Tailoring Your Financial Jersey for a Perfect Retirement Fit

Plan With The Tax Man

Imagine your retirement plan as a sports jersey, customized just for you. Today, we're exploring how every detail from numbers to names can define your financial future.

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Transcript:

Marc Killian:

Imagine your retirement plan as a sports jersey, customized just for you. Well, today we're going to explore how every detail, from numbers to names, can define your financial future, here, on Plan With The Tax Man.

Speaker 2:

Look up in the sky.

Speaker 3:

It's a bird.

Speaker 4:

It's a plane.

Speaker 5:

No, it's the tax man. He may not be a superhero, but Tony Mauro has saved many retirement plans with his extreme knowledge of tax planning strategies. It's time for Plan With The Tax Man.

Marc Killian:

Hey, everybody, welcome into the podcast, Tony Mauro and myself here to talk about tailoring your financial jersey for the perfect retirement fit. How's that for a little metaphor? Action going on? Tony and I are going to have some fun. It's preseason football time, and so I figured, hey, what the heck, right? Let's have a good conversation about this kind of stuff, Tony. And people are getting excited, geared up for the new sports seasons coming around. Hockey will be back. I'm a hockey fan. So, hockey will be back in about two months. So, why not? We'll have a little fun with this stuff. How you doing, my friend?

Tony Mauro:

I've been good. We're approaching the end of summer here, so state fair time here, and everybody knows that everybody goes out and has fun at that, but then everybody gets into the fall mode. So I figure, yeah, like you, football season around the corner, college football for us here, and everybody gets excited this time of year.

Marc Killian:

Yeah, yeah. We're taping this second week of August, I guess. So, we'll be dropping this this week, I believe. Yeah. So, it's right around that time. College football, professional football's about to hit us. Like I said, several other sports will be back soon. So, good stuff. Of course, baseball's obviously going. Seems like baseball goes forever anyway.

Tony Mauro:

Forever.

Marc Killian:

But let's have a little fun with this analogy, Tony. So, every jersey, well, has a number, I guess, unless... Well, wait, the Yankees don't have names, right?

Tony Mauro:

No.

Marc Killian:

But they have their numbers, right?

Tony Mauro:

Yeah. Numbers, no names. Yeah.

Marc Killian:

All right. So in some sports, though, the jersey number is dictated by the position you play, or at least it used to be. I still have trouble sometimes with some of the football stuff nowadays. It used to be linemen only wore certain numbers, like fifties, sixties, seventies, that kind of thing. And quarterbacks were always 19 and below, kickers, punters. But it's gotten a little looser, I guess, with the restrictions on some of that stuff nowadays.

I think some of the players, when they came from college, where I don't think those rules applied as much, I think they were really adamant about keeping their number if it was particularly lucky for them or whatever. So, therefore, they wanted to keep it, right? You might have a wide receiver that's a number two, even though that didn't used to be the norm. They used to be... Mostly, all receivers were in the eighties, right?

Tony Mauro:

Yep.

Marc Killian:

That was the norm for that position. Anyway, so if you've got numbers tied to the jerseys, well, you're probably definitely going to have numbers tied to your retirement account. At least you hope you do, anyway.

Tony Mauro:

You hope you do. And back to football for a second, some of these contracts these players are getting-

Marc Killian:

Oh, man.

Tony Mauro:

... with enormous money being spent, and they only have a very short career in the NFL, of course. It's not like baseball where you can play it a long, long time. But nevertheless, I don't know if that dictates some of the getting away from some of the traditional jersey stuff because they're making so much they get to decide, but anyway.

Marc Killian:

Oh, well, yeah, you're paying somebody $250 million, I'm pretty sure they let them do whatever you want, right?

Tony Mauro:

Whatever they want. But I do think, I mean, obviously, everybody's got their own number in their head about how much they should have for retirement. And really, I think what we work with them a lot of times on is they tend to focus on the wrong number. It's an important number. Know what you're going to have your nest egg, or your stash, whatever you want to call it. But I think they tend to focus too much on that.

Marc Killian:

Oh, for sure. Yeah.

Tony Mauro:

Yeah. The more important number, really, is whatever you have, what income is that going to throw off? Because that's what you're going to use to pay your bills and whatnot. And if that's not enough, how much do you need to get into the principal or your stash to have a retirement?

Marc Killian:

I like that, stash.

