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What should you do when the asset allocation of your retirement portfolio drifts? Joe and Big Al spitball on rebalancing for DJ in St. Louis. Plus, Coach Dobber in Minnesota is curious about municipal bonds in a brokerage account, and Daniel in Stevensville, Michigan needs details on emergency funds. Also, can Tim the Enchanter do a Roth conversion and avoid the “nasty, big pointy teeth” of capital gains tax? Duke in upstate New York told his wife they need 6 million dollars in retirement, and she said he was silly. What say Joe and Al? We’ll find out.
John in Boston is in the 32% tax bracket. Should he do Roth conversions? Flight Deck Dad and Irish Girl in Pensacola have a lot of tax-free pension income. Should they do Roth conversions? Bert and Ernie in New Jersey wonder if they should convert to Roth or take advantage of zero percent capital gains tax rates. Joe Anderson, CFP® and Big Al Clopine, CPA spitball for all of them today. Plus, Michael and his wife in Bellevue are 34, in the 24% tax bracket and wonder if they should contribute to tax-free or tax-deferred accounts, and if they should slow down on retirement savings and start a bridging account for the years between when they want to punch the clock in their early to mid-50s, and when they can access their retirement savings. Then, for something completely different, Frenchie from Maine writes back in: What are the disadvantages to paying off her mortgage ASAP, and what’s the tax efficiency of a money market compared to bond funds?
You’ve been jamming money into your retirement accounts for years now. When is it okay to slow down? Joe and Big Al spitball for Ron and Veronica in Indiana. Plus, how can Scott in Illinois bridge the gap from age 55 to retirement income at 57? How should Big Juan in Texas pay for college? Should he convert his TSP to Roth? Can he retire at 55 And finally, Frank and Jane Drebin in Wisconsin are 46 and 47 and wondering if their plan for retirement in 5 years is just a pipe dream.
What are the pros and cons if Chip uses the money in his taxable brokerage account for early retirement income? Jack and Sally ask Joe and Big Al to spitball on whether they can retire around age 55 or 60, and whether they should max out their Roth or convert to Roth. Plus, April and Andy ask the fellas to spitball on their dividend investing strategy, and Don wonders if a separately managed account or SMA makes sense for his taxable account. (We’ll also find out what an SMA is.)
Will your taxes go up? Stay the same? Go down, even? Jeffrey Levine is Chief Planning Officer at Focus Partners, Professor of Practice in Taxation at the American College of Financial Services, and the Lead Financial Planning Nerd at Kitces.com. In other words, he’s one of the savviest tax minds in the country. Jeff returns to the show today on Your Money, Your Wealth® podcast number 524 with Joe Anderson, CFP® and Big Al Clopine, CPA, with his thoughts on what will happen to taxes under the new administration, saving for retirement in a Roth IRA vs. a traditional IRA, managing inherited retirement accounts, and the future viability of Social Security. Plus, what should you do with required minimum distributions (RMDs) when you don’t need the money to live on? How do you calculate the maximum amount you should convert from your retirement account to a tax-free Roth account, and how much should you convert – or not – to keep RMDs under control? Finally, how can minor beneficiaries avoid probate?
What are the three predictors of retirement happiness? Dr. Michael Finke, CFP® from the American College of Financial Services tells us what his research shows. He also shares his insights on the four percent rule for retirement withdrawals and whether there is anything we can do to stave off the effects of aging on our cognitive abilities. Plus, Joe and Big Al do some retirement spitballing: can Jon in Pennsylvania retire early at age 56, and would it be better for him to take his pension monthly or as a lump sum? Steve and his wife in Colorado are 48 and 54 and have 3 million saved. When can they retire? Eager Eagle and his wife in Washington state have 2 million saved at ages 61 and 63. Can they retire next year?
What does the future hold for your Social Security under the new administration? Nationally-renowned financial thought leaders Jamie Hopkins, Jeff Levine, Eric Ludwig, and Steve Parrish share their insights with Big Al Clopine, CPA at the American College of Financial Services’ Horizons Conference in San Diego. First, the College’s President, George Nichols, gives an overview of the institution and their inaugural conference. Plus, Joe and Big Al spitball on whether Ricky and Lucy in Wisconsin even bother saving for retirement – they’re expecting to inherit about 20 million dollars. When should Tybob in Arizona collect Social Security? Are Roth conversions right for him? Should he go for Medicare or Medicare Advantage? Speedy Racer in Georgia needs a retirement spitball, and Gilligan in New York shares insight for other Gilligans trying to avoid a retirement shipwreck.
