Speaker 1 0:02
We see it every week, people who save millions of dollars did everything right, and still aren’t sure how to retire confidently. Today on Retire Smart Maryland Radio, we’ll talk about what’s changing in 2026 and how to turn savings into a real paycheck that you can trust.
Announcer 0:21
Welcome in. in to Retire Smart Maryland Radio with Prashant Sabapathi.
Speaker 2 0:28
Welcome in to Retire Smart Maryland Radio. Your hosts are Prashant Sabapathi and John DeFeo. You can find them at Elite Income Advisors, they’re independent fiduciaries, they’re headquartered Ellicott City, and a satellite office for your convenience in Annapolis. I’m Morgan Patrick. Again, a pleasure to be on and talk about all these different topics. And before we jump into what’s coming for 2026 I ask, I always ask, Prashant, how was the week? The
Speaker 1 0:55
week’s been busy, I mean, I feel like we say it every single week, but as we coast into the end of the year here, I feel like our office continues to get busier and busier, and so that’s really neat for us. I know a lot of other advisors slow down and take the holidays to take a break, but it seems like we’ve gotten a lot busier at the end of the year here with tax planning opportunities. We just finished up with some of our last seminars and live events for the year, had a pretty big client event, client appreciation event, just this past weekend, so it’s been a lot of fun, and I still feel like there’s so much more work to be done in 2025 before we kind of turn the page and head for 2026
Speaker 2 1:35
Yeah, John, what about you?
Speaker 2 1:36
Yeah, I’ll echo the same thing, it’s been quite busy, which is, as Prashant mentioned, surprising, because a lot of offices are shutting down, you know, there’s still opportunities for tax planning, even though we have, you know, just two weeks left before the end of the year at the time of this recording, so still a lot to do, getting prepared for next year as well. So love to stay busy, running up to the end of the year is great.
Speaker 2 1:58
I’ll tell you, it’s important to be prepared. I know we kind of get wrapped up into kind of end of year activities. Family looking forward to 2026 and that’s kind of what we’re going to do today, looking at important changes. So, I’ll just ask this broad question, and guys, you can just attack. What are the changes that workers and retirees that are facing for 2026 for things like, let’s say, social security, taxes, retirement plan, contribution limits. I mean, there are a lot of questions that need answers.
Speaker 1 2:30
I think when it comes to social security, there’s a couple major changes here. They did announce, they, being the government, did announce a cost of living increase that is important for both people who are receiving income from Social Security, as well as people are still deferring in their Social Security, it’s up to 2.8% is the cost of living adjustment that has been announced for 2026 so you can see some additional income coming in from Social Security, but one thing that I think is really important is they actually increase the wage base again, so if you’re a high income earner, typically for 2025 that limit was around $176,100 You probably noticed that once you surpass that threshold, you stop paying social security taxes. For the last several years, that wage base has gone up, and that’s going to continue again, heading into 2026 You’re going to be in the mid $180,000 range, right around $184,500 on the increases in the wage base for 2026 So, those are some important changes with Social Security. And then, as it pertains to Medicare, what we’re finding is that Medicare premiums are going up, specifically John on on Medicare Part B. Right, so this year it was a right around $185 a month in 2025 That number is going to over $200 per month for the base cost of Medicare Part B. So when it comes to Social Security and Medicare, because obviously those two things are very closely intertwined, especially for folks over the age of 65 and in retirement. You got to pay attention to cost of living on social security, you got to pay attention on Medicare. But John, what about retirement accounts? You know, you have catch-up contributions, you have limits that people have to abide by, why don’t you shed some light on what the changes are, but not just the changes. How can pre-retirees and retirees actually take advantage of those changes for their prosperity of their overall retirement plan?
Speaker 2 4:35
Certainly, yeah, so I think one of the big changes is every year they increase the amount of contributions you can make to your IRAs, your employer-sponsored plans. So, for 2020-six IRA contributions, $7,500 for traditional and Roth IRAs, that’s going to be the max contribution that you can make. If you’re over the age of 50, you actually get an additional $1,000 catch-up contribution. So that brings it up to $8,500 per year for folks over the age of 50, for your IRAs, for your employer-sponsored plan, so that’s your 401 k, your tsp, your 403 b. These are actually going to be about $24,500 per individual for 2026 with an additional catch up of about $8,000 going up to 32,500 if you’re over the age of 50, and there’s even a special provision for those folks that are between the ages of 60 and 63 that they’re going to give you an even higher catch-up contribution. So, the max employer-sponsored plan contribution for those between the ages of 60 and 63 is going to be $35,750 per individual, so a great opportunity to increase your contributions while you’re working and saving, and the one difference that we’re going to have in 2026 when it comes to the catch-up contributions, that extra 8000 or so that you get for your employer-sponsored plan prior to 2026 you could contribute that to your pretax source and your employment plan. What they’ve done is they’ve actually required that if you earn over $150,000 a year, that catch-up contribution is required to go into your Roth contribution source in the plan. So it’s a big change from previous years, starts in 2026 but still a great opportunity to stick.
Speaker 1 6:22
John, do you think that that is a good thing for retirees or a bad thing that they’re forcing it potentially to go into a Roth plan as opposed to a pre-tax plan? What’s your perspective?
Speaker 2 6:33
So, I think perspective has a lot to do with where tax rates are today and where they could be going in the future. You know, we talk a lot on this show about the level of national debt that we’re in, the possibility for increased tax rates in the future, and if you’re in the, you know, the mindset that your tax rate today is likely lower than what it could be down the road. I actually think that’s a really good thing to put money into an account that is going to grow tax free for you over your lifetime over the rest of your career and prevent you from having to then pull that out at a higher rate down the road. I actually think for a lot of people it’s beneficial at this time of where we are with our tax code, if that makes sense.
Speaker 1 7:12
So, look, I think we go back and forth with this so often, right? You have so many people that come into the office and they ask, how do we even go about making the decision? I was sitting with a client literally earlier this week who said, look, I’m contributing 8% to my 401 k plan. I don’t think I’m taking advantage of catch-up contributions, by the way. They were like 55 years old, so they are eligible for catch up contributions. They’re not currently taking advantage of it, but then the follow-up question was, they’re also high-income earners, so they actually thought that they were disqualified because of their income from putting money into their Roth 401 k, and so this is really important. If you’re a high income earner, you’re not actually bound by income when it comes to the Roth 401 k. You can do that. You might be disqualified from a Roth IRA, but Roth 401 K could be an important planning tool that is on the table. I think what it comes down to, what we’ve seen in our practice is that a lot of people just don’t know what they don’t know. It’s not any fault of their own. It’s maybe because their advisor hasn’t educated them on it, or they just haven’t organically come into the material to learn it. So, listen, folks, we’re going to open up our phone lines. We do it every show. The phone number is 800-653-8404 It’s 800-653-8404 If you’re within 10 years of retirement, the question really isn’t, can I still save more to me, it’s how much am I saving, and am I saving it in the right place to comply with the new rules. If you’re not sure what’s going to happen to Social Security, to Medicare, or whether or not you’re saving money at the appropriate amount in the right buckets, pick up the phone, give us a call. You’re going to be able to schedule a free consultation with our team at Elite Income Advisors, you come into office. Let’s talk about your situation in depth. Totally free conversation. That phone number again, it’s 800-653-8404
Speaker 2 9:12
When we return on Retire Smart Maryland Radio, it is strategy of the week. Don’t go anywhere, you We are back on Retire Smart Maryland Radio. Your hosts are Prashant Sabapathi and John DeFeo. You can find them at Elite Income Advisors. They’re headquartered Ellicott City and a satellite office in Annapolis, for your convenience. They’re independent fiduciaries. Want to tell you about a website treated as a resource, Elite Income advisors.com Again, Elite Income advisors.com links the TV show, radio shows, and podcast form. Really good information on planning. And really good information, background information on Prashant and the team, along with John, and again, that is a growing team to better serve Maryland and the surrounding areas, help you with your retirement planning. Well, we’ve talked about the important changes for 2026 that are upcoming, and now we’re going to get into strategy of the week. Prashant,
Speaker 1 10:19
yeah, so strategy of the week is something that we started doing recently. We got some really good feedback from the community. We have people that come into the office every single week, they tell us what caught their attention when they listen to the show. And I’m sitting with a gentleman a couple weeks ago, and he said, I love it when you guys do case studies where you give out little tips that I can digest and catch really quickly and put it into practice. So this week I really want to talk about the idea of shifting John from accumulating to distributing, right? So the way we look at this thing is you work your entire life, you put money away into your IRAs, your 401 K’s, your TSP, if you’re working with the federal government, but then when you get to retire, you have this big pot of money, hopefully it’s half a million, a million, $2 million but then it all hits you to the point where you’re like, well, now I have to take all this money that I saved and I got to turn it into a lifestyle that actually means something to me, so I think the natural question, because I don’t think a lot of people have an accumulation versus distribution mindset. Most of our clients just have a savers mindset. So when we talk about accumulation versus distribution, John, what’s your perspective on when the right time to make that shift from growing my money to making sure that I have a plan where my money is going to last the rest of my lifetime. When do you start that process?
Speaker 2 11:49
It’s a great question. I think it really depends on where you are with your savings, how close you are to retirement. I think is very important. If you think about it, you’ve worked your whole life, you’ve built this nest egg and now you’re tasked with distributing this efficiently over the rest of your life, that could be a 30 year time horizon. What do you mean by
Speaker 1 12:09
efficiently, though?
