Rich Men North of Richmond


Rich Men North of Richmond

You may be familiar with the music of Oliver Anthony, with his song “Rich Men North Of Richmond”, which has recently gone viral. If you haven’t yet listened to the song, you should seriously consider doing so. The lyrics will very likely resonate with how you may feel. The message in this song is very pertinent to Labor Day which has just passed. As you may know, Labor Day celebrates middle-class working men and women, and their contributions to the development of the USA. 

Our Core Business

While we do high net worth estate planning in our office, most of the work we do is with our middle class and upper middle class families. Most of them are retirees, and soon to be retirees. This is where our heart is – being able to help retired school teachers, factory workers, blue-collar and white-collar folks to protect their savings. There is this sentiment that no one is looking out for the middle-class citizens, which my clients and I can relate to. Many middle class folks feel like they are working to survive, living pay check to pay check. 

What is the Secure Act?

There is an issue affecting middle class families from both a legal and retirement standpoint. The Secure Act is a law that was passed in 2020, but which many people are not aware of. This is because information about this law was buried under the Covid Pandemic news. 

The Secure Act affects middle class retirees, who have most of their net worth invested in home equity, retirement accounts and IRA’s. The reason why IRA’s exist, is because about 50 years ago companies wanted to do away with pensions. The IRS then created “qualified accounts”, which include the 401k, 403 B and the individual IRA’s. If you worked for a company with a 401k, the company matched the contribution up to 4%. The money was invested in a qualified account until you retired.

The “50 Year Experiment”

Of course there is a large generation of Baby Boomers reaching their retirement years. It would appear that this “50 year experiment” has worked out well for most people. The money you put into a qualified account, was left there until you were 59 years old. When you retired, you would be able to pull the money out. Regardless of whether you or your kids pulled the money out, income tax was payable on withdrawal.

When I work with retirees in creating their estate plan, I have observed that many middle class retirees have all their money in retirement accounts and not much available cash. They have been brainwashed for 50 years not to pay income taxes. They are living frugally in their retirement years because they don’t want to pay tax to withdraw money from their IRA. When they pass away, their kids will inherit their IRA. While I’m not qualified to give them financial advice, I often advise my clients to enjoy their retirement they worked hard for. They should take their vacation and not leave all the money to their kids.

Before the Secure Act

It used to be the case that when you put money into the 401k, your kids got a “stretch IRA” when you passed away. That was based on the fact that if my dad in his early 80’s died, and left me his retirement account worth $200,000, my dad’s IRA became my IRA. I could then invest this money and enjoy tax deferred growth for my life expectancy. I would only have to take out a little bit of money each year. If I am 55 years of age when my dad dies, I would have 20 – 30 years of tax deferred growth. This means that $200,000 could grow to be more than $1,000,000 when I withdraw the money at the age of 80.

This was an opportunity for massive wealth transfer in middle class families. This is because the next generation inheriting these accounts, could also transfer wealth to their next generation with a stretch IRA. This all changed when the Secure Act was passed. Now, if my dad passes away leaving me a $200,000 retirement account, I don’t get to stretch the money. All the money must be withdrawn from the retirement account within the first 10 years after my dad passes. 

No Stretch IRA Any Longer

This means drawing at least 10% a year, which equates to $20,000 that I must pay tax on. I have lost out on 30 years of tax deferred growth, and at 55 years of age, I am also still working. This means I am likely in a high income tax bracket. Now I have to add my dad’s IRA to my income tax return, and pay more in tax.

If you think about it, for 50 years, you invested money into an account with tax favourable distribution for your children. Now when you get to your retirement years, they change the rules. This affects the middle-class folk who have retirement accounts, and it feels like a death tax on the middle class.  Oliver Anthony is referring to this in this song “Rich Men North Of Richmond”. Listen to the song by clicking this link.

What I have outlined here, is part of what we teach you at our Workshops. If you would like to learn more, please register to attend one of our “Three Secrets to Protect our Legacy” Workshops. Visit our website: