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Joe Anderson
Joe and Big Al focus on Social Security claiming strategies as part of the retirement spitballs today on youn Money, you, wealth podcast number 574. Bijou Plutus and her husband in Massachusetts are 62 and 64 with about a million dollars. Can she retire at 65 and should he claim Social Security early? Dr. Jekyll and Mrs. Hyde in the Twin Cities have about the same at 51 and 49 plus big pensions and high spending. Can they afford to retire early and when should they claim Social Security? Dig Roller Girl in Tennessee are 57 and 58 with about 600k and Digler estimates his Social Security break even is at age 77. Can he collect Social Security early and simply work recreationally? If you're listening in Apple Podcasts right now, do us a favor and leave your honest rating and a review. If you're listening on Amazon, Audible, Castbox, GoodPods, Pandora Player, FM, Podcast Addict, or Podchaser, you can rate us there too. It helps a lot when you do. I'm Executive producer Andi Last, and here are the hosts of youf Money, you, Wealth, Joe Anderson, CFP and Big Al Clopine, cpa.
Listener/Caller
Hello, Joe, Big Al and Andy love your information and entertaining podcast. I know this sounds geeky, but I get a spark of joy when your money or wealth drops into my podcast queue each Tuesday. Wow, geeky.
Joe Anderson
That I do too. That means that something's working.
Big Al Clopine
Sounds lovely, right? All right.
Listener/Caller
Hey, I wanted to request a spitball for some time but have been embarrassed by buying modest numbers compared to most of your listeners. But here it goes. Oh, don't worry about it.
Big Al Clopine
Yeah, don't worry about it at all.
Joe Anderson
And this is from Bijou Plutus in Massachusetts and I. So I had to look that one up. Apparently it's a type of pillow. But also bijou is French for jewel and Plutus is the Greek God of wealth. So this is the jewel of wealth that has written into us.
Listener/Caller
Okay, but it's also a pillow.
Big Al Clopine
Yeah, it could be a pillow that wrote in. Got it. Okay, I think Andy's second description is right.
Listener/Caller
The latter. The latter. I'm 62 and I've worked for the same nonprofit for 30 years. Current salary is $87,000. My husband, age 64, retired a year ago. He has a $20,000 annual pension with a cola and does some part time work that brings in about $50,000. He doesn't plan to. He doesn't plan to this side gig. Okay, hold on.
Joe Anderson
Turn this into a side gig. I think there might be some Words you missed.
Listener/Caller
It doesn't plan to turn this into a side gig, but might scale back as the years progress.
Big Al Clopine
Yeah, that sounds good.
Listener/Caller
All right. Husband and Social Security at 67 will be $25,000. Mine will be $31,000. Thank you for giving us the annual number there too, by the way.
Big Al Clopine
Yes. Pillow for short.
Listener/Caller
All right. My 403, 4% with 4% match is $580,000. My husband's self employed, 401k, just started to contribute $24,000 a year, so that only has $1,000 in it. Combined Roth IRAs are $260,000, always maxing out. High yield savings account is in some I bonds and an emergency fund is 70,000 at no brokerage account. We own our home outright worth about $500,000. No consumer debt, and always try to live within our means. We seem to spend an average of about $84,000 a year. I'm planning to retire at 65, mainly hanging on for the health insurance. If I could afford to pay for health insurance on my own, I might retire and scale back at around 63. But I can't figure out what those costs will be. I also wonder what impact would be retiring two years early and do I have enough in my 403 and the other accounts? Is my plan to retire at 65 even feasible or should I hang on even longer? Would starting hubby Social Security early make sense? Okay, some good questions here.
Big Al Clopine
Great questions.
Listener/Caller
Yep. Yeah, I can already tell. I think they're not bad. They're not.
Big Al Clopine
Yeah, I've done some analysis in which I'll get to in a minute.
Listener/Caller
All right. Okay. I Drive a 2021 Subaru Forester. Where are they from? Seattle?
Big Al Clopine
Oh, no, Massachusetts.
Joe Anderson
Massachusetts.
Listener/Caller
All right. And my husband drives a 2023 Toyota Highlander. He likes any type of light beer as long as it's cold. And I like an occasional glass of wine. We only have one kid fully launched in one geriatric cat. Oh, killed that one.
Big Al Clopine
You killed it?
Listener/Caller
I didn't get it.
Big Al Clopine
I was ready to pronounce it.
Listener/Caller
Geriatric. Got it. Thanks for any insights you might be able to share. Respectably yours. Bayou Plutus in Massachusetts.
Big Al Clopine
Yeah, I thought you were going to say Jeria trick.
Listener/Caller
Oh, man. I looked at it, I was like, oh, boy.
Big Al Clopine
Oh, wait.
Listener/Caller
It could be tricky.
Big Al Clopine
Got her done.
Listener/Caller
All right, so they want to live off of $84,000 a year. They're 62, he's 64. She would like to work until full retirement age or at least Until Medicare comes in because she can't figure out how to pay for that health insurance. So $84,000 plus health insurance. Probably close to $100,000 if she wanted to hang it up today.
Big Al Clopine
Yeah, probably so.
Listener/Caller
So what say you, Big Al?
Big Al Clopine
Well, first of all, I would say please, please don't be embarrassed. These are great numbers.
Listener/Caller
Huge bucks looking assets.
Big Al Clopine
It's a million bucks of liquid, half a million in home ownership. So here's what I did. I took 961,000. That's what they got currently. I went forward three years, 6%. I added about 48,000 a year based upon what they're saving and I end up with 1.3 million. Then I look at the spend 84,000, 3% inflation. Three years, it's about 92,000. Subtract out fixed income, which is pension, husband's Social Security. I think husband should take it at full retirement age. That's 44,000. Shortfall is 48,000. And then the distribution ratio at 65 is 3.7. To me that looks fantastic.
Listener/Caller
Yeah, that's without her Social Security.
