Your Money, Your Wealth Episode #548

Is Financial Software Giving You False Retirement Confidence?

September 23, 2025

Hosts: Joe Anderson, CFP® & Alan “Big Al” Clopine, CPA
Overview:
This episode tackles whether financial planning software can lull us into a false sense of retirement security, using real listener scenarios (Wendy & Joe in Colorado, Kurt & Courtney in New York, and Tim & Faith in Boston). The hosts break down the dangers of straight-line assumptions, the pros and cons of mortgage payoff vs. investing, and Roth strategy optimization for high earners—all served up with trademark banter.

1. Main Theme

Can Financial Software Give False Confidence About Retirement?
Joe and Big Al field listener questions about retirement projections, the pitfalls of financial software, Roth conversions, and prioritizing mortgages versus investing—all while keeping the tone light and humorous.

2. Key Discussion Points & Insights

Wendy & Joe in Colorado: $10 Million Software Projections & Roth Decisions

[01:10 – 16:35]

• Scenario: Wendy (57) and her husband Joe (54) ran planning software that projects $10+ million at death, despite high current spending and a recent job loss. Wendy wonders if they should keep prioritizing Roth contributions/conversions now, even at a high tax rate.
• Details:
  • $3.3M in investable assets, still saving.
  • Home worth $1.1M ($500k mortgage at 2.5%).
  • Spending ~$170k/year (shrinking after Medicare).
  • Strong Social Security later; considering relocation to "the Villages" for retirement.
  • Not sure how accurate/plausible their $10M end-balance forecast is.
• Software Pitfalls:
  • Joe: “There’s no way...the future planning software gives so much false confidence.” [06:37]
  • Straight-line, optimistic assumptions about returns/inflation don’t reflect real market variability.
  • Quote: “You get that compounding growth over and over again, which will never, ever happen. And then that’s why you have these imploded balances, and it will say 10 billion...” —Joe [08:07]
• Best Practices:
  • Review yearly, adjust for market/tax changes.
  • Don’t treat the projection as a guarantee; understand all assumptions.
• Roth Strategy:
  • Big Al: Keep maxing after-tax/Roth 401(k) contributions if in the 24% bracket soon. “That’s a decent tax rate to get money in Roth.” [11:45]
  • If considering backdoor Roth, moving IRA into 401(k) is fine—but direct after-tax 401(k) to Roth conversions can also be maxed.
  • Broader point: Think of all accounts (brokerage, IRAs, Roths) as one pool and optimize for tax efficiency, favoring Roth if possible without dramatically increasing taxes.
  • Quote: “You want to get it into the Roth. If we could do that at 20, 30, $40,000 a year, we would do that without blinking an eye...” —Joe [12:56]
• On “Die with Zero” and “The Power of Zero”:
  • Joe: Likes “Die With Zero” for encouraging spending and zero regrets, but critical of “Power of Zero” whole life insurance tactics. “Not a fan of the life insurance and fully funding that stuff.” [15:41]

Kurt & Courtney in New York: Mortgage Payoff vs. Market Investing

[17:39 – 31:54]

• Scenario: Kurt (40) and Courtney (38) have a $350k mortgage at 4.75% and want to know if extra payments to pay off the house before Kurt’s planned retirement at 62 are wise, or if that money is better invested.
• Details:
  • $150k (soon $190k) income; maxing Roth IRAs.
  • $250k in Roth, $120k 401(k), $65k cash (buying surrounding land), small brokerage account, modest state pensions expected.
  • Expect to spend $150k/year (house paid off) or $172k (with mortgage).
  • Projected retirement savings ~$3.5M at age 62.
• Analysis:
  • Big Al: “I’m fine with paying off the mortgage, maybe with a little extra along the way…psychologically, as someone who did pay off their mortgage, it does feel good.” [27:15]
  • Emphasizes sleep-at-night factor and discipline—a personal choice, not just math.
  • Joe: Warns of the “danger zone” from using planning software to justify not paying off the mortgage due to assumed positive market arbitrage, but annual returns aren’t always higher than interest rates, and market drops can hurt timing.
  • Suggests prioritizing Roth and other savings while young to maximize compounding, reconsidering mortgage payoff strategies closer to retirement when cash flow is clearer.
  • Quote: “If you can get that working for you today at age 40, it’s going to be a lot better for you if you wait until 50.” —Joe [28:55]
• Conclusion: Reassess as you get closer; it’s fine either way but don’t neglect savings for aggressive mortgage reduction unless you truly need the peace of mind.

