BIOGRAPHY
Andi Last brings over 30 years of broadcasting, media, and marketing experience to Pure Financial Advisors. Serving as Media Manager remotely, Andi is based in South Australia. She is Executive Producer of the Your Money, Your Wealth® podcast, manages the firm’s YouTube channels, and is involved in the production and distribution of the Your Money, Your Wealth® TV show.
Andi grew up in San Diego. Before joining Pure, she was Media Operations Manager for a San Diego-based financial services firm with a long-running, nationally syndicated financial advice TV and radio show.
Andi gratefully serves on the all-volunteer board of directors of Living LFS, a non-profit 501(c)(3) organization supporting those with Li-Fraumeni syndrome (LFS), a rare genetic predisposition to developing cancer.
Andi enjoys still photography, and her photos have appeared in national publications and on a Grammy-nominated record.
Andi and her husband Jay have been together since 2010. Sharing a passion for music, they produced and recorded a house concert series featuring live performances by professional touring musicians. The Lasts also play music themselves: their band has played ’60s garage rock for audiences of three in their living room, and tens of people have watched their music videos on YouTube.
Andi's Latest Contributions
B and S in Maryland are in their mid-40s with $425,000 and a couple of rental properties. Can they retire early at 62? Vee in Oregon came to the US as a refugee with nothing and built a three and three-quarter million dollar portfolio from the ground up. Is his Roth conversion plan solid? And finally, Chandler and Monica in Texas are sitting on $1.4 million and hope they can walk away from work in 3 years. Will Roth conversions keep the tax man from taking a giant bite on their way out?
What is IRMAA, and why does it matter for Roth conversions?
IRMAA, the Income-Related Monthly Adjustment Amount, is a surcharge added to Medicare Part B and Part D premiums when income rises above certain thresholds. Because Roth conversions raise taxable income in the year they happen, a large conversion can push you past an IRMAA threshold and increase your Medicare premiums about two years later, so timing conversions around those limits matters.
Frequently Asked Questions
Q: What does it mean to “cover the gap” in retirement?
A: The gap is the difference between what you want to spend each year and your guaranteed income from sources like Social Security, a pension, and rental income. Whatever those sources don’t cover has to come from your investment portfolio, and that shortfall drives how much you need saved. In the case of early retirement, “covering the gap” can also refer to how you fund the time between when you stop working and when you start drawing Social Security benefits and/or a pension.
Q: Should you make Roth or pre-tax 401(k) contributions?
A: Pre-tax contributions lower your taxable income now and are taxed when you withdraw them. Roth contributions use after-tax dollars and can come out tax-free later. Roth often makes sense when your current tax bracket is similar to or lower than the bracket you expect to be in during retirement.
Q: How can Roth conversions help reduce future required minimum distributions?
A: A Roth conversion moves money from a pre-tax IRA or 401(k) into a Roth account. Because original Roth owners have no RMDs, converting before RMD age can shrink the pre-tax balance that would otherwise be forced out and taxed as ordinary income later in retirement.
Q: Why does a surviving spouse’s tax situation matter when planning conversions?
A: When one spouse passes away, the survivor usually files taxes as single, where the same income falls into higher brackets than it did filing jointly. Converting to Roth while both spouses are alive can move money out at today’s joint-filing rates before that shift happens.
Joe and Big Al spitball for people with a small fortune sitting in pre-tax accounts, turning into a tax bomb. We’ll find out how Roth conversions and careful tax liability management can optimize their retirement income strategy. Eric in California is 72 with nearly $4M in pre-tax accounts. How much should he transfer in Roth conversions? Is borrowing against his own house to pay the tax bill brilliant or bonkers? Rick and Kiani are hoping they can quit sooner than they think. Mike just hit full retirement age. Should he claim Social Security benefits now or wait until age 70? And finally, Jeff wants to walk away at 59 with a roadmap for aggressive Roth conversions, assuming the tax cliff doesn’t get him first.
How do Roth conversions help reduce the taxes on a large pre-tax retirement account?
A Roth conversion moves money from a pre-tax IRA or 401(k) into a Roth account, where it grows tax-free and has no required minimum distributions for the original owner. Converting during lower-income years, before RMDs begin at age 73 or 75, can reduce the pre-tax balance that will later be taxed as ordinary income.
Frequently Asked Questions
Q: What is a “retirement tax bomb”?
A: A retirement tax bomb is the oversized tax bill that can come due when most of your savings sit in tax-deferred accounts like traditional IRAs and 401(k)s. Withdrawals are taxed as ordinary income, and required minimum distributions are mandatory, so a large pre-tax balance can push a retiree into higher tax brackets later in life.
