Episode Transcript
[00:00:00] Speaker A: 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.
[00:00:22] Speaker B: 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,
[00:00:48] Speaker A: no matter who you are, where you're
[00:00:50] Speaker B: from, or who you love.
So now let's start the Show. Here's Matt McClure.
[00:00:58] Speaker A: Well, hello there and welcome to another edition of Take Pride in retirement. Matt McClure here with you, your host, your advis, your pal, and your confidants. Really appreciate you being a part of things. As always, I always say it because I always mean it. This is the show where we talk about LGBTQ plus retirement issues and, and just, you know, retirement issues in general through an LGBTQ plus lens. And I thank you for being part of it. Please, please, please like and subscribe. If this is. If you're watching this on YouTube, hello. Or if you are on the podcast, like the podcast, subscribe to the podcast. Whatever you do, leave us a great comment. I would love it. Send it to friends, send it to family, he it to enemies, I don't care. Just send it out there and help us spread the word about all the great things that are going on.
So last time around we talked about how life insurance can protect you while you're alive. Today we're going to take that a little bit further. One step further. Okay.
We're talking about something that could really have a massive impact on your retirement and that's taxes.
Now, I will start out by saying I'm not like a tax attorney or a CPA or anything like that. I don't work with people who like, do your yearly taxes or anything and, you know, make recommendations, recommendations on that front. What I do though, is help people with long term tax planning by making sure that you have tax diversification across your financial life. And so you'll want like a tax free bucket, a tax deferred bucket, and a taxable bucket. Right? Those are the, those are kind of the big three. My favorite is the tax free bucket because you know, you don't have to pay taxes on it and life insurance is one of those things.
And so specifically, we're going to talk about tax free income while you're alive. Tax diversification as well. We're going to talk about a few myths that might be costing you some financial security here.
Gotta say as well, go to the website takeprideinretirement.com take prideinretirement.com plan.
If you would like to go there, you can sign up to get that free consultation. Also get a free copy of an ebook written by a wonderful colleague of mine called the Smart Retirement Plan. I wrote the afterword for that particular book and I would appreciate it if you'd go there and you can see my, my words by just filling out the quick little simple form there. And we'll get you a copy of that sent to your email because as I said, is an ebook.
Also, I gotta say that if you prefer, if you are one of the people who doesn't like to type in, you know, take pride in retirement.com and go to the website and look at all the nice wonderful things there. If you're more of a phone type, we do have a phone number, 855-246-921-1855-2469211. Is that number eight? Give it a call and I'll be glad to get back to you. If I don't happen to pick up immediately, just leave me a quick message, I'll get back to you. We can schedule a free consultation and that will be something that I think is very eye opening for you. There's no cost, there's no obligation at all. When you meet with me one on one. I just want to help make your life better and give you a retirement you can take pride in because that's what it's all about for me.
All right, so there are different realities that we're gonna, we're gonna go into today. A big reality check here. Many LGBTQ plus retirees, as I mentioned on the last episode, are single. Maybe you're aging alone, you have fewer tax shelters perhaps, and you may face higher income tax exposure.
And so tax strategy, which is what I like to help people with, one of the, one of the big things I like to help people with. So future tax strategy, tax planning matters and it matters quite a bit.
And so one of the things that you can do, as we talked about last time, you know, today's life insurance policies are not your father's, your grandfathers, your mother's your grandmother's. They are different, they've evolved. And so there are different kinds of life insurance policies out there that can actually have living benefits and have other benefits to you potentially while you are still alive. One of the most misunderstood tools in retirement planning, even among some financial advisors out there, quite frankly, is an iul.
It's an indexed universal life policy.
Now this isn't something that is for everyone, but if it is right for you and you use it correctly, it can be incredibly powerful for you.
So here's kind of the basic concept. An IUL policy provides life insurance protection, right? So it's your, your life insurance policy with the death benefit and all of that. Like that's kind of the basic thing. It builds cash value over time and it credits interest based on a market index.
The, the real sort of game changer here beyond that is you get the upside potential of the market without the direct market risks. Because many policies include a 0% floor. That means that the worst you can ever do, it's like zero is your hero, right? The worst you can ever is zero growth in a year. You can't lose anything in the market because it's not directly. Those funds are not directly invested in the market.
