Podcast Summary: Your Money, Your Wealth
Episode 567: Rising Costs and Retirement Unknowns? Here's What to Do
Hosts: Joe Anderson, CFP® & Alan (Big Al) Clopine, CPA
Date: February 3, 2026
Episode Overview
This episode revolves around the central concern: How do you protect your future from rising costs and retirement unknowns that are out of your control? Joe and Big Al dive into a series of listener questions that touch on navigating pre-tax and Roth savings, managing pensions, facing rising long-term care insurance premiums, funding college education without derailing retirement, utilizing student loans, and weighing capital gains harvesting versus Roth conversions ahead of a move to a higher-tax state. As always, advice is wrapped in humor and real talk about making the most of what you have, staying adaptable, and not sweating the stuff you can't fully predict.
Key Topics & Discussion Points
1. Pre-Tax vs. Roth Retirement Savings and Pensions (Al & Peggy, Illinois)
[01:18 - 13:07]
Situation:
- Married couple, early 50s, want to retire in 6-7 years.
- Current retirement savings: ~ $650k (Pre-tax/IRA/Roth), plus a $320k cash balance pension and retiree medical account.
- Debating final years’ contributions: Pre-tax 401(k) or Roth for tax diversity?
- Have part-time post-retirement plans, kids with 529 accounts.
Key Spitball Points:
- With current trajectory and assuming ~6% investment returns, projection is $1.1M by retirement. Annual spend goal set at $96k (inflated to $115k in future dollars).
- Plan includes working part-time for $36k/year at a shoe store to bridge to Social Security.
- Pension option: Lump sum or annuity ($24k per year with 100% survivor).
- Want to maximize Roth opportunities before retirement.
Insights & Recommendations:
- Distribution Rate: 5% initially, but drops once Social Security starts. (Ideal would be a lower spend or more part-time earnings for a safer margin).
- Roth vs. Pre-tax: Contribute pre-tax up to stay in the 12% bracket, funnel the rest into Roth. Take advantage of low tax rates now.
- Pension Lump Sum vs. Annuity: A 7.5% payout rate “sounds pretty good,” especially if it includes a cost-of-living adjustment. Annuity can be attractive given longevity and survivor needs, but depends on plan specifics.
“If it's a 7.5% payout plus a COLA, I'd take the payout. That's a good rate.” — Big Al [10:48]
- Keep Monitoring: Variables like market return, part-time work feasibility, and expenses make this an ongoing calculation.
Notable Moment:
“You can only count on so many things. If the market does 6%, I think you’re in good shape ... but this is where it gets tricky because it’s tight.” — Joe Anderson [08:04]
2. Long-Term Care Insurance Premium Increases (Eloise, Connecticut)
[15:20 - 20:27]
Situation:
- 70, divorced, retired, owns her home.
- $57k Social Security, $20k pension/annuities, ~$1.8M invested assets (IRA + Roth).
- Long-term care premiums have more than doubled and will increase 15% annually over the next three years.
- Considering dropping the policy and self-insuring.
Insights & Discussion:
- Keep the policy: At age 70, already insured, premiums—though rising—still offer significant value versus attempting to self-insure now, especially considering potential estate preservation.
- “If you try to buy that policy at 70 today, it’s probably double the price…they want you to drop it. That’s what they want, because they know it’ll pay out and the insurance company will lose. This is the time you can get back at the mean, bad insurance company.” — Joe [20:04]
- If no heirs/estate plan is a factor, self-insuring is more reasonable, but keeping the coverage is generally sound.
- Premiums likely still “pennies on the dollar” compared to benefits received, especially given mounting care costs.
3. Funding College Without Torpedoing Retirement (Eric & Tammy, Baton Rouge)
[20:37 - 34:38]
Situation:
- Couple, 50s, combined ~$250k income, $1.8M retirement savings.
- Two kids: one a college sophomore, one in 10th grade; $90k left in college savings for both.
- Considering modest student loan use to help budget, also weighing using funds earmarked for younger child now for older sibling.
Key Points:
- Student Loans: Reasonable in moderation, impart ownership to student and allow parents to keep contributing enough to retirement to earn employer match.
