Show Notes

• • 00:00 – Intro: This Week on the YMYW Podcast
  • 02:21 – Family Wrecking Retirement: How Much Can Benevolent Retirees Afford to Spend? (Hana)
  • 10:30 – We Have a Pension. Should We Do Roth Conversions After the OBBBA? When to Claim Social Security? (Peter Parker & Gwen Stacy)
  • 23:29 – Should We Claim Social Security Early and Invest It? (Mr & Mrs Scarecrow)
  • 29:56 – We’re 60 and 57 with $1.3M. Can We Retire in 3 Years? Should We Hire an Advisor? (Rosie & Astro, PA)
  • 41:04 – Outro: Next Week on the YMYW Podcast

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Transcription

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

Intro: This Week on the YMYW Podcast

Andi: Hana’s mom is 92, her husband is 74, and after years of trying to help a family member, nearly a million dollars has disappeared. How do they stop the bleeding before it’s too late, and how much can they spend each year from what’s left? That’s today on Your Money, Your Wealth® podcast number 564. Plus, Peter and Gwen from Virginia have a pension, Roths, and a shrinking IRA. With the new tax law, IRMAA, and Social Security decisions all colliding, should they keep converting to Roth, and when should they actually collect Social Security? Also, does it make sense for Mr and Mrs Scarecrow to claim Social Security early and invest it? Finally, Rosie and Astro from Pennsylvania ask if they can retire in just three years with $1.3 million, and whether it’s time to hire an advisor to help them get there.I’m Executive Producer Andi Last, and here are the hosts of Your Money, Your Wealth®, Joe Anderson, CFP®, and Big Al Clopine, CPA.

Joe: Been a while. Happy New Year.

Al: Yes. Happy New Year to you.

Joe: Yeah. Big Al, Joe Anderson. Andi Last, we’re hanging out. Andi, how was your holidays?

Andi: To be honest, it really kinda sucked. I mentioned in the last couple of podcast episodes towards the end of the year that I was out for kidney surgery, having my right kidney removed, and that I was waiting on the diagnosis for what that was. And it does turn out that I have metastatic breast cancer, but I’m now on a treatment plan that hopefully should keep me alive for a good long time. And that means that nothing is going to change with the podcast. So at least there’s that good news.

Joe: You look great. How do you feel?

Andi: So far, I feel fine. Treatment just started about two days ago, as of the time that we’re recording this, and I don’t have any symptoms yet, so hopefully that’ll stay that way. We’ll see.

Joe: Alright.

Al: Yeah, and we just-

Andi: If I start getting a little bit of weird brain fog or anything like that, just blame it on the drugs – treatment.

Al: Yeah. That, yeah, that’s, you’re allowed, and we were talking before the show. I really admire your attitude and your willingness to fight this head-on and live your best life. And hopefully that’s still a very long life for you. So kudos to you, and I’m happy you’re still part of our podcast.

Andi: Thank you, Al. I appreciate it.

Joe: It’s her podcast. We’re just, just along for the ride

Al: I know, we’re just guests, right? You’re right. Let me rephrase that.

Andi: Alright, why don’t we get to the emails?

Family Wrecking Retirement: How Much Can Benevolent Retirees Afford to Spend? (Hana)

Joe: Let, yeah, let’s get after it. Okay. Do we have? Is this a voice message or am I reading this?

Andi: Why don’t you go ahead and read this one.

Joe: Alright. Well said. Hi YMYW, I’ve been listening to your podcast for a few months since I’m retiring. But I’m really calling about my mom and her husband. She’s 92, he’s 74. She doesn’t drink. He drinks a lot of whiskey and they live with my nephew who they raised from a baby until he was five.

Okay, so they took from a baby to each five.

Al: Yeah, that’s what it’s saying. Okay.

Joe: Yeah. then he lived with my mom, but he came back to them when he was 18, which was 10 years ago. At that time, they had about a million of fun. That paid about 8%. Okay. So they had a million dollars in a fund that paid them 8%.

Al: Yeah,

Joe: they had over $200,000 in artwork. Wow. Wow.

Al: How much do you have? Not 200,000. Me neither.

Joe: $2. I did get some cool prints for, the holidays.

Al: Oh, there you go. Okay.

Joe: All right. they had three homes, their primary residence and two rental homes. in those 10 years, they’ve tried to help my nephew by paying for school to learn to do car wrapping and car protective coating.

Okay. Yeah. You know what car wrapping is? no. Do you? No, not a clue.

Andi: I think it’s where they put the cool designs or advertisements on the sides of people’s vehicles. You can actually get paid to have a, an ad on the side of your car.

Al: Okay. I know what,

Andi: so I think that’s what they mean by car wrapping.

Al: Okay. we’ll go with that. All right.

Andi: And I think that’s supposed to be car protective coating, not coding.

Al: Oh, okay. Yeah. Makes more sense. I, figured Yeah, I, that I, did figure that one out.

Joe: Yeah. All right. Okay, so let’s see. They rented the garage for about $3,000 per month, and they paid for cars for him to fix and sell.

