The Clark Howard Podcast - Episode: Ask An Advisor With Wes Moss (Released May 27, 2025)

In this episode of The Clark Howard Podcast, host Clark Howard brings in financial advisor Wes Moss and Krista Dibiaz to provide expert advice on retirement planning, investment strategies, and managing personal finances. The episode delves into a comprehensive 10-point checklist for retirement readiness, addresses listener questions about early retirement and investment management, and explores strategies to optimize spending in retirement. Below is a detailed summary capturing the key discussions, insights, and conclusions from the episode.

1. Retirement Readiness: A 10-Point Checklist

Krista Dibiaz kicks off the episode by presenting a 10-point checklist designed to streamline the often overwhelming process of preparing for retirement. This checklist aims to reduce anxiety by consolidating various concerns into manageable steps.

1. Count It Up ([01:33])
   “You need to do an inventory of all of your different assets.”
   Krista emphasizes the importance of creating a comprehensive inventory of all assets, including investment accounts, real estate, and any outstanding debts. This honest assessment lays the foundation for effective retirement planning.

2. Map It Out ([01:31]-[03:15])
   “Mapping out a retirement game plan can calm everyone's fears.”
   Developing a retirement plan well in advance (preferably 10-20 years prior) helps in understanding future financial needs. Utilizing tools like online calculators or working with a fiduciary advisor can aid in creating a feasible plan that accounts for growth rates, inflation, and spending.

3. Paint a Picture of Your Retirement Life ([03:15]-[05:19])
   “Think of the fun things you want to do in retirement.”
   Krista suggests visualizing retirement activities to clarify personal goals and desired lifestyle. This exercise helps in aligning financial plans with life aspirations, ensuring that savings are directed toward fulfilling experiences.

4. Lock in Your Income Streams ([05:19]-[07:02])
   “Understand and secure your income sources like Social Security, pensions, or annuities.”
   Identifying and securing income streams is crucial for sustainable spending in retirement. Krista advises evaluating options such as Social Security timing and potential pension benefits to ensure steady income without solely relying on investment withdrawals.

5. Finish Big Projects ([07:02]-[08:53])
   “Complete major housing projects before retiring to avoid financial strain.”
   Addressing significant projects like home renovations before retirement prevents unexpected expenses from derailing financial stability. Krista recommends tackling these endeavors 1-3 years prior to retirement.

6. Craft a Plan to Kill the Mortgage ([08:53]-[11:19])
   “Retirement happiness levels increase when your mortgage is paid off or near payoff.”
   Eliminating mortgage debt before retiring reduces monthly obligations, contributing to greater financial freedom and reduced stress during retirement years.

7. Get Your Healthcare Ducks in a Row ([11:19]-[14:32])
   “Ensure you have the right Medicare and supplemental plans in place.”
   Transitioning to Medicare involves selecting appropriate supplemental insurance. Krista underscores the importance of consulting with healthcare advisors to secure plans that maintain access to preferred doctors and cover necessary medical expenses.

8. Tune Up Your Estate Plan ([14:32]-[17:36])
   “Ensure your wills, trusts, and beneficiary designations are up to date.”
   Regularly reviewing and updating estate plans is vital to reflect changes in personal circumstances and asset levels, ensuring that your financial legacy aligns with your wishes.

9. Rethink Your Insurance ([17:36]-[19:10])
   “Update property, casualty, and umbrella insurance to protect your assets in retirement.”
   Revisiting insurance policies helps mitigate risks and shield assets from potential liabilities, adapting coverage to the needs of retirement.

10. Do a Digital Review ([19:10]-[21:17])
    “Secure your digital financial accounts with dual authentication and safe password storage.”
    Ensuring robust digital security for financial accounts protects against unauthorized access and provides a safety net for managing finances in unforeseen circumstances.

“You go through that 10-point checklist, you're gonna have a lot less anxiety when it comes to pulling the retirement trigger.”
— Krista Dibiaz ([11:19])

2. Listener Questions and Expert Advice

The episode features a segment where Wes Moss and Krista Dibiaz answer listener-submitted questions, providing tailored financial advice based on individual circumstances.

a. Early Retirement and Asset Management (Brian from Colorado) ([11:45]-[17:36])

Brian's Scenario:
Brian and his wife, both 53, have aggressively saved over the years. Their assets include:

• Retirement Savings: $2.7 million in various accounts (traditional IRAs, Roth IRAs, 401(k)s, HSA)
• Taxable Investment Accounts: $1.4 million in index funds and dividend-paying large-cap stocks
• Cash/ CDs/Money Markets: $1.1 million
• 529 Savings: $400,000 for their children's education

Questions:

1. When to Retire:
   “Should we consider early retirement given our substantial savings and debt-free status?”
   Krista assesses their financial readiness using the 4% rule, suggesting they could safely withdraw approximately $200,000 annually from their $5 million portfolio. This withdrawal strategy, combined with their existing assets, indicates that early retirement is feasible.

