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"Designing Your Financial Life Planβ„’" Webinar

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00:02 Welcome

Alright, welcome everybody to tonight's webinar, Designing Your Financial Life Plan. 

It's exactly 6 PM on the East Coast here, and we want to get everybody in and out on time where I'm glad you're with me! A lot of exciting things we're going to be speaking about tonight as far as financial planning and tax considerations, and all that good stuff. So I'm excited to dive right in.

And I see we have about 50 people on the webinar right now, and people are continuing to trickle in. We want to get started though. So welcome, everybody, as you're joining on, before I get started with anything, I want to make sure everybody can see and hear me. Okay, so I'm not just sitting in my apartment talking to an empty screen.

If everybody wants to in the chat box, maybe give a thumbs up πŸ‘ or a yes, that you can see and hear me. Okay, we can keep the party moving along. All right, Stephanie, Adrian, Adriana, Megan, thank you, everybody can sees me, that's good for me to know, as I'm sitting here, and a few housekeeping items. But even before we get to that, so on the right, you'll see my family's to rescue dogs, Zoe, and Zena.

And throughout the next 45 minutes or so you're going to be seeing a lot of me a lot of charts and different financial topics we want to talk about so the more I can show pictures of my dogs, or really anything else, the better this is going to go. So we're going to try to sprinkle them in throughout. And like I said, the presentation will be about 45 minutes long. And you can type in questions at any point throughout the webinar. I'm the only person that can see the questions. So feel free to ask whatever you would like. I'll try to get to them in the moment. If not, we'll make sure we leave time at the end. And before we go any further, I'm actually going to ask everybody on here for a quick favor.

If you could type into the chat box, where you're watching from where in the country, how old you are and what you do for work, that would be super cool. I'll actually read some of those results as we go through. But it also kind of frames how we want to talk about things, different areas we might want to cover. So I'll give everybody a minute. If you want to chat type in the chat box, I'll read some of them out. And my my mom is on the chat. She's only heard me speak like 1000 times and she typed in where she where she's at. So mom, thanks for filling out the survey.

We have a Miami, San Diego, San Francisco, California a lot in California. So a lot of this tax talk we're going to be speaking about will be a big deal. We have a Boston, Boston, all right, a bunch of Boston in a row. We're all over the map a few Atlanta and Washington DC. So that's good to know a lot of people in their 30s spread across the country. And Awesome. Thanks for sharing everybody. Without without further ado, let's get into a little bit more. So first off, who am I? Who are you listening to in tonight's webinar. My name is Gideon Drucker, I'm a third generation financial advisor at my family's wealth management firm Drucker wealth on both a certified financial planner, a CFP, as well as being an accredited investment, fiduciary. Both of those things really, you know, what they mean, when it comes down to it is when we're working with clients, I have to put your interests ahead of my own in everything we do everything we recommend and talk about, obviously a high standard to to be held to when you're dealing with people's money. And I'm really just as a testament to a lot of the great clients that I've been able to work with a lot of great young professionals, Henry's we'll get into that in a second, I was named the top advisor by Forbes by money under 30. Business Insider, my book has been picked up in a few cool spots. I think everybody got to download the first chapter of the book, How to Avoid Henry syndrome. And the book is a lot of what we're going to be talking about tonight, financial strategies to make sure you're looking at the whole picture, you're saving for the future and you're headed in the right direction, as you're making good money and setting yourself up for down the road. So enough about me. Let's get into what brought you here tonight, and what you're trying to get out of this. 

04:00 What Brought You Here? 

So I always like starting off what brought you here? What are you trying to get out of tonight, the next three months, the next six months? And it's probably not that you just finished Netflix today. They keep coming out with more content than I can count. I don't know if anybody's been watching this but about a hockey team out in Sweden. I want to say a junior like Friday Night Lights type show. It's awesome. I just started that. But probably it's not because you ran out of TV shows. So I actually do want you to think a little bit about what brought you here tonight. Yeah, it's

04:25 What You'll Get From This Webinar

Tuesday night. It's nice out here on the East Coast, could have been doing anything but you chose to be on a 45 minute financial presentation. How are you feeling about your financial world these days? What are you trying to get out of not just tonight or tomorrow? Or what happens a month from now but what would it mean to be on a better financial trajectory? How would you feel what it just mean that you're a little bit more confident you have a little bit less stress knowing that this part of your life is taken care of? Does it mean you're feeling confident to buy that first home or to save more for retirement knowing that you have that liquid reserves ready to go I really this whole webinar is about motivate motivating you take that next step, take control of your financial world do one thing that's going to move the ball forward. And the more we think about that, as we talk a lot about your financial world and the different strategies, the better this is going to go. And I feel a few people are typing in kind of what they're trying to get out of this. And that's awesome. More, we write it out, type it out, here's what I'm trying to get through in the next three to six months, the better shape you're gonna be. So thanks to everybody that commented on that. So because of my book, because I've been on a few podcasts and whatnot, we get reached out to by a lot of people, a lot of young professionals looking for help. And everybody has their own story, the way they think about money, the way they think about savings and investments and what they're trying to get out of their financial world. And it's really true, everybody has where they're coming from, it's a little bit different.

05:25 Two Types of People Who Attend This Webinar

But by and large, I hear two fundamental versions of the same story.

The first and maybe it's represented by the person on the right here, that up when our mid to late 20s, early 30s. And we're really making earning more money than we ever have before. It's kind of a new thing. We have a lot of disposable income, we're able to save and max out 401k is and we're not sure if we're doing everything the right way. We want to make sure before we move any forward, right, before we take that next step, am I missing anything? Am I thinking about all of my retirement accounts? My savings, the money in the bank that's kind of starting to accumulate almost by accident over the last few years? How do I make sure I'm taking that next step, and I'm looking at the whole picture, we get that.

And then maybe we're a few years past that we're in our mid 30s, or our mid early to mid 40s. And we've been making good money for a while now. We've been making good money, we've been saving into retirement accounts. And we have stock options and insurance policies, and old investment accounts. And we have a lot of stuff we feel like we're doing a good job of, of accumulating, we have no idea how it's tied together. How does the 401k relate to my savings account relate to my old insurance policy? How do we know that we have a plan that ties all these pieces together and make sure I'm driving on the right road? I hear that probably more than anything, I have all this stuff. But I have no idea what to do next. There's no plan. There's no roadmap. That's really what we want to talk about tonight. That's what you know, when we talk about having a financial plan, it's really looking at all these seemingly the separate areas of financial planning and saying, how do we bring it together one coordinated approach. So you know, your drive, again, I keep coming back to driving on the right road, that you're taking care of everything you need to now you might be looking at this insane investment management, I know exactly what I'm doing in my 401k the investments I'm using, whether it's pre tax Roth, I have that all set up perfectly. But I have absolutely no idea how that ties into the down payment I want to make on my home in two years, or no idea if I have enough disability insurance at work, and how is that related to what my 401k is doing.

That's really what tonight and then, you know, this whole idea of building a Financial Life Plan is all about building a comprehensive plan that looks at all of this in one in one shot. But I gotta be honest, we're good, not that good. We're not gonna be able to cover all of that in one webinar, right? Talk about all those areas and how they fit together in your financial world. So we've made this a two part series, every single person that signed up for this webinar gets a free 15 minute complimentary right fit call with me, where we're going to talk about how some of these financial strategies might be relevant for you how you're thinking about your money, what the next steps look like, and I'm thrilled to answer every single question you might have. That's what that 15 minute calls for, we've blocked out time again, we love when people sign up for these webinars, we got a great group tonight, again, like 61 people now. And we've blocked out time for everybody to take their call and figure out what you need to be doing next, putting that call, again, 1520 minutes, we're gonna learn a little bit about you what you're already doing, what you're not doing, where you're hoping to get to, you're gonna learn a little bit more about us those areas of the plan that we're just not able to get into in a 45 Minute Webinar. And ultimately, we're gonna figure out, are we able to help you? Are we able to move the ball forward, take some positive steps to define yourself in better shape three to six months from now? And if not, what do you need to do now before it makes sense for us to carry on go down that path. So before I do anything else, I'm going to put into the chatbox. A link to this right fit call that everybody can click on. 

09:16 Thank You!

I really do appreciate that everybody's here tonight. But I also know, we all have work and dinner and kids and things to do. So if you need to leave. At any point, I want to make sure you can book your call ahead of time, obviously, we want you to stay up to stay to the end, I think you'll enjoy it, it'll be worth it. But if you do need to leave, we want to make sure to you, you're able to book ahead of time, so you can go on and take care of that. Now we've blocked out the time. And with that, I want to keep the party going and really start talking about what brought you all here, which is what does it mean to design your financial life plan. Now I'm looking at some of the names that we have on here and we actually have a good amount of clients on here, which is great. They've heard this all before and they came out to support what we do. So thank you that that always does mean a lot. But um, everybody we don't know that's on here. You probably saw an advertisement on Facebook, on Instagram on Google for designing your financial life plan. And you thought, hey, that seems like a pretty good idea. Maybe that's something I want to check out something I should have. And I'm cool. Yeah, that's what brought you here. And I won't read any of the slides, you can read faster than I cannot. And I can say it out loud.

11:00 What is a Financial Life Plan? 

But for us, a financial life plan is not a vague kind of random idea out in the world. It's the exact process with every single person that walks through our doors shows up on our screen. Every single Drucker wealth clients starts by completing their financial life plan. And the simplest way I can define it is it looks at everything you're doing and says, Are you on the right track to achieve your goal? Take to achieve your goals, excuse me, taking into account your savings, your expenses, your retirement plans, your insurance plans, your tax coordination, based on everything you're doing, are you actually on the right track? Or do we need to make some changes for your plan to turn out the way you want it to immediately three years from now and 10 years from now. And then this financial life plan really serves as a decision center for all of our clients, they know they can go back to it at any point, maybe we need to change how much they're earning, we need to change their family situation, or they just bought a home to go back into the plan and say, Are we still on the right track? Do we need to make changes based on what's going on in your life. So to ask for a financial life plan should never be a static thing. It's not a set it and forget it. It's not just a PDF document. It's a it's a financial homepage, it's a dashboard that you can go in and make sure hey, yeah, we're still driving on the right side of the road, we're good we can make, we don't need to make any more changes. Now, based on what just happened in your life, especially for all the young professionals, 30-40 year olds on here, we know how much is going to change over time, we want to make sure we're always looking at the numbers as it exists today. And um, you know, kind of the metaphor one of my clients actually made a few months back was that this financial life plan really serves as their you know, his family's Google Google Maps or weights, right? It's kind of think about the last time you had a road trip you got in the car for a three, four hour drive. And first thing you did, as soon as you before you even turned on the car is you plugged it in to Google Maps or ways you wanted to know when you were going to arrive. Now, when you set out, you knew that you weren't going to arrive at exactly that time. Right what it said at the very beginning of the trip, you're stopping for gas, you're getting food, you had a work call, you had to stop the car, somebody had to go to the bathroom. But every step of the way, you knew Oh, yeah, I can still see it, I still know I'm on the right track. And if traffic came up, it'll update in real time. That's what having this financial life plan is about, and our financial life plan or not. That's what having a financial strategy is all about. It's making sure that you're not surprised by any outcome that occurs in your financial world. That's what we're all striving for. That's what really does provide that extra level of financial security, peace of mind knowing that nothing's coming out of the woodwork. So in our financial life plan, we faced it six core planning areas, six areas that we want to go through with every single client, everybody that goes through this process. And I'm actually we took this directly from the CFP board, CFP board has become a certified financial planner, the highest designation in our in our industry means you're a fiduciary and a CFP. So they did a great job of running those courses to become a CFP, you need to pass all six disciplines. That's why we've based our planning process on exactly how they drew it out. And you'll see that two of the two of the pieces are bolded in green tax planning and goal based planning.

