Retirement Planning - Redefined

What Is The Mega Backdoor Roth?

In this episode, John and Nick explain the Mega Backdoor Roth strategy and how high-income savers may be able to contribute significantly more to Roth accounts through their workplace retirement plans. They break down the rules, requirements, and potential tax benefits, while highlighting who may benefit most from this advanced retirement planning strategy.
 
Helpful Information:
PFG Website: https://www.pfgprivatewealth.com/
Contact: 813-286-7776
Email: info@pfgprivatewealth.com
 
Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.
 
Marc:
This week on Retirement Planning Redefined, part two of our conversation about the backdoor Roth IRA. This is the mega backdoor Roth. Let's get into that conversation with John and Nick.
 
Hey, everybody. Welcome into the podcast. This is Retirement Planning Redefined with John and Nick from PFG Private Wealth. Find the guys online at pfgprivatewealth.com. That's pfgprivatewealth.com. And it sounds like something, guys, out of a, I don't know, out of a superhero story or something. It's the mega backdoor Roth. And that's the topic of the conversation this week. So we're just going to dive right in because there's a lot to cover anyway. So we'll just jump in and get going.
 
I guess, Nick, if you want, why don't you talk to us, give us a really, really short recap of what we talked about last week for those who may have not listened to that podcast. And then what's to understand what to do if you want more than the IRA limits and just kind of set us up here a little bit for understanding the mega backdoor Roth.
 
Nick:
Sure. So just a quick recap on a Roth IRA and the benefits of it. So contributions typically are with after tax dollars. So income that has already been taxed. The account grows tax deferred, so you don't receive a 1099 each year. And then the withdrawals are tax-free after 59 and a half. The Roth IRAs do not require required minimum distributions, which are nice. And they're a great place to have more of your growth oriented assets because of the tax-free upside and the fact that you can leave a tax-free account to your beneficiaries.
 
Marc:
Gotcha. And I guess some confusion here, guys, and help me out to understand this a little bit, is that we've been thinking about the Roth. We typically just, I've been saying just the Roth, that's the IRA. But because they have now created the Roth 401Ks, that adds a little confusion to the conversation as well. It's always funny because the word contribution and contribution, excuse me, and conversion confuse people. So it just confused me right now. But also 401, the Roth 401k and then the Roth IRA is now confusing people as well too. So are we talking a little bit more about on this episode, that mega backdoor Roth being from the workplace plan? Is that what we're looking at here?
 
John:
Yeah. So we'll have to leave the IRA world and jump into the 401k plans where they have much larger contribution limits, which is where we get our superhero work.
 
Marc:
The mega term. Okay. Yeah.
 
John:
Exactly. We could do a lot more of what we discussed last week. So if you like the benefits Nick went over, this is a great way to really maximize those benefits.
 
Marc:
Okay. Well, let's start with the limits. What are the limits? I guess again, we're in the 401k plan now.
 
John:
Yeah. So for 2026, under the age of 50, standard contribution limit is 24,500. There is a catch-up, and for today's purpose, we'll just talk about the standard contribution. When you are talking catch-ups, just whatever we're discussing, add the catch-up to it. But for today's purpose, to keep it simple because we are going to do a deep dive into some of these numbers, let's just assume standard contribution limit, which for this year, 24,500. And what a lot of people aren't aware of because it typically doesn't apply is your total limit to the 401k contributions. Now this is employee and employer is actually 72,000 for 2026, and that gets adjusted up every year similar to the standard contribution limits.
 
Marc:
Oh, okay. Wow, that is a big number.
 
John:
Yeah, it's mega.
 
Marc:
Yeah, it's mega. Yeah. So why would the IRS build a $72,000 ceiling if they cap the personal down so low? So I guess what's the other 47,500?
 
John:
Yeah. So one of the things that we focus on is 401ks, which comes with employee benefits, perks, things like that. And some people hear the term matches quite a bit.
 
Marc:
Sure.
 
John:
Another one is profit sharings. So that $72,000 limit is basically the IRS saying, hey, the employee can do this amount, and if the employer's going to give X amount of benefits, it really can't go over this $72,000 threshold. So that's pretty much what it is. The IRS basically said, hey, let's put some limits to this so we can't over commit to people or do ... They want to be able to provide a benefit, but not go crazy with it. So that's where we get the number.
 
Nick:
And to kind of summarize that, a away to think about it is that there are standard
limits for the employee contributions. And sometimes as an example, we've seen clients say, we've told them, especially new clients, like, "Oh, well, I'm maxing it out when you include the employer match." And it's like, no, those contributions are for your dollars. And then this overall maximum amount that John's referring to is a combination of employee and employee dollars. So it's like two separate tranches within the same year of the same plan.
 
John:
To confuse everyone a little bit more, part of that 72,000 is, if your plan allows it, and we'll dive into this, is what they call the after tax contribution to a 401k. And I know we hit it last week, but that is something that goes into this feature, which is actually older than a Roth 401k, but it's not used very often or not many people are very aware of it, but we'll jump into it today.
 
Marc:
Okay. So the mega backdoor strategy is the employee kind of hacking, if you will, this potentially unused space. So can one of you guys maybe do a numbers example where it maybe will make a little bit more sense for folks?
 
Nick:
Sure. I'll kind of break it down and give an example. So let's say that there's a 40-year-old and because they're under age 50, their standard contribution into their retirement plan is going to be 24,500, so around two grand a month. In this case, their employer matches and the total amount of the match throughout the year is 10,500. So when you combine those two amounts, the total balance for the year, not including any gains or growth is going to be the total amount contributed is $35,000 for the year. So when we go back to that aggregate ceiling that John mentioned, the 72,000. So with our basic math, and if you're not good at basic math, now we have AI that helps us.
 
Marc:
You got 37 grand basically, right?
 
Nick:
Yep. So 72 minus 35 is $37,000. That is the gap or kind of the unused space below the IRS guideline. So that's the number that we can target should the plan allow it to build in or if you have ... All this is dependent upon cash flow, of course, but if you have the cash flow to be able to save additional money into the plan.
 
Marc:
Gotcha. Okay. So that makes a little bit more sense, right? So you've got that space. It's almost kind of like filling up your tax brackets before you move to the next tax bracket, if you want to think about it that way, not to add more confusion to it.
 
John:
Yeah. It's like filling up your gas in your tank here. I got this gap here. Let me, with the rest of this, like we said, Nick said, I said, if the plan allows it, I can do some after tax contribution up to that ceiling.
 
Marc:
So all right, with the Roth 401k existing now, and those contribution numbers are higher, because part of the reason for this hybrid guys, when they made the Roth 401k is you get the income limits of a traditional 401k, but you get the Roth benefits of the Roth IRA. That's why they kind of merged these two together because people often say, "Hey, I make too much money to use a Roth IRA." But the Roth 401k is higher. Isn't this just what this is, just a contribution to a 401k? It kind of feels like it.
 
John:
It’s not because the Roth 401k is a formal tax designation that falls under that
standard contribution limit, that 24,500.
 
Marc:
Okay. All right. Back to the standard 24. Okay. Yeah.
 
John:
Yeah. Yeah. So kind of think about it that way. It's that, hey, your pre-tax 401k contribution and the Roth 401k contribution are subject to that standard contribution limit, which in 2026 it's 24,500. And with the Roth 401k, it's after tax money and growth is tax deferred and tax-free distribution. Where the after tax, and we talked about that in detail, it's after tax contribution, but the growth is tax deferred, but the growth if pulled out will be taxed, the earnings on that. So again, kind of caveat to understand the difference between those two contribution types.
 
Marc:
Gotcha.
 
Nick:
Yeah. And in general, a lot of the podcasts that we do are focused on broader base impacts a lot of people. This is definitely a niche sort of strategy. There's not a huge percent of the population that has, number one, the ability to do this in the plan, but also the cashflow to do it.
 
Marc:
Gotcha.
 
Nick:
But for those that do, it can be a massive, massive edge on what they're trying to accomplish.
 
Marc:
Yeah. Well, especially with that aggregate number, right? So the rules, they're not as genus or generous, I should say, I guess as they are.
 
John:
Yeah, exactly. They won't let us take advantage of too much stuff. So basically it's like, hey, again, if the plan allows it, you can do more contribution, but it will be taxed when it comes out of the earnings portion of that.
 
Marc:
Okay. So to clarify, if I got this right based on Nick's example a second ago, that extra $37,000 gap, again, just to kind of recap, we had that we put in 24,500, the company did 10,500 for total of 35,000, 72 is the aggregate there. So left us with that $37,000 gap. So if I drop 37,000 of after tax into that gap, I'll get hit for taxes on all the compound interest of that growth when I pull it out, correct?
 
John:
Correct. Yes.
 
Marc:
Gotcha. Okay.
 
John:
Yeah. Which is the difference with the Roth where everything's tax-free.
 
Marc:
Yeah. So every dollar gets taxed.
 
John:
Every earning dollar gets taxed.
 
Marc:
Earning dollar. Okay. All right.
 
John:
Yeah.
 
Marc:
So this after tax contribution isn't the destination, it's just the first step, sounds like.
 
John:
Pretty much, yeah.
 
Marc:
Okay. All right. What else?
 
