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

Download our complimentary guide books, checklists, and other useful financial resources at savantwealth.com/guides. Welcome to today’s Savant live webinar, and thank you for joining us today. We’re discussing five retirement strategies you need to know as you’re preparing for retirement.  My name is Danielle Moore. I am a financial adviser in the Naperville, Illinois office. I’ve been in the industry for just about 23 years now. And I’m pleased to be joined by another female financial advisor. So, it’s a unique group duo today that you’ve got two of us women. So, I’m really excited about that. And my friend, Miriam Falaki. Welcome, Miriam. Thank you. Yeah. So, my name is Miriam Falaki. I am an adviser out of our Atlanta, Georgia office. and I’ve been in the industry for about 13 years now. Here’s our little disclaimer and moving on to our agenda. All right, so, we are going to start off by talking about how best to replace your paycheck in retirement and ensure that there is a steady income. Then we will explore how to make the most of your benefits and then keeping taxes from eating away through your savings. Finally, let’s focus on what it all leads to, living your best and most fulfilling retirement life. We’ll then wrap up this session today with the Q&A. So, feel free to type your questions in the Q&A box as we go. Now, let me pass it back to Danielle to get us started with the saving strategies. Okay, great. Thank you, Miriam. Again, let me click over to get this going. All right, saving strategies before retirement. Our very first slide is oh, you know, the old hamster wheel, right? This is looking at how do we prepare and get ready for retirement, especially when we’re in our peak earning years, go time, right? How do we make the most out of what we have? And Miriam and I are going to assume that most all of you that are choosing to join us today are at or near retirement, right? You’re a handful of years, 5 to 10 years out. You’re looking for how do I tweak and get in a good place? Maybe you’re doing it even sooner, which is wonderful. But the first thing when we think about look at on this slide is to say, okay, I’m working so, hard. I’m in my peak earning years. I can put away as much as possible for retirement. And ideally, you’re making more. So, you’re putting more away. You’re getting ready to launch yourself into retirement. But your risk is although you have more ability to save, you also have a greater ability to spend. So, step one is defining what does retirement look like for you? What is a budget for you? And budget for some can be really enjoyable. For some of us, we cringe at that word. So, it’s backing into what do I need to live off of. That’s really the place to begin because we only have so, many levers to pull in retirement, right? When do I actually retire? I can dial that up. I dial it back. The longer I put off retirement, the fewer paychecks I need to replace in retirement. And then also a big driver of that is how much do I need to spend. So, step one here is understanding your relationship with money. Be careful of lifestyle creep in these last few years moving up to retirement and have a realistic idea of what you are spending. So, use this hamster wheel to be careful that you’re not creeping up with inflation for your expenses. Now, if you’ve ever joined a Savant  webinar in the past, this is not a concept that you haven’t seen before because we’re always talking about this. If you are a current client, your advisor has discussed this topic with you. Investment buckets. If it’s your first time joining us, then here you go. You’ll get  you’ll get integrated in the Savant vernacular about investment buckets. So, what do I mean by that? I mean that when you’re preparing for retirement, a very basic  thought is you need to diversify what you hold, what you’re invested in. That’s all very true. Step one. Step two, where do you hold those accounts in what way? So, those different funds you can have a different bucket. Each of these categories is showing you how are they taxed different? What are the different rules regarding retirement and how to access them? And the point is that if you throw more money into a variety these buckets, so, each of these  different buckets, you can look at and decide how am I going to pull out. The more flexibility you have, the better. So, let’s begin with the  side of the screen that’s a very navy blue type of color. It says 401k, SE IRA, traditional IRA. This is your alphabet soup of the IRS tax code. that is  403bs, 401As, 457s, B’s, Fs. We’ve got all this vernacular that is defining pre-tax money. So, this is I’m putting away money now in this bucket subject to some rules about how the account is accessed and everything’s growing tax deferred. So, when I take it out in retirement, it’s taxed to me at the highest rate possible, which is listed your marginal rate. So, if you’re in your go- go years and you’re making a lot of income now, some of your peak earning years, you want to defer this to ideally when you’re in retirement in a lower tax bracket. So, you want to get this upfront tax deferral. The next bucket is saying taxable brokerage. So, look at the very first word listed there, taxable. Taxable means it’s outside of the parameters of these retirement accounts and the rules and restrictions. It’s completely under your control in terms of accessing the funds. They’re fully available to you depending on what you purchase and place within there. But they are taxable. So, there’s no tax deferral nature to these funds. Any income is going to be created and reported to you on an annual basis on your 1099. So, you want to be careful about what you hold in here. If you have a lot of cash and you’re earning some nice interest, that’s going to show up on your tax return in this bucket. If you have investment accounts, we want to be focused on growth subject to long-term capital gains which are lesser than the tax rates in the bucket that we just discussed. Right? If you’re owning like tax effic inefficient investments such as real estate investment trusts REITs which distribute a lot of tax inefficient income, this is not the bucket to have it in. So, building these up over time and being smart about what you hold where is really