13:33 The Money Cycle

And what I thought, you know, having done this a few times, we want to provide as much value on these webinars as possible and going a little bit deeper into these two specific areas. Instead of just trying to do a real quick kind of surface level look into everything. I think it'll it'll get your wheels turning and get you thinking about those next steps. So we're happy to answer questions on anything. But I'm going to focus for the rest of the time today on these two specific areas, because I think it'll be an important thing. And and I always start off, I want to start talking about the money cycle. And part of why we think it's such a big deal is because every single client on this webinar, every single person, everybody you can know is at some stage of the money cycle. And it starts out let's say we're getting our first job in high school, college after school, we're in the accumulation stage, the income that we're making the amount the money we're able to save for the future, it's for just that it's to accumulate, it's the compound, it's to grow for way down the road. We don't need it to pay our bills, right, that's what our income is for. So we want our savings set aside for way down the road. 10 2030 years from now, especially for most of us on the screen tonight. As we get closer to retirement, five to 10 years out, we start entering the preservation stage. This is when we want to get a little bit more serious about protecting and preserving a portion of that those accumulated assets because we might need it sooner rather than later. We no longer have 20 years to let it grow. We want to make sure it's there. It's accessible and liquid when we need it. So we want Start thinking about on taking some risk off the table in some of our accumulated assets. And then we enter the distribution phase. This is typically when we're at retirement and all that money we've accumulated, I don't know if you can see my arms, but assuming that we're holding it all in one pot, that we want to start paying ourselves all that money we've accumulated in 401, K's and savings accounts, we need that money to now replace our income because we're no longer working. So that's the money cycle. Or at least that's traditionally how it's taught and how it's explained. But what I realized, then what we try to explain to all of our clients is, most of us are on multiple stages of the money cycle simultaneously, right, because if you're 35 years old, you might be in the accumulation stage with your 401k or your 403. b, that money is perfectly set aside for retirement, 30 years down the road, but maybe you have, you're trying to buy a home in the next five to 10 years, well, that portion of the money might be in the preservation stage, we're thinking about that a little bit differently. And if we have kids that we're sending to college in two to three years, well, we're getting ready for that portion of the money, maybe it's set aside and 529 plans on that's going to be distributed, and we need that money sooner rather than later. So for all of us on this call, a big part of what we want to talk about is how do we differentiate between money that we're accumulating that we're preserving, and that we're going to start paying ourselves for things that are coming sooner rather than later on stay till the end, we're going to talk about the bucket plan and how this all fits together. But, but this is an important concept when we think about tax planning, which is where we're going to lead into next, because it's not just important how we save the money, but how do we distribute the money tax efficiently as well? So what I always like to ask is, when we're thinking about our taxes, are we proactive or reactive? Now, let's set aside let's assume everybody on this call is paying their taxes. All right, um, I'm gonna save safely assume that's the case. But how many of us are actually planning for our taxes meeting, how many of us are actually looking at the year, the next year ahead the next two to three years ahead and saying, hey, I want to deduct X amount into 401. K's, I want to convert this portion of pre tax IRA money, I have RS use that investing, and that's going to jump up my income, or I want to wait two years to exercise my stock options. Because I know I'm going to take a six month sabbatical and my income will be artificially low, right? We have a lot more control over the way we're thinking about our taxes, that we can add income, we can take money aside, but we have to be thinking ahead of time, we have to be planning for that and and control our tax bill. Again, not entirely, not entirely, so but we can control it to a larger degree than we think

17:35 Taxes

what we see too often, for most people is April 15, rolls around or this year, may 17, rolls around, and we kind of close her eyes and hope for the best. Alright, what came out of my w two, what do I owe? Hopefully, it's not too much, or I get a refund, or for a self or for a self employed or a small business owner. Maybe we have quarterly estimates. And we're just kind of closing our eyes for whenever that comes around. We want to have an exact idea of what are we going to be paying? And when do we want to increase the taxes we owe now? And when do we want to increase the the taxes we're saving down the road? That's what we're going to talk about a little bit more moving forward. So before we get into that, why is tax planning so important? Why are we spending the time talking about this? The first answer is pretty obvious. We all want to save money today, we want to pay our fair share, and nothing more. So if we can save money in taxes in the current year, cool. Most people would sign up for that. But we also want to reduce future taxation. We want to reduce the taxes we're going to pay on money when we take it out of our investments and 401, K's and savings accounts way down the road. And part of how we think about this is when it comes to your investment picture. All we care about is after tax rate of return, right? Because if you say hey, I'm earning 10%, a year in my 401k, or in my investment, well, that's awesome. But if I ask what's your after tax rate of return, how much money is actually ending up in your pocket at the end of the day? Meaning once you've actually paid Uncle Sam, you pay the IRS their share? How much are you actually keeping, that's the only number we care about. So after tax rate of return is how much money is being kept in your pocket. And how much of your purchasing power are we preserving, that's where tax planning really comes in comes in handy. The third part is creating plan flexibility. What we see a lot is that a lot of us are saving money to the bank checking account savings account, and we're putting money into our 401 Ks, but really nothing else. You know, we see that a good amount. And 401k is 403 B's tsp accounts for federally employed all of those accounts you can't touch until you're 59 and a half. So if you plan out plans on retiring early, or using that money for a home or using that money for the kids college, whatever the case may be, if you're not 59 and a half, you can't do so. So saving to other more tax efficient vehicles is a way of preserving your flexibility and not making that decision ahead of time for how you want to take out the money one day down the road. And then lastly, We want to reduce policy risk, we want to reduce the chances that as taxes go up in the future, as they're almost guaranteed to, and we'll talk about that in a minute. As tax rates go up in the future, more and more of your money is not at play for the federal government for state governments to take more and more of your earnings, your investment earnings over time. So that's what I want to talk about for a quick second here. So all right, obviously, we're not mincing words here, government spending is out of control. Currently, we have a 26 actually a little bit more now $26 trillion deficit. And by the way, this was actually even before 2020 and COVID. In 2019, we had an $850 billion deficit in one year. Alright, so even before COVID, this was a continuing problem that you can see in recent years has only gotten worse. Now, you might be looking at those astronomical numbers and saying, alright, why are you talking about this? What does this have to do with me, and here's where it comes into play. Right now, as a country, our debt to GDP ratio is 110% GDP being gross domestic product, or basically the way our economy grows over time, the way we account for that, currently, the debt to GDP 110%. It's the highest it's been in our country's history, except for one time, during World War Two, our debt to GDP ratio was 119%. Other than that, this is the highest again, I'm gonna keep repeating it in our country's history. Now, what happened after world war two to make up for that immediately following World War Two, Truman enacted in 92%, marginal tax rate, meaning above a certain income threshold for every dollar you earn 92 cents went to the federal government. And if you're in California, which I know a lot of the A lot of people on here are even more went to the states. So you kept close to two to 3% of every dollar you made, you know, again, this was going back back in the 40s, and 50s. Now, you might be saying, All right, well, this is what happened way back when but couldn't we just reduce spending? Isn't that the other option instead of the government having to consistently raise taxes in the future? And it's true, that's possible, we absolutely could do that. It's just not very likely. Because right now, as a country, our Social Security and Medicare, those federal programs account for 45% of all federal spending. And even at those current spending levels, both projects are set to expire within the next 15 years, they're going to run out of money. So while it's true that we could lower spending, but being at current

