LGBTQ+ Retirement & Taxes

Episode 40: Audio automatically transcribed by Sonix

Episode 40: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
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 predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Speaker2:
Welcome to Take Pride in Retirement, the podcast dedicated to helping members of the LGBTQ+ community protect and grow their hard earned money. Get set for a show full of education and insights with your host and advisor, Matt McClure. We recognize every family is unique. The goal of the show is to help you achieve financial freedom so you and your loved ones can have the retirement you've always dreamed of, a retirement you can take pride in, no matter who you are, where you're from, or who you love. So now let's start the show. Here's Matt McClure.

Speaker1:
Hello, and welcome to another edition of Take Pride in Retirement. I'm Matt McClure, your host, your pal, your confidante, also your advisor and your friend and your buddy. I do appreciate it very, very much. You taking the time to join little ol me here on the show? Um, it's going to be a lot of fun. Uh, this time around, I've got a wonderful guest to bring on in just a few minutes about talking about taxes and kind of why you need to go ahead and file your taxes right now. Um, if at all possible, and not wait until the last minute and not procrastinate. Like, I kind of like to do a lot of the time and I shouldn't, and I just slap myself on the wrist right now. Um, but, uh, Mark Steber is his name, and I really enjoy talking to him every year around tax time. He's like the most excited guy about taxes ever. So you'll enjoy that a lot. Okay, so that's coming up in just a few minutes this entire episode. Well, most of the episode anyway, it's going to be focused a lot on taxes and some smart tax strategies for your retirement, specifically relating to the LGBTQ+ community. Of course, a lot of it is applicable elsewhere and some other unique situations, but really with a focus on the LGBTQ+ community today.

Speaker1:
Because as we always say, no matter who you are, where you come from, who you love, how you identify, or how much money you have, I want to help you have a retirement you can take pride in. That is what the show is all about. That's what I do each and every day. And that's why I'm so glad that you've taken a moment or two, or maybe a few, a few more moments to join me on this edition of the show. I really can't say enough how much I appreciate it. Um, go to the website if you will do me that favor. Uh, take pride in retirement. Take pride in retirement. Uh, there you can find a lot of stuff you can do. You can contact me, you can schedule a consultation, which I'll go into a little bit more detail on that in just a bit. Um, you could also find all of the of the episodes of the show. They're right there on the episodes page. You can subscribe to the podcast there. You can contact me, say whatever you want. Just, you know, be nice about it. And so, so much more. All right. So just please go to the website if you will.

Speaker1:
You can also give me a call if you would like to schedule one of those free consultations. I was just talking about that number 85524692 11 (855) 246-9211. And I would be glad to talk to you there. Also, look me up. I'm on YouTube. Uh, the show. Take pride in retirement. Just search for it. See, a lot of great special content there and some highlights from the show as well. Also on the socials at Take Pride in Retirement on Facebook, on Instagram, and uh, try getting started on threads as well. But we'll see. You know how that goes. And it's still up in the air about the threads thing. But if you're on threads, give me a follow and I will know. I'll take the hint that that is something that is in demand here, right? So check that out and just don't hesitate to reach out to me in any way possible. I really do want to help you. That really and truly is what the show is about. And I would love to meet with you and discuss how I can help you reach your financial goals. You know can set you up with retirement planning, um, risk management, estate planning a whole lot more because, you know, building a sound financial plan for you is what I'm all about.

Speaker1:
This is what I do around here, building solid financial plans for listeners. And I've done it for for several listeners to the show now and hopefully for you as well. All right. So on this week's show, um, we got the quote of the week coming up in just a moment that will kick us off here. Then, of course, I'm going to share with you that interview that I was, uh, teasing just a few minutes ago. Mark Steber of Jackson Hewitt, such a fun guy to talk to. Yes, even about taxes. Then we'll discuss some smart tax strategies so you can manage your taxes in retirement. With the right financial plan, there are some things that you need to know. Okay. And then we'll get to some advice or some well, let's say advice. I will say some information about personal pensions. I can't really give you personalized advice obviously because this is a podcast. I can't you know, I don't know your particular financial situation. Right. So I'm going to say we're going to give you information about the options that you have for a personal pension. We'll talk about that in just a little bit okay. Right now though, let's kick it off as promised with our quote of the week.

Speaker3:
And now for some financial wisdom, it's time for the quote of the week.

