5 Retirement Strategies You Need to Know Video from Savant Wealth Management

[Music] Download our complimentary guidebooks, checklists, and other useful financial resources at savantwealth.com/guides. So, thank you for joining us today where you have this discussion of how you are going to get ready for the stage of retirement. My name is Danielle Moore. We were talking and kind of chatting before that many of you, if you work with me, you know me as Danielle Dahn. So, I am literally changing my name tomorrow. I’m a newlywed. So, thank you for that little chuckle. I am a financial adviser here in the Naperville office. And here is my good friend and colleague. She’s one of my favorite people to work with, but she’s in our Southeast location. So, you get Midwest and Southeast, Miriam Falaki. Miriam, do you want to say hello? Yeah. Hi, everyone. Thanks for joining us today. Thank you, Danielle, for getting us started. I’m just going to go over our agenda real quick. So today we want to first talk about how best to replace your paycheck in retirement and ensure that there is a steady income. Then we will explore how to make most of your benefits, keep taxes from eating away through your savings. And then finally, let’s focus on what it all leads to living your best life and most fulfilling during retirement. We’ll then wrap up this session today with Q&A. So feel free to type your questions in the chat box as we go. Now I’ll pass it back to Danielle to get us started with the saving strategies. All right, savings before retirement. So if you’re joining this webinar today, we are assuming that you are checking in with us because you’re preparing and getting ready for retirement. What we have listed here is this looks like a hamster wheel and sometimes it can feel like that, right? We’re nearing retirement. We’re in our peak earning years and we’re trying to get ready for retirement. The part you want to be careful about what we’re trying to show here is that once you’re retired, one of the biggest important pieces to know is the definition of retirement is what are you going to be spending? So what does that look like? So having a budget and getting prepared for that. One of the risk is that we have the  ability to work more, get more money, make more money, but lifestyle creep becomes a very real thing. So be careful of that and increasing spending right before retirement. Be aware of what you need and so what you can put away for your actual retirement spending goals. Now the next place that we have is looking at our investment buckets. So, what do we call this here? If you’re with Savant and you’re either a client or you’ve followed our webinars in the past, you’ll know that we’re very much focused on retirement planning and thinking about not only diversifying in the investments that you own, but also in the types of accounts. So, if we look at this, we’ve got the first bucket, and we’ll call this asset location. You’ve got your 401ks, your SE IAS, your traditional IAS, your 457F, your 457b, your 403A, your 403b, the list goes on and on. Just alphabet soup. That tax deferred money is while I’m working and I’m in a higher income tax bracket. I want to defer my income where possible. So that’s what this bucket does. It let me defer the money now so that the taxes ideally come out at a later point in time when I’m in a lower tax environment. Now we have listed the taxable brokerage account. The brokerage account is really outside of the purview of retirement accounts. So when we look at that, we’ve got the assets are set in such a way that there’s no parameters or rules that exist within retirement accounts and they’re taxed at capital gains rates which can be lower and typically are lower. So you want to be tax efficient in this bucket. The first word says taxable. So know that on an annual basis it’s hitting your tax return. So you want to be careful. But what we want you to do is have a combination of these different types of buckets. So the next one on your screen is looking at the health savings account. The HSA is looking at a triple tax-exempt account. So this is our very favorite account. So picture funds go into this account on a tax deferred basis and then they grow tax free and they come out tax free if you use them for qualified expenses. So, you never pay upfront, you don’t pay along the way, and you don’t pay when you take it out on the back end. What I’d like to comment on this is that it’s often overlooked because it’s a smaller bucket in size. And that’s because there’s caps of how much you can put in there. It’s not the right vehicle for everyone because it has to be paired with a high-deductible health saving health plan. And that’s challenging for many individuals to use. So if the right circumstances arise and you can have this use it as an investment vehicle, this is really great to let the funds accumulate for years to come and show up as tax-free assets available to you in retirement for health care spending for long-term care needs from COBRA to bridge the gap from retirement to Medicare. Essentially, this account can grow, and you can save your receipts and don’t be taking the money out on an annual basis, right? So, when you grab those funds, they’ll be available to you. All right, the next place I go is Roth 401k and the Roth IRA. So, these accounts, the distributions are tax free. So, we love these accounts too, right? This means that all along the way I put in the after-tax money, but it’s growing in a tax-free manner and it’s free to me when I take out from in income tax purposes. So that is great. So to back up, I’m just defining these four different buckets. If you geek out like Miriam and I, you like all the tax consequences, right, we can get into all the details and rules of these accounts. But what it means at a high level is you need to have a variety of buckets so that you have more flexibility in retirement. You want to be able to create your own paycheck and control the taxes at the time of the withdrawal to minimize your taxes in any given year for your situation as well as over your lifetime. So, if you came to Miriam and I and you had everything in a pre-tax IRA account, I mean, that’s wonderful, but your hands our hands are tied. There are certain things we could do with Roth conversions and etc., but still, you don’t have as much flexibility as the retiree who has multiple types of accounts. So, preparing for retirement also means making sure you’ve diversified the types of accounts that you own. All right. So, now what do we have listed here? We have your savings strategies before retirement. So, we’re listed a hierarchy and really at the bottom this is says start here. You’ve got this green arrow. It says your emergency savings accounts. Then above and beyond that, we’ve got your employer match, your max contributions, and finally, additional savings can go into either a Roth IRA or traditional IRA. The Roth IRA is so wonderful that it has caps on how much can go in there and based on your income. So, if you don’t qualify because your income is too high, there’s possibility of going in through a backdoor Roth contribution, but that’s going to depend on the makeup of your accounts and whether or not that’s a good option for you. So, Miriam and I are touching base on education, but we can’t speak to your specific items. So, please follow up with your adviser on your specific situation. And the last piece that we have at the top is your taxable brokerage account.

