I went to the Copley Financial Group seminar at Ruth Chris Steak House in Del Mar, California. I…read moredid not agree with much of this financial seminar although I admit I did learn something there. Two positives so two stars, no more because I feel sorry for the family I met there who I believe sold great properties using a 1031 exchange into a DST to avoid taxes on a Roth IRA conversion .. property they could have left for their daughter. I called Copley Financial Group's office and asked them to send me a contact email, I asked for confirmation that Matthew Copley is series 65 certificated because Matthew mentioned this and I didn't see any material from the seminar confirming this, and to explain the investment strategy Matthew mentioned at the seminar to do a Roth conversion and avoid the taxes which I believe is sell your real estate using a 1031 exchange into an investment guaranteed to create a tax loss called a DST to offset or eliminate paying the IRS taxes on the Roth IRA conversion. No email from Copley so I'm writing this Yelp review. My financially savvy colleague tells me this investment strategy is the dumbest idea he's ever heard, buying a losing investment to avoid taxes, and what happens if you get a letter from the IRS saying you still owe taxes. The fact is you want to try to make intelligent investments and make as much money as you can and not worry about the taxes but still use simple tax strategies.
I have yet to find a financial advisor I trust who has a better strategy than buying the S&P 500 and BRKB. After the seminar I asked about CA Prop 19 because of significant tax increase in inheriting a home but no solution.
In elementary school I read a book entitled "How to Make Big Money in the Stock Market" by Samuel Mitchell - I was just a kid but even now I like the title - one concept in that book is not to lose control of your money, so I don't like the idea of a DST due to lack of control, illiquidity, fees, potential for low returns, financing opportunity risks (can't refinance to lower rate), and tax complexity. I don't like the idea of reverse mortgages if you have kids. I'd rather rent out extra rooms rather than reverse mortgage because I care about my kids.
There is nothing wrong with paying traditional IRA taxes due to RMDs (required minimum distributions). The IRS forces you to sell 4% of your IRA at age 72 and the RMD goes up each year because you deferred the tax. Fair is fair. I plan to enjoy spending part of the RMD, pay the taxes, and reinvest what's left each year. Every financial advisor I have listened to wants you to do a traditional to Roth IRA conversion. My take is delay and minimize paying taxes as long as possible. The fact is if you contribute to a Roth IRA you are taxed upfront maybe 50% to the IRS if you're lucky enough to make that much, lets say your Roth portfolio grows to $500,000, that same portfolio would grow to $1,000,000 in a traditional IRA which is taxed later starting around age 72 when you're likely in a lower tax bracket. The RMDs aren't taxed like qualified dividends which in 2024 they are taxed at 0% if under $94,050, 15% under $583,750, or 20% above that. It only makes sense to contribute to a traditional or Roth IRA if your tax rate is lower going in (use a Roth) or lower at age 72 (use a Traditional IRA).
Now to the main seminar about Social Security and the suggestion that because of inflation it can make sense delaying social security (at ssa.gov) because the ssa payments increase each year and max out at age 70, plus payments will be higher if you delay due to ssa COLA (Cost Of Living Adjustment). The fact is you likely get COLA increases whenever you collect (even age 62) and each year after that. COLA increases are behind inflation so delaying ssa is not beneficial because purchasing power goes down vs true inflation. Also if you delay payments until age 70 vs 62 you lose 8 years of benefits which could be compounding in investment. Say you'd get $3000/mo for 8 years that's 8x12x3000 = $288,000 which if you die at age 69 1/2 you get $0 to leave to your family vs $288,000 starting ssa at age 62. My spreadsheet I created shows investing early ssa at 8% delaying ssa has no benefit (or let my investments ride and spend the ssa), at 10% I'm well ahead collecting early, at 35% I'd become a billionaire collecting early (its my speadsheet I can enter any value). In my case I retired at age 64 and ssa.gov's break even age was 82 if I delay ssa until age 70 - yet the SSA actuarial table shows my expect life expectancy is only age 84. What the actuarial tables don't tell you is only half the people make it to that age.. I'm working again so social security stopped my payments until I reach full retirement age around age 67 at which time my benefits will be continued and be recalculated with the increase. These are all considerations I looked at in deciding when to collect Social Security.
