Show Notes

• 00:00 – Intro: This Week on the YMYW Podcast
• 00:56 – Should We Stop Roth Conversions for the New $6,000 Senior Bonus Tax Deduction? (Chris, Maple Grove, MN)
• 07:44 – Lost Cost Basis After Moving Funds to Vanguard. Now What? (Windy Chicago, Chino Hills, CA)
• 10:21 – Tax Loss Harvesting: When Is It Too Much? (Teri, Salt Lake City)
• 18:49 – Can We Retire with Rising Health Costs and Care Needs? (Larry & Sally Morgan, voice)
• 33:34 – Outro: Next Week on the YMYW Podcast

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Transcription

(NOTE: Transcriptions are an approximation and may not be entirely correct)

Intro: This Week on the YMYW Podcast

Andi: Should the new temporary senior tax deduction change your Roth conversion strategy? Joe and Big Al spitball for Chris in Maple Grove, Minnesota, who wonders whether to keep converting to Roth now that the $6,000 Senior Bonus deduction phases out with higher income, today on Your Money, Your Wealth® podcast number 554. Teri from Salt Lake City’s broker has amassed $60,000 of losses in Teri’s $1.1 million account due to tax-loss harvesting. When is enough… enough? Windy Chicago in Chino Hills, California wonders what to do about their cost basis vanishing after transferring mutual funds to Vanguard, and Larry and Sally from Michigan are planning for retirement while facing significant health challenges. Can they afford to bridge the healthcare gap and still retire safely? I’m Executive Producer Andi Last, and here are the hosts of Your Money, Your Wealth®, the other two-thirds of “JABA”, Joe Anderson, CFP®, and Big Al Clopine, CPA.

Should We Stop Roth Conversions for the New $6,000 Senior Bonus Tax Deduction? (Chris, Maple Grove, MN)

Joe: Let’s kick it off Big Al.

Al: Okay. Love to,

Joe: in Maple Grove, Minnesota, you know Maple Grove is where, Ruthie lives.

Al: Oh, is that right? Okay. That is correct. So this is kind of near and dear to your heart then.

Joe: Oh, I bet they’re neighbors.

Al: Yeah, my mom probably, yeah.

Joe: Yeah. Right around the same age.

Al: They sure are.

Joe: Alright, let’s see what they got here.

Al: Okay.

Joe: All right. I’m 73, wife 70. This is my first year of RMDs. I have been doing Roth conversions up to the first IRMAA bracket for many years. This now turns out to be higher than the $150,000 income limit. The OBBB placed, you know what that stands for?

Andi: OBBB. I believe That’s One Big Beautiful Bill.

Joe: That is One Big Beautiful Bill.

Al: Okay, there you go. I didn’t know that. So learn something today.

Joe: Okay. I’m looking for guidance on how to evaluate the benefit of doing a Roth conversion up to the first IRMAA tier versus stopping the Roth conversion at the initial OBB limit.

I realized the $6,000 per person exemption decreases from 150 to 250,000. Our main reason to do Roth conversion is to give our children and get grandchildren tax-free inheritance and make sure our future RMDs of a solo survivor won’t be too high for reference. My current IRA is roughly 900,000 and my wife’s 260,000.

Our current Roth IRAs combined are 1.4 million. Our pension and Social Security provide about $10,000 per month, which cover our expenses. It puts us in the 22% tax bracket before the RMDs. Hope this gives you basic information you need to help me evaluate this new wrinkle in the tax code. Thank you. Hi, Andi.

In regards to our other assets, we have about $200,000 in a brokerage account, a hundred thousand dollars in cash. Our house is paid for worth 950,000. If you have any other questions, feel free. All right, so he’s looking at the $6,000 credit that will kick in with 150 to $250,000 of income. So it’s putting a little wrinkle in his arm or in his conversion strategy.

So if he goes too high, he’s gonna phase out of the, I guess, personal exemption.