They are just tied to the performance of an index on the upside. If that index goes down in a year period or however long your, your crediting period is for that particular policy, then you don't do like, if it goes down 10%, you're at zero, you're sitting pretty, but it goes up 10%, then you partake in those gains.
So that is such a great tool to be able to have in your tool belt. There are some other tools.
You know, it's obviously a screwdriver doesn't do the same thing that a hammer does.
But think of this kind of like, I don't know, a screwdriver versus a power drill kind of a thing. You know, they can do the same kind of things. One of them does better for some situations and the other is more useful in other situations.
But if the market drops so you don't lose any money due to market performance and over time, that really creates stability. It also can give you a lot of peace of mind. As I was mentioning, there are other tools that kind of behave in the same way. One of them is a fixed indexed annuity. Talk about that a fair amount here on the show.
And that is a tool that you take and you kind of operates the same way. You can take part in the upside of the market without the downside. Risk and then you build a value inside that annuity and then you can turn that into income later on.
Most of the time though, that is going to be taxable.
And, and those are, you know, funds that you can invest in one in in different ways with non qualified funds or with qualified funds, meaning from a retirement account. You can just kind of roll that into an annuity and then it can grow with the market but have no downside risk, all those things.
But what we're talking about with an IUL is it is tax free income. And that is where things get really interesting. Yes.
Because with properly structured policies, and I got to emphasize that if it's structured the right way, you can access money through policy loans. And those loans are generally not considered taxable income because it's not taxable money, it's life insurance money. And so that creates a potential stream of tax free retirement income. You don't have to worry about required minimum distributions. Where Uncle Sam says, okay, you're 73 now, I'm holding out my hand where my money take out a certain amount. I'm requiring you to take out a certain minimum amount to then pay the taxes on that because I need my money.
No, there's no required minimum distributions. So there's no forced withdrawals, no surprise tax bills from anything like that. And those are policy loans that you never have to pay back because then the insurance policy can then cover paying off those loans, loans after you are gone.
And so it's a good thing because it's like if you've ever been, if, boy, if you ever want, if you've ever got low blood pressure and you really want to increase it very fast, go to us debt clock.org us debtclock.org It'll show you a big just kind of ticking time bomb of our national picture here with the national debt. Taxes are going to have to go up, we're going to have to raise revenue in this country at some points. Taxes are going to have to go up some point according to economists of different stripes. They've said this over and over. But of course what just happened this past year old tax cuts got extended.
So we're just kicking the can down the road as far as being able to, to reduce our national debt.
And so you know, if you're worried about future tax rates, this is a conversation about an IUL that's worth having, it's worth exploring that at least have it on the table. There are other tax free options, the main one being a Roth. So like a Roth IRA for example, where you go ahead and pay the taxes now, you put post tax dollars in, and then it's tax free retirement income for you later on.
But the thing is that, you know, there are no forced withdrawals here. There are no surprise tax bills here. There are none with the, with the Roth either. So those are things that you wouldn't have to worry about with the tax free income stream, but just these options on the table. Because if you don't know they exist, if they're not on the table ever at all, then how do you, like, you know, how do you deal with them? Like, how do you, how do you plan for something that you don't know exists? Right.
So you can learn more if you book a strategy session.
Take pride in retirement.com is the website you can go to. Take pride in retirement.com or take pride in retirement.com plan and get your plan. All right. 855-246-921 11 is the number. 855-246-9211.
And so why does this matter specifically for LGBTQ+ retirees? Well, in our community, a lot of retirees face what I call kind of invisible, almost indivisible with liberty and justice for all invisible tax risks. In the LGBTQ+ community, for example, there is a higher likelihood among the community of being single later in life.
Some people, you know, never get married. A lot of people never get married. And that's just fine. If that's what you, if you're fine with that, then I'm fine with that and everybody's fine with that.
But it comes with its own sort of, you know, lack of, maybe some tax advantages that could be if you were married, right?
