Grow Your Wealth Tax-Free & Retire Sooner: YMYW Best of 2024 - 511 - Your Money, Your Wealth

Episode Transcript
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Andi (00:00):
YMYW friends, welcome to 2025. Today on Your Money, Your Wealth® podcast number 511,

(00:07):
we’re revisiting your favorite topics of 2024 as Joe and Big Al spitball on strategies for building
up tax-free retirement income in Roth accounts, determining your appropriate mix of taxable,
tax-deferred, and tax-free savings (also known as tax diversification),
and whether YMYW viewers and listeners can retire as soon as possible. Check the

(00:28):
timestamps in the episode description to jump directly to watch or listen to any question,
see which episode it originally came from, and where and how you loved it the most in 2024.
Click or tap the Ask Joe and Big Al link in the episode description to get a Retirement Spitball
Analysis of your own. We’ll kick things off with spitballs from two of our most popular episodes

(00:48):
on Apple Podcasts, YouTube, and Spotify. 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 (01:00):
We got, let’s see, Joe and Angelina Jolie. Interesting.

Al (01:05):
Yeah.

Andi (01:06):
I don't know if that's supposed to be a reference to you and Angelina Jolie.

Joe (01:10):
Oh, might as well. Strawberry Plains, Tennessee. “Hello, Joe, Big Al,
and Andi. I've watched YMYW for the last 5 years and watched all episodes from
the beginning.” What is wrong with you? How many episodes have you seen, Big Al?

Al (01:31):
Let's see. I told you about 3 weeks ago, I watched one. I think that's it.

Joe (01:38):
Okay. “I'm 63 and my wife is 57. Drink of choice is a good Hefeweizen beer,
and the wife prefers a Moscato-” Another Moscato. What the hell is Moscato?

Andi (01:51):
I believe it's a sweet wine.

Joe (01:54):
It's a wine.

Al (01:55):
Is it?

Andi (01:56):
Sweet wine.

Al (01:57):
Sweet wine?

Andi (01:57):
Yep, that's it.

Al (01:57):
That sounds right.

Joe (01:59):
Moscato. “-when the mood hits. I'm semi-retired now with passive income from
rental properties of $1600 a month. The little lady is still working full time and covers the
insurance and a few bills we have. We are completely debt free, as in owe nothing on
our house, valued at $400,000. And the Nissan Pathfinder’s paid off. I have $1,300,000 in IRAs,

(02:27):
$1,000,000 in traditional, $300,000 in Roth. And each year I'm moving $100,000 from the
traditional to the Roth. We have a brokerage account, $25,000, along with passive income
mentioned earlier. We have an emergency fund of $80,000 in savings and an HSA totaling $50,000.
The wifey makes $70,000-“, where's this guy from? He's like, here's that little lady-

Andi (02:49):
Strawberry Plains, Tennessee.

Joe (02:51):
She likes a little Moscow when she's in the mood. Help me here, little lady.

Al (02:59):
Is that, what you, call your little lady?

Joe (03:03):
Rosemary.

Al (03:05):
You can't get away with that in California. The little lady,
the wife. Yeah. Have you ever said-

Andi (03:12):
Wifey, even.

Joe (03:14):
Oh, I think she'd slap me.

Al (03:16):
Yeah, me too.

Joe (03:17):
“The wifey makes $70,000 from work and has IRAs, $50,000 in a traditional, $30,000 in a Roth,
along with several CDs totaling $40,000. I plan to collect Social Security at age 70,
if all goes well, which will be $4,300 a month and we can retire early at 65,
which would be $1,400 a month due to early, but possibly collect spousal benefit if higher. We

(03:45):
would like to retire abroad, maybe Asia, to stretch out our retirement dollar a little
bit further and enjoy some sightseeing. That said, we're planning on using $120,000 per year
adjusted for inflation. With the income as it is now, are we doing fine? But what would you do?
And what does Big Al think? Are we on track? Thanks! Tomb Raiders!” Tomb Raiders, okay.

Andi (04:16):
Angelina Jolie! Was there a male in that movie named Joe? I don't even know. I mean,
the whole thing was about Angelina Jolie.

Joe (04:22):
There's a couple of different Tomb Raider movies. Seen them both.

Al (04:27):
Have you?

Joe (04:28):
Oh yeah.

Al (04:29):
I only remember her, to be honest.

Joe (04:32):
I figured. Well, they're alright. Those were ages ago too.

Al (04:40):
That's a long time ago, yeah.

Joe (04:41):
So Al, what do you say?

Al (04:44):
Well, so they've, got about $1,500,000 Joe, and expenses are $120,000. He's got
about $20,000 of rental income. So they're short about $100,000. But wifey is working. If wifey
wasn't working, it doesn't look very good. They'd have about a 6.7% distribution rate,

(05:08):
but with the wife working and getting to the point where, you know, she would trade work for Social
Security. Yeah, then I, at retiring at age 65, then I think it probably does work. Right. I,
that’s a number of years off, but I think they'd be okay as long as she continues to work,

(05:29):
but she's going to have to. But that's what he's implying. He's saying that
she can retire early at 65. So that's, I guess he's thinking that would be early
for her while he is semi-retired. So, yeah, I think it may work, Joe.

Joe (05:45):
She's 57. She's going to work until 65?

Al (05:48):
That's what he's implying, it seems. He goes, “I plan to collect Social Security at 70-“

Joe (05:53):
Well, that's a year, so 70. He's gonna be 70?

Al (05:56):
Yeah, “Plan to collect Social Security at 70 if all goes well, which will be $4,300 a
month and she can retire early at 65.” So I think that's what he's thinking.

Joe (06:06):
So 70 is the retirement date for him, 65 for her. Yeah. So he's going
to have the $20,000. So that's $50,000, $70,000 with inflation
with her. Yeah. That's $90,000. They're spending $120,000 adjusted for inflation.
Yeah. Yeah. I think they're.

Al (06:23):
I think it works.

Joe (06:26):
I would wonder where the Tomb Raiders are going to go.

All (06:30):
Good question. I, a lot of people like Thailand and
I've heard the cost of living is a lot cheaper there. So maybe-

Joe (06:37):
I would imagine like Japan would be pretty expensive.

