When to Pay Off Your Home, Retire, and Do Roth Conversions - 503

Summary

Podcast Summary: Your Money, Your Wealth Episode 503 – “When to Pay Off Your Home, Retire, and Do Roth Conversions”

Release Date: November 12, 2024

Hosts:
Joe Anderson, CFP®
Alan "Big Al" Clopine, CPA
Executive Producer: Andi Last

---

Introduction

In Episode 503 of Your Money, Your Wealth (YMYW), hosts Joe Anderson and Big Al Clopine tackle a series of listener-submitted questions revolving around retirement planning, mortgage payoff strategies, Roth conversions, Social Security timing, and the impact of state taxes. Known for their engaging and humorous approach to personal finance, Joe and Big Al provide insightful analysis and actionable advice tailored to each unique financial scenario.

---

Listener Question 1: Jack and Swan from Florida

Scenario:
Jack (61) and Swan (57) reside in Florida with combined savings of $692K in tax-advantaged accounts, $178K in Roth accounts, and $318K in after-tax savings. Their pension provides $30K annually starting at age 65, Jack anticipates $110K income per year, while Swan expects $120K in expenses, excluding a $7K monthly mortgage payment on a $645K home with a low 2.5% interest rate.

Questions:

1. Should they pay off their mortgage now, in four years, or not early at all?
2. Should they retire now or adhere to their baseline plan of both retiring at 65 and 61 respectively?
3. Do they need to undertake any Roth conversions?

Discussion & Advice:

Joe Anderson emphasizes maintaining their low-interest mortgage, stating:
“I would not pay off the home mortgage at that interest rate. I love the mortgage. I love the rate. Keep it.” ([04:02])

Big Al concurs, advising against early payoff due to the favorable rate and suggesting focusing on continued savings and adhering to their retirement timeline. Both hosts recommend delaying retirement to align with their baseline plan, ensuring a more stable financial foundation.

Notable Quotes:

• Joe: “I don’t like retiring now as an ant, go at the baseline at working another four years.” ([04:02])
• Big Al: “You have some measure of control on your income taxes... where you don’t have really much control over a lot of other stuff.” ([07:33])

---

Listener Question 2: Jennifer from Colorado

Scenario:
Jennifer recently retired from the military at age 48, earning approximately $400K annually (including a $130K military pension, $82K tax-free). She plans to purchase a new home valued at $1.1M with a 4.5% mortgage rate. Jennifer and her spouse currently spend around $210K annually, including mortgage payments, and have substantial savings in Roth and traditional retirement accounts.

Questions:

• Should they halt additional investments to expedite mortgage repayment and achieve a debt-free retirement within ten years?

Discussion & Advice:

Joe recommends maintaining their investment strategy over aggressive mortgage payoff:
“I’d rather have them keep up savings and watch the interest rates. If they go down, then refinance later.” ([18:15])

Big Al highlights the importance of liquidity, suggesting they make manageable extra payments rather than allocating all excess income to debt repayment:
“I like to have the optionality versus just throwing everything, you know, with the kitchen sink there at the mortgage.” ([20:40])

Notable Quotes:

• Joe: “It’s not a great rate compared to what they have been say two, three years ago. But compared to history, it’s actually not all that bad.” ([18:15])
• Big Al: “If you’re taking every last dollar and throwing it into the house, you’re going to have a paid-off house, but then you’re not going to have any liquidity.” ([20:40])

---

Listener Question 3: Kevin from Scottsdale, Arizona

Scenario:
Kevin, age 66 and newly retired, is single with $3.2M invested in the market. His portfolio includes $500K in cash, $1M pre-tax accounts, $150K Roth, $150K HSA, $200K inherited IRA, and generates $80K annually in dividends and interest.

Questions:

• Should he collect Social Security in 2025 or postpone benefits and execute Roth conversions over the next two years?

Discussion & Advice:

Joe and Big Al discuss the benefits of delaying Social Security to maximize benefits and manage tax liabilities effectively. They consider the potential for higher future tax rates and suggest considering Roth conversions during years with lower taxable income.

Big Al advises:
“I would convert to the 24%, but if you move out of Texas, depends on where you move and what’s your residency.” ([25:30])

Notable Quotes:

• Big Al: “If in fact you do retire in four years, that would be the time to think about it.” ([05:07])
• Joe: “What do you think, Joe?” [mid-discussion] ([04:02])

---

Listener Question 4: Skipper from Texas

Scenario:
Skipper plans to retire in two to three years at age 61 or 62 with estimated annual retirement spending of $120K. His income sources include a $60K pension, $35K Social Security at age 67, $10K in royalties, $300K in Roth accounts, $500K in IRAs, $425K in a brokerage account, and $1.2M in real estate. He anticipates inheriting $2.7M in an IRA within the next 2-10 years and aims to establish residency in Florida to benefit from no state income tax.

Questions:

1. Should he continue aggressive Roth conversions given his impending inheritance and potential higher tax brackets?
2. How can he effectively establish Florida residency given his plans to own homes in multiple states?

Discussion & Advice:

Joe and Big Al examine the implications of Skipper's inheritance on his tax situation. They advocate for increasing Roth conversions to manage future tax liabilities, especially considering the inherited IRA which could push him into higher tax brackets.

Regarding residency, Big Al provides practical steps to establish Florida residency despite frequent relocations:

• Obtain a Florida driver's license.
• Register to vote in Florida.
• Use Florida-based bank accounts.
• Make Florida the primary exit and entry point for travels.

Notable Quotes:

• Joe: “I would be more aggressive with converting, especially since he may have 2.7 million coming.” ([26:53])
• Big Al: “I would probably get the nicer home in Florida to make that look like your residence.” ([25:30])

---

Listener Question 5: Harry and Helen Tasker from Minnesota

Scenario:
Harry (58) and Helen (55) have approximately $5M combined in retirement accounts, including $2.3M in a 401(k), $500K in Roth, $70K in HSA, and additional investments. They are considering fully retiring but facing differing opinions: Harry wishes to retire, while Helen believes he should continue working. They estimate annual expenses of $130K, with projections to increase to $220K when accounting for taxes. They aim for a 40-year retirement horizon and possess a paid-off home valued at $400K to cover long-term care if needed.

Questions:

1. Can they afford to retire on their current savings without additional income?
2. Should they pursue Roth conversions to manage their tax burden over a longer retirement period?

