TRANSCRIPT FOR THE SEPTEMBER 17, 2016 “ON THE MONEY” SHOW

Hosts: Gary Abely, CPA, CFP®, AIF® and Nancy Hecht, CFP®, AIF®

Yes, indeed, it’s the Ask the Expert Saturday morning on WDBO.  And this is On The Money, brought to you by Orlando’s oldest and largest independent — Independent firm of certified financial planning professionals, the Certified Financial Group in Altamonte Springs.  With us this morning, we have two of the twelve certified financial planning pros.  Say good morning to author of The Hecht Effect and A Man is Not A Plan, Nancy Hecht.  Hi.

Hi.  Good morning.

You look fine this morning.

Thanks.

Ready to go work out huh?

Yes, I am.

Maybe we can have time to talk about that knee of yours.

Maybe.

Be careful.

Sort of boring.

The equally as lovely Gary Abley —

Lovely Gary.  Morning all.

Is in the studio this morning.  Gary Abley is not only a certified financial planning professional; he’s also one of the most popular guys in the group because you’re a CPA as well.

Well, we get some tax questions from time to time.

So you might be able to help address that as well.

Absolutely.

We’ve got the experts in the studio, and you can talk to them right now.  Here’s the telephone number, 844-220-0965.  Yes, we’re live this Saturday morning.  844-220-0965.  Or you can text us at 212-32.  212-32.  Or if you’re so inclined and you want your voice to be on the program, you can use the open mic feature that you’ll find on the News 96.5 app.  Gary, refresh my memory — geez, I’ve only been doing this for 20 years now.  Refresh my memory, what are we taking calls about?

Well, we’re here to take calls about a number of financial topics.  It could be questions about Social Security.  We have on our website, this week, our info, must know, Seven Social Security Myths and the fact that, unfortunately, Americans, when they call the Social Security office, oftentimes don’t get the right information.  And there really is hard to find good sources for planning for Social Security.  But we’re also going to talk about your questions regarding retirement planning, cash flow, tax planning.  Maybe you have a question about life insurance, annuities, long-term care insurance.  So we’re here to take any of your questions, risk management, investments, etc.

Here’s the telephone number again, 844-220-0965.  844-220-0965.  Or text us at 212-32.  Speaking of Social Security, you’d think with all of the money that we pour into Social Security, all of the people that are involved, it would be so easy to understand, huh, Nancy?

You’d think, you’d think.  I took a call yesterday from a listener who had a question about Social Security.  His full retirement age for Social Security is age 66 and he’s going to defer to 68.  He calls the Social Security office to ask what would his wife get if he passes on any time after age 68.  What would you say?

Well, if he was going to defer to 68, then she would get whatever his benefit was at the time he passed, so assuming he passed at 68, you would get that amount.

So it’s his full retirement age, plus 16% on top of that because he’s deferred for two years.

That’s right.

Yeah.

Which is the correct answer.

Yay.  I passed.

Not what he was told by Social Security.

Well, of course not.

Wow.

Like the IRS.

Social Security told him that his wife would get the survivor benefit and his retirement age amount, not the deferred amount.

And that’s the shame and it’s the same with the IRS.  And frankly, we have made things complex to where you fill out a tax return, and I think annually, they have a survey the Wall Street Journal publishes, and they give the same tax information to 10 different CPAs.  These are licensed accountants.  And oftentimes, they get eight or nine different answers.  The same is true when we call Social Security.  It’s just a shame because people need that information because, oftentimes, I think the stat is that Social Security provides about 40% of what people need in retirement.  So if they don’t maximize that, they’re going to be in a world of hurt for a very long time.

And they’re getting so much bad information from the people who are hired to get them what is supposed to be proper information.

Is Social Security outsourcing to India yet?

No.

I don’t think so.

No.

Just wondering if maybe that’s where they’re getting their info.

I hope not.

Well, you hear so many complaints about this department in the government, Social Security Administration, but they do perform a valuable service.

Well, they do, and one of the things that somewhat irks me is that you’ll hear that they’ve never reduced benefits and people forget now that your Social Security benefits are — yeah, you’ll pay taxes on either half or even up to 85% of those benefits.

