Avsnitt
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Jennifer, 54, plans to retire soon. Her husband, 70, is retired, on Social Security, and dealing with some severe health issues. Jennifer worries about possibly becoming single in retirement, which could result in a higher tax bracket for her.
Jennifer is considering whether to convert her traditional accounts to Roth to lower future taxes or to change her contributions to Roth 403b, even if it means paying more taxes now. James walks us through several factors for her to consider and demonstrates why her future tax situation is likely not as dire as she thinks.
Questions Answered:
How should Jennifer maximize her retirement savings in light of her current financial situation and future tax implications?
What factors must Jennifer consider when deciding whether to convert her traditional retirement accounts to Roth or change her contributions to Roth 403b?
Timestamps:
0:00 - Jennifer’s question
4:46 - Retire early for tax benefits?
6:05 - Roth conversion strategy
8:43 - Consider future expenses
12:38 - Assess SS strategies
13:56 - Consider living situation
15:54 - The conversion question
17:54 - Main takeawaysCreate Your Custom Strategy ⬇️
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Joe is planning for retirement and wants to minimize his tax burden, especially on the interest earned from his three annuities. James explains that non-qualified annuities are purchased with post-tax money and offer tax deferral on growth until withdrawal. When taking out funds, the principal is tax-free, but earnings are taxed at ordinary income rates.
He explores strategies for tax-efficient withdrawals. He also touches on annuities, options like a 1035 exchange to transfer an annuity into a different product for improved performance, the tax implications for heirs, and early withdrawal penalties before age 59 and a half.
Questions Answered:
How are non-qualified annuities taxed upon distribution, including both lump sum and annuity options?
What strategies can be implemented to keep the tax burden as low as possible when withdrawing from non-qualified annuities?
Timestamps:
0:00 - Joe’s question
1:52 - Non-qualified annuity overview
5:11 - Potential tax strategies
10:02 - Annuitization option
12:31 - Annuity regret
13:22 - 1035 Exchange
14:33 - Things to knowCreate Your Custom Strategy ⬇️
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Saknas det avsnitt?
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Deciding to work with a financial advisor is about more than how much you've stashed away. It's also about determining whether an advisor's benefits outweigh the costs.
In your higher earning years, finances become more complex. More money means more decisions and more chances to make mistakes or miss out on opportunities. That's where a quality advisor can come in handy. They help you steer clear of bad investments, seize the right opportunities, and keep financial stress at bay.
Having more than one perspective to draw from is the key to well-informed financial decisions. Teaming up and talking it out, whether with your partner or a financial advisor, is always beneficial.
Questions answered:
How can I determine whether working with a financial advisor is worth it for me?
What factors should I consider when deciding if I need a financial advisor beyond just my age or income level?
Timestamps:
0:00 - Not an age-related decision
2:43 - Value and pricing structure
4:12 - Natural conflicts
7:24 - When benefit exceeds cost
10:02 - Cost of mistakes
12:18 - Cost of missed opportunities
14:16 - Cost of anxiety
16:02 - Thought partnership
21:36 - SummaryCreate Your Custom Strategy ⬇️
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Listener Ray is wondering what to do with his home as he embarks on a nomadic, van-life journey in retirement. Should he sell it to finance his travels or retain it for potential appreciation and cash flow?
James explores the nuances of home ownership as an asset versus an investment. He considers cash flow and leverage as he looks at Ray’s three options – sell, rent, or borrow – while emphasizing aligning financial decisions with personal goals and aspirations.
Questions Answered:
Why shouldn’t I consider my home an investment?
What are the key financial considerations for retirees when deciding whether to sell, rent them out, or explore other options?
Timestamps:
0:00 - Ray’s question
1:56 - Why a home isn’t an investment
4:38 - Do you want to be a landlord?
8:22 - The financials
10:14 - Asset appreciation
11:30 - Cashflow
15:04 - Leverage
19:02 - What should Ray do?