And at that time he sold maybe two. He’s wrecked five. He’s two for seven. He’s, killing it. But what about that protective co that there’s the,

Al: the it protect, it doesn’t protect, not car accident. Not enough. Not enough, yep.

Joe: Just the ailments or the,

Al: that’s right. Surface staff.

Joe: Yes. Yes. All right. He spent almost all their money.

My mom’s pretty far into dementia, and my stepfather has sold both rental properties and all the artwork. Oh boy. They have about $700,000 left in their primary residence. Ooh. Oh, and there. And their residence. Got it. Yep. I’ve been trying to tell them to stop paying for the garage to stop buying these cars.

I haven’t been successful, so I thought maybe I should try a different approach and find out how much money they can spend safely per month from the $700,000 so they don’t outlive their money. Maybe you can gimme a little spitball a month. All right. Okay. No, it’s a very interesting story. It was, I can picture everything there.

I guess I can too. So what there’s, he’s spending three thou, they’ve rented,

Al: a garage for his cars and he sold two outta seven. He wrecked the other five. So it doesn’t, it’s not a for-profit business. No. Doesn’t at this point, doesn’t,

Joe: not even a profit hobby.

Al: No. No. So they’ve got 700,000. They used to have more.

So they’re down to 700,000. She’s 92. She’s got dementia, he’s 74. And you know, we don’t know about their health, but, I. I, first of all, how much can they safely take from the 700,000? There? there’s, no real, there’s no great answer. I’ll give you some rules of thumb. Okay. At least, because it depends upon the market.

It depends upon a lot of factors and you kinda have to monitor it as you go. But maybe use this as a guideline at age 74 and she’s 92. I don’t know, five or 6%, maybe 35. Do you think cares about him?

Joe: I mean, he’s the one that’s wrecking cars and he’s drinking whiskey and

Al: about the spending all this money on that, about, about the nephew?

No, but apparently he does because he’s still paying for it. But I, guess to answer the question, I think 35 to 40,000 that’s what I would feel comfortable spending. But maybe you can spend more, but maybe it’s less. It depends upon what the market does and how long you live and all that sort of thing.

Joe: How do you think that’s gonna go over?

Al: Not well because the garage itself is 36,000. So, so this doesn’t work. It doesn’t work at I at all. And Joe, I think they already know that because they went from a million dollars and two, three homes. They got one home, 700,000 and all the gone stole, all the art’s gone.

So it’s, slipping away is what’s happening. Yep,

Joe: yep,

Al: Anyway, that’s so Al,

Andi: how do you set boundaries with that person that is staying in your home and, spending your money?

Al: that’s a great question at 28. Depends how mature they are. Maybe. But I would just actually just sit down, you know, this is what we’ve talked to a financial planner.

This is what we can spend and we will allocate whatever to you, whatever that may be. And maybe it’s 5,000 a year. I, you know, I don’t know. But, yeah, I just think they need to be honest with the nephew and just say, you know, we tried to help you for 10 years and, you know, but she’s not, yeah.

But mom’s got dementia. I, know. So she’s gotta

Joe: convince her husband.

Al: I think they raised him together, right? That’s, I don’t know how long they’ve been married.

Joe: she’s 92, 74, so, Yeah, yeah. I dunno. It’s probably been a while. She’s calling for her mom, so. This is.

Hana’s story about her mother. It could be. And the stepfather. I mean, I’m as, I’m Okay, so, so I’m assuming, so if he’s gonna go and counsel her mother who has dementia and the stepfather

Al: No. Spending all the money? No. On the cars? No. Just to counsel the stepfather. ’cause mom has got dementia, right? Yeah. So that’s not gonna, that’s gonna go over like a lead balloon.

I mean, what I’m saying is they’re already paying it even though she has dementia. So in other words, the stepfather is okay with it, at least to the point. But stepfather, I think, needs to be honest with the nephew and just say, we can’t do this anymore.

Joe: why are you putting them?

Oh, okay. Because the nephew, that’s his, the nephew’s hobby. Yeah. it apparently the nephew

Andi: is the one that’s spending all the money and, wrecking the cars and all of that.

Al: It sounds like they’re, trying to launch his career and it’s not, really working that. Got it. And he,

Andi: and they’ve been working on this for 10 years.

Al: He came back 10 years ago. Was wrecking the cards? No, It’s the nephew. Oh. At least that’s how I, that’s how I see it. Yeah. Yeah.

Andi: They raised him until he was about five. Then he came back 10 years ago when he was 18. So they’ve had him for a Yeah, a good long time. The last 10 years at the very least. And the five years from the time that he was a baby.

Al: Yeah. They, so they, I mean they, they kind of raised him, so I think they kind of feel responsible. So I get that as a parent.

Andi: If you think the biggest threat to your retirement is a market crash or picking the wrong investment, think again. Small, everyday financial pitfalls can quietly drain your wealth, add years to your working life, and cost hundreds of thousands of dollars without you even realizing it. This week on a brand new episode of Your Money, Your Wealth TV, Joe and Big Al break down the six biggest financial pitfalls Americans fall into and, more importantly, exactly how to fix them. From the tax traps hiding inside your 401(k), to lifestyle creep, credit card debt, missing emergency funds, healthcare blind spots, and investment mistakes that feel safe but are actually dangerous, this episode shows how everyday decisions can derail your retirement. Also, grab this week’s special offer, our Retirement Readiness Guide. It walks you through income planning, Social Security, taxes, healthcare, investments, and legacy planning, so you can see where you stand and what to fix before it is too late. As soon as you’re done watching or listening to the podcast, click or tap the links in the episode description to watch YMYW TV and download the Retirement Readiness Guide. Avoid the pitfalls, get the roadmap, and start making smarter decisions with your money today.

We Have a Pension. Should We Do Roth Conversions After the OBBBA? When to Claim Social Security? (Peter Parker & Gwen Stacy)

Joe: So let’s see. We got Peter Parker in Gwen. Stacy. Wow. I know Peter Parker’s Spider-Man.

Andi: Yeah, they’re both Spider-Man.

Joe: Gwen. Oh, really? Yeah. Who’s Gwen Stacy?

Andi: She was the first romantic interest for Peter following his high school graduation, before she was murdered by the Green Goblin.

Joe: Oh, wow. Wow. All right. The Green Goblin. Hello, Andi, Big Al, and Joe, I’ve been listening to your podcast since 2017. Wow.

Andi: Dang.

Al: That’s, is that a record, that’s legit.

Joe: Might be. Oh man, and I found your banter and financial insights extremely helpful. Your financial discussions in spitball analysis prompt me to retire at the age of 60, Joe, beating the drum on the Roth conversions in a nice cabernet, help me execute a Roth conversion strategy during my early retirement years. All right.

Andi: Gotta have a good drink to do that.

Joe: Yeah, you gotta, sometimes you gotta, ’cause you gotta pay the tax It’s, you gotta pay the tax, isn’t it? That’s why in April you just buy a bunch of boos. You do. all right, so my burning question is that with the big beautiful bill passage, permanent tax brackets, senior discounts is continuing Roth conversions of my IRA $239,000 remaining necessary In my financial position, I’ve been converting my IRA trying to stay below the IRMAA threshold in time Social Security withdrawals to minimize my taxes. The BBB only makes the equation more complicated. Okay, here’s my particulars. After 25 years of military service and 13 years in the defense industry, my wife and I are 64. Okay. Thank you very much for your service.

Al: Yes,

Joe: we have been living off my retirement pension $105,000 annually and drawing down $60,000 from our cash that’s in our brokerage account.

Bank accounts to cover our go years. Okay. They’re traveling. go. Budget, $165,000. All right. Our Social Security payments at FRA, which is age 67, will be $3,500 for me, a thousand dollars for my wife. I’m debating on when to take Social Security. I’m currently what? She should take the spousal first off, there’s a lot of meat in this.

yeah. He’s brought out a lot of terms that most people are like, what the hell is Yeah, you’re talking about. he is been listening for eight years, so since 2017 as the CFP, I’m debating on when to take Social Security because I currently do not need the income and wanting to maximize my Roth conversions and Social Security would only increase my taxable income.

Bottom line. Are Roth conversions worth the effort? Given the amount remaining in my IRA asked. Taxable account is 80% stocks, 10% cash, 10% bonds, 3.4 mil. Taxable account generates $50,000 in dividends for reinvestment or as budget Supplement. Bank accounts are 15 grand. Husband IRA is 240,000 husband’s. Roth is 716,000.

Wife Roth 2 77. Retirement accounts total 1.2 million houses worth 500,000. No mortgage, no debt. I drive a 2015 Lexus RX three 50, and my wife drives a 2020 Toyota Corolla. That’s a pretty popular car.

Al: Toyota Corolla. It’s, that’s a, US standard.

Joe: Yes,I like to drink beer, Cabernets. Riz, what’s Riesling?

Riesling. Riesling. Riesling. Yeah.

Andi: Riesling is a, German sweet wine, white wine.

Al: Anne likes that.

Joe: Yeah, you can tell I drink a ton of it.

Al: I will guarantee you wouldn’t like it unless you like syrup.

Joe: and enjoying a, an occasional Irish buck on a hot summer afternoon. I look forward to a lively discussion about the BBB. Thanks for your insightful spitballs, Peter Pucker and Gwen Stacey in lovely Chesapeake, Virginia.

Andi: Alright, so do you know the Irish Buck?

Joe: I’ve never heard of an Irish Buck.

A;”Me neither.

Andi: Irish Buck is a simple, refreshing, high ball made from Irish whiskey ginger ale or ginger beer and a squeeze of lime juice. Often garnished with lime mint, or apple. It’s essentially a whiskey ginger with Irish whiskey.

Joe: Okay, whiskey ginger. Isn’t that No, I’m thinking of, something else. Ginger beer. Ginger beer. Yeah. Ginger.

Andi: Ginger Beer is an ingredient in this.

Joe: Yes. Yes. ginger, ginger beer is different than ginger ale.

Andi: Yes.

Joe: Yes. That’s a true statement. Yeah. That’s pretty good. This is the,

Al: but no, I was a frank what I was called. I have learned more on this show. Okay. Lemme write that down. Ginger beer is different than ginger bas It is.

Joe: okay. I should shut up. let’s break this thing down. Okay. So he is doing Roth conversions.

He’s got $240,000 left in his IRA. Yep. He’s got, some questions in regards to permanent tax brackets. Yeah. And senior discounts. Yep. Alright, so he’s been converting his IRA to stay below the IRMAA threshold. So IRMAA. You want to go over to IRMAA? Yeah. That, that IRMAA

Andi: income related monthly adjustment amount for Medicare.

Joe: That’s pretty good.

Al: Oh, wow. That’s beautiful. Thank you, Steve. Yeah, you saved me on that one. what, it is, IRMAA is, so it, the, amount of your income from two years earlier determines your IRMAA, which, calculates how much you have to pay for your health insurance, once you’re on Medicare.

So that’s where that, that, that’s where that is. So when you’re doing Roth conversions, that adds to your income and it might. Push you over limits to where you’d have to pay more in two years from now for your health insurance benefits. So that’s that one.

Joe: Alright. So he is staying below the IRMAA thresholds and time Social Security withdrawals to minimize the taxes, but he has not claimed his Social Security benefit.

Al: Correct.

Joe: So his benefit at 8 67, so his wife, Peter and Gwen are both 64 years of age. That’s right. So he’s saying his benefit is, $3,500 a month at 65,

Al: and hers would

Joe: be

Al: a thousand,

Joe: but her spousal would be more than a thousand. It would be 1750. 1750. So Peter, if you claim your benefit at full retirement age she would then. Be, eligible for the spousal benefit, which is half of your benefit or her benefit, whichever’s higher, and in that case it’s half of yours.

Al: Yeah.

Joe: So. You can add that to, the budget. Just give them $750 a month. Right there, Big Al. Yeah. Done. Shut.

Al: Just shut down. But the, I guess the real question is about the Roth,

Joe: so, but let’s continue on.

So he’s also thinking, you know, what should, because there’s, more that meets the eye here. Big Al Yeah. Is my point.

Al: Okay.

Joe: Is that if he delays Social Security as he mentions that To keep his taxable income down to do more. Roth conversions. But if he delays his Social Security benefit more

he has to claim his benefit for his wife, Gwen, to claim the spousal benefit.

Al: That’s correct.

Joe: So she could claim her benefit on her own record. She could. At her age, 67, but she would not be eligible for the spousal benefit until Peter claims his benefit. So there could be some money on the table there.

You wouldn’t have to run the numbers.

Al: Yeah, it could be. It could be. so the question is, claim is 67 or 70. if he claims at 67, wife uses spousal right away.

Joe: So that’s an extra 750 bucks a month.

Al: That’s right. If he claims it’s 70, she can claim on her own benefit, but then switch to the spousal at age 70 when he claims.

So that, yeah. Gotta consider,

Joe: but, her spousal benefit is not gonna be on his age 70. It’s gonna be based on his age. 67.

Al: Oh, that’s right.

Joe: But it’s still greater than her benefit. It’s still greater than the thousand, it’s 1750. Yep. Alright. $240,000 left in Roths. He’s 64 years old. He’s gonna be 74 roughly.

When he has a required minimum distribution, his 250 is gonna be worth 500,000. Four times five is $20,000 distribution. Is that gonna be enough to push him into a higher bracket, is the math that he has to figure out?

Al: Yeah. So his pension is 105,000. He’s got, 3.4 million in taxable.

When is he taking his pension? pension. He’s probably, he’s taking, right now, he’s said that 13 years of military service, or 25 years of military service, 13 years of defense industry. So I think he’s taking it right now.

Joe: So in $105,000 pension. so he will receive some of the senior credit?

Al: Yeah, probably so.

’cause that’s a married couple that starts phasing out at 150,000. so

Joe: we don’t know what his interest and dividends are. We

Al: don’t. But let’s, just say 2%, maybe less. Call it 50 grand. So if it’s 50 grand, he’d be at 1 55 right there. So he’d be over, he’d get most of it. It’d be, it’s a, there’s a phase out period.

Yeah.

Joe: Oh, he says 50,000 in dividends for reinvestment. So 105 plus 50,000. So he’s gonna receive that. good question. Now, would you do Roth conversions? So I don’t think the RMD is gonna be. Is gonna

Al: push him into a higher bracket. I think at least as the brackets that we know him right now, it doesn’t really matter ’cause it’s the same bracket.

Joe: He’s in the 22% tax bracket. You convert to the top of the 22. Maybe you do it one more year.

Al: Yeah, I think me personally. I still might convert the whole thing and I’ll tell you why. Okay. because, with a pension of 105,000, that’s as if, you do a 4% distribution rate, that’s as if you had two and a half million ish.

Joe: But I bet some of that’s va that’s tax free. Prob yeah,

Al: good point. Good point. Yeah. if that’s true, then that, the whole 1 0 5 is not taxable. So maybe, yeah. So yeah, I probably would. I probably would just because there’s a lot of other income that you can’t do anything about.

