Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.
This is true. I'm in my mid 50's now. My wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with her profits over the years, but at least I earn more. I'm making money even before retiring, and my retirement fund has grown way more than it would have with just the 401(k). Haha.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $675k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
Interesting I think this is something I should do, but I've been stalling for a long time now. I don't really know which firm to work with; I feel they are all the same but it seems you’ve got it all worked out with the firm you work with so i surely wouldn’t mind a recommendation.
Finding financial advisors like Marisa Michelle Litwinsky who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
For the last segment, it appears that while the taxes are higher, there is a substantially higher amount of funds available as well, which more than offsets the higher taxes. focused solely on taxes, this makes sense. Focused on overall wealth and ability to spend money it does not seem to make sense.
Yes, this video doesn't go far enough. We need to see how much the 240,000 that the couple takes out in the first 10 years under the Roth scheme will grow under the model for the rest of their lives (or maybe to 5 years before their predicted death if they want to spend the money rather than pass it down as an inheritance). How much that 240k grows is key, because that needs to be added onto the 2.3 million RMDs in the first example (once the 240k is converted, it can just sit in an investment account for decades). If it grows to a million, then doing the conversion makes sense. If it only grows to 700k, then it doesn't.
Im 58 and planning on retiring at 61. According to Boldin scenarios we actually make more lifetime money in total by claiming social security at 62 vs 67 - its because it allows my $700k IRA balance to continue increasing because it drastically reduces my drawdown at retirement and the IRA increases outpace what SS and the anemic COLA increases can do and I can do ROTH conversions up to the 12/15% bracket. I do have two 'pensions' (military & VA) which provide 4300 a month so my drawdown needs at 62 can be completely covered for a several years by the reduced SS. I'd love to see you do a video exploring this kind of strategy and if it'd be viable for somebody without the 'pension' advantage I have.
My goodness! It seems our government thinks “the golden years” means the government gets to cash in. They’ve made it far more complicated than it needs to be. I’ve just subscribed to your channel. Thank you.
"Fairly complicated" you say. The US tax code is probably one of the most complicated things out there. Thanks for making the effort to simplify so it's easier to follow.
I’m 60 and my wife 54 we are both retired with over $2 million in net worth and no debts. Currently living smart and frugal with our money. Saving and investing lifestyle in the stock market made it possible for us this early even till now we earn weekly.
People leave money in tax-deferred accounts too long because that's what financial planning "experts" tell them to do. They are told to draw down taxable accounts first. That is idiotic. Draw down tax-deferred first. That solves or reduces the impact of RMDs, lowers taxes in later years, and leaves inheritance that is taxed much less -- if at all.
I agree about withdrawing from one's tax deferred accounts before RMDs and to delay ss until 70. Thanks for this video supporting this idea. Unfortunately so many think they should take ss at 62 and wait to withdraw thier tax deffered until they are forced to at RMDs.
Took SS at 69.5 years. Been taking out about 50K from my 401K for the last 5 years. Just putting that 50K back in the stock market as a ROTH conversion. RMDs start next year and ROTH conversions are very limited.
Glad you are providing this overview. I’m seeing from my own relatives that people don’t realize these things because they never make any attempt to lay out a plan.
Love this channel. Trying to learn as much as possible. Im 51, trying to educate myself early on and plan it out before I get closer to my 60s. Im going to have to get with a CFP- my situation is a little intricate. I have a mil retirement+ VA disability. Then I'll also be retiring as a Fed with a FERS pension and TSP. I also have a Roth and investments. Thats not even taking into account my wife's specifics. Our house is paid off and we have a cash emergency fund. Just seems like there are so many intricacies and I have so many questions. Keep up the great informative videos!
@@Noneofyourdambusssiness Hi dear Good evening . I hope my comment didn't sound as a form of privacy invasion your comment tells of a man with a beautiful heart which led me to comment I don’t a normally write in the comment section but I think you deserve this complement. If you don’t mind can we be friends? Thanks God bless you….🌺🌺🌺
It makes sense to withdraw money from retirement accounts in the next year after retirement. Most people don’t have much money, but I’ve accumulated quite a lot in my numerous company 401K, and rollover 401K, and Roth IRAs, and Regular IRAs. So I guess if I keep withdrawing, the expectation is my retirement accounts could go lower, but what if my investments continue to do well? My accounts will likely outlast me and my beneficiaries will get the money.
Every financial person argues these points differently. Some claim that delaying withdrawals will create more taxes but your overall account growth will more then cover this.
To complicated for me. It is food for thought though regarding what exactly do I plan to do with the funds in my qualified accounts? Right now - just retired a few years ago - it appears I will not need the funds in my qualified accounts any time soon. My pension and my social security combined are plenty to sustain my life style. So, I have been sticking the RMDs in a taxable account invested in the same way as my qualified accounts. I take from this that I should probably consider whether it makes more sense to take more than the RMD each year - but I am not convinced that doing so will reduce my total tax. Maybe? To hard to sort it out.