important so, that you can deploy and recreate a really nice paycheck for yourself. So, we’ve go from blue to a teal. Now, we’ve got this maroon type of color. The health savings account, Miriam will say this, too. We love the health savings account. It is triple tax exempt. So, you’re not only paying  the I say you’re not paying, you’re avoiding tax upfront, you’re getting a tax deferral, it’s growing taxree along the way. And if you take it out on the back end for qualified expenses, they’re completely tax-free distributions. So, the tax has never been taken from these funds. That’s a really beautiful thing. Now this is not appropriate for everybody in this world. And what I mean by that is it has to be paired with a high deductible health  health plan. And that’s not right for all individuals or for all families based on your age, your health, your personal needs, and what you’re comfortable with for out-ofpocket expenses. But if you do have access to this account, it’s really powerful because of that really tax favored nature that we just discussed I shared with you. , so, I really like this account if you can set it up and use it as an investment vehicle. What do I mean by that? Typically, your health savings account is going to require something like $1,000 to be held in cash at all time, but there may be a feature, and it’s very common to be able to invest all funds in excess of that amount. So, this is another way to have your money grow tax-free, and you can take it out in retirement. And also this has ability of save your receipts so, that anything that you could potentially take out now you could reimburse yourself down the road. It doesn’t have to be used in the same year. So, if you let this account grow, you’re paying your expenses with cash outside of this account and just letting it grow. You can have a really nice nest egg in later years. If you’re many years out from retirement, I would really strongly encourage you to put as much money in this account as possible. You’re going to love it to potentially use for long-term care expenses later in retirement. You can use it for Medicare premiums, part B and part D. You cannot use it for the  the supplemental or the metagap plans, but you can use it for dental. You can use it for vision. You can use it for COBRA, which is carrying you maybe from quitting work till when Medicare begins at 65. So, much flexibility. Let this thing grow and invest it for growth over time. Okay. And there’s also limits and caps. I made note here of the individuals for 2026. Contribution is $4,400 for the year. Family is $8,750. And there’s a $1,000 catchup for those 55 and older. So, there are caps on how much you can put in there. So, time is your friend. The more money you can put in there over  many years is a good way to go. Then our next  friendly favorite account is the Roth account. And when we say friendly, what do we like about it? It’s tax-free. So, later when you take this money out in retirement, it’s tax-free to you. And as long as you’ve met the rules for holding it for 5 years, earnings are free, too. This is just a really powerful account that if you build up is going to give you a lot of flexibility to combine pre-tax, tax-free, the taxable account. There’s just so, much nuances to this. The summary is you don’t have to geek out like Miriam and I on all these terms and how it works together. What you need to take away from me is that these all have different rules and different tax treatment. And the more variety you have, that’s a win. So, we can help you create a more flexible retirement paycheck and give you greater retirement security, okay, for when you go to withdraw from your portfolio. Now, when you’re saying, “Okay, I’ve got these different buckets. How do I really make sense of what order do I put money away?” And here, we’ve got a little bit of a cheat sheet for you. So, at the bottom, we’re saying start here. This is very basic emergency savings account. This is going to be dependent on how secure is your employment. Do other people independent  depend on you for your income? All these different considerations. Do you have large upcoming expenses? But in general, 3 to 6 months. That’s something fair to have a placeholder to begin. Then the next place we go is does your employer provide a match? If so, please contribute up to the match. You may even have a match in a health savings account if you’re using a high deductible health plan. Your 401k may provide a match. Please contribute enough to get the full match because that’s for free money for retirement savings that you never want to leave on the table. Then above and beyond that, go to max out each of those plans themselves. And we’re going to have later in this slide some of the maximums for contributions for 2026. But look to max out those plans. And then above and beyond those plans, you still have the ability to contribute to IAS, whether that be a traditional or a WTH. A Roth is going to have income limits. A traditional is going to have income limits, too, about whether or not you can deduct the contribution. So, there’s a little bit of complexity there. But that Wroth, even though it has an income limit, there’s a strategy called the backdoor Roth, and that works for individuals in special circumstances that do not have an independent traditional IRA. And there’s a couple other nuances. So, we cannot give you specific advice about your situation here, but it’s know that all these things exist and you should seek specific  guidance on your situation because this is meant to be just an educational environment here. So, whether you have a Son advisor now, please go back and ask about these different types of accounts and how you can best maximize or if you do not, please connect with  SI through the webinar here to say that you would like to have a follow-up conversation about your specific situation and then we can give you specific advice for yourself. And last to top it off, the cherry on the top is the taxable brokerage account. You’re going to love that account. If you’re in the last few years before retirement, please build that up as much as possible. It’s going to give you so, much flexibility in terms of keeping your income lower in the first years of retirement so, that maybe you want to do some  Roth