Q: Can you use a home equity line of credit to pay the tax on a Roth conversion?
A: Some retirees consider borrowing against home equity to cover the tax owed on a conversion instead of pulling those dollars from the account being converted, which keeps more money invested in the Roth. It also adds debt and interest costs, so whether it works depends on your interest rate, cash flow, and overall plan.
Q: Should you claim Social Security at full retirement age or wait until 70?
A: Claiming at full retirement age, which is 67 for most people today, gives you your full benefit. Waiting increases it by roughly 8% for each year you delay, up to 124% of the full amount at age 70, and it can raise the survivor benefit for a spouse. The right timing depends on your health, other income, and how long you expect to need the money.
Q: What is the rule of 55?
A: The rule of 55 is an IRS provision that lets you take money from your current employer’s 401(k) without the 10% early-withdrawal penalty if you leave that job in the year you turn 55 or later. It applies to 401(k)s rather than IRAs, and individual plan rules can differ, so confirm the details with your plan administrator.
Q: Is it better to make Roth or pre-tax 401(k) contributions?
A: Pre-tax contributions lower your taxable income now and are taxed when you withdraw them in retirement. Roth contributions are made with after-tax dollars and can come out tax-free later. Roth often makes sense when you expect to be in a similar or higher tax bracket in retirement, which is common for diligent savers who build up large pre-tax balances.
The margin loan debate continues today on Your Money, Your Wealth® podcast number 589. Jack and Jill, longtime listeners who recently moved from the UAE to Australia, want a sanity check on using margin loans (AKA pledge loans) to build and live off their portfolio. Joe and Big Al spitball whether borrowing against stocks and never paying tax on the gains, the Buy Borrow Die strategy, is actually smart, or a fast way to blow yourself up? They also recap the spicy comments our margin loan discussion back in episode 585 kicked up. Then the fellas flip the script for Forest and Jenni in Virginia: does a reverse glide path, investing conservatively now and getting more aggressive as you age, actually hold up? And finally, Jack and Diane in New Jersey are retiring this year, selling the house, and moving to Florida, so Joe and Big Al stress-test their Roth conversion plan before they pull the trigger.
What is the Buy, Borrow, Die strategy?
The buy, borrow, die strategy involves buying appreciating assets like stocks, borrowing against them through a securities-backed line of credit or margin loan instead of selling, and holding until death, when heirs receive a step-up in basis that can eliminate capital gains tax on the growth. It only works with assets held outside retirement accounts, and it carries real risk, because leverage magnifies losses when markets fall.
Frequently Asked Questions
Q: Is using a margin loan in retirement a good idea instead of selling investments?
A: It can make sense in certain situations, like avoiding capital gains tax or not selling stocks while the market is down, then paying the loan back over a year or two. But it depends heavily on your tax situation, your age, and the interest rate. Leverage cuts both ways, so it can amplify losses as much as gains if markets drop.
Q: What is a securities-backed line of credit (SBLOC)?
A: An SBLOC, sometimes called a pledge loan, lets you borrow against the value of your investment portfolio without selling the holdings. Interest rates vary by brokerage and can range from around 5% to 11% depending on the lender and current rates. Keeping the borrowed amount to a low percentage of the portfolio can help reduce the risk of a margin call in a downturn.
Q: How much leverage is safe to use on an investment portfolio?
A: There’s no single safe number, but keeping leverage low, such as around 25% of the portfolio, reduces the risk of a forced sale during a downturn compared to higher levels like 50%. History shows the risk clearly: the NASDAQ fell about 55% during the Great Recession and more during the dot-com bust, so anyone using leverage should go in with a clear understanding of the potential losses.
Q: What is a reverse glide path in retirement, and does it make sense?
A: A reverse glide path means starting retirement with a higher bond allocation and gradually shifting toward more stocks as you age, which can reduce sequence-of-return risk in the early, most vulnerable years. Researchers like Michael Kitces and Wade Pfau have studied it. Whether it fits depends on your withdrawal rate and comfort with risk, and for many retirees the benefit over a well-diversified portfolio may be modest.
Q: Which state’s income tax applies when you do a Roth conversion?
A: You generally owe state income tax on a Roth conversion based on the state where you live at the time of the conversion, not the state where you originally earned or contributed the money. Moving to a state with no income tax, such as Florida, Texas, or Nevada, before converting can reduce or eliminate the state tax on that conversion.