Big Al Clopine
That's without her Social Security. Yeah, that's his with his, so. And I didn't run it because you can only run so many scenarios on a podcast. But my guess is that they could probably retire a little bit earlier because
Listener/Caller
you got to just bridge the gap and you have a little bit higher burn rate in the beginning, but you'll make up for it at the end because of the dual Social Security coming in plus the pension.
Big Al Clopine
I think if it were me, I'd probably work to 65, Joe. And then I would probably have my husband take Social Security at 67. He's a couple years older, so simultaneous. So it doesn't feel like there's too much drain on the account. Then I would wait. I'd have her wait until full retirement age because that's a bigger benefit. And then you're going to be sitting pretty, I think.
Listener/Caller
Yeah. Right off the bat here they can take around $40,000 out of the portfolio if they retire tomorrow.
Big Al Clopine
Yeah.
Listener/Caller
So $40,000, he's going to work his side gig for a little bit more. So he's making $50,000 plus the pension. That's 70 plus 40.
Big Al Clopine
And I'm going to say this, maybe work the side gig until Social Security, then stop.
Listener/Caller
Yeah, exactly. That's going to cover any type of major shortfall or large earn rate from the portfolio.
Big Al Clopine
Correct.
Listener/Caller
As long as he doesn't mind working the part time work. And then if she wants to hanging up earlier. I don't know. Can she get a side gig that pays 20 grand a year?
Big Al Clopine
You know? Yeah, I think the, the prognosis is really good. Depending upon. I mean if you want to work till 65, great, but you may not have to. But 65, it looks, looks fantastic.
Listener/Caller
They are. I like how they're diversified too. From a tax free and a taxable perspective. 600,000 or 650 roughly in, you know, pre tax accounts to 50 and tax free.
Big Al Clopine
Yeah.
Listener/Caller
You know, from a percentage perspective, 25% of their liquid ass are in a Roth. So that's a pretty high percentage given.
Big Al Clopine
It's a really good percentage.
Joe Anderson
Do you think they should put something in brokerage?
Listener/Caller
No, I don't think they need to. I would put more money into the Roth if I was going to do anything.
Big Al Clopine
Me too.
Listener/Caller
Well, I would do conversions, you know, to get maybe a little bit more money into the Roth. So right now what is her. She makes 87,000 plus the 50 plus. So what do you think?
Big Al Clopine
Yeah. Yeah. Well, she's 401k. She puts in 4%, so that's about almost 4,000. And the match is about 4,000. He puts in 24,000 a year. And he could do a Roth option on the 401, his personal 401k self employed. And then would you go pre tax
Listener/Caller
or would you go Roth?
Big Al Clopine
I go Roth.
Listener/Caller
I would too.
Big Al Clopine
Yeah. Why not? Because make it even better.
Listener/Caller
Yeah. So I would change his 401 contribution to the Solo Roth 401K.
Big Al Clopine
Yeah. Especially Joe because he retired a few years ago and they're in a lower income bracket. So yeah, I'd go Roth.
Listener/Caller
Yep. Yeah, that 50,000 they're sheltering 2450 plus 90 is 130, minus the standard deduction is $100,000 not including contributions. So most of the contribution is going to be in the 12% tax bracket.
Big Al Clopine
I know. So why wouldn't you?
Listener/Caller
Yeah, why wouldn't you? Yeah, for sure. So, yeah, switch contributions to Roth, keep growing that. And if they would like to hanging. I mean I think they, they can make work optional at this point.
Big Al Clopine
Yeah, right.
Listener/Caller
It's a little tight, but I think they're doing things appropriately by him having the side gig and if he wants to do.
Big Al Clopine
He could maybe do a little side gig. I think, you know, most conservative, you work to 65, but I agree with Joe, you don't necessarily have to.
Listener/Caller
Yeah. So. And you know, drives you a little nuts at the old office. Guess what?
Big Al Clopine
And you know, your husband retired and you want to. So maybe you should think about that earlier.
Listener/Caller
Yeah.
Big Al Clopine
And there's all kinds of insurance options. Right. So don't.
Listener/Caller
Just knowing that sometimes is like, probably work would is, you know, hey, at any moment I can just walk out the door and say, go pound sand.
Big Al Clopine
Yeah. Yeah. And maybe you work till 63 or 63 and a half and get two years or 18 months of cobra, whatever it is right now.
Joe Anderson
So should you claim Social Security early at full retirement age or wait until age 70? The difference can mean thousands of dollars more in retirement income every year or a permanent reduction you can never undo. And that decision does not exist in a vacuum. It has to fit your taxes, your spouse's benefits, your longevity, and your overall retirement plan. Before you make one of the most consequential financial decisions of your life, make sure you understand all of your options. Download our Social Security Handbook. If you're new to ymyw, this is one of the core resources you'll want to grab immediately. You'll learn who qualifies and how benefits are calculated. The real cost of claiming early versus the real upside of waiting. How working while collecting impacts your check. Spousal, ex spousal and survivor benefit strategies, including the 2025 changes that eliminated the weapon GPO. For those of you with pensions and exactly how your Social Security income gets taxed, click or tap the Social Security Handbook link in the description of today's episode to download your free copy courtesy of youf Money, you, Wealth, and pure Financial Advisors. When you download it, choose podcast in the how did you'd hear about us? Dropdown.
Listener/Caller
Okay, let's go to Dr. Jekyll, Mrs. Hyde. They're in the Twin Cities, my hometown.
Big Al Clopine
Yeah.
Listener/Caller
Good afternoon. Good afternoon, YMYW team, and happy Halloween.
Big Al Clopine
We're on top of that.
Listener/Caller
Little bit behind here. I look forward to your show every week. I travel for work a few days most weeks and listen to your show in a car or while working from the home at kitchen table.
Big Al Clopine
So he's been listening every week for his question.
Listener/Caller
Just waiting. Just waiting. I guarantee you stop listening because that's too long. Yeah.
Big Al Clopine
Yeah.