@@ron9665 Hi dear Good evening . I hope my comment didn't sound as a form of privacy invasion your comment tells of a man with a beautiful heart which led me to comment I don’t a normally write in the comment section but I think you deserve this complement. If you don’t mind can we be friends? Thanks God bless you….🌺🌺🌺
In your example the income increase is about $1.1m ($3.5m - $2.4m) and tax increase is about $260k ($432k - $172k) to wait. Thus, your net take home is $900k more if you can delay. ...thus is the additional tax impact really a "bad" thing?
Liquidity is more important than taxes in retirement. Having liquidated retirement holdings and then being able to take long-term or short-term gains or loss in a taxable account or hold cash in a bank is more beneficial then continue to grow a co-owned retirement account with the fed/state governments
The last year I have been watching a lot of financial videos here and a lot on retirement info. I am 63. I had to google RMD, did not know what that was.
My parents delayed and basically were not advised to do any conversions by their "wealth manager". Now they are getting absolutely roasted by RMD's and IRMAA crap. There goes my inheritance over to taxes. Great planning guys! Geez.
Why do you think your parents money belongs to you anyway? You don't deserve any inheritance; it's a gift to receive an inheritance. You sound greedy and all you want is their money.
@@micheleyoungblood If someone is worried about the taxes from RMDs and IRMAA, they are in a position to want to leave money to heirs. People simply don't like paying taxes and fees. I've paid into Medicare for 40+ years, the fact that when I get Medicare it will cost me several hundred dollars more per month than others is annoying. I will be paying more for Medicare, to get worse benefits, than I pay for private health insurance.
@@danielhurst8863 I'm personally very worried about taxes and IRMAA. We were told to save in the tax deferred accounts and when we retire will be in a lower tax bracket than we are while we're working. Well that is so not true. We're going to have the same problems of paying more taxes barely breaking away from the Irmaa if we can as we get towards the rmds. So I understand what you're saying. But the whole inheritance expectation is what I was saying. when your children have expectations like this person was saying that is just a turn off to me. Parents need to spend the money that they earned & saved and enjoy themselves and make sure that they're okay not worried about their children's inheritance. What the children get when you die is what they get. If you have to pay more taxes cuz you save money well and just didn't plan accordingly then that's just too bad for the children. It's the attitude of children to think that the inheritance should be theirs and they expect it to be theirs. An inheritance is a gift and the parents save their money and they saved in order to have a good retirement for themselves, and to make sure that they're taking care of themselves and not being a burden on their children. Anything funds left over, that money then can go as an inheritance to the children. My problem is expectation. That expectation that leads to an attitude of ingratitude. I'm getting that feeling from the way the poster said what they said. That's where my comment was leading and that was the intention of my comment. Also the wording of his comment is not saying that the parents are specifically worried about the taxes they're paying and the lack of planning that is leading to a lower potential inheritance for this person. His last sentence of great planning guys, is showing that this person, who's the child of the parents, is demeaning and roasting his parents that had the planned better and done a better job specifically tax planning, then he would get more money as an inheritance. Saving all the money they saved that pushed them into the tax bracket and additional Irmaa charges so they actually did an excellent job of saving money and planning. So they didn't do anything wrong it's just tax planning wasn't done and so now this person is getting Petty and upset about his inheritance. Read the comment again and you'll see what I'm talking about. I don't see him saying anywhere that his parents are concerned about his inheritance and his parents are concerned about tax consequences right now. I see he's concerned and he's concerned only because he's not going to get his money for his inheritance.
@@danielhurst8863Yep, I hear you. We’re going to be soaked with IRMAA. We’ve delayed retirement and SS, remaining employed, with a very, very good medical/dental/vision plan.
That’s actually a good problem to have. They are making so much from their retirement account that they have to pay higher taxes on them. It sucks to pay higher taxes to be sure, but it’s nice to have an account that has that problem as opposed to a fund that is dwindling to 0.
So if someone is working til 67, and making a good salary until then, if they take an extra $20k out to covert to a Roth etc won’t that extra $20k be taxed at an even higher tax rate (say 37% if their salary is high). Wouldn’t it benefit them to wait until retired.
Can you please discuss pensions? For instance, I work in a company where I am vested in a pension plan and I have been working there for 20 years. In about 12-15 years I will be eligible for a pension of about 7-8k a month for life. I also have a 401k with a 700k in it, but I have another 15 years of working at least. What should be my thinking about planning the retirement? Thank you.