22:28 Government Spending

spending, we're still not in great shape, it's not likely we're gonna have to keep spending at a current rate just to maintain these projects on the book. So so you might say, well, patches already seem crazy high, There's no way they can make it, you know, all that's fine, well, and good, but they're not going to increase taxes anymore. And trust me, I just paid my q1 estimates, taxes absolutely fell higher than ever before. But historically, we're actually in one of the lowest tax environments in our country's history. In fact, from 1936 to 1981, the top federal tax rate never went below 70%, meaning for that entire time period above a certain income threshold 70% of your income went to the federal government today, that's only 37%. So again, historically, taxes really have no direction to go but up.

23:28 Increasing Tax Rates

you might be saying, well, taxes are gonna go up, you've convinced me but not for 2030 years, I don't really have to think about that right now. And, and that's, you know, that's where the error is. Because right now, taxes are gonna go up at the end of 2025. Even if the government does nothing, right, the 2017 tax cuts and jobs act that lower taxes for most people, you know, 2020 was lower across the board in 2017, that's set to expire come at the end of 2025. Government doesn't have to do anything, and we know that's going to happen. So we have this incredible opportunity over the next four years or so. pay taxes now, let our money grow tax deferred tax free, and and save money on taxes over this next five years, that effectively taxes are on sale. So I'm taking a quick break here, and I'm gonna ask a poll. So why are we talking about this? Let me ask you this. What percentage of Americans do you think pays income tax? So if you filed a 1040 if you're gearing up to pay your tax return in the next month or two, you qualify as this? What percentage of Americans do we think pay federal income tax? Let's throw out some numbers and see what we think. 7070 60% 3580 All right, we got an optimistic group here. 35%. So it's about 50%, about 50%. So the top 50% of wage earners in the country, the top 50% are responsible for 97% of all federal income, taxes paid and if you In the top 10%, top 10%, meaning your adjusted gross income was above 145,000, you are responsible for 70% of all federal taxes paid. Now, by the way, this is not a political commentary even a little bit. In fact, it probably makes sense that for a country to operate taxes have to view it this way. But what I am saying is, if you're a part of that income bracket, we do want to make sure we're being efficient and smart with the way we're saving money with the way we're distributing money and the way we're growing the pot. So that's what we want to focus on right now. So if I had to boil down tax planning to up to one sentence, seven words, here it is, not all money is taxed the same. It's the reason that some of these companies, Google Amazon, a warren Buffett of Berkshire Hathaway on the top right, that some of these companies seemingly pay less in taxes that then the employees that work for them, is because all of these companies internalized one idea, it's better to be an owner of capital in America, then an owner of income, capital is treated a lot better, America wants you to save money and grow that money, rather than just let your income keep cycling, right, because capital gains are treated all capitals treated at zero, 15, or 20%. Whereas your income could be taxed at as high as 37%. So income is treated worse. So we want more and more of our money to accumulate, and then to grow with those capital gains. And not only is it true in America, that it's better to be an owner of capital than owner of income. There are certain accounts, certain types of vehicles and retirement accounts and strategies that are actually tax free when we take the money out. And we want to talk about that a little bit as well. So I know it seems like there's a lot on the screen a lot, a lot of moving parts. But it's actually pretty simple. When we think about saving money and allocating resources, there are fundamentally only three ways that we can do so from a tax standpoint, three ways that we can add money into into an account, and then take it out when we're ready to. The first is what we call pre tax vehicles, where contributions are made with pre tax dollars, like a 401k, pre tax 403 B, a pre tax IRA pension for those of us lucky enough to have them not too many people in our generation do. tsp. Again, if you're federally employed, all of these accounts, when you put the money in, you get the deduction up front. So if you made $100 this year, and put $6 into any of these vehicles, cool, you only pay taxes this year, and $94 of income you say on that $6 that went into these accounts. But when you take the money out of all these accounts, every dollar is taxable, including the gains when you take that money out down the road. So if taxes go up, well, these type of accounts, these pre tax, financial accounts become less valuable, because we've effectively kick the can down the road, instead of paying the taxes today, we've elected to pay it down the road on a much larger sum. And if tax rates go up at a much higher tax rate, so something to think about, then we get on kind of the opposite side of the pendulum, where we have tax advantaged accounts.

