What Retiring With $6 Million Really Looks Like - 549

Summary

Your Money, Your Wealth: What Retiring With $6 Million Really Looks Like (Ep. 549)

Date: September 30, 2025
Hosts: Joe Anderson, CFP® & Alan "Big Al" Clopine, CPA
Producer: Andi Last

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Episode Overview

In this episode, Joe and Big Al dive into what it really looks like to retire with $6 million, breaking down the realities behind popular withdrawal strategies like the 4% rule and the "guardrails" approach. The hosts answer listener questions about sustainable withdrawal rates, bridging income gaps before Social Security, optimizing Roth conversions amid state tax changes, and increasing spending for lifestyle upgrades. True to their reputation, the mix of sharp advice and lighthearted banter makes financial planning accessible and, yes, even fun.

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Key Discussion Points & Insights

4% Rule vs. Guardrails Withdrawal Strategy

• Listener Bill's Comment (01:22):
  Bill challenges the classic 4% rule, asserting, "No one spends 4% plus inflation every year. The 4% rule is a rule of thumb, not a financial plan."
• Joe & Al's Take (02:00–04:11):
  • The 4% rule is only a starting point, never a full financial plan. "All it is, is a rule of thumb to see how much you need to save. That's really what this is all about," notes Al (02:00).
  • The real risk is “sequence of return risk” – the danger of bad markets early in retirement when you’re withdrawing money.
  • The "guardrails" strategy is gaining traction for dynamically adjusting withdrawals based on market performance, allowing for higher spending in good years and lower in bad years. "I like the guardrail strategy just fine. I think it's more achievable," says Al (03:32).

Spitball: Joe at the Beach’s Withdrawal Limit

• Case Summary (04:11–06:51):
  Listener "Joe at the Beach," a retired DIY investor, wants to know his “upper limit for yearly spend.” He’s 69, recently retired (not by choice), and waiting to start Social Security. Portfolio: $2.5M brokerage, $500K muni bonds, $400K Roth, $2M IRA, $265K inherited annuity, two North Carolina homes (one with $800K mortgage).
• Joe & Al’s Analysis (07:05–08:04):
  • 4% of his $5.7M “liquid assets” = ~$225K/year, add Social Security for ~$300K as a “max” (07:05).
  • “Can you spend that each and every year? No, it depends upon the market and your own situation,” cautions Al (07:39).
• Big Al’s Philosophy:
  • “There’s a peace of mind in knowing what that max spend is—not that I’m going to go there. It’s just nice to know.” (10:14)
• Joe’s Perspective:
  • Focus on the retirement lifestyle you want first, then work backwards to set a spending plan—don’t necessarily redline your portfolio for the maximum (08:04).

Memorable Quote

“It’s planning. It’s a process, not a product. ...The day you plug the numbers into your spreadsheet, the numbers are wrong, guaranteed.”
— Joe Anderson (11:41)

Spitball: Can Joco in Virginia Bridge to Social Security?

• Case Summary (15:15–17:05):
  • Joco (63) plans to retire at 67, wife (58), $1.6M in traditional 401k/IRA, $100K Roth, $100K brokerage, $50K cash. Desires $100K/year spending, but fixed income (SS + pension) won’t reach $60K until age 70.
• Analysis (18:01–20:47):
  • The needed $100K annual withdrawal for three years (age 67–70) is a ≈5.1% draw rate—acceptable for a short period as Social Security will soon provide most of their needs.
  • Joe: “If you run this through a financial planning software, I think you’d see a pretty high probability of success.” (19:31)

Notable Banter

“You don’t think he has any desire to have a vodka tonic in the winter?”
— Joe Anderson, poking fun at listener's seasonal drink choices (15:16)

• Advice:
  Don’t over-allocate to equities—time to structurally prepare for income needs.

Spitball: Harold & Maude’s Mega Portfolio and Roth Conversion Dilemma

• Case Summary (24:39–27:02):

  • Harold (61) and Maude (69), both retired, have $2.8M brokerage, $4M in IRAs, $800K Roth/HSA, two homes (CO & CA). Considering moving from CO (low tax) to CA (high tax). Spending $160K/year, want to increase for family/gifting.
  • Maude’s Social Security is discretionary (goes to grandkids).

• Main Questions:

  1. Roth Conversion Timing: Accelerate conversions before moving to CA? To what bracket—24%, 32%, 35%? How much ($) should be converted from total IRAs?
  2. How much more can they safely spend annually?
  3. Should they convert Maude's IRA first?

