Tools of the Trade with special guest Jason Parker

Steven (00:05):

Hello everyone, and welcome to the next episode of the Retirement Tax Podcast. I am one of your hosts, Steven Jarvis CPA, and with me today for the first time since the show launched is not Benjamin Brandt. Don’t worry, he will be back. He was gracious enough to let me sub in a guest today, Jason Parker, who is also a podcast host, who is also a retirement planning expert, who is also someone who spends his time helping people get ready for retirement. So excited to have Jason Parker here with me on the show. Jason, welcome!

Jason (00:38):

Steven Jarvis, what an honor to be a guest on the show. And I’ve got some big shoes to fill somebody like Benjamin Brandt as your co-host. We’ve had him as a guest on our show before. He’s really an excellent guy when it comes to this retirement planning stuff. 

Steven (00:52):

I feel very fortunate that I can co-host this show with Ben, but so excited to expose our listeners to some additional ideas here today. And Jason, we all know that podcast listeners tend to listen to multiple podcasts. So just real quick as we dive in, share a little bit about your podcast and where people can find it so that they can follow up afterwards, after you’ve blown their minds with the things we talk about today.

Jason (01:12):

Sound Retirement Radio is the name of the show. We have a little over a million downloads. If you do a search for retirement in any podcast app, you’ll find that Sound Retirement Radio, Sound Retirement Planning is one of the top shows in that category for either retirement or retirement planning.

Steven (01:29):

And I’ve gotta admit, I love the cover art because when I think of someday being able to just kind of walk away and just enjoy retirement sitting on a chair on a beach. That’s high on my list of things to do.

Jason (01:41):

So, funny story about how that picture came to be. My very first book that I wrote had a different title and a different name, and after a year of that book being published and being out in the world, we had a letter from an attorney firm, a law firm, tell us that we had violated somebody’s trademark. They owned the name of the book that I had published. And that first book had a picture of me on the cover. And, you know, I’ve got big ears and I looked really young. And so anyways, the cease and desist basically said we had to unpublish the book, and it was a total huge devastating moment for me in my career. But what I did was I ended up republishing the book. I added 40% new content, and when we did, I sent an email to my clients and I said, Hey, which cover do you like the best? And, you know, one of ’em was the picture of me with my big ears. Nobody picked that one except for my mom, you know, nobody. But the number one image that everybody liked, you know, we had different things on there. We had a compass, we had a lighthouse, and then we had those images of the chairs on the beach, and that was what our clients said. That was their favorite image. That’s what we went with, and that’s what we’ve been using now for some time. 

Steven (02:52):

I love it. Well, let’s dive into what our listeners are here for, which is talking about, I mean, often taxes we’ll deviate just a little bit from that, although I can always bring it back to taxes. But Jason, the biggest reason I was excited to have you on the show is cuz you’ve created this retirement budget calculator, this online tool that helps people who are planning for retirement. And the reason that that’s exciting to me is that is one of the common questions we get is, Hey, we love listening to the things that you and Ben talk about. These are great ideas, they’re great concepts, but how do I do the math? How do I line this out? How do I get a better idea of what this looks like for me and my situation? So talk about kind of where this idea came from and what it is that people are coming to the retirement budget calculator for. 

Jason (03:39):

The number one question that everybody has as they’re trying to make this transition into retirement is, are we gonna be okay? Have we saved enough? Are we gonna run outta money in retirement? That’s what people wanna know. And we did something that was totally radical, totally different than the rest of the industry. What most of the industry, the financial planning industry focuses on is your withdrawal rate. How much money have you saved, and then what percentage can you take out of that portfolio? But I found that retirement is really all about cash flow. It’s all about making sure you have enough income coming in to match up with your expenses. And I couldn’t find any good tools out there that really helped me understand the spending side of the equation when it comes to retirement. And really, that’s all people really care about.