conversions or things like that that we’re going to discuss in later strategies. And that taxable brokerage account is just so, helpful. And maybe you’re retiring super early. you need that account to be flexible  and outside of the retirement rules that have age restrictions and things like that. So, one, two, three, four, five. Just know the more you participate in each of these categories, the more flexibility you have down the road so, that when you come to meet with an adviser at the time of retirement and creating your paycheck, we have so, much more flexibility to optimize it for you. So, that gets us really excited, right? How do we put you in the best  position possible? keep as much money in your pocket as opposed to paying unnecessary taxes. We want to pay our fair share, but not more than what’s necessary because no planning was done. All right? And when I discussed all those different accounts, I don’t want to overwhelm you with numbers, but here we need the facts. What’s the maximum you can do in 2026? $24,500 into 401k. If you’re over 50, there’s an $8,000 catchup for this year. If you’re 60 to 63, we have a super catchup and that’s a total of $11,250 that you can put away. And I do want to clarify that this super catchup really began last year. So, that was the first year. So, this may be new to you and it may be the first years that you’re eligible. Also, what changes this year is that any contributions, if you earned more than $150,000 last year, then you’re going to be in a place where that catch-up contribution has to be a Roth contribution. So, those after tax monies. So, these should all be factored in your plan. And really, this is not based on your actual birth date, but your year, your age within the year. So, for example, in 2026, if you turn 64, this catchup contribution is no longer available to you, even if you do it in late December is your birthday, right? You have to be 60 or 63 throughout the year. All right? So, do not leave the employer match on the table. We’ve said this before, we’re going to keep saying it, right? This is  in your face. We won’t let it go.  but if you can do above and beyond the match, these are the maximum amounts that you can put in there, which is really helpful to know. Now, this slide is just introducing the facts between what’s a Roth versus a traditional and really this is referring to and the limits are referring to the 401ks that we just went through as opposed to an IRA. Miriam has a really awesome slide that’s coming up and some strategies about how you can get more money in a Roth. So, it’s really helpful to know what’s the difference between these two and then we’ll show you the mechanics of it behind the scenes. So, on the left hand side, we’ve got the Roth that’s in this teal color and it says I expect to be in a higher tax bracket in retirement. So, I’m choosing to pay taxes now thinking I’m lower than what I’ll be in the future. Well, what’s my benefit? I’m locking in that upfront payment of tax and then all the growth within there is tax-free. Here you’ll see the same contribution limits that we saw on the previous page. The requirement to hold  the funds for five years before your earnings can come out penalty-free. You want to take this out over 59 and a half.  Roth IRA, you can actually grab your contributions sooner, but we wouldn’t necessarily advise that because they’re taxfree. There’s all these nuances you can connect with your advisor specifically on. And the last comment there is saying if you’re over $150,000 in prior year earnings, then you’re going to be forced to do a catch-up contribution through a Roth vehicle. If you’re not in that circumstance, you can choose pre-tax or Roth. So, this is Roth, right? I’m choosing to pay the tax now so, that I can have all this awesome tax-free growth versus the traditional. The traditional is saying, “Hey, I’m in a higher tax bracket right now because I’m working. I got my salary. I got my bonus. I got my stock options. Whatever the makeup is of your income sources, deferred comp. You’ve got all these different pieces coming together and you’re in a higher tax bracket now than what you expect to be when you retire because those pieces will fall away. Then you want to be able to benefit from how do I avoid paying this tax now and defer it into the future. That’s what the traditional is doing for you. The only thing I will add is on the bottom of this slide it says RMD. RMD is standing for required minimum distribution. So, this traditional account is saying I’m deferring the tax and I’m deferring it and deferring it and deferring it until I choose to take it out at a later point in time. When I take it out, that’s when I owe taxes. The IRS is saying, “Hey, hold on. You’ve deferred this for many, many years. By the time you’re age 73, we have a minimum amount and a calculation we want you to take out. So, you can’t re remain at zero and defer it indefinitely. And that’s for individuals before born between 1951 and 1959. Then we jump over and we say, well, if I was born in 1960 or later, I have the ability to defer this tax deferred money as much as possible until age 75. At that point in time, I become subject to a required minimum distribution. So, that means that I have a very strong planning window between when do I retire and my income comes down until later years where it’s forced to increase. So, I probably have a lot of opportunities to do some creative things to optimize my tax situation which is exactly where Miriam will take us next. Okay. Yes. Thank you Danielle. Great lead into what I want to talk about now. So, you know, we often see that clients feel uneasy when it comes to the transition 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, let’s talk about how you can replace your income without maybe that wobbly feeling. The first chart here is depicting a household or a family making between 400 to 500,000 pre-retirement and is now retired. They are needing a draw of about 150,000 in living expenses. What you see here is those early retirement years, which are the light blue and yellow sides of the graph. The yellow bars are showing different income sources postretirement, like deferred comp, stock options, or maybe rental property income. you could be looking to supplement this period before social security