• Joe & Al’s Advice (29:34–32:20):

  • Roth Conversions: Convert up to the top of the 24% federal bracket before moving to California; the state differential isn’t worth going higher.
    “Would I convert into the 32 to save 5% on state tax? No. I would just stick to the 24,” Big Al (30:07).
  • Which IRA to Convert? Start with Maude’s, as she’ll hit RMDs first (31:00).
  • Spending Headroom: 4% of their $7.6M (excluding real estate) = ~$300K/year. “You’re at $160[k]; you could double the amount of spending.” (31:32)
  • Legacy Plan: “Let ‘em grind it out for themselves”—suggesting all resources should be focused on lifetime enjoyment, not inheritance.

Quick-fire Wisdom

• Consider taxes, market conditions, health, and goals when reviewing withdrawal plans.
• “Retirement isn’t a set-it-and-forget-it destination. It’s a journey,” and requires ongoing, proactive planning.

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Notable Quotes & Moments

• On Planning vs. Plans:
  “The day you print [your financial plan] or plug the numbers into your spreadsheet, the numbers are wrong, guaranteed... That’s why you update it on an ongoing basis.”
  — Joe Anderson (11:41)

• On Withdrawal Rules:
  “If the market’s zooming every year, then go for it. But you’re going to have years the market’s going to pull back and maybe you want to spend a little bit less that year.”
  — Big Al Clopine (03:32)

• Comedic Highlight:
  “No, I’m spending more on Mai Tais. I’m spending more on travel, I’ll tell you that.”
  — Big Al, on whether his aging has brought higher medical expenses or just more fun (14:32)

• On Planning for the Unknown:
  “You can write all sorts of what-ifs. What if this, what if that—it's all worthless because you don’t really know what’s going to happen.”
  — Joe Anderson (11:41)

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Important Timestamps

| Topic/Question | Timestamp | |---------------------------------|-------------------| | 4% Rule vs. Guardrails | 01:22–04:11 | | "Joe at the Beach" Withdrawal | 04:11–14:09 | | Financial Planning Process | 11:41–14:09 | | Joco in Virginia's Income Gap | 15:13–20:47 | | Harold & Maude's Roth Gameplan | 21:29–32:20 | | Spending Headroom Calculation | 31:05–32:15 |

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Overall Tone & Takeaways

• Language/Tone:
  Down-to-earth, irreverent, humorous, and highly practical with a strong emphasis on planning for uncertainty and adapting as you go.
• Key Takeaway:
  Wealth brings options, not guarantees. Rules of thumb (4% rule, guardrails) are starting points, not substitutes for regular, personal planning. Big portfolios should still use moderation, keep spending in check, and plan for what can’t be controlled (market risk, health, longevity).

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Closing Thoughts

Joe and Big Al excel at demystifying retirement for both high-net-worth and everyday listeners. By unpacking strategies with humor and healthy skepticism—“It’s a process, not a product”—they challenge you to keep your plan flexible, focused on your genuine goals, and ready for constant adjustment. As always, they recommend working with a qualified, fee-only advisor for personalized advice, but provide plenty of actionable “spitballs” for motivated DIYers and the simply curious.

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Transcript

[A]

Today on youn Money, you, wealth podcast number 549, a listener comment on one of our YouTube videos sparks a dialogue between Joe and Big al on the 4% rule versus the guardrails withdrawal strategy. Joe at the beach is managing his portfolio on his own, but he wants the fella's take on his upper limit for yearly spending so he can keep drinking his old fashions. Can Joe Co in Virginia afford to bridge the gap between retiring at 67 and taking Social Security at age 70? Plus, Joe and Big Al spitball on whether Harold and Maude should accelerate Roth conversions into high tax brackets before moving from low tax Colorado to high tax California. And how much more than their current annual spend can they afford for family vacations and travel? I'm executive producer Andi Last, and here are the hosts of youf Money, you, Wealth, Joe Anderson, cfp and Big Al Clopine, cpa.

[B]

Aloha. Big Aloha.

[C]

As usual, it's wonderful out here. It's, it's summer. It's a little warm, but the water is great. Our listeners do. You don't Addie cares.

[A]

I care. I've got rain here in Australia. It's raining and cold and it's also tomorrow, so. Yeah, and I know nobody cares about that either.

[B]

All over the world right here broadcasting.

[C]

But see, I care about that, Andy. So we'll just leave Joe out. Let's just have a chat, you and me.

[A]

Perfect.

[B]

All right. We're answering your money questions from across the globe here today. We got Bill, he put a comment in on one of our YouTube videos. He goes, analyze your budget and spending instead of trying to live off of 4% a year. No one spends 4% plus inflation every year. The 4% rule is a rule of thumb, not a financial plan. I don't think we ever said it was a financial plan. And I think every time I've ever Talked about the 4% rule, we, we said it's a rule of thumb to determine how much money that you should have from a ballpark perspective. It's not a withdrawal strategy.

[C]

I think we've said that every single time. And if it's your withdrawal strategy, it's a poor one because all it is, it's a rule of thumb to see how much you need to save. That's really what this is all about, right?

[B]

Because here's another example is that sometimes people retire with a certain dollar and they spend way too much because they don't really understand, hey, the market does 10% a year. So of course I could probably spend 7, 8%, 10%, 12% even. It's the sequence of return risk that really is a giant risk in retirement as you're taking distributions from your portfolio. So, yeah, you probably don't want to take more than 4%, but some years you can take a heck of a lot more. Some years you probably want to take less. It depends on your age, depends on what your investments are. Depends on a lot of different things. So I agree with him. Him. It's not a great financial strategy. And if it is your financial strategy, you should probably change it. He goes on to say guardrails. Oh, boy.

[C]

I like guardrails.

[B]

I love guardrails.

[C]

Yeah. Especially when I'm bowling. It's much more helpful.

[B]

Seems to be getting some traction. It's much more efficient and leads to a higher withdrawal rate, especially early in retirement, in the infamous Go Go years. You think Bill's in the business?

[C]

I would say so.

[A]

Bill comments a lot on our YouTube channel.

[C]

Yeah, yeah. Anyway, I like the guardrail system. Basically, what it's saying is have an upper and a lower limit. Maybe 4% is kind of the baseline. Maybe you spend as much as 5 or as low as 3. If you can't necessarily spend 5% every year unless the market is zooming every year, then go for it. But you're going to have years where the market's going to pull back and maybe you want to spend a little bit less than that year. So it's. No, I like the guardrail strategy just fine. I think it's more achievable than trying to say 4% in the year of retirement plus inflation, and that's it. I don't think that's a good strategy at all.

[B]

No. All right, cool. Let's move on to Joe at the beach. Hey, Andy, Big Al and Joe. This is Joe at the Beach. I love the podcast and listen to or read the transcripts of you guys regularly. I'm a past order client.

[A]

That's actually a typo on my part because this was originally a voice message, which I didn't have queued up to play for you guys, and when I pulled the transcript of it, I changed that to O instead of P. So it's pure. I'm a past pure client.

[B]

Okay. I got an assessment six years ago, but now I manage my own investments, and my question is, what is my upper limit of yearly spend given my current investments? I don't know. Joe, you left. You're at the beach. You're managing your own stuff. You should have realized that before you left me. Well, of course I've run the numbers, got multiple spreadsheets, but want to check with the experts. My wife and I are 69. I recently left my job not by my own choice. Oh, imagine that. Probably had a telling your boss you do his job a lot better.

[C]

Well, I think he ran the numbers and realized he could retire and just he didn't have the same energy anymore.

[B]

Well, he says not by my choice, but that's the way it goes. And now looking at being fully retired and maybe some consulting on the side, but I'm not counting on it. I'm waiting until next February to start Social Security. My wife is taking Social Security now, but I want to roll her into my spousal benefits so that this would provide me with the fixed income that we're going to need forward, which I estimate to be about $80,000 per year. So here are the numbers. I've got $2.5 million in a brokerage account. It's about 90% equities in low cost ETFs, $500,000 in a taxable bond account, completely composed of municipal bonds, $400,000 in my Roth, and I'm actively doing Roth IRA conversions and staying in that 24% tax bracket. $2 million in an IRA, but $400,000 of that is in bonds. And I have an inherited annuity with $265,000 from which I'm already taking RMDs. We have two homes, both in North Carolina. In my beach house, still have $800,000 mortgage, so about 20 more years to go on that mortgage. Finally, my wife and I enjoy a good bourbon. A bourbon old fashioned. And I love a good Merlot. Many thanks. Okay, well, the guy's got a ton of cash.

[C]

He does.

[B]

And $80,000 is going to cover his living expenses, it sounds like. And so he's looking at how much can he spend from this portfolio at age 70.

[C]

Yeah. So to me, and I'll use the 4% rule, but again, it's a guideline. This is not a financial plan. It's a guideline. Right. So you take 4% of your liquid assets, which is about 5.7 million. 4% of that's 225,000. Add your Social Security, 305,000. So somewhere around 300,000 was probably the. Probably the number. Can you spend that each and every year? No, it depends upon the market and your own situation. Circumstance, what's going on. But 300,000, I would say Joe, is.

[B]

Roughly the max spend.

[C]

Roughly the number that you want to think about? Yep. Well, actually, you could probably spend more in a couple years. A few years, Right. You know, using that guardrail strategy that we just talked about, maybe you could do 5% one year and 3% another. But I would want to be somewhere around 300,000 or preferably below. I always like to be below spending limits just to give myself a cushion. That's how I think about it.

[B]

Yeah. I don't know. Is that I think you do things maybe a little bit differently as you approach retirement. Now, I'm not saying that you are approaching retirement. Well, are you looking to find out what is the maximum amount of dollars that you can spend from your portfolio? Or is it like, what do I really want to do? What is my goals? How much money do I want to spend on the things that I want to do, to have the lifestyle that I want? And then you start there. I think that's what I would do because it's a wide open slate. I think when we're working, we're constrained to certain budgets, depending on what our paycheck is. Joe at the beach has done a phenomenal job of. Of saving money, and I think it was all because of Boz helping him get on the right track. But then he fired us six years ago.

