How to Structure Retirement Income for Lower Taxes and More Flexibility

Most retirees are shocked by how much of their hard-earned savings goes straight to taxes—are you prepared?

Discover the strategies that can help you keep more of your money in retirement and avoid the most common tax pitfalls.

In this episode, April Schoen reveals how smart tax planning can dramatically impact your future income and financial freedom after you stop working.

You’ll discover…

• Why many retirees end up in higher tax brackets than they ever expected

• The “three buckets” framework for easily understanding your tax exposure

• How your mix of assets can make or break your income in retirement

• The hidden risk of required minimum distributions—and how to prepare for them

• A simple shift that could save you thousands in taxes and Medicare premiums

Mentioned in this episode:

• https://curryschoenfinancial.com/

Transcript:

April Schoen: Hello, and welcome. My name is April Schoen, and I'm glad you're here today, because today we're going to be talking about taxes in retirement and some strategies of how you can keep more of your money in your pocket. Because if you're planning for retirement, it doesn't matter if your income is going to be is going to be coming from a pension and Social Security or if it's going to be coming mostly from, say, a 401k or a profit-sharing plan. 

This session is going to be for you, because here's the thing, most people's retirement income is going to be largely taxable by default, and that can come as a big surprise when you realize how much you've worked for and how much is going to be going straight to the IRS. Now my goal today is to keep this simple, so that you walk away knowing exactly why, first of all, why this matters so much, how this can have a big impact on you, how you can structure your income so that more of it stays in your pocket, not just Washington's. 

I've been in the financial services industry now for a little over 15 years, and I specialize in helping people get ready for that next chapter called retirement. I work with a lot of people in the Florida Retirement System and high-income earning professionals who have built a lot of their savings in pre-tax retirement accounts, like 401Ks, 403Bs, profit profit-sharing plans. And over the years, I've seen a pattern where people may do a great job of saving, but almost no one has a plan for taxes once the paycheck stops. 

And that's where we're going to fix today. I had a meeting earlier this week with a doctor, and she asked me a question, which was, hey, April, what is your favorite financial product for clients? Which I thought was kind of an interesting question to ask. And, you know, I thought about it for a minute, and I said, well, that question, that answer, really depends on the client and who I'm meeting with. 

What may be appropriate for you at this stage in your life, when you're about 10 years from retirement, isn't going to be appropriate for someone who's in their 30s and 40s and earlier in their career. So what I told her was that by and large, though, meeting with all my clients, and whether they're about to walk out the door or they're still a few years away from retirement, my favorite thing to do is tax planning. 

And she kind of laughed, and she's like, that's the first time I've ever heard that, because I don't think it sounds very fun and exciting. But you're going to see, as we get into this today, that this is really where you can have a big impact on what your future income is going to look like in retirement, but not only just like your future income, but also, you know, being able to have access to money along the way before you even get there. 

Because really having this structure and having this balance between different types of investment accounts and retirement accounts is going to make a big difference for you again, not just in retirement, but as you go along. So, I want to start with, why does this matter so much? 

Well, if you've got you know, different income sources, let's say a pension, Social Security, retirement accounts, you know, your income in retirement is going to probably be higher than you think it's going to be. Because what are we told? We're told that our income in retirement is going to be lower, that we're going to be in a lower tax bracket in retirement. But I can tell you firsthand from working with hundreds and hundreds of clients that that's not what I see. 

I do not see, by and large, my clients are not in lower income brackets in retirement. Let's think about this for a second. If you have a pension, it's all taxable. If you have Social Security, it's mostly taxable. Income coming from deferred comp, 403Bs, 401Ks, DROP accounts, profit sharing plans, it's all taxable. And when you reach your 70s, you're going to have required minimum distributions, which is when the IRS makes you take money out, whether you need it or you want it. 

I talk about RMDs every week with clients, and this means that it's very easy for you to end up in a higher tax bracket in retirement than you might expect once you start stacking all of these incomes together. And that higher income means more taxes, and it can also trigger you to have higher Medicare premiums through something called IRMA, which is a Medicare surcharge. Basically means the more money you make, the more you pay for Medicare. 

So those are all things we have to be careful of. But the good news is, is that when you understand the system, you understand the rules of the game, you can diversify your accounts quickly, right away, and you can actually create more spendable income in retirement with the same gross income. And isn't that what we want? 

When clients tell me, hey, I'm going to be in a lower tax bracket in retirement, a lot of them think it's because their income is going to be less. I'm like, is that really what you want? This time in your life, when you now have the time freedom to do the things that you want to do? You want to have less income coming in? No, that's not what we want. If anything, we want to have more spendable income in retirement, to be able to go and enjoy those things, right? 

To be able to go on those trips, to be able to lean into those hobbies, and have the money and the flexibility and the freedom to live the life that we want. And so that is what we're going to unpack today. And so I promise today I'm going to keep this clear and straightforward. It's going to be worth your time. I'm going to go through three types of retirement accounts in plain English so you know exactly what they are. 

I'm going to show you a simple framework that I use with clients to help make sense of where your money is sitting today. And we're gonna talk about how to mix these accounts together strategically so that you can actually reduce taxes over time and increase your after-tax income when you retire. Doesn't that sound good? I'm gonna show you an example of two people with the exact same income, how they can end up with very different results after taxes. 

And finally, I'm going to show you how you can apply this to your own situation by scheduling a 30-minute complimentary focus session where we'll build what I call your after-tax income map. So you're going to leave today with both the why and the how. Does that sound good? Let's dive in and get started today. So let's start with these three buckets of money. 

When I sit down with clients, one of the first things that we look at together is, where is your money actually at? Before we can talk about taxes, we need to understand what types of accounts you already have on your balance sheet and how those accounts are going to be taxed. Now don't worry, I'm not going to throw a bunch of tax jargon at you.

I'm going to show you a very simple way to think about this, a framework that I call the three buckets of money. And once you see this, you're instantly going to understand why most people pay more in taxes than they have to, and how you can start structuring things differently. So let's get into these three buckets. The first bucket is what I call as tax-deferred. And this is where most people have the majority of their retirement savings. These are accounts like a 401k, a 403b, a profit-sharing plan. 

And here's how these plans work. You don't pay taxes on the money you put in today. So you put in money today, tax deferred, you're getting that deduction upfront. It's going to grow, tax deferred, so you're not paying any taxes while it's growing, which that sounds good, right? But the catch is, is that when you retire and you start pulling money out of this account, every single dollar is taxed at your highest marginal rate. I'm gonna say that again. 

Every dollar is taxed at your highest marginal rate. I can't tell you how many clients that I have a conversation about them taking money out of their IRA, their retirement account, and they ask me, is there any way I can avoid the taxes. And the answer is no. Once it's in there, there's nothing that we can do about that tax, except maybe doing what's called a Roth conversion, which we'll get into later. 

But you know, of course, at that point, I'm talking about clients taking money out, right? So at that point, it's too late for us to do any planning. So let's think about this for a second. If you needed to take out $80,000, take out $80,000 from this bucket. It actually doesn't even matter what you need to take out. I talked to a client the other day, and she'd like to take out $10,000. Guess what? It's all taxable. All taxable at our highest marginal rate. 

But if you did need to take out $80,000 from this bucket, you're going to have to withdraw 100,000, 110, 120,000 just to cover the taxes, depending on what your other income streams are. And once you hit your 70s and the IRS steps in with required minimum distributions, this means you must, they're called required, you must start pulling this money out, even if you don't need it. This is why a lot of people end up being surprised by their tax bill. 

Because they may have done a great job saving, but everything is in one fully taxable bucket. And what I find is that when it's in that taxable bucket, it's almost locked in prison because that tax is now going to hinder you from wanting to take the money out. It's that psychological side of it. I've got the money here, but I don't want to touch it, because I'm going to have to pay all this tax. 

And then the issue with these accounts, too, kind of, going back to the RMDs, is, you know, even when you're in retirement, you're still going to want to have assets that are continuing to grow on your balance sheet, because you need to help offset inflation. And you can't always do that, or you actually can't do that with this bucket, because of those required minimum distributions. You're going to be forced to pull a portion out every single year. 

And so now that account's not going to be as easily set up for more growth. So we really want to be careful here how much we're going to end up having in this tax-deferred bucket when we get to retirement. The second bucket is tax-favored. Now this includes things like Roth IRAs, Roth 401Ks, properly structured cash value life insurance policies. 

And with these, you pay the taxes up front, so I pay the tax today, and then I'm contributing to the plan, but then money grows tax-free, so I'm not paying any taxes while it's growing, and I can take it out tax-free in retirement. And here's why this matters, because when all of your income isn't coming from taxable sources, you now have control. You can pull money from this bucket without increasing your taxable income. 

That's going to help you stay in a lower tax bracket. It's going to help you avoid those Medicare surcharges I talked about. It's going to help you keep more of what you earned. And this is going to give you more confidence in retirement, because you're not worried about every withdrawal pushing you into a higher bracket. It's kind of like having a financial pressure release valve. And these are great assets to have grow for your future. 

You know, due to that tax-free growth, you can take it out tax-free, there are no required minimum distributions right now on these types of accounts, so you're not going to be forced to take any money out. You can let it grow for as long as you want. So this can really become your tax-free inflation hedge. I recently met with a couple who they've been retired for a few years, and they're looking to buy a new car, and they're excited about their new car, and, you know, they've got the money to do it, but, like most people, they're just not sure of how to do it. 

What's the best way to pay for the car? Should they finance it? Well, interest rates are kind of high today than what they've been. Should they take cash? Should they pull money from their IRAs? Their Roth IRAs, they've got a lot of choices and options. So we looked at all their options and how each one's going to impact their taxes, their Medicare premiums. 

We looked at their investments and how they're doing, and together, we decided to use funds from their Roth IRA. And this one decision saved them about $12,000 in taxes, and it kept them below that Medicare IRMA threshold. Because if they had taken all of that out of their IRA, it not only would they have been paying more in taxes, but it was going to push them over that threshold. 

So they're so happy and thrilled not just about the new car, but about knowing, hey, we're making a smart financial move. Because it feels good to be able to make this big purchase without worrying about what is my tax bill going to be later? What's the impact of this going to be on me? And then the third bucket is taxable, or sometimes I call them taxed as you go, because these are non-retirement accounts. 

So I want you to think brokerage accounts, CDs, mutual funds, and stocks. They're just, it's not a it's a non retirement account. So this one gets taxed as you go. So this is an account you put money in today that you've already paid taxes on, and then you're usually going to get a 1099 at the end of every year where you pay taxes on interest, dividends, realized capital gains. Now people often overlook this bucket because it doesn't sound great, like I don't want to have to pay taxes every year. 

So a few things on that. One, on these types of accounts, we really want to make sure that we're being tax efficient. I've had several of these conversations in the last few weeks with clients who are looking to, they have some additional savings. You know, one of my clients, she is a university professor, she's doing a great job saving in her retirement accounts, but we're looking to do some diversification and save elsewhere on her balance sheet. 

And so one of the things that we talked about was, is, I was like, hey, we whatever we do here, we have to make sure it's very tax efficient, because she's already in high income brackets currently with her current income. And so we really want to make sure that whatever we put this in is going to be tax-efficient. Because, again, it's not always how much we earn, it's how much are we going to keep. 

And then another one of my clients, they're over 73, they're taking out their required minimum distributions. And we talked about, hey, they have to pull this money out, but they don't really need it for income, so we're reinvesting it back on their balance sheet. But the same thing here, we talked about tax efficiency of where those assets are going. 

So like I said, sometimes this bucket can get overlooked, but here's the actual advantages of these accounts too, especially for someone who is not retired yet. Because you can access this money at any time. There are no age restrictions, there are no early withdrawal penalties, there are no RMDs. There are no income limits. This bucket actually gives you a lot of flexibility and control. 

And then when you do go to take money out, it's going to be partially taxable, because there's a portion of this account that you've already paid taxes on. So that's going to come back to you without taxes, and then you'll just pay taxes on the growth or earnings. So having money in this bucket gives you liquidity and flexibility on your way to retirement, and then it's going to give you that same liquidity and flexibility when you are in retirement, because now you have another bucket where you can control how much income you have coming in and then how much you're going to be paying in taxes. 

Another thing on these accounts is these assets, as long as they're structured properly, will usually pass to your beneficiaries with very little tax due, because they get a step-up in cost basis. So when we start thinking about legacy planning and beneficiaries and how all those are going to impact our beneficiaries, this is an account we want to take into consideration, and also those tax-favored assets as well. 

So those three buckets are tax-deferred, tax-favored, and taxable. And here's a key takeaway. Most people I meet with have almost everything in that first bucket, which is fully taxable. And when that's the case, you're really setting yourself up for a tax storm in retirement. So if that is you, I would recommend that you schedule a time for us to do that 30-minute call, that 30-minute focus session, so we can look at where your assets are today, and then start talking about how you can start making shifts to have more balance across these three types of accounts. 

Because when you spread your savings across all three buckets, you get more control back. You get to decide, then in retirement, which buckets to pull from. You know, that's going to depend on what's happening in your income. That's going to depend on what are the tax rates? You know, there's a lot of concern right now that tax rates are going to go up in the future. That we're still in these like lower-income tax brackets for the next few years, but then what's going to happen? 

So this is a great planning time, great planning opportunity for you to take advantage of these lower-income bracket years to prepare for if and when we have higher taxes in the future. Because that flexibility, or being able to take advantage of these opportunities now, could literally save you 1000s of dollars and create 1000s of dollars more in spendable income every year for your retirement.

So I recently worked with a couple. They both work for the state. They have pensions, Social Security, deferred comp accounts. They're in DROP, and we found that, you know, almost all of their income is going to be taxable. But then we added in some of those tax-favored savings. We gave them a way to, like, pull income in the future without bumping into some higher brackets, and that is going to save them about 6000 a year in taxes that they're going to be able to use for travel. 

So this money that they're going to save on taxes in the future, we're earmarking that right now for their travel fund. So that's really the impact of being able to be strategic. So now that you've gone through and we think about these three buckets, I do want to talk a little bit about the impact of taxes, because I want to show you a simple side-by-side example. 

So it's getting like same income, but we're taking money from different places, and so this is where you can see how the impact of taxes and the impact of having tax diversification really helps you. Because understanding taxes isn't really the math, right? It's not the numbers. It's about how much of your income you actually get to keep and spend. 

You can have two people. I can have two clients in the exact same income situation, the exact same total savings, but if they're using their buckets differently, one could end up with 1000s more in spendable income every single year. So let's look at this example. So let's say a couple needed an extra $100,000 on top of their other income they have coming in, maybe from a pension or Social Security, and this is money that they need to live their life comfortably in retirement. 

So we're going to look at Scenario A, where all of their income comes from tax-deferred accounts. Things like a 401k, DROP, traditional IRAs, profit sharing plans. So when they withdraw that 100,000, every dollar is taxable. And if they're in the 32% tax bracket, that means 32% goes to taxes right off the top. And that's going to leave them with 68,000 to spend. So they took out 100,000, 32,000 went to taxes. 

They've now got 68,000 to spend. So let's look at a different structure and say, hey, can we increase that spendable income? So Scenario B, same $100,000 total income, but now it's coming from different buckets. So let's say half 50,000 is still coming from that same tax-deferred bucket, like a 401k, but the other half is going to come from more tax-favored sources. This could be a Roth account. This could be properly structured, cash value life insurance, it doesn't matter, as long as it's coming from that tax-favored asset. 

Well, the first 50,000 is still taxable, but the second 50,000 as long as it's structured properly, comes out tax-free. So now, instead of paying 32,000 in taxes, they're paying 16,000 in taxes. It cuts their tax bill in half, and now they have $84,000 to spend instead of 68. And that $16,000 difference in after-tax income, that's coming in every single year. And here's where that light bulb usually goes off because people realize it's not just about how much you have saved, it's about how much you keep and how that difference is gonna compound over time. 

Over a 20-year retirement, that $16,000 a year gap adds up to more than 300,000 in extra spendable income. That's going to make a big difference for you in retirement. I worked with a physician recently who had built everything in those pre-tax retirement accounts, especially in some profit-sharing plans. 

And once we took a look at everything, and then we rebalanced his mix, not only was he able to save on taxes in retirement, but he was actually able to also avoid an entire IRMA tier, which was going to save him again, not just on taxes, but on those Medicare premiums, and gave him more flexibility and control as he was getting closer to retirement. Because we weren't quite sure the exact age he wants to retire. 

So this is going to also give him that flexibility to retire early if he wants to. So it can definitely make an impact for you. So when we take a look at these different tax buckets and how to structure your investments, your retirement accounts, what does this really mean for you? You know, it's not just about lowering your tax bill, although that's nice. It's about giving yourself options. 

It's flexibility to pull income from the right bucket at the right time, depending on tax laws, depending on market conditions. It gives you control over how much of your income is going to trigger taxes, and it gives you confidence knowing you can maintain your lifestyle without worrying about tax surprises every year. I have a client who, when we first started working together, she was about to retire from a large telecom company, and she had several income sources. A pension. 

I know those aren't as common anymore, but she had a pension, Social Security. She had a sizable 401k. Most of her assets were in that tax-deferred bucket. But she did have a Roth IRA, and she had a taxable investment account. And when we first met, she wanted to know she's like, April, I have all these assets, but like, how do I put this together in the best way possible for me to have the income that I need, the income that I want in retirement, but to do it in the most efficient way possible. 

So we built a plan that balanced her income, balanced her withdrawals across all three buckets. You know, we pulled a portion from her tax-deferred accounts so that we pulled enough to stay within her current tax bracket, so we weren't pushing her up. We also then started drawing money from her taxable accounts and her Roth accounts so that she could reach her income goals. 

And the result of that, she met her income goals that she wanted, that she needed for retirement without paying more in taxes than she had to. And then, because we started drawing strategically down from her 401k earlier on, this is going to reduce her future required minimum distributions at 73. So that's going to actually save her in taxes later as well, because we're not just letting all of that 401k compound and grow to 73. 

We're actually being strategic. We're being tactical about how much we're pulling out and when to levelize that income, to levelize that tax bill over her retirement. And so that's a great example of how the right structure, not just investment performance. You know, not just how do my accounts do, but the right structure can make a big difference in how much you keep in retirement. Now, I know that this can sound like a lot. 

Which accounts, which buckets, how much do I pull from each? And so that's why I offer a complimentary 30-minute focus session. And in that session, we're going to look at your current accounts. You know, where do they fall among those three buckets? And we will start creating what I call as your after-tax income map. This is going to show you how to structure withdrawals in retirement so you can increase your spendable income and stay ahead of tax changes.

So by now, you can see how powerful it is when your income comes from this mix of sources, instead of everything just sitting in a fully taxable bucket. But the question is, what does this look like for you? So this is where that after-tax income map comes in. It's a simple, one-page visual that's going to show you. 

We're first going to look at, hey, what do you currently have in each tax bucket? How much are you contributing between now and retirement, and how's it going to grow over time? So, where's your money sitting today, and how's it going to grow before retirement? And then we can start looking at what is your income going to be? What's your tax picture going to look like? 

And then we can start looking at, what if you made changes? What small changes, tweaks could you make to increase your spendable income or reduce future taxes? And this is customized to you, so you know whether your income is coming from a pension and Social Security or it's coming from 401Ks, profit-sharing plans, investments, we can look at your options there. 

So one of my clients, she's a physical therapist, and she's done a great job of saving. She's currently putting money into her simple IRA. She's got an employer match. She's maxing out her Roth. She's investing in a taxable account on top of that. And when we were reviewing everything together recently, we noticed that most of her long-term savings is in that tax-deferred bucket. 

And again, that's great for lowering taxes now, but it can create a problem later, when every dollar that comes out is fully taxable. So instead of just focusing on hey, where's your money today, we modeled what her savings would look like over the next 10 years before retirement. So if she keeps saving the same way she is today, here's what this could look like, or here's what this would look like in 10 years. 

And then what if she starts to make some small changes? And this really gave her a chance to see the long-term impact of her decisions today. Where I put money in today, how is that going to look like, what is that going to look like for me 10, 15, 20 years from now? And based on that model, we adjusted how she was contributing. We reduced how much is going into the simple IRA, and increased what's going into her taxable investments. 

And with that change, she's going to have a much better balance between tax-deferred, tax-favored, and taxable buckets when she retires. She loved seeing this side by side, kind of before and after. We were kind of co-creating the plan, because we were making these tweaks in real time, and she could see directly how that was going to look in 10 years from now. And she's like, oh, I understand where my money's going and how it's working for me. 

You know, she was no longer just like saving on autopilot, because a lot of us do that. We're like, oh, I'm gonna max out my retirement account at work, because that's what I've heard I should do. That's what I've been told I should do. And sometimes we're just doing a lot of that on autopilot without really thinking about the impact. 

And for her, she wants to be intentional. We've been working on this for years. She wants to be strategic. She wants to be intentional with her planning. And you know now she knows, hey, I'm doing the right things, and we're gonna revisit this every year. You know, it's not a set it and forget it. It's not like, okay, we're gonna put this plan in place and just do this for the next 10 years. No, you have to look at it and you have to adjust it as income change, savings changes, tax law changes. 

So you do have to make tweaks and adjustments as you go. But that's what we do in that focus session, where we look at your mix of accounts and how they're going to grow over time. I can't emphasize that enough. It's not just what do I have today, but it's, we've got to be able to fast forward you and see what this is all going to look like for you 10, 15, 20 years from now. 

And then we can start to play what if. What if we made these small shifts today, how is that going to have an impact for you later? And so that's the clarity that we work on with our clients. And you know, in that 30-minute focus session, we're going to look at where's your money today, and what are some adjustments, what are some opportunities that could set you up for more control later? 

So this is a great chance to get clarity on where you are now, like identify where taxes might be quietly working against you or not so quietly working against you in some cases. You can see how you can make adjustments even before you get to retirement. Now, if you're closer to retirement, just know there are some things we can do too. This isn't all for someone who's 10 to 15 years out. 

There are plenty of things that we can do, even as you get closer. But the important thing is to start. You know, I will say that is the earlier that you start, the better, especially on tax planning. Because sometimes I do meet with clients that they get to retirement, and they first when we start working together, and they do have all their money in that tax-deferred bucket. 

And it's not that we can't do anything, it's just we can't be as strategic and tactical with it, because we don't have as much time to stretch things out. So it is important that the earlier you start, the better. And a lot of people tell me that like just seeing that map for the first time, really feels like that light bulb moment, they can finally understand where their money lives and how it can work more efficiently for them. 

So if you'd like to see what your after-tax income map looks like, you can scan the QR code on your screen, or you can go directly to my website, which is curryschoenfinancial.com to book a call. There's a link. You'll be able to go right to my calendar, and you can pick a time that works for you. And during that call, we're going to go through your numbers. I'll show you, like your personal map, and we'll see if it makes sense to continue working together. 

Even if you decide not to, even if we get through a conversation and we decide it doesn't make sense for us to continue working together in some capacity, you're going to leave with clarity and usually a few $1,000 worth of tax insights that you can take back to your CPA. Now I know this topic can feel overwhelming, especially when you're balancing everything else, so that's why I like to keep it simple, focused. 

Hey, one step at a time. What is my next best step for me to take action? And this is a great first step is to carve out 30 minutes for this call, so we can show you exactly where you stand and how you can start keeping more of what you've worked hard to earn. Now, if you go to my calendar and it's a hard time finding a time that works for you, send me an email, send my team, and we'll try to accommodate you as best we can. 

You know, here we are getting to the end of the year. This is a very busy time for me, and so I don't have as much as availability now as I normally do throughout the year. So like I said, if you go and you can't find something, email me, reach out to the team, and we will do our best to find a day and time that's gonna work for both of us. 

So I just want to say thanks for joining me today. You know, if you just learned like one little idea that can help you keep more of your money, then it was time well spent, and then again, you know you can schedule your call by going to our website, which is curryschoenfinancial.com. 

You can call our office, 850-562-3000, and if you still have questions you want to talk through something specific, feel free to send me an email. My team and I, we read every message, but I hope today helped you see that with a few smart moves, you can take control of your taxes, your income, and your future. Thanks again for being here today. I look forward to seeing you all in the next one. Bye now.

Voiceover:  Guardian, its subsidiaries, agents and employees do not provide tax, legal or accounting advice. Consult your tax, legal or accounting professional regarding your individual situation. Qualified withdrawals from a Roth account are income tax free. Tax laws are always subject to change.

This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, visit our website at curryschoenfinancial.com, or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address 1700 Summit Lake Drive, Suite 200, Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of The Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly-owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian. 

8553697.1, expires November 2027.

Top Factors to Consider Before Starting Your Social Security Benefits

Navigating Social Security can feel like running through an airport for a connecting flight—one wrong move could cost you thousands. Ready to make sure you don’t miss out on the benefits you’ve worked for all your life?

In this episode, April Schoen breaks down the crucial Social Security decisions every retiree faces—and reveals the game-changing strategies to maximize your benefits.

You’ll discover…

• Why your Social Security “full retirement age” is more important than you think

• The surprising trade-offs between claiming benefits at 62, 67, and 70

• How working in retirement could shrink—or boost—your Social Security checks

• Overlooked spousal and survivor benefits that could change your income story

• What looming Social Security changes in 2034 could mean for your retirement

Mentioned in this episode:

• https://curryschoenfinancial.com/

Transcript:

April Schoen: I'm glad that you're here today. We're going to be talking all about Social Security. And if you're like many people, you worked hard for decades, and now you're thinking about this next chapter called retirement. And one of the biggest questions that I get is, when should I take Social Security, and how do I make the most of it? Because here's the challenge.

The rules are complicated, the headlines are confusing, and one wrong decision can mean leaving 1000s of dollars on the table. And so that's why we're here today, because this isn't actually just about Social Security in general, it's about your retirement and making sure that you feel confident about the choices ahead. And just like any big journey, it helps to have a guide.

That's where I come in today, to help walk you through Social Security and what are going to be the most impactful pieces. So we're going to dig in today. And if you don't have it already, you may want to grab a piece of paper or a notepad, a pen, just so that you can jot down any specific questions that you may have as well as, some things that you feel like, hey, I want to talk to April about this. Or I want to talk to someone about this specific question that I've got.