Tony Mauro:

And-

Marc Killian:

I like that, the retirement stash. That's pretty good. I like that.

Tony Mauro:

Yeah. The stash, your nest egg.

Marc Killian:

That's right.

Tony Mauro:

And a lot of people don't end up adding up properly. I mean, we do it with them. Because you got to take income from all sources, not just your 401(k). I mean, there's your social security. There might be a pension in there. There might be something else. Maybe you've just got an account sitting. So, it's important to go over everything so that you know what the right number is and then what that first number is that you focus on because that is important. It's part of it.

Marc Killian:

Yeah. Well, and think about players, taking it back to that. Like I said, sometimes players, they come out of college, and they're adamant that they want to keep their college number for whatever reason, sentimental value or an attachment, good luck, whatever the case is. And so, sometimes we do kind of get attached to thinking a specific number is what we need to have, and maybe that is the wrong viewpoint of doing it.

And you got other players that are like, "Hey, I'm going to this team," and let's say that number is tied to an all-time legend or something. And it's like, "A, you're not getting that number, first of all, or B, have to ask their permission," or whatever the case is. And they're like, "You know what? It's not that big a deal. Let me focus on just having a good career here no matter what my number is." And I think that's maybe the message in your retirement number. While it's okay, I guess, to shoot for a specific, let's just go with the million dollar thing, while it's okay to maybe want to shoot for having a million dollars when you get to retirement, I wouldn't let that be the complete hang-up, right? That's what you're saying.

Tony Mauro:

What I'm saying, yeah, is because depending on where you're at, and hopefully you're working with your advisor on these goals and things, you may not be able to achieve that number. And so, your number might be a little different, even though it's in your head, "I'm going to try to get to a million," there just may not be enough time and money to put aside to be able to do that. So, you got to adjust.

Marc Killian:

Yeah, got to adjust. All right. Well, actually, so I guess thinking on that point, we'll go to the next point, which is, typically, jerseys always have the name on the back. As we just established, the Yankees don't do that. And actually, the Indiana Hoosiers don't do that either.

Tony Mauro:

That's right.

Marc Killian:

They don't put players' names on the back of the jerseys. But, and this might sound dumb, Tony, the way I'm going to word this, but obviously, it's important for your retirement plan to have your name on it. Now, that might scratch somebody's head for a second and go, "Well, yeah. Hello." But think about those places where basically they're providing almost the same exact plan from person to person to person. Is it really your plan or is it one that the company, this larger broker firm or whatever, has deemed a good fit for 80% of people or something like that?

Tony Mauro:

And it's so important to have an individual plan. I think that's where we're going with this, just like the name. And you're right, it has to have your name on it, meaning that it has to be specific to you and your circumstances and what you've got going on in your life, not just be-

Marc Killian:

Yeah. Not like a rubber stamp kind of thing.

Tony Mauro:

Yeah. Yeah, just not the run-of-the-mill, "Well, here, you should be fine. Do this," type of thing. Maybe in most cases you will be, but you want to know. I mean, that's the whole value of working with an advisor, I think, is you want to have a unique plan, and it needs to be based on your set of circumstances, not just run-of-the-mill. Some of it you can apply to everybody-

Marc Killian:

Of course. Yeah.

Tony Mauro:

... basically, but others you really can't because everybody's got different goals and different lifestyles and what they want out of retirement. So, definitely, it's-

Marc Killian:

Well, I think in a world where we have crafted so much stuff, Tony, to be applicable to a large number of people, and I get it, businesses, no matter what the business, tries to make their product, if you will, applicable to as many people as they can because then, stands to reason, they get a chance of making more money, right? Because, hey, if everybody can fit into this jersey, for example, we'll just stick with that, if everybody can wear an extra large, or the majority of people can wear this particular size, then they know they're going to print more of those because they're going to sell more of those, right?

And so, if you're thinking about the brokerage places, if they're like, "Hey, we've got this pretty good plan that really works pretty well for 75% or 80% of people. We'll just rubber stamp names on this and send them in and out the door and make this a little bit more turnstile, turnkey, if you will." And maybe, to your point, maybe that does work for someone, but why risk it when you could get a truly customized plan from more of an independent boutique firm like yourself than just some big box cookie cutter thing?

Tony Mauro:

I agree. And we tell clients it's similar... And you're right, businesses are out to make money. And I always use McDonald's, who's been very successful over the years, but you buy a McDonald's hamburger here versus where you're at or even versus overseas, they all taste the same.