2. Professional Account Management:
   “Is it worth paying a financial advisor 1% of our assets to manage our investments?”
   Krista explains that at the $5 million level, advisors typically charge lower percentages. She cautions that advisors often cannot consistently outperform the market and recommends using advisors for comprehensive financial planning rather than active asset management. If they prefer market returns without high fees, they might continue managing their investments independently using low-cost index funds.

“You're not paying a financial advisor ever to beat the S&P 500.”
— Krista Dibiaz ([14:32])

b. Shifting Investments to Avoid Capital Gains Taxes (David from Massachusetts) ([17:36]-[21:17])

David's Scenario:
David has built over $2 million through aggressive investing using a self-directed brokerage account. He is contemplating shifting from aggressive stocks to more stable investments in anticipation of retirement and is concerned about potential capital gains taxes.

Questions:

1. Managing Capital Gains Taxes:
   “Is there a smart way to shift investments without incurring significant tax liabilities?”
   Krista suggests a strategic approach to selling investments. By focusing on securities that have not appreciated or have minor gains, David can minimize capital gains taxes, especially if he falls within a tax bracket that allows for zero long-term capital gains tax. She also mentions reverse dollar cost averaging, which involves gradually selling portions of the portfolio to mitigate market volatility impacts.

2. Roth Conversions Concerns:
   “Would converting to a Roth IRA result in double taxation?”
   Krista clarifies that Roth conversions involve transferring funds directly from retirement accounts to Roth IRAs, which is different from contributing to a Roth from a brokerage account. She advises that conversions should be carefully planned, considering the tax implications and eligibility based on age and income.

“If you want to be the S&P 500 or any index, that's when you're either doing this on your own or you're looking at a hedge fund or a mutual fund.”
— Krista Dibiaz ([14:32])

c. Withdrawal Strategies to Manage Tax Brackets (Joe from Florida) ([35:16]-[40:36])

Joe's Scenario:
At 71, Joe and his spouse have:

• IRA Savings: $500,000
• Traditional Investment Accounts: Sufficient income from guaranteed sources and an additional six months in a high-yield savings account
• Investment Strategy: Dividend stocks, ETFs, and high-yield bond funds with a 6-7.5% withdrawal rate

Questions:

1. Sustainability of Current Withdrawal Strategy:
   “Our advisor claims our strategy is unsustainable. Is this true?”
   Krista reviews the withdrawal rate, noting that a 4% rule is generally considered safe. Joe's 6-7.5% withdrawal rate exceeds this guideline, potentially risking portfolio depletion. Krista advises adjusting the withdrawal rate closer to the recommended 4-4.5% to ensure long-term sustainability, especially if relying solely on investment accounts without additional income streams like Social Security.

“The 4% withdrawal rule is based on a long market cycle where you know that you will inevitably go through lower periods of rate of return.”
— Krista Dibiaz ([37:59])

2. Reinvesting Remaining Funds:
   “Does reinvesting 25% of withdrawals affect sustainability?”
   Krista explains that reinvesting part of the withdrawals does not alleviate the issue of a high withdrawal rate, as it offsets some depletion but still may not align with safe withdrawal practices.

3. Advisor's Recommendation of Immediate Annuities:
   “Should we consider immediate annuities as suggested by our advisor?”
   While immediate annuities can provide higher guaranteed income, Krista highlights the loss of liquidity and control over funds. She recommends balancing withdrawal rates to maintain liquidity for unexpected expenses while ensuring sustainable income.

“The four percent withdrawal rule is trying to protect you when things don't go well in markets.”
— Krista Dibiaz ([17:36])

d. Investing in Tax-Exempt Bond Funds (Akshay from North Carolina) ([40:31]-[43:41])

Akshay's Inquiry:
Akshay seeks advice on investing in tax-exempt bond funds such as VTEAX, VW, AHX, or bond ETFs like VTEB. He wants to understand when to invest in these instruments, how to incorporate them into his portfolio, and the associated risks.

Krista's Response:

• Risks Associated with Municipal Bonds:
  “These are obligations to local or state governments, and their credit ratings can vary.”
  While high-quality municipal bonds (e.g., AAA-rated) are relatively secure, bonds from financially unstable municipalities carry higher risks. Krista advises investing in highly-rated municipal bonds to minimize credit risk.

