Wealth Protection

Discovering Time-Period Retirement Planning

 

It’s often said that investing in the stock market can be like frequenting a casino. It’s ‘a crapshoot’ is a common description, owing to market volatility, gyrations and the risky nature of the endeavor. Even the primary tool to test long-term expected investment portfolio growth and the impact of withdrawals is known as Monte Carlo simulation.

So, why not a former craps dealer to offer financial advice and retirement planning?

Meet Steven Margulin, CPA/PFS, CFP®, ChFC, Wealth Manager and the managing member of Retirement Extender® in Albuquerque, NM, who took such an unusual path to his current livelihood.

margulin quote 2
Margulin will tell you that every step of the way through his career has helped him gain important knowledge that has shaped the financial strategist he is today. And early on, there were valuable lessons learned in Vegas.

“We were paid minimum wage, and we earned tips, so I enhanced my customer service skills,” he recalled. “I also watched greed in action. Gamblers would sometimes get way ahead, 20 or 30 times their original buy-in, then give it all back when the dice got cold. Not very different from bull markets followed by bear markets.”

His big takeaway from that experience was that good times do not last forever and to make rational, as opposed to emotional, decisions. He left Las Vegas for California and earned a bachelor’s degree in Economics. In 1986 he passed the Certified Public Accountant exam, then worked as a CPA and as a school district controller. In 1992, Margulin opened a small CPA firm to prepare tax returns for the semi-affluent.

“During my very first year of business, tax clients were asking me questions about their investments and whether their financial advisor was doing a good job for them,” Margulin remembered. “I really did not know, so I got licensed and started taking coursework so I could provide an educated answer. This led to tax clients moving their portfolios to me.”
Since then, Margulin has built a firm of ten other experienced professionals in many areas of financial planning. He said everyone earns a salary, and there is no pressure on anyone to sell anything or get new clients.

EXTENDING RETIREMENT
Entrepreneurial and driven, Margulin developed the Retirement Extender® method and trademarked the name in 2009. Today, it’s the firm’s name and website identity. With it, the team uses a time sequence portfolio construction method that some simply call bucket planning.

grp 1
“We use three time periods which are named Distribution, Down the Road, and Growth. Everyone has a different cash flow,” he explained. “Some people are projected to purchase a new car in seven years and others in twelve. Some are projected to take large vacations in a given year, after Covid-19 is behind us of course, and others aren’t.”

So, savings are invested according to how much a client will use and when they will use it. Rebalancing occurs between accounts or not, based on if the account has had a positive return for the prior year. Retirement Extender® implements a buy low, sell high philosophy, and will not sell low unless absolutely necessary. The firm tests that the portfolio allocation allows financial planning success using Monte Carlo simulation, in which running 1,000 trials are run to test the probability of different outcomes. Individual holdings and the rebalancing within an account are outsourced, but the Retirement Extender® team will rebalance between accounts based on market activity and the needs of each individual client.

“I learned a long time ago that if I worry or don’t worry about the stock market, it still performs the same. The Retirement Extender® method helps me not look to change the portfolio based on fear, either mine, or the clients’,” Margulin said.

FINANCIAL PLANNING WITH AN EYE ON TAXES
As of September 2, 2020, there are 658,267 actively licensed CPAs in the United States, according to the national database of CPAs, the Accountancy Licensee Database (ALD).

Margulin has also always used his CPA and tax preparation experience to his advantage and on behalf of his clients. It’s at the heart of his business philosophy. He’s also a CMA—a Certified Management Accountant.

“I tell a joke that I order the special tax lenses for my glasses at Costco so I can see the tax ramification of every transaction,” Margulin quipped. “I use those glasses and that mindset every day because taxes are a crucial factor that should not be overlooked.”

The firm prepares tax returns for all its clients as part of its service. And as a CFP™ practitioner, all clients have financial plans. Investment management is outsourced to Carson Wealth.
margulin quoteMargulin insists on helping clients to look after themselves and toward this end the firm is adding more health-related services for top-level clients. These include providing two meetings a year with an Exercise Physiologist for a written assessment, and two meetings a year with a Physician Nutrition Specialist also for an assessment.

“In subsequent years, they can schedule an update meeting, also at our cost, with these health experts,” Margulin said. “My rationale is that these clients have saved money all their life and may be reluctant to invest in themselves. I will offer education tailored specifically to them with a focus on helping them enjoy the healthy life they deserve.”

Margulin conveys three core principles to clients: 1) Pay off debt, including mortgage debt, because this creates flexibility when there’s a surprise need for money; spending is not linear. 2) Donate to charity. 3) Tax diversification, to maintain a blend between taxable accounts, tax free, and tax deferred.

“For example, if someone has $1 million in an IRA, the amount that is available for spending after taxes is much less,” he explained. “If an individual needs $40,000 for living costs after $36,000 in Social Security income, then has a home remodel for $100,000, that home remodel will really cost $145,732 before federal and New Mexico income taxes. That is not the same as spending $100,000.”

By planning years in advance to have money for future use, however, one could have accumulated $30,000 in a Roth IRA and another $20,000 in regular savings. If those sums were applied to the home remodel, the additional amount from the IRA would only need to be about $71,000.

PANDEMIC OPPORTUNITIES
Over 14 trading days from March 4 to March 23, 2020 one of the most dramatic stock market crashes in history occurred. The Dow Jones Industrial Average (DJIA) plunged some 8,500 points during that span due to COVID-19 panic selling, down roughly 31 percent. Public health was the primary concern, but some investors recognized the chance to restore health to their portfolios.

“This has been a great year to identify opportunities that can help improve clients’ financial lives,” Margulin said. “We took advantage of the bear market in March by buying stock on sale.”

The Retirement Extender® team also took IRA distributions up to the top of clients’ current tax bracket and added the net portion to their taxable accounts, and/or by performing Roth Conversions. They did tax harvesting, or selling investments that had declined in value to take advantage of capital losses for income tax purposes.

“We changed out an investment strategy that was not performing and are now in the process of adding a higher yielding fixed income investment to part of the mix,” Margulin noted. “Currently the stock market has just reached its mid-February high, so we are exercising our ‘sell high’ philosophy and rebalancing portfolios between accounts again.”

In a casino, a craps player never knows how the dice will land. But as a financial strategist, Margulin’s investment acumen is aimed at providing calmness and confidence – that no matter what happens in the world, the economy or the markets, clients have a higher probability of achieving their financial life goals.

To learn more about Retirement Extender, visit: retirementextender.com

 

Related Articles

© 2017-2019 Advisors Magazine. All Rights Reserved.Design & Development by The Web Empire

Search