All right. So, here we’re talking about maximizing your 401k. Your limit for 2025 is $23,500. I think this is a really nice time to touch base because today is October 1st. We’re just now stepping into the fourth quarter. So, the Secure Act 2.0 0 created legislation that for those aged 60 to 63, so you can’t end 2025 having hit your birthday of 64 any time in the year. But if you fall in the category of 60 to 63 for this year, you have an additional catchup available to you of $11,250. That is really awesome. That is something new. It’s new this year and beginning next year if you participate in that way it has to be made with after tax Roth dollars. So the whole point of this is if you fall in that category just consider looking at that for this year and follow and finally do not leave your employer match on the table. So please make sure you’re putting in enough at least to get the match.

All right. So here we’re outlining what’s the difference in the types of accounts Roth versus traditional. So Roth would be hey I expect to be in a higher tax bracket in retirement. So therefore, I’m putting the contributions in now in an after tax environment and it’s going to grow tax-free. The maximum again what we just spoke through to was the 23,500, 31,500, 31,000, if you’re over 50. And then finally withdrawals are penalty and tax-free if over 59 and a half and held for 5 years. And then for the traditional you do this if you expect to be in a lower tax bracket in retirement. So you want to take advantage of the fact that hey I’m in a peak earning year now and when I retire my income is going to be lower. So right now, I want to be taking advantage of the traditional which means I get the upfront tax deferral and then I will address the tax consequences in later years ideally when I’m in a lower retirement age or income situation. And we list on here, one of the differences is that these pre-tax accounts, once you reach age 73, and for some of you on this call, it may be as late as age 75. It’s based on your birth year. You have to begin taking a required minimum distribution that’s required by law. So if you’re preparing for retirement, you just need to know that exists so that you’re not surprised in later years that you’re going to have a larger tax bill based on what’s required to come out potentially depending on your spending and etc. So what you can do in the earlier years of retirement is actually control those distributions. So Miriam’s going to talk through some of the tax planning items, but that’s to give you a little bit of a background. So with that said, let’s go into replacing income in retirement. Great job. Thanks, Danielle. So, you know, when clients come to us, we often see that they feel a little uneasy when it comes to transitioning from wealth accumulation to distribution. It’s kind of like taking the training wheels off a bike. You know, you can do it, but it still feels like a big step. So, I want to talk about how you can replace your income without maybe that wobbly feeling. This chart here is depicting a household or family making somewhere between 400 and 500,000 pre-retirement and now they’re retired and are needing a draw of about 150,000 in living expenses. What you see here in that highlighted yellow box or circle is the yellow bars are showing the different income sources postretirement that could be like deferred comp paying out stock options or maybe rental property income and you would need to be supplementing this period before social security kicks in with portfolio withdrawals. Those are the light blue bars. That’s why the early years are so important to have great planning in place. But look what’s happening in the later years. They have all this income coming in from social security and RMDs with the occasional portfolio withdrawals. Maybe those are some bigger expense years, new car, home repairs, whatever that may be. In those early years, each person will have their own unique situation. So your situation might allow you to accelerate income. So maybe you might do some Roth conversions in those years or you might be in a high tax bracket due to other income coming in those years. and you might want to be able to withdraw from the tax-free account which why those buckets are so important. So without early proper planning in place the income in the later years can end up boosting you into a higher tax bracket with your own unique resources. This big picture view can really help you relieve the stress and be able to see when and where your income is coming from.