John:
So step two would be the actual conversion or the conversion or basically putting these funds into the Roth account, whether it's a Roth 401k or Roth IRA and we'll go over the two different ways you can do it. So that would be the next step is converting it or transferring it before there's any gains similar to what we discussed last week. Once there's gains in this after tax contribution and growth, now it's subject to taxes. So you want to do an immediate conversion or transfer to either to a Roth style bucket. I want to give an example of not converting immediately, what happens in that situation. So let’s say you do an after tax contribution of $10,000 dollars and you forget to convert it. And that $10,000 now grows to $15,000. So you have $10,000 is your cost basis, what you put into it and $5,000 is gained. So if you do the conversion after you have that gain of $5,000, your taxable income goes up by the taxable gain amount, which is the 5 grand. So you’re taxable income goes up by 5 grand, so you want to make sure you do the conversion immediately to avoid that additional tax hit from happening.
 
 
Marc:
Gotcha.
 
John:
And then once it's in that Roth bucket, basically everything is tax-free and tax-deferred, tax-free, and subject to the Roth rules.
 
Marc:
Yeah, the age rules and time rules, all that good stuff.
 
John:
Yeah.
 
Marc:
So John, can everyone do this?
 
John:
Yeah, so I'm going to give you the annoying answer of it depends, and it depends on if your 401 k has particular features to it. And one of those features are, does the 401 k allow for after tax non Roth 401 k contributions? Okay, so you have to check that, so that'd be a question to the plan administrator, HR, whoever handles it. So, if that is allowed, the next question is, can you do the conversion? And there's two ways you can do the conversion with with these 401 k plans. Option one is you do an in-service rollover and you roll the funds out to your Roth IRA, and it converts once it rolls out to your Roth IRA. Okay. Option two is you do an in-plan 401 k Roth conversion, so all the money stays within the plan.
 
Marc:
Gotcha.
 
John:
Okay, let's kind of review the in-service rollover strategy. So, while you're working, you're still employed, so that's where the in-service comes into play. What you would do is call up the provider and say, "Hey, I'd like to roll out these after-tax contribution funds to my Roth IRA. Again, outside of the plan you're rolling it out. So, when you do that, it creates the conversion when that happens. So, once it goes from the after-tax contribution in the 401 k goes to your Roth IRA. Now the funds grow as if it's a Roth IRA.
 
Marc:
Now it's Roth money, right? Okay,
 
John:
Correct. So that completes that transaction. So something to be aware of, and we talked about this last time when we talked about the back door Roth with the Roth IRA is the pro rata rule. When you do it this way, the pro rata rule applies. If you have pre-tax IRA, there's not to confuse everyone even more, but there's a formula involved. If you have pre-tax IRA money and you do the conversion this way, there is some type of formula. So, again, meet with the CPA, your financial advisor, if you're going to do this type of strategy while you have a pre-tax individual retirement account, IRA balance, okay,
 
Marc:
Geat, yeah, great disclosure there to make, make note of. So, good point there, John. What if your plan doesn't allow that?
 
John:
Yeah, so let's say you, your plan doesn't allow the in-service rollover, in-service withdrawal, whatever you want to call it, or you're not eligible to do it because you know certain plans you have to be above the age 59 and a half to do that. So, okay, recapping, your plan isn't - you're not eligible to take advantage of the in-service withdrawal slash rollover in your plan. The next thing you want to look at is, okay, does my plan allow for in-plan Roth conversions? So, that would be where everything stays within the 401 k hub, and what you're doing is you're converting the after-tax dollars right into the Roth 401 k funds. Okay, so it's pretty simple here. The money goes in after tax, and then you do the conversion within the plan, and now it shows up into your Roth 401 k balance. So, it doesn't create a taxable event, then doesn't create a taxable event, because well, let's backtrack. If you do the conversion immediately before there's any gains on the after-tax funds, it does not create a taxable event in that situation.
 
Marc:
Gotcha. Okay.
 
John:
All right. Okay. And something to note here, and I referenced the pro rata rule on if it goes to a Roth IRA within the 401 k, that pro rata rule does not apply. Okay, so that's a nice benefit of keeping it within the plan, is you don't have to worry about that formula if you have pre-tax balances.
 
Marc:
Gotcha. Okay, there's a lot to digest, for sure.
 
John:
It is. And actually, some plans I was just working with someone, and their plan actually had basically automatic conversions, so it was a feature where daily any money that hit the after-tax account would automatically convert to the Roth 401 k, so it basically could put on autopilot and not worry about it.
 
Marc:
Yeah, so it sounds like obviously these plan-specific features can provide possible green lights to do this, but you got to check that stuff.
 
John:
Yeah, exactly. And then, and just to clarify that pro rata rule, because it is confusing is if you do an implant conversion again, this is all within the 401 k plan. So you convert from after tax in the 401 k to Roth in the 401 k, and let's say you have a balance of $400,000 pre tax. The pro rata rule does not apply, you can convert it, not worry about, hey, how much do I have pre tax versus if you roll it out of the 401 k into a Roth IRA, the IRS will look into if you have any money in a pre-tax traditional IRA, and if you do, that's when the formula kicks in. Okay, so just, you know, that's an important caveat that I've seen people miss if they do conversions, and it's just important to, you know, talk to somebody, and before you execute these strategies.
 
 
Marc:
Okay. Yeah. So obviously there's a lot of nuance here, so there's a lot of things you got to be aware of. So making sure specific plan features have the green light, I guess, is one of the major steps to consider on this, Nick, right?
 
John:
One thing that we missed here, which is separate from the IRAs. So not to confuse everyone even more, when you do a conversion within a plan, there is no pro rata rule like the IRA. So it doesn't matter if you have 400,000 in your pre-tax 401 and you do a conversion, there's none of that formula there so you can do it and have no issue.
 
Marc:
Gotcha. And so circling back, Nick, you mentioned earlier, you got to check with the company, I guess, to make sure, again, we're talking about workplace plans here to make sure that they even have this green light to get this done.
 
Nick:
Yeah. Realistically, if somebody was trying to figure out the steps on navigating this, step one is contact your employer, HR department, and ask if the plan allows for non-Roth after tax contributions. That's step one. And then you kind of cascade down to the other parts or reach out to us and we can help walk you through it because all the details might make you want to cry.
 
Marc:
Right. Okay. All right. So let's say a ton of stuff here to think about, obviously a lot of stuff to process. So I guess, okay, here's a big question then. So you walk through the rules, some of the mechanics of whether you can do it. I guess the question, John, is should you? Just because you can do something as the saying goes doesn't mean you necessarily should.
 
John:
Yeah. So that really probably should be the starting point. So you don't have to go ask all these questions, see if you're eligible to come to find out, hey, I probably even shouldn't do this strategy. So if it goes back to planning, of course, can you afford to put a total of up to 72,000 potentially away into a 401 plan? If you can afford it and not have to worry about expenses and things like that, then now you should start considering it because this is a pretty risky strategy because you are locking up a lot of money subjecting it to all those IRS rules and penalties and things like that.
 
And then the other thing is, do you need the balance of having some more Roth funds, which I would say most people do where it's, do I need a good mix of pre-tax and after-tax stuff? Looking at tax brackets now versus in retirement and a lot of the other things that Nick has mentioned, he could probably jump in here and give a few more details of it.
 
Nick:
So I'll give a couple other ideal candidates as an example. So let's say that somebody is a person or a household, high-income earners, they're maxing out their 401k contributions. They don't have a lot of Roth money because their income is high enough where kids are grown, they're taking a hit from a tax perspective if they're not doing pre-tax contributions. And maybe they're saving a big chunk of money every month or every year into a non-retirement account, but they've also built up a decent balance in that account. And so they're looking for a way that they're not going to give up the deduction that they're getting up for their regular 401k contributions, but they want to develop some Roth funds and they make too much money. And so it's like, okay, check, check, check, here's a perfect place to do it. Another way, another circumstance that could make a whole lot of sense, inheritance.
 
So dependent upon the structure, if somebody inherits money from an IRA, from a non-spouse, they have 10 years to withdrawal and deplete that account. So as that money's coming out, maybe they're looking for a place to put money that can have some tax benefits for them longer term and they have more cashflow in those years of taking out those withdrawals, so that's a place that they can put it. Or somebody's double dipping on Social Security, they're still working and they're taking Social Security and they're looking for a way to deploy some of that money and put it into an account, that's another good opportunity.
 
Marc:
Gotcha.
 
Nick:
So those are all situations that could make a lot of sense and add a layer of strategy that somebody hadn't considered.
 
Marc:
So it sounds like obviously basic Roth conversions, there's some complexity there. You want to check with financial professional. The back door gets even more complicated. Then the mega backdoor gets even more complicated. So at the end of the day, to find out if this is the right strategy and fit for you, it's all about having a plan and running some numbers and getting some math put together to see what makes the most sense. Is that fair, John?
 
John:
It is, because even if you're a fit to be able to defer that amount of money, some of these rules really limit who can actually take advantage of it. Where we see it work quite a bit is solo 401k, someone owns their own company, it's just them and their spouse and they have a solo 401. Well, they can go to the provider and customize their 401 to allow this.
 