Al (06:39):
I think that'd be maybe even more expensive will be
more expensive than Tennessee. I would think.

Joe (06:44):
Right. It would be more expensive than almost Southern California.

Al (06:47):
Yeah. Right. Certainly.

Andi (06:49):
I hope they visited the place that they're planning on retiring
before they actually like set down roots there.

Joe (06:54):
Yeah, I'm going. I think I have a trip to Korea next year.

Andi (06:59):
Wow.

Al (07:00):
You have a trip. Really?

Joe (07:03):
I don't know how I'm going to make it. I don't know what they're going to put.

Al (07:06):
Wait a minute. Not only do you have a trip,
you have a trip across the ocean to Asia, Korea? That's amazing.

Andi (07:14):
In episode 500, we just revisited the fact that Joe's been to like 3 countries
in his entire life. This is, this is, you're stretching your wings, literally.

Al (07:22):
Wait a minute, are you starting your go-go years now?

Joe (07:25):
No. Yeah, the countries, usually you could drive to. When I lived in Minnesota,
I could drive to Canada. If I lived in San Diego, I could walk to-

Al (07:34):
You could walk. Well, you have to take,
yeah, you have to drive down to the border and walk across. Yeah. Yeah.

Joe (07:42):
My, my, my wife is, what is she? A quarter
Korean. So I guess we're going to just pack up the family and-

Al (07:54):
Got it. Well, you should go to Thailand. You should go to Thailand too.

Joe (08:00):
No, I think this would be the last family trip of the-

Al (08:05):
Is that right?

Joe (08:05):
Okay. I don't know. I like to stay in my bubble.

Al (08:08):
I know you do.

Joe (08:09):
Yeah, stay tuned. Let's see if we actually plan this trip.
“This is Theodore. I'm 61, and Louise, my wife, she's age 60. We're living in North
Seattle. Louie, Louise, likes red wine from one of the many wine club memberships that we have. I
drink a cold Pilsner, red wine, occasionally Fairmont Lush.” What's a Fremont Lush?

Al (08:35):
Fremont.

Andi (08:36):
That is an IPA.

Joe (08:37):
Oh.

Al (08:38):
Oh, IPA.

Andi (08:38):
Wouldn't work for you.

Al (08:39):
Oh, there you go. Okay.

Joe (08:40):
“Got no pets. We raised two young men who are financially independent. Yippee!”

Al (08:47):
That was very good.

Joe (08:49):
Yeah, killed it. “My wife and I are both elementary school teachers. I plan to retire,
I plan on retiring after 33 years this coming Summer at the age of 62. My pension will be around
$38,000 a year with a COLA of 3% annually. My wife will continue working until she's 65 and have a
pension of about $40,000. She will pay my medical until I'm 66. She's on a different state plan than

(09:16):
me and will be teaching 12 years, so is unable to collect her pension until 65. We will both
collect Social Security at 67. My Social Security will be $38,000 and Louise will be $34,000. I have
a 403(b) state teacher account of $930,000, additional 403(b) of $250,000 and $70,000 in
Roths. Louise has a $260,000 403(b) and a $70,000 Roth. Together, we have a brokerage account of

(09:44):
$210,000 and $60,000 in our savings account. Louise will continue to add $2000 a month to
her 403(b) and contribute $8000 yearly to the Roth until retirement. Our annual income is $260,000.
However, we put into our various accounts about $5500 per month of that income. We would like to

(10:05):
spend $160,000 annually after taxes when we are both retired. During the 4 years until Louise
retires, her salary will be $142,000, and I will have my pension of $38,000, adding up to $180,000
gross income for those years. We'll be taking little from any investments or our retirement

(10:26):
accounts during that time. Here's our questions. Is the plan feasible?” Sure sounds like it.

Al (10:34):
I think so too.

Joe (10:35):
You got- Let's see $2,000,000 liquid. Roughly. And then, the bridge when he retires,
she's going to continue to work. So he's got his pension is $40,000 and she's got her income.

Al (10:51):
Yeah. So when she retires, then she's got her pension. He's got his pension. The
$2,000,000 is going to be worth more because she's adding to it. Right? Right. And then
that's even without Social Security. So yeah, I think this looks pretty good.

Joe (11:05):
Yep. “As I understand it, I can keep contribute to my Roth
IRA until Louise retires, since she is contributing to a Roth. Is that true?” Well,
kinda. There's a spousal contribution. So this is a really good question.

Al (11:21):
It is a good question.

Joe (11:22):
Is that, so Theodore is retiring, so he doesn't have earned income. So there's
certain qualifications that you have to put into retirement accounts and earned income is
one of them. But he's retired. He's collecting a pension, but the pension isn't earned income. It's
not classified, even though he earned it from an IRS perspective, it's not called earned income.

Al (11:44):
Yeah. The reason is because he didn't currently pay Social Security taxes on it.

Joe (11:48):
So, he's like, well, if my wife puts into a Roth, can I put in,
or can I put into a Roth? Well, the qualification has nothing to do with her putting money into
a Roth IRA. The qualification is, she has earned income in, if you're married to her.

Al (12:06):
Correct.

Joe (12:06):
If she has earned income and you're married to her,
then you can put money into a Roth. It's called a spousal Roth IRA or spousal IRA contribution.

Al (12:15):
Right.

Joe (12:15):
So, good to go. “My employer in the last year is giving a Roth option.
Can I have two Roth accounts? What is the max for both?” Okay,
well now you're confusing two different things. You've got a 403(b) that's a
Roth. You can absolutely fully fund that. And then you can fully fund a Roth IRA.

Al (12:36):
Yeah, two different things.

Joe (12:37):
Two totally different things. You've got the 403(b) or a 401(k). For those of you that
have a 401(k) plan or a 457. Let's say he has a 457 with a Roth option,
which I believe he does. He could go 100% Roth in all of the plans.

Al (12:51):
Yep.

Joe (12:52):
So the limit on 403(b)'s- $30,500?

Al (13:01):
Yeah.
Joe; And then $8000 for the Roth?
Correct.