27:58 Retirement Accounts

These are things like Roth IRAs, Roth 401, KS and Roth 403. B's, both of those more and more companies and employers are offering them so it's absolutely something we want to take a look at FSA is an HSA is when it comes to saving for health related purposes, 529 plans for saving for college cash value life insurance, so you can take the money out independent of what it's for, it just needs to be a little bit further down the road. But all of these types of accounts, when you take the money out down the road, again, provided that you follow the rules, the distributions are tax free, including the gains, so which you never paid taxes on. So tax deferred growth. And if taxes go up in the future, well, these accounts, you basically decided to pay taxes on those accounts today, in order for them to be shielded or protected from the government way down the road. So it's kind of the exact opposite of those pre tax accounts. And then we get to the post tax. Now post tax is kind of in between. These are things when we talk about post tax accounts, we mean like a individual investment account, if you have a stock portfolio or mutual funds. If you have a bank account, real estate, all of these accounts, you're putting money into it from after tax from your checking account, let's say which has already been taxed when you earn that money. So it's after tax dollars. And then each year as you make more money in the account, you have to pay taxes on that, right if you have a checking or savings account and you got a 1099 from your CPA, because you have to pay taxes on those gains, again, provided they are at lower rates 15 or 20% for most people on this call. So it is double tax but at lower rates. Part of why you know, for a lot of our more high income earning clients this becomes a big part of the equation is because there are no contribution limits. So at a certain point, the government stops you from being able to save more money into IRAs or Roth IRAs or pre tax 401k or any of those vehicles. So at a certain point more and more of our money goes into these vehicles, because there are no contribution limits. The IRS does not limit how much can go in here. So it's something we We talk about your kind of as we build out the plan in the future. So, so far, we've talked about how we could be saving money, right? We can use all these different vehicles and age provide different upsides and downsides. Now I want to talk a little bit about, well, how should we be saving money? What's the order of operations? How do we want to be prioritizing the money based on something we call understanding the order of money. So the first level of this free money, if your company is matching a 401k, putting at least the match 100% there, nobody else is going to give you that free money. So we want to take advantage of that, if we're getting gifts or inheritances, you know that money is under a certain amount is tax free as well, I don't really spend too much time walking, you know, talking with clients about that, because we can't control it. We want to take advantage when it's there. But it's not something that we can really build out as part of an active strategy. Then we have the tax favored bucket. Again, Roth accounts, HSA is money that we want to be saving, some of these will actually go in tax free, like an HSA is actually triple tax qualified. So if you have that ability to save into one, you know, that's a really powerful thing. But again, it's paying the taxes upfront to make sure that it's tax free down the road. We have post tax, again, we just explained 23.8% is including the state capital gains tax. And when you hear politicians talking about doing away with capital gains, well, then we'd have to reevaluate because these types of accounts, right now as you earn money, maybe you're paying 15% in taxes, if the capital gains tax was eliminated, that would go back to ordinary income. Again, I'm not saying that's happening any day soon. But just in case you hear it, that's what that is what they're referring to that tax rates would go up to 20 to 2432, depending on where you fit in. Exactly. And then at the lowest level, we have pre tax, IRAs, and 401, K's and qualified plans, that you save money today. But when you take it out, you could be paying taxes on 30% 37%, based on the current highest tax bracket on all that money. Now, guys, this is a real high level kind of how we want to think about it. But everybody really does have their own situation, there are absolutely times that we want to be saving into pre tax accounts, pre tax, IRAs, and 401. K's like, for example, we want to at least have enough money in there one day to satisfy the standard deduction, right, because the first 12,400 of your income if you're single or 24, eight, if you're married, the first that amount of your income is tax free, no matter what government doesn't count it, it's like a free bump before you jump up. So we at least want to have that amount of money in these pre tax accounts. So you saved up front, and then it comes out tax free anyway. But the point of sharing that is we do want to have a deeper conversation about how that all fits together, this is just a high level way of organizing the different tax brackets.

32:52 ROTH IRA's 

So before we move on from tax land, and kind of move on to the rest of what we want to talk about, I want to talk about two specific strategies because they're awesome, they're a big deal. And um, and for a lot of high income earners on here, they're really the only two ways or two of the only ways we can get money into some of these tax advantaged accounts. So if you're making above a certain income for 2020, was about 135. It's now 140,000. If you're single, and it's up to 210. If you're married, if you're above those income thresholds, you can contribute directly to a Roth IRA. IRS doesn't limit doesn't like. So there are two ways that we can get money into Roth IRAs. If you're above that income threshold, we can contribute via the back door, or we can convert so via the back door, so we can open a traditional IRA convert into a Roth, and we can walk through steps on how to do that.

33:44 Backdoor ROTH IRA

And then certain people also have what's called a mega backdoor Roth IRA, the only way we can do this is if your company, your employer has an after tax 401k if they have that, it means we can actually save a lot more money into the after tax 401k and then do what's called an in service withdrawal, convert that money tax free into a Roth IRA. And, and that's a big deal. It's the way a lot of our clients are able to add 2030 35,000 a year into their Roth IRA, despite being above the income threshold. So we can talk a little bit more about that, but just high level, that's a big way that we want to start saving into these accounts. And then we can convert on the other side of the ledger, we can convert pre tax dollars pre tax IRA into Roth, by paying the taxes up front. So let's give an example. Let's say you have 100,000 in your pre tax IRA, alright 100,000 and you say alright, I'm in the 25% tax bracket and and I want to convert this into my Roth, what you would be doing is that 100,000 you're gonna say Alright, I'm gonna pay the taxes on that money today. Let's say you pay it out of a separate account, your checking account savings account, you have the money available, so you pay the 20 the 25,000 out Where 100,000 then goes into your Roth IRA moving forward. And let's say that Roth IRA grows to 500,000, over the next 2025 years. And again, the investment performance is really not the point, it's more comfortable, you can say it grows to 300, or 800. That's not the point. But what you've effectively done is paid 25,000 in taxes today, in order to not pay, you know, 125,000 in taxes, when you take that money out, way down the road, because if you did nothing, and it was still in that pre tax IRA, and you were still in that tax bracket, well, all of those dollars are taxable. So sometimes it makes sense to do what's called an IRA conversion, pay the taxes up front. Again, it doesn't always make sense. But but just another thing we want to think about, you know, as we set up those calls, as we figure out how this all fits together for you, before I move on, I do want to stress both of these strategies, there are no take backs, meaning once you complete a Roth conversion, or a backdoor Roth, you're really not you're not allowed to take the money back out, it's kind of once it's there, it's there. So I absolutely recommend working with a CFP a fiduciary to figure out, does this make sense? where, you know, what are the pieces were looking at? when we're looking at the whole picture? How does your income plan are you getting married is your income changing? That's, that's going to affect you know, how much this makes sense to what degrees. But um, but it's absolutely something that can be super valuable in the long run. So I'm gonna, if anything, I was just saying anything in tax land was interesting, exciting, or you're saying that all sounds great, but that kind of went right way over my head, you know, set up the call, that's what it's for, I'm happy to set up the time speaking about some of these tax strategies, how it might fit in with you, you know, so if that's the motivation to say, hey, I want to get a better handle on my financial plan on how taxes fit in, feel free to click on that link? Well, I will continue to make sure we leave that open. So you can schedule the call from here. And, um, and with that, I'm going to see if anybody has a quick question. As far as taxes go on anything I just said, in case you have a burning question, then we're gonna move on to the rest. We got about 1015 minutes left. So we'll keep this moving. Nobody has any questions. All right, cool. So I'm going to keep it going. And, um, and as. And as people ask questions, I'll try to get to them. And if not towards the end, Matt. married filing separately. Can you do backdoor Roth IRA? Yes, there are just specific rules based on each of your income has to be treated alone for whether the backdoor Roth makes sense. But yes, that by itself does not prevent you from doing a backdoor Roth, the fact that you're filing married separately. a backdoor contributions, if you have specific questions on kind of how it fits in, in your world, you know, set up the call, I'm happy to walk you through the logistics. But fundamentally, what you're doing is adding money to a non deductible or after tax IRA. money goes in there. And then you're immediately moving that or whenever you want. But let's say we're doing it immediately moving that money into a Roth IRA. And as long as you have no other IRAs, that's a tax free exchange. So again, there's a few moving pieces, but operationally that is how it goes. And there are a few questions coming in. But I'm gonna I just want o get through what we want to talk about.