High earners at large companies where, again, don't want to get into the weeds of this, but there's 401 testing rules where it really affects smaller companies. When it's a large company, you don't see the rules affect some of those high earners because in small companies, there's testing and stuff like that. And again, it's more confusing stuff, but smaller companies, it is harder to take advantage of that if you are considered what the 401k Department of Labor considers a high earner. So great strategy if you can afford to do it and you have the flexibility with the 401k to allow you to do it's an excellent way to take advantage of the Roth benefits and maximize it.
 
Marc:
Gotcha. So at the end of the day, it comes down again to having a strategy that fits for your situation. So understanding if it's right for you, do you qualify? How do you do it? Making sure it's done properly is the important pieces of all of this. And that's why we talk often about the fact that growing and accumulating money is a little easier for DIYers to do that. A lot of us can kind of, with the technology and the resources today, can build our wealth. But it's the preservation and distribution stage, which is also known as retirement, that you certainly need some help with because the rules get very complicated. And sometimes when you pull one lever, it affects nine other things that you didn't even realize. So that's why you want to get that retirement plan redefined with John and Nick. Reach out to them at pfgprivatewealth.com. That's pfgprivatewealth.com.
 
And with that, we're going to do it for this week. So make sure you subscribe to us on Apple or Spotify so that you can check out new episodes when they come out. And of course, if you have questions around this, and you probably do, make sure you reach out to them and have a conversation. Guys, thanks for successfully blowing our brains out with this one because it's a lot of stuff to take, but it's important because a lot of these strategies out there don't get talked about as often. So good stuff. Thanks for breaking it down, John.
 
John:
Yeah, no problem. And I enjoy some of these deep dives, so look forward to doing some more of them.
 
Marc:
Yeah, for sure. Nick, thank you, my friend, for jumping in as well and helping out. It's definitely a lot to unpack for people. So I always appreciate you guys.
 
Nick:
Thanks, Marcus.
 
Marc:
And be sure to consult with your tax advisor. This can affect your federal tax rates and also state taxes if you have state income tax. We'll see you next time here on Retirement Planning Redefined with John and Nick.

Replay: Should You Gift Money While You’re Alive or Leave A Legacy?

You’ve worked hard, saved well, and now you’re thinking about giving back—maybe to your kids, your grandkids, or a cause you care about. But should you wait and pass that wealth on later, or give while you’re still around to enjoy the impact? Let’s talk about how to make that decision with confidence.
 
Helpful Information:
PFG Website: https://www.pfgprivatewealth.com/
Contact: 813-286-7776
Email: info@pfgprivatewealth.com
 
Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.
 
 
Marc:
Welcome in once again to another edition of Retirement Planning, Redefined with John and Nick, and we're going to talk about gifting money while you're alive or leaving a legacy. You work hard, you saved well, so let's talk about how to gift and leave a legacy.
 
Welcome into the podcast everybody. Thanks for hanging out with John and Nick and myself as we talk about these topics this week. And guys, it's gifting, right? So I want to go over some basics here. It seems like there's been a trend the last couple of years for people to enjoy their retirement legacy with the family versus the old way of you pass and you'll leave a check, right? Here's your inheritance, we're gone, that kind of thing. So let's talk about that a little bit this week on the show and just kind of see what you guys are seeing in your neck of the woods. How you doing this week, Nick?
 
Nick:
Good, good. How about yourself?
 
Marc:
Doing pretty good's. How's the wedding action coming?
 
Nick:
Planning's moving along.
 
Marc:
Nice.
 
Nick:
Did some, hopefully we got the food picked out, so trying to check off all the big things, so.
 
Marc:
That's important. Got to have that good food going on for sure. Well, good. Kudos. Good. Glad to hear that. And John, my friend, how are you this week?
 
John:
I'm good. I'm good. Summer just started for the kids, so getting used to waking up in the morning and they're hanging out with me as I'm getting ready for work-
 
Marc:
And they're ready to go.
 
John:
Versus me just dropping them off. Yeah.
 
Marc:
That's right.
 
John:
It's a lot of fun.
 
Marc:
There you go. Are you guys seeing this trend that I talked about, not necessarily a new trend. It's been going on for a number of years now, but I think where people just want to maybe enjoy some experiences with their loved ones while they're still here versus just leaving that check, so to speak? Are you guys seeing that in your practice as well?
 
Nick:
Yeah, I'd say so. We've had, what are we on now? A 14, 15 year bull run from the standpoint of people have kind of exceeded what their perspective on goals was for the money that they might have in retirement and, so especially I would say, at least from what I've seen, the vacation side of things is kind of the biggest thing that people have been doing where they'll do a large family vacation and pay for the kids and their families to go so that they can all enjoy that together.
 
Marc:
Yeah, that's very cool. And we'll talk about some of the numbers and things in just a few minutes, but John, I'll kick this over to you. I'd say the first step probably still should be, make sure you are covered first, right? We all want to leave and do things for our kids and loved ones, but don't sacrifice your own retirement in order just to do that. Is that a fair place to start?
 
John:
That is 100% where you should start. The last thing you want to do is start gifting and spending money on a vacation, and then you look at it and you're like, "Oh man, I don't have enough money to live anymore." So first thing we do in this situation where it comes up with clients is like most things we say, we look at the plan and we will stress test it and look at different scenarios to make sure, hey, if this were to happen, how does your plan react to it? So we'll throw out some scenarios out there, whether it's healthcare, inflation, social security, things like that. And if the plan looks solid, we will typically give somewhat of a green light of, we think you should budget X amount for this. Or we can also look at scenarios where Nick talked about vacation, but we've seen some others where it's like, "Hey, I want to help my son, daughter with a home purchase." And with the way prices are going now, it's very difficult for first time homeowners to be buying houses. So we've seen a lot of people basically lending, not giving money to their kids for buying homes. So we will put that in the plan and say, "Hey, what does your plan look like if you were to give X amount for a down payment?"
 
Marc:
Gotcha. Okay. And we'll talk about some of those numbers and ways to do that here in a few minutes. So I would say if step number one, as John pointed out is make sure you are covered. The next step number two is maybe just kind of clarify your motivation. He kind of touched on that a little bit, but why are you giving, I mean, again, we all love our kids. We want to help, but what's the purpose? Is that an important kind of factor to decide through?
 
Nick:
Yeah, I've had some recent conversations where maybe there's specific topics like, okay, we're off conversions, and because somebody has read or seen an article or something like that, the thought process is, all right, well let's go ahead and let's convert all of our qualified money to Roth accounts and leave the money to them. And a tricky thing with that can be, as an example, is maybe their kids are not in the same sort of economic space as they are and they're not going to ever make nearly the same amount of money. Them taking a hit right away from a tax perspective maybe doesn't make sense, so try to take them back to the initial point in, Hey, what's your motivation? What are you trying to do? What's most important to you? Is it making sure that your plan is structured well to protect you first and then start to do some giving while you're alive? Or is it more focused on you want to give after you pass away and let's structure your assets accordingly?
 
So just so many things, making sure that you fully understand what your objectives are because it can be a little bit of the shiny new thing or a shiny new strategy that weren't familiar with at first or initially, and then once you go through and evaluate it in more detail, maybe it doesn't make a whole lot of sense. But yeah, really understanding how account types work, what your goals are and really what your focus is really important.
 
Marc:
And of course, working with a financial professional is going to help you identify that because often we're not going to know what the account types and the rules and the taxation things are going to be, so that's why you want to turn to the pros on that. So let's get into some of the numbers a little bit, guys, because I actually want to point out a couple of things that based on what you've said so far, and just kind of ask you some clarifying questions on that. But let's start with understanding the gifting rules. So John, what's some of the numbers that we need to know if we just want to gift money in general?
 
John:
So you want to look at what is the gifting amount before you trigger having to file a gift tax return or putting that on your return that you gifted money. So this number changes from year to year typically, and in 2025, it's $19,000 per person. So example, let's say you have a mother, father, and they want to gift to a child. They can each give $19,000 apiece.
 
Marc:
So married couples 38 grand, right?
 
John:
Yes. So that's a good starting point. And then if you have grandkids involved or whatever, you can start gifting to that. So it's $19,000 per person per year without triggering the gift tax filing.
 
Marc:
And that's hefty. Now I'm sure somebody listens going, "I love my kids, but I ain't giving them 38 grand."
 
John:
Again, everyone's situation's different.
 
Marc:
And you can do that. And it doesn't matter if it doesn't have to be family either, right? This could be anybody, right? You can give 19,000.
 
John:
It can be anybody. Yeah. If you want to just find a random person in the street, you're more than welcome to-
 
Marc:
Your favorite podcast host. I mean, podcast hosts need love too, so I'm just saying.
 
John:
Yeah. So that's definitely the starting point. If you're going to be gifting money to any particular individual. If you want to help out with tuition and medical expenses, as long as it's paid directly towards those institutions, you don't have to file any type of gift tax return.
 
Marc:
Now, I wanted to ask you about that because a minute ago you guys were talking about helping with school. Now you can't gift the money and pay the loan, right? It's not paying the student loan, it's paying the tuition. There is a difference there, correct?
 
Nick:
Yeah. And you want to pay it directly to the institution.
 
Marc:
Gotcha. Okay. That's important to know too, right? I'm sure from a tax standpoint as well. All right. What about QCDs, John? Can we do that in that arena as well? If you want to do some gifting?
 