Maybe you've got surviving partner who might have to pay some tax penalties perhaps, or you have a loss of married filing advantages because you haven't been married, as I was kind of alluding to a minute ago. And there's also something known as the widow's penalty or the widow's tax. So like one, one spouse passes away, the income bracket stays similar, but the tax brackets shrink. And so that can lead to significantly higher taxes for that remaining person. But tax free income sources, like an iul, like a Roth, like all those different things, can help offset that risk. They can provide some flexibility there. And that flexibility for you equals control. And what do I say about control? Always control the things you can control.
It's pretty much that easy, although, you know, structuring these types of policies and doing the things, not necessarily all that easy. But that's why? You work with a professional, right?
Hi, I'm the pro.
Give me a call. 855-246-9211 or go to takeprideinretirement.com it's absolutely free to do that. It's free to reach out for a consultation. I'll do a deep dive into your financial situation, provide you with all the reports and all the fancy things, and then I will tell you, here's what you got. Now, here's where that plan could be in X number of years. We'll do it, plan it out all the way to age 95 for you, and then we'll do the same thing with a recommended plan and then we'll see how those two stack up. And if you like what you see, then you can change to the recommended plan and I'll help you along in that. And if not, fine. No pressure. No pressure. No cost at all.
Well, one of the most important kind of concepts here, and I touched on it just a moment ago, but I'll dive into it just a little bit here.
More, a little bit more here, I should say, is the three bucket strategy. So what you always kind of want to do is have three different buckets of money in your retirement plan. One of those being taxable, taxable accounts, right? So that's, that would be things like your investments that are maybe directly in the market.
You know, you'd have to pay maybe a capital gains tax on those when you, when you sell those shares, that kind of thing.
So that's bucket one. Bucket two would be tax deferred accounts. So that's things like your 401ks, your IRAs you don't pay taxes on, especially like a 401k, you don't pay taxes on that upfront. That goes in tax free and then that grows over time. Then you pay taxes when you make the withdrawals, right?
And then bucket three is your tax free assets, things like an iul, things like a Roth account.
Most Americans are overloaded in that second bucket, that tax deferred bucket.
And so that creates something that you can look at as a ticking time bomb, which is funny because I just mentioned that a minute ago when I was talking about the national debt and taxes having to go up.
But this is also a ticking tax time bomb. If you are in, in taxable or tax deferred accounts, if you are overly invested in those, boy, you could have a big mess on your hands when you get to retirement. Especially the age of 73 when Uncle Sam says you've got to Take a requ. Minimum distribution and pay this, you know, this X amount of tax dollars. Pay the taxes now rather than later I think is a smart strategy for, for a chunk of your money.
And so that's the thing. I mean the IRS wants their cut. When you reach a certain age and retire, those requirement on distributions rather can push you into a higher tax bracket for perhaps it can increase Social Security taxation, it can trigger higher Medicare premiums. Thanks to Irmaa, who is our, not our friend, I think I mentioned her last kind of a couple of shows ago. Good old Irma. She is not the neighbor down the street. She is the one who looks two years back at your income and then says you got to pay more for your Medicare, perhaps significantly more this year because of what you made two years ago.
Right.
And so tax free assets can kind of act like, you know, think about a water heater for example. And I'm getting a little, a little, I don't know, DIY home improvement here for a second.
But think about your water heater. And it's got now these days, all of them are required to have a pressure valve on them so that if the water inside gets too hot, if there's too much pressure that builds up inside, as a result, the pressure valve releases, relieves that pressure.
And then you don't have an exploding water heater under your house. You don't have a rocket that's, that's perched under your house or wherever it might be.
So that's kind of the same thing with a tax free bucket of money. It can really give you flexibility in how you generate income.
And life insurance can be one of those tax free buckets. It can cause that ticking time bomb of taxes not to, to go off or to be significantly smaller.
You know, it could be a, instead of the, I don't know, it could be a tempest in a teapot. I don't even know if that's a thing that makes sense in that scenario. But you know what I mean? It can be instead of the mountain, it can be the molehill. In other words, really cut down on that risk of having to pay too much in taxes when you are in retirement.
Another sort of overlooked thing about life insurance is the stability piece.