38:17 Bucket Planning

And then we're gonna open it up for as many questions as you guys want. So um, so far, we've talked about saving money, basically, and allocating money from a tax standpoint, we've kind of isolated that variable. And obviously, that's important, but it's not the only thing we look at. So when we think about how we want to save and allocate money for the future, we want to come up with a system that looks at risk and taxes and liquidity and all these different factors that plan. And we do that through our bucket plan. Every single Drucker Wealth clients gets their own bucket plan, which is how we set think about the way we're saving for the future. And it's based on the most important variable, the time horizon of your money, when do you need the money is how we want to dictate how we want to save, invest in plan with those resources. So real high level now soon and later, the now bucket is money we're saving. In an emergency fund checking account savings account, what we want to say is we want to at least three to six months of living expenses sitting in the bank. So if you're spending 4000 a month, well, cool, we want to in between 15 to 25,000 sitting there liquid accessible there when you need it. But at a certain point, it kind of becomes the opportunity cost of not letting our money grow for the future. Because while there's no risk with money in the now bucket, there's also no reward, right? That money with interest rates being where they're at. We're not growing the pot at all. So when we think about money that's meant in your retirement account, let's say what we would call the later bucket. Well, that's money we want to be solely focused on long term growth, compounding interest on capital appreciation, we know we don't need that money anytime soon. So we have time for the market to go up and down for that short term volatility in order to generate long term growth. Because we know we've set expectations, we have our now and soon bucket, we can be a little bit more long term focus with the money sitting in our 401k or Roth, IRAs, etc. And then the soon bucket smoking is something we see a lot of clients don't have as much because we're all driven to save into our 401k. Which, again, great, we absolutely want to do that. And then to the bank. But you know, that covers us for 30 years from now. And the next six months, what if we're saving for a home in five years are the kids college and 10 to 15? How do we make sure we set up investments that are a little bit more accessible and liquid while still allowing us to grow the pot. So that's something we want to think about in the soon bucket that in between period of our lives. And the bucket sizes vary with your needs. I got off the client a phone call right before this webinar with a client that we completed their financial life plan about six months ago. And they're focused on buying a home within the next year like they're looking right now. So for them, everything we're talking about the way we built out their savings approach is really they're saving into their retirement accounts. Because we always think that's important. But every other dollar available that we figured out, they can save based on their cash flow, their expenses, the money they're earning, most of it is just being saved in their now bucket. It's just being saved up. So they know, hey, we're gonna have this nonpayment available, and we need it sooner rather than later. So when we had our checking meeting, we said, Alright, how much have we been saving the last three months? How's it been allocated? Cool, now we have enough for a down payment, we can start focusing on building that long term growth oriented approach, because we know cool, we've checked off that goal over the next year, so we can move on to what's next. So the buckets are always changing the size of the accounts, how much you want to have. That's the idea of having an ongoing financial plan is moving money recalibrating between the buckets as your goals change. So guys, I know we're running towards the end here, we only got like five minutes left, I promise, and then we'll open it up for questions. Um, so part of how we figure out this whole planning process. So we spoke so far, we want to allocate money on tax planning, and time horizon. But you know, the single most important thing and time higher time horizon is part of this, but is what are we planning for? What are the actual goals that are going to make up your plan over the next three years? 10 years and 30 years? So when we build out these financial life plans for clients, part of the onboarding process is figuring out what are your goals? And not just in a high level? Yes, I want to own property one day, or maybe down the road, I'm going to get married. But well, how much is the house is going to cost? What's an appropriate downpayment? What area are we looking at? Do we want to spend a certain amount on vacation each year and feel comfortable and confident doing so? Do we want to build up our cash reserves because we're not quite as comfortable as we need to be? We want to help walk through that I don't expect clients you know, as we're walking through this plan to know exactly what all these goals are.

42:53 Financial Goals and How to Achieve Them

That's kind of why we walk them through these checking these check-in calls. But the more we can articulate exactly what the goals are, what we're shooting for what we're striving for, it allows us when we deliver the plan, and walk you through all the next steps to show Alright, how on track are we? Are we already crushing it based on how you're living your life, you know, to this point, cool, we don't need to change too much we can keep on doing what you're doing. And you can feel great knowing that you're moving in the right direction, or, hey, maybe we more of like a 50% chance of plant success. And we need to make some changes, we need to be saving more, we need to be allocating more to our investments, we needed to let take a look at your benefits package at work because you're not adequately covered or protecting family. Whatever the case may be. We use this financial plan as basically a checkup. How do you take a look at how much you're saving the investments, how it all fits together, and then design an approach that you know, you're not missing anything. I'm gonna skip this for a quick second. A big part of what we do with every client is figure out especially my young professional, this is probably the most important thing we do for them is how much do we need to be saving to hit your goals? Right? If you're saying, Hey, I'm gonna buy a place in three years, I want to retire at a certain point I want to travel, how much money do we need to be saving? based on how much money can you be saving based on your income, your bonus? commission, your stock options, your RSP is how much do we need to be storing away each month in order to get there and how do we create an automated system to actually make sure you're doing it? Right. I'm sure if I asked everybody on here, what was the first account you started saving money to? For most people, it's their 401k. And they kept on doing it. Why? Because it's easy. You set it up day one, somebody shows you how to do it, you set it up, and then you kind of forget about it. That money is saved month over month after month, every single month that's being saved. And you don't have to think about it again. We want to come up with that same sort of approach what we call our wealth creation program to make sure that if we're saying hey, you need to save 5000 a month or 3000 or 2000. We're going to put in place the actual steps to get there, and then break those savings down between our now bucket, our soon bucket, our retirement accounts, and keep it like an ongoing machine. At overtime, each quarterly checking call, we want to say, Hey, can we be saving more or less have things come up, but we want to automate it as best we can. That's how you're gonna end up with most at the end of the day.