John:
Yeah. So let's explain what that is. So it's qualified charitable distributions from your IRAs. Nick and I use this quite a bit. So when we're doing the fact-finding with clients, one of the main, not one of the main, but one of the questions we go through is, do you do any charitable gifting? And if they check that box, we'll typically find out what institutions and how much they're giving. And once someone hits RMD age, a great way to save on taxes is gifts directly from your IRA. So you could save quite a bit depending on how much someone's gifting. So example, we have someone that doesn't necessarily need their distribution from the IRA, and they were just taking money out of just cash flow, whether it was social security or pension, they were gifting it to their church. What we would typically do is say, "Hey, let's kind of switch this. Let's go to, let's pull out of the IRA." Let's just use number. Maybe it's 10 or 15 grand and we're going to go directly from the IRA to the charitable institution. In this example, it's a church, and you don't pay any taxes on that amount that came out.
 
Marc:
That's ideal, right? And Nick, thinking about how you, if you're a charitably minded person and talking about leaving a legacy, since this kind of rolls into this conversation, people often ask, "Well, which account should I use for what?" And John mentioned that earlier. So if you're thinking about leaving money to your kids and you've got money in a Roth, you might want to leave the kids that right? And then maybe QCD some money from the IRA over to the church, for example, because that's a tax benefit to everybody. Correct?
 
Nick:
Yeah, for sure. That makes sense. I would say to one kind of red flag, or at least something to be very aware of and had this conversation recently with a client is, while you're alive, if you're in a position to be able to gift and if you're in a position to be able to choose where you want to gift money from, avoid gifting from highly appreciated assets from the standpoint of let's say there's a property or there's a taxable brokerage account that maybe you've held 10 different stocks for 20 years and they have a substantial gain. If you gift that while alive, then the recipient, when they sell those is going to pay taxes on the gain versus if you gift it after you pass away, those investments will get a step-up in cost basis, which can save a significant amount of money from a tax perspective. So I would say where you gift from is absolutely, probably if this is something that's important to you, that's where the largest amount of strategy comes into play and doing it from the right place.
 
Marc:
Nick, any other things we missed as far as with the QCD or some of the numbers there?
 
Nick:
Yeah, one thing that we have run into is that some custodians, including the one that we use, Charles Schwab, they don't send out a specific tax document when somebody processes a qualified charitable distribution. So that's something that you want to keep records of and indicate that you've done that with your tax preparer. We've had a couple of clients where they were anticipating that they were going to receive a specific document that laid out exactly what they did, who it paid to, and that sort of thing and that was not the case. It shows the distribution via the 10-99, but they have to notify the tax preparer and usually provide some sort of documentation showing that they made that gift to a charity. So just from a best practice sort of standpoint, that's something to keep in mind.
 
Marc:
All right. All right. Good stuff guys. So as always, if you've got questions and concerns, need some help when it comes to any kind of the financial pieces, the X's and O's when it comes to retirement, you always want to check with qualified financial professionals who do this day in and day out. And John and Nick certainly do so if you need some help, reach out to them online at pfgprivatewealth.com. That's pfgprivatewealth.com and don't forget to subscribe to the podcast on Apple or Spotify or whatever podcasting app you enjoy using. You can reach out to the guys on the website. You can also call them at (813) 286-7776. And don't forget to tune in for new episodes as they come out. I appreciate the time guys. Thanks so much for being here and we'll catch you next time here on Retirement Planning, Redefined with John and Nick.
 
Get yourself a plan, get yourself a strategy. Reach out to John and Nick today at pfgprivatewealth.com, that's pfgprivatewealth.com, to get started on your situation or to tweak your situation and dive into that process with the guys. You can reach out to them at 813-286-7776. Or again, find them online at pfgprivatewealth.com. Don't forget to subscribe to us on the podcast on Apple or Spotify, or whatever platform you like using. We'll see you next time here on Retirement Planning Redefined with John and Nick.
 

What Is A Backdoor Roth IRA?

This week, we're breaking down the Backdoor Roth IRA: the legal workaround that high earners use to get their money into a Roth and let it grow tax-free forever. We'll walk you through exactly how it works, who it's for, the one sneaky tax trap you need to watch out for, and whether it's actually worth the extra steps. If you've ever been told you earn too much for a Roth, this episode is for you.
 
Helpful Information:
PFG Website: https://www.pfgprivatewealth.com/
Contact: 813-286-7776
Email: info@pfgprivatewealth.com
 
Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

2026 Money Updates You Can’t Ignore

What’s new in 2026 for retirees & pre-retirees? From Social Security and Medicare to tax breaks and retirement contributions, this year brings several updates that could quietly impact your cash flow, taxes, and savings strategy.
Helpful Information:
PFG Website: https://www.pfgprivatewealth.com/
Contact: 813-286-7776
Email: info@pfgprivatewealth.com
 
Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

Common Retirement Myths And Why They’re Dangerous

There’s no shortage of financial advice out there, and unfortunately, not all of it is good. Some of the most damaging retirement mistakes don’t come from reckless behavior, but from ideas that sound reasonable and get repeated often enough to feel true. Today, we’re busting some of the most common retirement planning myths and explaining why believing them can quietly derail an otherwise solid plan.
 
Helpful Information:
PFG Website: https://www.pfgprivatewealth.com/
Contact: 813-286-7776
Email: info@pfgprivatewealth.com
 
Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

What Is Net Unrealized Appreciation (NUA)?

This episode takes a deep dive into Net Unrealized Appreciation (NUA), a little-known tax strategy that could significantly reduce taxes on company stock held inside a 401(k). John and Nick explain how NUA works, who it’s best suited for, and the key rules and timing considerations that can make or break the strategy. If you’ve accumulated employer stock and want to be more tax-efficient heading into retirement, this conversation will help you decide whether NUA deserves a closer look.
 
Helpful Information:
PFG Website: https://www.pfgprivatewealth.com/
Contact: 813-286-7776
Email: info@pfgprivatewealth.com
 
Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.
 

2025 Year In Review: What Actually Mattered for Your Money

A lot happened in 2025… Big political swings, stubborn inflation, new tax rules, and even a historic government shutdown. But what actually matters for your financial life? Today, we’re breaking down the year’s biggest headlines and what they may mean for your plan moving forward. 
 
Helpful Information:
PFG Website: https://www.pfgprivatewealth.com/
Contact: 813-286-7776
Email: info@pfgprivatewealth.com
 
Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.
 

Big Beautiful Bill Myths Debunked

Big tax law changes always bring big rumors. But before you assume Social Security is now tax-free or that you’re getting a $40K deduction just for breathing, let’s set the record straight on what this new bill didn’t actually do.
 
Helpful Information:
PFG Website: https://www.pfgprivatewealth.com/
Contact: 813-286-7776
Email: info@pfgprivatewealth.com
 
Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.
 
Speaker 1:
The big tax law changes always bring rumors, so before you get too hyped up or worried about anything, we thought we'd have a little fun and debunk some of the Big Beautiful Bill myths this week on the podcast. Let's get into it.
 
Hey everybody, welcome into Retirement Planning - Redefined with John and Nick from PFG Private Wealth. And one more time, we thought we would revisit the Big Beautiful Bill, the OBBBA conversation. I like saying OBBBA, it's just fun. The One Big Beautiful Bill Act. Guys, just kind of hopefully maybe dispel some of these things, continue to have questions all throughout the year as we're closing out the year we're just trying to knock down some of those worries or some of those fears that people still have. So let's set the record straight a little bit. We'll have some fun with this. You guys can be myth busters on this episode, if you will. John, what's going on my friend? How are you?
 
John Teixeira:
Not too much. Just wondering if Nick gave my phone number to a list because all of a sudden today I'm getting bombarded with, "Do you need a driveway cleaned?" And some random stuff. So I think I'm getting punked.
 
Speaker 1:
Oh man, it's that time of the year. It seems like spam calls have gone just through the roof for the last couple of months, so I don't know.
 
Nick  McDevitt:
My hypothesis on that is I feel like businesses are slowing down and they're kind of going back to their-
 
Speaker 1:
They're getting creative too.
 
Nick  McDevitt:
Yeah, they're going back to their list client lists or different marketing tools. I feel like I've gotten re-added or added to a hundred new email lists in the last three weeks. So it's interesting.
 
Speaker 1:
Yeah, it's a weird thing. And the text thing and the email, it's like they have so much access to you. Constantly getting stuff and of course the phones are always listening, so you just get all this weird stuff. But I'm with you, John, same thing. Would you like to sell your house?
 
John Teixeira:
No. Nick complained about it a couple of weeks ago and I was like, "I'm not getting too much." And all of a sudden I think he's like, "Well, if I got to deal with it, John's got it too." So.
 
Speaker 1:
Either that or your phone was listening and said, "Oh, you're not getting it? We'll get one, then. Here it goes."
 
John Teixeira:
It could be that one too.
 
Speaker 1:
All right, let's jump into a few myths. We'll have some fun here. Myth number one, Nick, Social Security is no longer taxed.
 
Nick  McDevitt:
Kind of for some. So just like most things, there's nuance to it. If your income falls within the threshold of where single or married filing jointly and singles, I think the 75,000 married filing jointly is the 150, then you actually get a $6,000 tax credit to help offset taxes that you may owe on your social security income. But it's not something that line item wise is gone. So for most people, up to 85% of their social security income is includeable in their overall taxable income. So this is a way that that amount can get reduced dependent upon the overall situation.
 