Joe: Yeah, this is a, this is where you get really, you have to put pen to paper. I think a lot of times we can spitball this and just kind of guesstimate, but there’s so many different moving parts now because of the big, bad, beautiful bill. And so he’s in this weird zone because he has a pension. Yeah. We don’t know what’s taxable and what’s tax free.

He has a lot of money that is in a, non-qualified account, that is kicking out a lot of interest and dividends that he is just reinvesting. so that falls on the tax return. So it, this is a game of like, how can I grow the portfolio but have the least amount of Stuff, right?

Interest dividends show up on the return. How can I tax manage this a little bit better? Sure. because then a conversion might. Makes sense depending on what his taxable income

Al: is. And then of course later there’ll be Social Security then, which will add to the income as well.

Joe: So he’s got time 64 through 67.

I would still convert.

Al: yeah. that’s what I’m thinking too. For all, those reasons. And, if he waits till age 70, you could convert even more.

Joe: Yep.

Al: And maybe you get it all done. But I guess the point is, if you don’t convert, it’s, not that big a deal. It’s,

Joe: it’s not gonna kill ’em, it’s not gonna blow ’em up into, if it was $2 million, then of course you would say you still want to convert.

But yeah.

Al: In fact, even, right now, Joe, if you look at the spend and the pension, the shortfall 60,000 into 4.6 million, that’s a 1.3% distribution rate. It’s cash flow is great. Yeah. And I’m sure he is not worried about that. he’s,

Joe: so that’s another point to convert because he doesn’t need the money.

Right.

So the longer he keeps it in there, the more tax you’re gonna pay because you’re just gonna have compounding growth. And then at 75, you know you’re gonna be required to take the money off. Yeah. And who knows where tax rates are gonna go. Anything, any, every time there’s a change in the task code, don’t they say permanent?

They do. It’s permanent until they change it again. Yeah.

Al: I would say permanent in quotes because there’s no such thing as permanent when it comes to taxes. That’s what the law is right now. Yeah. Until they change it.

Joe: Alright. good luck Peter and Gwen. Why would, I’m still confused with Gwen. He must really get in the weeds. okay.

Andi: You know how a comic book fans are, they wanna know every single detail.

Should We Claim Social Security Early and Invest It? (Mr & Mrs Scarecrow)

Joe: All right. Yeah. alright, we’re moving right along here. We got, Mr. and Mrs. Scarecrow, DFW, Dallas Fort Worth, worth, Mr. and Mrs. Scarecrow, wasn’t that a TV show? I think you’re right, but wasn’t it like a long time ago? Oh, detective of some sort.

Al: It’d be,

Andi: Scarecrow and Mrs. King.

Joe: Oh. Maybe that was in the eighties.

Al: Yeah, I remember seeing that one.

Joe: Alright. I’m Mr. Mom. Okay. In the Mrs. Still working. Remember that movie, Mr. Mom? Oh yeah. That was good.

Andi: That was, oh. What was his name?

Joe: Michael Keaton

Al: Keaton

Andi: Thank you. Yeah.

Al: Yes. Yeah, Terry Gar. That’s right. Yeah.

Joe: All right. Mrs. Income is $200,000 plus, a possible $30,000 bonus him. We got IRAs at $1.4 million. Mrs. Old 401(k)s 160,000. Current 401(k)s 115. They got Roths of 24,000. A brokerage account of 4G. And also has some restricted stock of $60,000 that paid out in 26 and 27, I, can’t remember what year, $32,000 in a CD, $32,000 in a high yield savings account and $15,000 in a sinking fund.

Al: You don’t see that term much. That’s a by, by the way, that’s an accounting term. That’s, that’s when you put money aside for repairs, like home repairs or something like that. Car repairs.

Andi: It’s going to be sunk. Is that why it’s called that

Al: you, you’re assuming it’s a sunk cost. You’re gonna spend it eventually, but instead of having all this money, you have to come up with, you have a, you have an account for that purpose.

Andi: So basically an emergency fund.

Al: Yeah. You could look at it that way. Yep.

Joe: Alright, so we got, Mr. Social Security’s gonna be anywhere from $1,600 to $2,800. Mrs. Social Security’s gonna be $2,600 to $4,800. Okay. If I do take Social Security, what should I do with it? Put in a brokerage account, sticking in a high yield savings account, put in a cd.

Any other suggestions? Okay, so those are all good ones. We have a 2021 Lexus three 50. We’ll be downsizing our house in retirement. The Mrs likes a tall rum and Diet Coke, and I like that little Johnny Walker. Double black. Yeah, on the rocks. That’s good. Double black. Never had a double black. I did have a Johnny Walker Blue over the holiday blew.

Oh, he did? Yeah. Okay. All right. Someone brought it over to the house. I had a IPA. Yeah. So thank you Mr. And Mrs. Scarecrow. We have two dogs, a 15-year-old Cava, p and a, one and a half year old French ton Princeton. Okay. All right. Okay. So should he start taking Social Security at 62, is his question? Yeah. So she’s still working.