Speaker1:
And the quote of the week. This week comes from Rumer Willis. Yes, the daughter of Bruce Willis and Demi Moore, and an actor in her own right. Rumer Willis said this love doesn't care how much money you have. It doesn't care who your parents are. It doesn't care if you're gay, straight, or transgender. Love doesn't care how much money you have. Love doesn't care any of those things. I love that quote from Rumer Willis, because it really does bring things into focus here about what is the most important in life. You know, love and you know, whether that is. And love takes all kinds of different forms, right? Love for humanity in general. Um, there's, you know, the love that we feel for our partner or our spouse or our other loved ones. Um, you know, parents, kids, cousins, those chosen family that we have as well that we, that we all tend to have as LGBTQ+ folks, either instead of our biological families or in addition to our biological families, as is in my case. And I'm so lucky that that is the case. Um, but there's all different kinds of of love, right? But it doesn't care. Pure. You know, just love. Doesn't care about any of those things. Loves colorblind. Love is blind.

Speaker1:
As to your sexual orientation or your gender identity. Love is blind as to how much money you have as well. Love is just love and it will be no matter what. All of those things happen to be those sort of qualifiers there that we were mentioning. And that really is, I think, goes to the core of why I do what I do. Because, you know, I always say kind of sort of the same thing, but in a different way every episode. Right? I said at the top of this episode, no matter who you are, no matter where you come from, no matter who you love, no matter how you identify, no matter how much money you have, you deserve a retirement you can take pride in. So it's I don't care who you are or where you are from, or any of those other things that I just listed off the main concern for me is that you are a fellow human being. You are someone who is, yes, deserving and worthy of of love, certainly, and also deserving of a retirement that you can take pride in. You are probably either, you know, nearing retirement or still working and working toward that retirement. You've worked hard for so many years now, and you've got, you know, some years ahead of you, no matter how many they are.

Speaker1:
I want to help you protect that money that you've earned and invested and grown, and I want to help you help it grow further, get you an income plan in place that's so important in retirement, having a steady income that you can count on for the rest of your life. So, you know, if you don't want really what should be your to use the old cheesy phrase golden years. If you don't want those years to be tarnished by financial stress, you'll you'll need to be prepared It with a solid plan ahead of time. You know, there was another quote that I had heard from somebody like the best way to solve a problem. And I forget who said this, so forgive me, but the best way to solve a problem is to solve it ahead of time, right? Or something like that. That's kind of paraphrasing there. Um, but it basically is like, you know, plan ahead and you're going to be much better off. Essentially, you won't have the problems that you otherwise would have had had you not done that, had you not planned ahead. So go to the website. It's take pride in retirement. The free consultation can be yours if the price is right and it is because it's free.

Speaker1:
Um, it doesn't cost a thing. It doesn't cost one single penny to meet with me and get a free consultation. I'll take a look at your particular, uh, investment objectives. I'll take a look at your your current situation. I'll take a look at where you are and where you want to be, and see if those two meet up. If they don't, I'll come up with my own recommended plan for you, and then I'll walk you through that plan and hopefully make you feel comfortable about that plan. And then we can move forward implementing it. And you can have that retirement. You can take pride in take pride in retirement again is the website or call 85524692178552469211. Well it is officially tax time again. Um, with we got some months to go until the deadline though. But uh, you know, you may think you want to put things off. Uh, I think I know a guy who would say, no, get it taken care of right now, and he's somebody that I like to talk to each and every tax season. It is Mark Steber. He's the chief tax information officer at Jackson Hewitt Tax Service. Mark how are you today sir.

Speaker4:
I'm doing wonderful. It's a very exciting time to be chatting with you on a very important topic. And it won't just be me saying, file your taxes early. The IRS and everybody else feels that way because they know what the benefits are.

Speaker1:
Yeah. That's right. And and what is that benefit? You know, for folks who may be procrastinators out there or, um, you know, this this guy right here that you're talking to who tends to procrastinate on things that are not exactly fun. Um, what are some, some reasons that you should go ahead and file now and not put it off?

Speaker4:
Well, I have two buckets of reasons. And really only 3 or 4 are specifics, but they'll make sense to your audience very simply. Uh, we know for a fact that two out of three taxpayers get a refund each and every year. This year will be no exception. That's about 100 million Americans will get a tax refund if it's like the last 20 years. That refund last year was about $3,000 on average, or about $300 billion. So 100 million people are just waiting on money. File early. Get your money early. It doesn't take a financial wizard to know that makes sense. Secondly, and not in the financial bucket, but in the risk mitigation bucket. We know that the IRS is assaulted every year with refund schemes and tax refund fraud using people's stolen personal information, their stolen data bought or purchased on the dark web, or stolen as a part of a data breach. So if you file early, you lock up your data with the IRS and your state. If you have one, you lock up your spouse or your significant other. You lock up your dependents if you have those. So some steamer can't buy your data on the dark web. File a fake tax return, which happens in the millions and tries to steal your refund. File early. Get your money. File early. Lock up your data. For those people who say, for whatever reason, I'm gonna do it later, I'm gonna. Oh, I had a good year in my crypto. Oh, because I had a good side hustle and I didn't make estimates because I wasn't working with a pro. I'm just going to file an April.

