@RobBerger, Good information. Started an account with new retirement. A lot to learn. Is there any program that you use to determine asset allocations for example I own apple and also own VUG and VOOG. How can I determine my % allocation of apple? I know I have a lot of "overlapping". Does it matter?
Great timing on this video. I was struggling with NR and regretting the $120 cost. I'm going to try again. Hopefully, the reverse mortgage feature works correctly now. I also haven't been able to make it so that my wife draws her SS, then a year later switches to her spousal benefit when I retire.
Thanks for sharing your knowledge. It will be extremely useful to to the same with the Projection Lab tool, which I believe is getting better and better by the month. Kyle is doing an excellent job. Thanks
I just started with New Retirement and am enjoying working with the tool. ??? To model a monthly pension into a checking acct, 18:24 that is rolled over to an IRA for 10 years, I did monthly income with zero taxes and monthly disbursements to an IRA for 10 years. Not perfect but hope the outcome isn’t too odd base.
I'm curious about my Social Security. I'm 58 and my full retirement at 67 will be 2222.00. My question is can i add a yearly COLA amount per year between now and 67 to get a better estimate?
Thanks for the best retirement UA-cams out there. Now my ask. Despite the fact that 50% of American adults are retiring single, I can't find one video about it. Not how to save and plan for retirement, but drawdown and tax strategies once we are there. Maybe since we can't do Roth conversions and stay under $44K there's nothing we can do so nobody has anything for us? O-H!!!!
I don’t think there is anything that is different for singles vs married filing jointly. The best time to do Roth conversions if after you retire and before RMDs hit. You can pull living wages from an after-tax account which would count as capital gains and then do a Roth conversion that hit your 10% and 12% brackets under 44k
I agree- nothing out there. I’m trying to help two widows and the assumption that married couples cost twice what single does is silly. 44k is a none life sustaining number. No Roth conversions for them. Bummer. Married couples can alternate and simply rotate to make it to 89 k. Taxing SS is crazy as well.
@@jabow1878 actually it is just under $58,000. Need to add the standard deduction, too. I am single, 56 years old and plan to do Roth Conversions. Key is to be debt free and have a fair amount of money in cash to get by on. Also, one does not need to convert all the money. Just enough to keep the Social Security tax torpedo on RMD's from kicking in. To stay under the 12% bracket in 2024, it will be. $61,850.
Hi Rob - Great video. Thanks for pulling this together. I have been using New Retirement for about a year and really like it. Question regarding Money Flows > Transfer into a Roth Fund vs. Money Flows > Roth Conversions. According to New Retirement, the output should be the same however I see a significant different when comparing the Monte Carlo simulation only. Any ideas why? A quick way to test is to take a portfolio that has Roth conversions; create a new portfolio based upon that Roth conversation portfolio; delete those Roth conversations and replace them with the exact same amount and returns as a Transfers. You should see a difference in the Monte Carlo simulation. I have no idea why?? I prefer the Transfer route since you only have one Roth account and if needed, you can pull from that account.
Yes, capturing the flow and impact of dividends remains a challenge. I use DRIP on several dividends paying stocks in taxable, tax deferred retirement, and tax-free retirement accounts. I update the data at least once quarterly as contributions to those accounts. Mentally that seems to work and not certain what happens in the background inside of New Retirement. At some point in the future some or all of those current dividends will be shifted over to transfers like you demonstrated. New Retirement did provide me a possible way to handle this area, but it seemed unsatisfactory at the time. There may need to be some new data fields to capture this area correctly and how best to handle the possible outcomes.
At 50:53 you answer the question: If NR uses your income first, what if your income is less than your expenses? Does it add it to your accounts? The first part of the question and the second do not seem to match. e.g. if your income is less than expenses you don't have excess income you have a shortfall and you previously explained the order NR takes from various accounts to make up for inadequate income. You answered the second question about NR adding excess income to your accounts. That answer would apply, I think, to situations where income is greater than expenses. Otherwise a great video so far and thanks for spending two hours helping us.
NR appears to be more to a budgeting tool while portfolio visualizer seems to be stronger in terms of asset location and investment outcomes? Both seem to compliment each other? I didn’t realize portfolio visualized free version is onky for 2 weeks?
Thanks for the explanation. I am a NR subscriber and find NR to be a great tool. Also, the NR staff, CS is responsive to questions and updating NR by adding features that reflect changes in tax laws.
Thanks for dropping this one Rob. The question on Chance of Success was very interesting to me and I at least could lose my "is it only me" feeling when you revealed your changes in success likelihood. I've tried to stay comforted that at the 'must spend' for both optimistic and average inflation/returns it has remained at 99%. At pessimistic it drops to under 15%, although the good news is we each need only die 3 years early (I use 100 years). I've also tried to comfort myself that if the first of us to go does not have the big draw down for final medical/hospice care, the second will be in decent shape. My ldelta to "like to spend" is mostly travel and I also remind myself that while I run the travel out to a pretty high age (90) we may travel less or travel less expensively, especially in later years, so that provides some cushion.
Great video, thank you!. As a note on why the options given to model dividends (turnover, passive income, separate account, etc.) do not work well besides the tax rate being used, is because, unless all your expenses are covered by the dividends, you will be depleting your taxable accounts (usually first) which in turn will reduce the dividend income down to zero once the taxable account is fully depleted. This will usually reduce the annual dividends faster than the increases in dividend rates. This of course is not the case if you can live solely on your dividends and leave your taxable account untouched.
I haven’t been able to figure out why the tool only assessed IRMA in two years when AGI is clearly way above the $206K throughout the entire period. I connected with an assistant but only sent me the article in the help center, which does not help.
It has been a year since I actively used New Retirement because I kept running into the strangest glitches. For example, when you changed your zip code to Ohio, there is no way your taxes should have increased by over $3M over your lifetime. I find that hard to believe. For me, it seemed like I had to override a lot of behaviors in New Retirement by fudging numbers to get things to work properly. Has anyone else run into glitches or other challenges and found a way to get those resolved to your satisfaction? I want this to be my retirement planner as I don’t know there is anything better out there for the DIY planner. I like these Q&A sessions, but would also be nice to have someone put together a video series or eBook walking through the entire process.
Could you explain how you might model an entrance fee into a continuing care community. Where you give the facility maybe hundreds of thousands of dollars but get it back when you move out (die). You get no interest on the money while you are living there. If you had to pull those dollars out of 401K or IRA there would be a large tax bill that year. Should you be doing Roth conversions to plan and mitigate the tax impact
Will NR optimize Roth Conversions when an additional cost of them besides current income taxes is also lost ACA healthcare credits prior to one or both spouses being eligible for Medicare?
If you are healthy, look into a ACA high deductible plan with an HSA. One can have a higher MAGI and still get a fair amount of tax credits. Here in California, I can have a MAGI of $55,700 and have a fully subsided HDHP plan, then an additional $5120 to fund an HSA, as it is an above the line deduction on the 1040 tax form.
I’m assuming this is the equity portion of your asset allocation so you have bonds/fixed income to offset losses in the market unless you have many years before retirement and are seeking aggressive growth. If the former, I like that mix if you’re looking for simplicity and low cost funds. No, you won’t beat the market but most managed funds don’t beat those index funds especially when you figure in the management fees. I’m curious if your bond allocation is in the Vanguard Total Bond Market Index?
@@johnsode17 no bonds at this point as I’m 26. But it wold expect to make the switch at some time in the future to reallocate and mix in some bonds whenever that mix becomes 70-30 or 80-20. TBD
@@DrNessbomb you are investing twice in most large companies since Vanguard total market already includes the SP500 companies which have the higher weight due to market cap. That is okay if you want mostly large companies a little invested in small cap. Alternatively VTI alone will do, and if you want to add more small companies then add a small % in VB.
exactly my thoughts, I'm going to let my heirs worry about it. maybe they will decide to quit working and withdraw for 10 years. Im not going to do Roth conversions, Don't want to pay the tax.
@@brianpabian5115If you can do Roth conversions to take you up to the top of the 12% marginal federal income tax bracket(or maybe higher), why not? Tax brackets are historically low now and odds are good that you (if not your heirs) will be pulling it out at a higher tax rate later. Plus, if you're not taking Social Security yet, taking the pre-tax distributions out when you are on it (and also subject to RMDs) could make more of your Social Security taxable that would otherwise have been tax-free.
Of course everyone's tax situation is unique, but one way or another you're going to pay taxes on pre-tax IRA/401k money. Delay RMDs til 75 and you could paying pretty steep marginal tax rates; doing some strategic conversions (e.g. til you max out 12% bracket) will minimize lifetime taxes and reduce your RMDs later. If your heirs don't quit their jobs, could be they're going to pay high marginal rates on your inherited IRA.
I’ve been putting the recommended longevity of 93 for me and 94 for my wife. At my age of 75 we have a good amount of projected savings. If I only change that we both die when I’m 75 we have way less at the age of 75. Any idea how that’s possible? I’d think the numbers at that age would be exactly the same. Thanks.
The suggestion to use the tax page rather than the Roth conversion tool to figure out optimal conversion amounts was brilliant! I am now going to double what I was previously going to convert in 2024. I want to maximize the 24% bracket with no W2 income coming in 2024. And then convert a bunch more in 2025. Excited to move so much from my traditional IRA to Roth IRA. Big time tax savings in the future. Especially if tax rates go back to 2017 levels in 2026. Will also reduce future RMDs significantly.
Doesn't the Fed automatically withhold 20% of your IRA withdrawal (50k withdrawal yields 40k in cash available for conversion and 10k withheld for taxes)? This would impact the amount going into your Roth conversion account and thus your expected return amount. Also throws a wrench in the NR conversion tool which you mentioned draws taxes in same sequence as regular retirement withdrawals as the taxes are withheld upfront.
@@michaelsd284 No, you decide if any taxes are withheld for Federal or State. I just tested this on my Schwab account before canceling. I was able to specify 0% withholding. I plan to pay the taxes out of my taxable account. What I did realize is that I am planning on moving to a lower taxed state in 2024 so I will want to wait until I have fully moved there before doing the conversion.
@@srconrad Thank for the insight. I think I'm getting confused between 401k distributions to cash as opposed to 401k distributions being converted to another qualified IRA. What I've been reading is that many 401(k) plans require a 20% mandatory withholding on 401(k) distributions. You may be able to avoid the 20% tax if you roll over your distribution directly from one 401(k) plan to another eligible plan or to an IRA. So, I guess the word of caution applies to those taking 401k distributions to cash to check their plans to see if they have this "mandatory 20% withholding" so they avoid any unexpected cash shortfalls.
@@michaelsd284 OK, something to look out for. I retired earlier this year and did a direct rollover of my 401k to an IRA. There were no taxes taken out for this. Now my traditional IRA and Roth IRA are with Schwab. They make it very easy to do Roth conversions. In fact, I don't even have to sell equities. I can just transfer them in kind and I specify how much, if any, taxes are taken out. None in my case and then I will pay them out of my taxable account.
My main issue is when using a fixed money flow (say 3.5%) and you add a recurring cost or a disbursement it appears to take it from the fixed income and does not add an extra draw. Very hard to model a real money flow or drawdown. What am i missing?
Thanks for sharing your knowledge. It will be extremely useful to to the same with the Projection Lab tool, which I believe is getting better and better by the month. Kyle is doing an excellent job. Thanks
@RobBerger, Good information. Started an account with new retirement. A lot to learn. Is there any program that you use to determine asset allocations for example I own apple and also own VUG and VOOG. How can I determine my % allocation of apple? I know I have a lot of "overlapping". Does it matter?
Great timing on this video. I was struggling with NR and regretting the $120 cost. I'm going to try again. Hopefully, the reverse mortgage feature works correctly now. I also haven't been able to make it so that my wife draws her SS, then a year later switches to her spousal benefit when I retire.
Great presentation, Rob. I've taken some notes so I can improve my use of NR.
Thanks for sharing your knowledge. It will be extremely useful to to the same with the Projection Lab tool, which I believe is getting better and better by the month. Kyle is doing an excellent job. Thanks
How does this tool compare to Projection Labs for retirement planning. Trying to figure out which to used for modeling early retirement.
I just started with New Retirement and am enjoying working with the tool. ??? To model a monthly pension into a checking acct, 18:24 that is rolled over to an IRA for 10 years, I did monthly income with zero taxes and monthly disbursements to an IRA for 10 years. Not perfect but hope the outcome isn’t too odd base.
I'm curious about my Social Security. I'm 58 and my full retirement at 67 will be 2222.00. My question is can i add a yearly COLA amount per year between now and 67 to get a better estimate?
Thanks for the best retirement UA-cams out there. Now my ask. Despite the fact that 50% of American adults are retiring single, I can't find one video about it. Not how to save and plan for retirement, but drawdown and tax strategies once we are there. Maybe since we can't do Roth conversions and stay under $44K there's nothing we can do so nobody has anything for us? O-H!!!!
I don’t think there is anything that is different for singles vs married filing jointly. The best time to do Roth conversions if after you retire and before RMDs hit. You can pull living wages from an after-tax account which would count as capital gains and then do a Roth conversion that hit your 10% and 12% brackets under 44k
I agree- nothing out there. I’m trying to help two widows and the assumption that married couples cost twice what single does is silly. 44k is a none life sustaining number. No Roth conversions for them. Bummer. Married couples can alternate and simply rotate to make it to 89 k. Taxing SS is crazy as well.
@@jabow1878 actually it is just under $58,000. Need to add the standard deduction, too. I am single, 56 years old and plan to do Roth Conversions. Key is to be debt free and have a fair amount of money in cash to get by on. Also, one does not need to convert all the money. Just enough to keep the Social Security tax torpedo on RMD's from kicking in. To stay under the 12% bracket in 2024, it will be. $61,850.
Hi Rob - Great video. Thanks for pulling this together. I have been using New Retirement for about a year and really like it. Question regarding Money Flows > Transfer into a Roth Fund vs. Money Flows > Roth Conversions. According to New Retirement, the output should be the same however I see a significant different when comparing the Monte Carlo simulation only. Any ideas why? A quick way to test is to take a portfolio that has Roth conversions; create a new portfolio based upon that Roth conversation portfolio; delete those Roth conversations and replace them with the exact same amount and returns as a Transfers. You should see a difference in the Monte Carlo simulation. I have no idea why?? I prefer the Transfer route since you only have one Roth account and if needed, you can pull from that account.
Yes, capturing the flow and impact of dividends remains a challenge. I use DRIP on several dividends paying stocks in taxable, tax deferred retirement, and tax-free retirement accounts. I update the data at least once quarterly as contributions to those accounts. Mentally that seems to work and not certain what happens in the background inside of New Retirement. At some point in the future some or all of those current dividends will be shifted over to transfers like you demonstrated. New Retirement did provide me a possible way to handle this area, but it seemed unsatisfactory at the time. There may need to be some new data fields to capture this area correctly and how best to handle the possible outcomes.
Fantastic show, Rob. As a fairly recent NR user, I love this! More please!
Excellent video Rob. Please create future Q&A sessions for NR.
At 50:53 you answer the question: If NR uses your income first, what if your income is less than your expenses? Does it add it to your accounts? The first part of the question and the second do not seem to match. e.g. if your income is less than expenses you don't have excess income you have a shortfall and you previously explained the order NR takes from various accounts to make up for inadequate income. You answered the second question about NR adding excess income to your accounts. That answer would apply, I think, to situations where income is greater than expenses. Otherwise a great video so far and thanks for spending two hours helping us.
NR appears to be more to a budgeting tool while portfolio visualizer seems to be stronger in terms of asset location and investment outcomes? Both seem to compliment each other? I didn’t realize portfolio visualized free version is onky for 2 weeks?
Thanks for the explanation. I am a NR subscriber and find NR to be a great tool. Also, the NR staff, CS is responsive to questions and updating NR by adding features that reflect changes in tax laws.
Thanks for dropping this one Rob. The question on Chance of Success was very interesting to me and I at least could lose my "is it only me" feeling when you revealed your changes in success likelihood. I've tried to stay comforted that at the 'must spend' for both optimistic and average inflation/returns it has remained at 99%. At pessimistic it drops to under 15%, although the good news is we each need only die 3 years early (I use 100 years). I've also tried to comfort myself that if the first of us to go does not have the big draw down for final medical/hospice care, the second will be in decent shape. My ldelta to "like to spend" is mostly travel and I also remind myself that while I run the travel out to a pretty high age (90) we may travel less or travel less expensively, especially in later years, so that provides some cushion.
Wonderfully helpful podcast
Looks like you are using the upgraded new retirement plan as this is NOT the free version
Am I correct?
He said in the video he’s using the paid version.
Great video, thank you!. As a note on why the options given to model dividends (turnover, passive income, separate account, etc.) do not work well besides the tax rate being used, is because, unless all your expenses are covered by the dividends, you will be depleting your taxable accounts (usually first) which in turn will reduce the dividend income down to zero once the taxable account is fully depleted. This will usually reduce the annual dividends faster than the increases in dividend rates. This of course is not the case if you can live solely on your dividends and leave your taxable account untouched.
How would you model it if you could live solely off dividends?
I haven’t been able to figure out why the tool only assessed IRMA in two years when AGI is clearly way above the $206K throughout the entire period. I connected with an assistant but only sent me the article in the help center, which does not help.
It has been a year since I actively used New Retirement because I kept running into the strangest glitches. For example, when you changed your zip code to Ohio, there is no way your taxes should have increased by over $3M over your lifetime. I find that hard to believe. For me, it seemed like I had to override a lot of behaviors in New Retirement by fudging numbers to get things to work properly. Has anyone else run into glitches or other challenges and found a way to get those resolved to your satisfaction? I want this to be my retirement planner as I don’t know there is anything better out there for the DIY planner. I like these Q&A sessions, but would also be nice to have someone put together a video series or eBook walking through the entire process.
Could you explain how you might model an entrance fee into a continuing care community. Where you give the facility maybe hundreds of thousands of dollars but get it back when you move out (die). You get no interest on the money while you are living there. If you had to pull those dollars out of 401K or IRA there would be a large tax bill that year. Should you be doing Roth conversions to plan and mitigate the tax impact
Enter after-tax brokerage dividends into passive income?
@rob berger can you remind us of the difference between Empower and NR?
Nevermind, just saw your comments in the vid. Thanks 😊
Will NR optimize Roth Conversions when an additional cost of them besides current income taxes is also lost ACA healthcare credits prior to one or both spouses being eligible for Medicare?
If you are healthy, look into a ACA high deductible plan with an HSA. One can have a higher MAGI and still get a fair amount of tax credits. Here in California, I can have a MAGI of $55,700 and have a fully subsided HDHP plan, then an additional $5120 to fund an HSA, as it is an above the line deduction on the 1040 tax form.
I know that New Retirement incorporates future North Carolina income tax rates. I've seen it in my plan.
45% Vanguard total market, 45% vanguard 500 index, and 10% vanguard total international index. Thoughts
I’m assuming this is the equity portion of your asset allocation so you have bonds/fixed income to offset losses in the market unless you have many years before retirement and are seeking aggressive growth. If the former, I like that mix if you’re looking for simplicity and low cost funds. No, you won’t beat the market but most managed funds don’t beat those index funds especially when you figure in the management fees. I’m curious if your bond allocation is in the Vanguard Total Bond Market Index?
@@johnsode17 no bonds at this point as I’m 26. But it wold expect to make the switch at some time in the future to reallocate and mix in some bonds whenever that mix becomes 70-30 or 80-20. TBD
@@DrNessbomb you are investing twice in most large companies since Vanguard total market already includes the SP500 companies which have the higher weight due to market cap. That is okay if you want mostly large companies a little invested in small cap. Alternatively VTI alone will do, and if you want to add more small companies then add a small % in VB.
The Roth conversion optimization tool is sort of a generalization. Take a hit on the chin now or later is all it seems to be worth.
exactly my thoughts, I'm going to let my heirs worry about it. maybe they will decide to quit working and withdraw for 10 years. Im not going to do Roth conversions, Don't want to pay the tax.
@@brianpabian5115If you can do Roth conversions to take you up to the top of the 12% marginal federal income tax bracket(or maybe higher), why not? Tax brackets are historically low now and odds are good that you (if not your heirs) will be pulling it out at a higher tax rate later. Plus, if you're not taking Social Security yet, taking the pre-tax distributions out when you are on it (and also subject to RMDs) could make more of your Social Security taxable that would otherwise have been tax-free.
Of course everyone's tax situation is unique, but one way or another you're going to pay taxes on pre-tax IRA/401k money. Delay RMDs til 75 and you could paying pretty steep marginal tax rates; doing some strategic conversions (e.g. til you max out 12% bracket) will minimize lifetime taxes and reduce your RMDs later. If your heirs don't quit their jobs, could be they're going to pay high marginal rates on your inherited IRA.
I’ve been putting the recommended longevity of 93 for me and 94 for my wife. At my age of 75 we have a good amount of projected savings. If I only change that we both die when I’m 75 we have way less at the age of 75. Any idea how that’s possible? I’d think the numbers at that age would be exactly the same. Thanks.
Check the Long Term Care settings in the Expenses and Healthcare section. By default, it will add LTC expenses during the last 3 years of your life.
That makes it a lot closer. I guess there is a lot I still need to learn. Thank you.
The suggestion to use the tax page rather than the Roth conversion tool to figure out optimal conversion amounts was brilliant! I am now going to double what I was previously going to convert in 2024. I want to maximize the 24% bracket with no W2 income coming in 2024. And then convert a bunch more in 2025. Excited to move so much from my traditional IRA to Roth IRA. Big time tax savings in the future. Especially if tax rates go back to 2017 levels in 2026. Will also reduce future RMDs significantly.
Doesn't the Fed automatically withhold 20% of your IRA withdrawal (50k withdrawal yields 40k in cash available for conversion and 10k withheld for taxes)? This would impact the amount going into your Roth conversion account and thus your expected return amount. Also throws a wrench in the NR conversion tool which you mentioned draws taxes in same sequence as regular retirement withdrawals as the taxes are withheld upfront.
@@michaelsd284 No, you decide if any taxes are withheld for Federal or State. I just tested this on my Schwab account before canceling. I was able to specify 0% withholding. I plan to pay the taxes out of my taxable account. What I did realize is that I am planning on moving to a lower taxed state in 2024 so I will want to wait until I have fully moved there before doing the conversion.
@@srconrad Thank for the insight. I think I'm getting confused between 401k distributions to cash as opposed to 401k distributions being converted to another qualified IRA. What I've been reading is that many 401(k) plans require a 20% mandatory withholding on 401(k) distributions. You may be able to avoid the 20% tax if you roll over your distribution directly from one 401(k) plan to another eligible plan or to an IRA. So, I guess the word of caution applies to those taking 401k distributions to cash to check their plans to see if they have this "mandatory 20% withholding" so they avoid any unexpected cash shortfalls.
@@michaelsd284 OK, something to look out for. I retired earlier this year and did a direct rollover of my 401k to an IRA. There were no taxes taken out for this. Now my traditional IRA and Roth IRA are with Schwab. They make it very easy to do Roth conversions. In fact, I don't even have to sell equities. I can just transfer them in kind and I specify how much, if any, taxes are taken out. None in my case and then I will pay them out of my taxable account.
My main issue is when using a fixed money flow (say 3.5%) and you add a recurring cost or a disbursement it appears to take it from the fixed income and does not add an extra draw. Very hard to model a real money flow or drawdown. What am i missing?
👍
Thanks for sharing your knowledge. It will be extremely useful to to the same with the Projection Lab tool, which I believe is getting better and better by the month. Kyle is doing an excellent job. Thanks