Joe (13:04):
So yeah, you could fully fund that, and then you could do a conversion. Here's number 4,
here's the Roth conversion show with Big Al.

Al (13:13):
No, I think it's the JoeJoe show.

Joe (13:16):
“I think we are very underfunded in Roths. Would it be wise to start doing conversions? If
so, how do we choose the amount each year that the account, how do we choose the amount each
year and what account do we use to pay the taxes? Thank you for any non-advice you can give.” Thanks
Theodore. This is not advice at all. Use your taxable account, use your brokerage account to pay

(13:44):
the tax. Should it make sense to do conversions? Your fixed income is going to be roughly
$150,000 per year. You're not going to touch the $2,000,000 that you currently have now for maybe-

Al (13:58):
- for a while-

Joe (14:00):
- for a while-

Al (14:00):
- maybe for a long time.

Joe (14:01):
Yeah. The amount that you pull out is probably not a lot. Right. So does it
make sense to do conversions? I would say, yeah, you would probably want to
map it out a little bit, but out the back of the envelope here, I would say, yeah.

Al (14:17):
I think so too, and I would, probably, given your situation-

Joe (14:21):
So he retires at the end of this year?

Al (14:24):
In the Summer this year. So, and, so, should he do a conversion
this year? Depends upon his income and whether he got extra vacation pay and
whether it makes sense. But the thing is, probably stay in the 22% bracket.

Joe (14:37):
Yeah, stay in the 22%, and the top of the 22%, taxable income is-

Al (14:41):
Yeah, that’s- Let me see- That's a couple hundred thousand dollars.

Joe (14:47):
So taxable income, so it's not your gross income adjusted gross,
so you have to look at your tax return and kind of forecast this out. So look at your taxable income,
stay in that 22% tax bracket, and that's where I would kind of start.
And if I were to pay the tax, I would pay it from my cash or taxable income.

Al (15:04):
I would too. And to say that another way, $200,000 is the top of the bracket,
standard deduction is about $30,000. So total income about $230,000-ish is what you could do.
So it would be your income, your wife's income, plus Roth conversion, no more than $230,000.

Andi (15:20):
Okay, did you see that document Big Al was referencing when talking about tax rates?
That’s the 2024 Key Financial Data Guide. Along with their email list and their HP12C financial
calculators, that single two-sided sheet is a must-have for Joe and Big Al to be able
to spitball for you. Download a free copy for yourself from the link in the episode

(15:42):
description. It’ll show you at a glance the 2024 tax brackets and capital gains tax rates,
retirement plan contribution limits, tax on Social Security, Medicare premiums,
and all the current credits, deductions, exemptions, distributions, and exclusions.
All the numbers that you’ll need to do your 2024 taxes, and all the numbers that affect

(16:03):
your financial strategies as you plan for retirement. One listener said that, basically,
this guide alone is worth the price of admission to YMYW - so, it's priceless! Just click or tap
the links in the description of today’s episode to download the 2024 Key Financial Data Guide,
to Ask Joe and Big Al for your Retirement Spitball Analysis, and to access plenty of other free
financial resources. Make sure you’re following us on YouTube and in your favorite podcast app,

(16:27):
and subscribe to the YMYW podcast newsletter, so you can get your hands on the 2025 Key Financial
Data Guide as soon as it’s available. Up next, YMYW listeners want to punch the clock at work
for the last time, ASAP. Whether or not they can was a big topic of discussion in 2024:

Joe (16:46):
“Hi, Joe, Al, Andi. Ricochet!

Andi (16:51):
Ricochet J!

Joe (16:55):
Ricochet J! I was gonna totally butcher that, but I took a guess that it was Ricochet.

Andi (17:00):
Well done.

Al (17:01):
Good for you.

Joe (17:02):
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,

(17:22):
and I first I wasn't sure about it. Well, just one of you.” I know where he's going with that.

Al (17:28):
I wonder which one.

Joe (17:29):
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 (17:47):
Or Morocco.

Joe (17:49):
Whatever. Yes. You say Morocco, I go to Monaco.

Al (17:53):
It turns out they're different places.

Joe (17:55):
It's so beautiful at both.

Al (17:57):
A little better in Monaco, in my opinion, but-

Joe (18:01):
“ 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 (18:16):
Non-alcoholic.

Joe (18:17):
Yeah, I've never had one of those.

Al (18:19):
Yeah, I have. They're pretty good.

Joe (18:20):
Are they?

Al (18:21):
Yeah.

Joe (18:23):
I think I'd rather drink water than NA beer.

Al (18:27):
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 (18:33):
Have a little taste?

Al (18:33):
Yeah, a little taste. Yep.

Joe (18:35):
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

(18:58):
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,

(19:23):
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

(19:45):
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

(20:12):
out $30,000 a year in rent after expenses.” $30,000 on $800,000. That's really good.

Al (20:19):
It is.

Joe (20:20):
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 (20:47):
It keeps going.

Joe (20:48):
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.”
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

(21:09):
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

(21:33):
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 (22:02):
It's $1500.

Joe (22:04):
$1500 a month? $1200 a month? $1200?

Al (22:07):
I think so.

Joe (22:08):
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

(22:32):
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 (22:42):
It's still going.

Joe (22:44):
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 (22:55):
Baguettes.

Joe (22:57):
Baguettes. “- baguettes and vino on track?”

Al (23:01):
Bread and wine.

Joe (23:03):
Mmm.

Al (23:03):
Translated.

Joe (23:03):
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,

(23:27):
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 (23:45):
Yeah. So that, that one's easy.

Joe (23:47):
So total assets. She's got $300,000.

Al (23:51):
Yep.

Joe (23:52):
$85,000 in a rollover IRA, $10,000 in a brokerage, $200,000 in a Roth.

Al (23:57):
Yep. Rental income, $30,000, $50,000 a year in pension later.
So let me recap a couple of things here, Joe.

Joe (24:08):
All right.

Al (24:09):
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,

(24:35):
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

(24:56):
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

(25:18):
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

(25:42):
$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,

(26:02):
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 (26:22):
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 (26:30):
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 (26:38):
It's almost impossible.