Marc Killian:

Should, right. Yeah.

Tony Mauro:

That's how they make money.

Marc Killian:

Right.

Tony Mauro:

And you don't get to go to McDonald's and say, "Well, you know what? I don't really want what you have. I want this eight ounce fillet with such and such." They're going to shake it out and vice versa. But so tying that back to financial planning, really, is you have to, in my mind, have some individuality. Can't go off that standardization type of thing because I don't think you're going to really... You're certainly not going to get the value out of your advisor if you're doing that.

Marc Killian:

True. That's a good point. That's a good point. All right. So, we would be remiss if we didn't talk about some jerseys, they're pretty hot, right? They look pretty good. You're like, "Okay, these are nice looking jerseys." And then, there's some that are just god awful, right? I'm looking at you, 1980s Astros, with some of the most hideous jerseys ever known to man. Or if you're a fan of the Pittsburgh Steelers, hey, no offense, but sorry, those jailbird ones from the '20s or '30s-

Tony Mauro:

Oh, yeah. I-

Marc Killian:

... they use them to throwback, or they call them the bumblebees sometimes, not a good look. But the jerseys might be hot, they might look great, but the team, it's going to stink this year.

Tony Mauro:

It's going to be bad.

Marc Killian:

They've lost players, whatever. They're in a rebuild mode, whatever the case might be, right? So think about the White Sox of the '80s, right? They often get lauded for their jerseys, but they didn't have a single winning season during that entire period, right? The pinstripe. Or not the pinstripe, the Chicago White Sox of that era... Well, no, they did have some pinstripes too, but different than that.

Tony Mauro:

I think they did have it.

Marc Killian:

Yeah, different than the Yankees. But anyway, so I mean, you want a good... I guess, Tony, do you want a good-looking plan, or do you want an effective plan? I guess that's where I'm going with this.

Tony Mauro:

Yeah. Well, I think overall you want an effective plan. It doesn't really matter if it looks good or not.

Marc Killian:

How many pie charts are in it?

Tony Mauro:

Yeah, how many pie charts, how fancy it is, which is kind of funny. I was just in Denver last weekend visiting my son, and we stayed right near Coors Stadium there for the Rockies.

Marc Killian:

Okay.

Tony Mauro:

He informed me, "I don't follow them," that, "I think they have a second-worst record in baseball right now. The White Sox, I think, are in the cellar, and they've only won like 28 games," he said, "which is awful." But the Coors Stadium there, I went there, and it's cool. It's right in the middle of downtown. I mean, it's got a great vibe to it. But obviously, the product, the team right now is not very good.

So, getting that back to our talk, you're right, I mean, just you have some plan and it's filled with fancy pie charts and things that maybe you don't understand, and maybe it's even thick, so it feels like you really got something, is it effective for you and your situation, like we just talked about? Because if it's not, none of that really matters. At the end of the day, what matters is are you going to get to your goal and be able to do what you...

Marc Killian:

Yeah, exactly. Are you going to be able to? It doesn't matter how good it looks, all the boilerplate stuff that's in there. And even if you've got a good effective plan that looks really nice, if it's more complicated, then you can really, I guess, deal with, or it's not resonating with you, are you going to be as effective with it, right? So, just some things to bear in mind with that.

And look, we'll end it with this one. I'll just tie this last one here together, Tony. Jerseys change over time to the point of some jerseys look good, they go through periods where they do redesigns, and so on, and so forth, whether it's to do the classic throwbacks, or modernize them, or whatever the case might be. And that's why, because the marketing office, the head, somebody in the office somewhere said, "Hey, we need to overhaul. We want to freshen up," whatever. Well, the same thing with your retirement plan. I mean, it's pretty easy, low-hanging fruit here, but that's the reality of doing reviews. That's the reality of getting those annual, or more than maybe annually, conversations in with your advisor so that your plan is fresh, I suppose, and up-to-date, because the financial world is ever-changing.

Tony Mauro:

It's changing. That's the only thing that's the constant there is that. And if you just again go with, like we talked about, some type of plan that is a boiler point or... What do you call it? Boiler, just standard-

Marc Killian:

Boilerplate. Yeah.