20:33 - Reverse mortgageCreate Your Custom Strategy ⬇️
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Listener Drew asks about a tax strategy for juggling capital gains and Roth conversions. While it can be a complicated question – especially when large accounts are involved – James provides some general guidelines that can be helpful for anyone with similar gnarly tax strategy challenges in retirement.
In this episode, we’ll cover the extent to which required distributions will be an issue, what you need to alleviate that issue, and the timeframe within which you have to do that.
James explains how to work backward to project your various tax brackets and determine how to prioritize tax gain harvesting, Roth conversions, and other tax strategies.
Questions Answered:
What is tax gain harvesting?
What is the tax planning window and how do I use it to my advantage?
Timestamps:
0:00 - Drew’s question
2:50 - Determine use for each asset
5:59 - Tax gain harvesting
11:10 - Back to Drew
15:30 - James’ priorities for Drew
18:41 - Usually not either/or
20:07 - Working backwards
24:50 - General principles
29:50 - Tax planning window
32:16 - SummaryCreate Your Custom Strategy ⬇️
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James responds to listener Jerry’s question about the optimal time to distribute inheritance or charitable gifts: before or after passing away.
James walks listeners through four important things to consider when it comes to gifting and inheritance: your gifting goal, whether you have a strong desire to see the assets gifted within your lifetime, the tax implications of various types of gifts, and what to do with assets you plan to retain for now but are intended for future generations.
Questions Answered:
Should I give my children and grandchildren their inheritance before or after I die?
What are the tax implications to my children when I gift them my assets?
Timestamps:
0:00 - Jerry’s question
2:20 - What is your gifting goal?
3:38 - Gift during your lifetime?
6:51 - Timing and priorities
9:17 - Different tax implications
12:08 - Exemption amounts
14:13 - Tax implications to child
15:33 - Proper beneficiary designations
21:41 - The right time horizon
24:45 - SummaryCreate Your Custom Strategy ⬇️
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A listener says, “Eventually, one spouse will pass before the other, which will often catapult the survivor into a significantly higher tax bracket. Shouldn’t a Roth strategy take this into account?”
James explores several factors that could positively and negatively impact a survivor’s tax liability and what to consider when creating a Roth conversion strategy.
Questions Answered:
How can Roth conversions benefit married couples beyond tax savings?
What factors should be considered when determining the optimal strategy for Roth conversions to protect a surviving spouse?
Timestamps:
0:00 - Steve’s question
3:40 - An example
6:41 - 3 changes
12:32 - Positive impacts
15:22 - RMD calculations
16:45 - Widows tax penalty
19:46 - When to do Roth conversions
23:40 - Big age gap
28:45 - Start with a good reason
29:57 - The bottom lineCreate Your Custom Strategy ⬇️
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Jason and his wife face a crucial decision: whether to purchase an annuity or pursue traditional investments as they prepare for a full-time, slow-travel retirement.
With a diverse array of income sources, including pensions, 401k, property sales, and Social Security, they estimate their monthly expenses at $7,500. James analyzes their situation, emphasizing the balance between annuity stability and investment flexibility.
He highlights the security of annuities and explains their limitations, guiding the couple towards a tailored approach that aligns with their goals and circumstances.
Questions Answered:
What are the pros and cons of annuities?
How can I effectively balance the stability of annuities with the flexibility of traditional investments?
Timestamps:
0:00 - Jason’s question
3:07 - Pros and cons of annuities
6:32 - Assessing Jason’s situation
9:52 - The role of Jason’s portfolio
11:40 - Annuity alternatives
13:23 - Support your retirement vision
16:54 - Integrate financial plan and portfolioCreate Your Custom Strategy ⬇️
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The "Three Bucket Strategy" is a popular retirement income planning method. The first bucket covers immediate expenses in retirement. Listeners John and Donna are seeking advice on constructing their first bucket. With $1.6 million in assets and pension incomes, they aim to retire in 2026.