Al: Yeah. So maybe let’s explain what it is. It’s the senior bonus deduction. And it’s for 2000, 2025 through 2028. So it’s for the next four years, $6,000 if you’re 65 and older. And Joe, it doesn’t matter whether you itemize or not, you still get to take that $6,000 if your income is low enough.

Joe: So it’s a deduction, not a credit.

Al: It’s a deduction, not a credit. That’s right. Deduction. And so if you’re single, it starts phasing out at $75,000, of taxable income and fully, phases out at 175,000. for married, it’s 150,000 to 250,000. So in either case, Joe, it’s about a hundred thousand dollars phase out.

It works out to about. For every dollar of extra income, you would lose 6 cents on this deduction. Is maybe a way to think about it.

Joe: Yeah. Or another way to think of it and tell me if I’m right or wrong here. So let’s say 150 to 250. So if he had $200,000 of taxable income, he would only receive 3000 of the exemption.

Al: That’s correct.

Joe: He’d lose half of it.

Al: He’d lose half. So in terms of a percentage, that’s a 6%. Percentage. Right? So if you’re trying to think about what’s, the extra tax, it’s 6% if you’re in that phase out range. But I will say there’s another wrinkle that makes this even more complicated, and that is for the IRMAA for 2025, it’s your income in 2023, right?

That’s which already happened. For 2026, it’s your IRMAA in 2024, which already happened. So if you’re really talking about planning, you only have two years that this makes any difference at all. 20 25, 20 26. So if you’re trying to preserve the whole $6,000 of deduction, you might wanna stay under as a married 150,000, single 75,000.

But like I say, that’s. It’s only gonna help you for 2027 and 2028 unless they extend it, which they could. But that’s how the law’s written right now. It’s temporary.

Joe: It goes away in 20 at the end of 2028, but, alright. Looking at his asset base, I mean, he’s already got a ton of money in Roth.

Al: Yeah.

Joe: So let’s call it $1.2 million. What’s his RMD is gonna be 45-50 grand.

Al: Yeah, that’s about right.

Joe: Yep. So, so $50,000. His taxable income is 120, roughly. That’s probably less than that. so his gross income, he said $10,000 a month with Social Security and his pension. Yep. So that’s one 20, minus 30. So I don’t know, he’s at $90,000 roughly of taxable income. So he could still do a conversion.

Al: He could, but I think he hits, I think he’s 73, so his RMD probably will hit this year.

Joe: Oh yeah. Yeah. So his RMD is gonna hit at $900,000. So 30,000 Yeah. Is gonna be his RMD. He still has about $20,000 of room to stay below that one 50 potentially.

Al: I agree. There, there’s a little bit of room, but just, yeah. If, it were me, Joe, I would try to stay under the one 50. ’cause that’s a pretty good deduction that, that $6,000.

Joe: Yeah, for sure. And I don’t think he’s ever gonna be higher than the 22% tax pro, unless the 22 goes back to 25.

Al: Sure, that’s the only risk, and, you know, and that, that’s a speculation, so.

Joe: Right, right. I would stay under the 150 as well. I think he’s done already a phenomenal job of getting a lot of money over to the Roth. IRA 900,000 is still a pretty good chunk of change, of, income that he doesn’t necessarily need, that he has to pay tax on. I do like the 22% tax bracket, but stay below the one 50. Or if he goes a little bit higher, it’s not gonna kill him. But, but yeah, but that’s the OBBB little wrinkle.

Al: One Big Beautiful Bill. Okay, now I know it.

Joe: Alright, cool. Alright. Maple Grove. Wonder whereabouts he lives. Maple Grove’s pretty big city.

Al: Is it okay? I don’t know it. Yeah, it’s nice, I’m sure.

Joe: Very nice.

Al: Yeah. It’s especially in the summer, huh?

Joe: Yeah, it’s very nice in the summer. alright, cool.

Andi: A retirement strategy is like a basketball game: you want every single shot you take to be nothing but net, but sometimes you need a Retirement Rebound. This week on Your Money, Your Wealth TV, Joe and Big Al show you how five plays can help you turn things around, get that rebound, and score a comeback. Click or tap the link in the episode description to watch it now. Plus, after a lifetime of saving, making the transition to retirement means facing a whole new set of challenges – how are you going to generate income in retirement? Download the Retirement Income Strategies Guide for 5 questions you need to ask yourself before you retire, the sources of income available for you in retirement, how to maximize your Social Security benefits, and how to develop a retirement income strategy that meets your needs. Click or tap the links in the episode description to watch Retirement Rebound on YMYW TV, and to download the Retirement Income Strategies Guide for free.

Lost Cost Basis After Moving Funds to Vanguard. Now What? (Windy Chicago, Chino Hills, CA)

Joe: Let’s go to Windy Chicago in oh. What? Windy Chicago and Chino-

Andi: So they’re calling themselves Windy Chicago and they live in Chino Hills, California.

Al: Yeah, that’s okay. Maybe they’re from Chicago.

Joe: but they live in Chino Hills, correct?

Andi: Yeah.

Joe: All right. I did an In-kind transfer to Vanguard of some mutual funds that we owned for quite a while. However, the cost information wasn’t transferred to Vanguard. Now when we look at the unrealized gain lost, there aren’t any. Will this be reported on my 10 99 when we sell these funds?

Al: Great question.

So I guess the first thing you can do is you can contact Vanguard and send them your cost basis information. They will generally put that in for you, but if you don’t want to, or they don’t do it for some reason, it’s no big deal. there’s, lots of cases where your brokerage house doesn’t know the cost basis.

And there’s three choices on the 10 99 Joe. The first choice is the brokerage house has the, sales price and the cost basis. The second choice is they have the cost base, they have the sales price, but not the cost basis, which would be the case here. And the third case is they don’t have either the sales price or the cost basis, but they’re letting you know something happened.

So at any rate, yeah, it’s no big deal. You just, if they, if it doesn’t get in the brokerage company, you just entered on the tax return yourself. And remember, income taxes are on the honor system.

Joe: So honor system, that’s,

Al: honor system and, I’m sure you all, out there have high integrity. So I’m counting on you.

Joe: All right, cool.

Tax Loss Harvesting: When Is It Too Much? (Teri, Salt Lake City)

Joe: Let’s go to Teri from Salt Lake City. My broker continues to amass losses due to tax loss harvesting. I struggle to see how this is a good thing, just amass losses. All right.

Al: Yeah, right.

Joe: At what point is this too much presently sitting at a $60,000 of loss on a $1.1 million account? What am I missing? He explains for future use, but I feel I’m missing current year opportunities. Any help explaining rationale would be appreciated. Why am YW the best? All right, Teri. All right. Let’s see. she’s got. $2.2 million in tax deferred accounts. Tax free is about a million. Taxable account, 1.2 million pensions is $95,000 a year. Social Security is 1 0 5, I’m 66. Spouse is 65. Retired living expenses, 72. Thanks for asking. Didn’t think it was applicable, but I’ll take whatever insight I can get. Beverage choice, ice cold Corona.

Andi: That’s another case where somebody replied to the email that they get after submitting a spitball request asking, are you sure that you gave us all the information needed for a spitball?

Al: Got it. Most importantly, what you’re drinking and you know what? And ice cold Corona sounds pretty good to me right now, Joe. I’m in Hawaii. It’s 81 degrees. I would take one.

Joe: Yeah, you look like you got a little sun too.

Al: I got a little too much. So I’ll try to tone it down next couple days.

Joe: alright. Tax lost harvesting. So presently sitting at $60,000 of loss on a $1.1 million account. Is this a good thing Al?