Because again, as I've said, as we've been on this life insurance kick here for these past couple episodes, people think about it just as the, as the death benefit and that's it. But it also can benefit your retirement. And retirement isn't just about returns, it's about resilience. One of the biggest risks that retirees face is sequence of returns risk.
And so you know, that's when you have market losses early on in your retirement that do long term damage. Because if you've got, if you've retired and you're taking income from a particular source, usually the 401k, the IRA, that kind of thing, you're drawing that down while the market is going down, that's a double whammy. And it's not the kind of double whammy that you want early on in retirement because it can do long term damage, you may never recover from that, or it can take a long, long time just to get back to where you were before that market downturn while you were also taking withdrawals. And so that's basically, basically sequence of returns risk. And so having a stable asset that doesn't move with the market in a downward direction can really help. And that's how life insurance, along with annuities as well. But life insurance can really act as a volatility buffer because in down markets you may have alternative income sources, so you don't have to draw down those 401ks or IRAs or whatever might be invested directly in the market. And so that means you're not forced to sell investments at a loss.
And then emotionally that gives you a lot of peace of mind. And it matters big time in your retirement years, especially for LGBTQ retirees who value security over speculation.
And we have been through enough, we've come too far to give up what security we have and what security we hopefully will continue to gain in the future. 855-246-9200 11. If you want to talk to me about anything that I'm talking about here on the show, see where life insurance might fit into your retirement plan and, and give you that volatility buffer. Because when the market is volatile, you want something that doesn't move with the market.
You know, you want that stability, you want that peace of mind. Take pride in retirement.com is the website.
Take pride in retirement.com.
alright, so before I go, I got some myths to bust here and I was tempted to pull out, you know, like mythbusters theme music, because I love that show, but I was afraid that I would have to pay royalties. So imagine that. There's mythbusters music playing right now.
Great show though.
I'm gonna wrap up by addressing a few myths, busting a few myths here. And myth number one about life insurance is the recommendation that some people, gosh, they will just make this and this is a sure sign that someone is not acting in a fiduciary capacity. Right. That meaning that they have your best interests as an individual. They have your best interests that they're taking into account here.
And if they say this, they're not. It just is a blanket statement out to the general public. Right. They say, buy term and invest the difference or buy term and invest the rest.
No, because, you know, it may work for you, it may not. Right. It may be something that fits. If you are extremely disciplined, then that's great. You know, do that. Buy term life insurance and then invest the rest. But it assumes a few things. It assumes that you're going to have perfect discipline, that you're going to have perfect timing and you're going to have perfect markets to work with over the years. And real life rarely fits into that little tiny box that we're trying to squeeze it into when we say, you know, buy term and invest the difference. It could be something to explore for you, but I feel like there are better options for a lot of people in a lot of different situations. And that really is the crux of what I do is I don't just make the blanket statements out there of like, oh, you have to do this, everybody has to do this or that or the other.
Because that's never true or at least very rarely true. I should say with, here's something that everybody, from a financial standpoint, everybody has to do this or everybody should avoid that.
If you hear somebody talking like that, that person is not a fiduciary. That person is not acting in a fiduciary capacity at all. And so I, when I work one on one with you now here on the show, it's for educational purposes. But when I meet one on one with folks, it is definitely I'm working in a fiduciary capacity. So I have your best interest, best interests at heart and on my mind.
Myth number two, Life insurance is a bad investment.
Well, that's the thing, is it's a misconception. It's not meant to replace your investments.
It's meant to provide protection.
It's meant to help create stability and offer tax advantages.
It's not meant to replace your entire portfolio. I would never recommend to somebody, oh, let's, let's sell all of your investments and let's buy a big life insurance policy with that. And that's going to be your plan for the rest of your life? No, it can be part of a diversified portfolio that's appropriate for you, but it is never intended, and should never be intended to replace your entire investment portfolio or your entire retirement plan ever at all.
Myth number three. I don't need life insurance because I don't have kids.
Well, as we have determined. Well, you know that this myth is going to be busted right now, because legacy is not just about children. It could be a partner. It can be a cause. It could be a community. It could be chosen family.
It could be, you know, that. That charity that we spoke of, a religious institution, whatever. It might be that. That you really care about.