Speaker4:
Bad idea. If you. Oh, you even have more incentive to file early one to find out how much you owe so you can start putting that money aside and start making preparation. But two equally important you lock up your data too. And so if you owe you file early, you lock up your data and everybody else's. But here's the thing for your audience. You still don't have to pay until tax day. Filing is separate from paying file today. Get a refund. Great. Oh, you still don't have to press that button and have your bank account debited or credit card charged. Or just put a check in the mail at midnight on April 15th. So you get the benefits of filing early and you still don't have to pay until April 15th. What could be easier? And a fourth benefit that we put into place this year, if you file with Jackson Hewitt, you're automatically entered into our double your tax refund sweepstakes. And it's not some overblown plan we've given away, you know, almost $500,000 to almost a thousand people in the last two years. Doubling your refund, two winners each week for grand prize doubling and then a host of other secondary prize winners. And if you. Oh, we got this question. You don't double what you owe. You still win a prize. So get your money file early if you need to pay and you don't have to pay till April 15th. And thirdly, you lock up your data. And fourth, you can enter the double your tax refund sweepstakes and maybe even double your tax refund this season.

Speaker1:
Hey, there's some incentive there for you. That's that's not not so bad. Well, talk about, uh, you know, that that was something that's new for, uh, Jackson Hewitt this year. But anything new for us as far as taxpayers go with tax law. Seems like there there are changes, or at least minor ones every year that we need to be aware of.

Speaker4:
Yeah, there's minor changes. Some good, some not good. First the good there's an increased standard deduction, increased credits. You know, reduced tax brackets to help people stay out of rate bracket creep. You know so there's some new benefits this year. Unfortunately there's a new requirement for people who get paid through third party apps. Think Apple Pay, PayPal, Venmo. You know, when you're getting money on your phone, if you're getting paid on those, the the rule hasn't changed. If you have side hustle income, it's still taxable. But the amount that has to be reported to the IRS by the platform has changed. In prior years, it was $20,000 and 200 transactions. It was changed to $600, down from 20,001 transaction. Now 2024 the current tax year we're talking about there's a transition amount. It's 5000 going to 2500 for this tax year 25 and then 600 as the final number for texture 26. The point is, for your audience, you know, if you got paid through a third party app in 24 more than $5,000, you're going to get a 1099 K, and so is the IRS. So if you've been not including that on your tax return for whatever reason, you know you got bad tax advice or you didn't fully appreciate it, know this. This year the IRS will have that data and you can't ignore it any longer. That's the big change. But life changes I think, are even bigger than the tax law changes and a lot more common. Getting married, moving to a new town, new job, have a child, starting a side hustle or taking care of your dependent parents and all the rest. Those drive bigger changes, frankly, than any legislative changes other than. But for the ones coming in a couple of years with the expiration of the Trump cuts. So a lot to watch every year. 2024. No exception.

Speaker1:
Yeah, absolutely. Well, and before we have to run here, kind of a two part question for you. Um, do you recommend generally that folks maybe in certain situations work with a tax Attacks pro instead of filing themselves. And then how can they best prepare to kind of get organized to do that for tax season? I guess, whether they work with the pro or not.

Speaker4:
Yeah, I do have a specific situation where it makes most sense to work with a tax pro. That's if you had any economic activity whatsoever, even over a dollar in the tax year, then it makes sense to work with a tax pro. A lot of people are always looking for that. If you're a high net worth or if you're rich, but that's simply not the case. There are more benefits and more credits to lower income, moderate income, even low income taxpayers than any of the high income people who get phased out. So it really makes no sense for anybody to say, I'm going to do it myself on my smartphone while I'm driving to work at the red lights. Everybody's got a complex situation in today's environment with credits, deductions, elections, state changes, life changes. So I don't care how simple your situation is. You know, there's some complex rules. So you can either hire someone to help you or you can do the work yourself. If you try to shortcut that or cheapen that and just think it's a postcard, it's They'll figure it out. You're making a financial mistake that could cost you money, because the IRS does not simply fix it and send you more cash like a retailer.

Speaker4:
Leave it off. Stays off. As to your second question about being organized, I say keep it simple. You know, keep that envelope by the door. Have you and your significant other keep up with those documents? You know, and again, as I said, it doesn't matter if you're high income, no income, and especially if you're retired, you'll receive all sorts of 1099 from your retirement plan distributions, Social Security. Heck, you may even still be working part time. So retirement is probably some of the most complex tax returns that I see. And also the people who are most sensitive to, you know, trying to save a dollar. That's why the right tax pro makes a difference. Make sure they understand what your situation is, what you need, and that they have those skills. It can pay for themselves by both reduction in stress and found benefits, found money and a bigger refund. It really is inconsequential on your economics or your income status. It really is for everybody today.