He is like, I’ll take it. I’ll get 1600 bucks a month. They got plenty of money in IRAs, 401(k)s. It’s kind of all over the board. What do they have? A total liquid assets? About $1.8 million. Yeah. Yeah. so. We don’t know what he’s spending. Yeah. Apparently

Al: doesn’t need the money. that’s, my guess because it would sound like they’re living on her income right now.

But if, we had the spending amount, it would be a little bit easier to answer.

Joe: What’d you do? Take it and invest it?

Al: No, I’d wait. I personally, I would wait until my wife retired and we actually needed the income, and then I, you know, you’d have, an increased amount each year that’s what I would do.

But Joe, I think it’s a bit more of a personal choice. I don’t think it matters that much. I.

Joe: No. If he’s not gonna spend any, if he invests, I don’t know. It’s all a game at that point.

Al: yeah. can you beat whatever the social

Joe: security’s gonna give you and

Al: you know,

Joe: gonna go broke

Al: in a high yield savings account?

Maybe not tough. That might be tight, but a brokerage account maybe. I don’t know. Yeah, that’s on the market. Yeah. You put that

Joe: $1,500, you know, a broker account, don’t spend it. I don’t know. And then you wait 30 years and see who won.

Al: Me personally, I just, wait till, I actually needed it. that’s what I would do.

But I, wouldn’t be upset with either choice really.

Joe: I think sometimes added cash flow that makes you feel a little bit cozy. I agree. Yep. Yep. Maybe he’s drinking double black. Yeah. On the box. That’s not cheap. that’s right. Maybe like a second one. Yeah. You could afford it then. Yeah. Yeah.

That like, do you think he’s saying, is it like a double. Or is it the brand is like a double black. I’m gonna say it’s a double. Oh, I don’t know. He likes Johnny Walker Black. Double on the rocks. Like double. Yeah, but is there a double black?

Andi: Yes, there is a double black.

Al: Oh, there it’s, oh, okay. ah, stand corrected then.

Joe: Okay.

Al: You as a former bartender. You should know that.

Joe: Yeah, I know that’s, it’s a while ago. It’s probably new. Put my time. I think it’s been a, it’s been a couple, years. Yeah, a couple years. Yeah. Okay. Since I was pouring cocktails, I suppose. All right. Okay. I like the little double black.

Andi: Why double malt with a lingering smokiness.

Al: Oh,

I bet it’s good.

Joe: Double malt. Okay. Here you go.

Al: We’ll have to get some and try it on the show while we’re answering questions.

Andi: That’ll make the spitballs really interesting.

Al: I think so.

Andi: Deciding when to collect Social Security can make your head spin. Claiming at 62, full retirement age, 70, or somewhere in between can mean the difference between leaving tens or even hundreds of thousands of dollars on the table over your lifetime. That is exactly why we put together our Social Security Handbook. It walks you step by step through how Social Security actually works, how benefits are calculated, and most importantly, how to decide when to collect based on your age, health, marital status, and overall retirement income plan. It also covers spousal and survivor benefits, working while collecting, and how taxes factor into the decision, all in plain English. There is no one right answer for Peter Parker and Gwen Stacy, Mr and Mrs Scarecrow, or for you. But there is a right way to think through the decision. Download the Social Security Handbook right now by clicking or tapping the link in the episode description – start making a more informed choice about when to collect your benefits.

We’re 60 and 57 with $1.3M. Can We Retire in 3 Years? Should We Hire an Advisor? (Rosie & Astro, PA)

Joe: We got Rosie and Astro.

Al: Oh, okay.

Andi: You know that reference, right?

Joe: That’s Jetsons.

Al: Jetsons.

Andi: Jetsons, yes. Rosie is the dog. No, Rosie is the housekeeper. And Astro’s the dog.

Al: The main Astros the dog. Yeah. Oh yeah. Rosie is a robot. Robot, yeah. Yeah, I’m think a little skirt. Yeah.

Joe: Yeah. The robot.

Al: yeah.

Joe: And Astro. Okay. They live in Pennsylvania. Drinks of Choice are red wine and old fashioned.

Al: Okay.

Joe: One of us is a podcast listener.

Andi: Probably Astro the dog.

Joe: Yeah, I think so.

Al: Yeah.

Joe: Jigs, you know they’re coming out with a movie, the Jetsons.

Al: No, I didn’t

Joe: know that. Oh. yeah. I forget who’s playing George, but it’s someone. Wow.

Andi: This is, so it’s live action.

Al: This thing I’ve learned, today, high quality.

Andi: so it’s actual people, it’s not animated.

Joe: Yeah, It’s actual people.

Al: Alright, cool. Okay. I know. Gotta look that up.

Joe: Yeah. Okay. On the tip of my tongue, I’m almost thinking like Tom Hanks of some sort. It’s like, it’s a, big deal.

Al: he does that. He does every, so a big name act.

Joe: It’s a big name.

Al: Okay.

Andi: Jim Carrey.

Joe: Jim Carrey. Dammit. I knew it was Jim Carrey.

