Retire With Style

In this episode, Alex Murguia and Wade Pfau are joined by Rob Cordeau to discuss the complexities and strategies surrounding Roth conversions. They emphasize the importance of long-term tax planning and the various factors that influence the decision to convert traditional IRAs to Roth IRAs. They explore the perspectives of financial advisors versus accountants, the timing of conversions, and the emotional aspects of financial planning. The conversation also touches on the implications of national debt and future tax rates, providing insights into how clients can navigate these decisions effectively. Listen now to learn more!   Takeaways Roth conversions can lead to significant tax savings over time.It's crucial to consider long-term tax implications rather than just immediate savings.Tax projections should be done annually to adjust strategies as needed.Advisors and CPAs may have differing perspectives on Roth conversions.Clients often have preconceived notions about Roth strategies that need addressing.Using standard deductions effectively can enhance tax efficiency in retirement.Roth conversions should be viewed as a hedging strategy against future tax increases. Chapters 00:00 Introduction to Roth Conversions 01:31 Understanding Roth Conversions 03:08 The Accountant's Perspective on Roth Conversions 05:06 When to Consider Roth Conversions 08:02 Analyzing the Break-Even Point 12:15 Adjusting Strategies Over Time 14:11 Emotional Aspects of Financial Planning 16:17 Advisor vs. CPA Perspectives 19:58 Client Perspectives on Roth Conversions 22:26 Predicting Future Tax Rates 25:14 The Role of National Debt in Tax Planning 30:31 Hedging Against Future Tax Increases 31:12 Maximizing Roth Conversions 33:02 Conclusion and Next Steps   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode, hosts Wade Pfau and Alex Murguia engage with Dan Veto to discuss the complexities of money conversations that arise during the holiday season. They explore the concept of the 'family bank,' where family members often turn to one another for financial support, and the emotional dynamics that accompany these requests, including love, guilt, and cultural influences. The conversation also touches on the importance of setting boundaries and understanding the implications of lending money within families. They also touch on creative ways to decline financial requests while maintaining family relationships, emphasizing the significance of context in these interactions. Listen Now to learn more!   Takeaways The holiday season often brings about awkward money conversations.The concept of the 'family bank' describes family members who provide financial support.Loans to family members should be treated as gifts to avoid complications.Cultural differences can influence how families approach money and lending.Setting clear boundaries is crucial when lending money to family members.Understanding the implications of repeated financial requests is important.The IRS has specific guidelines for family loans that should be considered.It's essential to communicate openly about financial expectations within families. Family financial dynamics can be complex and nuanced.Understanding the context of financial requests is crucial.It's important to align financial decisions with your partner.Recognizing the motivations behind requests for money is essential.Establishing clear boundaries around financial assistance is necessary..Being aware of family members' financial situations can inform decisions.Planning ahead for potential financial requests can ease stress. Chapters 00:00 Introduction to Holiday Money Conversations 02:15 Understanding the Family Bank Concept 10:33 Navigating Family Money Requests 14:54 Emotional Dynamics in Family Lending 20:34 Cultural Perspectives on Money and Family 27:39 Setting Boundaries in Family Financial Requests 29:01 Navigating Family Financial Dynamics 31:48 Personal Family Money Philosophies 35:31 Understanding Requests for Financial Help 39:00 Responding to Financial Requests 49:36 Creative Ways to Say No 51:30 Aligning Financial Decisions with Your Partner   Links Join us TODAY 11/12 at 2pm for RWS Live! If you can't join us, submit your questions for Wade and Alex here: www.retirementresearcher.com/ask. Use this link to join us live on YouTube: https://risaprofile.com/live Join the team at Retirement Researcher for a FREE webinar, “The Holiday Season: Making Memories...and Awkward Money Moments” hosted by Dan Veto, CSA on 11/19/24 at 1PM ET. Register to save your spot now at risaprofile.com/podcast   The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this episode of 'Retire with Style', hosts Alex Murguia and Wade Pfau with Jessica Wunder from McLean Asset Management delve into the complexities of early withdrawals from retirement accounts, specifically IRAs and 401(k)s. They discuss the penalties associated with early withdrawals, the Rule of 55, and various exceptions allowing penalty-free access to funds. The conversation highlights the differences between IRAs and 401(k)s, including specific exceptions applicable to each type of account. In this conversation, the speakers discuss the new exceptions introduced by Secure Act 2.0, including emergency withdrawals and disaster recovery relief. They delve into various early withdrawal exceptions, such as those for death, disability, and medical expenses. A significant focus is placed on the 72T approach, which allows for early withdrawals without penalties under specific conditions.    Takeaways The Rule of 55 allows penalty-free withdrawals from 401(k)s after age 55.Public safety employees have unique exceptions for early withdrawals.You can withdraw for medical insurance premiums if unemployed.Educational expenses can be covered by early withdrawals from IRAs.The 72(t) strategy allows for substantially equal periodic payments.There are strict rules governing early withdrawals from retirement accounts.Early withdrawal exceptions include death, disability, and medical expenses.The 72T approach allows for substantially equal payments from retirement accounts. Chapters 00:00 Introduction and Guest Introduction 01:38 Understanding Early Withdrawals from Retirement Accounts 04:02 Exploring the Rule of 55 11:09 Exceptions for IRAs vs. 401(k)s 15:57 Common Exceptions for Early Withdrawals 18:00 New Exceptions in Secure Act 2.0 22:00 Understanding Early Withdrawal Exceptions 30:00 The 72T Approach Explained 35:59 Planning for Retirement Cash Flow Needs   Links Click here to download Retirement Researcher’s free resource, “Exception to Early Withdrawal Penalties“: https://retirement-researcher.ontralink.com/tl/476 We’re hosting another YouTube LIVE Q&A episode for RWS! Click here to submit your questions: www.retirementresearcher.com/ask Watch this episode on YouTube: https://youtu.be/EzdIgudCkPQ?feature=shared The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode of 'Retire with Style', Wade and Alex discuss the complexities of pension decisions with Jason Rizkallah from McLean Asset Management. The conversation delves into the critical choices retirees face regarding pension options, including whether to take a lump sum or annuity payment, the implications of each choice, the importance of comprehensive financial planning, and the potential benefits of external annuities. They discuss the importance of evaluating commercial annuities, understanding the structures and benefits of different annuity options, and the credit risks associated with pensions and insurance companies. The conversation also covers strategies for diversification, the significance of rate lock procedures, and the impact of income decisions on overall retirement planning. Listen now to learn more!   Takeaways Annuities provide reliable income but come with liquidity issues.Tax implications are significant when taking a lump sum.External annuities can be competitive with pension options.Comprehensive financial planning is essential for retirement success.The choice between lump sum and annuity should consider long-term goals.Market conditions can affect the competitiveness of annuities. Consider all options before deciding on a pension or lump sum.Commercial annuities may offer better income rates than pensions.Evaluate the structure of annuities for survivor benefits.Credit risk varies between pensions and insurance companies.Diversifying annuities can mitigate risk but may lower income.Rate lock procedures are crucial in securing favorable annuity rates.Understand the implications of income on Medicare premiums.Ask providers about the potential repercussions of retirement choices.Partial rollovers may be possible but are often all or nothing.   Chapters 00:00 Introduction to Pension Decisions 02:35 Understanding Pension Options: Lump Sum vs. Annuity 05:54 Exploring the Third Option: External Annuities 08:51 Pros and Cons of Taking a Lump Sum 16:17 Evaluating Annuity Options 25:49 The Case for External Annuities 27:23 Evaluating Pension vs. Lump Sum Options 30:53 Understanding Annuity Structures and Benefits 34:34 Assessing Credit Risks in Pensions and Annuities 38:18 Exploring Partial Rollovers and Diversification Strategies 42:09 Navigating Rate Lock Procedures for Annuities 47:11 Considering the Impact of Income on Retirement Planning   Links Click here to download Retirement Researcher's free flowchart resource, "Should I take my pension as a lump sum?": https://retirement-researcher.ontralink.com/tl/474 We’re hosting another YouTube LIVE Q&A episode for RWS! Click here to submit your questions: www.retirementresearcher.com/ask The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode of 'Retire with Style', Wade and Alex delve into various aspects of tax planning, focusing on strategies such as front-loading taxes, tax loss harvesting, and deduction bunching. They discuss the implications of tax filing status changes, particularly for surviving spouses, and the impact of the Secure Act on inherited IRAs. The conversation emphasizes the importance of strategic Roth conversions and planning for future tax rates, providing listeners with valuable insights into effective tax management in retirement. The discussion also highlights the potential benefits of front-loading taxes and the implications of the SECURE Act on retirement accounts. Listen now to learn more!   Takeaways Front loading taxes can increase after-tax wealth.Inherited IRAs have new tax implications post-Secure Act.Roth conversions can be beneficial for beneficiaries.Tax planning should consider future income levels.Understanding tax liabilities is crucial for inheritance planning. Consider front-loading taxes to take advantage of current rates.Tax loss harvesting can add value to portfolio management.Deduction bunching can maximize tax benefits from charitable contributions.Donor advised funds offer flexibility in charitable giving.Appreciated shares can be donated to avoid capital gains taxes.Increasing after-tax spending power is a key goal in tax strategy. Chapters 00:00 Introduction to Tax Planning Conversations 05:12 Reasons to Front Load Taxes 08:01 Implications of Filing Status Changes 10:28 Embedded Tax Liabilities in Inheritance 12:39 Strategic Roth Conversions for Beneficiaries 14:51 Planning for Future Tax Rates 18:11 Tax Strategies for Retirement Planning 32:10 Maximizing Charitable Contributions 43:34 Future Tax Planning and Legacy Considerations   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this episode of 'Retire with Style', Wade and Alex discuss the complexities of tax-efficient retirement planning, focusing on understanding preferential income, tax brackets, and the implications of additional income on tax rates. They explore the net investment income tax, strategic Roth conversions, and the significance of timing in retirement income planning. The conversation emphasizes the need for careful management of social security and Medicare surcharges, particularly during the fragile decade of financial planning leading up to and following retirement. Listen now to learn more! Takeaways Preferential income includes