Speaker 1:
So technically no, they did not remove social security tax, but they're for certain brackets in certain age groups for a couple of years, you can definitely reap a benefit. So do that. But yeah, it didn't go away unfortunately. Myth number two, John, the new tax law means tax cuts for everybody.
 
John Teixeira:
Unfortunately not for everybody. Like we talked about in the last episode, the senior citizen tax deduction above the age of 65 is those single will get six, joint will get 12, but that's not even for everyone above 65. Well, because if you income level's too high, you also don't qualify. So not for everybody. And then even the SALT deduction, which Nick went into last episode as well, if your state doesn't have income tax, certain situations work for you, certain situations, and everyone's a case-by-case scenario here. So not for everybody. Some people might not see any tax benefits from this, but some people might see quite a bit.
 
Speaker 1:
Okay. All right. Nick, myth number three, the tax brackets are permanent, so I'm groovy. We're going to stay in this low tax bracket forever.
 
Nick  McDevitt:
Yeah, it'd be nice if things work that way, but as we know when it comes to taxes or really anything involving government or legislation, we can count on there being change at some point in the future. So although if people read through documents and they see, hey, this adjustment in brackets is now permanent, that's just kind of referring back to when they were originally reduced. There was a sunset provision that it had to get renewed at a period of time in the future. And so that's what happened is it was essentially renewed and locked into place, but a new president or a new Congress can adjust that and change that in the future. And based upon debt and all that kind of stuff, were of the opinion that at a certain point in time there will definitely be some changes. And the reality is that most likely they will be higher taxes.
 
Speaker 1:
Yeah, they changed their mind as the wind blows and what they do with it. Right? So, all right, myth number four, John, we didn't really talk about the estate tax too much on that prior episode where we talked about some things, but they actually raised it up a tick, made it a nice even number. So it's a $15 million estate tax exemption, which means estate planning doesn't much matter anymore because most people aren't going to get to that level. What's your thoughts?
 
John Teixeira:
Yeah, so it's nice they made it a nice even number, just like when they changed the RMDH from a 70 and a half to a nice even number there. So we like simplicity here. But yeah, it doesn't mean estate tax planning doesn't matter anymore because certain states do have their own estate tax themselves. We live in Florida here.
 
Speaker 1:
Good point.
 
John Teixeira:
So we don't have to worry about that. But depending on the state you live in, important to understand what those estate taxes are.
 
Speaker 1:
Yeah, that's a federal estate. Yeah, that's a great point. Yep.
 
John Teixeira:
Yep. So that's the federal level there, 15 million. So yeah, just make sure you understand where it is. And just because the exemption went up doesn't mean you don't need estate planning because we've come across some people that definitely needed to structure their assets correctly to make sure that Uncle Sam doesn't get all of it and also it goes to the right places. So.
 
Speaker 1:
Yeah, it's much more than just the tax is a good estate plan, so definitely you want to have the other pieces covered as well. So just because the number's high doesn't mean you don't need an estate plan. And you don't have to be a Rockefeller to need estate plan. A lot of people kind of surprised by the fact of what an estate plan can do for them. Just average everyday folks, it can still be very beneficial. So something to certainly consider.
 
Nick, we talked a little bit about the car loan interest on that prior one, but so I googled basically just common misconceptions about this, and that's how I'm wording these based on how some of these questions came up. So it's like, "Car loan interest is now fully deductible," and that's how with the internet and everything, that's how things get run amok. People think, "Oh, no, no, I totally saw that. Car loan interest is fully deductible. So great, I'm going to go out and buy a car and be able to write off the interest." But that's not the whole story.
 
Nick  McDevitt:
For sure. There are definitely... So there's a cap as far as the amount that can be deducted, it's about $10,000. From a deductibility standpoint, it is a temporary thing and there are certain thresholds from the perspective of income can't exceed a hundred thousand. And then the rules about the final assembly being the US for the vehicle. So it's not a blanket something that, just like anything else when it comes to rules and laws, especially on taxes, the devil's in the details and you want to make sure you have a full understanding of what it looks like. And on top of that, the reality is that a tax deduction is not usually a reason to spend money if you don't need something. So that's kind of like the famous last words of, "Yeah, but there's a tax deduction." But also if there's a cash flow issue, then it may not make sense. So just like anything else, you want to be smart about the decision.
 
Speaker 1:
Yeah. And I'll take this last one, John for a little bit. Myth number six, it was really around the itemizing. "I can skip itemizing and still get deductions for charity giving." And I think people confuse the itemization and QCDs. And so I think there's a little bit different disinformation there and there is some above-the-line stuff. So just hit me with that one real quick.
 
John Teixeira:
So you can make the deductions with charitable gifting. And it's just recapping last episode, it's capped at 1,000 for single in 2,000 for couples. So you can get the standard deduction and go ahead and get these additional deductions for giving to charity without itemizing.
 
Speaker 1:
And I think for a lot of people, especially if you're making good money, they think, "Hey, I don't need the RMDs," especially for a lot of your client base. "I got to pull this RMD. I don't want to, but I have to. The government's making me. How can I maybe be charitably inclined but also be effective from a tax standpoint?" And that's where the confusion with the QCD comes in. Because you can satisfy that RMD by doing a QCD.
 
John Teixeira:
Yeah, these are... Yeah, thanks for clarifying.
 
Speaker 1:
Yeah.
 
John Teixeira:
Yeah. These are two separate things here. The QCD is its own strategy and definitely take advantage of that if you are not, it's a great way to do it. And just let's kind of recap that strategy, Although it's not part of the bill here, but what you want to do is have your... Once you're above the age of 70, you can take advantage of it and you want the check or distribution that's coming out of the retirement plan to go pre-tax, let's emphasize that pre-tax, go directly from the retirement account to the charitable institution. So it has to be check made payable to that institution. They don't need to get it directly. I have some clients that will get it mailed to their house as long as it's written out to that institution. And the example, they go to church and they feel good about actually handing the check in.
 
And full disclosure, when you're doing your taxes, I don't want to say all, but most financial institutions aren't basically telling the IRS what you did. When you do your taxes, you actually need to say, this is what you did. So the 1099 will kind of reflect a little bit of that, but you have to actually tell your CPA, "I did this." Because if you do not, you will not get that tax deduction.
 
Speaker 1:
Yeah, no, for sure. And that's why I wanted to ask you that because it does get confusion around what the tax law changes were with the above line charitable deductions or gift giving and the QCDs, so there was definitely some confusion there. So thanks for clearing that up. And again, that's the whole point, right? Anytime there's legislation, it always brings confusion. So having a good strategy, a good plan, and a good team in place to help you deal with this stuff because dealing with it every day is a lot easier than us who just only see the headlines and whatnot. So if you need some help, reach out to John and Nick, get onto the calendar at PFGPrivateWealth.com, that's PFGPrivateWealth.com and schedule some time for yourself today. And with that, guys, thanks so much for hanging out. I hope everybody has a great holiday season. Don't forget to subscribe to the podcast on Apple or Spotify or whatever podcasting app you enjoy. Retirement Planning - Redefined with John and Nick from PFG Private Wealth. We'll see you next time.

What The “Big Beautiful Bill” Means For Your Retirement Plan

Today, John and Nick dive into the Big Beautiful Bill and what its changes mean for retirees and pre-retirees as the year winds down. They break down updates to tax brackets, standard and senior deductions, SALT caps, and Roth conversion strategies, while sharing tips on avoiding common pitfalls. Plus, they touch on credits and deductions like charitable giving, auto loans, and solar panels to help listeners make the most of these changes.
 
Helpful Information:
PFG Website: https://www.pfgprivatewealth.com/
Contact: 813-286-7776
Email: info@pfgprivatewealth.com
 
Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.
 
Speaker 1:
This week on Retirement Planning Redefined, still a lot of questions out there about the Big Beautiful Bill and what happened earlier this year and some of those changes. So, we thought we would talk about that and touch on that as the year is winding down here on the podcast. So, stick around. Let's get into it. Hey, everybody. Welcome into Retirement Planning Redefined with John and Nick from PFG Private Wealth. Find them online at pfgprivatewealth.com.
 
Guys, I know it's been around for a couple of months now, half a year or whatever, but still a lot of questions and things going on with the Big Beautiful Bill changes, especially as it affects retirees and pre-retirees. So, we thought we would dive back in and have a conversation on some of this and just maybe touch on some of the things you guys are still hearing a few months later and see if we can break this down a little bit for folks and help them out. John, how are you doing this week?
 
John:
Hey, I'm doing all right. Just getting ready for Thanksgiving here and just looking for some downtime right now.
 
Speaker 1:
Yeah, it's right here upon us. Nick, you're double whammy. You got Thanksgiving and then you got a wedding right after that. So, congratulations and happy holidays.
 
Nick:
Thanks. Yeah, it's going to be a busy end of the year.
 
Speaker 1:
Yeah, for sure. Well, speaking of, let's get into our topic here because there's lot of stuff that's happening and changes and whatnot. So, let's just dive into some of the things and break some things down. The big piece obviously was that the tax brackets that we were under the TCJA since 2017 got extended. All year, we were wondering if that was going to happen as the year was winding down. This stuff was going to wrap up at the end of this year, but they extended it and they made it permanent. So, talk to me about that, whoever wants to take this. That's interesting language and confusion for some people, but what's your thoughts on the tax brackets being extended?
 
