Your Money, Your Wealth guest Philip Taylor
ABOUT Philip

Philip Taylor, aka "PT", is a former practicing CPA, blogger, podcaster, husband, and father of three. He created PTMoney.com back in 2007 to share his thoughts on money, hold himself accountable, and to meet others passionate about moving toward financial independence. PT is also the founder and CEO of FinCon, the conference and community dedicated [...]


Joe Anderson
ABOUT Joseph

As CEO and President, Joe Anderson has created a unique, ambitious business model utilizing advanced service, training, sales, and marketing strategies to grow Pure Financial Advisors into the trustworthy, client-focused company it is today. Pure Financial, a Registered Investment Advisor (RIA), was ranked 15 out of 100 top ETF Power Users by RIA channel (2023), was [...]

Alan Clopine

Alan Clopine is the Executive Chairman of Pure Financial Advisors, LLC (Pure). He has been an executive leader of the Company for over a decade, including CFO, CEO, and Chairman. Alan joined the firm in 2008, about one year after it was established. In his tenure at Pure, the firm has grown from approximately $50 [...]

Published On
April 24, 2018
Your Money, Your Wealth guest Philip Taylor of PTMoney.comYour Money, Your Wealth guest Philip Taylor of PTMoney.com

Philip Taylor, AKA PT of PTMoney.com, shares the method he used to reach financial independence as he transitioned from CPA to financial media mogul. Plus, 5 ways to turn retirement savings into income, how a big lottery win might affect your Social Security benefits, and if you dollar cost average into Bitcoin to buy winter parkas, how is that actually taxed?

Show Notes

  • (01:33) Dollar Cost Averaging Into Bitcoin to Buy Parkas – What About Taxes?
  • (07:09) How Philip Taylor of PTMoney.com Got on the Road to Financial Independence
  • (15:59) Philip Taylor: From CPA to Financial Media Mogul
  • (24:56) Big Al’s List: 5 Ways to Turn Retirement Savings Into Income
  • (34:16) If I win the Powerball, how will that affect my Social Security?


Hey, thanks for listening to Your Money, Your Wealth®! For a free gift from Joe Anderson, CFP® and  Big Al Clopine, CPA, visit YourMoneyYourWealth.com and hit the “Special Offer” button to download our Key Financial Data Guide for 2018. This handy guide contains useful information about taxes, retirement account contributions, Social Security, Medicare, can’t-miss deadlines and more to help you organize, plan, and save in 2018. Download your free “thanks for listening” gift – click “Special Offer” at YourMoneyYourWealth.com

“I discovered personal finance blogs online. And I started following those folks, and I found my financial life really improving. And then eventually I said, “I’ve consumed enough. Consumer to creator. I need to kind of share my ideas with the world too, and maybe use this as a tool for myself to become accountable.” So I started a blog in 2007 and called it PT Money. We paid off all of our debts other than our mortgage, and we had really aggressively saved for both our emergency fund and for our retirement. The rest is history, I’ve been blogging full time since that point.” – Philip Taylor, PTMoney.com

That’s Philip Taylor, AKA PT of PTMoney.com. Today on Your Money, Your Wealth®, PT shares the method he used to reach financial independence, transitioning from certified public accountant to a financial media mogul in just a few short years. Plus, 5 ways to turn retirement savings into income, how a big lottery win might affect your Social Security benefits, and if you dollar cost average into Bitcoin to buy winter parkas, how is that actually taxed? To examine this ridiculous question, here are Joe Anderson, CFP® and Big Al Clopine, CPA.

01:33 – Dollar Cost Averaging Into Bitcoin to Buy Parkas – What About Taxes?

JA: You know, there’s Bitcoin, Alan.

AC: Yeah, a lot of people have Bitcoin now and they’re wondering how it’s taxed.

JA: Right. And I think there’s a ton of confusion on how Bitcoin is actually taxed.

AC: A ton of confusion, and I guess the answer is it depends. But in general Joe, Bitcoin is taxed just like stocks are. So in other words, if you buy Bitcoin for $1,000 and you sell it for $2,000, and you’ve held it for at least a year, then it’s long-term capital gain. So in other words then, you sold it, you got $2,000, you invested $1,000, $1,000 of gains, so you pay capital gains on $1,000. If it’s short-term, if I did the same thing, but I bought it three months ago and sold it, now it’s short-term capital gain, which is taxed at ordinary income rates. Which obviously are the higher rates. And I think that’s pretty easy to understand. But here’s where it gets tricky Joe, is when you have Bitcoin and you use Bitcoin to buy goods and services. Every single time you use Bitcoins, it’s a taxable transaction. So in other words, $1,000 I bought in Bitcoins, it’s now worth $2,000, and lo and behold, I found a really cool jacket that I wanted to get – a parka for winter. Because it’s so cold in San Diego. (laughs)

JA: (laughs) So that’s why you got Bitcoin, just to load up so you could buy parkas.