long-term capital gains and qualified dividends.Understanding how income stacking affects tax rates is crucial.The net investment income tax can increase effective tax rates significantly.Roth conversions should be timed carefully to avoid higher tax brackets.Social security decisions can influence tax planning strategies. Chapters 00:00 Introduction to Tax-Efficient Retirement Planning 02:46 Understanding Preferential Income and Tax Brackets 06:01 The Impact of Additional Income on Tax Rates 09:02 Navigating the Net Investment Income Tax 11:53 Strategic Roth Conversions and Tax Planning 14:55 The Importance of Timing in Retirement Income Planning 18:08 Managing Social Security and Medicare Surcharges 20:58 The Fragile Decade of Financial Planning 24:04 Conclusion and Future Planning Strategies   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode, Alex Murguia and Wade Pfau delve into the complexities of tax planning related to healthcare, focusing on Medicare premiums and the implications of income on these costs. They discuss the Income Related Monthly Adjustment Amount (IRMA) and how it affects Medicare premiums, emphasizing the significant impact of seemingly small increases in income. The conversation also covers the Affordable Care Act subsidies, highlighting the double-whammy effect of income on both Medicare and ACA costs. The importance of holistic financial planning is underscored, as the hosts stress the need to consider these factors together to avoid costly pitfalls in retirement planning.   Takeaways Medicare premiums can increase significantly with small income increases.IRMA can lead to extremely high effective tax rates on additional income.Understanding the different parts of Medicare is crucial for planning.Affordable Care Act subsidies can be impacted by income levels.Planning for healthcare costs is essential in retirement.There are specific life events that can help reduce Medicare premiums.Holistic financial planning is necessary to navigate retirement income.Software tools can help analyze the impact of income on healthcare costs.It's important to monitor income levels to avoid unexpected costs.Effective retirement planning requires integrating various financial factors. Chapters 00:00 Navigating Medicare and Tax Planning 04:22 Understanding Medicare Premiums and IRMA 09:52 The Impact of Income on Medicare Costs 15:58 Affordable Care Act Subsidies Explained 22:04 The Double Whammy of Income and Healthcare Costs 29:59 Holistic Financial Planning for Retirement   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this episode of 'Retire with Style', hosts Alex Murguia and Wade Pfau delve into the concept of the 'tax torpedo', a phenomenon affecting the taxation of Social Security benefits. They explore how increased taxable income can lead to a significant rise in the percentage of Social Security benefits that are taxed, particularly for middle-class retirees. The discussion covers the mechanics of the tax torpedo, the implications of provisional income, and strategies for effective retirement income planning to mitigate its effects. Through case studies and real-world examples, the hosts emphasize the importance of proactive tax planning to avoid unexpected tax burdens in retirement. Listen now to learn more!   Takeaways The tax torpedo refers to the taxation of Social Security benefits based on income levels.Middle-class retirees are particularly affected by the tax torpedo.Provisional income is a key factor in determining how much Social Security is taxed.Taxation on Social Security benefits can range from 0% to 85%.Roth conversions can help manage taxable income and reduce Social Security taxation.The tax brackets can create significant jumps in effective tax rates due to the tax torpedo.Understanding provisional income is crucial for retirement planning.Tax planning before starting Social Security benefits can lead to significant savings.The tax torpedo is a planning opportunity rather than just a snag.Effective management of taxable income can lead to real tax savings. Chapters 00:00 Introduction to the Tax Torpedo 02:29 Understanding the Tax Torpedo Mechanics 05:56 The Impact of Social Security Taxation 09:38 Provisional Income and Its Implications 13:09 Navigating the Tax Brackets 18:05 Case Studies and Real-World Examples 26:10 Planning Opportunities to Avoid the Torpedo   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode of 'Retire with Style', Alex Murguia and Wade Pfau delve into tax-efficient withdrawal strategies for retirement. They discuss the importance of withdrawal order sequencing, the types of accounts available for withdrawals, and effective marginal tax rate management. The conversation highlights techniques for generating taxable income, including Roth conversions and long-term capital gains harvesting, while emphasizing the need to maintain asset allocation integrity throughout the retirement income distribution process. The episode sets the stage for future discussions on social security and Medicare implications in retirement planning. Listen now to learn more!   Takeaways Tax efficiency can significantly impact retirement income.Withdrawal order sequencing is crucial for tax-efficient distributions.Understanding account types helps in planning withdrawals.Effective marginal tax rate management can save money.Roth conversions can enhance after-tax wealth.Long-term capital gains harvesting can reset cost basis.Maintaining asset allocation is essential during withdrawals.Short-term sacrifices can lead to long-term benefits.Taxable accounts should be spent down first to minimize tax drag.Future discussions will cover social security and Medicare implications.   