Speaker1:
Yeah, absolutely. So. And where can our listeners go to learn more, Mark Jackson Hewitt.

Speaker4:
Com is my great first stop. It's a website that has a lot of tools, videos, frequently asked questions. You put in your address, up pops the box. Uh, with the local offices, you can make an appointment there on site, or you can just get the address and walk right on in. So Jackson Hewitt. Com there's more information in there on the double Your refund sweepstakes and everything else you could want to know about taxes. But really it's the easiest way to find an office.

Speaker1:
Very good. Mark Steber is the Jackson Hewitt chief tax information officer. Mark, thank you so much once again for joining me. Really do appreciate your time and all your insights.

Speaker4:
Thank you and have a great tax season. Get that money. It's your money.

Speaker1:
See I told you Mark was fun to talk to. And, uh, just a really great, you know, passionate guy about taxes and, um, all of those things. He just really is great to talk to you each and every year. And so I thank Mark once again for joining me here on the show. I really, really do enjoy speaking to him each time. It's one of the few times I really enjoy talking about taxes. Access. Right. And I think that's pretty universal. I don't think anybody really enjoys paying taxes, at least not the paying part. Like, obviously, Mark Steber is someone who enjoys helping people with their taxes and explaining, uh, taxes and different tax situations and all that. I am not necessarily one of those kind of, uh, people who enjoys paying taxes or that necessarily, you know, um, explaining just the nuances and all of that. I am not a not a CPA or a tax attorney or anything like that. So, um, you know, I'm part of my duties here, uh, as a financial advisor, I don't help people with their taxes, like, as in filing their taxes. Now, what I can do is help you as far as tax strategies go. And we're going to get into a lot of that here over the next few minutes. Because, you know, tax planning really is a critical part of retirement preparation. Retirement planning for everybody, but really, for the LGBTQ plus community, there are some unique considerations due to a lot of different things historical disparities, evolving legal protections, specific financial planning needs.

Speaker1:
Of course, that's really where the rubber meets the road there that, you know, it always, always, always comes back to what's best for you in your individual situation, right? No matter what subject we're talking about here on the show. So some tax strategies to consider here for LGBTQ+ folks, specifically number one, marriage and filing status optimization. You know, same sex marriage is federally recognized now. It has been since 2015 and the Obergefell decision by the Supreme Court. Hopefully it remains that way, of course, and it will be recognized as the settled law of the land, because I can't even imagine the mess that would be created if that were trying. You know, if they tried to undo it, put that toothpaste back in the tube or whatever the saying is. Um, but of course, we got a plan for no matter what is going to happen, right? But if you are married, as I am, if you're a married, uh, LGBTQ plus couple, you can actually file jointly, of course, to take advantage of lower tax brackets and higher standard deductions. However, married filing separately could be beneficial in some specific cases. You know, one partner may have higher medical expenses or, you know, different other situations. So that's something to keep in mind and to explore.

Speaker1:
Number two, social security, taxation and spousal benefits. We went into this I believe it was two episodes ago now spent a lot of time talking about Social Security specifically and really, you know, LGBTQ plus. Gtk+ topics surrounding social security considerations. Things to keep in mind and this was one of them if you want to go back again. It was two episodes before this one in the podcast feed or on the website to download it. You'll see they are Social Security in the title, but that's a great episode to listen to if you have a lot of questions about Social Security. I share a lot of great information in that one, but if you're married, you may be eligible for spousal and survivor benefits, and that can provide a higher benefit than your own check or direct deposit. Or, you know, I guess they don't send paper checks anymore. But, you know, but this is a thing that it really is crucial for the people who were previously ineligible, of course, before a marriage equality. So that's a huge thing. The Social Security benefits to in order to receive those, be eligible for those spousal benefits, Of course you had to be married, so that's something to keep in in mind as well. Yes, marriage does have its have its benefits. And Social Security may be taxed depending on your income. So you've got to plan withdrawals from taxable accounts very carefully in order to not be, uh, having a bigger tax burden than you had planned on.

Speaker1:
All right. So be careful when withdrawing from those taxable accounts in your retirement years, because it could mean that you pay more for your Social Security. As far as the taxes go, the income taxes there. So number three, some retirement account tax strategies. One of my absolute favorites, one that I have been able to help a lot of different folks with is a Roth conversion, Roth IRA conversion. And this is such a great way to save money on taxes and in a couple of different ways. Number one, you can save money overall, right? Because you are paying the tax burden now and then you're putting the remainder into the Roth IRA. So let's say if you want if you have a 401 K or if you have a 403 B, if you have a TSP, if you're a federal employee, if you have your own IRA that you've established, those are all situations where you have not paid the taxes yet, right? Because those, you know, come out and go into those accounts pre-tax and then you pay the taxes later in retirement. That's the tax benefit. That's called tax deferred. So the benefit there is you don't have to pay taxes right now, but you do have to pay regular income taxes as you make withdrawals during your retirement years.

