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April Power Hour -Take Charge of Your Taxes

Quote of the Month

If Christianity is false, it holds no importance; if it is true, nothing surpasses its significance.” – C.S. Lewis

Wins of the Month: • One delighted client purchased her dream car, a Dodge Charger, much to her children’s surprise. • More than 12 clients have seized the opportunity to benefit from the higher rates on FIAs. • Two clients have just safeguarded their wealth by investing in gold and silver. • One client has retired fully with a generous bonus and can now concentrate on caring for her family.

Dream Story – Mary Helen Conroy

Everyone has a story, everyone has a dream… if you’re not dead, you’re not done!

A dream comes true, then many…

May Helen wrote her own book which became a bestseller, and now she is helping others to write and publish their own books. Over a dozen so far with more in the works!

Listen to hear Mary Helens talk more about this, and maybe you could be the next author!

Market Update

Consumers are benefiting from rising markets and low interest rates, but concerns arise from failing banks, potentially causing market volatility. Being prepared for potential challenges and positioning ourselves to withstand turbulence is crucial.

Bank failures have driven up demand for precious metals such as gold and silver, making inventory scarce due to increased investment.

The gap between spot and physical prices is significant due to high demand. Gold and silver can serve as a hedge against market fluctuations and currency changes.

Plus, in the event that the dollar loses value, owning gold or silver can act as insurance to protect one’s buying power.

It’s important to be cautious when buying these metals and be aware of retail providers who often have a markup of around 30-35%, compared to the 7-8% markup from wholesale providers that are our partners.

Take Charge of Your Taxes – The Power of the IUL

Today we will start with an introduction to the two broad approaches to tax planning – micro and macro. We will then dive into the different investment tax buckets and how they can be utilized for tax planning. Next, we will discuss the truth about taxes in retirement and the challenges that retirees face. We will then explore the IUL tax-free bucket and how it works. Finally, we will discuss strategies for making the most of the IUL tax-free bucket in retirement planning.Micro vs Marco Tax Planning

Micro tax planning focuses on ways to reduce your taxes in the short term. This might include strategies like taking advantage of tax deductions, maximizing contributions to tax-advantaged accounts, and managing capital gains and losses. By implementing these strategies, you can lower your tax bill in the current year.Macro tax planning takes a longer-term view, focusing on ways to reduce your taxes over your entire lifetime. This might include strategies like using tax-advantaged accounts to save for retirement, taking advantage of estate planning tools to minimize estate taxes, and making charitable donations to reduce your taxable income. By implementing these strategies, you can reduce your total tax burden over the course of your life.

Tax Buckets in Retirement

There are three tax buckets that all investments fall into; taxable, tax-deferred, and tax-free. Most yellow and red money falls into the taxable bucket with a few exceptions such as tax-free municipal bonds and variable annuities. Most of the tax-deferred and tax-free strategies are in the green money world.

When we talk about diversification, we should also be diversified among the different tax buckets. Especially as you enter retirement.

The myth has always been that you will pay less in taxes in retirement, however, that is often not the case. Having everything in taxable accounts can cause not only you to pay more in taxes but also hidden taxes such as Medicare premium increases based on income.

Even with all things being equal, you end up paying more in taxes later when all is deferred as this image shows.

The Power of IULs

Craig Daley from Lincoln Financial Group joined us to talk about the power of the IUL, an alternative for retirement savings and ROTH conversions.

Certain types of life insurance not only provide a death benefit for your heirs but can also help you accumulate tax-free income for retirement. Indexed Universal Life (IUL) is a flexible form of permanent life insurance that facilitates this dual purpose. IUL offers growth potential and protection through a method known as indexing.

Indexing enables policyholders to participate in the potential risks of a stock market index while safeguarding them from potential drops in its value. Various types of indexes are available, with one common method utilizing the S&P 500® with a cap and a floor set at zero. Through an IUL policy with indexing, you can accumulate retirement assets while shielding them from potential losses.

Using the S&P 500 with a hypothetical cap of 12% and a floor of 0% interest credited has historically averaged just over 7% over any ten-year period dating back to the 1990s.

Indexed Universal Life (IUL) is a versatile financial tool that provides both a death benefit for protection and a way to build retirement savings. The death benefit is essential to safeguard your retirement plan. If you pass away before retirement, your spouse and family will receive the death benefit as long as your IUL policy is active.

IUL policies not only offer a death benefit and tax-free retirement income but can also help with medical costs in old age. With an optional accelerated benefits rider (where allowed by law and for an extra premium), IUL can provide valuable living benefits. If you have a qualifying health event while the policy and rider are active, you can receive a portion of the death benefit while you’re still alive.

This allows you to access larger death benefits to cover medical expenses and living costs beyond your account value limits. Additionally, since it’s considered an acceleration of the death benefit, it’s typically received tax-free.

It is important to note that life insurance can be designed in various ways, from prioritizing the death benefit to optimizing cash accumulation and more. It’s crucial to coordinate your life insurance with all aspects of your estate plan and tailor it to meet your personal goals.

Estate Planning Spotlight

Estate planning has three key goals: providing for loved ones, managing your finances and care during incapacity, and distributing assets after death, which may include leaving a legacy. While IULs and other life insurance can assist in these areas, they aren’t a comprehensive estate plan on their own.

Have a great week and tune in next week for our monthly market update.
We serve clients in Mineral Point WI, Dodgeville WI, Platteville WI, Lancaster WI, Fennimore WI, Boscobel WI, Richland Center WI, Muscoda WI, Spring Green WI, Mazomanie WI, Sauk City WI, Middleton WI, Madison WI, Fitchburg WI, Verona WI, Mount Horeb WI, Barneveld WI, New Glarus WI, Monroe WI, Belleville WI, Oregon WI, Stoughton WI, Darlington WI, Cuba City WI, Hazel Green WI, Belmont WI, Dubuque IA, Freeport IL

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