Episode 033:
Tax Challenges Are Unavoidable. But There Are Solutions!


What is Episode 033 All About?

Buckle up for this one because Host Josh Bretl, founder of FSR Wealth Strategies, is not messing around.

This episode of the Retirement Equals Freedom Podcast is getting down to the nitty-gritty of tax strategy for retirement.

Following up on Episode 32 (which you can find here), as promised we’re getting the solutions and work-arounds for a range of tax-related challenges that all too often leaving us with a compelling desire to bury our heads in the sand.

This pod’s primary message is: Don’t do that! With a little sound financial advice and some planning, we can all set a course to enjoying the fruits of our hard-earned retirement savings.

You’ll come away with a better understanding of the downsides of mutual funds and a new way of thinking about capital gains as something to manage – not dodge at your own expense.

Just in the nick of time, Co-host Dave Schmidt gives us the break we need by introducing another round of “Get to Know Josh and Dave” followed by a DR2R that is somewhat obscure (and macabre) but highly effective!

Enjoy updates, laughs and a whole new understanding of the interplay between sound tax planning and enjoying the kind of retirement you’ve dreamed of – and earned!

If you haven’t already, please sign up for all the news you can use (+ lots of fun) at the bottom of this page for the Retirement Equals Freedom podcast newsletter. You might also want to join the conversation at our private Facebook group, which you’ll find here.

Click here to explore the services that FSR Wealth Strategies offers and schedule a discovery call with one of the team’s CPAs. When it comes to living your best life, it’s never too early to get started!

Sleepy Hollow and the Scott Smith Super Bowl Cocktail

Sleepy Hollow and the Scott Smith Super Bowl Cocktail

Talking Points

Get Ready for Updates:

  • About R=F’s fun newsletter full of common sense tips, articles, podcast episodes and highlights, “Get to Know Our Office” and fun surprises!
  • The second installment of Happy Hour with Josh and Dave featured a new Super Bowl Cocktail, hard on the heels of the popular debut of the Bretl Old-Fashioned.
  • You Asked for It: More about the co-hosts’ glory days of basketball, which are now playing out in next-gen match-ups.
  • A shout-out for the Ice Castles at Lake Geneva.
  • Catching up on Josh’s relationship with his gall bladder (or lack thereof).

Pt. II – The Episode for you! Solutions to the tax-related problems that can (might even inevitably) occur in retirement.

Recapping Common Tax Problems – and Solutions!

  • Problem: Mutual Funds – A popular investment with inherent problems (such as .15% to1.5% in management fees) and distributions over which you have no control, including rebalancing as a taxable event – known as a “tax drag.”
  • Solution: Consider direct indexing portfolios that offer more control over rebalancing decisions.
  • Problem: In order to avoid potentially steep capital gains taxes, people often hold onto stocks and rely on the so-called “step-up” basis tax break afforded by the federal government after death. Problem is, it means you’re not enjoying the fruits of your investment in your own lifetime! Also, what the federal IRS tax code giveth (in terms of the current “step-up” tax break) it can also taketh away.
  • Solution: When you’re relying on the “step-up” basis as a protection, you’re relying on the federal government not to make a change of policy that could render your whole tax avoidance plan moot. A tax adviser can instead help you structure a strategy to minimize capital gains by managing tax brackets, timing of stock liquidation, even charitable donations.

Check Out These Potential Tax-Minimizing Vehicles:

  • Specially designed life insurance policies.
  • Tax-deferred annuities.
  • Strategic spending plans to sequence distributions.
  • Savvy charitable donations.
  • Appreciation versus Income: Differentiate between and manage stocks that are highly appreciative versus those that pay a lot of income.

Phew! That was some hardcore knowledge sharing, Josh. Our ears are sore, which is why it’s definitely time for …

Get to Know Josh & Dave: Josh asks “What is one sure-fire way to grab your attention?

  • Dave: A movie trailer or something advertising something creepy or macabre.
  • Josh: He responds to the power of story and both uses and is attracted to narrative as a path to connection.

DR2R: Dave imagines how retirees with lots of income might get lost among the dark forces of unknown tax burdens. But Josh is like a Good Witch who can help guide them out of the woods (or Tim Burton's "Sleepy Hollow") to clarity (and financial freedom)!

Here’s to some Happy Super Bowl Feasting!

Quotable Quotes

“A lot of people just let (taxes in retirement) happen to them – and then problems can occur.” ~Josh

“People come into my office and they say, ‘I just don’t know how I got into this position’ … They worked hard and all of a sudden when they get to retirement they go, ‘Oh my gosh. I’ve got these problems I didn’t know I had.’ ” ~Josh

“If you have more than a couple hundred thousand dollars, you can (invest in stocks on your own) really efficiently … People walk into our office with millions of dollars sitting in expensive mutual funds when there are much better options.” ~Josh

“I always tell people not to give to charity just for the tax deduction, but if you’re going to give to charity then get the biggest tax deduction possible.” ~Josh

“There’s always this hierarchy in what you’re looking to do and with a good (tax management) plan you can really maximize the value.” ~Josh

“If you’re going to make retirement the best part of your life, (tax management) is something you’ve got to take control of.” ~Josh

“I’ll just stick to my cocktails and my DR2R. I mean, if it weren’t for this cocktail I think I may have run out of the room crying and screaming. That was hard knowledge!” ~Dave

“(Retirees) don’t realize that if they did things in a slightly different way that is more efficient and well planned out that they could be in a much better position … They could give a lot more to themselves, their family, their charity, whatever it may be, if they would just seek out the right guidance.” ~Josh

Episode Extras

About your Co-Hosts

A certified public accountant, Josh Bretl has spent the past two decades growing FSR Wealth Strategies into a firm that specializes in tax-focused retirement planning. Because taxes have the single biggest impact on how much you can spend in retirement, Josh is dedicated to developing individualized financial plans that extend and grow his clients’ retirement savings. Based in Elmhurst, Illinois, FSR Wealth strategically preserves and maximizes resources through tax-efficient strategies designed to fulfill retirement dreams.

Apart from producing and co-hosting The Retirement = Freedom Podcast, Josh's longtime friend Dave Schmidt is a content production and marketing adviser to local businesses and nonprofits. He’s also an advocate for t-shirts, all things 90s (especially the music), short walks and long naps. A serial “wallet forgetter,” Dave nonetheless swears that he has picked up the check on at least one or two meals with Josh over the years. Evidence pending.

Standard Disclaimer:
FSR Wealth Management is a registered investment advisor located in Elmhurst, Illinois. Information and opinions contained in this audio have been arrived at by FSR Wealth advisors. All information herein is for informational purposes and should not be construed as investment advice. It does not constitute an offer, a solicitation or recommendation to purchase any security. FSR is not providing legal, tax, accounting, or financial planning advice in this audio. These views are as of the date of this publication and are subject to change.

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