Latest / Retire and Thrive / How to Pay Fewer Taxes in Retirement (Legally)

Transcript

How to Pay Fewer Taxes in Retirement (Legally) · Retire and Thrive

• 0:00
  You stressed that tax planning might be a little more important
• 0:03
  to monitor during retirement than during the working days.
• 0:06
  Why is that? Well, I think during your
• 0:08
  working days, Cammy, you don't really have a choice.
• 0:11
  You don't. Once you retire, you can control
• 0:15
  to a certain extent how much taxes you are going to pay.
• 0:19
  Welcome back to another edition of Retire and Thrive, where we
• 0:23
  hope you live your life with purpose, wealth, and confidence.
• 0:26
  Yes, I'm Cami. This is Dan.
• 0:27
  We hope you're having a great start to your fall.
• 0:30
  We thank you so much for joining us for another edition of, I
• 0:34
  guess, just learning about finances.
• 0:36
  And this week we're talking about taxes, which to me can be
• 0:38
  intimidating. Sounds like it's something that
• 0:40
  can be intimidating. Sounds like something that you
• 0:43
  always are just paying and maybe you're not really fully sure how
• 0:47
  important it is to monitor right when you're paying taxes and how
• 0:51
  much you are being taxed. How are you, by the way, Dan?
• 0:54
  Everything. 'S great, yeah.
• 0:55
  We're we're getting close to Halloween, so that's just around
• 0:58
  the corner. It's hard to believe.
• 0:59
  That yes, well it feels like Halloween is like a three month
• 1:02
  thing now because what after 4th why they start putting out the
• 1:04
  Halloween decor in the stores. I was at a box store yesterday
• 1:09
  and yeah, same thing. They actually had Christmas
• 1:12
  stuff out and, and I made that comment.
• 1:14
  I said to the, to the kind of store.
• 1:17
  I said, well, I can't even find what I'm looking for because
• 1:19
  there's all this Christmas stuff.
• 1:20
  And he says, well, we actually, we operate in three seasons this
• 1:23
  time of year. So I guess that's what that's
• 1:25
  what they go. That's how it works.
• 1:27
  That's how they make their money.
• 1:28
  It's all about that money, right, Dan?
• 1:29
  Yeah. So let's talk taxes.
• 1:31
  Where we starting today because it just seems like such a broad
• 1:35
  topic it's. Very broad.
• 1:37
  What would you like to start with?
• 1:38
  So this is we've moved away from Lesson 5.
• 1:42
  We're now on Lesson 6, Social. Security.
• 1:44
  Social Security. Social Security, Yeah.
• 1:46
  Now we're talking about taxes. So we're doing a big shift here.
• 1:50
  Yeah. And it's, as you indicated, it's
• 1:52
  very, very broad. And so we're going to kind of
• 1:54
  narrow, narrow that down and we're going to dive into again,
• 1:57
  we'll focus a little bit on the more, more on the retirement
• 1:59
  side. But again, as I talked about
• 2:01
  last episode, if you want to come at it a little bit more
• 2:03
  from, you know, the accumulation phrase, we can certainly talk
• 2:06
  about that. Yeah, I don't, I don't.
• 2:09
  We never have a specific time that we've got these limited,
• 2:12
  but I did get an e-mail the other day that I did want to
• 2:15
  share with you and with the viewers.
• 2:17
  We we get your emails and we get comments below.
• 2:20
  But when I thought about this podcast, you know, it's been on
• 2:23
  my radar for at least a year. You know, the book came out in,
• 2:28
  in, in a little over a year ago and I wanted to do a podcast.
• 2:32
  And as I said last time too, I mean, you're just a great fit
• 2:35
  for this, asking the inquisitive questions.
• 2:38
  But my main purpose was I was hoping that we could help people
• 2:41
  make good decisions. And what I wasn't necessarily
• 2:44
  expecting was the implications that we're having.
• 2:48
  And some people just don't verbally talk about it.
• 2:50
  But I do want to read you this e-mail because I think it really
• 2:52
  hit home with me. And this e-mail, like I said,
• 2:57
  just recently came in and I'm going to just literally read it
• 3:00
  verbatim here. It says, hi, Dan.
• 3:02
  I've been watching your podcasts about retirement and really
• 3:05
  enjoying them. My husband and I have been
• 3:08
  talking about what will give us joy in retirement.