Discussion & Advice:

Joe advocates for their ability to sustain retirement due to substantial savings and suggests flexibility in their spending:
“I feel like they have the ability to make adjustments and changes depending upon what happens.” ([39:18])

Big Al emphasizes the importance of tax diversification and recommends strategic Roth conversions to remain within favorable tax brackets:
“I would be more aggressive by converting his IRA.” ([26:53])

They conclude that Harry and Helen's financial situation is robust enough to allow for retirement, provided they maintain flexibility and continue effective tax management.

Notable Quotes:

• Joe: “I don’t think he has to part-time get a part-time job.” ([39:18])
• Big Al: “I think they could be a little bit more aggressive by converting their IRA.” ([26:53])

---

Listener Question 6: Tomb Raiders from Colorado

Scenario:
The Tomb Raiders seek advice on managing a planned retirement spending of $120K annually. They possess $5M in retirement accounts heavily weighted toward 401(k)s, with $4.5M subject to ordinary income taxation upon withdrawal. Their strategy includes delayed Social Security and considering Roth conversions to mitigate future tax impacts.

Questions:

• Are their current savings sufficient for a 40-year retirement?
• How should they adjust their spending or savings strategies to accommodate potential tax hikes and market fluctuations?

Discussion & Advice:

Joe affirms their strong financial position, suggesting a conservative 3% distribution rate:
“I feel like they can adjust. I don’t think they necessarily have to work.” ([39:18])

Big Al warns of tax implications, especially with significant RMDs from inherited accounts, advocating for Roth conversions within the current favorable tax bracket:
“I’d probably want to get some of that money into a Roth IRA in that 24%.” ([29:19])

The hosts recommend building a diversified tax strategy and remaining adaptable to ensure long-term sustainability.

Notable Quotes:

• Joe: “Almost anyone with $5 million that is able to watch their spending and dial it down if need be… they have the ability to make adjustments.” ([41:36])
• Big Al: “If tax rates go sky high, that could blow him up a little bit.” ([42:14])

---

Listener Question 7: Listener from Strawberry Plains, Tennessee

Scenario:
A listener from Strawberry Plains, Tennessee, age 63, and his spouse (57) have amassed $1.3M in IRAs (including traditional and Roth accounts), a $400K debt-free home, and passive rental income of $100K annually. They plan to retire abroad in Asia, targeting an annual spending of $120K adjusted for inflation.

Questions:

• Are their savings and income sources sufficient for their retirement goals?
• Should they undertake Roth conversions to bridge their income and tax strategies over a longer retirement?

Discussion & Advice:

Joe assesses their distribution rate at approximately 6.7%, noting the high sustainability given their income streams:
“I think it may work.” ([47:29])

Big Al highlights the importance of tax planning and suggests converting a portion of traditional accounts to Roth to manage future tax liabilities:
“I would look at trying to figure out a diversification strategy as well.” ([42:14])

The hosts conclude that with disciplined spending and strategic tax management, their retirement plan is feasible.

Notable Quotes:

• Joe: “They’ve got about a million and a half… I don’t think they need to work.” ([47:07])
• Big Al: “I think he could be a little bit more aggressive by converting his IRA.” ([42:14])

---

Conclusion

In this episode, Joe Anderson and Big Al Clopine demonstrate their expertise in addressing complex retirement and tax-related questions with clarity and practical advice. They emphasize the importance of maintaining liquidity, strategic Roth conversions, tax diversification, and flexibility in spending as cornerstones of a successful retirement plan. Their conversational and humorous approach makes intricate financial strategies accessible and engaging for listeners.

Final Takeaways:

• Maintain Low-Interest Debts: Favor keeping mortgages with favorable rates over aggressive payoff strategies.
• Strategic Roth Conversions: Execute conversions during lower income periods to manage future tax liabilities effectively.
• Tax Diversification: Ensure retirement income streams are diversified across taxable, tax-deferred, and tax-free accounts.
• Residency Planning: Establish clear residency in states with favorable tax environments through tangible ties (e.g., driver's licenses, voting registration).
• Flexibility in Retirement: Be prepared to adjust spending and work strategies based on market conditions and personal circumstances.

Notable Final Quotes:

• Joe: “If it feels good, go ahead and make a couple hundred dollar extra payment per month or whatever. Just don’t go all in.” ([20:53])
• Big Al: “Have to live the slow go years.” ([42:19])

---

For More Insights: Access free financial resources and episode transcripts at YourMoneyYourWealth.com. Engage with hosts Joe and Big Al through their “Ask Joe & Big Al On Air” segment for personalized retirement spitball analyses.

---

Disclaimer: This podcast summary is for informational purposes only and does not constitute personalized financial advice. Listeners should consult with a certified financial planner or tax advisor for guidance tailored to their individual circumstances.

Transcript

[Andi Last]

When should Jack and Swan in Florida pay off their home, retire and convert their savings to Roth for lifetime tax free investment growth? Jennifer in Colorado wonders whether she should take taxes into account when calculating her expenses and whether she should pay off her home to be debt free in retirement. That's today on youn Money, you, wealth podcast number 503. Plus should Kevin in Scottsdale collect Social Security in 2025 or postpone and do Roth conversions over the next two years? Should Skipper in Texas do Roth conversions to the top of the 24 tax bracket instead of the 22? And just how closely will Big Brother watch his state of residency if Skipper buys homes in Florida and another location for his retirement? Harry Tasker in Minnesota's wife Helen says he needs to continue working. Is that a true lie? Harry asks Joe and Big Al to spitball on whether he and Helen can stay home during their Go Go years. And can the Tomb Raiders afford to spend $120,000 a year in retirement? I'm executive producer Andi Last with the hosts of youf Money, you, Wealth, Joe Anderson, CFP and Big Al Clopine cpa. To ask a money question or get a retirement spitball analysis of your own, click Ask Joe and Big Al on air in the episode description and send us an email or a priority voice message like this one.