[C]

It was that original assessment got him on the right path.

[B]

So here's what I would do, Joe. It's like, all right, well, here I have a beach house, and I have a regular house. I live in North Carolina. I like to play golf. I like to go to the beach. I like to do this, I like to do that. I want to travel more, I want to do whatever. And then just start. You and your spouse and wife just think about, all right, well, what do we want to do? And they kind of put a budget around it. I'm sure he's got spreadsheets. I'm sure he's got all sorts of things he says he does to really map out what your retirement life is going to be. What do you want that to look like? And then from there, you back it out and say, all right, how much is that going to cost us? He's 69 years old. Maybe over the next 10 years, you really want to do a lot of different things. And so your budget might be a little bit higher, but then when you get into your 80s, you might slow down a little bit. I don't know. Then you gotta plan for healthcare. You gotta plan for this and that, Whatever. I mean, that's what I would do. And Versus, like, what's the maximum amount of money that I can spend? And let me just redline the hell out of my portfolio and just make me, you know, he's 90% equities, he's got a few bonds. And I think you're doing this a little bit differently than what we would advise clients or how we would spitball this.

[C]

Yeah. So that makes sense to a point. So I'm closer to retirement than you, and I think there's kind of a peace of mind in knowing. What's that, Max? Not that I'm going to go there. Right. But what if my plan calls for a couple trips to Hawaii and one trip over to Europe? And.

[B]

Oh, that's not you, Al. You have six trips to Europe. You're going to Hawaii every other weeks.

[C]

Speaking. Speaking. Speaking hypothetically. But what.

[B]

What if.

[C]

What if that was my goal, just as you said. And, and I worked out the budget. Yeah. And it's like, oh, I could do a third trip to Hawaii. I could even. I could do a second trip to Europe. Maybe I'll do it this year. But it's not that I'm going to spend that every year. It's just nice. I think there's a peace of mind, comfort in knowing what you're kind of what the max spend is, not that you're going to do it every year. I think, I think you're right. I don't think you start from there. I think. I think you do exactly what you said, but I don't. I think it's actually just fine to know. You know, I better not go over this, otherwise I could be causing some trouble later on.

[A]

Do you take into account, like at the start of it, when you're creating that financial plan, what if I do get fired, you know, not of my own desire, I end up quitting work? Or what if I have a health care issue in retirement? Does that get built into the financial plan? Or, you know, do you hope for the best? Do you spend as little as possible?

[B]

It's planning. It's a process. It's not a product. And I think that's where people get confused. I mean, you could write all sorts of different what ifs, what if this, what if that, what if this, all of that is worthless because you really don't know what's going to happen. It could give you a peace of mind of saying, you know, what if I die at 92 and I'm 68, I'm going to be golden. It doesn't matter. I mean, there's so many things that you need to be taking a look at each and every year, given taxes, given the markets, given spending, given goals. So then it's just kind of updating and going through it ongoing versus putting together one thing with all these different scenarios. It's a good starting point to start the process if you want to look at all of those things to give you some peace of mind. Sure. But I think people get confused of what planning is and what a finance. I mean, the last two questions came in. It's like, well, that's not a financial plan. I don't even know what a financial plan is. I know what financial planning is, but not necessarily a product because the day you print it or the day you plug the numbers into your spreadsheet or whatever, the numbers are wrong, guaranteed because you can only use straight line assumptions in regards to rate of return, inflation and so on. And we know for a fact that those numbers are going to be wrong. It gives you a guideline, but that's why you want to update and review it on an ongoing basis because you don't. We can't tell the future.

[C]

Yeah, I think that's right and I think that's a good point, Andy, because we really don't know. And I think by and large you have your plan, you have backup plans, plan B, plan C for these kinds of things. But I think as a general rule we look at expenses, what we're spending now, and many people want to keep their same lifestyle, in some cases increase their lifestyle. Can they do that based upon their assets? Maybe yes, maybe no. Depending upon how much they've saved, they get to their 80s. Maybe they don't spend as much traveling, but maybe they spend more in healthcare. It's impossible to predict that. But sometimes you hear people say, well, by the time I'm 80, I'm going to be spending a lot less, so I can spend a lot more now. Well, that may be true, but maybe you'll spend just as much if not more because of medical. I don't really like to do that. Spend a whole bunch of my go go years because I'm not going to spend anything later. I think that's a little bit short sighted.

[A]

Look at Joe go go years and the eyes just roll back in his head.

[C]

I'm just quoting our.

[A]

Just quoting Joe at the beach.

[C]

Yeah.

