SPEAKER 02 : 0:01

Welcome to Retirement Unpacked with Al Smith, owner of Golden Eagle Financial. You want a retirement plan that alleviates your fears about the future so you know your money will last. As a chartered financial consultant, Al Smith will help you find a balance between the risk and reward of the market and the safety of your retirement income. And now, here’s your host, Al Smith.

SPEAKER 03 : 0:25

Welcome to another program of Retirement Unpacked. We’re getting into spring, a little bit nicer weather. Thank you so very much for tuning in. There’s other things you could be doing, I’m sure. And this time of year, many of us are thinking about taxes, especially if you haven’t filed yet, if you’re thinking about one thing or another, or if you’re working with your preparer gathering up some information because there’s not much time left. There’s a ballpark a week or so. And I think it is very timely then to talk about taxes from A strategic perspective, like 30,000 feet, history of taxes, what are taxes all about, what are the new tax rates, what does the future hold for taxes? Well, those of you who are Christians know that the Bible often refers to taxes, and Matthew, the first gospel writer, was a tax collector, and tax collectors were hated in that time because they collected the taxes that Rome, the governing body, wanted them to collect, and they collect additional taxes to line their own pockets. So they were very hated. They were put in the same bracket as prostitutes back in the time of Jesus. But getting a little more current, we are all familiar with the Boston Tea Party, and their statement was taxation without representation. In other words, they were taxing the tea that the colonists were purchasing and using, but they had no representation, no governmental representation in England. And that was the reason primarily for dumping the tea into the sea. And not too long after that, 1789 is when our Constitution was adopted. And one of the provisions in that Constitution, it was forbidden to have any direct taxation of the people. Taxation was done in other forms through excise taxes and tariffs and things of that nature. Not long after that was the first example of tax rebellion. That was the Whiskey Rebellion in 1794. Pennsylvania farmers had a serious excise tax on their whiskey. And as a result, there was a whiskey rebellion, and some of the men, the federal agents who were levying this tax against the Pennsylvania farmers, their homes were actually burned down. and through military action the whiskey rebellion was put down and i don’t know if the taxes on whiskey was changed at that point in time but that’s one of the very earliest examples of a tax rebellion so to speak and the taxes are country levied there were really no personal income taxes until near the Civil War. There were duties and excise taxes and things like that. The War of 1812, for example, those were duties and excise taxes levied on various goods and imports and things of that nature that funded the War of 1812. And after that, it wasn’t until 1861 when the Revenue Act was passed. And essentially what that did, it taxed individuals’ income if that income exceeded $800. At that same time, 1861, the IRS was founded. Now, that Revenue Act that was passed was primarily designed to pay back the debt that was incurred during the Civil War. The Civil War was extremely expensive. That Revenue Act that was passed lasted until 1872. So for 11 years during that time was the first time our country ever had an income tax. And our country operated purely on tariffs and levies and excise taxes on goods and services up until 1913. That is when the 16th Amendment was passed, and the 16th Amendment essentially authorized the federal government to tax individuals’ income. And the first individual’s income who was taxed was everyone whose income exceeded $3,000 per year. That’s the 16th Amendment, 1913. Now, to put this in perspective, 1% of the population of the United States had income that exceeded $3,000. I don’t have the other statistics of what most people’s income was during that period, but it appears that 99% of the people who lived in the United States had income below $3,000 a year. Now, once they got a little further along, like toward World War I, about 5% of the people were paying income tax, and they also increased that in order to tax estates and excess business profits. Now, I’m not exactly sure what level constituted excess business profits, but By that time, like 1913, 15, 1917, 5% of the American people were paying tax, including estates and excess businesses. That is how the taxation of our country began to grow and grow. From 1% paying tax in 1913, as little as a few percent, Years later, 5% paying tax in addition to estates and excess business profits, which brings us all the way to the New Deal. President Roosevelt, in order to… get the economy going again, which I’m not sure I think economists would argue excessive federal spending didn’t necessarily get the economy going again. It was World War II that got the economy going, and they passed the New Deal. And by World War II, they actually had a top tax rate of 79%. So some of the taxes in the past were incredibly punitive, to say the very least. Brings us all the way to 1940. People with as little income as $500 were taxed at 23%. The top bracket was 94% in 1940. We get to 1945, 43 million people were paying tax. So going from that 1% to 5% to 43 million people, I apologize I don’t have the contextual reference to know what the full population was then, but 43 million people, that’s a lot of people paying tax. I’m thinking that’s probably… 90% of the workforce, if I were to guess. And to put that into context, that brought in 43 billion by 1945. The 43 billion in federal tax revenue in 1941, it was only 8 billion. So considerable growth in federal revenue. Bringing us to the 1950s, the top tax bracket in the 1950s was about 80%. So some of the taxes that we enjoy right now, I wouldn’t say taxes we enjoy. I don’t know anyone who enjoys taxes. But to put it in perspective with the tax rates, there are no tax brackets that are anywhere near 80% right at the present time. Ronald Reagan in 1981 passed what’s called the Economic Recovery Act. And if any of you have heard of anything called the Laffer Curve, what that did, when Reagan passed this act, the Economic Recovery Act, tax rates were lowered, but tax revenue actually increased. The 1980s was an economic boom in our country. A lot of people were working. Businesses grew. And besides lowering personal tax brackets, the Economic Recovery Act, it increased investment. That was a very healthy time in our country. The economy grew. People had money to spend. And so forth. That was a very good economic time in our country. 1981, the Economic Recovery Act. That brings us nearly up to the present when the Tax Cuts and Job Act was passed. That’s the one that we are presently under, the Tax Cuts and Job Act. That was passed in 2017 in President Trump’s first administration. Prior to that, the higher tax brackets were considerably higher. than they are now. And essentially what that did, the Tax Cuts and Jobs Act, it was very similar to what Ronald Reagan did. It lowered the tax brackets at all levels, 10%, 12%, 22%, all of those levels, the tax rates were lowered. But The Laffer Curve, if any of you are economic buffs, that is a concept that to a certain degree, if you lower tax rates, the revenue to the government will actually increase substantially. And the reason for that, it stimulates the economy. When tax rates are lowered, more people end up working. Businesses can grow their businesses and hire more people. So even though tax rates are lowered, the total revenue that goes into the federal coffers increases. And that is called the Laffer curve. I think his name is Art. Art Laffer is a very famous economist. And I also recall once during the Obama administration when they were talking about having tax rates slightly lower for people in very high brackets. And when it was brought to Obama’s attention that, well, if the tax rates are lower on these people, people who have this really high income, the revenue to the government would actually increase. And Obama’s answer to that was, well, it’s a matter of fairness. In other words, people with high incomes should pay higher tax, even if it means less revenue to the federal government. And this isn’t a political discussion. This is history about taxation. That brings us up to the present. We’re presently under the same rules, the Tax Cuts and Job Act that was passed in 2017. Now that is set to expire at the end of this year, unless Congress passes a law to make it permanent. But one nice thing about this is each year, the tax rates have been made more modest. The standard deduction has increased each year. The brackets, the amount that you can earn and still remain in a smaller bracket, that has increased also. And before I came on the air, I downloaded the 2025 tax summary. What’s interesting is is with the current tax rate, for example, a couple who is married and they’re filing jointly with the current standard deduction for a couple is $30,000. They can actually earn $53,000 gross tax. and remain in the 10% bracket, but they would only be paying 10% on $23,000 of income. So that is pretty generous, but it’s also difficult for a couple to live comfortably on $53,000. I’ll have lots more information about taxes and ways to save on taxes and some of these brackets in 2025 after the break.

