Influential Entrepreneurs with Mike Saunders, MBA - Interview with Owen Edwards, with Edwards Investments Discussing the Retirement Tax Trap

Episode Date: March 10, 2026

Owen Edwards was born and raised in Northeastern Pennsylvania, where he continues to live and serve his community through his financial advisory practice. With nearly 30 years of experience, he is dedicated to empowering individuals and families to achieve financial freedom through education—bringing clarity to complex choices and guiding them toward confident, informed decisions. Owen is a Certified Financial Fiduciary® and holds a Certificate in Financial Planning from Boston University.Ready for clarity and confidence in your retirement plan? Schedule a complimentary consultation today.Learn more: https://edwardsinvestments.com/Advisory services are offered through Royal Fund Management, LLC, Royal Fund Management LLC is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Insurance products offered through Edwards investments LLC. Insurance guarantees are subject to the claims-paying ability of the issuing company. The adviser is paid commissions on the sale of insurance products.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-owen-edwards-with-edwards-investments-discussing-the-retirement-tax-trap

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 Owen Edwards with Edwards investments and we'll be talking about the retirement tax trap. Oh, and welcome back to the program. How you doing, Mike? Thanks for having me. Appreciate it. Hey, doing really good. And I know that every time you hear a word like trap, you know,

I want to know where a trap is so I can avoid it, right? And then taxes, it's like I definitely want to avoid a tax trap. So, you know, this is kind of like a loaded topic here, the retirement tax trap. Talk a little bit about what that means and what people need to understand. What do you mean by the retirement tax trap? Well, that's the question, right? Yeah. I talk about the retirement tax trap. I'm referring to something, it's very simple, but very misunderstood.

Most Americans have saved the majority of their retirement money in pre-tax accounts, like 401Ks, traditional IRAs, maybe a rollover from a previous employer. And those accounts are powerful tools. They help people save consistently. But here's the part that gets overlooked. The money isn't taxed yet. So here's the tax trap. in one sentence. Tax deferred is not tax-free. So when retirement begins and income starts coming out of

those accounts, every dollar is taxable as ordinary income. And once required minimum distributions begin, the government decides how much comes out each year, whether you need the money or not. So the IRS can become your largest retirement partner, whether you plan for it or not. Yeah. That's interesting. Because as you were talking, it made me think of a quote that I've heard years ago and maybe you've heard it, you know, often. An IRA is really an I owe you to the IRS. I've heard that many times too. Because a lot of times people think, oh, yeah, yeah, it's tax deferred, tax deferred. And they get deferred and free mixed up.

And they think tax free, nope. You just, you need to pay taxes. It just is going to be way down the road. And way down the road might not be the optimal time. We don't know that. Yeah. The time is coming. And I mean, I sit with retirees who assume their taxes would automatically drop once they stopped working with this tax deferred misnomer.

And sometimes they do, but sometimes they don't. And now Social Security income withdrawals, RMDs, and those withdrawals can push you into a higher tax bracket in retirement where most people are told there would be in a lower tax bracket in retirement. I say don't plan to fail. And we don't know where taxes are going to be. So the trap isn't that taxes exist. The trap is that most people, they never plan for how to withdraw their money as it's taxed. So they focus on building the pile, but they don't focus on how to draw it down effectively. So most people plan for growth.

Few plan for withdrawal. You know, I've heard it said too, like, you know, you work on accumulating your money for retirement. But the trick is the process is decumulating. you know, like how am I going to take it out at the right time, at the right place with RMD's required minimum distributions, which I want to talk about that in a second, too. But let's talk us a minute about the comment you made because I think that you touched on something that I think a lot of people, if you were to say true or false with this statement. And you know, you say a statement, they're like, oh, that's true.

And they're like, really? Well, the statement is, oh, tax is going to be lower when you retire and you're going to be in a lower tax bracket. Who says? Who says that the brackets, we. We don't know what the, you know, the 20% or 30 or whatever. Who says what the brackets will be? They can move.

We don't know what that's going to be. And we certainly don't know what the tax rate will be. And probably if we were to talk to 100 people off the street and say, do you think taxes are going up or down in the next 10 years? What do you think the answer will be? Because we know that taxes are tied to like the deficit. Like the deficit means we don't have enough money as a country and we're borrowing. kind of like when you run up your credit card debt. At some point, you better work on paying it off.

Well, the only way you can pay it off is make more money. Well, the only way we can pay down the deficit is raise taxes or cut spending. And we know where the cut spending initiative goes typically. So what do you say to people that think, oh, yeah, yeah, in retirement, my tax bracket will go down and probably the tax is going to be lower. Well, historically, federal taxes are pretty low. I mean, people, you know, we're always complaining about taxes are going higher and they're high. Historically, they're not. And no one can predict a future tax policy.

Here's what we can know. The national debt is high. The government obligations are growing. And the tax law changes are constant. So basically, to your point, our government's income is taxes. And we got big bills to pay. You know what? Drop the mic on that.