Chapters 00:00 Introduction to Tax-Efficient Withdrawal Strategies 02:48 Understanding Account Types for Withdrawals 06:00 Withdrawal Order Sequencing Explained 08:54 Effective Marginal Tax Rate Management 11:51 Techniques for Generating Taxable Income 15:12 Roth Conversions and Tax Implications 17:53 Long-Term Capital Gains Harvesting 20:58 Maintaining Asset Allocation Integrity 23:50 Conclusion and Future Topics   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this episode of 'Retire with Style', Alex and Wade delve into the intricacies of Required Minimum Distributions (RMDs). They discuss the calculations involved, the implications of RMDs on retirement planning, and the recent changes introduced by Secure Act 2.0. The conversation also covers the consequences of failing to take RMDs, the aggregation of RMDs across different accounts, and provides examples of RMD calculations using life expectancy tables. Additionally, they touch on the topic of RMDs for inherited accounts and introduce the concept of Qualified Charitable Distributions as a strategy to manage RMDs effectively. Listen Now to Learn More!   Takeaways RMDs are required to ensure taxes are paid on tax-deferred accounts.The starting age for RMDs has changed to 73 or 75 depending on birth year.RMDs do not apply to Roth IRAs or Roth 401(k)s.Failing to take RMDs can result in significant penalties.You can aggregate RMDs across multiple IRAs but not 401(k)s.RMD calculations are based on the account value at the end of the previous year.The uniform life table is commonly used for RMD calculations.Qualified Charitable Distributions can help manage RMD tax implications.Understanding RMDs is crucial for effective retirement planning.RMDs can impact social security taxation and Medicare premiums. Chapters 00:00 Introduction to Required Minimum Distributions 03:00 Understanding RMD Calculations and Implications 06:04 RMD Rules and Changes in Secure Act 2.0 09:10 Consequences of Not Taking RMDs 11:59 Aggregating RMDs Across Accounts 14:53 RMD Calculation Examples and Life Expectancy Tables 21:04 Exploring RMDs on Inherited Accounts 25:54 Qualified Charitable Distributions and Future Topics   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode, Alex and Wade discuss the importance of asset location in addition to asset allocation. They explain that asset location involves strategically placing assets in different types of accounts based on their tax efficiency. They discuss the tax efficiency spectrum, with tax-exempt bonds being the most tax efficient and REITs being the least tax efficient. They also discuss the tax advantages of different types of accounts, such as Roth IRAs, 529 plans, health savings accounts, and non-qualified annuities. Listen now to learn more!   Takeaways  Tax location is an important consideration in addition to tax allocation.Assets should be strategically placed in different types of accounts based on their tax efficiency.The tax efficiency spectrum ranges from tax-exempt bonds (most tax efficient) to REITs (least tax efficient).Different types of accounts offer different tax advantages, such as tax deductions, tax deferral, and tax-free distributions.Asset allocation should drive the decision of where to place assets for tax efficiency. Chapters 00:00 Introduction to Tax Efficiency 05:49 Understanding Asset Allocation and Tax Efficiency 09:39 Exploring the Tax Efficiency Spectrum 18:45 Placing Assets in Taxable, Tax-Deferred, and Tax-Exempt Accounts 27:30 The Importance of Asset Allocation in Tax Location Decisions 33:58 Other Considerations: Annuities, Life Insurance, and More   Links Spots are filling fast! Register now to attend a FREE Webinar with Retirement Researcher on 9/17 at 2:00 PM ET, 5 Must-Knows About Retirement Spending hosted by Christine Benz of Morningstar! Visit risaprofile.com/podcast to sign up now! The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this episode, Alex and Wade discuss tax-efficient retirement strategies, specifically focusing on tax diversification. They explain the three broad types of tax treatments in the tax code: taxable accounts, tax-deferred accounts (such as IRAs and 401ks), and tax-exempt accounts (such as Roth IRAs). They highlight the importance of having assets in each category to provide flexibility in retirement planning. They also discuss the characteristics and advantages of each type of account, including tax treatment, liquidity, and growth potential. Additionally, they touch on the different methods of tracking cost basis in taxable accounts. In this conversation, Alex and Wade discuss tax-efficient retirement distribution strategies. They cover the different types of retirement accounts, including tax-deferred accounts (such as traditional IRAs and 401(k)s), tax-exempt accounts (such as Roth IRAs and Roth 401(k)s), and taxable accounts. They explain the tax advantages and disadvantages of each type of account and discuss the importance of considering your current and future tax rates when deciding where to contribute. They also touch on the backdoor Roth contribution strategy and the concept of required minimum distributions (RMDs). Overall, the conversation emphasizes the importance of tax efficiency in retirement planning.   Takeaways Tax diversification involves having assets in taxable accounts, tax-deferred accounts, and tax-exempt accounts to provide flexibility in retirement planning.Taxable accounts are the least tax-efficient but offer advantages such as preferential income treatment, step-up in basis at death, and liquidity.Tax-deferred accounts, such as IRAs and 401ks, offer tax deductions on contributions and tax-deferred growth, but have required minimum distributions and early withdrawal penalties.Tax-exempt accounts, such as Roth IRAs, offer tax-free growth and tax-free distributions, but contributions are not tax-deductible.Tracking cost basis in taxable accounts can be done using methods like average cost, first in first out (FIFO), or specific identification of tax lots. Consider your current and future tax rates when deciding where to contribute to retirement accounts.Tax-deferred accounts (such as traditional IRAs and 401(k)s) provide a tax deduction now but are taxed upon withdrawal.Tax-exempt accounts (such as Roth IRAs and Roth 401(k)s) are funded with after-tax dollars but provide tax-free withdrawals in retirement.Taxable accounts have no tax advantages but offer flexibility and liquidity.The backdoor Roth contribution strategy allows high-income earners to contribute to a Roth IRA by making a non-deductible contribution to a traditional IRA and then converting it to a Roth IRA.Required minimum distributions (RMDs) are mandatory withdrawals from tax-deferred retirement accounts starting at age 72 (or 70.5 for those born before 1960).Tax efficiency is an important aspect of retirement planning and can have a significant impact on your overall financial situation.   