Manage episode 291049460 series 2846013
Big Number & Little Number in Retirement
Ford Stokes2: [00:00:30] Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees and surrender charges as described in the annuity contract guarantees are backed by the financial strength and claims paying ability of the issuer. Welcome to the Active Wealth Show with your host Ford Stokes. Ford is a fiduciary and licensed financial adviser who places your needs first. He’ll help you protect and grow your wealth. The Active Wealth Show has grown because activators like you want to activate their retirement planning with sound tax efficient investing. And now your host, Ford Stokes.
Ford Stokes: [00:01:07] Welcome to the Active Wealth Show Activators, I’m Ford Stokes Chief financial advisor. And we are going to have an action packed show today. I’ve got Sam Davis, our esteemed executive producer here with me. And we are going to be talking about a couple of things. No one is going to talk about big number and little number in retirement. What is your big overall portfolio number? And then also what is that little number? And we’ll talk about that here after we did the market update. But we’re also going to talk about tax free investing today and how, again, there’s only. Two different types of tax free investments and we’ll talk about that we’ve we talked about a few weeks ago and we got an overwhelming response. We wanted to make sure we revisited that and shared a couple of two new Rothblatt are examples and also a brand new example on tax free income that you can generate on your very own that you can never outlive. And we’ll do that in segment four. So you’re going to want to be around for that. So first, let’s get started and talk straight into our market update your active wealth market update. The worker filing for jobless benefits decline to five hundred and forty seven thousand last week, a new pandemic low that adds to evidence of a strengthening labor market and overall economic recovery. Initial unemployment claims, a proxy for layoffs, fell thirty nine thousand last week from an upwardly revised five hundred eighty six thousand the prior week.
Ford Stokes: [00:02:41] The Labor Department said Thursday. That put new claims on a seasonally adjusted basis below six hundred thousand or two consecutive weeks in mid-April, their lowest level since twenty twenty, the four week moving average, which smooths out volatility in the weekly figures with six hundred fifty one thousand also a pandemic low. The median sales price for previously owned homes climbed to a record high in March as a shortage of homes during the pandemic limited transactions, the National Association of Realtors said separately. And then also existing home sales dropped three point seven percent in March from February to a seasonally adjusted annual rate of six point zero one million, marking the second straight month of sales declines. Jobless claims remain higher than their pre pandemic levels. The weekly average in twenty nineteen was about two hundred eighteen thousand. But last week’s drop extended downward trend since the start of this year and raised expectations for further declines in coming weeks. This dip in jobless claims looks good in isolation, but what really matters is that it confirms that last week’s unexpected plunge was no fluke, said Ian Shepherdson, chief economist at Pantheon Macroeconomics. And also, a lot of folks are kind of bracing for what is looking like this sweeping, crazy climate change plan that the Bush administration is coming out with. Listen, we’re all for green energy and a cleaner planet for sure, and better oxygen and cleaner water at the same time.
Ford Stokes: [00:04:21] What people don’t understand is that a majority of our power plants are our power by coal plants, which also dramatically contributes to tough stuff within the environment as well. So stocks kind of slide ahead of Biden’s climate summit and we’ll be looking out for what happens on that. And then also, American and American Airlines posted a one point two dollars billion loss and also delayed getting new jets. And also the indices were mixed on Thursday with the Dow Jones Industrial Average down eighty seven points in early trading and the Nasdaq up thirty six point to zero points or up point to six percent. And the S&P 500 was down just up one point for three, which is point zero three percent, respectively. All right. And so what we’re talking about today, we are talking about two things. We’re going to talk about your big number and your little number in retirement. And we’re also going. To talk about. Tax free investing, and I think you’re going to find that to be something that’s fairly remarkable. These are kind of six figure secrets that can save you over six figures during your thirty five plus year retirement, something you definitely want to consider. But the big number in retirement is your overall portfolio number, your liquid net worth. It doesn’t include the house that you own, but it could include rental properties that generate income for you. But just the overall. Value of those properties, but mainly it’s it’s the amount of money you’ve got in your IRA, your portfolio or your investment, your investment accounts, your Roth IRA or all those combined.