Listener/Caller
We're about four. Four months late here. I would love a retirement spitball analysis for my wife and I. I enjoy sampling local beers while traveling for work, but before cold tours, light at home with my bros.
Big Al Clopine
Okay. All right.
Listener/Caller
Of course. Latte? Yeah, I'm probably one of his bros.
Joe Anderson
Probably down in the basement or in the garage.
Listener/Caller
Let's go. Guaranteed, he's got a. He's got a fridge in the Garage, guaranteed.
Big Al Clopine
Yeah, right. Or maybe. Maybe in the basement.
Listener/Caller
Did you get a garage fridge yet?
Big Al Clopine
No. I can fit it in the refrigerator.
Listener/Caller
The garage fridge is where it's at.
Big Al Clopine
That's where it's happening, huh?
Listener/Caller
Yep.
Big Al Clopine
Okay. I'll think about it.
Listener/Caller
That's where all the beer goes.
Big Al Clopine
As soon as I move, I go through 20 boxes from my parents. I still got to go through. Which I'm going to be adding to here shortly.
Listener/Caller
Got it. All right. Mrs. Hyde enjoys a cold Pinot Grigio. I drive a company vehicle, total Toyota Camry and the wife drives a 2012 Honda minivan for now, but will downsize most likely in the coming year so we get it paid off before any thought of retirement. I work in the insurance industry and the wife is a teacher in the Twin Cities. Minnesota. Yeah, cities. Yes. Minneapolis, St. Paul.
Big Al Clopine
Right. Even I know that and I'm not from there.
Listener/Caller
Yeah, that's why the Minnesota Twins are the Minnesota Twins.
Big Al Clopine
Yeah, right.
Listener/Caller
Twin Cities.
Big Al Clopine
Yeah, right.
Listener/Caller
That's right. Just in case you wanted to know that.
Big Al Clopine
Okay, well, that's helpful.
Listener/Caller
All right, thank you. Married 26 years. Three awesome kids. Two launched and one finishing college. Tech school. Me 51 years old. Salary and bonus of approximately $150,000 per year and growing 3% 401K match saving $23,000 plus match will add up to about $30,000 plus the match in 2026 and beyond. $5,000 in HSA and will max it out each year until I retire. I have almost 28 years with my employer. Awesome company and fantastic co workers. Very fulfilling career but a lot of work stress in retirement. I have access to health insurance of $600 a month through my employer as of October 25, I have $800,000 in my 401. 2% of that is in Roth. I also have $1,500 in a Roth IRA. For fun, I open up a brokerage account this year and have about $2,600 in stocks. Robotic Quantum AI.
Big Al Clopine
AI. Okay, cutting ED guys
Listener/Caller
but we'll switch to maxing out backdoor Roth $8,000 each instead and throw some fun money at the brokerage in BTI or similar after the Roth and 401K are filled up. Wife turns 50 soon her salary is $115,000. She's saving $5,000 a year to her 403 for now and then contributing 7 or 8 to 8% in her pension. Hoping after one of our kids wedding, hoping after one of the kids wedding next year she will increase that contribution. She has about $125,000. In her 403, she receives a small match of $0.20 up to 3%. If she retires at 55, her pension would be about $22,000 annually. With the 1% COLA starting at 65, or she works until 60, it'd be approximately $60,000 annually at retirement plus a 1% COLA starting at 65. She has a VEBA account.
Big Al Clopine
What is that?
Listener/Caller
God. I know what that is.
Joe Anderson
Voluntary Employees Beneficiary association plan for medical expenses.
Big Al Clopine
Oh, yeah. Andy wrote that in the notes for us. Now I see.
Listener/Caller
Yeah, yeah, yeah, yeah.
Joe Anderson
So I guess it's like an hsa.
Listener/Caller
Yeah, yeah.
Big Al Clopine
Yep, you're right.
Listener/Caller
Yep, yep, yep, yep, yep. Odd. I haven't seen those in years. They're not very common anymore.
Big Al Clopine
No, that's. I've never heard of it.
Listener/Caller
School district.
Big Al Clopine
So maybe it's something that they do. Yeah,
Listener/Caller
yeah. Instead of like an FSA, they probably.
Big Al Clopine
Yeah, yep.
Listener/Caller
So approximately $25,000 and will grow 2,000 and grow 2,000 each year until she retires.
Big Al Clopine
Okay, good.
Listener/Caller
All right. Social Security looks like approximately $3,500 a month each, starting at 67. Should one of us take this earlier or wait till 70? The plan is for her to work as long as she can, but at least 55, then do something else part time. She's a saint. This guy's very nice. He loves everyone. He loves his co workers. He loves his work.
Joe Anderson
He's got a perfect life.
Listener/Caller
He does, but it's stressful.
Joe Anderson
Yeah.
Big Al Clopine
Wow.
Listener/Caller
You wrote in Joe, he's my bro. We have some Coors lattes together in the Twin Cities.
Big Al Clopine
Right.
Listener/Caller
She's a saint and overworked, but I'm so proud of her and her career. Oh, my God. This is like a love novel.
Joe Anderson
It's a love letter.
Listener/Caller
Yes, it is. I'm sure she's gotten her wings to heaven five times over already. Oh, boy.
Joe Anderson
What is he buttering her up for?
Listener/Caller
Holy.
Big Al Clopine
He's going to have her listen to this podcast. I guarantee it.
Listener/Caller
To get the rule of 60 30. Even if that means she works part time a few years at the end of her career. I'm 95% sure 60 is the route she'll go. And this makes retirement much more attainable.
Big Al Clopine
Okay, okay.
