Business Innovators Radio - Interview with Danny Favreau with One Less Worry Discussing Taxes

Episode Date: November 5, 2024

Danny Favreau is a knowledgeable, detail-oriented leader with nearly 17 years of experience in the dynamic financial industry. As the owner of One Less Worry, Danny has become a trusted authority in pension and retirement planning, providing Federal and State employees with tailored guidance to achieve “Retirement by Design.” His success stems from his strategic approach to business development, his dedication to building strong client relationships, and his clear, practical communication style.Danny’s career spans a range of challenging roles, from field underwriter to account executive, financial advisor, and now business owner. Each position has refined his financial expertise and deepened his industry insights. With a National Social Security Advisor certification, Danny is equipped to address Social Security-related needs, including optimization strategies to maximize benefits.Throughout his career, Danny has demonstrated a commitment to professional growth, expanding his financial acumen through continuous education and leadership roles within top-tier organizations. His clients and colleagues alike value his integrity, his attention to detail, and his ability to consistently deliver exceptional results.Learn More: https://www.onelessworry.co/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-danny-favreau-with-one-less-worry-discussing-taxes

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with us, Danny Favro, who's the founder of One Less Worry and we'll be talking about taxes. Danny, welcome to the program. Welcome. Thank you, Mike. How you doing? So I love one less worry, and if we can make taxes one less worried, then that's quite an amazing feat.

So I'm excited to hear about your thoughts on taxes. But before we dive into that, get us started with your story and background and a little bit about you. And how did you get started in financial services industry? Well, this is something that I never thought I would be involved in. And it just happened to be one day. getting involved with it and I met with an advisor and the next thing I know I started loving it and I always love working with people and helping people and I started actually basically doing life insurance and you know it didn't hit me until that one day when you you know back in the day when you had to hand deliver a check somebody passes away well I had to hand deliver a check to a lady that's when it hit me how important our job is you know and then all of a sudden that

I went from life insurance to financial advisor and working with everybody on the spectrum here. And it's so important that people understand exactly what they have and time need because you're there to help them when they're alive. And even after they pass, all their wishes, I want to make sure that everything is done correctly. So that's how I do it. I just love helping people. Yeah, and I guess hearing that in how you started, you know, the life insurance, is one, you know, bullet point. So you kind of started realizing there's a lot more.

And if we can provide holistic, you know, advice and guidance, then, you know, that you can really build on to help people, you know, prevent and plan and all of that. So I think that's a really key point. Yeah. You know, 17 years of doing this. You've learned a lot. And I always go educate myself even further by taking training classes and staying on top of everything that's new.

So that's so important. to keep developing ourselves. And you learn a lot in the industry. And every time you sit down with somebody, you gain a little more interest and a little more information about people or situations. And then you could take it and apply it to others. So it's definitely a hundred percent.

Yeah. So taxes, we're going to have one less worry for people to worry about because you're going to solve all of our tax questions. So let's talk a little bit about taxes. What are the tax implications? for any kind of accounts, IRAs or any kind of retirement accounts, if rates increase in the future. And I guess I would like to draw the circle around the word if and bold it and underline it because we're pretty confident that taxes are going to go up.

We don't know. Nobody knows the numbers. But, you know, if the deficit is so monstrous and the only way to lessen the deficit is for the government to reduce spending, we know that won't happen. And then the other way to reduce the deficit is to raise taxes. So probably most people would check the box and say in the next 5, 10, 15 years, Rachel will probably go up for taxes. So talk a little bit about those tax implications.

Yeah, and you're so right. Our deficit is so huge. The country is, I think it's now $35 trillion in debt. And, you know, think about trillion. How many zeros are in that? There's 12 zeros in the number in front of it and happens to be 35. So that's a big number right there. So our taxes more than likely are going to go up

and don't foresee anything changing with the government of not spending because you seem to like to spend a lot. But if tax rates increases, you know, any type of account, especially additional IRAs, you could be facing higher taxes when you would draw the money out. So there's different things you could do to help ease that burden a little bit. but you guys start planning for it now, you know, before the taxes really start coming up. If you don't take that initial step and sit down with myself, then see, you're going to take a picture of everything that you have.