• 3:11
  And if you remember, that goes back to lesson #1 enjoying the
• 3:14
  fruits of your labor. And he said she says, I am a
• 3:17
  fully retired since the spring. My husband is now part time and
• 3:21
  has 10 weeks of vacation per year.
• 3:24
  Your podcasts have really inspired us to think about what
• 3:26
  is important and how do we want to spend our money.
• 3:30
  We've decided to book a large cabin in Wisconsin every year,
• 3:33
  invite all five of our kids and their kids.
• 3:38
  We are currently here. So they obviously were at the
• 3:40
  cabin when this when this was in her mind.
• 3:44
  And we're with one of our older sons and their 10 year old
• 3:46
  daughter and we are having a blast.
• 3:49
  We meeting her husband and her pay for everything and we will
• 3:52
  rebook every year going forward. Then she goes on to say we also
• 3:57
  own a one bedroom timeshare with four weeks in the Caribbean for
• 4:02
  the month of March. So the whole month of March,
• 4:04
  apparently they've got a timeshare in the Caribbean in
• 4:06
  2026. We have invited four of our kids
• 4:09
  and their spouses and their kids to join us.
• 4:13
  We will have a few of them with us each of our four weeks.
• 4:16
  The accommodations and plane tickets are their Christmas gift
• 4:20
  from us. They are all excited and I'm in
• 4:22
  the middle of getting everyone booked.
• 4:25
  Just know that your podcasts are inspirational.
• 4:28
  They have made us think about our future.
• 4:30
  We want to spend some of our money on quote experiences with
• 4:34
  our kids and grandkids while we are still young and healthy.
• 4:38
  And she says, PS thanks for making us think about what
• 4:40
  really is important to us as we age.
• 4:44
  That's fantastic. I.
• 4:45
  Have to be honest, I got a little emotional, yeah.
• 4:48
  But that's really what this podcast is all about, helping
• 4:50
  others thrive. I mean, that's truly what it is.
• 4:52
  But also just listening to that, it's like for those who are
• 4:55
  fortunate enough to have family members, loved ones that are
• 4:59
  around that they can spend time with, that's pretty special.
• 5:01
  Yeah, and I just, I love the part where she said we're going
• 5:05
  to focus on experiences in quotes.
• 5:07
  And it's like, you know, you hear it all the time, but you
• 5:11
  know, people get to their point in life where, you know, maybe
• 5:14
  they've just maybe they're in a skilled nursing facility or
• 5:16
  whatever, and they just talk about the people they've met and
• 5:19
  the lives that they've been involved.
• 5:20
  And so it is really about relationships.
• 5:22
  It's not, I mean, I know we get granular here and we get into
• 5:25
  we're going to be talking about taxes.
• 5:27
  But but, but those do have implications.
• 5:30
  And so, you know, from my lens, I always think of what's the
• 5:34
  most efficient way that we can either minimize taxes or
• 5:38
  maximize Social Security benefits.
• 5:40
  Yes. But I think this also was a
• 5:42
  reminder to me is let's not forget about what we're here on
• 5:45
  this earth for, and that is to live life to the fullest.
• 5:48
  Yeah, and hopefully these podcasts help you live life to
• 5:51
  the fullest and educate you so that you can get there, so that
• 5:54
  you're able to do those things and have those experiences.
• 5:58
  Fantastic. Thanks for sharing that.
• 5:59
  Yeah. It's fun.
• 6:00
  All right. We're going to do a quick 180.
• 6:01
  We'll talk about taxes now. Now we're talking about taxes.
• 6:04
  OK. So you can have the fun and you
• 6:06
  can do things correctly. So Dan, you stressed that tax
• 6:10
  planning might be a little more important to monitor during
• 6:13
  retirement than during the working days.
• 6:15
  Why is that? Well, I think during your
• 6:18
  working days, Cami, you don't really have a choice.
• 6:21
  I mean, you're kind of, I hate the word stuck, but you are
• 6:24
  kind. Of during the money and you do.
• 6:25
  It I mean really the only thing you can control.
• 6:27
  I mean, obviously you can control your wage based on jobs
• 6:30
  you take and businesses you may or may not start, but you're
• 6:33
  going to pay what you pay. And there is not a lot of
• 6:35
  control once when you're in your working years.
