Ready For Retirement

Connor plans to retire soon and wonders if he should pay off his mortgage of $300,000 or invest those funds, especially since he has a low interest rate. James gives a detailed response and reveals why there is no one-size-fits-all answer. When it comes to having a mortgage in retirement, math and spreadsheets can help with part of the question, but emotions and personal values should be considere...

Retirement tax planning should begin well before retirement. Listener Jodie, with over $2 million in assets in various types of accounts, is concerned about the high tax bracket she anticipates she be in in retirement. Is there a tax strategy that would put her in a lower tax bracket?   James explores some often-overlooked tax strategies that can save retirees thousands in retirement, especially f...

Listener Michael asks about how Social Security is taxed, the rationale behind the 50% and 85% tax thresholds, and the implications of these taxes on Social Security and IRA withdrawals. James responds by explaining how Social Security is taxed at the federal level, highlighting the concept of provisional income and the thresholds that determine the taxability of benefits. He notes state taxation...

Listener Nael opens up a discussion about Roth conversions. There are benefits to doing Roth conversions, but can you do too many? Are there any downsides to Roth conversions? Reaping the tax benefits from Roth conversions requires hitting a specific sweet spot. If you convert too little or too much, you’ll be leaving money on the table.  So, how do you find Roth-conversion the sweet spot? James l...

David has a question about taxes in retirement: When you’re retired and no longer getting a regular paycheck from which your employer withheld tax payments on your behalf, how do you estimate the taxes you’ll owe?  To answer this question, it’s important to understand where income in retirement will be coming from and how that income is taxed. Once you have an idea of what you’ll owe, you need to...

Mark asks a common question – What should I do regarding my withdrawal strategy? Should I first pull from my brokerage account or my IRA?  There is no one-size-fits-all answer, but James provides a framework for creating a strategy to increase your odds of getting the most out of your money saved. He walks through the pros and cons of first pulling from your IRA versus a brokerage account, taking...

Dr. Riley Moynes, author and creator of a popular TED Talk joins James to discuss his own retirement which led him to become the author of The 4 Phases of Retirement. While Dr. Moynes was financially prepared for retirement, he wasn’t prepared for the boredom and depression that followed the first two years of retirement fun. As it turns out, his retirement path was far from unusual.  Dr. Moynes s...

Listener Sherry asks a good question: How do large, one-off expenses (like a new roof, new car, etc.) fit in the 4% Rule?  James explains the concept of the 4% Rule and its limitations while demonstrating how it can be an effective guideline in planning and forecasting retirement success.  He addresses the importance of anticipating one-off expenses and, depending on your portfolio withdrawal rate...

Healthcare subsidies are like a tax break and should always be optimized, right? That seems like an easy question that should have a straightforward answer. But the correct answer is, “It depends.”  Cole from Move Health is back, as he and James explain how advanced premium tax credits work, when you might not want to take them, and why it’s imperative to have a financial plan and a tax strategy i...

We meet many people who are in a position to retire early. But when they think about healthcare in retirement and not being eligible for Medicare until age 65, they feel stuck, even though they’re ready for retirement in every other way.  Cole Craven of Move Health Partners chats with James about the healthcare options that are available for early retirees and why there is no one-size-fits-all, “b...

Drew Shockley of MOVE Health Partners joins James to address questions about Medicare. He overviews the Medicare system, explains Parts A, B, C, and D, and breaks down what Medicare does and doesn’t cover, who is covered, and when/why you might want alternative coverage.  Questions Answered: I’m 65, still working and qualify for Medicare, but I have health coverage through my employer. What should...

Graham and his wife are in their early 50s and plan to retire in 5 years. He wonders if they should continue maxing out their 401ks, how their investments should change, and what they should do with savings accounts to best prepare for their retirement goals.  James addresses these questions, Graham’s biggest risk as he nears retirement, and potential tax strategies for him to employ. Questions an...

Drew, a burnt-out, financially responsible 40-something father of two, hopes he can scale back from his stressful job and still be okay when it’s time to retire. James offers a practical and philosophical take as he tackles Drew’s question. He demonstrates how to determine when Drew and his wife will be in a good position to fully retire. He also challenges listeners to assess their spending and s...

How do you know if you can retire? It seems straightforward, but the answer is far from simple. Beyond portfolio balances and age thresholds, there are other things to consider. James explains his three-step test to determine your retirement readiness. By pulling together principles from the 4% Rule, straight-line projection, and a Monte Carlo analysis, you can assess whether your portfolio can su...

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 m...

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 w...

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...

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 emphasizin...

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...

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, an...

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...

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...

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 #...

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 ass...

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. Question...