Yeah.

And so one of the things that we talk about — and Nancy and Denise in our office have a Social Security workshop.  But one of the most integral parts of planning for Social Security is planning your taxable income.  Because if you have, say, five years between age 65 and 70 where you can live off of assets outside of your retirement account, you can spend those five years converting your IRAs into Roth IRAs so that you have less taxable income when you have your required minimum distributions at 70.  And then you may avoid taxes on those Social Security benefits altogether.  We’ve seen cases where people will say, well the tax savings are 20% by implementing this strategy, and they’re not even factoring in the benefits of not having those Social Security income taxed at a later date.  So with proper planning, property tax strategy planning, folks can save hundreds of thousands of dollars over their lifetime if they incorporate tax planning and Social Security planning together.  So it’s really important, when you’re making that decision.  Come into our office, attend the workshop.  Meet with a planner, talk about your unique situation because it’s so important to make that right decision.  You don’t get a second chance.  You used to be able to pay back your benefits and change it, and now that window of opportunity has narrowed.

At these workshops you’re talking about — I’m going to play devil’s advocate real quickly.

Alright.

Nancy, Gary, what are you trying to sell me here?  Are you going to twist my arm to try to sell me something?

I’ll tell you.  We are trying to sell information.

There you go.

We’re trying to say come and see that we actually have a brick-and-mortar office.  We’re real people.  And we have unbiased up-to-date, as much as we know, information to provide.  And that’s it.

Yeah.

Right.  And one of the nice things about our office, we have this — I say a super duper compliance officer.  None of us do these workshops to sell anything, but he actually reaches out to one of the attendees and he confirms that because we want to have that terrific reputation we’ve earned over these 40 plus years so that people can come and leave their checkbooks at home, and not feel pressured at all.

Alright, it’s coming up on 9:14 on News 96.5, WDBO.  Dave Wahl is in the News Center.  He’s got the latest from the presidential campaigns.  Of course, he’s going to look at the all-important weather forecast for the weekend.  Dave Wahl is coming up in about five minutes from now, so stick around for that.  Right now, let’s talk to David in Osceola County.  Good morning, David.

Hey, good morning.

Good morning.

Good morning.  What’s your question, David?

Are you familiar with a service contract?  What it is is my mother’s 98 and had to go to the nursing home, and they set up a service contract for me and my sister.  My question is, are you familiar with that service contract because we got a lump sum of money because she had — I guess they turned it from 98 — well, she was 97 and a half, whatever it was.  And so they figured the two and a half year period from that hundred.  And then times, I think it’s $5 a day, $25 an hour.  It comes to I think 2,550 a month, 33,000 a year.  So they figured that and they gave us that and a lump sum of money.  And so my question is —

David, who gave you that lump sum of money?  I’m a little confused.  Help me out.

My mother.

Oh, your mother, okay.

Well, my sister has the power of attorney and she wrote the checks, one for her and one for me.  And we were directed by — we had a law firm — actually, had two law firms involved in it.  But my question is, how do we — what do we do when — if you’re familiar with it, that is, what do we do with it as far as when it comes to taxes come in April?

And the money came from your mother’s account or did it come —

Yeah, yeah.  It came from her accounts.  It’s called a service contract.

Who was providing the care?  Was it you and your sister providing the care?

Well, we were when she was home and then still the service contract says we’re going to spend five hours a day —

Okay, I understand now.

Alright.

So what really is being — what this contract is doing, it is getting money out of her estate and, if she should ever need Medicaid, they can’t claw that money back because she was paying for care at a fair price.  It just so happened to be two family members.

Right.

So there’s nothing wrong with that type of an approach.  The question I think you’re asking is how about taxes.  Well, you are being paid for a service and that is taxable income.  Now, if —

Do I have to pay taxes on the full amount, or do I pay it per the contract, 33,000 a year?

Whatever income that each of you derived from that contract, less all reasonable and necessarily expenses were producing that income.  For example, if you incurred expenses to provide that care such as doing laundry, food, etc, you can deduct that from that income.

But you have to have copious records.

Yes.  Especially <Inaudible>.

If you were ever to get audited, yeah.  But it is, David, taxable.  I’m in a similar situation right now.  I’m the executor for my father-in-law’s estate and I have not been paid.  And I’ve been told my the attorney I should have been taking payments and it will be taxable.

Sure, because your providing a service.

Right.

Okay, that’s all I wanted to know.

Thanks for your call, David.

Thank you, David.

Thank you, David.  Here’s the phone number if you’d like to take that line —

And we’ve seen more and more incidences like that.

Yes, we could, and that brings up something, if we’ve got a moment, Kirk.

Sure.  Go ahead.

We’ve seen it — I know Joe touched on this over the last couple weeks, but it is worth repeating.  We had a scenario where somebody went into a hospital.  Now, imagine spending six nights in a hospital.  You’re admitted.

I know what it’s like, yeah.

Okay.  You leave the hospital and you need to go into a skilled nursing center.

Or a rehab.

Or a rehab, yeah.  Now, in that particular case, Medicare will pay up to 100 days for that care.  But now, let’s say you take a different person and they’re in the hospital, they have a hospital bed, they’re not admitted, but they’re there six nights receiving treatment, receiving medications.  But they’re in what we call observation status.  They later leave, go to a skilled nursing center, they’re going to be out 40,000, 50,000 for that new few months’ stay.

Whoa.

And the difference — it’s estimated that 1.4M people are going to get a letter from Medicare warning them that they are being treated as observation status.  But how good does that help you when you’re in the hospital and you’ve got a letter in your mailbox at your house?  So everyone needs to be aware, on Medicare, that if you are under observation status instead of in admittance status, is you have — you need to open up the wallet or get that doctor to make the case that you should be admitted.  That’s a big issue.

That’s something.  Wow.

And you know why they’re not admitting people, and this is a real tragedy.  We have basically the bouncy system.  You have Medicare auditors getting a piece of the action for the fraud they find.  And so the hospital’s are getting nervous that they’re going to have these claw backs from Medicare, and so they’re being very careful in the criteria they use to admit people.  Be careful out there.

It’s a crazy world.

Yes, especially if your parents are that age, on Medicare, you want to stay on top of that for your grandparents and your parents as well.

Right.

Alright, listen, here’s the phone number.  It’s 844-220-0965.  844-220-0965.  You can text us at 212-32.  Gary Abley and Nancy Hecht are both certified financial planning professionals and are sitting in the studio waiting for your phone call right now.  Or text them at 212-32.

It is an Ask the Expert Saturday morning on WDBO.  My name’s Hank.  With us, in the studio, Nancy Hecht, author of The Hecht Effect and A Man is Not A Plan.  And Gary Abley from the Certified Financial Group, both.  And are taking your phone calls right now.  844-220-0965.  Poor Nancy, why are you limping around like that, girl?

I’m not limping.

It looks —

I’m just preventing having to have surgery.

Oh my.  Bum knee there?

Yeah, yeah.  I have a copper band on my knee, so I can go exercise.  Until I’m crawling, I’m not getting surgery.

Before we take this call, let me ask you a question.  How would somebody get a hold of you if they wanted one of those private consultations?

They can simply go onto our website, which is financialgroup.com.  And on our website, there is a way to ask for a complementary consultation.  You’ll see a little blue box that says click here for a complementary consultation.  And during that meeting, what we do, Kirk, is — it is designed for us to tell you how we work, get a little information from you to see if we’re a good fit for you, and to answer your questions.  As we say, there’s no fee for that in that initial consultation.

Larry in Winter Garden wants to ask you all a question.  Good morning, Larry.

Hello, Larry.

Good morning.

Hi.

Hello.  My question is — I want to start taking Social Security as soon as I can, 62 and a half of whatever it is.  My question is if I’m drawing from a 401(k) plan, a friend of mine told me I can only take so much money, like 16,000 out of my 401(k) because 401(k) is considered income.  Is that correct or not correct?

No, Larry, that’s not correct.

Okay.