AC: A retailer accepts Bitcoin? That’s the only one I could find – a parka salesman. (laughs)  So they accept Bitcoins, so I say, “alright, here’s $500 worth of bitcoins. Cool.”

JA: That’s a nice parka. (laughs)

AC: Really. (laughs) It’s just tricked out. It’s got zippers and latches and I can carry stuff on it… (laughs) Anyway. So when I did that, I created a taxable transaction. And I think you can sort of see where this is going. So if my Bitcoin went up, basically doubled…

JA: So that $500 parka didn’t cost you $500. It cost you $500 plus the taxes on the gain of that. And it depends on if its short term or long term, it’s going to be ordinary income on that gain to buy the parka, or it’s going to be capital gains.

AC: So the gain on that parka, by the way, would be $250. So I gotta show that as a capital gain transaction on my tax return. And like you just said, if I’ve held the Bitcoin for at least a year, then it’s long-term. If I haven’t, it’s short term. If I’m adding and subtracting from Bitcoin all the time, that’s where it gets really confusing.

JA: So the blockchain is tracking all that. (laughs)

AC: Supposedly. (laughs) Right now there’s no reporting to the IRS. But that doesn’t mean that you should ignore it, because the IRS actually does have task forces that are trying to figure all this out. But a lot of people, then they say, “OK, I want to do it right. What do I do?” Well, you use form 8949. It’s kind of the detail page for the capital gain schedule D. So that’s where it goes, and it either goes in the short term or the long term. And when you use those forms, you have three different choices to make. One is that the IRS knows about this, what you sold it for and what you paid for it. Well that’s not going to apply. The other box is, the IRS knows what you sold it for, but they don’t know what you paid for it. That doesn’t apply. The third one is IRS doesn’t know anything about this, and that’s the one you check. It goes on 8949. Whether it’s short term or long term depends on how long you’ve held it, and then that will go forward to your schedule D, and you’ll pay capital gains tax on that.

JA: Yeah well, I don’t know. Good luck with that, I suppose.

AC: If you’re using it to buy goods and services, you’re going to have a complicated tax return, I’m tellin’ ya.

JA: (laughs) So that parka you bought, you gotta pay tax on it, then you gotta pay 10 grand to get your tax return done.

AC: Exactly. And then I had to pay sales tax on the parka because it was in California, and then I had to get some more Bitcoin and then I had some more gain.

JA: (laughs) Right. But it works in reverse too. You could harvest losses.

AC: You could harvest losses. Now you couldn’t buy the Bitcoin back for 30 days. You could buy another digital currency I suppose if you wanted to.

JA: How about if I’m dollar cost averaging into Bitcoin? And I’m using Bitcoin to purchase goods and services, and then I took it at a loss. So do I have to stop buying Bitcoin? Because of the 30-day wash rule?

AC: That’s an excellent question. These things haven’t been figured out yet.

JA: Right. Because hey I’m putting in…

AC: Out of your paycheck.

JA: Yeah, I want to buy $500 worth of bitcoin monthly.

AC: Right. I suspect that’s what’s going to happen. I think ultimately Joe, there’s going to be some kind of tracking system, it’s going to have to be average cost, it’s going to get too confusing otherwise.

Okay Big Al, but what about those of us who are still confused about Bitcoin and blockchain in general, let alone the taxation of cryptocurrencies? If you fall into that category, go to YourMoneyYourWealth.com, hit that search at the top of the page and type in “Bitcoin.” You can revisit Joe and Big Al’s interview with Amanda B. Johnson, a cryptocurrency expert who laid it all out in very simple terms. If you don’t have time to listen you can just scan the transcript right there in the show notes. There’s also a crypto for beginners Q&A and a video about whether or not Bitcoin is real money. Check it out at YourMoneyYourWealth.com

07:09 – How Philip Taylor of PTMoney.com Got on the Road to Financial Independence

JA: It’s that time of the show where we bring in someone that’s a lot smarter than us, more talented and has a lot more experience, So we have Philip Taylor – I’m really excited to have PT from PTMoney.com. He’s done so much for the podcast community and it’s our real big treat to have him on. PT, welcome to the show, my friend.

