THE PLAN WISE, RETIRE FREE PODCAST

Introducing The Roth Guy: Your Guide to Tax-Smart Retirement
May 24, 2024

We’re excited to announce our new podcast launching in the upcoming weeks! Join us as we discuss the impending expiration of the Tax Cuts and Jobs Act, potential future tax increases, and the importance of tax diversification in this episode. We introduce “The Roth Guy” and explore how proactive planning can help you achieve a tax-smart retirement.

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Episode Transcript

Note: This transcript was produced using AI, so please excuse any typos and inaccuracies…

00:02

Any successful plan requires wisdom and preparation and retirement is no different. It’s time for the plan wise retire free podcast.

Marc Killian  00:11

Welcome to the podcast everybody Jude nine here on Plan wise retire free to talk about actually the new podcast that we’re gonna be launching here pretty soon. In the next couple of weeks. I think Jude, we’re gonna get out the Roth guy. And if anybody who’s been listening to us for a long time might remember that from way, way back when me and you and Mike, were chit chatting. So we’re going to talk about that this week on the podcast, what’s going on my friend? How are you? Oh,

Jude Wilson  00:34

man, I am having a good day. I’m so happy to be here with you. And I’m even more excited to talk about the Roth guy,

Marc Killian  00:40

the Roth guy, so we’re gonna have a little bit of fun with this dude, I came up with this funny little cartoon character for the Roth guy, dude, still on the fence about it, but but everybody in the office kind of liked it. But so you know, when me and you and Mike started way back when chat and and we’re on episode, this is 120. Wow, that’s amazing cast. You know, we kind of talked a little bit about that way back then. And then of course, a lot of transition and changes happen, like retired, so on and so forth. So you and I were chatting, and you really want to focus on on a lot of things with this Roth guy concept. So tell me about it. The

Jude Wilson  01:16

reason why I wanted to do the Roth guy is I really wanted our audience to get an opportunity to one address what I think is a big concern that’s coming up in our country, I think taxes have a high likelihood of going up. We know for a fact that the tax cut and Jobs Act that was passed in 2017 is going to expire in 2025. And December 26. Yep. Yeah. So there’s only one of three things that could happen. Either whoever’s President and Congress at the time, vote that Act into law. So our tax brackets that we are currently enjoying, and nobody thinks we’re, we’re at the lowest tax brackets. But the fact is, we are at some of the lowest tax brackets that we’ve been in the generation, these brackets are less than they were previous to 2017. Now, in 2020, December 2025, when the ACT expires, either Congress and the President has to vote it into law and keep these rates, or they could choose to come up with a new tax act, which would have new rates, those could be higher or lower, I doubt they’re lower, or the third option, which is what I really think is going to happen. Because knowing our politicians, they’re going to argue with each other call each other names, and nothing’s going to have, therefore the actual expire, and it and the rates will revert back to where they were in the previous administration before 2017. Which those rates and the brackets were different. They were higher. And so my premise is that there’s a very good likelihood that people will have to pay more in taxes if they’re not proactive and doing some planning now to either reduce their taxable liability or create more tax free income in the future. Yeah.

Marc Killian  03:18

And so I think I mean, I agree with you, as matter of fact, the time we’re taping this podcast you, I just saw that Biden and Trump have agreed to two debates coming up in June. So that’ll be some interesting conversation for sure. And, you know, if obviously, if Trump gets back in the he’s going to try to probably continue on the tax cuts and Jobs Act, maybe to help with the economy situation, they could look at a whole nother structure, if Biden gets in, they could easily to your point, he could come up with his own plan, or they may just like revert back to the prior administration, which would have actually been the Obama years tax rates. And so if you’re thinking about what that is, not only are the if it goes, let’s just say it goes back to what to what it was prior to the tax cuts and Jobs Act in 2026. When that starts, not only are the rates a little higher, but the windows right, those little bracket margins are narrower. So getting bumped up to 28%. For example, if you’re 22. Now is pretty likely, yeah,

Jude Wilson  04:19

it’s very likely. And here’s the here’s the thing. Most financial advisors talk about investment, diversification, you’ve heard that saying as much as I have, don’t put all your eggs in one basket, right, but very rarely do financial advisors talk about tax diversification. And if you look over your lifetime, your biggest expense over your lifetime will be taxes, could be medical, but more than likely, taxes are gonna rain number one. And so a holistic financial plan should include tax planning, and that’s when we we spend wise in here at the firm, we’re a tech smart financial planning firm. So I wanted with the Roth guy to start talking to our audience about smart tax planning, the Roth is only a symbol, because everybody knows that when you put money in a Roth, you can take money out tax free. So I wanted that to be a symbol for people to kind of catch their eye, and then draw them in to talk about some really good tax planning, that can either reduce their taxable liability today, or create more tax free income in the future. Yeah,

Marc Killian  05:33

I mean, think about Clark Kent, right. Basically, when he opens up his shirt, you got the s, well, we got like an AR, right, you know, the Roth guy is hiding there, waiting to help with some sort of, you know, tax strategy. And really, if you think about this to judo, and a lot of our conversation, we’ve kind of centered around retirement over the last number of years. And that’s something you guys certainly specialize in. But I think the Roth guy gives us an option to really kind of broaden that a little bit to granted, your client base is still really talking to those retirees and pre retirees. But think about it, like my daughter’s 27, you know, so and I’m a pre retiree at 52. I’m in that window, right? I’m getting there, you know, talking about tax advantaged strategies, even for younger folks, not the worst idea, either, because they’re gonna have bigger problems down the pike than we do. All of this, you know, can kick in that we’re doing. Yeah, who’s paying for it? Absolutely not gonna be, you know, me and you because we’re gonna be dead.