Al: It’s a great thing. Let me explain. I mean, it’s good and bad in a sense. If  they’re doing it right, it’s a good thing. I’ll put it that way. Okay. So here’s what I mean. Here’s what I mean by that. So. In your brokerage account, non-retirement account, you’re gonna have certain mutual funds or stocks or ETFs that go up and certain ones that go down and when they go down. It’s a great strategy to sell them at a loss, but here’s the caveat, you need to buy something very similar so you’re still in the market, so you’re not missing out on opportunities.

You’re still in the market when the market comes back for that asset class or. That, sector or whatever it may be, you will enjoy that increase. But in the meantime, you’ve created a tax loss, which you can’t necessarily use unless you have tax gains. But think about this, they never go away. They carry over year, after year for the rest of your life, which means in this particular case, Teri, the first $60,000 of gains in your account is tax-free.

It’s a great thing and probably, I don’t know, your, your advisor, but chances are they’re buying something similar, so you’re still in the market. So yeah, I would like to have as many as I could. Yeah. I don’t like to lose money, but that’s the nature of investing. So that’s what I would say.

Joe: I wonder if this is like in the past year, the past month, the past week, right? $60,000. So if you take a look at the markets this year, I. It wouldn’t be, I wonder,

Al: I don’t think it’d be this year. Probably most of them are up.

Joe: Yeah.

Al: If it’s this year, maybe you got the wrong investments. we’ll put it that way, right?

Joe: Yeah. Yeah. That’s the point. It’s like, if they’re harvesting a bunch of losses in up markets

Al: Yeah. That, that goes bad.

Joe: What’s the investment strategy, you know, or you don’t wanna buy dogs to take advantage of taxes.

Al: True. that’s a good point. I guess I should have preference with assuming you have the right portfolio for you. We’ll start that way, huh?

Joe: But, you’re right. Let’s say if you have several different asset classes, small international merging markets, us whatever.

You know, they don’t all move in the same direction every year. Some go up, some go a little bit down. That’s the beauty of diversification. And so when you have dollars in a brokerage account, so we talk about asset location, and asset location means, you wanna have certain asset classes in certain accounts depending on how they’re taxed.

So in her situation, they have $1.1 million. In a brokerage account, they have a couple million dollars in a retirement account that’s tax deferred, and then they have another million dollars in a tax free account. So when you think about an. An overall asset allocation and an asset location strategy is that in the taxable account, the brokerage account, that’s where you want to keep more stock or stock mutual funds or stock ETFs.

Your Roth account is where you want to keep more stocks and where you want to keep more safety, like bond CDs. Cash would be more in the tax deferred account. And the reason why you want to have more volatile asset classes in your taxable account is because of the tax lost harvesting. You can harvest the losses and create tax free income as you utilize the strategy appropriately.

And also if you have high flyers in there that make 10, 12, 20% gains on, much rather be taxed at a capital gains rate than I would be at ordinary income if they were sitting inside my IRA. So it sounds like your broker. is doing a great job. Unless assuming she’s buying or, she’s buying, I don’t know what they’re buying. If you’re harvesting $60,000 a loss a month, that’s probably not the best strategy.

Al: It may not be. So here’s one more thing I wanna say. When you’ve got these losses, they’re capital losses. They can be used against any capital gain. I think a lot of people don’t realize a stock loss at capital loss that carries for on your tax return. You can use that against a real estate gain. You sell your home, you have more gain than the exclusion. You can use it against a home sale gain or a rental property gain. These losses are. Pretty valuable. So you want you, yes, you wanna have the right investment strategy, but assuming you do, if certain asset classes go down, you wanna sell ’em, buy something similar, harvest those losses so you can use ’em against future gains, and that’s super valuable, I would say.

Joe: Yep. I think some other confusion when it comes to capital losses is that if you don’t have any capital gains to offset the loss, then you’re only, you’re able to write 3000 of the $60,000 in that given year. So sometimes people will say, I got $60,000 of losses and I can only write $3,000 off. It’s gonna take me several years. It’s gonna take my lifetime to utilize these losses. I mean, isn’t enough already?

