Retirement Answer Man

Latest Episodes:

Relocation for Retirement: Why We Moved Jan 05, 2022

Show notes

A new year means a new Retirement Plan Live! Over the course of the next 4 episodes, you’ll hear about Joelle and Mike and their plans for their recent retirement. Then, at the end of the month on January 27, we’ll wrap RPL up with a live webinar that you can participate in. Head on over to LiveWithRoger.com to register.

On this episode, you’ll learn about Joelle and Mike’s thought process on moving to a different state for their retirement. You’ll also hear from Kevin in Coach’s Corner as he explains his Zero Based Budgeting process. This episode is jam-packed with information including one correction to an answer that I recently gave to a listener question. Press play to listen now. Coach Kevin’s Zero-Based Budgeting process

Creating your financial plan in retirement shouldn’t only include dollars and cents. It is important to build a plan that encompasses your life goals. Most people tackle their retirement budget from the wrong direction which is why Coach Kevin came up with his own budgeting process.

Step 1 - Start with 2 major retirement questions. Where will you live? Will you work or generate an income? Both of these questions can drastically change your retirement budget. Think about whether you’ll move somewhere new or whether you’ll stay local and how that decision will affect your budget and your retirement plans. If you choose to work a bit in retirement, that choice won’t simply change your budget; it will also change how you spend your time.
Step 2 - What activities will you do? Think about 3-5 activities that bring meaning and purpose to drive your life in retirement. Which activities would you like to build your life around? Set yourself up to do the things that you love to do.
Step 3 - What would make retirement special for you? This is where you get to think big. What are your retirement dreams? Would you like to travel to distant lands, buy a boat or RV, or maybe renovate your home?

Once you work through these 3 steps then you can begin to create your retirement budget. It is important to start with these steps rather than the money first so that you can ensure that you are making the most out of your retirement.

Step 4 - Continue creating your retirement budget by planning your day-to-day activities in retirement. These activities could include gym memberships, golf fees, sporting event tickets, theater tickets, and other areas where you will spend your time in retirement.
Step 5 - Finally, you can add in all the other expenses like food, utilities, household expenses, and healthcare.

Leaving your comfort zone is always a bit scary
Remember that the type of life change that retirement brings can be scary. Any time you disrupt the status quo you leave your comfort zone. The good news is that if you start acting out your retirement plans and they don’t measure up to your vision, you can always change the plans. The trick is to develop a plan where you can pivot. With this Zero-Based Budgeting process, you can iterate as needed rather than being stuck with the same plan over the next 30 years.
OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN A CORRECTION

[2:20] An HSA question correction

COACH’S CORNER

[3:52] How to create a retirement financial plan that encompasses your life goals

RETIREMENT PLAN LIVE WITH JOELLE

[19:50] Why Joelle volunteered to be the new Retirement Plan Live subject
[24:24] Joelle and her husband have different money styles
[29:38] How Joelle’s life was different living in L.A.

TODAY’S SMART SPRINT SEGMENT

[37:42] Give yourself grace about beginning again

Resources Mentioned In This Episode
Register for the Retirement Plan Live webinar on January 27 at 7 pm CST
LTCI Partners
Retirement Manifesto
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

Is Cryptocurrency a Good Investment for My Retirement? Dec 29, 2021

Show notes

Do you own any cryptocurrency? First introduced in 2009, Bitcoin and other cryptocurrencies have exploded in popularity over the past few years.

On this episode of Retirement Answer Man, we’ll discuss what cryptocurrency is, how it is revolutionizing the banking system and the drawbacks of this new type of currency. Listen in to learn whether you should add a bit of crypto to your retirement portfolio and you’ll also hear the answers to listener questions about IRA contributions and IRMAA surcharges. What is cryptocurrency?

Nan is curious about whether Bitcoin or other cryptocurrencies would be good investments to add to her retirement portfolio to hedge against inflation. Before we get into the answer to that question, we need to understand exactly what cryptocurrency is.

Stemming from the word cryptography, the word cryptocurrency means it is a currency that is encoded. This digital currency is secured by cryptography technology which prevents it from getting hacked. Why is cryptocurrency such a big deal?

Cryptocurrency is separated into denominations called coins or tokens which are actually cryptographically protected codes. These new currencies are atypical in that they are issued by non-centralized networks or entities and not issued by any government.