Great topic. Thanks for the video. I understand that you are withdrawing money from an IRA or 401k to use up a standard deduction or maybe all of the 10 or even 12% tax bracket. But why would you put that money in a brokerage account? Why not put it directly in a Roth. I think I understand a Roth 5-year rules, but am I missing something?
So complicated. All I know is tax planning is super important. If withdrawing only minimal $$ from 401K, our kids would pay the inheritance at his/her tax rates at all once or only upon withdrawals? Thank you!
Generally (there are some exceptions), your kids will need to drain 401K/IRA over a 10 year period - Hopefully they are not in their prime earnings years (and in a relatively high tax bracket).
I mean, it's the same idea as why you'd do Roth conversions, right? Don't waste opportunities to pay taxes at 10/12, or even 22% if you're going to be pushed into the 12/22 or 24% brackets in the future by RMDs. Especially when rates are likely to rise to 10/15/25/28 in 2026.
@@foundryfinancial No, not everyone wants to do a conversion, but It seems like the video shows that taking more than the RMD is a prudent choice, and one of the best uses for an unnecessary RMD seems like it would be a conversion.
Ok so if you don’t need this money, I’m assuming you’re going to put the distributions in a Roth IRA. But you’ll reach an age where you can’t do that (RMDs can’t be converted to Roth, etc.). So are we missing any tax implications for capital gains and stuff that will happen with this money we’ve withdrawn that we don’t need to live on?
I still make a decent income ($175K plus $55K in federal pensions). I'm 65 and I don't intend to retire until age70, if even then. We're going to buy a retirement home and use our $1.2M IRA to pay for the mortgage and for a huge trip each year. That should begin in 1 year. We're still not taking Social Security.
If you’re lucky enough, like me and have an inherited IRA, it puts you in a real bind, especially at 60 and using ACA. Hopefully once Medicare age, we can take more income from the IRAs. Good problem to have, but the IRS is the only beneficiary!
Building wealth involves developing good habits like regularly putting money away in intervals for solid investments. Instead of trying to predict and prognosticate the stability of the market and precisely when the change is going to happen, a better strategy is simply having a portfolio that's well prepared for any eventually, that's how some folks' been an impressive average return of $150,000 every seven weeks over the past four months according to Bloomberg.
Christine Maloney-wilson is one of the best portfolio managers in the industry, deserves recognition. She is well known; you ought to look at her work.
Your RMDs get taxed as ordinary income but you can’t roll over your withdrawals to a ROTH. I wish you could. I understand why you can’t but still would be nice to shelter the withdrawals for dependents in tax free account
@@foundryfinancial yes. In the process of doing it now yearly. Trying to maneuver and figure out strategy with pending new tax rates as well. Excellent video Thank you
Doing a Roth conversion will likely make you owe more taxes. If you have thousands of dollars in your accounts, you’re better off after retirement when just you’re getting Social Security. So should you delay Social Security to withdraw your retirement accounts?
@@melroman4496 I have a pension too so it’s a matter of how much taxes you want to pay. Delaying SS will increase your monthly paycheck in a later year so let the government pay your taxes. Also, Congress wants to make SS non-taxable so it’s a matter of when it will happen.
I only discovered your channel a few weeks ago, and I'm really liking it. You're very clear, concise, and extremely steady when discussing each point of each topic. The pace is fast enough that it never feels like you're bogging down, but not so fast that I have to keep backing up to catch things I missed. I'm learning a lot, and look forward to future videos. Thanks!
It’s not just tax brackets that should be optimized. Folks also need to maximize Social Security. Consider delaying SS and drawing down your traditional IRAs and 401Ks until SS starts. This further reduces RMDs later and has the effect of maximizing tax advantaged and inflation adjusted income. Also, folks with higher spending needs should account for IRMAA. Make sure that when doing withdrawals and/or ROTH conversions that you fill up your IRMAA bracket without going over into the next bracket. If you are even $1 over, you’ll incur hundreds or even thousands of dollars more in Medicare premiums 2 years later. You don’t really know what the brackets will be 2 years later; so, you might get lucky if you go over the current ones a bit, but be careful. 🙏
@@gg80108 No. You still spend the same money now, but you delay SS to maximize it and draw down other assets while you delay. You don’t sacrifice spending now, instead you actually are able to spend more now and in the future. Taking SS early is a short sited strategy that pretty much ensures you will be sacrificing higher spending now and in the future for the illusion of more short term spending. I’ve yet to see any retirement spending research that doesn’t support maximizing SS when possible to support higher spending throughout all phases of retirement.
The software minimizes taxes. This is different from maximizing amount of money to spend or bequeath to posterity. (e.g. donating 100% of savings to charity may eliminate taxes, but doesn't leave me anything to spend or bequeath). Assume heirs are in 24% incremental tax band. Is there an option that maximizes the money my heirs keep after I die at age XX? Assuming I have a pension: small vs large? SS invested at chosen interest claimed at 62, FRA, or 70 y/o?