That is a definite big myth that you don't need life insurance because you don't have kids. And also, there are the living benefits that we've been talking about. And if you missed the last episode, go back and listen to it, because if I do say so myself, there are some good nuggets of info in that one also.
And myth number four here, finally, employer coverage. That's enough. I got. I got plenty. Well, not necessarily.
Employer policies tend to be pretty limited.
They're not portable. They're. They're just temporary. Usually. There's generally just term life that you cannot take with you to another job because you're on that group plan with the group being the people that you work with. Right. In whatever company you work for now.
And so it's not. It doesn't offer the flexibility that maybe a permanent policy might. Is it, as I said in the last episode, is it a good idea to have term, like, especially group term, because it's usually pretty cheap?
Yeah, it's usually a very good idea to have that if it's available to you, but it's not all that you should have, generally speaking.
So those are a few myths that I wanted to bust here before we go. And. And I also wanted to say, look, retirement planning in our community, in the LGBTQ community, has never been one size fits all.
If you take nothing else away from this episode or any episode of the show, take this away. It's never been one size fits all, and it will never be one size fits all. It requires flexibility and thoughtful strategies, really, for you and, you know, intentional protection as well, and a willingness to look beyond kind of the traditional advice to things that you might not have thought of or didn't even know exist. Because, you know, for example, life insurance. Surely you, before listening to this show, you knew it existed, but you didn't know all the different things that it can do. It can be that protection tool. It can be a tax strategy, really, or part of your overall tax strategy, anyway. It can be a vehicle for your legacy, for passing along your legacy to an organization or to folks who you love and care for in this life. And it can be a source of confidence because it can be that volatility buffer that we talked about. It can be, you know, if you know that, okay, I've got this death benefit is going to go to so and so love one or organization. You also know that, oh, I can use this as an income tool for tax free income in retirement.
I can do X, Y and Z with it. Maybe there are living benefits that are possible that if I, I know that if I go into a long term care facility, I'm going to be able to pay those bills because I'll have access to this plan because of living benefit riders. Boy, talk about confidence and an added layer of peace of mind because you have worked with a professional to go through, determine what's best for you and if a life insurance policy is what is best for you.
If you don't have one now or if you have one now that may be old and outdated and doesn't cover the things that you really need for it to cover.
Making those changes can give you all of that peace of mind and more. Really it can.
And so if you want to build a retirement plan that protects you, protects your partner, protects your independence and your legacy, I would love to help you go to take prideinretirement.com take pride in retirement.com schedule your free strategy session there. It's absolutely complimentary. Free of any cost, free of any obligation. I just want to help you. And so if this episode resonated with you also I want to tell you, share it with your friends, your family, anybody help us spread the word about Take Pride in retirement. Let's, let's build a movement here of people who are looking out for themselves and their loved ones and maybe those organizations that you care about as well. When you go into your retirement years, as you draw closer to retirement, have a plan in place that is going to be a point of pride for you.
You deserve a retirement you can take pride in. No matter who you are, where you come from, who you love, how much money you have, how you identify, none. Those things matters to me.
As far as you deserving a retirement you can take pride in because you do. Regardless of any of those things, any of those dividers and walls that we like to put up between ourselves, those things are irrelevant to the fact that you deserve a solid retirement. And I'd love to help you get there. Take Pride in Retirement.com Take Pride in Retirement.com is the website or call 8552-4692-1185-5246-9211 well, that's going to do it for this edition of the show. It has come and gone of course, very quickly as it always does, because I love getting together with you.
Even though I can't hear you talk back. I love being here with you. Regardless, thank you so much for joining me for this edition of the show. And until next time, take pride in yourselves and take care of each other. We'll see you then.
[00:28:09] Speaker B: Thanks for listening to Take Pride in Retirement Members of the LGBTQ 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 takeprideinretirement.com investment advisory services offered through Brookstone Capital Management, LLC, BCM a registered investment Advisor, BCM and Active Wealth Management, Inc. 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.
[00:28:48] Speaker A: 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 ADV2A item 4 for additional information. Information provided is not intended as tax or legal adv advice and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional. 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.
