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 [...]

Andi Last

Andi Last brings over 30 years of broadcasting, media, and marketing experience to Pure Financial Advisors. She is the producer of the Your Money, Your Wealth® podcast, radio show, and TV show and manages the firm's YouTube channels. Prior to joining Pure, Andi was Media Operations Manager for a San Diego-based financial services firm with [...]

Published On
November 7, 2023

Will Ron and Candy in Connecticut ever be able to retire, and are Bruce and Selina in Philly saving enough to retire? Plus, are Pebbles and Bam Bam in Kentuckystone missing anything when it comes to using their brokerage account to pay Roth conversion taxes? And Susan in San Diego is 55, spends about $36K a year, and has almost a million saved – can she retire yet? And finally, our buddy Will knows he shouldn’t time the market, but….  

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Show Notes

  • (00:50) Will We Ever Be Able to Retire? (Ron, CT)
  • (09:54) Are We Saving Enough to Retire? (Bruce and Selina, Philadelphia)
  • (17:36) What Am I Missing? Brokerage Account Spitball (Pebbles & Bam Bam, Kentuckystone)
  • (27:05) Nearly $1M at 55, Spending $36k/Year: Can I Retire Early? (Susan, San Diego)
  • (31:36) I Know We Shouldn’t Time the Market, But… (Will)
  • (40:46) The Derails

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Andi: Will Ron and Candy in Connecticut ever be able to retire, and are Bruce and Selina in Philly saving enough to retire? That’s today on Your Money, Your Wealth® podcast 454. Plus, are Pebbles and Bam Bam in Kentuckystone missing anything when it comes to using their brokerage account to pay Roth Conversion taxes? And Susan in San Diego is 55, spends about $36K a year, and has almost a million saved – can she retire yet? And finally, our buddy will knows he shouldn’t time the market, but…. If you’ve got money questions, or want a Retirement Spitball Analysis of your own, visit YourMoneyYourWealth.com and click Ask Joe & Big Al On Air. I’m producer Andi Last, and here to spitball on all of these questions are the hosts of Your Money, Your Wealth®, Joe Anderson, CFP® and Big Al Clopine, CPA.

Will We Ever Be Able to Retire? (Ron, CT)

Joe: “Hello Joe, Big Al, Andi. My wife Candy, our cat Codi and I find ourselves living in the constitution state of Connecticut. Never occurred to us that we would settle in Connecticut, but here we are. First with the important stuff, Candy drives a 2022 Nissan Rogue.” Those are kind of a little bubbly 4×4 or something.

Al: Yeah, it’s kind of a smaller SUV.

Joe: “She loves it. I drive a 2015 Honda Civic. Just good old faithful there that never dies.”

Al: Keep that forever.

Joe: “I rarely drink these days, but when I do indulge in an ice cold margarita from Costco.” You can buy a margarita from Costco? I just learn so much from this show.

Al: Pre-packaged maybe? I don’t know. Or maybe in the constitution states you can buy it at the window.

Joe: “Candy also goes for the margarita or a nice red wine. I’ve been a devoted listener to YMYW on the iTunes app or the YouTube.” He just calls it “the YouTube.”

Al: Well, everyone knows what that means.

Joe: Or, on YouTube it should say, versus on “the YouTube.”

Al: I like “the YouTube.”

Joe: I like it too.

Andi: YouTube I’m sure likes “the YouTube” as well.

Joe: “We know you don’t give advice, but we were wondering if you could do a little retirement spitball for someone in our situation. I turned 60 this year. Candy is a young 65 and Codi is seven. No kids in the picture. We earn about $150,000 per year. $100,000 for me, $50,000 for her. We both have 401(k)s and IRAs. I have a small pension. Candy has no plan to retire. I have been encouraging her to work less and enjoy life more, even if she doesn’t. I hope to work another 5 years max. We have been through so many changes and layoffs in recent years, it may not be an option. When I do retire, I would probably pick up some part time work at a local school or theater. We live pretty simple. Our total expenses are about $70,000 per year or $68,937.” Oh boy, we got an engineer on our hands here.

Al: So, he’s going to ask a question about 5 years in the future. So, the expenses are $79,970 in 5 years.

Joe: We can round, okay? You can round up or round down.

Al: You can.