You can take any amount you want out of a 401(k).  I think what he may have been confusing is how much money you can contribute to a 401(k), perhaps.  Difficult to say.

Or could be looking at — because 62 is early.

Right.

Larry, if you take it at 62, would this be your primary source of income plus whatever you might withdraw from the 401(k) or would you still be working?

No.

You’re not working.

Okay.

<Inaudible>.  I was — actually I plan on — well, when we looked at Social Security, it said that you could only make — if you made over $17,000, that they would start taking money back away from your Social Security.

Okay, very good question.

And that’s what I was thinking.  That’s what I think your friend was referring to.

<Inaudible>.

You are underneath the threshold, so even though by taking it at 62, you’re relegating yourself to a 25% cut in income from Social Security forever, if you withdraw the amount from your 401(k) underneath the earnings threshold, then you won’t have to give any back.  That’s what your friend was referring to.

Correct.  That’s what I — I just wanted to make sure.

But there is no limit on what you can draw out.  It’s more, what is taxable.

Yeah, anything you want to pay taxes on, the government’s happy to take that money.

I’m not looking to pay taxes.  Alright.

A man after —

Thank you, Larry.

Thank you.

A man after my own heart there.  Listen, we’ve got Linda in Bavard County who has a question about Social Security, and Luis in Claremont has a question about an IRA, and I’m going to ask them to hold on because we have to break to the news right now.  And if you’d like to get in line to talk to Gary or Nancy, the number is 844-220-0965.  But right now, let’s go to Dave Wahl.

This is News 96.5, WDBO, where Orlando turns first for breaking news, weather, and traffic 24 hours a day.

Live <Inaudible> coverage starts now.

It’s 9:30 at News 96.5, WDBO.  Our top local story, we’re hearing from Orlando police, after somebody fired into a crowd as that crowd was leaving a pool hall early this morning.

At this point, we don’t know who the intended targets are.  We’re sorting through talking to all the many witnesses to figure out what led up to this, and we have to talk to some of the victims to see if they might have had a potential problem with somebody.

Lieutenant Daniel Brady at Bruton Boulevard in Columbia where shots were fired.  One person is dead, six injured.

News 96.5, WDBO, where Orlando turns first for breaking news.

We’re going to see only a 30% of an isolated shower or thunderstorm this afternoon and evening.  Enjoy the drier weekend.  I’m Channel 9 meteorologist, Marena Dureca.

And I’m Dave Wahl <Inaudible> News 96.5, WDBO.  Under our active weather radar, all is clear.  We’ve got lots of sunshine.  It’s 79 in Orlando.  On The Money, just a couple of minutes away.  We have new information about Julia, now a tropical depression several hundred miles east of Jacksonville.  Forecasters say they expect Julia to be downgraded to a remnant low later today.  But the system has lifeguards watching at our east coast beaches because there’s a danger of rip currents <Inaudible>.  And also an update on Tropical Storm Karl, still far out to sea, but Karl still far out to sea, but moving to the west, northwest.  Florida health officials expanding the local transmission area in Miami Beach that, after five non-travel cases of possible Zika are identified there.  And now, President Obama calling on Republican lawmakers to provide money to fund Zika prevention before they go on vacation in a couple weeks.

Even as we’re seeing more and more Zika cases inside the United States, they’ve refused to fund our efforts to protect women and children by fighting Zika in a serious way.

More aerial spraying of pesticide to eradicate Zika-spreading mosquitoes planned this weekend.  Many of the people in Miami Beach now say they want that program ended.  High school football, two undefeated teams, Dr. Phillips versus Apopka.  Dr. Phillips losing to the second ranked Blue Dodgers, 15-14.  Senoa High taking on Orange City University, winning 35-21 <Inaudible> treading out <Inaudible>.  It’s 9:32 on News 96.5, WDBO.