Speaker 2 12:10
Efficiently, good question. So we have so many things that can erode our wealth over time, that includes taxes, includes inflation, the market can cause losses in our accounts, and we have to find a way to take this money that we’ve worked hard to save and turn that into a consistent, efficient income stream, where we’re maintaining growth to increase the income that we have, as well as taking income safely. So, how do we do that? Right, what’s the proper way to shift from growth mode into a combination of growth and income, and I think it really depends on how close you are to retirement, how much you’ve saved, and what your ultimate income goal is. Right, I think we have to think about that, you know. I think of it kind of this way, you’re turned into your own pension manager in a way, right? You have to find a way to turn this into a consistent income stream. So, what we typically say is, if you’re approaching retirement, if you have the majority of your money in the stock market, then you’re, I’d say, even five years from retirement, it’s probably time to have a conversation about scaling back that risk, looking at something that might be a bit more conservative, a bit more safe, that could create a consistent income stream, because, God forbid, in the next five years we have a market correction, you know. Oh, 809 happens. I can’t tell you how many people had to work an extra 10 years just to get back what they lost during that time period and actually retire. So, I think the, you know, the closer you get to retirement, the more important it is to actually tone down that risk, and I think that’s where also proper planning and working with a professional to identify what actually is risky, what actually is safe, is the best thing for you. We’ve had clients that have come in that have said, ‘Hey, I’ve moved all of my money from these high-growth stocks to safer dividend-paying type stocks, and at the end of the day, yes, that can provide some income, but there’s still a lot of risk in that, so identifying the differences between conservative, aggressive, safe, risky is important. Something that we can help with, and that we help with on a regular basis.
Speaker 2 14:09
Guys, let me jump in. I just want to ask this question, because we’re hearing from the Jamie Dimons of the world, we’re hearing from Warren Buffett, more from his actions than his actual speaking about it, but he’s gone to cash, Jamie Dimon’s warning about this correction that you just mentioned, John. How important is it to really.. I mean, we’ve been kind of sleepwalking for the last 12, 1314, years. How important is it to kind of wake up and realize that the signs are there and you need to prepare for it,
Speaker 1 14:41
you know, I’ve always been, for years, been really intrigued by these Wall Street CEOs, right, because when you go to an investment bank like JP Morgan or Goldman Sachs, or, you know, the biggest banks that do very complex investment work, they’re objective. Active as a entity, as a bank, is totally different than the average client that walks into our office at Elite Income Advisors. These banks manage trillions and trillions of dollars for clients, and what they’re trying to do is make money. That’s what you pay these investment banks to do, is to help you make money, but it’s so interesting, because while helping our clients make money is at the core of what we do, it’s not the primary reason that people come in to visit with us. I think most of the people that come in to visit with us want to come in because they don’t have a clue how much time their money is actually going to last them into retirement, and so I always take with a grain of salt what the big Wall Street CEOs have to say, not because I don’t believe them, or not because I don’t think they’re really qualified or really smart, intelligent individuals. It’s because with the people that we come across in our office, making the most amount of money possible isn’t actually their concern, it’s making their money last as long as possible, and so when we hear things like, hey, JP Morgan might be moving to cash, or Warren Buffett just sold his entire position in X, Y, and Z stock, how do we make sense of that? To me, it’s not about trying to time the market and be in the right trade at the right time, it’s really about designing a plan that creates longevity. Right, I always think about things like as if you’re climbing the mountain versus you’re coming down the mountain. How fast you climb up the mountain is what I would call optional risk. You get to control how fast you walk up, but the problem is, if you’re on a steep incline coming down, you don’t have control over that. You might end up sprinting down the mountain when you want to be walking, only because of how steep the decline is. And so, when I think about that, that’s how I think about retirement planning, is how do we smoothen out the ride for clients along the way, and this is what I think professional planning comes down to. Do you have an income plan where you can look at one sheet of paper or one television screen and see how much income you’re going to have coming in every month, every year, for the rest of your life? If you don’t have that. I’d argue you don’t have a real plan. You don’t have a way to understand whether or not you’re truly at risk of running out of money. So, the income plan is one piece of it. John, I think you’d probably agree. Having the tax side of this thing nailed down is really important, specifically to taxes. What are the top, like, I don’t know, maybe two or three things that people need to consider when it comes to taxation in retirement that they are not already thinking about.