Al: Yeah, that’s a good point because a lot of people do think that I only get 3000 a year. What’s the point? the point is you get to deduct, deduct your losses dollar for dollar against capital gains and take another $3,000 per year against ordinary income.

So it’s, it’s pretty helpful. Here’s another misconception, Joe. I’ve got this capital asset short term. But my broker sold a long-term gain. I can’t use the two against each other. yes you can. Yes you can. It’s true that short-term losses go against short-term gains first, long-term, long-term losses go against long-term gains first, but then if there’s still extra losses, they go against the other one that didn’t have enough losses. So, it’s, yeah, it’s actually a good thing is presuming you’ve got the right investment strategy.

Andi: Get an idea of how long your money will last in retirement with our self-guided Financial Blueprint tool. It provides personalized insights, identifies potential shortfalls, and suggests actionable steps to help you secure your retirement future. Once you’re armed with the information you need, consider meeting with the experienced professionals on Joe and Big Al’s team at Pure Financial Advisors for a Free Financial Assessment, either in person or from the comfort of your own home via Zoom. The Financial Blueprint and the human assessment are both free, with the goal of educating and empowering you.The Pure team will help you develop a thorough financial plan that goes beyond the basics, offering guidance that addresses both your unique immediate needs and your long-term retirement vision. At the end of the assessment process, you can decide whether becoming a Pure client can add value to your financial life, and what those next steps look like. Get your Financial Blueprint and learn more about the assessment process. Click or tap the links in the episode description to get started.

Can We Retire with Rising Health Costs and Care Needs? (Larry & Sally Morgan, voice)

Joe: Alright. Hey Joe, Al, Big Al. Or I guess that makes you folks Jabba the Hutt.

Al: Joe, Andi, Big Al – JABA.

Joe: Oh, JABA.

Andi: Will the Gas Siphoner actually pointed that out a while back as well, so apparently JABA is our acronym.

Joe: Got it.

Al: Got it. Okay. Yeah.

Joe: Okay. Yeah, JABA.

Al: It’s not a super flattering reference, but that’s okay.

Andi: No.

Joe: I love Jabba The Hutt. Let’s see. Okay. This is Larry and Sally Morgan from Michigan. Bonus points for getting the reference without using the internet. Larry and Sally Morgan from Michigan. No clue.

Andi: I will admit, I did actually use the internet for this, and Larry and Sally Morgan are the main characters in a book called Crossing to Safety, a 1987 semi-autobiographical novel by Pulitzer Prize winning author Wallace Stegner. I don’t think any of us would’ve gotten that without the internet. I’m not sure how many of our listeners and viewers would’ve gotten that without the internet.

Joe: Who’s Wallace Stegner?

Andi: He won a Pulitzer Prize

Joe: Crossing to safety.

Al: Yep. Yeah, I would say if it’s gonna be like a book reference of 40 years ago, Charlie Brown, we, maybe that one, but otherwise we got about a 1% chance of knowing what it is.

Andi: I think that’s high.

Al: You’re probably right. Yeah. I don’t know. I would know Charlie Brown, Charles Schultz. I’d get that one.

Joe: Yeah. The only books I know is like

Al: Curious George.

Andi: Yeah. If it said Linus and Lucy or something, you’d get that.

Al: Yeah. I got Dr. Seuss down the Theodore Geisel. I got that one.

Joe: all right. or SE Hutton. Who’s that? Anyone?

Al: no. See I only-

Andi: not related to EF Hutton?

Al: I only get one out of a hundred right on this.

So. Got it.

Joe: Remember when we used to play, play the theme songs to like 1980s and nineties, TV shows.

Al: Yeah. Yeah. That was fun.

Joe: I think you got maybe 10% of them.

Al: Oh, I think 5%. I, yeah. That’s not now, not my, I mean, you have to play like something I know, like Gilligan’s Island for example.

Joe: That was it. I think those were the only ones. But we played like Taxi Hill, street Blues. We had like some, and you probably did Cheers.