And as I said before, any sort of big journey when we're thinking about Social Security and retirement, it helps to have a guide. And in fact, this actually reminds me of a trip that I took with my boys a few years ago. So my boys are now ages nine and 12, but this was a few years back, and this is when they went on their very first flight. And they were so excited, but they were also nervous, because it was something that they had never experienced before.

And with our first flight, it actually got delayed. You may not believe this. It got delayed for a paperwork issue of all things, and was delayed like 45 minutes. And I knew that that meant we might miss our connection. And by the time we landed in Atlanta, we only had five minutes to make it to our next gate. You guys know how daunting that can be.

So I grabbed their hands, and we ran through the airport together, backpacks flying, and we made it just in time to our next gate. But here's what stood out to me about that is that the boys weren't worried at all. So then it was a really fun adventure, because they trusted that I knew what to do, and they could just enjoy the experience, because I had the bigger picture in mind.

And that's a lot like retirement planning and Social Security, especially. It's new, it's uncertain. There are high deadlines, maybe paperwork issues, you know, decisions that can be stressful, but with the right guide, you don't have to carry all that stress alone. You can move forward with confidence, knowing that you're going to get where you need to go. So today, as we're going to be talking about Social Security, here's what we're going to walk through together.

How does social security actually work? You're going to know how you can read your own statement if you've never looked at that before. We're going to talk about claiming benefits at 62, your full retirement age, waiting to age 70. We're going to talk about the impacts of taxes, working in retirement, and spousal benefit. Why survivor benefits are often overlooked, but can be critical to a plan.

And then what happens if changes come in 2034, and how to prepare for them. So after we go through all of this, I'm going to share how you can take the next step, which would be to schedule a retirement focus session with me. So you may be asking, okay, April, well, what's a retirement focus session? Well, it's a complimentary call. There's no charge for it. It's a 30-minute one-on-one call where we're going to take a look at, hey, what we learned today, but then we're going to apply it to your situation.

Because as much as what we're going to cover today together, your decision about when to take Social Security and how it fits in with your pension, if you have it, your retirement accounts, investments, savings, taxes, working in retirement, this all really depends on your numbers and your goals. So think of today as just an overview, and then a detailed overview at that, and then the retirement focus session is where we make it personal to you.

So let's get started today, going through everything. And I want to make sure that you guys can see my screen. Perfect. I had a slight technical issue when I first jumped on the GoTo webinar my audio, my computer audio wasn't connecting. So I had to dial in on the phone. So it took me just a few extra minutes there to get in. And then, of course, that makes me start worrying that, like none of it's working.

So here we go. We're gonna roll up our sleeves and dive into today. So how does Social Security work? Well, Social Security has been around since 1935, and it's seen many changes throughout the years, but the basis of how it works has remained relatively the same. Social Security's trust fund is primarily funded through the taxation of wages earned by the current workforce.

Current workers are paying into Social Security, and that is what is paying current beneficiaries. So those funds are used to pay out current benefits to the current beneficiaries. And as of January 2025, the average monthly benefit for Social Security was $1976 a month. So $1,976 a month. Now we're going to talk about this later, but how Social Security is funded is actually going to be in one of the issues with the program, because back in 1945, there were 40 workers to one beneficiary.

I'm going to say that again, in 1945, there were 40 workers to one beneficiary. And today, excuse me, now, the Social Security Administration they think that by 2035, there's only going to be two workers for one beneficiary, two workers to one beneficiary. I want you to think about that for a second, especially if the average monthly benefit today is $1976 that means two people have to be paying enough in taxes to cover that.

You can see how this is putting more stress and pressure on the system. We're going to talk about that later. So when you are in your working years, you're going to earn credit, and so as you're working, you're paying into the system, earning credits, and if you've been working for 10 years or more, then both you and your spouse now qualify for Social Security and for Medicare. And then how does Social Security actually calculate what you're going to get?

Well, what they do is the government looks at your highest 35 years of work history. And if you don't have 35 years of work history, they fill in those missing years with zeros, which can really pull down your average. Then they adjust those past earnings to today's dollars by factoring in inflation. That way, what you made 20 or 30 years ago is compared fairly to income today.

And then once they get that adjusted average, that's what your Social Security benefit is based on. And the calculation to Social Security is actually pretty complex, so it's really best for you to review the amounts given on your own Social Security statement. Now, if you go to the Social Security website, there are some calculators. You can even Google and find other calculators as well.

But I always, always, always recommend that you create a login on Social Security's website and you use that to look at your benefit so you can see your specific amounts, because I've done calculations for clients before. And sometimes I get in the ballpark, and sometimes it's off, because you're not going to have all that information about what your earlier earnings history was to accurately be able to project that.

So just know you need to go onto Social Security's website, create a login if you haven't done it already, and go and view your statement. I actually just got an email. Oh, this is funny. I just got an email like two weeks ago from Social Security to go log in and look at my statement. I thought that was funny, considering I was doing the webinar today. So what are some things that you need to know about the program and about your Social Security benefit?

Well, one of the most important concepts to understand about Social Security is what is your full retirement age? Sometimes you might hear that called your FRA. This is simply the age at which you're entitled to 100% of your benefits. So why does that matter? Because your FRA, your full retirement age, sets the benchmark for everything else. If you take Social Security before your FRA, now, your benefit is going to be permanently reduced.

If you wait beyond your FRA, now, your benefit grows each year, it actually grows every month that you delay up until age 70. And once you reach this FRA, your full retirement age, you can work and earn as much as you want. There are no penalties from Social Security. And knowing your FRA is really foundational to deciding when are you going to claim, how much you're going to get, and then how working in retirement may affect you.

So let's take a look at an example. And we're going to look at an example of someone who was born in 1960 or later. So that means their full retirement age would be age 67. So now, once we know what that full retirement age is, we know that's when you're going to get a 100% of your benefit. But let's look at what happens if you claim earlier or later.

So again, if you are born in 1960 or later, then your full retirement age is 67, and if you decide to claim at age 6,2 which is the earliest possible age you can start your benefit, your benefit is going to be permanently reduced to about 70% of what you would have received at your full retirement age. And that's a permanent reduction.

Some people think I get a reduced amount before my full retirement age, and then at full retirement age, I'm going to get this higher amount. And that's not accurate. It is a permanent reduction. And then you can also delay Social Security up until age 70. 70 is the latest that you can defer to getting your Social Security benefit. And if you wait past your full retirement age, your benefit grows by about 8% per year for each year that you are past your full retirement age.

So let me give you some examples. We've got some maximum monthly benefits here. So at full retirement age today, maximum monthly benefits around $4000, and then if that person waited until age 70, they would receive about $5108 per month for their benefit. But if they had taken it at age 62, then it would be about $2800. So you can see there's a big difference between claiming at 62 and waiting till 70, and that's why this decision is so important.

So you may be asking yourself right now, well, when should I take Social Security? Should I take it at 62 should I take it at my full retirement age? Should I take it at age 70? And what I'll tell you is, this is a very personal decision, because it's gonna really depend on a lot of other factors in your financial world.

So again, on your on your statement, this is where you're going to see your personal benefit amounts listed. So it's going to actually going to give you, it's going to show you all the age ranges. So it's going to show you, if you take your benefit at 62, and it's actually going to break it down by year, all the way to age 70. Okay, but here's the thing: there's no perfect retirement age that works for everyone.

That right time to start your benefits is going to depend on your unique situation. It's going to depend on your health, your income needs, your spouse's benefits, your tax situation. And this is where most people feel stuck, because they see the numbers, but they're not quite sure, what does this really mean for your retirement, for their retirement? And that's why we offer that retirement focus session.

So in that 30-minute call, we take your statement, and we're going to talk about some other things, too, like pensions, or, if you have it, investments, retirement accounts. And we're going to talk about how do you actually start putting all that together? And we can run scenarios so you can see clearly, hey, if I claim at 62 here's what this looks like. And if I wait, here's the difference. And if I wait, how am I going to fill that gap? And here's how this is going to fit in with everything else that I've worked so hard for.

So today I'm going to walk you through these general rules, and when you're ready, that retirement focus session is where we make it personal to you, so you don't have to guess and you can move forward with confidence. Now let's talk about a cost-of-living adjustment or a COLA. So Social Security does include a COLA most years, but here is the important thing for you to know is, if not guaranteed. In fact, we've had plenty of years where the COLA had been zero or next to zero. Look at 2017, .3% increase. It's almost like adding insult to injury.

And even these years, when we do get an increase, it often doesn't actually keep up with the real costs of things like groceries, housing, health care, and so this means, if you don't plan ahead, Social Security alone will not be enough to protect your lifestyle from rising costs. Because we all know you're going to need more income tomorrow than you need today. And this COLA it does help.

So it helps. I'm not going to discredit it. It helps, but it's not a complete solution. This is why you have to have other income sources, and why a clear plan is so important about how you're going to have increasing income in retirement. Another thing to know about Social Security is that the benefits can be taxable depending on your overall income, and the IRS looks at something called your combined income, which includes Social Security plus other income sources like pensions, withdrawals from retirement accounts, or even part-time work.

And the higher that combined income is, the more of your Social Security that may be subject to taxes. In fact, up to 85% of your benefit can be considered taxable income. Now that doesn't mean that you're paying 85% of taxes. It's just that 85% of your benefit is considered taxable income, and here's when this matters. If you don't plan ahead, you might owe more than you expect, but with a plan, you can actually control how taxes affect your income in retirement.

This is exactly the kind of thing that we model in a retirement focus session, so you can see how Social Security, pensions, other accounts, all work together, and so you can know what to expect come tax time. Now I'm going to plug my next webinar, which is on October 30th. I'm going to do a webinar all about taxes in retirement.

Now, I know that doesn't sound fun, right? Like, who wants to be on a webinar about taxes in retirement? But it's not just about taxes. It's about what we call tax diversification. So how do you actually do that? How you have more control over your taxes in retirement. So that's what we're going to talk about in October.

So stay tuned for that webinar. Again, that's October 30th, at noon Eastern if you want to put that on your calendar. Now let's talk about working in your Social Security benefit. So if you start your benefits before your full retirement age and you're still working, Social Security is going to reduce your benefit if your income is over certain limits. And they are not high limits. In 2025, that income limit is $23,400.

So if you make more than $23,400 in earned income, so earned income is income from a job. This is not a pension. This is not taking money out of retirement accounts, investments, things like that. This is earned income, then Social Security is going to reduce your benefit. Now the good news is is once you reach your full retirement age, those limits go away, you can earn as much as you want and still receive your full Social Security benefit. And if some of your benefits were withheld before you hit your full retirement age, Social Security is going to adjust your payments upward at that point to account for it.

So you do kind of get it back on the back end, but they do penalize you for starting it earlier. So the key takeaway is this, the closer you are to your full retirement age, the easier it is to keep working without impacting your Social Security benefit. And in a retirement focus session, we can run these numbers so you can see exactly how working part-time or delaying retirement is going to impact your benefit.

Let's talk about some different payment scenarios and how those work. So first, let's talk about spousal benefit. As I said earlier, when you qualify for Social Security, your spouse qualifies too, even if they didn't work as many years or didn't have as high as income as you do. The Social Security Administration is first going to look at your spouse's own benefit record based on their salary history, and if that amount is less than 50% of your benefit, then Social Security is going to increase your spouse's benefit so they receive an amount equal to half of yours.

Now I feel like that's a mouthful. So let me try to summarize that for a second. The spousal benefit is equal to half of the higher-earning spouse. So let's say that my benefit was $3000 a month, then my husband is eligible to receive his benefit if it's higher or half of mine, which would be $1500. So he's going to get one of one of the two. So if his monthly benefit was $1,000 a month, they're going to increase his to $1500 in that example.

If his benefit was $2000 a month, then he's going to get $2000. Social Security has something called deeming rules, and they're deemed to pay you the highest amount available to you. So style benefits are great benefits, but they're going to look at both. They'll look at your own record, and then they're going to look at the spouse's benefit as well. Social Security also provides a benefit for widows and widowers, and if the surviving spouse's benefit is less than the deceased spouse's benefit, then the surviving spouse can receive the higher amount, actually up to 100% of the deceased spouse's benefit once they've reached full retirement age.

Let me give you an example. So let's say Brian, my husband, Brian, I are, you know, obviously we're married and we're both into retirement, and we're both collecting Social Security. And let's just make the math easy. Let's use those same numbers. Let's say that I'm getting $3000 a month and Social Security, and he's getting $1500. If I passed away first, what would happen is Brian would now get $3000. He would get the higher of the two. He doesn't get both, but he's going to get the higher of the two. And in that case, that would be $3000 a month.

On the other hand, if he passed away first, then I lose his benefit, right? So again, mine was higher in that situation, so I would get the 3000, and then the $1500 would go away. And one thing to note is, if you remarry at age 60 or older, you can still continue to receive that widow or widower's benefit. And there's actually a very important planning opportunity here that many people don't know about.

So if you are under age 70 and you qualify for a widow or widower benefit, you don't necessarily have to take your own benefit right away. You can choose to start that widow or widower benefit first and then allow your own benefit to keep growing all the way up to age 70. This is a very important strategy that we use a lot with our clients to help them maximize those. And that's why we want to look at these options that give you and your family the most lifetime income.

There are also benefits for divorced spouses. So if you're divorced, there may still be a Social Security benefit available to you. And if your marriage lasted 10 years or longer, and you're currently unmarried, then you may be eligible for a benefit on your ex-spouse's record starting as early as age 62. And it works just like the spousal benefit. If your benefit is less than half of your ex-spouse's, then Social Security is going to increase your benefit so you receive an amount equal to 50% of theirs.

And you know, here's what some people don't realize, is that your benefit as an ex-spouse doesn't reduce or affect what a current spouse may receive, or, you know your ex-spouse. So I've heard clients before say, oh, worried that their ex-husband got remarried and they're not eligible for his benefits anymore. And that's not true. It has no effect on you if they remarry. It's only if you're again, your marriage lasted 10 years or longer, and you're currently unmarried, then you're eligible for a spouse's benefit on their record.

So that can be a really big, important planning opportunity. So let's shift gears a little bit, and let's talk about some issues around the program, and then what do you do about it? So as we talked about earlier, one of the main issues with the program is how many workers there are today to beneficiaries. Let's walk through the system-level risks that are part of planning for Social Security. If you go onto the Social Security's website, you can read their trustee report. They are very open and honest about what their projections are.

And right now, depending on the year, they believe that the current trust fund will be depleted in either 2033 or 2034. That's really not that far away. And at that point, they believe they're only going to be able to pay out about 80% of scheduled benefits unless there are changes made. Let me walk you through that. Right now, if no changes are made between now and 2033 they believe that there would be a 20% reduction in Social Security benefit.

And that's not just for future benefits, that's for current beneficiaries. That's for people who are already on Social Security. And that's unless Congress makes changes. And one of the reasons this is happening is the worker-to-beneficiary ratio. So in 2023, there were about 2.7 workers for each beneficiary. But if you remember we talked about earlier that back in 1945, there were about 41 workers per beneficiary.

That's an extreme shift that showed how demographics are changing. People are living longer. Based off of 1935, our life expectancy in 1935 was a lot shorter than it is today. Like, when they created Social Security, they didn't anticipate people living into their 80s and 90s. Like it wasn't actually designed for that. And so this is creating these shifts that are creating stress and putting stress on the system. And we talk about this when we use these projections, it's not to scare people. I'm not a fear monger.

But it's to emphasize why having a personal retirement plan is so important, because the system isn't going to take care of all these risks. Now, I personally believe that there will not be a reduction in Social Security benefit. I do not believe there will be. I believe that Congress will make changes to Social Security between now and then. Now, they might wait till the 11th hour and do it at the very last minute, but I do believe they're going to make changes.

So what are some of those changes they could do? Well, first, they could increase taxes. Because it's an issue of receiving enough revenue in to pay current beneficiaries. So they could increase Social Security taxes on current workers. They can change when you could start taking benefits. Right now, the earliest you can start Social Security is 62. They get to, hey, we're going to increase that to, I'm just going to pick a number, I have no idea, 65 to make it more aligned with Medicare.

That's an option. They could increase that full retirement age. They've actually done that before. So, full retirement age used to be 66, and then they pushed it out to 67. So there are some changes and some things that they can do to help the longevity of Social Security, and I do believe they're going to make those changes and that we won't see a reduction. But it's important for us to understand what's happening, and I would rather you prepare for that reduction.

Let's prepare for worst-case scenario, because if that doesn't happen, then it's just icing on the cake. So let's plan, let's plan around that. So we want to make sure that we're planning appropriately for this. So one thing to remember also about Social Security is it was never meant to be your only source of income in retirement. It's just meant to be like a part of it. A foundation. And this chart, this is actually data all put out by Social Security.

This is from 2024 data, but it talks about how much of your pre-retirement income Social Security is going to replace. And Social Security looks at like different categories. They look at what they call low earners, high earners, and mass earners. So let's look in this like middle, they call them high earners, but this is someone that would have had like a pre-retirement income about $106,000 a year.

And if you fall into that category, then Social Security is gonna only replace about 32% of your pre-retirement income, 31.7 to be exact. And the more money you make, the less it covers. So this means the higher the income during your working years, the more you're going to need to rely on other income sources, like pensions, retirement accounts, investments, and savings, to maintain your lifestyle in retirement.

And if you're in that higher earning group, this is where planning becomes critical. We may want to actually look at strategies to increase your Social Security, like delaying benefits, but we also want to make sure that the other income sources that you have are structured in the best way possible. So this is what, again, we walk through in this retirement focus session, not just what Social Security is going to give you, but how all of your income sources fit together to cover your needs for life?

I had a call yesterday with a potential new client, and she is retiring in about two and a half years. She's actually retiring from the state of Florida, and we talked about her pension and Social Security, and she's going to have DROP and deferred comp, and, like, how does she put all of those pieces together? When does she take Social Security, how long can she let her DROP or deferred comp grow until she's 73, and what's that going to look like?

And is she going to need to bridge the gap for retirement? So all that can be done in part of that retirement focus session. I just met with a client yesterday. He's an attorney. He's 51, he's planning to probably slow down and retire, maybe at like 62. So we're talking about this 10 to 11-year time frame. And actually, one ofthe things we talked about was Social Security. And we looked at what happens if he took his benefit at 62 or if he'd waited to age 70.

But he wants to retire at 62. So then we went back to his balance sheet and said okay, well, what other assets could he tap into for those years to bridge the gap for income? And he, we actually looked at, okay, you know, investments, retirement accounts. He's got cash value in his whole life insurance policy. So we actually looked at some projections for him to use that cash from 62 to 70 to increase his income.

Then his benefit, his Social Security benefit, would increase, and then he could stop doing that and start taking Social Security. So it's a lot of pieces. There are a lot of pieces, financial pieces on the table. And the question really becomes like, how do you put all of those together in the best way possible to make your retirement the best? And not just for like, hey, day one, stepping off into retirement, but planning on you living a very long time. So how do we plan for retirement that's going to be 20 to 30 plus years?

That's what we want to take a look at as well. So sheer, bottom line is that Social Security is too important to just leave to guesswork. The rules are complex. The timing decisions are permanent. It has an impact on your lifetime income, on your spouse's lifetime income, and that's why this next step is simple. And that would be just a schedule a retirement-focused session. It's complimentary.

There's no charge for it. This is a 30-minute call where we're going to talk about your Social Security benefits. We'll talk a little bit about your pension, savings, other investments, and so we can talk about what does this look like for you to claim at 62 at 67, at 7,0 and how do you start to maximize that retirement income with confidence? You've spent your career, working hard, and now you deserve to step into retirement knowing that you've made the right decisions.

So one of the easiest ways to schedule a call is to go to our website. That's curryschoenfinancial.com. So, curryschoenfinancial.com, and you're going to see a button that says, schedule a call. That's going to take you to my calendar link, and you can select the 30-minute call and pick a day and time that works for you. The other option would be to call our office.

You can call our office at 850-562-3000, and just let Shannon or Brian know that, hey, you heard my talk on Social Security, and you'd like to schedule your complimentary call to go through your numbers. So we call that our retirement focus session. But if you just tell them, he,y you heard my talk on Social Security, and you like to schedule a call, they'll know, know exactly what you need to do. So yeah, the two best ways to do that. You can go directly to the website. You can also call to office, 850-562-3000.

I just want to take a second and just commend you for being here today. I know Social Security isn't the most exciting topic either, but it's a really important one to learn about, and I just want to commend you for taking time out of your day to be here and learn about this. It shows a lot. Shows you're taking it very seriously. I hope you found today impactful. I know there can be a ton of questions about Social Security.

Feel free to drop me an email and say, hey, April, you know, I heard you talk, and I had a question about this then, and I do my best to kind of get back to those as soon as I can. But feel free to shoot me an email with some specific questions that you've got. Again, I hope you found today helpful, and I look forward to seeing you on our next one. So just as a reminder, our next webinar is going to be on October 30th, all about taxes in retirement and how to make the most of it. Hope you enjoy the rest of your day, and we'll talk to you soon. Bye now.

Voiceover: The Social Security Administration has not approved, endorsed or authorized this material. Contact the Social Security Administration for complete details regarding eligibility for benefits.

This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, visit our website at curryschoenfinancial.com or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address: 1700 Summit Lake Drive, Suite 200, Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

8432870.1. Expires October 2027.

5 Signs You're Ready for a Financial Glow-up

You’ve worked hard and checked every financial box—so why doesn’t it feel like enough?
If you ever find yourself celebrating one moment and stressing over your bank account the next, you’re not alone. Discover the subtle signs that it’s finally time for your financial glow-up.

In this episode, April Schoen, financial advisor at Curry Schoen Financial, unpacks the five signs that you’re ready for the next step in your financial journey—and reveals how mindset shifts, clear strategies, and intentional planning can help you enjoy the wealth you’re building.

You’ll discover…

• The one habit that quietly erodes your financial progress even as your income rises

• Why saving more doesn’t always mean moving closer to your goals

• The surprising reason you still feel financially “behind” despite doing everything right

• How to banish decision fatigue in a world overflowing with financial advice

• The single question that changes everything about your money strategy

Mentioned in this episode:

• https://curryschoenfinancial.com/

Transcript:

April Schoen: Hi, I'm April Schoen, and I work with women who are doing great professionally, but still feel unsure about their next financial steps. You're smart, you're successful, you've worked really hard to get to where you are. But when it comes to your money, you may be wondering, am I doing the right things? Is there something that I'm missing? And I get it, I have felt that way too. 

Years ago, my husband and I were doing all the right things financially. We had a plan, we had savings, we had very little debt, we were checking all the boxes. But I didn't still feel good about it. I'd go from, hey, we're doing great, so let's book that trip and celebrate, to panicking, feeling like we were spending too much and that I was just spiraling out of control, even though the money was there. 

And one night, I remember after dinner, I was telling my husband, probably something along the lines of, we've got to get our spending under control. We're just hemorrhaging money. And he looked at me, and he said, April, you're like a roller coaster. I don't even know what you want me to do anymore. And he walks out of the room. And I remember just standing there, holding on to the kitchen counter and thinking to myself, why am I so stressed about money when we're doing everything right? 

That was my turning point. That's when I realized it wasn't just about spreadsheets and numbers and more savings. It was about shifting my mindset from scarcity to abundance. It was about trusting what was already working well for us and giving myself permission to enjoy it. And this shift really changed everything for me. My relationship, my stress levels. It changed how I live. It changed how I give. 

That was my financial glow up. And if you're feeling stuck, or if you're feeling like, hey, I'm doing all the right things, but I'm not sure, I still feel anxiety about it. Well, your glow-up might also be just around the next corner. So let's talk about today some signs that you're ready for some changes in your financial world. Let's talk about some signs that you might be ready for a financial glow-up. 

Sign number one, you're earning well, but you're not sure where it's all going. I hear this all the time. Maybe you're making more than you ever have, but your savings don’t quite reflect it. And as income increases, your spending often does, too. We call this lifestyle creep. It's very real. It's so common you start thinking, if we just made more money, we'd be in a better position. But without a system, more income doesn't always mean more progress. 

And let's be clear, this isn't about guilt. This isn't about cutting things that you enjoy. It's just about being intentional with your money. You need a system so you can track what's coming in, where it's going, so you know how much you're spending, how much you're saving, how much you're giving, and if there's anything left over. This is especially important if your income fluctuates. So if you get bonuses, commission, stock options. If you don't have a plan for those, then those windfalls can disappear fast, and you can be wondering what just happened to that? 

Sign number two is you're saving, but you don't really have a strategy. Now, one of the most common questions I get is, how much should I be saving and where? And the answer to that is, it depends. It depends on your income, your future goals. What buckets are you already putting money in to? Maybe a lot of your wealth is in your 401k and in real estate, which means we may want to prioritize other accounts that are going to give you more tax advantages later, going to give you more flexibility and control along the way. 

I hear people say, hey, April, I've heard a Roth IRA is good. Or I opened up a brokerage account. I put some money into it, but I never did anything with it. And the issue isn't that you're doing something wrong, it's that your money doesn't have a job. Every dollar should have a purpose, and if you don't have a plan, this is like hiring a team and then never telling them what to do. 

Number three. You feel behind, even though you're doing everything right. Okay, this is exactly where I was. I was checking off all the boxes, but I still felt anxious. I second-guessed my decisions, and I wasn't actually enjoying the money that we had worked so hard for. If this sounds familiar, you're not alone. This is just a signal that it's time for something deeper than just numbers and a spreadsheet, because it's not about just the numbers, it's about clarity. 

It's about knowing what you want your money doing for you and making sure that you have a plan to get there, because without a plan, how do you know if you're on track? That makes it harder to enjoy the money that you do have. But once you do have a strategy, once you know you're on track, that you're taking care of what matters, something shifts. The guilt goes away. You can now spend money without guilt. That means taking the trip, buying the things. You really start to enjoy life, because you know, financially, you're in a good place, and that's powerful. 

Number four, you're overwhelmed by all the options. There is no shortage of financial advice out there. So, should you invest in your 401k, pay down debt, buy real estate? Everything feels urgent, and everything feels like it's competing for first place in your financial world. Do you save for college for your kids? Do you renovate the kitchen? Do you book a vacation? Maybe these are all things that you want to do. 

When you start adding it up, you start wondering, how can I even make all of this work? It seems impossible, and you can hit decision fatigue. Here's an example that happened to me recently. We needed a new roof, and I've had people ask me, oh, did you consider a metal roof? No. The answer is no. I picked shingles. I picked a color so I could move on. Why? Because I make so many decisions in my everyday life that I didn't want one more thing to have to add to go research or figure out or analyze. 

