How to Plan for 35 Years of Retirement Spending With Smart Roth Conversions - 506

Summary

Your Money, Your Wealth Episode 506: How to Plan for 35 Years of Retirement Spending With Smart Roth Conversions

Released on December 3, 2024, hosts Joe Anderson, CFP®, and Big Al Clopine, CPA of Pure Financial Advisors delve into strategic retirement planning, focusing on long-term spending, Roth IRA conversions, and tax-efficient strategies. The episode features insightful discussions on various listener scenarios, offering tailored advice to ensure a secure and enjoyable retirement.

---

1. Planning for 35 Years of Retirement Spending: Wine Guy and Wine Gal in Sonoma, CA

Listeners' Scenario: Wine Guy (58) and Wine Gal (56) in Sonoma, California, seek guidance on ensuring their retirement savings last 35 years. With substantial income, ongoing savings, and inherited assets, they ponder the optimal Safe Withdrawal Rate (SWR) and the aggressiveness of Roth IRA conversions. Additionally, they're contemplating moving from Silicon Valley to a no-income-tax state and the implications of large-scale Roth conversions amidst rising healthcare costs.

Key Discussions:

• Safe Withdrawal Rate (SWR): Joe and Big Al emphasize the importance of a SWR analysis to determine a sustainable annual spend. They caution against relying solely on calculators, noting that life’s unpredictability requires flexible financial planning.

  Joe Anderson [04:37]: "Those assumptions are dangerous because it's a straight line. It's a sequence of return is really what he needs to care about."

• Roth IRA Conversions: The hosts discuss balancing tax efficiency with the cost of healthcare premiums. They advise against converting too aggressively into higher tax brackets to avoid hefty premiums under the Affordable Care Act.

  Big Al [11:32]: "If you convert to the top of the 12% bracket, it would be very expensive because now you've got all that Affordable Care act credit that you gave up."

• Relocation Considerations: Moving to a tax-free state can offer significant tax savings during Roth conversions. However, proving residency and genuinely relocating can be complex, as high-tax states like California scrutinize such moves to prevent tax avoidance.

  Big Al [16:08]: "If you move back into California, chances are that high tax state may want to look at that and you may have to pay all that back tax money."

Conclusion: Wine Guy and Wine Gal are in a strong financial position, but must navigate tax implications carefully. Continuous review and adaptable strategies are crucial for maintaining their desired lifestyle throughout retirement.

---

2. Relocating to a Tax-Free State for Roth Conversions: James Bond's Inquiry

Listener's Scenario: James Bond (59) and his retired wife (51) own properties in Silicon Valley and Rio, Brazil. With significant traditional and Roth IRA accounts, they're considering moving to a tax-free state like Texas or Nevada to optimize Roth conversions while minimizing state income taxes.

Key Discussions:

• Residency Requirements: Successfully relocating requires more than just changing addresses. Proving genuine residency involves establishing a primary residence, spending sufficient time in the new state (typically over 183 days), and integrating into the community.

  Big Al [16:33]: "You have to actually move. It's something you can't fake."

• Tax Implications: Properly executed, the move can save substantial state taxes on conversions. However, reversing residency shortly after conversions can lead to tax complications and potential penalties.

  Big Al [19:14]: "They may want to pay all that old, that back tax money that you should have owed, plus penalties and interest."

Conclusion: While relocating to a tax-free state can be advantageous for Roth conversions, it requires careful planning and genuine relocation efforts to avoid legal and financial pitfalls.

---

3. Early Retirement Planning: Doc from San Francisco

Listener's Scenario: Doc (54), a single father of a 10-year-old, plans to retire in eight years. With substantial assets, rental income, pensions, and Social Security benefits, he seeks advice on bridging the retirement gap between early retirement and full Social Security benefits.

Key Discussions:

• Expense Management: Doc’s estimated annual expenses are $72,000. With rental income and pensions, there's a shortfall that needs to be addressed through strategic withdrawals and investment growth.

  Big Al [25:04]: "That's $45,000 into a million 4.5% distribution rate, and that would be at age 62. That's probably pretty close."

• Bridge Funding: The hosts suggest maintaining a balance between spending and preserving assets, ensuring that investments continue to grow to support retirement needs.

Conclusion: Doc is on a viable path toward retirement, balancing current spending with future income streams. Continued strategic planning will help him bridge the gap until full Social Security benefits kick in.

---

4. Balancing Financial Goals with Family Needs: Rob from Kansas City

Listener's Scenario: Rob (39) and his wife (38) with three young children, are evaluating their financial trajectory. With significant savings, high incomes, and dedicated contributions to retirement and other financial goals, they're concerned about balancing immediate family needs with long-term retirement planning.

Key Discussions:

• Growth and Downscaling Strategy: Big Al outlines a path where Rob continues aggressive savings for a set period before descaling to allow investments to grow passively, aiming for a substantial nest egg by mid-50s.

  Big Al [29:15]: "If he works another six years at my assumptions, $4 million at age 55. I think you could have a great retirement."

• Diversification vs. Concentration: The importance of balancing risk through diversification is emphasized, recommending that while concentration can yield higher returns, it also increases vulnerability.

  Big Al [46:04]: "Diversifying is safer. It allows you to hold on to what you've made, but you may not have the same upside."

Conclusion: Rob and his wife are well-positioned for a comfortable retirement. By potentially adjusting their career pace and maintaining a diversified investment portfolio, they can achieve their financial and family goals.

---

5. Managing Excess Capital Gains: Elisa from Fremont, CA

Listener's Scenario: Elisa and her spouse delayed moving, leading to excess home equity beyond the $500,000 capital gains exclusion when selling their Fremont home. They seek strategies to manage the additional tax burden without jeopardizing their financial stability.

Key Discussions:

• Capital Gains Tax Calculation: Big Al breaks down the potential taxes Elisa might face by selling her home, considering improvements and net gains. The estimated tax liability is around 33%, translating to approximately $70,000.

  Big Al [34:34]: "So you sell your house, you walk away with $1,100,000 to pay $70,000. No one likes to pay, but I don't think it's going to kill you."

• Impact on Medicare Premiums: The increased income from the sale may temporarily raise Medicare premiums, but the hosts reassure that the financial impact isn't as dire as feared.

  Joe Anderson [34:42]: "It's going to increase the amount that you have."

Conclusion: While Elisa faces a notable tax bill from excess capital gains, careful planning and understanding of the tax implications can mitigate concerns. The overall financial health remains intact despite the additional tax burden.