Joe: “Here’s the breakdown of our assets. Pre tax 401(k)s is $526,000. Roth IRA is $115,000. Cash, $100,000. Taxable brokerage, around $75,000. Currently we’re saving 25%, approximately. $700 a week in retirement all Roth 401(k). Both employers match 401(k) contributions 50% up to 4%, basically 2%. My current pension estimate is $1,700 per month. If I can continue to work for 5 years, it’s estimated to be about $2,300 a month. Slightly less because I’ll likely take a 50% payout for my wife if I precede her. Expenses in retirement. We owe $150,000 on our mortgage at 3.25%. It is valued at $255,000. We owe $25,000 on the Rogue. We have no interest in paying either loan off early. Pun intended.”

Andi: Interest. Get it?

Al: Very clever. Yep. Makes me smile.

Joe: I need a margarita just going through this question here. “We expect to replace one car every 5-7 years. We always buy new cars and hold them for a long time. We expect to travel several times a year. We plan to remodel our condo modestly. Master bath, kitchen, countertops, replace vinyl flooring in the near future. Will I ever be able to retire? What are some of the things we should be looking for? Thanks for all your great content. Candy and Ron.”

Al: Let’s do a little math here.

Joe: Okay. So he wants to retire in 5 years. Candy, she’s never going to retire. What does Candy do? Do we know?

Al: No, we don’t know. Anyway, Ron, yeah, you can retire. You got plenty here. So let me tell you the math. And so our listeners can sort of follow along and do the similar math on their own situation. So you gave us a lot of figures, but let me boil it down to what’s important and maybe even for our future listeners, how to say it. So you’re starting with $800,000.

Joe: Liquid assets, that’s everything he has in 401(k)s and IRAs.

Al: Just your liquid assets for retirement, $800,000. You’re adding $39,000 a year. I don’t need to know all this stuff about weekly and the matches, what percent. Just tell me $39,000, includes the employer match. That’s what I need to know. Then I’ll say from your question, I’m just going to use 6% at 5 years, we get $1.3 million. So that’s what you’ll have in 5 years, given those assumptions. Okay. Now, if you work 5 years, and Candy works 5 years, then she’ll be 70, she can take her Social Security at 70, that’ll be $34,000. Your pension’s $28,000. Your expenses, I already told you, with inflation, are gonna be $80,000. So your shortfall is $18,000 and you got $1.3 million. Okay, your distribution rate is 1.3%. If it’s 4%, I’m happy. 1.3%, I’m ecstatic. So that also tells me you can probably retire earlier if you want to. I’m not going to do all these calculations live on the radio, but the point is, yeah, you can retire in 5 years. Maybe you can even retire earlier.

Joe: Yeah, I believe I agree with everything you’re saying there.

Al: And that’s not even including your Social Security, Ron, because you haven’t factored that in. So basically you don’t even need the $1.3 million.

Joe: So he’s 60, they make $150,000 a year. He’s got a pretty good size pension of $30,000. So it’s paying about 30% of his income. They have no kids. And they’re pretty modest in their cars. How accurate do you think his $68,937 is in living expenses are?

Al: Well, he’s got some kind of spreadsheet to show that. However… At first blush, I would say you may be spending more than you think.

Joe: I think so too.

Al: And the reason is because if you’re making $150,000 a year-of course you’re saving $36,000, right?

Joe: But they have $800,000, $36,000, how long do you think they’ve been saving that much? Five years?

Al: Not that long, probably. And the other thing is, even if you’re saving, let’s just do easy math. You’re saving $30,000, you’re making $150,000, your tax is a spitball, $20,000. So you got $100,000 to work with. And that even includes your 401(k) money going to retirement. So it seems like there’s extra money here that’s slipping out the door that you may not be thinking about.

Joe: Now, you know, he’s got a spreadsheet.

Al: Of course, because he’s got an exact number. I’m surprised he didn’t get cents. $937.24.

Joe: That’s the only variance because I think he’s right on track. He’s doing a great job. He’s saving a ton of money today. And they’re building this thing up.

Al: Even if he’s spending $100,000.

Joe: He’s still pretty close.

Al: Because with his Social Security, I think you’re just fine.

Joe: Congrats. But he wants to do all this remodeling though, vinyl floors, new cars every 5-7 years, this, that, whatever. So plugging that in…

Al: Still, if you use his numbers at face value, there’s lots of extra.

Joe: Yeah, if you take those living expenses, but the problem I think with Ron and Candy-it’s not a problem. I think the area here is that each year they have something, Hey, we want to do the floors. We want to do this. We want to do that. So maybe their true living expenses is $68,000, but these added projects are $10,000, $20,000 per year.

Al: Maybe that’s where the other money is going.

Joe: Maybe that’s where that excess cash flow potentially could be going.

Al: Yeah. Still, in the basic numbers we got, there’s extra.

Are We Saving Enough to Retire? (Bruce and Selina, Philadelphia)

Joe: We got Bruce, “40-year-old male and Selina, 38 year old female. Batman inspired.” I don’t get the Selina reference.

Al: I don’t either.

Joe: Bruce, I get Bruce Wayne. Selina.

Al: Is that Batwoman?

Andi: I think it might be Catwoman.

Al: Oh, Catwoman. Maybe.

Joe: Selina?

Andi: Yeah, that is Catwoman, Selina.

Joe: “Both physicians that live in the Philadelphia area. Drink of choice is a little Hendrix gin and tonic and a little funky IPA.”

Andi: Any funky IPA we can find.

Joe: Anything. If it’s funky, I’m drinking it. “She drives a 2020 Kia Telluride, and I drive a 2022 Mercedes GLC 300.”

Al: Perfect. Those are good doctor cars.

Joe: Bruce.. He’s a badass. She drives a Kia, and he’s got the Mac Daddy Mercedes.

Al: Yeah, but she’s got the biggest Kia they have, probably.

Joe: The Telluride. “We have two little ones under the age of 10. Our main question is, do we need to be saving more? And are there any tweaks we can make to optimize our retirement? I’d love to retire at age 60 and my wife likely at the same age. Plan to defer Social Security until age 70 and think… It’ll be about $20,000 a month combined. Net worth of $1.1 million with $500,000 in home equity. We have $350,000 in 401(k)s, $50,000 in Roths, $40,000 in a brokerage account. 529’s, we have $100,000 in them and we are funding them aggressively. $16,000 a year. Like most doctors, we got started late. We save around $120,000 a year towards our retirement between all of our accounts. $44,000 in 401(k)s, $50,000 in deferred comp, $13,000 in the old backdoor, $20,000 in brokerage. All our investments are in low cost, broad ETFs. We have $350,000 in student loans, but they will be forgiven via the Public Student Loan Forgiveness Program in the next 2 years. We spend about $200,000 a year. As we see salary bumps or bonuses, should we prioritize saving more, or do we have a reasonable plan?”

Joe: So he’s 40.

Al: Yep, 40. Got 20 years to go.

Joe: 20 years to go. Saves $120,000 a year. He’s got a half a million right now.

Al: Yeah. We’ll take out the 529 plan. So I’m starting with $440,000. Has $120,000 a year, 20 years, 6%, $5.8 million.

Joe: 5.8!

Al: That’s a good, really good figure.

Joe: 4 times 5 is… Well, he’s going to have about $300,000. You take the present value of that. He wants to spend $200,000 a year… He’s going to be short.

Al: It’s going to be short. You’re absolutely right. So 4% of $5.8 million. And I’m using, even though it’s 60, you probably want 3.5%, but I’m factoring probably lots of Social Security, which I don’t know.

Joe: He thinks it’s going to be…

Al: $20,000 a month combined. That’s a bit high, I believe. But anyway, without considering that. So I get $230,000 at 4%, that’s what’s available and your $200,000 and expenses in future dollars is $360,000. Okay. So you’re short by $100,000, $125,000.

Joe: He needs another couple million.

Al: Yeah, at least. And so, the tweaks that you do, and this is a good example, because for anyone listening, it’s not necessarily how much you have in retirement, it’s the relationship between how much you have and what you’re spending. So in other words, if you can take the $200,000 today, great lifestyle, I know you’re enjoying yourself, but if you could cut that a bit…

Joe: He’s a doctor.

Al: I know. And so it’s hard to, right?

Joe: It’s a stressful job!

Al: I get it. I’m just saying, at least on the surface. Now, how do you fix this? So you spend less today and get used to living less or you work longer, maybe you work until 65 instead of 60, there’s lots of ways to fix this, but based upon the numbers here. It’s short.

Joe: Well, you’re not including any Social Security, correct?