Ford Stokes: [00:06:17] That’s your big number. And your small number is your income, the monthly income number that you generate through retirement. And guess what retirement is? More about income than anything. And you’ve got to do a great job at figuring out how can you generate a consistent income? From your portfolio every single month, that is the efficient, market, efficient and tax efficient, and also you heard from us earlier. If you’re curious to what to do in activator as an activator, someone who listens to this radio show, it’s someone who. Wants a tax efficient, market efficient and the efficient portfolio, we say, and all kinds of different order, but we but that’s what it means. You want a retirement where you’re not just giving money to that silent partner in retirement. Call the IRS. What’s interesting about the IRS as your partner in retirement, they dramatically affect your small number because if taxes go up in the future and you’re charged at ordinary income tax rates, guess what? You’re going to be paying them more and more money. What’s interesting about this partner with the IRS is that they there are somebody only wants money from you when you distribute money to yourself. And they also don’t tell you how much of a cut they’re going to take until after you’ve earned the money, until right before you write, when you distribute the money.
Ford Stokes: [00:07:44] And that’s not the kind of partner you want in retirement, so. Why don’t you ask yourself this question, why don’t why do I have a partner like this in retirement? Why wouldn’t I kick them out of being my partner in retirement? Why wouldn’t I kick them all the way out? So they’re not my partner and either my big number in retirement and also so they’re not my partner with my small monthly income number. That is incredibly important to me. So I can make ends meet. I can or try to help out with a rehearsal dinner or a. You know, or sending kids to college or just helping out, hey, can you help cover groceries this month? Because, you know, the primary breadwinner in your child’s family lost their job or something. But also, if you want to travel for for your retirement, at least in the first 10 years of your retirement, where you can really enjoy it. Really taking care of that small number and trying to be as efficient in distributing. Income to yourself during retirement is incredibly, incredibly important, and one of the best ways to do that is implement a Roth ladder conversion and kick the IRS out of your retirement. And the other way is to invest in a product that can give you a tax free income that you can never outlive and also give you a probably death benefit on the primary breadwinner as well. And what else is great as you can just invest in this product for, say, five or 10 year period? Call it a five or a 10 pay and you can enjoy an income that is one hundred percent tax free.
Ford Stokes: [00:09:30] And we’ll get into that in segment four, but. In growing your large number and we only have a few minutes left, a couple minutes left here in the segment, but in growing your large number, you also want to make sure that you understand the fees you are paying. The correlation of your assets and right now, you definitely want to understand the quality of the bonds. That you hold in your portfolio and what’s your exposure in potentially losing market value on your bonds, not necessarily losing the income that your bonds pay out? And the best way to do that is just visit active while dotcom and click that set an appointment but in the upper right corner and we’re happy to give you a free, no obligation retirement plan to age ninety five, where we address your large number and your small number will also give you a portfolio analysis. You understand the fees you’re paying, the risk you’re taking with your current investments. And also for many of you, you’ve been in the same investment portfolio at 60 40 portfolio for years. Right now that 40 percent of your portfolio is quite the boat anchor drag on your portfolio because in a slightly rising interest rate environment, your bonds are worth less.
Ford Stokes: [00:10:49] Then the new bonds that come out with a higher interest rate, so we want to be careful about all of those things we’re going to talk about are were the week right. When we come back in segment two, I think you’re going to want to hear that we’ve got our beating bank CD segment in segment three. We’re going to also play two new excerpts. We’re towards the end of my Annuity three 60 book. And we’re we’re going to play Chapter 16 and Chapter 17. The basically talk about. How to build a successful retirement and how to take risk out of your portfolio with Chapter 16 by investing a portion of your bond portion of your portfolio in fixed index annuities and then Chapter 17, I think you’re going to really like hearing that because you can implement a Roth later conversion within an annuity. Most people don’t know that or talk to you that in segment four, but you’re listening to well show right here on AM. Not sure the answer. You’re going to want to come back and hear a word of the week beating bank CDs and how to reduce risk and reduce taxes in your portfolio right here on AM. Not sure of the answer. We’re so glad you’re with us. And we’ll be right back. Welcome back, Activators Broad Strokes, the chief financial adviser right here on AM 920 answer and let’s go ahead. We’re going to go straight into our Word of the Week.
Ford Stokes2: [00:12:29] Now, here’s our successful retirement. Word of the week
Ford Stokes: [00:12:37] Or the week is retirement income. Retirement income can include Social Security income benefits, as well as many benefits from annuities, retirement or profit sharing plans, insurance contracts, IRAs, even rental income, et cetera. The simplified method. This method is used to calculate the tax free portion of each pension or annuity payment as well. And so that’s really the definition of retirement income. It’s income that you get on a monthly basis that can help. Pay for your expenses to live during retirement, also for many of you, and that’s what we’re calling the small number and really it’s the most important income in retirement is one of the most important things out there. It’s not just your large number. Right. Also, if you think taxes are going to go up in the future, then I encourage you to consider kicking the IRS out of your retirement account, your IRA, your four on your four three be your four fifty seven year SEP IRA. Simplify your simple IRA. If you have any of those accounts, I would encourage you to give our office a call at 770-685-1777 again 770-685-1777. Our goal is to make sure that we make your small number as large of a number on a monthly basis as possible so you can really enjoy retirement, especially that those first 10 to 15 years where you can travel and really enjoy and see the world. Now that we’re done, we’re getting over the covid-19 pandemic. But also, one of the ways to do that is make sure it’s a tax efficient.
Ford Stokes: [00:14:20] Plan and in segment four, we’re going to talk about how to implement Roth conversions, and then we’re also going to talk about how to implement a tax free income. By buying a single product and we’ll share that in segment four, but. Let’s talk right now about the retirement income gap and specifically. The folks with your small number, did you know that? Every single married couple, at least one of the folks there in the married couple are going to face at least a thirty three percent drop in Social Security income in their lifetime guaranteed. That’s the surviving spouse. So let’s say. The male who’s worked all his life outside the home. And the wife has worked harder than the husband inside the home by taking care of the kids, kind of getting a manager, driving around ladies, but let’s say the husband has a thirty thousand dollar a year. So security income benefit and let’s say the wife and both of them evolve at age sixty seven or sixty six in a few months, so they they both reached for full retirement age. While the husband is making thirty thousand dollars a year in such income benefit, the wife can get 50 percent of his and she’ll make. Fifteen thousand dollars a year, so the two of them combined is forty five thousand dollars a year in such great income benefits, and that’s good limits. That’s a good income that works. And you can usually make ends meet on that, especially if you have your house paid off.
Ford Stokes: [00:16:08] But at the same time, I want to be clear about something. Guys, we usually pass away first when the male passes away. The wife is going to lose her Social Security income and she’s going to get his and she’s guaranteed to lose fifteen thousand dollars in income on the day that he dies. Guys and gals, we need to be planning for that eventual date, we need to plan to make sure that our law, our large number, is large enough to deliver a small number that’s large enough so that we can handle this eventual. So security, income loss, I mean, listen, Social Security was created during the Roosevelt administration to provide a retirement income for low wage earners and low wage income earners. Now it’s the number one or number two source of retirement income for virtually all Americans. I mean, it’s literally a vast, vast I mean, ninety five plus percent of Americans, the Social Security income is either the number one or number two source of income in the United States. And don’t just take my word for it, you can check out as the saga of an IRS dot gov to. See all the proof right there and many of their public publications, and so we’ve got to do a better job at planning that small number and we can get into it right now. Here’s how you implement a Roth ladder conversion to help you maximize the small number, but also maximize the large number. And I’ll give you some examples in segment four.
Ford Stokes: [00:17:54] But I’m going to tell you a Roth ladder conversions where you’re converting a portion of your IRA to your Roth IRA each year. You have to pay taxes on that in the same tax year that you take the conversion. And in fact, you really need to pay the tax on that within one quarter. Within that quarter. But what’s nice about that is you kick the IRS out of taxing on the growth of that principle that is remaining and also the best way to do a Roth later conversion is take an investment account and take a portion of that investment account out, which is a taxable account. I’m doing air quotes right now of taxable accounts as your investment account to be a joint investment account, or it could be your individual investment account. You’ll see the say you’ve got one hundred grand, you want to convert and you’re at a 20 percent tax bracket. You take 20 thousand dollars out of the investment account, let’s say you got one hundred grand in an investment account, you think 20 grand out of it, you got eighty thousand left over the investment account. But the one hundred thousand dollars moves from your IRA to your Roth IRA, a dollar for dollar. That’s right. One hundred percent of the dollars that you move from your IRA to your Roth IRA, a move. Into a tax free goes from a tax deferred environment within the IRA or for like a. And into a Roth IRA. And if you you can’t really do a Roth IRA conversion until you actually have money in an IRA, you don’t really implement.
