Business Innovators Radio - Interview with James Edward Durden Jr Owner of Edward Financial Group Discussing Living a Tax-Free Retirement

Episode Date: August 9, 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.comjames-edward-durdenInfluential 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-living-a-tax-free-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 this James Edward Durdon, Jr. who's the owner of Edward Financial Group and will be talking about living a tax-free retirement. James, welcome back to the program. Hey, thank you, Mike. So I just like the sound of that.

I want to live a tax-free retirement, and I think that anytime we turn the news on and hear all about taxes and up down and all around, you know, we all get confused. So let's talk about, you know, what is your definition of a tax-free retirement? Well, you know, I'm definitely going to get into that, Mike, but, you know, as always, I always do this, right? I'm going to take a step back. What I really want to do is want most pre-retirees to understand. the devastating impact that taxes can have on your portfolio, on your living, and what you leave to your beneficiaries.

And so, in a lot of times, I do classes. And in my classes, I just teach an example. And I want this example, everyone to kind of picture this example. So imagine I gave you a dollar and I told you it was going to double every day for 20 days. Okay. So day one, you get a dollar. Day two, that dollar turns to $2. Day three, that $2 turns to $4.

Right? And so on and so forth. Okay. And at the end of 20 days, most folks wouldn't believe that they would have $1 million. Wow. A little bit more, actually. All right. And so now, let's go back and let's imagine I'm going to give you that, I'm going to give you the same dollar.

but every year I'm going to tax it at 28%. So $1, taxed by 28% turns to that amount of money. Then that year, it's going to double again, but we're going to tax that 28%, so on and so forth. At the end of 20 days, you'll have $56,000. Not over a million. No. $56,000. Taxes can absolutely destroy.

your retirement plans and the amount of money that you want to leave to your beneficiaries. It could absolutely destroy it. So positioning yourself to be in a position to live a tax for retirement is something that everyone should see what it looks like. Okay. So what it looks like individual for you. What tools do you need to do and what and how do you position your money to get away from that type of devastating effect on your retirement. As you were describing that, it brings up the old cliche analogy of like the holes in the bucket. You know, you carry your bucket of water, which represents your financial money and retirement, all that, then all of a sudden, boom, here's a hole.

And then here's a hole. And those holes can represent all kinds of things, you know, like expenses or whatever, inflation. but that tax hole, that's a pretty big hole and we can never ever totally plug it up, but we can make it smaller. That's exactly right. That's exactly right. And so, you know, living in tax-free retirement is essentially about positioning your assets, more than likely in different strategies in order to not only does it grow tax-deferred,

but it comes out tax-free. So, you know, you stop the devastating effect of taxes on your income. You stop something else, too. We call it a legislative risk, which is congressman that you probably didn't vote for. That's paying for a program that you probably don't believe in that raises your tax. That you probably never will even hear about until it's too late. That's right. That's another thing, too.

Yeah, yeah. You know, they're coming up with creative ways not to notify you that they're, that they're poking a hole in your bucket as you, you know, the analogy that you used earlier today. So, you know, positioning yourself to be tax-free is absolutely, I think, imperative to understand what that means in retirement. How does it look and how it could benefit you? So now I know that you do not have a magic wand, a crystal ball, but from a broad perspective. Where do you think taxes will go in the next five to ten years? Well, I can tell you

emphatically, they're going to increase. The Trump tax cuts are going up already in 2026. It's going to happen. Unless, well, I guess Congress can pass a law to continue it or extend it. But, you know, but it's set the sunset. And even if it doesn't sunset, our current debt or deficits, $34 trillion. And the money isn't as, first of all, that's a mind-blowing amount of money, so I shouldn't say that. But with that said, that money, it's not, it's the interest on that money that's going to start being unbearable. So at some point, we're going to have to increase taxes or revenue in order to lower, you know, that deficit. And unfortunately, that comes from you. So I'm going to say emphatically, you know, it's my belief in majority of my

client's beliefs that taxes will go up in the future. Yeah, but we can tame that deficit, one really easy, simple way and just have government cut their spending rights, because that's easy to do. Yeah. Listen, guys, I don't know if you, first of all, it doesn't matter what side of the aisle it is. And I definitely don't want this to become a political conversation. But You know, everyone has what they want to spend everyone else's money on. Yep. And so I highly doubt that we're going to see any relief in spending. Yeah, I mean, that's just the biggest joke ever.