Right? I mean, exactly. So when you think about the retirement tax trap, why is it becoming a bigger issue today than what it was even a decade or two ago? Yeah, retirement today is very different than our parents and grandparents. I mean, for them, pensions were common. A large portion of retirement income came from guaranteed income sources like that, which were only partially taxable. Some weren't taxable at all. at the very least they were structured differently. Today's pensions are rare. They're gone the way of the doodle bird. So we've shifted the responsibility from companies to us as individuals.

And that means people are retiring with larger 401K balances than ever, which sounds like a good thing. And it is. But larger balances means larger withdrawals. Larger withdrawals mean larger tax exposure. So on top of that, people are living longer. I mean, retirement isn't 10 or 15 years. anymore. It's often 25 years or more. So that's decades of withdrawals. And you don't want the government deciding your income schedule. So the tax environment is that we're in historically

low tax bracket, low tax levels. And we don't know where taxes are going to go. So that's why we want to take control now, plan now, and just be ready for whatever they are. You know, let's talk about something too. Like you mentioned there about, you know, at one point pulling money out. at some point when you've accumulated, at some point, you need to go, okay, hey, I need to get X number dollars a month to live on through retirement. So whatever that number is, that means you need to start taking some money out of these accounts just to live.

But another factor is the required minimum distribution. And I think that sometimes people get really confused on that because they could think, oh, well, I've got, you know, five accounts and I took some out of this account, so I took some money out. That might not be correct. Or, hey, I sold my RV. and I'm flushed with cash. I don't need to take any.

I'm good to go, but that's not a good choice either. So talk a little bit about the RMD strategy that you need to make sure people are aware of. Required minimum distributions happen at certain ages. For some people, it's 73, for some people it's 74, for some people with 75. And it may go up in the future, it may not. And that's where we don't know where the tax strategy is going to be. But at certain point, Uncle Sam has tapped his foot long enough and tax deferred does not mean tax-free. So they want their pound of flesh, which means they require minimum distributions from your qualified accounts, which are all your IRAs and qualified accounts added up.

And you have to take a certain percentage. And that percentage goes up every year. You prepare for that by the three bucket planning because you have tax later, tax now, and tax free. The better you plan for those three buckets, the better those required minimum distributions are going to look. and the sooner you start planning, the better. It's never too late for a long-term plan. But at some point, the government says pony up, and you have to, and they dictate it then. So while you're younger and before you're 73, 74, 75, you control the narrative.

And once you get into the RMD stage, you no longer do. Yeah. You know, I'm, you're the expert, so correctly if I'm wrong here. But I wonder why required a minimum distribution? were ever created and it made me think, well, back in the 30s, 40s, 50s, people were not living as long as they do today and we're taking better care of herself. We're living to, you know, 75, 85, 90, in that kind of thing. And I feel like the government one day woke up and said, shoot, all these people have this money in tax deferred accounts. We haven't gotten any taxes on the money. They're living

forever or way longer. We need to start, you know, getting some money in our back pocket. Let's make them take money at a certain interval so we could start getting some of the money. these taxes to come back in. Is that kind of a fair assessment? I think that's a very fair assessment. And that's also why they started taxing Social Security. Back when Social Security came out in the 30s, the new deal, Social Security, you collected it at 65.

The average life expectancy was 67. So think about that for a minute. The average, you can start collecting at 65. Today, it's 63. It's 62, by the way. So it's actually less. So you can collect at 65. and life expectancy was 67.

So it really wasn't meant to get that long. And they didn't tax Social Security. And, you know, there were no required minimum distributions. And you're absolutely right. So at some point, people were average life expectancy went up by two decades or so by now. Yeah. And people are living longer. People are retiring younger.

Mm-hmm. So the government wanted their income. So required minimum distributions go come from quality. account. So that would be an IRA. When I say qualified, I mean qualified by the government as a retirement account. So that would be an IRA of 401k, a 403B, a 457, you know, alphabet soup from the IRS. The only qualified account that does not have a required minimum distribution is a Roth IRA. And that's because there are no tax consequences. They're tax, they grow tax free, and they're taken tax free, and they go to your family tax free, not tax deferred tax free. And that's the

only qualified account that doesn't have required minimum distributions and why because there's no tax consequences yeah yeah wow that's pretty huge so in addition to kind of the fuzziness on required minimum distributions which by the way if someone listens to this and goes oh why i guess i'll just go google it and have chat chp t or google tell me good luck with that so it's going to be different for everybody there's uh there's requirements there's strategy get with someone that knows what they're doing and can guide you in that process and put reminders and sticky notes and, you know, Google alerts or whatever to make sure you are doing it well ahead so that you're not getting penalties because if you don't do it right,

you're going to get penalized. But in addition to understanding fully RMDs, what other mistakes are you seeing people make today that kind of contribute to that retirement tax trap concept? Yeah. There's a few. That the first mistake is waiting too long to think about taxes. People spend 30 or 40 years focusing on, like you said, accumulation, saving, investing, contributing, but they don't think about distribution strategy. And that's tax strategy until they're on the doorstep of retirement or past it. So by then, some of the best planning windows may have already passed. And the second mistake is having no tax diversification. And there's where we get into those buckets. When you think about diversification, we usually think

about stocks versus bonds, domestic versus international, growth versus value. But there's other kinds of diversification that matter just as much and sometimes more, tax diversification. How much of your money is taxed later, how much of your money is taxed now, and how much of your money could potentially be tax free. So if all of your retirement savings are in one bucket, you have very little flexibility in managing the income strategy. So basically, diversification isn't just about investments. It's about tax treatment. And probably the third mistake is not coordinating Social Security with trials. The timing of Social Security combined with retirement account distribution can dramatically change how much of your income is taxable because now a portion of your