Tim & Faith in Boston: Are Roth Contributions Worth It at High Incomes?

[32:51 – 43:49]

• Scenario: Faith asks if making Roth 401(k) contributions makes sense, given their high income ($1.2–$1.5M), substantial RSUs, and 32%+ tax rate—or if traditional tax-deferred is better, with Roth conversions later.
• Details:
  • Ages 47 & 49. $1M brokerage, $2M unvested RSUs (vesting over 3 years), $730k in 401(k), $128k in IRA.
  • Live “modestly” aside from private tuition; plan to retire in NH at $12k/month.
  • Expect $8–$9M saved by retirement.
• Host Debate:
  • Big Al: Prefers pre-tax now (“high enough bracket, I’d get the tax deduction today” [43:49]); convert to Roth after retirement: “You can afford the tax [with nonqualified funds], and I think you can get a lot converted.” [42:32]
  • Joe: Leans Roth, highlighting the long-term benefit of compounding tax-free: “In 10 years...I’m going to be pretty happy that money’s in a Roth IRA versus in a retirement account.” [43:08]
  • Both acknowledge there’s no absolute answer—it comes down to assumptions and how much “sleep at night” matters if tax rates change.
  • Quote: “The Roth 401k is genius in a sense because...you just get a smaller net [paycheck] and he’s got such a high salary anyway. You won’t even miss it.” —Joe [43:14]
• On Retirement Security:
  • Both agree their plan is solid given their wealth trajectory: “I believe [they’re] going to end up with a lot of money, Joe.” —Big Al [39:33]

3. Notable Quotes & Memorable Moments

• On planning projections:
  • “It’s 100% assumptions...you can make that thing look as good or as bad as you want.” —Joe [08:30]
• On retirement account mental accounting:
  • “People silo their investments...Just look at your liquid assets as your liquid assets…and figure out how can I get it in the right spot with the least amount of tax.” —Joe [14:29]
• On kids of different musical eras (levity break):
  • “What the hell is a Fat Pete godfather?” —Joe [21:19]
  • “A bespeckled elderly child wearing glasses. Sorry guy.” —Listener describing Big Al [21:32]
• On mortgage vs. investing:
  • “Financial planning software...it will tell you to not pay off the mortgage. But psychologically, as someone who did pay off their mortgage, it does feel good.” —Big Al [27:15]
• On Roth vs. pre-tax:
  • “The compounding, tax-free, could make up for the additional tax. It depends on again, the assumptions.” —Joe [43:08]

4. Timestamps for Key Segments

| Time | Segment & Topic | |-----------|----------------------------------------------------------------------------| | 01:10–16:35 | Wendy & Joe’s $10M projection, Roth contributions, software pitfalls | | 17:39–31:54 | Kurt & Courtney: mortgage payoff vs. investment, retirement spitball | | 32:51–43:49 | Tim & Faith: Roth contributions for high earners, wealth projections |

5. Additional Resources Mentioned

• “Die with Zero” (Bill Perkins) and “The Power of Zero” (David McKnight) books for retirement philosophy [15:38]
• Suggests periodic (annual) check-ins and scenario analysis with (or without) an advisor.
• Emphasize discipline, liquidity planning, and flexibility over rigid adherence to software projections.

6. Closing Tone & Takeaways

• The hosts’ playful, irreverent banter steers the conversation through technical details without ever getting dry (“I’m a bespeckled elderly gentleman. Respect your elders!” —Big Al [29:33]).
• Listeners are reminded to build financial flexibility, keep their plans updated, and not be seduced by deceptively optimistic projections.
• Ultimately: Don’t let straight-line software projections or “truisms” about the market or taxes dictate your emotions or big decisions. Get in the habit of annual, evidence-based recalibration—ideally with a trusted pro (or at least a critical approach to your own assumptions).

Episode Recommendation: If financial confidence is based mostly on software output, step back and identify your actual cash flow, market assumptions, and risk tolerance. Use the projections as a tool—not a guarantee.