The Clark Howard Podcast - Episode 07.08.25: Ask An Advisor With Wes Moss

Release Date: July 8, 2025

In this episode of The Clark Howard Podcast, host Krista Dibiaz teams up with fiduciary advisor Wes Moss to tackle a range of pressing financial questions from listeners. The conversation delves into complex retirement planning strategies, the intricacies of Roth IRAs, optimizing Social Security benefits for public servants, and real-life success stories of achieving a fulfilling retirement. Below is a comprehensive summary of the key discussions, insights, and conclusions from the episode.

Roth IRA Rollover Nuances

The episode kicks off with Wes Moss addressing a common yet often overlooked mistake related to Roth IRAs.

Scenario Analysis: Rolling Over a Roth 401(k) to a Roth IRA

• Hypothetical Case: Bob from Texas is 68, has contributed $300,000 to a Roth 401(k) over the years, which has grown to $600,000. He intends to roll it over into a regular Roth IRA as he approaches retirement.

• Key Considerations:

  • Qualified vs. Non-Qualified Rollovers:
    • Qualified Rollover: If Bob meets the five-year rule and is over 59½, the entire $600,000 can be rolled over without immediate tax implications. (Wes Moss, [01:34])
    • Non-Qualified Rollover: Opening a new Roth IRA at age 68 may trigger the five-year rule on the IRA, potentially taxing the growth portion if the new Roth hasn't met the five-year requirement. (Wes Moss, [06:30])

• Solution to Avoid Pitfalls:

  • Proactive Approach: Open a Roth IRA early, even with minimal contributions, to satisfy the five-year rule well before retirement. This strategy ensures that future rollovers into the Roth IRA won't be hampered by the rule. (Wes Moss, [06:00])

Notable Quote:

"Opening a Roth IRA early on, even with just $100, ensures that you don't get stuck in the Roth trap later on." – Wes Moss ([06:00])

Rebalancing IRA Accounts Post Stock Surge

Listener Kirk from California inquires about managing an IRA account that has experienced significant stock price appreciation.

Guidelines for Rebalancing:

• Diversification Threshold: Wes recommends maintaining no more than 10% of any single stock within a retirement account to mitigate risk. (Wes Moss, [07:59])

• Rebalancing Strategies:

  • Periodic Review: Monitor account allocations and rebalance when a stock's weight exceeds the 10% threshold.
  • Avoiding Daily Adjustments: Implement a systematic approach rather than reacting to daily market fluctuations.

Notable Quote:

"If you're getting way too heavy into one company, even a stalwart, beyond 10%, I start to get nervous." – Wes Moss ([08:16])

Maximizing Social Security Benefits for Police Officers and Their Spouses

Neva from North Carolina raises concerns about Social Security benefits for police officers and the impact of pensions on spousal benefits.

Key Topics Discussed:

• Government Pension Offset (GPO) & Windfall Elimination Provision (WEP):

  • Historically, these provisions reduced Social Security spousal benefits for individuals with pensions from non-Social Security-covered employment.

• Legislative Changes:

  • Social Security Fairness Act (2025): Wes highlights that this new legislation retroactively addressed the issues posed by GPO and WEP, eliminating their negative impact on spousal benefits. (Wes Moss, [10:56])

• Implications for Police Officers:

  • With pensions now more favorably aligned with Social Security benefits, public servants can better optimize their retirement income without the previous offsets. (Wes Moss, [11:00])

Notable Quote:

"The Social Security Fairness Act has stopped the nonsense that was previously putting a dent in your spousal benefits." – Wes Moss ([10:56])

Evaluating Retirement Income Projections

Mike from California seeks advice on the reliability of retirement income projection tools and his retirement strategy.

Discussion Points:

• Reliability of Projection Tools:

  • Wes affirms trust in reputable tools like Fidelity's, especially when users input conservative assumptions to account for market volatility. (Wes Moss, [15:21])

• Mike's Retirement Plan:

  • Current Assets: $1.2 million in IRAs.
  • Strategy: Utilize IRA funds until age 65, then shift to pensions, and delay Social Security until age 70.
  • Projection Outcome: Conservative estimates show IRA depletion to $700,000 by age 70.

• Assessment:

  • Wes concurs that Mike's plan appears sound, emphasizing the benefits of having multiple income streams and delaying Social Security to maximize benefits. (Wes Moss, [15:21])

Notable Quote:

"As long as you're using conservative assumptions, you're less likely to find your situation much worse than what you've modeled out." – Wes Moss ([15:21])

Success Story: Joe and Cindy's Path to a Happy Retirement

Wes Moss shares an inspiring letter from Joe and Cindy of Indio, California, illustrating their journey to achieving a fulfilling early retirement.