Speaker 2 17:48
Yeah, well, there’s a couple of things. I mean, number one, where are tax rates going? We’re in the third most favorable marginal income tax bracket in history right now. So, is it likely the taxes are going up? Is it likely that they’re going to stay about the same, or the likelihood they’re going to go down. I mean, that is, you know, something that you have to decide as an individual based on the facts. You know, I know our perspective is that taxes are going up. We talk about this all the time. We’ve got over 38 trillion in debt. What does that mean when you start to take distributions? Right, what are you actually going to net out of a distribution from your retirement plan, when the taxes are eventually paid, I think that’s important. We also have to consider required minimum distribution, so maybe you’ve been able to go through retirement living just off of your social security, maybe you have a pension, maybe you have dividends or an annuity, and you’ve been able to keep your income under a certain threshold, and you haven’t had to touch your principal and your retirement accounts, that’s continuing to grow, and by the time you get to the age of either 73 or 75 which is the required minimum distribution age, you’re going to have to start taking that money out. How much additional income are you going to be forced to stack on top of what you’re already earning? Can that push you into a higher tax bracket? Is that going to affect your Medicare Part B premiums? I know that that’s not taxes, but it’s tax related, it’s income related, right. So, that’s something to think about. What about estate taxes? Right, there’s a threshold of assets that you are able to leave to your family that are not going to be taxed by the federal government in terms of estate tax. Right now, that is $15 million per person, but it doesn’t have to stay that way. If they make a change to the tax code, not only are they going to change the individual tax brackets, but they’re also going to change potentially the estate tax exemption. So, how much money do you have growing for you that could be structured a little bit differently? These are all things that we have to consider as we move into retirement, as we have these accounts that are tax deferred. How are we going to manage these types of things?
Speaker 1 19:50
Morgan, why don’t you let the audience here know the phone number to give us a call? Absolutely, want to schedule that free appointment.
Speaker 2 19:58
Yeah, absolutely. Again. No cost, no obligation. Call this number right now: 800-653-8404 Again, that’s 800-653-8404 If you’re sitting on the portfolio right now, we’re just talking about our strategy of the week. When you go from accumulation to distribution, and you have to change that mindset, and to do that with a plan again, very, very important. There are a lot of hoops you need to jump through. Make sure you’re doing that correctly. Again, 800-653-8404 That’s 800-653-8404 No cost, no obligation. Closing thoughts, guys.
Speaker 1 20:36
I think one thing that comes up when we talk about accumulation for distribution is like there’s this tremendous fear in America that we call FOMO, the fear of missing out, right? And I think this is what scares people when they think about protecting some of their assets. It’s like, what happens if you started the year with $700,000 in your account and by the end of the year you’re at a million bucks. There’s some part of human psychology that feels like that run will continue forever, and the thought of de-risking your portfolio after you just made $300,000 it almost – you almost feel silly doing something like that, right? And so, real quick, because we got to get to a break here in a minute, John, give me like maybe one, maybe two ways that are smart that you can balance shifting to a more conservative risk profile without having the FOMO, the fear of missing out on tremendous market gains.
Speaker 2 21:37
I think a great way to do this is through bucketing your money, right, have a bucket that is growth-oriented, that you can still participate in those gains as they come in, but also maybe shave off a portion of that into an account that is going to provide a consistent level of income or some level of security, so that if you do see a correction in the market and it’s not all rosy moving forward, you still have the income coming in that you need, you don’t have jeopardy in your spending and your retirement picture, so you can still take risk in the market, but you also have the income that you need just by bucketing into two different areas.
Speaker 1 22:12
800-653-8404 Folks, you dial that phone number, you’ll be able to schedule a free conversation with our team of retirement specialists at Elite Income Advisors. If you’re still investing the same way you did at 40 or 45 years old, but now you’re five to 10 years away from retirement. Now is the moment, while the market is pretty close to the all-time high, to pause and reassess. It doesn’t necessarily mean you have to make a change, but you should have a good understanding of where you stand and where you should be going. Free appointment to come in and visit, talk about your retirement. 800-653-8404
Speaker 2 22:49
We will have more Retire Smart Maryland radio coming up on the other side of the break. We are back on Retire Smart Maryland Radio. Your hosts, Prashant Sabapathi and John DeFeo. You can find them at Elite Income Advisors, the power behind this program. They’re headquartered at Ellicott City Silent Office in Annapolis, and they’re both independent fiduciaries, all about helping Maryland and the surrounding areas get ready for retirement. Check out the website Elite Income advisors.com easy to remember. Again, a resource for you: Elite Income advisors.com I’m Morgan Patrick. Pleasure to be on. And now we have an interesting scenario. Imagine you stop to get gas on the way home from work, and you say, you know what, I’m just gonna, I’m gonna buy a scratch off, you buy a scratch off, and you scratch, and boy, do you scratch that itch, a million dollar win. So, here’s the question, what happens now, guys?