@@ronmorrell9809 Hi dear Good evening . I hope my comment didn't sound as a form of privacy invasion your comment tells of a man with a beautiful heart which led me to comment I don’t a normally write in the comment section but I think you deserve this complement. If you don’t mind can we be friends? Thanks God bless you….🌺🌺🌺
I was thoroughly confused by your presentation, especially with the different examples. Seems to me like you were comparing apples with oranges and then going off on tangents, never getting back to the original line of reasoning. And where was your summary? (I'm ex-military. I'm used to the three step process: 1. Tell them what you will tell them. 2. Tell them. 3. Tell them what you told them.) I've been retired for 7 years now. I don't know if I've been making the same mistake as "80% of Retirees Make This Mistake". I know I've made other financial missteps that have cost me hundreds of thousands of dollars. But here I am, healthy, debt free, with an annual retirement income of over $100K and a net worth of $3M+ ... so I haven't done too badly. Could I be richer? Yes. Could I be happier? Absolutely. Could I be more satisfied with where I am in life? I don't think so, I am where I belong. I am where I was meant to be.
Nice video on the concepts… Can you do an update on this with a reality check? Both of your scenarios assume funds end at age 100, which is fantastic (or scary) to plan out. * Can you do your comparison numbers assuming an end of life is a more “real” age like 82, or 85, or 88(?)? Anything left over from that date is buffer for longer life expectancy, or shows inheritance at that date… * you indicated that this was their only retirement account, so should show post-tax yearly/monthly values for audience to understand how this scenario covers their monthly retirement living expenses & enjoyment…how does the scenario’s resulting ~$3.5k/mo correlates to the audiences financial hypothetical… * would model in cost-of-living as age increases, like assume senior living + senior care + hospice care curve after 83(?) Seems like first goal is to have enough to live without being broke (or get a retirement part time job) so that all monthly living (and play) expenses are covered til (unknown) end of-life…so highlight how this tax strategy can potentially maximize that goal. Side note: ave male life expectancy is 74.8 and female is 79.1
This wasn’t a financial plan. I was just showing how those numbers grow. And even if you don’t live long - your heirs will get stuck with it. Also, your age expectancy numbers are off. Not that 100 isn’t a bit long, but if you already reached age 65 your life expectancy is about 20 years. Check the social security life expectancy tables. Really helpful.
Hey Kevin this is unrelated to the video, but just saw Clare and Phil Dunphy on a commercial for whatsapp. Hope they're doing OK financially and that's just for fun money . . . 😂😂😂😂
In your example the income increase is about $1.1m ($3.5m - $2.4m) and tax increase is about $260k ($432k - $172k) to wait. Thus, your net take home is $900k more if you can delay. ...thus is the additional tax impact really a "bad" thing?
It all depends how much the 240k (well according to him, even more, since he couldn't turn off the inflation adjustment function) grows over their lifetime. That amount has to be added to the rmd totals in the first case.
Crazy audio error @5:20 that is going to give a lot of folks a heart attack. Not $36,500. $3,650 as is shown in the video.
I misspoke in the first cut, but it edited that in post and somehow it didn’t take. I hate how UA-cam won’t let me edit now.
oops!
Obvious mistake. But it wasn't necessary to point it out
@@tgiletto At least he knows we were actually listening and paying attention.
It was a test.
Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.
This is true. I'm in my mid 50's now. My wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with her profits over the years, but at least I earn more. I'm making money even before retiring, and my retirement fund has grown way more than it would have with just the 401(k). Haha.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $675k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
Interesting I think this is something I should do, but I've been stalling for a long time now. I don't really know which firm to work with; I feel they are all the same but it seems you’ve got it all worked out with the firm you work with so i surely wouldn’t mind a recommendation.
Finding financial advisors like Marisa Michelle Litwinsky who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
For the last segment, it appears that while the taxes are higher, there is a substantially higher amount of funds available as well, which more than offsets the higher taxes. focused solely on taxes, this makes sense. Focused on overall wealth and ability to spend money it does not seem to make sense.
Yes, this video doesn't go far enough. We need to see how much the 240,000 that the couple takes out in the first 10 years under the Roth scheme will grow under the model for the rest of their lives (or maybe to 5 years before their predicted death if they want to spend the money rather than pass it down as an inheritance). How much that 240k grows is key, because that needs to be added onto the 2.3 million RMDs in the first example (once the 240k is converted, it can just sit in an investment account for decades). If it grows to a million, then doing the conversion makes sense. If it only grows to 700k, then it doesn't.
Also little things like social security may become totally non taxable.