Speaker1:
But there could be a better way for at least a portion of your retirement money. And that is the Roth IRA. So if you've got money in one of those traditional accounts, you haven't paid the taxes yet. You can roll money from that account into something called a Roth account, a Roth IRA, specifically here in this situation that we're talking about. And you pay, you go ahead and pay the taxes now as part of that conversion. And the reason that you want to do that is because then that money inside the Roth grows tax free. It grows tax free. And then it also when you make withdrawals in retirement from that account, that money is tax free. When you make those withdrawals you don't have to pay a red cent in taxes. Nobody tell the federal government about this because they may they may wise up and try and take it away one day. But this is a really good advantage that you have As far as tax planning goes, you can potentially save a lot. You might say, well, Matt, well I'm already I'm paying the taxes one way or another. Well yeah, but think about it this way. A couple of different ways to think about the possible advantages of a Roth conversion. Let's imagine you are a farmer and you have to pay taxes on something and you are given a choice.

Speaker1:
You can pay either pay taxes on you, grow crops in a field, and you can either pay taxes on the seed. That you plant. So the little tiny, teeny teeny tiny little bag of seed. Or you can pay taxes on the harvest, which is a much larger amount. Obviously it's great you've planted it. It's grown. You've, you've, you know, taken care of it, you've watered it, you've given it all the sunlight and nutrients that it needs. And it's grown to be this big thing. Well, now, would you rather be taxed on that amount, which is a much larger amount of thing in this case, vegetables or, you know, whatever. Or would you rather be, you know, taxed on that little tiny bag of seed? It's going to be a lot less money to be taxed on the seed than it is on that huge harvest. Right? So that's one way to look at it. With a Roth account, you are paying money on the tiny paying tax money, rather on the tiny little bag of seed, which is the money that you're putting in right now, so that after years and years and years, it grows and grows and grows. You don't have to pay the taxes when you make those withdrawals, when when harvest time comes, you don't have to pay taxes. Another advantage is a lot of very smart people, analysts and economists and all say that we're going to have to see taxes go up at some point in the future.

Speaker1:
We are at historically low tax rates. God knows. And here's the thing. I don't know what's going to happen in Washington over these next four years? Not a clue. Um, but one thing is for sure, things as far as the national debt go, that something's got to give there. And that's really what a lot of economists say. Look, taxes are going to have to go up to pay for government services and to pay for the national debt. So that's another reason, because if taxes do go up in the future, then you will have a situation where you would have had a higher tax burden. So go ahead and pay taxes on a smaller amount of money now and then. Reap the benefits in the future where you can make tax free withdrawals rather than paying a higher tax rate on more money in retirement. If you want to know more about that, and I really enjoy doing this for people because it really is something that is is very advantageous for folks take pride in retirement. And of course, it depends on your individual situation. You know, you may already have a Roth or it may not exactly be right for you. You may have, you know, put too much money here, not enough there. We'll take a look at that.

Speaker1:
When you go to take pride in retirement, go to the upper right hand part of the web page and click schedule a consultation. I'll be glad to show you kind of the ins and outs here. Take pride in retirement.com. You can also call 85524692178552469211. All right. Also a tax consideration for different types of accounts right. Another sort of advantage of Roths is there are no required minimum distributions. You know, if you have one of those traditional accounts like I mentioned, a 401 K an IRA. Et cetera. Et cetera. Traditional IRA, you reach a certain age and Uncle Sam says, well, you know, I've given you this tax break already on this money for so long. Now it's time to pay up. You got to make you got to withdraw a certain amount so that you can pay the taxes on that amount. And I can get what's coming to me, says Uncle Sam. So obviously with Roth accounts like a Roth IRA, in this particular case with Roth accounts, there are no taxes to be paid. So there are no required minimum distributions. You know, that that sort of forced withdrawal there by Uncle Sam, that is a required minimum distribution or an RMD. And so what the advantage and another one of the advantages I should say, of a Roth is that you don't have to worry about paying taxes, of course, on that money in retirement when you make those withdrawals.