45:22 Planning First

So in wrapping up here, you know, planning first. So you guys have probably noticed, as I've gone through this, that I haven't spent any time talking about the investments that drop your wealth uses or index funds, stocks, bonds, all of that. And quite frankly, that's by design. Because I think way too many advisors way too many people out there focus on the investments before the plan. And that gets them into a lot of trouble, where their entire financial outlook just becomes is my money, or my investments are they down. And their whole, whether they're on the right track is dictated by that specific thing. Whereas for us, every single client starts with a financial plan, where they know how much they're saving, they're spending their insurance, their tax break down. And of course, investment planning is a part of that. But if we build out a comprehensive plan, what do you know exactly how it all fits together, the investments are going to come, you're going to we're going to know how much we need to be saving and investing to get where you want to get to. But I think too many people skip all these different areas just to focus on the investments. And, and we want to make sure it's part of the the planning recommendations, that for the same reason that if you go to a doctor before they recommend medicine, or they recommend the surgery, right, but anybody go to a doctor who says within the first 20 minutes, so the first meeting, alright, let's perform a surgery and see what happens. Now they're gonna do a full checkup, they're gonna do an X ray, they're gonna ask you a bunch of questions, and you'll have a bunch of reviews, and then they're gonna lay out what are the next steps? What are the options? And let's figure something out from there. So that's why, you know, I'm happy to answer questions about investments will absolutely talk about it as part of the planning conversation. But for now, we wanted to give some some of those strategies that not too many people are thinking about right off the bat. So guys, it's exactly 645 in New York, and I'm going to open it up for any questions, I'm happy to answer as best I can. Any anything you guys have to ask. So somebody asked just to get the ball rolling, do credit cards count is liquid for emergency, so I'm not quite sure. So, you know, I'm assuming you're saying you don't have credit card debt, but you're just paying off the credit card each month. So I wouldn't count that as liquid savings. But cool. That means we have no debt. And, and we the the amount we might need in the bank is a little bit lower, because we know we are paying off our monthly our cash flow on a on a monthly basis. What's the best? Alright, right, a few questions are coming in. So I'm going to try to tackle some of these one at a time. When is it a good time to? To one is it a good time to invest to invest after you have the six month cushion? So yeah, this is actually a great question. Because, um, I think one of the things I probably hear the most is, alright, I'm making a lot of money, I'm saving a lot of money. I have been for a while. And I've just kind of let that money accumulate in my checking and savings account, because I'm not sure what should come next. I'm not sure. You know, do I open an investment account? Do I put more into retirement accounts? So yeah, that's a big part of what we want to talk about, like we say, six months of living expenses, and then one to two years of plan plan expenditures. But if you have that set aside already, everything on top of that we kind of want to spread around into investment accounts. 401k. So yeah, we want to have a deeper conversation about how that money can be recalibrated for long term growth, now that you've kind of done now that you've done a great job of that, that baseline.

44:00 How Do I Track Down Retirement Accounts?

I may have lost track of change jobs many times over the past few years. So it's actually a great question. I'm definitely not horribly dumb at all. And we see it all the time. When we do these financial plans with clients, the amount of times we can say, you know, we found an extra 401k lying around or an extra SEP IRA or what have you. It's, it's all part of the gathering stage. So we're gonna want to reach out to former employers figure out if you have online access, if you have any statements, we ask you to send those to us when we get started building out the plan on how much money is in there, how is it allocated? And then we'll put together as part of the plan, how do we bring it all together? So you don't have 97 old retirement accounts that you can add any money to? It's not attached to you anymore? So yeah, we do a pretty deep dive and making sure that we're bringing everything together because, you know, we've seen that by the time you're 3035 40. You can you can have five different plans and not know where you know where any of it is. So how does drop you get paid when a client works with you? Great question, Jason.

49:57 Financial Life Plan 

So yeah, so when we do our financial life plan, this big financial checkup we do with everybody that comes across our screen, we charge a flat fee for our wealth builders. That's typically that It's anywhere from three to 5000. It's typically 3000. For our wealth builders, for our under 30 Division, it's a flat $2,000. And it's a one time fee as we build out the planning process, at the end of the plan, which takes three to four weeks, you know, we asked you requested, we asked for your tax returns your 401k statements, your pay stub, your benefits at work, we go through everything. At the end of the planning process, we will make specific recommendations, it's up to you at the end of the process. If you say, hey, this plan was great. I now know exactly where I stand what I need to do. I'm going to continue the party on my own. We'll say cool, good luck. That's totally fine. What ends up happening, like 99% of the time, though, just based on history is we get to the end of the planning process. And clients say, Well, this is great. I know what to do. But can you help me set this up? Can you set up the backdoor Roth, and the Disability Insurance and the savings account, and the SEP IRA because I'm self employed and whatever might come out of it. And that kind of starts the next phase of the relationship. But every client starts with this one time planning engagement, where we look through everything, and we go from there. What if I want to schedule a 15 minute call, but none of the times available work for me? Is there another way to schedule? Yeah, Rachel, thanks. If you want to just shoot me a note, we can kind of go back and forth and figure that out and figure out a good time. We can be flexible. But um, but if everybody you know, any times work, you know, please book that there. Because that makes sure you'll get exactly the time you want. And you're locked in. somebody asks,

51:33 Where are most of your clients located?