Al: No. Because I don’t buy the $20,000 a month.

Joe: Well, it’s probably… he thinks it’s $240,000 coming in Social Security.

Al: No.

Joe: It might be…

Al: Might be half of that.

Joe: Let’s call it $60,000. So he’s still going to be short, probably a million bucks. If he gets 7%, he’s there with the same amount of savings. If he gets 8%, he’s good. So then it’s looking at what’s the asset allocation. Should he be a little bit more aggressive? 6%’s a fairly conservative number over 20 years, I think.

Al: It is.

Joe: So if he’s 100% equities, he could probably get a 7.5%, 8% rate of return over 20 years. But I think from a planning perspective, Bruce and Catwoman should probably look at a 6% growth rate and maybe a 3% inflation rate just to be super conservative. But then he’s going to know, or they’re going to know once they get closer to retirement. There’s so many things that are going to change in life in 20 years.

Al: No, I know. But that’s the good thing about thinking about this early, because you can make changes. Now I use your 7.5%. So instead of $5.8 million, it is $7 million. So $7 million at 4% is what, $280,000? So now you’re basically $50,000 higher, it’s still short, but again, I haven’t factored in Social Security.

Joe: He’s going to max out Social Security.

Al: Yeah, of course.

Joe: Social Security is going to be $70,000, $80,000.

Al: Whatever that’ll be.

Joe: So I think he’s right there.

Al: Could be.

Joe: So with your bumps in pay, should you have more fun? What the hell? Yes! Just have a plan. I think this is where people mess up. Is that if he strategizes, and he has a plan, and he maps this thing out, he’s gonna know when he gets a bump in pay, do we wanna buy a nicer house, or do we wanna go on a nicer vacation? Should I get rid of my Mercedes and buy a G Wagon or the Batmobile or whatever the case may be. Then he has more control over the spending and is going to be more confident in the decisions that you make, especially if you just map this out.

Al: Yeah. So I guess that’s my comment. When we do these spitballs, this is just back of the envelope based upon what little facts we have. But if you do a full on financial plan with a qualified advisor…

Joe: And here comes the sales pitch.

Al: I’m not selling it. I’m retiring. I don’t want to do this. But that’s why you get this down on paper and then you start doing some what ifs. What if I do this? What if I work 2 more years? Does this work? Or what if I get 8%? Does it work?

Joe: You look at professionals in their 30s and 40s and then there’s that creep of income. As their income goes up, guess what? They’re not saving more. Their lifestyle goes up.

Al: Yeah, that’s what we see.

Joe: It’s a little lifestyle creep I think it’s what the technical term is. But congrats. He’s out of med school. He still has a little bit of debt over his head.

Al: It could be forgiven.

Joe: Hopefully, sure it will.

Al: It’s part of that, but you have to work 10 years with it in public service.

Joe: Got it, yeah.

Andi: Are you cruising into retirement, or are you on a sinking ship? By plotting a good course and using proper tools and strategies, you can cruise into retirement. Unfortunately, many people need a life vest: they’re ill-prepared and traveling without a compass. It’s all about being proactive. This week on YMYW TV, Joe and Big Al show you how to keep your retirement afloat with the steps to prepare, adapt, and remain on course. Watch How to Cruise Into Your Retirement and download the companion Cruising Into Retirement Checklist from the podcast show notes – it’s only available for a limited time, so download it before this Friday. Just click the link in the description of today’s episode in your favorite podcast app, you’ll see the TV show and the guide, right before the episode transcript.

What Am I Missing? Brokerage Account Spitball (Pebbles & Bam Bam, Kentuckystone)

Joe: Now we’ve got Pebbles and Bam Bam from Kentuckystone.

Al: I love that name. I remember watching the Flintstones as a little kid. Loved it.

Joe: “Hello, Joe and Big Al. Big fan of the podcast, you two and 3 with Andi are all perfect together. I appreciate how much you all enjoy each other.” We fooled Pebbles. “Love to get your spitball impression along with some ideas on how to best use a brokerage account from now to RMD age. Here’s the skinny. I’m Pebbles, retired, 66 with $3.2 million in a qualified account.” Wow. Pebbles just been socking some pebbles away. “We got $770,000 in a brokerage account, $100,000 in savings, $91,000 in a REIT, and $400,000 in Roth. I got Bam Bam, he’s 61, he’s still working. He earns $60,000 a year, he’s got $1 million in a qualified account and he just started a Roth IRA.” So, that sounds like a pretty good chunk of money there. What do you got now, about $5.5 million?