• 6:39
  I mean, you can control about the only thing that you can
• 6:41
  really control when you're working is how much you're going
• 6:43
  to contribute to your retirement plan pre tax to reduce that
• 6:46
  income. But outside of that, you don't
• 6:49
  really have a lot of control. You get to be retirement age,
• 6:53
  you have a complete literally like a blank canvas, and you can
• 6:57
  create whatever it is that you want in terms of your tax
• 7:00
  scenario. And there are certain steps that
• 7:03
  you can take to minimize them. But there's always this trade
• 7:07
  off. And the trade off is do I pay
• 7:08
  taxes now or do I pay taxes later?
• 7:10
  Right, right. So how do we make these
• 7:12
  decisions? How do we know what to do once
• 7:15
  we hit that retirement age? It's it's one of my least
• 7:18
  favorite phrases, but it depends, yeah.
• 7:21
  It's complicated. It is.
• 7:22
  It's complicated and it does depend, but let's let's just
• 7:25
  kind of peel back the onion for a minute here.
• 7:26
  Let's just kind of start with kind of the basics, OK?
• 7:30
  I think first you start with what income sources come in the
• 7:33
  door. No matter what.
• 7:34
  We we often times refer to those as guaranteed income.
• 7:38
  And those guaranteed incomes could be, as we talked about the
• 7:41
  previous three episodes, it could be Social Security, it
• 7:43
  could be pensions, not necessarily guaranteed, but it
• 7:47
  could be rental income, it could be dividends if you own
• 7:51
  individual stocks, it could be portfolio income.
• 7:54
  So those are income that is going to be coming in the door
• 7:57
  or coming into your bank account consistently.
• 8:00
  Can I just stop you for one second?
• 8:02
  When you say portfolio income, what specifically are you
• 8:05
  talking about? Yeah.
• 8:06
  So portfolio income would be is if I've got a portfolio of, of
• 8:12
  mutual funds or exchange traded funds, they may kick out a
• 8:16
  capital gain or they may kick out a dividend.
• 8:19
  So if we take a look at a company, for example, none in
• 8:25
  particular, but companies when they make profits, they can
• 8:27
  typically do one of two things, Cammy.
• 8:29
  They can take that profit and they can pay it out in the form
• 8:32
  of a dividend or a portion of it, or they can take that profit
• 8:35
  and reinvest it back in the company and not declare or pay a
• 8:39
  dividend. And by doing that, that
• 8:41
  determines the taxability of their profits.
• 8:44
  So a lot of your technology companies don't pay dividends
• 8:46
  because they're reinvesting back in their company.
• 8:49
  But if you take larger banks, Oregon oil companies, they often
• 8:52
  pay a pretty healthy dividend. So mutual fund would just be a
• 8:55
  pool of those. And so you don't necessarily
• 8:59
  have control of how much that is.
• 9:01
  You can invest in investments that kick out more income and
• 9:05
  maybe are geared more towards what we call more value oriented
• 9:08
  like a large cap value that includes some of those banks and
• 9:11
  oil companies. Or you can invest in more of the
• 9:13
  technology that doesn't pay much of A dividend.
• 9:15
  But what I'm getting at is that if you've got a portfolio of
• 9:20
  mutual funds or individual stocks, that income is coming in
• 9:23
  and you can't turn it off. That's probably a better way for
• 9:25
  me to phrase it. So Social Security pensions, if
• 9:27
  we've elected the monthly income, you can't just turn it
• 9:30
  off. It's going to come in whether
• 9:31
  you want it or not. OK.
• 9:33
  OK. So we're looking at all of this,
• 9:35
  we're on peeling this onion. So that's our first step,
• 9:38
  looking at all those revenue streams that we've had and
• 9:41
  sources of income, I guess. And then what?
• 9:43
  And then I think to go back to kind of the basic one O 1 with
• 9:46
  financial planning is we take a look at all of that income
• 9:49
  that's coming in and then let's figure out what we're spending.
• 9:54
  And there's always two sides to the spending.
• 9:56
  It's always, well, this is what my necessities are, which is my
• 10:00
  utility bills. And if you happen to have a
• 10:02
  mortgage or a car payment or whatever, any other type of debt
• 10:06
  that you might have. But then we also factor in what
• 10:10
  are some of the niceties. It would be nice for us to
• 10:13
  travel. It would be nice to get a new
• 10:15
  car. It would be nice to help our
• 10:16
  grandchildren with college or whatever is important to them.