Speaker1:
And you also don't have to worry about Uncle Sam coming with his hand out and saying, I want your money because you don't owe him any money at that point, right? So plan ahead for RMDs in those traditional accounts and be thankful in a Roth. That you don't have to pay them and you don't have to worry about them. Estate and inheritance tax planning is number four on this list of tax considerations for LGBTQ plus folks. Um, there are certain considerations here that I won't go into, obviously, because I'm. That won't go into in too much depth because obviously, as I said before, I'm not a tax attorney or a CPA or anything like that. But I will say a couple of things briefly is that spouses can inherit assets tax free, but unmarried partners may face estate taxes. That depends on your individual state, right. So those are things to keep in mind. It could rules could be different where you live. You need to also use beneficiary designations wisely for your retirement accounts and your life insurance to make sure that your assets transfer smoothly to whom you want them to go. Make sure that your beneficiaries are up to date. I cannot stress that enough. If you were married, divorced, and remarried, make sure that the beneficiary listed on those different accounts or policies, whatever the case may be, that those are who you want them to be, that those names are the names that you want to have listed as your beneficiary on those particular accounts or policies.

Speaker1:
You could also consider gifting strategies or trusts to minimize estate taxes. You can also protect assets from probate there. I'll have a little bit of info on another way to avoid probate a little bit later on. Probate. Not a fun process. So I will, uh, I'll go into that a little bit later. Number five, healthcare and long term care tax considerations. Um, health savings account and HSA. You've probably heard of this. They've gotten a lot more popular over the past several years, and contributions to HSAs are tax deductible. They grow tax free. They can be withdrawn tax free for medical expenses. So if you don't have a health savings account, that could be a good thing for you to look into because it's not like, you know, there are a couple of different types of accounts that your employer might have like that or provide, um, that you've, that you've heard of or maybe seen once a year during open enrollment. One of them is an HSA, which is a health savings account. That's actually money that is yours, right? It goes into that account. You can actually take it with you when you leave that job and it, you know, doesn't go away at the end of the year.

Speaker1:
A health reimbursement account or an HRA is the other one that's really not your money. You can't take it with you and all of that. It's a lot less flexible. Um, you know, and at the end of the year, generally speaking, anyway, that money will go away and it won't roll over until the next year. So you've got to be, um, you gotta have that in, in mind, right? So health reimbursement account versus a health savings account. Uh, just make sure that you consider those two different types of accounts and the tax considerations of an HSA. Uh, they have all those benefits that I just mentioned a few minutes ago or not a few, but a few seconds ago, I guess I should say long term care insurance and tax deductions, because now, look, premiums for qualified policies for long term care insurance, they may be deductible. Maybe you have to check and make sure you know, with your CPA, your tax professional, whomever that they are tax deductible. And that could be crucial for LGBTQ+ individuals who may not have traditional family caregiving support. If you have long term care insurance, then that can cover the cost of your care. And then if those premiums are tax deductible, you get another benefit on top of that. Adoption and family planning. That's number six and some tax benefits there. Lgbtq+ families who adopt may qualify for the adoption tax credit, and that helps offset some adoption expenses.

Speaker1:
Dependent care tax credits and flexible spending accounts can reduce taxable income for those who are raising children as well. There's another, you know, flexible spending account. I'm sure you're familiar with that as well. An FSA, you can use that money for a lot of different things, um, to, you know, household care products and personal care products and medicines and all of that kind of kind of stuff. And that can really help, you know, when you're trying to raise kids, especially if you're trying to do it. Um, well, I guess pretty much anybody, unless you're just filthy, filthy rich. If you're trying to raise kids, you're trying to do it on a budget because it's not cheap. One of the reasons I don't have any, at least not yet. A number seven state specific tax issues. Kind of touched on this a minute ago, but some states, um, really have different ways that they recognize same sex marriage for tax purposes. Right? And that may impact your filing status and your benefits. So if you're a same sex couple versus a opposite sex couple in a particular state, you may be treated differently for tax purposes there. So check the rules and the laws in your particular state. States without inheritance taxes are generally more favorable for unmarried LGBTQ plus partners. So something there to keep in mind as well.

Speaker1:
And then of course, there's charitable giving. There's legacy planning that you need to make sure that you keep in mind as well. There are things like donor advised funds that allow you to make charitable contributions. Take an immediate tax deduction while distributing funds over time. That could be something to to look into um, qualified charitable distributions. Qcds those can come from IRAs and they'll satisfy your RMDs, potentially without increasing taxable income. So when you get to, um, you know, that certain age, which right now I believe I neglected to mention this earlier, but 73 is the age of RMDs. Right now. It goes up to 75, uh, eventually, thanks to the secure act 2.0. But those qualified charitable distributions may actually satisfy the requirement for required minimum distributions, but then they don't increase your taxable income at the same time, like taking a regular RMD. So that could be something as well to consider in retirement or to, you know, kind of have that in mind. If you've got a traditional account and you've got a charity that you just absolutely love and you've supported for years and you want to give to it in retirement. There you go. There's another way for you to do that. So here's the thing that I want you to keep in mind from this. Number one, there are a lot of different ways that you can save on taxes.