How much do Nick and Nora in Pittsburgh, and Doc Mc Muffin and her Mr. in Minnesota, need to have saved, and how much can they afford to spend in retirement? What are the disadvantages to Fred and Ethel in Virginia if Ethel collects her Social Security early? Are the Moonshiner and the City Girl in Florida so obsessed with avoiding RMDs and IRMAA that they’re wasting too much savings on Roth conversions? Finally, will the tax benefits on a rental property offset the negative cash flow for Lily’s 29-year-old son, who has started his professional career with a $750K salary?
Is it better to save for retirement in traditional 401(k)s and IRAs, or in Roth accounts? What are the rules around contributing to two different types of Roth accounts? If required minimum distributions will be staggered because of a couple’s age difference, should they convert their retirement savings to Roth, or leave it alone? But first, Joe and Big Al have a backdoor Roth conversion withdrawal debate to settle.
Should Nancy in Washington take out a 401(k) loan and invest it in her brokerage account to catch up on saving for her retirement? When Joe and Big Al talk about having a balanced portfolio of various asset classes like stocks and bonds, Brian in Naperville, Illinois wonders whether that asset allocation strategy considers the stabilizing effect of monthly Social Security payments. Plus, Joy and her brother each have a $400,000 inheritance. How should they each invest it for their very different financial situations? Mike in Colorado has a good guaranteed income stream, so what should he do with the money he’s drawing from his taxable IRA every year – convert to Roth, put it in a brokerage account, go on a cruise? And finally, Skipper asks the fellas to spitball on whether he should do Roth conversions or take advantage of zero percent capital gains tax rates.
Financially speaking, should Old Bear in Northern Kentucky marry his Honey? How should Sebastian in Virginia navigate the financial aspects of his separation? Plus, Famous Missourians want to know, how much is enough for retirement and when can you take your foot off the gas? Can Paul with the Big Wallet Bridge the long gap between retiring and claiming Social Security benefits? And can Aspiring Adventurer in Oregon retire single at age 58?
Mike and his wife in Tampa are 39 and 36, they’ve got nearly a million bucks saved. Are they on track for retirement? Kate in California is 55 and hopes to retire in the next couple of years. How should she manage deferred compensation and retirement withdrawals? Joe and Big Al also answer questions from our YouTube viewers on considering IRMAA when making Roth conversions, paying Roth conversion taxes quarterly or in December or in January, protecting a gifted house from a child’s ex, and the tax impact of rebuilding on an inherited property. Finally, 8 years ago, Joe and Big Al said you shouldn’t have more than 2% of your portfolio in gold, and one YouTube viewer said that did not age too well. What do the fellas think today? We’ll find out.
What is the risk with BDCs, or business development company funds? Edward in Illinois wants to know. Do Pebbles and Bam Bam in Kentuckystone have too much invested in T-bills? Are mutual funds or ETFs a better place for them to invest qualified money in the decumulation phase? Is there a difference between a traditional IRA and a rollover IRA? Keith in Connecticut is 34 and wants a spitball on whether his investments are appropriate for his time horizon. Plus, Gus in Philly needs a withdrawal strategy for his dad’s multi-year guaranteed annuities (MYGAs). Speaking of MYGAs, YouTube viewer Ken thinks everyone should invest in MYGAs and bonds, and nobody should ever pay a financial advisor. What do Joe and Big Al think? Finally, comments on your state of residence for tax purposes, the prorated sale of a primary residence, bonds vs. a pension, and focusing on PERMA – but what is it?
YMYW Podcast Best of 2024: we’re revisiting your favorite topics of last year, spitballing on strategies for building up tax-free retirement income in Roth accounts, determining your appropriate mix of taxable, tax-deferred, and tax-free savings (also known as tax diversification), and finding out whether YMYW viewers and listeners can retire as soon as possible.
Does it make sense for Alex and his wife in Massachusetts to do Roth conversions now to the top of their eventual tax bracket? Steve in San Diego got serious about saving for retirement after Joe and Big Al gave him some tough love 5 years ago. Is he good to retire now, and should he convert to Roth? Can Barbara in New Jersey’s grandson move excess 529 funds to a Roth and withdraw the money after 5 years? P. Ware has a cunning plan to gift appreciated stock to avoid capital gains tax, but will it work? Should Mike create a limited liability company (LLC) for his rental properties? Qualified charitable distributions (QCD) don’t make sense to GetSmart Paul. Sherri in California wonders if her kids can inherit her savings account without any tax penalty, and whether there’s a safe, high-yielding investment she should put it in. Finally, Houry in New York wonders if her IRA can fund a charitable remainder unitrust (CRUT).
