Business Innovators Radio - Interview with James Edward Durden Jr Owner of Edward Financial Group Discussing How Taxes Impact Retirement?

Episode Date: August 19, 2024

James Edward Durden Jr. is the owner of Edward Financial Group and a seasoned financial professional with a strong educational background. He holds a double bachelor’s degree in Finance and Risk Management, equipping him with a comprehensive understanding of financial markets and risk assessment. Known for his high ethical standards and passion for his work, James is dedicated to providing clients with reliable and informed financial guidance. Outside of the office, he enjoys hiking, bike riding, and watching NFL football, balancing his professional life with a love for outdoor activities and sports.If you’re ready to take control of your retirement planning and secure a bright financial future, we’re here to help. Visit our website at Edward Financial Group.com or call us at 404-919-8916 to schedule a free consultation. Don’t wait—start your journey to financial confidence today!”Learn more: https://edwardfinancialgroup.comInfluential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-james-edward-durden-jr-owner-of-edward-financial-group-discussing-how-taxes-impact-retirement

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 back with us, James Edward Durden, Jr, who's the owner of Edward Financial Group, will be talking about how taxes impact retirement. James, welcome back to the program. Hey, Mike, are you there? Looks like.

Yeah. Yeah, man, thanks for coming back on. I think that this topic can take about nine and a half hours and then we'll still be scratching the surface. So, you know, how taxes impact retirement. Yes, that's a big one, isn't it? It definitely is. Taxes, you know, they're a wealth.

I think a good word to think about is erosion. All right. And so what taxes do is they literally erode your wealth. All right? And so if you think about compound interest, you think about, you know, what the current tax rates are, up to 37% of your wealth on a yearly basis, depending on how your retirement is set up, is going to be coming out and going Uncle Sam. And so the thought process is, do I want to build a retirement for myself, my beneficiaries, the things, the charities, the things that I love, or do I want to build a to retirement to send it to Uncle Sam, who may be investing in programs that I don't believe in and doing things that I don't particularly care for with my money. And so taxes, planning for taxes is extremely important when you think about retirement. That's a really interesting perspective you bring up there because we all have to, you know, the old cliche, there's only

two things certain in life, death and taxes. And so we know that taxes are going to hit. But when taxes are paid, it goes to an entity, the government, that uses them. And yes, we have our vote and we have our say. But as we all know, we don't control where that money goes for, you know, in reality. It goes to things that we could sit back and go, wow, I sure wish that I had been able to put that money in a different place. So if you can help your clients mitigate. And whenever I talk about this topic, we know that you can't eliminate taxes, but you, you can't eliminate taxes. But you can mitigate or lessen them. So I guess one question is, do you feel like taxes are going to go up in the next five to 10 years? Yeah, they're absolutely going to go up. If you think about it, our current debt, there's a deal that I have in my office that I set up and it's set up on us debt clock.org.

And U.S.debtclot.org, what it does is it tracks what the federal government spending is. So it kind of tells you what the national debt is. And as of the recording, as of this recording, it's at $35 trillion. That's the national debt. And if you think about it, when has taxes or the government lessened spending? When does that actually happen? Yeah, never. Yeah, right.

in my lifetime. So if the spending is going to continue to increase, the deficit is going to continue to increase, then at some point, the government's going to have to say, well, we need to, we either got to raise taxes or lower benefits, and both of those affect retirees substantially. And so my guess is, is that taxes are going to go up. And if you think about retirement, one of the things you want to think is, okay, well, is there a way to take my nest egg? What I've set aside my life savings to take care of myself, my wife, my beneficiaries and things that care about, is there a way that I can get them out of that Congress's bullseye. And there definitely is. And that's something that we definitely want to be thinking about in retirement. Yeah, you know, I think someone would go, oh, well, you can't say, well, we don't know how much taxes are going to go up. We don't know what tax bracket people would in it. But just that logical breakdown you just mentioned based on a number that we all know about,

you know, that deficit. And it's growing every second. And the only way to tame that deficit is cut spending. And like you said, not a good chance that's going to happen. The only other alternative got to raise taxes to cover that debt. And when that happens, what is going to be the impact? So what are the kinds of taxes that retirees need to be prepared for? Is it going to affect their security, their pension?

