wishyou never said now now we'll bound me
then, little chin diamond on yourfatina port. Don't you know it's all
(39:15):
right? We are back. Iapologize, as you can tell, I
am not in the studio. I'mactually new on this from my office.
This is one of the reasons whyI don't do this. But today I
got tied up. I got somefamily things going on, So, as
(39:36):
I said towards the end, Ijust want to highlight a couple of things
and make sure that you understand exactlywhat I said before I got cut off.
Family conversations are critical in this environment. When you're passing on a significant
amount of money to the next generation, it's important that everybody's on the same
page. You got three kids,All three kids need to understand the reason
(39:59):
why mom and dad are specifically settingthings up. If you have a child
that has drug addiction, alcoholism,a handicap, and some capacity a special
needs child, then it's even morecritical to have these conversations so it's dynamic.
Sometimes it leads to a greater understandingof exactly how your children feel.
(40:20):
About wealth, how important it isfor them to receive wealth. And it's
also a way for you to maybepossibly say, hey, you know,
Bobby and Susie want us to enjoythe money, but they also want us
to do some gifting, you know, to some charities, churches, synagogues,
universities, whatever it may be.So the first thing, when you
have the largest transfer of wealth andyou know that you're going to have a
(40:44):
vast amount of money going to yourchildren and grandchildren, You're going to start
off with a conversation. I'm goingto take a break. When I come
back, we'll talk about the twoother topics that you need to start considering,
especially during the greatest wealth transfer inthe history of mankind. It's going
to happen and over the next twentyto thirty years. My question to you,
are you going to be prepared forthis transfer. I'm Dave Kopec,
(41:07):
WGY's retirement planning Specialists. I'll beright back. The greatest risk in retirement
most of us have no plan forWe're insurance to cover the expense. A
long term care event can impoverish aspouse, drain your life savings and cost
stress and anxiety on your family,What is your plan and how will you
pay for a long term care event? Call the Retirement Planning Group today discuss
(41:29):
options you should consider to protect yourestate and have choices and independence. Take
action call today five eight five eightzero one nine nine or RPG retire on
the web the eighty six percenters.Do you know that eighty six percent of
the population has no defined benefit pensionplan? For most of us, we
have to take our life savings andcreate a paycheck for the rest of our
(41:51):
lives in retirement. What is yourplan for retirement income distribution? How you
manage your assets during the most criticalyears of your lifetime. Prize winning economist
William Sharp has called retirement income distributionthe nastiest, hardest problem in finance.
He points out that investment, uncertaintyand mortality can derail the most careful laid
(42:12):
out retirement income plan. Call ouroffices today to start the process of building
a retirement income distribution plan. Afterforty one years of being in the financial
services business, you need to starttaking action to start building your own personal
retirement income distribution plan. How doyou do that? To take action?
Five one eight five eight zero onenine one nine that's five one eight,
(42:32):
five eight zero one nine one nineor RPG retire on the web. Don't
procrastinate, motivate to start building yourretirement income distribution plan five one eight,
five eight zero one nine one nine. All right, we are back,
(43:00):
Yes, glad to be with youtoday. This is the Retirement Ready I'm
Dave kopek Wan g WHYS retire PlanningSpecialists. We're talking about the greatest wealth
transfer in the history of mankind.We're talking about some of the things that
you need to start considering. Thenext said conversation. It all starts off
(43:21):
with a conversation. The next onethat you want to do is you want
to make sure you have protection ofthe assets. ACID protection is critical to
protect your assets. Creditors, predators, evil son and laws and daughter in
laws, whoever else might show up, bankruptcies, divorce. So it's important
(43:45):
for you when you sit down andyou're starting to build out your legacy plan.
You want to protect your assets properly. Whereas there's chance they could be
going to someone else, heading intodestined that you never wanted them to go
to. So one of the hardestassets to protect, of course is the
(44:06):
IRA. Right you can't just takeall your money out of an IRA put
it into a trust because all ofthat would be taxes ordinary income. So
there's ways to tactically strategically move IRAassets, and for some of you,
it might make a lot of senseto do that, especially with the size
(44:28):
of the what we call pretax accounts, in order to reposition some of that
wealth, to protect it, toget it titled properly so the money stays
with the family and follows the bloodline. The other thing everybody worries about,
of course, is the home homefrom creditors and predators, death of a
(44:52):
spouse, or bankruptcy. Some stateshave homestead exemptions. Depending on the state
that you're in, you need tolook at that. I always say,
tell me the zip code that you'regoing to be living in during your retirement
years, because it's critical to understandexactly what assets. It's like IRA assets
(45:15):
and homes, you know. Iknow for Florida, we have a lot
of clients in Florida. Iras andhomes are protected in Florida. That's not
the case here in New York State. So asset protection for some of the
assets that we talked about, annuities, life, insurance that's determined by state
(45:39):
law. There's cash surrender values,which if they go after it, can
blow up the policy something that you'vebeen working on to guarantee the legacy that
you've been looking to develop for yourfamily. So make sure you understand that.