Listener/Caller
I have a rule of 85 and a lump sum or annuity option if I retire at 56.5. And if I can, monthly pension option is going to be $6,000 a month. If not a bit more. A coworker who is 56 said his lump sum option is currently $1,300,000 with a very similar salary and progression salary scale as me. Both options are usually estimated 10% or so low I've heard. And of course based on interest rate, salary and years of service, etc. So we'll see where I end up. I'd get the lump sum at retirement most likely, but I'd invest it until age 59 and a half at least. I don't want to retire from work, but retire to something. I already have a few others when I retire, a few offers when I retire. Okay, he's going to do a little part time work. Maybe $40,000 a year until I don't want to anymore. Maybe around 60 or 62. I'm not opposed to working a bit more needed. Just would like the Freedom house is worth $600,000. We owe 210,000 with a 3.4% mortgage. Maybe have an inheritance of 300,000 in 10 years or so. But I don't even plan on it. You're planning on it? If you wrote it down, just say it. I think he is guaranteed or else it wouldn't even be in the letter. His love letter. But I love my parents so they're the best people ever. I Hope they live 50.
Big Al Clopine
I never want to see it.
Listener/Caller
I'm going, I'm going to give it to my dad's favorite charity. So. No, he didn't say that. He says this. We love to travel. We love Florida. Make two trips to Maui in the last two years. Oh, Big Al, that's your neck. That is it will continue to do so until retirement. We love taking our kids and their significant others on the trip, even every few years as well. Heading to Marco island with them this winter. Marco island, that's what, Florida.
Joe Anderson
Yeah, it's off the west coast of Florida.
Listener/Caller
Yeah.
Joe Anderson
Beaches. When I look at the. When I do the Google search, it's just pictures of beaches. That's it.
Listener/Caller
Yeah. I heard Marco Island's pretty cool. I was. No, I've never been. I was going to go.
Big Al Clopine
But you know about it.
Listener/Caller
I do know about it. I do know about when I lived there.
Big Al Clopine
Right.
Listener/Caller
But I never made it there in retirement. We'd like to have $200,000 per year adjusted for inflation. Wow, that's a healthy income. If we're a bit light on that until my wife retires at 60 and I'm part time, that's okay. We want the ability to travel by a car if needed. Not get too worried about a few Amazon packages. Showing up. Just enjoy life and make work. Something that isn't required after the age of 60. But it's fun. Also, Minnesota is a higher tax state. Do I go pre tax or Roth? And what percentage do you think? Or wait and do Roth conversions with my part time income and work in a little more post retirement. Or maybe you. Or maybe use interest income from inheritance for conversions.
Big Al Clopine
Ooh, okay, so he's got the inheritance
Listener/Caller
in there twice, but it's not expensive.
Joe Anderson
So much for not planning for it.
Listener/Caller
Yes. Yep. Or is this a good idea to throw more money into a brokerage account as a bridge until 59 and a half? Appreciate the spitball, Joe. If you're in town, look me up and I'll buy you a cold Coors light. All right. Thanks. Dr. Jekyll. Mr. Hyde.
Joe Anderson
Mrs. Hyde.
Listener/Caller
Mrs. Hyde. Yeah. I'll look you up a couple Coors lights.
Joe Anderson
He can meet a saint of his wife and his wonderful co workers and his lovely parents.
Listener/Caller
Wow. I can't believe you. Don Eburt could. Heaven wings, angel wings. Time's over, you know.
Big Al Clopine
Or Dr. Jekyll could come to Hawaii, we'll get together, have a Coors latte, and we'll talk about how much we love our wives.
Listener/Caller
Yeah, that would be wonderful. You guys tell me all about it.
Joe Anderson
I'll.
Big Al Clopine
I'll patch you in via Zoom.
Listener/Caller
Okay, perfect.
Big Al Clopine
So you can contribute.
Listener/Caller
Yes. All right, so there's a lot here. They got some pensions, they got monies. They want to retire early. They want to have a lot of fun. They don't.
Big Al Clopine
Yeah, so let me, let me set the baseline and then we can go from there. Okay, so they got about 900,000 right now. And I just said five years. They're saving about 50,000 into savings. Six percent interest puts them at 1,500,000. Okay. And they want to spend 200,000, Joe. And that with inflation, 3% gets to 232,000. So we got to spend a two hundred and thirty two. But we got pensions of, let's see, we've got his pension at 72,000. And we've got. Yeah, 72,000. Wife's salary would be about 133,000 at that point. So including her salary shortfall, 27,000. Distribution rate, 1.8%. And if he works, they're actually saving Now, I didn't do a secondary analysis, Joe. And the reason I didn't is because there's so many variables here. I think you recalculate in five years and see, does my wife need to continue to Work or can she work part time and see if this still works? But I get.
Listener/Caller
Now I understand what he's doing here. It's like, oh, my honey poo should retire at 50.
Big Al Clopine
I get where you go.
Listener/Caller
And he's good. She's got the angel rings, but I think she's going to work till 60.
Big Al Clopine
Yeah. 90% sure.
Listener/Caller
Yeah, 98% sure she's going to work until 60. And I think I'm not expecting this inheritance, but should I use it for conversions?
Big Al Clopine
And I do think if that happens, Joe, I think it looks really good. I think you could recalculate.
Listener/Caller
But he wants to take the lump sum, right. So let's say he takes the lump sum at 1.3. At 55, he's going to work another five years. That 900,000 you said turns to $1,300,000. So that's $2,600,000 liquid assets that he has at age 55.
Big Al Clopine
Right.
Listener/Caller
So you take away that pensioned of $70,000, he's got $2,600,000, let's call it. You know, he could probably spend maybe a hundred.
Big Al Clopine
Yeah, maybe a hundred.
Listener/Caller
Yeah, maybe 100,000. Three percent.
Big Al Clopine
Yeah.
Listener/Caller
That, that can come out of the portfolio plus her income until 60.
Big Al Clopine
And that's not necessarily a bad strategy too.
Listener/Caller
Right. So either way, I mean, I think you would want to do a little bit more analysis as you get closer to take the lump sum or the pension.
Big Al Clopine
I think all of this needs to be reanalyze it in five years to see where they're at.
Listener/Caller
Right.
Big Al Clopine
And of course, it depends upon the market too, Joe. We'll have to, you know, no one knows. Right.