That's the important part. I could just simply say, you know, if you have IRA, the tax is going to go up and withdraw the money. That's one thing. But you got to take a look at everything that you have and figure out what is the best way of going about it without bringing your tax rate up. So that's a thing that you really need to look at. know. And if you're currently retired, you know, increasing taxes could change everything. You could actually run out of money, you know, if taxes rate to go up, because you're not planning for it, you know. So you got to take a look at the big picture. And that's what we do here. We look at the

big picture. You don't understand what you have, then you need to sit down and figure we figure that out for you. That's what we do. You know, and I think when we mention IRA, that's a super popular financial vehicle, you know, kind of next to the 401K. Typically, you go get your job and you get told, here's HR paperwork, fill this out for your 401K. And it's almost like people just take it, you know, I guess we better set that up. But then there's also IRAs, but both of those are similar because you put money in pre-tax and the government has not gotten their hands on that money.

So then what are some of the strategies to help mitigate the taxes? because like you said, any increase in outgo in taxes for a retiree, you're living on lower income, so that really hurts. So what are the kind of things that you would recommend for helping that situation? Well, there's always the Roth conversions. Okay, that is one part of it. And I personally, if you're healthy and in good shape, you get permanent life insurance. It could really and truly be the biggest tax saver out there. You know, money that goes into that account, it grows tax.

free and you've already paid the taxes on it so you don't have to worry about the government coming and knocking on your door about it and you can pull that money out anytime you want and like I said it grows tax-free you don't have to worry about it you don't have to put it back into your account either so that's another thing so a permanent life insurance is a great vehicle for retirement and it can give you a lifetime income out of it you know and that's that's important you know people struggle you know when it comes to retirement or the worry a lot about running out of money.

Okay, I got to say that's probably when I sit down on the clients. That's the number one thing. Worryed about running out of money, you know. If you take a look at everything that you have, figure it out of what is taxable, what's not taxable. You know, we do a thing called the Commerce Score. A risk factor. Now, if you sit down with any advisor,

they should be able to tell you what your risk factor number is, that Commerce Score number. If you don't know that, then that you need to back up a little bit figure out what your risk are and how much money you have at risk. You know, and I call that your red money and green money. Red money meaning, you know, it's easy access. They don't have to worry about taxes, red money.

Yeah, worry about taxes. And see exactly where you are because sit down with people all the time. And they feel like their money situated is fairly good. But when they do the commerce score, all of a sudden, now their risk factors telling them that they should have like 40% at risk. and they really got 90% at risk. So then we have to move money around to make sure that takes place. When it comes down to it, you'll be comfortable,

and your money's got to be set and dedicated. So the last thing you want to do is pay taxes when you retire. Yeah, because you have such a lower amount of maybe you're on a pension or maybe you're on Social Security. And any amount that leaves from there, it really hits you in the back pocket. Exactly. I mean, you know, every dollar that you can get, like even with Social Security, you need to maximize that Social Security benefit. If you don't maximize your Social Security benefit,

that every dollar that you didn't take is coming out of your nest egg. So every month you'd be pulling money out of your nest egg if you didn't maximize everything. So it's so important not only to do your IRAs and your, you know, get your pensions. Some people have pensions out there taking into consideration, but don't forget that Social Security, that's a big part. You know, if couples don't maximize that, take advantage of it.

I sit down with couples all the time that even if they are currently following Social Security, they started taking it at 62, and that hurts them. You know, when you turn around at 66, 67, when they're at their full retirement age, you know, or even later, all the way to 70,

they can make so much more money from it. And as a Social Security advisor, I see it all the time that people just are not leveraging everything that they have. And you need to nowadays, need to take everything in consideration. And if you had mentioned about having, you know, the score and what if you have too much in this type of a, you know, the market or whatnot, it's at risk. Well, the problem there comes if you need your money out of that portfolio, the market, and to live, maybe, you know, there's a gap between my security and what I need to live on. So let me pull it out of this account.