Speaker 1 23:55
Yeah, you know, I recently actually had this conversation with a client, it was really interesting, I actually promised her we would talk about it on the radio show, because I think it’s a good learning example here. So, her sister won a million bucks on one of these scratch-offs, right? A million dollars, and I’m not – this isn’t Mega Millions or Powerball on a scratch-off of all things, a million dollars, and I think we’ve all kind of fantasized about what happens if we win the lottery, right? I think the natural things come to mind: you pay off the house, you buy a new car, you set your parents up for life, or whatever, you travel, you invest, you retire early, but I think the part that doesn’t get talked about enough is that simply winning the money is not in any way the same as keeping the money, and it’s certainly not the same as turning that money into a lifetime of income, because look, while you’re working your financial life, it’s just money in, money out, we say it every single week, but what puts that in. Jeopardy. I think two things come to mind. Number one is taxes, right? So, John, I think where we have to start is, okay, you win a million dollars. What’s the very first thing I’m doing to make sure that this money is a protected and b, that I properly account for the tax liability?
Speaker 2 25:19
Well, the first thing I’m probably doing is either meeting with an accountant or some sort of financial professional to determine what I need to hold back for taxes the next year. Right, if you win a million dollars, that’s concluded in your taxable income, it’s likely a lot of that is going to be taxed at a higher marginal tax rate. So you need to figure out what you need to set aside for that, and then determine what it is that you’re going to do with this money. Hopefully, it’s not gambling, it hopefully it’s not buying a bunch more scratch-offs to try and double your money. But you know, in all seriousness, if you’re looking to protect this, turn it into a stream of income, you know, complement your retirement assets. You can look at a couple of things, right? You can invest it, look at, you know, investing it into the market. You could also look at potentially purchasing some sort of a safe investment, things like CDs. I would even say annuities are a great option if you’re looking to protect that asset, have some, you know, higher returns than you might get at the bank, potentially even create a guaranteed stream of income out of this, out of this lottery winning, I mean, how amazing would that be to be able to turn, you know, a 10 $20 scratch off purchase into a lifetime of income? Like, how cool would that be?
Speaker 1 26:32
Yeah, I think that’s one thing, and then I think another natural thing that comes to mind is let’s go ahead and just pay off debt. Yeah, I think that’s a big deal, right? How good would it be if you won a million dollars, you walk away with five or 600,000 or even, you know, let’s say half a million, you walk away with how great would it be to just pay off your house? You never have to worry about a house payment for the rest of your life. That’s what our client’s sister did. They went paid cash for a house. My understanding is they did that on the Eastern Shore, somewhere by the water, got a super cool place, and now they don’t have a payment for the rest of their life. And when you don’t have debt and you don’t have payments going out the door, one thing that that does is that it gives you a peace of mind, right? Like, what would it mean to you if you didn’t have to hit a certain monthly income target that was so linked to your mortgage? Right. So, I think that’s one. Number two, what would derail people is something that I call lifestyle creep, I guess that’s what all the kids are calling it these days. Maybe I’m on social media too much. Morgan, are you familiar with this term, lifestyle cream? I’m
Speaker 2 27:47
familiar with it. We talk about, and we’ve used the term windfall. If you receive a windfall, so many people, the first thing they think of is, well, I’m going to go spend it. You guys are going down the path of why don’t you plan how you’re going to do it first and foremost, how much you’re actually going to get after taxes, and then what can that money do for you as you move towards your retirement. I mean, it’s a, it’s exciting to think about, but I think a lot of people get wrapped up, “Hey, I just want some cash, and they go, they go on a spending spree.
Speaker 1 28:18
Yeah, exactly, and that’s exactly what lifestyle creep is. We see this not so much with lottery winners, like just because I don’t know that many lottery winners personally, but when we see it in practice, unfortunately, it’s in cases where people lose their spouse and they get a million dollars of life insurance, and a million dollars is more money at one time that they’ve than they’ve ever seen before, and they’re overwhelmed in how to handle it, because a million dollars is a lot of money. Guys, like, I don’t care what anyone says, where I’m from, a million bucks is a ton of money, and when you have a million dollars coming in, I think it’s absolutely natural to say, you know what? I’ve been driving a $15,000 used car with $150,000 150,000 miles on it. I deserve to drive something that’s 5060, 70,000 And now that I have the money, I should be able to go do that, right? I deserve to upgrade the house that I live in. I deserve to go take that trip that I never got to take. And the next thing you know, a million dollars becomes 600 really, really quickly. And what we’re finding is that when you’re, whether you win the lottery, inherent life insurance, you should position that money in such a way that it actually helps you make more money and give you more peace of mind over time. You know, it’s just one of these things that it’s natural to mismanage it. I think it’s not mal intent, but I think a lot of people just maybe don’t know better. And so, let’s run that hypothetical. Take me back to the very first conversation that you would have. I come into to meet with John, and I say, John. I want a million bucks. How do I start this conversation? I mean, you talked about tax, you talked about income, but what’s the next thing I should do?