The value of a cryptocurrency coin or token is stored digitally and managed by a blockchain network that facilitates transactions. Blockchain is basically a digital bank replacement that is virtually frictionless. Transactions are instantaneous and can be confirmed quickly.

The promise of cryptocurrency could revolutionize currency transfers and remove the need for a banking system. With encrypted digital currency there is no need for a bank. Transactions bypass the third-party gatekeepers that are typical of traditional banking transactions, so there is no need for any extra fees. How could cryptocurrency help combat inflation?

Inflation occurs when a currency loses value over time. We have seen the inflation rate spike over the past year and the more money that comes into the system the less value the dollar will have. Since the US government is printing currency faster than ever, many people are worried that the dollar will continue to lose its value.

New crypto coins or tokens can only be released by mining, so the value of the currency is based on a degree of scarcity. The finite supply of the currency’s structure is designed to retain its value over time. What are some concerns over cryptocurrencies?

With all the benefits that come with this revolutionary financial technology come some drawbacks. Since it is so new, cryptocurrency has become a craze with new currencies being released each day. Much like the internet craze of the early 2000s, no one knows which currencies will come out on top.

The novelty of this new trend has also created volatility in the values of different cryptocurrencies. Currency values can spike up or down 10%-20% in one day.

Investing in cryptocurrency is a bit like heading out to the wild west to pan for gold. Since it is so new, there is little to no government regulation which, paired with the anonymity that these currencies provide, can attract bad actors and lead to money laundering and tax evasion.

Listen in to hear whether I recommend adding cryptocurrency to a retirement portfolio to hedge against inflation. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN LISTENER QUESTIONS

[5:05] Is investing in cryptocurrency a good way to combat inflation in retirement?
[11:51] Why is cryptocurrency such a big deal?
[17:01] What are some concerns over cryptocurrencies?
[22:10] Contribution limitations in the year that you retire
[24:41] Appealing the IRMAA surcharge
[26:27] What counts as income when calculating ACA credits?

TODAY’S SMART SPRINT SEGMENT

[28:16] Finalize your 2021 net worth statement

Resources Mentioned In This Episode
Episode 300 - Medicare and IRMAA
Form SSA-44 - Medicare Income-Related Monthly Adjustment Amount - Life-Changing Event
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

How Will I Estimate What My RMD Will Be at Age 72? Dec 22, 2021

Show notes

Do you have a system for estimating what your future RMDs will be? Should you keep a mortgage or pay off the balance of your house in retirement? What should you do with the money that you withdraw to fill up your tax bracket? These are just a few of the questions that will be answered on this episode of Retirement Answer Man. Press play to check it out! My word of the year

The end of the year is always a good time to think about beginning anew in the next year. I’m not big on celebrating New Year, but I enjoy the renewal process that comes with the start of the new year.

If you have listened to the show in the past, you have heard me discuss my word of the year. I choose a word each year as part of my own process of renewal. I try to use my word of the year as my guiding light to help me stay focused on my goals for the year ahead. Have you ever chosen a word of the year to help you focus on your goals? Listen to this episode to hear what my word is this year. How do you calculate what your future RMDs will be?

You know RMDs are coming at age 72, but how can you estimate what they will be? To calculate your RMDs you can create your own spreadsheet to get an estimation. Once you have a feasible retirement plan in place and you know how you will fund your retirement you can use this fantastic exercise to help you optimize your retirement plan.

To estimate future RMDs, I set up a simple spreadsheet with these columns: your age, the year, the RMD ratio, the end of the year account value for the prior year, estimated withdrawals, and the year-end value. Once you have these values in place you can take the total and divide it by the value provided by the IRS uniform lifetime table to estimate your future RMD. How estimating your RMDs could benefit your retirement plan

One way that this exercise can benefit you is by allowing you to project the risks that you might encounter in retirement. You may realize that you won’t need this much money to live on and decide that it is a good idea to fill up your tax bracket by withdrawing from your IRA sooner so that you can lower your RMD in the future. What to do with the money that you withdraw from your IRA to fill up your tax bracket

If you do decide to withdraw from your IRA or 401K to fill up your tax bracket you will have the benefit that you know what your tax rate will be, but what should you do with the money? The way I see it you have 5 options. You can spend it, save it, give it away, invest it in after-tax vehicles, or convert it to a Roth IRA. The most important thing to do when making these arrangements is to think through your process in an organized way. What would you do if you decided to fill up your tax bracket? OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT DOES THAT MEAN?