---

6. Deciding Between Pension Options: Happy Camper and Jolly Pumpkin

Listeners' Scenario: Happy Camper (61) and Jolly Pumpkin (62) from Wisconsin are approaching retirement. They must choose between taking an annual pension of $38,000 for life or a lump sum of $520,000. With a robust investment portfolio and planned Social Security benefits, they question which option best aligns with their financial goals.

Key Discussions:

• Present Value Analysis: The hosts calculate the present value of the pension versus the lump sum, finding them relatively comparable depending on discount rates and life expectancy.

  Big Al [37:56]: "At age 61, 62, yeah, that looks pretty good."

• Flexibility vs. Certainty: Choosing the lump sum offers more flexibility and investment potential, while the annual pension provides a guaranteed income stream.

  Joe Anderson [39:21]: "If you want the certainty of a fixed income on top of your Social Security, then I would take the pension."

Conclusion: Both pension options present viable paths. The decision hinges on the couple’s preference for guaranteed income versus investment flexibility. Financially, either choice supports a secure retirement given their overall asset base.

---

7. Navigating Retirement Accounts Skepticism: Lloyd from South Dakota

Listener's Scenario: Lloyd Christmas (40) and his wife Mary own significant commercial real estate and a thriving business. Despite suggestions from financial professionals, Lloyd is skeptical about retirement accounts and prefers his current investment strategy focused on real estate.

Key Discussions:

• Diversification Benefits: The hosts advise Lloyd to consider diversifying his investments by incorporating Roth options, which can provide tax-free income in retirement.

  Big Al [44:23]: "Diversification is always a good bet, but concentrated risk is what makes people super successful and wealthy."

• Risk Assessment: While concentrating on real estate can yield high returns, it also poses significant risks if the market fluctuates. Diversifying helps protect against potential downturns.

  Joe Anderson [46:04]: "Yours is a double-edged sword. You just want to be careful."

Conclusion: Lloyd’s substantial investment in real estate has built significant wealth, but incorporating retirement accounts can offer additional security and tax advantages. Balancing concentrated investments with diversified holdings can enhance long-term financial stability.

---

Final Insights and Takeaways

Throughout the episode, Joe and Big Al reinforce the importance of personalized financial planning, emphasizing that each listener’s situation is unique. Key themes include:

• Flexibility in Planning: Life’s uncertainties necessitate adaptable financial strategies rather than rigid plans based solely on rules of thumb.

• Tax Efficiency: Strategic Roth conversions and understanding tax implications can significantly impact retirement savings and spending power.

• Diversification vs. Concentration: Balancing investment portfolios to protect against market volatility while seeking growth opportunities is crucial for sustaining wealth.

• Continuous Review and Adjustment: Regular financial assessments ensure that retirement plans remain aligned with evolving goals and circumstances.

Notable Quotes:

• Joe Anderson [06:02]: "If you don't want to run out of money, spend zero."

• Big Al [10:47]: "There's no such thing as a single number or a guarantee or anything like that."

• Joe Anderson [47:17]: "You've already done way more than most in accumulating a net worth of $7 million."

---

For more personalized advice and to explore your own retirement strategies, consider accessing the free financial blueprint and scheduling a consultation with Pure Financial Advisors, as highlighted during the episode.

Transcript

[Andi Last]

What's an SWR or safe withdrawal rate for Wine Guy and Wine gal in Sonoma, California to have 35 years of guaranteed retirement spending? How aggressively should they convert their retirement savings to Roth ira? Should the Bond family move from Silicon Valley to a no income tax state in retirement? Can Doc in San Francisco quit working eight years when his daughter starts college? Robin, Kansas City and his wife are in their late 30s and have $2 million saved. Can they retire early? Joe and Big Al's Fitball for all of them today on youn Money, you, wealth podcast number 506. Plus, we've got home equity. Elisa and Fremont has more than the capital gains exclusion for a married couple of $500,000 worth of it. How much will this cost her and will it kill her? Irma, should Happy Camper and Jolly Pumpkin take their pension's monthly annuity or the lump sum payout? And finally, Lloyd in South Dakota is not a fan of retirement accounts and he wants the fellas to talk some sense into him. I'm executive producer Andi Last, and here are the hosts of youf Money, you, Wealth, Joe Anderson, CFP and Big Al. CL Find cpa.

[Joe Anderson]

We got hello, it's Wine Guy and Gal in Norkill, Sonoma County. You might imagine our drink of choice is a nice Pinot or Chardonnay, but also like to make a Paloma on the warm days. We drive a 27 camera hybrid Camry.

[Andi Last]

A 2007 Camry Hybrid.

[Joe Anderson]

A 2007 Camry Hybrid. I drive a company car and not excited about buying a new car in retirement. I'm 58. My wife is 56. New to the show, but absolutely love it. Enjoy the numbers and good humor. All right, you get both on this podcast, that's for damn sure. Here's the details. Big Al, get your calculator ready.

[Big Al]

Okay.

[Joe Anderson]

All right. I make $350,000 to $400,000 a year. Wife does creative work and brings home $20,000 a year. Expect in 2025. Between small consulting work, we'll make another $100,000 a year. Assume no income in 2026 or beyond. $100,000 of RSUs vesting in the next four years. Three grown kids between us, all launched and independent. Okay. A lot of income there. Assuming no inheritance, but very likely to receive one in the million dollar range. Well, you just like to throw that in there.

[Big Al]

Well, let's not.

[Joe Anderson]

Let's not plan on inheritance, but it's.

[Big Al]

Going to be a mill.

[Joe Anderson]

I mean, if you just want to kind of throw it in There. Just put that on the side just in case.

[Big Al]

I'm just almost there.

[Joe Anderson]

If I'm short, throw it in. If I'm good, don't worry about it. I never brought it up right. All right. Yet their parents are in their 80s, in incredible health. We are born savers and currently save $125,000 a year. Both Wynt through divorces about 10 years ago, so I had to rebuild our wealth. We currently spend $165,000 a year. $100,000 on everyday expenses including the mortgage. 65 on vacations, eating outline and other splurges. Expect in February we will have the following assets before 2025 work income and RSUs. All right. $2.5 million in deferred accounts. One small $40,000 inherited IRA $60,000 and Roth 401. $1,600,000 in a taxable investment account. $325,000 in equity in a rental property which generates $6,000 a year of free cash flow. Consider selling that three to five years. $400,000 and primary residence $400,000 loan with 13 years remaining if stop working in 2025, Social Security will be $6,200 a month at age 70 in today's dollars. Spitball advice not focused on can I retire? Are we going to stop full time work? February 2025 already put in my notice. He's done.

[Big Al]

He's not waiting for us to say no.

[Joe Anderson]

Focus is on spending and tax efficiency. Specifically, what is a viable annual spend that is guaranteed to last 35 years. Done all the SWR analysis. Safe withdrawal rate. Is that what SWR is?