James analyzes their needs, income sources, and portfolio and lays a foundation for their Bucket #1. It's crucial to bridge the gap between expenses and income, considering risk capacity and tolerance.
Questions Answered:
How do you divide assets into the three buckets, and what is the purpose of each?
What role do risk capacity and risk tolerance play in determining portfolio allocation?
Timestamps:
0:00 - John and Donna
3:36 - The bucket approach
5:50 - Start with expenses
8:53 - Non-portfolio income sources
11:23 - Identify and bridge the gap
13:06 - Assessing their portfolio
14:53 - Portfolio dividend yield
16:49 - Do you need Bucket 1?
19:16 - What is the specific need?
21:07 - Risk capacity
23:22 - Test contingenciesCreate Your Custom Strategy ⬇️
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Benjamin, nearing retirement at 65, faces a familiar dilemma with his taxable account housing expensive mutual funds. Despite their underperformance, converting to low-cost index funds entails a significant tax hit due to long-held appreciable value.
James explains weighing the immediate tax consequences against the risk of holding onto underperforming assets. He also provides a framework for assessing risk, identifying options, and making decisions based on personal financial goals.
Questions Answered:
How can you decide whether to sell underperforming mutual funds or continue holding onto them?
What factors should you consider in determining whether converting to low-cost index funds aligns with your financial goals and risk tolerance?
Timestamps:
0:00 - Listener question from Benjamin
2:17 - Tail wagging dog?
3:52 - Benjamin’s situation
5:31 - WCS of selling vs not selling
11:17 - Be careful about tax drag
12:47 - Rethinking the break-even point
14:11 - Consider your goal for the money
17:17 - Identify the bigger risk
19:26 - Make your decision
20:26 - Will your tax situation change?
24:20 - Consider staggering sales
28:21 - SummaryCreate Your Custom Strategy ⬇️
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Typical retirement strategies assume a retirement age of over 60. With an earlier retirement goal, a careful look is required to determine what strategies will create the best outcome. James responds to a listener’s question about where to invest as he anticipates an early retirement. James walks through the steps of Root’s Sequoia System to explore options for early retirement scenarios.
Questions Answered:
How does early retirement impact traditional retirement planning strategies, such as the 4% rule?
When deciding between retirement accounts (e.g., 401k) or brokerage accounts for pre-60 funds in early retirement, what factors should be considered?
Timestamps:
0:00 - Question about early retirement
2:21 - Is early retirement possible?
3:30 - Why the 4% rule doesn’t apply
6:08 - Assessment of Juan’s situation
8:11 - The Sequoia system Step 1 - purpose
10:16 - Step 2 - retirement income
12:49 - Relying on SS benefit?
14:09 - Withdrawal strategy
15:32 - Sourcing funds from age 50-59
17:20 - Brokerage vs 401K
20:22 - A part-time income scenario
23:04 - Consider how expenses might change
25:14 - Step 3 - investment planning
28:09 - Steps 4 & 5- taxes and protectionCreate Your Custom Strategy ⬇️
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The 4% rule helps us understand how much we can safely take out of our portfolio each year without running out of money in retirement.
Yet, as simple as the 4 percent rule seems, the practical implications are drastically misunderstood. I explore the three common mistakes people make when applying this rule and how to avoid them.
Questions Answered:
How do RMDs impact the 4 percent rule?
Does the 4 percent rule account for changes in expenses and income sources?
Timestamps:
0:00 - Questions from listeners
1:26 - Misconception 1 - RMD
3:27 - 4% rule applies to portfolio
5:51 - Assumption of 30 years retirement
7:51 - Misconception 2 - annuity distributions
10:01 - An example
12:33 - Misconception 3 - static cash flow
13:42 - Examples of changes
17:44 - SummaryCreate Your Custom Strategy ⬇️
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Retirement is not just about financial readiness; it's also about finding purpose, passion, and personal growth.