Are you losing sleep, tossing and turning?  Well, this isn’t an ad for a new pillow or mattress.  It’s an offer to help put your mind at ease.  In a recent survey, 40% of Americans said they’re unsure if they’ll have enough money to last them through retirement.  After all, they don’t teach us this stuff in school and many of us go through life trying some of this and some of that, only to wake up in the middle of the night worrying that our financial life could just be a collection of financial accidents.  For nearly 40 years, certified financial planning professionals at Certified Financial Group have been providing retirement planning and investment advice for a fee, and they can probably help you get a good night’s rest, too.  Working on your behalf for a fee, they won’t be trying to sell you something.  Forget the new mattress and get a complementary consultation right now.  Call 407-869-9800.  That’s 407-869-9800, or 1-800-EXECUTE, as if you’re executing a financial plan.  Certified Financial Group, where they’re planning tomorrow today.  Online at financialgroup.com.  Fee-based planning and investment management from certified advisory <Inaudible>, a registered investment advisor.  Financialgroup.com.

Summer remodeling plans start at S&W Kitchens.  Scott Inez back.  You know, I’ve been 100% satisfied with the working that S&W Kitchens has done at my house, from the remodel in the kitchen and the two bathrooms, we couldn’t be happier with the job that S&W Kitchens did.  There were no surprises.  Everything was talked about and agreed upon during the planning process.  S&W Kitchens.  They’ll do the same for you, folks.  If you’ve been thinking about transforming that tired old bathroom, now is the time to do it with S&W Kitchens.  Go ahead and make that decision to replace last century’s appliances.  And heck, if you just need cabinets, let S&W Kitchens help you with the best selection and pricing in town.  Local family-owned since 1977, visit the updated website.  Sandwkitchens.com.  Or call them at 407-487-4901.  Five show rooms.  Coast to coast, Ocala to Okichobee, S&W Kitchens is simply wonderful.

Hey, it’s Sean Hannity and you are listening to News 96.5, WDBO, where Orlando turns for breaking news, weather, and traffic 24 hours a day.

Good Saturday morning.  As you’re heading out and about, we’re going to be looking at a drier weekend on tap.  We are going to see a high of 91 this afternoon with only a 30% chance, a few isolated showers and thunderstorms as we head into this afternoon and evening.  Watch for a very strong rip current risk along the coast throughout the weekend, as we are still seeing ramifications of Tropical Storm Julie.  From Channel 9, I’m meteorologist Marena Turic.

Red alert.  <Inaudible> security triple team traffic center.

Looks like that earlier crash we had west bound on the four-way and I-4 has cleared.  Those delays have now eased in that area, but we are still seeing some slowdowns west bound on Colonial Drive just before Bombay Avenue.  This traffic report is brought to you by Halifax Health Hospice.  Halifax Health Hospice has been providing extraordinary care to those with life limiting illnesses and their families since 1979.  For more information, call 1-800-272-2717.  Halifax Health Hospice, healthcare for Orange and Osceola Counties.  Triple team traffic on the <Inaudible> News 96.5, WDBO.

This is Severe Weather Center 9 chief meteorologist Tom Perry.  This is where Orlando turns first for breaking news, weather, and traffic.  News 96.5, WDBO.

Hey, it’s Joe Kelly.  Join me for Orlando’s morning news every weekday morning start at 5:00.  Listen when you wake up using your News 96.5 app.  Then on your radio when you get in the car.  I’ll make sure you get to work on time with triple team traffic and the best coverage of the I-4 ultimate project.

Now, our Ask the Expert weekend continues on News 96.5, WDBO.

Good morning to you.  This is On The Money brought to you by the Certified Financial Group in Altamont Springs.  We’re taking your phone calls about any pocketbook issue you may be having.  Don’t forget, as Ask the Expert weekend continues, after the top of the hour, it’s Florida Homes and Gardens, Orlando’s original home fix-up show so you can ask anything you want if you’ve got a question about your house.  Gary Abley is in the studio, along with Nancy Hecht.  Both of these people are certified financial planning professionals.  You can put them to work now.  Nancy, what are you taking calls about?

The pocketbook questions that are on everybody’s mind.  Social Security’s a hot topic this morning, but we’ll talk about retirement planning, estate planning, taxes, 401(k)s, IRAs, Roth IRAs, any pocketbook and retirement planning concerns you have that are on top of your brain, right now, give us a call.

