April 24, 2024 • 18 mins
Retirement is a milestone many of us eagerly anticipate, but it also marks a significant change in how we manage our finances. Instead of a regular paycheck, we'll rely on various income streams. So, what income streams will you have in retirement? And how can you plan for this stage before you retire? In today's episode, we'll cover all of that and more.
Here’s some of what we discuss in this episode:
- Strategizing your retirement accounts and Social Security together
- The shift from pensions to defined contribution plans in the U.S.
- The differences between traditional and Roth 401(k)s
- Understanding required minimum distributions in retirement planning
- The difference between tradition and Roth IRAs
WAYS TO CONNECT:
Book a 15-minute discovery call with the team here: https://calendly.com/rachel-bwg
Visit https://bulmanwealth.com/marcos-lemus to learn more about Marcos Lemus and the other members of the team.
If you have any questions about what we discussed or anything else in your financial plan, email us at ask@bulmanwealth.com. You can also reach the team by phone at (916) 458-8199.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Have you ever wondered what the transition
would feel like from receiving astandard paycheck or salary to
multiple streams of income inretirement?
What streams of income will youhave, and what are some ways
you can begin to plan before youget to that final retirement
stage?
So in today's episode we'llcover all of that and more.
Speaker 2 (00:27):
Welcome.
You are listening to the BowmanWealth Group's Financial
Compass Podcast, a showdedicated to helping you
successfully navigate to andthrough your retirement.
Our Financial Compass processgoes beyond traditional holistic
financial planning.
We care as much about you andyour lifestyle as we do about
your plan.
Your hosts are Bowman WealthGroup financial advisors who,
(00:49):
for more than two decades, haveprovided financial leadership
for those they serve.
Speaker 1 (00:55):
This is Marcos Lemus.
I'm a financial advisor atBowman Wealth Group in Roseville
, california and you arelistening to your Financial
compass.
Thanks to all of our listenersfor tuning in.
If this is your first timetuning into us, thank you for
joining us.
Thanks for taking the time.
If you've listened to ourpodcast before, we certainly
(01:16):
appreciate you and want to saywelcome back.
Whether you stumbled onto ourpodcast from references from our
newsletter, from Spotifypodcast or any other podcast
platform, thanks for joining us.
We do appreciate all thesupport.
So, really, if anything sticksout, anything resonates with you
(01:36):
today maybe you've gotquestions or comments or any
kind of feedback.
Please feel welcome to reachout to us at our email address.
That is the best way to get incontact with our team and that
email is ask at Bowman wealthcom.
That's a S K at Bowmanwealthcom.
(01:57):
So every episode we like tofocus on a different topic.
There's probably some overlap,but we like to focus on topics
that folks share in common, havequestions about with respect to
the financial realm.
So today's particular episodeis focused on really income
(02:18):
planning for retirement.
But we're going to focus onwhat we'll refer to as three
pillars of income in retirement,and you know what are they, how
big of a role do they play inretirement planning?
And we'll get into some of thespecifics.
And so I'll say this with acaveat, because you know, our
philosophy here at Bowman WealthGroup is that you should really
(02:39):
focus and worry about fiveworlds, and those five worlds
for us are, you know, incomeplanning, investments, tax
planning in terms of taxefficiency healthcare and then
estate and legacy planning.
So you know that first one, Imentioned income planning.
That's kind of the focus of oftoday's podcast, and we'll cover
(03:02):
the three pillars, or the threelegs of this retirement stool
and get into that today.
So replacing your paycheck inretirement certainly isn't an
easy task, you know.
While it does take growing yoursavings over your working years
, transforming those savingsinto income later, when you're
retired, is an entirelydifferent question to ask your
(03:23):
money to do right.
So if your retirement incomeplan isn't comprehensive,
doesn't account for everything,you may come up short on your
financial goals long term.
So that's why efficientlyutilizing these three pillars
that we're going to talk abouttoday, these three pillars of
retirement income, is crucial toproviding yourself the income
that you're going to needthroughout those retirement
(03:44):
years.
So the first one we're going tocover is a common one.
Everybody should know thissocial security.
It is one of the three pillarsof retirement income and we're
going to talk a little bit aboutmaybe optimizing some of those
benefits.
But optimizing that can takesome strategy, um, and it
requires some thinking.