Al: I knew Cheers.

Joe: Yeah. Oh, okay.

Al: Of course, I knew Cheers, but like Hill Street Blues, I would’ve known it, the song, but I may not have in that moment, thought of it quickly enough. Got it. Yeah.

Andi: I have a hard time with anything that’s an instrumental. I’ll be like, yes, I know that perfectly. What is it? I have no idea.

Al: We should start doing it and trying to stump Joe.

Joe: Oh. it would be pretty tough. If there’s like movies, but like that, you know, the TNTW, TBS days.

Al: Yeah.

Joe: So the ones that were just constantly on. Yeah. You know them.

Al: I could,

Joe: oh, I would know ’em, give me 10 seconds or five seconds. I would be able to know the movie and before like even the credits were going.

Al: Got it. Okay. All right.

Joe: So that, that, that’s a little, yeah. I’m embarrassed to admit that’s a talent of mine. So

Al: watch, a lot of TV when you’re younger.

Joe: I’m, I like movies, Alan. I’m a big movie guy.

Al: Got it. Okay.

Joe: So,

Al: And you remember ’em all.

Joe: Yeah. I didn’t have HBO, you know? Yeah, Back in the day. Yeah. If they were on normal cable, that, that was your HBO. That was your Cinemax. That was the showtimes.

Al: so, so you watch a movie. You remember the name of the movie, who was in the movie, what the plot was, what some of the lines were, and I’ve already seen the movie. I can’t even remember if I saw it or not.

Andi: I’ll see it in a half an hour after, it’s over. I’ve forgotten everything. That is just not necessary to keep in my brain. I’ve got too much other stuff up there.

Al: Yeah. I think I’m in that camp. Andi.

Joe: Yeah. I like, I’m a big movie guy.

Al: Yeah, so that’s good. You got a great go. Great memory too, so keep it up.

Joe: Oh, sharp as.

Andi: And you retain  all that along with the Roth conversion information.

Joe: I do. It’s getting too full lately. I can tell that it, I gotta brush it up. anyway. Alright. We’re looking for a pitfall here. Analysis of our ability to retire.

Alright. Currently making about $300,000 per year, but that has only been for the last two years. Prior to that, our income was about $170,000. With our employer match, we save about 30% of our income into our retirement each year. Our current savings are $590,000 in a 403(b), $465,000 in employer contribution.

Supplemental tax deferred account, 40 grand, a four fifty seven, a hundred fifty 2000. In a Roth, IRA $102,000. In another Roth, IRA $110,000 in a brokerage account. $680,000 in a second brokerage account. My God. How many accounts do you have? Wait, there’s more. Yes. $560,000 in a third brokerage account. This guy loves mail.

Al: He does.

Joe: well, I mean, how much stuff comes into his mailbox? Here’s a brokerage account statement. Here’s another one. You pl place a transaction and any of these things, it just gets flooded. Confirmations up the yin yang.

Al: That’s right. if you’re trying to keep track, it’s about 2.8 million.

Joe: He doesn’t like consolidation.

Al: No.

Joe: He likes to have lots of different accounts, lots of different.

Al: He wants to see if I know how to add, so I think he’s given me a little test here.

Joe: All right. On top of that, we have about a hundred thousand dollars in cash in CDs across all our accounts. We have about 13% guaranteed, 61% equities, 4% real estate, 21% bonds, and 1% in a money market. You think this guy has spreadsheets?

Al: I think so.

Andi: well, and I just realized the recap that I give at the beginning, I started adding it all up, and then apparently I just gave up. That’s completely outta date.

Al: Yeah, you did. I noticed that. At least he rounds to the nearest thousand, so that’s good.

Joe: Thank goodness. Yeah. we have no debt house property worth about $700,000. That cabin worth $65,000. I drive a 2021 Jeep, a 2020 Explorer. And have a 20 You drive both. And a 2016 GMC pickup. That’s a beater truck for things we take to the cabin. Our only source of fixed income will be our Social Security, which will be about $45,000 per year for me, and about 26 and a half thousand for my wife at a full retirement age.

