facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause

What You Need to Know About Financial Advisor "Free" Dinners

I get a lot of mailers from financial advisors, and they generally fall into one of two categories: either a free meal or an educational seminar. I’ve noticed a trend in the one’s offering a free meal (didn’t a wise man once say there’s no such thing as a free lunch?) – they use a scare tactic to try a grab an audience, just in case the free food isn’t enough. And what is scarier to a retiree than “loosing” their Social Security?

A case in point is the latest mailer I got earlier this month from a firm called Peace of Mind Wealth Management. I’m only going to focus on one area of the flyer – but doom and gloom features prominently:


Will Social Security be there for me?

Rising Inflation

As the old commercial said, "Calgon take me away."

I’d like to dig a little deeper on the bullet point that states “How withdrawals from IRA’s could cause you to lose up to one-third of your Social Security.” That sounds terrifying, but what is the reality?

If one’s income exceeds certain thresholds, 85% of Social Security benefits are subject to income tax. But how does one “loose” 33% of their Social Security? In short, you’d have to have $1 million of yearly income to have 30% of your Social Security income eroded by income tax.   

Perhaps looking at a more common example helps. I work with a retired couple (age 75 & 73) who I’ll call the Bakers (not their real name). For 2023 their income consists of $50,000 of Social Security and $100,000 of IRA distributions and they take the standard deduction. In this scenario, the tax on their Social Security is ~$5,900. I calculate this using their effective tax rate (total tax / taxable income ) of 14% x their taxable Social Security of $42,500.

Rather than scare people with misinformation, we prefer to educate you on how effective tax planning can help minimize lifetime taxes at the lowest rate possible.