[A]

No, that was Bill.

[C]

I guess that was Bill. That was Bill. I'm carrying Bill's on. What's wrong with go go slow go and no go?

[B]

Alan, are you spending more money on medical nowadays?

[C]

No, I'm spending more on my ties. I'm spending more on travel, I'll tell you that.

[A]

Feeling a little stressed after hearing the talk about sequence of returns risk and why the 4% rule might not cut it for you. You need a plan, not just a rule of thumb. Our Withdrawal Strategy Guide will walk you through the variables that determine a sustainable spending plan that can adapt when the market gets choppy, as well as how to pull from the right accounts, be it your 401k, your Roth or your brokerage in the right order to make your bridge to retirement spending as sturdy as possible. Learn how to create a flexible plan that works for your unique life. Grab your free copy of the Withdrawal Strategy Guide by clicking or tapping the link in the episode Description this is.

[B]

Another withdrawal rate question I'm guessing, right?

[A]

Correct.

[B]

Joco in Virginia, but will retire to Florida. I'm 63. Wife's 58. Drink cabs in the winter and vodka tonics in the summer. You don't think he has got any desire to have a vodka tonic in the winter?

[C]

Apparently not. It's kind of black and white one or the other.

[B]

Or like a cab at dinner in the summer.

[C]

I'm sure he's done it, but this is his preference. This is plan A. Plan B is habitatonic in the winter.

[A]

It's a flexible thing. He has to review it every year.

[C]

Or every month, whatever.

[B]

Sure. Wife drinks of choices, little white wine and or a margarita. All right, Joko. He's looking to retire in four years at age 67, but not take Social Security until age 70. All right. Retirement spend will be approximately $100,000. Current savings is 1.6 million in a traditional 401, $100,000 in a Roth, $100,000 in a brokerage. She's got $50,000 in cash at 70. We should have Social Security in a small pension totaling $60,000 a year. Can we safely withdraw money from retirement accounts from age 67 to 70 to cover the gap between spend and fixed income? Also, should the next 40 years put savings in a brokerage account instead of the retirement account? Thank you. Enjoy the podcast. So he wants to spend $100,000. He's going to retire at 67.

[C]

Yep.

[B]

So he's got age 67, 68, 69. What's the wife's age? Oh, he's 63 and she's 58.

[C]

Correct.

[B]

So we got to bridge the gap for to age 70. His age 70 is 60,000. Is that all in?

[A]

Well, it says that 60,000 is including their Social Security and their small pension totaling 60,000.

[B]

Yeah, but is that both of their Social Security? Because she's several years younger than him.

[A]

That's what it looks like. At age 70, we should have Social Security and a small pension totaling 60,000 a year in fixed income. It sounds like they're not going to have that 60k a year until she's 50. Until she's 70. So 12 years.

[B]

So then he is 75 years of age.

[C]

Well, unless. Unless she takes it the spousal early. I think that's what he's thinking. She'll probably start when he starts collecting his.

[B]

So when he turns age 60, at his age 70, he's going to claim his benefit, she's going to claim hers at whatever age he is at that point, and then that's going to total 60.

[C]

That's how I read it, sure.

[B]

Okay, so they're going to be $40,000 short. At his age 70, he's got $2 million, roughly total liquid assets.

[C]

Yeah, $1,600,000. I went four years, 6%. I don't know how much he's adding. I just said $20,000. He ends up about $2,100,000. So year two is probably about right. And if he's spending $100,000.

[B]

Well, hold on. He's got 1,600,000 in the traditional 401 and Ira, he's got another $100,000 in Roth, so that's $1,700,000. He's got $100,000 in brokerage. That's 1,800,000, plus $50,000 in cash. So that's $1,085,000.

[C]

Oh, you're right. Okay, well, then let's make it $2,300,000. We'll make it 2,300,000. But if he wants to take $100,000 out with inflation, it's probably about a 5%, 5.1%, 5.2% distribution rate. I'm okay with that for three years because then the Social Security comes in. I think they'll be just fine. But I hate answering a question. Can we safely withdraw money? Well, it depends upon the market and a lot of other factors.

[B]

Yeah.

[C]

In all likelihood, you can, but it depends on various factors, like what the market's doing, and if you can stay within the spending limit, you retire and all of a sudden now you want to spend more. You know, health. All kinds of things can factor into this. But based upon just the straight numbers, I think, Joe, this is probably okay.

[B]

Yeah, no, I'm with you. I mean, let's say if he doesn't invest another dime and then he just keeps everything in cash. I think I still feel pretty good about him taking $300,000 out of the portfolio over those three years and then he's 70, 40,000. It's still a fairly low distribution rate, but it's close. I mean, a lot of things can factor here, but yeah, if you would run this through a financial planning software, Monte Carlo, I mean, all of that, I think it would give him a pretty high probability of success given all sorts of different ranges of returns and depending on how he's invested. So yeah, I think he's done a great job. Savings, I don't think they spend outlandishly. They're gonna have 60% of their living expenses covered by Social Security. They just gotta bridge that gap for three years. Yeah, I would just wanna look at how you can't be 100% equities. You need to start toning that portfolio down, ready to create the income that you need. But yeah, I'm with you. Alright. I think Joe Coe is okay.