Everybody's situation is goingto be a little bit different.
(04:06):
So, with respect to socialsecurity, you know these
benefits are based on youraverage income over your highest
, earning 35 years of working,and it's designed to replace,
about, you know, 40% of yourincome or so if you're claiming
a full benefit.
So we'll talk about thedifferent ages.
We've referenced this in a pastpodcast but just to kind of
(04:29):
cover it again, you know you canclaim social security at any
age, really, starting at age 62.
If you take it as early as 62,which is the earliest you can
elect to take that benefit,you'll be receiving, you know,
receiving the minimum benefitfor you at that age.
You can, however, choose towait, to delay it, so you can
(04:50):
wait as long as 70, really, andwe'll get to that.
But a person's full retirementage, what's deemed as their full
retirement age amount, is 66and 67.
So if you're able to wait untilthen, that's a more substantial
monthly amount you can expectto receive.
You can, however, choose todelay even further and wait
(05:13):
until age 70.
And at age 70, that'sessentially the maximum benefit
that you can receive.
It is the maximum that you canreceive.
It will not grow beyond that.
You can certainly wait beyond70 if you don't want or don't
need the income, but it doesn'tcontinue to grow any more beyond
70.
So certainly, figuring out whenyou want to claim or when you
can claim Social Security is amajor part of your income
(05:36):
strategy, and that answer isgoing to be different for
everybody.
It depends on a lot of factors.
Are you still working?
Are we using other things tokind of fill the gap?
Fill your income gap until youchoose to elect at maybe a
higher amount.
Maybe you want to claim earlyif your spouse is still working.
Or you want to claim early ifyou just rolled over your
retirement account holdings froma traditional account to a Roth
(05:59):
account, maybe a Roth IRA thatrequires you to wait five years
before you start drawing onthose Roth IRA funds because of
that five-year rule.
So strategizing your retirementaccounts and social security
together is the key tooptimizing your retirement
income.
So that's kind of socialsecurity at a high level, right,
(06:21):
but it is one of those legs ofthis, the three-legged stool of
retirement, the three pillars,right.
So, moving on to the next one,think of it as the employer side
.
So this next section ispensions and 401ks.
But not just 401ks.
This is really any 400 seriesemployer contribution plan,
(06:43):
employer plan, employersponsored plan.
So this can be a 457, a 403B or43A or 401k, right, this may
even be a TSP if you're agovernment employee.
So these are accounts that,again, are sponsored by your
employers, usually haveincentives and penalties that
(07:04):
are aimed at encouragingsomebody to save for retirement
and utilize those savings asincome later down the road when
you do retire.
Now going back to pensions,pensions were very common in the
70s and 80s and there was atipping point when companies,
more and more companies, startedto utilize the 401k plan as an
(07:27):
alternative to a pension planand we'll talk about kind of the
differences between the two.
But pensions were a commonvehicle for retirement savings
and you know, now, more oftenthan not you're seeing, 401ks
are much, much more common.
So some people are lucky enoughto still receive a pension
they're few and far betweennowadays.
But pensions were structuredfor income, for guaranteed
(07:50):
income for life essentially, andthe employer really carried all
of the investment risk.
So pensions are defined benefitplans and what happened was
those slowly, as I mentioned,started shifting to employers
using 401k plans.
So if a pension was seen as adefined benefit plan, 401ks and
(08:13):
some of these other 400 seriesretirement plans are defined
contribution plans.
So that word in the middle wasthe difference.
And you know pensions are lesspopular now because all of the
risk, as I mentioned, was withthe employer.
They had to try to figure outyou know how long do we expect
this person to live, you knowwhat's the guaranteed amount we
(08:34):
can pay them.
And it was really a lot of work, I think, on the
employer-sponsored plan side.
When the shift occurred and westarted using 401ks and similar
plans, you know all that riskshifted from the employer to the
employee and it really becamethe employee's responsibility to
(08:55):
make those contributions ontheir end.
Now there are certain tax breaksthat we get with traditional
401ks If we're contributing.
Those are pre-tax contributionsand you get a tax break in that
fiscal year, which is great fora lot of folks.
But we're just deferring thetaxes down the road and letting
(09:18):
us deal with that when we startto take those withdrawals in
retirement.
There is, however, analternative.
More and more companies, evennowadays, are offering a Roth
401k option and you may haveheard that term before Roth.
