Could You Retire Tomorrow If You Had To? - 573

Summary

Podcast Summary: Your Money, Your Wealth

Episode 573: Could You Retire Tomorrow If You Had To?
Date: March 17, 2026
Hosts: Joe Anderson, CFP® & Alan "Big Al" Clopine, CPA

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Episode Overview

This episode dives into the real-life retirement questions and quandaries of listeners at different life stages and with unique priorities. Joe and Big Al "spitball" customized strategies on retirement spending, Roth conversions, RMDs, tax minimization, and even the financial implications of divorce. True to form, their advice is served with plenty of humor, banter, and relatable anecdotes that make personal finance surprisingly entertaining.

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Main Listener Scenarios

1. Reuben "Sailing Shoes": How Much Can I Spend in Retirement?

Timestamps: [01:04] – [07:41]

Scenario:

• 68, single, retired, Wyoming (originally Oregon)
• $1.6M saved (mix of taxable, Roth, inherited IRA, cash)
• Income: Pension & Social Security ($2,300/mo pre-tax)
• No debts; lifelong renter; no heirs
• Never had a budget; wants to know, “How much can I spend?”

Key Insights & Analysis:

• Spending Rule of Thumb: Big Al applies the 4% rule for sustainable withdrawals:

  • $1.6M × 4% = $64,000/year
  • +$25,000/year from pension/Social Security
  • Total “safe” annual spend: $89,000

  “If you spend that number, I wouldn’t be doing many QCDs, because you need it for yourself.” – Alan, [05:30]

• Joe & Al discuss asset breakdown confusion but agree Reuben is in very solid shape and commend his lifestyle.

• On Roth conversions: Probably unnecessary given low spending; maybe just up to the 12% tax bracket.

Memorable Moment:

• Al quips about the mystery of “Reuben Sailing Shoes” and Wyoming sailing.
• Joe: “Keep traveling. Keep enjoying life, Reuben sailing shoes.” [07:34]

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2. Leslie & Ben: Maximizing Tax Efficiency for Federal Retirees

Timestamps: [08:38] – [17:09]

Scenario:

• Ohio, both retired federal employees (CSRS)
• Ages 72 & 76; both retired for decades
• ~$700k taxable, $400k tax-deferred, $300k Roth, $30k in I-bonds, $30k in gold/silver
• Home paid off, $120k gross annual income (mostly pension)
• Ben already taking RMDs; Leslie starts in 2026
• Regular Roth conversions in anticipation of tax changes; now, what next?

Key Insights & Analysis:

• Tax Bracket Management: Currently in the 22% bracket, with most assets in brokerage accounts.
• Suggested Strategy: Continue conversions up to the 22% bracket. RMDs are “not going to kill them” tax-wise.
• On TSP vs IRA for conversions:
  • Simplicity Matters: Big Al recommends consolidating in an IRA: “I would have everything at one custodian…easier for the spouse, the beneficiaries.” [16:11]
  • But, if they love the TSP, it also works—just a little less convenient for RMDs and rebalancing.

Practical Points:

• Leslie should do her RMD before any Roth conversion each year
• “I like consolidation...as you get older, you have one statement...one spot.” – Joe, [16:54]

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3. Mork & Mindy: Roth Conversions and the Widow’s Tax Trap

Timestamps: [17:09] – [26:23]

Scenario:

• Retired couple, Delaware, ages 71 & 73
• $1.3M traditional IRA, $330k Roth, $100k taxable
• Live off $7k/mo Social Security, $15k/yr pension, $45k/yr deferred annuity
• Main goal: Minimize lifetime tax, widow’s penalty, tax for adult children, maintain liquidity

Key Insights & Analysis:

• Estimate Income for Bracket Decisions: Unsure if SS is $7,000 or $70,000 (typo in question). If $7k/mo, they’re in or near the 12% tax bracket.

• Conversion Guidance:

  • Convert to the top of the 12% bracket before RMDs kick in.
  • When RMDs start (+$50k/yr), they may still be under/near top 12% for a while, but could consider filling up the 22% bracket to accelerate conversions, especially to mitigate future widow’s tax.
  • One-time Big Conversion: If possible, do a large conversion in a year when they can push the first RMD for Mindy (turns 73 this year), then resume annual smaller conversions.
  • “Push the RMD to next year, do the conversion to the top of the 22. Then each year after that you can do up to 12 or 12 [bracket].” – Joe, [25:29]

• Liquidity: Concern about affording taxes on conversions is real since they don’t have a lot of outside cash.

Notable Quote:

• When Mork reveals ChatGPT helped with the question:
  • Joe: “I bet ChatGPT didn’t come up with that answer.” [26:11]
  • Big Al on AI: "It’s like having a personal assistant right with you that knows everything." [26:36]

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4. Juan & Mary in Brooklyn: Retire or Divorce—Can Either Work?

Timestamps: [28:26] – [38:21]

Scenario:

• NYC couple, 49 & 48, with kids
• $2.2M saved: $100k Roth, $1.3M tax-deferred, $800k brokerage, paid-off house
• Rental income: $50k/year; project $60k SS/yr at 62; pension $40k at 60
• Saving $200k/year, spending $100k, but marriage is rocky
• Asks: Can I retire now? If we get divorced, is it still feasible?

Key Insights & Analysis:

• Early Retirement (no divorce):

  • "Distribution rate is about 2.3%. Even at 49, I'm okay with a 2.3% distribution." – Al, [32:03]
  • Would need to tap retirement accounts early using 72(t) periodic withdrawals, which locks you in for ~10 years and reduces flexibility.
  • Joe skeptical: “I don't like the 72T. At 49 you're...drawing money from that? I don't know.” [33:47]
  • Possible, but probably underestimates expenses, especially in NYC.