Ford Stokes: [00:19:32] And a Roth IRA conversion without money, first being moved from the car into. And IRA accounts, you move money from an IRA account to a Roth IRA to implement a Roth letter conversion. The reason it’s called a ladder is because you want to implement a little bit each year for five years in a row and each year is considered a rung on the ladder. And that’s really important because we want to keep you below the. Twenty four percent tax rate, we want to keep you at twenty four percent or lower when you’re doing conversions right now. Did you know from nineteen sixty to nineteen sixty three, the current twenty four percent tax bracket? Is, believe it or not. Was fifty six percent, that’s eight percent higher. That’s eight percent higher than 2x of where we are right now. So what does that mean to you? Let’s say you take out ten thousand dollars. For a cruise, you want to go on. OK. Well, if we go back to where we were during the Kennedy years, which was when a Democrat was in power. You’re looking at. Giving the IRS fifty six hundred dollars and you get forty four hundred dollars to pay towards you going on the cruise, so that means you need to you need to literally take much north of a lot more than twenty thousand dollars to be able to go on your ten thousand dollar cruise. I don’t think the IRS deserves that much of your money.
Ford Stokes: [00:21:10] Many people don’t realize the IRS is a silent partner in your retirement account and you need to kick them out. You absolutely do. And we do this every week. And I’m going to give you two great examples of real life people. We change the names to protect the innocent that helps them. Make their big number more attractive and they’re big, no more efficient. And then also helps their small number. Be great and tax free and allows them. To take a future tax increase risk off the table and listen, as a fiduciary, it’s my job to take risk off the table for my clients, and that’s exactly what I’m doing. Every week I do it all day, every day I preach Roth conversion because I believe in it and you also you really need to start doing Roth conversions before you have to start taking Ahmadi’s at age 70 to. So we need to kind of do that between the time you retire or the time you’ve got depressed income where let’s say you got laid off and you want a year without really working very much, but you had, you know, some reserves you were living on, but you didn’t have a lot of income that be a great year to do a conversion. So that’s something to consider. But again, our goal here is to try to make sure that we’re prepared to fill that retirement income gap. And we can do that through a couple of strategies. One would be a fixed index annuity that you can invest in or indexed universal life insurance.
Ford Stokes: [00:22:45] That you can generate an income that you can never outlive, and so when that when one spouse passes away, guess what? The money, the income is there to help backfill. That retirement income gap that is caused by the loss of 30 at least thirty three percent of the Social Security income that comes into the household. Anyhow, listen, we’re going to talk through. In next segment about beating banks CDs, we’re going to play Chapter 16, which is about how to reduce risk in your portfolio by investing in fixed index annuities. We’re going to play that from an excerpt from a book, Annuity Three Sixty. And we’re so glad you’re with us here on the AM nine 20. The answer on the active wall show. We also want to thank you for making our show the number one most listened to show on Amnion to answer on the weekends. You folks are awesome and we really appreciate you. And we’ll be right back. We’re going to talk about beating bank CDs or to talk about how to reduce risk in your portfolio. I want to talk more about tax smart investing, tax efficient investing with Roth IRA conversions and how to generate a tax free income for life that you can never live. The Active Wealth Show right here on AM nine 20 the. Welcome back to Active well show Activators on board stocks, your chief financial advisor, and Sam, let’s go ahead and get right into it. Let’s play our beating bank CD, Sounder Beat.
Ford Stokes: [00:24:24] A higher rate of return from your safe money. Listen up. It’s time to beat the bank CD rates.