[Jack]

Alrighty then. Spitball request from Jack61 and Swan57 in Florida. We've listened to your show via podcast for over a year and checking out some of your shows on YouTube like the show Educational and entertaining. Okay, she drinks a sweet Moscato every now and then, but mostly water. I regularly drink whiskeys and dark rums primarily ARR. But why is all the rum gone? She drives a 2009 Mercedes ML and I drive a 2014 Mercedes C300. Both have high miles. We're going to drive until they drop and probably she'll get a new vehicle and I'll get a used one. Okay, combined savings tax advantage 692k Roth 178k after tax 318k. My pension 30k per year with no COLA. I get this at 65. Thinking of taking this with a 100% survivability for her my income 110 per year. Hers is 120 per year expenses which does not include the 1.9k per month PI is about 7,000 per month. That's what 84k per year home is valued at 645k. We've got an outstanding mortgage at 211k 2.5% rate. I love this rate. I love this rate. Home would be used for her long term care. Alright, so we're thinking of both retiring at the same time, which is our baseline plan, 65 and 61. We plan on doing SSA at 67 for me and 65 for her. Here are the three questions. Should we pay off the home in four years or now or not early at all? Second question, do we retire now or wait until the 65 and 61 baseline plan that we have? And of course knowing the answer, but here it is anyway. Do we do any Roth conversions at all? Thank you. Looking forward to your response. Love the show. I said that, right?

[Joe Anderson]

Wow. Now Jack's got a lot of personality, doesn't he? But the voice, you know what, that kicks us off. He might. Maybe he's a fellow podcaster with that voice and that personality. Just guessing.

[Andi Last]

He's doing the Pirates of the Caribbean thing. Why is elder rum gone?

[Joe Anderson]

Yeah, well, Joe, just doing a little math here. So they've got about 1.2 million right now, which is fantastic. They're spending about 108,000. And if they retire right now, this is of course well before Social Security, it would be a 9% distribution rate. So I don't, I don't like retiring now as an ant, go at the baseline at working another four years. I'm not sure if we even got Social Security figures. So we don't. I can't, we can't really talk about that. But yeah, I would definitely. I would, I would work them. I go back to the baseline, work four years. I would not pay off the home mortgage at that interest rate. I love the mortgage. I love the rate. Keep it. No need to pay that off early. And Roth conversions, of course. What do you think, Joe?

[Big Al Clopine]

Yeah, I was so lost. I was just.

[Joe Anderson]

You were just caught in the entertainment.

[Big Al Clopine]

Why is the rum all gone? You know then I was. Then he starts going through the numbers like, at least I saw Big Al. You're taking notes. So.

[Joe Anderson]

Yeah, yeah, yeah.

[Big Al Clopine]

Going to punt on this one.

[Joe Anderson]

Yeah, well, he's got out of the 1.2 million. We'll call it 700,000 in A. In tax deferred, call it almost 200,000 a Roth and call it 300,000 in non qualified. So assuming he's got decent Social Security, he and his wife, they'll probably be in what is currently the 22% bracket in the future, I'm guessing. But I wouldn't do Roth conversions until they retired. Right now I think their income's too high. I'd wait till you retire. If in fact you do retire in four years, that would be the time to think about it.

[Big Al Clopine]

Yep, totally agree. All right, let's switch gears. Let's go to Jennifer from Colorado. She goes, hi, Andy. Not sure if I'm spelling your name correctly. Sorry. I love the show. It's fabulous. Quick question. When you all quote people's budgets, does this assume they are including their taxes in the number? Thanks. Makes a big difference on the withdrawal rate. Depends. Sometimes people say excluding tax and some people say including tax. But in most cases when you're doing your own calculations, I would exclude tax. Just look at your. I would say besides property tax, but not federal and state tax.

[Joe Anderson]

Yeah, keep off federal and state tax. The reason we think that way is you have some measure of control on your income taxes, federal and state, where you don't have really much control over a lot of other stuff like property taxes, like mortgage, like, you know, household expenses, food, transportation and so forth. With taxes, you do have some ability to control it. Now, for some people, Joe, it's easier than others. People that have big pensions and social securities and not much savings, that they don't have much ability to save taxes because it's all ordinary income. But those that have saved outside of retirement or even inside of retirement and can consider Roth conversions into tax free income for lower rates later, then that's where you can make a big difference.

[Big Al Clopine]

Well, yeah, I think the biggest thing in regards to your retirement strategy is finding a way to control the taxes as best you can. And so having tax diversification is a key component of that, making sure that not all of your eggs are sitting in a basket that is going to be taxed at ordinary income rates. So if you have a pool of money that's taxed at cap gains, if you have a pool of money that's tax free plus your tax deferred accounts that are tax at ordinary income, then you can control the distribution on how you're pulling from those accounts that potentially could keep you in a lot lower tax bracket long term if you weren't diversified. From a tax perspective, I think sometimes people lose sight of, they ask, well, should I do a Roth conversion? It's like, well, the main reason why we like Roth so much is because you get the diversification from a tax perspective on your retirement income strategy. So many people, if you've listened to the show for any amount of time, is that the bulk of their assets are sitting in that retirement account because we did what we were told it's easy to save in a 401. You get a nice tax deduction, you get the tax deferral of it. But for those of you that saved very well and have other fixed income sources, now you have this big pool of money sitting in a tax deferred account that's all going to be taxed at ordinary income. We hear all the time that you're going to be in a lower tax bracket in retirement. And that is true for most. Don't get me wrong. That is true. That rule of thumb works for most people because most people haven't saved a lot of money and especially in their retirement account. So the majority of the population will be in a lower tax bracket in retirement because. Al, what's the latest statistic of, you know, average balance or what's the median balance of a retirement account? You know, it's a few hundred thousand bucks, correct?

[Joe Anderson]

Yeah. 200, 250, something like that. So we know a lot of people are going to be in a low bracket, and that's Joe. That's the average of people that actually have retirement accounts. There's like a quarter to a third of the people that have no savings at all. So, yeah, a lot of people will be in a very low bracket, but a lot of folks that listen to this show are listening because they have saved a little bit more and they're curious about the strategies that can help them.

[Big Al Clopine]

We got Kevin from Scottsdale, Arizona, writes in. He's like, hey, I'm single, newly retired. I'm 66 years old, 32, $3.2 billion invested in the market. He's got $500,000 in cash, $1 million pre tax, $150,000 Roth, $150,000 HSA, $200,000 in an inherited IRA, and he's got dividends and interest annually of $80,000. Okay, where's the $80,000 of interest in dividends coming from?

[Joe Anderson]

I think, well, if you add up what he told us, it's $2,000,000. And he said he had $3,200,000. Maybe there's 1.2 million of non qual. I don't know. We'll go with that.

[Big Al Clopine]

No dependence. I Drive A 2014 Honda Odyssey and enjoy craft beer. Should I draw Social Security in 2025 or postpone until and do Roth conversions in 2025 and 2026? Thanks. Okay, so we're a little sporadic here. So he's single, he just retired. He's 66.

[Joe Anderson]

Right.