I wanted a solution that worked, and that's what many women want with their money, too.  system that works, a plan that gets them results. And when you're clear about your goals, your path becomes obvious. So, for example, let's say you said, April, I want to buy real estate. Well, then maxing out your 401K isn't going to help you, because that money's locked away until you get to retirement age. You need liquid cash. And so once you know what you want your money doing for you, the right decisions become clear. 

Now, sign number five, you know you should have a plan, but you don't. This is all so often in common that I hear. You're juggling so much already, you're making a lot of decisions at work. You're making decisions for your family, but when it comes to your financial strategy, it's kind of half-built hodgepodge put together. It might be some stuff you read, things that you heard friends are doing. 

But it's not really all put together. You started doing a few things, but you're just hoping it's all gonna come together in the end. But hope isn't a strategy. And this isn't because you don't care. It's usually because of one of two things. One, you just haven't had the time to sit down and go through it all yourself. Or you haven't had someone that you can trust build a plan with you. That makes all the difference. If we were sitting down together having coffee, here's what I would be asking you right now. What do you want your money actually doing for you? What's its purpose? Why are you working so hard to build wealth? What do you want that money doing for you and for your family? Do you want to retire one day? And if so, when? Are there any big milestones ahead? College, buying property, stock, options, inheritances? 

These are all things that we want to start mapping out. Start asking yourself, what's happening in the next year? Next 5, 10, 20 years? Let me give you an example. For me, In the next year, we're going to be replacing the floors in our home, so we're starting to save for that. In the next five years, both of my kids will have had braces by then. I'll have one teenage driver, and college is right around the corner. In 20 years, retirement. These milestones help shape your plan, and it all starts with knowing what's important to you.

So did any of these signs resonate with you? If you said yes to even one, then your next best step is to take the smart money scorecard. There's a link in the description box. There's no cost. It's a two-minute self-assessment that I created just for women like you. It's going to help you quickly evaluate areas where you're strong and areas where you need to focus on next. There's no pressure, there's no jargon, just clarity. And if you want help reviewing your results and turning them into a personalized plan, I'd love to walk you through that as well. You've done the hard work of building your career. Now let's make sure your money is working just as hard as you are. So the link is in the description box. 

So grab the scorecard, it takes two minutes. You'll be so glad that you did. Make sure that you like this video. Subscribe to my channel. This way, you're going to get access to any new videos that pop up, just like this one. I'm working on a new series just for women. This is the first of many to come. I'm so glad you're here. This is just the beginning of our conversation. We've got a lot more coming your way. Until next time, make sure you're taking care of your money and yourself. Bye now.

Voiceover: This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, you can visit our website at curryschoenfinancial.com or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address: 1700 Summit Lake Drive, Suite 200. Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York. New York. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

8144850.1. Expires August 2027.

How to Weather a Financial Storm

Storm clouds can form on your financial horizon at any time—are you truly prepared to weather the next crisis?

Discover the secrets to resilience, clarity, and action when financial uncertainty strikes—without feeling overwhelmed or lost.

In this episode, April Schoen walks you through the essential steps to weather any financial storm, blending real-world advice, proven frameworks, and a calming approach—even when life throws unexpected curveballs.

You’ll discover…

• Why “financial storms” aren’t just market crashes—and how to spot their earliest warning signs

• The real reason most people struggle financially (it’s not bad decisions)

• How to build an emergency fund that works for your unique situation—not just a generic rule of thumb

• When sticking to your investment strategy is the right move—and when it’s time to make tweaks

• The step-by-step financial “hurricane prep kit” you need before a crisis ever hits

Mentioned in this episode:

• https://curryschoenfinancial.com/

• Book a complimentary focus session: call 850-562-3000

Transcript:

April Schoen: Hello and welcome. My name is April Schoen, and I'm so glad you're here. Today's webinar is all about helping you prepare for what we call our financial storms. Now these are unexpected things that come your way that really can throw off even the best-laid financial plans. 

Now, this is not a doom and gloom session. This is more about gaining control, getting clarity, and building a plan that helps you face uncertainty with confidence. And so whether you're just starting off on your financial journey or you're getting close to retirement. This session is really designed to give you practical, actionable steps to help you when we start thinking about financial storms coming our way. 

Now, I think it's a little funny, because I plan my calls, my sessions, my topics, months and months in advance. You know, I've got, usually, my next three to four months planned. So when I planned in June to do a webinar on how to weather a financial storm and managing your finances during a crisis, I did not plan that the US would have bombed Iran the weekend before, right? So the timing of all that just kind of happened. 

But just know, I plan these things so far out in advance, and a little bit of irony there with some things that are happening geopolitically. And hopefully, the next time I do this talking session that there won't be any other geopolitical issues going on. But that is one of the things that we want to talk about, right, like, what happens? Those are those financial disruptions that come our way. 

That could be war. Could be like we had COVID in 2020, some sort of economic downturn. These can also be personal things that happen. Maybe we get sick, we lose a spouse. We have to take time out of work to take care of a family member. We lose a job, right? There are a lot of things that can happen that can disrupt our plans, and we may not be able to prepare and plan for everything, but there are things that we can do to make our financial plans be more resilient, and that is what we're going to talk about today. 

Now we work with a lot of people who are getting close to retirement, and they're trying to make smart, confident decisions with their money. This is a lot of people who work for the State of Florida, people over 50. I also work with, obviously, clients in their 30s and 40s who also want to make sure they're all doing the right things with their money. And most of the people we meet with, they're not struggling because they made bad decisions. 

They're struggling because they're overwhelmed. Our financial system is complicated. You have a lot of options out there. There's a ton of information out there. The market feels uncertain. There's no clear roadmap on what to do next, and that's where we come in. Our job is to simplify the process and guide you through those key decisions so you know where you stand, what's possible. How do you protect what you've built so hard to build? 

And that's what today's session is going to be about. So, how do you prepare for uncertainty? How do you protect your finances and build a plan that works no matter what storms come your way? So let's get into it. Here's what we're going to talk about. We're going to talk about what a financial crisis really is. Sometimes it's not what you think it is. We're going to go through a preparation framework. 

Think of it like a hurricane checklist for your money. And we're going to dive into some fundamentals, like emergency funds, investment strategies, spending plans, and we're going to wrap up with what does a confident financial plan look like, and how do you make sure that you have one? Understanding a financial crisis and how to recognize financial storms. A financial crisis can be global, like a recession, war, COVID, inflation spike. 

It can also be personal. Job loss, health issues. I want to tell you about a client of mine who a few years ago, she had to retire early, a few years earlier than she planned to, to help take care of her mother, who was having health issues. And it happened very suddenly. Now, emotionally, it was very hard for her because of what she was going through, but also financially, it had ripple effects. She was retiring from the state of Florida, and because she had to retire early, her pension was now lower than expected. 

She was in DROP, so now her drop account was a lot lower than she was planning on it being. So she had to stop contributing to her retirement investment accounts, so she didn't have as much saved, and she was also working on paying off some debt before she retired. Now, none of that was in her plan, but we worked together to adjust the strategy. And that's the point of this: that life is going to throw you curveballs. We know that it's not a matter of if, it's when. 

And so if we can recognize some of these, maybe even some signs that can help you, and even just having a plan that's adaptable, that's going to help you have more confidence and not panic. And just like we track storms with radars and forecasts, you can track your own financial health, and you don't have to know everything, but you do have to be aware and proactive. And the common theme with financial storms it's not if they happen, it's when, and it's how prepared you are for when they do. 

Most people panic because they weren't prepared. So when you have a plan, you don't have to panic, and that's what we're going to talk about today. Now, this is not true for every financial storm, but sometimes there can be warning signs. So if we can understand what a financial crisis is, if we can spot some of those early warning signs, then it can help us be prepared better. The earlier we recognize them, the more options we have. 

So let's think about this for a few minutes. Here are some common early warning signs. Especially on a global side, if we see a lot of market volatility, rising inflation, interest rate hikes, increasing unemployment, those are all things that can point to globally or even locally, more, think of the US economy having some type of financial storm, like a recession. Think back to the Great Recession of '08. 

On the personal side, if we see that we're having higher credit card balances, we're dipping into savings, maybe we're not able to save at all, that should be a sign that we needed to pause and take a look at what's happening. Or emotionally, if you're feeling anxious or overwhelmed, you know you're not making financial decisions because you're putting it off. That sometimes is your gut telling you that it needs attention. 

So if we look out for some of these warning signs, we can get ahead of it, and we can be better prepared. And if you're not sure what your own warning signs might be, or whether if you're already there, this is where we can help you. I'd recommend, a focus session is a great way to get clarity without judgment. Most people are just relieved to know where they stand, but in our focus sessions, we talk more about which we're going to talk more at the end of today's call on how to do that. But we can talk through what are some of those warning signs that you should be looking out for?

Now, how do we prepare for a financial storm? I want to use a hurricane as a metaphor. You know, here I am in Florida. Obviously, hurricane season, we're very used to it, and we know what to do when a storm is coming. We've dealt with them before. We stock up on supplies. We make sure insurance is in check. We pay attention to the weather channel and the news media to know what's happening. We know if we need to evacuate, where to go, right? 

So we know how to handle if a hurricane is coming our way. Well, we can take that same approach for our finances. So I'm going to walk through this metaphor, thinking about prepping for a hurricane, and how do we prep from a financial planning standpoint? So the first thing is your emergency kit. Now, in your finances, your emergency fund is going to be like your emergency storm kit. It gives you access to essentials like cash when you can't rely on normal income or you need to cover an unexpected expense. 

And just like you wouldn't want to run out of water in a storm, you don't want to run out of liquidity, out of cash, during a financial disruption. So that's where your emergency fund comes in. Having an evacuation plan, your financial plan is your evacuation route. When a storm hits, you need to know where you're headed and how you'll get there. A good financial plan maps out how you're going to handle different scenarios. Think job loss, market downturns, health events, retirement, so you're not scrambling in the moment. 

This is something we help our clients with. We call it stress testing. So we think about someone maybe getting ready for retirement. Yeah, let's stress test it. Sure, your plan looks great today, when everything's going wonderful. But what about if we had a market correction and the market's down 20%? How is your plan going to handle that? What if you have a health event? What if something happens and you need care? You or your spouse? Can your plan handle that? 

We want to know how we're going to go into those situations before they happen. That's where I find a lot of people have stress when it comes to their money. Is things pop up and then they don't know how they're going to address them. So having a plan for those things, so we can say, oh, nope, we already prepared for that. It's like the market this year, the market's been all over the place this year. Most of my clients were like, hey, nope, we're good. We've been planning for this because we know it's not if it's going to happen, it's when it's going to happen. 

And is your plan resilient enough to handle it? Taking a look at your insurance coverage. Insurance coverage helps you recover from physical damage, like your homeowners insurance helps you rebuild after physical damage. On the personal side, you've got life insurance, disability insurance, that can help, property and casualty. Obviously, that falls from that homeowner's insurance as well, but helps you recover financially when life doesn't go your way. 

So making sure that you've got the proper coverage. And sometimes we can self-insure, and there are other times when we want to transfer that risk, so making sure that we're analyzing that. Now, insurance, an analogy I like to use for insurance is, insurance is like needing an umbrella when it's raining, but you could only buy the umbrella when the sun is shining. Think about that for a second. 

If I left the office today and I got into a car accident on the way home, I cannot call my property and casualty agent and say, hey, I just got into a car accident. Can you bump up my liability coverage? It doesn't work that way. Same way as like, if a storm is coming, there's a point in time when homeowners insurance companies, they'll pause you being able to add coverage or make changes to it. It's the same thing in our financial world. 

These are things that we have to have in place before something happens. Now, securing valuables. In a storm, we're going to make sure that we don't have things in our yard that are going to blow away, and make sure that everything's like in good order. In our financial life, we want to protect our long-term goals. So we want to make sure our retirement accounts are allocated properly. We want to make sure estate plans are up to date. 

We want to make sure we have key documents that are accessible, making sure beneficiaries are up to date. These are all things that we can do to secure our financial valuables. We seek professional guidance. So in a storm, in a hurricane, we rely on meteorologists. I can't even say that word, but we focus, we watch the weather channel. We want to know. We want to stay up to date on like, where's the hurricane going? What category is it going to be? 

And this is where financial professionals come in to help you look at the data, help you adjust course when necessary, because you don't have to figure this out alone. We also want to do continuous monitoring. During a hurricane, we're checking the radar, we're listening to updates. We're adjusting as the storm evolves, and your financial plan needs that same level of attention. It is not a set it and forget it strategy. It needs to be reviewed and refined regularly. 

Preparation doesn't stop the storm, but it puts you in a position of strength, you don't panic, you act, and that makes all the difference. Now, one of the things I mentioned earlier, which is a crucial tool to help you weather the storm, is an emergency fund. So what is it? Why is it important? What do we do with it? So an emergency fund is a pool of money set aside to cover unexpected expenses. It can help with a job loss, a medical emergency, or unexpected home repairs, right? 

This, your emergency fund, is going to allow you to stay afloat. Now we recommend, so how much should you have in your emergency fund? Now, this is going to be different for every person. We recommend keeping at least six months’ worth of expenses in liquid savings. But I want to ask you a question: what's your happy number? How much do you want to keep in savings at all times? It's different for everybody. 

A lot of my clients who are near retirement or in retirement, guess what? They have very low expenses. So, having six months’ worth of expenses in savings for an emergency fund isn't enough for them. Maybe they want to keep 50,000 liquid in cash at all times. So yes, we could have this rule of thumb of six months of expenses, but then we got to ask the question about, what's going to make you happy, though? What's going to make you feel comfortable? What's going to help you sleep at night, knowing you've got access to that money. It's cash, it's liquid, and get your hands on it, you don't have to worry about the market. 

So important. I've got a client of mine that works in, he's in the tech world, and he usually works for tech startups as a developer. It's a very volatile position because he works these tech startups, and sometimes they go under. So he might be out of a job for six months, nine months a year at a time, and then he's re-employed, right? So when we were going through this, I was like, absolutely not. We cannot have six months’ worth of expenses in savings for you. 

You need to keep at least a year because of the nature of his job and how long it takes for him to find a position. And that happened after our work together, he did end up losing his job, and he was out of work for about six months, and then went back to work. So he was able to use his emergency fund. He wasn't stressed about it, and then when he went back to work, he built his emergency fund back up. So it really is going to come down to everybody's individual situation. 

Now, where should you keep it? There are lots of options. Checking, savings, CDs, money markets, cash value life insurance. So you've got lots of options of where to keep it. Where you don't want to is in an investment account or retirement account. You don't want your emergency fund to be down 20% because of the market, and you need it. You need it for something. So make sure it's something that's not going to be as volatile like the market.

Now I talk with all of my clients about creating a spending plan. So let's talk about what is a spending plan, what is it not, and why is it important? And this is important for clients who are in their working years, clients in their 30s and 40s. This is important for clients who are going into retirement. I am not a budget person. I don't believe in budgets. I think they feel too restrictive. I don't think that we stick to them very well. A budget, to me, is like a very restrictive diet that we maybe stick to for a few days, and then we order a big pizza. 

I don't know about you, but at least, that's what I do. And I think budgets are the same way. So we don't want to budget. This isn't about being restrictive. It's about just being intentional with our money, knowing where our money is going, and just being purposeful, right? Deciding on purpose, where your money goes. So what I recommend on a spending plan is take a look back at the last three months of spending. 

Don't judge it, just observe it and ask the question, does this reflect my priorities? Is this how I want to be spending my money? And if not, what changes can I make? This is going to allow you to have guilt-free spending. Everybody wants guilt-free spending, and it's going to help you actually even weather those changes in income, unexpected expenses, big life transitions. It's at least having an idea around your spending. 

It doesn't have to be down to the penny. We just want it like in the ballpark. We want round numbers, estimated. This is about what we spend on a monthly basis. And then we want to look at what is discretionary spending and what is essential spending? So essentials are like, how do I keep the lights on? Mortgage, rent, utilities, groceries, how do I live my life? And discretionary spending are things we enjoy, but maybe not necessary. Could be eating out, entertainment, shopping, things along those lines. 

The discretionary spending, those are things that we can cut back when times are tough. Doesn't mean you have to cut out everything, but it is helpful to know what's your wiggle room. Are there some things that you could trim? And if so, what are you going to do with that? It's good to know look at your income and your spending plan to say, hey, do I have a surplus? Do I have a deficit? And a lot of my clients, if they go through this, they do find things where there are inefficiencies, I'm going to call them. 

There are holes in the bucket. You know, one of my clients didn't realize she was spending $300 a month on DoorDash. There's nothing wrong with DoorDash, but she was like, April, I didn't know, because it's easy. So then she looked it and was like, oh, I don't have to do that. Now, she's still going to order DoorDash, of course, but maybe she's just more intentional about it now. Maybe just makes her stop and think. And then she can do other things with that money. Those can go to other goals. 

So, when I'm thinking about this emergency fund or creating a spending plan, the challenge I see is that we know we should have these things, but we haven't done it yet, and that's where we can come in to help clients, because you don't have to figure this out alone. This is what we help people create real-world, flexible strategies based on their actual lifestyle and goals. And it doesn't have to be hard. We can make it easy. 

But it is good to have those kind of things, especially when thinking about preparing for some type of financial storm. Now, let's get into protecting investments and retirement accounts. And some of this, listen, you're going to say April, I already know that, but I think it's so good for us to hear it again. The first thing is, diversification is key. We always hear this, right? Diversification. 

Don't put all of your eggs in one basket. We don't want to have all of our investments in the same type of asset. We want to spread it out across different investment types, so your whole portfolio, your whole account, isn't moving in the same direction when the markets shift. Think about this year the market volatility. We want to have things that are going to be like a hedge against the market going down, right? 

Well, things are going to go up when it happens. So we're not experiencing so much of that loss. One thing I talk about with clients is, do we need to stay the course, or do we need to make strategic changes? We hear a lot, don't panic, stay the course, and for a lot of people, in a lot of situations, that is true, and that's good advice. But the reality is, your course might need changing. It might need updating. 

We need to look at your goals, your timeline, your circumstances, and we also need to look at your investments. If it's a sinking ship, when do you want to get out of it? So your investments need to adjust over time, and strategic changes can help you avoid unnecessary losses or take advantage of opportunities. So I think we don't need to be making changes for the sake of changes. 

But we do need to be strategic. We do need to be tactical, but we don't just need to be an ostrich and have our head in the sand and not look at it. So, when do we need to stay the course, and then when do we need to make changes? Look at your current trajectory. Ask this question: if I continue on this path, am I going to reach my goals? We have clients all the time with retirement projections, income analysis, investment reviews and sometimes some small shifts now can help us reach our goals faster. 

It can help us avoid big problems later. It can help us put us in a better situation. So ask that question again, if you continue doing what you're doing today, if you stay on your path, will you reach your goals? Let's say you want to retire in five years. So if you made no changes, are you going to be able to do that in five years? Or are there some tweaks that are needed? For most people, tweaks are needed. 

And so it's understanding where we are today. And then are there some things that we can do to make it better. Knowing when to make changes. Timing is everything. You don't want to be reactive, but you don't want to wait too long. So it's this fine balance, right? This is one that's really good to have a process in place. And when I recommend that you review your plan at least annually, that becomes very crucial. 

Look at it when you have big events that are happening globally, and deciding, do I need to make changes now? And if I don't, when am I going to make changes? I had a client that when last year when we were reviewing his investment account and deciding if we're going to make some changes. And I recommend, I said, hey, look, there's still a lot of uncertainty about what's happening with interest rates and the Fed. 

And so why don't we circle back in six months, so we can have a better understanding of what's happening with interest rates, because that's really going to impact the bonds in your portfolio. And we can decide then, do we need to stay the course or make changes? So if we're not making changes today, when are we going to make changes if we need to?

This is really where the importance of professional guidance comes in, because it's hard to make objective decisions when your emotions are involved. I deal with this too. I look at my own personal financial situation, and I think I should be doing X, Y, and Z. For example, I think I should be paying more down on my mortgage. And I literally have to say, now, April, what would you tell yourself, if you were a client? And my mortgage interest rate is 3.125. It's very low. 

If it was a client sitting across the table from me, I would tell her, no, do not pay a penny extra on your mortgage. Instead, put that money over in a separate account and build it up and sure, if you get to the point where you can pay off the mortgage in one sweep, go for it. But I would tell her not to pay it off early. So I have to play that game with myself to take my own advice. 

And that's really why working with a planner, someone who can step back, look at the data, offer recommendations, is so valuable. And you know, it's not really just recommendations. I'm gonna say something else here. It's actually getting clarity first. That's the first place we start. We don't start with recommendations. Oh, you should be invested in this, you should buy this product. We start with, what is it that you want? What do you want your money doing for you? 

What's the job of your money? Why is this important? We have to start with the goal, with getting clarity on what you want, and then we look at what you're doing and say, is this the right thing or not? We met with some new clients a few weeks ago, and they met with an advisor several years ago, who, at the first meeting, started selling them a product. 

Actually, several products, to the point where the wife was like, I got so overwhelmed at that meeting that we walked out and we didn't do anything. And we haven't done anything, and that was years ago. So, fast forward to us meeting a few weeks and we didn't know that at the time that they'd been in that situation, but we started off asking, what do you want? Do you want to retire one day? If so, when? What are some big goals and dreams that you have for your money? What are your concerns? What are your challenges when it comes to money and really understanding what is it they want? 

And then we look at what you got and how it's working, and are those things going to help you achieve those goals? And that's what is really good about working with someone. So whether it's, it doesn't have to be us. It's us, someone else, you don't have to navigate these storms alone. We've helped hundreds of clients navigate these challenges, and our job is to help you avoid unnecessary risk and missed opportunities, because you shouldn't have to guess. 

You shouldn't have to just hope it's all going to work out. Hope is not a strategy. If you want a second opinion on your investment setup, or how you currently are positioned. This is a great time to schedule a focus session, and we're going to talk about that at the end, on how to do that. Now, what are the keys to building a competent financial plan? One that works not just when the sun is shining, but when the forecast is uncertain. 

The first thing you want is, you want to have a plan that works in all seasons. A good financial plan isn't built for perfect conditions. It's built to withstand volatility, getting sick or hurt, job changes, life transitions. Think of it like a house being built on a strong foundation. And the role of professional guidance, just like a contractor would help make sure that your house is up to code, a financial professional helps make sure that your plan is built soundly. T

They can help you see things you might miss and guide you through key decisions. Stress test your financial plan. We walk clients through this all the time. What happens if you retire early? What if the market drops 20%? What if healthcare costs spike? You want to know that your plan holds up in all of these scenarios. Continuous improvement and tweaking. Life changes. Your plan should, too. We recommend regular reviews to adjust your strategy as needed. 

Think of it like tuning up your car before a road trip. You want to make sure that you're on the right path. Don't set it and forget it. Prepare for life's unexpected events, whether that's a health issue, a family need, job changes, maybe an opportunity, a flexible plan is going to make it easier for you to respond with confidence, not fear. Planning ahead gives you options, and that's really what financial confidence is all about. 

Most people want a plan like this, but they haven't been able to pull all the pieces together, and that's exactly what we help our clients do. Now, as we've been going through this today and talking about, how do we understand what a financial crisis is, how do we build financial resilience, and those keys to having a confident financial plan. If you're unsure about your plan or you want a second pair of eyes, I invite you to book a complimentary focus session. 

Here's how that works. It's a 30-minute call where we're going to help you get clarity on your financial goals. We're going to identify any roadblocks, and we're going to pinpoint any opportunities you may not have seen. You're going to walk away with some action steps, some tweaks that you can implement right away, with or without us, and if it makes sense to continue working together, we're going to talk about what that looks like, and if not, you still get to leave the call with that clarity and having some tweaks. 

So there are a few ways you can book a call. You can scan the QR code, and that's going to take you right to my calendar. You can book a 30-minute call. You can also call our office, 850-562-3000, and let them know you heard me speak and you'd like to schedule a focus session. Again, that phone number is 850-562-3000. And I recommend, while we're on the call, or right after, go ahead and do that. 

If you're interested, if you want to book a call, do it while you're thinking about it, while it's top of mind. I don't know about you, but I can be so guilty of having something on my to do list and just not getting to it yet. I called someone yesterday that I met with a few months ago to just check in, see how things were going, see if they were ready to move forward with their retirement plan. She goes, oh my gosh, I'm so glad you called. You have literally been on my to do list for weeks now, and I just haven't had a chance. So we all get busy, and life gets in the way. 

And there is a cost to waiting. There's clarity. Most people don't fail financially because they made a bad decision. It's because they postpone making decisions, and the biggest obstacle is inaction. So don't wait until you're in the middle of a storm to say, hey, I need to figure out if this works. Let's test it now. Let's strengthen it. Let's build confidence now, while we can. And sometimes clients have, we can feel some obstacles to getting this financial clarity. 

Sometimes people say, I already have an advisor. Wonderful. Most of my clients do. My goal isn't to disrupt what you already have. It's more about how can we add value? There can be emotional barriers. Sometimes we don't really want to face our financial situation. I can't tell you how many times clients have said, oh, I'm worried for what you're going to tell me today. We're worried what it might reveal. Listen, we are here to support and guide you. 

I literally have a sign in my office that says this is a no judgment zone. I've seen it all. There's nothing you can say that's going to shock me. And this is a place where we can talk about your goals and your challenges, and if there are problems, when do we want to talk about it? The more we bring that out into the light, the less scary it is. 

So getting through some of that. And perceived cost, right? They might be worried about, what's this going to cost me? Our initial talks are always at no charge. We take the time to understand your unique situation, we're going to give you some insights, and then we'll decide together if it makes sense for us to move forward and work together in some capacity. 

And if, and if we decide to do that, of course, we're going to be very transparent with you so you understand exactly how much our fees are for planning. We have different plan options, so we can discuss different pricing options and make sure that that aligns with where you are and what you need. But again, those initial talks are always no charge.

So let me share a quick story I think that really drives this home, about how important it is for planning. One of my clients always thought she had plenty of time to plan and prepare for retirement. She was focused on building her career, and retirement just felt something that was really far in the future. But as she got older, time, as it does, slips away, and she started to feel uneasy about it. 