SPEAKER 01 : 14:50

Retirement planning with Golden Eagle Financial isn’t about products or spreadsheets. It’s about you. Al Smith spends more time listening than talking when he meets with clients. He understands that before he can build a strategy, he must understand the person for whom it’s designed, fears, dreams, wants, needs, and comfort with risk. That’s why clients trust Al Smith with comprehensive retirement planning, from pensions and Social Security to owning property or donating time and money. Al wants to know the things you really want to do with your money in retirement. Once he understands you, he will use tools to help you understand different scenarios to fine-tune your plan. Al Smith says it’s easy. Once he knows someone, the planning is simple. Call Al Smith of Golden Eagle Financial if you’re ready to make your dream a reality. No pressure, no upfront cost. Just a conversation and a unique plan crafted for you. Find Golden Eagle Financial on the KLZ Advertisers page to start the relationship your nest egg deserves. Investment advisory services offered through Brookstone Capital Investment LLC, a registered investment advisor. BCM and Golden Eagle Financial Limited are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents.

SPEAKER 03 : 16:06

welcome back to retirement unpacked with april 15th looming in a very short period we’ve been talking about taxes and i was just talking about the new 2025 tax summary i was talking about the lowest 10 percent bracket for married couples married couples to repeat that can earn $53,850 and still be in a 10% bracket. They will also have a standard deduction of $30,000, so that means the married couple would be paying tax only on about $23,850 and still remain in the 10% bracket. The next bracket which is only slightly higher is the 12% bracket. A married couple at this level can be earning, it looks like, $127,000 and still be in the 12% bracket. This is assuming the standard deduction, which for married people is $30,000 coming up in 2025. And the standard deduction replaced the old itemized deductions. It used to be that a lot of people had to keep track of all their medical expenses, all of their charitable donations, all of their property losses and things of that nature to determine if their itemized deductions exceeded the standard deduction. And when that act was passed, the Tax Cuts and Job Act in 2017, The standard deduction was made much, much larger, which made tax preparation much easier for tax preparers or individuals who were filing their tax because rarely does anyone need to do that. the itemized deductions, and so forth. Some of the other brackets, for example, the 22% bracket for married couples, that actually goes as high as $236,000 a year, and you would still remain in the 22% bracket. But the brackets are graduated, so someone who earns $236,000 a couple, a large, about a third, no, but just about half of their taxes would still be in that 12% bracket. So if anyone would like a copy of this 2025 tax summary, get in touch with the radio station. They will get in touch with meet you. And they’ll also get in touch with me, and I will email this to you. It’s a 2025 tax summary, and I’m going to itemize a few of the things that are in here. Obviously, all the tax brackets, the very highest bracket is 37% for married couples. That’s of income over $780,000 a year. A mid-range bracket, 24%, for example, that goes all the way up to $400,000. So with the Tax Cuts and Jobs Act, the tax brackets are made a bit more favorable, to say the very least. um some other things that you might want to know about is let’s say for example the child dependent tax credit it’s two thousand dollars per child and up to seventeen hundred percent of that is refundable also there’s 500 per dependent if there is a qualifying dependent in the household And there’s a deduction for state and local taxes that you pay that you can deduct on your federal tax of up to $10,000. IRA contributions, if you’re under age 50, the maximum you can put in is $7,000. Age 50 and over, it’s $8,000. And phasing out for IRA contributions, in other words, if your income reaches a certain level, You’re not allowed to put money into an IRA if you have another retirement plan. And the level of that for married filing jointly is about $176,000 when you figure in the standard deduction. There is also information for various retirement plans. What’s the maximum you can put into your 401k? What’s the maximum you can put in if you’re over age 50 into your 401k? And for example, if someone is in his 60s, you can actually put as much as $34,750 into a 401k if you are age 60 or older. So if someone has very healthy income and they haven’t saved quite enough for retirement, this is extremely, extremely helpful. But this is extensive. I’m not going to go through the entire tax summary because there’s a whole lot of information here. There’s the break at which you can deduct premiums for long-term care. It has the maximum wage limit for Social Security. and just a whole lot of other information. But again, if you’d like a copy of this, get in touch with the radio station and tell them you’d like the 2025 tax summary. I can email that to you, and if you don’t do anything with email, I can put it in direct mail in an envelope with my business card. So what all does this mean to us about taxation? What can we do to minimize our own personal taxes? Well, one of the resources that I really like to do is to use Kiplinger. Kiplinger has great ideas, financial ideas, retirement ideas, and so forth. And one of the things they talk about is living more comfortably in retirement. And I’m not suggesting this to everyone, but they’re talking about a minimalist approach. And that concept has been around for as long as 80 years. And it’s not just about getting rid of a lot of stuff that you don’t need. It’s about making your life a bit simpler. For example, 30 or 40% of retirees move into a smaller home when they retire. That may involve relocating, but if it’s a smaller home with less value, their property tax is going to be less. Their maintenance is going to be less. Homeowner’s insurance is going to be less. If they decide to relocate, I know some states are very favorable to retirees. Wyoming, for example, does not charge state tax on pension income. nor do they charge tax on Social Security income. So if someone does relocate, in addition to being close to family, think in terms about what is this new state’s income tax? What’s their property tax like? Is the real estate itself less expensive in this new state? Vehicle registration, if you have a late model vehicle, Your registration can be quite expensive if you live in Colorado, especially if you live in a municipality like Littleton or Columbine or something like that. Some other things. that people think about to improve their tax circumstance if people are approaching retirement but they have a certain window before they retire they can create a strategy of converting traditional ira to roth now some accountants and some experts say well don’t do that you got to pay tax on the whole the whole thing all at once Well, I’m not suggesting you convert an enormous IRA all at once to Roth, but you can do that incrementally and stay in the same tax bracket. But the point is, if you retire in your 60s, you may be around for 30 years. That Roth IRA can grow considerably during that time frame. And you can make the choice of paying tax on the seed rather than the harvest. So if you have $100,000 IRA, you pay $20,000 in tax, ballpark estimate, but that remaining $80,000, that could grow to half a million, $750,000 over the 25, 30 years remaining in your life. And then the question becomes, Do you want to pay tax on $100,000 or on $500,000 or $750,000? Because that is the concept, that is the thinking behind converting traditional IRA to Roth. Now, if someone’s already in their late 70s, I don’t necessarily suggest that because it takes a certain window of time to make that attractive. Again, if you would like to have a copy of the 2025 tax summary, all the tax brackets and the breakdown of how much you can put in your retirement plan, give my office a call at 303-744-1128. You can also call that number if you’d like to have a conversation with me. Thank you for tuning in. God bless you. Hopefully you’ll be here next week. And the market has risen today. That’s a good thing. And let’s continue to pray for peace in the Middle East.

SPEAKER 02 : 27:00

But are offered and sold through individually licensed and appointed agents.