Do you hate the thought of working past 55 or 60? Do you hate not being able to live the life you deserve today? Do you hate not knowing what your financial future looks like? It's time to stop doing what you hate, here's your host, Mr. Harold Green.
(00:20): Oh, LOHO every everybody. This is Harold Green of Brightree financial group, and it is time to stop doing what you hate. I hope you folks are having a fantastic day today. I'm taking a couple of days off just to catch my breath and to maybe relax a little bit work from home here and there. Not due too much. It's just been a, it's been a rough few weeks with the market being all over the place. And I call that that's when it's time to fly the plane. And it was just very interesting just to kind of see how things were performing and to see how people were reacting to all of the different news, just CRA crazy things. It was entirely unreal. A lot of people got extremely emotional. They got all tied in to the news, just crazy stuff. But thankfully, a large majority of my clients, I would say 99%, although they were a little bit, you know, kind of nervous.
(01:20): A lot of 'em just kind of kept reading emails and my newsletters and, and it just kind of brought them some peace in, in the storm because there were a couple of times where people call and they were, you know, they were panicking and different things like that. And I understand, however, we have a long term plan in place. We have an intermediate plan in place. We have a short term plan in place, no matter what happens, there is a plan in place, but you know what? You gotta stick with the plan. And when you don't stick with the plan, guess what happens? You panic, sticking to the plan, prevents panicking. And I'm gonna say this, even if you do panic, just stick to the, and it'll work out, it will work out. So are you folks ready? I didn't tell you the title of the show.
(02:12): It's smart withdrawals from your retirement plan. That's right. Smart withdrawals from your retirement plan. So are you ready? 1, 2, 3. Let's get it. They're smart withdrawals from your retirement plan and there are not so smart withdrawals from your financial plan. So I wanna talk to a little bit about what's going on right now. Right now. There's a bill, I think in Congress or whatever it is. And they're talking about raising the age where, you know, people take monies out of their retirement plans, starting at age 75. They're they're allowed to wait until they're 75 to start taking withdrawals out of their retirement plans. I don't know about you, but I sure as hell ain't waiting until 75 to start taking monies out of my retirement plan. Why would I do something like that? Well, a couple of different reasons why I would number one, I don't need the money.
(03:10): Number two. Hmm. I don't think there was a number two. So I think there's only one reason why I would wait is I didn't necessarily need the money, but there's a lot of different things. That'll happen to you. If you wait until 75 in order to start taking money out of your IRAs and different things like that, it's gonna complicate your estate planning tremendously, tremendously. And the reason why is because you have all of those withdrawals are all of that money, just building and building and building and building pre-tax in some of your retirement plan. And although I know it's a noble idea, but it's one of the craziest ideas I've ever heard, and it's not gonna work that well for you. And here's what I think they should have done. I think they should have said, well, extending the, the age to 75 is one thing, but I think they should have opened up the door so that people can start taking their monies from their IRAs and their routes and all these different things at age 50, not 59 and a half.
(04:14): So to extend the age to 75 is one part. But without opening the, a door sooner, say at age 50, it absolutely probably does you no. Good. And here's the reason why let's say, for example, you're going to leave your IRAs to your kids right now. There's a couple of different things that are gonna happen. They passed new legislation a while back that says based on certain situ, soon as you got 10 years to pull the money out. And if you don't pull the money out in 10 years, guess what? You're gonna be penalized, penalized, penalized, penalized up to 50% of what you were supposed to take out. And let's say, for example, it's just basically, you got Tesla stock in there that went up to 3000% and now that IRA has worked 10 million, that's gonna be very problematic. So I want to talk to you about smart withdrawals from your IRAs.
(05:11): Now, one of the things that I talk to my clients about all the time is the 401k exit. Just like you had a strategy of going into your and K and into your IRAs, you're going to have to have a strategy to come out of those very same accounts. What does that look like? Now? I'm gonna give you an idea for people who want to retire early. I don't know if you're working with anybody or not, but if you wanna retire early or make a shift, I call that phase one, a rapper retire, where you quit your job, you start doing something different. And let's say, for example, you're living on a hundred thousand dollars a year. One of the main things people don't look at when they're working is, and when they wanna retire, they don't look at calculating out their tax situation. What they're funding into their 401ks, what they're paying in FICO taxes and all these crazy things.