(04:21):

They just wanna know that they’ve got enough income coming in to be able to spend on the things that they care about. So when I first invented the retirement budget calculator, it was just to try to answer that question because you have some expenses that are monthly, some that are quarterly, some that are annual, some that are semi-annual. You have some expenses that go up with inflation, some that don’t go up with inflation, you have higher spending at the beginning of retirement and that spending drops off. So we just didn’t have a way to really model that in a way that I thought was genuine and that was accurate. And so that’s how the retirement budget calculator got started. Today, It’s so much more than just a budgeting tool today. And it’s not like a Mint or a Quicken or a wine or one of these, you know, Dave Ramsey’s Every Dollar.

(05:00):

It’s not a tool that’s trying to help you budget your dollars on a monthly basis. It’s really a tool that’s trying to help you project out into the future. To answer the question, have we saved enough or are we gonna run outta money in retirement? And today that’s what it does. So we’re taking into consideration federal income tax calculations, and then we’ve got a table that just shows, you know, if you retire at age 60 and here’s how much money you have and here’s what your spending is, that helps us understand what the portfolio withdrawal rate is. And then we just project it out over your lifetime and say, are you gonna have enough? You know, have you saved enough to be able to retire and not run out of money in retirement?

Steven (05:35):

I love that concept from a high level, that might feel simple, but that’s really all for the best, right? I mean, usually the things that we can follow the best are things that are simple. And the idea that, hey, how confident do I feel that I’m not gonna run out of money? You know, we talk all the time on this show that while our focus is taxes, I’ll be the first to admit that taxes should not be the primary reason you make a decision. And that while we dive deep on taxes on here, that message might not come back off as often as maybe it needs to, but I fully stand by that of taxes should not be the primary reason you make a decision. And so be able to start with, here’s what I expect my cashflow to look like. Here’s what I expect my income and expenses to look like, will provide you a great roadmap for what comes in the future. And selfishly, it also can help with some of the tax planning things we talk about here, because so many tax planning strategies are dependent on your relative earnings in different years. And so being able to sit down and say, oh, here’s gonna be a couple years where I expect my income to be lower or higher. That’s nothing but advantageous from a tax perspective as well.

Jason (06:45):

Yeah. You know, taxes are an expense. That’s part of what we need to be planning for. And it can be a big expense for people if you’re not thinking about it. So one of the things we did in the calculator was we allow people to set a withdrawal order for when they’re gonna dip into different accounts. When they have the ability to model that out into the future, they can say, well, look, if I take money outta my brokerage account first, we’ll pay less money in taxes those first couple of years of retirement, but then maybe we’ll pay more later on. So people can go in and play around with those numbers. They can say, well, let’s tap into the IRA first and save the brokerage accounts. Or they, maybe they wanna tap into their IRA and their Roth at the same time. So we give them the ability to do that in the calculator.

(07:24):

So you can start to model out taxes and even project them over your lifetime, say, how much money am I gonna pay in taxes with these different strategies? And like I say, the calculator started out as just a very simple budgeting tool that was different than the industry. Cuz the industry’s always saying, well, just take your annual spending, multiply it by 25, that gives you an idea of how much money you need to have saved to replace a lifetime of cash flow. But we said, no, let’s put all the focus on the emphasis on the spending side of things. And then one of the things we do in the spending too, Steven, is we break it down between your essential expenses and discretionary expenses, paying the mortgage your electric, your garbage, your water, your sewer, those things you have to pay those bills. But other things that are discretionary, like maybe some people Netflix might be discretionary or maybe the trip to Europe every year is a discretionary expense.

(08:15):

And then we let you model in the calculator, what would my situation look like if I was only spending my essential expenses every year? Versus what does it look like if I’m spending all the essential and the discretionary? You know, I think the reality is, I think most people have probably over saved for retirement, at least our experience with the people that are using the calculator. They tend to be people that are higher net worth, that are using the calculator when you recognize that you have saved enough and that you are gonna be okay at the end of the day. Really what we’re trying to help people achieve is clarity, confidence, and freedom. Clarity to know that they’re what’s most important in their life. Confidence to know the numbers are gonna work. And ultimately we want them to experience freedom, freedom from fear, freedom from greed, freedom from worry, freedom so they can go out and spend their time with the people that are most important to them.

(09:03):

And so that’s what the calculator was designed to do. As the podcast has grown as the books have grown in popularity, I found that we didn’t have the capacity to help as many people as we wanted to on this retirement journey. And so it just made sense, you know, I had built the spreadsheet to do my own family’s budget and understand our own family’s expenses. And then I said, you know, can I take this spreadsheet and turn it into a tool that lives in the internet? And that’s what retirement budget calculator is now. It’s a software as a service that exists in the cloud and we’ve got a freemium version. So, you know, the free version, you can do your budgeting and your net worth at no cost. But then if you really want the premium features, the federal income tax calculations and the ability to project out into the future, you can pay a monthly subscription of $9 and 95 cents, or you can pay an annual subscription and have access to that tool for $95 a year.

Steven (09:57):

Geez, I really like the model you’ve created there. There’s so much information out there and it seems like the disparity between the volume of information and the useful tools is a lot bigger than I’d like it to be. And a lot of the tools that are available, it’s always this fine line, right between, you want experts and professionals who are good at these things giving you advice, but those people are running businesses. And I appreciate you just being transparent about here’s how much it costs and here’s how it works. Because anytime it’s not obvious where the point to pay is, then there’s always this question in my mind of, okay, where’s the hook? At what point does, does my access get cut off? You say, oh, you have to come into my office, or you don’t get access to this anymore. But for you, I mean, similar to what Ben and I are trying to do here is really we’re trying to impact as many people as possible recognizing that there’s no possible way that we can personally one-on-one help those people. And so having forum, having platforms like this to help more people is just something I’m such a huge fan of again, which is why I’m excited to have you on the show today.

Jason (11:00):

Well, I am excited about it too. And I love Benjamin’s vision for helping a million people retire. You know, I’m thinking along those same lines, like, how can we help as many people as, because you know what happens when you give people clarity, confidence, and freedom, they go out and they impact their communities, they impact their families, they impact the world in a really amazing way. And we need that in our society now more than ever. I think this mentorship that this generation can provide. And so if we can help make that happen, strengthen America as a result, you know, that is a really cool thing. I will tell you, I am a fan of advisors. I mean, I own an SEC registered investment advisory firm. You know, we help a lot of people manage investments as they prepare for and transition into retirement, but there’s a lot of people that wanna do this on their own.

(11:46):

And I’m not opposed to people that wanna do it on their own. We built the calculator for that community. You know, those people that don’t wanna necessarily hire an advisor. But if you look at all of the studies out there, if you look at what the work that Morningstar has done in Vanguard and BlackRock and Investnet in Canada, everything shows that people that work with advisors tend to make more money and tend to have more money. And so you know, I know that people don’t like the idea of working with an advisor because they don’t like the cost associated with it, where they’re focused on the cost and they’re not focused on the value. But one of the concerns I have with the calculator is that it is detailed. You really have to know what you’re looking at and what you’re doing as you’re entering information in.

(12:25):

And if you make a mistake, it’s like anything garbage in, garbage out. So I love the idea if people use the calculator as a baseline, you know, to start getting everything organized, and then they go somebody to like to you or to Benjamin and they say, Hey, can you help me evaluate these numbers? Am I doing this right? Am I on a good path? I think that’s why, the verse says, plans fail for lack of counsel, but with many advisors, they succeed. We want people to have many advisors giving them advice to make sure that they’re not making mistakes. And there’s so many moving parts. There are so many moving parts in a retirement plan and investment plan and a tax plan and an insurance plan. If you don’t have somebody looking over your shoulder and you’ve never done this before, it can be totally overwhelming. So as much as I love the software, and I love the impact that we’re having, a fear that keeps me up at night is that people aren’t using it properly and accurately. So I would not tell people to stop at just the calculator, use the calculators that maybe a starting point, but get professional advice in there as well. 

