Podcast Summary: Your Money, Your Wealth – Episode 555

Title: Retiring Before Social Security? Consider These Portfolio Changes
Hosts: Joe Anderson, CFP® & Alan "Big Al" Clopine, CPA
Date: November 11, 2025

Episode Overview

This energetic episode finds Joe and Big Al spitballing withdrawal strategies, Roth conversion timing, and saving priorities for listeners navigating complex retirement and savings questions. The hosts tackle scenarios including early retirement before Social Security, combining tax efficiency with portfolio withdrawals, maximizing Roth conversions to avoid future RMD (Required Minimum Distribution) surprises, and the age-old debate: should young families prioritize retirement or college savings? The conversation stays practical and humorous, peppered with cocktails, quirky listener personas, and real-world money concerns.

Key Discussion Segments & Timestamps

1. [Christine’s Early Retirement Withdrawal Strategy (00:53–13:50)]

Situation Breakdown:

• Christine (retired at 59, now living in France)
• Portfolio: $750K IRA, $550K Roth IRA, $500K brokerage account (great tax diversification!)
• Needs: $60K/year for three years until Social Security; also wants to pay off $75K securities-backed line of credit at 7%
• Concern: Minimizing taxes, managing future RMDs, and possibly doing Roth conversions

Core Advice & Insights:

• Non-Qualified Funds First:
  Big Al recommends paying off the $75K SBLOC from the non-qualified brokerage account to avoid triggering ordinary income taxes.

  • “That’ll be the most tax-efficient way to go…without utilizing the Roth IRA.” (05:23 – C)

• Bracket Management:
  For annual withdrawals, stay within the 12% tax bracket (~$64K for a single filer in 2025).

  • “You want to stay at about $64,000 total income, including your capital gains. If you go over that, your capital gains are taxed at 15%.” (07:36 – C)

• Mix Distributions for Tax Efficiency:
  Combine modest IRA withdrawals (to max out the 12% bracket) with brokerage account capital gains harvesting (possibly at the 0% rate within the bracket), and take any shortfall from the Roth if needed.

  • “Maybe you take $50,000 from the IRA and sell $15,000 in gains…Then you could still be at the 0% capital gains rate.” (07:01 – B, 07:36 – C)

• Tax Gain Harvesting:
  Sell appreciated securities (within the lower bracket) and repurchase to increase cost basis without triggering taxes.

  • “That’s called tax gain harvesting…It’s a really cool strategy you could potentially do there…” (08:28 – B)

• Roth Conversions?
  Likely unnecessary since she already has substantial Roth assets; focus on efficient drawdown.

  • “I don’t think conversions make a ton of sense, because she has $550,000 already in a Roth…” (08:20 – B)

• Maintain Portfolio Balance:
  Use withdrawals as opportunities to rebalance and manage risk, not just for tax planning.

  • “You want to consistently rebalance all three accounts to manage your risk now that you’re pulling [income]…” (09:42 – B)

Memorable Quote:

“Just because you have to pay some capital gains, I’m saying it’s not the end of the world – that’s a cheaper rate. So good for you for having gains in the right account.” (10:54 – C)

2. [Prickly Richard & Margarita Maggie: Roth Conversions vs. RMD Avalanche (13:50–25:22)]

Situation Breakdown:

• Richard (68) & Maggie (69) in Tucson, AZ
• Combined portfolio: ~$5M (IRA, Roth, brokerage); big IRAs at risk of large RMDs
• Social Security: Delaying Richard’s, Maggie’s currently receiving; $180K–$180K+ annual expenses
• Built a detailed spreadsheet to project RMDs, income, taxes, IRMAA (Medicare means-testing)
• Core dilemma: Do “pull-ahead” IRA withdrawals and/or Roth conversions now to avoid big RMDs and IRMAA surcharges later?

Core Advice & Insights:

• Distribution Rate is Safe:
  Their projected withdrawal rate is well within norms for their asset base.

• Maximize Use of Lower Tax Brackets:
  Take advantage of lower-income years now for Roth conversions or IRA withdrawals up to the 24% bracket, considering that future RMDs plus Social Security and pension will put them at higher taxable income.

  • “I would try to get as much out…at least maximize the 22% tax bracket.” (22:49 – B)
  • “For IRMAA…that extra Medicare cost is probably going to be less than the other 2% taxed. I would go to the top of the 24% tax bracket for two, three years.” (24:25 – C)

• Roth Conversions Despite IRMAA:
  The additional Medicare premium (IRMAA) is a minor marginal cost relative to permanently sheltering funds from future higher RMD taxation.

