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Ed Slott:
Do you ever hear the saying less is more? Yeah? Well, less is not more. Less is less, except when it comes to taxes. The less you pay the more you keep, but to keep more and pay less you have to have a plan, which almost nobody does, that's why we're here. Because if you don't have a plan, like most people, you get a plan. I call it the government plan. That's not a good plan because that's the default plan. That's what everybody gets. When it comes to retirement, taxes are the single biggest factor that separates you from your retirement dreams. We spent our lives, 20, 30, 40 years building, working, saving, investing, sacrificing, so you have something now.

Ed Slott:
But that's done at halftime, like a football game. There's two halves in football, first half and the second half. Most games are won at the end of the second half, like the college games tonight. I'll make a prediction. Somebody's going to do something in the last five seconds that will turn the game. It's the same thing with retirement. People work, save and invest, that's what I call the first half of the game, and finally they get to retirement and they said, "Look at me, I have retirement money. I've saved. I've done it." They pat themselves on the back, walk into the locker room, they're done.

Ed Slott:
Meanwhile, the IRS, they come out. They're playing the third and fourth quarter, they're playing nobody so they win. The point is now we have to move into the second half of the game when the money comes out. Remember, this money, most people don't like to remember, is taxable. It is your 401(k)s, IRAs, it's a very simple concept, probably one of the biggest concepts though. The difference between tax-deferred and tax-free. That's a huge difference, and that big difference comes down to one little word, and that word is yet, Y-E-T.

Ed Slott:
Tax-deferred means you won't pay taxes on that money yet, but you will. At some future time in retirement, and probably at a higher rate. Tax-free means you'll never pay taxes on that money. When you get advice, even in the papers you see it everywhere, everybody's wishy-washy. They say generally, probably, maybe, nobody likes to give you definite rules. Here's an always rule, a definite rule. This is your first rule for today. Tax-free is always better, you get it? That means you keep 100% of your money. You will always have more money if it's tax free in retirement.

Have you ever heard the saying "More is Less?'  "Well, less is not more. Less is less, except when it comes to taxes." That's according to Ed Slott of Ed Slott & Company, LLC.  

Slott was the keynote speaker at TheStreet's Retirement, Taxes & Income Strategies Symposium, Prepare for the Lifestyle You Want. It was held in New York City on Saturday, April 8, 2019. It was hosted by Retirement Daily editor Robert Powell for a compelling program to help serious investors of all ages and their advisers create plans for a secure and happy retirement. 

Watch Thursday, April 11, 2019 at 1 p.m. FREE WEBINAR: TheStreet & TurboTax Tackle Last Minute Tax Tips for Retirees

Video Transcript

Ed Slott says, "The less you pay the more you keep, but to keep more and pay less you have to have a plan, which almost nobody does, that's why we're here. Because if you don't have a plan, like most people, you get a plan. I call it the government plan. That's not a good plan because that's the default plan. That's what everybody gets. When it comes to retirement, taxes are the single biggest factor that separates you from your retirement dreams. We spent our lives, 20, 30, 40 years building, working, saving, investing, sacrificing, so you have something now."

Retirement Planning: What to Do

"But that's done at halftime, like a football game. There's two halves in football, first half and the second half. Most games are won at the end of the second half, like the college games tonight. I'll make a prediction. Somebody's going to do something in the last five seconds that will turn the game. It's the same thing with retirement. People work, save and invest, that's what I call the first half of the game, and finally they get to retirement and they said, "Look at me, I have retirement money. I've saved. I've done it." They pat themselves on the back, walk into the locker room, they're done."

"Meanwhile, the IRS, they come out. They're playing the third and fourth quarter, they're playing nobody so they win. We have to move into the second half of the game when the money comes out. Remember, this, money is taxable. It's your 401(k)s, IRAs, it's a very simple concept, probably one of the biggest concepts though. The difference between tax-deferred and tax-free. That's a huge difference, and that big difference comes down to one little word, and that word is yet, Y-E-T."

Tax-Deferred vs. Tax-Free

"Tax-deferred means you won't pay taxes on that money yet, but you will. At some future time in retirement, and probably at a higher rate. Tax-free means you'll never pay taxes on that money. When you get advice, even in the papers you see it everywhere, everybody's wishy-washy. They say generally, probably, maybe, nobody likes to give you definite rules. Here's an always rule, a definite rule. This is your first rule for today. Tax-free is always better, you get it? That means you keep 100% of your money. You will always have more money if it's tax free in retirement."

Watch: FREE WEBINAR: TheStreet and TurboTax on the Top Overlooked Tax Deductions

Watch: FREE WEBINAR. TheStreet and TurboTax on Navigating Tax Reform