PT: Thanks for having me. This is an honor.

JA: Well I would like to talk a little bit about your background. You’re a CPA by training, and then you decided to not do taxes anymore and get in to being a media mogul. So walk me through your career path here.

PT: Sure. Yeah, I went to school to be an accountant, just like my father. My dad is a CPA, but my mom was a teacher and a writer. Little did I know, I would bring that talent into my life at some point. But I went through the traditional path, accounting school, wanted to follow in my dad’s footsteps, get a CPA, felt that was a safe track, a safe place for me. Did some public accounting, and did some corporate accounting as well. So I did some taxes, auditing and found myself in internal audit. I spent about 10 years doing that. I was semi-satisfied with that work, and certainly enjoyed the lifestyle it afforded me. But one thing I noticed along the way was that my knowledge of taxes and auditing and corporate finance wasn’t necessarily propelling my personal finances. And I really needed to kind of take it upon myself to discover how to improve those things. So I found myself a little bit in debt, had a problem really saving money and accumulating money for emergencies, or for those big, like a house down payment, things like that. So I was like, “man, why am I still struggling with this? I’m supposed to be the guy who’s got it figured out.” And I started doing some research, I discovered Dave Ramsey of course, a lot of people credit him with kind of helping them figure things out. And then I discovered personal finance blogs online. So there are these people online, sharing their story of how they were getting out of debt, or how they were improving their financial life, and I was really attracted to these real people, sharing these real stories – albeit sometimes anonymously, so they could get away with kind of sharing the details – but that was very attractive to me. And I started following those folks, and I found my financial life really improving. And then eventually I said, “I’ve consumed enough. Consumer to creator. I need to kind of share my ideas with the world too, and maybe use this as a tool for myself to become accountable.” So I started a blog in 2007 just as kind of a hobby on the side when I was doing my corporate gig and called it PT Money, and just started talking about money from my perspective. I think my first article was comparing watching a UFC fight – you know, the Ultimate Fighter Championship fights every other Saturday or so – I compared going to Hooters to watch it (laughs), or staying at home and watching it on Pay Per View. And so that’s kind of where my mind was, how geeky was about money at the time. Like, “am I going to save money by going to Hooters, or watching at home and maybe inviting a friend over?” So that kind of kicked it off for me, and I shared more on the blog through the years, but it’s been a real life changer to have discovered that medium, blogging, and then podcasting eventually, and just to kind of be in this little budding industry.

JA: So what were some of the lessons, I guess in the beginning that you learned? You’re a CPA, you’re a real smart guy, you were in corporate finance, CPA for 10 years. So when it comes to financial acumen, you were probably ahead of most, but you were still struggling. It’s like, “how do I continue to accumulate?” So you start reading blogs. What was the turning point? So it was like, “OK now I’m having a little bit of fun with this.” But what was the turning point for you to say, “You know what? These are some lessons that I learned to really change my financial life.”

PT: Yeah the turning point was actually seeing what other people who were having success were actually doing. Oftentimes money is still a taboo, and you guys are talking about it on your show, but it’s not often talked about amongst family members or friends in the real details. And so I still had debt in my life, and I was struggling with living beyond my means a little bit. Even though my income was going up, I still had some car payments, had some student loan debt that was sticking around. And I just felt like I was living sort of on the edge with my finances, and I was not progressing at a rate that I saw these other folks who were sharing their details online were progressing. So in a way, it was like throwing down the gauntlet on me – like this is what they’re doing to move forward. They’re just a regular joe just like me, I could put myself in that same situation and move toward financial independence a lot faster.” And so getting really hyper-aggressive about getting debt out of my life, and getting out of the idea of borrowing from the future to pay for today’s expenses, whatever it is. Getting the debt out of my life and moving forward to a place where I wouldn’t necessarily have to finance everything in my life. And also that I was being aggressive with my savings. So we’re taught sort of 5, 10% was sort of like the high watermark oftentimes for folks, what the industry kind of preaches, and these folks who were really aggressive, or really radical with their messages of 20, 30, 40, 50% savings rate, so that you could move toward financial independence much faster. And that hit me at a time where I was in the corporate world, and somewhat enjoying my work, but really just kind of searching for that next thing, and realizing that I was kind of stuck in my cubicle, in a way. And I wanted more freedom in my life, more independence. And so I saw finances as a way to kind of escape the path that I created for myself through college and career and then this debt. And so those are kind of the key moments and searching for that freedom, and wanting to kind of become an independent person, was probably the biggest catalyst for me.