kicks in with portfolio withdrawals, the light blue bars. So, that’s why the early years are so, important to have great planning in place. Look at what’s happening in the later years. They have all this income coming in from social security and RMDs, which Danielle just discussed, with occasional portfolio withdrawals. In those early years, each person will have their own unique situation. your situation might allow you to accelerate income. So, maybe you might do 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 a tax-free account. So, without early 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 help you relieve the stress and be able to see when and where your income is coming from. So, on the next slide we have the different sources of retirement income available to you. This is the chart. This is a 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, right? personal savings, social security, and employer sponsored plans. However, your sources are unique to you. That could be you are drawing from your retirement plan or  that you have property that produces rental income or you have pensions in place. The idea is basically to create a robust plan that relies on multiple income streams and creates that wellbalanced foundation for the retirement lifestyle that you want. So, now that we’ve looked at how to replace your income in retirement and the planning you need to 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 I can’t say enough, I love that slide because it’s all about how do we create income and take advantage of the fact that you’ve been deferring for all these years. Love that.  so, moving on from that what are some of the sources of your fixed income and your benefits available to you? First is social security. Well let me say first of all we have entire webinars on social security. Also a few slides behind here we’ll talk about Medicare because the two generally complement each other around similar ages for beginning. But these are complex topics that are unique to you and your circumstances. So, I’m going to give you some highlevel pointers, but please know that at Savant, we have a really nice break even tool that will break out  your specific circumstances, your benefit, at what age, and what are the claiming strategies available to you? And if you have a spouse, how do those two incorporate? Because that’s where it gets a little more complicated. So, I’ve been doing this for years and there are some rare circumstances where it is simple and straightforward. I love that. Don’t we love when things are clear and easy to do? But often it’s not. I need to write down on a table just like you will. What’s your year of birth? What’s your full retirement age? How long are you planning to work? What is your spouse’s benefit? What is the magnitude of your benefit compared to your spouse’s? What is the life expectancy between the two of you? And what are your portfolio assets and other sources of income so, that we can make a good decision for you specifically. And one other thing I’ll say before I jump into this is I always think of social security as dry powder. So, this says pros and cons of delaying till 70. Most of you on this call I’m going to assume your full retirement age is age 67, right? Because we’re at or nearing retirement. 67 full retirement age for social security planning purposes. If you get to full retirement age and you delay it until 70, you get an 8% raise each year, that’s awesome and it’s hard to replace or replicate with your portfolio. But there may be reasons you don’t want to do it. or circumstances may change for you where maybe your health changes or maybe you’re an aggressive investor and your portfolio remained very aggressively invested and the markets pull back and you would like another fixed income source because markets will pull back and they will pull back many times throughout your retirement span. So, basically what I’m trying to get at is you can have a frame for work for what you want to do with your Social Security benefits, but I call it like ready to be ignited. It’s dry powder. You can go in and start this thing up anytime  you want once you’re fully eligible and continue to lay along the way, but if you decide that that’s no longer the best way for you, then you can always begin it. You’re not missing out there. So, here we have cost of living adjustments. This year in 2026, social security for beneficiaries of social security, you get a 2.8% raise. And then we talk about the factors to consider health and life expectancy. Well, where I talked about this break even analysis that exists that Savant can run for you is I think about if I knew exactly what your last day on earth would be and your spouse too. We can come up mathematically with the perfect claiming strategy, but nobody knows that there’s risk involved. So, how do we weigh the pros and cons? And again, if you begin down this path and you’re in great health and that suddenly changes and it makes sense for you to enter the system so, that you can collect your benefits sooner,  then that all can be a reality and something that changes. Then we have earnings test before full retirement age. What does this mean? This means when I talked about social security, they care about when do you actually qualify for full retirement age under their purposes. When do you have your full benefit? That is at your full retirement age, which I’m going to assume is  age 67 for most individuals on this call. What this is saying is that if you go in and take your social security before your full retirement age and you’re still working, you’re going to be subject to an earnings test. So, I made note of what those amounts are. Let’s say that you’re not yet to your full retirement age and you’re still working. If you earn more than $24,480 in 2026, $1 for every $2 and benefit that you receive above and beyond  this amount will be withheld from your social security benefit. So, what you don’t want to do is jump in and then expect a certain benefit and then be surprised by the earnings test. You need to know it exists. You need to plan around it  the year that you reach full retirement age. So, if you file in the same year but before your full retirement age, they’re a little more forgiving and the earnings test begins at $65,160. Once you’re