Well, what if the market's trending down, you're pulling. it out of there and it's trending down and you get a double whammy, right? Oh, definitely, definitely. You know, we'll call it a sequence of returns. You know, the way you pull your money out, it's so important to make sure that you do it properly because it could literally financially ruin you, okay, especially when the markets are down and you pull money out of it. It's a double dipping coming out of that situation.

But, you know, we take a look at all of that and we figure it all out for you what's actually going to be best. And, you know, we look at these accounts. Sometimes we sit down quarterly with people because they want to make sure that they stay on top of it. And we do that for you. You know, a lot of people nowadays can have an advisor. They're going to build their retirement fund up, build their retirement fund up. And, you know, they're going to accumulate an income.

Okay. So they do that. And then they come to retire. Now things got to switch. You literally are going to be in the income phase of what. life instead of the accumulation phase of life. And that's, which is hard for some people. You're going to end up having probably less money into a stock market situation where

it's going to be more money set for a lifetime income. And that's what people want. You know, sit down with a lot of people. And when we give them a lifetime income with their pension, lifetime income with their Social Security and even, say, a life insurance, permanent life insurance product, now they get some money that they actually could play with. So that way they could enjoy retirement. Yeah. You know, I think a lot of times when people are thinking about, A, do I have a retirement plan, right? I mean, it's more, I think most of the time people just kind of have a hope and a prayer. But when you think about having that retirement plan, how do they factor in planning for taxes to maximize savings? Because we've been talking about it, but bringing it down into what are some strategic things to do? What are the things that you're recommending to your clients in the plan?

so that their savings are maximized? First of all, it's so important to take a, like I said, look at everything. But one of the biggest things of the tax situation is that permanent life insurance. If you're 59 and a half and you have an IRA, you want to be able to pull that, put that into account and have a life insurance policy. That policy does more than just protection for your life. That's, you know, but your death benefits there. But it's also going to give you, like, living benefits.

So if you get sick, heart attack, cancer, or stroke, you can pull your money out of your account tax-free while you're alive. And that's kind of cool. Another thing, too, this is going to grow money into your account that is going to be tax-free. Because you already pay the tax on it. So that's the number one thing. You know, if you're healthy enough, that's the way to go. other things would be Roth and Roth conversions. Now, there again, you're going to want to make sure that you don't raise your tax bracket when you do that.

So a lot of people do it slowly and gradually over years. That could actually be a savings right there, converting that over to. But it just depending on, you know, there's no one rule for anybody, everybody's different. And that's what's nice about it. It's what's nice about this job, you know, my career, saving a job as a career. What I love about it so much is I'm sitting down with everybody, everybody's needs are going to be different. Not the same thing every single day.

Your needs are going to be different than somebody else's. We look at that that way. Yeah. Well, that's a big point, too, that I think a lot of times people don't really pick up on is it's not like Danny is just sitting there with this cookie cutter template going next, next, next, next. Everyone's different. And a certain plan will not work for everyone the exact same way. So you've mentioned permanent life insurance. That might be wonderful for client A.

but it might not fit the best for client B. And then also factoring into that, so I want your comment on that, but factoring into that, isn't it true that sometimes people don't really understand the full benefit of a professional like yourself being independent, which gives them way more options, versus talking to someone that works for XYZ big company and all they can offer is their products and services? Oh, so true. So true. Think of it this way.

If you were building a house, you'd have a couple of construction people give you bids, right? Or if you got cancer, you'd have a couple different doctors to give your opinion. Well, that's the same thing with your financing. You really and truly need to have a couple different people give you another opinion. If you currently have an advisor now, you want a second opinion, I'd be more than glad to do that for you. Because that's important. You need several different eyes on it. like I said, everybody's going to be different.

Now, a lot of advisors get stuck in the same routine over and over and become a cookie cutter program because that's the tools they have and it's limited. But as an independent, sky is open here. You know, I could pick any type of program. We could figure it out for you. If it's something I can't get, then I'm going to find somebody to come in and help with it, okay? Because that's an important part. I don't know everything.

I know a lot of stuff, but I don't know everything. If I don't know it, I'm going to get the person that's expert in it to come and help with it because that's important. Because I look at my clients one way. Do what's best for the client, period. If you do that, you're going to be all set because the man upstairs are going to take care of you. It's pretty easy that way. That's been my philosophy. And, you know, it's been perfect.

You know, just do what's best for the client every time. Yep. Yeah, it's kind of like the old saying like, hey, if I'm presenting this to you, I would tell you to do this even if it was me telling my mom. You know, so like when people phrase it that way, it's like, look, you're going to tell your mom or your family, you know, the bare bones truth. So just treat people right. And that's the way, that's the golden rule. People want to be treated right. You know, you've mentioned a couple times about Roth conversions and without getting into the weeds of how it works and all of that.

But there's some benefits with moving money into a fund or an account. where it can grow tax-free. You've mentioned also permanent life. Well, can you convert money out of your IRA into a permanent life policy similar to, like, the Roth conversion? Yeah, you can, actually. You could take that IRA money as long as you're 59. And a half because you don't want to go before that, then you can get penalized 10% from the government.

So you don't want to be penalized. We don't want to pay any more that we have to do the government. Okay, pure and simple. You pay your share, but you don't need to have to jump and pay them an extra 10% there. But, yeah, so if you're 59.5, you can take that money, and we put that into an account. And then as we fund the permanent life insurance policy, they will take that out and pay the taxes accordingly. So therefore, that's all done on the back scene for you. So it just makes it a very easy transition for you, the client, and it makes it work really well.

So you put your funds into it and then it can help. And then from there, that account will turn around and pay the policy. And then, you know, the fact about 59 and half to avoid then that penalty. So that's important. But then let's just call it rounded up to age 60. So from age 60 to when you, you know, retire, that you might not retire at 62 or 65. So then, you know, the clock is ticking at age 60, which means that money that was in that IRA that's growing. but you've not paid taxes on it.

So now you've got money growing in another vehicle, like we were talking about the Roth account, but now it's in this permanent life account. But now for the next five, 10, 15, 20 years or whatever, it's growing tax-free. And so you kind of trigger the taxes today because we know what the tax rates are today. Because whatever the tax rates are, the time you did this at 59.5, that's what the tax rates are. But in five years, question mark. 10 years, question mark. So that's a, it's an interesting.

So in other words, you don't want to do this at age 90, you know, or 74. You know, you want to do it as soon as possible to allow the money to sit in that account and grow tax-free or else it's growing for 10 minutes. Right. And another thing, too, you got to be healthy enough to get that policy. So, you know, the younger you are, the better chance of you being healthy, you know, God forbid something happened to you. and all of a sudden you got cancer, and now it's going to be too late, and you can't get that policy.

Yeah. So you know where you are at 60, that's a key thing right there. If you're healthy at 60 and you've got one now, take advantage of it. Even if you're still working, you can still pull money out of the accounts, and take advantage of something like that.

Yeah, huge point. So, you know, there's kind of wrapping up the thought conversation here on taxes. There's no way around it. You know, the only thing promised in life is death and taxes. We know that old saying, but we can mitigate them. We can properly address them as much as possible using some of these strategies. Are every strategy right for everyone? Of course not.

But get with someone like Danny who can sit down and look at your situation, ask the right questions, and go, okay, here's something to consider. And if you did it this way, here's what it would look like. If you did this, here's what it would look like. And just kind of guide the process. So I think that is super spectacular. And if someone is interested in connecting with you, Danny, what's the best way that they can do that? My phone number is the best way. You know, it's easy to pick up the phone and dial it.

It's 475-257-1807. Perfect. Well, thank you. 257-1-807. Awesome. Well, I will make sure that we also put the link to your website in the show notes so people can click on that and visit your website. and I really appreciate you coming on today.

It's been a pleasure talking with you. Thank you. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www.com.