Speaker 2 30:09
I think you have to look at what your goals are. Ultimately, you mentioned debt, you know. Do you have any high-interest debt that you could pay down to reduce expenses, increase your cash flow, reduce the amount of interest that you’re actually paying to the bank. I think that’s important. You know, do you have a retirement plan in place that allows you to create consistent income in the future? You know, have you sat down and looked at that yet? I mean, we had this – it’s a great example – I had a gentleman that came in to visit with us, you know, they were married at the time. We kind of had a conversation just about debt reduction, you know. They’d spent a lot of their years just kind of playing catch up. They’ve had some misfortunes, so they didn’t have a whole lot of assets built up. They were, you know, aggressively paying down their debts. They had high income, so the conversation was really just about debt management. I got a call from that gentleman about five months later, and unfortunately his wife had passed away, and he, between the life insurance policy, had about 100 assuming $1.5 million that was coming to him based on the life insurance, and we had the conversation, and we talked about what he would be comfortable putting away in order to ensure that he does have a retirement plan, because again, he went from having almost zero assets to now having $1.5 million and instead of talking about paying debt down and retiring in 10 years, we were talking about potentially retiring in just a few years. It completely changed his timeline, and after the initial conversation, you know, he had let me know he wanted to renovate the kitchen, you know, he wanted to get a new car, just as you’d mentioned, um, he wanted to take the trip him and his wife had always wanted to take, so after talking through what things he wanted to spend the money on that he rightfully deserved to be able to enjoy himself a little bit, he just lost his spouse unexpectedly. He had about $1.1 million left over after debts were paid off, he was able to get the car, do what he wanted to do, and we took that $1.1 million and we put it to work for him to ensure that about $700,000 of that was going towards creating a guaranteed income stream for him when he retired in two years, by the way, is what we figured out, rather than 10, he was able to retire in two years, and that remaining 400,000 or so, we were able to invest in the market for growth, so paid his debts down, got some money working in the environment in the market for him, and ensured that he had all the income that he needed in two years to retire, which was not likely to happen if that didn’t go the way that it did. And, of course, my heart goes out to him, you know. We let him know that, look, this is the worst thing that could have happened. Your spouse passed away, but in it, there was also an opportunity open for him to be able to retire, because he did it the right way. So, it’s important, very important, that you sit down, you figure out how to make that money work for you, rather than just using it to spend on things today.
Speaker 1 32:52
One thing I really appreciate about the story you just told is that you’re in a situation where you’re truly a counselor to this gentleman, right, you’re not just a yes man that says, yeah, go do this and go do that. You’re telling him, here’s the pros, here’s the cons of the decision making process that comes along with getting this kind of money. Folks, if you’ve ever wondered what you would do with a financial windfall, or how to make sure your retirement savings actually last, this is exactly what a lot of people think about whether you do have a lottery situation or not. You should be thinking about this every single day. That phone number, 800-653-8404 that’s 800-653-8404 Schedule that complimentary visit with our team. Let’s sit down, have a conversation about the things that are actually important to you. It’s a free conversation. We’ll walk you through the process. All you have to do is give us a call, 800-653-8404 Well,
Speaker 2 33:48
I feel like I win the lottery every time we do this show, guys. Retire Smart Maryland Radio will continue coming up, you Retire Smart Maryland Radio, hosted by Prashant Sabapathi and John DeFeo, both of Elite Income Advisors, the power behind this program. Check out the website, it is a resource, Elite Income advisors.com easy to remember, rolls off the tongue, Elite Income advisors.com and both Prashot and John, independent fiduciaries. They’re headquartered Ellicott City Satellite Office in Annapolis, for your convenience. I’m Morgan Patrick. Absolute pleasure to get on here and just talk about the importance of being proactive, having a plan, being prepared, working with a professional again, teamwork to make the dream work. When it comes to your retirement, and there are a lot of you out there that have saved well, but haven’t started the planning process. And there are a lot of you out there that have started the process, and you’re frustrated. You need that second opinion on this program. We open up. Appointments, and they are complimentary, no obligation appointments. Stay tuned, we’ll tell you about it. So, guys, we are going to go over what our listeners should be doing this week, just to review.