844-220-0965.  Melinda in Bravard County, we’ll start with you.  Good morning, Melinda.

Good morning.  Thank you.  I’m 62 and I was thinking of collecting my Social Security now.  I was married 23 years.  My ex-husband is five years younger than me and isn’t anticipating to retire for a number of years.  So I was wondering if I could collect my Social Security now because I’m 62, and when he retires, switch over and get half of his instead because my work history is very, very small.

Okay, so if you start taking your Social Security at age 62, of course, you know you’re going to take a 25% cut in what you get.

Right.

Would this be your sole source of income?

I have a little bit of other retirement money, but not too much.

So you’re not working at this point.

No.

Okay.  And he’s how many years younger than you, you said?

Five.

Five years younger.  Okay.

Yeah, so he’s not going to retire for a number of years, maybe even 10 years, and then he would collect his Social Security.

Right.

Which would still be more than — half of his would be more than mine.

Right.  But you understand taking half of his, you’re still going to have a reduction on that because you start taking it early.  So you would get half of his minus your 25%.

Okay.  I didn’t realize that part.

Yeah.

<Inaudible> it may not be any more than <Inaudible> —

If you draw early, it’s a permanent reduction, whether it’s your benefit or whether it’s a spousal benefit, yeah.  So that’s the one thing you’re going to want to look at.  Try and estimate what his might be when he — if he were to retire and you flipped over to the spousal.  If the spousal minus the 25% is going to be more, then yeah, you’re going to want to apply for the <Inaudible>.

What’s the maximum allowable now if you were a very high-wage earner for a man at 65?

Of course, the maximum is going to be at age 70 and I think at 70 — I don’t know, you typically see them somewhere in the 3,200, 3,300 a month.

Correct, yeah.

So if you go — if you pull back a little bit on that, about 8% a year, you could walk into the maximum — what would you say, around 2,600?

Somewhere around there, yeah.

At full retirement age.  So half of that, if he were to get the maximum and he retired at full retirement age, he’s looking at about 1,300.  And you would have a reduction.

Minus 25%.

Right, you would have that reduction.  So you still may find that your benefit, at 62, is worth more than half of his reduced.

What is — is full retirement age for you 66?

I think it’s 67, 66 and a half, something like that.

What year were you born, if I may ask?

1953.

So I think it is 67 for you.  For somebody who was born then, because I just looked at that for somebody else last week.  If you can afford to wait the five years, then of course you’re going to be in a much better position.  If taking the money at 62, with the reduction, is going to make your standard of living that much easier, then you go right ahead and do it.

So Melinda, there’s two things, also, to think about.  One thing we like to emphasize is that you’re likely, if you’re the typical person, to get the same amount of money from Social Security at age 62 or at age 65 or at age 68 or at age 70.  In other words, from an actuarial standpoint, the benefits are the same because obviously if you collect at 62, you’re collecting for four more years than, say, 66.  But one of the strategies, especially if you don’t have a lot of retirement assets, that you might consider if you own your own home, is — and you’re planning on staying in that home, is living off of a reverse mortgage so that you could get an 8% bump-up in your Social Security benefit each year.  And you were able to say, get four or five years, worth of income from a reverse mortgage, that might give you a much better income for life going forward.  So that’s something to think about if you own your own home.

Okay.

Thank you very much for your call.  And Gary, that was a great suggestion.

Thank you.

We’ve got — Tony moves to the on-deck and right now, let’s talk to Luis in Claremont.  Good morning, Luis.

Is it Louis?

No, it’s Luis.

Okay.

Luis, are you there?

Maybe not.

Hold on.  I know where he is.  There he is.  Luis.

Good morning.

Good morning.

Thank you for taking my call.

How can we help you?

Yes, I am 64 years old right now.  I’ll be 65 next month.  And I have a traditional IRA, and I heard you saying about planning, planning is very important about what would be the disadvantages and advantages for me to turn that traditional IRA into a Roth IRA because, with an IRA, I have to — we draw a certain amount, 10%, by the time I’m 70 and a half.