full retirement age, you can make as much as you want and collect social security. That’s not necessarily a good tax strategy, but you can do it. Then we’ve got listed spousal benefits. This is where it definitely gets complicated because you can be title entitled to the greater of one half of your spouse’s benefit at full retirement age or your own benefit. So, whichever one is greater. It can get complicated in the sense that if your benefit is significantly less than your spouse’s know that if something happens to either one of you, the survivor only receives one payment and they’re going to get the higher of the two, right? So, if you look at that, you want to be careful about, oo, if we have really different  amounts and they’re not very similar, maybe one of these we should maximize as much as possible, but also consider the difference in your ages and whether or not you should be claiming a spousal benefit or your own benefit sooner. So, there’s a lot to consider. , expouse benefits. So, if you were married for at least 10 years and then you are currently unmarried and if you’ve been divorced at least two years if your expouse is not yet claiming benefits, you can be entitled to a benefit on your expouse’s record up to 50%. So, there’s just so, many nuances that can be considered. And finally, the survivor benefits. What I just talked about is the one payment between the two of you. You want to be careful that you’re maximizing so, that the survivor is getting as much benefit as possible. All right. So, things to keep in mind before claiming earnings test. We just talked about this. There’s a reduction in benefits if you claim before your full retirement age for social security. Taxation of social security benefits. Did you know that social security is not fully taxable? It’s only taxed up to 85% which is awesome. a little benefit in the sense that it’s not fully taxable and you can be as low as 0% depending on how much income the sources of your income and that’s why when Miriam has that chart about your income you can control to some degree based on the flexibility of your income how much tax you’re paying. Now, also, when you sign up for benefits, you’re not automatically having withholding take place through your benefit being paid to you. What I mean by that is Social Security is going to pay your full benefit, but you’re not having the taxes withheld like while you’re working, right? And you have taxes through payroll being withheld. Now, you want to consider, well, how do I get my tax withholding to the government? One way it can be through your social security benefits. So, we just don’t want you to go ahead and file and then forget that, oh, I never did any withholding and then have a surprise at tax time, whether that be an additional taxes owed or possibly even a penalty. So, if you look at this, , Social Security doesn’t let you just write in whatever amount you want with withholding. You can select select either of these four options, 7, 10, 12, or 22. And it used to be that you could only do this by sending in on a form that is called the form W-4. That’s your voluntary withholding form. But now you can do it online. This is a recent change with Social Security. You can make the election yourself directly through the website. So, if you’re someone who does not desire to make estimated tax payments, maybe you have larger income through Roth conversions, you want to be careful and mindful of what taxes do you owe in the way of social security and how should you be withholding. So, don’t forget that step. Medicare. Oh my goodness, we’ve got a we’ve got a bullet here and a slide behind us, but this is such a complex topic. Medicare. We had before the enrollment period opened in October of this past year, we had a really nice webinar that was wellreceived just on the Medicare topic alone and it was very comprehensive and done with a partner that we work closely with in the way of Medicare planning and the health insurance brokerage field. So, I’d encourage you to go search our website to find greater details there, but essentially think about you have the ability to claim either  from your 65th birthday, the month of you turn 65, you have 3 months leading up to that, the month of or 3 months thereafter. So, a 7-month window. You need to be careful about whether or not you are remaining on employer coverage. If not, you need to be capturing the Medicare. , you need to be filing for Medicare to make sure that you’re being accounted for parts B and part D and there’s no penalties down the road. Same thing should be considered if you are still remaining on your plan and it’s a larger employer plan. You need to see whether or not your plan needs to coordinate benefits with Medicare. There’s just quite a bit involved with it. So, if you’re still working, , know that you need to make these considerations, but you can likely defer. If you’re not working, then you need to go in and file with your in your enrollment period. And the lower half of the page is saying Social Security Fairness Act and Government Pension windfall elimination provision. All of these were part of the Social Security Fairness Act that was signed in January of 2025. What I’m going to say here because this is not a new law now and those of you that are infect affected by it, you’re likely familiar with it. But in case you’re not, in years past, if you were part of certain government employees, which is fire, police, teachers, and you had a government pension, you could be subject to either the government pension offset for survivors or windfall elimination provision, which basically meant there was a reduction in your social security benefit if you had your own separate benefit. Please know that those rules are gone. They no longer exist. So, you’re going to have an even greater income stream. That’s a nice benefit and a win to you. The only thing that I want to point out here is that if you are someone in this circumstance, Social Security is pretty good about connecting up with your own personal benefits. But if you have this impacted in such a way of an expouse or you are a widowerower, you need to be able to connect those benefits with that person’s records and connect it directly with social security so, that you now have access to these funds as well. So, there’s