Speaker1:
Yes, I did say that. I did say you can save on taxes. And here's the thing. I don't want you to come away from this thinking, oh, he wants us to, you know, skirt the tax laws and all that. No. My whole thing is that I want people, that clients of mine and you listening and people you know, everywhere to pay their fair share. I want everybody to pay their fair share. But I don't want anybody to give Uncle Sam a tip. You know, you don't need to do that. You need to pay what you owe. Obviously, you need to not get in trouble with the law. There are ways that you can reduce your tax burden and do And do it completely illegally. And we at Active Wealth Management, which is the firm that I work with here locally in, in the metro Atlanta area, of course, we serve clients all across the country. We can help you do that, can help you plan for taxes in the future so that your tax burden is lower than it otherwise would have been. All right. Go to take pride in retirement. That's take pride in retirement. Click on the upper right hand side of the page and you will see the schedule a consultation button that will actually take you directly into my calendar. And then you can just schedule an appointment right then and there directly with me. Okay. It's no cost, no obligation at all.

Speaker5:
Come on down as we test your financial knowledge in right or wrong.

Speaker1:
Okay, it's been a long time since I've done an edition of Right or Wrong, but I want you to play along with me as I read off these questions and give you the answers to these questions. I will just present them as a statement. Actually, it won't even be a question. It's going to be a statement. I'll present it as if it is true. Then I will reveal the correct answer whether it's right or wrong. So shout it out so I can hear you through the podcast speakers or earphones or wherever you're listening. And then I will, um, tell you the correct response, whether that particular statement is right or if it's wrong. Okay, here we go. Right or wrong, I want you to play along. And here is statement number one. If you choose to take a lump sum on your pension when you retire, you can receive you can receive up to a 20% bonus on your money. Is that right or is that wrong? Well, that is actually right. It's one of those things that might sound too good to be true, but you can if you receive a lump sum on your pension when you retire, you can take that money and put that into a fixed indexed annuity, which I'm going to talk a little bit more about a fixed indexed annuity a little bit later. Um, before before we're done here today.

Speaker1:
Not that much longer in the show, but I'll touch on it in just a few. Um, but if you roll that into a fixed indexed annuity, a couple of things, you can get a bonus. Depending on the particular annuity that you invest in, you can get a bonus of up to 20%. Now is the probably the highest one that I've seen on the income benefit base. So the income benefit base is that amount of money that your income is going to be based on when you retire and when you decide to turn on income from the annuity. That's basically what that number is. And so that is where that 20% bonus, at least on this particular product that I'm thinking about this one that that I actually really like for a lot of clients, not everybody of course, but for, for for some, um, that you get a 20% bonus upfront on the income benefit base, which basically means the money, the amount of money that your retirement income is going to be based on starts out 20% higher than it would have otherwise. You get that 20% credited to your account on the income side, and it doesn't cost you, you know, an extra penny, really. There could be, you know, some different writer fees and that kind of thing. They're extremely, extremely low. Um, they're not going to be structured as fees that you actually pay out of pocket or anything like that.

Speaker1:
It's just going to be, you know, extremely low. But again, it all depends on your individual situation. And contact me. Take pride in retirement.com. Click schedule a Schedule a consultation or the contact page, and then I will be glad to walk you through kind of the specifics there and see if it's right for you. Okay. But you can. That means that you can generate higher income during the, you know, maybe three decades plus of your retirement years. So that's going to mean more income for you in retirement basically is what I'm getting at. All right. Okay. So that one was right. This one is going to be statement number two. Here we go. There is no product safer than a bank CD when it comes to protecting your money. Is that right or is that wrong. Well that one is wrong. A fixed indexed annuity that I was just talking about can protect your wealth while also providing upside as the principal invested is tied to an index, but it's not actually invested in that index. So zero is your hero. That's what we like to say, that, you know, you're you're protected on the on the downside, so you're not going to lose value in that account. It can only go up. So in the down years, that's why we say zero is your hero.

Speaker1:
The balance of that fixed indexed annuity stays where it was. It doesn't go down. So while everybody else is reeling and, you know, trying to sell family heirlooms and things to to make ends meet because the bottom fell out of the stock market or whatever. You're sitting pretty because it's protected on the downside against something like that happening. And then when comparing that to a bank CD, you know, the FDIC only protects up to $250,000 in deposits. And there's only a 10% financial reserve requirement for the banks. The fixed indexed annuities are a product where they're issued by insurance companies, and insurance companies have a 100% financial reserve requirement. There are many other options for different types of annuities. For shorter terms as well, you're going to talk about something like a multi year guaranteed annuity. Um that's called Amiga. Amiga. We can explore those as well if you go to take pride in retirement. Com. All right. Number three here you can structure your retirement accounts to deliver tax free income during retirement. Is that right or is that wrong. Well I hope you're paying attention. Uh, and if you weren't, then shame on you. That's absolutely right. Roth IRAs and life insurance. Those are two tax free investments available to Americans today. Roth IRAs. We talked about a lot. Life insurance, particularly something like, um, an indexed universal life policy, works kind of a lot like a fixed indexed annuity that we were talking about a minute ago.