Listener/Caller
Totally. Totally.
Joe Anderson
Social Security strategy.
Big Al Clopine
Social Security is way too early. Again, you 51, you recalculate security strategy.
Joe Anderson
My, my plan is to take it as late as possible. When that'll be, we'll see.
Big Al Clopine
Yeah, yeah, you re, you recalculate maybe in your 60s, you know, and see. Excuse me, See where you're at, I think. But as far as contributions, they should be all Roth at this point got, got 900,000 of tax deferred and almost nothing.
Listener/Caller
And they're going to have a ton of fixed income. That's tax at ordinary income.
Big Al Clopine
Yeah. And I, and I know they're in a higher tax bracket now with his job, but that's still what I would do. Just for a little more balance, what are they?
Listener/Caller
About 200,000. Minus their contributions, minus the standard deduction, they're probably in the 22% tax bracket.
Big Al Clopine
Probably yeah, yeah.
Listener/Caller
Now you, some of it might be in the 24.
Big Al Clopine
Now you could Joe, make an argument to go pre pre tax and then do conversions after when you're in a low bracket. So I wouldn't be upset with that, but I would probably switch to Roth just because of that. It's not balanced.
Listener/Caller
Yeah. So going through his questions, do I go pre tax or Roth 401k? So go Roth 100% Roth. Do I wait to do conversions? Yes, do conversions as well. But you can't do conversions with my part time income. You can help pay the tax on the conversions with your part time income. So a Roth conversion is when you're taking dollars from your retirement account and converting it into a Roth ira. You will have to pay the tax on that. So it's not. Or you can make a contribution with your part time income. So you can convert as much as you want, whatever that dollar figure is. But a contribution is going to be limited to how much money that you make as income or what the contribution limits are when you are part time.
Big Al Clopine
Yeah. And I would say this, he's got 800,000 in his 401k. He'll be retiring after 55. So that's where you get your extra income needed is right. From the 401k. Because at 55 you can as long as you work until at least 55 and then retire with a 401k, as long as it stays in the 401k, you actually can pull money out without penalty. It's a different rule than an Iraq.
Listener/Caller
Yeah. And then I think he's confused on another thing. It's like maybe use the interest earned from my inheritance for conversions. So the inheritance is going to be in a brokerage account that's in a non qualified account. It's not in a retirement account. So that cannot be converted into a Roth ira. Only retirement accounts can convert to a Roth ira. Why you would want to do that is the Roth IRA grows 100% tax free. So the interest that you're going to receive out the inheritance that you don't plan on spending, but you mentioned a few times in this overall email, is going to be taxed at ordinary income rates. If it's interest or if it's capital gains, it will be taxed at that rate. You can take those dollars and use them to make a contribution into Roth IRAs as long as you have earned income. So if you, if he's planning on working part time or the wife is going to continue to work at the school district I mean, you're good to go there. Or you use some of those dollars to pay for the taxes. Again, that, you know, on the, on the commitment.
Big Al Clopine
To me, that would be. You would do that. That's most important to, to pay the taxes on conversions with after tax dollars and then to be able to have extra money when you want to do things like vacations or whatever.
Listener/Caller
Yep, yep, yep.
Big Al Clopine
So I like that. Although that may not happen for 20 years.
Listener/Caller
Right. Well, you know, then it's like, is it a good idea to throw more money into a brokerage or bridge? I don't, I don't think you need a bridge until 59 and a half. As long as you work until 55. Yes. Like you said, it's the rule of 55. You can take the money out of the 401k plan.
Big Al Clopine
Yeah.
Listener/Caller
There is no 10 penalty. So there's no bridge that you would have to worry about as long as you do work until 55.
Big Al Clopine
Exactly. So I wouldn't. Yeah, I wouldn't worry about that. The rule of 55 will be important in this particular case, but there's so many different scenarios. Then you just want to rerun this in five years when you retire, and then.
Listener/Caller
Yeah, you got to rerun this all the time.
Big Al Clopine
And then rerun it at 60 when she wants to retire or if she wants to retire earlier than that, rerun it and see how it looks. So that's. There's. There's a lot here, but it's looking pretty good.
Listener/Caller
Very good. Okay, well, I'll look you up next time in the Twin Cities and at that. Take you up on that Coors Light
Big Al Clopine
and let me know when you're in Hawaii again.
Listener/Caller
All right.
Joe Anderson
To see how to turn your savings into income and maybe pay zero tax while doing it, you need to watch this week's you Money, you Wealth TV called How to Retire Tax Free with a Smart Income Plan. Joe and Big Al show you real examples of how couples can make $100,000 a year in retirement and pay zero in taxes by managing where that income comes from. They'll show you how to balance withdrawals from your ira, Roth and brokerage accounts, and how strategies like Roth conversions, the home sale exclusion, and qualified charitable distributions help you keep more of what is yours. And download our companion Tax Free Retirement Guide. It walks you through the tax brackets, capital gains thresholds, and proven moves that can help you build a retirement income plan with little to no tax bill. Click or tap the links in the episode description to watch how to Retire Tax Free With a smart income plan on YMYW tv and to download your free tax free retirement guide. Tell a friend.
Listener/Caller
All right, let's. We're moving on. Howdy. From Diggler in Roller Girl. Well, Dick Dink. Dick. Dick.
Joe Anderson
Dirk. Diggler movie. Boogie Nights.
Listener/Caller
Yes, yes, yes.
Joe Anderson
Mark Wahlberg and Heather Graham.
Listener/Caller
Yep.
Big Al Clopine
Okay. Yeah.
Listener/Caller
Did you like that movie?
Joe Anderson
I never saw it.
Listener/Caller
You've never seen Boogie Nights?
Joe Anderson
No.
Big Al Clopine
Even I've seen that.
Joe Anderson
What did you think of it, Al?
Big Al Clopine
It was a little odd, but it was entertaining. Okay.
Listener/Caller
Yeah. I don't know where I stand on Boogie Night.
Big Al Clopine
I don't know. It was different. Do you remember that?
Listener/Caller
Yeah. I mean, it was like, there's a lot of drugs and of course there's a lot of sex.
Joe Anderson
Yeah. I read the little recap. And basically the guy becomes a porn star and then he gets derailed by his drug addiction.
Big Al Clopine
Yeah, something like that.
Joe Anderson
Sounds like a whole lot of fun. Very uplifting movie.
Big Al Clopine
I remember Roller Girl being kind of distinctive.
Listener/Caller
Yeah.
Big Al Clopine
In her outfit.
Listener/Caller
Yeah, she's attractive. A lot of really good actors. Very good director. So there was parts of it. It was, you know, well written. It was from that aspect of it. But I don't know. It's not.
Big Al Clopine
You wouldn't watch it again?
Listener/Caller
I'm not. I couldn't.
Joe Anderson
That's not enough violence.
Big Al Clopine
Yeah.
Listener/Caller
I don't. I don't like the drug movies. I love the violent movies. Like, you don't see people all coked out and stuff. It just makes me nervous. It's like, gives me anxiety.
Big Al Clopine
Well, and I wouldn't watch it either for probably the same reason. Wow.
Listener/Caller
Okay. I'm surprised you've seen this movie.
Big Al Clopine
I know. It's. It's shocking.
Listener/Caller
It is shocking. It is. It's not a Hallmark movie.
Big Al Clopine
I guess I wasn't watching a Hallmark movie that night.
Listener/Caller
Okay. My drink of choice is gin and tonic. Roller Girl loves a dirty martini. I drive a Ford Bronco soft top and she's got a GLE350. I'm planning on retiring next year at the age of 58. I'll have a pension co adjusted of 102 and a second at age 60 of 9,000. All right. I'm currently earning $180,000. Roller Girl earned $62,000 and is currently 58. Her salary is $74,000. And we'll have a COLA adjusted pension of $20,000. Our annual spend is $90,000. My Social Security at FRA is $43,000. Hers is $20,000. Okay. Your annual spend is $90,000. And there's all sorts of different types of fixed income coming in. His COLA adjusted pension is 102,000.
Big Al Clopine
Yeah. If you. When you read carefully this, his spending is not 90. Okay, you'll come to that same conclusion.
Listener/Caller
All right. We have a traditional 401 with $200,000 today. And we have $80,000 in emergency fund and $300,000 in a brokerage account. Our debt is 190 with a 2.5% mortgage or mortgage on it. I plan to draw from the 401 rule of 55 to bridges Social Security. My question is regarding Social Security. It appears that my break even age from age 62 early draw is 77 and the delta payment is 1,400. Can't I simply re. What is that word?
Joe Anderson
Where are you Recreationally.
Big Al Clopine
Oh yeah. Recreationally.
Listener/Caller
Oh, I thought it was re. Recreationally. The lights in here are bright.
Big Al Clopine
Can I simply re.
Listener/Caller
Re. Can I simply.
Big Al Clopine
It's hard to say.
Joe Anderson
Can I simply recreationally work to work for fun.
Listener/Caller
Simply recreationally work and earn $1,400.
Big Al Clopine
Tongue twister. And I knew how to say it and even I couldn't say it.
Listener/Caller
It's like the combination of the three words just kind of blew me up there.
Big Al Clopine
It's a. It's a tough combo. Simply recreationally work.
Listener/Caller
Can I simply recreationally work?
Joe Anderson
See, the more times you say it, the more confident you sound about it.
Big Al Clopine
Well, yeah, yeah. Let's re tape this part now.
Listener/Caller
Right. I guess you can simply re. Recreationally work. Yeah, it's extra fun and earn that fourteen hundred dollar Delta. What are your thoughts on our chance of success? Okay, so there's. There's a lot going on here.
Big Al Clopine
Right. So let me start with spending.
Listener/Caller
Okay.
Big Al Clopine
Okay. So they make. She. She makes. Let me find that. He makes 180, she makes 74. So they.
Listener/Caller
250,000.
Big Al Clopine
250k. And look at their savings is 580,000 and they want to spend 90.
Listener/Caller
Yep.
Big Al Clopine
What do you think?
Listener/Caller
Nope. Nope.
Big Al Clopine
Their current spending with monies going into 401ks, which isn't a ton because that's 200,000. They're probably spending 200,000 or more. Not sure what the taxes are in Tennessee, but I don't think they're that high.
Listener/Caller
Yeah, it all depends on children. I mean, do they have 10 children
Big Al Clopine
college and they're all graduating?
Listener/Caller
Yeah. I don't know.
Big Al Clopine
Same thing. Yeah.
Listener/Caller
So the crux of this is really fine tuning exactly what you're spending, how you're spending it. And you think that you can go. All right. Most people want to replicate their paycheck as much as they can.
Big Al Clopine
Correct.
Listener/Caller
So if you think of it that way, they're making 250,000. You take away some taxes. So call it, you know, you have roughly 200,000, maybe a little bit less. Let's call it 180. Right. And that you want to spend half of what you're currently spending today.
Big Al Clopine
People are saying, oh, I don't need
Listener/Caller
this, I don't need that, or whatever.
Big Al Clopine
So, okay, so you don't need any. We do this all the time. Oh, you don't really need any clothes. Your car's never going to break down. Oh, you're never doing any trips.
Listener/Caller
Soft top.
Big Al Clopine
It'll last forever. Right.
Listener/Caller
The life expectancy on a poor Bronco.
Big Al Clopine
Anyway. So here's what we're getting at, I guess, which is look at your net salary after 401k in taxes. Right. And look at your why and that. And that's a number. Right. That. That could be are you. Are how. And then. Then let's say that's 200,000, just as an example. Income's 250. Taxes, money going to 401k. Let's say net is 200. And I think I'm. I'm being generous, but. Because I think it might be more. But Anyway, you're spending 200,000, and then you got to evaluate. It's like. Because a lot of people have no idea what they're spending, then you got to evaluate, okay, if I'm. If I'm spending, if I'm spending 200,000 now, can I really spend 90? Am I really going to cut my living expenses more than half? Right, right. And then most people would say no. So I.