It's very popular.
You hear it a lot with RothIRAs and we'll get to that.
But with a Roth 401k, again,it's still tied to an employer
(09:43):
and still an employer-sponsoredplan.
But the Roth portion just meansafter tax, so it means you are
accepting the tax burden thisyear.
It's not a tax deferred account.
And there are 401ks that oftenhave a split.
Maybe there's some pre-tax andsome post-tax money in there,
but it's important to note thatif you make post-tax
(10:06):
contributions in the Rothportion of a 401k, pay the taxes
now or in that calendar yearand you don't have to worry
about them again down the road,which is a fantastic benefit.
Those get to grow tax-free andthen when you are retired and
need those funds and canwithdraw them at that point,
they're also free of tax.
(10:27):
So I think one other thing tonote is the lovely RMDs.
So that's an acronym that we'vereferenced in a past podcast,
and RMD stands for requiredminimum distribution.
Now, with a 401k, if it's atraditional 401k or a pre-tax,
you do have to worry about RMDs,and what that means is when you
(10:51):
get to a certain age in thisyear, 2024, the age just moved
out to age 73, which means ifanybody turns 73 in this
calendar year, they have tobegin taking those required
minimum distributions per theIRS and the tax code.
So they have to be prepared topull a certain percentage out
(11:14):
every year from thosetraditional 401ks and even
traditional IRAs.
But we'll get to that.
So I think, just keeping inmind the employer sponsored
plans, whether that's a pensionor a 401k, either traditional or
Roth.
You know we want to beconscious of those RMDs.
(11:38):
Lastly, the last leg of thislast pillar we'll reference is
the personal savings side, andthat's kind of the third pillar
of retirement income.
And when it comes to personalsavings, it's not just a savings
account.
You know we'll get a little bitdeeper into that.
It can be, but here we're goingto look at the other side of
(11:59):
retirement accounts.
So we spoke about the employersponsored retirement account,
right, the 401k or pension 457.
Those often give you lesscontrol over your finances, over
your investments.
They do come with benefits,right, with those employer
sponsored plans, a lot ofemployers offer a match, which
is fantastic because you canlook at it almost as free money.
(12:21):
If you put in 3%, you know theemployer will often match 3%, or
sometimes up to 4 or 5% or 6,depending on your plan.
So while you have some benefitsthere, there's also some
limitations in terms of, youknow, investments, in terms of
expenses, in terms of where youcan hold those funds.
(12:41):
So, with an IRA or an individualretirement account, these are
individual accounts that you setup on your own outside of the
employer and you contribute tooutside of the employer.
So these accounts are taxadvantaged if you use them
properly for your retirement.
So we talked about atraditional or a pre-tax and a
Roth or a post-tax with respectto 401ks.
(13:04):
The same is true on thepersonal retirement side too.
So you can have a traditionalIRA individual retirement
account or a Roth IRA individualretirement account, and
figuring out which one toutilize is can be tough, and
it's almost a guess in terms oftrying to figure out what your
(13:28):
income will be at when you doretire.
So the maximum for anybodywho's 50 years old or younger in
this year, 2024, is $7,000 interms of a contribution.
If you're over the age of 50,you can contribute $8,000 each
year as of 2024.
That holds true for bothtraditional and Roth IRAs.
(13:52):
It's not $7,000 into both, it'sall of them.
But with RMDs, if you'reputting money into a Roth IRA,
however, you don't have to worryabout RMDs later down the road,
right, because we're alreadypaying the tax in this calendar
year, this fiscal year.
So you pay them once.
You're not going to have toworry about those taxes down the
(14:13):
road.
Let's talk about somehypotheticals Maybe, where we
had some issues with SocialSecurity, pensions, 401ks and
personal savings and just didn'tutilize the three very well.
Suppose somebody maybe took toomuch income in a given year
which increased their tax burden.
You know how can this happen?
Maybe from not factoring inRMDs we talked about RMDs quite
(14:36):
a bit Maybe from liquidating anaccount and not rolling over the
funds in 60 days during thattimeframe, or maybe adjusting
their portfolio and they endedup paying out more interest or
more dividends in the form oftaxable income that we weren't
prepared for.
Maybe they claim socialsecurity too early, too late.