[Big Al]

I think so. Sounds right.

[Andi Last]

When I initially looked it up, it was standing wave ratio. So you have to put in that it's a financial analysis you're looking for.

[Joe Anderson]

I'm guessing it's a safe withdrawal rate analysis. Used your retirement calculator.

[Big Al]

Okay.

[Joe Anderson]

All right. Cash flow analysis calculates our SWR is 175 per year for 35 years. And we can spend $225 in assets in the first 10 years while paying off the mortgage. Keep getting the same answer, but we're in disbelief that we can spend more money than we are today and never run out of assets. Love to hear if you agree. How aggressive should we convert to Roth ira knowing that we have seven to nine years of private health insurance costs through Obamacare if we do large conversions. Calculate health plan to be about $20,000 a year. Confident we will always fill up the 12% tax bracket. But wondering if it makes sense for the 22%. Thanks for consideration to the spitball. Okay, so wine guy and gal, it looks like you've saved quite a bit of money. 2,600,000. $1,600,000. I don't care about the equity in your primary. You're going to pay that off. I don't know if you're going to use that. You got $6,200 a month. He wants to spend $165,000.

[Big Al]

Yep.

[Joe Anderson]

All right. Plus tax, plus a cost of living.

[Big Al]

Right.

[Joe Anderson]

So you go on the calculators and you put in all your assumptions. Those assumptions are dangerous. Well, because it's a straight line. It's a sequence of return is really what he needs to care about.

[Big Al]

Yeah. Well, so the first, the first, the question, what's the viable annual spend that is guaranteed? There's no guarantees on anything. So if you don't want to run out of money, spend zero.

[Joe Anderson]

Or you could buy some sort of guaranteed product, but that probably wouldn't be.

[Big Al]

Yeah, but if you want a way to think about this, you've got $4.3 million. You retire at 58, although you've got lots of money coming in for the next four years, including the RSUs. I don't know. There's a lot of factors here. But what if we. So let's just go conservative. 4.3 million at 3% distribution rate, just to be conservative, that's 129,000. Add 6,000 rental. So that's 136,000 plus Social Security when that's received. So, yeah, 200ish is probably. I mean, eventually. I mean, it's based upon whatever assumptions you put in the retirement calculator. But that, that probably could be true. But as what's true? In almost every case of retirement, there's uneven cash flows. And so it's hard to just say, here's your number because you got all these different calculations to make.

[Joe Anderson]

Yeah. Each year is going to be a little bit different. You have to be thinking about a. All right, the first step of all of this is how much assets that you have and how much money that you want to spend. And then you look at what is your fixed income sources, and then you find your shortfall and you kind of divide that by 4% or 3%, which is kind of the standard spitball. But he wants a little bit more info here. He's going to different calculators, he's scouring the Internet and he's using acronyms like swa, swr, swr, Right, Yeah, the Safe Withdrawal rate Analysis. So all that is a rule of thumb. The SWR is just to see if you're in the ballpark, that you have enough assets once you retire, what you already put in the paperwork, this is when the real work begins. It's like, all right, now you have to create the income from the portfolio at some point. And what is that portfolio going to look like and where are you going to be pulling the money from? So he's got Roth dollars, he's got pre tax dollars, and he's got some equity and some rentals. So he's going to convert to the 12%, but then he's worried about the Affordable Care act premiums.

[Big Al]

Yes.

[Joe Anderson]

So you have to calculate that as an added tax if you convert higher than the 12 bracket. Because if you're spending $200,000 a year, just think your first 10 years, you're spending $2 million out of the nest egg, plus tax, plus the cost of living. You have $4,000,000 today, or $4,200,000. You're going to spend almost half of that nest egg in 10 years.

[Big Al]

Right?

[Joe Anderson]

So if the market goes sideways, if the market goes down, if you don't do this with a tax efficient kind of mindset, I mean, Right. It's not going to completely blow up on them. But I think with all these different calculators that people run, it might give them false confidence that they can spend a lot more than they probably should.

[Big Al]

Well, I think that's right. I mean, it tells you whether you're in the ballpark. But here's the reality is life happens, right? The stock market goes down 10% for four years in a row. Now what? Right. So every year you're making adjustments based upon your life, what's happening in the market, your investments, your ability to handle risk and all kinds of things, your health now, your kids, your grandkids or whatever they might need. Oh, you need to spend money for this or that, Joe. Things change. And so these calculators give me an idea of can I retire? Yeah, you can probably retire. Is this the number for life? No way. Life changes. And that's why a financial plan is. It happens over time. It's not something you do once. And you got your number, you got to do every year, maybe even multiple times, maybe look at it each quarter just to make sure you're still on track.

[Joe Anderson]

But yeah, I think he's done a really good job of saving. He's born saver. He can't forget about the million dollars that we're not really counting. But he wants us to count.

[Big Al]

No, I mean. So you're right. So taking another step back, this is an amazing story. So they both got divorced and probably lost a bunch of money, but they buckled down for another 10 years, saved a lot of money. So the truth is they're in a great spot. They'll be able to have a great retirement. But there's no such thing as a single number or a guarantee or anything like that. Financial planning is a process you do throughout your life.

[Joe Anderson]

Yeah. But I guess my point is that he needs to figure this stuff out. And I think he can. He's already doing some of the research now. Now. But he might be looking in the wrong areas. Is that here you have to figure out a distribution plan and strategy. The safe withdrawal rate is a rule of thumb, as we just talked about. But he's got Roth assets and he's got pre tax assets. 2.6% is pre tax. So how much should he be converting? He wants to go to the 12% to avoid a little bit more premium on the Affordable Care Act. But is that going to bite him later as that deferred asset continues to build and grow where he could save a lot more tax and premium if he did this correctly and ran the numbers maybe a little bit differently.

[Big Al]

Well, and I would say if he converts to the top of the 12% bracket, it would be very expensive because now you've got all that Affordable Care act credit that you gave up. Right. So you probably want to convert to the top of the 22 or the 24 if you're going to then avoid. Not. Let me try to figure out how to say this properly. You're giving up the credit. Right. And so to say it again, what you.

[Joe Anderson]

Right. If you're going to go to the top of 12 and give up to the credit, don't do it.

[Big Al]

Yeah. Because that's a really high.

[Joe Anderson]

Right. So if you go to the top of the 22, if you're going to give up the credit.

[Big Al]

That's what I'm trying to say.

[Joe Anderson]

No, that's well said.