Whatever you're spending it on, whatever initiative, you know, it doesn't matter. But we know that government spending is out of control and we're not going to get that balance budget from just cutting spending. So then what's the alternative? of raising taxes and whether this, you know, you know, Trump plan or whoever's plan or sunset, whatever that happens, that's actually probably not even the full driver because we know that that deficit is growing. And I'm, I don't, I'm not an economist, but I would venture to say that you can't ignore the deficit and just kind of keep it, you know, maintaining because at

some point, you better start paying it down where else our credit rating as a country starts faltering. So whatever the answer to that question is, the point is what you just said. Taxes are going to go up. Now, how much and who knows, but they're going to go up. So if that's the case, what do you do about it now? How do you create that tax efficient retirement plan taking this tax quandary into consideration? Yeah. So there's three products that we, that, that, that,

kind of give sort of that that tax-free environment. Each have, you know, pluses and minuses, and I'm going to kind of run through each of the three. And then also, more importantly, is a retirement income plan. Okay. And so I'm going to talk about the type of products that are available, and then I'm going to jump on the retirement income plan. The most important thing in this conversation isn't the products.

It is the plan. Okay. And so let's talk products first. The first one is municipal bonds. Municipal bonds are tax-free on the federal level. However, they can be taxed on the state level. So this depends on what state that you're in. So the upside is obviously is tax-free.

The downside are is that the rates of return historically on those have been kind of low. There's also a very low chance of default, but they can. default as well. So although it is an option, a lot of times that's not an option that we use very often within our firm. Okay. The other one is Roth IRAs, Roth 401Ks within their plans. Now these options, we definitely want to exercise a lot. Upside with the Roth is that obviously it grows tax-free and comes out tax-free. That's the upside of a Roth. A downside to it is if you're talking to individual Roth or individual IRA is that there's a limited amount of money that we can put into that bucket. So if we're getting ready to retire, sometimes we've got to dig deep and put a lot of money away, then that isn't an option. Another downside is the amount of income. So as a family, you make above a certain income. And as an individual person, you make above a certain income.

You don't qualify for that. Okay. Now, a little bit different depends on your company. If your company allows a Roth, you know, 401K, then we definitely want to take advantage of that. Okay. But the last one and the most unique, and a lot of folks hadn't heard about this, is life insurance. Okay. And so life insurance is one of those things where you can put, first of all, as much money in it as you need to.

The money grows tax deferred. It comes out tax-free. Okay. and it has ancillary benefits to that. For example, if you put money into this plan, got to it something that happens to you day one, well, you've got a death benefit that your family, you know, gets to take advantage of, okay?

If you get sick, there's other things in there, rather that's, you know, terminal illness. You know, doctor says, hey, I got so much time to live. Okay. I can't perform two of the six ADLs, dressing myself, feeding myself, bathing myself, transferring between getting myself up and out of bed, that type of deal.

If I can't do two or six of those, then I can access that debt benefit. It gives me another avenue of funds to get other than my retirement funds, right? So it kind of shields those a little bit. And the last one, you know, if I get a illness, stroke, heart attack, cancer, that type of deal, then I'm going to access.

So, you know, I like, that option a lot, but a combination of those two options can get us in a position to where we don't have to worry about what happens in Congress, right? Yeah. Worry about that. We, you know, our income is coming to us tax-free and a steady income is a life-changer when it comes to retirement. And it also gives our other assets the ability not to have to worry about volatility or to depend solely on assets that are going up and down, right? Yeah, I was literally just thinking about that. And I know that you would never say, you know, annuity or whole life insurance or permanent life insurance is where you put

everything. So whatever the tool is, you need to have a good balance. But I think when you have some of these protected kind of buckets, so to speak, it sure does take the edge off of that volatility, right? It surely does. And the big thing is, is that. that with the written income plan, what that does is that says, here's how much money that I got coming out that is tax free. And here's how much money that it's got is taxed. And I'm going to put an asterisk surrounding tax. If you do it right with a written income plan, obviously there's a amount of money that the government's going to give you a standard deduction, right? $25,000 currently, I think, this year for a family of two.

and typically that increases by 3% a year, and I'm saying 3%, whatever the CPI is. It typically increases, right? Well, think about it. If I retire and I've got good assets and any of those vehicles that I just mentioned, so I got a lot of income coming tax-free. But then I got this taxed income over here, as Mike said, you want to make sure to keep a good mix. Well, if I'm taking out enough taxed income that's below that standard deduction, well, how much taxes am I paying on it?