a lot to consider. There’s a small percentage of the population that’s impacted, but you just want to make sure that you are getting your highest benefit possible at all time. Now, here’s the Medicare information. And again, Medicare, your pre-retirement, just know it’s there. Know that it’s health insurance that’s available to you. You probably heard u many seniors discuss this. And what’s the enrollment period, the three months prior to the 3 months following your birth month, and when you want to look out for though, what we’re going to discuss specifically in the way of planning is Irma. Now, Irma, you know, that’s can be a female’s name. I know one Irma in my life. It’s not your great aunt. What it’s referring to is the income related monthly adjustment amount. So, it’s an acronym. And Irma is something you could care less about and not even pay attention to until you get whacked up by the side of the head of it. At the end of the year, you get a letter that’s saying this is what your Medicare premium is for the following year and you’re shocked. Oh my god, it jumped so, much. What the heck happened? Right? Well, you just got hit by Irma. So, you need to be careful and thoughtful about your income sources because Irma is saying it has a base premium, which we’ll look at in just a moment for all individuals that are participating in Medicare. But if you earn over certain thresholds, all of the sudden your premium increases. And this is looking back two years. So, in 2026, we’re looking at 2024 income. So, in 2024, I hope you were making good decisions considering what your income brackets would be and how Irma is impacted. It doesn’t mean you want to make all decisions to avoid all of Irma, but there’s no reason to go just a little bit in the bracket when you can control it or if you  make a decision and not even consider Irma, oh, that’s so, so, frustrating. There’s also the ability that once you have a life circumstance change, so, in this example, for those of you on this call, you’re talking about gearing up for retirement. If you retire, again, they’re looking back two years, we have a form  that we can help you with. You can Google and look online, too, for to appeal the Irma and get that corrected, right? based on life defense, disability, , anything in those types of nature. There’s a list of life-changing events that they will look at your current circumstances and remove the Irma where applicable. So, just know it exists. Watch out for it. Here’s the table. So, 2026 is saying, “All right, what are these income brackets look like?” So, if you’re single and look at this second T, well, let’s look at the first first. It says $109,000 or less. or if you’re a joint filer 218,000. So, if your modified adjusted gross income is below that, your total premium is $22.90, right? And there’s no sir charge for part D. If we look to the next bracket, the minute you go over 100,000 9,01 $1. So, oh my goodness, please don’t just go over by $1. That was such a mess. Now you’re paying an Irma premium of $8120

 

and that makes your total premium of $284 and then you’ve got an additional part D sir charge of $14.50. So, if I put those two pieces together I’ve got an additional premium well a total a total premium I should say of about $300 a month versus I was at $22. Now, if you do that for a couple, I’m multiplying that times two and then 12 months in the year, it can add up pretty fast, right? So, if you look at the table at the bottom, you’ve got $487,000 in additional Irma charges if you’re over $500,000 single, $750,000 if joint, and that’s your additional sir charge every month. And then you have the Part D coverage of $91 on top of that. So, that’s a sizable amount of additional premium. That doesn’t mean you should make all planning to avoid at all costs, but you should not be making decisions that are in isolation of this. So, picture once you’re 63, you need to be thinking about Irma because 65 is when this starts impacting. All right. So, just like Miriam had a slide of the different sources of income, here’s the different ways to fund your insurance prior to 65. I think that’s probably the most common goal for individuals is I want to make it far enough to get  my retiree health insurance in place. So, one thing that’s often overlooked and a strategy to think of is the first bucket says Cobra. Cobra means that I can stay on my current employer’s plan for 18 months. So, that means at 63 and a half, if I really like the plan that I have and I want to keep it, I can pay for  my current cost of the plan plus my employer’s cost plus generally it’s about 2% administrative cost. So, let’s say 102% of the entire plan. So, it’s more expensive to you, but you’re keeping the plan and then it’s accessed to you and you have coverage until you go on to Medicare. There’s one option if and we have at the end if you have your HSA, you can use it to pay those premiums. Maybe you have a spouse, so, coordinating their insurance if they’re still working with you  will be part of that decision making process depending on your ages. And then we have the Affordable Care Act health insurance exchange. So, you can go out and purchase a policy on your own. You can play around with that now at healthcare.gov gov to identify what a potential cost is for yourself so, that you can plan that as part of your ongoing expenses in retirement. Maybe you’re going to work part-time so, that you can continue to secure a benefit related to health insurance. Or maybe you’re very blessed. There’s some individuals we work with that I say blessed. I think it’s a wonderful benefit. They have retiree healthcare, right, for various reasons. That’s a really great perk. So, that’s a source, too. And then again, we’re putting this orange almost red color to say, don’t forget your HSA account. You’re building this up so, that you can be able to have a bucket to draw from to support these health insurance needs in case you don’t want to work all the way till 65, right? How do you how do you access  retirement early and have coverage that’s appropriate for you? Okay, so, strategies for maximizing efficiency of tax planning. Miriam, I’ll turn it over to you. Yay. I get to talk about everyone’s favorite subject, taxes. So, you know, the key to taxes isn’t really avoiding them entirely, but optimizing them so, you’re paying the least amount of lifetime taxes. It’s hard to talk about tax efficiencies without referring back to this buck 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 are filling each of these buckets with different types of assets. 