And so when we finally sat down to review everything, she realized she was behind. All of her investments were tied up in her 401k and she wasn't saving enough. To compensate, she was taking on way too much risk, hoping that the market would help make up the difference, but that's a dangerous strategy, and it only works if your timing is perfect, but most of the time it's not. 

And what really stuck with me is one time she said, I wish I had started this five years earlier. But here's the thing, we had actually been introduced five years earlier. She was introduced and referred to me by another client, and we had some initial conversations, but she said the timing wasn't right for her then. So, fast forward five years later, and she was ready to get together and roll up her sleeves and get to work. And you know what, she's gonna be fine. 

She's gonna be totally fine. And we were able to course correct and build that plan together. But I want you to think about the difference those five years could have made for her. She could have had more flexibility. Maybe she would have been on track to retire at 65 instead of 70. Or maybe she would have just had more freedom to spend money how she wants to today. And that's the power sometimes, of taking action before you even feel ready. 

We know how to help because we've done it for people just like you, and if you're still watching this, I think that tells me that you care. You're smart, you're motivated, but you just need the right guide to help you walk this road. So here's what I'd recommend. Your next step would be to book a focus session. We'll sit down for 30 minutes, we'll talk about your goals. We'll map out some strategy, some tweaks that work for you. No pressure. Just get some clarity. 

You've already taken a great first step by being here today. Let's just make sure that this moment is where the momentum really begins. So that next step for you would then be to book that focus session. Thank you so much for joining me today. I hope you enjoyed today's conversation, and then I look forward to seeing you on the next one. Bye now.

Voiceover: This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, visit our website at curryschoenfinancial.com, or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address: 1700 Summit Lake Drive, Suite 200, Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of  FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

8113687.1. Expires, July 2027.

Avoid These Three Mistakes With Your Retirement Plans

What if your retirement feels more like a question mark than a dream come true? Most people think they’re prepared—until the freedom finally arrives, and with it, uncertainty. Have you forgotten to plan for what really matters after the alarm clock stops?

In this episode, April Schoen helps you design a roadmap for the life you want—with clarity, confidence, and purpose—so your retirement isn’t just financially sound, but genuinely fulfilling.

You’ll discover…

• Why financial security alone won’t guarantee a happy retirement

• The one mistake that leaves many retirees feeling lost, even with a solid nest egg

• How to uncover your hidden vision for life after work (and why it might surprise you)

• What most people get wrong about post-retirement spending—and the three phases you must consider

• The proven framework to align your money with your dream lifestyle (and avoid regret)

Mentioned in this episode:

• https://curryschoenfinancial.com/

Transcript:

April Schoen: So imagine this. It's your first day of retirement. You just woke up, no alarm clock, no commute, no meetings to go to, just silence. And for the first time in decades, no one's telling you what to do. And in that moment, a question hits you. Now what? This is the part that most people miss, they forget to plan for, and that is what we're going to tackle today. What is your life actually going to look like when you get to retirement? 

Welcome to your retirement story. How to craft a plan for the life you want. Welcome. I'm so glad you're here. My name is April Schoen, and whether retirement is right around the corner or decades away, today's session is really designed to help you think about your future with clarity, confidence, and excitement. 

So many people spend their entire careers working hard, saving, trying to do the right things financially, trying to be responsible, but when it comes time to retire, they're not sure what it's actually going to look like for me. And that's what we're going to work on today. Helping you define this vision so that you can understand what you want retirement to look like. What's your goal? When you wake up and every day feels like a Saturday or every day feels like a Sunday, what are you going to do with your time? What's going to give you purpose and meaning so that you can not just be retired, but actually enjoy your retirement? 

And that's what we're going to talk about today. We're going to talk about how do you create this ideal vision for your retirement. I'm also going to go through some of the most common mistakes that I see people make, and then I'm going to go through a very simple framework with you that I take all my clients through in helping them design not just what is that vision for retirement going to be for them, but also the financial side of it. How do you build a financial plan that supports the lifestyle that you want for your retirement? 

I'm excited. Let's dive in and get started today. So retirement is more than just money. Most people think about retirement planning like numbers, savings, investments, pension calculations. And while those are important, if that's just a piece of the puzzle, that's just part of it. Money is just a tool. It's the financial tool to allow you to do the things that you really want to do in retirement. And the focus should be on, what are those tools going to enable you to do? So retirement is, it's a lifestyle shift. It's not just a financial event. 

So there are a few questions I want you to think through as you're starting to think about what is retirement going to look like for you. So, what do you want to spend your time doing when work is no longer the main event? When you don't have to plan your week around Monday through Friday, eight to five, what are you going to do? What's going to give you meaning, purpose, joy, what are you going to look forward to? What are those things that you wish now that you think, oh, if I only had more time, I would do fill in the blank. 

And I really encourage you to take some time and think through that. Are you going to volunteer? Are you going to work on a hobby? Maybe it's that you want to work on your golf game. Maybe you want to start picking up pickleball. What are you going to do with your time? Is it travel? Travel, I hear that a lot. Hey, I want to travel when I retire. Great. But where are you going to travel to how often? That's not going to be something you do every day. 

So, how often are you going to travel? Is it going to be one big trip a year? Is it going to be these maybe smaller trips every quarter? What's that going to look like for you? Who are you going to spend time with? Now that you have all the time in retirement, who are the people that you're going to spend time with? What are you going to look forward to? Most retirees don't plan for how they're actually going to live once work stops. 

They focus on the numbers, and they miss the bigger picture, how they're going to spend their time. What's going to give their life purpose and fulfillment? What is that really going to look like on a day-to-day basis? I've worked with clients who had more than enough saved. So financially, on paper, they were good to go, yet they struggled. I had one client tell me, you know, April, I've worked for 40 years, and I have no idea who I am without work, because our work can become a lot of our identity. 

Now, I find this tends to be more for men than women. But yes, our work can be our identity. So when we're not working anymore, who are we? What are those things that are important to us? What do we want to do with our time? And this left him feeling very, he just felt like he was drifting. He just didn't feel like he had as much purpose as he did before. And that's when this part matters so much. 

Without a vision, you risk getting to retirement and being bored. I've had clients go back to work because they said, hey, this wasn't for me, and that's okay. But also, with some planning of thinking through those things, you can make sure that the retirement is exactly what you want it to be. You know, when you wake up with all of this freedom, you now have time freedom and hopefully, you know you've got the money to live the life, but you just don't know what you're going to do with that. 

That's not what you've worked this hard for. That's not what you've spent decades of your life getting to. But here's the good news: you get to decide. You get to decide what this next chapter looks like. If it's going to be full of travel, volunteering, new hobbies, spending time with family, whatever excites you, you get to decide. And first, you need to define it. So what we're going to talk about today, today's goal is helping you design a fulfilling and financially sound retirement. As I mentioned earlier, I'm going to walk through what are some of those big mistakes that I see people make. 

How do you set realistic goals for retirement? And then a simple framework that you can follow. This is a framework I take all of my clients through so you can connect your money with the life that you want. Here's what we want in retirement, here's our goal, here's what we want life to look like in the future. Here's where we are financially. How do we put those things together? How do we start matching our finances with the lifestyle that we want? And by the end, you're going to walk away not just with more knowledge, because you don't need that. You need a vision, and you need a starting point for action. 

So let's get started. So, what does your ideal retirement look like? I'm going to ask you some questions, and I really encourage you to take some time to think this through. You know, you maybe even want to grab a journal or something to jot down some ideas. So what does your ideal retirement look like? If you don't have a vision for retirement, you could end up feeling lost, bored, or even regretful, despite having financial security. 

So let's take a moment to reflect, and I want you to really think about this. When we think about retirement, one, where are you going to live? Are you going to stay in your same home, in your same town? Are you going to move? I live in Tallahassee, and I had some clients who retired here in Tallahassee a few years ago, and they moved to Orlando to be near children and grandchildren. I've got clients who have sold their house and bought an RV and traveled all over the US for several years before selling the RV and then settling back down in the Carolinas. 

I've got clients who moved to Virginia because they wanted to live on a lake or move to the beach, because that's where they really envisioned their retirement. So, where are you going to live? How will you spend your time? I love asking the question, if every day is like a Saturday and a Sunday, what are you going to do with your time? I had some clients retire earlier this year, and I just met with her last week, and I love something she said; she's like, I don't know how I had time to work before. 

I have so much going on in my life today that my days are filled. You could just tell she was so happy that she was really loving retirement, and that's because she had that purpose. So, how will you spend your time? I'm going to throw out some examples. Again, is it going to be volunteering? A lot of people tell me that. Hey, I wasn't able to do these things when I was working, and now I want to give back. Is it a hobby? Maybe you already play golf and you want to join a men's group and golf three days a week. 

Maybe it's that I really want to, you know, play pickleball or pick up a card game. I want to garden. I want to work on my collection. Like, whatever that is, what is that hobby that's something that you are going to enjoy doing? Maybe it's starting a business. Maybe you worked your whole life in a career, and then you retired, and now you're saying, hey, you know what? I think I'm going to be a consultant. I'm going to start a company, I'm gonna start a job. I want to do something like that, and in order to fuel some of that creativity. 

So, how are you going to spend your time? Who are you going to spend it with? I think this is as much of an important question to ask as any of these others. Who are you going to spend time with? My dad retired, I think, 12 years ago now. And I know one of the things that he struggled with was like a lot of his friends were his coworkers. Because you spend a lot of, we spend more time at work than we do at home. So his friends were his coworkers. 

He retired, and so he lost some of that social interaction. He lost some of that social aspect, because now he had time freedom, but they were all still at work. And that was an adjustment for him, a transition for him. So think about that. Who are you going to spend time with in retirement? What are some things that are going to bring you joy and meaning? It's that sense of purpose. We all need a sense of purpose. 

And a lot of times in our career, our jobs, our career, is our purpose. So what is that going to be for you? And when you begin answering these questions, you can start to really build this vision for what you want life to look like. And the clearer we have this vision, then the more one we're committed to it, right? And suddenly it's not just about something that's far off, potentially going to happen in the future. It starts to really feel real, and you start to want it. 

And you start making decisions around that to make sure, hey, I want to make sure this happens in the future. And this vision becomes the foundation for every financial decision that you make. It's going to impact other areas of your life, like your health. If you're like, hey, April, I want to be able to be able to travel and go hiking and do these active things. Well, I need to make sure that I'm active today so I can do those things when I get to retirement. 

So it's not just numbers. We really want to plan for what do you want your life to look like in retirement? Now I get asked this all the time: what are the biggest mistakes I see people making? What are some things that we should avoid when we're thinking about retirement? So I want to talk through some of the biggest mistakes that I see people make when getting ready for retirement. And these mistakes aren't about picking the wrong fund or missing some sort of market move with the economy. 

It's bigger than that, and they can have long-term consequences if you're not careful. So one, no vision after work, so no vision for your life after work. What am I going to do now that I'm retired? Assuming that your spending will go down? Oh, I'm retired, I'm not going to be spending as much money. I do not find that to be true. People tend to spend the same amount of money, if not more, in retirement. And then delaying big decisions, it can feel like we're making these major decisions in our life, because it's going to affect our retirement for the rest of our lives. 

It feels like, hey, we can't make a mistake, because there are no do-overs when it comes to retirement, so we can push those off until the last minute. I ask people all the time, have you started to look at what is your income going to look like in retirement? What are your expenses going to look like in retirement? And a lot of people tell me, no, I haven't. And I even asked someone yesterday I spoke to on the phone. Said, I'm scared to. 

So think about that for a second. He's getting ready to retire. And he said, I'm scared to look at the numbers because I'm afraid of what they're going to tell me. It's real, and we need to overcome that fear and look at it so we can plan for it and make decisions around that and make sure that we're doing the right things. So let's get into this first one about not having a vision. 

So, too many people focus just on the money and not on what they're actually going to do with their time. They hit their savings targets. They think, I'm ready. Maybe they hit their 30 years of service, and they're going to get their pension. But retirement isn't about just not working. It's about the life you're going to live. I had a client retire early, and he spent the first few months of retirement on his couch watching TV all day long. And he was so unhappy. 

One, he was watching a lot of the news, and the news is all negative, so he's just hearing this negativity all day long. And he just really wasn't happy. He was like, April, I think I'm going to have to go back to work. And so what we did instead, which, again, totally fine if he wants to go back to work because he wants to, but we started mapping out a plan for what he was going to do with his time. And that meant some trips that he had been putting off. 

So you know that whole what's on your bucket list. So jot those down. What's on your bucket list? Where are the places that you want to go, the things that you want to do? Start making a list. I'm not saying you have to wait until retirement to do all those things, but if you're close to retirement, you should have a list. You should have those. Hey, these are things I want to do this year and next year and maybe a few years after. And we started mapping out some of his trips. 

We started mapping out then, okay, let's see if we can kind of get involved with some organizations here. For him, it was golf. It was great, join a men's group, go golf. And then also we built in some time for him to spend some more time with his grandkids, so he could, you know, one day a week, go pick them up from school and go do something with them. And that really changed everything for him. He now had energy. He felt like he had, like, a plan and a purpose. 

So you don't have to have it all figured out, but if you don't have a plan for your lifestyle, you really risk trading stress for boredom, and that's not a win. That's not what you want. It's not what you've worked your entire life to get to. So we want to make sure, like again, sometimes when people are getting close to retirement, they can feel bored, and they can feel like they don't have any direction if they don't have a plan for that. 

Plan for activities that bring fulfillment. So, not just going golfing or pickleball, but what are those things that are actually going to bring you joy and purpose? Having a sense of purpose matters just as much as income. I have some clients who in retirement, what they're doing is they are they're kind of being a chauffeur for the people in their church. So some of the elderly members of their church who can't drive anymore, they go pick them up. 

They take them to their doctor's appointments, they help them run errands. And when they talk about this with me, their whole face lights up. I mean, they are so happy and joyful to be able to do those things. And they said, I can't even imagine how we worked before. We're so busy and so fulfilled right now with all of these things that we have to do, and they've just really found a way to connect to that in retirement.

Another mistake I see people make is assuming that you're spending will drop. Assuming your spending is going to go down in retirement, and while it might for some the opposite is often true. We actually find that usually in that first 10 years of retirement, your spending goes up. So think about this for a second. You finally now have time to travel, to take up new hobbies, to do upgrades, like renovations around the house, visit the grandkids, and these things cost money. Healthcare expenses tend to rise. 

Inflation can quietly eat into your purchasing power. Quietly or sometimes not so quietly. In the last few years, inflation hasn't been so quiet. So planning for this is so important, because we know you're going to need more income tomorrow than you need today. So we have to plan for that. There's something in retirement, I don't know if you've heard of this before, but there are these three phases of retirement, and they call them, go, go, slow, go, and no go. 

So I want you to think about if your retirement was 30 years. So if you retired at 65 and you live to 95. Your first 10 years of retirement are your go, go years. This is when you're traveling. This is when you're doing all the things that you want to do. You're more active. So you have your Go, go years, then you have your slow go. So you might still be active, you might still be traveling or involved in some sort of physical activity, but it's not as much. 

Maybe you're not traveling overseas anymore. You're kind of staying more regionally. Maybe you're not going on as many trips. Maybe you're not playing golf three times a week anymore. You're starting to slow down, and then that last phase of retirement is no go, where we're not traveling as much, where we reach a point where we don't travel, and we're not really involved in as many extracurricular activities. So this is what I see happen is we assume that our spending might go down, and really we have what's even called, where our spending goes up and then starts to come back down. 

So think about travel, hobbies, healthcare, obviously, may increase over time. Inflation eats at your purchasing power. And your retirement lifestyle requires accurate numbers. We have to account for these things. We can't assume that your cost of living, your lifestyle, is going to be the same. You know that's not going to be true. We have to have a plan in place to combat that inflation. The other mistake I see is people delaying big decisions. 

And these are some can be some of the most important decisions that you're ever going to make about your retirement, like when to take Social Security, how to draw from your retirement investment accounts, how to handle your pension. You really need to be planning for these well in advance and waiting too long can limit your options, and it can create some mistakes. So let's think about some of these big decisions. Social Security timing. When are you going to take Social Security? When is your spouse going to take Social Security? 

How are you going to structure if you have a pension, thinking about timing your pension and which pension option to take. Structuring your income from retirement accounts and investment accounts. When are we going to do those things? Thinking about tax strategy and RMD planning? We're so guilty of just saying, okay, here's what my income is going to be, too, and we don't think about the taxes, and we don't think really about what's required minimum distributions when you have to start taking money out. 

And these small delays in making these decisions can cost make a big mistake in retirement. So maybe we're making decisions rashly, because we just have to. Maybe we don't think through all of the options in what we could or could not do. So we want to make sure that we're thinking about these well in advance of retirement. And so these three mistakes that I've gone through are all completely avoidable. By addressing them now, you're giving yourself a much better shot at a retirement that you've been dreaming about. 

So one of my clients, she dreamed of moving to the beach. That was her dream from when she got to retirement. She wanted to be able to move to the beach, but they weren't really sure if they could do it financially, if it was realistic. So what we did is we reviewed their retirement income, we analyzed their retirement income, we analyzed the cost, which we're going to talk a little bit later about, and we created a plan that wasn't just possible, but it was sustainable. 

And today, hey were able to achieve that dream without sacrificing security, and I think that's really important. And so today they're able to live that dream without stress and without financial sacrifice. And it took a little planning, a little being strategic and looking through things. And so when your goals are clearly defined like that, your retirement plan becomes a roadmap, not a guessing game. 

And that brings us to the next step, which we're going to talk about is, how do you create a simple framework that turns your vision into a reality. And really, what we want to do again, when I'm working with clients, we first start with, what is your vision for retirement? What do you want retirement to look like? And so if we know here's what I want retirement to look like, we can then look at here's where I am financially, and see if those two things are in alignment. Do they match up? 

So let me kind of walk you through this framework. Once your goals are set, once you have this vision for retirement, the next step is connecting that vision to a financial plan. This is where it becomes real. And surprisingly might be surprising to you. It doesn't have to be complicated. So here's a framework that I use to work through with clients on building a realistic retirement plan that supports their ideal life. 

First, you're going to identify income sources, think Social Security, pension investment, retirement accounts. Where's your income going to be coming from in retirement? Creating a realistic spending plan. I am not a budget person. I do not believe in a budget. I had a client yesterday ask me, are you going to make me do a budget? And I was like, No, do you want to do a budget? And she was like, no, I hate the idea of a budget. And I agree. I think with budgets, we make them way too restrictive, and we don't stick to them. 

So it's not a budget, it's a spending plan. How do you want to spend your money? Think back to that vision, that goal, that dream that you have. These are the things I'm going to do in retirement. Well, let's start thinking then about the financial side. If you're going to travel, how much money do we need to be setting aside for travel? If you are in a golf group, right? A men's group, golfing three days a week, what does that cost? Start thinking through the spending side. 

One thing too is you wanna make sure that you plan for both taxes and inflation. I find that people leave these out of their plan. They don't think about the tax side. We're not strategic about taxes. We just kind of hazardously take income from accounts, and we don't think about how we could be more strategic about that. And we're also not planning for inflation. We also need to build in flexibility into your plan. Things change. Life changes. Life throws us curveballs, right? 

Maybe we get sick, maybe a spouse passes away, maybe, you know, our child gets an amazing job in Washington, and we want to move to be closer to them. Things change. Life happens, and we've got to be able to adapt with that. And work with a professional. Work with someone who's done this before, not just once or twice, but someone who focuses on retirement income planning. 

Even if you feel confident about where you are, having a second pair of eyes, especially someone who's gone through this hundreds of times, can make a big difference. A good financial advisor can help you optimize your income, minimize taxes, and make sure that you stay on track. So let's talk through some of these pieces just a little bit more in detail. Know where your money's coming from. 

You need to identify those income sources. So that might be Social Security. Do you have a pension? Thinking about retirement accounts, investment accounts, how are you going to structure income? Do you have other income sources? Is there rental income? Is there business income? Understanding the timing and reliability of these sources is going to help you build that plan that feels stable and predictable.

Then we want to match your income to your lifestyle. So, build in a spending plan. Compare your expected income with lifestyle expenses. What does it take to fund the life that you envision? We help clients look at this from a hey, these are my essential costs. These are my discretionary costs. And we can build a strategy to make that sustainable. You want to plan for taxes and understand how that's going to impact you. 

Most people underestimate the impact of taxes. We want to plan for the unexpected. Expect the unexpected because we know things are going to come up. The roof has to replaced, the air conditioner goes out, the car dies before we think it's going to. All of these things are going to happen. And we shouldn't be surprised by them. We just have to have a plan for how to take care of them, and also just having some flexibility. 

We want to make sure that we can adapt. Life changes, market changes, healthcare changes, and we need to have a plan that's built with that in mind. So that includes, sure, having an emergency fund, making sure we've got protection strategies in place, making sure we've got liquidity so we can make smart decisions around those items. And you don't have to do this alone. If this all feels like a lot to navigate, I want you know, that's why we do what we do. 

We help people take this idea of planning for retirement from something that may seem very overwhelming to something that's simple and doable. We have a proven process that we take clients through that looks at everything in their financial world and helps them build that retirement income plan that's really going to match up their income with their lifestyle. Because with the right plan, you can get everything that you hoped for in retirement and more. 

And that should be avoiding those common pitfalls we talked about earlier. This is getting a second pair of eyes on your plan to make sure there's not something that you're missing. It's coordinating income and taxes and investments. It's legacy planning. It's staying on track. It's having mechanisms so that we can stay on track. So I want to wrap up with a few key takeaways today. 

One, I want you to think beyond just money and start with the life that you want. Avoid those common pitfalls that I talked about earlier. Set clear, realistic goals. Align your finances with your ideal lifestyle, and get help building your financial roadmap. So and again, you don't have to do it alone. I love to hear from you, what is your ideal retirement look like? You can send us an email letting us know, after going through this what is your ideal retirement look like? 

If you're ready for clarity, purpose, and financial confidence in retirement. Let's connect. No cost, no commitment. Click the link below or call us at 850-562-3000 to schedule your complimentary retirement focus session. Here's how we help our clients, step by step. Step one: you book a retirement focus session. This is a one-on-one conversation where we review your retirement timeline and begin identifying potential retirement income streams. 

Step two, we build a personalized retirement roadmap. This is not a generic plan. This is tailored to you and your situation. Step three, you walk away with clarity and control. You know exactly what you need to do next, and you feel confident on your path forward. This is not a sales pitch. It's a professional strategy conversation. It helps you understand your numbers, see your options, and it allows us to decide if working together makes sense? 

I don't know if we're the right fit for you, because we're not the right fit for everyone, but I can tell you at the end of this call, we'll know if it makes sense for us to work together in some capacity. And yes, we do charge planning fees, because this is real work that gets real results. But this first session, this first call, is where it all begins. And since we don't know yet if it makes sense for us to work together, we do not charge for these initial calls. 

Now I want you to imagine your life six months from now. You're sitting down with a clear, customized plan. You know exactly how much income you're going to have and when you can retire. You've strategically managed taxes, you've structured your retirement income strategy. And you're not just reacting to life or reacting to planning for retirement, but you're leading with a plan. And you have certainty, you have confidence. 

This is what a meaningful, customized retirement plan feels like. If you're ready for clarity and confidence, let's take that next step together. Schedule your complimentary retirement focus session today by clicking the link below or calling our office at 850-562-3000. Until next time, hope you enjoyed this video today, and we'll see you on the next video. Bye now.

Voiceover: The Social Security Administration has not approved, endorsed, or authorized this material. Contact the Social Security Administration for complete details regarding eligibility for benefits. This promotional information is not approved or endorsed by the Florida Retirement System or the Division of Retirement. Neither Guardian nor its affiliates are associated with the Florida Retirement System or the Division of Retirement. This material is intended for general public use. By providing this content, Park Avenue Securities, LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, visit our website at curryschoenfinancial.com or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities, LLC. Address: 1700 Summit Lake Drive, Suite 200. Tallahassee, Florida, 32317. Phone number, 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities. Member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

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Retirement Planning Made Easy

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Retirement planning should feel empowering—not overwhelming.

But what happens when you’re faced with a maze of options, perplexing pension choices, and high-stakes decisions that keep you up at night?

In this episode, John and April unravel the complexities of retirement planning for Florida Retirement System (FRS) members—making it clearer, simpler, and surprisingly fun.

You’ll discover…

• The story of two retirement decisions in one family—and how one choice changed everything for decades.

• Why DROP and pension options aren’t as “set and forget” as most people think.

• The shockingly common mistake that could cost retirees thousands in unnecessary taxes.

• How timing your Social Security and coordinating benefits could radically increase your income for life.

• The overlooked risk of forced withdrawals and how to keep your retirement savings working for you.

Mentioned in this episode:

• https://curryschoenfinancial.com/

• Contact the office: 850-562-3000

Transcript:

April Schoen: Hello and welcome. My name is April Schoen, and I'm sitting here with John Curry.

John Curry: Hello, April. Hello, everyone.

April: And we're so glad you're here. Today, we're going to be talking about retirement planning made easy for FRS members. And now we all know, I kind of chuckle a little bit because John, you know, we know retirement planning isn't actually easy, especially when you're thinking about FRS pension choices, DROP, tax rules. There are a lot of things that you have to consider, and our job is really to make that easier for you by bringing clarity, by bringing structure.

And we primarily work with people who are retiring from the state of Florida. Many of them are already in DROP. And what we find is many of our clients they spend their entire career working for the state, maybe in the education system, university system, and now it's time for you to turn your attention to your future. And if you're like a lot of the people that we meet, you may be feeling overwhelmed.

After years of focusing on your work, your family, you may feel like retirement is coming up really quickly. Maybe coming up fast, and you've got a lot of decisions you have to make, and the stakes are so high, it's complicated. You might be asking questions like, what pension option did I choose, and was it the right one? What should I do with my DROP account payout? When should I take Social Security?

And of course, am I really ready to retire? You're not alone if you feel this way. And the truth is as well, you're not behind. It's just that the system is confusing, and that's not your fault. We believe that after decades of working, you shouldn't feel anxious about what's next. You deserve clarity. You deserve a retirement that works for you, and that's why we do what we do. Our job is to guide you through this maze of options, simplify the process.

Our job is really to try to make it as simple as possible for you, give you clarity and confidence so that you can move forward. And we specialize in helping FRS members understand what they have, first and foremost, what it means, and how to make the most of it. Actually, recently, we met with a couple who had always handled the finances on their own, but now that they're getting ready to retire, they wanted a second pair of eyes.