James and guest Cynthia Meyer debunk the arrival fallacy, the illusion that reaching retirement will bring lasting happiness.
Having structure in retirement and pursuing your passions is vital to feeling fulfilled. Although it's easy to fall into comparing our retirement experiences to those around us, this is a dangerous trap. Finding what's truly important to you and following that will lead to much greater happiness.
Questions Answered:
What is the arrival fallacy?
How can retirement coaching help you find freedom and fulfillment in retirement?
Timestamps:
0:00 - Arrival fallacy
1:25 - Retire…then what?
3:58 - Structure in 4 chunks
6:06 - Risks of no structure
7:59 - Procrastination
9:35 - Finding your passion
12:33 - Microsteps and consistency
14:32 - Prodding the brain
17:01 - Not just for retirement
20:33 - Passion follows commitment
22:43 - Experiment and be flexible
24:20 - Be careful of stereotypes
26:17 - Rewire retirement
28:08 - Advice and resourcesCreate Your Custom Strategy ⬇️
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Sammy, a 51-year-old retiree, is seeking advice on how much she should convert from her traditional IRA to a Roth IRA each year to avoid jumping tax brackets and minimize the taxation of her social security benefits.
James analyzes Sammy's current financial situation and offers guidance on approaching the tax planning aspect of her retirement strategy.
Learn:
How to determine how much to convert from an IRA to a Roth IRA
Why forward-looking tax planning is essential
The potential consequences of certain financial decisions
Questions Answered:
What factors should you consider in planning Roth conversions?
How can you avoid going into a higher tax bracket?
Timestamps:
0:00 - Sammy’s Roth conversion question
2:29 - The Roth/tax rules today
4:58 - Tax on different types of income
7:24 - Some assumptions
10:19 - Figuring tax and making assessments
12:28 - RMD part 1
15:33 - RMD part 2
17:25 - Caution about tax bracket assumptions
21:58 - Important side note
23:45 - TakeawaysCreate Your Custom Strategy ⬇️
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James addresses a common concern for a couple approaching retirement through a listener’s question. Listener Rob plans to collect Social Security early at 62, raising questions about his wife’s retirement.
Understanding Social Security strategies to avoid potential losses during retirement is important.
James explains the intricacies of spousal benefits, detailing how they are calculated based on the primary earner's full retirement age benefit.
Key Takeaways:
-Wait until full retirement age to maximize spousal benefits
-Primary earner must start to start collecting for the spouse to be eligible
-Nuanced calculations involving the spouse's own retirement benefit
Questions Answered:
When should a spouse collect Social Security spousal benefits?
How are spousal benefits calculated?
Timestamps:
0:00 - A listener’s question
3:00 - Two SS options
5:17 - Spousal benefit amounts
7:24 - When spouses can collect
8:55 - Spousal + primary benefits
11:59 - Implications of collecting early
14:16 - The good news
16:00 - The key takeawaysCreate Your Custom Strategy ⬇️
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As one listener prepares for an early retirement, James discusses the situation, covering how to build a bond ladder based on non-retirement funds.
James provides a different way of looking at the stock-to-bond conversation.
Learn how to determine the appropriate amount to have a bond ladder and whether you should own individual bonds or bond funds as a part of that ladder.
Questions Answered:
How do you balance risk capacity and risk tolerance in portfolio allocation?
How do you build an effective bond portfolio for retirement?
Timestamps:
0:00 - Listener case study
2:37 - James’s perspective on bonds
7:42 - Considering purchasing power
10:18 - Balance of stocks and bonds
13:39 - Dividends are typically resilient
16:40 - All bonds not created equally
20:30 - Bond ladder
23:09 - Different types of bonds
24:51 - Withdrawal strategy
26:39 - More on bonds
30:09 - 3 questions to considerCreate Your Custom Strategy ⬇️
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James explores the concept of sequence of return risk in retirement planning. Most people are unaware of how risky this is, as it doesn’t become an issue until you begin living off your portfolio.