• 10:20
  So we build those in. And so when we start kind of
• 10:23
  building out this budget, if you will, then what we do is we take
• 10:27
  a look at that and then we match it up and see what those income
• 10:30
  sources are. So you know me, I like to use
• 10:32
  examples. So if we've got income coming in
• 10:36
  that's $6000 a month between pensions and Social Security and
• 10:41
  we've got expenses that are $8000 per month, we've got a
• 10:44
  deficit there of $2000. Then we go and we take a look at
• 10:49
  where are we going to get that $2000 deficit from and that
• 10:54
  could be from any number of sources.
• 10:56
  And so again, my analogy peeling back the onion, we go back and
• 11:01
  we start looking at that and it's like, OK, we've got the
• 11:04
  income sources coming in, we've got this deficit of $2000.
• 11:09
  And pretty much everything can be broken up into three
• 11:11
  different tax statuses or tax types, let me refer to as tax
• 11:15
  types. The first tax type would be non
• 11:18
  retirement money. This would be money that you've
• 11:21
  already paid tax on. What we call kind of a jargon in
• 11:25
  our industry, we call it non qualified assets.
• 11:28
  Qualified is associated with retirement accounts.
• 11:31
  This is not a retirement account.
• 11:33
  So think of it is it's after tax money.
• 11:36
  You can take it anytime you want whether you're 40 years old or
• 11:40
  if you're 65 years old. Their their tax has already been
• 11:44
  paid on it. I take $100,000 I invested in a
• 11:47
  stock, it goes up to $120,000. My initial 100,000, I've already
• 11:52
  paid tax on it. So or I could be sitting on
• 11:55
  $50,000 at the bank. That's considered non
• 11:58
  retirement, non qualified after tax money.
• 12:02
  The second type of tax status is going to be retirement accounts.
• 12:06
  And so that would be, for example, if you work for an
• 12:09
  employer, you've got a four O 1K, you retire, you roll that
• 12:12
  over. If it's pre tax Cammy, every
• 12:16
  dollar you pull out of there is 100% taxable.
• 12:19
  It's treated as ordinary income. What's ordinary income mean?
• 12:23
  Just like your wages just gets tacked on top of that.
• 12:28
  So we've got non retirement, then we've got retirement.
• 12:31
  And then the third component, which I get very happy about,
• 12:33
  and that's that Roth IRA. And the Roth IRA is you've
• 12:37
  chosen to pay tax on that in some form, but then whatever it
• 12:43
  grows to, as long as you meet certain criterias, you pull the
• 12:46
  money out 0 taxes, OK. That's why you get happy.
• 12:50
  I get really happy. OK, next step, what are we
• 12:53
  looking at? So if we take our income that's
• 12:57
  coming in the door and we look at our expenses and we've got
• 13:00
  that deficit, then what we do is we take a look and see where do
• 13:03
  we pull from and how that matters from a tax standpoint is
• 13:09
  the first scenario is going to be either very limited or small
• 13:12
  tax. The second scenario with pre tax
• 13:15
  is 100% taxable in the Roth is no tax.
• 13:18
  Sure. So why does that matter?
• 13:20
  Well, this isn't the lesson on tax brackets, but you know, as a
• 13:25
  married couple, you take a look at all of your income, you add
• 13:29
  that all up together, and then you take your standard deduction
• 13:33
  typically, and let's say that number comes out to be $75,000.
• 13:39
  We look at the tax brackets and we see what the difference is.
• 13:43
  If you were to pull money out of your retirement accounts that's
• 13:45
  100% taxable as ordinary income, How much you can pull out of
• 13:48
  those accounts and still stay in those lower brackets.
• 13:51
  And just to give you an idea, there's two big jumps in the tax
• 13:54
  brackets. The first bracket is it
• 13:58
  obviously 0, but then the next bracket is at 10%, then it's 12%
• 14:02
  and the first big jump goes from 12 all the way up to 22.
• 14:07
  And then we go from 22 to 24. And then the next big jump is
• 14:12
  from 24, then it jumps all the way to 32.
• 14:16
  I won't go through all of the numbers and, and, and how much
• 14:20
  you have to have in taxable income to hit each of those.
