Podcast Summary: The Clark Howard Podcast

Episode: 12.09.25 – Ask An Advisor With Wes Moss

Date: December 9, 2025
Host: Clark Howard
Guest: Wes Moss (Financial Advisor)

Main Theme Overview

This special edition of "The Clark Howard Podcast," titled "Ask an Advisor," features financial advisor Wes Moss alongside Clark Howard. The episode explores critical retirement planning topics, including Roth IRA conversions, the hidden costs and risks of rapid conversions, what happens to forgotten 401(k)s, and a host of listener questions about college savings rollovers, withdrawal rules, life insurance, investment approaches, and practical retirement strategies.

Key Discussion Points & Insights

1. The “Tax Bomb” of All-at-Once Roth Conversions (00:50–09:33)

- Wall Street Journal Opinion Critiqued

• Wes Moss critiques a recent Wall Street Journal op-ed suggesting retirees convert entire IRA balances to Roth IRAs in one go, using a $1 million example.
  • "This kind of advice to me is...scary, because imagine somebody reads this article...and then they're going to be creating what is an absolute tax bomb, tsunami, whatever you want to call it." – Wes Moss (03:18)
• The article assumes flat tax rates (10, 20, or 30%), disregarding the real, progressive U.S. tax system.

- Why This Advice Is Dangerous

• Converting a large IRA all at once could push you into the top tax brackets (up to 37% federal, plus state), resulting in a tax bill of $400K–$500K for a $1 million IRA.
  • "You would be immediately in the 37 [percent] tax bracket. Most likely...Your tax bill could be $400,000 to $500,000 to do that conversion." – Wes Moss (08:04)
• Also affects Medicare premiums, Social Security taxation, and loss of deductions and credits.

- The Practical Approach: Staged Conversions

• Real-life Roth conversions should be made gradually, “filling up” each tax bracket without jumping to a higher one.
  • "It should be done over time. You fill up one tax bucket, you make sure you don't get to the next tax bracket..." – Wes Moss (09:04)
  • Rare cases may justify a lump-sum conversion, but most people should avoid a huge, single conversion event.

2. Listener Q&A with Wes Moss

A. 529-to-Roth IRA Rollovers for Children (Rich in Nevada) (09:34–12:29)

• Rollovers can start even if the Roth is custodial (beneficiary under 18).
• Only permissible up to annual earned income (current/future IRA limits apply; for 2026: $7,500/year).
• Plan to convert up to $35,000 over 5 years.
• Paperwork: Ask the custodian to code rollover transactions correctly as non-taxable.

B. Adjusting Withdrawal Rates Pre- and Post-Social Security (Dan in Missouri) (12:29–15:09)

• The 4% rule is just a rule of thumb; you can withdraw more (e.g., 5–6%) in “gap years” before Social Security starts, then lower the withdrawal rate thereafter.
  • "It is not a straight line calculation, it is a destination." – Wes Moss (12:52)
• Beware sequence of returns risk during higher withdrawal periods.

C. When to Cancel Life Insurance (Debbie in North Carolina) (15:09–18:01)

• Cancel when you no longer need it, i.e., when dependents are financially independent and you’ve accumulated sufficient assets for your spouse.
  • “It's somewhat subjective, but there's some really, really important check marks...” – Wes Moss (15:45)
• Exception: If premium rates become unaffordable, or if it’s a low-cost policy you don’t strictly need but want to keep as a hedge.

3. The Problem of Forgotten 401(k)s (21:10–23:34)

- Increased Auto-Rollover Thresholds

• Employers can now transfer old 401(k) balances between $1,000–$7,000 into safe harbor IRAs, often defaulting to low-yield money markets.
• Lost growth risk: Example—a $4,500 balance in a money market versus being invested could mean ending with $10K vs. $33K over decades.
  • "That's the last thing you want is to have three or four of these floating around doing nothing." – Wes Moss (22:06)

- Best Practices

• Consolidate old 401(k) accounts into a current employer plan or roll over to an IRA.
• Helps keep track of assets and manage investment allocations.

Rapid Fire Listener Questions

1. Should I Shift More to a Guaranteed 7% Fund Pre-Retirement? (Patrick in NY) (23:34–28:25)

• If you have access to a guaranteed 7% or even 8.25% fixed fund, the "4% rule" is too conservative; you could take even higher withdrawals safely.
  • “Yes. The 4% rule is too low for you...If you have a locked in 7%...you could take more than 7.” – Wes Moss (24:34–25:16)
• Wes cautions that no state guarantee is absolute; watch for changes in state fiscal health.

2. Building a “Dry Powder” Safe Fund for Retirement (Patty in AZ) (28:25–31:11)

• Three years of safe assets is based on average bear market recovery times.
• Start building "dry powder" (short-term bonds, laddered ETFs, or money market) near retirement, though accumulating early can offer peace of mind.
  • "The three years comes from...that should get us through most bear markets." – Wes Moss (29:00)

3. Why Own Small and Mid-Cap Stocks? (Andrew in Iowa) (31:11–33:09)

• As companies grow, they graduate from small to mid to large cap; owning all categories ensures you don't miss long-term gains as companies grow.
  • "You do want to own all three...Makes sense to have small, mid, and large." – Wes Moss (32:10)

4. Updated “Home Value” Benchmark for Retiree Happiness (Gary in FL) (33:09–34:45)

• The $350,000 home value cited in Wes's older book now equates to $700,000, adjusting for home price inflation.
• The key for happy retirees: Pay off your mortgage, not necessarily hit a certain home value.

Notable Quotes & Memorable Moments

• On Roth Conversion Op-eds:
  • "If a big tax bill is no problem...When is that ever?" – Wes Moss (04:14)
• Roth Conversion Reality:
  • "You fill up one tax bucket, you make sure you don't get to the next tax bracket..." – Wes Moss (09:04)
• On Keeping Multiple Old 401(k)s:
  • "That's the last thing you want...floating around doing nothing." – Wes Moss (22:06)
• On the “4% Rule”:
  • "The 4% rule is a rule of thumb...It is not a straight line calculation." – Wes Moss (12:52)
• Financial Security in Retirement:
  • "The real key here is to have your mortgage payoff within sight or paid off. That's one of the habits of happy retirees." – Wes Moss (34:36)

Timestamps for Key Segments

• 00:50 – Roth conversion article debate begins
• 03:00 – Academic vs. advisor reasoning for conversion
• 04:14 – “If a big tax bill is no problem…”
• 09:33 – First listener question (529-to-Roth rollover)
• 12:29 – The “4% rule” flexibility
• 15:09 – When to cancel term life insurance
• 21:10 – Forgotten 401(k)s and auto-rollovers
• 23:34 – 7% fixed fund and pension withdrawal rate
• 28:25 – Building a safe “dry powder” bond ladder
• 31:11 – Why diversify with small/mid/large cap stocks
• 33:09 – What home value signals retiree happiness?

Conclusion

This episode is a masterclass in practical retirement planning, dispelling dangerous oversimplifications about Roth conversions, reminding listeners about the risks of forgotten retirement accounts, and answering nuanced listener questions with real-world perspective. Wes Moss and Clark Howard combine expertise and clarity, giving actionable, step-by-step advice for listeners at every stage of their financial journey.

To submit your questions for future episodes, visit clark.com/askclark.