[Andi Last]

Wine Guy and Gal used our free financial blueprint to calculate the retirement readiness. Have you look for the link to it in the episode description. Just answer all the questions it asks and it'll analyze your current cash flow, your assets and your projected spending for retirement. Then it'll calculate three different scenarios to forecast your probability of retirement success. It outputs a detailed report that includes future taxes and actionable steps you can take now to reach your retirement goals. But as Joe said, even if it says you're in great shape, a lot can happen in a 35 year retirement. This is not a set it and forget it kind of thing. This is where meeting with a real live human financial advisor comes in. Schedule a time to review your financial blueprint with one of the professionals on Joe and Big Al's team at Pure Financial Advisors. They'll help you develop a thorough plan for retirement that's not only constructed to meet your personal financial needs and goals and your tolerance for risk, but also designed to weather economic changes and market volatility with adjustments as you proceed on your path to retirement. Calculate your free financial blueprint, then schedule a free assessment with a financial professional at Pure Financial Advisors. Click the links in the episode description to get started. Now Back in episode 503, Joe and Big Al discussed for SCPR the IRS residency requirements when splitting time between locations when one is a no tax date. And I think that may have spurred this next question. To ask your money questions or to get your own retirement spitball analysis, click Ask Joe and Big Al on air in the episode description and send us an email or a priority voice message like this one.

[James Bond]

This is Bond, James Bond. This is not my voice because too many of my friends listen to the show. So I'm using a combination of AI tools to produce this first time. So forgive me if it's amateurish. Where is Q when you need him? I am 59 years old. I finally made an honest woman out of Moneypenny and married her. She is 51 years old. She retired four years back. We have three grown and self sufficient children. We live in the Silicon Valley. We have absolutely no debt. We own two houses with a combined total of about $1. 8 million. One is in Rio, Brazil. We plan to rent the Silicon Valley house once we pull the trigger and leave the Valley. That's part of my question. We have about $2 million in traditional IRA accounts, another million in Roth IRAs, about $2 million in a brokerage account and $100,000 in the online bank as part of the emergency fund. Have $500,000 in a 401k and and converting that to Roth about 3/4 done but want to start converting the traditional IRA to Roth and have 15 years to do it before RMDs kick in. My question is getting a bit tired of the Silicon Valley as it's getting too busy and too dang expensive. We're thinking about moving to another state, ideally a tax free state. I went back to work Due after retiring at 52. But my job is exceedingly easy. I basically use it to continue to fund Roth IRAs and pay for some living expenses though we don't need that, really. Just nice to have. When we want to start converting the traditional IRAs into Roth IRAs in the not too distant future, we're thinking about being in a state like Texas or Nevada where there's no state income tax. We travel all the time, so an actual physical location is not that big of a deal. We would stay in the state as long as required to meet the residency requirements, but other than that, this would just be a rental or something. Just to have the local address and tax treatment for these conversions. The thought of moving to another state doesn't bother us at all because like I said, we travel all the time anyways. So want to get your spitball on if this works? Does it make sense to relocate to a tax free state for a few years in order to convert IRAs and not pay state income tax as we do now? Right now, The Aston Martin DB5 is in the shop. The Lotus Espirit is too small for a Joeish size person like I am and is unreliable. So we drive something sensible. When home, it's usually parked. I like my martini shaken, not stirred. Moneypenny does not drink because she cannot. Sadly allergic to alcohol. Love the show. Been listening for years, so keep it up. Thanks guys and gal. Cheers, James.

[Big Al]

Wow. James Bond listens to our show.

[Joe Anderson]

That was very difficult to follow.

[Big Al]

A little bit difficult, yeah.

[Andi Last]

The Lotus Esprit is too small for a Joe ish sized person. I like that.

[Joe Anderson]

Oh, Joe. I was like, I didn't catch what. What that was.

[Big Al]

Yeah, I guess you don't fit into it.

[Joe Anderson]

Maybe I could f1.

[Big Al]

You could.

[Joe Anderson]

So what's the question? He wants to move to a tax free state to do the Roth conversions?

[Big Al]

Yeah, I think so.

[Joe Anderson]

Because he travels all the time and doesn't necessarily. I don't know. Well, you got $5 million, 5.6 million, correct?

[Big Al]

Yeah. So that's what he's at.

[Joe Anderson]

And he's got $500,000 left in the 401 that he's going to convert. He's saving into the 401, but he's got another $2.5 million of.

[Big Al]

He's got 2 million in traditional IRA as well. So two and a half million total. So basically he wants to convert. He's tired of Silicon Valley, wants to move out of California. He would like to do roth conversions. He's 59 years old. Sounds like he wants to retire. Right. And so then he does conversions. If he does a conversion tax conversion or Roth conversion out of state, out of California. Well, I'm having trouble today. I'll get it. I'll stick with me. So if he, if he moves to Texas, they move to Texas or Washington state or Nevada, for example, there's no state taxes. And Joe, that does work. You can move to another state, do your Roth conversions and pay no state tax on the conversion. However, you just have to be careful because California and other high tech states are onto this. Here's what they look for. They look to make sure you actually move. They want to make sure you have a new residence, you acquired or you're leasing a new residence and you sold your old residence or you leased your old residence, you set up your driver's license in the new state, register a voter, your bank accounts, your brokerage statements, your doctors, your, your all your life is in the new state. Maybe that's where you're buying groceries. That's where your cable bill is. So on and so on. And if you can prove that, you know, that's, that's one thing. The other thing is spending 183 days in a particular state is, that's over half the year. So that would be important too. But some people that travel don't get to the 183. So it could be the majority. But there's a lot of factors. But you really have to move. It's something you can't fake. And one more thing I'll say is if you're doing this for, just to avoid state taxes so you can immediately move back into California, that doesn't go over very well in tax court.

[Joe Anderson]

There's no real audit on the days they're just going to judge if it comes to audit, there's no way they can track how many days they're going to look at just the bills, as you mentioned. All right, well, here, why didn't you buy groceries for four months or 11 months in Nevada? You bought groceries there for a month.

[Big Al]

Yeah. So here's cases in the past that have failed. People that got a P.O. box in Las Vegas and they call that their, that doesn't work. Right. Or they get, they have a $5 million home in Silicon Valley and they, and they bought $100,000 condo in what, Texas. Texas. You know, rural Texas somewhere. Right, sure. And they, and they don't spend. Yeah, that's, that's how these things fail. But even people that do everything right, if they, if you move out of state, you go ahead and avoid state taxes for whatever transactions you want to do, whether it's selling your company right or Roth conversions. And you move back into that, chances are that high tax state like California may want to look at that. And you may have to pay all that old, that back tax money that you should have that you would have owed, plus penalties and interest. So just, just be aware of that.

[Joe Anderson]

All right. Thanks, James. Have you ever watched the James Bond movie?