Al (26:39):
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 (26:49):
She is 45, husband is 51.

Joe (26:51):
All right, so she wants to retire in the late 50s?

Al (26:54):
Yeah.

Joe (26:55):
Okay, so 45, 55. I'm gonna- I'm gonna get her retired at 60.

Al (27:00):
Okay, you're going 15 years.

Joe (27:02):
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 (27:18):
I got $140,000 for 12 years, but in the ballpark, but-

Joe (27:23):
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 (27:29):
Don't know.

Joe (27:30):
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 (27:38):
Yep, that's right.

Joe (27:39):
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 (27:49):
Sure.

Joe (27:49):
So if you need $80,000, what was her husband's Social Security?

Al (27:53):
Well, it's a- It's at 62 it's $1200, then $1900 at 67, $2400 at 70.

Joe (28:03):
Alright, I'm gonna say she needs, like what you said, $50,000 is what the shortfall was?

Al (28:10):
Yeah, that's what I calculated.

Joe (28:12):
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,

(28:36):
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

(28:58):
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 (29:08):
Could be, yeah.

Joe (29:09):
You get baguettes from here.

Al (29:10):
Yeah, the rental income would go away, but.

Joe (29:13):
Well, no, he's got a rental and the primary.

Al (29:15):
I know, but she's saying she might want to move into the rental.

Joe (29:17):
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 (29:38):
Okay. I'll accept that.

Joe (29:41):
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,

(30:02):
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

(30:24):
to give you kind of a number to shoot for. So. I don't know. We're just dragging these things out.

Andi (30:30):
You're spitballing.

Joe (30:33):
Alright, good luck. I'm glad you,
I warmed up to you. She's like, she only likes one of us, Al.
No, she likes both now. Yeah.

Al (30:43):
Probably likes you better because you're like fine wine. Just keeps getting better.

Joe (30:46):
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 (30:57):
I wonder why he kept coming back.

Joe (30:58):
It's like, man, you know, I've tried you now 4 times.

Al (31:00):
This has got to be a good show. No, not really.

Joe: We got a little Barney and Betty from Northwest New Jersey goes, “Hey, Andi, (31:03):
undefined
Big Al, Joe, big fan of the show and greatly appreciate the combination of sound financial
information and humor. Personally, I don't think Joe's sarcastic enough.”

Al (31:21):
Really.

Joe (31:23):
“Listened to the show a couple of years ago.”

Al (31:25):
Wow. Okay.

Joe (31:27):
Try to tone down. You get all hopped up on Celsius and you got to deal with life.

Al (31:34):
You've toned down a little bit.

Joe (31:36):
This is my outlet.

Al (31:38):
I think once you started, you know, you had family, kids, I think you toned down a bit.

Joe (31:44):
I'm coming back hotter than ever. We should really lay into this letter. All right,
I'll lay into you. I can take it. All right. “I'm currently 56. My wife's 57.
I recently switched from full time to part time work. I'd like Joe and Big Al to spitball for
me the earliest that I can quit the part time work and fully retire.” All right, here we go,

(32:08):
Barney. “For retirement savings currently have about $3,000,000 in-“ Okay. That's enough. You're
good. You're done. Oh, I don't know, can I retire. By the way, I got like $20,000,000-
Please call me Barney and Betty. Cause I don't want anyone to know I'm super loaded.

Al (32:27):
Sounds like you're, you're ripping on him.

Andi (32:30):
He can take it.

Joe (32:34):
He can take it. All right, “-$3,000,000in a pre-tax 403(b), $450,000 in 457 accounts,
$150,000 in a Roth IRA, oh, $1,200,000 in a taxable brokerage account, $13,000 in HSA,
oh, we have $1,300,000 in home equity.” Come on,
dude. “I make $315,000 per year for my part time work.” Oh, woe is me.

Andi (32:58):
Part time, $315,000-

Joe (33:00):
Oh, my God. Poor you. Part time, $300,000. Most people don't make that in a lifetime Barney.
“My wife works full time. She makes $250,000 a year.” All right, “I contribute about $30,000 a
year to my pre-tax 403(b), $22,000 into the 457, $8000 per year in the backdoor Roth. My employer

(33:23):
contributes $40,000 per year into the 403(b), total $100,000 per year. This will obviously stop
when I fully retire. My wife contributes $30,000 per year to her pre-tax 403(b),
$8000 to the backdoor, $8000 to our HSA. Her employer contributes $23,000 per year into the
pre-tax 403(b), total $69,000 per year. My 3 kids will be off to college in 5 years. Their

(33:48):
college is completely funded by the 529 plans.” It just gets worse and worse for this guy.

Al (33:53):
Another one.

Joe (33:54):
Yeah. “In 5 years, we'll sell our current home,
buy a smaller house or a condo and net about $300,000 in profit.”

Al (34:03):
Let's add that to the total.

Joe (34:05):
In terms of expenses, I spend $5000 a month. “In terms of expenses, my portion of the household
expenses is currently $22,000 per month. This will decrease to $17,000 per month in 5 years when we
downsize and have an empty nest. I currently draw $60,000 per year out of my brokerage account to

(34:26):
cover the difference between my income and expenses. This difference will eventually
be covered by the $300,000 profit from the sale of the house. My wife will work until age 67,
at which point our combined Social Security benefits will 100% replace her income. Thus,
I think we can keep my wife's income, her portion of the household expenses,

(34:48):
and our Social Security benefits out of the analysis.” And I’ve not heard anything bad
yet. Not even close. Okay, “I like Kentucky bourbon with a little large round ice cube.”

Andi (35:03):
Why has that become so popular?

Joe (35:05):
Yeah, you know, I'm not that a big ice cube guy.

Al (35:08):
You're not.

Joe (35:09):
Nope. I like the rocks. I’m here to tell you. The big ice cube just,
I don't know, it doesn't do it for me.

Andi (35:15):
I want to chew ice. The big ice cube doesn't do it. I can't do that.

Joe (35:18):
I'm a chewer too. Yeah. I like to- What is that? Is that, just-

Andi (35:24):
It probably means we're OCD or something. I don't know.