JA: You know it’s funny. I think the really good blogs out there can really help motivate an individual in such a different way than a financial adviser could. So if you’ve ever listened to our show, and I hope you never do because it’s really boring and it’s awful. We talked about Roth IRAs, who can contribute, what’s the tax code, blah blah blah. So we give a lot of facts. And then so some people really enjoy that. “I really didn’t know that I could do a Roth IRA conversion,” for instance. Or “what is tax loss harvesting?” And any other example that I can throw out there. So you listen to that tidbit, and sometimes people will take that information and try to build an overall financial plan. At the end of the day it kind of looks like Frankenstein. They’re doing things that they probably shouldn’t do. But at the end of the day I think what people are lacking is the motivation to continue to save, and probably to pay down debt and really have a true vision of what their financial life should be. Because a lot of individuals that come into the office, after they give us all their information, a lot of questions, they’ll say, “well, what do you think? Comparatively, to someone else? Are we in good shape, bad shape?” Because I think in the back of the mind, everyone wants to know they’re going to be OK. But if I read these blogs, and I could compare in my living room or my bedroom or wherever I’m reading these, it’s like, “man, this person’s saving 40% of their income. They have a million dollars saved and they’re 30 years old.” Or whatever – then it’s like that can help potentially motivate someone a little bit more, and it sounds like that happened to you.

PT: Yeah absolutely. They say you’re the equivalent of the people you surround yourself with. And so I really started surrounding myself mentally with these online characters, who were a lot farther ahead of me, and I didn’t buck against that. I saw myself moving toward that. So I want to aspire to what those folks had put out there for me. And so that was kind of part of it.

We’ve certainly surrounded ourselves with quite a collection of characters here on Your Money, Your Wealth®: we’ve talked to folks who have reached financial independence through rental real estate, through blogging, starting side hustles – even some pretty creative gigs like flipping VW camper vans and cat-sitting. Listen to these inspiring stories or read the transcripts at YourMoneyYourWealth.com. Subscribe to the podcast, get our podcast newsletter, and take advantage of a huge learning center full of personal finance articles, white papers, webinars and hundreds of video clips and full episodes of the Your Money, Your Wealth TV show. It’s all at YourMoneyYourWealth.com.

15:59 – Philip Taylor: From CPA to Financial Media Mogul

JA: So then you started blogging a little bit. When did you make the switch? You’re like, “alright, I’m going to be a professional or get paid to blog.” I mean, that’s a leap of faith – I don’t blame you though, because I got buddies that are in corporate audit. They’re either alcoholics or they’re almost on the side of suicide. 10 years man, you need a trophy. (laughs)

PT: Yeah, it was a grind at times. When I started doing it, I started just on nights and weekends. And I became really obsessed about the topic of personal finance, and just sharing sort of my little ideas and tips and tricks for others. And then once you get into the community and the process of creating, it just sort of creates this habit of repetition, and you just sort of get into the groove, and you start getting feedback from listeners, readers, followers: “Hey, this is helping,” or “hey, what about this idea,” and you just sort of get into the groove, as you as you do with your show, I’m sure. And so, somewhere along the way, I turned on ads on my site. So I think it was about 8 months into my journey I turned ads on, and then a couple months later I got a check in the mail. And I was like, “cool, this is like Google sending me $100 for doing this website,” and I discovered I could actually turn this into something that would create a side hustle for me. And so that was my initial goal, was just, “hey, it would be cool if one day this paid my mortgage.” And so I started paying attention to what other bloggers were doing out there to monetize their sites. Eventually found myself at a point to where I had replaced about a third to a half of my corporate salary. And during those three years as well, from 2007 to 2010, we paid off all of our debts other than our mortgage, and we had really aggressively saved for both our emergency fund and for our retirement. And so I was by no means financially independent at that point. I think I was around 30, 31, 32. But I decided that I had enough on-ramp.

And so it was 2010, I was faced with another big trip through my corporate gig, and it was going to be over my daughter’s first birthday. And my wife said, “hey if you want to go do your own business thing right now with the blog, this would a good time to do it so you can stay home for the birthday.” (laughs) I was like, “yes, that’s my excuse!” I was a little nervous about making the leap, obviously. Health insurance at the time wasn’t figured out. And so it was a concern for me. But we did it. We had enough on-ramp and I’m a CPA, and so I always felt like I could fall back on that at a minimum if I needed to. But the rest is history. I’ve been blogging full time since that point, and then started the conference a year later, because I needed another side hustle. (laughs)

JA: Right. So now you’re transitioning a little bit. Before it was just personal finance, and then you were blogging to help other individuals find financial freedom. But then you started a movement if you will, in the podcasting world, especially in regards to personal finance. So you started FinCon. Tell me a little bit about that.

