Ready For Retirement

How do you know if you can retire? It seems straightforward, but the answer is far from simple. Beyond portfolio balances and age thresholds, there are other things to consider. James explains his three-step test to determine your retirement readiness. By pulling together principles from the 4% Rule, straight-line projection, and a Monte Carlo analysis, you can assess whether your portfolio can sustain your desired lifestyle over decades amid various market conditions. However, these tests alone don’t paint the complete picture. James emphasizes the importance of considering other assets like potential inheritances or property downsizing to more fully and confidently evaluate when you can retire. Questions Answered: How can I determine if I’m financially ready to retire? Is the 4% Rule sufficient for determining retirement readiness? Timestamps: 0:00 - Consider withdrawal rate 2:14 - 4% Rule 5:12 - Not a perfect strategy 7:39 - Straight line projection 9:09 - Downside of SL projection 11:07 - Monte Carlo test 13:07 - Understand severity of failure 16:20 - Defining success, 18:25 - Looking ahead Create Your Custom Strategy ⬇️ Get Started Here.

Jennifer, 54, plans to retire soon. Her husband, 70, is retired, on Social Security, and dealing with some severe health issues. Jennifer worries about possibly becoming single in retirement, which could result in a higher tax bracket for her. Jennifer is considering whether to convert her traditional accounts to Roth to lower future taxes or to change her contributions to Roth 403b, even if it means paying more taxes now. James walks us through several factors for her to consider and demonstrates why her future tax situation is likely not as dire as she thinks. Questions Answered: How should Jennifer maximize her retirement savings in light of her current financial situation and future tax implications? What factors must Jennifer consider when deciding whether to convert her traditional retirement accounts to Roth or change her contributions to Roth 403b? Timestamps: 0:00 - Jennifer’s question 4:46 - Retire early for tax benefits? 6:05 - Roth conversion strategy 8:43 - Consider future expenses 12:38 - Assess SS strategies 13:56 - Consider living situation 15:54 - The conversion question 17:54 - Main takeaways Create Your Custom Strategy ⬇️ Get Started Here.

Joe is planning for retirement and wants to minimize his tax burden, especially on the interest earned from his three annuities. James explains that non-qualified annuities are purchased with post-tax money and offer tax deferral on growth until withdrawal. When taking out funds, the principal is tax-free, but earnings are taxed at ordinary income rates. He explores strategies for tax-efficient withdrawals. He also touches on annuities, options like a 1035 exchange to transfer an annuity into a different product for improved performance, the tax implications for heirs, and early withdrawal penalties before age 59 and a half. Questions Answered: How are non-qualified annuities taxed upon distribution, including both lump sum and annuity options? What strategies can be implemented to keep the tax burden as low as possible when withdrawing from non-qualified annuities? Timestamps: 0:00 - Joe’s question 1:52 - Non-qualified annuity overview 5:11 - Potential tax strategies 10:02 - Annuitization option 12:31 - Annuity regret 13:22 - 1035 Exchange 14:33 - Things to know Create Your Custom Strategy ⬇️ Get Started Here.

Deciding to work with a financial advisor is about more than how much you've stashed away. It's also about determining whether an advisor's benefits outweigh the costs. In your higher earning years, finances become more complex. More money means more decisions and more chances to make mistakes or miss out on opportunities. That's where a quality advisor can come in handy. They help you steer clear of bad investments, seize the right opportunities, and keep financial stress at bay. Having more than one perspective to draw from is the key to well-informed financial decisions. Teaming up and talking it out, whether with your partner or a financial advisor, is always beneficial. Questions answered: How can I determine whether working with a financial advisor is worth it for me? What factors should I consider when deciding if I need a financial advisor beyond just my age or income level? Timestamps: 0:00 - Not an age-related decision 2:43 - Value and pricing structure 4:12 - Natural conflicts 7:24 - When benefit exceeds cost 10:02 - Cost of mistakes 12:18 - Cost of missed opportunities 14:16 - Cost of anxiety 16:02 - Thought partnership 21:36 - Summary Create Your Custom Strategy ⬇️ Get Started Here.

Listener Ray is wondering what to do with his home as he embarks on a nomadic, van-life journey in retirement. Should he sell it to finance his travels or retain it for potential appreciation and cash flow? James explores the nuances of home ownership as an asset versus an investment. He considers cash flow and leverage as he looks at Ray’s three options – sell, rent, or borrow – while emphasizing aligning financial decisions with personal goals and aspirations. Questions Answered: Why shouldn’t I consider my home an investment? What are the key financial considerations for retirees when deciding whether to sell, rent them out, or explore other options? Timestamps: 0:00 - Ray’s question 1:56 - Why a home isn’t an investment 4:38 - Do you want to be a landlord? 8:22 - The financials 10:14 - Asset appreciation 11:30 - Cashflow 15:04 - Leverage 19:02 - What should Ray do? 20:33 - Reverse mortgage Create Your Custom Strategy ⬇️ Get Started Here.

Listener Drew asks about a tax strategy for juggling capital gains and Roth conversions. While it can be a complicated question – especially when large accounts are involved – James provides some general guidelines that can be helpful for anyone with similar gnarly tax strategy challenges in retirement. In this episode, we’ll cover the extent to which required distributions will be an issue, what you need to alleviate that issue, and the timeframe within which you have to do that. James explains how to work backward to project your various tax brackets and determine how to prioritize tax gain harvesting, Roth conversions, and other tax strategies. Questions Answered: What is tax gain harvesting? What is the tax planning window and how do I use it to my advantage? Timestamps: 0:00 - Drew’s question 2:50 - Determine use for each asset 5:59 - Tax gain harvesting 11:10 - Back to Drew 15:30 - James’ priorities for Drew 18:41 - Usually not either/or 20:07 - Working backwards 24:50 - General principles 29:50 - Tax planning window 32:16 - Summary Create Your Custom Strategy ⬇️ Get Started Here.

James responds to listener Jerry’s question about the optimal time to distribute inheritance or charitable gifts: before or after passing away. James walks listeners through four important things to consider when it comes to gifting and inheritance: your gifting goal, whether you have a strong desire to see the assets gifted within your lifetime, the tax implications of various types of gifts, and what to do with assets you plan to retain for now but are intended for future generations. Questions Answered: Should I give my children and grandchildren their inheritance before or after I die? What are the tax implications to my children when I gift them my assets? Timestamps: 0:00 - Jerry’s question 2:20 - What is your gifting goal? 3:38 - Gift during your lifetime? 6:51 - Timing and priorities 9:17 - Different tax implications 12:08 - Exemption amounts 14:13 - Tax implications to child 15:33 - Proper beneficiary designations 21:41 - The right time horizon 24:45 - Summary Create Your Custom Strategy ⬇️ Get Started Here.

A listener says, “Eventually, one spouse will pass before the other, which will often catapult the survivor into a significantly higher tax bracket. Shouldn’t a Roth strategy take this into account?” James explores several factors that could positively and negatively impact a survivor’s tax liability and what to consider when creating a Roth conversion strategy. Questions Answered: How can Roth conversions benefit married couples beyond tax savings? What factors should be considered when determining the optimal strategy for Roth conversions to protect a surviving spouse? Timestamps: 0:00 - Steve’s question 3:40 - An example 6:41 - 3 changes 12:32 - Positive impacts 15:22 - RMD calculations 16:45 - Widows tax penalty 19:46 - When to do Roth conversions 23:40 - Big age gap 28:45 - Start with a good reason 29:57 - The bottom line Create Your Custom Strategy ⬇️ Get Started Here.

Jason and his wife face a crucial decision: whether to purchase an annuity or pursue traditional investments as they prepare for a full-time, slow-travel retirement. With a diverse array of income sources, including pensions, 401k, property sales, and Social Security, they estimate their monthly expenses at $7,500. James analyzes their situation, emphasizing the balance between annuity stability and investment flexibility. He highlights the security of annuities and explains their limitations, guiding the couple towards a tailored approach that aligns with their goals and circumstances. Questions Answered: What are the pros and cons of annuities? How can I effectively balance the stability of annuities with the flexibility of traditional investments? Timestamps: 0:00 - Jason’s question 3:07 - Pros and cons of annuities 6:32 - Assessing Jason’s situation 9:52 - The role of Jason’s portfolio 11:40 - Annuity alternatives 13:23 - Support your retirement vision 16:54 - Integrate financial plan and portfolio Create Your Custom Strategy ⬇️ Get Started Here.

The "Three Bucket Strategy" is a popular retirement income planning method. The first bucket covers immediate expenses in retirement. Listeners John and Donna are seeking advice on constructing their first bucket. With $1.6 million in assets and pension incomes, they aim to retire in 2026. James analyzes their needs, income sources, and portfolio and lays a foundation for their Bucket #1. It's crucial to bridge the gap between expenses and income, considering risk capacity and tolerance. Questions Answered: How do you divide assets into the three buckets, and what is the purpose of each? What role do risk capacity and risk tolerance play in determining portfolio allocation? Timestamps: 0:00 - John and Donna 3:36 - The bucket approach 5:50 - Start with expenses 8:53 - Non-portfolio income sources 11:23 - Identify and bridge the gap 13:06 - Assessing their portfolio 14:53 - Portfolio dividend yield 16:49 - Do you need Bucket 1? 19:16 - What is the specific need? 21:07 - Risk capacity 23:22 - Test contingencies Create Your Custom Strategy ⬇️ Get Started Here.