• If Divorced:

  • Assuming assets/expenses split 50/50, each would have $1.1M and likely need $70k/year.
  • “That’s a 6.8% distribution rate at 49. No, that doesn’t...Not even close to working.” – Alan, [35:35]
  • Best bet: Continue working, saving, and push retirement to at least 55.

• Emotional/Bigger Picture:

  • Joe: “I think you get the divorce if you're not happy. I would get the divorce. It starts there...Happiness first, finances second. Always.” [38:18]
  • Alan concurs, reflecting on his own positive marital experience.

Notable/Memorable Moments:

• Podcasts rarely tackle divorce planning: “I don't think divorce is talked about much in retirement plan. But...life's too short to be with someone if the spark is not there anymore.” – Listener Juan, [31:48]
• Humor persists: “Just go pound down a couple Sheridans in the basement…watching Parks and Rec in the winter.” – Joe, [37:10]

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Notable Quotes

• On Roth conversions becoming pointless with small account balances:
  “I wouldn’t be doing many QCDs, because you need it for yourself.” – Alan, [05:30]

• On keeping things simple for retirees:
  “I would have everything at one custodian and make it easy for me, the spouse, the beneficiaries.” – Joe, [16:11]

• On life before finances:
  “Happiness first, finances second. Always.” – Alan, [38:18]

• On retirement realities:
  “If I came home and it was like, oh my god…it was horrible, see this lady?...Just go pound down a couple Sheridans in the basement.” – Joe, [37:09]

• On ChatGPT:
  “It is so much more advanced than Google...90% is correct. But it’s not gospel.” – Alan, [26:28]

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Other Memorable Moments

• Chuckling over mystery drinks (“Sheridan’s,” “Reuben Sailing Shoes”) and brewing brands as small talk leads into serious finance.
• Hosts riffing on “Parks and Rec”/“Mork and Mindy” listener pseudonyms.
• Al lamenting “trying to read” through the challenging emails.

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Episode Structure & Timestamps

| Time | Segment/Question/Caller | |------------|----------------------------------| | 01:04–07:41 | Reuben “Sailing Shoes”: Spending in retirement | | 08:38–17:09 | Leslie & Ben: Fed pensioners Roth/RMD strategy | | 17:09–26:23 | Mork & Mindy: Roth strategies & widow’s tax | | 28:26–38:21 | Juan & Mary: Early retirement, divorce maths |

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Takeaways for Non-Listeners

• Thoughtful, case-by-case retirement coaching with a heavy dose of fun and empathy.
• Key themes: Withdrawals, asset location, the value (and risks) of Roth conversions, and prioritizing quality of life.
• Divorce and retirement don’t mix easily—working longer may be the only solution, but happiness comes first.
• For those considering early retirement, the devil is in the withdrawal mechanics and realism about expenses.

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Final Words

“Life’s too short—to keep working forever, and to stay in an unhappy marriage. But either way, retiring (or divorcing) early takes more than math—you need a clear head, a true picture of your future spending, and a plan you can actually live with.”

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For your own “Retirement Spitball Analysis,” submit your situation at YourMoneyYourWealth.com or catch Joe & Big Al on YouTube every week.

Transcript

[A]

Juan and Mary in Brooklyn are 49 and 48 with $2.2 million saved. Can Juan afford to retire early or just walk away if he gets fired and if they get divorced? Yikes. But does the math still work? That's today on youn Money, you, wealth podcast number 573. But first, Ruben sailing shoes is 68, single, retired, and has $1.6 million saved. But he's never had a budget in his life. How much can he actually spend? Leslie and Ben are federal retirees in their with great pensions and a mix of pre tax and Roth savings. And Mork and Mindy in Delaware are retired with an annuity, pension, Social Security and $1.3 million saved. Joe and Big Al spitball on how Roth conversions and RMD timing can help both couples minimize taxes and make the most of what they've got. If you're listening on Apple Podcasts, please follow the show and leave your honest ratings and reviews. We really appreciate it. I'm executive producer Andi Last, and here are the hosts of youf Money, you, Wealth, Joe Anderson, CFP and Big Al Clopine cp.

[B]

We got Reuben sailing shoes.

[A]

I searched and searched. I cannot find a reference for that. I can't even find sailing shoes that are called Reubens. So I think this is just what the guy has decided he's calling himself.

[B]

Okay, he's from Wyoming. Is there a lot of sailing in Wyoming?

[A]

I wouldn't think so.

[B]

I would think more horseback riding.

[C]

Yeah, yeah, maybe they think of that as sailing. I don't know.

[B]

68, male, single, never married, no heirs. Currently Wyoming resident, retired and moved from Oregon at age 60. Drive A, paid for 2024 Subaru Outback Onyx XT. Lifelong renter, but had a condo and then a house in the early 1980s and 90s. I got $1,600,000 saved, no debts, approximately $985,000 taxable. 90 bucks.

[A]

I think that's money market slash cash. So I think it's 90.

[B]

Is that $90,000 or $90?

[A]

90,000

[B]

in a Roth pre 2000, 20 inherited IRA, 15,000 with required RMDs taxable. Almost all total index mutual funds deferred in total index bond funds. God, this. This is tough to read.

[A]

It's really hard to read.

[B]

This is.

[C]

I'm sounding like I'm glad I'm that

[B]

you're reading because I'm like, this doesn't make a bunch of sense here. I'm just reading, reading the words.

[A]

That's why my recap has a bunch of Question marks.