PT: Yes, so as part of my journey of making the blog successful, it really relied on me talking to other creators around me. And they gave me so many ideas. “Hey, you need to be writing on this kind of stuff,” or “make the post look like this,” or “work with this advertiser.” And so through those conversations, that discussion on a daily, weekly basis, my efforts just got so much better. And so I was like, “I gotta meet more of these people. I’ve got to be face to face. These are my new friends, my new colleagues, we need to get together for a meetup.” So we started meeting up around the country in different places, other conferences, and then ultimately one day I just said, “it’s time, we need to have our own event. There needs to be a personal finance blogger conference.” It was very limited in scope initially, the idea. So I invited 10 or 15 of my blogging friends, thinking maybe you know 50, 100 ultimately would show up. Ended up having 250 people across all the mediums, so we had podcasters there, traditional radio there. People doing video, bloggers, other traditional journalist outlets, things like that. It’s really just a kind of a celebration of sort of online digital personal finance information. So we quickly changed it to FinCon. And then, I didn’t know what I was doing from an event perspective, necessarily, I didn’t have that background, so I enlisted a friend from college who had a little bit of skills in that area. And she and I built out the conference and been running ever since.

JA: Who were some of your early influencers? That first group of great podcasters, or financial bloggers. Who are those individuals?

PT: Yeah, so J.D. Roth from Get Rich Slowly comes to mind. He was probably one of the biggest, most successful early financial bloggers out there, and he was our opening keynote at the event. I think it was fitting that people kind of considered him the grandfather of the of the industry. And so to have him there was great. Paula Pant was there, who has a fantastic podcast called Afford Anything. She does a great show. Who else was there? The Podcast Answer Man Cliff Ravenscraft was there. Even though he’s not specific personal finance, I wanted to rely on someone who was really into the podcast world, who could come and teach us and help us. He was there, and then, of course, Pat Flynn, who’s big at Smart Passive Income in your town of San Diego, does a really good job –  he keynoted for us that year. And then Ramit Sethi from I Will Teach You To Be Rich was there as well. So we had a rockstar lineup. It was really cool that these folks supported the event, came out, and really came together as a community. I think that speaks to the topic we talk about – like we’re the ones, the weird people online talking about money and having this conversation. (laughs) And so when we get together, it creates this real bond and collaborative spirit to where we kind of all see ourselves fighting a bigger battle of financial illiteracy and the world’s money problems, and so it’s easier for us to not be competitive with each other, but just kind of work hand in hand on things.

JA: Where do you think someone could go that’s listening to this, that wants to get more information on personal finance that’s probably new to maybe blogging or bloggers or other financial podcasts. What’s a good resource where someone can go to get more information on personal finance – and then I’ll flip the question, where now you’re starting another podcast, really to help podcasters, I think, get a little bit better on the media side.

PT: Yep, certainly Rockstar Finance is sort of an aggregator of a lot of the best personal finance blogs, podcasts, books and shows out there. If you’re into YouTube and you want to follow someone on YouTube, we have a listing over at FinCon if you just search for Personal Finance YouTubers, you’ll find that list. So those are some good places to start. Of course, my site. I’ve got actually a map of all the personal finance bloggers on my blog. And so you can kind of see where, across the country, different perspectives and different sites. We also have a list of some of the top podcasts out there on the show. And then, of course, you mentioned The Money and Media podcasts that we do leading up to the event. On a weekly basis, we reach into this archive of speakers and folks who contribute to our event at FinCon and interview them on specific subjects, whether it be podcasting, blogging or vlogging and really deep dive with them about how they’re kind of creating their craft. And oftentimes, folks turn to that show to get their podcast going or kind of get going with this craft.

JA: We’re talking to Philip Taylor aka PT from PTMoney.com. Hey, I know you’re a busy guy. I really appreciate the time that you spent with me. Any parting final words of wisdom for our listeners?

PT: Pay yourself first, do it automatically if you can. And once you get tired of consuming, start creating.

JA: There you go. There’s PT, folks.