Steven (13:25):

I could definitely relate to that feeling, whether it’s the book or the podcast or we’ve just started doing live webinars for our audience as well to try to go deeper on because like, there’s a lot of people who want to do this on their own, and there’s a lot of people very capable of doing it on their own. What I typically tell people is that you’ve gotta have somebody on your team who understands these different pieces and that that could be you, but you’ve gotta be willing to commit the time and energy to understanding enough and applying to your situation. And what we find is that some of these DYIers either get to a point where the complexity is too much or, and I think this one might even be more common. They get to a point where they say, I would rather just let somebody else handle it. And that’s where we like to step in and say, Hey, if that’s the point you’re at, we’ve got a whole community of advisors that we can potentially connect you with. So Jason, wanna come back to the, since this is a tax focused podcast, you’ve mentioned a couple of times that the premium version of the calculator, it will incorporate taxes..

Jason (14:24):

We have federal income taxes, not state income taxes. So we’re not trying to figure out every state’s income tax loss.

Steven (14:30):

So that’s what I’d love for you to speak to, just because the tax code is massive. It’s tens of thousands of pages. There’s the federal side, the state side. So just give our listeners an idea of what does the calculator do well when it comes to taxes and what are the limitations that you’ll just freely admit, Hey, this will only, we can only go so far on taxes.

Jason (14:49):

Yeah, absolutely. This is not tax planning software. So this is not something that a CPA is going to use to try to prepare somebody’s tax return. But you know, again, garbage in and garbage out. The more detailed you are with itemizing your actual income in a good way to help you understand your income, is to look at your tax return as you’re entering information into the calculator. So if you wanna take into consideration interest income or dividend income, you can do all of that. We’re automatically doing the required minimum distribution calculations. One of the limitations currently in the calculators that we’re not calculating QCDs qualified charitable distribution. So if you’re over 70 and a half and you’re doing those types of things, we don’t have the ability to model that within our calculations currently. We do give people the ability to do Roth conversions so that they can see how a Roth conversion might impact their plan going forward.

(15:38):

But again, we’re only looking at federal income taxes. The way that we have the program structured currently on state income taxes is you have to enter a dollar amount in for how much you think you’re gonna be paying in state income taxes. So, you know, again, the state income tax laws, like you have said, they’re complex and some places tax, social security, some people tax withdrawals from retirement accounts and other states don’t. And so you, there’s just all this complexity around state income taxes and it’s not something that we’ve tried to tackle yet, but you’ll get a pretty good estimate for your federal income taxes if the data that you input is correct and accurate into the calculator. And one of the things we do is we’re trying to understand how much money you’re gonna pay in taxes over your lifetime, not just how much you’re gonna pay in one year.

(16:22):

And so that’s what the future, we call it the future view in the calculator is a table that allows you to see here’s how much income you’re gonna have in 2025, here’s how much estimated federal income tax you’re gonna have. Here’s how much we’re you’re gonna have to pull out of brokerage account or an IRA or Roth IRA, here’s the account that it’s coming out of. So we’re just trying to help people model these different ideas. Again, it’s not tax planning software, it’s just to give them an estimate and, you know, it’s gonna get us in the right range of taxes, but it’s not gonna be something you would use to prepare your tax return with. The other thing you mentioned community. You guys have this community of advisors that you work with. One of the things that we wanted to do in the calculator was to build a community portal.

(17:04):

So inside the calculator we have a private community. This is not a Facebook community cuz some people don’t like Facebook. This is an actual private community portal that’s been built into the calculator. And again, we call ourselves the RBC Nerds Retirement Budget Calculator nerds. So a lot of the people that are part of this community, they’re people that are pretty financially savvy, they’re within a couple of years of retirement. And it’s a way for people to crowdsource their thinking. It’s a way that they can go to a public community and say, Hey, here’s what I’m thinking about doing. Has anybody done this? A great example of this recently was somebody was talking about long-term care insurance. They were trying to understand if long-term care insurance made sense. And they said, what kind of questions should I ask as I’m evaluating long-term care insurance? And other members of the community could chime in and say, well, here’s what I did and here’s things you wanna ask about. And so it’s just really a cool way of bringing smart people together to help them make better decisions as they’re making this transition into retirement.