[B]

Oh, my goodness. I come from pension. Okay. I come from pension.

[C]

That's a new one. I never heard that.

[B]

Do you come from. I come from pension.

[C]

I come from San Diego, but I come from Minneapolis.

[B]

I come from pension and Social Security. 2,300 before taxes and Medicare. And this started having taxable dividends, etc.

[C]

Oh, you know what that means? Income. You forgot the N. Income from pension and stock.

[A]

So income.

[B]

Not.

[A]

I come from income from.

[C]

Okay, you forgot the end.

[B]

Got it. You just missed the end. All right, so he's got income from pension and Social Security, $2,300 before taxes and Medicare. This started having taxable dividends, etc. Sent to the money market rather than reinvesting. I've never had a budget, but always paid myself first. I dipped into savings a little until Social Security started 62. Spending six plus years traveling full time in a couple different RVs. Been mostly in Wyoming since. Took a trip back east last year and then went to Thailand for four months and actually came back with more money than I started with. You just got back from Thailand?

[C]

I did.

[B]

Did you come back with more money than you started with?

[C]

I don't think so.

[A]

That's you.

[B]

All right, so Thailand, four months. All right. Because I didn't maintain a residence during that time. How much could. Should I spend? Roth conversions don't appear to make much sense for me anyway. At least to the 12% tax bracket. And then QCD's perhaps down the road. Looking forward to hearing about your thoughts. Thanks. Currently drinking light beer. He's currently drinking a lot of light beer right in this. Only enjoying most anything that is not sweet.

[C]

What's. What's the light beer of Wyoming, would you say?

[B]

No idea. Never been to the good state of Wyoming.

[C]

Is that PBR or.

[B]

Could be, yeah. Coors. Like

[C]

all sorts of plants.

[B]

All right, so, Reuben, I don't even know where to start here. He's got $1.6 million saved. He wants to know how much money that he can spend. He's got $2,300 before taxes.

[C]

Okay, yeah, so I've got an answer. All right, $89,000.

[B]

Okay, so let me explain.

[C]

All right, so he's got about 1,600,000. And he's got fixed income of about 27,500. Social Security, but that's before insurance. So I'm just going to say he's got about 25,000.

[B]

$25,000 coming in.

[C]

Okay, so I take 68. I'm good with a 4% distribution rate. $1,600,000. 4% $64,000 plus $25,000 is $89,000.

[B]

Okay.

[C]

I think that's the number. And I think if you spend that number, I wouldn't be doing many QCDs, because you need it for yourself. But if you're going to do QCDs, then subtract that from the 89 and spend what the difference is. So that's how I would look at that.

[B]

Yeah. Approximately $985,000 taxable. So he's got $1,600,000 saved. So when I read $985,000 taxable.

[C]

Yeah.

[B]

Is that in a brokerage account or do you think he's referring to an Iraq?

[C]

I'm going to guess. Well, that's a good question. I don't know. I took it at face value in a brokerage account.

[B]

That's what someone in the industry, I think would.

[C]

Right.

[B]

He's saying $985,000. That's going to be taxable. Could be the way he talks.

[C]

It could be. So when you take his assets and he says he has 1,600,000 and you subtract out the ones he told us, there's a difference of 400.

[B]

400 grand?

[C]

Yeah, 425,000. So, yeah, good point. Either that's deferred part or that's the.

[B]

Yeah, that's the brokerage account fixed. Then he goes, all right, I got 985 taxable, $90,000 in cash and $100,000 in Roth.

[C]

Yeah.

[B]

All right. So that is not one that doesn't equal one point.

[C]

That's what I'm saying. There's another 400,000, which is. You make a good point. That could be the brokerage account or it could be flipped.

[B]

Yeah. I don't know. I'm thinking, does conversions make sense for the guy at $1.6 million, I don't think he spends anything so. Well, I don't need 90,000. If he doesn't spend 90,000, I mean,

[C]

he made money by going to Thailand. Yeah.

[B]

Right.

[C]

From his Social Security. Right, right.

[B]

Yeah. I think maybe you look at the top of the 12% tax bracket.

[C]

Yeah, that's what I think, too. I think the only caution there is you got to. You got to Social Security. Yeah, think about Social Security.

[B]

But if he's going to live off of 89, he's going to fall into that threshold.

[C]

They're falling to it anyway. Right, Correct.

[B]

But. All right. But yeah, he's sitting in really good shape.

[C]

I think so.

[B]

Yeah. Keep Traveling. Keep joining life. Reuben sailing shoes.

[C]

Nice.

[B]

Stumped.

[C]

Stumped on that one.

[A]

Okay, what does your golf game have in common with your retirement plan? More than you think. Whether you're figuring out how much you can spend in retirement like Reuben, or. Or navigating Roth conversions and RMD timing like Leslie and Ben and Mork and Mindy, coming up, you don't need a hole in one. You need a strategy. This week on youn Money, you, Wealth tv, Joe and Big Al team up with PGA professional Chris Riley to walk you through the retirement course. Learn how to get off the tee, navigate hazards like longevity, healthcare costs, inflation, taxes, and sequence of returns risk and sink the putt for a success. Successful retirement. Watch the episode, then use our free self guided financial blueprint tool. It'll show you how much you'll likely need to retire comfortably and what you can do right now to get there. Click or tap the links in the episode description to watch YMYW TV and to calculate your free financial blueprint. Then tell a friend.

[B]

We got Leslie and Ben from Ohio.

[A]

That's in reference to Parks and Rec.

[C]

Okay, got it.

[B]

Okay, so you named them or they named themselves?

[A]

No, they named themselves.