Ford Stokes: [00:24:32] We’re talking about beating bank CDs. Many of you still own bank CDs. And maybe they’re paying you two or three percent because you’ve got them a couple of years ago when they were about the sunset. And if you go to look to put money back in bank CDs right now because you just want to you’re worried about the market or whatever that is, you’re worried about what the Bush administration is going to do. I would encourage you to consider investing in either a multiyear guaranteed annuity that’s safe, that we’ve got a two year multi-year guaranteed annuity that’s offering two point one five percent. We’ve got a three year multiyear guaranteed annuity that’s offering two point four percent. And we’ve got a five year that’s offering three point zero five percent. And that’s four to six times more than what a typical bank CD is paying. And if you go to SunTrust or or through us now or Bank of America or any of those banks and ask them for a bank CD, they’re going to pay you like point zero three or point zero five of one percent. I mean, it’s so small that you’re basically paying them to take your money and protect your money. And that’s crazy. I mean, don’t do that. And then the other big one is investing in a fixed indexed annuity that can get you a 10 percent bonus to pay you five to seven plus percent. I’ve got clients that may never seven percent last year with the Silak Tetum bonus fourteen, they got a 10 percent bonus on top of it. So because the Barclays Atlas five index and the year twenty twenty, get this, it made seven point one five percent and the Barclays Atlas five and the teams time bonus 14 was offering ninety five percent of the growth of that index.
Ford Stokes: [00:26:15] So you had ninety five percent of seven point five one. That’s pretty great stuff without your money being at risk in the market. So the way to beat a bank CD is to invest in some type of annuity, whether it’s a multiyear guaranteed annuity or a fixed index annuity that can get you market like gains without market risk and also give you a great income. And right now, what we’re going to do is we’re going to talk about how to reduce risk in your portfolio, specifically the risk associated. And there’s a bunch of risk associated with bonds. You’ve got longevity risk, market risk, inflation risk sequence of return risk. And consider I would just encourage you to consider a smart plan that would include smart risk and smart safe. So, Sam, let’s go ahead and play Chapter 16, which is reduced risk in your portfolio with fixed index annuities. Also, if you want a copy of my free book, all you have to do is visit Annuity 360 dot net. That’s Annuity 360 dot net. Or you can just send me an email at four at Active Wealth and we’ll send you a free, hard copy of my book, Annuity three sixty. Or I’ll send you an ebook, copy your choice and go ahead and play Chapter sixteen. Therefore, Sam, in how to reduce risk in your portfolio with annuities,
Ford Stokes: [00:27:34] Chapter sixteen, reduce risk in your portfolio with annuities. Big idea. An annuity can protect against several risk that can affect retirees and pre retirees and offer a better financial safety net than other investment types. One of the biggest benefits of investing in annuities is reducing risk in your portfolio. With current market volatility, pre retirees and retirees are more concerned than ever about their retirement funds and protecting their hard earned well. We believe that annuities can be the answer to risks in your portfolio. Longevity risk. Retirees and pre retirees are concerned about outliving their wealth. We have offered some strategies in this book that will stretch your retirement funds, such as following the four percent rule. But annuities can offer even more protection against this fear. We are living longer, so it is important to plan for at least three decades of retirement. An annuity can help create an income you can never outlive. Your money will last for your entire retirement by utilizing monthly, quarterly or yearly distributions from your annuity account. After your money grows during the accumulation phase, market risk fixed indexed annuities can protect you from market risk. These annuities are not actually invested in the market. They’re only tied to a specific market index. This means that you enjoy all the benefits of your market index when it performs well, but you are not exposed to any of the market risks. Should your index perform poorly, you will either make money or remain flat. You will never lose any money. Zero is your hero. Inflation risk. Annuities can offer riders that can help you adjust for inflation, even though a rider might reduce your payout, protecting yourself from inflation will ensure that your money lasts and is not exposed to any unnecessary risk.
Ford Stokes: [00:29:24] It is important to have an annuity with a payout linked to the consumer price index or CPI, instead of one that increases at a fixed rate each year to ensure you are protected against inflation risk and annuity. The increases at a flat rate each year does not offer sufficient protection against inflation sequence of return risk. An annuity with a lifetime withdrawal benefit can counteract the effects of a down market at the start of your retirement. Research conducted by retired one has shown that you can flip 15 years of returns from retiring during a recession to retiring during a market that is up and completely change your retirement outlook. The positive returns would offset your withdrawals and grow your assets before your account felt the effects of a negative return. Consider a smart, safe plan with a smart, safe plan. Your money is invested not in the market. The characteristics of investing, not in the market, include growth with safety market upside limited to no downside principal and gains protection. Low cost zero to one percent annual fee time horizon of seven to 14 years can earn five to seven percent annually. Options are available for guaranteed income. Here’s some examples of not in the market investing bank CDs. The annual percentage yield API is about one to two percent. Your time horizon is typically one to three years and you cannot access the funds until the contract is up.