  • “What’s the extra IRMAA expense? $3,500. That’s a 1.9% tax. So kind of same-same.” (23:33 – C)
  • “If it were me, I would do some Roth conversions to the 24% tax bracket.” (24:25 – C)

• Humorous Teamwork:

  • “You’d rather spitball and I like to have a little prep. But it’s all good. That’s why we compliment each other.” (24:39 – C)

3. [Michigan Queen & Mississippi Boy: Retirement vs. College Savings Priorities (26:19–39:52)]

Situation Breakdown:

• Couple (33 and 34), three young kids, dog, minivan
• Income: $170K/year; Maxing out 401(k) + 2 Roth IRAs + HSA + 529s ($8K/year, $50K balance)
• No debt except mortgage; Home equity; Wife will eventually have pension/benefits when back to work
• Concern: Are they saving enough for retirement to retire at 55? Are they overdoing college savings?

Core Advice & Insights:

• Current On-Track but Stay Flexible:
  Big Al projects if they continue maxing contributions they might amass ~$3.4M by age 55, but early withdrawal needs and variables make precise predictions difficult.

  • “So many things will change over 20 years… probably you’ll be saving more…You’ll probably be in good shape.” (34:49 – C)

• Rule of Thumb: Save 20% of Income:
  Net of taxes, allocate 20% of household income to retirement; if income rises, ramp savings proportionally.

  • “Try to get up to saving 20% of what you’re making, which is about what you’re doing. Just keep doing it.” (35:28 – C)

• Balance College & Retirement:
  Current 529 contributions are appropriate for three kids and not excessive. Don’t shortchange retirement savings to superfund college — prioritize “paying your future self first.”

  • “Just keep your head down, keep saving away. Don’t do anything cute.” (36:44 – B)

• Beware Lifestyle Creep:
  As income increases, avoid ramping up expenses faster than savings rate.

  • “Lifestyle creep will get you, too.” (39:19 – B)

• Retiring at 55:
  May require part-time work, or bridge years, which is fine — focus more on diligent, steady saving than forecasting twenty years out.

  • “If you’re $60,000 short…just make $60,000 for a few years until Social Security. There’s lots of opportunities to not have to do the career grind.” (38:40 – C)

Notable Quotes:

“He probably started the 529 before he even met his wife!” (31:56 – B)
“Have a strategy that’s sound and stay to it…ignore the noise.” (37:45 – B)

Notable Quotes & Moments

• On Portfolio Tax Efficiency:
  “Just because you have gains in your non-qual[ified account], good for you…that’s what you’re trying to do.” (10:54 – C)

• On Listener Details:
  “He talks in code…this has got engineer written all over it.” (16:45 – C)

• On Early Saving:
  “He probably started the plans before he even met his wife.” (31:56 – B)

• On Roth Conversions and IRMAA:
  “$3,500 [extra IRMAA]…that’s a 1.9% tax. So same-same, if it were me I’d go ahead and do some Roth conversions to the 24%…get it over with.” (23:33, 24:25 – C)

• On Avoiding Financial FOMO:
  “You hear the Joneses are doing something different…why are you in this boring S&P500?…Just have a sound strategy and stay to it.” (37:45 – B)

Humor & Tangents

• Cocktails: Two listeners coincidentally favor the French 75 cocktail (gin, champagne, lemon, sugar) — causing great amusement.
• Minivan Love: A young dad sheepishly admits: “I hate to admit that I love [our minivan] since it’s so stinking practical.”
• Listener Codenames: Prickly Richard, Margarita Maggie, Michigan Queen, Mississippi Boy — adding personality to each scenario.
• Engineers & Code: Richard’s spreadsheet-style inquiry is joked about as “engineer written all over it.”

Useful Timestamps

• [00:53] Christine’s withdrawal and tax strategy question begins
• [04:33] Tax-efficient withdrawal and capital gains harvesting
• [13:50] Prickly Richard & Margarita Maggie’s detailed RMD/Roth planning
• [22:49] Deciding how much to convert to Roth and address IRMAA
• [26:19] Michigan Queen & Mississippi Boy start: balancing college vs retirement savings
• [35:28] Rule of thumb: Save 20% of net household income
• [37:45] Don’t get “cute” with investments as you accumulate wealth

Final Takeaways

• Coordinate withdrawals across all account types for tax efficiency—aim to bracket manage each year.
• Roth conversions can still make sense even if you trigger IRMAA, if you permanently reduce future RMDs.
• Long-term success for younger savers is more about consistency (20%+ of income to retirement) than precise, rigid plans.
• Don’t let tax fear paralyze you; sometimes realizing gains or “harvesting” can be the best move.
• Humor, practicality, and real listener stories make even arcane strategies relatable and memorable.

For further learning, check out the hosts' free guides and videos on retirement withdrawal tax strategies—linked in the episode description.