I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement, I'm 55.
Most people have a 'do-it-yourself' mentality but lack the necessary expertise. Financial advisors are ideal representatives for investing, and I can attest to this. Been working with Monica Mary Strigle and Since covid-outbreak to date, my portfolio has grown by over 330%, reaching nearly $1m. Check online if she meets your requirements.
That’s a great mix and very similar to mine. SCHG has been a real diamond over the last 15 yrs for me and I predict no changes. SCHX very similar with a little more dividends. Good luck spending all that money!
The first day SCHD is positive in your IRA, sell it and focus on growth stocks. SCHD is a great retirement fund once you have a lot of cash. It's what an annuity should be. Pay you consistently yet doesn't F you in so many ways like the annuity... 50 SCHD, 25 JEPI (less year over year growth but pays out much more to increase your income), 25% rock solid single companies paying consistently monthly or quarterly. Earns you income, and you don't touch much. Dividends don't get you to the finish line fast enough, they ARE the finish line.
Very refreshing to hear a balanced view compared to others with the conversion hammer seeing everything as a mail. I agree with everything said on this video with only one comment regarding paying more tax with one or the other strategy. You can pay more tax DOLLARS by deferring and still come out ahead if the tax rate is lower and the only reason for paying more tax dollars is the account has grown. You may not know which gives you the highest after tax net worth until 10 years after you die when your heirs empty the account. I have decided not to convert for the following reason. I Retired this year and in top of 22% bracket but under IRMAA. I want to take advantage of the next 7 years before SS to spend down some of my taxable account as well as reposition the balance to municipal bonds, stocks, and cash value LI to free up space to then start to withdraw from tax deferred accounts to live on along with SS, taking advantage of the standard deduction and low tax brackets. I also intend to move to a tax free state which further boosts the benefit of not converting. Once RMDs kick in at 75 I will have a bit lower balance (depending on market performance vs the withdrawals) and the standard deduction and tax brackets would have had 12 years of inflation adjustments which further helps. Then I can pay tax slowly over many years in future inflation adjusted dollars. I do acknowledge the widow trap changes the dynamic some but I am challenged to make a decision based solely on that factor.
I think you need to apply the tax brackets differently from when you convert or deposit and when you withdraw. I'm in the 24% tax bracket currently employed at 61. I am able to Max my deposits into a 401k and my employer matches 10%. So I'm putting about $43k into my retirement account each year. If I did it as Roth between federal and state taxes, I would have to come up with another ~$12K. So I'm paying 24% federal tax if I put this money into a Roth. If I put this money into a regular 401K and then retire a couple years later. Say I withdraw $43k from my IRA at 65. So my income at age 65 would have about a net federal tax of 11% on the amount I make over the $14.6k standard deduction. I'm also moving to a state that does not tax retirement withdrawals. So by using a standard 401k, I saved $12,000 in taxes and 3 years later I only pay $3,000 on that amount when I withdraw it. In what world would my tax rate be higher when I retire? I'm going to be able to live on about half what my standard income is. Also, I am barely scraping the max out my 401k. Consider if I was 20 years younger. If I made Roth deposits, I would have to decrease my yearly deposit from $43,000 to $31,000. Do the math on those two different yearly investments for 20 years. Consider an 8% return in the stock market and I'm going to have so much more money at the end.
If you have real estate income and SS that put your base income over $150,000 a year does it make any sense to convert? I want to but at a 30% plus marginal rate I see no reason to convert …….
Problem is that for each year in the future you run numbers the less correct those numbers will be. Adding the fact that half the inputs are pure guesses (even by a CPA), you may be as accurate just running a spreadsheet on your own. How long will i live, what will the market rate be year over year, what will tax rates be, what if i invest the cash from the taxes i would pay. Almost every inout past next year is a guess. I can be wrong for free no matter how complicated we make the process seem. Been running my own numbers for the past 30 years and looking back i have been pretty spot on. Giving someone 30,000 a year to make guesses, I can make myself just doesn't make sense.
I would love to see a case shown of someone that is not sick etc, but never should convert simply because their taxes are low their entire remaining life, so no reason to convert. Another words, they're in the 12% bracket or lower forever by taking their IRA withdrawals and their social security. Of course you could always partially convert in that case if there is any room in a year at a 10% or 0% rate.
That applies to a significant number of people with limited size IRAs. I am guessing the reason for the lack of podcasts on this condition is the fact that those people don't actually need wealth management. Checkout Numbers Crunch Nerds videos on the subject - you will be able to set up your own spreadsheets or purchase his (very cheaply) to better make your own decisions. What I have come to realize watching these various presentations is there will be situations where you may still want to convert. My personal goal in retirement is to minimize what I give back to Uncle Sam (preferably zero tax) yet maintain an enjoyable retirement while I still can. This is the first year that my self-employed income will almost all go to retirement accounts and that I will be able to move a significant amount of pre-tax funds to Roth. I will execute the same plan in 2025 and then make adjustments based on the changes to the tax code in 2026. I am hoping the 10% and 12% brackets are maintained in 2026 and beyond but I am not counting on it. The funds I move to Roth will be used for expenditures in a year that would move me to a higher tax bracket - vacations, new vehicles and gold / crypto (I don't have a lot of faith in the government's ability to continue the manipulation of fiat currency). Good luck.