Joe (35:26):
Yeah. Look at my pen. I chew on my pen. I chew on ice. Alright. “So,
the wife. She likes little New Zealand Sauvignon Blanc. I drive a 2021 Honda CRV. My wife drives
a 2024 Hyundai Telluride. We have no pets. Do you agree with maxing my contributions

(35:49):
to my retirement accounts? Even though this means taking some money out of the brokerage
accounts? I would like to retire as soon as possible and have several hobbies to occupy
my time. My wife loves her job so she's fine working until 67, 70 until I-“ what?

Andi (36:07):
While I am-

Joe (36:10):
“What total do the retirement savings need to reach for me to retire? At what age
do we switch from 3% to 4% in terms of a safely yearly withdrawal rate on the retirement savings?
Or should I just use 3.5% percent? Thanks for your spitball.” okay. There's a ton of assets
here, a ton of income, a ton of savings. Can he retire and do some cool stuff as soon as possible?

Al (36:34):
Yeah, so he's starting with $5,000,000, Joe, and the only problem is the spending. So,
$22,000 a month, if you run that over the course of the year. I just divided that into 3%,
just at age 56, I think he said he was. That was one of his questions. When to use 3%,
3.5%, 4%. I personally use 3% around 50, 55, 3.5% at 60, 4% at 65. It's not a hard

(37:01):
and fast rule. It just gives us an idea, you know, a ballpark idea. If you take $22,000,
divided by 3%, you're gonna need about $7,900,000 and you got $5,000,000. So,
but in 5 years when you're spending is, $17,000, I think that's no problem. So you could retire
right now if you saved a little bit on spending. Otherwise you got to grow the portfolio a little

(37:23):
bit for that kind of spending. But again, assuming that the spending is less later.

Joe (37:30):
I got $8,800,000, Al.

Al (37:32):
$8,800,000? Okay. $22,000 times 12 divided by 3%.

Joe (37:40):
Yeah. 03% divided $8,800,000.

Al (37:44):
You did? Okay. Yeah, I got $7,900,000.

Andi (37:48):
It's the Battle of the calculators on YMYW.

Joe (37:52):
What do you have? You're using your phone. I got an HP 12C here.

Al (37:56):
It's a HP app.

Joe (37:58):
So, but what I'm confused about here. So “in terms of expenses,
my portion of the household expenses is currently $22,000 a month.” So did you get $8,800,000, bud?

Al (38:09):
I did.

Joe (38:11):
So it's-

Al (38:13):
I must have done it too fast.

Joe (38:14):
So $260,000 a year is his portion of the expenses.

Al (38:19):
That's what he's saying. He's saying let's keep the wife’s out
of there. She's got- she's covering her side and her income isn't going
to change because she retires and Social Security takes over.

Joe (38:28):
Okay, and then so Barney makes $300,000 a year, right?

Al (38:32):
Yeah, $315,000.

Joe (38:35):
Okay, so he needs $260,000 after tax. He's making $300,000. So with his savings
that's going into the 403(b) and the 457 plan, he's taking money out of the brokerage account
and he's funding those accounts. So I don't know if that makes a ton of sense because he’s
going to have a ton of money in retirement accounts. And they're they want to spend high

(38:59):
dollar in retirement. His wife makes $200,000 a year. She's going to continue to work until
age 67. So he's taking money from a brokerage account that's going to be taxed at a capital
gains rate. He's taking the money and he's putting it into a retirement account. He's
getting a tax deduction today. But then the money grows tax-deferred, but he's going to
have to pay taxes on those dollars at a later date. So I think the math is all right well,

(39:24):
what tax bracket are you in today? What tax bracket do you think you're going to be in
the future? It sounds like he's relatively going to be in the same tax bracket. Because a ton of
the money that they're saving and all of this match is going into a qualified plan. So all
dollars that are coming out is going to be taxed at ordinary income rates. So I don't know if that
makes- I would have of course to get my HP12C a little bit more exercise here, but I don't know

(39:48):
if that makes sense unless- If, I'm going to take money from a non-qualified account and put
it into a brokerage account to reduce my taxable income, I would do conversions and keep my taxes
the same, versus what he's currently doing. So, I don't know if I like that move at all.

Al (40:06):
I'm with you there because he's already got $3,500,000 or $3,000,000 in retirement accounts.
He's adding to it. He's still young. I mean, that thing can double twice. I mean, can you imagine
what the RMD is going to be in the future? So I don't really, the only reason I would take money
out of the non-qualified account and put it into retirement is if I was doing Roth, just like you
said. Because then I'd like more tax-free, but yeah. Agree with you there. So I did a little

(40:33):
fat finger, on my calculator. So $8,800,000 is the correct answer. Now, if you use 3.5%, again,
this is just, to give you in the ballpark, even if you use a 3.5% distribution rate right now,
you need $7,500,000. You got $5,000,000. So you can't really retire right now at this spending
level. But as you say your spending goes down $5000 per month in 5 years. Then it starts to look

(40:59):
pretty good, right? So now you can I think you can make that so yeah, I think you will be on track.

Joe (41:04):
He's really close to be honest with you. Because there's a lot of calculations
that he needs to do. So if let's say he retires as soon as possible. Tomorrow,
you retire tomorrow. You're going to have a large distribution rate, $264,000 into $5,000,000,
right, is 5.3%. It's not awful. So you take 5.3% out of the overall account for the next several

(41:34):
years. And then it's going to be a little bit less because your spending is going to
go down depending on what the portfolio does. What will kill him is the sequence of return
risks. So if he retires today and takes 5.5% out because that money needs to last quite some
time. But there's all sorts of things that he could do to say, all right, well here,
I'm going to spend $265,000 a year for the next, let's say 15, 20 years. And then I'm going to tone

(41:58):
that thing way down because I'm not going to be doing the hobbies. I'm not going to be traveling.
I'm not going to have membership with the country club or whatever the case may be. So, you know,
people spend a little bit higher in their first 10 to 15 years, and then they kind of slow things
down and then they spend a little bit less, but then there could be healthcare costs. So
I think he's super close here. That's- if I was him if I hated what you're doing and you got

(42:23):
$5,000,000 bucks and your wife is working full time making $200,000. See you later.

