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  • Poterack Capital Advisory

Things That Make You Go Hmmm?!

Marketing and opinions in the financial world are all around us. Experts contradict each other for any number of reasons.  Can we trust marketing?  What opinions are biased?  Can an investment or strategy be perfect for your neighbor, and totally inappropriate for you?  So many firms and advisors are seeking to “program” your thinking and actions as if everyone has the same values and objectives. 


I’ll put on my Contrarian “hat” and share some observations and questions you’ll hopefully find interesting!


  • Question:  Why do you save and invest money? Answer: In order to spend money in the future.

  • We all understand we cannot take our money to the grave.  Inherently, money is nothing but ink on paper until you exchange your money for something you value!

  • People often continue saving and investing for growth, even after their objectives change from accumulation to spending (income distribution) or inheritance.  


  • Question: Which objective is more important to you; spending money as you want or providing inheritance?  Answer: Either you will spend your money how you wish, or someone else will spend your money how they see fit.

  • There is no “wrong” answer here.  Well beyond 90% of people I’ve posed this question to, say their spending objectives are more important than passing money on as an inheritance.

  • Despite this, from my experience, well beyond 90% of people don’t want to spend their savings before dying.  If you are “protecting your principle” during retirement, then who gets your principle when you die?  Yep, it becomes inheritance.  Too often strategies don’t match objectives.


  • Question: If you are married, what is the likelihood that you, or your spouse, will die first?  Answer: 100%

  • Based on the IRS Tax Code, the income tax bracket applying to the surviving spouse, after the death of their spouse, may increase as much as 83%

  • It is not uncommon for the income tax bracket to go up for a surviving spouse.


  • Question:  Do you believe income tax rates will go up or down in the future?  Answer:  Who knows but most people I ask, say up.

  • If you believe your future tax bracket will increase, then tax deferral may be a bad strategy for you.

  • If you are retired with Traditional IRA money, then you should know that your account value will be subject to income taxes.  Why forgo paying income taxes on some of your IRA now, at lower tax brackets, versus paying later at a higher income tax bracket?

  • People often act like tax-deferral is the same as tax-free.  Paying taxes on IRA withdrawals or Roth conversions is not a cost that can be avoided, but it can be managed.


  • Question:  If you are retired, how long do you want to receive regular income?  Answer:  Everyone I have ever asked has said “for my lifetime”. 

  • This is why people tend to love their Social Security and/or pension checks!  These income strategies fit your objective.  Income as long as you are alive.

  • However, people often continue using a growth strategy for income, which is a very inefficient use of their money.

  • Growth strategies are for growth objectives, which may be appropriate if you are wanting to grow the inheritance you will leave.


These are situations whereby actions and strategies may not serve a family’s stated objectives and best interests.  As always, please respond with questions or thoughts!

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