Chapters 00:00 Introduction and Excitement for Tax-Efficient Retirement Strategies 01:26 Tax-Efficient Retirement Distributions as a General Theme 03:01 Understanding Tax Diversification and the Three Types of Tax Treatments 04:20 Advantages and Considerations of Taxable Accounts 15:11 Benefits and Limitations of Tax-Deferred Accounts 25:14 The Advantages of Tax-Exempt Accounts 26:04 Methods of Tracking Cost Basis in Taxable Accounts 00:31 Overview of Retirement Accounts 08:43 Tax-Deferred Accounts 18:30 Tax-Exempt Accounts 25:14 Taxable Accounts 28:47 Backdoor Roth Contribution 33:44 Required Minimum Distributions (RMDs) 38:26 Tax Efficiency in Retirement Planning 45:11 Retirement Tax Cliff 47:09 Conclusion   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode, Alex and Wade introduce a new arc on tax-efficient retirement distributions. They discuss the importance of tax planning and how it can add value to your bottom line. They explain the concept of marginal tax rates and how they differ from average tax rates. They also touch on state income taxes, filing options, and the different federal income tax brackets. Additionally, they mention other types of taxes, such as social security and Medicare payroll taxes. In this conversation, Wade Pfau and Alex Murguia discuss various aspects of income taxation and deductions. They cover topics such as ordinary income, non-qualified annuities, qualified dividends, long-term capital gains, above-the-line deductions, adjusted gross income (AGI), below-the-line deductions, standard deductions, itemized deductions, and preferential income stacking. They also touch on strategies like deduction bunching and gains harvesting. The conversation provides valuable insights into the complexities of the tax code and the importance of tax planning in retirement. Listen now to learn more!   Takeaways Tax planning can add value to your bottom line and is an important aspect of retirement planning.Understanding the difference between marginal tax rates and average tax rates is crucial for making informed decisions.State income taxes, filing options, and federal income tax brackets all play a role in tax planning.Other types of taxes, such as social security and Medicare payroll taxes, should also be considered in retirement planning. Understanding the different types of income and how they are taxed is crucial for effective tax planning in retirement.Above-the-line deductions, such as contributions to retirement plans and health savings accounts, can lower your adjusted gross income (AGI).Below-the-line deductions, such as mortgage interest and charitable donations, can reduce your taxable income.The Tax Cuts and Jobs Act of 2017 increased the standard deduction, making it less likely for many people to itemize deductions.Preferential income, such as qualified dividends and long-term capital gains, have their own tax brackets and can be taxed at lower rates.Strategies like deduction bunching and gains harvesting can help optimize your tax situation.Understanding the nuances of the tax code and working with a tax professional can help you make the most of your retirement income. Chapters 00:00 Introduction to Tax-Efficient Retirement Distributions 04:28 The Basics of Marginal Tax Rates 15:44 State Income Taxes, Filing Options, and Federal Income Tax Brackets 23:38 Considering Other Types of Taxes in Retirement 27:11 Understanding Different Types of Income and Their Taxation 29:42 Exploring Above-the-Line Deductions and Adjusted Gross Income (AGI) 36:10 Utilizing Below-the-Line Deductions to Reduce Taxable Income 43:02 The Impact of the Tax Cuts and Jobs Act on Itemized Deductions 47:13 The Importance of Tax Planning in Retirement   Links Join the waitlist for the next Retirement Income Challenge by visiting http://www.risaprofile.com/podcast The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

The Retirement Income Challenge is a four-day event that helps individuals create a retirement income plan. Day one focuses on the Retirement Income Style Assessment (RISA), which analyzes two factors: probability-based safety first and optionality versus commitment. Day two introduces the funded ratio, a balance sheet approach to financial planning that compares assets to liabilities. The funded ratio helps individuals understand if they have enough assets to meet their retirement goals. Day three explores how the RISA and funded ratio work together to fill income gaps and create a comprehensive retirement income plan. The conversation covers the Retirement Income Style Awareness (RISA) framework and the Retirement Income Challenge. The hosts discuss the importance of reliable income to cover essential expenses in retirement and the role of the RISA framework in providing alternatives to fill income gaps. They emphasize that shooting for 100% on the RISS percentages is not necessary and that it's important to have reliable income covering essential expenses. They also mention the non-financial aspects of retirement and the importance of planning for what you want to do in retirement. The hosts highlight the interactive nature of the Retirement Income Challenge and the value it provides in helping individuals gain clarity and confidence in their financial plan for retirement. Listen now to learn more!   