[Big Al]

Yeah.

[Joe Anderson]

Do you have a favorite? Who's your favorite? James Bond.

[Big Al]

You know, I started watching after Sean Connery retired, so although I've seen the old ones and he was great. Roger Moore was James Bond when I first started watching and I really kind of liked him because that's what I got used to. That was kind of my initial frame of reference.

[Joe Anderson]

Got it.

[Big Al]

How about you?

[Joe Anderson]

Yeah, probably Daniel Craig, but I like them all.

[Big Al]

Yeah, Daniel. And see, you're younger, so there you go. Daniel Craig.

[Joe Anderson]

There you go. Yeah, I'm a big James dream spawn guy. I enjoy the movies. We got Doc from San Francisco. He goes, I'm 54 years old, single dad of a 10 year old 2022 Toyota Tacoma. Probably be my last vehicle in drink of choice is Tito's Tito. Vodka, soda water and lime. Why would that be his last vehicle?

[Andi Last]

He's figuring it's a Toyota Tacoma, so it's going to last for the next 40 years.

[Joe Anderson]

He's 54.

[Andi Last]

He's not exactly.

[Big Al]

You know, that makes no sense to me either.

[Joe Anderson]

This will be my last car. All right, well, we'll just keep reading here, funny guys on the podcast and enjoy your show while I'm walking my dog in the morning. He found found you guys on the podcast. So you found us on the podcast?

[Big Al]

Yeah, well, podcast app, let's just say. Let's insert that word.

[Joe Anderson]

All right. Enjoy your show while I'm walking my dog in the morning. Have about $300,000 in a Roth 4, $190,000 in a Roth IRA, $130,000 in crypto pension from my parents of $800 a month for life personal pension of $25,000 a year. At age 65, he's going to claim Social Security. At 67 or at 65, it's $2,500. At $67,000, it's $3,100. I'm sorry, $25,000 a year at 65,000 is the pension. He's got $2,500 at age 67 for Social Security or $3,100 a month at age 70. So why does he put pension annually in Social Security monthly?

[Big Al]

To mix you up.

[Andi Last]

Doesn't Social Security actually they quote based on the amount that you're going to get monthly. So he just didn't do the annual calculation for you?

[Big Al]

That's a correct statement, Andy, but that's.

[Andi Last]

Why I put it at the top of the sheet.

[Big Al]

They say monthly. So he could have said $2,000 a month pension, but he said $25,000 a year.

[Joe Anderson]

He's got rental income that generates about $3,000 a month. And the home is paid off. Life is live a simple life. No extravagant purchases. But would like to take my daughter on nice vacations every summer. Maybe a budget of $6,000. My rent is $1,700 a month. Want to continue working part time and hoping to be done working when Donner enters college in eight years. Thoughts and thanks in advance. All right, Doc, you're 54. You want to retire in eight years. 62. You spend how much a month?

[Big Al]

Well, it looks like his budget is $6,000. When I first saw this, I thought that was what he wanted to spend on his vacation, but I think maybe that's what he wants to spend ongoing monthly. So let's go with that.

[Andi Last]

That's how I read it, too.

[Big Al]

Let's say $72,000 a year is his spending.

[Joe Anderson]

72. Okay.

[Big Al]

Yeah. And so if we go with that. So at least we got. Because otherwise we're just. There's no answer. We need a spending number, so we're going to go with that. So, Joe, just a little bit of math for you. So if you start with $620,000 and for eight years at 6%, I assumed he's adding nothing. I don't know. It doesn't say. So just what would that be in eight years? It's $1 million. Okay. And if he's spending $72,000 in eight years at 3%, that'd be $91,000. Okay. So his current income between rental and I don't know what, the $800 a month from parents, but we'll just go with that. So $10,000. So that's $46,000. So shortfall is about $45,000. Now, I didn't do inflation on the other income, so maybe it's a little bit less than that. But $45,000 into a million 4.5% distribution rate, and that would be at age 62. That's probably pretty close, given that he's got a pension of $25,000 and three years later and then Social Security. So, yeah, that probably works.

[Joe Anderson]

He's got $91,000 of fixed income at 67.

[Big Al]

Yeah, that's right. Yeah.

[Joe Anderson]

So he wants to retire at 62. So he's got to bridge a gap from 67.

[Big Al]

That's the key.

[Joe Anderson]

And he's. If he wants to spend 70, $80,000, I think he's right there. Yeah, he's going to have a higher distribution rate those first seven years or five years. Maybe he wants to work part time too, is what he said. He's got a pretty simple life. Yeah. So, no, I think he's right on track for sure. Given the fixed income that he's going to have once he reaches age 67, I do too.

[Big Al]

And here's an example.

[Joe Anderson]

He could blow through all of his liquid assets and if he spends $91,000 a year, sounds like this guy's going to be pretty happy.

[Big Al]

Yeah, yeah. Because that's the fixed income. So here's an example of sometimes we just say in your 60s or 65, 4% distribution rate as just kind of a ballpark. Right. So here's 4.5% at 62. Is that too high? Well, well, there's fixed income coming, so probably not. It's probably okay.

[Joe Anderson]

All right, good luck. Hopefully we got those numbers right. We got. Hey, Joe, Big Al, Andy, this is Rob from Kansas City. I've been a big fan of the show, listening for a few years now. Wanted to ask you my own financial spitball. I'm 39 years old, wife is 38. We drive a 2011 Subaru Legacy, the 2017 Toyota Highlander. Our drinks of choice are a little local pale ale and a glass of red wine. We've done a good job, savings over the year, but we've started to wonder, are we really on track? Life is hectic right now with three kids between the ages of 5 and 10, so it's hard to project the next 25 years based on today's numbers. I love a little spitball on how we're doing, especially as we juggle competing financial goals like vacations, home improvements, funding the kids education, and even in early retirement or at least downsizing to a less stressful career with a lower income. Here's where we stand. Kind of feel what he's going through. Big Al, you do?

[Big Al]

You can relate.

[Joe Anderson]

I can relate a little bit.

[Big Al]

Yep.