Speaker 2 35:10
Yeah, and this is again a newer segment as well. It’s something that we had a request from our clients. You know, what should we be looking at regularly, right? And I think this week the topic that we want to talk through is your estate plan, you know? Have you looked into, if you have one, your will, your trust, your power of attorney documents recently to ensure that they’re still up to date with the changes in your life, the changes of your intentions, you know? Have you, you know, identified how you want your assets to be left to your beneficiaries, and you know what types of efficiency, so Prashant, maybe you could touch a little bit on some of the documents that we encourage folks to have, some of the things that we encourage our clients to review on a regular basis to ensure that their wishes are addressed when they pass. You know, it’s
Speaker 1 35:53
really funny that we’re talking about this very well versed in this area, because my wife and I just sat down with our estate planning attorney about a month or two ago to talk about this conversation, and the impetus for it for us was, you know, we just had a baby back in June or so of 2025 and so it got us thinking like before, before kids, it was like, yeah, if something happens to one of us, there’s no one really to leave the money to, other than our parents or whatever. But now that we have a little one, it really gets you thinking of if something happens to you, and there’s not just money, but then there’s a house, there’s property, there’s life insurance. How do you leave that all to a minor child and expect them to deal with it, so what we did is we sat down with our estate planning attorneys, specialized in dealing with wills, trusts, and estates, and we put together a series of documents, and those things included things like a last will and testament. Okay, what’s going to happen to anything that is not covered in our trust? Number two, we got a revocable living trust done, and what that’s going to do is that’s going to have very specific instructions for what happens to our money and our house when we pass away. The third thing we did is we each got a power of attorney for each other, so that just says that if either one of us is incapacitated, the other one has the legal authority to act on the other’s behalf, that’s number three. Number four, we did an advanced medical directive, so in the event that either one of us has a medical event that incapacitates us, there’s very specific medical instructions on what means are to be used in terms of keeping us alive, so to speak, there, and I think the most important kind of experience that we had through this process was it forced us to have a lot of really uncomfortable conversations. One of the things that the attorney asked us was, if something happens to both of us. Who do we want to be the legal guardian of our children? And it took us two and a half months, really, to, because we started talking about that before we visited the attorney, but it took us like two and a half months from start to finish to really even get to the position where we could make a decision on that. Yeah, and so these are not easy conversations to have. They’re not the type of thing where you’re probably going to come to the answer immediately, and so what better time to start that process than right now? Because what would typically happen is you’re probably going to need time to think about it. You’re probably going to need time to speak with your spouse if you’re married on it. You’re probably going to have to have conversations that you’ve never had before, yeah. Okay, so that’s where I would start, but then once you get all that in place, it’s not enough to just get the estate plan together, you actually then have to get your estate plan to match your financial plan,
Speaker 2 38:56
that’s right, yeah.
Speaker 1 38:58
And so, how do we, how do we go about doing that. Right, it’s so much to take on all at once. Yeah, let’s say I bring an estate plan to you now, John, as a CFP, as a certified financial planner, which you are. How do you counsel people on how to make their estate plan match their financial plan? At the end of the day,
Speaker 2 39:17
it’s important. You know, I think the objectives that you have about how you want to leave your wealth between your family, maybe charities are important. There are ways to reduce the taxes that our beneficiaries pay with strategies like Roth conversions, like qualified charitable distributions, all while you’re alive. There are also trusts that allow you to leave a portion of your assets directly to another entity, such as a charity, while still living off of the income to ensure that some of that is not calculated in the estate tax threshold. I mentioned earlier that it’s about $15 million per person that we have an exemption for, but it’s very likely we could see. Change to that in the future. There’s already been previous administrations that have suggested maybe making a change to it. So, how do we minimize the taxes that those folks we want to inherit our money have to pay? It’s one thing to set it up to make to ensure that they receive it properly, but how do we also make sure that they receive it efficiently, tax efficiently the way that we want it to go to them. How do we ensure that there are safeguards around it, so that they don’t have that lifestyle creep and go blow through it? I mean, for an example, Prashant, I went through the same thing. You know, I had my second kid back in May, which is crazy. It’s been that long, but we had to go back to the estate planning attorney to revise our will, revise our trust, our documents, to include my daughter, and you know, one of the things that we instituted with this was that, you know, if both of us were to pass away, we have, you know, an executor to take care of that estate, also took us a while to figure that out, but what it says is that my kids actually have to obtain the age of 35 before they’re entitled to the full balance of the estate that I leave to them. People ask me, what made you choose that age, and I figure, you know, I knew what I was like at 25 although I was responsible, and I, you know, I, you know, I like to think that I knew everything back at 25 I still don’t think I would trust a 25 year old with millions of dollars. So I figured 35 was a good age, and if they don’t have it figured out by 35 well, have fun, right? Yeah, I did my best, but that’s a way to ensure that they don’t inherit, as Morgan had suggested, a windfall of money and blow through it, or do something that’s not responsible. They have to be able to show that they are responsible, that they can handle it. My brother has the ability to give them access to some of that money for things like school health maintenance, you know. If he feels like they need some of this money to do something, he can allot that, but they don’t get full access to it to a certain age. So that is how you look at this. How do you ensure that when they receive it, they don’t blow through it? You know, how do you ensure that the taxes that are paid on this money through trust, through the taxes that they have to pay, are minimized. How do we make sure the charities that we want to leave money to get the most out of it? Those are just some ideas, but it’s such a broad topic that we can only scratch the surface in this podcast, and that’s why we always recommend, if you have a question about how to leave your estate efficiently, it’s likely a good time to speak with a financial professional about your goals. You know, as a certified financial planner, I tell people all the time I can help you create the framework that you need to identify how you want your money left to your beneficiaries, how to do it most efficiently, what tools are out there to do so, and then we have a great estate planning attorney that Prashant was just speaking about, that we can work with, and you to write those documents and ensure that everything is done smoothly.