Now this this here is another chart just to give you a quick visual depiction of all the different sources of retirement income. Most people will be relying on the first three personal savings, social security, and employer sponsored plans. So the savings and employer sponsored plans are kind of what you have control over right now, which is why it’s so important to figure out the best savings vehicle for you pre-retirement when the sources again are unique. So other options, of course, could do part-time work. If you’re lucky, you could be one of those people that has a pension and then the rental property income. The idea around this is basically to create a robust plan that relies on multiple income streams and creates that well-balanced foundation for the retirement lifestyle you want. So, now that we’ve looked at how to replace your income in retirement and the planning you need put in place early on, let’s turn our attention to maximizing the benefits that you’re entitled to. I’ll turn it over to Danielle to elaborate on those benefits. Thank you, Miriam. And that chart with the income and know that you’ve got this ticking tax time bomb down the road and how to accelerate and bring it in. That’s what we do all day every day. I love that Miriam pulled that together for you. So, here I’ve got a listing of Social Security. You know what? Social Security, I’ve been an adviser for a couple decades now, and you would think that it’s straightforward. It’s not. It can be and boy is it nice when you have some straightforward decisions to make. But as a whole, it’s based on when you’re going to retire, when if you’re married, what’s your spouse’s planned retirement, what’s your health, what’s the life expectancy, do you want to draw from the portfolio early or delay it so that you can get a nice 8% raise each year? If you work with Savant, we have a really nice tool that does a break-even analysis. So, it’s really great to bring together these different pieces. So, we can educate you today, but there’s so much to consider. So, regardless of who it is, I always have to write down a little grid of this is your date of birth, this is what your benefit is, and to identify the best claiming strategy. And you could be flexible and as your circumstances change, maybe alter from what you had originally planned. But the factors to consider that I talked about was health and life expectancy. So, if you plan to delay your Social Security benefit because you want that 8% raise you get each year between your full retirement age, which for most people on this call, if you’re preparing for retirement, I’m going to assume is around age 67. If you are delaying your Social Security, but something changes in your health and something drastically changes, you can always enter the system, right? It’s dry powder. It’s ready to go. So, I like that. Also, we’ve got listed here the earnings test. So, what this means is before your full retirement age, if you want to maximize your social security benefits, you need to consider the fact that if you’re working, even part-time, that if you exceed their earnings test, Social Security is going to hold back some of its payments to you. So specifically, this year in 2025, if your income’s over 23,400 in the years before of your full retirement age, it increases a little bit leading up to the months right before your full retirement age, but just know that there’s an earnings test that exists, right? You don’t want to go and file and then not see your full benefit come and not understand why. So that should be factored in. Spousal benefits. So for spousal benefits, you’re entitled to the greater of your own benefit or one half of your spouse’s. So you should be considering and comparing those. And your spousal benefit isn’t going to increase past your full retirement age. So there’s lots of different things to think about and consider. Ex-spouse benefits. So, if you were married for 10 years and you haven’t remarried, you have the ability to claim on an ex-spouse benefit. So, this can get pretty complicated pretty fast depending on your factors. And the last being survivor benefits. Survivor benefits I think come into play most if there’s a health issue. But then above and beyond that, think about social security. If there’s a marital relationship and something happens to one of you, the survivor is not receiving both social securities. They’re only getting one. So if at the time of filing and making decisions about filing it can be considered what if you have a smaller benefit and your spouse has a much larger or vice versa. If there’s a significant disparity between the benefits there can be a considerable advantage to delaying the larger that being that you get that 8% raise all the way up till 70. So you know that the survivor is getting the highest benefit possible ideally for many years to come. Okay. So there’s just a lot of things to consider is what I would summarize for you. Okay? It feels straightforward and you may have a political or emotional reason why you want to go in and grab it. That’s not necessarily wrong, but you should be considering all the alternatives and what works best for your situation. So again, education, but connect with your adviser. You’re going to hear that from us a lot because it’s very specific to your individual circumstances. Then we’ve got listed here things to keep in mind before claiming. All right, the earnings test we just talked to and what that looks like right before full retirement age having some of the benefits held back. In the early 1980s, Social Security became taxable. So this is listed here as a taxable benefit and the taxes range from 0% to as much as 85%. So in today’s environment you’re never having 100% of your social security tax to you but up to 85% absolutely. Then we have listed here the withholding brackets. So one of the unique things about social security is that