Benjamin, nearing retirement at 65, faces a familiar dilemma with his taxable account housing expensive mutual funds. Despite their underperformance, converting to low-cost index funds entails a significant tax hit due to long-held appreciable value. James explains weighing the immediate tax consequences against the risk of holding onto underperforming assets. He also provides a framework for assessing risk, identifying options, and making decisions based on personal financial goals. Questions Answered: How can you decide whether to sell underperforming mutual funds or continue holding onto them? What factors should you consider in determining whether converting to low-cost index funds aligns with your financial goals and risk tolerance? Timestamps: 0:00 - Listener question from Benjamin 2:17 - Tail wagging dog? 3:52 - Benjamin’s situation 5:31 - WCS of selling vs not selling 11:17 - Be careful about tax drag 12:47 - Rethinking the break-even point 14:11 - Consider your goal for the money 17:17 - Identify the bigger risk 19:26 - Make your decision 20:26 - Will your tax situation change? 24:20 - Consider staggering sales 28:21 - Summary Create Your Custom Strategy ⬇️ Get Started Here.

Typical retirement strategies assume a retirement age of over 60. With an earlier retirement goal, a careful look is required to determine what strategies will create the best outcome. James responds to a listener’s question about where to invest as he anticipates an early retirement. James walks through the steps of Root’s Sequoia System to explore options for early retirement scenarios. Questions Answered: How does early retirement impact traditional retirement planning strategies, such as the 4% rule? When deciding between retirement accounts (e.g., 401k) or brokerage accounts for pre-60 funds in early retirement, what factors should be considered? Timestamps: 0:00 - Question about early retirement 2:21 - Is early retirement possible? 3:30 - Why the 4% rule doesn’t apply 6:08 - Assessment of Juan’s situation 8:11 - The Sequoia system Step 1 - purpose 10:16 - Step 2 - retirement income 12:49 - Relying on SS benefit? 14:09 - Withdrawal strategy 15:32 - Sourcing funds from age 50-59 17:20 - Brokerage vs 401K 20:22 - A part-time income scenario 23:04 - Consider how expenses might change 25:14 - Step 3 - investment planning 28:09 - Steps 4 & 5- taxes and protection Create Your Custom Strategy ⬇️ Get Started Here.

The 4% rule helps us understand how much we can safely take out of our portfolio each year without running out of money in retirement. Yet, as simple as the 4 percent rule seems, the practical implications are drastically misunderstood. I explore the three common mistakes people make when applying this rule and how to avoid them. Questions Answered: How do RMDs impact the 4 percent rule? Does the 4 percent rule account for changes in expenses and income sources? Timestamps: 0:00 - Questions from listeners 1:26 - Misconception 1 - RMD 3:27 - 4% rule applies to portfolio 5:51 - Assumption of 30 years retirement 7:51 - Misconception 2 - annuity distributions 10:01 - An example 12:33 - Misconception 3 - static cash flow 13:42 - Examples of changes 17:44 - Summary Create Your Custom Strategy ⬇️ Get Started Here.

Retirement is not just about financial readiness; it's also about finding purpose, passion, and personal growth. James and guest Cynthia Meyer debunk the arrival fallacy, the illusion that reaching retirement will bring lasting happiness. Having structure in retirement and pursuing your passions is vital to feeling fulfilled. Although it's easy to fall into comparing our retirement experiences to those around us, this is a dangerous trap. Finding what's truly important to you and following that will lead to much greater happiness. Questions Answered: What is the arrival fallacy? How can retirement coaching help you find freedom and fulfillment in retirement? Timestamps: 0:00 - Arrival fallacy 1:25 - Retire…then what? 3:58 - Structure in 4 chunks 6:06 - Risks of no structure 7:59 - Procrastination 9:35 - Finding your passion 12:33 - Microsteps and consistency 14:32 - Prodding the brain 17:01 - Not just for retirement 20:33 - Passion follows commitment 22:43 - Experiment and be flexible 24:20 - Be careful of stereotypes 26:17 - Rewire retirement 28:08 - Advice and resources Create Your Custom Strategy ⬇️ Get Started Here.

Sammy, a 51-year-old retiree, is seeking advice on how much she should convert from her traditional IRA to a Roth IRA each year to avoid jumping tax brackets and minimize the taxation of her social security benefits. James analyzes Sammy's current financial situation and offers guidance on approaching the tax planning aspect of her retirement strategy. Learn: How to determine how much to convert from an IRA to a Roth IRA Why forward-looking tax planning is essential The potential consequences of certain financial decisions Questions Answered: What factors should you consider in planning Roth conversions? How can you avoid going into a higher tax bracket? Timestamps: 0:00 - Sammy’s Roth conversion question 2:29 - The Roth/tax rules today 4:58 - Tax on different types of income 7:24 - Some assumptions 10:19 - Figuring tax and making assessments 12:28 - RMD part 1 15:33 - RMD part 2 17:25 - Caution about tax bracket assumptions 21:58 - Important side note 23:45 - Takeaways Create Your Custom Strategy ⬇️ Get Started Here.