[1:30] My word of the year

LISTENER QUESTIONS

[6:55] How do you calculate what your future RMDs will be?
[15:33] Is it a good idea to keep a mortgage in retirement?
[21:34] What do you do with the money that you withdraw from your 401K?
[26:20] A suggestion from Mike
[28:21] The efficacy of using balanced funds

TODAY’S SMART SPRINT SEGMENT

[36:18] What will be your word of the year next year?

Resources Mentioned In This Episode
LTCI Partners
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

Are I-Bonds a Smart Investment for My Retirement Portfolio? Dec 15, 2021

Show notes

Do you have a net worth statement that you update regularly? Whether or not you do, you’ll want to learn about the psychological benefits that this exercise can create. In this episode of The Retirement Answer Man show, we’ll discuss what a net worth statement is and how you can gain from creating one regularly.

You’ll also hear several listener questions that range from inherited IRAs to I-bonds, to SPIA annuities. If you are interested in rocking retirement, you’ll need to arm yourself with the knowledge to help you navigate this change in life. Listen in to get started on your retirement education journey. A Rock Retirement Club announcement

If you are looking to join the Rock Retirement Club you can sign up for the waiting list until we open enrollment again in late January. We closed enrollment in early December to restructure the club a bit and introduce periodic enrollment so that new members can be a part of a cohort. This will help freshmen members to take full advantage of their membership as they work their way through all the benefits that the club provides. If you are interested in checking out the Rock Retirement Club, head on over to the website and join the waiting list to receive the latest email updates. What is a net worth statement?

If you have listened to the Retirement Answer Man show in the past, then you already know that a net worth statement is a statement of the resources you have accumulated with your wealth.

Your net worth statement lists all of your assets and their values and your debts and their values. Assets like your retirement accounts, investment accounts, or property are listed on the left side of the net worth statement. These assets can be categorized by whether they are tax-deferred, after-tax, or tax-free accounts. On the right side is the debt column. Total each column up to see the value of each. Once you do that you’ll subtract the debts from your assets and have your net worth.

Creating this valuable financial tool is a way to understand the cumulative impact of the financial decisions you have earned. Do you have a net worth statement that you update regularly? The 5 ways you can use your income

Since there are only 5 things that you can do with your income, your net worth statement reflects those financial decisions that you have made. These are the 5 ways that you can use your money:

Spend it.
Pay down debt
Give it away.
Save it as cash in an emergency fund.
Invest for the future.

For every dollar you have earned you have made a decision (whether consciously or unconsciously) to do one of these 5 things, so your net worth statement is a reflection of these choices. Creating a net worth statement provides a psychological impact

By updating your net worth statement periodically you’ll be able to compare how your finances reflect your values and whether you are using your finances to stay in line with your goals. If you identify any incongruencies then you can address the behavior before it gets out of hand.

Have you ever put together a net worth statement? When was the last time you updated it? As a rule of thumb try revisiting it every 6 months.

Make sure to listen to the next episode to hear my word of the year! OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN PRACTICAL PLANNING SEGMENT

[1:56] What is a net worth statement?
[4:50] Creating a net worth statement provides a psychological impact

LISTENER QUESTIONS

[11:21] You can work with LTCI Partners directly
[14:45] Mike asks if I-bonds are a no-brainer
[20:12] Examples of how people have blended retirement with meaningful work
[24:28] A comment about SPIA annuities
[32:25] Alternatives for the fixed income portion of assets in retirement
[35:27] Navigating the changes to the inherited IRA RMD rules

TODAY’S SMART SPRINT SEGMENT

[37:51] Consider creating experiences rather than giving gifts for the holidays

Resources Mentioned In This Episode
BOOK - Retirement Planning Guidebook by Wade Pfau
Wade Pfau - Retirement Researcher
TreasuryDirect.gov
LTCI Partners
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

What Is a Retirement Plan of Record? Dec 08, 2021

Show notes

You have probably heard me refer to a retirement plan of record in the past few episodes, but you may be wondering what exactly this is. I have had several listeners reach out and ask me to define this term, so in addition to hearing listener questions, today you’ll learn exactly what a retirement plan of record is and how it can help you plan your retirement. Press play to check it out. What is a plan of record?