John:
Yeah, so the tax brackets from 2017 now remain in place where they were set to expire. So, they're as permanent as I guess you could be when it comes to tax brackets-
 
Speaker 1:
To Washington.
 
John:
... to Congress. Yeah, exactly. So, obviously, Congress can make some changes at some point, but for right now, this is where we are. For retirees, important to take a look at historically where tax brackets have been and if you really pay attention where in some pretty low tax brackets if you look throughout time. So, now could be advantageous to some people to really develop some strategies to take advantage of this low tax bracket period for themselves because permanent doesn't mean too permanent as we just discussed. Depending on what happens, the next administration, things could not become permanent.
 
Speaker 1:
So I mean, one of the things Roth conversions has been really on the radar for many people for the last number of years because to your point of the historical tax lows, so now you do have some time to Roth over time for at least a couple more years anyway, until what, '28 or '29 potentially.
 
John:
Yeah, so Roth conversions is definitely something we implement for clients, and while this is going to be in place for the next few years. Maybe we get a little bit more aggressive and I think we're going to touch on it a little bit more in the podcast. We'll talk about some of the pitfalls to avoid with that because there are some new deductions that you want to remain below.
 
Speaker 1:
Yeah, yeah, for sure. Well, Nick, let's have you just jump in and tackle some of that. So, talk to me about some of the deductions, the standard stuff, some of these other pieces that they locked into place and some things we might want to know and think about.
 
Nick:
So for people that aren't familiar with the jargon when it comes to the tax or they don't prepare themselves, essentially people have two options. They can either use the standard deduction, which is what the majority of W-2 earners do especially or they can itemize. So, the reason that people would itemize historically is they would have enough expenses maybe through a business, maybe through interest from a mortgage or kids or different things that would allow them to itemize and there'd be a benefit to them from a tax perspective.
 
But when this was originally put into place and the standard deduction was increased, it really shifted it to people being able to just, for the most part, use the standard deduction, which previously about $29,500 for joint, $14,600 for single, and the updated number is going to be $31,500 for joint and then $15,750 for single. So, it's bumped up a little bit. Years ago, it was lower, and so there would be a lot of people that would get caught between the standard and the itemized, but it is a benefit for quite a bit of people.
 
Speaker 1:
Yeah. I mean, there's some decent numbers here we're talking about. When you take the standard deductions, it's going to be hard to get there, but you could really make a big dent. We'll talk about some of the add-on deductions as well here in a second. Does the SALT cap change a lot of things for you guys in Florida? I'm not sure versus other states like New York or California, New Jersey, and I guess maybe to clarify, John, what is the SALT cap and can you break that down a little bit?
 
John:
So I'll punt this to Nick. He just actually did this with a client. So, he can give a personal story, which is probably better than me.
 
Nick:
Yeah. So, the SALT cap is really state and local tax. It is or historically has been much more relevant in states that have higher property tax and/or state income tax. So, a lot of the northeast states, really just a lot of states in general. Here in Florida, we don't necessarily run into this a ton, however, we do have quite a few clients that do the snowbird thing.
 
Speaker 1:
Yeah, sure.
 
Nick:
So they have to incorporate taxes in other states and that thing. So, the reality is that it had previously been a benefit for people that were paying a large state income and/or property taxes. They could use it to offset the tax that they paid against their federal income. I guess when the legislation was changed, I think it was like 2017, 2018, they had reduced that SALT cap to $10,000. So, that really had an impact from the perspective of especially high income earners in states that had those different taxes that were applicable. It did cause a decently effective increase in taxes for them.
 
So, with the good old lobbying that's done, they went ahead and increased that from the $10,000 that's been in place for the last five, six years to $40,000 cap for incomes below $500,000. So, although we don't see it here, we have recently had some clients moving into homes that do have pretty significant property taxes. Although they're not paying state income tax, the level of the property taxes where they've gotten with the run-up in real estate around this area, it has become a little bit more relevant than it was previously.
 
Speaker 1:
And so that could make a difference. So, again, you want to make sure that of all these changes that are potentially there, you're talking with your financial professional and your CPAs and working together on making sure that you're being as effective as possible. So, John, you punted that one back over to Nick. I'll give you this one, the senior deduction. There was a lot of talk, obviously, a lot of campaigning on just getting rid of taxes on social security. They did their bartering and their deals and they came up with this senior citizen deduction. I mean, it's not bad for a number of years. It's like you're not paying social security taxes, but it's a little confusing for folks. So, can you break down some of the data on that?
 
John:
Yeah, so it was initially discussed as, "Hey, we're going to eliminate social security tax." This has come up a little bit with some clients asking, "Hey, did they get rid of it?" And the answer is, your social security still is taxed, but if you're above the age of 65, you do get what they call a senior citizen deduction. That's $6,000 per person, $12,000 married filing jointly, and there are some income limits to it. The single is $75,000 and the joint is $150,000. So, I would say over the last few months, we have been doing quite a bit of planning to make sure people stay below these thresholds to maximize the deduction and when we're doing our projections for this year and upcoming years, for some people, it's a big difference.
 
It's a nice little benefit for these retirees who unfortunately over the last few years are really impacted with inflation. I mean, the cost of everything is up. I know CPI recently, I think last year was like 2 to 3% or something, which doesn't feel like that, but if you're on a fixed income, this is a pretty big deal. So, it's nice to see some of these retirees get some relief, but especially with this one more than others, I think if you can stay below those income thresholds, now's the time to do it because as of now, they're expiring in 2028. So, you really only have about two or three years to really take advantage of this.
 
Speaker 1:
Be effective. Yeah. I mean to your point, Nick earlier was talking about the $31,500 for the standard, and then you slap another $12,000 for married, right? Then you slap another $12,000 on here. I mean, that's pretty hefty, right? So you could get really efficient with this. It's just a matter of making sure that you're, again, jumping in and taking advantage of it while you can. Any thoughts on that, Nick?
 
Nick:
Yeah, no, just like anything else, what you can see a little bit with some of these changes are that there's certain gaps that it's stepped in to help with. The reality is a lot of times it's going to be people that are middle, upper middle class, but from a tax perspective, so if they can keep their income under the 150 for a joint household, that tends to be a middle, upper middle class family.
 
Speaker 1:
Well, it's funny you say that because there was so much argument about, "Oh, they're going to do stuff for just the wealthy," but a lot of the changes that were put in on the Big Beautiful Bill really actually do help lower and middle class like these. So, I mean, I think there's some good benefits to the bill for everybody. There's some things that obviously are a little weird too.
 
Nick:
Oh, for sure.
 
Speaker 1:
You got to be effective with it.
 
Nick:
Yeah, yeah, for sure. The devil's always in the details. Absolutely. That's the case with any legislation that is this large and this comprehensive. But those are the standard deduction and the senior citizen deduction are definitely two that are going to have a pretty substantial impact on a large group of people.
 
Speaker 1:
John, I'm going to go back to you for a minute because we were talking about the Roth earlier. We tossed that in there at the beginning piece there. Again, clearly, this is a good time to think about the fact that it is still alive for a little bit. So, again, Rothing over time is back on that table as we talked about, and so that may be a really effective part of your strategy. You do not want to ignore it because it still could be a limited window.
 
John:
Correct, yeah. So, definitely that's one thing we're looking at currently is what's the right amount of Roth conversions to be doing at this time. So, it is a great time to-
 
Speaker 1:
Any traps in there? Any pitfalls we should be aware of?
 
John:
Yeah, so I was going to say there's definitely a good time to be aggressive with it, but with this new senior citizen deduction, if you're doing some conversions, you want to make sure you stay below those thresholds to take advantage of that additional $6,000 per person. So, now is a great time to be aggressive with this, but at the same time, you want to be cautious because there are some things you could be missing out on if you get too aggressive. So, like we've always said, look at the plan, talk to your CPA, talk to your financial advisor. One of the most important things going into retirement is avoid unnecessary taxes. So, it's just an eroding factor on your money. So, if you can avoid it, that just helps you overall.
 
Speaker 1:
Well, people tend to stay confused if we don't do this about the whole brackets and the steps anyway, right? Because I think a lot of people think, "Oh, I'm in the 22% bracket. That stayed. Yay, cool. I'm still there. I don't have to go up," but every dollar is taxed at that and that's not how it works. That's what I think confuses people. So, when you're talking about maximizing your Roth or something like that, you want to maximize those steps in that bucket, if you will. So, that you just don't pop into the next bracket if you can. Is that accurate?
 
John:
Correct, yes. You definitely want stay within the bracket, not really jump up, and sometimes it's okay to jump up as long as you understand how much-
 
Speaker 1:
Yeah, not every dollar is going to be at 24 if you popped up to 24.
 
John:
Correct, yeah. I mean, we have some clients that are doing some Roth conversions from an inheritance standpoint, so they look at it and say, "Well, I'll pay 22 so my kid doesn't have to pay 30, whatever, whatever it is."
 
Speaker 1:
Right, yeah.
 
John:
Depending on your situation, you really want to pay attention to what bracket you'll be, what your effective rate is, and just don't do it willy-nilly. You want a strategy.
 