Steven (18:02):

I love that there’s, that resource of a community to go with it. One of the things that kept going through and mind as you were describing that, and I really appreciate you being willing to just be really transparent with here’s what it does well, and here’s what it doesn’t. I try to remind people that tax planning, retirement planning, these things take work no matter what tool you find, no matter what podcast you find that there’s great information tools out there, but you’ve gotta go in knowing that there’s work that goes into this. So I appreciate that you’re acknowledging in there, it’s about the level of detail, it’s about the accuracy of the data. And for some people they think, Hey, give me the tool. I’ll use it all day. I’ll be the operator. And there’s gonna be people who say, you know what? That seems still like a lot of work. I think I’m gonna find somebody who can help you with it. Whichever camp you’re in, you just gotta recognize that it’s gonna take a lot of work. You just gotta decide if you’re gonna do the work or if you’re gonna partner with a professional to do the work. 

Jason (18:51):

You know, Steven, it’s such a good point. I was over at a friend’s house the other day and he has a piece of land that he’s been modifying and changing and he bought a tractor and he’s a doctor. He doesn’t know anything about driving a tractor, leveling land, moving dirt around. And so he got the tractor started, but could not figure out why it wouldn’t go into gear. And it was just he thought maybe he had thrown a belt or something. So he had a friend of ours that came over to his house and got on the tractor. This guy has spent his whole life moving dirt around. And it was just a matter of, he didn’t push it into gear hard enough. And so this guy comes over and pushes and the gear and the tractor moves right along.

(19:30):

And, you know, it’s true we can build these tools, but you and I, this is how we spend all of our time. I mean, 10, 12 hours a day in many instances. I mean, when I’m out jogging in the morning, I’m listening to podcasts about taxes and financial planning, investment management. And to think that somebody’s just gonna step into this and have all of the knowledge that an advisor has that spends all of their time thinking about it. I mean, they’re just never gonna get there. They can get pretty good, but I just don’t think you know, it’s one thing to manage your own retirement plan and be thinking about the nuances, but when you’re working with an advisor or a tax professional, a CPA, somebody that’s doing hundreds or maybe even thousands of these things, you’re just gonna have so much more confidence.

(20:13):

You’re gonna be able to see things that the average person doesn’t see. And so I’m a big fan of advisors. Like I say, I think most people that work with advisors end up in a better situation than those that don’t. But, you know, I also found that a lot of times if you don’t have enough money, like if you don’t have a million dollars invested, a lot of investment advisors won’t even talk to you. They won’t even work with you. So one of the thoughts that I had when we were building the calculators, this is a way to democratize retirement planning. I mean, if mom and Pop have 300,000 or 500,000 invested in a retirement account and they just want to know if they can retire well the calculator and they don’t have enough money to work with a, you know, a financial advisor that has a million dollar investment minimum, well this is a way for them to get a really good picture of what their financial future could look like, even if they don’t have the assets to necessarily work with an advisor. And I’m excited about that because I really want all Americans to be able to retire with clarity, confidence, and freedom, not just the top 5% of Americans. And that’s usually who’s paying for advice. And those are the people that usually have more money because they are paying for advice.

Steven (21:15):

Well, Jason, I certainly appreciate what you’re doing to make that more available to more people. Definitely a big goal for Ben and I as well. It’s being able to spread this message, spread this information, spread these tools to as many people as possible, it takes a lot of individuals to get to having helped a million people retire.

Jason (21:33):

Awesome.

Steven (21:33):

Well Jason, really appreciate you being here. It’s been great. Really enjoyed the conversation for our listeners, retirementbudgetcalculator.com, go check it out. It’s a great tool, great community behind it. And until next time, remember, don’t let the tax man hit ya, where the good Lord split ya.

Steven (Disclaimer) (21:50):

Hi everyone. Quick reminder before you go. While Ben and I feel very strongly about the information we’re sharing on this podcast, it is for educational purposes only and should not be taken as specific tax, investment or legal advice. You need to make sure that you are working with a professional to evaluate how these concepts apply to your specific situation before you take action.