They wanted a second opinion. And in our first meeting, we were able to help them understand where they stood, what their options were, and how they can move forward. And they walked out with a structure, a plan in place, knowing that they were on the path to making the right decisions. And that's what we want for you, too.

So today, we're going to walk through some of the biggest decisions that you face in retirement, and we're going to show you how you can build a plan that fits for your life, your values, and your goals.

John: April, I think it's also important for people to know why we have chosen to work with members of the Florida Retirement System. On page 10 of my book, I tell the story, so I'll keep it brief here. I grew up in a state employee family. My father and my grandfather both worked with DOT, Department of Transportation, out of the Defuniak Springs office, halfway between here and Pensacola.

So I saw firsthand some of the things that they had to deal with. And when my grandfather retired, he chose option one. He chose option one because he wanted to get the maximum income. Unfortunately, he died a few years after retirement, before age 72. So my grandmother went 27 years without his pension, because when he died, the pension died. She died at 95, and all that money disappeared. My dad said, I'm not going to make the same mistake.

So he chose option three. He got an income stream for the rest of his life. He died at age 85. When he died four years later, my mother died, but both of them continued to get the same income, because option three pays to both. And you'll get into that later. But it's very important to sit and think and say, okay, which option should I choose?

Some people say, you're always better taking option one like my grandfather did, because I'll probably live longer. Well, he didn't. He thought he would, he didn't. So which man made the best decision? Back then, there was no deferred comp, there was no DROP program back in those days. So they got, actually pretty poor advice to be candid, but they were both hard headed, too, and didn't seek a lot of advice.

And they thought had it all figured out, but that is why, in 1983, I made the decision to spend most of my time working with members of the Florida retirement system. We have clients in other fields, but it's important that people who are under the Florida Retirement System get good information and not just a sales pitch.

April: That's why I'm happy that we're doing this today. We've been getting so many questions around options, and there's a lot of confusion out there. Not just about the pension, but what are your choices and options about what to do with DROP, deferred comp? When do I take Social Security? What does Medicare and health care look like in retirement? There are a lot of pieces to it, really.

John: And if you don't do it properly, you could find yourself paying a lot of taxes unnecessarily. So there are a lot of moving parts. And some people just don't like dealing with it. It's too complicated for them.

April: Yeah, that's why I love what we do is really helping them kind of be able to put all of those pieces together and help them make those decisions.

John: For us, since we're geeks about this stuff, it's fun for us.

April: It's fun for us!

John: It's like, it's like throwing the puzzle on the table and saying okay, where are the pieces, and where's the picture?

April: I said this to someone the other day. I was like, oh, this is the fun part. You know, it's like putting together, which we'll talk about later is a retirement rehearsal. And she goes, oh, I'm glad you think it's fun. I'm glad you find enjoyment out of it. She was making a joke, but she's like, no, seriously, I'm glad that we have people like you that like this is what they love to do. This is not my thing. So here's what we're going to talk about today.

We're going to walk you through the most important parts of building your retirement plan, and most importantly, you're going to know how it's going to apply to you. So we're going to talk about, when is the best time for you to retire. How do you get the most out of your FRS and Social Security benefits? And then also, what are some common pitfalls to look for so that you can avoid costly mistakes.

Now we're going to cover a lot today, but don't worry, the goal isn't for you to become your own financial planner. The goal is to help you realize how valuable it is to have a clear system and a guide on your side. So you don't need to memorize everything. You just need to understand what's possible, and then who can help you get it right.

So as we're going through this today, if there are certain sections you've got questions on, I encourage you to jot it down and say, oh, maybe I'm going to put a star by it and say, hey, this is something I want to talk to John, I want to talk to April so I can learn more about this. So let's dive in. The first thing that we're going to talk about is the four pension options under the state of Florida pension, and which option is going to be best for you.

So before we get into the technical stuff, let's talk about the real reason you're probably here. You know you've spent your entire life working, you're in DROP, retirement is probably coming faster than it seems, and you're wondering, am I doing this right? Am I making the right decisions? And we hear that all the time. Most of the people we work with, when we first meet them, they might feel unsure. They might feel overwhelmed.

You know, we had a client yesterday, she said she used the word foggy. She's like, oh, my plan is a little foggy. And that's what she was here for, was to get clarity on that. And almost all of our clients, when we first meet them, they're worried about making the wrong decision, especially when it comes to their pension, and that's not okay.

You know you've worked your entire life, most of you, decades for either the state or education system, teacher and you deserve to be able to retire with clarity and not confusion. So if all you get out of today is really understanding how the pension works and how DROP works, it'll be worth your time.

John: Absolutely. And it will also help them understand that it's not as complicated as some people like to make it. I don't want to say it's easy, but we can make it easier.

April: That's right. So let's walk through these four pension options, what they are, and what they mean to you. So option one, this pays the highest income. Pays you the highest income for your life. It's guaranteed for your life, but it dies when you die. It ends when you pass away, and there's no survivor benefit.

John: I call that my grandfather plan.

April: Option two includes a 10-year guarantee. So once your pension starts, if you pass away within the first 10 years, your beneficiary sees the income for the remainder of that period. There's one thing I want you to note here, is that if you're in DROP, when you went in to DROP that starts the clock on the 10 years. So you can be in DROP now for up to eight years.

So think about that. You go into DROP, you're in drop for eight years. When you come out, there's only a two-year guarantee left, not 10. So make sure you understand when that 10 years starts. Option three is joint with 100% to the survivor. Meaning your spouse continues to get the same pension that you are getting after you pass away.

There's no reduction for either one of you. You both get the same income for as long as either one of you are living. Now, option four is where there's a lot of confusion. This is a joint but, it's two-thirds to the survivor. So here's where people get tripped up. The reduction kicks in as soon as either of you, either spouse passes away.

Not just the employee, not just the person who accrued the pension benefit, either spouse. And a lot of people don't realize that. And choosing the wrong pension can't be undone. We've seen people lose 10, sometimes hundreds of thousands of dollars over time because they made a decision without fully understanding the consequences. Think about what John just talked about with his dad and his grandfather. Recently, we met with a client who thought that she understood her pension choice until we sat down and we reviewed it together.

She had selected option four, thinking that her spouse's benefit would only reduce if she passed away first. But that's not how it works. And so once she saw the full picture, she said, why didn't anyone explain this to me before? And so that's the power of having a second set of eyes, having a second opinion to make sure you're making the right choice.

John: Sometimes it was explained to people, but they didn't want to hear it. Okay. We see that also where they're so focused on, okay, I'll get the full benefit. I die, my husband or my wife gets X amount, even though it's pretty clear in the paperwork you sign, if you read it.

So, to be fair to the Division of Retirement, it's usually explained, it's just that we are in such a rush to make these decisions that we don't really process it. And they cannot. The advisors there cannot advise. All they can do is help you pick the options based on what you tell them, whereas we can look at everything as a process.

April: Yeah. And so for her, we did some things differently because of the pension option she chose. So I don't want to make it seem like it's a lost cause.

John: No, and I'm glad you said it that way, because what we're able to do is look at the other assets they have, and then take some of those assets to help offset that loss for either party. That's the part that's fun. How do we move these chess pieces and get this done?

April: That's the planning piece of understanding first, what do you have? Actually, I'm gonna take that back. Really, the first goal is to understand what do you want? What do you want life to look like in retirement? What are your goals?

John: Your vision.

April: Your vision. What do you want it to look like? Do you plan to travel? Are you gonna stay where you currently live? Are you going to move like, what are your plans? What are you going to do when you're retired? So, first, we want to have an understanding of what your goals are for retirement.

Then we want to see, okay, here's where we currently are, here's the financial pieces that we have, so we can see, are they working? You know, if what you currently have, is that going to help you achieve your goal?

John: And if it's not, when would you like to know? Not, not until the last minute. The sooner the better.

April: Sooner the better.

John: On the way here, there was an accident, big car pile-up, at least four cars. Well, it changed my direction. I couldn't go that far, so I'd go all the way back, backtrack the way I had come and take a different route. So if somebody could have told me, you know, 10 minutes earlier, 20 minutes later, well, hey, there's an accident down the road. Let's save you some time. Don't go that way. I'd have been happier.

April: For sure. So now let's talk about DROP. And if you're already in DROP, here are a couple things you need to know. One, just because you're in DROP, that doesn't mean that your planning is done, far from it. There are lots of decisions that you need to make. One, what are you going to do with your lump sum from DROP? When are you going to take Social Security?

How are you going to structure your retirement income? Are you doing things to avoid unnecessary taxes? These are the questions we help people answer, and so if you're in the DROP program, we know exactly what issues you're going to be facing and how you should be thinking about that now.

So let's walk through the program itself for a minute so you can make sure you understand exactly how it works. When you enter DROP, the state considers you retired. This means that you stop earning service credits towards your pension, and the state starts paying your monthly pension into a separate account in your name, and that account earns 4% interest annually while you're still working.

And then when you officially retire, when you exit DROP, you're going to receive that accumulated lump sum. And here's the important part, you can't leave the money in DROP. You have to make a decision on what to do with it. You can't leave it with the state. So here are your choices. You can take a lump sum. You can take it all out. You can have them just mail you a check.

But be prepared that entire amount is taxable in the year you take it. So that DROP payout gets added to all your other income, and you're going to pay taxes on it, which we're going to talk about in a few minutes. You can roll it over. You can roll it over to deferred comp. You can roll it over to an IRA, and this is going to be a tax-deferred decision. So you don't pay any taxes when you roll it over into an IRA or deferred comp.

You can also do a combination of the two. You could say, I want some now and I want to defer some. And this is really where planning comes in, and this is where we have to understand, what are your goals? What do you want this money doing for you? What do you need this money doing for you? Do you need income when you retire? Can you let it grow for the future? What is going to be the goal and the purpose of that account?

So one client came to us she wasn't quite sure what she needed to do with it. Now she had some debt that she wanted to pay off, so we walked through her options, and we were able to help her save 1000s of dollars in taxes, because she was going to take a really big lump sum out of DROP right away to pay off debt.

And we talked through the timing of that, when's gonna be the best time for her to do that? And we encouraged her to actually wait until the next calendar year to take the money out of her IRA to pay off the debt, and it saved her 1000s of dollars in taxes. And so we were able to help her.

She rolled it over to an IRA. The next year, she used some of to pay off debt, and then the rest, we structured to give her guaranteed monthly income. So that convo not only gave her the lifestyle she wanted, it helped her pay off the debt, and then also saved her on taxes.

John: And everything you just said applies to a deferred comp account, too, because you may want to send some of it today. You may want to leave some behind as an inheritance, which has another taxifying issue. Some people say, I'm going to designate this money to go to my kids and my grandkids, and I'm sure you'll get into it in a few minutes, some of the tax issues regarding that.

April: So you might be asking, how do I avoid mistakes? How do I make sure that I'm not missing out on something? So here's how we help clients do that along every step of the way. So step one would be that you would book a retirement focus session with our team, which we're going to share with you at the end of the webinar how to do that. You can also reach out to our team and book a retirement focus session.

So this is a no-cost one-on-one conversation where we review your pension, your DROP payout, your retirement timeline, and we help you build a personalized roadmap. So this is not a generic plan, but one that's designed around your situation, because everybody's situation is different, and what happens in this conversation is you're going to walk away with clarity.

You're going to know what to do next. You're going to feel more confident and in control. So this session is not a sales pitch, it is a professional strategy session. It helps you understand your numbers, see your options, and helps us decide if working together in some format makes sense. And yes, we do normally charge fees for planning, because this is real work and it delivers real results.

But this first session, this first call, where it all begins, it's at no cost, right? Because I don't know you. You don't really know me, and it's a time for us to get to know each other and see if we're a right fit to work together. So if you're ready for some of that clarity and confidence, a great next step would be to book that retirement focus session, which we'll talk about towards the end of the webinar. So now let's talk about taxes in retirement.

John: Do we have to talk about taxes?

April: We do, we do.

John: Nobody likes taxes.

April: No, no. We do a whole webinar just on taxes. I promise we try to make it fun. No death by PowerPoint. So let's talk about taxes so that you know how they work and you can make some decisions around it. I wish taxes did stop when we retire that would make things easier, but in fact, it doesn't, and it actually makes things more complicated on the tax side.

So taxes are different for everyone, right? This is going to depend on your situation, your pension, your social security, your retirement accounts, how you structure your DROP payout. This is why we are big believers in tax diversification. So what is tax diversification? It simply means spreading your money across different types of accounts that are taxed in different ways. And there are three primary types that you're going to want to be aware of.

First is tax-deferred accounts. This is probably the most common one that you're familiar with. Traditional IRAs, 403bs, 457s, DROP accounts. You haven't paid tax on that money yet, so every dollar you take out is taxable. Then there are taxable accounts, like brokerage accounts or savings.

I call these tax as you go, because you pay tax along the way on interest, dividends, capital gains, but when you go to take money out, you can actually receive some tax benefits, because some of that comes back to you with no tax.

Then you have tax-favored or tax-free accounts like Roth IRAs and cash value life insurance. You've already paid the tax, so now it grows tax-free, and as long as it's all structured properly, the money you take out is tax-free. Now it's not just about what accounts you have. So let's say, if you you have these three tax-deferred, taxable, tax-favored, it's more about how and when you use them.

We call this the order of operations. Which accounts do you pull from first and which ones are better to let grow for the future. This is where we see people get caught off guard, where they can make mistakes, especially with things like DROP distributions, deferred comp withdrawals, big IRA rollovers. One of the biggest mistakes we see is that retirees accidentally trigger big tax bills just because no one helped them think through the timing.

But with the right strategy. This is something you can plan for. And it's not just about reducing taxes today, but it's about being strategic, being taxable, reducing them over the next 10, 20, 30 years. For example, one of our clients came in and she had a mix of accounts, just like I said before, tax-deferred, taxable, and tax-free, but she didn't really have a good, clear, withdrawal plan.

So we were actually able to help her by just adjusting the sequence of when she was pulling income from each year. And by making some tweaks there, we were actually able to increase her after-tax income. Just by being strategic, just by being tactical about where she was pulling the money from.

John: But the key to that is, is knowing how to do it. It's one thing to say it. It's another thing to have the experience that we've had over the years, my 50 years, and your 15, to be able to take those pieces and say, okay, if we move this here, move this here, and people will look at it and say, you made that look so easy. Now it's not that it's so easy. It's just we've done it so many times. You're looking at your plan, we've looked at 1000s of plans.

April: Absolutely. That's where experience comes in. And being able to look at that financial MRI, as we like to call it, and say, hey, this looks really good, but we need to make some changes here. So let's talk about what retirement really gives you.

And this is what we call the four freedoms. Time freedom, money freedom, relationship freedom and location freedom. And most people think about retirement in terms of age, like I want to retire at 62 or 65 or 70, but that's not the real question. The real question is, what do you want your life to look like in retirement?

John: That goes back to the word vision. When you made a comment earlier, I said, you mean the word vision. And if you think about these four freedoms, I hear people all the time, say I can't wait until I retire. You ask this question, well, you're going to have more time. What will you do with the time? I have no idea.

Well, will you have the money to allow you to have the freedom to enjoy that time? They go together. And what are the relationships that are important to you? And will you be able to spend time with those people that are important? And location, where we spend that time? In my case, I spend a lot of time at my lake house.

When we're done today, I'm going to the lake house after our last appointment this afternoon. And I enjoy being there. It allows me to relax, but also so my time is there. I'm with other people there. Sometimes my lady, sometimes it's with my kids, grandkids. Sometimes it's just a matter of just me by myself, relaxing. So I could also spend that time somewhere else.

I can take a cruise, and as long as I have the time and the money, I can do these things. So it's not just how much money you have. If you can't tell me what you're going to do with that money, I would say you don't have a good picture, good vision of your retirement. And some people just say, well, I'm going to fly by the seat of my pants, and I'll take $10,000 out to take this cruise. That's one way of doing it.

Or another would be sit down and say okay, based on these four freedoms, what do I really want? How much time am I going to have? How much money do I have? How do I finance it? And who does spend that time with? And by the way, where do we go? Location. So we could tie it all together. I could spend an entire webinar just on those four things. As you know, I work on that all the time, and I'm guessing that's probably why you had me cover this one.

April: Yeah, you know, because it's not just about the numbers. It's about having the life that you want. You know, John, we had a podcast that we did, called just that. Retirement isn't just about the money, it's not just the numbers. And we got a lot of good feedback from that. People really enjoyed what we went through on that podcast, talking about this, about making sure that we're thinking through, what do we want it to look like?

John: Maybe we should dust that off and revise it and do a webinar for everyone.

April: Yeah, for sure. So we definitely want to think through what is it you're going to look at. What do you want your life to look like? Because it's going to help you answer these other questions that you may be thinking about, when to take income? How much? It gives you that clarity.

John: Let me cover one more thing. You'll see the bullet point that says retiring for the wrong reasons. Why are you retiring? Are you running away from something or running to something? Some people say, I hate my job.

I can't stand working with the people I'm working with, and it's is sad to hear that, especially when we love our work so much. But there are people who are so miserable at work, they're running away from work, and they're not really embracing retirement. They're just running away from a negative situation.

So I would encourage you, if you're in that environment, rethink that and restart reprogramming your brain. Say okay, what is good and positive that I'm retiring to not what am I retiring from? Sometimes difficult, but you can make that transition, and if you do, these four freedoms, will be truly freedoms.

April: I went back to look. The title of our podcast was finding balance in life and finances. So that's the one that we really did get a good, some good feedback from when we went through that.

John: You want to tell them how to find it?

April: So you can go to our website and find that at curryschoenfinancial.com. You'll see a link for our podcast and see all the most recent episodes. This one was from last November, but, yeah, it's called Finding balance in life and finances, but you'll be able to see our podcast. We're also in the Apple podcast app and on Spotify.

The name of our podcast is The Secure Retirement Method. So if you look at that, look up that you'll be able to find us. We're also on YouTube as well. So, The Secure Retirement Method podcast, you can find us on YouTube. And on YouTube, we don't just have our regular, like full-length podcast episodes, but we have other, like, shorter videos as well.

We go into a lot on FRS. I've got a whole playlist on YouTube for FRS, if that's something you're interested in. So let's talk about Social Security. Because I would say outside of pensions and DROP, Social Security is probably the other topic that we get the most questions about. And really, timing here makes a huge difference.

So you can start benefits from Social Security as early as 62 or delay up to age 70. Now your full retirement age is going to be dependent upon the year you were born, and that's going to be sometime between 66 and 67 if you go pull your Social Security statement from the Social Security website, it's going to tell you right there what your full retirement age is, and that's when you can receive 100% of your benefit.

And if you take it early, at 62 or between 62 and your full retirement age, then your benefit is going to be reduced. You'll have a reduction. That's a permanent reduction. On the other hand, if you delay taking Social Security past your full retirement age, your benefits are going to increase, and they increase it by 8% per year.

Okay, so lots of different options. Do you take it at 62, at your full retirement age, at age 70, or somewhere in between? And this is what we help clients figure out. When is going to be the best time for them to start taking Social Security, because everyone's situation is different.

So, a couple of things that we talk about with Social Security. One, know that the benefit is taxable. It's going to depend on your other income sources, but most likely, part of your Social Security benefit is going to be considered taxable income.

And now this is a question we get a lot is, is Social Security going to go away? There's a lot of fear around Social Security. It's been in the news a lot this year. Is it going to be privatized? So let's kind of kick that around for a few minutes, John, about will Social Security ever go away?

John: My opinion is it will never go away. We will see changes made in it. Changes that should have been made many years ago. When President Reagan was in office, there was the first major revision of Social Security since it was started in 1935. It was big, sweeping changes, big. That most people didn't think about or know about because the press didn't cover it.

Had they covered it properly, there probably would have been a revolution in some ways. But there were a lot of changes that were good, too. They also started increasing the taxes we paid on it. Because for a while there were no taxes on Social Security, and there's talk now about doing away with taxes on Social Security.

But both political parties use it as a political football, and I'm of the opinion, I've been following this for at least 45 years now, my career and I decided to work on retirement planning. I don't think it would ever go away. I think what we're going to see is more and more tax burden to finance it.

People your age are going to be paying more in Social Security taxes down the road. I think ultimately you're going to see a higher retirement age, like maybe 70. Age 62 should have never been allowed. It was not the case for years, not until the 80s. Never should have been allowed. Should have always been a higher age, 65, 70. So you're going to see a lot of discussion about that. And here's what I like to tell people.

I had this conversation this morning with a friend. I don't know what will happen with Social Security, nor do you. So we have to do your planning in such a manner that it doesn't matter what they do. If the benefits are dropped by 25%, one projection says the trustees say that Social Security trustees.

So if that happens, what do you do to offset that? That is under your control. How do we control that? Spend less, save and invest more, and do it in a manner that we can tap into those resources. But I don't think it will ever go away. I'm 72 years old. I've been collecting Social Security since 66. I chose not to wait until 70. I'm glad I didn't, because I've had the time value of money. It's done a lot of good things for me and my family along the way.

I could have used other money, like my investments, but in this case, it goes back to what you said earlier, April, about planning. Instead of tapping into retirement accounts then, I let those grow and I can use those now in retirement, and I've already benefited from the Social Security along the way.

April: Yeah, I agree. I don't see Social Security going away. Good, bad, or indifferent, there are too many people that rely on it as their only source of income, so I don't see it ever going away. Now I'm 41, so I do think that, I think I'll see sweeping changes to Social Security, whether that's changing of when people can take it. I agree about higher taxes for those working, but I don't see it going away.

John: I think it also back to your point about social good. It is a social insurance program anyway you cut it. The reason it was started was because of the Great Depression, because people were hurting, and it's no longer being used the way it was intended. And all of us want to get our money. I do. I don't want mine cut.

Yeah, I like seeing it pop in my account the second Wednesday of each month. But there should have been changes made, and there will be. Some political party will ultimately have the backbone to say, look, if we don't fix this and get both parties together and fix it, it's going to fall apart.

April: I agree. So here are a couple takeaways I want you to think about when you think about Social Security. One, the timing is not one size fits all. It depends on your overall plan. Your pension, your spouse's age, their benefits, your health. What do you think your longevity is going to look like? Your tax picture?

And we've helped clients go through and look at their options and increase their income that they're getting from Social Security just by making better decisions about when to start it. It's also about understanding all of your options. So I'm going to give you some examples. One client, her husband, had passed away, and she was getting ready to start taking Social Security, and so we encouraged her to actually start her survivor benefit on his record at her full retirement age, then let her benefit continue to grow.

She's getting that 8% growth, and then that way, at 70, she could switch to her own benefit. That alone increased her income for life by 10s of 1000s of dollars. It made a very drastic impact on her income plans by doing that. And she didn't know she could do that. She wasn't aware that she could take his and let hers grow.

John: Think about how many times we've dealt with a widow or widower, and they did not realize that they could start collecting that benefit. We had to tell them, you are entitled this. Get your fanny over to Social Security now and get this money.

April: Same thing for divorce spouses not realizing that, hey, if that marriage lasted 10 years or longer, that they're eligible for a spousal benefit under their ex-spouse’s record.

John: Correct.

April: That's another area in which we're able to help people. We have one couple that he assumed when he took if he took his benefits early, it was gonna hurt his wife's future benefit. So we helped them actually make a change in what they were thinking and was to actually take her benefit first at 66, that was her full retirement age, and then he could let his continue to grow, and then take his at his full retirement age.

So this strategy helped do two things. One, it gave them the income now, more income now that they wanted to have when they first retired. And it also maximized their overall survivor benefits, because now his benefit grew, so that was going to help either him have a higher social security benefit later, or her have a higher social security benefit later, because of the survivor benefits.

So this is the type of planning we do, helping you coordinate all of these moving parts to have the best possible outcome. Now, if this feels like a lot to navigate because we've already gone through a lot so far today, that's normal. These aren't decisions that you need to make alone. And again, we're going to share at the end how you can schedule a retirement focus session so we can talk through your options one-on-one to get a plan that's going to work for you.

I want to briefly touch on Medicare, because this is one area that catches people off guard. I actually had someone email me this week in reference to the webinar, and said, hey, have you thought about including information about Medicare? Because I'm starting to learn about it. I get lots of questions about it from my colleagues. And I said, yeah, actually, we do cover Medicare in our webinar, but we just do a brief overview here, and then we have another presentation that we give that's more in detail.

So let's kind of cover just the main parts of Medicare. First of all, there are two ways to get Medicare. You've got Original Medicare, that's where you get parts A and B through Medicare. And if you do that, you're going to want to add on a supplement plan and a drug plan. And the reason that you're going to want to add on a supplement plan is because there are too many gaps in Medicare's coverage.

Parts A and B won't be enough. It's not going to cover everything that you need it to. So you're going to need to get a supplement plan. And then, of course, you do have to add on a drug plan, even if you don't take prescription drugs, you still have to have that plan when you first go into Medicare, or you're going to have penalties.

Okay, we're going to talk about that in a second as well. But that's Original Medicare. You can also get a Medicare Advantage plan. We call this Part C, and this is where it rolls all your coverage into one plan. So we're here in Tallahassee, and one option for an advantage plan locally is Capital Health Plan. If you're familiar with how their insurance works, it's very similar. Kind of rolls everything into one.

So here are some things that you want to pay attention to when it comes to Medicare. You want to make sure that you enroll on time so you avoid late penalties. Because if you have late penalties with Medicare, you have them for the rest of your life. It's not a one-time late fee. It is for the rest of your life, and they have some weird timing about making sure you've got Part D on time and Part B.

Okay, so make sure you enroll on time. And of course, these Medicare decisions which way you go with Medicare. If you go with original meridicare, you go with an advantage plan. This is going to affect your coverage, your costs, so make sure you don't wait till the last minute to really sit down and understand your choices here.

John and I do not sell Medicare supplement plans. That's not part of what we do, but we do help our clients plan early so they can avoid penalties, and they make sure that Medicare fits into the rest of their retirement strategy.

John: Let me spend a moment on that. I chose to go with Original Medicare, Parts A and B, and then I bought a supplemental policy. And most people, maybe no one on this call knows my story, but my right leg was amputated above the knee in March of 2021. I knew that all of the stuff I went through between the amputation and rehab and then physical therapy, that over a million dollars was paid out between Medicare and my supplemental policy.