• 14:23
  But going back to the onion analogy, we look at what your
• 14:28
  income sources are, where the budget is, what the deficit is.
• 14:34
  And let's say that you've got room that you could pull out
• 14:37
  another $10,000 and still stay in that 12% bracket as a
• 14:40
  retiree. We'd pull out $10,000 out of
• 14:46
  your pre tax, the IRA that still keeps you in the 12% bracket and
• 14:52
  let's say anything up and above that would put you in a 22%
• 14:55
  bracket. That's where we tap into the
• 14:57
  Roth. OK, OK, so I think I know the
• 14:59
  answers of this, but if you could simplify it for me, if you
• 15:02
  have two retirees with the same amount of savings, why could
• 15:05
  they possibly pay different taxes?
• 15:08
  True, and a lot of it is based on income.
• 15:12
  I know I've touched on this before and it's not necessarily
• 15:14
  relevant here, but when you retire, it's based on the income
• 15:19
  you receive, not the assets that you have.
• 15:21
  And so in this particular case, it's kind of the reverse.
• 15:25
  It's like when you have all these incomes that are coming
• 15:27
  in, you know, I could have somebody that's got, you know,
• 15:31
  $1,000,000, you know, retiree A and retiree B, they both have
• 15:35
  $1,000,000, but one of them elected to take their $4000 a
• 15:39
  month retirement pension. That's $48,000 that they're
• 15:43
  receiving that the other one isn't receiving.
• 15:45
  So again, taxes are based on income, not assets.
• 15:49
  So if one has a lot more income sources that's coming in and the
• 15:53
  other one doesn't, the one that has a lot of income sources will
• 15:56
  pay a lot more in income tax. OK.
• 15:59
  Depending on where you live, is that a big, big difference?
• 16:03
  I mean, you can live in different States and there's
• 16:05
  different income taxes or no income tax, whatever, Yeah.
• 16:08
  And I appreciate you bringing that up because oftentimes I my
• 16:12
  mind always goes right to the federal government, which
• 16:14
  obviously is when I start talking about 12% jumping to 22,
• 16:17
  it's all federal, but each state has their own.
• 16:22
  One of the things that's really gaining a lot of popularity is
• 16:25
  states are going to a flat tax. And quite honestly, I love it.
• 16:28
  I absolutely love it. I mean, you've got states that
• 16:30
  have no income tax. And I'm often asked, well, why?
• 16:33
  Why would they not charge an income tax?
• 16:35
  Well, it's not that they're so flush with cash that they don't
• 16:38
  generate revenue. Other sources, whether it's
• 16:40
  property taxes or clothing taxes, different way.
• 16:42
  So. So they get it other ways.
• 16:45
  But yeah, so each state is vastly different and they range
• 16:51
  from 0% all the way up to I believe the highest is right
• 16:55
  around 14%. So yes, you're right, that gets
• 16:59
  added on top of of the federal income tax.
• 17:04
  So taxes, there's a lot to discuss.
• 17:07
  You've touched we, it feels like we've just scratched the
• 17:09
  surface, but it's very complicated.
• 17:12
  And sometimes even when we're explaining it, when you're
• 17:14
  explaining it, we can get lost in what exactly you're
• 17:17
  explaining. So when folks are heading into
• 17:19
  that retirement age and they're looking at taxes, what would you
• 17:23
  like them to take away from this episode?
• 17:28
  I think the biggest take away from this episode is that taxes
• 17:31
  make a big difference when you retire and you do have choices.
• 17:36
  And once you retire you can control to a certain extent how
• 17:41
  much taxes you are going to pay. I think in the next episode
• 17:45
  maybe we should have a little bit of a discussion about the
• 17:47
  accumulator, maybe at your age or your stage I should say, and
• 17:52
  why it matters. And if you remind me in the
• 17:56
  book, I talk about a story about borrowing money from your rich
• 18:00
  uncle, and I think that pertains to our younger audience.
• 18:03
  That's the accumulators and I want to share that with them.
• 18:06
  But I think the biggest take away today is just that, that
• 18:09
  when you're retired, you have lots and lots of choices.
• 18:13
  And often times when you're meeting with your accountant,
• 18:16
  depending on how involved or how active you are with your
• 18:19
  accountant, often times they're simply reporting the data.
