Income Shield

ABOUT THIS EPISODE

On this episode, Eddie discusses the Income Shield. This comprehensive plan focuses on avoiding income mistakes and managing your income between your work life and your retirement years.    

If you want to read the entire story, pick up a copy of his book Easy Retirement Solutions, now available on Amazon.com 

To learn more, visit Eddie online at: https://www.padlockretirement.com/ 

And Welcome to the Easy Retirement Solutions podcast with financial expert and number one Amazon bestselling author Eddie Bennett. Each episode features helpful insights, practical tips, and reliable strategies to help make your retirement as enjoyable as possible. For the next few minutes, enjoyed listening as co host Dave Henning talks with Eddie Bennett about the retirement secrets your broker doesn't want you to know, Chapter four income shield and how to use Uh, vehicles in the insurance industry that can that can be protected, uh, you know, from from basically paying a lot of taxes on them. Is that sound rout right? Yeah, taxes are a big thing, right Um and uh for most of you know, everyone that's out there. Um, you know, you have what's called a defined contribution...

...plan four one K plan, meaning that they define the contribution the amount of money that you could put into it, right um And and well that's why I love federal employees because they still have a pension, right um. And and that's really cool. That's what's called a defined benefit, meaning that the company says, hey, this is what we're going to pay you if you make it to retirement. Right. In the past, there were what we like a lot of people in you know, in our industry, we caught it the three legged stool of retirement that you know, and you know, anyone who's ever sat on a bar stool, three legs are pretty stable, right. I don't want to sit on one as two. I just I don't think that's gonna work one another pogo stick. So but I can't do that. Um. But if three legged stool, that would be your pension, that would be your Social Security and then that would be your personal savings, UM. And so traditional retirement planning what's set up that way? And...

...so you had three places where money was coming from, UM, and you know, and that was really that was that's grandfather's retirement, right. Grandfather's not around anymore. Those retirement plans aren't around anymore. Companies aren't doing pension plans anymore. You know, going into the days of a guy or you know, a mayor or female who would go and work, um at a company and they'd worked there for thirty five years, you know, they missed three days, right, society has changed a little bit. Yeah, those are good folks, um, but you know they work in one place for their whole life and they retired, Well, pinsions made a lot of sinci. Then you know, now people are working in you know for thirty years, they may change jobs twelve times. Yeah, it's an average, um, change jobs twelve times. I mean, you really don't have any way of ever creating any type of substantial pension. And the eighties is when you...

...know, they started bringing in the four O one case and so four one ks are taxed, uh, you know on the back end, and so most people have put money in into a retirement account for years. That when they start taking distributions. And that's what the income shield is, is a distribution plan when and where and how to take money from all the accounts that you have. But once you start taking money out of that four one k when you retire, you start having to pay taxes. Right, you have to start paying taxes on that money. And so um, making a distribution plan that minimizes the amount of taxes, right. Um case in point talked to a person where, um, they had something to do. I can't remember what it was. Um, maybe they're going to buy another car, but whatever the situation was, Um, you know, they just kind of talked to their broker, and the broker said, well, you have a...

CD that's coming to and so you know, we'll just exercise the CD. We'll let you pull the money out of the CD. Um. They use the money, you know, to pay for that. The unfortunate thing about that was is that the money that was coming to them was taxable okay, and so uh they took this money, um and guess what then they had to pay taxes on it because it was seen as income. Well, if you had just stepped back a little bit and seen that, like, Okay, well if you pull from this account, you're gonna pay income taxes on that. But you have plenty of money in your savings, and that's what this person had. They had tons like they could have wrote a check and it would have been a big issue, um, and and avoided that taxable event. Those are those you know, those things along the way, like we talked about those destinations and things that change. Those are the things that we do as we move forward through. Your plan is taking a look at those things, right, like, well, we don't take from this account,...

...right because um, you know, I asked this question to everyone I talked to, you know, and you you know, you don't have to answer this because I think I know what your answering me. But um, do you think taxes are going to go up or down? That's a no printer, you know, and you know and and I've never had anybody, by the way, I've never had anybody tell me they thought they were going to go down. Um. Some people you know where I don't never really thought about it. And that's fine too, you know. Um, but you don't really have to be that a student financial situations right to to look at the environment of of the social security situation like we talked about earlier, of the government spending more money than it's taking in. Um, and you know, just to to the government, you know, their primary income so to speak, it's taxes and so uh, they're gonna tax you and in programs and things are getting bigger and everything is getting bigger and bigger and bigger,...

...and so taxes are gonna go up. Um. The debt, I mean I tell people all the time, I think it's US debt clock dot org. And may be wrong on that, but yeah, I think it's US and debt clock dot org. I challenge everyone just go to that website and just watch it click, it's the it's the national debt, right, I mean it's it's trillions of dollars. We can't even fathom what that number is. So the point is is that when you when it comes to distribution, when it comes to having an income plan, you need to make sure that one you're take pulling money from the correct accounts. You know, a lot of people that I've talked to, I mean that there are clients. I mean they're they've been savvy investors. You know, they have a lot of different areas that they can pull money from. And uh, they may have savings, they may have safe money, they may have invested money, they may have CDs and may have an duties and they have all different types...