(14:58):
Maybe they had some old, lost401ks from previous employers
that they forgot to account forwhen it comes to RMDs and got
penalized, from previousemployers that they forgot to
account for when it comes toRMDs and got penalized.
So there's a lot of differentways where these hypothetical
clients could run into someissues if we're not looking at
everything comprehensively,looking at each leg of this
(15:18):
income stool, so to speak.
So again, this is kind of ahigh level, but a quick look at
income planning at a high leveland there's certainly at income
planning at a high level andthere's certainly different
income streams that everybodycould have, but these are three
common ones that most of thepopulation will encounter in
some way, shape or form when itcomes to retirement planning.
So you know, when all you hadto do during your working years
(15:41):
was make sure that you savedenough each month, it may have
felt easy to manage yourfinances on your own, but when
it comes to shifting, shiftinggears and shifting your
retirement plan to provide youwith income now it becomes your
paycheck it's certainly easiersaid than done.
So whether you're worried aboutwhere your income sources are
going to come from, how toprotect income from market risks
(16:01):
or just different unique risksto your retirement portfolio,
there's certainly many of us inthe space that work with these
types of things day in and dayout and can help tackle these
roadblocks.
So again, I want to thank youguys all for listening Again.
If anything here resonated withyou today, if you have
questions, comments or you justwant to dive deeper into your
(16:21):
particular unique situation,like I said, shoot us an email
at that email address, that's,ask at Bowman wealthcom.
Certainly appreciate all thesupport.
Again, regardless of thepodcast platform you joined us
on, we will thank you.
We thank all of our listeners,new and returning.
We appreciate all the feedbackand greatly appreciate you, your
(16:44):
reviews and your most preciousasset your time.
Thanks for sharing that with us.
Please join us next time onyour Financial Compass.
Speaker 2 (16:53):
This has been your host, Marcos Limas with the
(17:20):
Bowman Wealth Group.
Take care, Thank you.
Investing always involves riskand possible loss of capital.
Opinions expressed are solelythose of Bowman Wealth Group and
our editorial staff.
The information contained inthis material has been derived
from sources believed to bereliable, but does not guarantee
accuracy and completeness anddoes not report to be a complete
analysis of the materialsdiscussed.
Any statements or opinionsexpressed should in no way be
construed or interpreted assolicitation to sell or offer to
sell advisory services to anyresidents of any state other
(17:42):
than the states where otherwiselegally permitted.
Advisory services are offeredthrough Chris Bowman Inc.
Dba Bowman Wealth Group.
Registration as an investmentadvisor does not imply a certain
level of skill or training.
Insurance products and servicesare offered and sold through
Chris Bowman Inc.
Dba BWG Insurance Agency.
Have you ever wondered what the transition
would feel like from receiving astandard paycheck or salary to
multiple streams of income inretirement?
What streams of income will youhave, and what are some ways
you can begin to plan before youget to that final retirement
stage?
So in today's episode we'llcover all of that and more.
Speaker 2 (00:27):
Welcome.
You are listening to the BowmanWealth Group's Financial
Compass Podcast, a showdedicated to helping you
successfully navigate to andthrough your retirement.
Our Financial Compass processgoes beyond traditional holistic
financial planning.
We care as much about you andyour lifestyle as we do about
your plan.
Your hosts are Bowman WealthGroup financial advisors who,
(00:49):
for more than two decades, haveprovided financial leadership
for those they serve.
Speaker 1 (00:55):
This is Marcos Lemus.
I'm a financial advisor atBowman Wealth Group in Roseville
, california and you arelistening to your Financial
compass.
Thanks to all of our listenersfor tuning in.
If this is your first timetuning into us, thank you for
joining us.
Thanks for taking the time.
If you've listened to ourpodcast before, we certainly
(01:16):
appreciate you and want to saywelcome back.
Whether you stumbled onto ourpodcast from references from our
newsletter, from Spotifypodcast or any other podcast
platform, thanks for joining us.
We do appreciate all thesupport.
So, really, if anything sticksout, anything resonates with you
(01:36):
today maybe you've gotquestions or comments or any
kind of feedback.
Please feel welcome to reachout to us at our email address.
That is the best way to get incontact with our team and that
email is ask at Bowman wealthcom.
That's a S K at Bowmanwealthcom.
(01:57):
So every episode we like tofocus on a different topic.
There's probably some overlap,but we like to focus on topics
that folks share in common, havequestions about with respect to
the financial realm.
So today's particular episodeis focused on really income
(02:18):
planning for retirement.
But we're going to focus onwhat we'll refer to as three
pillars of income in retirement,and you know what are they, how
big of a role do they play inretirement planning?
And we'll get into some of thespecifics.
And so I'll say this with acaveat, because you know, our
philosophy here at Bowman WealthGroup is that you should really
(02:39):
focus and worry about fiveworlds, and those five worlds
for us are, you know, incomeplanning, investments, tax
planning in terms of taxefficiency healthcare and then
estate and legacy planning.
So you know that first one, Imentioned income planning.
That's kind of the focus of oftoday's podcast, and we'll cover
(03:02):
the three pillars, or the threelegs of this retirement stool
and get into that today.
So replacing your paycheck inretirement certainly isn't an
easy task, you know.
While it does take growing yoursavings over your working years
, transforming those savingsinto income later, when you're
retired, is an entirelydifferent question to ask your
(03:23):
money to do right.
So if your retirement incomeplan isn't comprehensive,
doesn't account for everything,you may come up short on your
financial goals long term.
So that's why efficientlyutilizing these three pillars
that we're going to talk abouttoday, these three pillars of
retirement income, is crucial toproviding yourself the income
that you're going to needthroughout those retirement
(03:44):
years.
So the first one we're going tocover is a common one.
Everybody should know thissocial security.
It is one of the three pillarsof retirement income and we're
going to talk a little bit aboutmaybe optimizing some of those
benefits.
But optimizing that can takesome strategy, um, and it
requires some thinking.
Everybody's situation is goingto be a little bit different.
(04:06):
So, with respect to socialsecurity, you know these
benefits are based on youraverage income over your highest
, earning 35 years of working,and it's designed to replace,
about, you know, 40% of yourincome or so if you're claiming
a full benefit.
So we'll talk about thedifferent ages.
We've referenced this in a pastpodcast but just to kind of
(04:29):
cover it again, you know you canclaim social security at any
age, really, starting at age 62.
If you take it as early as 62,which is the earliest you can
elect to take that benefit,you'll be receiving, you know,
receiving the minimum benefitfor you at that age.
You can, however, choose towait, to delay it, so you can
(04:50):
wait as long as 70, really, andwe'll get to that.
But a person's full retirementage, what's deemed as their full
retirement age amount, is 66and 67.
So if you're able to wait untilthen, that's a more substantial
monthly amount you can expectto receive.
You can, however, choose todelay even further and wait
(05:13):
until age 70.
And at age 70, that'sessentially the maximum benefit
that you can receive.
It is the maximum that you canreceive.
It will not grow beyond that.
You can certainly wait beyond70 if you don't want or don't
need the income, but it doesn'tcontinue to grow any more beyond
70.
So certainly, figuring out whenyou want to claim or when you
can claim Social Security is amajor part of your income
(05:36):
strategy, and that answer isgoing to be different for
everybody.
It depends on a lot of factors.
Are you still working?
Are we using other things tokind of fill the gap?
Fill your income gap until youchoose to elect at maybe a
higher amount.
Maybe you want to claim earlyif your spouse is still working.
Or you want to claim early ifyou just rolled over your
retirement account holdings froma traditional account to a Roth
(05:59):
account, maybe a Roth IRA thatrequires you to wait five years
before you start drawing onthose Roth IRA funds because of
that five-year rule.
So strategizing your retirementaccounts and social security
together is the key tooptimizing your retirement
income.
So that's kind of socialsecurity at a high level, right,
(06:21):
but it is one of those legs ofthis, the three-legged stool of
retirement, the three pillars,right.
So, moving on to the next one,think of it as the employer side
.
So this next section ispensions and 401ks.
But not just 401ks.
This is really any 400 seriesemployer contribution plan,
(06:43):
employer plan, employersponsored plan.
So this can be a 457, a 403B or43A or 401k, right, this may
even be a TSP if you're agovernment employee.
So these are accounts that,again, are sponsored by your
employers, usually haveincentives and penalties that
(07:04):
are aimed at encouragingsomebody to save for retirement
and utilize those savings asincome later down the road when
you do retire.
Now going back to pensions,pensions were very common in the
70s and 80s and there was atipping point when companies,
more and more companies, startedto utilize the 401k plan as an
(07:27):
alternative to a pension planand we'll talk about kind of the
differences between the two.
But pensions were a commonvehicle for retirement savings
and you know, now, more oftenthan not you're seeing, 401ks
are much, much more common.
So some people are lucky enoughto still receive a pension
they're few and far betweennowadays.
But pensions were structuredfor income, for guaranteed
(07:50):
income for life essentially, andthe employer really carried all
of the investment risk.
So pensions are defined benefitplans and what happened was
those slowly, as I mentioned,started shifting to employers
using 401k plans.
So if a pension was seen as adefined benefit plan, 401ks and
(08:13):
some of these other 400 seriesretirement plans are defined
contribution plans.
So that word in the middle wasthe difference.
And you know pensions are lesspopular now because all of the
risk, as I mentioned, was withthe employer.
They had to try to figure outyou know how long do we expect
this person to live, you knowwhat's the guaranteed amount we
(08:34):
can pay them.
And it was really a lot of work, I think, on the
employer-sponsored plan side.
When the shift occurred and westarted using 401ks and similar
plans, you know all that riskshifted from the employer to the
employee and it really becamethe employee's responsibility to
(08:55):
make those contributions ontheir end.
Now there are certain tax breaksthat we get with traditional
401ks If we're contributing.
Those are pre-tax contributionsand you get a tax break in that
fiscal year, which is great fora lot of folks.
But we're just deferring thetaxes down the road and letting
(09:18):
us deal with that when we startto take those withdrawals in
retirement.
There is, however, analternative.
More and more companies, evennowadays, are offering a Roth
401k option and you may haveheard that term before Roth.
It's very popular.
You hear it a lot with RothIRAs and we'll get to that.
But with a Roth 401k, again,it's still tied to an employer
(09:43):
and still an employer-sponsoredplan.
But the Roth portion just meansafter tax, so it means you are
accepting the tax burden thisyear.
It's not a tax deferred account.
And there are 401ks that oftenhave a split.
Maybe there's some pre-tax andsome post-tax money in there,
but it's important to note thatif you make post-tax
(10:06):
contributions in the Rothportion of a 401k, pay the taxes
now or in that calendar yearand you don't have to worry
about them again down the road,which is a fantastic benefit.
Those get to grow tax-free andthen when you are retired and
need those funds and canwithdraw them at that point,
they're also free of tax.
(10:27):
So I think one other thing tonote is the lovely RMDs.
So that's an acronym that we'vereferenced in a past podcast,
and RMD stands for requiredminimum distribution.
Now, with a 401k, if it's atraditional 401k or a pre-tax,
you do have to worry about RMDs,and what that means is when you
(10:51):
get to a certain age in thisyear, 2024, the age just moved
out to age 73, which means ifanybody turns 73 in this
calendar year, they have tobegin taking those required
minimum distributions per theIRS and the tax code.
So they have to be prepared topull a certain percentage out
(11:14):
every year from thosetraditional 401ks and even
traditional IRAs.
But we'll get to that.
So I think, just keeping inmind the employer sponsored
plans, whether that's a pensionor a 401k, either traditional or
Roth.
You know we want to beconscious of those RMDs.
(11:38):
Lastly, the last leg of thislast pillar we'll reference is
the personal savings side, andthat's kind of the third pillar
of retirement income.
And when it comes to personalsavings, it's not just a savings
account.
You know we'll get a little bitdeeper into that.
It can be, but here we're goingto look at the other side of
(11:59):
retirement accounts.
So we spoke about the employersponsored retirement account,
right, the 401k or pension 457.
Those often give you lesscontrol over your finances, over
your investments.
They do come with benefits,right, with those employer
sponsored plans, a lot ofemployers offer a match, which
is fantastic because you canlook at it almost as free money.
(12:21):
If you put in 3%, you know theemployer will often match 3%, or
sometimes up to 4 or 5% or 6,depending on your plan.
So while you have some benefitsthere, there's also some
limitations in terms of, youknow, investments, in terms of
expenses, in terms of where youcan hold those funds.
(12:41):
So, with an IRA or an individualretirement account, these are
individual accounts that you setup on your own outside of the
employer and you contribute tooutside of the employer.
So these accounts are taxadvantaged if you use them
properly for your retirement.