• 18:24
  This is what you owe as opposed to doing a little bit of
• 18:26
  strategy before. Now, if you have an accountant
• 18:29
  and they're proactive, that's great and you've hired them to
• 18:31
  be proactive. But oftentimes people are like,
• 18:33
  well, this is what my income was, what do I owe on taxes?
• 18:36
  And they may have pushed into the 22% bracket.
• 18:39
  We touched on it last episode about taxability of Social
• 18:43
  Security. And that's a huge thing because
• 18:44
  a lot of times people focus just on that 12% bracket.
• 18:48
  But what they miss sometimes is that also now half of their
• 18:50
  Social Security becomes taxable, so that factors into taxes also.
• 18:55
  So you touched on it briefly as well about the Roth.
• 18:57
  And when I hear this and you look at the retirement and the
• 19:00
  tax implications or lack thereof.
• 19:03
  So can you just reiterate to those who are maybe a little bit
• 19:05
  younger watching and that accumulation phase, why it's so
• 19:07
  important in your mind to contribute to a Roth IRA?
• 19:11
  Yeah, because I think the biggest reason for contributing
• 19:14
  to a Roth IRA and there's in fact, I think we're going to
• 19:17
  save this for next episode. I'm going to answer your
• 19:18
  question, but there's three ways to get money into a Roth
• 19:21
  account, which I do want to talk about next episode.
• 19:24
  And I think it's important and that applies to everybody,
• 19:25
  whether you're whether you're 25 years old or whether you're 75
• 19:28
  years old. I do want to touch on the three
• 19:30
  ways to get money into a Roth account.
• 19:34
  But to answer your question, why is it important?
• 19:36
  One of the biggest uncertainties when you retire is what tax
• 19:41
  rates are going to be right? You know, for me in my 50s,
• 19:46
  there's a chance that we're going to see them go up in the
• 19:49
  next few years. Probably not because it just
• 19:52
  the, the sunset basically, you know, with the, the big
• 19:55
  beautiful bill that got passed, you know, it goes back and it
• 19:58
  basically somebody asked me the other day, how long is that for?
• 20:01
  And I said, well, they say it's permanent, but you know how long
• 20:03
  permanent is in the government. They can change at any time.
• 20:05
  But my point is, is the likelihood of tax rates changing
• 20:08
  drastically in the next few years is unlikely.
• 20:11
  But in your lifetime, I'm going to pretty much tell you there's
• 20:14
  a likely chance. Now my guess would be based on
• 20:18
  where we're at as a country and the debt and everything else,
• 20:20
  it's going to be higher. But Cammy, I can't tell you if
• 20:23
  it's going to be double or 10% higher.
• 20:26
  To answer your question, that's where the Roth is huge because
• 20:29
  it takes away the uncertainty of what future tax rates are.
• 20:33
  And we'll touch on it next week. The the big element of Ross are,
• 20:40
  you know, you don't get to get into a Roth for free.
• 20:42
  It's not like it's you get the free benefit of it.
• 20:45
  It's you either pay taxes now on that money or you pay it later.
• 20:49
  And your follow up question, which majority of Mars, which is
• 20:54
  better depends on the scenario and again we can touch on that
• 20:57
  next week too it. Depends, it depends.
• 20:59
  All right, fantastic. Thanks so much, Dan.
• 21:01
  Appreciate it. Thanks to you for joining us
• 21:03
  this week and learning a little bit more about taxes and what
• 21:06
  you should be considerate of as you do head into retirement and
• 21:10
  planning for the rest of your future.
• 21:13
  Thanks again. We drop a new podcast every
• 21:15
  week. We thank you for joining this
• 21:17
  week. You can always follow along
• 21:18
  wherever you watch your podcasts.
• 21:21
  Thanks again. Have a great week everyone.
• 21:24
  Fortress Financial Group, LLC is a registered investment advisor.
• 21:27
  Advisory services are only offered to clients or
• 21:30
  prospective clients where Fortress and its representatives
• 21:32
  are properly licensed or exempt for licensure.
• 21:35
  The opinions voiced in this material are for general
• 21:37
  information only and are not intended to provide specific
• 21:40
  advice or recommendations for any individual.
• 21:42
  All indexes are unmanaged and may not be invested into
• 21:45
  directly. Investing involves risk,
• 21:47
  including loss of principal.