Takeaways The Retirement Income Challenge helps individuals create a retirement income planThe Retirement Income Style Assessment (RISA) analyzes two factors: probability-based safety first and optionality versus commitmentThe funded ratio is a balance sheet approach that compares assets to liabilities to determine if individuals have enough assets to meet their retirement goalsThe RISA and funded ratio work together to fill income gaps and create a comprehensive retirement income plan The RISS framework provides alternatives to fill income gaps in retirement and ensures reliable income covers essential expenses.Shooting for 100% on the RISS percentages is not necessary; it's important to have reliable income covering essential expenses.Planning for the non-financial aspects of retirement, such as what you want to do, is crucial.The Retirement Income Challenge is an interactive session that helps individuals gain clarity and confidence in their financial plan for retirement. Chapters 00:00 Introduction to the Retirement Income Challenge 09:57 Day One: The Retirement Income Style Assessment (RISA) 11:33 Day Two: The Funded Ratio 23:37 Day Three: Integrating the RISA and Funded Ratio 25:33 The Role of the RISA Framework in Retirement Planning 28:40 Shooting for 100% on the Funded Ratio: Is It Necessary? 30:55 Planning for the Non-Financial Aspects of Retirement 39:25 The Value of the Retirement Income Challenge   Links Registration for the next Retirement Income Challenge is OPEN: Learn more and join us for this LIVE 4-Day event starting on August 26th-29th, 2024 from 12:00 -2:00 PM ET each day by visiting risaprofile.com/podcast The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this episode, Alex, Wade, and Jason discuss what to expect in retirement. They cover several major lifestyle changes that occur during retirement, including the loss of work identity, increases in unstructured time, changes in social connections, shifts in physical health, adjustments in daily routines, and the need for financial planning. They provide insights on both the positive and negative aspects of these changes and offer suggestions on how to navigate them. In this conversation, the hosts discuss the importance of structure and routines in retirement. They highlight the difference between structuring time and developing routines, emphasizing the need for both to maintain a sense of purpose and productivity. They also explore the challenges of spending more time with a spouse or partner in retirement and the importance of communication and finding a balance between shared activities and individual interests. The hosts also touch on the impact of social connections and the need to build new networks outside of work. Lastly, they discuss the health and aging process in retirement, emphasizing the importance of managing physical and mental health and avoiding negative feedback loops.   Takeaways Retirement involves major lifestyle changes that can have both positive and negative impacts.Losing work identity and a sense of purpose can be challenging, but it also presents an opportunity to create a new identity based on personal interests and passions.Having unstructured time in retirement can lead to boredom and unhealthy habits, so it's important to establish a new routine and pursue meaningful activities.Maintaining social connections and building new relationships is crucial for overall well-being in retirement.Physical health may change in retirement, and it's important to prioritize self-care and engage in regular exercise.Adjusting daily routines and finding a balance between relaxation and productivity is key to enjoying retirement.Financial planning is essential to ensure a secure and comfortable retirement.Each individual's retirement experience is unique, and the impact of these lifestyle changes will vary.Retirement is an exciting opportunity for personal growth and exploration. Structure and routines are essential in retirement to maintain a sense of purpose and productivity.Spending more time with a spouse or partner in retirement requires communication and finding a balance between shared activities and individual interests.Building new social connections outside of work is important to combat social isolation in retirement.Managing physical and mental health is crucial in retirement, and avoiding negative feedback loops is key.Creating a financial plan that addresses retirement income style and funded ratio is essential for a successful retirement. Chapters 00:00 Introduction and Overview 02:03 Chapter 1: Navigating the Loss of Work Identity in Retirement 11:39 Chapter 2: Managing Unstructured Time in Retirement 15:10 Chapter 3: Maintaining Social Connections in Retirement 18:13 Chapter 5: Adjusting Daily Routines in Retirement 20:47 Chapter 6: The Importance of Financial Planning in Retirement 26:38 Building New Social Connections in Retirement 32:58 Managing Health and Aging in Retirement 39:59 Creating a Financial Plan for Retirement   Links Registration for the next Retirement Income Challenge is OPEN: Learn more and join us for this LIVE 4-Day event starting on August 26th-29th, 2024 from 12:00 -2:00 PM ET each day by visiting risaprofile.com/podcast The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode, Wade, Alex, and Jason discuss the meaning of retirement and the factors to consider when deciding on a retirement date. They explore the idea that retirement is not just about leisure activities like golfing, but also about personal goals and relationships. They also touch on the possibility of working in retirement and the importance of financial independence. The conversation highlights the need for careful planning and consideration of health, financial, and personal factors when determining the timing of retirement. In this conversation, the hosts discuss the different factors that can influence retirement decisions, such as health, career changes, and financial stability. They emphasize the importance of asking the right questions and setting goals to create a comprehensive retirement plan. The hosts also mention the upcoming retirement income challenge, where participants can learn more about retirement planning. They end the conversation by teasing the next episode, which will focus on the changes that occur in retirement. Listen now to learn more!   