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I mean, you know, typically the people that are coming into our office are wanting to make sure, you know, as they get closer and closer to that retirement date, that they’re invested properly, right. So, they want to continue to make adjustments to make sure if we saw that 2008 scenario, they don’t significantly take three steps back.
And it’s something that we adhere to pretty much on point that secure money advisors, basically what it means is you take your age, so if you’re 60 years old, 60% of your money should be safer, more conservative 40%, you want for more aggressive, more risk for long-term growth.
But a lot of people that I’m dealing with are saying I’d rather deal with the known tax rate right now than what the future holds and the potential increase in taxes. So, getting money to a Roth and allowing it time to accumulate, I think can always be a good decision. Now, whether or not it’s the best decision for you, we’d have to know a little bit more details.
And inheriting money can be a big taxable event, if not managed correctly. So, it’s important that you really understand the tax implications of where to transfer that money to, to maximize your situation. That’s the first step. Taxation is always the first step, deploying it, whether it be investments or real estate, or wherever it might be, that’s secondary, right, but you know, at the end of the day, you know, a good plan will help you decide where to put that.
And this is where things like the rule of 100 come into play. So, this is where we take 100 minus your age. So, if you’re 60 years old, we take 100 minus 60, which equals 40, 60% of your money should be protected, right, we don’t want a lot of risk with that money and 40% of your money can be in a high risk, growth-oriented investment.
Okay, well, just taking money out is not a plan, we have a withdrawal rate, is there a certain rate of return we’re trying to achieve? How much income are we going to need? What are we going to pay in taxes? Do you have Roth IRA money, traditional IRA money, there’s a lot that goes into figuring out proper distribution, and to properly do it in a way that you mitigate risk so that you don’t run out of money while you’re still alive.
I think people are always very surprised with how much risk they really are taking. You know, a lot of people think they’re a lot more conservative than what they are, we’ll hear a lot of times that the markets have been doing well, but they haven’t been getting the returns.
Yeah, well, you know, the biggest eroder of your wealth is going to be taxes and inflation, you know, and I actually printed off some inflation numbers before we even started the show. And I can’t believe what I looked at car rentals are up 87% on the year, gas prices 45%. I remember that we had a birthday party for Maddox, my little two-year-old. Yeah, a couple weeks ago. And I got to the gas pump, and it was $78 to fill my tank. And just a couple months prior to that was $50 to fill my tank. Wow. So, you’re seeing it and you’re feeling it.
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