Financial management and Roth conversions aren't as hard/complicated as financial planners would like you to believe. Buy or use free financial planning software and do it yourself.
They actually do address that just not in much detail as there is not much of a case to discuss if one answers Yes to the 1st Q of "Will your taxes be lower or the same in the future?" If yes, well then no conversion. So really that's the end of discussion unless you want to leave a big inheritance to someone with out a tax bill for them, then maybe you do a ROTH but maybe not.
My 457 says I can withdraw and keep working at 59 1/2. Would it make sense to take out $2000. A month from 457. Then put back in $2000. A month back in but into the Roth 457?
A problem with conversions I ran across I ran I've never seen mentioned in these presentations to WAIT AS LONG AS POSSIBLE IN THE YEAR to convert. In 2019 i started converting my IRA account with the goal of holding my tax rate @ 12% making the contribution in October. Unfortunately, i had 2 December income "windfalls" pushing my rates close to the 24% bracket increasing my total tax liability over $8000 . Having learned that lesson, in 2023 I benefited from an inverse situation. Costs from a Christmas plumbing surprise at a rental property reduced my income to a point where even with my SS, which i only began taking in the last 3 months of the year, left me with a Zero fed income tax rate, since i had no conversions left to make. The net result, over the 4 yrs 2019-2023, was a average tax rate of 11.5%. Had i not missed on the first year, it likely could have been between 8 & 10%.
This was going great until he mentioned the person having long term life insurance. No one in their right mind buys long term life insurance. This product is great for the agent and the company. The short life expectancy should not be a factor. The kids will inherit the Roth tax free.
I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement, I'm 55.
Your allocation looks solid. Consider dollar-cost averaging & dividend reinvestment. I suggest you consult with a financial advisor for guidance.
Most people have a 'do-it-yourself' mentality but lack the necessary expertise. Financial advisors are ideal representatives for investing, and I can attest to this. Been working with Monica Mary Strigle and Since covid-outbreak to date, my portfolio has grown by over 330%, reaching nearly $1m. Check online if she meets your requirements.
That’s a great mix and very similar to mine. SCHG has been a real diamond over the last 15 yrs for me and I predict no changes. SCHX very similar with a little more dividends. Good luck spending all that money!
The first day SCHD is positive in your IRA, sell it and focus on growth stocks. SCHD is a great retirement fund once you have a lot of cash. It's what an annuity should be. Pay you consistently yet doesn't F you in so many ways like the annuity... 50 SCHD, 25 JEPI (less year over year growth but pays out much more to increase your income), 25% rock solid single companies paying consistently monthly or quarterly. Earns you income, and you don't touch much. Dividends don't get you to the finish line fast enough, they ARE the finish line.
Her track record looks really good from what I found online. I've scheduled a call to discuss further
Very refreshing to hear a balanced view compared to others with the conversion hammer seeing everything as a mail. I agree with everything said on this video with only one comment regarding paying more tax with one or the other strategy. You can pay more tax DOLLARS by deferring and still come out ahead if the tax rate is lower and the only reason for paying more tax dollars is the account has grown. You may not know which gives you the highest after tax net worth until 10 years after you die when your heirs empty the account. I have decided not to convert for the following reason.
I Retired this year and in top of 22% bracket but under IRMAA. I want to take advantage of the next 7 years before SS to spend down some of my taxable account as well as reposition the balance to municipal bonds, stocks, and cash value LI to free up space to then start to withdraw from tax deferred accounts to live on along with SS, taking advantage of the standard deduction and low tax brackets. I also intend to move to a tax free state which further boosts the benefit of not converting. Once RMDs kick in at 75 I will have a bit lower balance (depending on market performance vs the withdrawals) and the standard deduction and tax brackets would have had 12 years of inflation adjustments which further helps. Then I can pay tax slowly over many years in future inflation adjusted dollars. I do acknowledge the widow trap changes the dynamic some but I am challenged to make a decision based solely on that factor.