...of you know, places to pull money from, and it makes sense to pull them from the right one that minimizes taxes. So we always, you know, do strategies revolving around income and taxes, um. But in in retirement, it's all about preserving and protecting, right you shouldn't. I mean, here's the thing, and I don't mean this in a bad way, but if you are retiring and you're sitting down with me and you need to earn more money. Then then we're then you're probably not in a good place to retire. Right. Retirement is when you've made it that that's that's when you've put enough money back. It doesn't mean you know that you have to have some certain amount, right, It's just if you still need to earn a large amount of money on your retirement to make it to retirement, then then something's gone wrong there. Right. And so in retirement it's more about preserving and protecting um. For example, income needs that I asked people in...

...the next ten years, do you think you'll need another car? Right? Maybe? Maybe not? Are you going to travel? Yes? No? What does that look like? You know? Um? Are you prepared for any market downturns? Right? Um, hopefully you are right hopefully talking to me. We can get that thing taken care of. But but have you thought about those things? Have you thought about inflation? We've already went over that, right, But inflation is um about as um definite as taxes. Right. You know you just said it. You said you bought your half first house dollars, right, yeah, yeah, and that's wild. Um. The office manager here in my office, she she pulled up, she's get an old change or something like that. And I said, you got a nice ride, you get a new rude? She says, no, they're trying to sell it to me, right, But it was, uh,...

...very nice vehicle. But I said, how much does that thing? He said, it's ninety thousand dollars. Think about it. It's just a vehicle, right, And then I'm gonna say it's not a nice vehicle. It's just you know, Ford suv. Right, but dollars right, you bought you could you could buy three houses back to the house. Right. So yeah, inflation is certain, right, Um, the cost of living is increasing, and that's certain, and so we need to make a good income plan to make sure that we can take care of those things. And one final thought on that is, you know, well I want to live on five thousand dollars a month. Okay, Well, once again we can. We can dig into the plan. Financial softwares that I have can show you what that would look like. It it puts in the inflation, it puts in the travel, it puts in maybe you shouldn't, maybe you'll buy another car. All of those variables can be put in there, and I can say, actually, you could live off seven thousand dollars a month and be great, or you may want to drop that back down to forty two.

Right and so um, once again, it's all based on that information, um, and and it's not it's not my opinion and it's not how you feel, right, it's just making that great decision on the information that you have on on on your plan that you've put together so on, on you know, on your retirement, on your the on the things that you've put um put back for all these years. Right, we're using that data which is real. You know. That's another thing. You know, you hear people talk all the time like, well, you know, if you lose money, um, that's a paper loss. And that's true if you're thirty, right, yeah, if I'm sixty five, it's not a paper loss anymore because I need that money. Right, it's not a paper loss of real loss. And so don't let people tell you things like that like, well, it's not a loss until you've pulled it out, you until you realize that loss. And I know what they're saying, and they are...

...technically correct. But if I'm sixty seven years old and I'm relying on this money to distribute income to me, monthly. It makes a great deal to me if I lose thirty of it or maybe sometimes even ten. Right, So you've got to be very careful and distributing your money. And so if inflation goes up, are you just gonna take more money? Well? Can you always the question? Or are you just gonna have to stay with the amount that you already have? What if you don't have a plane, you have no idea. Once again, that's just what we do. I'm reminded of the old beatle of George Harrison's song tax Man, where where you're taxing me from start to start to finish. You know who was? It? Was? It Mark Twain that said two things there for certain death and taxes. That's it. I had a I was renting going to graduate school years ago in the Midwest. I was renting from a mailman, a mailman who decided to shelter his uh, his retirement by hey, I think he owned...

...like over the years he had made it available. He uh, I think he owned like maybe thirty thirty five hot rental houses, little small houses, and over time he could determine which one could he sell later on and then balance that with with the with the investment, you know, for repairs and maintenance and so forth. Who to level that all out? I think you told a story as well about a couple who who had rental houses and a similar thing where their banker just said, we'll just take the c D out and this and of course, as you know, c D s now are making what less than maybe a one half of one per cent, so with inflation, you're probably actually losing money with the CD. With that sounds about right, yeah, I mean, you know, and and and that's the thing is, you know a lot of different vehicles out there, and so each one may fit in a situation, uh, depending on where your needs...

...are. And so you know, like I tell people all the time, is a CD bad? What depends on your situation. You know, they've been good, you know, but but we won't know unless we open up the hood, right and see what's in there. Um, So you know, the vehicles that are in place where people can you know, a lot of times they are good, they're good products, they're good things that you should do or maybe they're good products, but they're not for you. And so we won't know that until we until we look at it. But yet, like you know that that couple, Um, you know, they were taking distributions from something and they wound up having to pay income taxes on when they could have just cut a check. Um. So you know, it's just one of those deals where someone if they were paying attention, you know, to to what was going on, Um, they could have made a better decision and I got a tax bill. They were upset about that. But yeah, of course absolutely, I think you find them about this. How important was for a second opinion? Absolutely? Will you sound like the...

...the man to talk to for sure? With your with your tools, you're training your skills, your education and your and basically though, the important thing is you're caring, caring for people. I'm speaking with with Eddie Bennett, the co author of of The Uncomplicated Truths Early Retirement Solutions, The Uncomplicated Truth on Retiring with Ease. Eddie, has been a pleasure to talk with you today and we'll see you on the flip side. All it sounds good, Thanks for having it. Thanks for listening to the Easy Retirement Solutions podcast with retirement planning expert and number one Amazon bestselling author Eddie Bennett. Learn more or get a copy of Eddie's book when you reach out to him at easy Retirement Solutions dot com. That's easy Retirement solutions dot com. Small extent, its worst,.

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