Im 58 and planning on retiring at 61. According to Boldin scenarios we actually make more lifetime money in total by claiming social security at 62 vs 67 - its because it allows my $700k IRA balance to continue increasing because it drastically reduces my drawdown at retirement and the IRA increases outpace what SS and the anemic COLA increases can do and I can do ROTH conversions up to the 12/15% bracket. I do have two 'pensions' (military & VA) which provide 4300 a month so my drawdown needs at 62 can be completely covered for a several years by the reduced SS. I'd love to see you do a video exploring this kind of strategy and if it'd be viable for somebody without the 'pension' advantage I have.
My goodness! It seems our government thinks “the golden years” means the government gets to cash in. They’ve made it far more complicated than it needs to be.
I’ve just subscribed to your channel. Thank you.
Thanks for adding information for singles! I am really enjoying your channel!
"Fairly complicated" you say. The US tax code is probably one of the most complicated things out there. Thanks for making the effort to simplify so it's easier to follow.
My pleasure.
I’m 60 and my wife 54 we are both retired with over $2 million in net worth and no debts. Currently living smart and frugal with our money. Saving and investing lifestyle in the stock market made it possible for us this early even till now we earn weekly.
Great job ! I bet you’re living your best life right now.
I’m a young dad, I’m really glad to hear your story it inspires me. Please how did you achieve this milestone.
Look, there’s a lot of investing options (real estate,airbnb,stocks,cr.ypto,ETFs) my best advice is get a pro who will lead you to a profitable one.
I recommend you reach out to my CFA Laura Grace Abels .
Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
People leave money in tax-deferred accounts too long because that's what financial planning "experts" tell them to do. They are told to draw down taxable accounts first. That is idiotic. Draw down tax-deferred first. That solves or reduces the impact of RMDs, lowers taxes in later years, and leaves inheritance that is taxed much less -- if at all.
I agree about withdrawing from one's tax deferred accounts before RMDs and to delay ss until 70. Thanks for this video supporting this idea. Unfortunately so many think they should take ss at 62 and wait to withdraw thier tax deffered until they are forced to at RMDs.
Took SS at 69.5 years. Been taking out about 50K from my 401K for the last 5 years. Just putting that 50K back in the stock market as a ROTH conversion. RMDs start next year and ROTH conversions are very limited.
Glad you are providing this overview. I’m seeing from my own relatives that people don’t realize these things because they never make any attempt to lay out a plan.
Love this channel. Trying to learn as much as possible. Im 51, trying to educate myself early on and plan it out before I get closer to my 60s. Im going to have to get with a CFP- my situation is a little intricate. I have a mil retirement+ VA disability. Then I'll also be retiring as a Fed with a FERS pension and TSP. I also have a Roth and investments. Thats not even taking into account my wife's specifics. Our house is paid off and we have a cash emergency fund. Just seems like there are so many intricacies and I have so many questions. Keep up the great informative videos!
@@Noneofyourdambusssiness Hi dear Good evening . I hope my comment didn't sound as a form of privacy invasion your comment tells of a man with a beautiful heart which led me to comment I don’t a normally write in the comment section but I think you deserve this complement. If you don’t mind can we be friends? Thanks God bless you….🌺🌺🌺
It makes sense to withdraw money from retirement accounts in the next year after retirement. Most people don’t have much money, but I’ve accumulated quite a lot in my numerous company 401K, and rollover 401K, and Roth IRAs, and Regular IRAs. So I guess if I keep withdrawing, the expectation is my retirement accounts could go lower, but what if my investments continue to do well? My accounts will likely outlast me and my beneficiaries will get the money.
Every financial person argues these points differently. Some claim that delaying withdrawals will create more taxes but your overall account growth will more then cover this.
You can still have account growth. Just put the money in a brokerage or do a Roth conversion.
@@foundryfinancial And pay capital gains on the brokerage accounts.
I like Arnold Swartzennegger's quote "I like paying alot of taxes, it means I made alot of money" 😅
Thanks for your detailed and clear presentation. Love the examples!
To complicated for me. It is food for thought though regarding what exactly do I plan to do with the funds in my qualified accounts? Right now - just retired a few years ago - it appears I will not need the funds in my qualified accounts any time soon. My pension and my social security combined are plenty to sustain my life style. So, I have been sticking the RMDs in a taxable account invested in the same way as my qualified accounts. I take from this that I should probably consider whether it makes more sense to take more than the RMD each year - but I am not convinced that doing so will reduce my total tax. Maybe? To hard to sort it out.
7:45 How does the government justify any tax on SS when they have already said that we will only receive about 70% of what we should get??
We’re from the government and we’re here to help. LOL criminals all of them.
Great point
cuZ the employer contribution was never taxed. That is way they add back in 50% of your SS for tax test.