Speaker 2 42:52
Important again, planning, and I love that term you use, guys. You almost reverse engineer it if you’re starting with that estate plan. How is it going to fit with what you’re doing with your finances? You need to have these types of conversations, and you can certainly do that, and it’s complimentary, no obligation. Give us a call, Elite Income Advisors, 800-653-8404 We have 10 appointments, they’re complimentary. Call now, 800-653-8404 but when we start talking about estate planning, the importance of powers of attorney, financial health, but also the reviews, guys, a lot of people that get into this situation, they feel like, well, once I’ve done it, I’ve done it, but you really need to revisit, you need to really pay attention.
Speaker 1 43:41
Yeah, I’m glad you brought this up, because you’re exactly right. I think we want to think about this kind of morbid stuff one time we address it, we get it out of the way, and then we never really want to think about it again. How often should people be reviewing their estate plan? John, what’s your experience? I mean, I know you’re not an estate attorney, but you and I, we see enough people where we get a kind of really good sense. What’s your perspective on how often people should actually be reviewing their documents and making proactive changes to them?
Speaker 2 44:12
I would say at a very minimum every 10 years, just maintenance, even if not much has changed in that time, it’s still good to review it, ensure that the laws that we, that this was written upon, are still in place anytime there’s a big change in your life. I mean, if you obviously, I think at number one is, if you go through a divorce, you know, or if you lose a family member that was in that will previously, if the executor that you had selected, something happens to them, maybe they’re not cognitively there anymore to be able to help take care of you, so you have to keep up with these things to make sure you’re adjusting for it. I mean, an example of this is that we had a client that had a 401 k with his employer, he had gotten a divorce and he never changed his beneficiary to his new spouse, so that meant that the, you know, this was probably a 10. Year divorce timeline, so we divorced 10 years ago, remarried, started a new family, he passed away, and the first wife got the entire account because he
Speaker 1 45:10
never changed the beneficial, never changed
Speaker 2 45:12
beneficial, and so that
Speaker 1 45:12
that just speaks to the importance of making sure this stuff is updated, so we always say periodically or as needed, as needed means major life change. You want to make sure that your entire plan, both financial and retirement, is really buttoned up. Folks, as we wrap up today, I want you to think about one simple question: if you stopped working tomorrow, do you know where your income would come from? Do you know how it would be taxed? Do you know what would happen to that income and your assets if you passed away. If you’re not sure the answers to these questions, as a starter, you need to pick up the phone and give us a call. It’s the last opportunity for today’s program to get into the office. Visit with our team of specialists at Elite Income Advisors. The phone number, it’s 800-653-8404 It’s a complimentary appointment. You come in to visit, just have a conversation. We’re not agreeing to take you as a client. Most importantly, you’re not agreeing to become a client, and there is no charge. It’s 800-653-8404
Speaker 2 46:14
Another edition of Retire Smart Maryland Radio in the books for Prashant Sabapathi and John DeFeo. I’m Morgan Patrick. We’ll see on the radio next week.
Speaker 3 46:31
Fanuity guarantees are subject to the claims payability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain period of time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes, persons selling annuities and other insurance products receive compensation for these transactions. Products are subject to fees and additional expenses. Any comments regarding safe and secure investments and guaranteed income streams refer only to the fixed insurance products. They do not refer in any way to securities or investment advisory products. Information presented on this program is believed to be factual and up to date, but we do not guarantee its accuracy, and it should not be regarded as complete analysis of the subjects discussed. Discussion should not be construed as an offer to buy or sell, or a solicitation of an offer to buy or sell the investments mentioned. Professional advisors should be consulted before implementing any of the strategies discussed. Investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. Investment advisory services offered through Elite Income Advisors Incorporated, a registered investment advisor located in Ellicott City, Maryland. The firm only conducts business in states and jurisdictions in which they are properly registered or exempt from registration requirements. Registration is not an endorsement of the firm by securities regulators, and does not mean the advisor has achieved a specific level of skill or ability. Content should not be viewed as personalized financial advice. Insurance and annuity products are sold separately through Retirement Planning Services Incorporated. Neither firm is affiliated with or endorsed by the Social Security Administration or the IRS. Social Security, Medicare, pension, and tax rules are subject to change at any time. Insurance and annuity products are sold separately through Retirement Planning Services Incorporated. President Ozer Culhagil, Prashant Sabapathi, and Jonathan Defeo receive commissions for the sale of insurance products as insurance agents for Retirement Planning Services Incorporated. Insurance annuity product guarantees are subject to the financial strength and claims payability of the issuing insurance company. Morgan Patrick is not client of or affiliated with Elite Income Advisors, however, he has a financial incentive to promote our services because he was compensated for his work on Retirement Maryland. The program is paid production of elite income advisors,
