The Clark Howard Podcast Episode: Ask An Advisor With Wes Moss
Release Date: June 17, 2025

Introduction

In this episode of The Clark Howard Podcast, host Krista Dibiaz engages in a comprehensive discussion with financial advisor Wes Moss. The primary focus centers on strategies for early retirement, navigating complex IRS rules, and understanding the elements that contribute to a fulfilling and happy retirement. Throughout the conversation, they address listener-submitted questions, delve into investment strategies, and explore the intersection of financial planning and personal well-being.

1. Early Retirement Strategies: Understanding Rule 72T

Krista Dibiaz introduces the topic of early retirement, particularly focusing on IRS Rule 72T, which allows individuals to access IRA funds before the typical retirement age without incurring the standard 10% penalty.

Krista Dibiaz [01:14]: "We're here to talk about a theme that comes up a lot and you've done a ton of research on Wes and that is retiring early."

Wes Moss elaborates on the mechanics of Rule 72T, explaining how it enables individuals under 59½ to withdraw funds through Substantially Equal Periodic Payments (SEPPs), thereby avoiding penalties.

Wes Moss [01:36]: "72T is an exception that allows us to take substantial equal periodic payments from an IRA, enabling early access to funds without the 10% penalty."

He emphasizes the complexity of the rule and advises consulting with financial institutions to ensure compliance and optimal execution.

Key Points:

• Rule 72T Basics: Allows early IRA withdrawals without penalties through SEPPs.
• Calculation Methods: Typically uses the amortization method, allowing approximately 5.5% annual withdrawals based on account value.
• Commitment: Requires consistent payments for at least five years or until reaching age 59½, whichever is longer.

2. Listener Questions and Advisor Responses

a. Moving IRA to 401(k) and Roth IRA Considerations

Listener Mark from Florida inquires about the feasibility and benefits of transferring an IRA to a 401(k) and whether starting a Roth IRA is advisable given his upcoming retirement plans.

Mark’s Question [08:15]: "Did I hear correctly that you can move your IRA into your 401K? And if so, is that a good thing?"

Wes Moss responds by outlining the advantages of a reverse rollover, such as lower costs, better investment options, and the flexibility offered by some 401(k) plans. He also discusses the strategic benefits of adding a Roth IRA to diversify tax treatments in retirement.

Wes Moss [08:44]: "Rolling your IRA into a 401(k) can provide benefits like lower costs and better investment options. Additionally, starting a Roth IRA can enhance your retirement strategy by offering tax-free withdrawals."

b. Investment Strategies: S&P 500 vs Total Market Index

Listener Ed from North Carolina expresses surprise over Wes recommending the S&P 500 for young investors, questioning the lack of diversification.

Ed’s Question [17:10]: "Why not recommend a total market index fund?"

Wes Moss acknowledges the concerns, explaining the inherent concentration in the S&P 500 due to its cap-weighted nature. He defends the S&P 500's efficacy for young investors who benefit from its growth potential over time but also suggests supplementing with sector-specific or international funds to enhance diversification.

Wes Moss [17:19]: "The S&P 500 is cap-weighted and has become more top-heavy, but for young investors, its growth potential is significant. To mitigate concentration risks, consider adding sector-specific or international funds."

c. Managing 401(k) Contributions and Roth Options

Listener Sean from Nebraska, a 38-year-old planning early retirement, asks whether to prioritize contributions to a 457 plan or a brokerage account, expressing concerns about potential tax bracket increases.

Sean’s Question [37:21]: "Should it be better to focus on the brokerage account? And is this general rule of thumb we could use between these two accounts?"

Wes Moss advises favoring the 457 plan due to its flexibility and tax advantages, especially since Sean is already maximizing his HSA and Roth IRA. He reassures that contributing to the 457 won’t necessarily increase his tax bracket in retirement, given the nature of his income sources.

Wes Moss [38:23]: "I still like the 457 because it's a retirement-type account. Given your projected lower tax bracket in retirement, contributing to the 457 alongside your Roth IRA is advisable."

d. Immediate Annuities vs. 4% Withdrawal Rule

Listener Jay from Missouri questions the attractiveness of an immediate annuity offering a 6.65% payout compared to the traditional 4% withdrawal rate from an IRA.