Al: Yeah, $5.5 million.

Joe: They got no debt, they have grown children, and the house is valued at $600,000. “I drive a 2015 Lexus, Bam Bam, he drives a little Honda Spyder. We do have an old Lexus RX300 for the Dog and Home Depot runs. I love old fashions, but the older I get, the more they don’t love me.” You got that Big Al?

Al: Yeah, I can relate.

Joe: Does it really kind of bite you?

Al: You just have to be a little more careful.

Joe: “Here’s the issue, the questions, and may I ask, what am I missing? The cash, T bills, and Bam Bam’s income are all bucketed over the next 5 years of income at about $170,000 a year. We’re looking to do Roth conversions to the top of the 24% tax bracket until RMDs hit. That’s in year 2030.” So they got a few years. “Both will collect Social Security at 70. Pebbles $4,000, Bam Bam $2,000. Plan to pay conversion taxes with money from the brokerage account. What are your thoughts on how the brokerage account is being used? What are some other ideas for the use of the brokerage account? What am I missing? Appreciate your spitball. Cheers, Pebbles and Bam. Well, first of all, congratulations. You have done a phenomenal job of saving for retirement. You got Bam Bam still slugging away there, but for $60,000 a year, he’s got $1 million saved in retirement accounts… I don’t know if this has been his job he’s been working at for some time. Social Security is half of hers. So he’s a good saver and they’re looking to spend about $170,000 a year. Or, is that the income need?

Al: I don’t think they gave us their spending.

Andi: It says the income is bucketed for the next 5 years at about $170,000. So hopefully that’s actually what they want to spend.

Joe: It says $170,000 a year.

Al: But how I read that was that that’s Bam Bam’s income plus whatever investment income. I don’t know, hard to say. But if we could just use that figure for spending… And obviously they’re in great shape. I mean, you take $5.5 million times 4% you get $220,000, which is in excess of the $170,000. That’s not even including Social Security. So I think the real crux of the question is, should I be doing these Roth conversions to the top of the 24%? And when I look at this, I go, yes, of course. Because if you look at the qualified accounts, I’ve just looked at Pebbles. In 7 years at her RMD age, it’ll be $4.8 million just at a 6% growth, which means an RMD, Required Minimum Distribution of $192,000, which puts them even without any other income, in the 24% tax bracket. Which in 2026 will become the 28% tax bracket and who knows what it could be after that. So I think that is appropriate. I think part of the question was, should I use the brokerage account to pay the taxes to do this? And maybe not all of it, but yes, that would be a great use of this.

Joe: Yeah. You want to look at your brokerage account and the cash as going to be your buffer that you’re going to draw down. You’re probably going to draw down quite a bit of it over the next several years, as you’re trying to convert as much money as possible to the 24% tax bracket. 2026 is going to be a little bit of a different year depending on what happens to taxes, do they revert back to where they were? And so you’ll want to make some decisions there. Another thing that you’ll want to consider too, is that you’ll have to do a little bit of math, because there’s a ton of money in qualified accounts, and they’re going to have decent Social Security. And they have other assets where they might want to take money from the retirement account to live off of as well as doing conversions, because if they want to live off $170,000, you don’t want to deplete 100% of your liquid assets. So you’re going to have to kind of jockey around a little bit of what is actually the true right conversion number. Is it going to be to the top of the 24% or is it going to be something less where you want to live off of some of those qualified dollars that you could pull out in the 0% or 10% tax bracket?

Al: Yeah, totally agree with that. But also keep this in mind. In 2026, we revert to the higher tax rates. So we’re talking 2023, 2024, 2025. So we only have 3 years to work with, at least under the tax system as we know it today.

Joe: Yeah. And then they would probably convert to the top of the 28% tax bracket because their RMDs and Social Security and everything else could put them in the 28th EMT or higher.

Al: Oh, I totally agree with that. And probably we don’t talk about this enough. Make sure you don’t go broke while you’re doing these Roth conversions with the money that you need to live on and you want to have emergency funds and stuff like that. Maybe even earmark some funds for something fun, like a great trip or whatever, but the taxes as we know it right now are going up in 2026. So your best 3 years are right now and for the next 2 years to get as much converted as appropriate, given your brokerage account.