you can’t just write in the num the number that you want for withholding. They have four distinct brackets. So those are listed here as 7, 10, 12, and 2022. So a pro tip or what I would share is that most individuals go in and file for social security, but at the time of filing, it does not prompt you for your withholding. You have to send in a separate form. And so often we find that withholding does not exist on social security. So you want to be careful about that. Make sure you’re withholding in the right places. And the really nice thing is since this summer, the Social Security Administration has announced that you can now do withholding online. So I myself have yet to actually see that executed, but from my understanding, you can go do it. So please check that. My understanding is that you have to sign up first, but then afterwards, you can go back in the system and potentially change your withholding online. So wouldn’t that be wonderful instead of using a form because we want to make sure there’s no surprises at tax time. Then we’ve got Medicare listed here. Social security, Medicare. These are entirely se separate and distinct webinars in themselves. So we’re just kind of touching the basics here, but you can go back through the library of webinars on our website and absolutely sit look for spend the time on some webinars. Just in September, we had a very nice one on Medicare. So, that’s something timely to be visiting, especially with an enrollment period. But when we look here, it says it can be claimed together or separately. So, you can file for Medicare at the same time as your Social Security or not if you’re still working and you need to coordinate it with your employer benefits and you’re in a larger what’s deemed a larger employer plan. And then the Medicare premiums can be withheld directly from your benefits. Now, the lower half of the page is speaking to the Social Security Fairness Act. So, this applies to January of 2025. You may remember the law changing and those of you that were impacted, I bet you absolutely remember what happens is that the government pension offset and the windfall elimination were removed. They’re gone. what that means. Teachers, police, firefighters, certain government employees that participated in the pension system had offsets to their social security benefits. Well, that’s been removed. One thing I’m finding that I want to also give you as a tip too, there may be someone in your life that’s exactly in this position is that Social Security did a great job of automating if you’re already in the system and giving those benefits. You got the retroactive payment from 2024 where applicable and then also you get the increased benefit in 2025. That’s all wonderful, but Social Security did that based on individual benefits. So if your spousal benefit is now higher or you have a dis deceased spouse’s benefit, so your survivor benefit, if that’s higher, the system needs to be told to go look for those benefits. So even though you’ve got your own increased benefit, make sure you’re getting the higher of what’s owed to you. I’ve found a handful of people this year that that applies to. So, just think about if you know somebody in your life who did benefit from this law change and they were already collecting their social security, just remind them, hey, are you getting your act your absolute highest benefit possible? And that’s just going to depend on independent examination of each individual circumstance. So, that gets a little technical, but if you’re that person, please follow up with your adviser. don’t want any money left on the table. And in fact, I’m writing a little article for the Savant website that will go up to give a little greater detail and color around that. All right. So, Medicare eligibility begins at age 65. Your initial enrollment period is the three months leading up to and the 3 months prior. And then you can have special enrollment periods. If you work past 65, you have to make decisions about is supplemental insurance appropriate for you. Do you want to use an advantage plan? There’s lots of decisions to made coordination of your benefits with your employer benefits if you’re still working. But the biggest one that we think about in relation to retirement planning is Irma. So when you think about this, Irma is not a person in your family that you know. It’s related to the income related monthly adjustment and amount. So that acronym is Irma. And Irma is something you don’t know about until it hits you because it’s not fun. Irma says we all pay a base premium for our Medicare. And then if we’re in one of the higher income brackets, our premium increases and it’s looking back to two years before income. So it can get tricky. So I think exactly right language is used here. Watch out for Irma. What that means is that this can impact you. You should be planning for it. It shouldn’t shape every single decision you make, but you should absolutely be aware of it and be thinking of it. So here’s the current table. Here’s 2025 numbers from CMS. So this is looking at what’s the current premiums, right? So, even if you go to, let’s pretend you’ve got $212,000 of income and you go over by $1, you are now moving up into the Irma range, right? You can see your additional premium, it’s increasing by $74. And if we’re doing that, you’ve got that for part B and part D in terms of increases. So when we look at those, if you’re a spousal situation, you do that time 12* 2, it adds up quite a bit pretty fast. So if you have the ability to control your income, you want to be mindful of how this table comes together for you. So this is a big part of what we do in planning. You don’t want to not do a great Roth conversion or some other things to benefit your tax situation just because of Irma, but you should factor it in. And what we see all the time is that if this hasn’t been a consideration, so if you’re