Jay’s Question [33:38]: "Is it a pretty good deal? It is fixed for our lives, so it will not increase with inflation or earnings in the stock market…"

Wes Moss highlights the trade-offs, noting that while the higher payout rate is appealing, immediate annuities lack liquidity and growth potential. He recommends using annuities as a supplemental income stream rather than relying solely on them, balancing them with traditional retirement accounts.

Wes Moss [37:21]: "An immediate annuity can boost income, but it eliminates liquidity and growth potential. Consider allocating a portion of your IRA to annuities while maintaining other investment avenues."

e. Whole vs. Variable Life Insurance

Listener James from Georgia inquires about the scenarios where purchasing whole or variable life insurance makes sense, challenging Clark Howard’s general skepticism.

James’s Question [41:41]: "Is there any scenario in which it's a good idea to purchase whole or variable life insurance?"

Wes Moss concedes that while Clark Howard typically advises against these products, there are niche situations where they are beneficial, such as for ultra-wealthy individuals needing to offset estate taxes or business owners who require guaranteed payouts for buyouts.

Wes Moss [43:24]: "Whole life insurance can be valuable for ultra-wealthy individuals facing significant estate taxes or for business owners needing guaranteed buyout funds."

3. Research on Happy Retirees' Habits: Core Pursuits and Joy

A significant portion of the episode is dedicated to Wes Moss presenting his latest research on what constitutes happiness and fulfillment in retirement. He introduces the concept of "core pursuits," which are activities that provide purpose, joy, and socialization for retirees.

Wes Moss [25:25]: "Core pursuits are activities that fill your time and provide a new life purpose, bringing joy and socialization in retirement."

Key Findings:

• Number of Core Pursuits: Happy retirees typically engage in five or more core pursuits, whereas unhappy retirees have four or fewer.
• Time Investment: Happy retirees spend approximately 18 hours per week on these activities compared to 13 hours for unhappy retirees.
• Top Categories of Core Pursuits:
  • Creative Activities: Gardening, music, painting, and art.
  • Adventure: Travel, RVing, and exploration.
  • Volunteering: Community service and charitable activities.
  • Socialization: Spending time with family and friends.
  • Physical Activity: Exercising, walking, and sports.

Notable Insights:

• Socialization as a Core Theme: Seven out of nine categories emphasize social interactions, underscoring the importance of community and relationships in achieving happiness during retirement.
• Purpose Beyond Finances: While financial security is crucial, the ability to engage in meaningful activities significantly impacts overall well-being.

Wes Moss [31:04]: "The real theme in seven out of the nine main categories is socialization, and that is what brings us joy in retirement."

4. Conclusion and Takeaways

The episode wraps up with Wes Moss reinforcing the importance of balancing financial strategies with personal fulfillment. He underscores that while financial planning is essential for a secure retirement, nurturing core pursuits and maintaining social connections are equally vital for long-term happiness.

Wes Moss [32:47]: "All the money in the world doesn't necessarily make for a happy retirement. Engaging in core pursuits that bring joy and purpose is essential."

Final Takeaways:

• Early Retirement Requires Strategic Planning: Utilizing rules like 72T can facilitate earlier access to retirement funds but necessitates careful calculation and commitment.
• Diversified Investment Approach: Balancing various investment vehicles, such as 401(k)s, IRAs, Roth accounts, and brokerage accounts, can optimize both growth and tax benefits.
• Importance of Core Pursuits: Engaging in multiple, time-invested activities that provide social interaction and personal fulfillment is key to a happy retirement.
• Customized Financial Advice: Listener questions highlight the necessity of personalized financial strategies tailored to individual circumstances and goals.

This episode offers valuable insights for individuals planning early retirement, emphasizing the interplay between financial strategies and personal well-being. Wes Moss's expertise provides listeners with actionable advice to navigate complex financial decisions while fostering a fulfilling and joyful retirement lifestyle.