[Joe Anderson]

Pre tax 401s, $500,000 Roth 401, $600,000 after tax investments $150,000 Total invested $1,200,000. We got $529,000 for the kids is about $100,000. Cash is $30,000. Total net worth is $1,800,000. I make around $300,000 which has doubled over the past six years. But it comes with a lot of stress and I'm not sure how sustainable it is long term. My wife works part time and earns around $50,000 which is great while our kids are young. I'm willing to push through for now, but I love to scale back in my mid-40s and possible retire in my mid-50s. We probably live off $150,000 a year, but I know a lot of that is discretionary spending. I think we can manage about $100,000 if needed, but I also know how easy it is to spend more when you're not careful. $200,000 would be out of the question if we get a little loose given our savings, income and future goals. I'd love to hear your thoughts on whether we're on track and how to balance everything moving forward. Thanks. Follow up. One part I did forget to mention is our current savings plan. We currently max both mine and my wife's Roth 401s as well as my HSA and save an additional $60,000 per year towards longer term expenses and financial goals like those mentioned above. Vacations, renovations, children's education and possibly an early retirement. Okay, $1.2 million for Rob in Kans. He is saving $60,000 per year roughly into that $1,200,000. Rob is what, 40 years old? 39.

[Big Al]

39. So Joe, here's what I did. So I said I'll just go with his scenario. He wants to work at current pace through mid-40s. So let's say 45, six years from now. So I did this.

[Joe Anderson]

That's going to be a challenge.

[Big Al]

Well, wait till I'm done.

[Joe Anderson]

Got it.

[Big Al]

Six percent. Six years. Add $64,000 a year, he's got $2,300,000. Then what I've said is now he wants to downsize. What if he could pay for all his expenses but just not add to savings, what happens for another 10 years? So now you got $2,300,000. 10 years, 6%, no adds and that's $4,100,000. So it's got $4,100,000 adds.

[Joe Anderson]

So you're saying he downsizes his career, gets a less stressful job and then.

[Big Al]

He'S not saving at a retirement.

[Joe Anderson]

He's not saving a dollar but, but.

[Big Al]

He has a couple million dollars when he does that and then lets that grow, and then it grows to four.

[Joe Anderson]

Got it. So 55 is probably a realistic number for full retirement. And you're saying 45 could be realistic for.

[Big Al]

For downsizing.

[Joe Anderson]

For a little downsize, Less stressful.

[Big Al]

That's. I mean, that's, that's what I'm thinking.

[Joe Anderson]

But he's saving 30,000 into the 401 and additional $60,000 to added expenses.

[Big Al]

And I didn't, I didn't even count that. Only because he said that was for vacations, renovations, kids, college.

[Joe Anderson]

So. Yeah, that's gravy.

[Big Al]

Yeah, that's. That's what I mean. Some of that's possible early retirement, but I just said, what if that was all gone? Right. So I think he ends up with over $4 million if he works another six years at, at my assumptions. Right. And then 10 years after that doesn't add anything. Just lets it grow. So, yeah, 4 million bucks at age 55. I think you could have a great retirement.

[Joe Anderson]

Yeah, no, I think Rob is doing a great job. I mean, he makes a ton of money, but also that comes with some stress. Right. So he's like, man, I can power through maybe a few more years, but God, I would love to get out of this place.

[Big Al]

I hear you. Remember what I was thinking at that.

[Joe Anderson]

Age you punched almost.

[Big Al]

Almost going to make my money in real estate. And then the Great Recession hit and then I went back to work. So you never know.

[Joe Anderson]

Yeah.

[Big Al]

And you're still working still, right?

[Joe Anderson]

Almost 20 some odd years. All right, Rob, very good.

[Andi Last]

Whether you are a millennial like Rob, a Gen Xer like Joe and me, or a baby boomer like Al, the stakes are high when you're trying to create financial security for your future. Watch Financial planning at every age on your Money you Wealth TV as Joe and Big Al guide you through the financial strategies and goals that each generation should implement. That can mean the difference between a retirement of scarcity or a retirement of abundance. Click the link in the description of today's episode in your favorite podcast app to watch financial planning at every age. Then click through to our YouTube channel to subscribe and to join the conversation in the comments. Also, download the retirement Readiness Guide for free to learn the secrets to controlling your taxes in retirement, creating income to last a lifetime, making the most of your retirement investing strategy, and much more. These plays will boost your retirement readiness despite the uncertainties of market volatility and inflation and rising health care costs and the future of Social Security. And Medicare. Just click the links in the description of today's episode in your favorite podcast app to access all of these free financial resources.

[Joe Anderson]

Let's go to Fremont, California. Hi, guys. Andy, we waited too long to move, got comfortable, and now our equity is way over the $500,000 exclusion when we're looking to sell. We bought our house for $300,000, and now it's probably worth 1,200,000 or more. How will this excess equity be charged? If I'm in the 24% tax rate, it will kick me over the 25 and kill my Irmaa. Kill my Irmaa.

[Big Al]

Wow, that's big.

[Joe Anderson]

Not your Irma. How can we move now and manage this tax bill? Love the show. Okay, Irmaa. Yeah, yeah, well, kill my Irmaa. It sounds like it's like killing a relative or something.

[Big Al]

Yeah, that's referring to Medicare premiums that she'll pay two years from now. Okay, so let me tell you, Alyssa, it's probably not quite as bad as you think. And I just did a little calculation. What if you sold your home for 1.2 million, you probably have 100,000 closing costs just come up for Realtor and other costs. So you probably net $1,100,000, something like that. And you bought it for $300,000, but you probably put improvements in it. So let's just say $100,000 improvements. So $400,000 versus $1,100,000. So the gain is $700,000 in that example. Exclusion is $500,000. So maybe I have a taxable gain of $200,000 just with the assumptions I came up with. Now, even if percent bracket means your capital gain will be taxed at 20, probably. Maybe some at 15. Yeah, some at 15, but let's just say at 20. Right. Some 23.8% for the net investment income tax. State of California, Fremont, call it 9.3. So let's add those together. It's about a third. It's about 33%. So a third of $200,000 is 67,000. Call it 70. You sell your house, you walk away with $1,100,000 to pay 70. No one likes to pay 70, but I don't think it's going to kill you.

[Joe Anderson]

Yeah, it's not as bad as they think.

[Andi Last]

But is it going to kill Irma? He said it's not going to kill her, but is it going to kill Irma?

[Joe Anderson]

So what's that going to do to Irmaa? Well, it's going to increase the amount of income that you have. So yeah, it's going to increase the amount that you pay to Medicare.

[Big Al]

Yeah. For a year. I wouldn't worry too much about that. I think a lot of times people.

[Joe Anderson]

But think about it, you bought the house for 300,000 and you're going to.

[Big Al]

It's like that's a great problem. Right. I'm just saying the taxes in many cases, like cases like this are not as bad as you probably think.

[Joe Anderson]

So my parents bought their house in like 1974 for like 50 grand.

[Big Al]

Okay.

[Joe Anderson]

And then they sold it when my dad died years ago. But when my mother sold it, she sold it for like 80 grand 35 years later.

[Big Al]

Wow. Okay. Well, it made a nice profit there.

[Joe Anderson]

I guess it's sold relative on where you live.

[Big Al]

Yeah, this is a California type problem.

[Joe Anderson]

That's a nice gain that you have. And so if you got to pay a little bit of tax, I think it's all right. Hello, Joe. Big Al, Andy, Love the show. I've been listening for over five years. I listen to podcasts while exercising in the morning. I live in the beautiful state of Wisconsin. My drink of choice is a little nice Amber. Alright. My husband's choice of drink is a bitter IPA or good whiskey. For today's show, our names are Happy Camper and Jolly Pumpkin. We both drive company cars, but that will change in retirement. We will need to purchase two used cars in 2025. We plan on retiring next year at the age 61 and 62. We are empty nesters and the kids are off the payroll and are sufficient in doing well financially. My question is whether I should take an annual pension or a lump sum. The annual pension will be $38,000 per year for life with no cola or a lump sum of $520,000 of no debt or mortgage. The house is worth 750. Estimated expenses in retirement are 150. We'll both plan to take Social Security at age 70. Estimated Social Security payment would be $55,000 a year for each of us. Currently investments are in broad index funds. Pre tax savings is 1,700,000. Roth savings toll at 900. Brokerage account 300 I bonds, 100 HSA. 100 grand total. Little over $3,000,000. Al.

[Big Al]

Okay, got it.

[Joe Anderson]

Two questions. Should I take the pension or the lump sum? Am I in good financial position to retire in 2025?

[Big Al]

Okay.

[Joe Anderson]

All right. Did you do any calculation here?

[Big Al]

I did.

[Joe Anderson]

How old is she?

[Big Al]

She's 61 or 2.

[Joe Anderson]

So, Jolly Pumpkin, or is she Happy camping.

[Big Al]

I don't know, but here's what I did.

[Joe Anderson]

What do you think? I think she's.

[Big Al]

Well, she's probably 61. Only because it sounds like she wrote it. And she probably put her age first. But what are the names?

[Joe Anderson]

I'm more curious on who's a happy camper and who's jolly pumpkin.

[Andi Last]

I would guess that that means that again, she put herself first. So she's the happy camper and he's the jolly pumpkin.

[Big Al]

Well, yeah, we'll go with that. I don't know. Anyway, here's all I did.

[Joe Anderson]

Jim, you think of a jolly pumpkin? You think male or female?

[Big Al]

Well, I would think female for Jolly pumpkin.

[Joe Anderson]

Jolly pumpkin.

[Big Al]

Yeah.

[Joe Anderson]

Andy.

[Andi Last]

See, I was thinking more in terms of what the shape of the person might be, but could go either way.

[Big Al]

Okay, well, happy camper.

[Joe Anderson]

And it sounds like, I don't know, like a rugged camper.

[Big Al]

Yeah, it sounds like a dude.

[Joe Anderson]

It does for me. I don't know. I don't know. I don't want to be sexist. I don't want someone to write in and. But I'm just thinking. All right, hey, someone. You got the overalls and kind of like a. Not saying that women can't be farmers or campers. I'm sure I'm just going to get myself in trouble. I'm shutting down.

[Andi Last]

You just stop now.

[Big Al]

So here's what I did. I said, all right, so what's the net present value of 38,000 a year for 25 years? I used a 5% discount rate. I don't know if that's a good rate or not. I get 535,000, which is about the same as the $520,000.

[Joe Anderson]

Would you put four in?

[Big Al]

Four? Okay, let's see. So $38,000 is your payment, and 25 years, and 4%, the present value is $593,000. Okay, but wouldn't you think of that? I mean, in terms of what you could make on your investments?

[Joe Anderson]

You could.

[Big Al]

So it could be 6%?

[Joe Anderson]

Could be 6%, which would then bring it down to probably 500 grand.

[Big Al]

Yeah, about 500. So it depends upon your discount rate. So I guess the point, what we're doing is we're trying to decide which is better for you. And they're relatively equal in terms of numbers. Right, Right.

[Joe Anderson]

So it's going to rely on life expectancy. So if you live 35 years, the numbers are going to 25 years or 25 years. You're 61, you're 61, 62. Years old. So if you have longevity in the family, you're probably going to make out a little bit more. If you take the pension, if you want more flexibility, if you want to invest the money, if you want to take on more risk, then you take the lump sum. If you want the certainty of a fixed income on top of your Social Security, then I would take the pension. You have $3 million of other liquid assets that you can do Roth conversions with, that you can take on a little bit more. And if you think about having a really strong baseline in regards to fixed income, then maybe I would take the annuity plus Social Security, and then you can maybe create a larger legacy for the kids by taking on maybe a little bit more risk with the liquid assets.

[Big Al]

Yeah, I like your thinking. And partly when I think about this, at age 61 and I'm not going to collect Social Security until 70, that's nine years of going through my nest egg. I think I'd like to have the pension. My nest egg doesn't take such a big hit waiting for Social Security.

[Joe Anderson]

I guess the point is, it's not a huge discrepancy. It's not like you would make a huge mistake because of how the discount rates are working with this particular pension. I mean, we've seen before that the lump sum is a lot better than the annuity, and we've also seen where the annuity is a lot better than the lump sum. Doing the math here. Given a certain life expectancy, the numbers are almost the same, so.

[Big Al]

Right. So either decision is going to be.

[Joe Anderson]

Yeah, personal choice. Either decision. I think, financially, from a numbers perspective, you're right on. So I'm not necessarily.

[Big Al]

And are they in a good position to retire? Just quick math. $150,000 of expenses if they take the pension, $38,000 shortfalls, $112,000 into $3 million. 3 million 7% distribution rate. Age 61, 62. Yeah, that looks pretty good.

[Joe Anderson]

Yeah, it looks really good. Again, there's a lot of forces that are unknown and creating the income. Where are you going to sell? How are you going to manage the risk? What the portfolio looks like? What's the strategy?

[Big Al]

Yeah, well, back of the envelope, this.

[Joe Anderson]

Looks pretty good, but they've done a really good job. Savings for sure. But then it's like, all right, well, let's say you take the lump sum or you take the pension. You still have to take $110,000 distribution.

[Big Al]

You do. Right.

[Joe Anderson]

So you're still draining the portfolio quite a bit. So then you're thinking, all right, So I have seven years of pulling $110,000 out.

[Big Al]

Or even nine years. 61.

[Joe Anderson]

Yeah, nine years. I'm sorry. So again, that's a million plus dollars that you're pulling out of your $3 million. So a third of your nest egg is taking out of the portfolio before you reach full Social Security.

[Big Al]

So you better have it invested for some growth because that's do investments in retirement.

