Business Innovators Radio - Interview with Samuel Dixon, RFC Co-Founder of Oxford Advisory Group

Episode Date: May 21, 2024

As a managing partner of Oxford Advisory Group, Samuel J. Dixon is focused on retirement planning, IRA legacy planning, and investments for retirees, executives, and small-business owners. He routinely offers educational classes on taxes in retirement and developing a steady and reliable retirement plan.Samuel, with his expertise as a RFC, also contributes articles that are featured in financial publications such as Kiplinger Financial, Newsmax, and The Street.Samuel has passed the Series 65 securities exam and also holds his insurance licenses in Florida and South Carolina. Samuel graduated from the College of Business at Florida State University with a degree in risk management and insurance with a focus in financial planning and wealth management.Samuel and his wife, Katie, are raising their three children, Clark, Callan, and Elowen. Samuel also enjoys coaching Clark in sports. He teaches youth at his church and enjoys boating on Lake Butler with his family.Learn More: https://oxfordadvisorygroup.com/This is prepared for informational purposes only. It does not address specific investment objectives, or the financial situation, and the particular needs of any person who may receive this report. The information herein was obtained from various sources. Oxford Advisory Group does not guarantee the accuracy or completeness of information provided by third parties. The information in this report is given as of the date indicated and is believed to be reliable. Oxford Advisory Group assumes no obligation to update this information or to advise on further developments relating to it.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-samuel-dixon-rfc-co-founder-of-oxford-advisory-group

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 a Samuel Dixon, who is the co-founder of Oxford Advisory Group, and we'll be talking about taxes in retirement. Samuel, welcome.

to the program. Thanks for having me, Mike. Excited to be here today. Yeah, you're welcome. I always love learning from different people getting their backgrounds and perspectives because it can be the same topic, but you can get a whole different flavor. So I'm excited to learn from you on your perspectives on taxes and retirement. But before we dive into that, give us a little bit of your background, your story, and how did you get into the industry? Yeah, it's pretty interesting. You know, at a young age, so I co-founded this firm with actually my brother, Chris Dix and Christopher Dixon. So what's interesting is at a young age, we saw a relative go through a super difficult time financially,

ended up losing a house, okay? Didn't really understand why I was a little too young at the time and kind of knew we didn't go to that house anymore, right? You know, we had to help them move. We had to do all this stuff. So as your kid, you don't really understand. As I got older, I kind of started looking into it a lot more, especially in college. And I was actually going to go into mergers and acquisitions and go the whole straight up the Wall Street route.

That was kind of where I was positioning myself. And then I started digging into that and realized, you know, that was completely avoidable. You know, had that route to have been given good advice or some type of good guidance, none of that even happened. So it was really eye-opening to me. And then I figured out, you know, I kind of actually like working with people more than I do companies. You know what I mean? So it's just a little bit more personal touch to work with people. So that's kind of what Steered and Chris obviously encountered the same thing in college after we graduated like, hey, you know, we might want to actually go this route. So a completely different

angle than we were initially going, but it's worked out pretty well. You know, it reminds me when you were describing people. You know, you hear, you know, B2B business to business or B to C business to consumer. And I've often said that really we should look at those approaches and acronyms as H to H, human to human. Because in reality, no matter what we're doing, we're helping or serving or providing value to humans. And there's feelings. And yes, you need to logically understand numbers and things like that. But look at that impact that stuck with you all of these years with that loss of house, you know?

And it just, it just hits you in the gut and the confusion there. And it's almost kind of like, I'm certain that you feel this way. If you can just help this one family prevent that. And then the next family, you don't need to save the world, but just this one and this one and this one and just kind of ties into your purpose, right? Oh, absolutely. So, I mean, a big motivator for Chris and I with Oxford is, is how many families can we have an impact on, right? So, you know, we look at it as, hey, I'm helping, because we focus in retirement is our bread and butter. but hey, I'm helping this person with their retirement, but hey, they also get to go visit their kids more now because they can afford to because we did a plan. Hey, they can visit their grandkids and be an impact in their grandkids life. So it's not just one generation we're helping. We see it as three to four generations. We're actually having a direct impact on it. And, you know, it's rare, Mike, to find a profession. This is my opinion. To find a profession where, you know, you can make a pretty good living and also give back kind of to that magnitude.