(06:02): And I have a lot of clients who end up with a net pay raise when they retire versus a pay cut. Why? Because they're not paying all of that money coming out of their check and ICO taxes, state taxes, federal taxes. I mean, it's just nuts. And I tell 'em, I said, you know what? In some cases you are better off retiring and maybe taking a lower paying job or a less stressful job, and then doing something different. So what does that look like? Let's say we go into phase one, make a hundred thousand dollars a year. You know, I know a lot of clients make way more than that, but I'm just kind of giving you an example for quick math, right? Let's say at a hundred thousand dollars a year and a 15% tax bracket or whatever, that might be $15,000 in taxes.
(06:44): And let's say you don't need the whole entire a hundred thousand dollars and you haven't been living on the whole hundred thousand dollars anyway, because a lot of it is being taxed in. So you're probably netting, meaning anywhere between 65 and 75,000, depending on if you're the funding of 401k. So the question is, is how much do you actually have to make to continue enjoying the life that you've had? I'm gonna go on a limb and say, you probably only need to make about $40,000 a year. Well, where do you get the other 15 to $20,000 a year from, well, if you're under the age of 15, nine and a half here is what you can do. You can take the difference from your 401k. And I'm gonna go out here on the limit and say, shoot, pay the fricking penalty to pull the cash out on an annual basis.
(07:33): Right? What does that look like? So let's say you're taking out $20,000 and the penalty on that is basically maybe 10%, right? How much does that come out to? That's like two grand a year. And if you're working with a phenomenal investment advisor, I am sure they can make up the penalties that you're having to pay on the IRA money every single year. If you're working with a phenomenal or even maybe halfway decent person, but any, anybody can pretty much make that up. All right. So what does that do for you? It frees you up from doing what you hate working a job that you really don't love, but you're doing it because you think you need the money, but when you run the numbers, you may not need everything you think you need. So I would say, sit down with someone. If you find yourself in this situation, calculate out the numbers and see if you can start making those smart kind of withdrawals from your plan that will allow you to retire early and deal with less stress.
(08:29): Now, another thing I have clients do is we begin doing some Roth convergence on some of the money that they don't need. And we do the Roth convergence every single year, we do the withdrawal, roll it over to the Roth, convert it. Then we send the taxes to the IRS. So at the end of the year, they don't have a huge tax bill because we've sent the taxes to the IRS already. We can calculate those things out. Now, here's the thing about that strategy. If you're gonna do the Roth conversion, it has to be on money that you're not gonna need for five years, because if you take monies outta the Roth IRA, after you put it in, if you haven't waited five years, you're not gonna be able to take the gain on the Roth IRA without penalty. And again, you have to be 59 and a half in order to take the monies out without paying any penalties on it.
(09:15): But in their, in some situations, we're not gonna really worry about that. It just kind of depends on where you are in life. What's going on, where your stress levels are. I have a client right now, their stress levels are through the roof. And I said, you know what? You got the green light to retire this year. If you want to, right? I'd rather see you retire and living a long life than dead in a year or two, because your job is going to kill you. And so they haven't really made the decision yet if they're gonna pull the trigger, but I've given them the green light. And a lot of it is, is what's going on in society right now in terms of not society, but the war and different things like that. The economy inflation is like, oh my God, can we live in this high inflation?
(09:55): And I'm like, yep, we already got that built into your plan. Yep. You don't have to worry about that. You are good to go. So that's all I have for you folks today. I just wanted to rant a little bit and give you an idea or two that will help you get to where you want to be and stop doing the things that you hate a lot sooner than you probably thought you could. And if you want to take a look at that out with me, get on my calendar, click in the show notes, right? Schedule an appointment with me, and then we can sit down and run your numbers and, and tell you where you are and what it is that you're gonna need to do in order to get from where you are to where you really want to be. So that's it. You folks have an amazing day. Thanks again for tuning in. And so next time, everybody. 1, 2, 3, let's get it.
(10:42): This is the podcast factory.com.