Hey, have you noticed? Many of the folks who have shared their paths to financial independence on Your Money, Your Wealth® tell us about researching, learning, reading, and understanding the road ahead of them before and during their journey. Whether your goal is financial independence or a secure retirement, having a strategy to make your money last is key. Southern California, learn Financial Strategies for Turbulent Times at our free monthly Lunch ’n’ Learn events in San Diego, or sign up for our retirement classes in San Diego, Orange County, and Los Angeles. Visit the Learning Center at YourMoneyYourWealth.com to reserve your spot at one of our live events. Get the tools and confidence you need to make your money last. Sign up in the Learning Center at YourMoneyYourWealth.com

Time now for Big Al’s List: Every week, Big Al Clopine scours the media to find the best tips, do’s and don’ts, mistakes, myths and advice to improve your overall financial picture – in handy bullet-point format. This week, 5 Ways to Turn Retirement Savings Into Income

24:56 – Big Al’s List: 5 Ways to Turn Retirement Savings Into Income

AC: So, this is for folks that have saved and they’ve got money in their IRA, maybe money in their Roth IRA, maybe money in their non-retirement accounts, non-qual accounts. And it’s like, “all right, now what? How do we go about coming up with an income distribution plan?” Because a lot in a lot of cases, think about a generation or two ago Joe, most jobs had pensions. And then there were Social Security, you had pensions, Social Security, and you didn’t really have to worry much about this. Nowadays, there are so few pensions, relative to the past. Government employees still have them. But now it’s a matter of saving your own money, and then when you turn 65 or whenever you retire, how do you go about distributing that money? So here are five different methods. First one, you’ve heard this a million times: the 4% safe withdrawal rate. This is a traditional approach that says you can safely withdraw about 4% of the initial value of your retirement savings, and increase that amount each year with inflation. So, a real simple example, you got $100,000, 4% of that is $4,000, and you earn 6%. So you save 2%, so now you got $102,000. So now, the next year, you get to take 4% of $102,000, which is, what, $4,080 if I’m not mistaken.

JA: You know, I love Bill Bengen.

AC: Yeah. And that’s who came up with it in the early 90s.

JA: But I don’t think that works at all on a distribution plan. I think it’s a really good tool to use to see if you are close, in regards to what your nest egg should be.

AC: In other words, before you retire, apply that test.

JA: Apply the test before you retire.

AC: To say, “how close am I?” So what are the cons with that strategy?

JA: Well, the sequence of return risk will kill you.

AC: Yeah. What if the market crashes?

JA: Right. So, “my $100,000 just went down to $70,000, am I still going to pull 4% out of the 70?” That’s what the rule implies. You’re going to have to take a significant haircut, but people will not do that, because they’re comfortable or they have bills to pay. They have certain things that they have to do. And so they are accustomed to pulling X amount of dollars out of their account, they’re going to continue to pull that same amount of money out of their accounts, even though their portfolio is going down because they’re not looking at where they should be pulling the money. Are they selling stocks, are they selling bonds, do they have enough cash? What is their rebalance strategy as they’re pulling dollars out? What’s the tax strategy? So I guess my point is, the 4% rule, to say hey, if I want to spend $50,000 a year,  4%, $50,000, what, a million bucks, a little bit more than that, what is that, $1.25 million? So that will tell you if you’re close, because if you’re spending $50,000, and you have maybe $400,000, even though 400 is a big number, but $50,000 will eat that up very, very quickly. So you want to do just simple arithmetic just to see, well what does that number need to be close to?

AC: Yes. In other words, am I in the ballpark. Because like, if you have $100,000 and you want to spend $40,000 a year, it’s like no. So I agree with you. Now here’s another one. The 7% optimal withdrawal rate. This is Wade Pfau. And he’s the one that said the 4% was too high. But he came up with the 7%.

JA: Because he’s probably using, what,  a guaranteed income annuity or something? Reverse mortgage?

AC: No actually, it’s kind of interesting. I’m not sure I’ve seen this one before. He’s argued that some retirees may be willing to take a larger risk of depleting their savings for more income early. In other words, enjoy it while you can. So he proposes a 7% initial withdrawal rate as a more optimal balance between competing demands of higher income and preserving income. But then of course, you’ve got to tail it off and spent a lot less later.

JA: Yeah, because you’re out of money. (laughs)  So you’re just going to live off of Social Security.