Al (42:30):
I wouldn't do that at the spending level of- me personally to me. That's
too rich of a distribution rate at age 56, but-

Joe (42:37):
5%?

Al (42:38):
More than 5%.

Joe (42:40):
But he's going to get Social Security, he's going to tone down
his savings in a couple of years, his wife is working full time, he's going to be-

Al (42:46):
Here's the problem with this kind of question, is we really need financial
software to plug all this in, because there's a lot of variables, so we're just giving you
a quick answer based upon what's in front of us, and in my case, my phone, and Joe's case his HP.

Andi (43:02):
And this is why it's called the spitball.

Joe (43:05):
This is a big, wad, spitball here. For sure.

Al (43:10):
Anyway, I wouldn't retire just yet. Also,
I'm just thinking about you still have kids that are at home.

Joe (43:18):
But the kids are, I suppose, but the college is paid for.

Al (43:21):
I, no, I get that. But then it's like, alright, I don't know. I personally, I would,
I let the kids get through high school at least? That's kind of how I would think about it.

Joe (43:30):
If you could be flexible in your spending. If it's a hard fast, you know,
$270,000 plus a COLA. Yeah, it's, super tight, but, you know, down markets or things. If you,
if most people spend a little bit more, some years, a little bit less, the other years,
you know, it's variable. That's why you have to be looking at this constantly. And it's a

(43:52):
process. It's not here's a spitball when you're 57 years old. And then you're going to, you know,
come back 15 years from now when your $5,000,000 portfolio is $2,500,000 and come in blazing.

Al (44:04):
Wait a minute, Joe. He said it was okay.

Joe (44:06):
Yeah. Where's that Anderson punk? He said I was all right. That sarcastic a-hole. All right.

Al (44:13):
On the other hand, $5,000,000 bucks is a lot of money. So you can definitely
retire tomorrow. You just have to probably make a couple of changes.

Andi (44:20):
Calculate your likelihood of retirement success with a Financial Blueprint. Click or
tap the Financial Blueprint link in the episode description, input your details, and our free
tool will analyze your current cash flow, assets, and projected retirement spending. It’ll output a
detailed report with three scenarios to help you determine your probability of retirement success,

(44:40):
including future taxes and actionable steps you can take now to achieve your financial goals.
Next, schedule a free financial assessment with one of the experienced human professionals on Joe
and Big Al’s team at Pure Financial Advisors to review your Financial Blueprint. They’ll
help you develop a thorough financial plan that addresses your unique immediate needs

(45:01):
and your long-term retirement vision. At the end of the assessment process,
you can decide whether Pure Financial Advisors is a good match for your retirement planning needs,
and what the next steps look like. Click or tap the links in the episode description to
get your Financial Blueprint and to schedule your Financial Assessment - both for free,
courtesy of Your Money, Your Wealth® and Pure Financial Advisors.

(45:23):
Next up, when Joe and Big Al had the opportunity to talk the IRA Guru himself,
they jumped at the chance, and that show has now become our most-viewed podcast
episode of 2024 on YouTube. Here’s a clip from the fellas’ chat with Ed Slott, CPA.

Joe (45:37):
Someone reads the book,
how much money do you think that they could save in taxes over their lifetime?

Ed (45:45):
A hundred- depending on their balances, obviously, but hundreds of thousands or
millions. You know, people say, look at the market every day. Well, don't look today, but
look at the market every day, and they say, oh, I made $10,000. I made $20,000. I made $100,000.
You can make millions in good tax planning. Most people don't see it. They don't think it's much,

(46:05):
but that's money that you would otherwise lose. If somebody told you you're going to lose $1,000,000,
unless you do that. They would probably do something, do some of the good planning I talk
about in my book, and I'm sure you mention all the time on your program, because we seem to be
saying the same thing, they could save a fortune in taxes and that's more money that they can use

(46:28):
in retirement and will go to their beneficiaries and if you do it right, all tax-free.
So this whole thing that we're talking about comes down to one big giant bet. And the bet is, do you
think future tax rates will go up? And I think the answer is yes. You know, I asked a group,

(46:50):
Al, this same question. I always ask advisors and consumers. I always ask them, do you think taxes
will go up? And about half the room raises their hands. And then I ask this question. All right,
I get that. How many of you think taxes will go down? Nobody raised their, raises their hands. And

(47:11):
then I say to them, but that's the same question I just asked you! If they're not going down,
they're not going to go up, but even if they stay, I mean, you know, this is higher math, you know,
but that’s the whole bet. If you think future taxes are going to go up,
the Roth bet or getting the money out of the IRA and putting it into other tax-free vehicles or

(47:35):
even doing charitable planning, that will pay off big time for you and your beneficiaries.

Al (47:40):
Yeah, when you think about it, you think about all the, all the taxes you pay in retirement,
pulling the money out of the accounts, extra income, extra adjusted gross income causes
all kinds of extra income on Social Security, on real estate earnings,
on and on and on. Then you add in, you pass away. Now the marriage penalty because now

(48:02):
you're on the survivors on the single brackets, and now you when they the survivor passes away,
the kids have to take the money out in 10 years, many times in their high earning years,
and then if the estate tax deduction becomes a lot less as planned in 2026, that there's
all kinds of reasons to do this right now for the next two years, while we know tax rates are lower.