Speaker 1:
Yeah, if you have $1 million you want to convert from a traditional 401 over to a Roth, you want to make sure that you're not going bracket busting on that, right? Don't do it all at one time. Again, Roth over time, right? That's the conversation piece there. So, what else is of note in the bills, guys? Nick, what's some other things that jumped out at you?
 
Nick:
Yeah, I think it's definitely less applicable for many people, but they did bring back bonus depreciation for... It's typically used by small businesses or landlords, oftentimes applies to qualified business expense or rental property purchase. For example, it can have to do with vehicles, large equipment where a company can accelerate the depreciation into the year, instead of spreading it out over multiple times, which can help offset if they're having a really good year from an income perspective or just bring down the taxes in general.
 
From the standpoint of a couple of other things, I'll have John speak to the EV credit because he took advantage of pretty much all the EV stuff that you could. But one of the deductions, additional deductions that they had put in place is for auto loan interest deduction. So, it's an above the line. It applies to cars purchased in 2025 or later, and the car has to have final assembly in the US.
 
Speaker 1:
That's a funny one right there. It's like how much of that this qualifies, right? So what's final assembly mean? Is there a percentage break?
 
Nick:
There's definitely cheat sheets out there. Ask your local AI machine.
 
Speaker 1:
Or dealership I suppose.
 
Nick:
Yeah, yeah, the dealers will definitely know, but once again, there's an income threshold on that. So, income above $100,000 won't qualify. From a charitable giving standpoint, there is an above the line deduction for people that do not itemize. So, $1,000 per person or $2,000 for married filed and jointly.
 
Speaker 1:
It's not a lot, but I mean it's still something, especially in the season of giving, right? It's above the line. So, give some money.
 
Nick:
Yeah, exactly.
 
John:
Better than nothing.
 
Speaker 1:
Yeah, exactly.
 
Nick:
For sure.
 
Speaker 1:
Yeah, for sure. Well, what about that EV thing, John?
 
John:
Yeah, so the vehicle EV credit went away at the end of September, so that one can no longer be used. So, that was if you bought new, there was a tax credit you could obtain and then if you bought used, there was something you could actually get as well depending on the value of the car. If you were actually leasing, basically, the dealership got the credit, which would hopefully reduce your payment depending on how good you are at negotiating.
 
Speaker 1:
Got you.
 
John:
But the big one that we've been talking to clients about, and I did myself, which Nick was referencing, was solar panels. So, after 12/31/2025, you will not get that 30% reduction for solar panel installation on your house.
 
Speaker 1:
Yeah, it might not be enough time now, huh? I wonder if you could get that done.
 
John:
It depends how quick your contractor is. I'll tell you, by the time I agreed to mine, I thought it'd be about a month out and I think within two to three weeks, they got me on the calendar and put it in. So, I had mine in much faster than anticipated, which I was happy about, but it's a 30% tax credit. If you put some solar panels on the roof, it just has to be installed by 12/31. It doesn't have to pass inspection or anything as far as I know. It needs to be installed by that date. But I'll tell you, for those that are comparing this, I just got my first bill from the energy company and there still is a fee to be on their grid.
 
In Florida here, apparently with these hurricanes, there's additional fees that we're getting charged to build the grid back up and to pay for the emergency services. A funny conversation with the person, I said, "Well, when it's built back up, does this go away or whenever we're done paying for the cost of the emergency services?" Yeah, that's a good question.
 
Speaker 1:
That's a question.
 
John:
Well, let's take a look at that.
 
Speaker 1:
On ours here in North Carolina, we have storm repair tax or whatever. It's been on there for a number of years now, and it's like, but when the storms are repaired, what then? Ongoing storm.
 
John:
I'm like, "Okay, so this is just an ongoing bill-"
 
Speaker 1:
Pretty much.
 
John:
... regardless of my usage that I'm doing here.
 
Speaker 1:
Another way for them to just hit us with something and go, "Oh, but it's necessary." Yeah. Okay. All right. Well, final one here I thought was interesting was the no tax on tips one, right? Might not affect necessarily your client base, but maybe their kids or grandkids, especially a lot of service industry in Florida. So, no tax on tips up to 25 grand, I think, and that's temporary as well, but that could be interesting. Any final thoughts as we go to wrap this up guys? Anything, Nick, on something we should do now or be effective as the year's winding down?
 
Nick:
I mean, I wouldn't say that there's a lot to do before the end of the year when it relates to this. I think this is a good example though, and one of the conversations that we have with people is that just because a certain strategy is best now doesn't mean it's going to be best in 5 years or 10 years or 15 years. So, when you see a bill like this and with the different changes, something's becoming permanent, something's changing, new rules that are built into sunset, it just shows you how important it's to plan, to build in flexibility, have options both now or later on in retirement, have different buckets of money and really just have a strategy moving forward so that you can benefit no matter what's happening.
 
Speaker 1:
All right. John, final thoughts from you?
 
John:
Not too much. I think we hit mostly everything. I think just being aware of where we are. Historically, tax brackets to me is something to take a look at because I think part of this new bill added, I think, 2.4 trillion of new debt over the next 10 years and I think 4 trillion increase in debt ceiling. So, there's a lot of-
 
Speaker 1:
Future tax liability.
 
John:
There's a lot of trillions getting created here. So, just be wary of what's down the road. So, it's good to just take a look at your overall strategy.
 
Speaker 1:
Yeah, good point. Timelines, definitely got still a couple of years left, but just be effective and get on it as soon as possible because we all know time just zings it right by. So, if you've got some questions, need some help, reach out to the team at pfgprivatewealth.com That's pfgprivatewealth.com and have a conversation with John and Nick and the whole team today and just get started. Don't forget to subscribe to Retirement Planning Redefined on Apple or Spotify or whatever podcasting app you enjoy.
 
You can find all that information again at the website as well or check the show links. There's some just stuff in the descriptions there. So, pfgprivatewealth.com. Guys, thanks for hanging out. Appreciate it. Hope everybody has a great holiday season and happy Thanksgiving everyone. We'll see you next time here on the podcast.
 

The 5 Must-Do’s In Year One of Retirement

Well, you’re retired. Now what? Some people subscribe to the “first year rule” which says that the majority of your best retirement months will all take place in the first year of retirement. So how can you be strategic during that first year and set the tone in the right way, both emotionally and financially?
 
Helpful Information:
PFG Website: https://www.pfgprivatewealth.com/
Contact: 813-286-7776
Email: info@pfgprivatewealth.com
 
Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.
 
Marc Killian:
Well, you're retired. Now what? Some people subscribe to the first year rule, which says that the majority of your best retirement months will take place in that first year. So how can we be strategic during the first year and set the tone the right way, both emotionally and financially? Let's talk about it this week here on Retirement Planning Redefined.
 
Hey everybody, welcome in once again to another edition of the podcast with John and Nick from PFG Private Wealth, as we talk about the five must do categories in year one, or things at least to be thinking about when we get to that first year of retirement. John and Nick have helped many families get to and through retirement, so it's a good conversation for us to have and get some insight from the fellows this week. If you need some help, go to pfgprivatewealth.com. That's pfgprivatewealth.com. Nick, what's going on, buddy? How are you?
 
Nick:
Good, good. Just staying busy. Can't believe it's already almost October, so time flies.
 
Marc Killian:
Yeah. By the time we drop this, it might be closer to November, so time definitely flies for sure. John, my friend, how are you doing? Are you hanging in there with the family?
 
John:
Yeah, doing well, doing well. Family's good, the girls are getting back into gymnastics, I'm trying to get them into basketball, so having some fun.
 
Marc Killian:
Okay, nice.
 
John:
Got some solar panels put up on the house before the tax credit goes away, and I'm excited to try those out, I'll keep you posted.
 
Marc Killian:
Nice. Yeah, look at that, being efficient. So share some of that information with the listeners out there in case they want to, because that's a great point, the tax credit may be going away, I think pretty soon, so maybe something worthwhile.
 
John:
Yes, end of the year.
 
Marc Killian:
Yeah. Well, let's get into this first year conversation, guys. We'll start with some financial, then we'll transition to the more touchy-feely side of things, although it's not that touchy-feely, it's just important stuff to think about. But I guess you've got to learn how to adapt, that's going to be probably the overarching theme, that first year is a heck of a gear change from the working life to the retired life, so learn how to adjust financially, I suppose. John, you want to start?
 
John:
Yeah. So the first few years, I'd have to say, are typically the most difficult for retirees to adjust. I just had a meeting actually yesterday, and the person did a great job saving, actually had a pension, good retirement accounts, and there was this fear of how much should I be spending, what should I be doing? So it was that one month, two month shock of, all right, how do I get a paycheck and what should I be doing with my time? So it's important to take a look at what was on your bucket list, what do you want to accomplish, and like we say with anything, and I know Nick's going to jump into this a little bit more, what's your strategy for income moving forward?
 
Nick:
Yeah. Especially the first year, clients tend to break into A or B as far as the structure of how they like income. So for example, we'll go through the exercise, get the expenses on paper, go through the plan so we've got a pretty good idea of what the expenses are going to look like, and then create their distribution schedule for the first year. And some people like to look at the numbers and say, let's just say that their number works out to them needing income from their investments at 8,000 a month, so some of them, and it's interesting because you kind of see the mindset, some of them will start to say, "All right, well, hey, we built in a bunch of buffers in there, I want to make sure we're not spending too much money, so let's start at 6,000 a month and let's see how that plays out over the first year."
 