We’d like to hold off on claim Social Security until 70, which would put us to about $57,000 and are open as to when would be the best for my wife to start claiming. Our annual spending is about $95,000 currently. We would like to keep it near that at our retirement, but we do want to have two to three bucket list vacations, which will probably cost about $60,000 each in the next six years.

My wife is 60 and I’m 58. And we’re looking to retire in two years. All right. That leaves us with a five year Medicare gap. For me in a three year Medicae gap for my wife, I can use Cobra for the first 18 months of that gap. But then when have to go head to the a CA, I’m assuming the 8.5% rule will last, prior to my retirement.

So going Cobra will cost us about 22. will cost us about 22 in $5,000 per year. This is not included in the above annual spend, while our silver Plan California estimate is about $32,000 per year. One question I have is, can I get our ACA cost down or increase the subsidy by drawing retirement spending prior to Medicare from our brokerage account and claiming capital gains to minimize the MAGI? Yes. That’s all about retirement income, strategy and planning.

Al: It’s, yep. Agreed.

Joe: They’re not gonna look that you have 400 different accounts or that you have 2.8 million, you should be, penalized by having several hundred accounts. But no, you’re not gonna be penalized for how many accounts that you have, and you’re not gonna be penalized for how many assets that you have. What they’re gonna look at is how much income is drawn from the overall accounts, or how much is generated from the accounts that land on the 1040.

Al: That’s all they look at. That’s right.

Joe: So if you have a tax-efficient strategy of pulling dollars, yeah, you would have, very large subsidies.

Al: Okay.

Joe: The other wrinkle in the plan is I have a degenerative brain disease. Oh boy, sorry to hear that. Which while not fatal will progress at a random rate for each person making difficult to plan, all right. But it will likely remove my ability to eventually function on my own. and so that necessitates the long-term care, hence the timeframe for the bucket list trips. So the big question is can we cross safely into the retirement and enjoy drinking our California Cabernets in petered scotch on our deck two years from now? Yeah, let’s see. Couple million dollars. You gotta bridge the gap to Social Security. He wants to spend a hundred thousand dollars. I think he’s sitting in pretty good shape.

Al: He is in great shape. let me go through the more formal math. So he is got 2.8 million. he’s adding about 90,000 a year. He says 30% with the employer match on 300,000. So 90,000 a year. He wants to work two more years. I just did 6%. I get 3 million, one 50. Okay? He wants to go on two to three. bucket list trips, 60,000 each. So I said, how about two and a half? So that’s 150,000. Let’s end up with an even 3 million.

What does that do at age 60 or 62, whatever? I think three and a half percent’s a pretty safe distribution rate in general. Three and a half percent of three and a half million is 105. He needs 95. I know there might be a little extra for insurance, but that’s before Social Security. Yeah, I’m thinking this looks fine.

And I would, definitely execute on that plan, particularly depending upon your, your disease. You know, make sure you certainly enjoy the time you have. Hopefully it’s a lot of time, but, yeah, make sure you enjoy it as, as soon as you can. That’s what I would say. I, think this looks fine, Joe.

Joe: Yeah, he’s got a plan for long-term care. He does. He’s going to be, and I’m not sure if he has insurance and he is probably uninsurable at this point.

Al: He would probably, he’d probably be uninsurable. He, they’ve got the house and the cabin. I’m not saying that’s first choice to sell those, but they’ve got, those assets as well.

Joe: Yeah, I think he’s sitting really good. He’s done a really good job saving and he’s plowing a lot of money into the overall accounts as well. And a hundred thousand dollars, you gotta bridge a six to eight year gap, you know, for Social Security. So let’s say a hundred thousand dollars over, you know, 10 years. I mean, he’s, he still, let’s say if he has zero growth in the overall accounts, it still looks really good.