Ed (48:25):
Yeah, you got to take advantage of low tax rates. In fact, in my book on page 28,
I give the history of tax rates from the 16th amendment 1913 when our current system started
till right now 2024. The reason I do that is because some people, most people, look,
nobody wants to pay taxes before they have to. Everybody, you know, everybody hates taxes,

(48:50):
but you can use these rates to your advantage. So many people don't realize that these are the good
old days. So I put that chart in there and a lot of the- and I highlight in the chart the
years people like me and maybe some of most, most of the people who are worried about this,
the baby boomers, they seem to have the most money now in IRAs. The years, the baby boomers were

(49:13):
born, 1946 through 1964. And I remind people by showing them that chart. I do it in seminars too,
that the top federal tax rate for 1946 through 1964, the top federal tax rate for each of those
years exceeded 90%, that's 9-0. You're not hearing me wrong, exceeded 90%. Except for the last year,

(49:41):
1964, when they dropped the top rate down all the way down to only 77%. And they tell me,
I don't know, because I was 10 years old then watching the Beatles on Ed Sullivan,
but they tell me when they dropped the rate down to only 77%, the whole country did a happy dance,

(50:01):
because it was only 77%. Well now, that's more than double today's top tax rate. So you need to
take advantage of the opportunity of a lifetime to bring down these IRA balances. If anything,
Congress, with the SECURE Act, the Insecure Act, I should say, encouraged us to trim these

(50:22):
balances now. Get them out at the low rates and build up in tax-free vehicles to protect against
the uncertainty of what future higher tax rates could do to your standard of living in retirement.

Joe (50:34):
Yeah, I think it gives people a lot more flexibility. What do you
think about people that don't necessarily have the money to pay the tax? Would you
ever recommend someone paying tax out of the IRA to do a conversion?

Ed (50:45):
Oh generally not and remember a lot of things I’m saying are for people with larger balances.
If you have the money to pay the tax, maybe you're not in a big tax situation. It's not
for everybody. But the more you have in your IRA, the more is at risk. That's why I said earlier
the people at the highest risk are the people that save the most for retirement. It’s always that way

(51:05):
with tax law, you know, it always seems to come down that our tax system is a penalty on savers.

Andi (51:11):
Check the episode description to watch the entire conversation with Ed Slott,
CPA. I think we still have a small handful of copies of Ed’s book,
The Retirement Savings Time Bomb Ticks Louder. Ask for a complimentary copy when you have
your financial assessment with Pure Financial Advisors. In the meantime, episode 468, called,
How Much to Save in Tax-Free, Tax-Deferred, and Taxable Accounts, was our most downloaded of 2024,

(51:35):
across all podcast platforms. Your Money, Your Wealth podcast officially became a video and
audio podcast in October 2024, but this was back in February, so it’s audio-only. Then,
we’ll wrap up the Best of 2024 with one of my favorite video Derails of the year.

Joe (51:51):
Got Brian from Naperville, Illinois. “I understand that tax diversification is
important and that money should be saved in the taxable, tax-deferred,
and tax-exempt accounts. However, I haven’t seen a description about the proper proportion to be
held in these accounts? I understand that this is a complex idea and it will be somewhat different

(52:13):
for each individual circumstance. However, there should be some general guidelines and
ideally there should be a calculator or formula that should help investors determine the correct
target percentages. So having 80% versus 40% assets in a Roth is a big difference

(52:34):
and it will have a huge impact from a tax perspective.” Okay, where's the- I agree.

Al (52:40):
Yeah.

Andi (52:41):
I think the question is, what should be the proportion to be held in each type of account?

Al (52:46):
And the answer is, it depends.

Joe (52:49):
You already answered it. How much money do you wanna spend? Do
you wanna spend $200,000 a year or do you wanna spend $40,000 a year?

Al (52:54):
What tax bracket are you in now versus in the future?

Joe (52:57):
Do you wanna leave a legacy? Or do you want to give it all to charity? You,
I mean, there's so many different factors.

Al (53:02):
Exactly, exactly. Real life example, you got $100,000 in an IRA and nothing else. Keep
it in the IRA. You're going to be in the lowest bracket. Who cares? You got $5,000,000 in an IRA.
You better start converting that because your required minimum distributions are going to be
through the roof. But it does depend if- Now, if you're going to give a lot of it away to charity
with the qualified charitable distribution, you can keep a lot more in. If you don't have kids,

(53:27):
and it's just going to go to whatever, maybe you don't care about the taxes as much- but I
will say one other thing is, a lot of times when people are thinking about this, they think about
what's best for my kids, but it's like, no, it's really what's best for you because people are
living into their 90s. So you retire and you may have 30 more years to be in a high tax bracket.

Joe (53:47):
Let me try to answer this, because I- we get this question often, and everyone wants
a really simple answer. Okay, well here, have 30% in a Roth, and 33% in this, and you know,
33% in that, and the rest in cash. Here's what they have to do. You have to do a little bit of
work. There's no general guideline. There's no rule of thumb. I wish there was. I mean,

(54:10):
for me, 100% Roth. There you go. That's what you want. You'll never, ever pay taxes again. But,
I don't know what tax bracket that you're in. So, you could overpay in tax by getting everything in
Roth. So, it's not that simple. Is it 50/50? Maybe. But you can map this out by looking at
how much money that you really want to spend and then you map out what you have in each of these

(54:34):
different accounts. So you take your inventory, how much money you have in tax-deferred accounts,
such as your IRAs, how much money you have in Roth accounts, how much money you have
in a brokerage account. And then you forecast those out, model it out at 6%. Now then you
have to look at your fixed income. Do you have a pension? Do you have Social Security? Model
that out with inflation. And then you're going to look at your shortfalls. How much money is

(54:59):
going to be demanded from the overall portfolio? Is it $20,000 a year or is it $180,000 a year?
So if you already, if you have enough money, then you can model it a lot more effectively by
saying here, I need to pull X amount of dollars from my portfolio and I want to keep myself,
let's say in the 12% tax bracket for life. So I might have to convert to the top of the 22%

(55:25):
tax bracket today to keep myself in the 12% tax bracket forever. So, those are the strategies
that you want to start modeling out. I wish I could just say, yeah, just put, you know, 33%
in each of the different pools and call it good. That's probably better than not doing anything.

Al (55:43):
Probably so. I mean, a couple questions ago, we talked about Tom in Spokane,
and what I would do is convert 100% of it because he's got so much pension income
and not a ton of IRA, I would convert it all. But that's- every case is different.