Key Elements of Their Success:

1. Financial Freedom:

   • Aggressive Investing: Maximized 401(k) contributions over four decades, resulting in a net worth of nearly $6 million without any inheritance. (Wes Moss, [22:39])
   • Diverse Income Streams: Income sources include pensions, IRA dividends, investment income, deferred compensation, and future Social Security.

2. Lifestyle Design:

   • Active Pursuits: Engaged in over 15 activities, including biking, hiking, golf, volunteering, and participating in community groups like book clubs and wine clubs.
   • Social Connections: Incorporated into a 55+ active adult community, providing ample opportunities for social interactions and friendships. (Wes Moss, [25:53])

3. Intentional Planning:

   • Strategic Relocation: Moved to Indio, California, to enjoy a desirable climate, proximity to family, and a vibrant community.
   • Debt-Free Living: Purchased an RV storage condo before tapping into retirement funds, ensuring financial security.

Financial Breakdown:

• Assets:
  • $4.2 million in IRAs
  • $350,000 in taxable accounts
  • $1.3 million in real estate
• Income vs. Expenses: With approximately $300,000 in annual income supporting a $240,000 lifestyle, Joe and Cindy maintain a comfortable financial buffer. (Wes Moss, [22:39])

Notable Quote:

"They wanted to say that if you really think about all the main components to make up a happy retirement – financial, lifestyle, core pursuits, and social – it leads to an awesome place in life." – Wes Moss ([24:12])

Changing Dynamics of Peak Spending Ages

Elizabeth from Colorado challenges the notion that individuals reach their peak spending in their late 40s or early 50s, arguing that with modern family dynamics, peak spending may now occur in the late 50s or early 60s.

Wes Moss's Response:

• Acknowledges the validity of Elizabeth's observation, noting demographic shifts such as delayed child-rearing impacting spending patterns.
• Refers to statistics from 2013-2014 indicating peak spending ages between 48 and 54, but agrees that this range is gradually extending higher due to changing societal trends. (Wes Moss, [29:09])

Notable Quote:

"As time goes on, it's just going to continue to climb higher." – Wes Moss ([29:09])

Understanding Buffered Index-Linked Notes

Mike from North Carolina raises concerns about the transparency and fees associated with buffered index-linked notes recommended by his fiduciary advisor.

Explanation and Assessment:

• Nature of Buffered Notes:

  • Structured financial products created by investment banks, combining calls and puts to limit downside risk while allowing for some market upside. (Wes Moss, [31:20])

• Fee Structure:

  • While these products may not have explicit ongoing fees, underwriting discounts and embedded costs in the derivatives used mean they aren't entirely fee-free. The investment bank sets the pricing, retaining a portion of the returns. (Wes Moss, [31:20])

• Investment Suitability:

  • Can be suitable for investors seeking limited downside protection, but it's essential to understand the embedded costs and potential limitations on returns. Comparatively, traditional ETFs or index funds might offer greater transparency regarding fees. (Wes Moss, [31:20])

Notable Quote:

"A buffered note is basically a financial derivative burrito. You’ve got a call and a put wrapped into one thing." – Wes Moss ([31:20])

Valuing Pensions in Retirement Plans

Jimmy from Florida seeks guidance on assessing the value of his pension within his broader retirement strategy.

Valuation Methodology:

• Pension Formula:

  • Typically based on years of service and a multiplier (e.g., 2% of salary per year of service).

• Jimmy’s Scenario:

  • Salary: $75,000/year
  • Years of Service: 11 years
  • Annual Pension: 2% × $75,000 × 11 = $16,500

• Present Value Calculation:

  • Assuming a 5% discount rate over 25 years, the pension's present value is approximately $412,500, yielding around $250,000 in today's dollars. (Wes Moss, [35:29])

• Strategic Importance:

  • Understanding the present value helps integrate the pension's role within overall retirement income, ensuring sustainable withdrawals and financial planning. (Wes Moss, [35:36])

Notable Quote:

"Pensions are sort of, they add up to a really significant number when you do the math." – Wes Moss ([35:36])

Conclusion

Throughout the episode, Wes Moss provides insightful, practical advice on navigating the complexities of retirement planning. From understanding the subtleties of Roth IRA rollovers to optimizing Social Security benefits for public sector employees, the discussions aim to empower listeners to make informed financial decisions. The success story of Joe and Cindy serves as a testament to the effectiveness of diligent planning and diversified income streams in achieving a happy, secure retirement.

Final Notable Quote:

"The dedication and steady effort lead to being in the spot you're in, some happy retirees, and a place a lot of folks would be pretty psyched to be in as well." – Wes Moss ([29:27])

For more personalized advice or to submit your questions, visit www.clark.com/askclark.