James addresses a common concern for a couple approaching retirement through a listener’s question. Listener Rob plans to collect Social Security early at 62, raising questions about his wife’s retirement. Understanding Social Security strategies to avoid potential losses during retirement is important. James explains the intricacies of spousal benefits, detailing how they are calculated based on the primary earner's full retirement age benefit. Key Takeaways: -Wait until full retirement age to maximize spousal benefits -Primary earner must start to start collecting for the spouse to be eligible -Nuanced calculations involving the spouse's own retirement benefit Questions Answered: When should a spouse collect Social Security spousal benefits? How are spousal benefits calculated? Timestamps: 0:00 - A listener’s question 3:00 - Two SS options 5:17 - Spousal benefit amounts 7:24 - When spouses can collect 8:55 - Spousal + primary benefits 11:59 - Implications of collecting early 14:16 - The good news 16:00 - The key takeaways Create Your Custom Strategy ⬇️ Get Started Here.

As one listener prepares for an early retirement, James discusses the situation, covering how to build a bond ladder based on non-retirement funds. James provides a different way of looking at the stock-to-bond conversation. Learn how to determine the appropriate amount to have a bond ladder and whether you should own individual bonds or bond funds as a part of that ladder. Questions Answered: How do you balance risk capacity and risk tolerance in portfolio allocation? How do you build an effective bond portfolio for retirement? Timestamps: 0:00 - Listener case study 2:37 - James’s perspective on bonds 7:42 - Considering purchasing power 10:18 - Balance of stocks and bonds 13:39 - Dividends are typically resilient 16:40 - All bonds not created equally 20:30 - Bond ladder 23:09 - Different types of bonds 24:51 - Withdrawal strategy 26:39 - More on bonds 30:09 - 3 questions to consider Create Your Custom Strategy ⬇️ Get Started Here.

James explores the concept of sequence of return risk in retirement planning. Most people are unaware of how risky this is, as it doesn’t become an issue until you begin living off your portfolio. Responding to a listener’s inquiry about early retirement, James dives into the potential impact of market timing on retirement outcomes. Learn three actionable strategies: Questions Answered: How does sequence of return risk impact retirement outcomes? How can early retirees protect against sequence of return risk? Timestamps: 0:00 - Ben’s question 3:19 - Sequence of returns matters 6:48 - 3 projections to consider 11:49 - The 4% rule 16:05 - Considerations for early retirees 18:57 - 3 protective takeaways 22:15 - Summary Create Your Custom Strategy ⬇️ Get Started Here.

Should you sell long-term stocks for a real estate investment? I walk through one listener’s question and explain what you need to consider before making such a decision. Aside from the obvious–is it a good financial investment–you also need to consider if it's a good emotional decision. Learn: ➡ The tax implications: how are capital gains taxed differently? ➡ How to compare the dividends of a bond to those of a property investment ➡ What important factors and questions need to be carefully accounted for Questions Answered: When does it make sense to sell long-term stocks for real estate investments? How can you determine the “dividends” of a real estate investment? Timestamps: 0:00 - Trade stock for real estate? 2:55 - Calculate yield 6:39 - Consider net operating income 9:15 - Other considerations 12:36 - Calculate taxes 18:57 - Quick summary Create Your Custom Strategy ⬇️ Get Started Here.

When you’re doing well financially, paying advisor fees might seem unnecessary. So do you need an advisor if you’re already in a good place? Having a successful retirement isn’t just about not running out of money; it’s about what more you can do. Through a real-life client story, I explain how having an advisor’s perspective to implement the right strategy can be more valuable than the cost of their fee. Advisors can help you avoid biases in the way you invest and plan. They can ensure you have the right withdrawal strategy and don’t overpay on taxes. When handling finances for yourself, you may worry about what you could be missing. A good financial advisor will give you peace of mind, knowing you have all the right information. It’s important to reframe your thinking: Is the cost of your advisor justified by the value provided? Questions Answered: What’s the opportunity cost of not having an advisor? What value does an advisor provide when you are stable financially? Timestamps: 0:00 Financial advisor vs DIY 3:37 Does an advisor add value? 8:30 Story of lost opportunity 12:27 Understand the bigger picture 13:41 Being ok vs optimizing 17:44 Risk of wrong withdrawal strategy 21:13 Risk of overpaying taxes 22:20 Continuity costs 23:27 The real goal 27:31 Appropriately compare Create Your Custom Strategy ⬇️ Get Started Here.