God, I’m so upset. That’s a big name. Yeah, that is a big name. but he’s kind of lost his mind though, hasn’t he,

Al: is he, is he the one doing The Price is Right?

Joe: No, that’s Drew Carey,

Andi: That’s Drew Carey.

Al: You’re right. Yeah, you’re right. Nevermind. No, Drew Carey’s lost some weight. He’s lost weight Mind. You’re right.

Okay, so lemme go back to Jim Carrey. yes, I agree.

Andi: I believe he’s gotten very philosophical.

Joe: Yeah. Yes. Finding different paths of life. Yes. Yes. Yeah. All right. Here’s this spitball request. $458,000 in cash. CDs. $53,000 in Roth. 403(b) is $515,000 in traditional 401(k), 23 in Roth IRA, $73,000 in a traditional IRA 20 5K in I bonds, and $82,000 in a money market account.

So if I add all that up, it’s like 1.1 0.3, 1.3 million. $4,600 a month in Social Security between the two of us. Hubby wants to retire in three years. We are 60 and 57. No pensions, no debt. Two homes, one of which will be sold around year 10 of retirement. We’re 400,000. Okay. Can we retire then? You wanna retire in 10 years or you want 10 now? Can we retire then?

Andi: yeah. It says that the house will be sold around year 10 of retirement. Then can they retire? Then

Joe: retire in three years or 10 years? we’ll do both. How about hubby wants?

Andi: Oh, okay. maybe hubby wants to retire in three years and she wants to retire when he’s in 10 years of retirement.

Joe: 57. She wants to retire in 67. Maybe takes Social Security then. All right. Let’s see. Okay. That could be, we’ll have to cover healthcare two years for me and five for him.

Al: Two years for me. So that means she’s gonna work to 63. So that’s six years.

Joe: I have no idea what’s going on. I’m being recruited by Baird and want your thoughts because they say, no problem, you can do it.

We’re also talking about Lehman.

Andi: No, you were talking about Lehman.

Joe: Oh,

Andi: You were talking about Lehman and then laughed and mentioned Bear.

Al: Actually Bear Stearns, I think. Yes. they’re Baird. Bear.

Joe: And then there’s also Bear Stone, but the

Andi: conversation that, that, Rosie and Astro are actually talking about was when Mark Horner was on the show and you and Mark, Joe, you and Mark had a conversation about Bear versus Lehman and so that’s what she’s referencing.

Joe: Got it. Okay.

Andi: How Bear’s deferred comp plan probably did better than Lehman’s, but that obviously doesn’t necessarily have to do with her situation here.

Joe: Yeah. Because they’re both worth zero. Yeah. I’m concerned about turning over to them. I’ve been do, I’m a do it yourselfer for the last 10 years.

Okay. Hubby’s not interested in the financials. We’ve been in index funds with small international. Should we continue to self-manage? I’m not sure about withdrawal strategies, about hearing you laugh over Baird’s name. I’m seriously concerned. Help. I’m terrified of making the wrong decision and I’m not sure we have enough funds to retire.

alright.

Al: So, so let’s get, we’ll start with three years, Joe, and if they got 1.3 million today, 6% a rate of return being conservative three years from now, add, I dunno what they’re adding. I’ll just say 20,000 a year, so that gets ’em to 1.7. Okay. If they wanna spend 78, I just took that straight number.

I should have done inflation, but I just took 78. that’s through spend. no other income at that point. That’s a 4.5% distribution rate before Social Security and before selling the other home. So that, that likely works. but maybe, maybe they’ll. Hubby might wanna take Social Security at 63 just to have a little bit more cushion.

So, I don’t know. I mean, it’s tight, but I, think it could work.

Joe: What do you think? Hire a professional or going alone?

Al: personal choice. Yeah. If she’s a do it yourselfer for the past 10 years, she’s comfortable with it. They got 1.3 million. Yeah. Just keep listening to the show.

Joe: I don’t know.

I just think, this is a biased opinion of course. ’cause I’m in the business. Yeah. Yeah. But I’m in the business. I’ve, we manage just a lot of money. We do 12 billion, yeah. Maybe more,

Al: less 12 million. 12 billion. Yeah. not that much, but a lot. 11, 10 and a half. Or 10.7? 10 point 10.7. Yeah.

Joe: Okay.

Al: Yeah. That’s, with a, B,

Joe: B.

Al: Yeah, that’s a big number. It’s a big number.

Joe: And, just the amount of things that you wanna make sure that you’re doing on an ongoing basis. I think it’s, too much for the average person that doesn’t have the technology or the time or the passion. Yeah.

But she’s done it for 10 years, but she’s saving money for 10 years in no offense. True. God bless Rosie and Astro here. Only one of ’em listens. And maybe the one that

Al: I think, Astro’s the husband,

Joe: but Astro’s not interested

Andi: in

Joe: the financials. So they have $638,000 in a taxable brokerage account, $588,000 in retirement accounts.

So she wants to retire in a couple of years. We don’t know if it’s 10, six or three, first off with that. I just went with three Rosie. Figure out when you wanna retire. Or, maybe it’s all three. Yeah. But now you have to like bridge the income for Social Security. You have to understand, you know, what the taxation’s going to be.