I think you need to apply the tax brackets differently from when you convert or deposit and when you withdraw. I'm in the 24% tax bracket currently employed at 61. I am able to Max my deposits into a 401k and my employer matches 10%. So I'm putting about $43k into my retirement account each year. If I did it as Roth between federal and state taxes, I would have to come up with another ~$12K. So I'm paying 24% federal tax if I put this money into a Roth. If I put this money into a regular 401K and then retire a couple years later. Say I withdraw $43k from my IRA at 65. So my income at age 65 would have about a net federal tax of 11% on the amount I make over the $14.6k standard deduction. I'm also moving to a state that does not tax retirement withdrawals. So by using a standard 401k, I saved $12,000 in taxes and 3 years later I only pay $3,000 on that amount when I withdraw it. In what world would my tax rate be higher when I retire? I'm going to be able to live on about half what my standard income is.
Also, I am barely scraping the max out my 401k. Consider if I was 20 years younger. If I made Roth deposits, I would have to decrease my yearly deposit from $43,000 to $31,000. Do the math on those two different yearly investments for 20 years. Consider an 8% return in the stock market and I'm going to have so much more money at the end.
If you have real estate income and SS that put your base income over $150,000 a year does it make any sense to convert? I want to but at a 30% plus marginal rate I see no reason to convert …….
Is there a 5 year Roth IRA holding period rule?
Problem is that for each year in the future you run numbers the less correct those numbers will be. Adding the fact that half the inputs are pure guesses (even by a CPA), you may be as accurate just running a spreadsheet on your own. How long will i live, what will the market rate be year over year, what will tax rates be, what if i invest the cash from the taxes i would pay. Almost every inout past next year is a guess. I can be wrong for free no matter how complicated we make the process seem. Been running my own numbers for the past 30 years and looking back i have been pretty spot on. Giving someone 30,000 a year to make guesses, I can make myself just doesn't make sense.
😂😂😂😂 5:49 Crick hollow court 6:29
I would love to see a case shown of someone that is not sick etc, but never should convert simply because their taxes are low their entire remaining life, so no reason to convert. Another words, they're in the 12% bracket or lower forever by taking their IRA withdrawals and their social security. Of course you could always partially convert in that case if there is any room in a year at a 10% or 0% rate.
the RMDs changes the discussion completely...a couple million in your IRAs and your RMD is huge
That applies to a significant number of people with limited size IRAs. I am guessing the reason for the lack of podcasts on this condition is the fact that those people don't actually need wealth management. Checkout Numbers Crunch Nerds videos on the subject - you will be able to set up your own spreadsheets or purchase his (very cheaply) to better make your own decisions. What I have come to realize watching these various presentations is there will be situations where you may still want to convert. My personal goal in retirement is to minimize what I give back to Uncle Sam (preferably zero tax) yet maintain an enjoyable retirement while I still can. This is the first year that my self-employed income will almost all go to retirement accounts and that I will be able to move a significant amount of pre-tax funds to Roth. I will execute the same plan in 2025 and then make adjustments based on the changes to the tax code in 2026. I am hoping the 10% and 12% brackets are maintained in 2026 and beyond but I am not counting on it. The funds I move to Roth will be used for expenditures in a year that would move me to a higher tax bracket - vacations, new vehicles and gold / crypto (I don't have a lot of faith in the government's ability to continue the manipulation of fiat currency). Good luck.
Financial management and Roth conversions aren't as hard/complicated as financial planners would like you to believe. Buy or use free financial planning software and do it yourself.
In other words
They actually do address that just not in much detail as there is not much of a case to discuss if one answers Yes to the 1st Q of "Will your taxes be lower or the same in the future?" If yes, well then no conversion. So really that's the end of discussion unless you want to leave a big inheritance to someone with out a tax bill for them, then maybe you do a ROTH but maybe not.
Another reason not to convert prior to age 65 is if your health care is through the ACA.
My 457 says I can withdraw and keep working at 59 1/2. Would it make sense to take out $2000. A month from 457. Then put back in $2000. A month back in but into the Roth 457?
Great info
A problem with conversions I ran across I ran I've never seen mentioned in these presentations to WAIT AS LONG AS POSSIBLE IN THE YEAR to convert.
In 2019 i started converting my IRA account with the goal of holding my tax rate @ 12% making the contribution in October. Unfortunately, i had 2 December income "windfalls" pushing my rates close to the 24% bracket increasing my total tax liability over $8000 .
Having learned that lesson, in 2023 I benefited from an inverse situation. Costs from a Christmas plumbing surprise at a rental property reduced my income to a point where even with my SS, which i only began taking in the last 3 months of the year, left me with a Zero fed income tax rate, since i had no conversions left to make.
The net result, over the 4 yrs 2019-2023, was a average tax rate of 11.5%. Had i not missed on the first year, it likely could have been between 8 & 10%.
This was going great until he mentioned the person having long term life insurance.
No one in their right mind buys long term life insurance. This product is great for the agent and the company.
The short life expectancy should not be a factor. The kids will inherit the Roth tax free.
Term life would cover the taxes..
since you cant speak for everyone.....your advice isnt a workable plan.....try harder...