at 65 and you’re doing the Irma adjustment amount, it’s looking at your income from 2 years prior. So this is something that you really just can’t be surprised about. You have to do tax planning. It’s a big part of what we do here at Savant. All right. So here we’ve got listed health insurance prior to 65. And I will say on Irma too, it’s looking back two years. So if you have a death of a spouse, if you retire, disability, you have these life-changing events, you can proactively notify through an appeals process with Medicare and reduce that Irma surcharge. So that’s important to note and your advisory team can help you do that, too. So, health insurance prior to age 65. I’d say the biggest one on here is COBRA. And what I mean by that is it’s often overlooked because it’s very common to hear, oh, I’m going to work till 65 so that I get my health insurance, right? Well, you can always go purchase on the exchange or different options, too. But if you like the plan you’re on, your current doctors, and you want to use Cobra, it’s going to carry you for 18 months. So at 63 and a half, you could elect to retire and you’re going to be carried all the way to 65. So that’s something that should absolutely be considered. You’re going to be paying your own premium, the employer’s premium plus a 2% search charge. So it may be expensive, but it doesn’t mean you necessarily have to keep working till 65. Maybe there’s an option to go on your spouse’s insurance. Maybe  purchasing a policy through the exchange, part-time employment to keep up with the ability to have a access to a health plan. And then finally, HSA. So, you can use your HSA account to pay for  premiums, but not for the Medicare policies. Once you’re on Medicare, you can use it for that, but not for the Medigap. But you can use it for COBRA. You can use it for long-term care expenses later in life. We love the HSA. So again, like I was saying before, hold on those receipts. Don’t reimburse yourself and let that account grow. If I’m a younger person preparing for retirement, I’m going to try and get as much in the HSA as possible so that I have a nice bucket that’s there for long-term care decades from now. I love that idea. All right, strategies for tax efficiency. Let’s kick it back over to Miriam, our tax guru. Yeah, I get to talk about everyone’s favorite subject, taxes. And you know what we like to tell people is the key to taxes isn’t really avoiding them entirely, but optimizing them so you’re paying the least amount of lifetime taxes. So, it’s hard to talk about tax efficiencies without referring back to this bucket mantra that Danielle has already introduced us to. So, for those of you that are in your pre-retirement years, talk to your adviser. Make sure that you’re filling each of these buckets with different types of assets. Now, why do you need to do that? It gives you the flexibility to adapt to life changes and or tax law changes down the road. So, let’s briefly go over these three buckets. The first one, the Roth IRA, that’s your tax deferred, I mean, your tax-free bucket. That includes the Roth IRA, Roth 401ks, and HSAs for qualified medical expenses. And I love how Danielle keeps talking about the HSA because it is one of my favorite accounts because of the tax-free growth and the triple tax benefit that you get through contributing to it and using it. So, we love that one. And then, you know, next is the taxable bucket, right, which is your brokerage account. And once you’ve established like all three, I think I skipped traditional IRA. I’m sorry. The traditional IRA grows tax deferred. Withdrawals are taxed as ordinary income. So, you know, ideal characteristics to contribute to those usually is high ordinary income, lowest expected growth, high distributions. So, a lot of people have a hard time trying to figure out which one is the best for them to contribute to. And it really kind of just goes down to do you want to pay the taxes now or later in the simplest way to put it. But it’s also kind of like organizing your pantry. You know, you store items where they will keep best. So you make sure the ones you use the most often are easily accessible and so on. So for example, you know, when you’re placing different investments in the different accounts, we practiced asset location, which Danielle mentioned earlier. Some examples of that would be like REITs and bonds. We usually place those in IAS because they’re taxed as ordinary income. So, you want to defer that ordinary income tax and put those away in that type of account that is also taxed as ordinary income. Individual stocks usually belong in the taxable accounts where your beneficiaries can get a stepped up cost basis. International stocks are better off not in an IRA because there’s no foreign tax credit in IAS. And then finally, you know, the highest growth potential items should be placed in a Roth where the appreciation will not be taxed. Now, this this applies if you have all these buckets and you’re kind of able to practice this t asset location. But I want to give you an example for some new clients that we onboarded in retirement recently. They make about 250,000 a year retired came to us with individual MUN bonds in their taxable account. Since MUN income is federally tax-free, I mean, that makes sense, especially while they were working. But now with now that they’re newly retired and have a lower income, they’re in a lower tax bracket. It doesn’t necessarily make sense to hold those MUN bonds. So we’ll let the munis mature in the taxable account and then replace them with corporate bonds and the IAS and stocks will be held in the taxable account instead of the munis because of the preferential rate for capital gains and qualified dividends. So when you’re retired you have more control over your income and again like with the proper planning you can also have some control on your taxes. Go to the next one.