AC:  But even he agrees. He says it may not be safe, because his calculations say there’s a 57% chance over 30 years you’ll fail. More than half. So even he’s not saying it’s the best approach, but you get the thinking. And a lot of people have that same question with us. “I want to spend more now, while I can travel, and less later.” And there’s there’s some justification for that. But the problem with any of these is life changes. You really need to be monitoring this all the way through, instead of just this hard and fast rule.

JA: I wish there was a magic bullet that you could do that. Because that would be ideal. “Let me pull 7% out for the next 15 years, and then I’ll only pull 3% out because I’ll be frail.” Who knows what the market is going to do during those periods of time when you’re pulling 7% out. Blow you up.

AC: That’s right. Here’s another one Joe. This is kind of a traditional, old-fashioned one: living off investment income.

JA: What, just interest and dividends?

AC: Yeah – interest and dividends. The problem with that is… what? (laughs) There aren’t any.

JA: (laughs) Right. Depends on how much you wanna make.

AC: I mean Treasury notes are paying 2%, under 3% anyway. And if you’re wanting to live on 4, 5, 6, 7% as we just went over, you’re going to have a lesser lifestyle.

JA: The problem is that if you go back 30 years ago, now the retirees are using rules that maybe their mother and father used. “Well we got GE stock, it’s a great dividend paying stock, we’re going to live off the dividends. We’re going to buy some bonds and get a 6% coupon and we’re never going to touch the principal. Oh if you touch the principal that’s bad.” Well, we don’t live in that time anymore. It’s a time warp. You’ve got to figure out, OK, well what are you trying to accomplish with the money that you have? How much are you trying to distribute to yourself in the form of income? But that’s why these high dividend paying stock ETFs, mutual funds or strategies are just overinflated. Because it sounds great. Who doesn’t want high dividends? I do!

AC: Of course. Anyway, and we get that question all the time. And we live in a different world. I think total return is a better approach. Now here’s another one Joe. This is kind of cool. This is “spend safely in retirement.” That’s the plan.

JA: Well I think that’s an obvious. (laughs)

AC: (laughs) So that’s all you gotta do. So Stanford’s Center for Longevity and the Society of Actuaries. Smart people. They studied 292 different retirement strategies and came up with their ideal plan.

JA: There are 292 retirement income strategies?!

AC: That’s what they looked at. 292 different retirement strategies.

JA: That would be a great show. Let’s go over all 292. (laughs)

AC: We may have to devote a month to that. We’ll get right on it. So here’s what they say – it’s not a bad idea, actually. I mean, absent of any other real planning (laughs) is delaying Social Security benefits to age 70. I like that. Withdrawing 3.5% of your nest egg from age 65 to 70, and then using the IRS required minimum distribution tables to determine withdrawals for all your retirement accounts starting at age 70. So it’s an increasing amount.

JA: The smartest minds in the world came up with this?

AC: 292 retirement strategies and this is the best one.

JA: Push out Social Security to age 70. How about if I retire at 65?

AC: Well that’s okay, you withdraw 3.5%. If you retire at 60, it doesn’t say. Or 55. (laughs)

JA: Got it. So push it out to 70, only take 3.5% out, and then only take your RMD.

AC: Yeah.

JA: Yeah, perfect.

AC: It’s actually not a bad idea.

JA: (laughs) Is that your plan now?

AC: That’s it. I’m 60 years old. I got to work five more years, and I’ve got the best plan, according to the Stanford Center of Longevity and Society of Actuaries.

JA: I thought after your little Rock n Roll cruise you’d push your retirement a little earlier?

AC: No I’m not going to do that, I’m just going to take more vacations. (laughs) I only get four weeks.

JA: You took two vacations in three weeks!

AC: I know.

JA: That week back from the office was just too much for you.

AC: Yeah. And now I’m not leaving until June so I’m really in trouble.

If you’re mentally ready to ditch the job, taking two vacations every three weeks like Big Al, make sure you’re financially ready for retirement, too. Learn more about creating retirement income, as well as how to control your taxes in retirement, and how to protect yourself against market volatility, increased longevity, rising healthcare costs and Social Security uncertainty in retirement: visit the white papers section of the Learning Center at YourMoneyYourWealth.com and download our free Retirement Readiness Guide. You’ll learn strategies that’ll make your money last a lifetime, and it won’t you cost a thing. Download the Retirement Readiness Guide from the White Papers section of the Learning Center at YourMoneyYourWealth.com. Now if you need more help preparing for your retirement, call us at (888) 994-6257 or email info@purefinancial.com. That’s (888) 994-6257 or info@purefinancial.com

34:16 – If I win the Powerball Jackpot, how will that affect my Social Security benefits?