Speaker1:
But it can be tied to an index that is designed to grow your investment over time. And then you can use a particular mechanism to turn on turn on an income stream in your retirement years. So that's something that you might want to explore as well. All right. And again may or may not be right for you, but it depends on your individual situation. Okay. One more here in right or wrong. This is that one. It is a waste of time to have your financial accounts reviewed on an annual basis. Is that right or wrong? Well, that one is of course very wrong. Because here's the thing we like to say zero is your hero. Obviously we said that earlier, but we like to say you need to inspect what you expect about your financial future. So we like to do an annual checkup, at the very least an annual checkup. Even more often than that, if you would like. We would love to have you involved at a greater level than that and checking in on your retirement accounts, right? Making sure that everything is on track. An annual checkup, though, can prevent you from paying too much in taxes and fees before those expenses cause a lifestyle change down the road.

Speaker1:
All right. So do you want to just kind of wait and see where the market is when you retire? Or do you want to get to guarantees and get to planning what you're going to do with your time in retirement and with the paychecks and the play checks that you're going to receive each month. Take pride in retirement once again, is the website take pride in retirement.com. Okay, I promised I would talk about this and I will right now. Um, it is actually possible. And this is going to be what I close out on may go into further detail on this next week, but is it possible to create your own personal pension? Yes. Is the answer to that. You can absolutely establish your own personal pension. So what's a pension? Well, a pension is a guaranteed payout for life, right? So, like it used to be, you would work for a company for 40 years. You would retire, you'd get the gold watch, you'd get the pension, and then you'd go along your merry way. And you knew that those, you know, pension checks were going to be coming every month or however often the payment would be made. And so that would be a traditional pension like you might think about. It's a what we call a defined benefit plan. And those have generally gone the way of the dinosaur.

Speaker1:
There are a few private companies that still offer them some some government agencies have them. Government employees have access to to them as well. But if you are part of the vast majority of us who don't have access to a pension, you can actually create your own personal pension. That's a guaranteed lifetime income. Using a similar strategy that companies and governments use to guarantee their benefits for former employees. And that is using something that I referred to earlier. One particular strategy to do it is called a fixed indexed annuity, like I mentioned. And that is something where you put in a particular amount of money. It grows based on the amount of growth and the specific index, like a stock market index or whatever, but it's not actually invested in that index directly. It's just the performance is tied to it. So when that index goes up over a certain period of time, and there are several different periods crediting periods that you could be looking at here. But when that index goes up over a certain period of time, so does the money inside your annuity. But on the downside, when that index falls over whatever time period that is, you don't lose a penny. Your money stays right where it was. So again, while everybody else is reeling, you are sitting pretty, sipping a mint julep on the front porch because you're so happy with yourself, right? So that's the advantage.

Speaker1:
And then in retirement, after it's grown for for several years in retirement, I can then take turn on an income stream and in your retirement years, have an income that you're not going to outlive. You know that those checks are going to be coming just like a regular pension. You've built your own personal pension here, and those checks are going to be coming like clockwork each and every month. And you can't outlive it. And of course, it's based on the claims paying ability of the issuer. Always have to say that. But we work with the highest rated insurance carriers and a lot of, you know, names that that would be familiar to you as well. So if you want information about any of that or anything that we've talked about here on the show today, I'd be glad to share it with you. Take pride in retirement.com is the website that's take pride in retirement. Com you can email me Matt at take pride in retirement. Com or you can give me a call 211 (855) 246-9211. All right. Well that's going to do it for this edition of the show folks. I will see you once again the next time we get together. And until then, take pride in yourselves and take care of each other. Talk to you next time.

Speaker2:
Thanks for listening to Take Pride in Retirement. Members of the LGBTQ plus community deserve to work with a fiduciary financial advisor who puts their needs first. To schedule a free, no obligation consultation with Matt McClure and the team at Active Wealth Management, call (855) 246-9211 or go online to take pride in retirement investment advisory services offered through Brookstone Capital Management LLC. Bcm, a registered investment Advisor, BCM and Active Wealth Management Incorporated are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents.

Speaker1:
Registered investment advisors and investment advisor Representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interest of our clients, and to make full disclosures of any conflicts of interest. Please refer to our firm brochure, the ADV Two-a. Item four for additional information. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not in any way refer to investment advisory products. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company, not guaranteed by any bank or the FDIC. 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. Information provided is not intended as tax or legal advice and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional.

Speaker2:
Matt McClure, an active wealth management are not affiliated with or endorsed by the Social Security Administration or any other government agency.

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