Retirement Planning With $1,000,000 ALL Pre-Tax! MUST WATCH
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- Опубліковано 4 сер 2024
- Today we're doing some retirement planning with a one million dollar portfolio, but in this case it's ALL PRE-TAX! It may be surprising but the answer is not simply to do Roth conversion. Learn about the importance of retirement planning with all pre-tax dollars and how it can benefit you in the long run. Don't miss out on this valuable information for your retirement future.
0:00 - 0:51 Intro
0:52 - 1:50 Taxes & Retirement Planning
1:51 - 2:15 IRMAA Tax Explained Simply
2:16 - 3:08 Retirement Plan Overview
3:09 - 3:35 Tax bracket planning in retirement
3:36 - 4:08 When you shouldn't do Roth conversions
4:09 - 6:02 Tax breakdown retirement planning
6:03 - 6:30 Like & Subscribe! :)
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Thanks for watching! What'd you think of this plan? Any other ideas for those who have a lot of pre-tax dollars in retirement?
I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
I feel your pain mate, as a fellow retiree, I’d suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $30k in value stocks and digital assets, Up to 200k so far and pretty sure I'm ready for whatever comes.
@@Elliot-Ivan That's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well
@@VioletJessica- My advisor is Victoria Carmen Santaella
You can look her up online
@@Elliot-Ivan The crazy part is that those advisors are probably outperforming the market and raising good returns but some are charging fees over fees that drain your portfolio. Is this the case with yours too?
Retirement is now more difficult than it was in the past. I've been saving for a long time instead of investing, and right now I only have about $516k. I'm not sure how to make it grow, considering all the inflation, into something substantial that I might use for retirement. I just here for ideas.
In my opinion, IRA is a valuable strategy for retirement planning, providing growth and tax advantages. While the market is promising, expert guidance is essential for portfolio management.
Low six-figure income, no debt, nearing mortgage payoff ($400k property), age 43. Invested over 15x annual salary, amazed by focus on scraping by in retirement. I aim for surplus. My goal: retire at 55 with $5M. Unless the markets crash, these two points should align. I'm quite lucky to have started working with a financial advisor early.
"Jennifer Leigh Hickman" is the licensed advisor I use. Just research the name. You’d find necessary details to work with to set up an appointment
Thank you! I entered her full name into my browser, and her website came out on top. I filled her form and i hope she gets back to me soon.
Exactly what I was looking for… without having a passive income, I wont advise to go this route… figure that aspect of your revenue before considering this path
Great video, I’m 50, retired a while at 45. I have 35% of my capital investments in an IRA. 25% in index funds, and the balance spread across other investments acts. In cumulative of over $5m. I receive income from my rental properties too. Zero debt and all is going accordingly.
Indeed, most people downplay the roles of financial advisories until they are burnt by their mistakes. Productivity is optimized and keeping up to date strategies and analysis makes it more lucrative. I’ve been able to navigate the volatilities and scaled up 80k to 20k with a firm
Pulling more money out of your before tax account doesn’t mean you have to spend more , you can bank it or reinvest it if you so choose .
Its really hard to say what the tax brackets are going to be given the total financial disaster we call the Federal Government. But while rates are low 12%, take out as much as you can of pre-tax and stay within the 12% bracket. If married, that expands the amount. You don't have to spend it. Withdrawal amounts are not always tied to your annual expenses.
Thanks for watching! Tax brackets are an interesting topic. With all the federal spending, you would think they would have to raise taxes at some point....
well yes, but they print money so 1+1=whatever they want...
In 2026 the Trump tax cuts expire and it is doubtful they'll extend it. So expect to pay 2% more in most brackets
Haven’t been in that 12% tax bracket since…well…ever.
Most people have at least some money taxed at the 12% bracket
This doesn't even make sense. Whether he "spends" $1000 more per month or converts it to ROTH he's withdrawing the same amount and paying the same taxes. If anything, the ROTH conversions give him more tax planning options as time goes on.
Great stuff, Eric!
Thanks, Haley! 😎
I have been maxing out my 401k, 457b and Roth IRA for the past decade. Two incomes doing the same. Grinding down hard in my 20s-30s to let it ride into my 40s and beyond.
Great Video!
Thank you!
Thank you for the info. I feel like im watchin Huey from the Boyz giving retirement advice
That's hilarious. Just had somebody tell me that the other day for the first time! 😅
Absolutely love it!!! I'll have to be financially stable in every sense before purchasing my first supercar. The best thing to do with your money is to invest rightly because money left saving will end up with no returns
One of the biggest misunderstandings about traditional IRAs and 401ks is the fact that the withdraws are taxed as ordinary income instead of cap gains.
Thank you for doing this video. I think there are so many people for whom the bulk of their reitirement savings are pretax and there just isn't a lot of information about how to manage it. Sure I'd love to have one third in a brokerage account and one third in a Roth, but that's not where I'm at and I'm honestly confused about how people end up with that sort of asset location. I had always assumed that spending more, before RMD age could be a valid strategy and this video assures me that I wasn't way off base. Thanks. Now, if you could do a few more about this exact subject, I'l love to hear about other ways of managing a portfolio that is virtually all pre-tax.
Short answer? Earn a lot of money, and save 90k a year.
1. Max out your 401k + Employer match: 30k pre-tax, assuming your employer matches 50%.
2. Max out your mega-backdoor Roth: another 30k or so.
3. Invest 30k a year in a brokerage account.
Obviously that's oversimplified and requires that a MBD be available - I'm currently at 50% Roth, 40% 401k, and 10% brokerage, due to conversions I did while under-employed during the 2010's. (ie, my tax rate was relatively low as a contractor, so I transfered my 401k from my contrating agency into my IRA, and converted up to the next tax bracket for 10 years or so.) My income is higher now, so I'm currently splitting 50/50 with my Roth/401k, via the backdoor and Mega-Backdroor strategies.
I am in the same situation. I wish there were more videos on 100% in preTax. I plan to take out 5% and just put whatever I don't use in a brokerage account or possible ROTH.
Thank you for posting this video. It was nice to watch a quick, right to the point video without all the other nonsense.
I try to get to the point as quickly as possible while providing enough context for it all to make sense! Thanks for watching!
This - and the one Justin did earlier. is excellent! I was 'retired' (laid off) in 2019 and never worked again. I saved HARD during my career, I don't recall a Roth 401K available but when I was aware of Roth's in general I was making over the limits at the time, and I really liked the tax break then anyway b/c I didnt have dependent decustions. I am 60 now. My Fidelity Team lead and I discussed Roth conversions and he said he didn't think it was worth it, and, to a point I don't mind paying taxes via RMDs (still gotta live long enough first - LOL) but I was still worried a LOT about IRMAA being a double hit at that point! So now I'm thinking I could just max out the 25% bracket and keep that in my regular brokerage account, for the next 15 yrs and lessen t he hit (maybe) that way without the additional hoops of Roth conversions!
an option for the RMD would be doing QCD - qualified charitable distribution - to lessen the reported income
Thanks for watching! Great idea with the QCD mentioned. If you plan to pull more out and pay the tax, then the conversion allows that money to grow tax free instead of the brokerage route.
Doing pretty much the same thing. Maxing out the tax bracket to the IRMAA limit. All funds that I don't need go into brokerage account. Brokerage becomes "my" money to spend at will.
People are making 100k a year in retirement and are stressing about 69.90 a month ? Really ? Crank it up to the $300/mo. Now go ahead and try to find healthcare for that price. Good luck. If you're making 6 figures and have any money saved up or in the market, tax implications and/or market fluctuations will hit you harder than that. smh
@@lalew2 Thank you. Yes, I was aware of that as well.
Great Video, I went through the new car purchase ended up getting a new car loan 2.99% instead of the large withdraw from qualified IRA account, Did I hear your correctly that you used 2.5% for inflation and what was used for SS COLA increase? Thank you
The low interest rates are always nice! They are getting tricky to justify now a days! We did use 2.5% in the plan for inflation and SS Cola used was 2.5% also.
Great content, but I think the terminology is a little mis-leading to investors. I think you mean "Tax-Deferred". Pre-tax is a term investors use for gains that have not been taxes yet on investments using after tax funds. In a 401k or IRA, all the money will be taxed. Thus, the investment holistically is tax-deferred.
He did not go into the difference between qualified dividends and non qualified dividends. Qualified dividends you pay no tax but non qualified dividends you pay tax, with some income limits. Is there a limit on qualified dividends amount of total dollars? I want to build up a no tax dividend portfolio income. I find it hard to find someone with the knowledge of stocks and taxes as retirement planning. My CPA is no help and I have talked to a planner with no help. All they said I was doing great! I just found your videos and will start looking thru them. Thanks for your help!
Your comments are not for retirement accounts All money… every single dollar pulled from a pre tax retirement is ordinary income no exceptions. Sure you can grow dividends within the account but once you pull them you cannot apply a different tax treatment to them from a retirement account.
Do a video on qualified dividends for tax purpose??
I'll see what I can put together! Dustin did a pretty in depth video on dividends toward the end of last year that I'd point you to for now!
Not one mention of the "B" word. The focus of the video is "spending more". The median income for retirees in the US is $50K and the average is a little over $70K. What you'll NEVER hear from a financial advisor is good advice about how to live well, while on a reasonable budget. Why is that? Because they get paid based on "AUM" - assets under management. The more money they convince you to save, the more money THEY make...off of your money. Keep that in mind when you watch any video from an asset manager...their motivations are not pure and their advice is not sound.
The focus of the video was retiring on all pre-tax... As said in the title. We're big proponents of not saving too much just a FA to eat your money away in fees. We talk about that a lot actually. Thanks for watching! 😄
@jasonbroom7147 … You are correct it’s another reason they generally don’t like real estate being it is not a AUM.
I’m retired 71 years old with more than 1M in pretax dollars. When I start my RMD, I won’t really need the money. So my plan is to divide RMD money between my kids n grandkids n probably do QCD. I’m planning to do Roth conversions to cover d 24% bracket. I also heard about QLAC. What do u think. Thanks…
At some point as you get older Roth conversions may not have enough years to grow for you to come out ahead tax wise. That said, if your primary goal is to remove the tax hit for the money left to your heir, well then you may still choose to do it later in retirement.
Does the government count brokerage account withdrawals as income for tax purposes? How does the taxation of brokerage account long term gain play into managing tax brackets?
The funds deposited into a brokerage account are after tax money, so withdraws of the original deposit amount do not count as income. You will have to deal with dividends and short/long term capital gains that the account generates, but that is still less of a tax hit than the whole pot being pre-tax.
You can also make the case that assets that will generate long term capital gains should be in a brokerage account rather than a 401k/IRA. In the pre-tax account you'll pay tax on long term CG at your ordinary tax rate, in the brokerage account you'll probably pay 0 or 15%.
As long as you can deal with the 5 year rule at conversion, Roth is the gold standard for avoiding taxes (after tax on the original contribution has been paid). It also limits income for the purpose of Social Security, IRMAA, and if you're under 65 and want to get health care under the affordable care act.
@@richweadon9376By the way, long term capital gains is counted as income. It counts as income when calculating how much social security income is going to be taxed, it counts as income when figuring out if you owe IIRMA, and it counts as income when figuring out what tax bracket IRA withdrawals are taxed at
Brokerage account withdrawals are taxed at their own special rates but they are beyond a doubt considered income in the eyes of the US government
UA-cam censored my first comment?
Anyway, brokerage account withdrawals are taxed at their own special rates (mostly short and long term capital gains) and only taxed on their cost basis. However the withdrawals do count as income in the eyes of the federal government
It counts as income when determining the amount of social security income that gets taxed. It counts as income when determining if you owe IIRMA payments. It counts as income in a couple other equations too
He can put the extra monthly money into an investment account.
what is this nestegg site you are using?
We use it here at Jazz as a tool for building a thorough retirement plan :)
@houazy ….New retirement is a nice individual option as well for Monte Carlo software….
How about a video on living on a cruise ship? Send Mama Jazz out for the research!!!!!! 🎉
That's the perfect new role for her! I'm SURE she wouldn't have any gripes with that 😅
Everyone is screaming about taxes the median withdrawal amount from the median 401k account in 2023 would have amounted to almost nothing in tax….. Most people that were saving in a traditional never maxed them out so they actually saved more due to the fact they had more to add as it was before tax…. If you pull a modest sum from your Pretax you’re likely to be in a low tax bracket in retirement… You paid taxes all your working years it’s really no different in retirement plus you have the 15% of social security that is not taxed at the present time. I suppose if your Peter Thiel it’s a big deal but for the median account holder in 2024 not so much..
yeah, I mean at that level you need to watch out for the so-called tax torpedo, but if you've got 500k in pre-tax you can withdraw ~20k a year or so (plus social security) without any major worries.
That being said: the target audience for retirement financial advisors tend to be people that do have 1 million or more in their accounts, of which there are a few.
More and more people might face a tough time in retirement. Low-paying jobs, inflation, and high rents make it hard to save. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire without any investment. Retirement becomes truly fulfilling when you possess two essential elements: financial resources and a meaningful purpose in life. Make prudent investment choices to secure good returns and ensure a comfortable retirement.
How about "Retirement Planning With $2,000,000 ALL Roth! Is there something that someone in that position should do to optimize their plan?
Lucky me wen I retire all my money 💰 will be I'm my Roth I.R.A
Employer match will be taxed
Average your lifespan and party. That’s 8-9 k per month
I think the best way to avoid taxes is just not spend it and transfer it to me. I will take care of it… I will not let you down.
At about 3:18 you said RMD at 75 - I think you meant 73.
A regular IRA is a "older Retiree's tax trap". Start younger to either convert, or just plain pay taxes and invest the remainder after taxes paid.
Bad advice. Why pay taxes now at 25% when you can pay 15/10/nothing later?
@@ItsEverythingElsecorrect. I avoided paying taxes at 22 or24% while working, but in retirement I’ll try and stay in the 12% bracket.
When you get into RMDS that are so high it puts you in terrible tax brackets, and IIRMA kicks in and then if you are lucky and die before its all gone, your heirs get to RMDS on an accelerated scale. Oh, dont forget many of us Seniors lose a spouse and then there you are a single taxpayer with those huge RMD's.
With all this inflation you have to assume taxes are going up in the future to recoup.. just something to think about
@@richarddpetersen169For the majority of the population RMDs are a Boogeyman. RMDs start at 4% which is what we're pulling out for the safe withdrawal rate anyway. Even by age 90 it's only an 8% rate
So with the median retiree only have $148,000 in retirement accounts? 8% wouldn't even get them out of the standard deduction
I have been maxing out my 401k, 457b and Roth IRA for the past decade. Two incomes doing the same. Grinding down hard in my 20s-30s to let it ride into my 40s and beyond.
Absolutely love it!!! I'll have to be financially stable in every sense before purchasing my first supercar. The best thing to do with your money is to invest rightly because money left saving will end up with no returns
Retirement is now more difficult than it was in the past. I've been saving for a long time instead of investing, and right now I only have about $516k. I'm not sure how to make it grow, considering all the inflation, into something substantial that I might use for retirement. I just here for ideas.