Joe (55:57):
And the whole purpose of having money in each of these different accounts is having
control over your taxes in retirement. Because you're going to potentially, you know, hey,
I'm going to take enough out of my retirement account just to get me to the top of, let's say,
the 12% tax bracket. Or for people that want to spend a lot more money,
I'm going to pull out of my retirement account to the top of the 22% tax bracket. But I still

(56:22):
need more cash flow. So then that's when you pull from the Roth. That's when you pull
from your brokerage account, because those are going to be taxed at a lot lower rate.
So you're controlling your taxes long term. So, ideally, would it be great to have everything in
a Roth? Sure, because then you know that you took the uncertainty of higher taxes
off the table. But unfortunately, that's probably not the most effective way because

(56:43):
you're going to leave money on the table because you converted probably too much.

Al (56:46):
Yeah. And to me, there's one kind of foolproof way, which is you look at your tax bracket today.
What's your top rate, your marginal rate, the highest rate that you're in, let's say it's 33%,
for example. Then you look at your income after you retire, before Social Security, before
required minimum distributions. Oh, you're in 12% bracket. You should be converting like crazy,

(57:07):
right? When you look at what your income is going to be after your required minimum distributions
and Social Security. So you just have to look at your income at different points. Now,
if you're in a very high bracket and you always will be in a high bracket. It's,
there's less urgency in a way, but on the other hand, maybe your kids are in high brackets too and
you want to convert so that you relieve them from taxes. I mean, it's so individualized.

Joe (57:32):
“Hey guys, great entertaining show and better information. My writing is
worse than Joe's reading. So this should be fun.” Oh my gosh. My reading is so
bad. It's so embarrassing. I don't know why we continue to do the show the way we do it.

Al (57:47):
Because it's entertaining.

Joe (57:48):
We're gonna just make an AI person read this stuff.

Al (57:53):
We should, yeah.

Joe (57:54):
“We are the Griswolds, Clark and Ellen.” God, I love the Griswolds.

Al (57:59):
Yeah, I did too.

Joe (58:01):
Remember? I used to call you Clark all the time.

Al (58:03):
Yeah, yeah, I think you still do sometimes.

Joe (58:05):
You are Clark. “Currently living in Tutsville, Florida.”

Andi (58:10):
I think that's Titusville.

Joe (58:12):
Titusville, Florida. See my reading is top-notch.

Andi (58:17):
I take it Titusville is not anywhere near where you went to college?

Joe (58:20):
Tired again. I was gonna say Tittysville or something, but I was like, that can't be right.

Al (58:26):
Well, you moved the U where the I was, and you, and you skipped the I.

Joe (58:31):
So, yeah. "We travel 5 to 6 months a year in Airstream Atlas Motorhome named-"

Andi (58:37):
Nittany. You know, like the Nittany Lions.

Joe (58:41):
So if you have an Airstream, are you supposed to name it? Is that the deal?

Al (58:45):
Some people do.

Joe (58:47):
Yeah, my best friend Mikey Martin has an Airstream, and he named it.

Al (58:51):
Do you name your car?

Joe (58:52):
No.

Al (58:53):
Me neither.

Joe (58:54):
No. Car.
I have to get in my car. I'm like, I have to get in Little Johnny to go down to the grocery store.

Al (59:07):
When I got my Tesla, I was supposed to put in a name.

Joe (59:10):
A name.

Al (59:11):
Yeah. So I didn't know what to do. So I-

Joe (59:13):
You called it car.

Al (59:14):
I put, I put Tesla.

Joe (59:17):
Oh, yeah. I don't know. I don't know if
I could hang out with someone that names their automobiles.

Andi (59:24):
Which is worse? Talking about yourself in the third person or naming your car?

Joe (59:31):
I think it's both. If someone,
if someone names their car, they definitely talk in the third person.

Al (59:36):
They probably do.

Joe (59:37):
Joe's got to get little Johnny to go to the grocery store.

Al (59:41):
Little Johnny, come on over. We're going.

Joe (59:43):
I've got to get Clark some new ho ho hogagoggin. Oh gosh. All right, Airstream.

Al (59:53):
Okay.

Joe (59:54):
Yeah, his name, was, like, he named it Dolores or something, or Doris.

Al (59:59):
Oh yeah, I think you're right.

Joe (01:00:00):
“We have been to East Mount- East-“

Al (01:00:04):
Eastern-most.

Joe (01:00:05):
Well, thank you. “Eastern-most point, Southern-most point and the Western-most
point and the Northern-most point in the lower 48 states.” Okay. So he's been all over the US.

Al (01:00:18):
Yep.

Joe (01:00:18):
“Also, we have swam in Atlanta, Pacific, and Arctic Oceans. The Arctic
Ocean swim was after a 600-mile one-way drive on a dirt road to Tooka Yucca.” (Tuktoyaktuk)

Al (01:00:34):
That's in Canada.

Joe (01:00:37):
It’s a really nice place I heard. Oh boy, this is, this is, this is tough.

Al (01:00:43):
Oh, he says “Joe, can't wait until I hear you pronounce it.” Let me, let me try
it. Took, took, took, took, took, took, took. Tuk, tuk, toe, yuck, tuk. Tuk, yuck, tuk, tuk.

Joe (01:00:54):
Tuka, yuck, tuk, tuka. Alright, that's it, we're done. Thank you everyone for the
wonderful questions. Andi, great job on putting all this stuff together.

Andi (01:01:02):
Thank you for doing it.

Joe (01:01:04):
We'll see you all next week. Show's called Your Money, Your Wealth®.

Outro (01:01:07):
2024 YMYW Podcast Stats

Andi (01:01:07):
As we close out this best of 2024, let’s talk stats
Your Wealth® podcast for more than 38,000 hours on YouTube. You made it one of the top 10% of
video podcasts on Spotify. You downloaded it over a million times in the podcast apps in last year,
and over 4 million times since the podcast started publishing. You put Your Money,

(01:01:30):
Your Wealth® in the top 0.5% most popular shows out of over 3.4 million podcasts,
globally. Clearly, Your Money, Your Wealth® is your podcast. I mean it
every time I say, the show wouldn’t be a show without you. We thank you for that.
Your Money, Your Wealth® is presented by Pure Financial Advisors, a registered investment

(01:01:51):
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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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Grow Your Wealth Tax-Free & Retire Sooner: YMYW Best of 2024 - 511