[B]

Is that.

[C]

What's the Parks and Rec?

[B]

Who's the guy who's in that?

[C]

Hold on. There was. It was. It was a girl. That was the main character.

[A]

Woman is Amy Poehler.

[B]

Yeah, but no. What's the Avenger? The guys that is in the Gardens of the Galaxy.

[A]

Oh, Chris. Adam Scott.

[C]

Chris Pratt. Okay.

[A]

Ben, I guess is. Is Adam Scott. That's him.

[B]

Not sure. Oh, those two. Okay.

[C]

Yeah. Okay. All right.

[B]

Is it Chris Pratt and Parks and Rec. Yeah, like he was, like, overweight.

[A]

Yes. This dude different.

[B]

He got super jacked.

[C]

Yeah, right. And then he started having cool guys.

[A]

Oh, there we go.

[B]

Then he's again. Then he's an avenger.

[A]

There you go. There's Chris Pratt. Super jacked.

[C]

Yeah, he's definitely versus not. Yeah. Okay.

[B]

I drink an occasional founders session IPA or Manhattan. And my husband likes Bell's Two Hearted. Never heard of Bell's Two Hearted.

[C]

Me neither.

[B]

Or founder sessions IPA.

[C]

Well, that'll be some kind of IPA. And you don't really pay attention to IPAs.

[B]

No. Is that there's no such thing as a founder. Is that a type of IPA?

[A]

Founders Brewing Company all day IPA is a 4.7 ABV session IPA. Oh, I've never heard of a session IPA.

[C]

Well, since he capitalized Founders, I'm guessing it was. That's a company.

[A]

Founders is the brewing company. Yeah.

[B]

All righty. I drive a 2013. 2013 Honda Civic.

[C]

Wow.

[B]

Wow. How many miles do you think sound that bad boy?

[C]

He's got 150.

[B]

Ben Drive 2016 Honda Accord. Look at those.

[C]

Yeah, that's Great.

[B]

I am 72, been married. Oh. I have been retired for 17 years and Ben is 76 and has been retired for 22 years.

[C]

Good for you guys.

[B]

We both have longevity in our families. Ben's mom just turned 101 and his dad lived until his 90s. As did my parents and grandparents. We have no debt. We own our home approximately $350,000. We have two amazing grown children whom we managed to get through college debt free. We are both federal serves. What is that? Civic Service Retirement System. Csrs.

[C]

Wow, look at you pull that out.

[B]

Come on. I used to do workshops to federal employees back in the day though. So CSRS retirees. So you got CSRS and fers. CSRS is a badass pension. There's a lot of money coming in.

[C]

It's a good one. Yeah. Okay.

[B]

With pensions in small amount of Social Security that provide us with plenty to live off of. Approximately $120,000 per year.

[C]

Well, there you go. That's pretty good.

[B]

It is. Ben has approximately $50,000 in a Roth Hun, $50,000 pre tax IRA and $550,000 in a brokerage account. I have approximately $100,000 in a brokerage account, $30,000 in I bonds, $30,000 in gold and silver which I am getting ready to sell. $200,000 in my TSP pre tax, $60,000 in the pre tax IRA and $240,000 in a Roth. Ben has been taking RMDs for a while and donates most of that money. I've converted $50,000 to a Roth both in 24 and 25. Anticipate a tax change, but since it didn't happen, should I continue to do roth conversions in 2026? It is possible to do conversions to the Roth component of the tsp. Should I do that or move my money out of the TSP into an IRA to do the conversion? We are in the 22% tax bracket and I want to keep it that way. I have to start taking RMDs in 2026. What do you recommend? I started listening about a year ago, but when back and listen to all the old shows, really enjoy it.

[A]

Wow. All the old shows. Imagine that.

[B]

I can't imagine all of it's like imagining me being stuck in quicksand. Something you don't Imagine.

[C]

No, you don't.

[B]

Thanks so much. Wow. All right.

[C]

Okay.

[B]

So they got. They got some things going on here.

[C]

Yeah. So to summarize, they got about 400,000 in tax deferred. They got about 700,000 in taxable and about 300,000 in a Roth.

[B]

So they don't have a ton of money compared to their overall net worth, like most people is in the tax deferred accounts. They have most in tax, like in a brokerage account at 700 grand.

[C]

Right.

[B]

So 400,000. The RMDs are not going to kill them in the 22% tax bracket. They're still fairly young. Let's see. Well.

[C]

Well, they're. They're in the 22% bracket. And when RMDs kick in for him or. No, for her. For her. Yeah. It'll still be in the 22% bracket.

[B]

So I might as well just take advantage of the full 22%. I think so.

[C]

Yeah, I think so. Unless they want to do QCDs. But yeah, I think I would consider doing up to the top of the 22% bracket. It's personal choice. It's 400,000 to tax deferred RMDs, or 4% of that, maybe 16 to 20,000. So it's not going to be that big a deal. But how much you should do pension? 120 dividends. I got $14,000 at 2% of $700,000. As a guess, his RMD is about 6. So that's about $140,000 of income minus $30,000 standard deduction. I'm rounding, which means they could convert about $100,000 and stay in that 22% bracket, which happens to be at 211,000. And by the way, the lowest Medicare rate is 218,000. So they're staying below that as well. So I would say up to the first. Up to 100,000. Well, no, no, I would go to 22% because that's lower than the first Medicare. Yeah, so I would say. But I think one of the more important things I would say is if you keep converting, then make sure you do your RMD first and conversion second. If you do it the other way around, it's not a good thing.

[B]

Yeah, because that would be an over contribution.

[C]

Yep.

[B]

So What? She's got $200,000 in the $260,000 in hers.

[C]

Yeah. You think she should do go to an IRA and convert?

[B]

Yeah, I don't know. I don't think it matters all that much as long as I Mean, people love the tsp. I get it. You get four or five choices. They're dirt cheap and yeah, you know, they're like. They're index funds. You can get the same exposure to the market in an ira, probably. Are you going to pay a little bit more? I don't know, maybe a smidge. But Some of these ETFs today are almost free.

[C]

True.

[B]

Yeah, there are some that are free. I like consolidation. I would have everything at one custodian and make it easy for me, the spouse, the beneficiaries.

[C]

Sure.

[B]

I don't like to have a couple of different accounts. When you have to take the rmd, she's going to have to take two RMD from the IRA and one from the tsp. If you move it into the ira, then it's just one rmd.

[C]

Simpler.

[B]

Yeah, Simpler, yeah. Easier to manage. I think it's easier to rebalance.

[C]

Yeah.

[B]

If I want to do a conversion from an IRA to a Roth ira, I can. I don't have to sell anything. I can just journal my shares over XYZ stock because they don't need the money. They got plenty of money in pensions and Social Security. So I think there's more reasons to put it into an IRA if I were. If I was Leslie or Ben. But if you keep it in the tsp, that's fine too. You can convert into the TSP component. But I don't know. I just like simple, especially as you get older, you have one statement. You can take a look at everything in one. One spot.

[C]

So I would agree with you. That's what I would do. But in the same breath, I would say it doesn't really matter. If you want to stay in the tsp, go for it. But that I think Joe and I are in agreement. We would both go to the IRA just because it makes it simpler.

[B]

All right, moving on. We got Mark and Mindy. Nano, Nanu Shazbat. Joe. Now, thank you for all your financial knowledge and entertainment you continually share. I've been an online listener for seven and yes, Al, this is my all time favorite podcast. Wow.

[C]

Okay.

[B]

All time.

[C]

That's. That's saying something.

[B]

I've been doing quite a bit of research lately on Roth conversions and would greatly appreciate your professional perspective. My goal is to determine the most effective strategy for my wife and me moving forward. Our main objective is to obviously minimize our overall federal and state tax exposure over time. I'm also concerned about reducing the potential widow's tax as well as minimizing the future tax impact of our adult children when they inherit our accounts. At the same time, I want to make sure we maintain sufficient liquid assets to cover any unexpected health or long term care expenses that may arise. Could you please share your thoughts on strategies or timing that might best balance these priorities? Here are some of the facts. Okay. We're both retired in Delaware and live a conservative lifestyle. Living off our Social Security, pensions and annuities. We got traditional IRA balance of $1,300,000. Current Roth IRA balance of $330,000. We got non retirement investment account of $100,000. Our joint Social Security is $7,000 a month. Pension yearly is $15,000. Deferred income annuity, yearly is $45,000. Filing status? Married? I'm 71, my wife is 73. End of year. What type of conversion approach should you suggest? Lump sum, laddered, etc. Regards, Mor and Mindy. P.S. i stopped drinking many, many years ago. I heard that alcohol consumption increases a person risk of developing dementia. I thought you should know that.

[C]

Did you know that?

[B]

No. No. Okay. I had chatgpt help me prepare my question.

[C]

Okay, very good.

[A]

Thank you for your honesty, Mork.

[C]

Yeah,

[B]

Let's see.

[C]

So we've got. We got about $1,700,000 in assets. One million three hundred is in the, in the tax deferred.

[B]

I'm guessing the deferred income annuity was. I don't know if there's basis in that. So I'm not sure what the taxable

[C]

amount or if I'm thinking that's in the ira. I don't think there's any basis.

[B]

You think so?

[C]

Yeah, because there's only $100,000 in the tax.

[B]

No, no, the $45,000 of income.

[C]

I know that wouldn't come from a $45,000 taxable.

[B]

Let's say if he had money that put into it in income annuity that was not qualified, there would be a pro rat on the taxes as well.

[C]

I understand. Well, I guess if he didn't include it in his ass. That's what you're saying?

[B]

Yeah.

[C]

If he included it in his assets, it has to be in tax deferred. There's not enough money in taxable. But if he didn't include it because he thinks of it more as an income.

[B]

No, I'm speed. He's already done it.

[C]

I know, I know he's done it.

[B]

Still don't. I don't follow. What do you mean? So $1.3 billion in an IRA?

[C]

Well, an annuity has a surrender value and some People?

[B]

No, no, no, not if it's a. It's an income annuity. So he already took a lump sum and bought the income.

[C]

Oh, okay.

[B]

Is what I'm thinking. Okay, so I don't know if that $45,000 is his annual income. I'm not sure how much of that is taxed.

[C]

Got it, got it. Okay, I'm with you now.

[B]

So he's got 45, 55, 60, what, almost $100,000 of income.

[C]

Yeah.

[B]

And so he's good living off of that. He's got non retirement of $100, then $1,300,000.

[C]

Right.

[B]

So he doesn't need any of the $1,300,000. How much should he convert?

[C]

Well, once they both get to RMD age, their RMD will probably be about $50,000.

[B]

But hold on a second. Joint Social Security GROSS Yearly benefit, $7,000.

[C]

Yeah, that does seem pretty low, doesn't it?

[B]

But did you see, you see the K? That's like kind of far away from the seven.

[C]

Maybe it's 70.

[B]

Is it 70?

[A]

Is this I come.

[C]

Well, that's a good point. Oh, you're catching all kinds of things.

[B]

I know. Well, look at the 15Ks. The K's right next to the 5.45K,

[C]

the K. Every other K is right next to it.

[B]

Yeah, the seven. We got a little gap.

[C]

Could be 70.

[B]

It could be, I don't know, how old are they?

[C]

71 and 73.

[B]

So maybe if they collect it at age 70 or. Unless there's 45,000 deferred income annuity. Is this a pension from something that they put in where it took from their Social Security. But Social Security laws change. I don't know.

[A]

Yeah, and I just double checked and made sure that yes, in the email it says 7 space K. So 7

[C]

space K. All right, so well, so if it's 7,000, what's your answer?

[B]

Yeah, right. Well then their income is $67,000.

[C]

Yeah. Plus if they'll be. Well then when they get to RMD, you add another $50,000. Yeah.

[B]

So at $70,000 of income plus 30, I mean, they're in the 12.

[C]

Yeah, near the top of the 12.

[B]

So you're going to convert to the top of the 12 for sure.

[C]

Yeah, which might be just a little bit.

[B]

Well, I don't know if their income is 67 today. When does RMDs happen? Couple years.

[C]

Yeah, 73. So for Mindy now or this year and for Mork in two years.

[B]

Okay, 67 minus 30. So their taxable income is going to be $37,000 with.

[C]

Without RMD.

[B]

Without RMD.

[C]

Correct, correct.

[B]

You take the RMD, which is going to be what, 40? I don't know. They didn't. I don't know.

[C]

How much is hers?

[B]

I don't know.

[C]

Yeah, I'm just going joint. And joint is about 50 grand. 4% of 1.3 million.

[B]

Okay.

[C]

So that's what it's going to be. So if you take 30 grand plus 50, 80. So maybe they can convert. Top of the 12 of 12 is 101,000. So maybe. What did I say 30, maybe 20 grand.

[B]

Yeah. I don't know. Do you just stay in the 12 maybe?

[C]

Because that's. Even with the RMD. That's where they're at.

[B]

I know the RMD is not going to push him into the 22 count balance.

[C]

It will eventually, but not right away.

[B]

So if they convert to the 12, it's going to be slowly kind of getting that money out.

[C]

But they could.

[B]

12 to 22 is not that big of a jump.

[C]

Well, I know. So if they do that, they can do another 110,000. Because the top of the 22 is about 211, so it's something to consider. Their taxable is only 100, so they have limitations on how much tax they can pay. So that's another thing.

[B]

Right, right, right, right, right.

[C]

Yeah.

[B]

They only have $100,000 non retirement to pay the tax.

[C]

I think 30. I think if they go to the top of the 22, which maybe is a good answer because the RMD will be lower. In fact, Maybe she does a two RMDs next year because she turned 73 this year. Yeah, yeah.

[B]

So what, what Al is referring to is that you can push your RMD the next year, but you just have to take two. So she could do the conversion. A lot larger conversion this year, push the RMD the next year, you could get a lot more out. You could still stay in the 12% tax bracket or the 22. Maybe you do one big one to the 22 one year.

[C]

I think you do one big one and stay. Then you're done.

[B]

And then you're done. Yeah, yeah. Or then you look at the 12%.

[C]

Yeah, yeah. I think. I think that's what I might do.

[B]

I like that. I like that a lot.

[C]

Yeah, yeah.

[B]

Push the RMD to next year, do the conversion to the top of the 22. And then each year after that you

[C]

can do up to 12 or 12.

[B]

Right. You take your RMD and then if there's room in the 12, you convert the top to 12.

[C]

Now, if the Social Security is 70,000, that makes a difference. Yeah.

[B]

You got to write back in.

[C]

Well, then you go to the top of the 20 and maybe that's what you do. Yeah, but you got to be careful. You got to afford the taxes.

[B]

But I think they can't afford the taxes if they have that much fixed income.

[C]

Well, that's Good point. Yeah. With the RMD as they can.

[B]

Right, Good point. The RMD would be available to pay the tax.

[C]

Yeah. Yeah, you're right about that.

[B]

Cool. I bet Chat GPT didn't come up with that answer. Oh, Chat GPT. You use chatgpt.

[C]

I do. Do you?

[B]

No.

[C]

I will tell you this. Once you use it, you can't.

[B]

You're addicted.

[C]

You are addicted. It is. It is so much more advanced than Google. It is. Try it.

[B]

All right.

[C]

It's like having a personal assistant right

[B]

with you, just right in your pocket

[C]

that knows everything, everything, everything. Perfect.

[A]

Have you found that it hallucinates or lies to you, though? Is it telling you stuff that's completely not true and you don't even know it?

[C]

Maybe, but I. I would say from. From things that I do know that I can verify. I'd say over 90% is correct. Got it. But yeah, it's not. It's not gospel. It's not like, you know, the Bible.

[B]

Yeah.

[A]

Kiblinger calls investing in a Roth one of the smartest money moves a young person can make. But only if you know the rules. Miss them and you could be handing the IRS money that you didn't have to. That's why we put together the complete Roth papers package. This free bundle of guides covers everything. How Roth contributions and conversions work, the backdoor Roth strategy for high earners who can't contribute directly, the five year withdrawal rules, and how a Roth IRA stacks up against a traditional IRA and a Roth 401. It's the roadmap you need to unlock decades of tax free growth without the costly surprises. Click or tap the link in the episode description and download it for free. Now, if all of this feels like a lot to manage on your own, that's because it is. And you don't have to. Schedule a financial assessment with Joe and Big Al's team at Pure Financial Advisors. Meet in person at one of our offices, nationwide or online from anywhere. They'll review your entire financial picture, from soup to nuts, and tell you straight up whether Roth conversions are right for your circumstances. No cost, no obligation, just an experienced financial professional providing A second opinion on your DIY retirement strategy. If they can help you save money in taxes, isn't it worth it? To give it a shot, click or tap the free assessment link in the episode description or call 888-994-6257 to get started and do a friend a favor and share this with them.

[B]

Hi Joe, Big Al, Andy, this is Juan and Mary writing you from Brooklyn, New York. I've been thinking about retirement for a while. Been listening to every episode of your podcast for a few years now. Thanks for keeping it Fresco.

[C]

Fresco.

[B]

Love that.

[C]

Me too.

[B]

We keeping it Fresco?

[C]

It's not fresh, It's Fresco.

[B]

We are married couple, 49 and 48 years old, with kids, living in Brooklyn, New York. She drinks white wine. I have a few beers in the summer in gardens in the winter. Okay, Sheridan's.

[A]

Look it up.

[C]

No, don't know.

[B]

What? No idea. Never had a Sheridan. We have $2.2 million saved. $100,000 in a row.

[A]

Coffee layered liqueur.

[B]

The funky layer coffee.

[A]

Coffee layered liqueur.

[B]

Oh, probably tastes Fresco

[C]

Good.

[B]

We have $2.2 million saved, $100,000 in a Roth, 1.3 in tax deferred accounts, $800,000 in a brokerage account, plus a paid off house. Fixed income would be rental income, which is currently producing $50,000 a year, and then a retirement in retirement. Expected Social Security to be $60,000 total at 62. And I have a pension that provides $40,000 if I stop working now and collect at age 60. No. COLA currently save $200,000 a year from my salary. Wow. My wife's income is sporadic, low, and we spend around $100,000, which is what I would expect to spend in retirement as well. I'm Open for a 2 for 1 retirement spitball.

[C]

Okay.

[B]

My plan is to retire at 55, but if I am fired, I don't plan on finding another job. So if I was fired tomorrow or changed my mind. You want to retire tomorrow? Will I be fine? All right, so if we tell him the answer, do you think he's going to just walk into the work of like, I don't give a anymore.

[C]

He. The answer to the first question is yes, and I'll explain in a minute.

[B]

Same scenario as the previous one. Whether I'm fired or retired tomorrow. But now can we afford to divorce? What the. Juan,

[C]

take a. Take a little turn here.

[B]

Wow, man, this is going all over the place. Fired. Divorce.

[C]

Yeah, this is the two for one football.

[B]

Little two for one. Hey, can I get fired? And divorce, does that still work? Still be good? Can I get fired?

[A]

Or if I quit or if I get divorced, are we going to be okay

[B]

and move to Florida on the beach with my girlfriend.

[C]

Right.

[A]

And drink my coffee and liqueur.

[B]

Yeah. With my sheridans. I estimate that our joint expenses would grow from 100 to 140. I don't think divorce is talked about much in retirement plan. But just like life is too short to keep working forever, it's also too short to be with someone if the spark is not there anymore. And if we spend too much time fighting. Sorry to end on a sour note. Would prefer to not have you go back to work just to afford a divorce. If things just don't work out for us. Want to marry. They're fighting.

[C]

They are.

[B]

It's like life's too short, man. So let me just want to sit there and just fight with my wife. I want to get a divorce and I hate my job.

[C]

So can I get divorced and quit? Am I good?

[B]

All right.

[C]

Okay.

[B]

Let's see you.

[C]

Let me give this a stab. So currently they spend 100,000. Fixed income would be about 50. Currently, that's the rental income, assuming that continues. Right. And so shortfall's $50,000. They got $2,200,000. Distribution rate is about 2.3%. Even at $49,000, I'm okay with a 2.3% distribution. I think that probably works.

[B]

Well, at 49%, they would blow out their brokerage account.

[C]

Yeah.

[B]

Where the money's going to come from.

[C]

Yeah. I think you might do a 72T. I don't know if I like because, I mean, the average 72t is about 4%. So that. That kind of almost about takes care of it. Or not quite, but almost. Anyway, just something to think about. So I think that works. You're right. You have to figure out where it comes from. But I think 72T is be perfect. So you mull over that while you talk about the divorce.

[B]

But 72 t tax election is a separate, equal periodic payment. So Juan would have to take or Mary would have to take. Take the same amount of money out of the account for five years or until they turn 59 and a half. Yeah, whatever's longer.

[C]

Yeah. So it'd be like 10 years.

[B]

So 49, 10 years pulling money from the retirement account.

[C]

But I think that's what they need. About 4% of that. So I think that works.

[B]

4% of that.

[C]

Yeah. Of 1.3.

[B]

Yeah. Of $1,300,000.

[C]

Yeah. They need $50,000.

[B]

Yeah. 4% of 1 point. Yeah.

[C]

I think that's pretty good.

[B]

Yeah.

[C]

You starting to agree now?

[B]

No, I don't like the 72T. At 49, you're 49 years old. You start drawing money from that. I don't know.

[C]

Well, the problem with that, as I see it, and maybe you're already going there is, then if he does decide to get a job later, he's got too much income and he's paying more tax.

[B]

You're blowing. Yeah. You can't convert the 72t. The money has to come out. You're going to put it into your brokerage account. The guy's making a mint. He's saving $200,000 a year.

[C]

I know.

[B]

And he's assuming he's spending $100,000.

[C]

Yeah.

[B]

I'm guessing there's pro little bit more being spent. I don't know which Garan's run, but I don't know. Brooklyn, New York is not cheap to live.

[C]

It's not.

[B]

I think he's probably underestimating the living expenses. I think he's underestimating how much the divorce is going to cost him.

[C]

Well, I haven't got to the divorce, so.

[B]

Okay, the divorce doesn't work.

[C]

Yeah, divorce definitely doesn't work. So. So one thing I would say is New York is not a community property state like California. So community property state. The way that works is assets are split 50. 50. New York is called. Is an equitable distribution system, which means it's fair, but it's not necessarily split 50, 50. So I have no idea how these assets would be split. But let's assume 50, 50 because I don't know any different. And I just used his $100,000 expenses. Now I'm seeing he said it would go up to 140.

[B]

Why 70,000 each or what?

[C]

I guess. I don't know. But anyway, so let's say 100. That's what I used. And fixed income goes. I'm splitting that in half with the rentals. 25 grand needs 75 grand. Half of the assets is 1.1 million. That's a 6.8% distribution rate at 49. No, that doesn't. Not even close to working.

[B]

Yeah.

[C]

Now I think if he works till 55 and saves half of the 200 a year, it's 106% rate of return. I think he ends up with about 2.3 million. And then I think then it probably does work because he needs.

[B]

Well, I don't know. I mean, I'm looking at this. 49 is young.

[C]

Yeah.

[B]

And do you think he wants to just get fired or leave his job because he's so unhappy at home?

[C]

Well.

[B]

So everything kind of turns into, like. Everything kind of sucks.

[C]

Think way back when you were 49.

[B]

Yeah, that was yesterday.

[C]

Didn't you want to say, you know, maybe I should just kind of stop doing this?

[B]

I think about that every day, Alan.

[C]

See, that's what I'm saying.

[B]

When did you sell your CPA practice?

[C]

48.

[B]

48.

[C]

Because I was done and I'm still here. How about that? But I'm here because I want to. I don't have to.

[B]

Yeah, I'm with you. But look at. But you're a very happily married man.

[C]

I am. Yeah. So I don't. I don't have to worry about this.

[B]

But I'm guessing if I came home every day, like, it makes everything kind of miserable, I would imagine. Yeah, I'm very happily married as well.

[C]

I know you're. Yeah.

[B]

And so it's like, you know, if you have a bad day at work, you'd love to come home. Because then it's like, okay, you know, this is why I do this. You got family. It's. Everything's nice, Bada boom. But if I came home and it was like, oh, my God, it was horrible. See this lady?

[C]

Yeah. Yeah.

[B]

Just go pound down a couple Sheridans in the basement.

[C]

Alone.

[B]

Alone. Watching parks and bragging.

[C]

Yeah. In the winter.

[B]

Freezing the winter in Brooklyn. Yeah. I could see why he's like, man, I gotta. I gotta. I gotta fix this.

[C]

Yeah.

[B]

I think you get the divorce if you're not happy. I would get the divorce.

[C]

Yeah.

[B]

It starts there.

[C]

I agree. I agree with you.

[B]

Okay, let's figure out what the finances are and then come up with the overall strategy on. On how you can become financially independent.

[C]

So I am.

[B]

Because you don't want to hold on to. It's like, I'm not going to get a divorce because I want.

[C]

I can't afford it.

[B]

Because I can't afford it. You're just going to have more resent, I think, towards the partner than.

[C]

Yeah. Because now you're with them all the time.

[B]

It's like, I'm stuck. I can't. You know.

[C]

Yeah. 100%, Joe. I think happiness first, finance is second. Always. I mean, you always got to be happy. So me personally, if I was in the situation, I would. I would. If it was that bad, I would. I would go for a divorce and then work longer to. To where I. Then I could retire successfully. That's what I would do.

[B]

Exactly.

[C]

Fortunately, I've never had to think about that. So that's.

[B]

I would punt. I would punt for Mary and kind of figure out my own strategy.

[C]

I hope Mary's not listening to the podcast.

[B]

Well, Mary can punt from Juan.

[A]

It's the same.

[B]

I don't know. Do you think Mary loves Juan as much as Juan loves Mary?

[C]

That's a good point.

[A]

They probably love each other. They just don't necessarily like each other anymore.

[C]

Oh, that's. Now we're going deep.

[B]

Oh, God. Sounds like my parents.

[C]

It was love, but they didn't want to be with each other.

[B]

All right, Aaron's got to get on a flight. Where are you going? Aaron Crowe shot New Zealand.

[C]

It's gonna be right down the street from me.

[B]

Oh, yeah. I suppose you're gonna be down under.

[C]

Yeah.

[B]

All right. Everyone's just a world traveler.

[C]

Yeah. How about you?

[B]

Yeah, I'm going. No, you're probably gonna go to Minnesota.

[C]

Yeah.

[B]

Maybe Arkansas.

[C]

Those are two great places.

[B]

Yes, they are very beautiful. Love, my family. All right, that's it for us. We'll see you guys next time. Show Scott yout Money.

[A]

Well, next week on ymyw, join Big Al, Spitball, Social Security and retirement strategy question for Bijou plutus in Massachusetts, Dr. Jekyll and Mrs. Hyde in the Twin Cities, Diggler and Roller Girl in Tennessee, and Lloyd and Diane in Maryland. Join us then. Won't you subscribe to the podcast so you don't miss a thing? Watch us on Spotify or YouTube, where you can also join me in the conversation in the comments. Pure Financial Advisors is a registered investment advisor. This show does not intend to provide personalized investment advice through this podcast and does not represent that the security or services discussed are suitable for any investor. As rules and regulations change, podcast content may become outdated. Investors are advised not to rely on any information contained in the podcast in the process of making a full and informed investment decision.