The answer is none. So if you mix all these together with a good retirement income plan with the right financial professional, oh man, you can severely reduce your tax burden in retirement, which severely increases your standard of living in retirement and puts you in a position to give how you want to give, God forbid, something would happen to you. And, you know, let's kind of circle back to that example you gave about the dollar doubling for 20 days. you know, that's a product of compounding. And compounding works as growth. And compounding works when you throw it into the calculation about those taxes. Because now if you have certain calculations where you're going to get hit with this tax and whatnot, now the net that you can use to spend in retirement is going down.

But if you've got that nice mix, you're getting momentum, you know, faster because you don't have the taxes coming out. So I think that that compounding aspect, people, I guess what? I've heard the quote that, you know, Albert Einstein says it's one of the wonders of the world is compound interest. Yeah, it's the wonder of the world. That's correct. Talk about that all the time. We call it the compound interest curve. You know, it gets to a point where it's just going to accelerate. And so that example talks about that a little bit more in detail. But think about that and then think about, you know, most of the time when you retire, you've got, you kind of at the peak of your income. earning years for most of us, right? And so we're making more than we ever made before. We're also good at doing it. Whatever it is that we've been doing for 20 years, we're really good at it, right? Even if we don't want to do it anymore, that's the case. I are really good at it. And so if you think about it, I've retired at the point, and I'm set myself up to avoid taking, giving so much income to

Uncle Sam, right? I've avoided creating a retirement plan for Uncle Sam, and I've created it for myself, which is going to give me more income, you know, in retirement, less worries. You know, I don't know. I just can't. I just, I tell everyone that you want to know what this is and you want to deal with a financial professional that's familiar with it. Yeah. So that you can at least see how that looks for yourself.

You know, you hear certain old buzzwords we say like, oh, Roth or annuity or Roth conversion or whatever the word is. cannot go out and Google it and go set it up click done i mean it's it's there all of these things are just so intricate and intricately um work have to intricately work together so yeah working with someone like yourself to go you know let's find that you know where you're at now where do you want to be and what are some of these lifestyle things that we need to put together then some of these financial tools you've been mentioning now you put them out there for consideration because I can just tell that you are not one that you say, you must do this. It's like, hey, here's this.

How does that make you feel? Hey, here's this option. And here's some pros and cons. And you're just kind of like a waiter or a teacher just going to let me teach you about it. And then what do you want? Right. And it's also a, it's literally. So when I say a written income plan, I literally mean it. You can see dollar for dollar what's happening with what agreed upon set of assumptions. Right. That's important. But you can see exactly, you know, what it looks like. And so I'm going to give you the facts, let that mull over, and then go from there. I'm going to tell you what I recommend, right? And then at that point, it's really about you and how comfortable you are. And that's important, too. So this is not a, you know, sometimes I'll have a client come in and say, hey, listen, here's what I want to do.

Let's do it today. And I have to say, no, ma'am, no. sir, we're not going to do it today. And the reason we're not going to do it today isn't because I don't want you as a client. I really do. But it's because if you don't understand inside and out of this and you make a quick decision now, that that's going to lead to, hey, you know, maybe an uncertain expectation. And what I want to have is a certain expectation. I want you to understand that here's the range we should end up in based upon the numbers that we discuss. I want you to understand that we model everything. So if the rate of return is a lot higher, we're going to show you what it looks