So we talked about atraditional or a pre-tax and a
Roth or a post-tax with respectto 401ks.
(13:04):
The same is true on thepersonal retirement side too.
So you can have a traditionalIRA individual retirement
account or a Roth IRA individualretirement account, and
figuring out which one toutilize is can be tough, and
it's almost a guess in terms oftrying to figure out what your
(13:28):
income will be at when you doretire.
So the maximum for anybodywho's 50 years old or younger in
this year, 2024, is $7,000 interms of a contribution.
If you're over the age of 50,you can contribute $8,000 each
year as of 2024.
That holds true for bothtraditional and Roth IRAs.
(13:52):
It's not $7,000 into both, it'sall of them.
But with RMDs, if you'reputting money into a Roth IRA,
however, you don't have to worryabout RMDs later down the road,
right, because we're alreadypaying the tax in this calendar
year, this fiscal year.
So you pay them once.
You're not going to have toworry about those taxes down the
(14:13):
road.
Let's talk about somehypotheticals Maybe, where we
had some issues with SocialSecurity, pensions, 401ks and
personal savings and just didn'tutilize the three very well.
Suppose somebody maybe took toomuch income in a given year
which increased their tax burden.
You know how can this happen?
Maybe from not factoring inRMDs we talked about RMDs quite
(14:36):
a bit Maybe from liquidating anaccount and not rolling over the
funds in 60 days during thattimeframe, or maybe adjusting
their portfolio and they endedup paying out more interest or
more dividends in the form oftaxable income that we weren't
prepared for.
Maybe they claim socialsecurity too early, too late.
(14:58):
Maybe they had some old, lost401ks from previous employers
that they forgot to account forwhen it comes to RMDs and got
penalized, from previousemployers that they forgot to
account for when it comes toRMDs and got penalized.
So there's a lot of differentways where these hypothetical
clients could run into someissues if we're not looking at
everything comprehensively,looking at each leg of this
(15:18):
income stool, so to speak.
So again, this is kind of ahigh level, but a quick look at
income planning at a high leveland there's certainly at income
planning at a high level andthere's certainly different
income streams that everybodycould have, but these are three
common ones that most of thepopulation will encounter in
some way, shape or form when itcomes to retirement planning.
So you know, when all you hadto do during your working years
(15:41):
was make sure that you savedenough each month, it may have
felt easy to manage yourfinances on your own, but when
it comes to shifting, shiftinggears and shifting your
retirement plan to provide youwith income now it becomes your
paycheck it's certainly easiersaid than done.
So whether you're worried aboutwhere your income sources are
going to come from, how toprotect income from market risks
(16:01):
or just different unique risksto your retirement portfolio,
there's certainly many of us inthe space that work with these
types of things day in and dayout and can help tackle these
roadblocks.
So again, I want to thank youguys all for listening Again.
If anything here resonated withyou today, if you have
questions, comments or you justwant to dive deeper into your
(16:21):
particular unique situation,like I said, shoot us an email
at that email address, that's,ask at Bowman wealthcom.
Certainly appreciate all thesupport.
Again, regardless of thepodcast platform you joined us
on, we will thank you.
We thank all of our listeners,new and returning.
We appreciate all the feedbackand greatly appreciate you, your
(16:44):
reviews and your most preciousasset your time.
Thanks for sharing that with us.
Please join us next time onyour Financial Compass.
Speaker 2 (16:53):
This has been your host, Marcos Limas with the
(17:20):
Bowman Wealth Group.
Take care, Thank you.
Investing always involves riskand possible loss of capital.
Opinions expressed are solelythose of Bowman Wealth Group and
our editorial staff.
The information contained inthis material has been derived
from sources believed to bereliable, but does not guarantee
accuracy and completeness anddoes not report to be a complete
analysis of the materialsdiscussed.
Any statements or opinionsexpressed should in no way be
construed or interpreted assolicitation to sell or offer to
sell advisory services to anyresidents of any state other
(17:42):
than the states where otherwiselegally permitted.
Advisory services are offeredthrough Chris Bowman Inc.
Dba Bowman Wealth Group.
Registration as an investmentadvisor does not imply a certain
level of skill or training.
Insurance products and servicesare offered and sold through
Chris Bowman Inc.
Dba BWG Insurance Agency.
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