right? I mean, the medical profession, you can certainly do it. Look, biology never interested me, man. It's not my thing, right? Yeah. So. And you could be selling cars and nothing wrong with people selling cars, but it doesn't really have that legacy impact like you're describing here. So yeah, I totally see what you mean. Yeah. So, I mean, that's kind of is our driving motivator. And we keep a we counter on that for year. Hey, how many families did we help this year? How many plans did we develop for the retirement help them? So it's pretty interesting to, to view it from that. loans. So this is kind of, this pops into my mind. Do you guys as a firm or individually, whether public or private, you know, like you and your brother together, do you have a number? Like, we want to help. Before we retire and get out of this industry, we want to help a billion families, a million, 100,000. Do you have a certain number that you're kind of going here? This is where we want to head. You know, I think years ago, we started off, you know, helping as many as me and Chris could, right? And then we realized something. If we want to have a bigger impact and truly have a bigger reach, people are yearning for it. So we started expanding and opening different offices. I think we're up to like seven now, seven different offices. And it's help. So to answer your question, more, right? The number is more. I want to help more. You know, and if it's helping in a different area or or anything that we can do to help them in retirement financially, you know, with taxes and state. is it income planning like anything we can do uh we count that as helping them well and in some

senses if you had a certain number and you achieve that mentally you could go okay well we've hit that so now but but i like them more because that means it's like i'm constantly and never ending improving my service and value to my clients and it's not a number it's just impact and impact and and then you're now able to have an exponential growth by opening up more offices and training more advisors to do the same thing you guys are doing. So I love that. We're talking about taxes in retirement and how to handle them, how to plan for them, how to mitigate taxes in retirement. We don't have four days straight to talk about this because I'm sure that four days straight would only be scratching the surface. But where do you start when you're

working with your clients and helping them to start thinking about what they should be doing about taxes to plan for retirement? Great question. So, In my humble opinion, taxes are one of the most overlooked things when it comes to retirement. Like, people just kind of glance over them and they don't pay any attention to them. They don't realize how much wealth is potentially lost that way each year. So we look at it with the end in mind first. We say, all right, what kind of lifestyle did you want in retirement? What's your goal?

You know, is it 50K? Is it 100K? Like, what's your lifestyle? Like, really tell me what your lifestyle is that you want to achieve, right? And then we look at it and we say, all right, if it's 100K,000, how much of that 100K do you get to actually keep? Well, that all depends on how it's taxed, right? And there's all these different ways

that can be taxed in retirement. A lot of, especially middle class people, get hit with tax deferred monies, which is ordinary income. So it's like, hey, you're not bringing home 100. Hey, you wanted 100, you know, you wanted 100K out. You're not bringing home 100, right? What's your after tax number?

That's the number we hone in on. And we see, all right, what's the impact right there? and what kind of planning or strategies do we need to do to get them to their goal, right? So I always start with the end in mind. It kind of gives us a bull's eye. Hey, we need to hit this number, right? All right. What strategies and tax planning do we need to do?

Right? Do we need tax free? What do we need in here to hit this number? You know, that's the age old, you know, gap. Like, here's what you want to be doing to spend this much money to go here, do this. And here's what it looks like you'll have. And here's the gap. We need to close it.

But I think that big question mark that we've been talking about is taxes in the sense of that nobody really knows. You know, it's not a simple equation like one plus one equals two because what is the tax rate today and what's it going to be in five years, 10 years, 15, 20? That is where it starts to get fuzzy. But I think that what I always like to ask is what is your approach with your clients given the fact that I think that there's a misconception people tend to have, oh, in retirement, my tax bracket is going to be lower than it. is now or oh, the tax rate is going to be lower. Well, is that the case? And secondly, isn't it true that the deficit as growing fast as it is, the only way to tame that thing is to cut government spending, which probably will not happen the way we want it or raise taxes. So where is taxes headed? Might not be down. Yeah, I would, you know, I'm not a gambling man, Mike,

but I wouldn't say down, right? Yeah, yeah. We're $34 trillion in debt. counting right now, record levels of debt, and people hear that all the time. If you look at historical tax rates with our debt, you know, our taxes, they don't feel cheap. They're kind of cheap right now compared to what they've been in the past. And at $34 trillion in debt, it eventually has to be paid, right? Yep. So, and then people can argue about who did it, who did the debt, who did all that. I'm not in it for that. I'm in it for, hey, they're going to want this money at some point. The tab's been run up. We've got to have it paid. Where are they going to pull it from? So the next step we look at is, you know, hey, those retirement accounts, what type of account you're pulling from?