All right, Roth conversions. So, I think we we’re hearing that a lot more and more lately, but what exactly is a Roth conversion? Right. It’s essentially taking money out of I’m sorry, I’m losing my slide here. Oh, can you see this? Okay. Oh, yeah. Transferring. Sorry. Okay, no worries. This ties to your beautiful income slide, right? Okay. Yes. A high income. The Roth conversion means transferring funds from your tax deferred account into a Roth IRA. So, prior to retirement, individuals might fund a Roth 401k or Roth IRA through sources of wages. You know, for the Roth IRA, you’re capped for but the Roth 401k, if that’s an option, it doesn’t matter how much you make and you can still contribute to it. But the Roth conversions are very common planning strategy for our clients between retirement and the year that they have to start taking RMDs. You’re simply choosing to pay your taxes today rather than a future later date so that you’re able to draw in the future tax-free from your Roth. Now what are the reasons to do this? You know there can be a lot but typically this would be if you anticipate that your future income tax bracket might be higher so you can take that tax hit now. You know, you might have some additional pensions or deferred comp that’s going to last for, you know, throughout a good portion of your retirement. Or you might have goals where you want to keep you want to give assets to your children which have no tax implications because and there’s also no RMDs with Roths. So it can be true that even those individuals that will maintain a higher income tax bracket can benefit from the Roth conversions primarily because of the tax-free growth in the Roth IRA over the long period of time. So why don’t we all do this? Well, first of all, it creates a tax liability and then it’s just important to analyze whether any of these situations will allow you to be in a lower tax bracket. The reason that investment buckets are important for individuals making Roth conversions is because other buckets like cash and after-tax investment accounts help them maintain their spending goals while minimizing their income tax situation to allow for larger Roth conversions. So if you find yourself in a situation where it is the right time to do the conversions, you should go ahead and do it. Another point we always like to make is if you don’t have the cash on hand to pay for taxes of the Roth conversion, we prefer not to do it because taking money out of a traditional IRA to convert to a Roth and then taking money out of it again to pay the taxes, it could it just kind of starts to pile up. But like what me Danielle mentioned earlier, we also want to consider some factors like Irma and how much you are accelerating your income with a conversion. Now that’s not a reason not to do it. especially if you have good reasons to do it. But that is part of the planning process just to make sure because you have control year over year of how much you want to convert. You do not have to convert the entire pre-tax account to a Roth in one year. It’s actually best to do it over the course of a few years if you can. So now that we’ve covered the Roth conversions, let’s just jump into some of the tax strategies here. So, just to wrap this up, I have five quick strategies I want to briefly touch on. Optimizing your lifetime taxes. So, income tax planning is all about legally minimizing the taxes you pay throughout your lifetime. Sometimes paying a little more now can save you a lot down the road. All right. Second one, adjust the income timing. This is something I discussed earlier in this presentation, but those early retirement years, you remember that pretty graph, Danielle’s favorite graph. Those early retirement years can present an opportunity to accelerate or deaccelerate retirement income. And that is when it becomes important to do a tax analysis to understand where you stand today and what future tax brackets will look like. Third one, tax loss harvesting. As we all know, markets don’t always behave like we want them to. But if you see yourself running into a situation, or when you see yourself running into a situation when some of your investments are making losses, you can use that opportunity to tax loss harvest to decrease your tax bill for the current year or for future years. The strategy behind this is to sell a security at a loss and you can use it going forward, but then turn around and purchase a similar security. so that you’re able to stay invested in the market. There are a few more rules to this. We don’t have a lot of time to get into it, but that’s kind of like, you know, making lemonade out of lemons. That’s how we like to look at it.  tax planning opportunity. And then the fourth one here is the state tax planning. You know, people tend to relocate after retirement. Could be for warmer climates, closer to family to avoid state income tax, and hopefully get that favorable tax treatment. But income state rates do vary state by state. You also need to consider property and estate taxes in the new state. They really can be completely different. And I heard this from one of our other colleagues, but taxes are like termites. They can just eat at your portfolio without the proper treatment. And then finally, the last one, charitable gifting strategies. I know we have a webinar in itself about this and there are many gifting strategies that can reduce your taxes. I’m just going to touch on two today. So, QCDS or qualified charitable contributions. Once you reach age 70 and a half, you can gift directly from your IRA to a charitable organization. So, you can use these to satisfy your RMDs. And obviously, before you hit RMD age, it’s a good way to reduce the value of your IRA. So, when RMDs do come, you know, the account is a little lower. And again, this only makes sense if you’re charitably inclined. You can also gift highly appreciated securities from your taxable account. For example, you purchase stocks for $1,000. They grow to 5,000. Instead of using current cash on hand or selling the fund, paying the gain, and making the donation, you can gift the fund directly to the organization. they the organization will not pay any taxes if they are a 501c3 and you will benefit from a charitable deduction. So essentially you’re able to donate a larger amount to a meaningful cause to you when you initially paid a th000 in this example. So again