The other thing is is that trust. Which I'm not an attorney,
(46:01):
and I emphatically say that loud andclear everybody understands. But the trust assets,
depending on the type of trust thatyou establish, can shield your assets
not only for creditors and predators,but also can shield those assets from the
evil sudden laws and daughter in lawsand even your children if you find it
(46:27):
within reason that one of your children, or maybe both or all three are
unable to manage this kind of wealth. So we have trust services through Fidelity,
also through US Trust. We usedtheir guidance and establishing the trust and
(46:50):
the type. There's also family limitedpartnerships, and of course there's other asset
protection strategies, but I'm not goingto get into those in greater detail than
what I've done. The bottom lineis this is with this kind of wealth
transfer that we're starting to see thenumbers sometimes are staggering. The amount of
(47:14):
wealth that's going to be transferred tothe next generation, whether it's one hundred
thousand or it's a million dollars,it's important for you have an understanding exactly
how that money is going to betransferred, what the options are going to
be for the individuals that's receiving theassets, how ultimately that money is going
(47:35):
to be taxed in their lifetime,if there's going to be any tax at
all. You know, there's anold saying, you know, with a
home, it's location, location,location, with the state planning, it's
tax free, tax free, taxfree. So if we have the ability
to do step up and basis,that's fantastic. If we don't have the
(47:57):
ability to do step up in basis, or if we don't have assets that
are already tax free or tax advantageinvestments, then we have to tactically go
through the estate and look at differentways if it's important for the individuals to
take some of that money and getit over to the other side of the
fence, where if you get adollar, it's a dollar for a dollar,
(48:19):
it's not a dollar minus the federaland the state tax liabilities. So
this is complicated landscape. It's alandscape where you really need professionals, a
financial advisor and your financial team tohelp you manage what you're trying to accomplish
the goals that you have not onlyfor yourself and your spouse, but also
(48:42):
for your family. A lot oftimes when we work with our team,
not only are we personally fiduciaries throughthe retirement Planning group, but we're also
trying to create a personalized plan withour strategic partners, the attorneys and CPAs,
and a lot of this can bebelieve it or not, a lot
of this sometimes we have to gooutside the five one eight area code to
(49:04):
find the expertise that we're that's necessaryfor what the clients are looking for.
So if any of this is somethingthat you'd like to sit down with us,
we would love to have the opportunity. You can say, I listened
to Dave on the radio. Hewas talking a little bit about this great
wealth transfer. I want to comein and talk about my overall estate planning,
(49:24):
trust planning, retirement savings accounts,and we'd be more than happy.
We'd be honored to sip down withyou. Our telephone number at our office
is five one eight five eight zeroone nine one nine. You can check
us out on the web. Rpgretiredot com. Rpgretire dot com is our
(49:45):
web. And the other thing thatI wanted to say here is that we're
very, very happy with our affiliationwith Fidelity. Fidelity brings a lot to
the table, not only as faras investment management and resources, but also
they have a very diverse background asfar as they're will be called not strategic
(50:09):
partners, but they're competent staff thatthey have not only as far as the
state planning, but also the individualsthat help us out as far as bringing
ideas and concepts to our clients.So again, if we can be of
assistance, it would be an honor. Five one eight five eight zero one
(50:29):
nine one nine is our telephone numberagain, that's five one eight, five
eight zero one nine one nine.So listen to Dave. I want to
come in for a chat. Fiveone eight five eight zero one nine one
nine. Be safe, have agreat week, see another Week for retirement.
Thank you for listening to Retirement Readyhosted Buying Dave Kopek, w G
(50:49):
Wines retirement planning specialist. If you'dlike to talk with day for someone of
the retirement planning group call five oneeight five eight zero one nine nine.
That's five five eight zero nine duringbusiness hours or visit rpgretire dot com.
The Retirement Planning Group has five convenientoffices located in Albany, Malta, Glens
(51:12):
Falls, Syracuse, and Oneana.Tune in again next week for retirement planning
strategies with Dave Kopek right here onWG wise Retirement Ready. The information or
services discussed on this show is forinformational purposes only and is not intended to
be personal financial advice. The investmentsand services offered by US may not be
(51:34):
suitable for all investors. If youhave any doubts as to the merits of
an investment, you should seek advicefrom an independent financial advisor.
Live from the wgy iHeart Studios.Welcome to Retirement Ready with your host Dave
Kopek from the Retirement Ready Show.Every week, Dave and his team discuss
the ways they can help people makeinformed decisions about a wide array of retirement
planning information that can support you anddeveloping a more certain financial future for you
(00:20):
and your family. Now it's timefor Dave Kopec, WGY's retirement Planning specialist,
(00:49):
save nice good afternoons. Happy ninetiethI know, happy ninetieth birthday to
Frankie Valley. Hard to believe FrankieValley in the Four Seasons. I said
this morning on the Retirement Planning Showthat I saw Jersey Boys in New York
(01:17):
City with my wife. Was oneof the greatest shows I've ever seen.
You left there hopping in a dancingand a big smile on your face.
So if you haven't seen The JerseyBoys yet, I'm not even too sure.
If it's still on Broadway, gosee it, even if it's a
regional theater, because it really isa pretty fun show. But I'm Dave
(01:37):
Kopak. I am WGY's retirement planningspecialists. We have two shows here on
WGI that also broadcast nationally through iHeartRadio, Retirement Planning Show, and of course
this show Retirement Ready, which istopic specific. Anything that I'm talking about,
you can get a hold of usat rpg reti dot com. Rpgretire
(02:02):
dot com. That's our website.And today's topic is something that I think
is pretty staggering. The largest wealthtransfer in the history of mankind is going
to start happening. Matter of fact'salready started happening, almost eighty five trillion
(02:23):
with a t dollars in assets fromthe Baby Boom generation to younger generations primary
millennials and the gen Zers. Thistransfer is known as the Great Wealth Transfer
and aspects that take place over thenext twenty to thirty years. The transfer
is happening through wills, trusts,property purchases, gifts, a whole bunch
(02:49):
of stuff. But I'm going tobe talking today about the problematic money,
problematic assets at death, things thatyou need to understand, because if you
don't, basically all you're doing isyet you're creating a large tax liability.
You're not leaving a legacy, youare leaving a tax liability. So with
(03:15):
that being said, that's today's topic, the greatest transfer in the history of
mankind, estimated to be about eightyfive trillion dollars. Boy, when you
like your little piece of that.But let's take a phone call. We've
got Mike. How can I helpyou? Mike? Hi, I think
(03:36):
I know what you're going to say. But okay, I'm going to run
something quick BYO. Retired sixty three, soon to be sixty four very soon.
Yep, six hundred thousand, deferredcomp, Social Security, and my
pension is about seven thousand dollars amonth. Uh, actually deposit into my
(04:01):
account and seven thousand yes, yes, that is in insurance and everything.
I'm at seven thousand a month.That's pension and Social Security combined. And
once again, the only investments Ihave is the New York State deferred comp,
(04:23):
which obviously I can't add to anymore. But here's the the danger for
me, I guess is I haveno planning. I don't have any retirement
planning. I don't have any protection. I should sit down with somebody,
right, Well, I mean that'syou're you already know the answer. You
(04:46):
already know the I mean here here, here's my answer to that. No
plan, any destination will do gotcha. Yeah, I mean, h there's
you know. I've been doing itnow. This is my forty second year,
soon to be forty third, andI'll say this, the amount of
(05:12):
options that are available to to individualsis huge, too many that to discuss
specifically, I will be talking aboutsome things that you should be at least
considering. Do you have a wifeand children and children? Single? Single?
No children, no debt? Sowhat's the destination of the assets?
(05:35):
Well, which the home in mindinvestments. I'm thinking of starting to while
I'm reasonably healthy, start drawing downa nice chunk of money. Everyone.
Yeah, I figured, if Imake it a seventy five eighty, I
want to have everything that I wanted, and I might as well spending this
(05:57):
money. I great train of thought. Do you have long term care insurance?
I don't have anything. Oh no, no, I just have regular
health insurance. Okay, so youdon't have long term care insurance. And
by the the income that you're generatingin the money that you set aside,
you might be actually in a positionwhere you can self ensure that risk.
(06:20):
Because if you don't care where themoney goes when you pass away, then
you know you're probably a candidate toutilize your savings in order to give you
the quality of life that you're lookingfor. If you need to go into
a nursing facility. Okay, yeah, I got questions, but this isn't
(06:46):
the time. I mean, Ican't got to come in and sit down.
Yeah, but I would say toit. We've put two persons on
the phone, you know what Imean. We've got we've got five locations
in New York. So if youwant to have a chat, let us
go to our website or give usa call. Your office at five one
eight fighting zero one nine to ninewill be more than happy to sit down
with you. Mike. Is thisthe one where David works at? Yeah,
(07:14):
you're talking to the Dave. Ohokay, I talked to you a
while ago. Oh my god,I haven't come in yet. I'm sorry
you backfired on them. I will. You won't remember you talked to a
million people a day. But Iwill set up an appointment to come in
and sity and be honest with you, to be honest, to be honest
(07:38):
with you, Mike, I dorecognize your voice, and I also recognize
your your your format here a littlebit, because you basically said the same
thing the last time you called in. Yeah, I know, and and
I need I need that little pushto say, you know, this could
be wiped out in just a matterof a year or two, all that
(07:59):
I've worked out. Hear you saythat, you know that, you know?
Why why not protect what you workedall your life for? And uh,
that just rings my you know,the bells in my head, and
it's like, why am I notjust at least sitting down with them.
You know. I don't want toget into cost or anything. That's not
a factor obviously, but I dowant to. I do need some directions,
(08:24):
okay, and I know it maycost some money to protect things.
I get it. So I'll giveyou a call and can I talk with
you though when I make an appointment, can you Yeah, just specifically ask
just ask for me and I'll bethere. Okay, awesome, Thank you
so much. Tall you something aboutyour character, your demeanor that just I
(08:45):
trust you and I don't even knowyou. Well, I appreciate that.
God bless and have a great weekendand give me a call on Monday.
Same to you. Thank you somuch. Okay, Mike, have a
good day, all right. Sothat was a good question not uncommon.
We go through a lot of differentscenarios with existing clients and perspective clients.
(09:09):
He's in a very fortunate position.He's got great pension of Social Security,
He's got a nice little nest eggthere with the New York State deferred compensation.
But as I just stated, whatour topic is today is the greatest
transfer in the history of mankind isgoing to happen here over the next twenty
to thirty years. And it's aquestion what kind of assets are you leaving
(09:33):
to the next generation. Are youleaving a tax liability or are you leaving
a legacy? And for a lotof people when they transfer assets to the
next generation, there's over forty ofthat eighty five trillion that we're talking about,
(09:54):
forty trillion of it is in qualifiedplans iras four O one k's TSP,
New York State deferred compensation. Youcan go through the whole laundry list
of qualified accounts and those are assets. There's really three assets at death that
are very problematic, very problematic,and those three assets will talk in great
(10:18):
greater detail when we came back frombreak. But remember, you know,
like Mike said, I've got togive you a call, or I need
to pick up the phone. Youknow, the best laid plans are the
ones that you actually implement, notthe ones that you think about. So
it's easy to procrastinate. It's easyto sit on the fence. It's easy
(10:39):
to basically say, you know,I'll get to it tomorrow, and then
tomorrow comes and you got another listof stuff that you got to do.
So you have to make this important. It's gonna be out at the top
of your list. So we'll talkeda little bit about that too. Why
it's procrastination, especially as you age, is not a good decision to make.
So I'm Dave opec I am wg wi's retirement planning specialists. We
(11:03):
had a workshop not too long ago. We had about one hundred and fifty
people there. It went absolutely fantastic. We had a great, great participation,
great people. We're starting to seesome of those individuals right now that
as always, we offer a complementaryconsultation to all the listeners, whether you
at ten workshops or any of ouryou know what I call our dog and
(11:26):
pony shows, We're more than happyto sit down with you at one of
our five offices here in New YorkState and give us a call at five
eight, five eight to zero onenine one nine, and remember today's topic,
greatest transfer of wealth and hit inthe history of mankind? How are
you going to deal with it?We'll be right back the eighty six percenters.