[C]

Joco. Yep.

[A]

If all this talk about guardrails and market volatility in tax brackets makes you feel like you're drowning in a sea of uncertainty, you're not alone. Retirement isn't a set it and forget it destination. It's a journey that you have to navigate with proactive planning to keep you on course. This week on YMYW tv, Joe and Big Al show you how to grab the ship's wheel and navigate the risks to keep your retirement plan afloat. Watch how to cruise into your retirement and download the free companion Cruising into Retirement checklist and guide. This guide is only available for a limited time, so get yours before this Friday. Click the links in the episode description now to watch and to download the checklist before this offer sails off into the sunset.

[B]

All right, so let's. We got Harold and Mon.

[C]

Oh, okay.

[A]

You know that reference, right?

[B]

Brand new.

[C]

That's a, that's a movie from the 70s.

[A]

1971. He's like 20 years old, she's 79 years old. And they fall in love.

[B]

One more time.

[A]

He's 20, she's 79, and they fall in love. He apparently is obsessed with death and she helps him to see that, you know, life is worth living. And the only reason I know about that is because I went through a Cat Stevens phase where I really loved his music and he did the soundtrack for the movie.

[C]

Oh, he did? Okay.

[B]

No, never.

[C]

Yeah, never. Heard of it now you want to watch it?

[B]

No.

[C]

Sounds great, doesn't it?

[B]

No, I do not. It's not going to be on my rewatchable list.

[A]

I have a feeling that Maude's not going to be very happy about this because Harold is only 61 in this case of this emailer and Maude is 69. So there's only an eight year difference between them. As opposed to 60 years in the movie.

[B]

60 years.

[C]

That's a lot, right? Yeah.

[B]

All right.

[C]

That's. That's. That'd be more than I've ever heard of.

[B]

Yeah. All right. So they're both currently retired. Currently residing in Durango. Nice, Colorado.

[C]

Like you've been to Durango?

[B]

No, never been.

[C]

It's a lovely city.

[B]

Is it by Boulder?

[C]

Is it now?

[B]

It's Denver.

[C]

It's by Four Corners. It's right on the southern, south, southwestern edge of Colorado.

[B]

Got it. Four Corners. That's where. Four states.

[C]

You can. You can stand in four states with two arms and two legs. It's quite, it's quite the thing.

[B]

You got a picture of that?

[C]

Oh, yeah, yeah.

[A]

I do too.

[C]

You just act like a spider. Yeah, one. One limb in each. Each state.

[B]

Let's see, what does mod drive? She drives a 2021 Lexus RX350. Yeah. Drinks a little Pinot Grio and has a cocker spaniel named Joe. Joe, AKA Joe Cocker. All right. Love it.

[C]

Yep.

[B]

Harold drives a 2020 Schwinn median tricycle. Meridian.

[C]

Meridian.

[B]

What the hell?

[C]

I think that's like a three wheel bike. Maybe he's got.

[B]

All right, that's cool. He buys his silver bullets by the 30 pack.

[C]

Put some on the back of the tricycle. Maybe.

[B]

You got it. And it has a well trained pet goldfish named Frank. Very trained.

[C]

Yeah.

[B]

Love it.

[C]

I don't know how you train a goldfish.

[B]

I don't think you do.

[C]

We had goldfishes when I was younger.

[B]

Yeah. And they like the toilet faster than.

[C]

They don't last long. And what's weird is when the mother wants to has the babies, she starts eating them.

[B]

I've never had a goldfish that long to see a pregnant.

[C]

Yeah.

[B]

Goldfish.

[C]

There's this little plastic thing you put in the tank so the, the little babies can swim at the bottom and the mother can't get them. It's the weirdest thing.

[B]

Okay. Wow. Learned something.

[C]

I was going to say not the.

[A]

Kind of thing I expect to learn from Big Al.

[B]

Yeah, There we go. And goldfish baby safety lesson.

[C]

And I Went on one, I would say. Yeah. You can't train them, as far as I know.

[B]

All right. Okay. We'd love a little spitball insight on our situation here. The numbers to assist you. Financial holdings brokerage account, about $2.8 million. All right, now we're talking big dollars.

[C]

Yeah. Right.

[B]

Wow. Traditional IRA account holdings, four mil.

[C]

Oh, boy.