Joe: Yeah. So with the amount of money that they have in qualified accounts, they might want to get a little bit creative. Where yes, you want to spend most of the money that you have outside of retirement accounts to pay the tax in almost every case. But given that tax law is changing, potentially- if tax rates go up with this amount of money in retirement accounts, given their spending needs and Social Security and fixed income, so it’s going to be playing around with it. Because they want to draw more money out of it at these lower rates. So, either you’re going to live off of it or you might want to take a little bit more out and use some of those dollars to pay the taxes, even though in most cases it doesn’t work as well. But I’d much rather pay tax at 24% than 32% or 35% in the future.

Al: Yeah. So what we’re talking about is IRA 401(k) actually using some of those funds to pay the tax. So now you’re taking money out that’s taxed to pay the tax, which by the way, we normally don’t recommend. However, when you have a very high IRA balance and you’ve got somewhat limitations on your non IRA balance, that can be very appropriate.

Joe: Yeah. We’re not recommending anything.

Andi: This is just spitballing.

Joe: This is not advised by any stretch of the imagination.

Andi: Well, he did say we don’t normally recommend this.

Joe: And we’re not recommending anything at this point, too.

Al: Yeah, but we don’t normally spitball this thought. How about that? Is that better?

Andi: For a good retirement spitball, the fellas need to know four things about your finances: number one, how much do you, and your spouse, if you have one, have saved for retirement in tax-deferred, tax-free, and taxable accounts? How much fixed income will you have in retirement, that’s number 2 – for example, from Social Security and pensions? Number 3, kind of important,  when do you want to retire? And finally number 4, how much you expect to spend annually in retirement, adjusted for inflation? Now don’t forget to give us whatever name you’d like us to call you, and your real location, in case state taxes factor into your spitball. Then, let us know the irrelevant details too, we want to know where or when you listen, how you found us, and of course, what you drink so Joe and Big Al can really get into your situation. Click the link in the description of today’s episode in your podcast app, go to the show notes, click Ask Joe and Al On Air, and send in your retirement spitball. If if you prefer to fiddle with the numbers and spitball for yourself, give our free new retirement calculator a try. Go to EASIretirement.com, that’s EASIretirement.com. Try it out then email us and tell us what you think of it!

Nearly $1M at 55, Spending $36k/Year: Can I Retire Early? (Susan, San Diego)

Joe: All right, here we go. “I’m 55 years old. Currently not working and loving it.” Congratulations. 55. Retired. “Enjoying traveling around the world. And when I’m not home taking care of cats and doing yoga…” Let’s just think of you, Al, with your new yoga habit.

Al: I know. I don’t have cats, but I do like yoga.

Joe: “I’m mortgage free and budget $36,000 a year to live on. Yes, I’m a simple person who likes to cook at home most days. I drive a 2014 Honda Civic. Drink of choice is vodka soda. So my question is, if I have approximately $930,000, which is invested between safe annuities of $400,000, Roth of $85,000, Vanguard investments of $200,000, the rest in CDs and liquid, can I retire early?” All right. So she wants to spend $36,000 a year. She’s 55, currently just doing yoga and drinking vodka sodas, playing with cats. So if you spend $36,000 a year, you don’t want to pull out any more than probably 3% at age 55, you need $1.2 million if I do the math correctly. So what that means is 3% of $1.2 million is $36,000.

Al: Yeah, that’s right.

Joe: So she’s got $930,000.

Al: Yeah, pretty close.

Joe: Because what you need to figure out, or what Susan needs to figure out, is that in 10 years… or 10, 12 or maybe less, she’ll be eligible for Social Security. So that’s going to bridge the gap to some degree. So maybe if she pulls out 4%, that’s going to give roughly $36,000. I’m guessing it’s pretty close to 4%.

Al: Yeah. It’s a 3.9% as it stands right now. And actually 3.9% is a little rich, I would say for a 55 year old. However, if Social Security benefits are good and strong, then maybe that’s okay. And then in some cases, people have pensions, then that’s probably fine. It depends on those variables.