Well, it’s not 10%, just to clarify.  It’s based on your life expectancy, and the first divisor when you turn 70 is 27.4, if I’m not mistaken.

It works out to 3.65% in the first year.

So about 3.65% is what you could take out.  But the tax strategy goes like this: If you have money that you can live on outside of your retirement account, then it may make sense for you, if you have very low or no taxable income, to convert each year between, say, 65 and 70, so you’d have five years to implement this strategy, a portion of your IRA to a Roth IRA that would still keep you in the maybe 0% bracket, or 10% bracket, or 15%.  A lot of folks don’t realize, for example, married filing joint — if you had $95,000 of taxable income after your standard deduction and personal exemptions for a couple, you’re still in the 15% tax bracket.  So one of the problems that we see is people celebrating the early years of retirement and they’re not paying any income taxes.  And that’s really giving up a huge opportunity to convert your IRA to a Roth IRA at little to no taxes.  And now you’re building up a wonderful nest egg for your 90s that you would be able to use on a completely tax-free basis and/or to leave to your children or your beneficiaries at a completely tax-free event for them as well.  So if you have low taxable income and you have assets you can live on outside of the retirement or Social Security for example, it might make sense to you to convert.  So that’s where you really want to sit down with your CPA or your tax preparer and strategize where your tax brackets are.  Does that help?

Yeah.  Well, I intend to collect full retirement, Social Security at 66.  But I don’t want to leave anything on the table, but I want to continue work for at least a year, because my divorce five years ago was devastating and I still — I’m paying — I have the alimony and then on that <?>.  And then in doing so, converting that percentage of that Roth IRA — I’m doing it for myself.  I’m not thinking about living up to 90 years old, something like that, I want to have —

And I’m going to say this, just to step it back a little bit.  If you are going to be working, this strategy does not work because you’re increasing your taxable income, and I wouldn’t want to throw you into another higher bracket.  So it’s really going to be in those years — let’s say you were going to work one year.  You might do it between ages, say, 67 through age 70.  But if you’re still working and you’re drawing Social Security, you probably don’t want to be converting IRAs to Roth IRAs because that would throw you into a higher tax bracket potentially.  So that’s where you really need to look at the brackets, look at what your income is, and decide what makes sense for you.

I think the key for you, Luis, is to have some solid tax planning done and try and do some estimates on what, potentially, you could be paying based on current tax laws between now and age 70 and as far as converting goes.

Right, and keep in mind that alimony is tax deductible.  So basically, yes, you’re paying it out, but it will lower your taxable income.

I’m claiming it right now as it is, but once I stop working, would that be taken considerate as part of the income?

Potentially.  You really need to make an appointment with a CPA.  And if you don’t have one, please call our office and ask for Gary.  Thank you so much for this call.

Yeah, we’ve got to move on here.  Let’s talk to Tony in Lakeland before we go to Dave Wahl in the News Center.

Good morning, Tony.

Good morning.

Morning.

Good morning.  What’s your question, Tony?  What can we do for you?

My question is I’m retired and I’m in my mid-70s.  The bulk of my retirement funds are in a traditional IRA account, and that’s generating approximately 3%.  And I’m pretty well satisfied with that because I’m very conservative; I usually am.  I have another amount of money that I have in a brokerage account.  I put that in a brokerage account a couple of years ago because I had it in a CD IRA, and that came due.  I was getting 5% on that, so I had to find a place to put that money.  And I ended up putting it into the brokerage account.  My question is, as I get the statements each month, I notice that a line item is for fees.  It keeps jumping up considerably.  I’m wondering, is there any way that I can determine if this is an excess amount of fees that I’m paying for what they’re doing with the funds that I have in that account?  Is there a yard stick that they go by as to how much you should be paying in fees and so forth?

Tony, are you seeing a lot of buying and selling on your brokerage account that’s generating these fees?

I continually get quite a few documents from them, showing me what companies they’re working with, the mutual funds, etc.  So it looks like they’re doing a lot of trading.

And are they transaction fees?

It doesn’t show as a transaction fee.  It just states fees year to date.