What are some of those things that you start educating your clients on being prepared for? Yeah, well, 100% of pensions, those of us that are lucky enough to have pensions, 100% of pensions are, they go off your income tax. So they're 100% taxable. So the good thing about pension is a steady income that comes in, you know, until we die. A bad thing about it is that it's 100% taxable. So if you take your pension plus your Social Security, and plus your other investments, and that tax number could definitely be bigger than you think,

and it can impact you more than you think. And so there are definitely ways to plan around it, rather that's, you know, rather that's three real strategies, right? There's Roth conversions, so maybe some of my nest egg I can convert to a Roth. if that makes sense, when it makes sense, break it down enough to match it to our income, understand how much we have to pay up front to make that happen. Another version is going to be your maybe municipal bonds. Good thing about municipal bonds is that they're pretty steady,

although there's a risk of loss. Bad thing about it is that you've got a lower rate of returns. We don't really use those in planning as much. and the other one is, you know, life insurance. And so it's how do you properly structure life insurance in order to give you yourself a tax-free income forever. And so with a mix of those two things, there's the raw, so your life insurance is definitely a solution for lower tax burden forever and also getting it out of the Congress's bullseye. You know, and I heard someone say something to the effect of thinking about your retirement accounts like an IRA, like a 401K, that haven't been taxed yet, right? Because we work for 30 years and the money goes in pre-tax and it's been growing.

And the government has been sitting there, you know, tapping their fingers on the table going, when can we get at that? It's almost like, you know, a fox, you know, sitting on on top of a prairie dog hole waiting for it to come up so it can get lunch. So we know that those accounts haven't been taxed and they need to be taxed, but you're saying that there's some ways even that retirees can think about maybe shielding that and like even like you mentioned, the Roth IRA. In some of those things you mentioned, Roth conversion may be, annuity maybe, properly structured life insurance maybe. These are not things that everybody must do each and every time. They're just options that you would show your clients to see if it fits their plan, right? Yeah, that's absolutely correct. the thing about financial products is there's not one financial product that is perfect for every situation.

And sometimes when I hear financial folks on TV or on the radio and different aspects, I often hold my breath because it's more of this is bad and that's good and this is bad and that's good and that type of deal. And the truth is, I've been doing this for 17 years. it's not every financial product has a downside. Every financial product has an upside. It's just educating you on which one of those items is best for you and when. And once you know what they do, how they can support you, how they can potentially lower your tax burden going forward in the future,

then at that point you're in a better position to take care of, you know, your individual needs for yourself and your family. Yeah. And it really ties into, you know, when you think about that bucket, you know, representing your retirement income, and then here comes a hole and a hole and a hole, you know, maybe the one hole is taxes, one whole is fees, one hole is inflation, you know, all the things that can seep money out of that bucket. And if you're looking at that tax aspect, you know, how are we able to shield

or mitigate? And it's wonderful, some of the things that you've mentioned here. And it kind of gets into like estate planning, right? I know that that's a phrase people have heard. And and then it's like this broad thing. But in reality, your estate is anything that you own, you know, whether it's your house and car, anything you own that's going to pass on to your heirs after death. Well, talk a little bit about estate planning as it relates to tax efficient strategies. Yeah. So, a state plan is essentially passing on your wealth to your beneficiaries and, you know,

at a lower cost. And so we're talking about tax. says, but another thing that you can think about when it comes to estate planning is, you know, probate fees, lawyer fees, that type of stuff. So avoiding probate. Probate is essentially when the state comes in and says, we don't know what we want to do with your assets. As a result, here are these laws and these rules that you have to go through. And oh, by the way, by going through our plan, not your plan, you're going to get charged some hefty fees from that, right? And so the more that, you plan, you know, or commit you to your state planning, you lessen that, that impact.