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, I’m going to briefly go over these three buckets. You have the tax-free bucket, which includes your Roth IRA, Roth 401k, and HSA, Danielle and I’s favorite account. then your tax deferred bucket with your traditional IRA or in some cases annuities.  then the taxable bucket which is your brokerage account. So, once you’ve established these three buckets, we want to make sure to place certain assets in the right location.  we refer to this as asset location. It’s kind of like organizing your pantry. You store items where they will keep best. So, you make sure the ones you use most often are easily accessible and so, on. So, let me give you some examples. REITs, real estate investment trusts and bonds can be placed in IRA because they are taxed as ordinary income. So, you want to defer the ordinary income tax and put those assets in a type of account that is also taxed as ordinary income. Individual stocks belong in a tax in 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, highest growth potential items should be placed in a Roth where appreciation will not be taxed. You know, another example that comes up regularly for new clients, we onboard at retirement. So, we we get this new client made about 250,000 a year, retired. , then they come to us with individual MUN bonds in their taxable account. Since MUN income is federally tax-free while they were working, this makes sense. With this newly retired client’s lower income, they are now in a lower tax bracket. It doesn’t make sense anymore. So, we’ll let the munis mature in the taxable account and then replace them with corporate bonds in 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. When you are retired, you have more control over your income. And again, with the proper planning, you can also have some control on your taxes, right? We want to we don’t want to hit Irma or we don’t want to get hit by Irma. So, next I’ll I’ll talk about Roth conversions. This is also a really popular topic, right? So, what exactly is a Roth conversion? Roth conversion means transferring funds from your tax deferred account into a Roth IRA. Prior to retirement, individuals might fund a Roth 401k or Roth IRA through sources of wages. Roth conversions are a very common planning strategy for our clients between retirement and the year that they have to start taking RMDs. They’re low income tax years. You’re simply choosing to pay your taxes today rather than a future later date so, that you’re able to draw in future tax-free from your Roth. So, what are the reasons to do this? You anticipate that your future income tax bracket might be higher so, you can take the tax hit now. Or you might have goals where you want to give assets to your children which have no tax implications. Also there are no RMDs with Roths. It can be true that even those individuals that will maintain a higher income tax bracket can benefit from Roth conversions primarily because of the tax-free growth in the Roth IRA over a long period of time. So, why don’t we all do this, right? Well, number one, it creates a tax liability. Again, if you just if you can do a Roth conversion and you’re just $1 over from that table that Danielle showed you, it can really increase your premiums for Medicare. Well, and then number two, it’s important to analyze whether any of these situations will even allow you to be in a lower tax bracket. The reason that those investment buckets are so, important for the individual making the 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. But also consider some of the factors like Irma and how much you are accelerating your income with a conversion. So, now that we’ve talked about the rush conversions, I just want to jump into some tax strategies here. So, I just have five quick  tax strategies I want to briefly touch on. Number one, optimizing your lifetime taxes. 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. Number two, adjust the income timing. This is something I discussed earlier in this presentation. You know, those early retirement years can present an opportunity to accelerate or deacelerate 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 could look like. Number three, tax loss harvesting. Markets don’t always behave like we want them to, but if you see yourself running into a situation where 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 the following year. This strate the strategy behind this is to sell a security at a loss in your taxable account so, you can use the loss 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 time to get into it today but just know that that is that’s a great strategy to deploy to lower your taxable income. And then number four, state tax planning. People love to relocate to states looking for warmer climates, closer to family, and hopefully have favorable tax treatments on retirement. Income state rates do vary by state to state. So, you also need to consider property and estate taxes in the new state. You know, taxes are like termites. They can just eat away at your portfolio without the proper treatment. And then number five, finally, charitable gifting strategies. I know we have a webinar in and itself about this and there are many gifting strategies that can reduce your taxes. I’m just going to touch on two today. 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, we use the QCDS to help satisfy RMDs and exclude donations from taxable income. 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 will not pay any taxes if they are a 501c3, and you will benefit from a charitable deduction. Essentially, you’re able to donate a larger amount to a meaningful cause to you when you initially paid $1,000 for the stock. Now, this only makes sense if you’re charitably inclined. We don’t suggest people do this just because all of these, you know, all these strategies are like assembling a puzzle, right? But 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 here, Danielle will talk about how to build a fulfilling retirement.