Social Security is taxable and has been for 40 years now. So finally, and this is the biggest one, many people don't have a written retirement income plan. They have investment accounts, they have statements, they have balances, but they don't have a documented strategy that outlines where income will come from. And here's enough in what order and how taxes will be managed over time. Investments alone are not a retirement plan. Yes. And hope is not a strategy. I hope it all works out.

I think you taught me that one. I've heard that for decades, decades. I'm sure that I attribute it to Zig Ziglar saying that, but he probably got it from someone and nine other people probably. So it just really is a great concept. It's like, look, you know, measure twice, cut once. You know, don't hope, plan and then check the plan. And, you know, trust but verify all of those little things. It's like, know what's going on.

Know the state of your flock. And haven't written, have it documented. It's a living, breathing thing. It changes as your life changes and your life might not change for six months. It may change three times in a month. So you have a living, breathing plan that changes as you do. But it's written down and you could do projections out 10 years, 15, 20, 25 years. And have it documented.

So think of someone that's been saving diligently in their 401k IRA. Is it too late if they're five or 10 years from retirement to make some strong? strategic moves that can reduce maybe some long-term tax exposure. When is it like, oh, man, I mean, in a perfect world, you should start thinking this way in your 20s, of course. But, you know, when is it like, look, man, it's kind of too late. You're retiring in whatever time frame. It's never too late for a long-term plan.

And as we discussed, retirement now is, I think the average is 22 or 23 years. And some people, it's 30 years. So long-term investing is 10. years or more or so. So if you're in your early mid-60s and you haven't planned for this yet, and you're going to live to be in your mid-80s and you probably will if you're that age now, you got 20 years. And if the long-term plan are 10 years or more, it's never too late for a good long-term plan. But just like anything else, the sooner you start, the better. Yeah. And for those people who are, you know, 10 or 15 years away from retirement or more,

the first step is just being aware of it. Simply understand what types of accounts you have. And this is pretty simple. You look at your statements and categories tax now, tax later, or tax free. And if everything falls into tax later, it's not automatically bad. But it does mean you want to explore adding flexibility. The second is consider running multi-year tax projections before retirement, not after. The longer you have to plan, the better for anything that we do. But it's never too late, even if you're pushing retirement.

And you're not retiring next year, but you could see it from here. you're still planning for the long term. If you're required minimum distributions, don't start until 75 and you're 63, and you're thinking about retiring in the next couple of years, you have a decade. That's long term. So it's not,

a lot of people think it's too late. It's never too late. And they have longer than they think. That's great. You know, let's kind of wrap up with this thought, because this could actually be a whole weekend seminar, six hours a day for two and a half days.

But I think when I think of retirement, tax traps or retirement risk and things like that is the risk of volatility and having a certain percentage or too much of your money in the market versus, hey, let's put it in some tax favorite accounts or some tax favorite accounts that can't ever go down. Talk a little bit about the final point of making sure that your money is not at risk while you're accomplishing these things. Well, there are options for that. There are investments that have no actual market. risk and they go up when the market goes up, they don't go down when the market goes down. But it's really not about chasing the hottest investment or even products.

It's about structuring income intelligently. And to your point, you have that short-term guaranteed as long as you could lock down your income for a certain amount of time between Social Security, a pension if you're fortunate enough to have one, and guaranteed incomes from other sources, then the rest can grow. doesn't matter what the market does. And that's the true freedom people get when they retire and the paycheck stops. It isn't about the hottest investment or where gold is or a war starting overseas or it's about structuring income intelligently. Because retirement isn't just about building the wealth. It's it's about keeping more of what you've built. So when income strategy and

tax strategy, they work together, that's where clarity and real confidence comes from. So Mike, retirement is an address rehearsal. You get one shot at it. You better get it right. And you better get it right by talking to the right people like yourself who can sit down and understand someone's goals, where they are now, where they want to be, guide them. Let's not rely on hearsay, water cooler, chat GPT or Google. So if someone is interested in connecting with you to learning a little bit more and get some of that clarity, what's the best way they could reach you, Owen? Well, they can look up my website.

You can Google me or Edwards Investments, and Royal Fund Management is my registered investment advisory firm. There's contact information on there. Email would be Owen at Edwardsinvestments.com, or you could go through my website and schedule an appointment. Or you can simply call my office and speak to me or someone who works here, and that would be 5703-3015. And I'd be happy to help. Excellent. Well, Owen, thank you so much for coming back on. It's been a real pleasure chatting with you today. You're welcome, Mike. My pleasure. I hope this gives folks some clarity and any time. Thank you. Yes.

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