If I had not purchased that Medicare Supplement policy, I would have paid out hundreds of 1000s of dollars out of pocket. So I cannot emphasize enough that if you go the original route, make sure that you coordinate that and get yourself a good medicare supplement policy. I'll also tell you that I've been to three of the presentations with CHP. Their plan is good.

Also, if you want the Medicare Advantage plan, they're good. I'm not going to say anything beyond that, because we're not licensed to go sell that. But for me, I chose the Original Medicare path. That's a personal choice, but I can tell you, if you go that route, make sure you have a supplemental policy.

April: Perfect. Yes, that's great. I love that you can share some of that firsthand experience.

John: Yeah, I'd rather not be able to share that, but the truth is, that's the case. It happened to me and I deal with it. I was in physical therapy this morning.

April: Well, one thing I'm gonna say about Medicare is it is very confusing. They did not make it easy. There's, we call it alphabet soup. There are a bunch of different choices. And if you haven't already hit 65 when you get close to 65 you're gonna be inundated with information about Medicare, which also makes it worse.

John: You're gonna get inundated anyway, because of the TV commercials you see when it gets close.

April: But I will say that once you kind of get through that and you're on Medicare, I never hear anybody complain about it. Everybody is very happy with their Medicare coverage. So just take that to heart.

John: Some people are not happy with what it costs them for Part B because their income levels, because they're paying Medicare Part B premium, plus a little extra thing. Little teaser there.

April: Yes. Okay, next we're going to talk about required minimum distributions. There's often a lot of confusion and questions about this. We call them RMDs for short, and required minimum distributions, it's not just a technical IRS rule. This is a major factor in your retirement plan. And if you don't plan ahead, you could end up paying more in taxes or paying penalties.

So, how do RMDs work? Right now, you can let your pre-tax retirement accounts, this is your IRAs, 403Bs, 457s, 401Ks, any of those pre-tax, tax-deferred vehicles, you can let them grow until you're 73. And then at 73, you're going to have to start pulling money out of them for your required minimum distributions. And the IRS has a schedule you have to follow.

So that's why we call them required minimum distributions, because they have a minimum amount that you have to pull out each year, and that amount has to get recalculated. So as we get older, they're making us take more out of the account. They're making us take a bigger piece of the pie.

John: I object to that word older. As you become more vintage.

April: That's right, more vintage. So the real issue when we think about the RMDs is how are you going to take the money out? When are you going to take the money out? If you've got more than one account, that also complicates it. So if you've got more than one, a few things here. If you have more than one IRA, the IRS doesn't care which IRA you take it from as long as you take the total amount out that you needed to for that year.

But if I had different plan types, let's say I had an IRA, I had a 403B, I had a 401K, I have to take an RMD from each of those. So this is where people get tripped up, because they think I'm already taking money from one account, and that's going to count for everything. And it may not.

John: Throw the 457 deferred comp in there, because we see people have all four of those.

April: In that case, you'd have to take four.

John: Correct.

April: In that case, you're not really doing RMD planning. We really work with our clients on getting an RMD plan to help you. You're just kind of just ad hoc, taking it from each of those.

John: Well actually, what you're doing is you're allowing the government to tell you how to take your money, instead of being proactive in coordinating it and doing it your way.

April: And being more strategic about it.

John: Correct.

April: So here's a couple things to look out for RMDs. One, you have to pull that money out. It's going to be considered taxable income. So this could put you into a higher tax bracket. It can mean that you've got more taxes now on your Social Security benefit. It can even cause IRMA, which is what John was talking about a few minutes ago, which is if you're over certain income limits, this is going to increase your Medicare premiums.

Your Medicare premiums, Part B, there's a flat premium, and then it goes up depending on your income levels, and if you file single or joint. The other thing about RMDs that some people don't think about is what happens when we're in a down market, like we were earlier this year in March and April.

Well, RMDs can now force you to sell investments at the worst possible time. So now RMDs really are forced liquidation, and this is what can cause your retirement accounts to have to work even harder.

John: Say that again. It's what?

April: Forced liquidation.

John: Make sure that sinks in, because that's exactly what it is. It's not the fact that the IRS or the Department of Treasury is looking out for your lifetime income. They're saying, excuse me, ladies and gentlemen, you did not pay taxes on this money all these years, and now we want our portion.

April: Yeah, right, whether you want to or not, and if you don't do it, guess what? They charge you a penalty. So we actually saw in, um, this is why, again, the timing of all that really matters, because, like I said, what if the market's down and now you've got to take your RMD. So now you've locked in your losses, and now your account has to work even harder to get back to where it was.

So you can see how it starts to have this compounding issue and compounding effect throughout your whole plan. So that's why it's important to think about which accounts are you going to take income from first? Just like we talked about earlier, with that order of operations, right? How do we balance growth versus income needs?

Now required minimum distributions, they aren't just some tax rule to check off. They can seriously impact your retirement if it's not handled correctly. We've had clients who thought they were doing the right thing, and a client who we recently met with and she was like, oh yeah, I'm taking my RMDs. And when we dug into it, what we found out is she actually was just moving money from one IRA to another.

So she thought she was taking it out correctly, but she just had it transferring from one IRA to another, so it didn't count. Now, we were able to help her that could have triggered a big penalty, but we caught in time. We were able to help her get it fixed. And that's the thing, right? With some of this, you don't get second chances.

RMDs can trigger, like I said, the IRMA, which is the Medicare premiums, it can push you into a higher tax bracket, force you to sell investments in a down market. So without a plan, you're exposed to these risks that can be avoided. But I want you to imagine for a second that you're sitting down six months from now with a clear plan in place. You know how much income you're going to have in retirement. You're going to know when you can retire.

You've got a strategy for what to do with your DROP payout. You're managing your taxes, and you're not reacting. You're actually leading your plan. All of that, that's what we want for you, and that's why it's so important that you're here and learning about all these things today. So no matter where you are in your retirement journey.

Whether you're years away, maybe you're retiring soon, you can't afford to guess. You have to be proactive with your decisions, with your income, with your future. And look, I know we walked through a lot today. There are a lot of these puzzle pieces of retirement. Pension, Social Security, DROP, Medicare, RMDs, taxes, you name it.

And the real question is, do you have a clear picture of how all this fits together for you? If you're not 100% sure, then the next best step is to schedule that retirement focus session, and here's what we're going to do during that session. We're going to walk through your financial goals and concerns. We're going to talk about what strategies could work for you.

We're going to talk about, are there any roadblocks, are there any risks, any pitfalls that could trip you up? And we're going to lay out some next steps that are going to help you save time, reduce taxes and then feel more confident about moving forward. And as I said earlier, we're not the right fit for everyone, but this session will help us decide together if we're the right team to help guide you through this next phase to retirement.

John: I submit to you that some people who think they have everything 100% correct are the very people who need to go through this session, because it's what we don't know that gets us in trouble. At least you'll have someone who will challenge you in your thinking and be able to help you make sure that you're on the right track.

April: Absolutely. So here are a couple things you could do to schedule this focus session. You can go to our website, which is curryschoenfinancial.com. I'll say that again, curryschoenfinancial.com and you're going to see a button that says, schedule a call. You can click right there, and it's going to take you to my calendar, and you can schedule a 30-minute call. You can also just call our office, 850-562-3000.

We actually had a few people call in this week regarding the email they got about the webinar to go ahead and schedule a conversation to talk through some things. So you can call our office, 850-562-3000, and let Leslie or Shannon know that you heard our webinar and you'd like to schedule a time for your focus session. But either way, that first step is yours.

John: And the people who called yesterday, I know at least two called yesterday, they are already on the calendar. They're ahead of the pack.

April: They're proactive. Love it. Love it. Well, I just want to say thanks for being here today. I know that we talked through a lot, and I also just want to commend you for being here, because it shows a lot that you were here, that you took time out of your day to learn about these things.

I hope that we get to connect sometime in the future. We'd love to be able to help you build a retirement plan that works for you, not just now, but also in the decades ahead. Bye now. Have a great day.

Voiceover: The Social Security Administration has not approved, endorsed, or authorized this material. Contact the Social Security Administration for complete details regarding eligibility for benefits. This promotional information is not approved or endorsed by the Florida Retirement System or the Division of Retirement. Neither Guardian nor its affiliates are associated with the Florida Retirement System or the Division of Retirement. This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, visit our website at curryschoenfinancial.com or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address: 1700 Summit Lake Drive, Suite 200. Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

8044227.1. Expires June 2027

The Truth About Tax Brackets and Your Future

Think you’ll pay less in taxes when you retire? Think again. Discover why tax diversification might be the secret to keeping more of your money in retirement—and why most people get it wrong.

In this episode, April Schoen unravels the surprisingly complex world of taxes in retirement and reveals actionable strategies for tax-efficient retirement planning.

You’ll discover…

• A common retirement tax mistake that could cost you thousands

• Why your retirement income might be higher—and more taxable—than you expect

• Three critical types of investment accounts and how they each impact your future tax bill

• The power of Roth IRAs and cash value life insurance as overlooked tax planning tools

• What one simple analogy can teach you about planning for a tax-smart retirement

Mentioned in this episode:

• https://curryschoenfinancial.com/

• Contact the office: 850-562-3000

Transcript:

April Schoen: Hi and welcome. My name is April Schoen, and I'm glad you're here today, as we're going to talk about a super fun topic, taxes. Now, before we get started, I wanted to turn my camera on for a minute, just so you could see that I'm a real person. In today's day and age, when we have AI everything, I wanted you to know that I'm not some robot stuck behind a camera just reading off tax codes to you. 

And in a little bit, I'm gonna go off camera so that you can focus on the material and don't have to worry about, you know, what's my facial expression saying as I'm going through, talking about tax planning and trying to explain taxes in plain English, because that's what I'm going to do today. And today, we're going to be diving into tax diversification in retirement. What is that? Why does it matter? And how do you achieve that in your own financial plan? 

There's a lot of noise out there right now about taxes, about retirement planning, and I want to make this simple for you. I want to make it actionable, so you're going to know exactly what applies to you and how to start using that in your own plan. And I want to talk for a minute about why is this so important? Why is tax planning so important? And I want to use an analogy. 

So let's say that you wanted to buy a house in three years, but in the next three years, you don't think about it, you don't look into it, you don't care what your credit looks like. You don't see how much you need for a down payment or figure out how to finance it. You don't look at any of it. Well, guess what? In three years from now, you're not buying that house. Because you're not going to be ready to do that. There are things that you needed to do along the way to make it easier for you. 

So, imagine the other side of that is if you are proactive about it, and what a difference it would make. What if, in the next three years, you started meeting with realtors and mortgage brokers and you started just gathering information, and so you started looking into, hey, what sort of neighborhood do I want to live in? What sort of house do I want to live in? What's the price range for those houses? 

What's gonna be the best way for me to finance it? If you did that, if we were proactive about that in our own financial situations, think about all the difference that that would make for you. Unfortunately, when it comes to taxes, we see people making decisions in a vacuum, without thinking about everything, without taking everything into account. We're so guilty, I am too, we're so guilty of letting the tax tail wag the economic dog. I'm gonna say that again. 

We are so guilty of letting the tax tail wag the economic dog. Meaning we're so focused on reducing taxes today that we don't take into account how much we're going to have to pay in taxes later. And we actually end up doing some reverse tax planning, which is not what you want. Reverse tax planning says, I defer taxes today at a lower rate to only pay higher taxes later. Nobody wants to do that. 

That's not what they say come January 1 of 2025, you would like to do this year is I'd like to pay taxes today at a lower rate, just so in a few years I got to pay more. That's not what we want when we think about tax planning. But we can be guilty of that, of being so focused on the here and now and not thinking about how the taxes are going to impact us when we get to retirement. I work with a lot of people who are retiring from the state of Florida, and taxes can be a big issue. 

Because think about it for a second. If you retire from the state of Florida and you have your pension. Your pension is fully taxable. Social Security, most of it's going to be taxable. If you've got income coming in from deferred comp or from DROP, all of that's going to be taxable. So you're already going to have a lot of pre-tax retirement income coming in that can push you into those higher brackets. Not to mention when you hit 73 and you have to start taking your required minimum distributions. 

So you have to start taking money out of those retirement accounts, whether you want to or not. And so that is why this is so important that we start talking about this today. So I just want to say I'm glad you're here. I commend you for taking some time out of your day to learn about taxes. I know it's not the most fun thing ever. I'll tell you, I had a lot of coffee getting ready for this, so I'm going to try to make it as exciting as possible as we can today. 

So I'm gonna go ahead and share my screen and then, yeah, let's, let's roll up our sleeves and get to work. Perfect, perfect. So, yeah, as I mentioned earlier, what we're really going to focus in on today is tax diversification in retirement. I really think about that as you know, how do we make your retirement income better? How do we learn how to pay less in taxes so that our income feels like more? Even if we have the same income or we're paying less in taxes, that's going to be more money in our pocket to spend. 

And that's really what we want to go through today. And I got a couple of questions for you as we get into that. The first thing is, will your income in retirement be higher or lower than it is today? I'm gonna say that again. Will your income in retirement be higher or lower than it is today? So a lot of people that I meet in my practice will say, oh, I'm gonna be in a lower tax bracket when I'm in retirement, because that's what we're told. That's what we've been taught. 

But I will tell you that I don't find that to be true. That for a lot of people, that's not the case. For most of my clients, their taxes, their income and their taxes is the same or higher in retirement. Again, think about what I said a few minutes ago. If you've got a pension, you've got Social Security, you're taking income out of deferred comp, out of DROP, out of that 401k, this all starts adding up to your taxable income and can push you into higher brackets. 

So, the first thing when we think about having some tax diversification in retirement, the first question we have to answer is, will your income in retirement be higher or lower than it is today? That is actually going to help you when it comes to tax planning. That's going to help you know what type of accounts should you be putting your money into today? And if you're not sure, if I ask that question, like, if I don't know, then I will tell you that's an area that we can help you in. 

We can help you look at your own financial situation to see, hey, what if the tax landscape looks like today, and what is it going to look like for me in retirement? Another question, will tax rates be higher or lower than they are today? Will tax rates be higher or lower than they are today? I don't know. You know, this is when I wish I had my crystal ball, and I could tell you exactly what was going to happen. That would make my job a lot easier if I had that crystal ball. 

What I can tell you is that we are in historically low tax rates today. If we go back and look at tax history, we are in historically low tax rates today. And if you've been following what's happening with the national debt, it's hard to imagine that tax rates would be lower. It's hard to imagine that they're going to be lower than what they are today. I would venture to say that they're going to be where they are for, you know, we assume they're going to be kind of where they are for the foreseeable future, and then definitely can see those increasing. 

But that's the thing that we don't know. And that's where this diversification comes in, because we have to be able to adapt. If tax rates zoom back up to 50%, how will you handle that? Are you prepared to handle tax rates zooming back up to 50%? Most people aren't. What if tax rates do go down? So we gotta be flexible. We've gotta be able to adapt as those tax rates change. Here's what we're gonna go through and talk about today. 

Different types of investments and how they're taxed. I'm going to spend a good bit of time on this, because there's a lot of confusion on this part, different types of investment accounts that you have available to you, and how they're taxed. Both while you're saving into them and when you go to take money out in retirement. We're going to talk about the impact of taxes. Now, we all know the impact of taxes. 

I met with a client yesterday, and she's retired, and she's 73, so she's having to pull money out of her IRAs. And she's like, oof, how is this going to impact my taxes? I said, yeah, this is all going to be taxable income to you at your highest marginal rate. And if you don't know about something called IRMA. This is when your income can impact your Medicare premiums. And she's going to be in that situation. 

She was pretty borderline before she had to start taking money out for RMDs, and now those RMDs are pushing her over that limit, and so she's going to have to start paying more for Medicare. So you might want to jot that down, if that's something that you're not familiar with, is IRMA. Income Related Adjusted Monthly Amount, something along those lines. And you can look at, there are some charts, so you can see what your income bracket falls into, and if you'll be impacted by those IRMA brackets. 

And then we're going to talk about how do we actually get this tax diversification? A lot of people we meet with have all of their savings in retirement accounts. It's not that that's a bad thing. There's nothing wrong with the 401k. There's nothing wrong with an IRA or deferred comp or a 403b, but we just have to understand how that's going to impact us tax-wise. Okay? And we're also gonna look at a short case study. 

So we're going to look at how do we have the same income, but it spends, like more, because we're going to have higher after-tax income. And we're going to talk about how this is going to give you flexibility, so you can have more control over when and how to take income in retirement. Also having tax diversification, it's not just about income for you, although that's very important. That's really going to be the basis of what we're talking about today. But having this tax diversification actually allows you to have more tax-efficient options for your beneficiaries. I talk about this a lot with clients. 

When we look at all the different financial aspects they have in their world. And let's say they've got savings, and they've got non-retirement investments and life insurance, and they've got retirement accounts, and we talk through this. Which one is going to be the best for you to spend over your lifetime? And then what's the best assets to leave behind? And if we do it properly, if we plan it properly, we can achieve both things. We can achieve better outcomes for us, and we can also achieve better outcomes for our beneficiaries. 

So let's get into this today. And as I said, I'm going to start with talking about the different types of investment accounts that we have and how they're taxed. So as we kind of get into this, I'm going to go ahead, I'm going to turn my camera off, like I said. I just wanted to make sure you knew I'm a real person, and not just some AI robot behind the screen. And let's get into this today.

So I've got a couple of disclosures for you first, before we get started. And the main thing to note here is, I am not a CPA, and I'm not a tax attorney. I'm a financial advisor. I've been doing this for, I've been in the financial services industry for about 15 years now. I work with a lot of clients in helping them through this. But one thing I'm not is a CPA, and I'm not a tax attorney. So make sure that, as you are making notes and going through this, you really want to make sure that you get some good tax advice and some legal advice so that you don't have a big tax mistake. 

So as I mentioned earlier, about what are tax rates going to be in the future? So, when we think about using different types of investment accounts, this is how we can have tax diversification. Easy for me to say, right? So, using different types of investment accounts can help you achieve tax diversification. It can give you more spendable income in retirement. Isn't that what we want? And there are really three types of accounts that we think of. 

Tax deferred, tax favored, and taxable. And while we know there will always be taxes, again, we may not know and be able to foresee those changes in tax rates. So that's why tax diversification is so important, because when we use a wide range of investment options in retirement planning, you might be able to pay less in taxes. As you start to take money from these different accounts, and if they're taxed differently, this can lead to you having more disposable retirement income for you and your family. 

So let's start, we're going to go through first and we're going to want this first category, which is tax-deferred accounts. These are the most common approach we see to retirement planning. It doesn't mean it gives you the best outcome. It just means that we see this to be the most common approach. So the first thing we think of is tax-deferred accounts with pre-tax contributions. And I know that's a mouthful, so I'm going to give you some examples. This would be like a traditional IRA, a 401k, a 403b, deferred comp, and defined benefit plans. 

These are accounts that we put money into today that we don't pay taxes on. So I contribute to my 401k, you know, I put in 3% my company puts in 3% and you know, if I'm doing that all in a pre tax, not a Roth, then that money goes in today that I haven't paid taxes on, so I get a tax deduction for that, not taxed on that income. It's going to grow tax-deferred. So I don't pay taxes while it's growing. 

But when I go to take money out in the future, when I go to take money out in retirement, I am taxed on every dollar, every single dollar that comes out, and I am taxed at my highest marginal bracket. So I mentioned the client yesterday, who's got Social Security and a pension. She actually has two pensions. Her husband passed away. She's got her pension, her husband's pension, and then her Social Security. 

So she already has a good baseline for retirement income, and then when she goes to take out these required minimum distributions that gets added on top of her income, and then she has to pay taxes on that at her highest marginal rate. You also have to follow IRS guidelines, and there are a lot of them. There's a lot of IRS red tape. Let me just tell you a few. Okay, so you put money in these accounts, you can't touch them until you're 59 and a half. 

Some plans allow you to touch them at 55, but you know, a lot of plans, you can't touch them until you're 59 and a half, or you have penalties. Not only do you have taxes, but you have penalties. And then you can only put a certain amount of money per year into these accounts. They may have income limits. If you make over a certain amount, you can't put any money in at all. And then you're also going to have what's called required minimum distributions. 

So that means at some point in the future, you're going to have to start pulling money out, whether you need it or want it, and you have to follow the IRS's guidelines, or they tax, or they penalize you for it. And you go outside of any of those rules, and there's penalties. If you take it out early, if you don't take it out when you're supposed to, if you put in too much, if you make too much. These are all things that you can then have penalties. 

So again, nothing wrong with these accounts. We just have to understand how they work, and we have to understand how they're going to work when we get into retirement and we start taking money out of them. They're the most common approach that we see to retirement, but it doesn't mean it's the best. And it's the most common because it's systematic and automatic. Most of these are employer-sponsored plans. So it's your 401k, 403b, 457. These are plans that we checked a box on, and they started taking money out of our paycheck and putting it into the account, and they started doing it systematically and automatically. We didn't even look at it. 

It didn't even hit our bank accounts. We didn't have to make a decision. It just did it for us, and this is why they're so successful, not because they're the best, because it made it easy, because it made it systematic, because it made it automatic. The other type of account that we talk about are tax tax-favored. So those are tax-deferred. We have tax-favored accounts. So let's walk through how these work. These are funded with after-tax dollars. 

That's why they're not called really tax-free, because you have to pay the tax sometime, and we pay the tax today. So remember how I said we are historically in low tax brackets today, low tax brackets today. So this is why tax-favored accounts can be a good option, because let me go ahead and pay taxes today at a lower rate, so that then as it grows, it grows tax-free. So I have to pay tax today, and then as long as everything is structured properly, I don't pay taxes again. It grows tax-free. I can take money out of them tax-free. 

So this is why we call them tax-favored. Examples of these accounts, municipal bonds. Now we're in Florida. I'm in Florida. Florida doesn't have a state income tax, so I'll tell you, we don't use a lot of muni bonds, but that is an option for you. Roth IRAs, 529 plans are mostly for college savings. One thing I have on here is HSAs. Those are health savings accounts more for medical expenses, and you're only eligible for those if you have a high deductible plan, so I didn't include that here. And then you've also got cash value life insurance. 

And all of these are tax-free when it's structured properly. So we're going to get into more detail on those, how they work, how you put money in, how you take money out. And so we're going to talk a little bit more about those in a little bit. But those are tax-favored. Then you have taxable accounts. I call these tax as you go. Examples would be money market funds, CDs, mutual funds, stocks, bonds, real estate rentals. These are things that we don't put in, like a pre-tax vehicle. 

You could think of these as like brokerage accounts or a non-retirement investment account. But we call these tax as you go. They're funded with after-tax dollars, just like the tax-favored are, but what's going to happen with these is you generally will get a 1099 every year, and where you have to pay taxes on any sort of income that comes in. So that interest you earn on those CDs, it's taxable. So CDs have been very popular in the last few years because interest rates are so high. 

They're just not super popular come tax time, because you realize, okay, great, I got four or 5% but now I have to pay taxes on all of that. You know, if you've got stocks, bonds, mutual funds, ETFs, you may find that you've got a tax impact on those too, because even if you're not taking money out of them, because as interest comes into the account, dividends come into the account, any sort of like realized capital gains, these are things that we have to pay taxes on along the way. 

But you do have a lot of flexibility, some flexibility and choice here. One thing I like about taxable accounts is you don't have as much IRS red tape. There's no income limits, there's no contribution limits, there's no required minimum distributions, there's no early withdrawal penalties. So you actually have a lot more flexibility and control with these accounts. And the other benefit is when you go to take money out in retirement, it's not all going to be taxable, because you've been paying a little bit of taxes along the way. 

So when you go to take money out, you're going to have part that's going to be taxable and part that's going to be tax-free. So it can help you when looking at your tax planning and saying income planning, so hey, here's the income that I'm going to have coming in retirement, these different accounts it's coming from. If we think about those three accounts we just talked about, maybe I've got some coming from tax-deferred, so I know all of that's taxable. Maybe I have some coming from tax-favored because there's no taxes. 

And then maybe there's some from the taxable account, because that's partially taxable. And this is an area in which we help clients. First, figuring out where are you today, and looking at how much do you have in these three areas. Taxable, tax-favored, tax-deferred. How much do you currently have in these three different buckets? And then we can also kind of play what if and like, fast forward you to retirement and say, what is it going to look like when you get in retirement? And this is going to help you think through, what should I be doing today. 

If I'm saving into these different accounts, or maybe, you know, I'm only saving into one and not the others, do I need to continue the path that I'm down, or do I need to make some changes? And so that's something we help clients with. We actually put this information together in a super easy pie chart for you to see, so you can see how much is in tax-deferred, tax-favored and then partially taxable, so you can make decisions around that.

Now let's get into some tax planning strategies. And this is going to go back to some of those questions that I asked in the beginning. So when I asked, is your income going to be higher or lower and are tax rates going to be higher or lower, this is going to help you do tax planning. So let's talk about some tax planning strategies if you think you're going to have higher taxes in retirement. So, what are some options? Let's just talk about what that means. 

So if your income is going to be higher than it is today, if we think tax rates are going to be higher than they are today, then these are some strategies that you want to pay attention to. You want to contribute more to tax-favored. That's where you get the income comes out tax-free as long as it's structured properly. So some examples of that would be Roth IRAs, cash value life insurance. You pay taxes today, and this is so you can enjoy that tax-free income in retirement. 

So the accounts you choose for your retirement income that's going to depend on where you think your tax rate is going to be when you're retired. So if you think your tax rate in retirement is going to be higher today, either because tax rates go up or because your income will be higher, then you should put more into these tax-favored accounts. This way you're again, you're paying taxes today, and then you get to enjoy that tax-free income in retirement. 

The other thing I'm going to say about tax-free income is I can tell you when I'm talking with clients in retirement, and we're talking about, hey, like the client I talked to yesterday is putting in a new porch, front porch. And so she's like, hey, where should I pull this from to pay for it? And so we looked at all her options she had available to her. And one thing I find is that when people have money in those tax-deferred accounts, even though the money's there, even though it's available to them, even though that money is designed to provide them an income in retirement, the taxes cause people to think twice about taking the money out. 