• Tax Equivalent Yield Calculation:
  “A 3.5% tax-free bond is equivalent to a 5% taxable bond if you're in a 30% tax bracket.”
  Krista explains how to compare tax-exempt yields with taxable bonds using the tax equivalent yield formula, helping investors assess the true value of tax-exempt investments based on their tax situation.

• Investment Strategy Integration:
  Investing in municipal bonds outside of retirement accounts can provide tax-efficient income. Krista recommends balancing these investments with other asset classes to maintain portfolio diversification and manage tax liabilities effectively.

“Assuming you stick with really high quality municipal bonds, then it's hard to say they're the same credit level as the US government, but they're pretty close.”
— Krista Dibiaz ([40:36])

e. Roth vs. Traditional 401(k) Contributions (Kevin from Illinois) ([43:03]-[43:41])

Kevin's Scenario:
At 57, Kevin contributes to a company 401(k) with a mix of traditional and Roth options. With plans to work until 70, he seeks advice on whether to allocate entirely to Roth or continue the current mix.

Krista's Advice:

• Tax Bracket Consideration:
  “High tax bracket, stick with traditional. Low tax bracket, do Roth.”
  Krista advises that individuals in higher tax brackets may benefit more from traditional 401(k) contributions due to immediate tax deductions, whereas those in lower brackets might prefer Roth contributions for tax-free withdrawals in retirement.

• Middle-Ground Strategy:
  For those in middle tax brackets, maintaining a 50/50 split between traditional and Roth contributions can provide tax diversification, offering flexibility in managing taxable income during retirement.

“If you're in that middle range, split them 50/50 so that you have both.”
— Krista Dibiaz ([43:03])

3. Structuring Spending in Retirement

Following the listener questions, Wes Moss introduces a discussion on structuring spending in retirement. Krista elaborates on managing withdrawals from various accounts to optimize tax efficiency:

1. Understanding Withdrawal Order ([27:08]-[35:16])
   Krista outlines the importance of recognizing three main "buckets" of retirement funds:

   • After-Tax Accounts: Individual brokerage or savings accounts
   • Retirement Accounts: Traditional IRAs, 401(k)s, etc.
   • Roth Accounts: Roth IRAs

   The general strategy involves withdrawing from after-tax accounts first, followed by retirement accounts, and using Roth accounts for larger, occasional expenses to manage overall tax brackets efficiently.

2. Age and Withdrawal Rules ([29:30]-[35:16])
   She emphasizes knowing the minimum age for penalty-free withdrawals (typically 59½) and understanding the rules around different account types to avoid unnecessary taxes and penalties.

3. Practical Scenarios ([35:16]-[43:41])
   Krista provides hypothetical scenarios to illustrate how strategic withdrawals can significantly impact tax liabilities and financial stability in retirement.

“The key, what we want to do is be able to keep and manage our tax bracket most efficiently for as long as we can.”
— Krista Dibiaz ([27:48])

4. Light-Hearted Segment: Apple Connoisseur

Interspersed between the financial discussions, Wes and Krista engage in a playful debate about the best types of apples, highlighting the podcast's balanced mix of serious financial advice and entertaining segments. This light-hearted interaction serves to humanize the hosts and provide a brief, enjoyable respite from the technical discussions.

“Anybody that calls Pink Crisp horse food is just that. That's just... that's heretical.”
— Krista Dibiaz ([22:13])

5. Conclusion

The episode concludes with Wes Moss and Krista Dibiaz summarizing key takeaways on retirement planning and expressing their readiness to address future financial inquiries from listeners. They encourage continued engagement through listener questions and emphasize the importance of informed, strategic financial planning to achieve long-term financial freedom.

Notable Quotes:

• “You go through that 10-point checklist, you're gonna have a lot less anxiety when it comes to pulling the retirement trigger.”
  — Krista Dibiaz ([11:19])

• “If you're in that middle range, split them 50/50 so that you have both.”
  — Krista Dibiaz ([43:03])

• “Anyone that calls Pink Crisp horse food is just that. That's just... that's heretical.”
  — Krista Dibiaz ([22:13])

Final Thoughts:

This episode of The Clark Howard Podcast offers valuable insights into retirement planning, emphasizing the importance of thorough preparation, strategic investment management, and tax-efficient withdrawal strategies. By addressing real-life scenarios and providing actionable advice, Wes Moss and Krista Dibiaz empower listeners to make informed financial decisions, paving the way toward a secure and fulfilling retirement.