The retirement plan of record is something that I work on with my clients and I am in the process of developing a template that will be available in the Rock Retirement Club masterclass. This plan of record will help you create a current representation of your decision-making framework so that you can walk through a decision-making process in an organized way. Why is it important to have a plan of record

There is so much to consider in retirement planning--asset allocations, withdrawal rates, Roth conversions, IRMAA, taxes, not to mention who your friends will be and what you’re going to do all day. With all of these considerations, it is easy to become overwhelmed by the choices if you don’t have an organized way to make decisions. Without a clear direction, your decision-making process could have you bouncing around like crazy. The 3 pillars of the agile process

When creating a retirement plan of record, it is important to organize your financial goals into 3 pillars so that your plan can remain agile. First, develop a feasible plan, then, make it resilient, and lastly, optimize your plan. If you can arrange your decisions under these 3 pillars, then you can think through the process in an organized way.

A retirement plan of record can ensure that your decisions reflect your values and goals. You’ll be able to create feasible spending goals based on your resources. Your plan needs to be resilient so that you can manage risks.

Once you have your plan of record in place then you can work through each decision while referring to your plan. You’ll be able to see the changes you are considering within your organized process and create a what-if scenario by making a copy of your plan of record and adjust accordingly. This way you’ll be able to flush out the implications of this new variable so that you can examine the decision in a thoughtful way.

The plan of record is a useful tool to accomplish organized thinking that you can execute in a consistent rhythm so that you can stay agile and make the most of your life regardless of what happens. Your plan of record allows you to focus on what you can control. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT DOES THAT MEAN?

[3:50] What is a plan of record?

OUR SPONSOR

[12:22] Check out LTCI Partners for your long-term care insurance needs

LISTENER QUESTIONS

[13:31] Lee is worried about inflation--should she work longer?
[22:05] Thinking about Social Security claiming strategies
[28:18] How IRMAA surcharges work each year
[33:26] How to deal with switching from an HSA to Medicare
[35:32] Filling up tax bracket buckets

TODAY’S SMART SPRINT SEGMENT

[39:03] Review your retirement contributions to make sure you are hitting the numbers you want

Resources Mentioned In This Episode
Episode 385 - The 4% Rule
Episode 395 - Retirement Risk Basics
Check out LTCI Partners for your long-term care insurance needs
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

Overcoming Frugality Dec 01, 2021

Show notes

Rocking retirement doesn’t mean getting your Roth conversions right, it means minimizing your regrets. At the end of your life, you don’t want to think “yay, I paid fewer taxes!” you want to think “wow, my life was awesome!” Overcoming the frugality that stems from a lifetime of saving is one way to live a life free of regret in retirement.

To ensure that you can live life to the fullest, create a retirement plan that can iterate as life unfolds. When you have a feasible, resilient retirement plan that utilizes the resources you have you’ll be able to build the life you want. You’re already well on your way to rocking retirement by listening to the Retirement Answer Man show. On dialing back

Recently I committed publicly to publishing 2 episodes per week in an effort to improve the show. However, very shortly after making this change, I realized that it wasn’t a good change for me. For this reason, I decided to pivot back to one episode per week. I realized that it is important to live my life true to myself rather than base my choices on the expectations of others. Have you ever made a decision that you quickly had to undo? Should Gene pay off his house from a pretax retirement account?

Gene is considering paying off his house from his 401K account. He owes $200,000 at 2.5% on a 25-year loan. He would like to know what the best course of action would be in his situation.

As with any major retirement planning question, my recommendation is to refer to your retirement plan of record. (To get a more detailed understanding of the retirement plan of record, make sure to listen to the next episode!) After walking through that plan with the mortgage in place, then you can create a what-if scenario in which you pay off the mortgage. This way you can compare each choice side by side to see which one would best serve your overall goals.

Listen in to hear why I wouldn’t take the funds from my 401K to pay off my house and hear what I would do instead. How to move from accumulation to distribution phase of life

You have saved for decades, so when the time comes to start spending that savings it can be a challenge to loosen the purse strings. Retirement is not simply about spending money: it’s about living your life to the fullest.

Think about why you chose to save your money and act frugally for so many years. Chances are, you did so to achieve financial security and to pay for the best retirement lifestyle that you could afford. Achieving financial security means that you feel comfortable with your retirement plan. If you don’t have faith in your plan, consider having a professional look over your plan to bolster your confidence so that you can rock retirement. How to improve your life and overcome frugality

If you are a naturally frugal person, you may think that you have everything you need at this point in life, so there is no reason to spend more than you do. However, there are many ways that you can improve your life by spending money. Consider whether these activities would enhance your life.