So even though they have it there, they're like, oh, gosh, I don't want to take it out because I don't want to pay the taxes. So it almost locks it up in jail. Locks it up in prison, because you just don't want to have to pay the taxes, or because you know, you have to take out so much more because of the taxes to even do what you want to do. So that's where those tax-favored accounts come in. 

And people say, hey, I need some money to go take a trip, or I'm gonna go take some money out to, I need a new car. We're gonna remodel the house, like, whatever it is. If they're like, oh, this isn't gonna impact me from a tax standpoint, they're much more likely to actually do that. You're much more likely to actually take that money out to do those things. Now, what if, on the other hand, you think that your tax rates are going to be lower in retirement, so tax planning strategies for lower taxes in retirement. 

So, how do I have lower taxes in retirement than I do today? Well, my income could be lower or tax rates go down. So I would not plan on tax rates going down. I think we could plan more for them either staying where they are going up. But then you really need to look at your retirement income to see will your income be lower in retirement? That is not true for most of my clients. But yes, we obviously have clients where that's the case. 

I have a client who has been in higher education her whole life, but she doesn't have a pension plan, so everything is in a, 403b equivalent. She is going to have less income in retirement than she does today. So these are the strategies that apply to her. And what we want to do is we actually want to contribute more to those tax-deferred accounts. So if my income is going to be lower, my tax rates are going to be lower, then today, I want to contribute more of those tax-deferred accounts. 

That's traditional IRAs, employer-sponsored retirement accounts, 401ks, 403bs, 457s. All those workplace plans, because I want to take advantage of the tax deduction today. If my taxes are going to be less in the future, then how do I lower my taxes today? So I can defer. This is when it's good to defer. And so I take advantage of the tax deduction today, and then I'm going to pay taxes on taking that money out in the future. Now this is not again one size fits all. You can see how this has to be individualized. 

And I can't just blanketly say everybody should do this, because everyone's situation is different. So this is when we want to do some tax planning so we can understand where we are today, and what is this going to start to look like for us in retirement. And then we want to be able to adapt and make changes as we go. All right, so let's kind of get into this a little bit more in detail, and go through and talk about these different types of retirement plans and retirement accounts. 

And I want to talk about some alternatives. So, most people think of retirement plans. They think of that employer-sponsored plan. Some people think of a 401k, you know, if you're with like the state, county, education, some sort of nonprofit, like a hospital, then you might have a 403b or 457 plan. And that's again, this is why it's the most common, because what we think of when it comes to retirement plans, but there are a lot of alternatives. CDs, mutual funds, muni bonds, IRAs, Roth IRAs, and cash value life insurance. 

There are a lot of choices that we have. And there are two strategies that I find that are overlooked, which we're going to talk more about today, which are Roth IRAs, and then permanent life insurance, like whole life insurance. And so we're going to go into how both of those work and the tax implications and how they might apply to your situation. But before we get there, I want to look at the impact of taxes and why this can be so impactful. 

So again, tax diversification means that your money is in different types of accounts. So this strategy gives you flexibility and choice in determining how you're going to be taxed in retirement. So let me give you an example of how this might play out. So let's say that one client is going to take out $100,000 from their 401k, and they're after age 59 and a half. So don't worry about any penalties. 

What would the tax impact be? Now we're assuming that this person is in a 32% tax bracket. It doesn't really matter what the tax bracket is. It works on all brackets, but let's just say 32. This means they've already got a good income coming in, probably from let's say, two Social Securities, two pensions, what have you. And if they take out 100,000 from the 401k, then, and they're in the 32% bracket, they're gonna pay 32,000 in taxes, and that's gonna leave them with 68,000 left as net income, cash flow for them to spend. 

And then let's compare that with another option of saying, what if they took half out of the 401k, so 50,000 on the 401k, and then 50,000 out of a tax-favored asset. That could be a Roth IRA, that could be cash value life insurance. So now half, which is going to be 50,000 is taxed at 32% and the other 50,000 there's no taxes. So we get the same cash flow 100,000 out, but we only pay 16,000 in taxes, not 32,000. That's a huge difference. Huge difference. 

And again, like I said, you might be thinking, Well, April, you know, I'm not in the 32% tax bracket, and I get that, but it works no matter what bracket you're in. If you're in a 22% bracket, then think about that. So you would pay your 22% on half, and then the other half would not be taxable, and it would still reduce your taxes by half. It still cuts the taxes down in half. This is why it makes such a big difference. It's the same cash flow. 

This is what we want. We don't have the same income, if not more, but we want to pay less in taxes. How can we have the best of both worlds? So now we're going to do a deep dive into these tax-favored accounts, Roth IRAs, and then cash value life insurance. So the first thing I want to talk about is a Roth IRA, like, what is it? Again, we call it that tax-favored account. So you contribute with after-tax dollars. So I put money in today I have to pay taxes on. 

As it's growing, I'm not taxed while it's growing. It grows tax-deferred. There are no taxes while it's growing. I don't get a 1099, or anything like that. And then when I go to take money out in the future, I can get that money back tax-free when it's structured properly. April, what does that mean? Well, I'm going to show you in a minute what it means to be structured properly. They call it a qualified withdrawal from a Roth IRA, if you want to know the technical term. 

But yes, withdrawals are income tax-free when structured properly. Sometimes I get questions from clients, well, what is it? What is it in? And you can have a Roth IRA in any kind of investment vehicle. Wide range of investment vehicles. Sometimes I see people have Roth IRAs and the money's just sitting in cash. Now I don't normally recommend that for a Roth IRA, because if we get tax-free growth and tax-free income, we want it growing. 

But yeah, you've got all the options available to you, like you would in a normal retirement account. There are no required minimum distributions. This is when I say, under current tax law, could that change, absolutely but right now, Roth IRAs, you can let that grow for as long as you want. There's no required minimum distributions. And we usually in retirement income planning with Roth will position that to actually be a growth bucket, unless we're trying to meet some income and tax-specific guidelines or goals, we'll look at the Roth IRAs being in that growth bucket. 

Because sometimes we call this the tax-free inflation hedge. I'm gonna say that again, tax-free inflation hedge, because if it can grow tax-free, I could take it out tax-free, that's really going to help me when I need more income later. So that's really where we like to position that Roth IRA to be a growth bucket. And then also it goes income tax-free to beneficiaries. So this is also a good asset to leave behind, much better than the tax-deferred accounts. 

I know I'm not going to have time to go into it, but they have a lot of restrictions for what happens when that money goes to beneficiaries. So those aren't always the best to leave behind where like a Roth IRA would be. So how do you fund a Roth account? I keep saying Roth IRA, but there's also Roth accounts. But so how do you fund one? How do I get one? Right? You can contribute to a Roth IRA. 

Now you have to have earned income to contribute. So if you're already retired and you're not working in any capacity, you cannot contribute to a Roth. You could do a Roth conversion, but you can't contribute. So just know that you have to have earned income. There are also income limits and contribution limits. So they only let you put in a certain amount, and if you make over a certain amount of money, you can't put money in. Now, there are some workarounds to the income limits. We call it a back-door Roth. 

Again, I'm not going to have time to go into that today, but if you think that is your situation, that you make too much to put money into a Roth then reach out, and we'll walk through how the backdoor Roth works. You can contribute to a Roth retirement account through your employer, if they have one available. Not everybody does. I do have a Roth option in my 401k, my husband has a Roth option in his. 

So for us, when we're saving for retirement, all of that's going into Roths, but not everybody has that. So just make sure you want to check and see if that's something that would be available to you. And then you can also do a conversion. So you could take a pre-tax retirement account, like a 401k or IRA, and then you can convert that to a Roth, which we're going to talk about next. So Roth IRA conversions. 

This is when you convert pre-tax retirement accounts to the Roth. So in the year that you do the conversion, whatever amount that you convert is considered taxable income. So if you converted 50,000 this year, that 50,000 is considered taxable income. So there are a couple of things you want to ask. How are you going to pay the tax? Are you going to have the account pay the tax? Are you going to pay it out of pocket? When do you need to take income from this account? That's a very important question. 

When do you need to take income from this account? And then how much if you were going to take income, how much you take out? And then how is this account going to be invested? But the when do you need to take income and how much this is going to help you decide if you should even do a Roth conversion. Because if I'm paying all the tax today, then I really want to make sure that I've got time to grow. 

That I've got time to make up the taxes that I'm paying today. Now Roth IRAs have what's called a five-year rule. This is going to impact how distributions are taxed. So short answer is, is, if you've had the Roth for five years and you're over 59 and a half, then every dollar that comes out comes out tax-free. Let me say that again. If you've had the Roth IRA for more than five years and you're over 59 and a half, then every dollar that comes out is a qualified distribution and you don't pay any taxes on that. 

If you do not fit into those two rules, so you haven't had it for five years, or you're under 59 and a half, know there may be some taxes or penalties to pay. Okay, so that's the big thing on the five-year rule. Contributions are always income tax-free. So if I put money in my Roth, let's say I put 7000 into my Roth today, I'm 41. If I go to take it out, I took out my contributions. I don't pay taxes because I've already paid taxes on it, right? 

So comes back to me tax-free. And then converted funds are tax-free as well, but on the converted funds, if you haven't had it for five years and you're under 59 and a half, you can have penalties to pay on the converted amount. So again, you may not pay federal income taxes, but they may charge you the 10% penalty. So you want to pay attention to that part. 

If you're taking money out of the Roth and you haven't had it for five years and you're under 59 and a half, because that's when you can trigger taxes and penalties. So again, if you're over 59 and a half, and you had the account for five years, and it comes out tax and penalty free. If not, you really want to make sure that you work with a professional to understand how that is going to impact you from a tax standpoint.

Now let's switch gears. I've gone through the Roths. I want to talk about the cash value life insurance, and then we're going to keep going from there. So earlier, I mentioned a couple things we see overlooked. Roth IRAs, and then the cash value life insurance as a savings vehicle. And you may be like, I didn't realize it was a savings vehicle. How does that work? So you're probably familiar with the primary purpose of life insurance, and that is to financially protect families and businesses in the event of the death of the insured. 

That's what we call is the policy's death benefit. But permanent life insurance also has what's called, we call them living benefits. These are things that I can benefit from while I'm living so I can access the cash values for a range of financial purposes. That could be to supplement retirement income. That could be just to take more income out of my retirement accounts, because I have the life insurance to come into the family tax-free. 

So it can be this versatile financial tool that can help you create and increase your retirement income. So again, you might be familiar with some of the benefits, which is the tax-free portion, the income tax-free death benefit. So again, the death benefit comes in tax-free to the family or whoever is named as a beneficiary. You have tax deferred build up of the cash value inside the policy. So as you're paying in, as dividends are credited to the policy, you've got cash value that's building, and you're not paying taxes while it's growing. 

And then you have access to the cash values on a tax-favored basis. You can do a loan, you can do a withdrawal. There are different ways for you to access the cash, and again, as long as you structure that properly, you can do so on a tax-favored basis. So a couple of the benefits here. You've got the death benefit, which, again, allows for that lifetime insurance protection. We think of it, you can think of the cash value as a portfolio asset. 

So the cash value can be part of a comprehensive portfolio asset in your in your plan. We think of it as a non-correlated asset. Meaning the cash value inside the policy is not in the stock market. It never has a bad day. So like all this market volatility that we've been feeling this year, I know you're feeling it because I am, my clients are right. All this market volatility that we're feeling, guess what? My cash values and my life insurance are not down. They're actually up. 

So that's why we call it that non-correlated asset, because it's not in the stock market. You can have guarantees. This can be contractually guaranteed growth on the cash value. You can also have dividends. Now, dividends, of course, are not guaranteed. You really want to pay attention to what company you use, so that you use a company that's got a good history of dividends. But you've got dividends that can go back into the policy to help grow the cash, help grow the death benefit. 

You can take the dividends as income, so it's a way that you can supplement your retirement income is using the dividends. You've got other living benefits, some of this we talked about, where you can access the cash anytime without a penalty. There's no required minimum distributions. There's no time where the IRS is going to force you start taking money out of this. If you've got loans, you don't have to repay them. You can leave them outstanding, and then what happens when you pass away is the loan gets paid first, and then they pay the remaining death benefit to your family. There can be creditor protection. 

Now this is going to depend on states, which state you're in, so in Florida, we have great creditor protection and lawsuit protection. And so in Florida, your cash values are fully protected from creditors and from lawsuits. So it can give you definitely some more of that control where that other accounts, even like the Roth IRA, can't provide you. It gives you more benefits and can give you more control about when you take money out and how to use it as well. 

So we kind of go through, and again, talked about using these different types of accounts so that you can have tax diversification, so that you can have more income in retirement because you're paying less in taxes. We want to have the same cash flow, same income, pay less in taxes. And so no matter where you are, if you think you can wait longer or not, if you have to be proactive with your money. 

You have to be proactive with the decisions you're making, so that you can know your choices. We find a lot of people make decisions based on feelings, and we want you to make decisions based on facts. Based on knowing all your options, and so that you can make an educated decision. So if you've got your money going to these different accounts, you can know if that's the right decision and choice for you. 

And so as we're going through this, if you've got questions about some of this, you're thinking, April, I'm not sure how this applies to my situation, I would recommend that you schedule time for us to do a 30-minute focus session. And what we're going to go through is we can talk through these strategies that we went through today, and we can see if are they a good fit for you, right, or for your situation, which one is better? And it's incredibly important that you don't make these decisions without seeking professional advice. 

So that you don't make a big mistake and have a tax issue. These are great strategies for people to implement, but you've got to make sure it's right for you, because, as I said earlier, it's not one size fits all. We have to know which way you should go. So what I'd recommend with this focus session, 30 30-minute call, and what we do is we're going to get clarity on your goals and concerns. We're going to talk about what opportunities are available to you. 

Is it one of the strategies we talked about already? We're going to talk about, what are some action steps, what are some specific things that you should be thinking about between now and retirement. And I don't know if we're the right fit for you, because we're not the right fit for everyone, but I can tell you, after a 30-minute call, we can both determine if it makes sense for us to continue to work together in some capacity. And I'll be happy to share with you, like how we work with clients, how we help them, and how we work with them as well. 

So there's a couple ways that you can schedule this call. You can go to our website, curryschoenfinancial.com/call. Or you just go to our website, you're going to see a button that says, schedule a call, and it'll take you to my calendar so you can pick a time that works for you for a 30 minute call. You can also call our office, 850-562-3000. You can talk with Luke or Leslie, tell them that you heard my talk on taxes in retirement, and you'd like to schedule a time for a focus session, and they'll pull up the calendar and be able to help you pick a time that's going to work for both of us. And again, that phone number is 850-562-3000. 

Well, thank you again for joining us today. I'm glad that you took time out of your busy schedule to focus on the super fun topic like taxes. Hope you enjoyed it, hope you got some good kind of tidbits to take away from it. And then let us know if you've got questions specifically on some of those items, you can always shoot me an email, and I'll try to get back to you as soon as possible. And then I look forward to seeing you on the next call. Bye now.

Voiceover:  The primary purpose of life insurance is the death benefit. Life insurance is intended to provide death benefit protection for an individual's entire life. With whole life insurance the payment of the required guaranteed premiums, you'll receive a guaranteed death benefit and guaranteed cash values inside the policy. Guarantees are based on the claims paying ability of the issuing insurance company. Dividends are not guaranteed and are declared annually by the issuing insurance company's board of Directors. Any loans or withdrawals reduce the death benefits and cash values and affect the policy's dividends and guarantees. Whole life insurance should be considered for its long term value. Early cash value accumulation and early payment of dividends depends on the policy type and or policy design and the cash value accumulation is offset by insurance and company expenses. 

This promotional. Information is not approved or endorsed by the Florida Retirement System or the Division of Retirement. Neither Guardian nor its affiliates are associated with the Florida Retirement System or the Division of Retirement. This material is intended for general public use. By providing this content, Park Avenue Securities, LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, visit our website at curryschoenfinancial.com, or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities, LLC. Address, 1700 Summit Lake Drive, Suite 200, Tallahassee, Florida, 32317. Phone number, 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

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Future-Proof Your Retirement with These Key Tips

Navigating the intricacies of Social Security can feel like deciphering a complex puzzle...

But what if you had expert guides to help secure your financial future?

In this episode, John Curry and April Schoen explore the vital aspects of Social Security retirement benefits, offering insights on how to maximize them for a secure retirement amidst the backdrop of economic uncertainties.

In this episode, you’ll discover…

• The impact of demographic shifts on the sustainability of Social Security

• Strategies to maximize your Social Security benefits based on timing and work history

• How to navigate spousal and survivor benefits effectively

• The realistic concerns around the future of Social Security funding

• Essential factors to consider when planning your retirement income strategy

Mentioned in this episode:

• https://curryschoenfinancial.com/

Transcript:

April Schoen: Hello, welcome. My name is April Schoen, and I'm sitting here today with John Curry. 

John Curry: Hello, folks. Hey, April.

April: And glad you're joining us today. And the first thing is that what we're gonna be talking about today is about Social Security retirement benefits. We are gonna go through, like how to maximize them, what you need to know about the program so that you can make sure that you can secure your own retirement. Very important there. 

Secure your own retirement. But before we get into this today, I want to talk about why is this important. Why is it important that we're talking about this today? And I just want to commend you for being here because you're taking time out of your schedule, out of your day, to learn about this important topic. If you are paying attention, you're in the news. You're Googling. There are lots of concerns about the future of Social Security. What's going to happen to it? Is it going to be there? Are our benefits going to be reduced? 

So there's a lot of concerns around Social Security, even if you just go to try Google what's happening with it today. So it's important for us to understand that and know what's happening and understand some of those changes that might be coming down the line. And then what are things that you can do to protect yourself if we do see some of those changes.

John: But for those who've been doing this for 50 years, this is nothing new. It’s just getting recycled again, same topics, same issues, and we'll talk about some of that as we go through. Stuff I've heard in the past, stuff we're talking about today, and there are only a few things that can be done to fix Social Security, and we'll touch on those.

April: Absolutely. If you received our email about this talk today, one of the things I mentioned is that when John and I are talking to clients in our practice, new clients, specifically, they have concerns about Social Security. You know, we kind of hear the jokes. Oh, well, if it's going to be there, you know, these are not people who are retiring 10 or 15 years away. These are people who are retiring in the near term. 

And someone even replied to the email and had concerns about the future of Social Security. And I had a great conversation with her and and she's actually retiring soon, in the next few years. And I said, look, I really don't think that you're gonna have a problem with Social Security because you're so close to retirement. It's those 10, 15 at my age, I'm 41, that's going to see these sweeping changes to Social Security. 

John: I agree. 

April: So, let's kind of get into this today.

John: But I've been saying that ever since the ‘80s, when Ronald Reagan pushed Congress to make the first major change in Social Security in many, many years since it was founded, actually. And they didn't go far enough at the time to be honest about it. If they had, we would not have the problems we have today. And if there's time, we'll talk about that some. 

April: Sounds great. 

John: That's one advantage of being 72 years old and in business 50 years. You got a lot of experience in helping people do this stuff.

April: That's right. Lots of experience for us. So, these are my two boys. They are now, they're actually going to be nine and 12 this year, which is crazy. And pictures from a few years ago when they went on their first flight to Phoenix. They had a great time, but they couldn't help but feeling they were super excited, but they were also nervous about it, because they never phoned before. They didn't know what to expect. 

And we took some time to talk about it. We even watched YouTube videos so that they could see what does it look like in the plane. You may find this funny. We even talked about the bathroom situation. We're going to be on a long flight to Phoenix. We're going to have the bathroom. How does all that work on a plane? Because it was all this, this new experience for them. 

And overall, we had a pretty good experience on the flight. Except our first flight out of Tallahassee, we got delayed. Delayed by about 30 to 45 minutes. I couldn't believe it. It was because of a paperwork issue, which just makes me laugh. It wasn't a mechanical issue. It wasn't that we didn't have a crew member. It had to do with paperwork. 

And so we're sitting there waiting to take off, and then I'm starting to get nervous because I knew that our layover in Atlanta wasn't very long. And so the longer that we were sitting on that jet way in Tallahassee, I knew the shorter amount of time we had in Atlanta to get to our next flight. And so when we landed in Atlanta, we had five minutes to reach our next gate. 

So I was just obviously cutting it close, as you can imagine. So I told the boys, I was like, hey, give me your backpacks, and we're just gonna run through the airport together. I was determined we were gonna make it on time. And I told my oldest, I was like, you just hold Connor's hand, I'm gonna hold your hand, and we're gonna run as fast as we can. 

John: Like a train. 

April: That's right. Zoom, zoom, zoom. And we made it in time. We were one of the last few people to get on that next flight. But I was thinking back about it. It's interesting. They weren't nervous at all. They actually found it to be very fun. It added a thrill and excitement to it. And part of the reason that they weren't worried is because they had me with them, who had, you know, obviously, I've been flying a lot. 

I even knew, you know what, even if we miss our next flight, no big deal. We're gonna find another flight out to Phoenix. And so they had need to help guide them, and that really took a lot of stress off of them, and they could just enjoy it. And you know, I tell you all of this to say because I think that experience of that flight can be similar, like we've all had experiences like that, and it can be similar to getting ready to retire. 

Maybe we're stressed about it, maybe we're worried about it. Maybe we have unexpected delays, like paperwork issues. It's something we've never experienced before. But also being prepared, being able to adapt, seeking guidance, those are all the things that can really make a difference for someone, whether it's retirement or making it to Phoenix on a plane.

John: True. That's true about everything in life. That's why you hire personal trainers for fitness, things like that. You hire a nutritionist. Same thing. You hire somebody that knows more than you and that is willing to help keep you accountable.

April: That's right. So, today we're going to talk about how does Social Security work. Some of this you may know, but I think it'll be a good refresher so we can kind of understand the mechanics of it. We want to understand the key components of your own benefits and then what are some different payment scenarios on the program? 

So how does Social Security work? Now, Social Security has been around since 1935. That's 90 years ago, and it's definitely had some changes throughout the years, but really the basis of how it works, has remained the same. And that's that the Social Security Trust Fund is primarily funded from the taxation of wages by the current workforce. 

So current workers are paying current beneficiaries. And later, when we talk about one of the issues in the program, this is one of the issues that we face. Because in 1945, there were about 40 workers to one beneficiary. 40 to one. And Social Security estimates that by 2035, there will be, there'll be a two-to-one ratio, two workers for every one beneficiary. 

John: In 10 years.

April: In 10 years. So you can see how that, in and of itself, is putting stress and pressure on the program. We're going to talk about that a little bit later too, about some of those issues, and what are some things that you can do around that. Now, how you qualify for Social Security is you earn what's called credits. You need 40 credits to qualify you and your spouse for Social Security and Medicare. 

And with the credits, essentially, if you've been working for 10 years or longer, you and your spouse qualify for both Social Security and for Medicare. Social Security is going to take an average of your highest 35 years of work history, highest 35 years. And if you don't have 35 years of work history, then they're going to fill in zeros. 

So you can see how that would really pull down your average over time. And sometimes I get questions, well, April, my income, you know, 35 years ago was so low compared to what it is today. And they do do a future value calculation of like, what your income was 30 years ago, and they bring it to today's current dollars, looking at looking at inflation, and they adjust it for that. 

And if you go on to your benefits, which we're going to talk about in a second. You go onto the website, and you download your statement, you're actually going to see your earnings history listed on your statement. If you've never been on Social Security's website, we recommend you go and create a login. They don't mail paper statements anymore, but you can download them right on the website. 

We recommend that you don't just use their retirement estimator. It's just a calculator where you can put in your current salary, and it'll give you some estimates. But actually go and get your statement, your own record, so you can see everything. That's going to be a better estimate for you. And it's going to break down for you, this is actually an old picture of a statement because today, what it does is it shows you every age, starting at age 62, that's the first year that you could start Social Security. 

It shows you at every age, from 62 to 70, what your benefit would be. Now, when we think about Social Security, let's talk about what we should know about this program. And the first thing you need to figure out is what is your full retirement age, and the year you were born determines your full retirement age. So if you were born between 1943 and 1954, then your full retirement age is 66. 

And then if you were born in 1960 or later, it is age 67, and if you're born somewhere in between, they, uh, they extended it from 66 to 67. So you might be 66 and four months, six months, eight months, etc. And this is going to determine how you receive your full benefit. But you can claim it early, like we talked about a minute ago. 

You can start your Social Security benefit as early as age 62, but your benefit will be reduced, and it's a permanent reduction. Sometimes people think I started at 62, and it's a lower amount, and then when I get to full retirement age, they increase it. But that's not accurate. It is a reduced benefit, a permanent reduction. And then you can also delay taking Social Security until age 70. 

That is the latest that you can delay taking your benefit. And we're going to look at an example of what that looks like. So, let's say you were born between 1943 and 1954. If you took your Social Security benefit at your full retirement age, which would be age 66, then your benefit, these are current numbers for 2025. Then, the maximum monthly benefit available would be $4,018. 

If you took it early, you can take it as early as 62, you can see here your benefit would be reduced at 75% of what you would have received at your full retirement age. And if you take it at 63 or 64 or 65, they have calculations that are going to show what that reduction would be. And then you can delay taking Social Security every year that you wait past your full retirement age, which increases it by 8% per year. 

So if your full retirement age was 66, you can delay for four full years, which would give you 132% of your benefit. That would make your Social Security monthly amount at age 70, $5,108. So let's look at these options that we've got for delaying our benefit. If my full retirement age is 66 and I delay to 70, it's going to be worth 132% of my original amount. If my full retirement age is 67, I've only got three years to wait to age 70, and so my benefit would be increased by 124%. 

Now, some people think that you have to wait until you reach these specific ages, like it has to be on your birthday, and that's not accurate either. You can really start Social Security at any time, and these 8% increases, they'll increase it every single month. So if you waited to 67 and 10 months, you would have 10 months of an increase off that 8%. 

When looking at your statement, this is, again, when we recommend that you look at your own numbers, because you'll be able to see what your amount is going to be at age 62, full retirement, age age 70. And there's really, there's no perfect age for retirement that covers everyone. This decision to delay your benefit, to take it early, is going to be up to you, and you need to review your own life and your own circumstances to help determine when is going to be the best time. 

Now, this is an area in which we can help you. This is one of the big conversations that we have with clients is, hey, when should I take my Social Security? But there are some things you want to consider about, especially if you're considering taking your benefit early. Are you going to have any other earned income in retirement? Because, again, we're going to talk about this in a few minutes. If you take your benefits early, but you're still working, you have earned income. You may have a reduction in your benefits. 