When it comes to the taxes directly, it is, are these items taxable currently right now? If they are taxable, then how do we get them to, you know, to kind of transition into a state that's not taxable? Or how do we structure this within these particular, financial tools to rid that from your overall network. So think about yourself as a person. And hypothetically, maybe I had a state of $15 million. Just throw a number out there. And that's not.

And if I got a state of $15 million, well, can I structure my assets to pull them away from myself to lower my overall net worth, which entails saves me a ton on taxes. And so estate plan is it's really crucial to when you're thinking about retirement, retirement planning and taxes in general. It really is. And it kind of makes me think about, you know, the stages of life like, you know, during your 20s, 30s, 40s, 50s, you're accumulating. And then all of a sudden, you're looking at, you know, preserving and protecting. And then it's passing on to, you know, the legacy planning. And how do I lessen taxes so that when I'm in retirement, I can use it for retirement.

But after I pass, then how can I lessen taxes so that my heirs get as much as possible? And then also, isn't there an aspect two of legacy planning and estate planning of, you know, you know what? I've got a nice amount of money and my heirs are going to get a nice amount. But I also want to set up something to take care of charity. Because like what you mentioned a minute ago, James, is like if the government has it and puts it in things I don't agree with, well, what if you had the ability to go, you know what? I want this charity, this whatever.

to get a portion of my estate. Is that a way that you can use some of these tools that you're mentioning as well? Yeah, absolutely. I've got a client who husband was a pastor, businessman all around, just great guy for the community. He passed away, and she was sitting well, so well. She had to have the conversation of, you know, I need help because I don't even know how to navigate all this stuff. as I'm getting these huge tax bills every every year. And I hear about, I hear that there's maybe a way to mitigate some of this stuff, but, you know, but let's have this conversation. And believe it or not,

this is going to sound silly. Financially, she was okay. Financially, her children and their children are probably okay in this situation. And so the conversation went to, well, what do you want to happen? You know, what do you, I know about these things if you've done in a community, but what does it mean to you? And if you could do something, what would it be? And in her mind, it was, it was scholarship programs. And so, yeah. And so, yeah, so that led down the path of setting some of this wealth up to maintain not just do one time, not just a couple times, but maintain a steady flow scholarships for these people. particular set of students that she wanted to help. And that, you know, that's what I call it. That's beautiful. You took a situation where instead of writing a check to the government for, and not knowing what's going to happen, she knows exactly who and what she wants to do with her money. And she's able to do that and she enjoys doing it. So, you know, that's really good. You know, getting, getting out of the, you know, quote unquote, weeds of numbers and money and all these things, when you explain that. that now transcends so much into like purpose and mission. And I'm on a crusade to help more and more students and said, yeah, I've, you know,

my husband, Pastor Long's money and I've got all the money I need and, and I don't, I don't need all this money. What can I do with it? Oh, I'm going to take care of my family. Okay, good. And you need to take care of your family. But then with that amount extra that you're talking about, she now has this extra, whatever you want to think of it as, but the word that came to my mind is like crusade.

I'm going to crusade to help some kids. And that almost gives her a little bit of a spring in her step and a little excitement in her spirit to go, I'm helping kids with scholarships and how wonderful is that? Yeah. You're absolutely right. You know, Crusade would be a, you know, I would co-sign that word there. Because she got a fire on her belly about that. So much so that she actually looked at some of the,

some of the money that she, she, she says she's wasting. I, I didn't feel that way, but she felt like, you know, I'm wasting some of this other stuff. Let's just, let's pour some other stuff over there. And she could well afford it. So, yeah, I think crusade is a good thing. And so at the end of the day, it's just taking the assets that would otherwise go, go to, go to one place and to go for what you, what you wanted to go for is, is the heart of this. And give a more fulfilling life. And, and, and I, I, I, I, I, I know that you've probably heard of like the concept of longevity, you know, like people used to live to X age. Now they're living to Y age. Why is that?