Eating out with friends more frequently
Attending physical therapy
Getting regular massages
Hiring a personal trainer to improve fitness
Hiring a nutritionist to help you plan meals

Overcoming frugality can help you live your life to the fullest and rock retirement. Think about how you could increase your spending to maximize your life. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN LISTENER QUESTIONS

[4:00] A correction on QLACs
[5:05] Social Security and Cola
[9:25] An urgent inherited IRA question
[12:30] On dialing back
[15:08] Whether or not to pay off the house from a 401K
[20:48] One listener appreciated learning about Roth conversions

COACH’S CORNER WITH KEVIN LYLES

[26:18] On overcoming frugality
[29:42] Spending guaranteed income is much easier
[31:26] How you can improve your life by spending
[34:25] 3 tips to incorporate to spend your money

TODAY’S SMART SPRINT SEGMENT

[42:55] Look for ways to enhance your life today

Resources Mentioned In This Episode
Start here to listen to the Retirement Tax Management series with Andy Panko
Brian Johnson’s Optimize.me
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

The Mechanics of Decumulation Nov 24, 2021

Show notes

How do you pivot from a moderately aggressive portfolio in the accumulation stage of retirement planning to the decumulation stage? In today’s episode, we tackle two listener questions about the mechanics of decumulation in retirement planning. You’ll also hear a question about using QLACs to reduce RMDs. If you are wondering about the details on how exactly you are going to make this retirement thing work then be sure to press play. Retirement plan live is coming soon to a podcast near you!

In January we’ll be hosting the next edition of Retirement Plan Live. Retirement Plan Live is an extremely popular series that we run each year where I walk out the logistics of creating a retirement plan over the course of 4 episodes with a listener. At the end of the series, we host a live webinar where we analyze whether that particular plan is feasible. Our last Retirement Plan Live series dealt with Trish and her unexpected retirement.

If you would like to be the next subject of RPL, make sure you are signed up for the 6-Shot Saturday newsletter so that you can access the link to the application form. We’ll choose one listener from the dozens of applications we receive. We will make sure to change the name and details of your situation while at the same time keeping the generalities in check. Listen in to hear the details. How to get the most bang for your buck in your retirement portfolio

Steve has invested moderately aggressively, but as he turns 65 and enters retirement he is looking to become more conservative while at the same time getting the most bang for his buck. He is trying to figure out how to structure his portfolio conservatively while providing a bit of growth and income through dividends.

The best way to approach this or any retirement planning question is to take a top-down approach. If you start at the bottom and work your way up you miss out on how your question fits into the big picture.

Retirement planning starts with your overall goals for retirement. Then you need to understand how this particular question fits into your retirement plan. Once you have a feasible plan, then you can build a cash flow model which plans out your spending over the next 5 years and beyond. Once you have this cash flow model in place then you can make that model resilient. This is where your question comes in. How would you make your plan resilient?

Do you want to optimize your portfolio for more money and higher returns or do you prefer to have a high level of confidence in your spending no matter the market? Rather than getting the most bang for your buck, consider what kind of outcome you would prefer to secure. How to simplify retirement accounts without taking a huge tax hit

Karen is planning on retiring at age 61, but before she does she would like to simplify her retirement accounts. Currently, she has over 50 different investments. She wants to simplify the accounts into as few funds as possible and rebalance them without taking a huge tax hit.

Once again, we must approach this problem in an organized way. When you consider what you are trying to accomplish by simplifying your accounts then you can see how this exercise will fit into your overall retirement plan. How would you approach this question? OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN PRACTICAL PLANNING SEGMENT

[1:30] News on the show

LISTENER QUESTIONS

[6:25] Using QLACs in retirement planning to reduce RMDs
[11:35] Rita is interested in another series on long term care
[12:46] Steve’s question getting the most bang for his buck during decumulation
[30:20] Karen’s question about simplifying her portfolio

TODAY’S SMART SPRINT SEGMENT

[40:14] Go beyond the normal thankful things--think about the things that warm your spirit

Resources Mentioned In This Episode
Retirement Plan Live 2021 - start here
Decumulation series - start here
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

Reflections on the Retirement Scene Nov 17, 2021

Show notes

We often have monthly themes to guide the topics of this show, but this month on Retirement Answer Man we are doing a bit of a mishmash. Today I want to share some thoughts I had on retirement in general and answer a few retirement questions. As you listen, think about which topics apply to you and your situation and see if you can come up with actions that can get you closer to your retirement goals. Overcoming frugality can be a challenge

After decades of saving your money and delaying gratification, suddenly letting loose to spend money on the things that make you happy may not come easy. If you have been a diligent saver over the years, you may find it challenging to shift from a saving mindset to a spending mindset especially when that mindset shift is timed with the loss of income from your human capital.