@@ron9665 Hi dear Good evening . I hope my comment didn't sound as a form of privacy invasion your comment tells of a man with a beautiful heart which led me to comment I don’t a normally write in the comment section but I think you deserve this complement. If you don’t mind can we be friends? Thanks God bless you….🌺🌺🌺
Some don't withdraw from tax-deferred accounts because they are still working past their RMD age.
You had me at account compounding and getting larger and larger and larger. Lets hope!!!
In your example the income increase is about $1.1m ($3.5m - $2.4m) and tax increase is about $260k ($432k - $172k) to wait. Thus, your net take home is $900k more if you can delay. ...thus is the additional tax impact really a "bad" thing?
Liquidity is more important than taxes in retirement. Having liquidated retirement holdings and then being able to take long-term or short-term gains or loss in a taxable account or hold cash in a bank is more beneficial then continue to grow a co-owned retirement account with the fed/state governments
The last year I have been watching a lot of financial videos here and a lot on retirement info. I am 63. I had to google RMD, did not know what that was.
My parents delayed and basically were not advised to do any conversions by their "wealth manager". Now they are getting absolutely roasted by RMD's and IRMAA crap. There goes my inheritance over to taxes. Great planning guys! Geez.
Why do you think your parents money belongs to you anyway? You don't deserve any inheritance; it's a gift to receive an inheritance. You sound greedy and all you want is their money.
@@micheleyoungblood If someone is worried about the taxes from RMDs and IRMAA, they are in a position to want to leave money to heirs.
People simply don't like paying taxes and fees. I've paid into Medicare for 40+ years, the fact that when I get Medicare it will cost me several hundred dollars more per month than others is annoying. I will be paying more for Medicare, to get worse benefits, than I pay for private health insurance.
@@danielhurst8863 I'm personally very worried about taxes and IRMAA. We were told to save in the tax deferred accounts and when we retire will be in a lower tax bracket than we are while we're working. Well that is so not true. We're going to have the same problems of paying more taxes barely breaking away from the Irmaa if we can as we get towards the rmds. So I understand what you're saying. But the whole inheritance expectation is what I was saying. when your children have expectations like this person was saying that is just a turn off to me. Parents need to spend the money that they earned & saved and enjoy themselves and make sure that they're okay not worried about their children's inheritance. What the children get when you die is what they get. If you have to pay more taxes cuz you save money well and just didn't plan accordingly then that's just too bad for the children. It's the attitude of children to think that the inheritance should be theirs and they expect it to be theirs. An inheritance is a gift and the parents save their money and they saved in order to have a good retirement for themselves, and to make sure that they're taking care of themselves and not being a burden on their children. Anything funds left over, that money then can go as an inheritance to the children. My problem is expectation. That expectation that leads to an attitude of ingratitude. I'm getting that feeling from the way the poster said what they said. That's where my comment was leading and that was the intention of my comment.
Also the wording of his comment is not saying that the parents are specifically worried about the taxes they're paying and the lack of planning that is leading to a lower potential inheritance for this person. His last sentence of great planning guys, is showing that this person, who's the child of the parents, is demeaning and roasting his parents that had the planned better and done a better job specifically tax planning, then he would get more money as an inheritance. Saving all the money they saved that pushed them into the tax bracket and additional Irmaa charges so they actually did an excellent job of saving money and planning. So they didn't do anything wrong it's just tax planning wasn't done and so now this person is getting Petty and upset about his inheritance. Read the comment again and you'll see what I'm talking about. I don't see him saying anywhere that his parents are concerned about his inheritance and his parents are concerned about tax consequences right now. I see he's concerned and he's concerned only because he's not going to get his money for his inheritance.
@@danielhurst8863Yep, I hear you. We’re going to be soaked with IRMAA. We’ve delayed retirement and SS, remaining employed, with a very, very good medical/dental/vision plan.
That’s actually a good problem to have. They are making so much from their retirement account that they have to pay higher taxes on them. It sucks to pay higher taxes to be sure, but it’s nice to have an account that has that problem as opposed to a fund that is dwindling to 0.
So if someone is working til 67, and making a good salary until then, if they take an extra $20k out to covert to a Roth etc won’t that extra $20k be taxed at an even higher tax rate (say 37% if their salary is high). Wouldn’t it benefit them to wait until retired.
In order to answer he would need to know if they were married or single and exactly how much they were making at a minimum.
$300k
@@wdeemarwdeemar8739 my point is really about anyone in a higher tax bracket.
Can you please discuss pensions? For instance, I work in a company where I am vested in a pension plan and I have been working there for 20 years. In about 12-15 years I will be eligible for a pension of about 7-8k a month for life. I also have a 401k with a 700k in it, but I have another 15 years of working at least. What should be my thinking about planning the retirement? Thank you.
Quite confusing???