this only makes sense if you’re charitably inclined. We don’t suggest people just start gifting just to do it because there’s a little bit of tax savings but not enough to do it just because. But really, all of these strategies are like assembling a puzzle, right? So, it’s not just about saving money. It’s about using that money to live a rewarding and fulfilling life. So, on our last segment, Danielle will talk about how to build a fulfilling retirement. Over to you, Danielle. Miriam, you’re so good. You’ve got the puzzle, you’ve got the pantry, the termites. Oh my god, these are great stories because we love the vernacular of these financial terms, but I’m sure not everybody on this call loves it. So, thank you. Those are such good analogies. I’m going to steal them. All right, so living a fulfilling retirement. What this means? All right, I have not retired myself yet. That’s why you have me on the call. And in fact, it’s probably quite a ways off considering next year I’m going to have four kids in college. There’s a lot going on.  but what I do have the luxury of doing is helping maybe four to five people retire every single year. And at Savant, we’re really helping people retire every day. So what are my observations, my antidotes that I take from that? My little bit of evidence would be your transition time to retirement. I think generally I find you’re more successful if you have something to retire to. And what that means if someone struggles it’s generally the personality type of your work and trust me we Mary and I are probably these people and then a lot of our clients are high achieving passion for their work purpose and if your work is really defining a lot of who you are please make sure you know what you’re transitioning to because you may have a retirement where The first few months, pretty common, I think, where everyone catches up on their sleep, right? You get into relaxation mode. You’ve been waiting forever for this. Then you start cleaning out those closets and organizing the files that you’ve had in the basement forever and get everything in order. Then you come up for error and you’re like, what’s next? If that purpose was removed and you don’t have a fulfilling purpose to transition to, it can be quite challenging. But if you’ve given this really careful consideration, I think you can end up in a really wonderful spot and transition really well. And so, not only having the retirement plan and projections lined up, but what are you retiring to? Are you going to do more athletics? Have you started figuring out what that looks like? Are you going to watch grandkids or help the family out a couple of days a week? Well, maybe some sort of experience beforehand of what that looks like so you don’t step off into that commitment and it not be a good fit for you, right? There’s so many things to consider. Are you going to do more charitable volunteering? Are you going to invest in your family and your relationships? That’s all wonderful and you can explore it at that time, but if you explore some of it in advance, oh, it’s just it’s so much more rewarding and you’ll have a better idea of what your budget should look like. we can help you shape all this and get you in a good place. So, we get really excited about this retirement factor, too. I know some of you have put questions in throughout the webinar, but if you have a webinar, please question, please throw them in the Q&A box because we’re going to take those in a moment. But essentially, transitioning your retirement, we want you to be successful. And I think what we often find is that no matter how secure the retirement is, you don’t feel secure because you’ve always had that income coming in and now it’s time to replace your paycheck. So even though you have the ability and all the planning’s been done to prove that, if you don’t have the planning, I don’t even know what that’s like. That’s like diving off the deep end and not knowing how to swim. I would panic. Some people can live like that. I can’t live like that. That’s why I’m financial planner. But even if you have all the planning lined up, you can still feel a little bit uncomfortable. That’s natural. That’s normal stepping off. We try to reassure our clients in that. And let me tell you once we get a couple of years in and you see that the distributions have come out but your portfolio is still maintaining primarily the principal there could be points in time the timing of when you retire down market sequence of returns but as a whole you’re going to see that security that’s there you’re going to have a nice sigh of relief and then we’re going to be nudging you to like how you want to spend this money right we don’t need to be so cautious anymore so that’s what I would say is a nice transition to retirement. Now, we have listed here at Savant. If you’re a current client or if you’ve worked with Savant in any capacity, you’ve likely seen this document. If not, there’s a link in the chat. You can go in and grab it. This is really if you’re going to your physician on an annual basis, as we all should to get our checkup for our physical and overall health, mental health, everything, our well-being. That’s important, right? Invest in yourself. Well, in addition to that metric, that’s all the health and well-being. On the other side, what about the financial areas of your life? This is an assessment, a really taking an annual checkup of where you’re at. So, if you go through this process, what it’s listening on this wheel is the 10 areas that we focus on. And what it’s going to do is score you in terms of and prioritize where are you doing well and where are some ideas for improvement. And this is a good nice tool especially for beginning an initial relationship with an advisor to assess where to begin. But then above and beyond that, it’s nice to actually check in overtime to see, oh, look at the progress that I made. Right? Some of us want a sticker on the little chart, right? It gets us a little excited. I want the gold star. So this what the financial health assessment tool is. Now, here is also in the chat. Again, Miriam and I, we love this. This is our passion. This is our life’s work. And we are chuckling about our enjoyment of doing these webinars. And it’s fun to do them together. But it’s only educational based. The depth and breadth of what we cover is so deep. And  your specific situation, we