So yeah, great question. So we are at this point 100% virtual planning firm. And actually, it didn't just start with COVID. This has been like the last three or four years, I'd say where all of our clients we set up, everything was done virtually the documents, we sign, the actual planning portal, the investment, online access, everything is done virtually. Because most of my clients are young professionals 26 to 45. And, you know, even if you were living locally, or in New York City, maybe you didn't want to come to my office after work or at your lunch break. So we've set this up over the last few years to become 100% virtual. So we have clients a lot out in California, San Francisco, Atlanta, Miami, really all over the map. So where you're located is really not an impediment at all. And, yeah, we're happy to work regardless of where you're located in the country. Everybody, you know, after that initial phone call, if we continue on, we set up a virtual virtual zoom meeting, and we go from there.

52:33 Do We Have Income Parameters for Wealth Builder Type Clients? 

It's a great question. And I'm going to give a little bit of a BS answer. But it's the honest truth is that I genuinely care less how much assets you have, what your net worth is, what your income is, and more about how much can you save, right? We have clients that maybe their income doesn't break the bank, but they're still saving 1000 a month, 2000 3000 a month, those are clients we want to work with, we want to build this out over time. And then we have clients on the flip side that might be making 250 300,000. And they're not they're not saving anything. Yeah, we need to, you know, kind of write the ship. So I'd say income planner is really especially because we're all located throughout the country, and living expenses are different. But I would say if you can save 1000 bucks a month or more than there are opportunities to build out a more comprehensive savings approach, retirement outlook, and with everything we talked about. And sorry, Joe, you got me on a whole rant here. But everything we strive to talk about with clients is it's not about how much you make, it's about how much you save, it's about how much you put away. We have clients that their financial life plans look amazing, they were crushing it, they were on the right track, and their incomes were nowhere near what you might expect. Because they live below their means. They they've been saving a lot of money, they invest aggressively for the future. So the income. Um, it's a moving slide, and I'm happy to talk about it. But we really Stress Stress with all of our clients, how much can we save, that's going to dictate the degree of our financial success more than anything else. All right, well, these. So the the webinar will be sent out at the end of tonight, so you'll be able to see the slides all over again. You can listen to me as many times as you want. So I hope that helps. Got a drop. Great presentation. Thanks very much, Jason probably left. Thank you. I appreciate it. I'm sliding up a little bit to make sure I'm addressing everybody's questions.

54:58 Do I Have to Move My Investments to Drucker Wealth? 

Um, somebody asked, I have investments at another firm Do I have to move them if we do the plan? So great question and no, absolutely not. Um, we do this financial plan for everybody that comes across. And what we found is a lot of people that they made even have, you know, they have an advisor or a lot of times I hear is fine. Say, Hey, I have money in an account. I think somebody is managing it, but I'm not really I don't really think they do plan. You know, they don't talk about taxes.  They don't talk about how much I'm saving build out a strategy. And I mean, one of my first questions is then well, what is that? You know, what are they doing when it comes to your financial outlook? Um, but that's why we focus on the plan. So yes, when we do these plans for clients, we'll do a full investment on it. How are your investments? How are your retirement accounts allocated from a cost standpoint, performance, asset allocation, and we're gonna make our recommendations totally up to you at the end of the process. If you say, Hey, this is great. I love the plan. I know what I need to do, but I want to keep managing my own investments, or I want to keep using ABC. Again, historically speaking, that hasn't happened too often. You know, we want to whap Wow, you throughout the process. But um, but yeah, this can absolutely serve as a financial checkup. And then we can figure out and you can figure it at the end of the process where you want to go from there. One thing does not mandate the other, we think the plan is that important by itself. But quick shout info. Thank you. Thanks, signed up. So um, guys, I know it's getting towards the end here, we still have 40 people on so I really appreciate that. We nobody's left to eat dinner, do anything else. So any other questions? I'm happy to answer what we still have. Over 70% of you have booked a call. So that's fantastic. If you haven't yet, um, you know, book it, I'm happy to speak freely, I try to make sure every single person that books their call, we're giving them something, even if I don't think we're ready, maybe for us to get involved, that you know, we're not ready to set up a plan or invest. I want you to walk away with something you've sat through this whole webinar, we we want you to walk away with a good idea. So I recommend set up the call. We're happy to give you something and then if it makes sense to go on from there. We absolutely will. And I'm going up again, because I do think I missed a question or two. And I did not mean to but they kind of came rolling in, s

56:50 Should I Pay Down My Debt Before Starting To Invest?

So great question. And one, I would say it depends the type of debt student loans if they're at three or 4%, totally different thing than credit card debt at 25%. Right, a mortgage if you're paying two and a half 3%. So the type of that matters, I would Absolut should only say we have credit card debt, we want to take care of that first those, you know the it's almost criminal, but the credit card rates that you're paying are so astronomically high, that it really would be difficult for your investments to make as much money investing that the stuff that you're losing in the credit card, the only thing I would say is we do want to save money to an emergency fund simultaneously to paying off credit card debt, what we don't want to have happen is maybe you're aggressively paying off the debt. But as a result, you have very little in emergency funds. What that means is what happens you lose your job, you get injured, you get sick, and now we have to take out more debt because we didn't have any money saved up. So I would say we want to strike the balance between paying off debt and emergency funds. But when it comes to credit card debt, I would lean paying that off sooner than then investing in In fact, you know, we just had a client I got off the phone a few hours ago, we set up his savings strategy about 4000 a month, but he's still had 14,000 of credit card debt. And he was all excited to be adding to his Roth IRA once I walked him through that his investment account maxing out his 401k. And I said, Hey, all of that is great. We want to help you get there. And you know, we manage money for clients. You know, that's what we do. Of course, we want to do that. But the first the 4000 we're saving, we need to take the next three months pay off the debt because it was a ridiculous credit card rate, pay off the debt, build up the cash cushion, then we can start in the investing strategy. So it does strike a difference depending on the debt, but I hope I answered your question. And, guys, it's exactly seven o'clock. We got a lot more questions now. People are starting to leave. So thank you so much for joining. I hope you book the call. I'm looking forward to speaking with all of you. And yeah, have a great rest of the day. Great rest of the night. Thanks for being with us.