“You can always take a loan out for college, but you can’t take a loan out for retirement.” — Joe [29:55]
- 529 Use: Okay to treat accounts as interchangeable if needed—leftover funds can easily be reallocated.
- Retirement Trajectory: On track—likely to have $4-5 million by retirement, affording >$120k spending or even more if desired.
Guidance:
- Don’t short retirement savings for college—use loans if necessary, maintaining long-term financial stability.
- “I think you’re doing a really good job of planning…just don’t assume your daughter’s college will be cheaper; plan conservatively.” — Joe [32:40]
4. Capital Gains vs. Roth Conversions Before Moving to a Higher-Tax State (Lana & Sterling, New England)
[35:58 - 48:14]
Situation:
-
Both age 57, plan to retire in ~3 years; will relocate from a 5% state income tax state to one with nearly 10%+ combined state/local tax, including on capital gains.
-
Very diversified asset base:
- ~$670k pre-tax, $1.4M Roth, $500k brokerage, $75k HSA
- Healthy pensions and Social Security to come
- Aggressive (80/20) allocation
-
Want to simplify brokerage holdings and are wondering if it’s better to realize capital gains now in lower-tax state, even at current high incomes, or focus on Roth conversions before the move.
Key Analysis:
- Taxes: Current state does not tax capital gains, but destination state does (as ordinary income).
- Strategy: Prefer harvesting gains now over high-level Roth conversions unless you'd otherwise lose a valuable bracket window.
“I wouldn't do Roth conversions in the 32% bracket when you'll be in the 24 when you retire.” — Big Al [43:42]
- Broader View: Not necessary to “over-tweak.” Already well-diversified by tax type. Don’t get too focused on leaving assets for step-up basis—use them as needed; you may need the money for your own retirement.
- Rebalance: If you want to consolidate your brokerage account, consider tax-gain harvesting now to take advantage of the no-state-tax window. Don’t trigger extra tax just to optimize holdings unless benefits are clear.
“They’ve done a great job. They’re diversified. Don’t overthink it or get cute... you can only fine-tune so much.” — Joe [47:52]
Notable Quotes & Moments
- “Thank you for self-censoring.” — Andi Last joking as Joe reads a colorful listener email. [01:41]
- “You can always take a loan out for college, but you can’t take a loan out for retirement.” — Joe Anderson [29:55]
- “Most people have very little money in a Roth. You have $1.5M already… I would not worry about the capital gains tax; you could tax gain harvest if worried about the state tax.” — Joe Anderson [47:22]
- “If it's 7.5% payout plus a cost of living adjustment, I would take the payout. That's a good rate.” — Big Al [10:48]
- “They want you to drop it. That’s what they want… because they know it’s going to pay out and the insurance company is going to lose. This is the time you can get back at the mean bad insurance company.” — Joe Anderson (on LTC insurance) [20:04]
Timestamps for Major Segments
- Pre-tax vs. Roth and Pension Elections (Al & Peggy): 01:18 – 13:07
- Long-term Care Premium Increases (Eloise): 15:20 – 20:27
- Kids’ College Funding/Student Loans (Eric & Tammy): 20:37 – 34:38
- Capital Gains vs. Roth Conversions Before Move (Lana & Sterling): 35:58 – 48:14
Tone & Style
As always, Joe and Big Al deliver targeted, actionable financial advice in a style that’s both irreverent and deeply knowledgeable. Jokes about “Captain in my Pepsi Zero,” dog ashes, and being called “Joel” or “John” keep things light amid the technical spitballing. Their advice is grounded, emphasizing flexibility, keeping a long-term view, and avoiding overreacting to 'the noise'—with each question answered thoroughly, yet accessibly.
Summary Takeaway
Protecting your future from rising costs and unknowns isn’t about predicting them all—it’s about putting a flexible plan in place. Maximize your low-tax Roth and capital gain windows, don’t put college ahead of retirement, and don’t abandon good insurance once you’ve earned it. Overthinking the details or getting “too cute” usually hurts more than it helps. As Joe and Big Al would say, keep saving, keep spitballing, and don’t lose your sense of humor along the way.