Understatement
Great topic. Thanks for the video. I understand that you are withdrawing money from an IRA or 401k to use up a standard deduction or maybe all of the 10 or even 12% tax bracket. But why would you put that money in a brokerage account? Why not put it directly in a Roth. I think I understand a Roth 5-year rules, but am I missing something?
By putting it in a Roth on main Roth conversion.
Oops. I answered my own question. Even if you're over 59 and 1/2, each Roth conversion has its own 5-year clock
So complicated. All I know is tax planning is super important. If withdrawing only minimal $$ from 401K, our kids would pay the inheritance at his/her tax rates at all once or only upon withdrawals? Thank you!
Generally (there are some exceptions), your kids will need to drain 401K/IRA over a 10 year period - Hopefully they are not in their prime earnings years (and in a relatively high tax bracket).
Great video, learned something new today, thank you 👍🏻
I’m glad! Thanks for taking time to let me know.
I mean, it's the same idea as why you'd do Roth conversions, right? Don't waste opportunities to pay taxes at 10/12, or even 22% if you're going to be pushed into the 12/22 or 24% brackets in the future by RMDs. Especially when rates are likely to rise to 10/15/25/28 in 2026.
Yeah. But, not everyone wants to do a conversion.
@@foundryfinancial No, not everyone wants to do a conversion, but It seems like the video shows that taking more than the RMD is a prudent choice, and one of the best uses for an unnecessary RMD seems like it would be a conversion.
Ok so if you don’t need this money, I’m assuming you’re going to put the distributions in a Roth IRA. But you’ll reach an age where you can’t do that (RMDs can’t be converted to Roth, etc.). So are we missing any tax implications for capital gains and stuff that will happen with this money we’ve withdrawn that we don’t need to live on?
I still make a decent income ($175K plus $55K in federal pensions). I'm 65 and I don't intend to retire until age70, if even then. We're going to buy a retirement home and use our $1.2M IRA to pay for the mortgage and for a huge trip each year. That should begin in 1 year. We're still not taking Social Security.
What is the target 401k balance before RMD kicks in?
RMD is a portion of any balance amount you must take put based on Your age.
If you’re lucky enough, like me and have an inherited IRA, it puts you in a real bind, especially at 60 and using ACA.
Hopefully once Medicare age, we can take more income from the IRAs.
Good problem to have, but the IRS is the only beneficiary!
Yeah, inherited accounts are tricky!
I have the same dilemma. I am not qualified for ACA because i have to withdraw and its more than 50k
5:20 Graphic says $3,650 but narrative says $36,500..... Which is correct?
3,650. I misspoke.
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Christine Maloney-wilson is one
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She's mostly on
Whatts~Apk
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Your RMDs get taxed as ordinary income but you can’t roll over your withdrawals to a ROTH. I wish you could. I understand why you can’t but still would be nice to shelter the withdrawals for dependents in tax free account
Correct, would be nice. But, if you do a conversion early it lowers the balance.
@@foundryfinancial yes. In the process of doing it now yearly. Trying to maneuver and figure out strategy with pending new tax rates as well. Excellent video Thank you
Doing a Roth conversion will likely make you owe more taxes. If you have thousands of dollars in your accounts, you’re better off after retirement when just you’re getting Social Security. So should you delay Social Security to withdraw your retirement accounts?
@@finned958 you would be correct except for the fact that I have a pension so that is nit the case for me. But great point
@@melroman4496 I have a pension too so it’s a matter of how much taxes you want to pay. Delaying SS will increase your monthly paycheck in a later year so let the government pay your taxes. Also, Congress wants to make SS non-taxable so it’s a matter of when it will happen.
I only discovered your channel a few weeks ago, and I'm really liking it. You're very clear, concise, and extremely steady when discussing each point of each topic. The pace is fast enough that it never feels like you're bogging down, but not so fast that I have to keep backing up to catch things I missed.
I'm learning a lot, and look forward to future videos.
Thanks!
Thank you! It’s a hard balancing act to give enough info without giving too much, so the feedback is appreciated.
It’s not just tax brackets that should be optimized.
Folks also need to maximize Social Security. Consider delaying SS and drawing down your traditional IRAs and 401Ks until SS starts. This further reduces RMDs later and has the effect of maximizing tax advantaged and inflation adjusted income.
Also, folks with higher spending needs should account for IRMAA. Make sure that when doing withdrawals and/or ROTH conversions that you fill up your IRMAA bracket without going over into the next bracket. If you are even $1 over, you’ll incur hundreds or even thousands of dollars more in Medicare premiums 2 years later. You don’t really know what the brackets will be 2 years later; so, you might get lucky if you go over the current ones a bit, but be careful. 🙏
@@mikephilpot9857 wow. Have to research and try to understand this. Thank you
Lol delay SS, you will find money is worth more when your health age is good rather than later. So as a practical idea its bad to delay.
@@gg80108 No. You still spend the same money now, but you delay SS to maximize it and draw down other assets while you delay. You don’t sacrifice spending now, instead you actually are able to spend more now and in the future.
Taking SS early is a short sited strategy that pretty much ensures you will be sacrificing higher spending now and in the future for the illusion of more short term spending.
I’ve yet to see any retirement spending research that doesn’t support maximizing SS when possible to support higher spending throughout all phases of retirement.
The software minimizes taxes. This is different from maximizing amount of money to spend or bequeath to posterity. (e.g. donating 100% of savings to charity may eliminate taxes, but doesn't leave me anything to spend or bequeath). Assume heirs are in 24% incremental tax band.
Is there an option that maximizes the money my heirs keep after I die at age XX? Assuming I have a pension: small vs large? SS invested at chosen interest claimed at 62, FRA, or 70 y/o?
@@ronmorrell9809 Hi dear Good evening . I hope my comment didn't sound as a form of privacy invasion your comment tells of a man with a beautiful heart which led me to comment I don’t a normally write in the comment section but I think you deserve this complement. If you don’t mind can we be friends? Thanks God bless you….🌺🌺🌺
Ithought the standard deduction for 2024 was 14,600 not 16,400.
It’s higher if you’re 65
@@foundryfinancial Thank you, I missed that.
And isn't the untaxed portion 25,000 vs 27,500 (for single filers)?
lol. Not sure I’ll have this problem. My retirement account will probably just have enough for us to live a basic life.
I was thoroughly confused by your presentation, especially with the different examples. Seems to me like you were comparing apples with oranges and then going off on tangents, never getting back to the original line of reasoning. And where was your summary? (I'm ex-military. I'm used to the three step process: 1. Tell them what you will tell them. 2. Tell them. 3. Tell them what you told them.)
I've been retired for 7 years now. I don't know if I've been making the same mistake as "80% of Retirees Make This Mistake". I know I've made other financial missteps that have cost me hundreds of thousands of dollars. But here I am, healthy, debt free, with an annual retirement income of over $100K and a net worth of $3M+ ... so I haven't done too badly.
Could I be richer? Yes. Could I be happier? Absolutely. Could I be more satisfied with where I am in life? I don't think so, I am where I belong. I am where I was meant to be.
Nice video on the concepts…
Can you do an update on this with a reality check?
Both of your scenarios assume funds end at age 100, which is fantastic (or scary) to plan out.
* Can you do your comparison numbers assuming an end of life is a more “real” age like 82, or 85, or 88(?)? Anything left over from that date is buffer for longer life expectancy, or shows inheritance at that date…
* you indicated that this was their only retirement account, so should show post-tax yearly/monthly values for audience to understand how this scenario covers their monthly retirement living expenses & enjoyment…how does the scenario’s resulting ~$3.5k/mo correlates to the audiences financial hypothetical…
* would model in cost-of-living as age increases, like assume senior living + senior care + hospice care curve after 83(?)
Seems like first goal is to have enough to live without being broke (or get a retirement part time job) so that all monthly living (and play) expenses are covered til (unknown) end of-life…so highlight how this tax strategy can potentially maximize that goal.
Side note: ave male life expectancy is 74.8 and female is 79.1
This wasn’t a financial plan. I was just showing how those numbers grow. And even if you don’t live long - your heirs will get stuck with it. Also, your age expectancy numbers are off. Not that 100 isn’t a bit long, but if you already reached age 65 your life expectancy is about 20 years. Check the social security life expectancy tables. Really helpful.
Hey Kevin this is unrelated to the video, but just saw Clare and Phil Dunphy on a commercial for whatsapp. Hope they're doing OK financially and that's just for fun money . . . 😂😂😂😂
This is common sense ,im only 50 seconds in,just say spread out your tax liability ,holy crap,then we can all go home LOL LOL LOL !!!!!
If you’re going to take the time to do long videos you should tell people what a R M D is !
I am glad most comments here dont have a clue. I like people paying lots of tax.
Phew over my head!
It’s all very tricky. But put simply: for many people, it doesn’t make sense to delay withdrawing or converting their tax-deferred money.
Very misleading title. This is not a mistake at all, if it’s what you’ve planned to do.
Federal standard deduction: where are the $16,500 for single and $32,300 for married couple coming from??
As I point out in the video, in this scenario they’re 65 and therefore a higher standard deduction.
In your example the income increase is about $1.1m ($3.5m - $2.4m) and tax increase is about $260k ($432k - $172k) to wait. Thus, your net take home is $900k more if you can delay. ...thus is the additional tax impact really a "bad" thing?
It all depends how much the 240k (well according to him, even more, since he couldn't turn off the inflation adjustment function) grows over their lifetime. That amount has to be added to the rmd totals in the first case.