Ford Stokes: [00:30:54] Treasuries, the API is about three percent. Your time horizon is 10 years and you cannot access the funds until the 10 years is up. Fixed annuities, the annual percentage yield is between three and four percent. Your time horizon is typically four to seven years. You are able to access the funds during the contract period, multi-year guaranteed annuities or MYGAs. You get between two and four percent growth on your principal depending on the duration of your policy. This is less growth than a fixed indexed annuity, but it is guaranteed the annuity company is required to pay you the rate they promise for the duration of your policy. Fixed indexed annuities you receive between five and seven percent growth on your principal. The time horizon is seven to 14 years and you do have access to the funds in your account if you need them. A smart, safe plan does not invest your money directly in the market. Your investment is tied to an index without being invested directly in it. This means that you get a portion of the market gains without the market risk. You may want to consider investing in a fixed indexed annuity over other not in the market options. If you invest in treasuries or CDs, you will lose ground in your investment due to inflation. Investing in a fixed index annuity will likely cut down on your inflation risk. We prefer accumulation annuities because they minimize your risk in several areas and they lock in your gains for the use of point to point protection periods, meaning you won’t lose money
Ford Stokes: [00:32:25] And wanted to make sure you understand the big idea there that we said its annuity can protect against several risks that can affect retirees and retirees. And it also offers a better financial safety net than other investment types. You just heard how it kind of addresses and and it kind of combats longevity risk, market risk, inflation risk and sequence of return risk. I just wanted to reiterate a smart plan. It’s kind of a two part or even three part way of looking at it. So a smart financial plan involves smart risk, which should be tactical asset allocation. If you’re trying to get into smart safe with fixed index annuities or multiyear guaranteed annuities to do bond replacements to replace 40 to 40 percent in your portfolio, that’s bonds, usually 60 percent. Is usually in equities for a retiree portfolio using more and Foleo theory with what Harry Markowitz did in nineteen fifty two. That’s a very almost a 70 year old. Investment strategy. You’ve got an opportunity here to have a new 60 40. You’ve got an opportunity to invest a fixed indexed annuity that can get you tax deferred growth and market like growth without market risk. So that is something we want you to consider. And you can get my free book. All do is visit annuity three 60 dot net or you can visit active Web.com. And we’ve got a slider and a section on there that offers the free book and we’ll send you a free copy. Absolutely no cost to you. And you can also call our office at 770-685-1777 if you want a Roth ladder conversion consultation.
Ford Stokes: [00:34:14] Absolutely for free. No obligation to you. So you can understand and make an informed financial decision about how to get more tax efficient in their portfolio. We are happy to help you. We do that because we’re fiduciaries. We need to put your needs ahead of our own. Again, you can call our office at 770-685-1777. Debre and our team are already standing by to take your calls. And again, you just give our also call it 770-685-1777. Or you can visit activewealth.com and click. That set an appointment but in the upper right corner and you get booked right into my calendar. You get to talk to me, the host the of well show and I’m a fiduciary Series 65 licensed advisor. I got an MBA for finance econ concentration and also life and health license here in the state of Georgia and other states. And we look forward to helping you. And we come back. We’re going to dive into these Roth IRA examples. We’re still going to talk about your little number and your big number within retirement. And we’re going to talk about how to generate a completely tax free income that you can never outlive. The actual show right here on AM. Not sure the answer will help you come right back. These important Roth latter conversion examples and how to generate tax free income and. And welcome back, Activators.