The good news is that shifting to a spending mindset doesn’t need to happen like flipping on a light switch. This is a gradual change that can occur slowly. One way to help yourself become more open to spending is to construct a framework to help you make decisions.

Becoming a new version of yourself takes time. Give yourself grace and time to make change happen. Retirement planning is complicated

If anyone ever tells you that they have all the answers to retirement planning, run in the other direction. This is because no one can ever have all the answers to something so complicated as retirement planning. The way I like to go about planning is by organizing decisions under 3 separate categories.

Are your dreams feasible? Consider the life you want and whether it is feasible given your resources. This means that you need to consider your values and what you really want. Next, you’ll want to discuss it with your spouse if you are married and run the numbers to see if your dreams are truly feasible.
Is your plan resilient? The winds of change will come and they could take many forms. They could come in the form of inflation, uncooperative markets, death, or healthcare bills. Having a resilient plan will help you stay the course that you set. Ways that you could make your retirement plan resilient could be through cash flow planning, matching your assets, and managing your risks in an organized way.
Can your plan be optimized? Optimization is a way to enhance your journey. Tax planning, asset allocation, Roth conversions, ACA credits, and Medicare decisions all fall under the category of optimization. These are ways that you can enhance your plan to improve it. However, it is important to remember that these are the extras, not the plan itself.

Organize your retirement planning to stay on track
By organizing your retirement planning under these 3 pillars you can ensure that you aren’t letting the tail wag the dog. Having an organized way to deal with your retirement plan will ensure that you aren’t missing out on an aspect of retirement that could have a major impact on your life.
Make sure to stick around for the listener questions segment of the show. You’ll hear me answer questions on how to calculate modified adjusted gross income to include capital gains and I’ll even respond to a recent critique that I had from one listener.
OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN REFLECTIONS ON RETIREMENT

[4:35] Overcoming frugality is a challenging thing for many recent retirees
[6:50] Retirement planning is complicated

LISTENER QUESTIONS

[13:07] Modified Adjusted Gross Income
[16:33] My response to Janet’s critique
[18:57] Otto’s comments on a recent question I answered

TODAY’S SMART SPRINT SEGMENT

[22:28] Think about something that you need to undo

Resources Mentioned In This Episode
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

Listener Questions: Which Account Should I Withdraw from to Fill Up My Tax Bracket? Nov 09, 2021

Show notes

Ever since listeners enjoyed our Retirement Tax Management series with Andy Panko we have received an influx of questions surrounding taxes. I’ll answer several questions today about filling up your tax buckets.

I’ll also respond to queries about planning when to take Social Security when you will have excess RMDs and how to incorporate balanced funds into your asset allocation. Don’t miss this episode if you still have burning tax questions left over from last month’s series on retirement tax management. The Rock Retirement Club has so much to offer

The Rock Retirement Club recently hosted the Retirement Rodeo Round-Up in Fort Worth, Texas. I was so impressed by the levels of motivation and excitement that I saw from the participants. Everyone who attended was excited to share their knowledge and learn from each others’ journeys so that they could make the most out of their retirement.

Have you considered joining the Rock Retirement Club? If so, or even if you just want to learn more about it, check out the virtual open house that we’re having on November 16. At the open house, you’ll get a sneak peek of the Club’s Retirement Master Class and preview member tools like Everplans and the New Retirement Planner Plus calculator. The open house will be a great way to decide whether the RRC is right for you. Register for this event at LiveWithRoger.com. Are you having trouble overcoming frugality?

One common concern from the participants at the Retirement Rodeo Round-Up conference was the challenge of overcoming frugality. Like many Retirement Answer Man listeners, RRC members are amazing savers, but after saving and delaying gratification for so many years it is hard to break the habit.

There is a mental shift that must take place to switch from saving to spending and shifting your mindset can be difficult. Instead of watching your accounts grow, you now see them stay stagnant or decrease over time and this can set off alarm bells in your mind. Have you experienced difficulty navigating this change? What did you do to shift your mindset from saving to spending? When should Jenny claim Social Security?