Tony Mauro:

Boilerplate. And as things change, and as your life changes, and the economy changes, and all of that, that even tax laws, because, obviously, they're set to maybe have some major changes at the end of next year, that if you're not going to make these changes and change with things as your circumstances change, you're going to be left behind. Not that you're going to end up in financial ruin-

Marc Killian:

Sure.

Tony Mauro:

... but you may not end up with meeting your goals or really having the type of retirement I think that you want. And this is the whole purpose of, I think, being able to work with an advisor and having those annual, maybe more, meetings, talk about that kind of stuff. Most advisors, they're not just going to come in and just basically just talk about the weather and things like that. Most of them are using financial planning software. Most of them are going to be able to tell you where you're at right now, "What's going on? Are we still on track?" after you talk about the craziness in the market and all that.

Marc Killian:

Yeah, yeah. I mean, there's always going to be those one-offs, and the market's always going to do its thing. It's going to be moving around. So, little adjustments are required here and there. Sometimes your life's going to change. Somebody, a daughter's getting married, and it's going to be a bigger deal than you thought, and you were going to pay for the whole thing, and now you got to look at the best structure to change this or that. Even if you've got a great plan put together with Tony and his team, life changes, right? So, you may have to update that.

And of course, for many people, they've been doing it themselves because it's been fairly easy, I guess, for the last little bit when the markets overall have been pretty good on a fairly long run. It's definitely had some blips, and some sizable blips, over the last couple of years, but still, I think a lot of people have been doing the DIY mode for a while. And if you're growing your wealth, Tony, it's a lot easier to be in DIY mode than when you get to actual retirement or getting close to it because it's, again, when you pull one lever in retirement, it affects so many other things. How you pull your income, from where and when, it changes a lot of stuff. And that's where, I think, people start to go, "Okay, this is maybe more complicated than I realized."

Tony Mauro:

Yeah, I agree. And for us, it's using what we call tax-intelligent type of planning so that especially on the distribution stage, like you're saying, there are ways to minimize taxes, because taxes are the biggest chunk that could be taken from you. So, if you just haphazardly start doing that, it's going to work, but you could end up paying a lot more to Uncle Sam than you really needed to legally. So-

Marc Killian:

Yeah, absolutely.

Tony Mauro:

... keep that in mind.

Marc Killian:

Yeah, it's definitely important to get on with an advisor, have a conversation. As always, if you need some help and you've got some questions, reach out to Tony before you take any action. You always want to do that no matter what you hear on any kind of financial thing. Whether it's big talking heads or little talking heads like us, whatever the case might be, you certainly want to have a conversation with a qualified pro. And Tony's been doing this for 30 plus years. He's a CPA, CFP and an EA. And if you're already working with him, you already know that.

If you're already listening to the podcast, thank you so much for checking out our episodes when we do these, and hopefully they provide you with some good nuggets of information and things to think about. And don't forget to share the podcast with others that might benefit from the message as well. They can find it on Apple, or Spotify, or YouTube, and you can find all the information at yourplanningpros.com. That's yourplanningpros.com. You can also just check the show notes of each episode. There's usually some little details in there as well. You can click on the links that way to subscribe to Plan With The Tax Man on whatever app you like using. So Tony, thanks for hanging out, my friend, and getting into the sports feel of this thing, and hopefully your college team does well this year.

Tony Mauro:

So yeah, we'll see you on the next one. My college team, my true love is, of course, Notre Dame, and, of course, then the Hawks.

Marc Killian:

Okay.

Tony Mauro:

Everybody starts out, sky-high expectations, and then it just starts dwindling.

Marc Killian:

Well-

Tony Mauro:

We'll see.

Marc Killian:

Yeah. What is it? Hope springs eternal, and I think that certainly applies to sports fans. They're always like, "It's a new season. We got a shot."

Tony Mauro:

Oh, yeah.

Marc Killian:

Even if walking into it, you know your team doesn't look good on paper, the true fans are like, "Yeah, we don't look that great on paper, but you know what? You can't measure. Paper doesn't measure heart, so we're going to see how they do," or something like that. All right, folks, well, thanks for hanging out with us again. Don't forget to subscribe to us, and we'll catch you next time here on Plan With The Tax Man.

Securities offered through Avantax Investment Services SM, member FINRA, SIPC. Investment advisory services offered through Avantax Advisory Services. Insurance services offered through an Avantax affiliated insurance agency. Investment strategies discussed in this episode may not be suitable for all investors. Please consult with a financial professional.