Takeaways Retirement is whatever you decide it to be, and it can look different for everyone.Working in retirement or pursuing new ventures after retiring from a career is becoming more common.Retirement should not be solely focused on leisure activities, but also on personal goals and relationships.Financial independence is a key driver of retirement, as it provides the flexibility to do what you want.The timing of retirement should be carefully considered, taking into account health, financial, and personal factors.Retirement plans may need to be adjusted if health issues or unexpected circumstances arise.Retirement is a transition that requires planning and preparation to ensure a smooth and fulfilling experience. Retirement decisions can be influenced by factors such as health, career changes, and financial stability.Asking the right questions and setting goals is crucial for creating a comprehensive retirement plan.Investing in relationships and health is important for a fulfilling retirement.The retirement income challenge is a valuable resource for learning more about retirement planning.The next episode will explore the changes that occur in retirement. Chapters 00:00 Introduction and Small Talk 03:45 Working in Retirement 06:47 Beyond Leisure: Personal Goals and Relationships 09:38 The Importance of Financial Independence 12:25 Timing Retirement: Health, Financial, and Personal Factors 20:31 Adjusting Retirement Plans for Unexpected Circumstances 22:35 Retirement as a Transition: Planning for a Fulfilling Experience 25:15 Asking the Right Questions for Retirement Planning 28:01 Investing in Relationships and Health for a Fulfilling Retirement 37:40 Join the Retirement Income Challenge 41:21 Next Episode: Changes in Retirement   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode, Wade and Alex discuss the evolution of messaging in the financial advisory industry and the importance of retirement income planning. They highlight the transition from brokers to investment managers to wealth managers and the shift from accumulation to decumulation. They emphasize the need for comprehensive financial planning that considers both the asset and liability sides of the balance sheet. They also discuss the challenges of retirement income planning, including longevity and liquidity risks, and the importance of addressing these risks in a client's financial plan. In this conversation, Wade Pfau and Alex Murguia discuss the signs of a retirement income advisor who is knowledgeable and focused on the specific needs of retirees. They highlight the importance of advisors addressing concerns and risks faced in retirement, such as sequence risk and longevity risk. They emphasize the need for advisors to have a well-thought-out approach to retirement income planning beyond just investment diversification. They also discuss the significance of advisors having specialized retirement income certifications, such as the RICP or RMA designations. Additionally, they stress the importance of advisors having a clear and specific messaging that resonates with retirees and solves their unique retirement income needs.   Takeaways The financial advisory industry has evolved from brokers to investment managers to wealth managers, reflecting a shift from transaction facilitation to comprehensive financial planning.Retirement income planning is a distinct field within financial services that focuses on managing assets to meet liabilities in retirement.Comprehensive financial planning considers both the asset and liability sides of the balance sheet, taking into account the goals and risks of retirement.Retirement income planning addresses challenges such as longevity risk and liquidity risk, ensuring that clients have sufficient resources to meet their expenses and unexpected spending shocks in retirement. A knowledgeable retirement income advisor will address concerns and risks faced in retirement, such as sequence risk and longevity risk.Advisors should have a well-thought-out approach to retirement income planning beyond just investment diversification.Specialized retirement income certifications, such as the RICP or RMA designations, can be a good indicator of an advisor's expertise in retirement income planning.Advisors should have clear and specific messaging that resonates with retirees and solves their unique retirement income needs. Chapters 00:00 Introduction and Acknowledgments 02:51 The Shift from Accumulation to Decumulation 06:12 Comprehensive Financial Planning: Managing Assets and Liabilities 10:13 Addressing Longevity and Liquidity Risks in Retirement 22:08 Signs of a Knowledgeable Retirement Income Advisor 24:12 Beyond Investment Diversification: A Comprehensive Approach to Retirement Income Planning 27:19 The Importance of Retirement Income Certifications 31:23 Clear and Specific Messaging: Key to Effective Retirement Income Planning   Links Join Alex and Wade for our workshop "Elevate Your Practice: Workshop on Marketing Mastery for Retirement Income Advisors" to discover how to better market yourself as a retirement income advisor so you can stand out, attract prospects, and turn them into loyal clients. Register to attend LIVE on August 6th or 7th at www.risaprofile.com/marketingworkshop The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