AC: This was not to us. This was to Kiplinger’s Personal Finance but I thought it was kind of an interesting question.

JA: You could’ve just said it was to us. (laughs)

AC: I could’ve. (laughs) “If I win the Powerball jackpot, will that affect my Social Security benefits? I’m 63, so I’m worried about the earnings test.”

JA: (laughs) This guy’s just dreaming! What the heck is this about?!

AC: (laughs) It’s a one in a billion chance, so don’t lose much sleep over this.

JA: (laughs) “Yeah, my retirement plan is the Powerball, weekly.”

AC: “It’s going to mess up my Social Security!”

JA: “So I save $100 a week but it’s to the Powerball, it’s not to my retirement account, because I’m going to win!” No. The earnings test is based on earned income.

AC: EARNED income, so that’s like salary. Not Powerball winnings.

JA: Now Powerball winnings. Powerball winnings would not affect your Social Security.

AC: So, in other words, you could win the Powerball and still get your full Social Security. (laughs)

JA: (laughs) Well no. Well yes, if you took it early. So he’s referring to is that if you take your benefit prior to full retirement age, you cannot have more than about $18,000. I’m rounding. $17,800? If you make more than that as earned income, then every $2 that you earn, they take a buck back. And it’s not really they’re taking a buck back. What they are doing is that they’re assuming that you’re not taking it for that month, and then your benefit would increase when you do stop working. So if you claim it early and you still have wages higher than $18,000, then every $2 that you earned over that $18,000 limit, they’ll take a dollar back from your Social Security benefit. But that’s earned income. So that’s wages, that’s self-employment income. So when you look at Powerball winnings, (laughs) it affects the taxation of your Social Security benefit, because you’ll probably receive interest and dividends from that Powerball winnings.

AC: Not to mention the winnings themselves are taxable. (laughs)

JA: Right. (laughs)

AC: So Joe, the number, I looked it up:  $17,040. So just over $17,000 is our number.

JA: $17,040? Look at the fact check on Big Al.

AC: I got the little cheat sheet right in front of me. Anyway, I think it’s kind of an interesting question that you would be worried about collecting your Social Security benefits when you got the Powerball winnings. (laughs)

JA: (laughs) Well that’s the world we live in. I hope he wins it!

AC: And I hope he or she is not losing sleep because it’s not going to happen. I’ll tell you that.

JA: You ever seen that show, those Powerball winners, and how fast they blow through millions?

AC: Yeah. And the stats are, whether it’s Powerball or any lottery, within five years they’re bankrupt. I mean, the majority. It’s crazy. Because when it’s not your own money, it just doesn’t feel the same. (laughs)

JA: Right. Let’s buy 14 four wheelers! (laughs) And buy a ranch!

AC: Yeah, “have you ever been to your ranch?” “No, but I hear it’s great! (laughs)

JA: “Yeah, I have 4,000 acres so I can my four wheeler around in it!” (laughs)

AC: “Have you actually driven the four-wheeler?” “Nope. Don’t know how to!”

JA: Social Security – he’s claiming that at 62, maybe he’s taking all his earnings from Social Security and just parlaying it into the Powerball? Why not! That’s called leverage! (laughs)

AC: Because he doesn’t want to lose that, because he got to keep parlaying that into more Powerballs! (laughs)

JA: You have to! Alrighty, that’s it for us today, thanks for listening. For Big Al Clopine, I’m Joe Anderson. The show is called Your Money, Your Wealth®, we’ll see you next time.


So, to recap today’s show: Bitcoin and other cryptocurrencies – they’re taxed like stocks are, so take that into account when dollar cost averaging into crypto, or using digital currencies to buy that sweet, sweet parka. There are at least 292 retirement income strategies, and the best one for you may not be one of ‘em. It all depends on your specific financial situation. For help figuring it all out, contact Joe and Big Al at info@purefinancial.com. And please, whatever you do, don’t bet your retirement on the Powerball. It’ll probably screw up more than just your Social Security.

Special thanks to our guest, Philip Taylor. Learn more from PT on how to reach financial independence at PTMoney.com.

Subscribe to the podcast at YourMoneyYourWealth.com, your favorite podcatcher, or Apple Podcasts – and hey, thanks for putting us in the top 200 investing podcasts on iTunes! It was only for about 5 minutes, but hey – that counts for something! Listen next time for more Your Money, Your Wealth®, presented by Pure Financial Advisors. For your free financial assessment, visit PureFinancial.com

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