Do you pay a fee for the management of your account, or does the person get paid commission?

No, it’s for the management of the account.

So you’re paying a management fee and your paying transaction fees —

Right.

For a lot of trading.

Right.

Well, Tony, I would say that’s a great time for a second opinion.  It’s really hard without looking at your actual data to know, are you paying excessive fees.  But certainly you don’t want a layering of fees between a management fee and transaction fees, if that’s what’s happening.  So that’s one of the advantages of coming to our office.  We offer a complementary consultation.  You can bring the information in and get a second opinion.  And really any financial advisor who’s doing well for his client should be comfortable with them going and getting a second opinion.

How would we arrange that?

Just go onto financialgroup.com and click on our little blue box that says click here for a complementary consultation, and one of the twelve of us would be happy to look at your statement and give you some advice.

Or if they wish to call our offices, Monday through Friday, 8:30am to 5:30pm, 407-869-9800.

Or, if you’re outside the dialing area, you want a free call —

1-800-EXECUTE.

1-800-EXECUTE.

Good morning to you.  It’s an Ask the Expert Saturday morning on WDBO, and this is On The Money brought to you by the Certified Financial Group.  We’ve got about three and a half minutes left in the program.  I’ve got a text I want to read to you and we’ll give you some telephone numbers how you can get a private consultation with the Certified Financial Group.  Nancy, you’re the expert — although you don’t call yourself that, you and your colleague, Denise Kolvatch — on Social Security and you have a boot camp coming up don’t you?

Yeah, we do.  On October 20th from 6:00 to 7:30pm.  Leave your checkbook at home, come hungry.

Thursday evening and we’ve got three others coming up.  We’ve got one actually in September on the 27th, Financial Basics For Life Strategies or Success, where we go over 10 life strategies to keep you in good financial footing.  It’s great for anybody, I would say 16 years and up.  We also have, When Can You Retire, Know Your Numbers.  So we’re going to help you calculate the lump sum of money that you need.  That workshop is Tuesday, October 25th.  It’s an evening one also from 6:00pm to 8:00pm and we’ll have dinner there as well.  Then, Count Down To Retirement, November 15th, also a Tuesday evening from 6:00pm to 9:00pm as well.

All of those are hosted by Gary.

Yes, and we have Joey Murphy <Inaudible> parking lot, estate planning attorney will be joining us for that to answer questions about what you need in terms of legal documents as you get closer to retirement.

Again, Nancy, when is your Social Security Boot camp?

20th of October.

The 20th of October, okay.

It’s a Thursday, 6:00pm to 7:30pm.

Cool, find out more on the website at financialgroup.com.

Here’s the text: Hello my singular goal was to maximum my Social Security benefit, what is the minimum amount I should pay myself and for what period of time before taking the — that’s all.

So you know we get that question a lot, especially from business owners.  I’m sure you’ve gotten it from your clients as well, Nancy.  You know folks who own an S corp, they say hey I’ve got some flexibility on what I pay myself and what should I pay myself to maximum my benefits.  We’ll your not supposed to do that technically, your supposed to pay yourself a reasonable wage from your S corp and then the rest you can take out as distributions.  However, people should know that the Social Security office takes your highest 35 years and those are adjusted for inflation and if you think about the wage base getting <?> a little over 100,000 and what it has been in the past.  To optimize your benefits what would you say, Nancy, you would want to see as your benefit, somewhere in that 80,000 to 100,000 <Inaudible>.

Definitely, yeah.

Hopefully that answers the question.

Okay, again here’s the telephone number for the Certified Financial Group.

It is 407-869-9800.

Somebody wanted to find out more information online.

They could go to financialgroup.com.

Stay tuned for Dave Whall in the news center followed by Florida Homes and Gardens today, three big flooring trends and what’s best for you with Bill Burton of the W Kitchen <?> <Inaudible>.  Stick around.

Information presented on this program is believed to be factual and up to date but we do not guarantee it’s accuracy and it should not be regarded as a complete analysis of the subjects discussed.  Discussions and answers to questions do not involve the rendering of a personal

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