Show Notes

• 00:00 – Intro: This Week on the YMYW Podcast
• 01:04 – Save to Brokerage vs. Solo 401(k) to Retire as Soon as Humanly Possible? (Ricochet J, CO)
• 15:23 – Watch Your 11-Step Path to Financial Freedom on YMYW TV, Calculate your free Financial Blueprint
• 16:36 – Is a $40K/yr Pension Similar to $1M in Bonds According to the 4% Rule? (Micah, SD)
• 18:48 – Marginal vs. Effective Tax Rates: How Much to Convert to Roth? (Barney & Betty)
• 22:58 – Download the Complete Roth Papers Package
• 23:48 – How to Have Maximum Possible Retirement Income to Age 90-95? (Amir, NM)
• 30:13 – Outro – Next Week on the YMYW Podcast

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Transcription

Intro: This Week on the YMYW Podcast

Andi: Ricochet J in Colorado and her husband want to retire as soon as humanly possible. Are they on track? Should they save their surplus funds to a brokerage account or a solo 401(k)? That’s today on Your Money, Your Wealth® podcast number 505. Plus, Micah in South Dakota wonders whether having a $40,000 a year pension is basically the same as having a million dollars in bonds, according to the four percent rule. What do Joe and Big Al think? Barney and Betty will be in the 12% or 22% marginal tax bracket, but their effective tax rate will only be between 10% and 12.4%, so how much should they convert to Roth? Are they asking the right question? And finally, Joe and Big Al spitball on ways to ensure that Amir in New Mexico has the maximum possible retirement income to last him to age 90 or 95. To ask your money question or to get a Retirement Spitball Analysis of your own, click Ask Joe and Big Al in the episode description and send us a message. I’m Executive Producer Andi Last, and here are the hosts of Your Money, Your Wealth®, Joe Anderson, CFP® and Big Al Clopine, CPA.

Save to Brokerage vs. Solo 401(k) to Retire as Soon as Humanly Possible? (Ricochet J, CO)

Joe: We’ll continue on.  “Hi, Joe, Al, Andi.  Ricochet!

Andi: Ricochet J!

Joe: Ricochet J!  I was gonna totally butcher that, but I took a guess that it was Ricochet.

Andi: Well done.

Al: Good for you.

Joe: Yeah.  He’s here from, Ricochet J from Colorado. “This is surely what my golf nickname would be if I played more.” Ah, okay a little ricochet probably a little blade it right in the trees. “Thank you for taking my question.  I started listening to show about a year ago, and I first I wasn’t sure about it. Well, just one of you.” I know where he’s going with that.

Al: I wonder which one.

Joe: I know. See, it’s just like I’m a fine wine. It just takes time. You fall in love.  “But you’ve grown on me, and I enjoy listening each week during my commute. Now, not really in the car, so I’ll tell you, the last exciting place we traveled was to Monaco and the Canary Islands.”

Al: Or Morocco.

Joe: Whatever. Yes.  You say Morocco, I go to Monaco.

Al: It turns out they’re different places.

Joe: It’s so beautiful at both.

Al: A little better in Monaco, in my opinion, but-

Joe: “ Look at Snooty Pahootie over here. Okay. “The coast of Morocco is amazing.  And it’s worth the road trip. Drink of choice for me is a Paloma or a glass of Chardonnay. Husband doesn’t drink. But he does love those athletic drinks NA beers.”

Al: Nonalcoholic.

Joe: Yeah, I’ve never had one of those.

Al: Yeah, I have. They’re pretty good.

Joe: Are they?

Al: Yeah.

Joe: I think I’d rather drink water.  NA beer.

Al: Well, I’ll give you, I’ll give you 10 more years when you don’t need quite as much alcohol, but you still want to have fun.

Joe: Have a little taste?

Al: Yeah, a little taste. Yep.

Joe: Okay. All right.  “I am looking for a spitball on our situation. I’m wondering how best to direct an expected increase in income in the future retirement funds.” Okay. “I work for a municipality and my husband is self-employed. My question is whether we are better off directing surplus funds to a brokerage or setting up a solo 401(k) for him. Here’s our info.  We have a combined gross income of $200,000 and next year I expect to have a pay increase to about $15,000. I’m 45. My husband’s 51. We also have a 10-year-old son. We have currently retirement savings of $285,000, $125,000 in Roth IRAs, $85,000 in a rollover IRA, and $75,000 in a Roth 401(k) through our current employer. I’ve been maxing out the Roth IRAs, including catch-up for me and my husband, the Roth 401(k) each year, and plan to keep doing so. I’ll be eligible for a pension, and since I’m already close to 10 years in, I think I’m in it to win it and will try to stay in the system. My hope is to reach a point where I’ll receive around $50,000 a year from the pension. I’ll have to stay at least another 10 years to wait to draw upon it until my early 60s. We have a brokerage account that I just set up this year. We have about $10,000 in it. We currently add $500 a month to this. Our primary home is worth $800,000 and we owe $330,000 on it at a 3.25% interest rate. We also have a rental home in Denver, also worth around $800,000 with no mortgage left. We currently- it currently nets out $30,000 a year in rent after expenses.” $30,000 on $800,000. That’s really good.

Al: It is.

Joe: All right. “Our son has about $55,000 in his 529 plan our account and our account, and the grandparents- we keep-  we’ll keep putting funds into this, and I’m a little more worried about a retirement right now, so I’m not going crazy with that and just adding $300 a month.” Wow. Ricochet J.  This is a novel.

Al: It keeps going.

Joe: Yeah.  “Spend about $8000 a month depending on where it’s hockey season for our son, aka the longest and most expensive sport a kid can play.”

Joe: Never played hockey, but my best friend did in high school.  “I expect we’d spend the same, or a little bit more in retirement since we’d love to travel.” Alright. “We’d like to retire as soon as humanly possible, but I know in reality that it won’t likely be until our early 60s. If we could work some spitball magic to see if late 50s were in for us and early 60s for my husband, that would be great. Since my husband is 6 years older and could tap into his Roth 401(k) sooner than I can access my funds, would it make sense for us to start one of those for him? Or should we start putting more funds into a brokerage account?  It seems to me the solo Roth would be a better option given that there ain’t- there isn’t any tax on the flip side like a brokerage, and we use either to bridge the gap until I could use or turn on the pension.  I’m not paying the Social Security currently, so my projected payout is low, $12,000 at 67 or $15,000 at 70.” Is that $15,000 or $1500?

Andi: It’s $1500.

Joe: $1500 a month? $1200 a month? $1200?

Al: I think so.

Joe: Yeah. “My husband’s is $1250 at 62, $1900 at 67 and $2450 at 70.  We have a loose plan that as we near retirement time, we move back into our rental to get two years of primary residence back before selling the lot. We’d love to move around, maybe France, or move abroad, maybe France. France and live in a country with a national health care. But we’ll see what the state of the world is in 10 to 15 years.”  I’d like to see what the state of the world is when I get done reading this question.

Al: It’s still going.

Joe: I’m sweating. This is hard work here.  “Can you spitball how we’re doing and how I should be directing our new funds? Is our dream of living in the land of baguettes?-“

Andi: Baguettes.

Joe: Baguettes. “- baguettes and vino on track?”

Al: Bread and wine.

Joe: Mmm.

Al: Translated.

Joe: Okay, thank you, bro.  “I’m also curious if you approve of my asset allocation strategy. I’m going heavy on stocks since I have a pension coming. I have my husband’s Roth IRA, 70/30. The brokerage is all in stock market. We’re just trying to sort out how to best fund the gap until we can start reaching our Social Security and our pension, hoping that between you, some of the combined house sale funds in the brokerage of our rounds, okay, blah, blah, blah. Thanks so much for your insights. Keep up the great work.” All right. So she’s got some extra cash, right? She wants to put it in some, a brokerage account or Roth 401(k).

Al: Yeah. So that, that one’s easy.

Joe: So total assets. She’s got $300,000.

Al: Yep.

Joe: $85,000 in a rollover IRA, $10,000 in a brokerage, $200,000 in a Roth.

Al: Yep. Rental income, $30,000,  $50,000 a year in pension later.  So let me recap a couple of things here, Joe.

Joe: All right.

Al: So first of all, question whether we’re better off directing surplus funds to a brokerage or setting up a solo 401(k) for him. I would do the solo 401(k) every day of the week, particularly since when it, the funds might be needed according to the year. Your explanation or question, he’ll be in his 60s and it would be fully available for withdrawal. Right? So yes, do the solo 401(k). It’s going to be tax-free. So that’s an easy one. In terms of whether you’re going to be okay. First of all, thanks so much for your question, but this really is a better question for a financial planner to run an analysis instead of us trying to figure out all these numbers in our head, but nevertheless, I did- I did do a spitball for you. So I’m going to say this. You got $300,000 now, you’re adding about $38,000 per year. Based upon two Roth IRAs and maxing out a 401(k). I’m going to say 12 years from now, I just made that up, you’re 57, husband’s 63, 6% interest. You end up with about $1,200,000. Okay. So right now you want to spend about $96,000 a year, 3% inflation, 12 years from now, that’s about $137,000. Okay. There’s a pension of $50,000 a year, although you won’t get it until I think he said 60, but I’m going to put that in anyway.  And real, rental real estate, $30,000. So that’s about $80,000 off the $137,000. So in other words, you need $57,000 from your portfolio. Then you take $57,000 shortfall, divide that into what you have at that point at a 6% return, $1,200,000, you get 4.8%, which is a little bit higher than we’d like to see. However, if your husband takes Social Security at 62, which we’re not necessarily recommending, but if he did, then that distribution rate would go down to 3.5%. And it, you’re kind of right on the cusp, but that, that I’m going to say, maybe. It may work out for you. But this is something that-

Joe: Well, hold on, let’s see, there’s an easier way to deal with this. Don’t start peddling financial planning services over there.

Al: Well, yeah, but, I mean, you can’t, it’s hard to spitball this when there’s so many variables.  I don’t care-

Joe: It’s almost impossible.

Al: I don’t care if, she uses a program herself.

Joe; It’s $96,000 is what she wants to spend and she’s 45 years old, right?

Andi: She is 45, husband is 51.

Joe: All right, so she wants to retire in the late 50s?

Al: Yeah.

Joe: Okay, so 45, 55. I’m gonna- I’m gonna get her retired at 60.

Al: Okay, you’re going 15 years.

Joe: I’m gonna go present value and then you got 15 and then let’s say Inflation is at 3.5% and then so that’s $160,000 living expenses 15 years from now. I’m just taking that $96,000 and pushing it out.

Al: I got $140,000 for 12 years, but in the ballpark, but-

Joe: So at $60,000, she’s gonna have $50,000 pension. I don’t know if there’s a COLA on that pension or not, but-

Al: Don’t know.

Joe: She’s pretty excited about the pension. So am I, would be too. $50,000 plus another $30,000 of rent, I don’t know if there’s going to be an increase in rent.

Al: Yep, that’s right.

Joe: So $80,000 call it, so she needs another $80,000, not including Social Security. She says she’s going to have a pretty small Social Security and then you’ve got to bridge the gap with the husband.

Al: Sure.

Joe: So if you need $80,000, what was her husband’s Social Security?

Al: Well, it’s a- It’s  at 62 it’s $1200, then $1900 at 67, $2400 at 70.

Joe: Alright, I’m gonna say she needs, like what you said, $50,000 is what the shortfall was?

Al: Yeah, that’s what I calculated.

Joe: I would say, she needs to target, like, if you can get to $1,500,000 over the next 15 years, I think you’re sitting in a really good spot. So it’s just kind of focusing on a goal, what the number is. I think once people can get a number in their head, then they’re much more apt to adjust to achieve it. But you’re right. I mean, we’re just spitballing. It’s a back of the envelope. But if the more that you can save right and the more that you invest, you’re all in stocks, you don’t need the money for another 12 to 15 years. I think all of that is really good. You’re in low-cost index funds great for you. Should you put money into more Roth IRAs? Yes, because you’re going to have a lot of fixed income. So you’re doing all the right things. I think where you’re driving yourself crazy or making yourself a little bit nervous is that, yeah, you want to travel more. You want to go get some wine and vino and baguettes or whatever the hell that is. And so, and then you’re going to sell the house. So there could be equity within the home if they’re going to. You know, hang out in Francois.

Al: Could be, yeah.

Joe: You get baguettes from here.

Al: Yeah, the rental income would go away, but.

Joe: Well, no, he’s got a rental and the primary.

Al: I know, but she’s saying she might want to move into the rental.

Joe: Oh, I didn’t read that. Well, I got bored of it or something.  But let’s see, she gets $1,500,000. All right, so that’s the target. So if you- Ricochet? don’t ricochet this, just kind of keep the focus, keep saving. And then if you can get to $1,500,000, I think you’re sitting in a really good spot.

Al: Okay. I’ll accept that.

Joe: But, right, sometimes it gets super confusing. Because there’s all these cash flow needs that have to happen at certain time periods because your Social Security is timed at a certain, right, then your pension is going to come in, you want to retire at a certain point, but then your husband is going to retire at another point. So, yeah, you have to spreadsheet this thing out. But if you’re just looking at back of the envelope, you can look at, all right, well, what’s, what do I want to live? What do I want to spend on an annual basis? And she figured that out closely to $100,000 a year. You just need to figure out what that $100,000 is going to buy in 10 or 15 or whatever year that you really want to retire. And then look at, all right, well, divide that by a distribution rate, 3%, 4%, and then that’s going to give you kind of a number to shoot for. So. I don’t know.  We’re just dragging these things out.

Andi: You’re spitballing.

Joe: Alright, good luck.  I’m glad you, I warmed up to you.  She’s like, she only likes one of us, Al.

Joe: No, she likes both now. Yeah.

Al: Probably likes you better because you’re like fine wine. Just keeps getting better.

Joe: I am, you know. Remember that one guy? He was like, yeah, I came back like 4 times. I just, I gotta leave again, I just can’t do it. But they keep coming back. Why do you guys keep coming back?

Al: I wonder why he kept coming back.

Joe: It’s like, man, you know, I’ve tried you now 4 times.

Al: This has got to be a good show. No, not really.

Watch Your 11 Step Path to Financial Freedom on YMYW TV, Calculate your free Financial Blueprint

Andi: If you just can’t get enough Joe and Big Al, check out the YMYW TV show. This week they’re talking about Financial Freedom: only about one in ten Americans are living their definition of financial freedom. 54% say that means living debt free, 50% say living comfortably, 32% say financial freedom means not having to work, and 13% define it as being rich. But too many of us fall short of financial freedom because of lack of retirement savings, salary constraints, debt, or unforeseen emergencies. Watch this week’s brand new episode of Your Money, Your Wealth TV, where Joe and Big Al put you on Your 11 Step Path to Financial Freedom. Find out how to take inventory, invest in yourself, and sustain your financial dreams and goals. Our Financial Blueprint tool that will help you with that first part, taking inventory. Click the Financial Blueprint link in the episode description, enter your details, and you’ll get an analysis of your current cash flow, assets, and projected spending for retirement – along with three scenarios that will help you determine your probability of success. Watch Your 11 Step Path to Financial Freedom on YMYW TV and calculate your Financial Blueprint. You’ll find links for both in the description of this episode.

Is a $40K/yr Pension Similar to $1M in Bonds According to the 4% Rule? (Micah, SD)

Joe: We got Micah from South Dakota.  “Hello.”  Hello, Micah.  “Is it safe to say that I If I get $40,000 in pension, is it similar to having $1,000,000 in bonds according to the 4% rule?”  Yeah, I would say that’s a good way to look at it.

Al: It is a good way to look at it. I think probably 4% rule, though, is it was originally designed for a mixture of stocks and bonds. But, yeah, you’re on the right track. That to me, the main difference is when you have a pension, you know what it is, it’s $40,000 a year, maybe of cost of living, maybe not. When you got the $1,000,000 you can spend more than $40,000 a year, or you can spend less than $40,000 a year, or you can convert some of that to Roth IRA. So you have a lot more flexibility. I’d rather have the $1,000,000 than a $40,000 pension because of the flexibility. But that can backfire. Joe, sometimes people spend too much, and then they run out of money.

Joe: For sure. That $1,000,000 could go to $700,000, and 4% of $700,000 is less than $40,000.

Al: Right. Correct. So, what I said is I’d rather have the $1,000,000, but there’s risks in that.

Joe: Yeah, because you’ve got a lot of extra dollars in your big fat wallet.

Al: Oh, come on.  If I had a choice. I mean, wouldn’t you, if you had a choice?

Joe: Because I think we have experience in the business. Right, so let’s say,  if I’m conservative,  depends on the client, I would be like, alright, well here, if you don’t want to deal with investing this, and if you want to guarantee the income and $40,000 is going to give you all the things that you need in life, then take the $40,000 all day.

Al: Yeah, then there’s no concern.

Joe: Or, if you want to have a little bit more flexibility, but there’s risk there. Right. So that $1,000,000 could go to $1,200,000 or $1,300,000. But if you were to ask someone, okay, you got $1,000,000, and that $1,000,000 went to $2,000,000, or that $1,000,000 went to $500,000, people would be like, no, I don’t want that game. I’d much rather take the $40,000. Right. So.

Al: A lot of people would say that. I agree.

Marginal vs. Effective Tax Rates: How Much to Convert to Roth? (Barney & Betty)

Joe: All right, here we go. “Hi, Andi, Joe, Big Al.  Hoping to get a spitball question answered. I’m 62 and my wife is 60. We’re both retired. We have no debt. I have about $1,300,000 in all deferred IRAs with very little in a brokerage account.  About $200,000 in Roth accounts and have $3400- or $34,000 per year in pension with a cost-of-living adjustment for life.  I will get about $60,000 per year between my wife and I, Social Security, starting at age 70. I want to do a little Roth conversion to the 12% tax bracket for the next few years. But my question is this, if I will be in the 12% or 22% marginal tax bracket, but my effective tax rate will only be between 10% and 12.4%, does doing conversions to the 12%  or 22% marginal tax bracket make any sense? I also have a 7% state tax to worry about. I think I spend about $60,000 to $70,000 or $6000 to $7000 per month.  LOL.”  What was so funny about that?

Andi: He really should figure that part out.

Al: Oh, that’s the funny part.

Joe: No, that’s hilarious. Nobody spends $6000 or $7000 per month. LOL.

Al: I think what, what he meant or she, I guess he, meant to say is I really should figure that part out right. Right? LOL. That’s what it should have been.

Joe: Love it. “Best regards. Love your show.” Well, we love you. Barney and Betty.

Al: Yeah.

Joe: Riot.

Al: We had another Barney and Betty before.

Joe: A lot of Flintstone fans.

Al: Different one.

Joe: A lot of Flintstone fans.

Al: Yeah. Yeah.

Joe: Okay, let’s see. Okay. He’s got very little bit in, so he’s got $1,500,000 in total assets. He’s got fixed income of $94,000, $34,000 from a pension, $60,000 from Social Security. He’s gonna spend $80,000. He’s not gonna touch the deferred assets. Does he do a conversion? And he is, I’m sorry, he’s 62, So. He’s retiring.  Is there a bridge?  When is he retiring?

Andi: Both retired. He’s 62. She’s 60. Both retired.

Al: Yeah.

Joe: So we need to bridge the gap. He’s 62. So they need, let’s call it $80,000 a year-

Al: Yeah, I think they’re okay.

Joe: – for the next 8 years. He needs how much?

Al: Well because he’s got $34,000 pension, but he’s, shortfalls about $50,000. $50,000 into $1,500,000. It’s, about a 3.3% distribution rate. So I think that’s good, especially since Social Security is coming.

Joe: So $50,000 plus $34,000 minus the standard deduction, he’s in the 12%.  The question is, does he take out more of the retirement account that he has in $1,500,000 and convert the remainder at the top of the 12%?

Al: Yeah, I would.

Joe: I would do all day, every day, even on Sunday.

Al: Wow, on the day off, on the day of rest.

Joe: Yes.

Al: Got it. Yeah. The reason is because 12% bracket, that’s, a great bracket, right? And so you want to take advantage of it, particularly when you got over $1,000,000, right? In a tax deferred account. Social security is coming. That’s taxed at ordinary income. Your pension is taxed at ordinary income. So you want to try to get as much as that of that future required minimum distribution tax-free as possible by filling up the 12% bracket. One of your questions was, you’re getting confused about marginal bracket and an effective rate. Effective rate is your blended rate. Your marginal rate is your highest rate. For purposes of Roth conversion, you always look at your marginal rate. Your marginal rate is your highest rate. That’s the rate that you’ll pay tax on for the conversion. And then the question is, is that rate or that tax worth it? Compared to your future rate, and in this case, 12% rate is about as low as it goes. So I would do that all day.

Joe: Yep. Well said, my friend.

Download the Complete Roth Papers Package

Andi: Once your money is in a Roth, your earnings in that account will not be taxed. There are a lot of rules though. Download our Complete Roth Papers Package and make sure you understand Roth accounts thoroughly so you can take full advantage. This bundle of Roth guides is packed with valuable information: what’s the difference between a Roth contribution and a Roth conversion? What are the pros and cons of saving in a traditional IRA vs. a Roth IRA vs. a Roth 401(k)? How do you withdraw money from your Roth without penalty? What can you do if you make too much money to contribute directly to a Roth? Get the answers to all of these questions in the Complete Roth Papers Package, yours free courtesy of Your Money, Your Wealth and Pure Financial Advisors. Scroll down to the description of this episode. See that link that says Complete Roth Papers Package? Click it to go to our website and download yours.

How to Have Maximum Possible Retirement Income to Age 90-95? (Amir, NM)

Joe: Hello. My name is Amir A.  I’m 68-year-old single man born in November 1956.” Oh, can you give me the date?  What hospital?

Al: We need more information.

Joe: Yes, we need just a smidge more, Amir A. Oh man. “And I’ve been working for the same company for 28 years. My current salary is $265,000, and I’m thinking about retiring in July, 2025.  I have $1,200,000 in the 401(k), extremely conservative at 4% yearly return with 70% of my money in the market- in money market and 30% stocks and bonds. I have a pension plan that pays me $6300 a month at the time of my retirement. My Social Security will also pay me $4100 a month, July, 2025. $4400 when I’m 69 or $4600 when I’m 70. I also have a total annuity of $150,000 for the past 15 years that pays me $1300 a month in case I want to start taking monthly payments.”  Okay? “I also own a condo in Denver from which is clearing about $1800 a month valued at $430,000 fully paid. I have a $250,000 CD that matures in January. I have $216,000 in cash. My primary residence is in New Mexico, and it’s fully paid for.  It’s appraised at $160,000. I’m thinking about selling and moving in a house in Irvine, which is my second residence.” Man, Amir, he’s got houses all over the place. He’s got Denver, New Mexico, Irvine. “I’m a 50% owner of a restaurant in Costa Mesa with my sister, which pays us about $2000 a month.” Well, hook a brother up!  We’re just right down the street from Costa Mesa.

Al: We are.

Joe: I’d like to go to your restaurant.  Can I have a, you didn’t even tell us what country it is. Come on. “My desired income after retirement is to have $140,000 a year of spending.  I really appreciate your evaluation of my financial blueprint with an additional comment and suggestion that you may have. My main concern is with inflation and taxes, will it be okay until 90, 95?” No idea. “What other advice do you have for me to have a maximum, to have a maximum income possible?”  Okay. “I’ll be in Southern California in about a month. I’m wondering if I could have a little meet greet with Al.”  What do you think, Al? You got some time for Amir A? “Al, Joe-“

Joe: Oh, I didn’t see that.

Al: “-or any other fiduciary advisor that is recommended to meet with me.”

Joe: Oh, wow. Okay.

Al: How about that?

Joe: Costa Mesa.

Al: Yeah, it’s close to San Diego.

Joe: Yep. 68 years old, wants to retire soon.

Al: Okay, wants to spend $125,000 net, $140,000 gross. He’s got $1,900,000. At age 68, you could do a 4% distribution rate. That’d be $76,000. His fixed income, with the rental income, is about $95,000. Actually, that doesn’t even include the restaurant. So yeah, if you add all that stuff in, it’s a close to $200,000 of spending, whether you want to spend that much. I mean, that, that could be max spending.

Joe: He wants the shortfall’s about $140,000, $125,000, something like that.

Al: Yeah. Yeah.

Joe: He’s got plenty of fixed income, plenty of assets.

Al: This works just fine. And, so if you want to spend $140,000, great. If you want to spend a little bit more, you know, maybe $180,000, $190,000 would be max spending. But, see the thing is when you, calculate max spending, basically that puts you on the margin where you can’t make errors. So I’m not suggesting you would spend that much, but you could spend more than $140,000 from time to time if you want to.

Joe: Yeah, he’s a conservative individual. He’s mostly in cash, money market, he bought an annuity that’s fixed, he’s got CDs, you know, but it’s funny, he owns a restaurant.

Al: Yeah, well, probably his sister needs some capital, I’m guessing.

Joe: I don’t know, but isn’t a restaurant pretty risky?

Al: Yes, it can be, so that $24,000 of income may not be forever, you never know.

Joe: But, yeah, I think you’re sitting just fine. You just want to- but for, you can’t really use a 4% burn rate with him because he’s probably not even getting close to 4% long term with his allocation.

Al: Well, yeah, well, we don’t know what his 401(k) assets are-

Joe: – but the, yeah, the other 70% cash.

Al: Oh, it says that?

Joe: Yeah.

Al: Okay. Yeah, you’re right, so probably, maybe a 3%.

Joe: I would, yeah, 3% or 2%, 2.5%?

Al: Maybe. Maybe so.

Joe: But he’s trying to squeak out the most income that he possibly can with the least amount of risk. And I think that’s what everyone’s goal is, right? It’s like, alright, how do I go about creating the income that I need, and not worry about, you know, my investments and not worrying about the markets and so on and so forth. So, you’ve done a really good job of accumulating the wealth. I think if you take a smaller distribution rate, you can spend maybe a little bit less. He’s got houses all over the place. He’s going to sell some of those homes, move to Irvine-

Al:  Didn’t even calculate that.

Joe: Yeah. I mean, you’ve done a great job. Now it’s just kind of planning and just figuring out what’s the appropriate step. So you don’t make any mistakes along the way. And then just come up with the appropriate allocation that you’re comfortable with. To, you know, to give you the return that you want with the least amount of volatility and the least amount of risk. And yeah, Big Al is available at any time you want to meet up here. I will set that appointment for you. Saturday mornings.

Al: Saturday mornings.

Joe: You want to come in the office?

Al: Yeah, just bring me, bring me takeout from the restaurant. All good.

Joe: All right. That’s it. We’re done. Thank you, Amir. Thank you everyone for the wonderful questions. Andi, great job on putting all this stuff together.

Andi: Thank you. Thank you for doing it.

Joe: Here to ride your guys’s coattails.  Aaron, thank you for the lighting.  Appreciate it. We’ll see y’all next week. Show’s called Your Money, Your Wealth®.

Outro – Next Week on the YMYW Podcast

Andi: James Bond in the Silicon Valley, Doc in San Francisco, Wine Guy and Wine Gal in Sonoma, Joe and Big Al spitball for you – and maybe some non-California viewers and listeners too – next week in YMYW podcast episode 506.

Your Money, Your Wealth is your podcast and this show wouldn’t be a show without you and your participation. Keep sending in those voice messages and emails, keep watching and commenting on YouTube, leave us your honest reviews and ratings in Apple Podcasts, and keep telling your friends how we’re making fun of finance over here at Your Money, Your Wealth.

2025 is now just 5 weeks away, with a new administration with new rules coming in January. Find out what last minute tactics you may still be able to leverage to bring down your 2024 tax bill, and make sure your plan for your financial future is secure. Schedule a free assessment with one of the experienced professionals on Joe and Big Al’s team at Pure Financial Advisors, either in person or online via Zoom. There is no cost and no obligation, and this assessment is tailored specifically to your financial needs, your tolerance for risk, and your retirement goals. Don’t procrastinate – the calendar is filling up fast. Click the Free Assessment link in the episode description or call 888-994-6257 to book yours while there’s still time.

Your Money, Your Wealth is presented by Pure Financial Advisors, 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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