Responding to a listener’s inquiry about early retirement, James dives into the potential impact of market timing on retirement outcomes.
Learn three actionable strategies:
Ensure a reasonable initial withdrawal rate.Implement a suitable withdrawal strategy.Own a diversified mix of assets.Questions Answered:
How does sequence of return risk impact retirement outcomes?
How can early retirees protect against sequence of return risk?
Timestamps:
0:00 - Ben’s question
3:19 - Sequence of returns matters
6:48 - 3 projections to consider
11:49 - The 4% rule
16:05 - Considerations for early retirees
18:57 - 3 protective takeaways
22:15 - SummaryCreate Your Custom Strategy ⬇️
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Should you sell long-term stocks for a real estate investment?
I walk through one listener’s question and explain what you need to consider before making such a decision.
Aside from the obvious–is it a good financial investment–you also need to consider if it's a good emotional decision.
Learn:
➡ The tax implications: how are capital gains taxed differently?
➡ How to compare the dividends of a bond to those of a property investment
➡ What important factors and questions need to be carefully accounted for
Questions Answered:
When does it make sense to sell long-term stocks for real estate investments?
How can you determine the “dividends” of a real estate investment?
Timestamps:
0:00 - Trade stock for real estate?
2:55 - Calculate yield
6:39 - Consider net operating income
9:15 - Other considerations
12:36 - Calculate taxes
18:57 - Quick summaryCreate Your Custom Strategy ⬇️
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When you’re doing well financially, paying advisor fees might seem unnecessary. So do you need an advisor if you’re already in a good place?
Having a successful retirement isn’t just about not running out of money; it’s about what more you can do.
Through a real-life client story, I explain how having an advisor’s perspective to implement the right strategy can be more valuable than the cost of their fee.
Advisors can help you avoid biases in the way you invest and plan. They can ensure you have the right withdrawal strategy and don’t overpay on taxes. When handling finances for yourself, you may worry about what you could be missing. A good financial advisor will give you peace of mind, knowing you have all the right information.
It’s important to reframe your thinking: Is the cost of your advisor justified by the value provided?
Questions Answered:
What’s the opportunity cost of not having an advisor?
What value does an advisor provide when you are stable financially?
Timestamps:
0:00 Financial advisor vs DIY
3:37 Does an advisor add value?
8:30 Story of lost opportunity
12:27 Understand the bigger picture
13:41 Being ok vs optimizing
17:44 Risk of wrong withdrawal strategy
21:13 Risk of overpaying taxes
22:20 Continuity costs
23:27 The real goal
27:31 Appropriately compareCreate Your Custom Strategy ⬇️
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James addresses a listener's question regarding Social Security strategies in retirement. Sasha, aged 59, seeks advice on when to start collecting Social Security, considering her husband's benefits and their overall retirement plan.
James emphasizes the importance of considering spousal benefits, survivor benefits, and age gaps in making this decision. He explores the complexities of Social Security analysis, encouraging listeners to run break-even calculations based on the assumed age of the first spouse's death rather than just life expectancy.
James also shares a real-life example where delaying one's own benefit and collecting a survivor’s benefit early can be a strategic move. When choosing a Social Security claiming strategy, evaluate the broader impact on taxes, withdrawal rates, asset allocation, and legacy considerations.
Questions Answered:
How does the age gap between spouses impact the Social Security claiming strategy?
What factors should be considered when deciding on your Social Security claiming strategy?
Timestamps:
0:00 - Sasha’s SS question
2:19 - Analysis of Sasha’s situation
5:51 - The challenge
9:08 - When assumptions don’t pan out
12:29 - General principles
16:08 - Look at the whole pictureCreate Your Custom Strategy ⬇️
Get Started Here. - Visa fler
