Retirement technology has changed. Should you?

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By: Matt Vysoky

Technology has made some great strides over the last few decades. Heck, even over the last few years. It’s safe to say that most of us get on board with new tech at some point. I bet most people reading this are reading it on a tablet or a phone.

 Every aspect of our lives has made advances and yet most people are saving and planning for retirement the old way.

 What do I mean by “the old way?”

The old way is simply accepting that there are aspects of your retirement that are unavoidable. Don’t get me wrong, that way of saving for retirement worked when things were different.

In the good ole days savers could rely on their company having a pension. Their company would put money away on the employee’s behalf for retirement. Sounds like a great deal. Sadly, pensions are a thing of the past and saving for retirement is solely on the shoulders of the employee now.

In the good ole days there were enough people in the workforce to support those on Social Security. Today there simply are not enough workers to sustain the boomer generation through retirement. That means that Social Security benefits for future generations are going to be very questionable and certainly not something they can count on.

In the good ole days my grandfather would wait until the very last day to mail a check to pay any of his bills. Why? Not because he didn’t have the money to pay his bills but because he was getting 18% at the bank on his checking account. Remember those days?

As you know, those days are long gone. But the qualified plans that people saved in back then are the same plans people are saving for in retirement now. Think about that. The same tool people used 30 plus years ago is the same thing people are still using and there has been no updates or additions to make those financial vehicles any better. 

I would be impressed if there is much around you that you have been using for 30 years or more. Times change and with that we use new and improved options to get the tasks done better or achieve the goals we set.

Back to my statement about accepting certain aspects of saving that you thought were unavoidable. In qualified accounts you have to accept that there is risk from being in the market [I can guarantee the market will do two things: go up and go down] and you have to accept that you will pay taxes on the money you pull out.

That may not seem like a big deal to you because that is all you have known or been told about. But what if I told you there was another way that you could save for retirement that did not mean you had to compromise and accept risk and taxes; would you be interested?

Let me go ahead and jump to what is going to speak to you. By using the new rules of retirement, of which I am referring to Section 7702 of the IRS tax code, you can do three things…

  1. Reduce taxes by hundreds of thousands of dollars in retirement.
  2. Increase income in retirement by thousands of dollars a year.
  3. Take market risk off the table.

So, what does that really look like? I recently showed one client if he kept saving for retirement the old way, the 401[k] at work, that he would save $189,000 by deferring taxes. That’s great news. The bad news was that by continuing to put his money in the 401[k] that his taxes in retirement would total over $398,000. I was able to save him over $200,000 in taxes by using the new rules of retirement.

I also was able to increase his income by about $22,000 a year in retirement. And this is all completed without any market risk.

There are a lot of stories that I could share with you like this, but I have helped people in all different stages of life reduce taxes, increase retirement income, and eliminate risk.

Recently with COVID-19 many people lost a lot of money when the market went down. When you use Section 7702 of the IRS tax code, you would not have lost a penny.

So, if you’re the kind of person that wants to make sure you are using the right tools, we should talk. Give me or your agent a call to learn more about what this could look like for you.

ABOUT THE AUTHOR: Matt Vysoky has been in the insurance and investment industry for over 15 years. Matt has a passion for helping people find a better way to save for retirement that eliminates the compromises most people accept as part of the deal when saving for retirement. Matt uses new tools and products to put his clients in a better place so they can maintain their standard of living in retirement. Matt is married to Ann, who works at Both Hands Foundation, and they have three wonderful children. Their oldest is graduating from the University of Tennessee this year. Their oldest daughter is continuing her education at UT and their youngest has received a cheerleading scholarship to Ohio State University. Needless to say, Matt and Ann are beyond proud of their children. You can often find Matt spending time with family, friends, working out, or doing obstacle course races.