Like you said earlier, most people might think they're going to start in a lower tax bracket. And sometimes they might, even the first year or two, have been a lower tax bracket than when they're working. The problem I think I run into the most is people will say, well, you know, I'm not making that big salary anymore, Sam. Like I'm not making that big income from my job anymore, right? So my tax bracket will drop. It's like, okay, yeah. But where are you pulling the money from to live in retirement? Oh, well, I'm pulling that out of my 401k or my IRA.

Okay. Are you aware that's taxed as ordinary income, similar to how you're when you're working, right? So they're in the same bracket. So if you're living on about the same money you were living on before from that salary, let's say your salary was 100K, hey, but you only want to live on 90, but you're pulling that out of a 401k or an IRA. Well, guess what? You're taxed the same almost, right? it's not necessarily your bracket will drop.

And in fact, I would say one of the biggest pitfalls is your bracket going up because of what we call required minimum distribution. So even if your bracket drops initially, in your 70s, you have to start these required minimum distributions. I call them a ticking time bomb, right? Yeah. Because they start going off and they keep going off the rest of your retirement. They force you to pull out that taxable money, that tax deferred money, which is taxed like

it's income. So on paper, it looks like you're pulling out of this money of the income, even though you might not have to be spending it. So that can actually cause your bracket to increase or not ever decrease. Right. So it's kind of a twofold problem there. And we see that only getting worse with the level of debt we have today. And with those required minimum distributions, isn't it, I know that you know more than me. I'm just hearing things in the industry.

So talk to this point. if someone says to you, oh, you know what, we had kind of a good year because we sold the RV and we got a little liquid cash or whatnot. I don't need to do my required minimum distribution, so I'm good to go. Well, if you don't do it at the right time, there could be several consequences, right? Oh, absolutely. It ranges between 25 to 50 percent penalties. If you do not pull it out on time and in a timely manner in the correct amount, right?

So regardless of what you're doing with your other money, you could have plenty of other income and not even need the money, Mike. Yeah, but you better take it out. They make you pull it out. Yeah. And guess what? When you pull it out, it counts as income and you're going to pay taxes on that. And guess what? When it counts as income, then you pay taxes on all your other income too, right?

So it all goes into one pot and it could raise your bracket. You know, and it's like when you mentioned a minute ago, when you're out there working, and you're just clipping along and here comes this salary and all of the money coming in. Yeah, you know, you get this expense or that expense or taxes. But in one sense, you realize that, okay, well, I got the paycheck coming in next week, next month, next quarter, whatever the case is. But in retirement, when you get that hit of an expense or taxes, things like that, it's a bigger hole in that bucket because there's not as much money coming in as it used to be.

So this is not just something like, well, what are you going to do? Tax is going to go up. We've got to deal with it. But if there's some ways that you can be doing some planning years ahead to be tax efficient, that's what I feel like people need to be aware of. So what are some of those tax efficient strategies you recommend to your clients? Like maybe, you know, if we know that taxes are what they are now, because at least that's a known thing, what about doing some type of a conversion, taking some money out of that qualified account,

taking the hit now and putting it into something that might be better, you know, better taxed? Yeah, great question. So you know, everybody's situation is a little different. Let me preface it with that. But like I'll give you a couple examples you might explore, right? Of course, you got to see mathematically that works out for you. But like you mentioned an easier strategy to understand. We kind of look at ourselves as most people look at their taxes as looking in the rearview mirror. They're looking at what they did last year. Hey, how much am I going to pay because of what I did last year? And then they pay it, right? We see ourselves as instead of looking in the rearview mirror, we're looking out the windshield. Right. I'm driving the house. car and I'm driving to the destination where I want to go. What tax rate do I want to be in? What strategies do I need to do today? So I don't have to pay that next year like I did last year, right? So one thing you'd look at would be, you know, an easy one for most people to understand is Roth conversions. Those are really popular right now. And some people get like really drastic with it. And I remind them, you don't have to do the full IRA to a Roth diary. You don't have to do the full 401k to a Roth and pay all that in one year. We prefer you actually should.

