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We are joined by two great guests an acute -- and so we're here with Matt dean ended Damon Robert thank you guys for joining us.
I knew you -- recently written an article about the importance of retirement and making sure that people can't -- -- What is coming especially when it.
So much national debt and a lot of policies being debated right now I doesn't start with you Damon.
Why is this so import tax.
The reason this is so important this is really two reasons.
Number one is that.
A tax efficient plan in retirement wolf we'll make sure that retirees funds will last a lot longer view and then number two is the majority of Americans are.
Saving their money in retirement accounts like a 401K.
Or an IRA and man these are tax deferred accounts.
And if they can.
If they can save money on their taxes yes -- by knowing what tax laws are now and then they'll be better off in the future.
So that's a lot to understand because a lot of people think at hand putting away money in my -- -- -- my retirement.
That's great I -- saving that itself is section he has such a huge accomplishment but -- you know this is.
The some of the rules that we need to understand what are the basics to people should be thinking about more when they do take out that currently there.
Well you need to be thinking about what potentially attack traits will be in the future so a lot of people think that during retirement my -- going to be lower and so my taxes will be lower.
But that may not be the case -- in 2012 the contrast Congressional Budget Office.
But I report that said -- at some of the lowest tax rates we've seen since 1981.
What that means is that potentially people are saving money they're deferring taxes.
But they potentially may take that money out later on during retirement and tax rates are higher so they're really not -- -- that.
On the taxes that they thought they -- state.
Exactly so what should we expect attacker tax rate to look like having I know you don't have a crystal ball to tell me but what -- what is feasible to expect.
Well while we don't have a crystal ball we do you have an educated guess and you can look at.
What current tax rates are like -- adjustments and we are at historic low tax rates in comparison when the bush tax cuts cuts came -- to play.
We had the 10% tax bracket introduced which we didn't have since 1941.
And so across the board we are paying lower taxes yet.
We're sitting out.
A historic high -- debt rate.
And with our debt being so high we only have two ways of paying that down one would be to cut spending the other would -- to raise taxes and it's our belief that.
Taxes are gonna go up.
In the future and so with that in mind it's really important -- know what can I do now to become tax efficient now and in the future.
So what are some of those well I know the -- that continue to change a book how do you allow individuals to become.
More efficient and more -- -- and make sure that the hard.
Earned money now either way Farr -- K every single page -- in this certainly affects every single one of us that are lucky enough people.
Well that congress heard that IRS is actually made some changes -- the way that.
Money has been safe inside before -- -- and IRA and can be potentially converted to a tax free investment.
Basically what they've allowed for us to do is do what they call it an IRA conversion.
-- that isn't where you take that money you pay the tax on it you move it over into Iraq.
A Roth will grow tax free.
And you in so those you'll never have to pay taxes on later when potentially tax rates are higher.
They removed all other restrictions so you can do as much -- you want.
You don't have to wait till you're 59 and a half and it doesn't matter how much you -- you can still -- those numbers and so it's a great opportunity for every American has money in those accounts.
Be more tax efficient to move it over now while tax rates are low so they don't pay higher tax rates in the future.
So essentially pay up now and then not worry about later yeah.
In most cases I mean I -- -- -- -- team you have to look at what's your tax rate is now and if you are for example.
Couple making 60000 dollars a year.
We'll pay a 15% tax.
But in the future if you if you roll back the clock and congress does raise taxes they typically will not reinvent the wheel.
They will go back to what it was and if you compare that to someone now making 60000 dollars is going to be.
15% whereas before B 27 and a half percent in 2001 and so.
You look at your tax rates and you say I am here and if I can afford to.
Take a little bit more before -- hit the next tax bracket and I'm gonna do that much you need to be careful because if you take too much you will end up paying more tax and defeating the whole purpose.
That's exactly my fear is if I take this advice literally where to violate that when I'm trying to retire.
But what what other rules of the game in terms making sure your maximizing.
Well there's a few things that we would suggest number one if your employer's -- your contributions.
Take advantage of that that's free money -- -- matching 3% make sure you're contributing up to that.
If you have money in a 40 and care and IRA.
And you're in a tax bracket you have room inside of that tax bracket did do some conversions.
Look at opportunities to take that money pay the tax on it move it over into the rock.
Without taking you into a higher tax bracket.
-- -- product that we should be watching out for I know there's a lot of different kinds of an excellent actors out there.
And people tend to do a lot of research on Internet I didn't -- flags that we should be watching for in terms of making when you make that decision.
I think it comes down to your stage of life.
Certain investments are appropriate at different times in your life that.
In your thirties and forties you can afford take more risk in the stock market.
Was mutual funds and stocks in your later years closer retirement you need to be taking less risk.
While return is important.
The preservation of what you have becomes almost more important.
And so looking at products or financial vehicles that provides safety as well as return in the later years of your life this is probably.
The most important thing to look at.
And talking a little bit about recent news obviously excited decided not to tape are and that has had a pretty positive effect on the stock market this -- it.
The market was -- jittery over the summer.
For you guys as you're dealing with retirement money in very important savings for a lot of people you know what's your short term.
Cents on what's happening and how people should respond to it.
Well it's hard to predict the future and a lot of people -- you know there was some people are saying get out the market before they make that decision because.
When the market jumped when they gave positive news or what the market interpreted as positive news.
It very well could have been negative news and we could have had a come back on.
So we tell people as has their investing again at Siemens that is make sure -- -- -- according to kind of risk.
That you can take that kind of loss is the potentially -- take your portfolio.
And make sure it's age appropriate if your plan -- retire in the next couple of years.
You can afford large losses in your portfolio because it's very difficult to get them back and short period of time.
Right through it all about timing is when I'm taking away at absolutely thank you very much -- Deaton and Damon Roberts both acute financial of course if you wanna learn more about that we can check out their website which is acute financial.
Dot -- in of course there article that they were here talking to us about today.
Thank you again both of you humidity hair.
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