Joe: So a million bucks. You’ve done a great job to accumulate that at 55. It just might be a little rich. It really depends on the rate of return because what we’re doing is looking at a distribution rate of how much that you can pull out of the overall account. If we have a bear market over the next 2-5 years you could get in trouble. If we have a bull market where the market’s up and you’re fully invested, then I think you’re home free. So this is why again, it’s a process You have to be looking at this constantly to figure out, what leverage do I have to pull this year? What are the things that I need to be looking at? What’s the environment that I’m in? What is my lifestyle going to be? She’s simple today because she probably just stopped working. She’s like fine, I want to yoga and I want to drink and I want to play with cats, but then all of a sudden guess what? The cat gets annoying. And then the vodka sodas turn into, I don’t know, maybe she wants some old fashions or some margaritas. So the cost of that is going to go up. And now she wants to go to yoga camp and retreats. She wants to do retreats in Hawaii.

Al: I was going to say Italy, but yeah, Hawaii, that’d be good too.

Joe: So it’s like all of a sudden, or she’s bored and she wants other activities and things like that. So 55 is pretty young to retire.

Al: Yeah, I would say, this is just me, spit balling. I would say if this were my situation, I’d keep working myself.

Joe: You would? Take a hiatus. You’re enjoying it now. I don’t know, take a year. Take two. She doesn’t spend a ton, $36,000. You could do a job at Ralph’s, make $36,000, couldn’t you?

Al: Sure could. Yeah. Right. You don’t have to keep doing what you’re doing, I guess that’s the point.

Joe: Yeah. Home Depot, you could do something fun. You could do something like, she could, be a yoga instructor. Start her own business.

I Know We Shouldn’t Time the Market, But… (Will)

We got Will. He writes in. He goes, “hello, Your Money, Your Wealth®, or YMYW trifecta. I’ve heard my story referenced a couple times.” What’s his story?

Andi: Will’s the gas siphoner.

Joe: No, sir.

Al: Really?

Joe: Will the gas siphoner.

Al: That one. Okay.

Joe: Oh my god. It’s been a while. “So I figured it’s time for me to write back. During the pandemic, I restarted my trading curiosity.” Oh, that’s never a good sign.

Al: I want to be a trader when I grow up.

Joe: “Unfortunately, it was towards the end of the bull cycle, but I’m still determined to learn and improve to make my trading profitable.” So far, not so good.

Al: Let’s get back to losses.

Joe: “I know we’re not supposed to time the market, but if a bear market is coming, market cycle, now wouldn’t it be wise to slow down and then wait for some lower amount using basic TA to continue.”

Al: Basic TA. No idea.

Joe: “One might not get to the bottom, but at least it’s not buying near the local top.” Maybe it’s a self fulfilling prophecy, since people probably do this, they expect a bear market, don’t buy stocks, and they short instead. The prices go down, fueling their reactive traders, with this signal to join in.

Andi: Just real quick, T. A., I come up with technical analysis.

Joe: Oh, okay. That’s what he’s trying to say.

Al: Okay, got it. That makes sense. So bear market. So you actually know when a bear market’s coming?

Joe: Are we in a bear or are we in a bull cycle right now?

Al: You always know after the fact.

Joe: This email came a few weeks ago. We’ve had a choppy market over the last couple of weeks. So if he’s thinking it’s a bull market, other people are thinking it’s a bear market.

Al: Well, so here’s the problem. So we had the great recession. Remember then the market came back and that was a dead cat bounce. So we’re going right back into it.

Joe: Dead cat bounce.

Al: Yeah. I remember that one.

Joe: Technical analysis right there.

Al: Yeah, that’s right. That’s what they were saying. The TAs. And then 2011, not sustainable. Going into bear market. 2012, going into bear market. 2013, going into bear market. 2014, going into the bear market. We heard that every year from pundits going, you need to be conservative because this isn’t going to last. And if you had done that. You would have missed the longest bull run in the history of our stock market. There is no way to know when a bear market happens until it actually happens. And you can say, yeah, of course, all the signs were there. What do you mean all the signs were there? They were there every single year. There’s valid reasons by very smart people. The bear market’s coming. Which is why we say, don’t time the market, stay invested because it’s impossible to predict. Now, if you could predict the bear market, this is a great strategy, but so far, very few people have been able to do that.

Joe: Well, let’s really get to the brass tacks here. Will siphons gas out of cars. Do you think that he’s got the ability, no offense to our buddy Will here, to have more information than the market itself? Because that’s what you’re betting on.