Jenny has been a diligent saver and will end up having excess RMDs. This issue has caused her to think about the most beneficial time to claim Social Security. She is considering taking Social Security at age 62 to lower her income, but I have another strategy for her to consider. Listen in to hear my thoughts on what you should do if you have substantial projected RMDs. How to fill up your tax bracket bucket in retirement

One of the strategies that Andy Panko and I talked about last month in the Retirement Tax Management series was filling up your tax bracket. When filling up your tax bracket you'll want to take funds from your IRAs or other tax-deferred accounts and either spend that money, invest it in after-tax assets, or convert it to a Roth IRA. Work out the best situation for you by creating a retirement plan of record and then test different outcomes. Have you created a retirement plan of record yet? OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN LISTENER QUESTIONS

[2:40] It takes a big mental shift to stop saving and start spending
[4:01] How much to allocate to asset allocation if you have balanced funds in your portfolio?
[7:05] How Social Security works with RMDs
[13:10] How to fill up the tax bracket bucket
[15:15] What to do with the money that you fill up your tax bracket with
[16:26] Scott really enjoyed the episodes with Tanya Nichols

TODAY’S SMART SPRINT SEGMENT

[17:10] Calculate your projected income for 2021

Resources Mentioned In This Episode
Register for the Rock Retirement Club’s virtual open house at LiveWithRoger.com
Tanya Nichols with Align Financial
Check out Tanya Nichols in the Women in Retirement series - Start Here
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

Retirement Planning Guidebook with Wade Pfau Nov 05, 2021

Show notes

Do you wish you could find a comprehensive guidebook to help you plan your retirement? If so, you won’t want to miss this interview with Dr. Wade Pfau. Wade is the founder of the Retirement Researcher website and a retirement income professor at the American College. He is also the author of several books and his newest, the Retirement Planning Guidebook, was recently published. This book is the most detailed retirement guide that you will find, so don’t miss out on this interview to hear what to expect from Wade’s guidebook. There is no one way to plan for retirement

Unfortunately, there isn’t a simple answer to how to plan your retirement. The way that works for you may not be ideal for your next-door neighbor. This is why it's important to come up with a strategy first. That way you can build your retirement plan according to your strategy. If you can come up with a flexible solution then you can make iterations based on changes in the world around you. Retirement planning is all about preparing for uncertainty. With the right strategy, you can make educated decisions to carry you through those uncertain times. Retirement choices cause a ripple effect throughout other areas

The choices you make in retirement have a ripple effect in many areas and one decision can create unexpected consequences in another part of your retirement plan. This makes it challenging to make any choices and can lead to analysis paralysis.

Let’s see how one decision could lead to a domino effect. Say that you are trying to diversify your portfolio. If you sell a major position that you hold then you could end up with capital gains which could push you into another tax bracket which could eliminate the possibility of using ACA credits and so on.

Rather than be paralyzed by the fear of making the wrong decision, you need to think in an organized way about what problem you would like to solve. If you are trying to lessen your market risk you will need to sell to diversify your portfolio. However, if you are trying to focus on getting ACA credits the decision to diversify all at once may not be the best strategy. How much should we consider tax policy in retirement planning

Taxes are one of the great unknowns in retirement planning. No one can say for certain how tax policy may change in the future. So how much should you try to predict tax policy changes when planning for retirement?

It is always good to start with a basis and then test different outcomes. The current tax rates are a good starting point for building your retirement plan of record. Once you build this foundation, you can tease out different outcomes as you learn more information.

Retirement tax planning isn’t made on a yearly basis, rather you should plan to try and reduce your overall lifetime tax bill.

Learn how to utilize Social Security, plan for the unknown, and lower your lifetime tax bill on this episode of Retirement Answer Man with Wade Pfau. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WADE PFAU INTERVIEW

[3:30] One decision you make in retirement affects others
[10:21] There is no one way to plan for retirement
[13:31] How much should we consider tax policy in retirement planning?
[16:45] Social Security considerations
[25:53] Consider the premium cliffs that are out there
[31:31] How to factor in a cognitive decline
[34:58] How to navigate the lump sum vs. lifetime income decision

Resources Mentioned In This Episode
BOOK - Retirement Planning Guidebook by Dr. Wade Pfau
Retirement Researcher website
The American College
BOOK - How to Decide by Annie Duke
BOOK - Because a Little Bug Went Ka-Choo by Rosetta Stone
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

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