[B]

Okay, Harold's got two and a half. Mod's got $1,600,000. Roth HSA accounts totaling $800,000. Yeah. Overall, 75, 25. Stock bonds fit with stock bonds split with equities consisting primary of low cost mutual funds. ETFs, bonds are. Got a little Treasury CDs and some bond funds. Okay. They got a real estate primary residence in Durango, Colorado. 750,000 with no mortgage. Second residence in San Marcos, California. Just right up the road here, Right?

[C]

Yeah. Yep.

[B]

Valued at $1,500,000 with no mortgage. Real estate holdings are our backup plan for long term care should the need arise. We got a few revenue streams. MOD currently draws Social Security. However, these funds are reserved for grandchildren and other discretionary items not included in the family budget. Interesting. Okay, so MOD is like, this is my money. I'm going to do whatever. Don't touch it. I'll put it in my own account for the kids.

[A]

Yeah, I'm spoiling the grandkids.

[B]

And Harold, don't even worry about it.

[C]

Yeah, don't even think about it.

[B]

I've seen this before.

[C]

I have too, actually.

[B]

Harold is projected to draw Social Security of $45,000 annually at 67 or 56 if deferred until age 70. In addition, there is an income stream from a personal loan of $50,000 a year for the next seven years, acting as a bridge. All right, annual spending. Currently annual spending is $160,000 pre tax and projected to increase 4% annually. Currently AGI is approximately 130. Now. And for the projected near future, before any Roth conversions, capital gains and possible RMDs, see number three below. Legacy plans, none. Let them grind it out for themselves.

[C]

Okay.

[B]

All right.

[A]

That's why Maude is keeping her Social Security, to hand it off to the.

[C]

Grandkids because Harold's like, she's got her own plan.

[B]

It's Harold or mod. I feel like it's mod right in there.

[C]

I'm going to say mod too, but it's not exactly clear.

[B]

Yeah, because she kind of switches from Harold. Maybe they're both doing it. A joint email.

[C]

Yeah.

[B]

Okay. All right, so let me understand. They want to spend 160. But their AGI is 130. The 130 comes from $50,000 a year. Where's the other income coming from? Because mod is not.

[C]

Well, they've got brokerage accounts, 2.8 million, probably dividends.

[B]

But that AGI, 130s, including mod, Social Security.

[C]

Oh, sure, yeah.

[B]

But.

[C]

And whatever interest in dividends they have and.

[B]

Okay. All right. Yeah, sounds good. Just trying to see what happened, how we got there.

[C]

Yeah.

[B]

What they're pulling to take the additional dollars.

[C]

Yeah. And maybe she's taken some from the ira. I don't know.

[B]

Okay. Number one, we would love the inside on Roth conversion strategy since we are planning on changing of residency from Colorado 4.4 to California. Yeah. 13% here sometime around 2030. These guys are planners. Yeah. Given the difference in state tax, both exclude Social Security income. We believe we need to accelerate our conversions in the next five years. But by how much? To the top of the 32% tax bracket. 35 higher. Also. What percent of our total IRA bucket should we aim to convert? 75%, 80%, 90%.

[C]

Pretty good goal if you get there.

[B]

That's aggressive. Super aggressive. All right. We would like to also increase our annual spending to fund family vacation, tuition assistance, travel, and gifts. Yeah, you really want them to grind it out? Let's all go.

[C]

We're gonna. We're gonna spend it on you while we're live. And then there's nothing left.

[B]

Yeah, perfect. We believe There is headroom versus our current pre tax budget of 160. How much headroom? All right, should we do Roth conversion from mods IRA first, given the age differential, or reduce the postponer RMD as well, optimizing Roth conversions. If so, to what extent? Cheers. Thanks advance for the spitball and as well as the education entertainment. Have a great day. Cool. All right.

[C]

Okay, well, let's. How do we tackle the first one? So they're moving from Colorado, which is a lower tax state than California. 13.3 is the highest rate in California, but if we touch that. No, see, here's the thing. If your income is under 500,000, 9.3 is really the number. Right. So that's kind of what you look at. So 9.3 to 4.4. So what's that? That's a 5% differential. Would I convert into the 32 to save 5% on state tax? No. Yeah, I would just stick to the 24.

[B]

I would agree with you 100%.

[C]

Yep.

[B]

So, yeah, I would just convert to the top of the 24% tax bracket. And whatever that. You get out. You get out.

[C]

Yeah, yeah, exactly. I wouldn't even look at a goal. Just do as much as you can.

[B]

Yeah, yeah. It's probably going to be less than you want, but you got $4 million in tax deferred accounts.

[C]

Right.

[B]

So there's 62 and 69. 61 and 69. You start converting mods. Because she's going to hit her RMD first.

[C]

Yeah.

[B]

She'll get $1,600,000.

[C]

Yeah. Hers will be at 73, so that's four years. His will be at 65, which is 14 years.

[B]

He's got 14 years.

[C]

Yeah. 75. I mean. Yep.