can’t give you advice today. It’s just educational. So for your specific situation, please connect with your advisor. If you don’t have one and you want to connect with someone, please click on the link in the chat to just get that initial discussion started. And now we’re going to go over to questions, but let me click here for the disclosures because legally we have to share this information with you. Now, let’s hop over to  the questions that we have. So, with these coming in, let’s see. There’s a handful, but we’re almost coming up on the hour. So, maybe I’ll give one to you, Miriam, and if you want to throw one at me. Sounds good. Do you want to go first or you want me to? Sure. Yeah, I’ll go first. Okay. So, can you speak about the solvency of social security? Yes, absolutely. Okay. So, this is definitely something that brings up fear in individuals and it’s very warranted because there’s a lot of math and there’s information that comes out about how solvent is social security. So, we know that in 2033, Social Security has a problem. It’s no longer fully funded. Does that mean that your Social Security is going to disappear? No. If no additional income comes in above and beyond changes to legislation or things like that, we just continue with the current status of paying in and then paying out benefits. So the workers are paying in and then the beneficiaries who have claimed their benefits are receiving benefits. Beneficiaries are expected to receive 81% of their payments. So that’s a haircut there. Nobody wants a haircut, but and I feel most advisers in this space feel strongly that social security is going to have to resolve it itself. Unfortunately, it is a political move. I think it’s very challenging to cut a retirees’ social security benefit. So, that’s very unlikely to happen. But what’s more likely to happen is there’s a cap on social security wages right now that are taxed. Remove the cap. Full retirement age is 67. people are living longer, working longer push that age out. I’m not saying they should do this, but these are the different things that could be changed. Also, the payout rate. Social Security also pays a higher replacement rate to lower income wages, right? So, changing that for higher income wages to even adjust it more so the replacement rate is lower. So, making it a little bit more means tested. There’s so many different proposals out there. And what I want to remind you of is yes, we know that’s in 2033, but last time we had a crisis in social security was the early 1980s. And at that point in time, I’m sorry, I always where my camera’s at. So in the early 1980s, it literally was resolved the month before. So I think we’re going to be talking about this for a long time. I wouldn’t want it to give you any sort of pause or concern for you that are approaching very close to retirement or retired. If you’re Miriam and I and you’re a little younger and not yet retiring, I think it’s very real that those are the situation is going to change for us. But that’s all going to be defined, you know, in a handful of years. So that’s what I would say about social security. It’s real. The facts exist. Unfortunately, it’s going to take some changes and that’s likely not going to happen for some time because of political pressure, but we’ll see. All right. And then here’s another question. Again, we’re getting very close to running out of time. Oh, and it ties back to my favorite slide. What if you have most of your money in pre-tax money? Miriam, we also talked about the buckets, right? And you want variety. what how they say specifically how does it impact me if here I’ve put all my money they’re probably talking about their employer plans or IAS right and that’s a very reasonable thing to do over the years what how’s that impact me of course well first of all I’m sure that was done because you wanted to save tax you know initially funding that pre-tax bucket but it also depends on what stage of life you’re in so if you’re in your early 60s or around 65 you’re not taking social security that that’s and depending, you know, on cash savings, etc., it would it could be a good opportunity to do some Roth conversions. You know, depending on where you are, how close you are to retirement, I would start at least saving some more in a taxable bucket so that you do have that ability to do Roth conversions without using the pre-tax money but also, it’s not the end of the world to have just the pre-tax money in retirement. you know, presumably you should be in a lower tax bracket if social security is going to be your only income source and the rest from your IRA. but there are solutions that you can do and it’s really just unique to your situation depending on if you have a partner, how old you are and when you’re going to take social security. You know, like Danielle mentioned, every year that you delay taking social security, that’s going to go up eight%. Especially for the those that are nearing retirement. And we do get that question a lot. And with our younger clients, a lot of them when we do our planning, you know, which is why it’s so important is they don’t want to count on social security. So they just want to make sure that they’re saving enough now to make sure that they can fund their retirement. So having the money all in pre-tax is not the worst thing. And if you’re still working and you just have a couple years, there’s another question like that in here. You can switch to Roth 401k. You if your company offers Roth as an option that’s becoming more and more popular. you can switch to the Roth. You can start doing your Roth contributions. You won’t get that tax savings that you’re used to. So for some people that can hurt a little. So, if that’s, you know, very important to you, I would maybe do it in chunks. Maybe do 50% Roth, 50% pre-tax. But if you are the person that has everything pre-tax, I personally think it would be nice, you know, to just start building out the Roth and put everything in the Roth for those last few years that you have before retirement. All right, great. Thank you, Miriam. I think we’re pretty much done for the day and thank you to everybody who joined us and I think we’ll wrap things up now. Yeah. Thanks everyone. Have a great day. If you enjoyed this webinar, visit savantwealth.com/guides and download our complimentary guidebooks, checklists, and other useful financial resources.