Al: Yeah. When you add the Social Security on top of it.

Joe: Yeah, I agree.

Al: Yeah.

Joe: So, yeah. So a hundred thousand. 10, let’s say he just stayed in CDs. He’s got $3 million. He spends a hundred. You take all the money out.

He still has $2 million at age 70. He’s got roughly $60,000 of Social Security. He needs $50,000 to draw from. He needs 1.2, $1.3 million at age 70. He’s gonna have. Probably well over two, just depending on the growth of the overall accounts. Yep. It’s a sequence of return risk. Is it? It gets a little dicey, the long-term care stay of how much he really needs to be thinking about, in, regards to side cash to help pay for that care because basically if he needs around the clock care. His wife won’t be able to do that. You know what I mean? Sure. And I’m sure, of course, he wouldn’t wanna put his wife through that. So you probably have to have some in-home care, things like that. And that stuff isn’t cheap. No, that’s, adding another 95,000, a hundred thousand dollars on top of the a hundred thousand dollars living expense.

So I would wanna be running some of those different scenarios and different numbers. Just to make sure that you, know, just kind of put a bow on this thing and for best case, worst case type of scenarios. Yeah. but I’m with you. I would retire if, two years is the mark I would punch, go on those bucket trips.

Have a blast. Yep. because I, think he’s got a lot of really good things covered.

Al: So yeah, drink that wine, drink that scotch. Have a great time.

Joe: Oh, I would double fist every day.

Al: I know you would.

Andi: You saying you don’t already?

Joe: I’d be on that deck. I’d be with him. Yeah. There you go. You hanging out with Larry, right? You could some scotch and some wine. I don’t drink wine or scotch, but I would start.

Al: You’d start, yeah, for sure.

Joe: Hanging out with Larry.

Al: I’d hang out. I’d hang out too. I’d do it too. Why not?

Joe: Yeah, I would show me his spreadsheets now. He probably has just a stack of old statements from probably the eighties.

Yeah, probably. I could just see this guy’s- I mean, he probably saves every document. He’s got tax returns from when he was 12.

Andi: He can give a view the CliffsNotes version of the Pulitzer Prize winning book that his name is from.

Joe: Oh yes, we could we could talk about really good books.

Al: Yeah, that’s right.

That’d be a short conversation.

Joe: Oh my god. You would probably have to get wasted.

Al: Yeah, probably.

Joe: All right. Cool. Al enjoy your, time in Hawaii. Cut this one a little short. but yeah, we got a few done, so call in a day.

Al: All sounds good. Thanks guys.

Joe: All right. Thank you Andi. Thanks Al. We’ll see you guys next week.

Show’s called Your Money, Your Wealth®.

Outro: Next Week on the YMYW Podcast

Andi: Next week on Your Money, Your Wealth®, Christine wants to know the best withdrawal strategy before claiming Social Security at 62. “Prickly Richard” and “Margarita Maggie” from Tucson are trying to avoid a Roth conversion avalanche before RMDs hit, and “Michigan Queen” and “Mississippi Boy” from Tennessee are deciding between saving for retirement at 55 or saving for their kids’ future.

If today’s episode helped you rethink your Roth plan or your tax moves, make sure you’re subscribed to the Your Money, Your Wealth® podcast and YouTube channel so you don’t miss what’s next. Share the show with a friend or family member who’s navigating new tax rules, and don’t forget to click or tap the free financial assessment link in the episode description to schedule that one-on-one, comprehensive assessment at Pure Financial Advisors. They’ll help you get your Roth conversions, tax strategy, and retirement plan all working together.

Pure Financial Advisors is a registered investment advisor. This show does not intend to provide personalized investment advice through this podcast and does not represent that the securities or services discussed are suitable for any investor. As rules and regulations change, podcast content may become outdated. Investors are advised not to rely on any information contained in the podcast in the process of making a full and informed investment decision.
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