[B]

So Maud, convert yours to the top of the 24, the 1.6. He is as much as you can get out there. He's got 14 years for his.

[C]

Yeah, yeah. So that's kind of an easy one.

[B]

Yep.

[C]

And then.

[B]

Yeah. How much headroom do they have?

[C]

You can spend. Well, just. Just take your liquid assets. 7.6 million times 4%. Just a rough number. That's about 300,000.

[B]

So I would say they could spend because they have Social Security and everything else. I don't know what 370 could spend. Thousand dollars.

[C]

His won't kick until later. So know if you want to be safe. 250. But I'd be pretty comfortable with 300,000.

[B]

Yeah. 350. 300.

[C]

Yeah.

[B]

You're at 160. So you could double the amount of spending.

[C]

About double.

[B]

Yeah. And maybe they don't, you know, they're going to go on the family trips. They're going to do this, they're going to do that. You know, maybe you do that every couple of years.

[C]

Not every year.

[B]

160. And then one year you do a big family trip, go to Disney World or whatever that you want to do.

[C]

Yeah.

[B]

So, yeah, it's nothing too extravagant. Roth conversion. Don't worry about the tax rates because you're already in the 24 to go to the 32.

[C]

Yeah. That's an 8% increase. And you're probably only going to be in a 5% increase bracket in California.

[B]

You're going to pay way more tax there.

[C]

Yeah, don't do that.

[B]

Yep. 24% tax bracket. You can spend.

[C]

$300,000 plus.

[B]

Yeah. Depends. Yeah, I don't know. I think they're. They're doing awesome.

[C]

Doing great. Yep.

[B]

That's. I think that's all we got for Harold and Mod. Appreciate everyone listening once again.

[C]

Yeah. Great show. Good job, J.

[B]

Great job. Great job. Andy. How was Your birthday.

[A]

It was awesome. Had a great time. Thank you.

[B]

What did you do?

[A]

I went to the Adelaide Botanic Garden and I saw where all the bats in Adelaide Roost. 50,000 bats. It was amazing. That's my kind of day.

[B]

Are you speaking English? What are you talking?

[A]

You know what bats are, right?

[B]

Oh, like an animal?

[A]

Like the bats? Yes. That fly?

[B]

Yes.

[A]

There is a camp of 50,000 bats that lives in Adelaide in the Adelaide Botanic Garden.

[C]

Adelaide?

[B]

Yeah.

[A]

I live in the city of Adelaide.

[B]

Okay.

[A]

So the Botanic Garden here in Adelaide. The bats roost in the trees, out in the park, and at sunset every night they all take off at the same time and it's just an amazing natural spectacle.

[B]

Wow.

[A]

Probably right up your alley, Joe.

[B]

I think you're getting an accent.

[A]

Might be.

[B]

Yeah. The body. Beautiful.

[C]

And you got such a good accent.

[B]

I'm going to. Yeah. Books on tape. Going to read audible in my Australian accent.

[C]

I like it. You better. You better start practicing.

[B]

Let's go. All right, we'll see you next week. Show us called your money. You're welcome.

[A]

Next week, Joe and Big Al spitball on the timing for converting pre tax money to Roth for tax free gains for life for Barry in New York, Jerry and Elaine and Alex in Pennsylvania clarifying the age plus 20 rule for contributions and Roth 401k rules for Lisa in San Diego. Thank you so much for being part of the youe Money, you, Wealth family. If you'd like to lend a hand, just spread the word. Tell a friend or a family member about the show or that guy walking the opposite direction when you're listening while you walk your dog. More listeners and viewers means more fun for everyone. Subscribe to us on YouTube to see us in all our glory and goofiness and join us in the conversation in the comments or leave your honest ratings and reviews on Apple podcasts and all the other platforms that accept the them. Those are a huge deal in helping the show to get noticed. Which means these fellas can keep delivering the financial wisdom and barstool chatter that you love. Your money, you, wealth is presented by pure financial advisors. Listening to or watching YMYW is a great way to stay up to date on financial strategies. And a spitball from Joe and Big Al is great to get a general idea if you're on the right path, but let's be real, it's not enough. You've worked hard for your wealth and you deserve a plan that's as unique and smart sophisticated as your portfolio. The experienced pros that pure Financial advisors can help you with the complex tax planning, generational wealth transfer and investment strategies that go way beyond what you can learn on the podcast. It's about moving from general knowledge to specific, actionable steps designed to secure your future. And it's super convenient to meet with the Pure Team face to face at one of our 13 nationwide offices or from the comfort of your own home via Zoom. Don't wait. Click or tap the free Financial Assessment link in the episode description or call 888-994-6257 to schedule your one on one financial assessment. Tell them you heard about it on the youe Money, you Wealth podcast. 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 securities or services discussed are suitable for any investor. As rules and REC 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.