Because they're taking better care of themselves and all these things. Well, I've heard another statistic when the statistically, when people retire and they go, okay, I'm done working. Their purpose and their reason to get up kind of changes. And it's like now their mortality rate increases to where it's like, huh. Well, now in this example you just gave, she's got that fire in her belly. And not that that's going to, you know, you can't necessarily save that added 10 years to her life. But I'll bet it gave a little bit of a little fire on the belly that kind of helps toward that. And I think there's so much more in life than just dollars.

And it's wonderful to have dollars. But when you can have that purpose and you see these kids that get retired, you know, the scholarships and who knows, maybe they go to, she goes to one of the graduations or whatever the case is. You can really get involved in that and get behind it. I think that is just such a spectacular example. Yeah, and she definitely does. And, you know, I don't know. This is the reason I do what I do, Mike.

I be honest with you because that fire that she got lit up on the building, how do you think I felt? Right. I felt as, you know, as on fire with meeting and greeting as many people like her and saying, hey, did you know you could do this? Did you know that this is one of my clients have done? And what do you think about that? And so, yeah, it definitely makes me feel good about what I do and makes me feel excited about all the good that she's going to continue to do. And if things weren't set up the right way when funds passed to her and a huge percent got sucked up into taxes, maybe the impact that we've been talking about would have been lessened. So let's wrap up with the thought of how can people pass their retirement savings to their heirs, their family, their kids without having to pay as much taxes. Is there specific strategies for that or a specific financial product that would help with that?

Yeah. Two that come to mind is that one is obviously a life insurance plan. Life insurance, you know, it passes on to your heirs tax free. It expands your estate. and it is, you know, one of the strongest vehicles that I can think of that only multiplies what you, what you're doing, but it gives it to your family tax free. So that's one. Another one could be annuities structured correctly with the right riders. It can also increase your estate and pass that to your beneficiaries, depending on how it's structured, tax-free as well. Now, I want to, every time I'm listening to people, I'm listening for and watching for certain things that catch my attention.

And you said something a couple times properly structured. So this is not something that you can hear, oh, life insurance annuities and tax free. Google how to click, click, click set up. Okay, I did it. No. This is something where it takes someone that knows your situation, knows how to properly structure. Maybe it's a little bit of both, a little bit of a life insurance and a little bit of life insurance and a lot. a little bit of annuity, but you can't just go out there and go give it to me.

So that's something where you would be able to sit down and kind of understand what people need and then show them how to accomplish that with a properly structured plan. Yeah, I've been doing this 17 years, Mike, and I can tell you the products, the players, and the things that you can do change daily. Yeah. And so that expertise is essentially saying what is the best way to get that outcome out of these financial tools, right? Yeah, it's not just checking the box.

Oh, I got a life insurance policy. It's like, did you get the right kind? Was it set up the right way? Did it have the right writer? And you might come to find out when it's too late. Oh, I guess it wasn't set up the right way. Yeah, that's absolutely correct. Well, I'll tell you, James, this has been really enlightening to hear how to, you know,

lessen, mitigate taxes in retirement. So if someone is hearing this going, you know, maybe I should have a conversation or can you look at my situation? what's the best way they can learn more and then also reach out and connect with you. Yeah, sure. So you can go to www. edward. That's with no S. So Edwardfinancialgroup.com.

And on the top right button, there's a there's a, there's a some verbiage that says, let's talk. All right. So again, it's www. edward, nos financial group.com. And top right corner, let's talk. and you'll set up a 15-minute conversation with myself, and we can give you an overview and go from there.

Excellent. Well, thank you so much for coming back on. James, there's a really great talking with you again. Hey, appreciate it, Mike. 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. www.com.

Thank you.