And so, one of the first questions that John and I will ask them is, "Will that prevent you from having any fun or doing any of the things that you want to do?" And if it will, then we'll oftentimes suggest that they do the 8,000, and then let's review it at the end of the year and see, hey, did savings go up, did savings go down over that period of time?
 
Marc Killian:
Yeah, that makes sense, because people will often say, "Hey, let me retire on less just so I can make the numbers work," and then it's like, well, maybe you should try that for a few months too, maybe even while you're still working.
 
Nick:
Yeah. We really look at that first year as the test period, and even to the extent a suggestion that we'll make is, especially if they've got maybe multiple credit cards they've used for different things, "Hey, consolidate the house down to one card, you can have the same account for both of you, put all your expenses on there so it's easy for us to track. We'll do a data dump at the end of the year, seeing where the money's actually going." And then, all we've got to do is we look at, all right, the total withdrawals that we took, did the savings go up or did it go down? And we look at the report on that credit card, and then we can mirror the expenses moving forward on that, and we use that as a test drive.
 
Others would say, "Hey, no, I feel very comfortable, I'll still do the things that you want to do. As long as you're okay with me sending you an email and saying, 'Hey, we need 10,000 for a trip,' I'd rather manage the day-to-day expenses coming from that lower amount. And then, if we need bigger chunks to come out for different specific reasons, then we'll just message you and have you send the money."
 
Marc Killian:
Yeah, that's a great point. So that first two pieces, really, these five things we're talking about is you've got to learn how to adapt, learn how to adjust financially to that gear change, and then establish that income plan with that withdrawal strategy so that you're giving yourself the salary really is what I'm hearing, Nick. So some people... Because I was talking with somebody not too long ago about this and they were like, "My wife is super frugal, and so she's scared in that first year to spend anything." And I talked to them a little later on, and it was like, "Yeah, after seeing the salary come in from the nest egg every two weeks or once a month or whatever it was, after a couple of months, she got comfortable."
 
"Okay, well, now we can roll, now I feel better about spending."
 
So that's a great point on how to just watch that over that first year.
 
All right. So then, John, then I guess the next piece would be to maybe start to shift a little bit and start thinking about the purpose. Again, we talk about this being a gear shift in that first year, you're working, you've got your job, you've got your career, many people are all about who they are at work, so what are you retiring to? What is your purpose in retirement? That's a struggle for folks.
 
John:
It is, it is, because you're trying to figure out, where do I fit now?
 
Marc Killian:
Who am I now, kind of thing?
 
John:
Yeah. I can tell you where my parents fit, they fit watching my kids, which they tend to enjoy, so that's where some grandparents are.
 
Marc Killian:
That's where many are, sure, yeah.
 
John:
[inaudible 00:06:27] conversations that Nick and I have, it's like, "Hey, I'm going to spend some time with the grandkids and take them on vacations and watch them," so that's perfectly fine and that's where some people do find where they want to start going.
 
We have others where they look at the first 10 years of retirement as these are the years we're going to go travel and do the things we really want to do while we're healthy enough to do it, whether it's go sightseeing, go to national parks, you're going to have more energy, you can go hiking, you can do things like that, so that could be the purpose is just enjoying the next five to 10 years of really doing some physical activity vacations. Then we have some others that will join some charities that they had an affinity towards, but now they have more time to volunteer and dedicate some time to or build something or just some hobbies. I think Nick, in our classes, does a great job of talking about some different activities people can get into and some resources of now what, what do you do now when it's not time to go to work anymore?
 
Marc Killian:
Right, yep.
 
John:
I'd say the most important thing is just building a routine, so you have a purpose, you have things to do, so you're not just sitting around watching the news all day, driving yourself crazy, because I'll tell you, I think I spent... One time, I wasn't feeling too well, so I had to take a break, I put on the news and I'm like, "Uh-uh, I can't do this."
 
Marc Killian:
No. And if you're doing that with a stock ticker or any of those financial shows, that is not good either. As a person with ticker problems of my own, that's the last thing I want to watch on a daily basis is the stock ticker. So Nick, he set you up for this next one, really the fourth piece is take stock of your health. It's the perfect time in that first year, if you didn't have time to maybe better your health as your career was winding down, man, get on it that first year retirement so you can do the go-go stuff.
 
Nick:
Yeah. And a couple of things, and I'll actually bridge the purpose one and then the health almost from a mental health standpoint, one thing that I've realized recently, and even a little bit with my parents, especially because we're down here in Florida and so many people here are from somewhere else and they've got siblings, kids, whatever, in other areas... I had a conversation with my mom maybe two weekends ago, and her older brother was going to turn 70, he's still up in Rochester, and she was thinking about going up for the birthday to get together, see my grandmother, see family, all that kind of stuff, and then she started complaining about the plane ticket. And I was like, "What are we talking about, $70? Is it $70 more than you thought it was going to be?" Which now is dinner at Chipotle. So the-
 
John:
Don't get me started on it, Nick, I just had dinner at Chipotle and it was about $70.
 
Nick:
Yeah, it comes from somewhere. And the point being is oftentimes when people have moved away, they're used to the day-to-day, they're used to working, they live within their means, they're frugal with their money, they've come to a peace and understanding of, hey, I'm not going to see my family that live in different parts of the country as much, that's just part of how it is, all these sorts of things. And a one-week trip or a five-day trip or just going for a weekend, these little trips and times that you can go and spend and make memories with people oftentimes put you in a much better mindset, from a mental health standpoint, from a, hey, feeling more purpose, like, okay, yeah, I can do these things, I can spend those important times, because... And what I told her was, "You're not going to remember the $70 in six months, you're going to remember the time that you spent at the party, so just go and do it." And so, doing those things are important.
 
I would say one of the biggest positives that I'll see people do for their health as they transition into retirement is having a dog, from the social aspect, from the exercise aspect, getting out, seeing people. I think these days, the kids call it touching grass, and just there's a social aspect to it where you're interacting, because it's funny how an eight-hour day can go by quicker sitting at home on the computer or watching TV than it did when you were going to the office.
 
Marc Killian:
Yeah. And as an animal lover in that regard too, it certainly can help that population, so adopting a dog or whatever can go a long way to helping that kind of stuff, just because you've got the time now. So if you're in the right position to take care of one, that's a great way to have some... Don't be like my in-laws, my in-laws did it and they barely spent any time with the dog, so don't be that way. Do it if you're going to do it, do it right. But that's a great point.
 
Nick:
Yeah. And maybe the concern is by getting a dog that you're worried that it'll prevent you from travel or doing different things, so number one, oftentimes there's options for that, doggy daycare, all that kind of stuff, or number two is maybe it really isn't a good fit to get a dog.
 
Marc Killian:
Maybe not, right.
 
Nick:
But I can tell you there's all sorts of charity, diving into the charity aspect, where I've got friends and/or clients that will go and walk dogs at-
 
Marc Killian:
Volunteer, yeah.
 
Nick:
Yeah, volunteer, go walk the dogs for a day, you're sure to come home in a better mood, that sort of thing. So yeah, there's opportunities. We used to joke, kids and dogs, for the most part, even if they're not your own, usually those are things that people will like and you'll feel better.
 
Marc Killian:
And that's why they're cute, because that way, you don't take them out when they're little. Keep them cute, right, John? All right, John, last piece here real quick, so basically just what I'm hearing is the fifth piece is just test drive the plans, whatever they might be, whether it's a downsizing conversation or relocating or doing the snowbird thing or living on less, whatever's potentially on your radar, test drive it out, and that way, you've got a long-term plan that you have now vetted it a little bit.
 
John:
Yeah, that's really important. I think we talked about that a little bit at the beginning, is just the first year as an experiment to figure out what makes sense, what is your spending going to be, how are you adapting to that paycheck? To give you some examples of what we've seen, where people may want to move to a different area, and it's, hey, why don't you spend a summer there, do a Vrbo for two or three months and see if you like it before you make a big move? Because I'll tell you, from things we've seen, you might make a move, there's a lot of cost to moving and buying something, closing costs, furniture, and all of a sudden, it's like, hey, this isn't for me. It's hard to adjust to those mistakes, so just do a trial run of things. If you can afford it, definitely do it. And even if you can't afford it, just try to figure out a way to do the trial run before you make it permanent.
 
Marc Killian:
Yeah, don't buy the $70,000 RV if you're only going to like the RV life for about a month, maybe just rent one first and see how you like it.
 
John:
Exactly, yeah. If you find out, hey, after about six hours of driving, I can't really take this, or parking this thing, I'm hitting things.
 
Marc Killian:
Exactly.
 
John:
You've got to figure out exactly what works for you and what doesn't, and can't stress that enough is that do your plan, try things out and figure out what makes sense.
 
Marc Killian:
Indeed. Well, the habits, the routines, the choices you make early in retirement will echo through the remaining years as they roll down, so be intentional with your strategy and get a strategy. Reach out to John and Nick and get started today at PFG Private Wealth, that's pfgprivatewealth.com, and get some time onto the calendar, subscribe to the podcast, all that good stuff, so that you catch new episodes when they come out. But certainly, you want to talk about your unique situation, so reach out to them again at pfgprivatewealth.com for John and Nick. I'm your host, Marc Killian. We'll see you next time here on Retirement Planning Redefined. Have a great day.