Al: I think after you siphon the gas, you get a little bit high, so you probably do.

Joe: Because if you’re thinking you have more knowledge than the collective market – because that’s what market timing is. I’m going to get in before everyone else gets in, and the market’s going to shoot up, and I’m going to get out before everyone else does. So then you either have to have information that no one else has, you have to be extremely lucky, or you’re forecasting. You’re thinking, because of this news that just came out, I feel that the markets are going to do X, Y, and Z. But guess what? Everyone else has that same information. Everyone has that same news. And people that have computers right on Wall Street are probably moving a little bit quicker than Will. Again, no offense.

Al: Yeah, that’s exactly right. And furthermore, the financial networks love to play negative commentary because that’s what people listen to. Oh, I better listen to this, better get out of the stock market. And people like Harry Dent and hundreds of others every single year predict the crash. Eventually you’re going to be right. But if you look at the long term history of the stock market, in spite of downturns even crashes, it’s… I mean, over the last 100 years, S&P is up almost 10% a year.

Joe: I’m not saying timing the market is impossible because there’s people that absolutely can do it. It’s just highly improbable. There’s a lot of luck involved and even the smartest people on Wall Street get it wrong most of the time.

Al: And here’s how we know that is because when you go to actively traded mutual funds, they don’t outperform the passive funds, which just buy and stay in the market. In fact, they underperform by the amount of their fees. You can look at study after study long term, year in, year out, of course there’s variances. But when you look at long term, the active managers can’t beat the market because this whole thing is the market. And so they end up with market returns minus their higher fees because they’re active managers.

Joe: “Another thing I learned further was solo 401(k). I wish you had covered it a lot more in detail as to how it’s a pretty strong way to contribute to a Roth 401(k) or Roth IRA, since during that time, the pandemic seemed to create a lot of self employed gigs. One can easily put away $50,000 plus of income.” I think we spent some time talking about solo 401(k).

Andi: Not enough for Will.

Al: To put away $50,000 of income, you’ve got to have a pretty big income.

Joe: “One website that really helped me with this was Solo 401(k).” Yeah, we talked about… that’s our friend.

Andi: That was actually My Solo 401(k). Will is suggesting a completely different site, which is just Solo 401(k).

Joe: Solo 401(k).

Al: Well, they’re similar, I’m sure.

Joe: Priya, right? Priya, wasn’t that her name?

Andi: I believe that is correct. Yeah.

Joe: Priya from Orange County.

Al: I remember her.

Joe: “Since they have a live chat feature…” Oh, could you imagine having Will in a live chat feature?

Al: Let me tell you about how to save money on gas.

Al: That’d be awesome.

Joe: “Even if you’re not a client. They were the very first custodial document provider in the industry, but I’m not affiliated with them. Just happy to pass along helpful resources. Thanks guys. Aside from my rants, you’re still the best. Andi, don’t ever go. Sincerely, Will. P.S. Oh, by the way, how does Al, my spitball pal sound?

Andi: He’s referring to when you guys were saying that you guys needed nicknames.

Joe: Oh Al, my spitball pal? I love it.

Al: I think we could do better.

Joe: “I don’t want to use Joe, the Roth IRA…

Andi: I think that’s supposed to be “schmo”.

Joe: Oh there ya go, “Joe the Roth IRA Schmo, since it’s bad. So, how about Joe, the Roth IRA Fellow?”

Al: Yeah, but that doesn’t rhyme.

Joe: Joe and Fellow.

Andi: See, I call you guys “the fellas” all the time. So, I suppose it could work.

Joe: “I know terms like pal and fellow aren’t exactly new, cool, and fancy, but hey, they are classy.” Well, good to hear from you, our friend Will. You always make it a little entertaining, at least for us. That’s it for us today, appreciate you hanging out, we’ll see you again next week. The show is called Your Money, Your Wealth®.

Andi: YMYW listeners’ drink preferences, the Flinstones, and a train station in Wales in the Derails, so stick around. Help new listeners find YMYW by telling your friends about the show, and by leaving your honest reviews and ratings for Your Money, Your Wealth in Apple Podcasts, and any other podcast app that accepts them (like Amazon, Audible, Castbox, Goodpods, Pandora, PlayerFM, Pocket Casts, Podcast Addict, Podchaser, Podknife, and Spotify.) 

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The Derails



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.

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