Jude Wilson  06:31

Future, but we will, and our kids and grandkids,

Marc Killian  06:33

right. I mean, they’re gonna be I mean, a $35 trillion debt, which is where we’re approaching real quick like, is not going to get solved in one generation, I don’t think, look,

Jude Wilson  06:43

we’re going to talk a lot about the deficit, we’re going to talk about real strategies, but you can’t talk about real strategies until you address the problem, and you just hit it, the deficit is out of control. Now, depending on who you read, and what your political stripe, you may say that the deficit is starting to come down. Now, there’s some data for that. Or you can look at it and say the deficit is like you said, you know, over 35 trillion now,

Marc Killian  07:12

almost 35 a thing. Yeah. And, and

Jude Wilson  07:15

the three biggest part of the deficit is defense spending, Social Security, Medicare, Medicaid. And so if we don’t, as a society talk about those issues, that deficit is going to remain out of control. So what do we have control over? We don’t have control over our congressmen and our president once we’re

Marc Killian  07:36

supposed to, but

Jude Wilson  07:39

that’s the ideal, right? What we have real control over is our own personal finances. And I, I feel like Paul Revere instead of saying the British are coming, I’m saying that taxes are coming, the taxes are coming. And I want to help people be proactive within a comprehensive financial plan. So we’re not only going to talk about taxes, it’s going to be a big part of the shows, talking about tax free strategies, tax efficient strategies. But we’ll talk about other things, because of course, should be part of a holistic plan. Absolutely.

Marc Killian  08:12

I mean, we’re still going to cover all the things we need to cover. But I think it’s going to give us a more interesting focus as well. And it’ll just be fun and creative kind of way to kind of, you know, get hopefully get more folks involved with thinking about the fact that this it’s all it’s it’s on its way, whatever shape or form, whether it’s, you know, next year, the following year, five years, it doesn’t matter. And think about this to folks, if they’re if we’re approaching $35 trillion in debt, and there’s 41, their estimates are anywhere somewhere between 41 42 trillion, up to $100 trillion in retirement money that has yet to be taxed. Where do you think that they have put a target?

Jude Wilson  08:53

Right? Absolutely. Because when we talk to clients, we and I said before we talk about tax diversification, there’s your pre tax bucket money that you received income, but you haven’t paid federal income tax, and you put it in a 401 k or IRA or 403 B, that’s pre tax, there’s post tax, you’ve paid federal income tax, and you put that money in a savings account, or you bought an investment, but you get you get a 1099, or make pay capital gains on that money. And then there’s the tax efficient funnel, which is the money that you put in a Roth or a couple of other things I’m going to hold back on, I don’t want to talk about everything today that could possibly come out tax free. And when you talk about this, it could address a number of different groups, from retirees to pre retirees, or many of our clients have successful young adults that are in the beginning stages of their career. I can’t imagine mark, you know, we’re around the same age. Could you imagine when you were 21 If you started putting money in a Roth at 21 know how big that Roth could be? And when you retire getting all that income tax free, that’s amazing.

Marc Killian  10:08

Yeah, we’ll have some good content, we’ll have some resources for you to tap into. Lots of good stuff. So for now, we’ll wrap it up and say, look out for the Roth guy. It’s on its way we should be dropping this hopefully in June. So we’ll be Jude in June will be will be the new thing we’re kind of going with but you know, if you got some questions, need some help folks, as always go to Centaurus, fs.com. That’s interest fs.com. Reach out to Jude and Sam and the whole team, get yourself onto the calendar and have a conversation. And for now, go ahead and continue to subscribe to this podcast because we will actually have the links and everything helping you keep getting the information you know with the new podcast as well with a new show, so feel free to check out plan wise retire free on Apple and Spotify. We’ll see you next time here on the podcast with Judy Wilson. Thanks for checking us out.

Walter Storholt  11:00

The preceding program is sponsored by Judy Wilson, who is solely responsible for its content. Financial Planning and advisory services are offered through prosperity Capital Advisors PCA an SEC registered investment advisor, with its principal place of business in the state of Ohio. Centaurus financial strategies in PCA are separate non affiliated entities. PCA does not provide tax or legal advice, insurance and tax services offered through centrist financial strategies are not affiliated with PCA. information received from this podcast should not be viewed as individual investment advice. Product discussions and illustrations are hypothetical in nature and will vary based on many factors including but not limited to age, health, product, insurance, carrier and product design, you should consult the insurance carrier website and policy for detailed information. For information pertaining to the registration status of PCA, please contact the firm or refer to the Investment Advisor public disclosure website WWW dot advisor info.sec.gov. For additional information about PCA including fees and services sent for our disclosure statement as set forth on Form ADV from PCA using the contact information here in please read the disclosure statement carefully before you invest or send money

 

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