[Joe Anderson]

Sometimes I feel like we give a little bit of false confidence with people. Yeah, it looks great. It's back in the envelope. Spitball. All right, go for it. And then in five years, we're going to get calls. Hey, Big Al.

[Big Al]

Yeah?

[Joe Anderson]

You said, you said I. All right, we got Lloyd. Lloyd Christmas. Okay. Dumb and Dumber. Hello. Love the show. So I'm not a fan of the idea of retirement accounts.

[Big Al]

Okay.

[Joe Anderson]

All right. I own a small business and we offer a 401 to employees, but I don't use it. My wife Mary and I are approaching 40, so retirement isn't much of a thought yet. We have $4 million worth of commercial real estate, about $2 million in my business, about $1 million in real estate funds, and she has about $300,000 in our 401. Our CPA and CFP are both telling me about the immediate tax benefits of contributing to a 401. But I'm pretty sure our effective tax rate will continue to go up as we age. I have no interest in paying more taxes later. If we did the Roth conversion, we don't save taxes now. I'm struggling with changing what we've been doing as it's been working. Talk some sense into me. Wife drinks anything but whiskey. I drink anything but tequila.

[Big Al]

Wow, that's a broad range. All right.

[Joe Anderson]

I say to Lloyd Christmas from South Dakota, keep doing what you're doing.

[Big Al]

It's working.

[Joe Anderson]

It's working. You're 40. You got a net worth of what? Well, several million dollars?

[Big Al]

Yeah, over 7 million.

[Joe Anderson]

You got 7.3 million of total assets. I don't know what the debt is on you. Estate, Right. You like real estate?

[Big Al]

Yeah.

[Joe Anderson]

You got a business that's worth 2 million bucks.

[Big Al]

Yeah. It's going well. So I, I Lloyd, I, I might offer one thing for you, and that is your taxable accounts are in real estate funds. Why not at least have a Roth option in your 401k, contribute to the Roth and invest in your real estate funds in the Roth. Because that'll be tax free. Same same, except now you're creating tax free income in the future.

[Joe Anderson]

Yeah. If you love real estate, just open up a Roth Roth or convert your wife's and then you can still buy real estate funds.

[Big Al]

You can buy real estate funds or you can even buy real estate and a self directed Roth if you really want to go that route.

[Joe Anderson]

You're probably a little heavy on real estate.

[Big Al]

Well, so my second comment is that reminds me somewhat of me at age 40, although the numbers were a lot smaller, I will say. But I had a business and I had real estate, not much else. And I felt pretty good until the Great Recession hit. Then I didn't feel so good. Now I realize it's kind of nice to have a little bit of diversification. So that's just me, but I get it. I love real estate too. I always have.

[Joe Anderson]

But I don't think we got to talk some sense in yet. But I think there's other things that you could be potentially doing that would benefit you long term. Diversification is always a good bet, but concentrated risk is what makes people super successful and wealthy.

[Big Al]

I know, and we don't talk about this often enough. We talk about diversification. What is diversification? That's having all these different asset classes because they go up and down at different points and you have a smoother ride. But to get rich, the best way is to concentrate in a single company or asset class. But that asset class or company or real estate has to do really well. Sometimes it works, sometimes it goes the other direction and you end up with very little concentration. Is a lot riskier. But Joe, you can make a lot more money if you pick the right asset class.

[Joe Anderson]

Yeah, well, he owns a business that's going to make him a lot of money. Right. So he's doubling down on his business and it's worth a couple million dollars. He's 40 years old. I have no idea what type of business that is. You know who are the wealthiest people? The ones that take the most risk. But also you could lose your assets, assets very quickly here too. It's a double edged sword. So you just want to be careful. It depends on your risk tolerance. It sounds like he has an appetite for risk. It does, but you just have to be aware that with risk it can't go the other way on you. That's $7.5 million that you have in total assets. How would you feel if it went to 2 million?

[Big Al]

Right.

[Joe Anderson]

It's like one boom or 3 million. Would that blow you up? If not, then I think, all right, keep doing what you're doing. And I don't need to talk sense in you, but you have to look at the downside. If I'm not looking at the downside, what is the worst case scenario? I'm not saying it could happen, but it may if you want to protect that. Most people are twice as fearful or twice as upset or twice as mad when they lose a dollar than they are to gain a dollar.

[Big Al]

That is true.

[Joe Anderson]

So you've already done way more than most in accumulating a net worth of $7 million. Now you just have to talk to yourself to say, where do I want this $7 million to go? Would I be twice as happy if the $7 million went to $14 million? Or how mad would I be if that $7 million went to $3 million? Is your life going to change all that much if that net worth went to 10 or 20 versus if it went to 2? Yeah, that's 7 million dollar net worth. Al. That's a ton.

[Big Al]

At age 40, that is a ton. And so if that seems like a good amount, then think about diversifying. But what diversifying does is it's safer. It allows you to hold on to what you've made, but you may not have the same upside. That's really what it comes down to.

[Joe Anderson]

So, Lloyd, his buddies. Anyone know his buddies? It was Harry. What was Harry's last name? Dumb and Dumber.

[Big Al]

Yeah, I don't remember.

[Joe Anderson]

Probably. No. Kind of look like Harry.

[Andi Last]

Harry Dunn. Harry Dunn. D U N E Done.

[Big Al]

Meta. There you go.

[Joe Anderson]

Well, speaking of done. We're done.

[Big Al]

Yes.

[Joe Anderson]

Great job Andy. Thank you.

[Big Al]

You too. It was fun as always.

[Joe Anderson]

And we'll see you guys next week. Shows called your Money or what.

[Andi Last]

We've got some new blog posts on year end financial moves to make right now and the US national debt and its impact on long term investing. So check out the links in the episode description for these and all our other free financial resources. Your Money, your Wealth is your podcast and this show would not be a show without you. Keep sending in your voice messages, your emails, keep watching and commenting on YouTube and leave us your honest reviews and ratings in Apple podcasts. And keep telling your friends how we're making fun of finance over here at yout Money, you, Wealth 2025 is just around the corner. Find out more about those last minute tactics you may still be able to leverage to bring down your 2024 tax bill and make sure that your plan for your financial future is secure. Schedule that free financial assessment with one of the experienced professionals on Joe and Big Al's team at Pure Financial Advisors. It's free and it's tailored specifically to your financial needs, your risk tolerance, and your retirement goals. Don't put it off any longer. The calendar is filling up quickly. Click the free Assessment link in the episode description or call 888-994-6257. Book yours now while there's still time. Your Money, you, Wealth is presented by Pure Financial Advisors, a registered investment advisor. This show does not intend to provide personalized investment advice advice through this podcast and does not represent that the securities 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.