Do you know that eighty six percentof the population has no defined benefit
(11:50):
pension plan? For most of us, we have to take our life savings
and create a paycheck for the restof our lives in retirement. What is
your plan for retirement income distribution?How you manage your assets during the most
critical years of your lifetime. NobelPrize winning economist William Sharp has called retirement
income distribution the nastiest, hardest problemin finance. He points out that investment,
(12:11):
uncertainty, and mortality can derail themost careful laid out retirement income plan.
Call our offices today to start theprocess of building a retirement income distribution
plan. After forty one years ofbeing in the financial services business, you
need to start taking action to startbuilding your own personal retirement income distribution plan.
How do you do that? Totake action? Five one eight five
(12:33):
eight zero one nine nine. That'sfive one eight, five eight zero one
nine one nine or RPG retire onthe web. Don't procrastinate, motivate to
start building your retirement income distribution planfive win eight five eight zero one nine
one nine. Will you run outof money in retirement? Will your investments
provide income for possibly decades? Howdo you navigate the two greatest risk in
(12:54):
retirement sequence of returns in longevity?At the Retirement Planning Group, our Bucket
of Money approach addresses these concerns andwe offer a complimentary consultation to discuss this
with you. Call our office todayfor a free complimentary consultation to develop your
own personal retirement income distribution plan atfive eight five EID zero one nine nine.
That's five eight five EAD zero onenine one nine. You're just too
(13:33):
good to be true. I can'ttake my all right. Happy birthday Frankie
Valley number ninety ninety nine to Ohwhat a group? Great music brings me
back to my youth. You know, there's a thing in wealth transfer that
(13:56):
we try to avoid as much aswe possibly can. For some of us,
it's going to be impossible. Forsome they know nothing about it.
But I'm going to educate you onthree investments that are very problematic, and
there's trillions with a team of dollarsin these types of investments. The first,
(14:16):
of course is an IRA. Whetheryou spend the money your wife,
your husband, your children, yourgrandchildren, pre tax money is always a
tax liability. When you pass iton to the next generation, there's no
(14:37):
more stretch IRA. It's now tenyears a non spouse beneficiary has in order
for that money to come out.Now they want to change it again,
they want to make it five years. If that is the case, you're
going to have a huge tax liabilitywhen you least want it. Because statistically,
because of people living longer, childrenwill receive these assets or grandchildren when
(14:58):
they're in their fifties sixties, whenthey're in the prime of their life.
They're receiving probably the maximum amount ofincome. And now they have to take
these distributions, not because they wantthem, but they're forced to take them.
So I raise number two non qualifiedannuities. You know, annuities when
(15:18):
I first got in the business werepaying eight, ten, twelve percent guaranteed
guaranteed. This is during the eightieswhen it was the go go years,
eighties and nineties when interest rates werethrough the roof, and you put in
fifty thousand dollars, and now you'vegot two hundred and fifty thousand dollars in
the annuity. Kept on growing andgrowing and growan He never used it.
(15:41):
You were just looking at that bigpile of cash. Hopefully you'll spend that
money. You never spend it.Now you pass away. You pass that
money on to a child, aloved one, whatever it may be.
Tax liabuilding. Anything over the fiftythousand dollars is now a tax liability is
ordinary income. Whoever's receiving the assets. There is no step up in basis
(16:07):
on iras non qualified annuities. Nowhere's one that will resonate with the older
people out there. Maybe some ofthe younger people, but most of the
older people, A lot of olderpeople through payroll through their employer, through
the local bank. Series E bonds, Series E bonds, Right, you
(16:30):
don't pay the tax while the moneyis accruing, accruing. You put in
you know, let's say one thousanddollars. Now it's worth nine thousand dollars
that you have in Series E bonds, you have an eight thousand dollars ordinary
income tax liability. Same as IRAsame as non qualified annuities now Series E
(16:52):
bonds. So what are you sending. You're sending a tax obligation. You're
not sending a legacy to the nextgeneration. This is what we call a
death I R d IRD Yeah,IRD, Income and Respect of a decendan
(17:12):
IRS Rule and income and respect witha decene refers to untaxed income that a
decenant had earned or had a rightto receive during their lifetime that now they
passed on to a beneficiary inherits thatmoney, and the beneficiary now has to
declare that income depending on when theyget the distribution and how they get the
(17:36):
distribution, and most of it,of course, will be taxed as ordinary
income. So you need to understandexactly what you've created for your beneficiaries,
because beneficiaries are responsible for paying thetaxes on all these trillions of dollars that
are out there. And it's goingto be a huge bonanza for our friends
(18:02):
down in Washington, d C.Now, I had a guy call me
the other day and he said,you know, I've got this large IRA
and like the guy Mike, theyjust called it. Got this large deferred
compensation six hundred thousand dollars really don'tneed any more additional income from it,
right, So what am I gonnado with it? Am I just gonna
(18:23):
sit on the fence and I'm goingto wait and see what happens. Allow
the money to keep on growing.Then you have what we call RMD required
minimum distributions at age seventy three,where the government forces you to liquidate that.
Now you're on the government plan,you're not on your plan. So
with these trillions of dollars that arebeing passed down to the generations, the
(18:52):
boomers have to make some decisions here, and those decisions are pretty simple.
Do I pay the tax? DoI reposition this wealth so it's more tax
efficiently passed on to our loved ones? And my answer to you on that
is that that's a personal decision.That's really a personal decision. We also
(19:14):
have a question right now, whereis our state tax going? Okay,
because all states don't mirror federal Sonot only is the federal and jeopardy right
now because it's supposed to end intwo thousand and twenty five, So not
only could you possibly have what wecall the triple tax, triple tax,
what the heck's the triple tax day. Well, you've got state income tax,
(19:41):
you got federal income tax, andyou could possibly, depending on the
size of your estate wherever it goes. Now the end of twenty and twenty
five have an estate tax liability.So with trillions of dollars in jeopardy right
now as far as huge tax liabilities, I'm going to be talking in the
(20:03):
second half hour of today's Retirement Readyshow actions you can take to eliminate some
of this tax liability in your lifetime. So you're passing on assets monies to
the next generation that they're reaching thebucket, and it's tax preference money.
(20:25):
What I mean by tax preference moneymoney that a good portion about, if
not all of it is tax free. Tax free, you've already paid the
tax. You want to have ittaxed again and again and again and again.
Well, there are ways that youcan basically reposition some of this wall
(20:48):
not only during your accumulation years,but also in your retirement years in order
for you to facilitate what you're tryingto do in your estate planning process.
You know, we talked a littlebit about how irais are very problematic.
Not only are iras problematic during yourtransfer of wealth. But they're also problematic
(21:11):
as you age, especially if youdon't have long term care insurance or you
haven't had the ability to purchase someform of long term care or reposition somebody
to your wealth. Iras will currentlyin New York State are aggressively being attacked
by the counties in order to payfor long term care. So when you
(21:33):
hear some of the messaging out therethat iras are protected from a Medicaid spend
down as long as you're taking periodicpayments, that is not the case anymore.
I can speak from experience what thecounties are doing now. They're aggressively
going after those irays and they're makingyou spend that money down based off of
(21:55):
life expectancy, not off of periodicpayments or what we call required minimum distributions.
So we'll talk a little bit aboutinherited diarrays. What you need to
know if you have established diarrays,you have large pools of money. Some
of the tax consequences that you mightwant to consider in your lifetime in order
(22:22):
to make it less burdensome. Talka little bit about non qualified annuities.
Those are assets that you've put intoa tax deferred investment money just kept on
growing and growing and growing. Oneof the huge advantages of an annuity,
which almost ninety over ninety percent ofthe people never take advantage of, is
(22:44):
called annuitization. What makes a newitizationso good because when you get that payout,
they do a formula, actual aerialformula, and a good percentage of
that assets depending on how much youput in and what the growth was exempt.
It's called the exclusion ratio. Isexempt for tax purposes because IRS considers
(23:07):
it to be a part of returnof your principle. So people that have
large non qualified annuities a lot oftimes if they're looking to reposition that wealth,
we'll put it into what we calla payment status or a payout status
under annuitization, So they get thattax preference and now you can reposition some
of that wealth. Yes, you'regoing to have some tax liability, but
(23:30):
nowhere near what the tax liability wouldhave been if you just let it keep
on growing and growing and growing andsending a tax liability to our children,
grandchildren, friends, whatever it maybe. So we talked about three problematic
assets. We'll talk some more.Series E bonds, IRA accounts, non
(23:57):
qualified annuities. Those three assets,which there's trillions of dollars in never receive
a step up and basis always atax liability is ordinary income, never any
tax preference unless you the non qualifiedannuity. You do what we considered to
(24:21):
be one of the best things todo if you're looking to reposition that wealth
is to turn that over into whatwe call a payment status or annuitization in
order to get some of that taxpreference in your lifetime. Any of these
topics that we're talking about today,we would love to have the opportunity to
sit down with you have a chatabout the retirement Planning Group. All of
(24:44):
our assets are held at Fidelity.We're an independent financial advisory firm here in
the Capitol District region. We're intwenty eight states. We have five locations
down in New York State, soona new location in Florida and Sarasota.
So if you would like to sitdown with us have a chat, whether
zoom, face to face, justa telephone call. I'll give you our
telephone number at the office. It'sfive one eight five eight zero one nine
(25:10):
one nine. That's five one eightfive eight zero one nine one nine,
and you just say listen. Ilistened to Dave on the radio. I
heard Retirement Ready. He was talkingabout the largest transfer in the history of
mankind. Give me a call.I'd be more than happy to sit down
with you, have a chat andsee if we can facilitate what you're looking
(25:34):
for and what you're trying to accomplishwith your overall estate plan. Our telephone
number again five one eight, fiveeight zero one nine one nine. That's
five one eight five eight zero onenine. When when I'm away from you,
(26:11):
I know what to send. Allright, we are back Dave Kopek
WG Wise retirement planning specialists. Gladyou're with us for another Retirement Ready show.
Topic specific. Today's topic is thelargest wealth transfer in the history of
mankind, estimated to be approximately eightyfive trillion dollars in assets over the next
(26:37):
twenty to thirty years. It's astaggering figure. Not only is it staggering,
but a lot of that wealth isgoing to be problematic because it's ird
income or respect to a deecedent.So you're not sending a legacy, You're
sending a tax liability to the nextgeneration. A lot of this planning in
(27:00):
order to reposition wealth is going tobe done by the boomers, because once
the horse is out of the barn, once the assets have been transferred,
you've lost the opportunity to give ittax preference. With possibly with the exception
of the annuity. Every annuity isa little bit different. Every annuity,
every annuity company has different payout structures. So not only is it important for
(27:25):
you to look at those values,but also what happens something happens to you.
What is your spouse or non spousebeneficiaries? What are they going to
have to do with the non qualifiedannuity. So I'm going to give you
some ideas and concepts to think aboutin this half hour and some of the
things that you might want to consideras far as transferring that wealth tax efficiently.
(27:48):
We'll start with the non qualified annuities. Non qualified annuities have been around
most of the time, and Isay non qualified annuities. These are what
we call MYGAS multi year GIAR guaranteedannuities. There are the annuities that you
bought years ago guaranteed rates. There'sstill guaranteed rates right now with an MYGA
get over five percent guaranteed for threeor five years, depending on how far
(28:12):
you want to extend yourself out.A lot of people use them as an
alternative to a certificate a depositive treasury, because what because the money grows on
a tax deferred basis, you haveno tax liability until you withdraw the money.
And then when you withdraw the money, you have two options. You
can either take the interest out oryou can do annuitization, which gives you
(28:33):
some tax preference, meaning a portionof the income is going to be exempt
from taxation. So the non qualifiedannuities give you more opportunities as far as
transferring some of that income or someof that wealth with tax preference. Some
clients have elected to turn it intoa guaranteed income stream for a certain period
(28:56):
of time. So if you doit for fifteen or twenty years, you
got a five year life expectancy,your errors would receive that tax preference and
the money would transfer even though it'sno longer with you, it's with the
insurance company. There are named beneficiariesfor what we call period certain annuities,
(29:18):
so that might be something to do. The one other thing that we've done
with non qualified annuities is that wehave turned that income stream into an alternative
asset, meaning life insurance. Andwhen I talk about life insurance, life
insurance from day one, dollar onegives you maximum velocity on those dollars.
And it's pretty staggering the amount ofmoney that you can create in life insurance
(29:42):
when you do one of these paymentstructures, especially if you have hundreds of
thousands of dollars in that annuity.I've been flabbergasted with the amount of wealth
transferred. We're in a situation rightnow which i'll highlight one more time.
I know I talked about this before, but we had clients in Florida.
(30:03):
They had about three hundred and fiftythousand dollars inside of a tiakref annuity.
That annuity, I asked them whatwas it set up for? Was it
going to be for wealth replacement?And the husband said, no, it's
going to be there for income thatwas going to be necessary for us to
have long term care. And Iasked him, I said, would you
(30:25):
be receptive to another idea or conceptand he said absolutely, So I showed
them Care Matters, which is aninsurance contract through Nationwide, and we took
that annuity and we're having it paidout over the next ten years. Over
the next ten years, it's goingto generate about forty two thousand dollars of
income. That income is now goingto purchase what we call care Matters contract.
(30:48):
It's universal life insurance of long termcare. As long as he makes
those ten payments, it's guaranteed forlife. And that is now going to
create over a million dollars day one, dollar one of long term care coverage,
which two spouses can utilize, bothhusband and wife. It's not just
specific to one. And if theydon't use it, there's a death benefit.
(31:11):
If they do use it'll be thebest money they've ever spent in their
lifetime. So three hundred and fiftythousand dollars became a million dollars day day
one, dollar one, and itwill grow to about one point four to
one point five million dollars over thenext fifteen to twenty years. As far
as the adjustment that it has,as far as the rider on it that
(31:33):
gives them purchasing power, additional purchasingpower. So all of these concepts and
ideas, like the gentleman that calledin earlier and he said, what should
I do with that money? Well, it's really specific to you. It's
specific to you as far as whatyou want, what ultimately do you want
your money to do for you?How important it is it for you in
order to create not only create wealth, but how important is it for you
(31:56):
to protect your wealth and also thelife you see that you wish to leave
your loved ones. So there isone way just by simply repositioning some of
that what I call lazy money.And when I say lazy money, it
was sitting there. It was setaside. There was no guarantee that it
was going to be utilized for longterm care. Excuse me, because no
one has a crystal ball that they'regoing to go into a long term care
(32:20):
facility. Healthy sixty five year oldcouple, statistically one of you will go
into a nursing home. So there'sone idea, one concept out of many
iras, you can do the samething. It doesn't have to be the
entire IRA. You can be aportion of your IA. We call it
what we call it the retirement PlanningGroup, and they do across the board
(32:42):
of the industry is call it carbout. Just say keep it. Use the
same example carbo off three hundred andfifty thousand dollars you pay it out over
the next ten years. There's arider on the insurance that basically said,
as long as you make the tenpayments, we'll see is guaranteed for life.
So you pay it for ten years. You got a million dollars of
(33:06):
assets life insurance. Let's just sayit's not the long term care. This
is all hypothetical, but probably it'sabout correct. The number would be somewhere
in that neighborhood. Now, yougot one million dollars at tax three dollars.
Typically we have the insurance owned bya trust because we don't want it
to be affected by creditors or predatorsor evil son and laws and daughter in
(33:28):
laws. You want to make surethat the legacy follows the blood, what
we call per sturpees. Another option, series E bonds. What's the problem
with Series E bonds. I gotall this money grammy, Grammy left me
all this money. Well, that'sgreat, glad that grammy left you all
the money. But you realize thatyou've got a huge tax liability. Now
(33:51):
that's all ordinary income from the daythat she purchased it until the value of
that bond right now, and forsome people it's thousands and thousands and thousands
of dollars of tax liability. Sohow do you handle that. Well,
a lot of times when people havea lot of money in Series E bonds,
what we do is what we callis a structured payout, meaning that
(34:13):
we have those bonds paid out overthe next three to five years. We
don't want to do bracket creep,but we want to basically want to reposition
that wealth allocated into something that ismore preferenced for you at your lifetime and
reposition those assets over a period oftime. So it's not such a hit,
it's such a short period of time. So, as I said,
(34:37):
the Baby Boom generation will be bequestinga lot of money. It is the
greatest wealth transfer in the history ofmankind. And one of the things you
got to start thinking about, isthis important to you? Is this something
that you would like to handle withyour own person situation. As far as
(35:01):
how I'm going to transfer my wealthto the next generation, it's based on
you, your values, how importantit is for you to leave assets to
your children. I know, personallymy wife and I we prefer to leave
assets to our kids that have taxfree money, not taxable money or money
(35:24):
that's forced liquidation or money that's inthe form of an IRA. So there's
really what I considered to be threeprimary areas right that you got to start
thinking about. And I'm going totalk about that when we come back from
break, and I'll highlight them brieflyhere. The first is is the family
(35:45):
conversation. You know, I thinksome kids are going to be shocked.
Some children are going to be shockedwith the wealth that mom and dad have
created over their lifetime. I hada very successful couple in my office this
week. He's an attorney. Shehad a great job locally here with one
(36:08):
of the financial institutions, and theyhave created fairly vast amount of wealth.
One of the first questions that Isaid to them is your partner for success.
David Kopik, heir WG WISE retirementPlanning specialists the Retirement Planning Group.
(36:28):
We understand that retirees face many importantdecisions that can affect their long term financial
success. Some of these decisions revolvearound making investments that will help create a
hedge against outliving their assets, theimpact of inflation, taxation, and rising
healthcare quests. Most of our clientslike the time, the desire, or
(36:49):
the experience to manage their own investmentportfolios. We consider it to be an
honor and a privilege to help ourclients make sound investment decisions though contribute to
a secure financial future for them.Because over ninety percent of our clients or
retirees with similar concerns, we arein the best position to approach such challenges
with experience and skill. Give usa call today at five one eight,
(37:13):
five eight zero one nine one ninefive one eight five eight zero one nine
one nine or RPG retire on theweb. The greatest risk in retirement most
of us have no plan for We'reinsurance to cover the expense. A long
term care event can impoverish a spouse, drain your life savings, and cost
stress and anxiety on your family.What is your plan and how will you
(37:34):
pay for a long term care event? Call the Retirement Planning Group today discuss
options you should consider to protect yourestate and have choices and independence. Take
action call today five one eight fiveEID zero one nine one nine or RPG
retire on the web. There ain'tno good, no good five true.
(38:01):
Love's a lot of try. Icry deep deep that cannot see what we
(38:35):
got. You say you're gonna gocall quits. Don't chump take all the
break to bits bread. I wishyou never said now now we'll bound me
then, little chin diamond on yourfatina port. Don't you know it's all
(39:15):
right? We are back. Iapologize, as you can tell, I
am not in the studio. I'mactually new on this from my office.
This is one of the reasons whyI don't do this. But today I
got tied up. I got somefamily things going on, So, as
(39:36):
I said towards the end, Ijust want to highlight a couple of things
and make sure that you understand exactlywhat I said before I got cut off.
Family conversations are critical in this environment. When you're passing on a significant
amount of money to the next generation, it's important that everybody's on the same
page. You got three kids,All three kids need to understand the reason
(39:59):
why mom and dad are specifically settingthings up. If you have a child
that has drug addiction, alcoholism,a handicap, and some capacity a special
needs child, then it's even morecritical to have these conversations so it's dynamic.
Sometimes it leads to a greater understandingof exactly how your children feel.
(40:20):
About wealth, how important it isfor them to receive wealth. And it's
also a way for you to maybepossibly say, hey, you know,
Bobby and Susie want us to enjoythe money, but they also want us
to do some gifting, you know, to some charities, churches, synagogues,
universities, whatever it may be.So the first thing, when you
have the largest transfer of wealth andyou know that you're going to have a
(40:44):
vast amount of money going to yourchildren and grandchildren, You're going to start
off with a conversation. I'm goingto take a break. When I come
back, we'll talk about the twoother topics that you need to start considering,
especially during the greatest wealth transfer inthe history of mankind. It's going
to happen and over the next twentyto thirty years. My question to you,
are you going to be prepared forthis transfer. I'm Dave Kopec,
(41:07):
WGY's retirement planning Specialists. I'll beright back. The greatest risk in retirement
most of us have no plan forWe're insurance to cover the expense. A
long term care event can impoverish aspouse, drain your life savings and cost
stress and anxiety on your family,What is your plan and how will you
pay for a long term care event? Call the Retirement Planning Group today discuss
(41:29):
options you should consider to protect yourestate and have choices and independence. Take
action call today five eight five eightzero one nine nine or RPG retire on
the web the eighty six percenters.Do you know that eighty six percent of
the population has no defined benefit pensionplan? For most of us, we
have to take our life savings andcreate a paycheck for the rest of our
(41:51):
lives in retirement. What is yourplan for retirement income distribution? How you
manage your assets during the most criticalyears of your lifetime. Prize winning economist
William Sharp has called retirement income distributionthe nastiest, hardest problem in finance.
He points out that investment, uncertaintyand mortality can derail the most careful laid
(42:12):
out retirement income plan. Call ouroffices today to start the process of building
a retirement income distribution plan. Afterforty one years of being in the financial
services business, you need to starttaking action to start building your own personal
retirement income distribution plan. How doyou do that? To take action?
Five one eight five eight zero onenine one nine that's five one eight,
(42:32):
five eight zero one nine one nineor RPG retire on the web. Don't
procrastinate, motivate to start building yourretirement income distribution plan five one eight,
five eight zero one nine one nine. All right, we are back,
(43:00):
Yes, glad to be with youtoday. This is the Retirement Ready I'm
Dave kopek Wan g WHYS retire PlanningSpecialists. We're talking about the greatest wealth
transfer in the history of mankind.We're talking about some of the things that
you need to start considering. Thenext said conversation. It all starts off
(43:21):
with a conversation. The next onethat you want to do is you want
to make sure you have protection ofthe assets. ACID protection is critical to
protect your assets. Creditors, predators, evil son and laws and daughter in
laws, whoever else might show up, bankruptcies, divorce. So it's important
(43:45):
for you when you sit down andyou're starting to build out your legacy plan.
You want to protect your assets properly. Whereas there's chance they could be
going to someone else, heading intodestined that you never wanted them to go
to. So one of the hardestassets to protect, of course is the
(44:06):
IRA. Right you can't just takeall your money out of an IRA put
it into a trust because all ofthat would be taxes ordinary income. So
there's ways to tactically strategically move IRAassets, and for some of you,
it might make a lot of senseto do that, especially with the size
(44:28):
of the what we call pretax accounts, in order to reposition some of that
wealth, to protect it, toget it titled properly so the money stays
with the family and follows the bloodline. The other thing everybody worries about,
of course, is the home homefrom creditors and predators, death of a
(44:52):
spouse, or bankruptcy. Some stateshave homestead exemptions. Depending on the state
that you're in, you need tolook at that. I always say,
tell me the zip code that you'regoing to be living in during your retirement
years, because it's critical to understandexactly what assets. It's like IRA assets
(45:15):
and homes, you know. Iknow for Florida, we have a lot
of clients in Florida. Iras andhomes are protected in Florida. That's not
the case here in New York State. So asset protection for some of the
assets that we talked about, annuities, life, insurance that's determined by state
(45:39):
law. There's cash surrender values,which if they go after it, can
blow up the policy something that you'vebeen working on to guarantee the legacy that
you've been looking to develop for yourfamily. So make sure you understand that.
The other thing is is that trust. Which I'm not an attorney,
(46:01):
and I emphatically say that loud andclear everybody understands. But the trust assets,
depending on the type of trust thatyou establish, can shield your assets
not only for creditors and predators,but also can shield those assets from the
evil sudden laws and daughter in lawsand even your children if you find it
(46:27):
within reason that one of your children, or maybe both or all three are
unable to manage this kind of wealth. So we have trust services through Fidelity,
also through US Trust. We usedtheir guidance and establishing the trust and
(46:50):
the type. There's also family limitedpartnerships, and of course there's other asset
protection strategies, but I'm not goingto get into those in greater detail than
what I've done. The bottom lineis this is with this kind of wealth
transfer that we're starting to see thenumbers sometimes are staggering. The amount of
(47:14):
wealth that's going to be transferred tothe next generation, whether it's one hundred
thousand or it's a million dollars,it's important for you have an understanding exactly
how that money is going to betransferred, what the options are going to
be for the individuals that's receiving theassets, how ultimately that money is going
(47:35):
to be taxed in their lifetime,if there's going to be any tax at
all. You know, there's anold saying, you know, with a
home, it's location, location,location, with the state planning, it's
tax free, tax free, taxfree. So if we have the ability
to do step up and basis,that's fantastic. If we don't have the
(47:57):
ability to do step up in basis, or if we don't have assets that
are already tax free or tax advantageinvestments, then we have to tactically go
through the estate and look at differentways if it's important for the individuals to
take some of that money and getit over to the other side of the
fence, where if you get adollar, it's a dollar for a dollar,
(48:19):
it's not a dollar minus the federaland the state tax liabilities. So
this is complicated landscape. It's alandscape where you really need professionals, a
financial advisor and your financial team tohelp you manage what you're trying to accomplish
the goals that you have not onlyfor yourself and your spouse, but also
(48:42):
for your family. A lot oftimes when we work with our team,
not only are we personally fiduciaries throughthe retirement Planning group, but we're also
trying to create a personalized plan withour strategic partners, the attorneys and CPAs,
and a lot of this can bebelieve it or not, a lot
of this sometimes we have to gooutside the five one eight area code to
(49:04):
find the expertise that we're that's necessaryfor what the clients are looking for.
So if any of this is somethingthat you'd like to sit down with us,
we would love to have the opportunity. You can say, I listened
to Dave on the radio. Hewas talking a little bit about this great
wealth transfer. I want to comein and talk about my overall estate planning,
(49:24):
trust planning, retirement savings accounts,and we'd be more than happy.
We'd be honored to sip down withyou. Our telephone number at our office
is five one eight five eight zeroone nine one nine. You can check
us out on the web. Rpgretiredot com. Rpgretire dot com is our
(49:45):
web. And the other thing thatI wanted to say here is that we're
very, very happy with our affiliationwith Fidelity. Fidelity brings a lot to
the table, not only as faras investment management and resources, but also
they have a very diverse background asfar as they're will be called not strategic
(50:09):
partners, but they're competent staff thatthey have not only as far as the
state planning, but also the individualsthat help us out as far as bringing
ideas and concepts to our clients.So again, if we can be of
assistance, it would be an honor. Five one eight five eight zero one
(50:29):
nine one nine is our telephone numberagain, that's five one eight, five
eight zero one nine one nine.So listen to Dave. I want to
come in for a chat. Fiveone eight five eight zero one nine one
nine. Be safe, have agreat week, see another Week for retirement.
Thank you for listening to Retirement Readyhosted Buying Dave Kopek, w G
(50:49):
Wines retirement planning specialist. If you'dlike to talk with day for someone of
the retirement planning group call five oneeight five eight zero one nine nine.
That's five five eight zero nine duringbusiness hours or visit rpgretire dot com.
The Retirement Planning Group has five convenientoffices located in Albany, Malta, Glens
(51:12):
Falls, Syracuse, and Oneana.Tune in again next week for retirement planning
strategies with Dave Kopek right here onWG wise Retirement Ready. The information or
services discussed on this show is forinformational purposes only and is not intended to
be personal financial advice. The investmentsand services offered by US may not be
(51:34):
suitable for all investors. If youhave any doubts as to the merits of
an investment, you should seek advicefrom an independent financial advisor.
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