In this conversation, Bob French and Rob Cordeau discuss ESG (Environmental, Social, and Governance) investing and its growing popularity. They explore the different ways investors can align their portfolios with their personal values and beliefs. They also address common misconceptions about ESG investing, such as it being solely for liberal investors. The conversation highlights the importance of understanding the impact and potential trade-offs of ESG investing, including the potential for lower expected returns. They discuss different approaches to implementing ESG investing, including using funds and ETFs, separately managed accounts, or donating the difference in returns to charities. The conversation concludes with advice on how to approach the decision of whether ESG investing is right for an individual.   Takeaways ESG investing allows investors to align their portfolios with their personal values and beliefs.ESG investing can involve adding or subtracting certain stocks, industries, or sectors based on values and beliefs.ESG investing may result in a slightly lower expected return compared to a globally diversified market portfolio.Investors should carefully consider the impact and potential trade-offs of ESG investing before making a decision.Different implementation options for ESG investing include using funds and ETFs, separately managed accounts, or donating the difference in returns to charities. Chapters 00:00 Introduction and Setting the Stage 07:37 Implementing ESG Investing: Adding or Subtracting 09:41 The Impact and Trade-Offs of ESG Investing 14:04 ESG Investing: Not a Boycott or Punishment 20:01 ESG Investing and Portfolio Performance 26:58 Implementation Options: Funds, SMAs, and Donations 39:37 Making the Decision: Is ESG Investing Right for You? 41:50 Conclusion and Final Thoughts   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this conversation, Wade Pfau, Alex Murguia, and James Matthews discuss retirement income and the Retirement Income Style Awareness (RISA) framework. James shares his background in the retirement income space and his realization that traditional retirement planning advice was lacking. The conversation touches on the limited investment options in 401(k) plans and the need for a holistic view of retirement income. They also discuss the importance of risk management and the gaps in the current financial planning curriculum. Overall, the conversation highlights the need for a more comprehensive approach to retirement income planning. The conversation explores the need for a strategic approach to retirement income planning and the limitations of traditional retirement income paradigms. It emphasizes the importance of maximizing living standards in retirement and the need for open-mindedness in exploring different methodologies. The conversation also discusses the role of the Retirement Income Certified Professional (RICP) designation in addressing the gap in retirement income planning education. It highlights the shift towards a more client-focused and personalized approach to retirement planning and the potential applications of the RISA framework in other retirement decisions. The conversation concludes with a discussion on the importance of finding an advisor who embraces an open-minded and client-centric approach.   Takeaways Traditional retirement planning advice often lacks a comprehensive approach to retirement income planning.401(k) plans typically offer limited investment options and lack clear mechanisms for converting assets into retirement income.The Retirement Income Style Awareness (RISA) framework provides a more holistic view of retirement income planning.Risk management is an important aspect of retirement income planning that is often overlooked.There is a need for improvements in the financial planning curriculum to better address retirement income planning. Retirement income planning requires a strategic approach beyond traditional paradigms.Maximizing living standards in retirement should be the primary goal.The RICP designation addresses the gap in retirement income planning education.A client-focused and personalized approach is crucial in retirement planning.The RISA framework can be applied to other retirement decisions.Finding an advisor who embraces an open-minded and client-centric approach is essential. Chapters 00:00 Introduction and Background 09:59 The Retirement Income Style Awareness (RISA) Framework 23:21 The Importance of Retirement Income in ERISA 30:40 Applying the RISA Framework to Other Retirement Decisions 37:05 The Importance of Finding an Advisor with an Open-Minded Approach   Links Join the Retirement Researcher team for "Travel in Retirement: New Options and Opportunities," with Dan Veto, CSA, to learn how travelling in retirement is different from the vacations you took while you were working - and how you can make the most of these differences. Register to attend LIVE on 7/23/24 at 1:00 PM ET by visiting risaprofile.com/podcast. The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

In this episode, Wade and Alex answer listener questions about portfolio allocation in retirement. They discuss the impact of low yields on TIPS and how it affects a retiree's portfolio. They also explore the optimal allocation of assets in taxable, tax-deferred, and tax-avoided accounts. Additionally, they address the role of annuities in retirement income and how they can replace the bond portion of a portfolio. They emphasize the importance of tax diversification and asset location. Finally, they provide insights on investing in stocks and the different factors to consider, such as value, small-cap, and REITs.   Takeaways Low yields on TIPS impact a retiree's portfolio and may require a reassessment of risk and allocation.Tax diversification is important, but the exact percentages in each type of account are not as crucial as asset allocation and asset location.Annuities can play a significant role in retirement income by providing protected lifetime income and reducing reliance on other investments.When investing in stocks, it is important to capture market risk and consider factors such as value, small-cap, and REITs.Growth indices may not necessarily provide a premium over value stocks in the long term. Chapters 00:00 Introduction and Small Talk 02:45 Navigating Low Yields and Portfolio Allocation in Retirement 09:15 Optimal Allocation of Assets in Taxable, Tax-Deferred, and Tax-Avoided Accounts 25:58 The Importance of Tax Diversification and Asset Location 26:41 Investing in Stocks: Capturing Market Risk and Considering Factors   Links The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/  This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips