Lance Belline With more than 21 years of experience in financial services and as a Certified Financial Planner™ professional. I founded Lighthouse Financial, a boutique financial services firm that focuses on working with higher-income and higher-net-worth individuals to help them plan for… and reach… their financial goals!
What sets us apart from other firms is that we combine tax planning strategies into our investment strategies in an effort to lower the amount of taxes our clients pay during their retirement years.
You see…we believe a person’s largest expense that they will pay during their retirement years is not our fee or investment and insurance products expenses…but rather… it’s the IRS.
If we can help lower the amount of taxes a person pays…they may be able to have a retirement lifestyle that normally they would not be able to have…or they could transfer more wealth to their family upon their death.
We love what we do…and we look forward to working with you!
Being married and a father of 3, I take an active role in my community, not only with children-related activities but also with community organizations. I am deeply involved with Cobblestone Project, and in addition to “digging in the dirt,” I formerly served on the board.
Episode Highlights Here:
Lance:
When people are receiving income during their retirement years, they’re no longer working, have a W two, or no longer health, self-employment income, we can try to paint a picture that looks like something like this, you know, give them, let’s say $120,000 of income, as an example. They pay less than $2,000 in taxes.
Jessica:
So the topic for today’s show is more or less, more wealth, fewer taxes. You want to talk a little bit more about the distribution phase and how people manage their taxes during their accumulation phase so that they’re prepared to do that when they are then in the distribution phase. So I’m going to let you take it from here. Talk to us. What’s your focus? How does that relate? And by the way, when you’re doing this, let’s get out of the jargon. What is the accumulation phase? And what the heck is the distribution phase?
Lance:
Yeah, so, in short, when I’m trying to do when people are receiving income during their retirement years, they’re no longer working, no longer have a W two, or no longer have self-employment income, we can try to paint a picture that looks like something like this, you know, give them let’s say $120,000 of income, as an example. They pay less than $2,000 in taxes. Another concept is to provide them with, let’s say, just over $109,000 of income, and they pay no taxes. And so it that is the result of strategically withdrawing from your different accounts based on how they’re taxed when they make withdrawals.
Jessica:
Got it. So how are you setting this up for them? Boy, I would love to have $109,000 in retirement income and not have to pay taxes. So how are you setting up clients to do
Lance:
that. We have to understand how the tax code works without getting complex, right, you have income taxes on one side of the table, and you have capital gain taxes on the other side of the table. And what many individuals are not aware of is that there are three tax rates on the capital gain side. And that is that there’s 0%, there’s a 15%. And there’s a 20% tax rate. But those are determined by where you fall on the income side. So if your income, for example, was you’re fortunate enough to have an income of 660,000 or more, you’re equal. You’re now at a 20% tax rate on your capital gains. If it’s less than that but greater than 83,000 by 50, then you qualify for the 15% tax rate. And it’s left if it’s less than 83,005 50, then you ready for the 0% tax rate. But not very many individuals would like to make less than $83,500. Right when they’re working and growing their wealth. But during the distribution or withdrawal stage, what we do is we limit or not withdraw at all money from what I call bucket one, which is your taxable bucket when you make withdrawals, like an IRA or a 401 K. So that’s that becomes your new W two in retirement. And so if we, for instance, don’t take money from that, which we have, right, as you know, until age 72, before we are forced to withdraw from that category, then we can have now two-income, or we have no taxable income. And so then that’s why we get the 0% tax rate. So from what I call your bucket to money, which is money that you had excess cash, and you invested it in stocks, bonds, or mutual funds, and hopefully, you’ve made gains over the years. And then you can trigger those games, and those get taxed at 0%, up to $83,550. And so the reason it gets to be 109,000 is that, as you know, every taxpayer qualifies for a standard deduction, even if they don’t give money to charities. That standard deduction allows individuals to take 109,000 minus 25,009 50. And that gets you below the 83,005 50. And so all that gets taxed at 0%. And so that’s the concept and then the other monies if people want more income than that. Hopefully, they’ve accumulated some wealth, and that is what I call your tax-free bucket, which is a Roth IRA, you know, that got introduced in 1996 or a Roth 401 K, you know, and cash value life insurance is another category or health savings accounts. So then we can get income from that category, and it’s not reportable as income. So taking monies from buckets two and buckets three in retirement. This is how we lower the amount of taxes the individual pays during the retirement years got it
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About Lance Belline
Lance Belline With more than 21 years of experience in financial services and as a Certified Financial Planner™ professional. I founded Lighthouse Financial, a boutique financial services firm that focuses on working with higher-income and higher-net-worth individuals to help them plan for… and reach… their financial goals!
What sets us apart from other firms is that we combine tax planning strategies into our investment strategies in an effort to lower the amount of taxes our clients pay during their retirement years.
You see…we believe a person’s largest expense that they will pay during their retirement years is not our fee or investment and insurance products expenses…but rather… it’s the IRS.
If we can help lower the amount of taxes a person pays…they may be able to have a retirement lifestyle that normally they would not be able to have…or they could transfer more wealth to their family upon their death.
We love what we do…and we look forward to working with you!
Being married and a father of 3, I take an active role in my community, not only with children-related activities but also with community organizations. I am deeply involved with Cobblestone Project, and in addition to “digging in the dirt,” I formerly served on the board.