Ford Stokes: [00:36:03] Segment four here on the actual show, and we’re so glad you’re listening to us here on AM, unaware of the answer. And one of the reasons why we exist is we’re trying to take future risk off the table for our clients. We also try to educate everyone here on this show and we’re going to be talking about Rothblatt or conversion examples and also how to generate tax free income that you can never outlive here on this in this segment for. But a lot of people don’t understand that you can implement a Roth ladder conversion within a fixed indexed annuity if you’ve got qualified funds in an IRA for OK for fifty seven or Sep IRA or simple IRA. So or for three B so. Here’s the deal, we’re just going to ask you to consider implementing a Roth IRA conversion, even in part even if is the bond portion of your IRA. And invest in fixed index annuity, but did you know you can also do the Roth conversion within that annuity and we’ve got a chapter on that in my new book. It’s called Chapter 17. You can buy an annuity with your Roth IRA account. And so I would encourage everybody to really listen to this chapter carefully. It’s only a three minutes long. And Sam, go ahead and play that. And when we come back, we’re going to talk about those Roth examples and we’re going to kind of give some impressions on this Chapter 17. So go ahead, Sam, and play Chapter 17. You can buy an annuity with your Roth IRA account.
Ford Stokes: [00:37:43] Chapter 17, you can buy an annuity with your Roth IRA account. Big idea. Many people don’t know this, but there are at least five annuity carriers who allow you to invest your Roth IRA account into a fixed indexed annuity. And many others are beginning to follow suit. A Roth IRA is an individual retirement account IRA under United States law that is generally not taxed upon distribution, provided certain conditions are met. The principal difference between Roth IRAs and most other tax advantage retirement plans like IRAs, four one KS for three B’s, 450 Sevan’s CEPA, etc. is that contributions into the Roth IRA are invested with after tax dollars and qualify withdrawals from the Roth IRA plan are tax free and growth within the account is also tax free. The Roth IRA was introduced as part of the Taxpayer Relief Act of 1997 and is named for Senator William Roth, who introduced and sponsored the legislation. This may surprise you, but you can actually invest your Roth IRA account into a fixed indexed annuity as of the printing of this book. There are five annuity carriers that will eagerly accept a full Roth IRA conversion from your IRA. There are only three annuity carriers that can handle partial conversions, but more carriers are adjusting their business operations and illustration software to accommodate Roth IRA investments into their annuity products.
Ford Stokes: [00:39:10] The largest annuity care in the United States allows for Roth IRA investment into their annuities. They allow Roth IRAs in all of their current fixed indexed annuities, full and partial, with some parameters, including number one. Roth conversions will create new policy numbers so they will show in separate accounts. But this does not change any product feature or the surrender schedule. With the annuity product number two, conversions must be at least some product minimum premium between ten thousand and twenty thousand each. Therefore, you cannot implement a Roth conversion that is less than ten to 20 thousand dollars depending on the annuity product. The title of my next book is Taxes are on Sale. I will cover all the aspects of Roth IRAs, Roth IRA conversions and why now may be the best time to kick the IRS out of your retirement account with a Roth IRA conversion. I believe that taxes will likely increase in the future. So strategic Roth latter conversion will help reduce your future tax risk and save you six figures in taxes paid during your thirty plus year retirement. Please do not let your current Roth IRA account or your desire to convert your IRA to a Roth IRA impede you from investing into a fixed indexed annuity.
Ford Stokes: [00:40:28] So we just listen to the fact that you absolutely can implement a Roth IRA within a fixed indexed annuity. Many people don’t know that. They don’t know. But there are at least five and the number of annuity carriers are growing out there. There’s five annuity carriers who will help you implement a Roth later conversion within an annuity you purchase from them with IRA dollars. And many others are starting to jump on this train, too, because they’re all competing for baby boomer dollars. And thousands and thousands of baby boomers are implementing Roth conversions every single day. And we’re working with all kinds of folks doing that to ourselves. And if you’ve got questions about it, how to implement a Roth IRA conversion, all you’ve got to do is give our office a call at 770-685-1777 or visit activewealth.com. That’s activewealth.com. And we’re happy to help you just click that set an appointment but in the upper right corner. So let me give you a couple Roth examples. And I promise this. I want to make sure so Janice has nine hundred and seventy thousand dollars in her IRA she worked for basically was kind of like the office manager for a major law firm and just kept growing at. She’s doing a Roth conversion over 12 years.
Ford Stokes: [00:41:56] She is divorced and single, so she can only she’s converting one hundred and twenty thousand dollars a year for 12 years. And she’s retiring like right at 60 years old. She’s got a tax savings over her thirty five year retirement of five hundred and seventy seven thousand nine hundred and twenty dollars. That’s five hundred seventy seven thousand nine hundred and twenty dollars off of nine hundred and seventy thousand dollars that are sitting in her IRA. So Roth conversion clearly is a six figure secret. If you implement it the correct way, you can save six figures during retirement. If you just take action and implement a Roth conversion, like you can save your teeth. If you just go to the dentist, you floss and you brush your teeth. You can save hundreds of thousands of dollars. If you just implemented Rothblatt or conversion with your six figure Iara. And I’ve got one example where Brian and Kelly, he’s got six hundred and eighty thousand dollars in his IRA and she has a million dollars in her IRA, they’re retiring. Early as well, at age 60, they will convert two hundred and twenty eight thousand dollars. A year for 12 years. To include converting the growth on their account and they are going to save, it’s estimated here, they’re going to save one point one seven four million dollars.
Ford Stokes: [00:43:37] Of there, one point six. Eight million dollar is together, but they’re able to convert at a higher rate because they’re married, filing jointly in the twenty four percent bracket. Is. Remarkable because it helps you get you can go all the way up to thirty three hundred and twenty eight thousand nine hundred dollars, that’s the top end of the twenty four percent tax bracket is three hundred twenty eight thousand nine hundred dollars. And they’re living on right at one hundred thousand dollars a year. They’re planning to they’re doing like Airbnb stuff. They’re backpacking and hiking and all that stuff. These they’re pretty awesome folks and they’re they’re independent and then they’re getting cheap flights, but they’re going to travel for 10 to 12 years. And they’re and they’ve got their house paid for and they’re just going to take one hundred thousand dollars out, but they’re going to convert two hundred twenty eight thousand dollars every year and. They’re going to save one point one seven four million off of it. She’s got a pension as well, so that helps that helps them meet their income needs. But also, in both instances, both Janice and also Brian and Kelly, all of them converted their money using an investment account to pay the taxes so their money moved dollar for dollar over.
Ford Stokes: [00:45:05] So let’s recap what you may have missed. It’s the final countdown.
[00:45:11] It’s the final countdown.
Ford Stokes: [00:45:17] So today, we talked about a market update, we talked about your big number, which is your large nest egg number, and we talked about your small number, what your retirement income number. We talked about retirement income gap planning. We talked about what’s going to happen when one spouse passes away, that the other spouse is going to lose at least thirty three percent of their Social Security income. We got to have a plan for that. And we walked you through Chapter 16 and 17 of my book, Annuity Three Sixty. You can get a free book at annuity three sixty dot net. And we also walked you through to strong Roth ladder conversion examples. We ran out of time, but next week we’ll talk about tax free income planning. And on at least two segments, you’re going to want to stay tuned on tax and tax free income planning right here on. I am not sure of the answer and I hope everyone has a great week. We’re going talk about tax smart investing next week right here on the Active Wealth Show on AM 920 The answer. Have a great week, everybody.
Ford Stokes: [00:46:16] Thanks for listening to the ACT Wealth Show. You deserve to work with a private wealth management firm that will strategically work to protect your hard earned assets. To schedule your free consultation, call your chief financial advisor, Ford Stokes at 770-685-1777 or visit ActiveWealth.com Investment Advisory Services offered through Brookstone Capital Management LLC. Become a registered investment advisor, become an act of wealth management, are independent of each other. Insurance products and services are not offered to become, but are offered and sold through individually licensed and appointed agents. Investments involve risk and unless otherwise stated, are not guaranteed past performance going to be used as an indicator to determine future results. Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs, and may not be suitable for all investors. It is not intended to protect the performance of any specific investment and is not a solicitation or recommendation of any investment strategy here, here and here.
Ford Stokes5: [00:47:16] For active wealth. The professionals at Active Wealth won’t just hang in there with your investments. They’ll work hard to protecting grow your wealth so that you can enjoy the well-earned, successful retirement that you deserve. Active wealth will deliver a tax efficient portfolio for you. Visit active Web.com to book your pre financial consultation there right here in Atlanta. So contact them today at Active Wealth, listen to the Active Wealth Show with Ford Stokes, your chief financial advisor. The actor will show this Saturday from noon to one.