 

Oh, we’ve said so, much of like we can only touch the surface here, right? So, that’s the same here in this scenario. Building a fulfilling retirement. Oh my goodness, that’s there’s so, much involved with that. What I would say is that I have the luxury of being in this position for a couple of decades now and helping four to five people retire every year that I feel much better prepared than the average person. I’m sure Miriam feels the same and also at Savant across Savant in our sharing ideas we’re like we’re helping people every single day retire. So, what does it look like? I would say the biggest predictor of success is what are you retiring to and have you defined it and have you maybe done some practice steps to see what that looks like. It doesn’t mean you can’t change and pivot in retirement and change what you’re interested in. But what I mean by that is if you are someone that’s really energized by work, your career,  that’s where your sense of pride comes from, where you spend the majority of your time, and then you remove that without a plan. What where does your joy come from? What does that look like? And you kind of don’t want to flounder at the beginning of that. You want to feel good. You want to be excited about what you’re going to do. So, if you’ve committed to maybe watching some grandkids during  retirement, have you ever tried that? Do you really want to spend two days in a row with really small children? Maybe you do. Maybe you thrive. Maybe you try that a few days and that’s not the best experience for you.  it maybe you want to build time with other relationships, maybe you want to pick up hobbies that you never had enough time to dedicate to, whether it’s golf, yoga,  a lot of traveling, right? These are all things to be excited about, but really spend the end of your gearing up for retirement giving some really careful consideration about what this looks like for you and practicing it. One thing you want to be careful about is every day becomes a Saturday. So, you may be like, “Well, I’m no longer commuting. I no longer have the work clothes, the suit, or whatever you’re wearing, and I don’t need these types of things.” Well, what are you going to spend your time doing? Right? And that could be really low cost or that could be really high cost. So, you really should have some idea about how this fits into your financial plan and your level of success and happiness. I’d say most everyone, we’re all just burned out, right? You you go into hibernation mode for the first month or two and you’re just catching up on sleep. You’re organizing those files in your basement, that paperwork that you’ve put aside for decades, and now you’re getting everything in good order. Then you come up for a breath of fresh air. Well, what do you what’s next? What do you want to do? We want you to be excited about that. We often find that a lot of people don’t spend enough in retirement. We’re kind of in the opposite end of the spectrum where our clients have such strong habits of saving that becomes Miriam and I’s job to encourage them to spend, to gift, or if not, what’s the ultimate legacy goals? So, I’d say that’s how that all comes together. , one of the last pieces here, you’ve possibly seen this before if you’ve joined another webinar, but there’s a link in the chat. You can take our financial health assessment. I want to get back to a few questions before we completely run out of time today because we have a lot of content that we covered. But essentially, these are the 10 key areas at Savant. We focus on charitable planning, which Miriam just talked about. A lot of income tax planning, that’s a big part of what we do. education planning, risk management, retirement planning, investments, business succession planning, all these different things. Taking this health assessment really gives you a checkup to say, where do I score in these different areas and how do I prioritize where are my areas and opportunities for improvement? Okay? And again, this is all education and not specific to your situation because even if I knew everything about you, I’d have to sit down and analyze it. So, we can’t answer every question. So, please follow up with Savant to get some answers to your specific questions and the ones that came in. Miriam, do you want to start with something that you saw? Yeah, sure. So,  Danielle, this is it’s a good one for you. What happens if my spending changes dramatically in the first [clears throat] 5 to 10 years of retirement? Oh, that’s very well said because it’s it’s such a common thing. We in fact we plan for it. And what I mean by that is I don’t know. I just I can’t sit still. I use my hands. And today I’m saying go go go. I don’t know why I’m saying go go go. But the go- go years like when you’re early retirement, you want to travel for a lot of individuals. You want to see the world. There’s a lot of things to be done that you may not be doing in your 80s and thereafter, right? So, we plan for that travel budget upfront. It’s not uncommon to plan for a second home, right? We put those expenses in there, maybe a car replacement every so, many years at the beginning of retirement. These spikes are so, common and in Miriam’s chart about income, you did see some spikes because that was unique to that specific individual. We would create the same for you. So, I would say we very much encourage it as long as your plan allows for it. We use Monte Carlo to stress test and make sure that you can survive all scenarios. And I don’t want to discount that in the later years of retirement, it’s not uncommon to have large expensive medical expenses. So, we need to balance and we plan for all these different things, but please know that’s a really common place to be and we plan around that. Okay.  then for Miriam, oh this is how do I know whether it makes more sense for me to draw from my portfolio in those early retirement years versus accelerating my income or doing Roth conversions? I love this. This person was definitely listening closely. Definitely. So, again, when we do this kind of advanced planning and look at that chart that I went over earlier, we want to see what your potential RMDs are going to be for you in that age 73 to 75 range. If you’re going to have if you built up a really big pre-tax bucket now and you’re going to have really sizable required minimum distributions, you know, in the 100,000 plus range, you’ll be in a higher tax bracket because you’ll also have social security income. So, you know, if we know that that’s going to happen in your early with your early income, early retirement income being lower before social security and RMDs kick in, those years may be an ideal for accelerating income or doing partial Roth conversions. If you’re in a high income year because of things like deferred comp or rental income, it may take may make more sense to draw from your portfolio instead. But again, like a a little deep dive or a simple tax projection helps you compare both paths and choose a strategy that that keeps your your lifetime taxes as low as possible. I love that. So, we have a lot more questions in here, but we’re up on the hour, so, we kind of have to go. But please, if your question wasn’t addressed, make sure it’s in the Q&A so, that Savant can follow up with you directly. And we thank you for taking the time to be here. And please follow up directly with your adviser. Hopefully this sparks some conversations as you prepare for retirement and we want you to be very successful. So, thank you. Thanks everyone. Bye. If you enjoyed this webinar, visit savantwealth.com/guides and download our complimentary guidebooks, checklists, and other useful financial resources.