Listener/Caller
Do you want to.
Big Al Clopine
Yeah.
Listener/Caller
It's like you're retired. You're Saturday every day.
Big Al Clopine
Yeah.
Listener/Caller
You know, you want to do different things. You want to travel, you want to see the world or whatever. Take your Ford Bronco out.
Big Al Clopine
Now, on the other hand, I did compute what they could spend roughly.
Listener/Caller
Okay.
Big Al Clopine
So I inflated their assets with what they're. I actually didn't add any because I'm not sure what they're saving, if any. But Anyway, it becomes $700,000 in four years, and so that's great. The fixed income would be about $136,000 at that point from pension and actually two pensions. And then I think they could spend about $164,000 if you add those two together. And also with a 4% distribution rate.
Listener/Caller
Right. They could probably do a 10% distribution rate. It doesn't matter because their pensions are giant and they'll just learn to live off of 190,000 a year. You know what I mean? They'll slum it because that's not even including the.
Big Al Clopine
I know it's not including Social Security, but there's quite a bridge period there. And I think the spending is off.
Listener/Caller
Well, he's 58. Social Security is going to come in 10 years. Let's say they claim it at 68. He retires now, they got $600,000. Yep.
Big Al Clopine
Right.
Listener/Caller
I don't know. Take 10% out a year. I don't care. It doesn't matter. They could draw it down to zero. My point is that they'd still be okay because of the giant pension that he has.
Big Al Clopine
Yeah.
Listener/Caller
Got $102,000 pension if you equate that to liquid assets.
Big Al Clopine
Yeah, no, I.
Listener/Caller
Several million dollars.
Big Al Clopine
I know, but he wants to spend 200, and then that's going to be inflated, too. I don't think the math works.
Listener/Caller
Got it.
Big Al Clopine
Well, yeah, and I know there's Social Security. I get that. Here's what I think. I think he can spend $145,000 in today's dollars, taking the $164,000 without Social Security. So this is conservative. I agree. And then you present value that back to today's dollars. I think it's about 140. Call it $150,000. I'll be generous. So 200's not the right number in today's dollars. $150,000 might.
Listener/Caller
So I think he already knows he's spending $200,000. It's like, well, our annual spend today is $90,000, but we have a goal of $200,000 in retirement.
Big Al Clopine
Yeah, well, I think he's got it backwards. I think his real spend is 200, and he wants to spend 90 anyway.
Joe Anderson
So what should their Social Security strategy be? Well, he's asking about the break even.
Listener/Caller
He did the math wrong, so he's looking at a break even. So he's saying. All right, if I take Social Security at 62, early draw is 77, and the Delta end payment is $1,400. So I don't know what he's saying is the Delta in payment $1,400 from age 62 to age 70?
Big Al Clopine
Well, he's saying that his full retirement age, Social Security is $43,000 up in the end of the first paragraph.
Listener/Caller
Okay.
Big Al Clopine
And hers is $20,000.
Listener/Caller
Right, but he's talking about, like, the Break even in this $14 million.
Big Al Clopine
I know that makes no sense.
Listener/Caller
It doesn't make.
Big Al Clopine
That's just a delta. We don't even know what you're. We need to know what the total payment is versus what it would be, then we can. But, yeah, I would.
Listener/Caller
But he's saying his break even's age 77.
Big Al Clopine
Yeah.
Listener/Caller
So he has to live in. But I've never seen a break even at 77 before.
Big Al Clopine
Yeah, me neither. And I. And I don't really care about that. I think. I think he defers it as long as he can.
Listener/Caller
He wants to take it at 62.
Big Al Clopine
I know.
Listener/Caller
I think because he spends everything that comes in.
Big Al Clopine
I, I think she should take it at 62 because it's a smaller benefit. He goes longer to get a bigger benefit for the family. If he passes, then she gets that same benefit. So that's what I would do or want to do anyway.
Listener/Caller
Yeah.
Big Al Clopine
Now if they can't afford it, they can't afford it. They do it. Right.
Listener/Caller
But, yeah, you know, they're very fortunate to have these really large pensions.
Big Al Clopine
They are. And Social Security looks good, too.
Listener/Caller
So this is a very common scenario that we see that people that have large pensions don't necessarily have large 401k balances.
Big Al Clopine
Right.
Listener/Caller
Because they know they're going to have a large pension. Pension. So it's like, well, why should I save into the 401k when I already have the fixed income? Let's enjoy life now.
Big Al Clopine
Yeah, yeah. And I. And I get it.
Listener/Caller
Yeah.
Big Al Clopine
But then you get used to that lifestyle.
Listener/Caller
Exactly.
Big Al Clopine
It's hard. It's hard to cut it in half. Has been our experience.
Listener/Caller
Yeah. But you're in great shape. Dirk.
Big Al Clopine
Dirk.
Listener/Caller
Dirk Diggler.
Big Al Clopine
Dirk Diggler, yeah. What was Roller Girl's name?
Listener/Caller
Roller Girl.
Big Al Clopine
That was the only name she ever had. A sign to her. I don't.
Listener/Caller
Yeah, I don't think.
Big Al Clopine
I think you're right.
Listener/Caller
I don't know. I don't know if she actually.
Joe Anderson
Her name was Brandy. That was the name of the character in the. In the film.
Big Al Clopine
Wasn't Burt Reynolds was in that? Right.
Listener/Caller
Yeah, he was.
Big Al Clopine
Yeah.
Listener/Caller
Bert.
Big Al Clopine
Yes. One of his classics. I'm sure that was a comeback. It was. You're right.
Listener/Caller
Put him back on the map.
Big Al Clopine
Yeah, yeah, yeah.
Listener/Caller
You ever watch Smokey and the Bandit? Oh, yeah, That's a good one.