space it out over a few years, right? We call it filling up your tax bucket. So, hey, if you're in a current bracket right now, I'd like to maybe see how much room you have in that bracket that you can convert over without paying more in taxes, right? That doesn't necessarily mean your tax bracket has to go up to do, to achieve our goal of getting more to tax free. And then, of course, when that money goes into tax free, it grows tax free and the income comes out tax free. Right. So it's a beautiful thing over there. It's about how much do you want to get? get there and how quickly, right? And then I call it, what's your pain threshold? Okay. If you want your taxes, tax bracket to stay the same, we'll build that plan out. Then I have some people like,

hey, I don't mind going up one bracket, Sam. All right, then here's how much we should move over year by year. And again, it's not a one time thing. It's a, hey, let's look at this year to year to year. Let's build a plan. And most importantly, Mike, let's implement the plan. Exactly. Let's implement it. Yeah. Let's make sure you're going to, I'm sure you've had some people say, hey, that sounds good. Let's just get her done. Just one whack, get her done. But you might jump two, three tax brackets to your point.

And if you spread it out, you know, yeah, there's some paperwork or some steps, you know, each year. But if we keep you under that threshold. And again, like you said, this is not something that works for every single person, every single time. Everyone's different. There's unique financial situations. And let's do what feels right. But if you can reposition something out of an account that's never been taxed and is, going to get the big old tax whenever it comes out, why not start dribbling it out now,

paying what we currently know is probably lower taxes than what it will be in five or 10 years? We don't know for sure. But then if it goes into an account like a Roth, like you were mentioning, and it grows, that growth becomes tax-free because Roth is tax. So I think that a lot of people have heard about this kind of a strategy, but really don't understand it. And I think that that's the kind of thing where it's like, okay, sit down with someone like yourself and you know you can look at their situation ask certain questions and go well here's what it would look like yeah absolutely we always tell people you know

what you mentioned earlier is i have people say let's do it all in one year and i'm like all right well let me show you the math on that yeah let me make sure you're very aware of that and then sometimes like what what tax impact is they're going to have if you do all that as long as we know the good and bad at front it's usually people are usually okay with it if the good good outweighs the bad. I think it's important to bring that up front, right? And then I've had some people where I'll show on the math. They're like, oh, well, you know what? Sam, let's do it over five years instead. I like that plan better. So we always say, hey, we'll try a couple different strategies. We'll show you different options and then let you make an informed decision. That way you're not just

shooting from the hip. We know mathematically, and you have examples of maybe three different situations, three different strategies we might think you qualify for and recommend. And then you get a pick and you can see the impact of each one. But it kind of goes back to, I always tell people, you know, 20 years ago, if you could go back or even 30 years ago and buy Apple for the price it was, you know, 30 years ago, what type of account would you prefer to buy Apple in? Would you prefer to buy it in a taxable account or a tax-free account where all that growth the last 30 years was tax-free? Yeah, if possible, that would be great.

And then all the income you pull on. It'd be fantastic, wasn't it? So why aren't we trying to achieve? that today then, right, with the same bucket and navigating some money over there to that tax-free bucket to get some of that tax-free growth. I'm not saying put everything over there. Yeah. But a portion of a portfolio, we could see that being pretty reasonable. Give you a little bit of protection in case they hike taxes. Yep. Yep. And again, everybody's different. And you might show someone scenario A and B, and they might want to do it all in one for whatever other reasons,

because it's not like you care. You're just showing them the options. And I think that's what makes people feel comfortable. You know, they're never going to be forced to do something that they don't understand or don't want to do, but show me the options. And when you probably can show it to them in a report in black and white and go, oh, my, that's a big difference one way or the other. And so I think that's what's really, really huge.

You know, when you think about taxes and you think about, okay, we've accumulated this, now we want to preserve it and save it and prepare for taxes, what about the aspect of passing your money along to the kids at the time of death. How does that work with taxes there? Are there some strategies you can advise your clients to put into place now so that the kids would receive those funds with as little taxes as possible? Absolutely. So there's things we look at there and we say, you know, legacy is one of your goals. How much are you planning on leaving. And again, back to what I mentioned earlier, it's, all right, Sam, I wanted to leave this much money. Okay, well, you're currently leaving it in a taxable bucket to where it's going to be

taxed, and that won't be the dollar amount that gets left behind. I want to leave a million bucks. Okay, well, it's a million taxable. So here's what you could net in today's taxes. Now, we don't know what the future taxes are going to be, so it could be 400 grand, 500 grand, I don't know, right? So if that's any one of your goals, that's where we would then say, all right, you might want reposition to the tax-free area and some type of a tax-free account. And then let's just go ahead and give that account a job description, right? Just like when you had a job, you had a job description. We're going to give that account of job description.