like. If the rate of return is lower than we expected, we're going to show you what it looks like. And so I need you to be a partner with me in this. And because if you are, not only did I just transfer that knowledge, which you then can transfer into your beneficiaries and those folks that came behind you to help your whole family tree, but I feel comfortable that, that whatever we decide to do, that not only am I a good steward, but that you are. Yep. Yeah, you know, let's talk a little bit about more of that tree and transferring because it makes me think of the word legacy. Like if you've done things the right way ahead of time and you get to your retirement, you can accomplish that living a tax-free retirement. Well, at some point at the

end of your life, you want your wealth to then pass on to your heirs, hopefully as much tax-free as possible. And by putting some of these things in place, you know, it's, it's kind of like the hole in their bucket. You don't want to have a certain figure transfer to them. And then all of a sudden, bam, here comes their taxes. They've got to pay. So talk a little bit about that legacy and that transfer. Yeah. At the end of the day, in my opinion, one of the reasons that I, that I, that I started at the firm is I was got a saying is that we stand on top of the shoulders of the folks that came before us. Okay. Sometimes, And it's okay if you feel this way.

This is definitely not a scolding. You know, there's a thought process of, listen, I've given my children, my all seed, my spring, everything that I can. I really want to enjoy me. Okay. And so that's a normal feeling. And this is not again. I want to repeat it. That is not anything, you know, to make you feel bad about.

But the question that I always ask anyone that's there, well, if I can, with your help, get you as comfortable as you can in retirement, okay, and leave some, maybe even if it's larger than you expect to your children, would you at least be willing to take a look at what that is? Okay. America's a capitalist country. We just are what we are, right? And corporations, our corporate, I mean, if you, if you travel around the world, You look at our corporations, make hand over fist, you go to some other places. You start to understand how much of a business we are in America, right? Our children may need a little bit of help.

The cost of a house wasn't the same as it was 40 years ago. Yeah. Right? The cost of college definitely one the same. And so these are things that we may need to help in, how we help, doing it the right way, right? In context, doing it, you know, we're definitely helpful folks that help others, but how we do it matters. And so you, yourself, your wife, what you've done so far, can absolutely change your family tree if done right. Yeah, 100%. And then isn't that such a gift?

You know, you might think, oh, yeah, I've accumulated X to transfer, you know, to my heirs and my family. but what an added gift that it is that you've done a little bit of work ahead of time to make sure it's going to transfer at the highest level so that they don't have as much taken out. And that becomes, you know, an added level of that legacy gift, not just the dollar amount. absolutely yeah yeah i you know like i said i it's one of the reasons i started this uh you know i tell you guys about that um and one of other shows together i had a discussion with you about one of my earliest clients and you know i gave her a half a million dollar check and she called me back two months ago and say what to do with it well guess what she's done with it she she she did she she never had to go back to work uh so she didn't go back to work uh you know until she was i think her oldest kid was around 20 and she took a part-time job just teaching. And I was really,

that was really to keep her busy. The way her situation looks right now is, is that when she, and by the way, our kids don't know it. They know, they know they have an inheritance. They don't know what it is. They don't know how much it is. She's, you know, following the steps that we teach internally. And, you know, the way it's looking right now is that their children will, will be their children and the children out of that should be well taken care of. And she's living her best life that she could ever live. And it all started from her husband who basically looked me dead in eyes and said, hey, you know, he met with some bigger firms and some folks that have had more experience. And he said, he said, there's something about you that I trust.

And as a result of him saying that, guess what she said. hey, it's something about you that I should trust and I want to move forward. So this is the path. This is what kind of gives me goosebumps as I have right now because I love doing it and I want everyone's family to experience it. And it just comes down to what we've said before. It's just all about serving and providing value. So if someone is listening to this, James, and thinking, let me see how I can get a little bit of a clear picture on living a tax-free retirement. what's the best way they can learn more and also reach out and connect with you?

Sure. They can go to www. www. edwardfinancial group.com. And Edward is no S. So it's just Edward with a D Financial Group.com. And in the top right corner, there's a button that says, let's talk. If you click that, that'll give you some time. We'll have a 15-minute initial conversation. And at that point, we'll go from there.

Excellent. Well, James, thank you so much for coming back on. It's been a real pleasure talking with you. Hey, I really, really appreciate the time that you give me, 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.com.