Big Al Clopine
All of them. Yep.
Listener/Caller
What's that other race car movie he was in, I think with the chicken
Joe Anderson
was the Cannonball Run.
Listener/Caller
Can't. No, no, no. I love not Cannonball Run. It was like he was a NASCAR driver.
Big Al Clopine
I'm drawing a blank on that one. I like Cannonball Run too. That was a good one.
Listener/Caller
It was a chicken.
Joe Anderson
Chicken Stroker Ace.
Listener/Caller
Yeah, there it is. Stroker Ace. What a great movie that is. That's a, that's a rewatchable 1983 Stroker Ace. I'm gonna watch that this weekend. Burt Reynolds was not in Cannonball Run, was he? Oh, yeah, him and Dom DeLuise.
Big Al Clopine
Yeah, Ballyfield, I think.
Listener/Caller
No, that's not Run. That's Smokey and the Bandit.
Big Al Clopine
Wasn't she in Cannonball Run too?
Listener/Caller
Well, Andy, let's see Cannonball Run also, or the Cannonball Run 2.
Joe Anderson
Okay, Cannonball Run was Burt Reynolds, Dom DeLuise, Roger Moore, Farrah Fawcett, Jackie Chan, Sammy Davis Jr.
Big Al Clopine
Fan.
Listener/Caller
He was in Maserati.
Big Al Clopine
That's right.
Joe Anderson
Next week on ynyw, Lloyd and Diane and John are planning for their kids. How can Lloyd and Diane retirement early, spend a lot and still leave an inheritance? Will John and his wife help their autistic daughters more if they sell the house and move to a lower cost estate now? Or wait and let the daughters inherit the house and sell it with the help of trusted advisors after they're gone? The fellow spitball on those questions and more in episode 575. Follow us in your favorite podcast app or subscribe and turn on notifications on YouTube so you don't miss a thing. If you're making decisions that impact your thoughts 30 or 40 year retirement, you can't afford to screw it up. A spitball from Joe and Big Al is great, but it's not a comprehensive review of your entire financial life. Big Al may run some quick numbers, but he hasn't seen your tax return. The fellows don't know your whole situation. Joe is literally reading your question for the first time. Do not rely entirely on a spitball for your long term financial well being. Instead, schedule a financial assessment with one of the experienced professionals on Joe and Big Al's team at Pure Financial Advisors. Just like a spitball, it's free. Unlike a spitball, a free assessment is detailed, personalized and built around your specific retirement needs and goals. Find out how you can increase your tax free retirement income, manage volatile markets while drawing down your portfolio and avoid wasting any of the nest egg you've spent your entire career building. You can meet in person at one of Pure's offices in San Diego, Woodland Hills, Irvine, Brea, Davis, Seattle, Phoenix, Denver, Salt Lake City, Chicago or Nashville, or meet with the Pure team online via Zoom from anywhere. Either way, don't skip it. Make sure your retirement plan aligns with your retirement reality. Call 888-994-6257 to schedule your free financial assessment now or click or tap the free assessment link in the episode. Description 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 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.
"When Should You Take Social Security? (Don’t Screw This Up)"
Hosts: Joe Anderson, CFP® & Alan “Big Al” Clopine, CPA
Date: March 24, 2026
In this episode, Joe and Big Al answer detailed listener questions revolving around Social Security claiming strategies and retirement readiness. With a signature mix of humor and deep financial analysis, they spitball plans for three couples at different life stages: Bijou Plutus in Massachusetts, Dr. Jekyll & Mrs. Hyde in the Twin Cities, and Diggler & Roller Girl in Tennessee. The focus is on determining optimal Social Security timing, considering pensions, spend rates, tax diversification, and withdrawal strategies.
[02:06]–[10:28]
Scenario:
Key Insights:
"Please, please don’t be embarrassed. These are great numbers."
— Big Al, [05:41]
"To me that looks fantastic."
— Big Al, [06:32]
Tax & Account Structure Recommendations:
"Why wouldn’t you?" (regarding Roth 401k contributions)
— Joe, [09:37]
Notable Moment:
[11:50]–[28:44]
Scenario:
Key Insights:
"My plan is to take it as late as possible."
— Joe, [24:49]
On Inheritances and Roth Conversions:
"You're not really planning for it if you mention it three times in your email!"
— Joe (paraphrased), [21:06]
Notable Quotes & Moments:
"She’s a saint...I’m so proud of her and her career. Oh my god, this is like a love novel."
— Joe & Al riff, [17:00]–[17:32]
[29:49]–[41:04]
Scenario:
Key Insights:
"Most people want to replicate their paycheck as much as they can."
— Joe, [35:18]
"It's hard to cut it in half [your spend]...has been our experience."
— Al, [40:55]
“Can I simply recreationally work?...It’s a tough combo.”
— Joe, Al & Listener, [33:04]–[34:15]
On Listener Modesty:
“Please, please don’t be embarrassed. These are great numbers!”
— Big Al [05:41]
On Social Security Decisions:
“Should you claim Social Security early, at full retirement age, or wait until age 70? The difference can mean thousands of dollars more in retirement income every year—or a permanent reduction you can never undo.”
— Joe [10:36]
On Recreation and Retirement Math:
“Most people want to replicate their paycheck as much as they can.”
— Joe [35:18]
“It's hard to cut it in half [spending]. Has been our experience.”
— Big Al [40:54]
On Spouse Strategy:
“I think she should take it at 62 because it’s a smaller benefit. He goes longer to get a bigger benefit for the family.”
— Big Al [40:12]
Joe and Big Al underscore that Social Security is a multidimensional decision connected to taxes, longevity, your spouse’s plan, and all assets. "Spitball" analyses are valuable, but listeners are reminded to seek professional, comprehensive reviews before making major retirement decisions.
This episode is packed with practical spitballs, real listener stories, and classic YMYW humor.
For more resources, download YMYW’s Social Security Handbook [see show notes].