We're going to say, hey, this is going to be for legacy. We want it to be tax-free today. And we want it to most importantly stay tax-free when it passes on to the next generation. 100%. And I think that sometimes people might say to you, Samuel, this sounds great and wonderful. I don't understand everything. but it just is so, it almost feels laborious, which means you should now handle this up front well ahead of the time when you need to make these decisions.

Because if it feels laborious and confusing now, imagine what it feels like if there's a constricted amount of time to put some of these strategies into place. Because doing one of those conversions you mentioned, that takes a minute or two. And it's not like you can just push a button and go, okay, here it is. You need a little bit of runway. So what would you say to people hearing this saying, okay, you know, need to make some of these decisions and strategies. Should that be one year before retirement, 10 years?

What is the sweet spot there? You know, what's the old saying the best time to plant a tree was 30 years ago, the second best times today, right? I would say what it comes down to is more so, you know, how much do you want to get there? Do you want to do the labor-intensive process yourself? Do you want to find somebody in the industry who does it? I'm not saying it has to be us.

I mean, anybody who's qualified can do it, right? And map that out for you, right? It depends if you want to kind of do the heavy lifting yourself or you want to put the burden on somebody else and have them help you do the heavy lifting. So it sounds labor intensive, but if you partner up with the right person, maybe it's not so labor intensive on you.

Maybe it's not as hard as you'd think. It gets laid out. Maybe it's a little bit more labor intensive the first year, but every year after it gets really easy. Right. So I would say, and I have people in different, camps. I have some people say, hey, Sam, that's great. You know, I want to try to do like most of it myself or, hey, I don't want to do any of it. I'd rather you guys help me and advise me on the whole process, right? And we're good with either one. I don't care either way. We're here to help people. Yeah. You know, I always often find that if I'm personally trying to learn something and it's a certain topic, let's say that I'm not familiar with, I have found that, man, I kind of went through this course or bought this book and it's still as fuzzy. And I went to this other person. And same thing. Fuzzy, fuzzy. Then all of a sudden, this person right here, man, it just came to life and it was so simple and it just, you know, it was so easy.

I think that that's when some clients can understand some of these things, if you have a way to explain them like what you've been doing in our conversation here, it might be that final light bulb moment for someone. So I would just ask you if someone is listening to this thinking, maybe just give me like your perspective, give me a second opinion or show me where I'm at now and where I could be. what's the best way that someone can learn a little bit more and then also reach out and connect with you? Yeah, that's a great question. So we have different reports we can run for people. They don't have to come in. We can do it virtually. We have a tax analysis report.

We have a tax map report. So both of these reports will look at, hey, if you don't do anything, what's your current taxable situation look like right now? Right. And then what we're doing from there is we're seeing, does even looking at tax-free make any sense to you? And if it does, great. We'll maybe show you some strategies over there. But the report will also hint to us if it doesn't. And then we always try to make it into an educational event for the client.

So we want them to not just do what we say, but understand what they're actually doing, right? Because if I ever go anywhere and they tell me just to do something, I'm not good. I'm not that guy. I'm not just going to do it. They have to explain to me and then educate me. And then I make a good informed decision. I feel good about it. So the same deal here.

We like to educate, educate. But first step would be, hey, what's your current taxable situation? now. Do you even need to look at tax rate? If so, how much potentially? And we can usually determine that from the tax map report. Yeah. Nice. Excellent. Well, what's the best way to get all of that and on the website? Oh, yeah, Oxford Advisory Group.com. You can go there. We should have a little drop down for you. You know, people see us on TV a lot and they'll go on the website and fill out those reports. And then if you want us to reach out, we will. If not, just tell us, no, you don't want us to reach out, right? It's all good. Either way, we don't care. We're here to help,

but you won't help. So, yeah, Oxfordavisor Group.com. Excellent. Well, Sam, thank you so much for coming on today. It's been a real pleasure talking with you. Thanks for having me, Mike. I've enjoyed it. 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. Visit www. influential entrepreneurs radio.com