That's one of the questions. Am I going to have any earned income while in retirement? How's my health? What are my other income sources? If I don't take Social Security, do I have other things I can tap into to let my benefit continue to grow? Thinking about longevity, your family's longevity history. Is that something, hey, are we planning on living a very long time? I hope all of our clients live a very long time in retirement.

John: Absolutely. 

April: And so planning on this longevity piece and taxes. So sometimes we are, oh, I'm gonna go ahead and start my benefit. I want to go ahead and start my get my benefits now and get my money now and then. Sometimes we'll ask the question, well, what are you going to do with it? 

Well, I don't need the income. Well then, okay, now you're going to stop getting your accrued benefits. Or your delayed credits. Now you're going to start getting a benefit and have to pay taxes on it. So we don't have a problem with people taking Social Security. Let's just make sure that we're doing it in the right order.

John: Another issue that most people don't think about is, I've heard people say, well, I don't really need Social Security. I understand, so delay it as long as you can because of the survivor benefit if the other spouse has a lower income. And we see people who should have waited, they didn't, then we see people that, like, in my case, I didn't wait to 70. I took my full retirement age 66 because of the time value of money. I wanted it now. But there are reasons why people should delay it, and one of those is making sure that upon their passing, that there's a higher benefit for the spouse. 

April: Absolutely.

John: And most people we talk to, they don't need thinking about that. Doesn't cross their mind.

April: And we're dealing with clients that not are only getting ready to retire, John and I really focus in on this retirement space and helping people who are getting ready to retire. Many of them are retiring from the state of Florida. We're located here in Tallahassee. So this question of what to do about Social Security comes up a lot. But then we also have clients who are already retired. 

You know, we had a client this year, he was 80, and he passed away. And so his wife, she lost one of their social security benefits, which we're going to talk about in a little bit about the widow and widowers benefits and how that works. And so sometimes we forget that's going to happen too. That, hey, we're both getting Social Security today, but one day, one of us passes away, there's going to be less Social Security for the surviving spouse.

John: Well, we take it for granted. It's coming in, it's steady. We don't think about it. It's on autopilot. It just pops up every month, and then all of a sudden, it's gone.

April: And between that and then having higher taxes, you've got to have a plan on how to handle those things, especially for the surviving spouse.

John: You just said something. Take just a moment to talk about the higher taxes.

April: This is something we don't think about, too. But when we have, when our spouse passes away, or we pass away, and now it's left to our spouse, what happens is we've now gone from filing a joint return to filing a single return. But we may not have a big change in our income. So yes, you're going to lose Social Security, but if you've got two pensions, you've got money coming in from retirement accounts. 

There are a lot of things that are just going to continue to be the same. And if you look at the tax rates on similar incomes versus a married filing jointly and a single income. That single income you hit higher tax brackets much faster on the same income that's been coming in.

John: And many people say that is unfair, especially to a widow or widower. All of a sudden, you've already lost the income anyway. So I have less income, but I'm in a same bracket or higher.

April: That's right. So definitely something you got a plan for on that. Now, what are some reasons why people would take Social Security at an early age? Or, you know, why are some reasons that they may want to delay it? When I think about taking it at 62, actually, I think about my dad. My dad took his benefit at 62, but that's because he had retired a few months, about 10 months earlier, and he was having some, he had hurt his back and couldn't work anymore. 

He was like, I remember us having a conversation about it, and him saying, I don't know what my life expectancy is. I don't know how long I'm going to be here. Now, knock on wood. He's 74, and he's still with us today, which is wonderful. So he's been getting those Social Security benefits for the last 12 years. I still think he made the right decision. Like you said, time value of money earlier. He wasn't working. Go ahead and get that income coming in for him, then. 

And then a lot of times, when we're talking with clients about this, I like to say, if you're saying, hey, April, here's my two choices. I'm either going to start Social Security, or I'm going to tap into my retirement accounts or my investment accounts. I say, tap into Social Security. Go ahead and start your Social Security benefits. That way, you're leaving your investment accounts, your retirement accounts, on your balance sheet.

John: I would argue one point there. It depends on what you think the tax bracket is going to be in the future on your retirement account because that's the most heavily taxed thing we have. That's the only thing I would challenge.

April: Yeah, but most people already have everything in retirement accounts. They don't have a lot of non-taxables, so. 

John: We see that a lot. 

April: We see that a lot. So it's kind of a moot point.

John: How to balance everything in retirement.

April: And then you may want to look at taking it at full retirement age if you've got two spouses and like when they're going to retire and being able to take those spousal benefits, which we're going to talk about in a little bit. And then, deferring to age 70, as John mentioned, if someone is a higher income earner. We want to have a higher benefit that goes to the surviving spouse. 

Maybe they don't have as much life insurance, and this is going to provide that benefit for them as well, or if they're continuing to work. What I'd recommend here is, if you're questioning when should I start Social Security, I'd recommend that we schedule a time for us to have a call. This is something that we help clients with. 

Throughout the week, whenever we're meeting with clients and working on having them develop a plan for retirement. And we'll talk about this at the end of the call too, how to do this, but scheduling a time for a discovery call so that we can take a look and answer your questions that you've got about Social Security. What kind of concerns that you may have and talking through this and when is going to be the best time for you to take Social Security. 

Now, Social Security does have a cost of living adjustment, a COLA. It's not guaranteed to have a COLA every single year, but they base it on the CPIW. So the COLA, the cost of living adjustment for this year, was two and a half percent. But we've definitely had years where we've had zero increase in benefits. 2011, 2016 are some examples of when we've had no increase in Social Security. So, yes, there is a cost of living adjustment, but it's not guaranteed. It is going to be tied to that CPIW. Your benefits are taxable, and how they do this taxable portion is complicated. 

They didn't make it the easiest to figure out how your benefit is going to be taxed. But we're going to walk through a few key things for you to know on how much your benefit would be considered taxable income. It's going to depend first on how you file your taxes. Do you file an individual or a joint return? And then, you have to figure out what your combined income is. 

And Social Security defines your combined income as your adjusted gross income plus any non-taxable interest plus half of your Social Security benefit. They didn't make it easy. And that is your combined income, and depending on the level of your combined income, is going to tell you if you have to pay taxes on your Social Security benefit, and then how much of that is considered taxable income. 

So if you file a single return, and your combined income is less than 25,000, no taxes. If it is not taxable, excuse me, it's not taxable income. If the combined income is between 25,000 and 34,000, then 50% of your benefit is considered taxable, and if your combined income is over 34,000, then 85% of your benefit is considered taxable income. 

Now, if you have a joint return, you file a joint return, and your combined income is less than 32,000, then your Social Security would not be considered taxable income. If it's between 32 and 44,000, then 50% would be considered taxable income, and combined income over 44,000, 85% of the benefit would be considered taxable income. 

You can have Social Security withhold taxes from your benefit. We had a client a few years ago who she didn't realize she could have Social Security withhold taxes. She actually got some penalties from the IRS because she wasn't having enough withheld for taxes.

John: Piece of trivia, real quick. Before the ‘80s, before Social Security was overhauled, there was no income tax on your Social Security. It was all tax-free. And there's discussion now about going back to that.

April: Going back to that. Now, if you are continuing to work and you're taking your Social Security, know that depending on when you start your Social Security, if you are working, you've got earned income, then they may reduce your benefits. So if you claim Social Security before your full retirement age and you earn over a certain limit, then they reduce your benefits. 

So if you took Social Security at 62 but you had wages over $22,230 in 2025, then Social Security is going to reduce your benefit $1 for every $2 over that limit. They also have another calculation if you take your benefit in the year you turn your full retirement age, but you haven't hit your birthday yet. So, I'll give an example. My birthday is in December. 

So if I started my benefit earlier in the year that I turned 67 in my case, but it wasn't December yet, then I may have a reduction if I'm over the limit. And then if I start my benefit in the month I turn my full retirement age. So for me, December of when I'm 67, then there's no earnings limit. I receive 100% of my benefit. They don't care if I make a million dollars a year, I'm gonna get my full benefit from there on. Sometimes, we have clients here that will retire early. 

They take their Social Security benefit, and they are going to work in some capacity, and they just choose to, hey, I'm going to work enough and keep my earnings under that limit. Maybe they work part-time. Maybe they're doing consulting, and they're saying, yep, I'll do enough work to hit that limit and not go over it.

John: I'm thinking about our friend right now, he'll say, nope, I can't take that job this year. See me next year. See me next year. Can't take it because I've already hit my limit. That's right.

April: That's right. Now, let's go through some different payment scenarios. The first is that there is a spousal benefit. So as we said earlier, if you qualify for Social Security once you've got 40 credits, you and your spouse both qualify for Social Security. And what the administration does is they're first going to look at your spouse's benefit record, which is based on his or her salary history. 

And if the benefit amount equals less than 50% of your benefit, the administration is going to increase their benefit to an amount that equals half of yours. So let me give you an example. Let's say I'm spouse A, and my Social Security is $1,000 a month. And let's say spouse B, my husband's name is Brian. Spouse B works perfectly. So spouse B, let's say that his social security benefit was only $250. 

Well, as a spousal benefit, he is entitled to receive half of mine, the amount equal to half of mine. So if mine's 1000 that he's gonna get 500 under the spousal benefit, not just his own record. And Social Security today has what's called deeming rules, and they're deemed to pay you the highest amount. So they're going to take a look at that when you go to file for Social Security and look to see, hey, should you take your own record, or should you take a spousal benefit. 

A few things to note is that to activate the spousal benefit, the higher earning spouse has to also be taking Social Security at the time. So if Brian's retired, but I haven't retired yet, I'm not taking my benefit. He can't activate the spousal benefit yet. He can take his own personal benefit on his own record, and then when I start Social Security, then he can start the spousal benefit. But the higher income-earning spouse does have to be collecting at the time to make that work. 

There is a widow or widower's benefit where you are entitled to receive 100% of the highest earning spouse's benefit. So again, my example earlier, let's say I'm getting $1,000 a month, and then Brian's getting 500 a month because he's getting the spousal benefit. If I passed away first, Brian doesn't get both. He's gonna get an amount equal to the higher of the two. So he'd get $1,000 a month in that case. 

So you can take widow or widower benefits early, even as early as age 60, but there is a reduction for that. And then also, if you have earned income, you may not qualify. That is the one thing with the widow and widower's benefit is they do have not income limits where they just reduce your benefit, but they have income limits where they'll say, no, you can't take it yet. You have to wait until the full retirement age. 

There are also payments for divorced spouses. So as long as you are married for at least 10 years or longer, the lower records and the lower record spouse remains unmarried, then that spouse is entitled to the same spousal benefit as if they had continued to be married. So, again, let's use my example with Brian. We've been married this year will be 13 years actually. 

So let's say we got divorced, we get to retirement, he would still be entitled to a spousal benefit off of my record, as long as he's not married at the time. He didn't get remarried. If I am remarried myself, then my spouse, my current spouse, is also entitled to a benefit, and it does not impact one another. You can have divorced spouses, current spouses, and there's no impact there. 

I've heard where in divorce and say someone tries to say in a divorce decree, if you don't do this, I'm gonna make it where you can't get my Social Security benefit. It was a client of mine who called me to ask me some questions about this is what her soon to be ex husband was telling her. And I was like, well, that's not accurate. He doesn't have control to say that you're not entitled to that. 

John: Correct. 

April: Now, let's talk about some issues around the program. One that we talked about earlier is the ratio of workers to beneficiaries and how it's shrinking over time. If you go to Social Security's website and you read their trust fund report, they're very honest about the situation. They're very honest about they expect that the trust fund will be exhausted by 2034. That date does change. 

Sometimes it's 2033, 2034, 2035, depending on kind of the current status, they update that every year. But like we talked about before, in 1945, there were about 40 workers for every beneficiary. And now, by 2035, they estimate there's only going to be two workers per each beneficiary. 

And what they're estimating will happen if nothing changes in the Social Security program at all between now and, say, 2034, that they estimate that they'll be collecting enough payroll taxes to pay about 76 cents for each dollar of scheduled benefits. 

So, I want you to think about that for a second. If your or someone's Social Security benefit was $1,000 a month, and this were to happen, and we start seeing a reduction. Now, instead of getting $1,000, they're going to get 70, excuse me, they're going to get $760. That's a 25% reduction.

John: Big drop.

April: So, let's talk about some changes that we could see coming to the program to solve that problem.

John: Some of the things that they talked about every time this comes up, going way back to the Great Commission, back in the 80s, you could increase the age at which you're entitled to a benefit. I personally think that nobody should ever have been allowed to take it at 62 unless they were of disability, which there's a provision for that. I think the system made a big mistake by allowing 62. 

At one time, you couldn't do it. It was 65. I think also, another thing you can see is much greater increase in the earnings cap on Social Security. Currently, there's a cap. I forget the exact number this year. I want to say it's like 150. 

April: I think it's at 180.

John: 180. That could become unlimited, just like Medicare. You could find that some of the spousal benefits you talked about earlier could be attacked. There's been discussion of that before about why should two people be collecting as a spousal benefit? And that's one of the reasons that the system met with 10 years. Said okay if you've been married 10 years, surely you should get something. 

And you know, just this morning, I heard an economist that we follow, Brian Westbury is his name, talking about these very issues. Some people are back on the track of pushing forward to be privatized. I don't think that will ever happen. I could be wrong, but every time it's been brought up, it's been shot down. Everybody agrees, Democrat, Republican, independents, that something has to happen. 

The problem is, are you willing to risk what is involved politically to take a stand? And that's why nothing has happened all these years. Talk, talk, talk, no action. And this is something I've been following for, well, since 1982. Paying attention to it and learning and studying, read everything I can get on it.

April: I do feel like they're gonna make changes before 2034. I don't think they'll just let it go the way it is and then see a reduction. I really don't see that as an option. The reason I don't see that as an option, and then, even when people say Social Security is going away, the reason I don't see that as an option either is there are too many people. It's their only source of income. 

John: It will never go away. 

April: It will never go away. No.

John: Tax rates might be much higher, and the amount you pay tax on could be higher. You might even see a change in the cost of living adjust. So there's a lot of tweaks that could be done that would make it last much longer, or maybe make it permanent without having a lot of pain, if the people in charge, i.e Congress, would get off their butts and do something about it. And I'm talking about all of them. I'm not taking sides here. Every damn one of them needs to be locked in a room and say you can't leave until six.

April: So you talked about the taxes earlier. So the limit for this year your tax for Social Security on your first $176,000.  So that has been proposed several times about increasing that to $400,000. That's been thrown around, of just increasing that limit to just a flat $400,000 of income. Or making it unlimited as well. I could see them doing that before they change ages. 

John: I agree.

April: Because that's like an easier change. Instead of saying, okay, we're going to get rid of 62 or now we're going to change the full retirement age from 67 to 68 or 69 or something along those lines.

John: And would be the easiest to do, and it would be the least political pushback doing it that way. That's been a big discussion many times over the years.

April: Yep, absolutely. And, you know, you just kind of brought up something about it being like the subject to these political agendas. I know you've called it before: political football. We hear about it, one every election cycle, and then it's also been a very hot button this year as well.

John: Well, let's talk about some of those political footballs. The talk right now, current administration is saying no tax on Social Security. That would be wonderful if there's a way to pay for it. But everything that's being discussed, and again, I don't care if you're Democrat, Republican, you know, independent, or whatever, you can talk a good game, but you have to show how to pay for it. 

And if you can find a way to pay for it, go for it. But unfortunately, we're spending money as a country and as individuals. I just saw this morning, again, the same economist talking about how the household debt today is the highest it's ever been, which is crazy. And it's getting worse, but yet we keep spending as a nation as if it were not a problem. 

So I don't say that to be doom and gloom, because I'm the kind of person I believe that once people get the facts and they see what's really happening, they'll make changes. How many times we've seen that when dealing with clients? Once they get the facts, they go, I got to make a change. Coach me, guide me, help me make a change.

April: We want people to make decisions based off facts, not feelings. 

John: Correct 

April: A lot of times, we make decisions based off feelings.

John: I think the majority of people do. You have to train yourself to be analytical enough to say, wait a minute. I'm reading a good book now about how Warren Buffett and Charlie Munger always invested. They removed the emotion from it, and either one of them had the right to kill the deal. They said, no, we're not doing it. We're going to rethink this. 

And you have to have that ability to look at it from almost like cold hearted, take the emotion from it, and you'll make a better decision when it comes to your finances, investing, retirement, things like that. That's difficult. That's why we should have someone else look at it. That's why I have you look at my stuff because I want to make sure I remove the emotion out of it. So I think this is what I want to do. What do you think? Give me your feedback.

April: Unbiased. I was working on something yesterday about just off topic, but something came through that that I thought was so applicable, either to thinking about, like, retirement planning, our own financial planning, and this had to do with the, it actually to do with scheduling your time and time blocking and things like that in your work week. And the quote essentially was something like, every time you deviate from your blocked schedule, you're stealing from your future self.

John: I like that. It's true.

April: I really resonated with that, not just thinking about okay time scheduling, whether that's like for business or personal, because what happens is I have a tendency then to set some boundaries, and then I let things kind of creep into it. And so it was every time that I do that I'm stealing from my future self. 

I really thought about it, in financial planning or retirement planning, we do the same thing. Because everything is fighting for us today. It's the mortgage, it's the groceries, it's the kids need help. Everything feels so important today, and it is. Feels urgent right now. And then we get to retirement, now retirement feels urgent.

John: Well, during my career, the two biggest issues were always saving for college for my kids, and planning for my retirement. But these two were at odds because if I put money aside for the kids to go to college, I'll have less money for retirement, which is true if you look at it that way. 

So then we have to be analytic. And I said, wait a minute. How can we have both? Maybe you have to put some in each account now and then, once college is taken care of, kids are gone, then you redouble your efforts for retirement.

April: One of the things that we talk about with Social Security, and along this financial planning or retirement planning, is an issue of how much Social Security is going to replace your income. And this isn't necessarily an issue with the program itself because Social Security was never meant to be your sole source of income in retirement. It was just meant to be a baseline or to add support. 

And this actually, this chart here actually comes from Social Security based off information in 2019, and this shows different pre retirement levels of income, and then how much of that income from Social Security is going to be replaced from Social Security, and how much is going to need to come from other sources. 

So I just want to look at this like middle option here, this middle income that those that have pre retirement income of $86,000. Yeah, that's pre-retirement income. Social Security would replace 32% of that pre-retirement income. So that's about $28,000 a year, $2300 a month. And then that remaining 67%, that remaining $58,000 per year is gonna have to come from other sources. 

And this is why it's so important that we do focus in on our own retirement plan to make sure that we are setting things up correctly. So, let's talk about what are some of those other sources of income? Where could it come from? First, it could be a pension. Maybe you have a pension. If you're retiring from the state of Florida, for example, you could be in the pension plan. 

You could be in the investment plan. You could have retirement accounts. You could have a 401k, 403b, 457, things that you've been saving along the way. You could have a non-retirement account that you've been saving. You could have real estate. You could have just savings accounts. 

There are other sources of income, but it's important for us to start looking at this, and the earlier we look at this, the better. So that we can have an understanding of what is our retirement income going to be in retirement. That's a lot of retirements. Retirement income in retirement.

John: Retirement income in retirement.

April: So if you're questioning that. If you're saying, hey, I don't know what my other income sources are going to be. I don't know even what my retirement income is going to be, this is where we can help you. Because one of the things that we do for our clients is something called a retirement rehearsal. 

Where we fast forward you to retirement, the day you're stepping off into retirement. And we're going to play what if. We're going to throw all your financial pieces on the table. I like to think of it like a puzzle. All the pieces are on the on the table. How do we put it together in the best way possible?

John: We throw you into the retirement swimming pool and say swim.

April: I was talking with a client yesterday, and she's planning to retire in about four years, and she has the same questions. I don't know, you know, what's my income gonna be? Is it gonna be enough? She's like, you know, I wanna continue living my same lifestyle. It's not like I want to go travel all around the world all the time. I just want to continue living my same lifestyle. 

And she's just trying to make sure, like, hey, that I'm going to be able to do that. And I think her words were, I don't want to have to move in with my daughter. I don't want to have to be, so we hear that a lot. I don't want to be a burden on someone. I don't want to have to go back to work at 80 if I don't want to. It's one thing if you want to go back to work, but not having to for financial reasons. 

So we talked through about, hey, let's look at it. Let's fast forward you and put all these things on the table. She's retiring from the state. She's going to have her pension, her Social Security, she's going to have her DROP. She doesn't know what to do with it, so we want to talk about what she's going to do with her DROP. She's going to have deferred comp. 

So like, hey, yeah, you've got a lot of pieces here. Let's figure out how to put it together. I think about the order of operations. If I am going to take money from somewhere, where am I going to take it from first? What are the best places for me to take it from, and how? So that's something that we help clients, coach them through as part of our planning process and as part of our retirement rehearsal. Anything else you want to add here?

John: The only thing that I think about when I see that graph is how many people believe that Social Security is going to be their primary source of income. The higher the income you're getting less and less replaced. But yet, the higher your income, you're paying more and more in tax. And that's just a fact. And if we do see the cap increased or totally removed, then you're going to see that number be really different. 

So just understand that you're paying for Social Security. You pay your taxes, employers are paying the tax on it, and you need to monitor it. I mean, you don't see it like a 401k or an IRA, but you're paying into a system, and most people look at it, they fuss about how much income tax they're paying. The Social Security withholdings, but they don't give it any more thought than that.

April: It's important to pay attention to what it is and what's happening with Social Security. What's that amount going to be? How is that going to impact your retirement? We think of Social Security as a retirement foundation because it's guaranteed streams of income. Pension, Social Security, this is really going to be someone's baseline, because it's going to be that foundation for them.

John Curry: I like to ask this question occasionally. What would happen if it went totally away? I ask myself that question. I'm 72 years old. I say, okay, if I could not rely on Social Security, what would I do? I would have to start tapping into the other retirement assets sooner. There'd be pressure on those assets about how long that would last. Going back to what you said earlier about what the trustees report is. If benefits were reduced down to 76%, I think we should go through that exercise as individuals. 

What if it did happen? I don't think it will. But what if it did? Plan for it. Because then, if you plan for it, you acknowledge it, you hit it head on. It's less fearful, and you say, well, you know that did happen. I can adjust. I looked at my numbers. I can. So if they make that change, then I'd have to take money out of other assets. Do I want to? No. Could I? Yes. So it's a matter of planning for that.

April: Hope for the best and plan for the worst.

John: Absolutely. How many times have we said that?

April: And if we can be okay in that worst-case scenario, which is not likely to happen, then it's going to be even better.

John: All of my working career, every time I had to make a choice about something, even buying a house, I would ask this question: what's the worst that could happen? Okay, I remember the first time I had a mortgage. I was like, boy that's big. What's the worst that could happen? Well, I lose my job and I don't have the money, and I can't pay it. Or I would come disabled. 

Well, I've got disability income insurance at the time. Or I die. Family loses it. Well, I've got life insurance, so that's not going to be an issue. So if I lose my job, I can't work, I've got savings that would take me through six months, nine months. So it's not likely to be an issue, okay, I'm good with it.

 But I've always had that mentality of thinking it through. And maybe it's because of being an aircraft mechanic when I was in the Air Force, I don't know. But it's questioning everything and asking myself, what is the worst thing that can happen? And then I'm good with it. Okay, if that's the worst that can happen, and I can live with that, let's do it.

April: Great advice.

John: And I think our retirement rehearsal helps people with that. Because you could see that if you continue on the track you're on, you will see the numbers. And now the numbers come to life. It's not just well, in the future you'll have X amount. You can actually see it coordinating with Social Security, pension, IRA, 401k, 403b, whatever you've got. You actually see your own numbers, and they're your numbers, and they're based on what you want, not what we want.

April: Yeah, I think it's helpful seeing black and white.

John: We can talk about tax rates, talk about inflation. We haven't talked much about inflation today. Accept the COLA. The COLA helps, but it's not enough.

April: Inflation cost for health care, lots of moving pieces to put in there, for sure. So what I would recommend is that those of you listening to this, if you've got questions about Social Security, you've got questions about, hey, what is my income going to look like in retirement. Questions, concerns, then I would suggest scheduling a time for a discovery call. 

This is a 30 to 45 minute call where we just go through and talk about, what are your goals, what are your concerns. We can talk about, hey, what what opportunities are available to you, what's holding you back? What are some things and steps that you can take to save you time? To save you money? To help you get to where you want to be even faster. 

And usually in these calls, we're able to give a few tweaks or ideas for you. And it also really helps us figure out, hey, should we continue working together in some capacity. Right now, I don't know if we're the right fit for you, but I can tell you that after a 30 to 45-minute call, we can figure out together if it makes sense for us to move forward in some capacity. And then we'll be sure to share with you, too. How do we work with clients? What are your options?

For a lot of our clients, we put together a financial plan, and we charge a fee for that, but we have different schedules and different plans available depending on the complexity of your financial situation. And so we're usually able to find something that works for everybody. 

There are a couple of ways you can schedule this call. You can call our main office number, 850-562-3000. You'll talk to Luke or Leslie, just let them know that you heard our talk on Social Security and you would like to schedule a time for a discovery call. You can also go to our website, which is curryschoenfinancial.com, and there's a big button that says, schedule a call. 

And you click on that, it's gonna take you to a link to my calendar, and you can pick a time for us to do a phone call. You can pick a time for a Zoom meeting as well. And again, that's curryschoenfinancial.com. So, thanks again for joining us today to hear us share our thoughts on Social Security, and we look forward to talking to you soon.

John: And I want to end with this. Just a reminder. Watch the news, be informed. But don't let either side of the political aisle scare you and make you do things that you shouldn't be doing. If you find that you're getting anxious, give us a call. Come see us. Let us help you do your planning.

April: Bye, now.

John: Bye.

Voiceover: The Social Security Administration has not approved, endorsed or authorized this material. Contact the Social Security Administration for complete details regarding eligibility for benefits. This promotional information is not approved or endorsed by the Florida Retirement System or the division of retirement. Neither Guardian nor its affiliates are associated with the Florida Retirement System or the division of retirement. This material is intended for general public use. By providing this content, Park Avenue Securities, LLC, and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, you can visit our website at curryschoeninancial.com, or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address: 1700 Summit Lake Drive, Suite 200, Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

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