How, much money should you pull from a tax deferred account to a taxable account, to a tax free account? Should you be thinking about Roth conversions? How do you manage the risk? How do you tax manage it? How do you create the income? And I, there’s a lot to this.

Al: Yeah.

Joe: truth. So I would, at least.

Like Baird’s recruiting her. I thought she was like applying for a job at Baird for a second.

Al: No, he, they want her as a client. Got

Joe: it. I would be thinking about, what are you gonna do for me besides pick stocks and, create an asset allocation? All right. So I you could do that online.

Al: Yes.

Joe: If I’m looking at creating an asset allocation, I could give you three funds right now that are almost free. But I think as you. Look at retirement, income strategies in the, things that you need to do with your portfolio, in my opinion. There, there’s a lot more to it

Than picking an asset allocation. It’s the maintenance of the account, it’s creating the income and making sure that you’re, maximizing the return with the least amount of risk, with the least amount of tax possible. Yeah. And it’s more than just picking a few funds or you stop.

Al: All right. You talked me into it.

Joe: All right. Yeah. Here’s my number. 888-. But like Baird’s a great company, but if that’s a traditional big brokerage, wall Street firm. So when you’re interviewing advisors, I think I would wanna make sure that they’re credentialed. Do you have a CERTIFIED FINANCIAL PLANNER®? Are you a cima? Are you a CFA, CPA?

What type of strategies and planning are you going to do? And if they say it’s free, you know, then I’d be a little bit weary of that because it’s free. what, how much time and energy are they actually gonna put into the overall planning if there’s no cost to it? Because what it is, it’s a sales pitch then to get the assets and they’re gonna charge you whatever percentage on the assets.

Or it could be a brokerage account where there could be commissions. I mean, you have to find value. don’t look at fees as a bad thing, as long as there’s value there. If there’s no value, if it’s just an asset allocation, they’re trying to pick some stocks, I don’t know how much value that brings. So then you just want to pay appropriately.

But I would absolutely interview the advisor and just to see. Alright. Because I, I think she has the wherewithal or the knowledge of asked, you know, decent questions.

I think when people sometimes interview advisors, they don’t know what questions to ask.

Al: Right.

Joe: And so then they’re just kind of waiting and then they hear a sales pitch of some sort, and they get a bad taste in their mouth.

Or maybe they don’t understand what the advisor’s talking about, and then they don’t wanna make a. The wrong decision. Hiring an advisor in most cases is not the wrong decision as long as you do the research. If they’re gonna put you into a, a product. That is high cost, high fees, you know? Yeah. That could be a little bit of a mistake, but in most cases, you know, if you can do your homework and you know, and you have a little bit of knowledge to be dangerous, I mean, partnering with the professional I think is the right move.

Al: Yeah. So I’ll add, so here’s a couple questions to ask the advisor. First of all, how do you get paid and find out how they get paid? And the second thing is. What if you want to self-manage in a year or two? Is that possible? What are the costs involved? Basically, you don’t wanna get stuck into something that’s gonna require you to be in a, some kind of product for five years, five years, or 10 years or something like that.

Typically when you get locked up like that means that there was a commission up front, and you probably wanna avoid that, particularly if you’re used to self-managing. So maybe what, so I’ll piggyback off of what you, I agree with everything, what you just said. Maybe you want to try it for a couple years and learn what you can.

Maybe you continue or maybe you say, you know what, I got it. I can do this on my own. That’s up to you. But make sure you can get out of it, whatever you may you wanna get into.

Joe: All right. Looking forward to that Jetsons movie. Can’t wait. Stay tuned. Yeah. All right. That’s it for us, Andi. Great to have you.

Thank you. Good to see you all again. It’s been a while. Yeah. Okay. We’ll be back next week. for Andi, last Big Al, I’m Joe. Show’s called Your Money, Your Wealth®.

Outro: Next Week on the YMYW Podcast

Andi: Next week on YMYW, can Lucky Lou afford to bridge the gap until early retirement at age 50? Which retirement accounts should high earners Alexei and Anna max out first, and can they afford a downpayment on a house? Where should Jay and Gloria save, considering their state doesn’t tax retirement income? Should Sleepless in Seattle’s 28 year old daughter buy a home in an expensive market? And how should Jennifer in Texas invest an inherited IRA for the most growth and the least amount of tax? Subscribe, follow, join us in the YouTube comments, and tell a friend about YMYW.

So, be honest: do you have your own retirement plan figured out, or are you just winging it and hoping a spitball is all you need? If it’s the latter, then it’s time to schedule a one-on-one financial assessment with Joe and Big Al’s team of experienced professionals at Pure Financial Advisors. It’s free, like a spitball, but it’s tailored specifically for you and your needs in retirement. You can meet in person at one of our many offices around the country, or online via Zoom. The Pure team help you build a retirement income plan, cut your taxes now and in retirement, and give you confidence about your financial future. Click or tap the free assessment link in the episode description to book yours. There’s no obligation, and it might just be the smartest step you take toward a stress-free retirement.

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

_______

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