[Big Al Clopine]

$3,200,000 in the market. So I look at $500,000, plus one is $1,500,000, plus two is $1,700,000.

[Joe Anderson]

Yeah, it adds up to $2,000,000.

[Big Al Clopine]

It doesn't add up to 3,000,200, Al.

[Joe Anderson]

I think he's admitted as non qualified account. I'm guessing.

[Big Al Clopine]

So do you think he looks at the non qualified account as just an income versus a balance?

[Joe Anderson]

That's what I would guess. Right, because he gave us the income from that account, not the balance of it. And the income apparently is $80,000 in interest and dividends, or let's say a.

[Big Al Clopine]

2% dividend yield or interest rate. I mean that's 4 million bucks.

[Joe Anderson]

Could be a lot. But he said he had 3.2 invested in the market, which presumably includes his pre tax.

[Big Al Clopine]

I don't know, maybe 3.2 plus on this other stuff. I don't know.

[Joe Anderson]

Maybe Roth conversions.

[Big Al Clopine]

That's the question. He's got all this dough you just retired. The math is off. Should have conversions. He's got $80,000 of interest in dividends. So that's in the 15% tax. Well, no, he's single, so some of that is going to be taxed at cap gains. So he's already the threshold given the standard deduction should he do conversions. You got a million dollars pre tax? I don't know what he spends. Yeah, let's say he spends $80,000 or $100,000. It might make sense to do a little conversion. He's 66. He's got another 10 years roughly for RMDs to hit. So that could be 2 million. That's going to give him another $80,000 of an RMD on top of the $80,000 of interest and dividends on top of his Social Security. That could pop him up into a higher bracket.

[Joe Anderson]

Yeah, I think it makes sense and I think at least for. Well, he says 25 and 26. I would say for 2024 and 2025 because we know the tax rates will be lower then. We don't know yet about 2026. They're scheduled to go back up to higher rates, so we'll just have to see.

[Big Al Clopine]

Yeah, he just retired. So it depends on what his income was this year, what's his tax.

[Joe Anderson]

That's true. Maybe his income's too high. But at any rate, I would certainly do it for 2025. What I would go up to is probably me personally assuming that he's got all this money in non qual, which it seems like he does. He's got the Money to pay the taxes. Maybe I'd go to the top of the 22% at least. Maybe even consider more. But then as far as. Yeah, so we'll make that assumption. His income's too high for 2024. When you do it in 2025, 2026, we're just going to have to wait and see what happens with the tax rates.

[Big Al Clopine]

So would you. So this is the hard part for people. Is that all right? Should I delay Social Security? I'm at 66. I can see my Social Security check coming in. It's going to give a fixed income. Should I delay that? Well, you're going to get an 8% delayed retirement credit. So depending on what your longevity is, does it make sense to push that thing out? You might even want to push it out to age 70 and clear the slate on taxable income for the next couple of years, depending on what happens with tax brackets, and then continue to do the conversions and take your Social Security at age 70.

[Joe Anderson]

But yeah, I agree with you.

[Big Al Clopine]

That's hard for people to do. Most people, I mean, that's the advice, I think, of most advisors, but I would say probably a very small percentage of people actually do it.

[Joe Anderson]

Yeah, I agree with that. I think when you're single, a lot of it depends upon your health and what you think is your life expectancy. Like, if it's shortened for any reason, you might take it earlier. If not, you might push it out just because then you get a much higher income, rest of your life. Of course, no one knows, right? That's the hard part. But I think most people in their mid to late 60s have a sense of am I average? Above average? Below average? Where am I at?

[Big Al Clopine]

You wait until 70 there, bud.

[Joe Anderson]

I'm waiting till 70 myself.

[Big Al Clopine]

Yeah, okay.

[Andi Last]

Deciding when and how to take your Social Security benefits are among the most important decisions you'll make about your retirement. Download our free Social Security Handbook from the link in the episode description for more details on maximizing your monthly Social Security payments. If you're worried about outliving your savings, you're not alone. Discover how long your money, including Social Security, can sustain you in retirement with a complimentary financial blueprint courtesy of your money, your wealth, and pure financial advisors. Click the financial blueprint link in the episode description and input your income and savings, investments and debt, and your expenses and goals. This tool will analyze your current cash flow, assets and projected spending for retirement. And it'll calculate three scenarios to help you determine your probability of retirement success. How will future taxes and when you collect Social Security impact your spending power in retirement. This detailed report will show you and you'll learn what you can do now to help you achieve your retirement goals. Minimize stress Maximize life Prepare for the future Take control of your retirement. Click the Financial Blueprint link in the episode Description to get started we got.

[Big Al Clopine]

Jennifer another Colorado Coloradian. Is that right?

[Andi Last]

I think that there's a chance it's the same Jennifer that asked about whether or not she should include her taxes in her budget. I think that was a pre question for this one.

[Big Al Clopine]

Sure. Yeah, right. So Jennifer, she's recently retired from the military, relocated and I'm buying a new home at the age of 48. My spouse and I make roughly 400,000 doll per year, of which 130 is a military retirement pension and 82 of that is non taxable. We currently spend around $210,000 on mandatory and fund expenses per year. Including the mortgage. We have roughly $800,000 in Roth accounts and $1 million in a traditional deferred account. I contribute to my company's Roth 401 to take advantage of the company match. I contribute.

[Andi Last]

685.

[Big Al Clopine]

685 company contributes 685 per month. Other investing is currently paused to build up our down payment on the new home due to the high amount of guaranteed income. We keep our retirement accounts invested in the NASDAQ S and P and similar mutual ETFs to maximize returns. 4 year spitball. Our mortgage for the new home at 1.1 million is at 4.5.4%. Should we stop all additional investing to pay down the mortgage as fast as possible to be debt free in retirement? I'll keep investing into the 401 to receive my company match, but all other excess income should go towards the house. I like the idea of being mortgage free before retire in about 10 years. I really enjoy red wine, variety of beers and a whiskey neat. But not all at the same time. Oh, I drive a 2012 minivan. You still make minivans? I don't know. I haven't heard of a 2024 minivan.

[Joe Anderson]

I would have thought with two kids you'd already have one.

[Big Al Clopine]

Yeah, no, my parents had one. I grew up in a minivan. Got it in 2008. Jeep Wrangler. I had a Jeep Wrangler.

[Joe Anderson]

Yeah, I remember that.

[Big Al Clopine]

Don't plan to buy any new cars until our youngest daughter is old enough to drive in about four years, at which point she will inherit one of the two older cars and if they Still. And if they're still running, I listen to your podcast while walking my two Labradoodles. Labradoodles.

[Joe Anderson]

Labradoodle.

[Big Al Clopine]

Labradoodle.

[Joe Anderson]

There you go.

[Big Al Clopine]

Okay. Well, first of all, thank you for your service. A lot of great fixed income here. $130,000, $82,000 of that is tax free. So they make four Hyundai, big Al. 5.4% interest rate on the house. Accelerate paying that thing off or what do you think?

[Joe Anderson]

I wouldn't. It's not a great rate compared to what they have been say two, three years ago. But compared to history, it's actually not all that bad. I'd rather have them keep up savings and watch the interest rates. If they go down, then refinance later. That's what I would rather have them do, I think.

[Big Al Clopine]

Yeah, if you want to pay it down to a million, I don't think you can write off anything over a million. So they got $1,100,000. So maybe $100,000 that you pay off a little bit more rapidly just because. Tax deduction on that.

[Joe Anderson]

Yeah. Well, tax update. The new rule is 750k. Right.

[Big Al Clopine]

When does that start?

[Joe Anderson]

It already started a few years ago.

[Big Al Clopine]

Oh boy.

[Joe Anderson]

Yeah. Yeah. So anyway. But yeah, I mean, that's a good point. I mean certainly the higher parts would make more sense to pay down because you're not getting a tax break. But.

[Big Al Clopine]

Yeah, but here's what we see is that you want liquidity. 5.4 is not awful. I mean we've seen interest rates double digit. So if you're taking every last dollar and throwing it into the house, you're going to have a paid off house, but then you're not going to have any liquidity. And if all your money's in a retirement account, I don't know, I like the balance. I would continue to have. Build up your savings, build up your brokerage account and let's say that builds up to a million dollars. Well, you can always pay off your mortgage. You can just cut a check at that point. So I like to have the optionality versus just throwing everything, you know, with the kitchen sink there at the mortgage.

[Joe Anderson]

Yeah. And I will just say one more thing. If it, if it feels good, go ahead and make a couple hundred dollar extra payment per month or whatever. Just, just don't go all in. That's, that's how I would think about it.

[Big Al Clopine]

Well, that's going to make her feel really good. A couple extra hundred bucks a year.

[Joe Anderson]

No, no per payment.

[Big Al Clopine]

All right.

[Joe Anderson]

Or whatever. Yep.

[Big Al Clopine]

Okay. Cool. Well, good luck with that. We got Andy Joe Big Al Skipper here, back with a question. I haven't heard you cover much the impact of state taxes. But first, love the show. All right, thank you. Try listening to other financial podcasts, but found them all to be very dry, preachy and or overproduced.

[Andi Last]

We try to keep it under produced here.

[Big Al Clopine]

Want to keep this thing simple as pie. Love the conversational tone of YMYW. I'd rather listen to a 5 year old YMYW episode than a current episode of any other financial podcast. Keep up the great work. Relevant information. Here we go. Wow, a five year old ymyw. It's like an aged wine.

[Joe Anderson]

It just gets better, right? Or so the Skipper says.

[Big Al Clopine]

Love the Skipper. Overproduced. I wonder what's an overproduced financial podcast?

[Andi Last]

Too many bells and whistles, I guess. Flashy graphics and things.

[Joe Anderson]

Or maybe too many free offers or whatever. I don't know. Yeah, or not. So free offers.

[Big Al Clopine]

Overproduced. Preachy, Big Al. Preachy. You got the sermon?

[Joe Anderson]

I can be if you want me to.

[Big Al Clopine]

All right, let's get to the relevant information here. Okay, Skipper is likely to retire two to three years at 61 or 62. $120,000 estimated annual spending in retirement, $60,000 annual pension, $35,000 annual Social Security at 60, and $10,000 of annual royalties. So 67, 80, 90, 105. He's spending one hundred and twenty. That looks pretty good so far. Skip. Yep, $300,000 in Roth, adding $60,000 a year to retirement, not counting conversions. He's got $500,000 in IRAs and another $425,000 in a brokerage account and $1.2 million in real estate. No debt pending inheritance of $2,700,000 in an IRA in the next two to ten years. Our benefactor is in their nineties. All right, let's go number one. My pension plus the RMDs from the inherited IRA account will far exceed our spending needs during the ten years of those RMDs. We will invest the excess and not touch any other investments or file for Social Security. After a decade of growth and further investing, the other accounts should have grown significantly. And I'll start drawing my Social Security benefit. So unless the market tanks, we'll be in a much higher tax bracket then than we are now. After listening to ymyw, I've been doing Roth conversions to the top of the 22% tax bracket. Should I be more aggressive with the conversions? Does your answer change if I tell you, there is a 99% probability I will move to Texas.

[Andi Last]

Move out of Texas.

[Big Al Clopine]

Oh, move out. It's going to move in. The lack of state taxes is great, but it's just too damn hot here. I haven't heard you talk a lot about the impact of state taxes on conversion decisions, so please share your thoughts. Number two, more on state taxes upon retirement. Our plan is to sell our big house, buy two modest houses, one in the north and one in the south, probably state tax free Florida, and then travel between the two based on the travel to the two based on the weather. My question is about establishing residency. My research shows that you must spend six months in one day to place to declare your permanent residence. Our children live in three different states, we have family overseas and we do a fair bit of travel for hobbies in sightseeing. So I doubt we'll spend more than five months at either house. Can you speak about the relationship or can you speak about establishing residency in a new state? In this situation, does big Brother really count the days? Thanks for the spitball. Alrighty.

[Joe Anderson]

Okay. Why don't you take the first one, I'll take the second one.

[Big Al Clopine]

It's going to get $2,700,000 in an IRA here in the next couple of years.

[Joe Anderson]

Yeah. Should he be more aggressive?

[Big Al Clopine]

More aggressive than. Yeah, I would convert to the 24, but if you move out of Texas, depends on where you move and what's your residency. So I guess it kind of hinges on number two to answer number one appropriately. $2.7 million IRA that has to be distributed out in 10 years. I would be more worried about how are you going to distribute that out? Well, no, it's going to be based on the 90 year old's life expectancy because he's already taking RMDs.

[Joe Anderson]

Yeah, I always hate to do a financial plan based upon an inheritance. Right, yeah, me too.

[Big Al Clopine]

We're not doing a financial plan, Al. It's called a spitball.

[Joe Anderson]

Well, if it were me. Right, I'll put it that way. So he's got about $500,000 in an IRA, which doesn't require an overly aggressive conversion. But the fact that he may have 2.7 million coming puts him in a much higher bracket because of the RMD.

[Big Al Clopine]

Let's say that $500,000 or a majority of that's in a Roth that's going to compound tax free. Doesn't have to take an RMD there. He's going to have plenty of income on the distribution potentially from he's already at 95% of his income with just his fixed income, not including any of his liquid assets. So I think he could be a little bit more aggressive by converting his, his ira.

[Joe Anderson]

Yeah, I agree with you. I just wanted to sort of throw that out because chances are, because that.

[Big Al Clopine]

Money could be gone with health care for the 90 year old, he could live to 120.

[Joe Anderson]

Could. Yeah.

[Big Al Clopine]

Gentlemen.

[Joe Anderson]

And there's. Right. And there's three bucks left in the IRA that he gets. Got to spread that over 10 years. Yeah. So yeah, I would probably go to the 24% bracket for. I mean, especially since he's in the state of Texas right now. Right. I think that makes sense as far as moving out of state, establishing new state taxes or state of residency. So that there's a couple things the IRS looks at. One is that the number of days you are in any particular state and if you pass, it's called 183 Day Test. If you're 183 days in one area, then that, that kind of indicates that's your state of residency. But in a lot of cases that's not necessarily true. People spend some time in one state, sometime in another, maybe they travel, maybe whatever. So it depends upon facts and circumstances. But here's what I would do. If Florida is one of the states, make that your state of residency because there's no taxes there either. Right. And so when you move to Florida, compared to the other place that you want to have a home in, I would probably get the nicer home in Florida to make that look like your residence. I would, I would get a driver's license in Florida. I would register to vote in Florida. I would do your bank accounts and your brokerage accounts in the state of Florida. I would do all that stuff. And then I would also do one more thing, Joe. I would. When I went on a trip, I would leave from Florida and I would come back to Florida, which then indicates you are a Florida resident during that, that whole trip. That's. That, that's how I would do it. And then the other state that you move to will probably not be as cheap as Florida because Florida is free with regards to income taxes. So that, that's what I would probably do. But right now he's in a Texas. He's in Texas. No state tax. Why not at least crank up that the conversion to the top of the 24? Because we know we have that at least for the next two years.

[Big Al Clopine]

Yep. Facts and circumstances. So he's not there. 183 days he gets audited. I mean, he's like, do you think Big Brother is going to be that detailed? Tickets?

[Joe Anderson]

If you're faking it, yeah, they will. Like, if. It's pretty clear you bought this, you know, you rented this cheap place in Florida and you got this mansion in Minnesota, right? And it's pretty clear you're spending most of your time in Minnesota. They might ask for your grocery bills and your utility bills and all kinds of stuff to show. They might want to ask for your phone records. Where are you making calls from? They're allowed to do that? No, they're not going to call days, but they can get a pretty good sense by looking at other type of evidence.

[Big Al Clopine]

All right, Skipper, good luck with that.

[Andi Last]

Ever donate to those birthday fundraisers on Facebook? Or give an old car to your local public broadcast station? Or write a check to support your favorite charity? It feels good, right? But as the end of the year approaches, those may be completely missed opportunities to save big on your taxes and give even more to the causes that matter to you. Learn six secrets to bigger tax savings from your nonprofit donations on youn Money, you, Wealth TV with Joe Anderson, cfp, and Allison Alley, cfp, filling in for Big Al. Watch the show and download the companion Tax Smart Charitable Giving guide to get your strategy in place before year end. Click the links in the episode description to get started. Then share the show and the free financial resources with your friends.

[Big Al Clopine]

Hi, Joe. Big Al. Andy, it's Harry and Helen Tasker here. Yes. From the 1994 movie True Lies. Remember that movie, Big Al?

[Joe Anderson]

I do, yeah. Jamie Lee Curtis. Yeah, yeah, I remember that Curtis.

[Big Al Clopine]

I said Arnold and you said Jamie Lee Curtis.

[Joe Anderson]

That's where my mind went to.

[Big Al Clopine]

How about Tom Arnold?

[Joe Anderson]

Yeah, I guess so.

[Big Al Clopine]

Then Tia Carrera.

[Joe Anderson]

Oh, yeah, that's right. She was in that, too.

[Big Al Clopine]

Yeah, man, it's four right off the, Just right off the cuff.

[Joe Anderson]

Look at you, huh?

[Andi Last]

When did you watch that movie last, Joe?

[Big Al Clopine]

When is the last time I watched it? Oh, that's 20 years, probably.

[Andi Last]

Wow. Good memory.

[Big Al Clopine]

Steel trap. I do have a good memory.

[Joe Anderson]

You do have a good. Especially for movies. You just, it just goes in and never comes out. It's, it's there.

[Big Al Clopine]

Yeah, I do like a good movie there.

[Joe Anderson]

I, I, I remember the Jamie Lee Curtis scene in the bedroom. That's, that's why I remember it. Oh, you remember that?

[Big Al Clopine]

Yes, I do remember that. Now, I was gonna say. I thought you were gonna say the.

[Joe Anderson]

Helicopter, but, well, that, no, that was fun, too. Yeah.

[Big Al Clopine]

Got it.

[Joe Anderson]

It's A good movie.

[Big Al Clopine]

All right, so they're riding in from Joe's home state of Minnesota. All right. Don't you know, we have been listening to the show for several years and love it. Helen has started watching some of the TV episodes and she just can't get enough. We often listen while we're driving and often I find myself chuckling out loud. We both like how Joe and Big Al do not always agree, just like Helen and I. Little smiley face. How cute, Harry. But I value the insights and knowledge you share on your thoughts, process on your thought process. All of which makes the show authentic and prompts good discussion. Now to the important details. We drive old model Fords, Older model Fords. That Model T is what I thought he was going to say. Escape and Taurus. Oh my God. For Taurus. So last time you've seen a four Taurus. You're right. Holy. That is older than.

[Joe Anderson]

It's been a couple decades since I.

[Andi Last]

Yeah, they stopped making them in 2019.

[Big Al Clopine]

So they stopped making a Ford Taurus in 2019?

[Joe Anderson]

Yeah, I haven't. I haven't seen one in 20 years, Joe. I can't recall.

[Andi Last]

Maybe that's why they stopped making them.

[Joe Anderson]

No one bought them.

[Big Al Clopine]

But I'm hoping to upgrade to the cherished Ford F150 in the future. All right, good luck with that. Okay. I prefer a good bourbon with a clear, large ice cube. But Helen changes her mind pretty much daily. But some of her favorites are cocktails with vodka or tequila, wine, a little beer, and we have no pets. We need your help with a little bit of a spitball. I'm 58. Helen's 55. Both our companies have been downsizing and I recently got the hammer. Helen has a high likelihood of being impacted in early 2025. Assuming Helen is laid off due to her severance, we could have our 2025 expenses covered. And in 2026, we could both tap into our retirement accounts without penalty. We're both willing to look for other positions, but really hoping. Your spitball says we can just stay home. Alright. However, given our ages, our retirement could be closer to 40 years versus 30 years. Helen is hesitant to take this approach and feels I need to be heading back to work. She does not feel she needs to. Okay, so we need a spitball here. Here are the relevant details. We have just shy of five million. Oh, boy. Okay, you're good.

[Joe Anderson]

Stay home. Do whatever you want.

[Big Al Clopine]

You live in Minnesota, you drive a Ford Taurus.

[Joe Anderson]

You're not going to overspend.

[Big Al Clopine]

Stay home. Okay. 401k. They got 2.3 million in a 401k, 500,000 in a Roth, 70,000 in HSA stocks and bonds is 115,000. Total 4.9. All right, we have no debt and our kids are fully launched. I have no. I have long term care insurance of 300,000 with a life insurance payout if not used. And our home is paid for worth another 400,000 which you are planning to cover long term care if needed for Helen. So now for the spending. Today we spend $130,000 annually. We are estimating this continues plus an additional 20,000 for health insurance until we hit Medicare. An additional 20 for the go go years.

[Joe Anderson]

Those are your favorite. I know.

[Big Al Clopine]

I hate it.

[Andi Last]

I actually tried to find out where that came from and it's just always existed. I cannot find the source of the.

[Joe Anderson]

Go go slow go slow go the. No no go.

[Big Al Clopine]

Yeah.

[Andi Last]

And everybody is just latched onto it except you guys.

[Joe Anderson]

Oh, I like it. I like the go go years.

[Big Al Clopine]

Yeah, you're in your go go years.

[Joe Anderson]

I'm working on it.

[Big Al Clopine]

Well, maybe when I get a little older I will be like man, I'm in my go go years.

[Joe Anderson]

I want to hear you say that.

[Big Al Clopine]

All right, you just did.

[Andi Last]

I'll get it on tape.

[Joe Anderson]

You're right.

[Big Al Clopine]

This brings our estimate annual spent of $170,000 before taxes. Since most of our funds are in pre tax account. So no, I have to pay the tax ban. In the spreadsheet I'm estimated combined federal and state tax around 30% bringing our annual need of 220. Yes, I rounded and 30% is 5% more than what we pay now. But the hikes are coming. If you have a better guesstimate, please let me know and I'll use it. We have the following retirement income all in today's dollars. Helen has a pension of $24,000 at 62. I'll take Social Security at $22,000. Helen will wait till 70 and she'll take hers at 53. All right, can we both just stop working with the latest downsize actions taking expected or expected to be taken. Do we have enough for a 40 year retirement? If we don't have enough, how would you project retirement spending needs to be reduced. We have a slush here and there. Switch to cheap bourbon. Helen to all light beer. She'll not be happy with this. I know we are 401 heavy. Is it worth doing conversions using the pre tax money to pay for the tax? Since we are looking at a longer retirement, would it be worth liquidating our stock bonds or even tapping into the Roth to pay the tax for the conversion. That is we could do smaller amounts to keep it within a favorable tax bracket until RMD start. What am I missing? By the way, we have predicted Joe will say we can do what is can do. By the way, we have predicted Joe will say we can do and Big Al will say we need to pick up some part time work. For the record, if this happens, I bet I'll be heading back to work and Helen will be staying home. Could our predictions be correct? Thanks much and thanks Andy for keeping the guys on track. Keep up the great work, Harry. All right, so you already said how old is Harry?

[Joe Anderson]

He is 58.

[Big Al Clopine]

So he's got a 10 year bridge.

[Joe Anderson]

Yeah. So she may get let go next year at age 56 but have severance to last through the rest of next year.

[Big Al Clopine]

Right.

[Joe Anderson]

So it's really 20, 26 and beyond they're concerned about. So here's a couple numbers Joe, and that is this, that if I just take what he gave me or what he gave us. $170,000 in spending, $170,000 in spending and she has a pension of $24,000. So the shortfall is $146,000 without even considering Social Security. Divide that into the $5 million. It's a 3% distribution rate. Three and a half three. 124 divided by or 146 divided by five.

[Big Al Clopine]

Okay.

[Joe Anderson]

Okay. Anyway, I'm good with 3% distribution rate without considering Social Security and the fact that since they drive older cars I know they could spend less if they need to. So I don't think they need to work. I don't think he has to part time get a part time job.

[Big Al Clopine]

Well, you're missing taxes, so there's probably close to 4% burn rate. 58 out of 4% for the bridge of 10 years. Couple things. I know that they're not going to retire. Even if I said both of us said yeah, take it off, I don't think they would. I think they would continue somewhere. Yeah, I don't think they feel comfortable with the dollar figure that they have. He's probably run a 400 spreadsheets and he's run different scenarios and I bet most of them come out pretty good. But it depends on the assumptions that he's running. If he runs like a sequence of return risk type of scenario and it's a doomsday as soon as he retires and it's down 20% for two years. I mean, that could blow him up quite a bit. If tax rates go sky high, that could blow him up a little bit. So. But if he goes to cheap bourbon in light beer, I mean, I think they'll be all right and not upgrade to the Ford F150 and just keep cruising in the Taurus.

[Joe Anderson]

And the Taurus. Yeah, I feel like with their ability to save, they have the ability to spend less. I feel like they can adjust. I don't think they necessarily have to work. Here's what maybe he should try though, or they should try is maybe not working for a year and figure out does that feel good or do you feel like at age 58 or 59 you'd kind of like to get back in the game?

[Big Al Clopine]

Yeah, I wish they had more non qualified assets though.

[Joe Anderson]

Yeah, it makes the Roth conversions difficult for sure.

[Big Al Clopine]

Right. So they're really good at saving in retirement accounts, but then from any other type of savings outside of that, there was a little bit of a struggle because most of the, probably the free cash flow went to the retirement account. But the good news is that they got 5 million. The bad news is that they have $4.5 million in retirement accounts. That is all going to be taxed at ordinary income rates. So it's a big number. But he doesn't have 4.25 million in a retirement account. You got to take 30% off of the top because of taxes, depending on what his distribution strategy is.

[Joe Anderson]

Yeah, true. But he still has over 3 million. If you think of it that way, that's still a big number.

[Big Al Clopine]

Well, that's 90,000 and he spends. Yeah, no, it's still a huge giant number. Don't get me wrong.

[Joe Anderson]

I would say. So maybe we're saying something different than he anticipated. I would say almost anyone with $5 million that is able to watch their spending and dial it down if need be. When you save that much money, you know how to spend less. So they want to spend more because they want to do the go go years. Great, try it. But if it feels like the money's draining too quickly or we have a couple years of bad markets, make adjustments. If you have to go back to work, do it. But I feel like when you have that much in investments, you've got, you have the ability to make adjustments and changes depending upon what happens.

[Big Al Clopine]

Have to live the slow go years. But his age is really the go go years is.

[Joe Anderson]

No, no, no. He, he's doing the go go, but he might have to get his airplane tickets on points Instead of dollars.

[Big Al Clopine]

Yeah. I would look at trying to figure out a diversification strategy as well. So he's not working this year. Depending on the severance, depending on what their income is, if they're in the 24% tax bracket, I'd probably want to get some of that money into a Roth IRA in that 24, because that's probably going to go to 28. You're right. Who knows what they'll actually be spending? But that's a giant number. The RMDs could blow them up into even higher tax brackets. I'm sure Harry's got a spreadsheet and he's kind of running in the numbers here, but yeah, I think you're right. If he can be flexible in the spending, go for it, retire. But he's young. I mean, it's like, what are you going to do? All right, Are you going to be bored or is there activities? Is there still things that you want to keep your mind active and have purpose and all of that good stuff. But congratulations, Harry. Very good. Well, Minnesota. Minnesotan, right there.

[Joe Anderson]

Right.

[Big Al Clopine]

Land of the free, home of the Vikings. We got, let's see. Joe and Angelina Jolie. Interesting.

[Joe Anderson]

Yeah, I don't know if that's supposed.

[Andi Last]

To be a reference to you and Angelina Jolie.

[Big Al Clopine]

Oh, might as well. Strawberry Plains, Tennessee. Hello, Joe. Big Al. Nandy. I've watched YMYW for the last five years and watched all episodes from the beginning. What is wrong with you? How many episodes have you seen? Big Al?

[Joe Anderson]

Let's see. I told you about three weeks ago. I watched one. I think that's it.

[Big Al Clopine]

Okay. I'm 63. My wife is 57. Drink of choice is a good Hefewebeissen beer and the wife prefers a Moscato. Another Moscato. What the hell is Moscato?

[Andi Last]

I believe it's a sweet wine.

[Big Al Clopine]

It's a wine.

[Andi Last]

Sweet wine.

[Joe Anderson]

Sweet wine. That sounds right.

[Big Al Clopine]

Moscato. When the mood hits. I'm semi retired now with passive income from rental properties of $100,600 a month. The little lady is still working full time and covers the insurance and a few bills we have. We are completely debt free, as in owe nothing on our house, valued at 400,000 in the Nissan Pathfinder is paid off. I have $1.3 million in IRAs, 1 million in Traditional, 300 in Roth. And each year I'm moving $100,000 from the Traditional to the Roth. We have a brokerage account, 25 grand. Along with passive income mentioned earlier. We have an emergency fund of 80,000. It's savings and an HSA, totaling $50,000. The wifey makes 70. Where's this guy from? He's like, here's that little lady, Strawberry Plains, Tennessee. She likes a little Moscow when she's in the mood. Come here, little lady.

[Joe Anderson]

Is that what you call your little lady? You can't get away with that in California. The little lady, the wife. Yeah. Have you ever seen Wifey?

[Big Al Clopine]

Even slapped me.

[Joe Anderson]

Yeah, me too.

[Big Al Clopine]

The wifey makes $70,000 from work and has IRAs, 5 or 50,000 and a traditional 30,000 in a Roth, along with several CDs totaling $40,000. I plan to collect Social Security at age 70, if all goes well, which will be $4,300 a month, and we can retire early at 65, which would be $1,400 a month due to early, but possibly collect spousal benefit, if higher. We would like to retire abroad, maybe Asia, to stretch out our retirement dollar a little bit further and enjoy some sightseeing. That said, we're Planning on using $120,000 per year, adjusted for inflation. With the income as it is now, are we doing? Fine. But what would you do? And what does Big Al think? Are we on track? Thanks. Tomb Raiders. Tomb Raiders. Okay.

[Andi Last]

Angelina Jolie. Was the. Was there a male in that movie named Joe? I don't even know. I mean, the whole thing was about Angelina Jolie.

[Big Al Clopine]

There's a couple of different Tomb Raider movies.

[Joe Anderson]

Seen them both, have you?

[Big Al Clopine]

Oh, yeah.

[Joe Anderson]

I. I only remember her, to be honest.

[Big Al Clopine]

I. I figured. No, they're all right. Those. Those were ages ago, too.

[Joe Anderson]

It's a long time ago. Yeah.

[Big Al Clopine]

So, Al, what do you say?

[Joe Anderson]

Well, so they've. They've got about a million and a half Joe, and expenses are 120. He's got about 20 grand of rental income, so they're short about 100,000. But wifey is working. If wifey wasn't working, it doesn't look very good. They'd have about a 6.7% distribution rate. But with the wife working and getting to the point where she would trade work for Social Security, retiring at age 65, then I think it probably does work. Right. That's a number of years off, but I think they'd be okay as long as she continues to work. But she's going to have to. But that's what he's implying. He's saying that she can retire early at 65. So I guess he's thinking that would be early for her. While he is semi Retired. So, yeah, I think it may work.

[Big Al Clopine]

Joe, she's 57. She's going to work until 65.

[Joe Anderson]

That's what he's implying, it seems. He goes, I plan to collect Social Security.

[Big Al Clopine]

Well, that's eight years.

[Joe Anderson]

70.

[Big Al Clopine]

He's going to be 70?

[Joe Anderson]

Yeah, yeah. Plan to collect Social Security at 70, if all goes well, which will be 4,300amonth and she can retire early at 65. So I think that's what he's thinking.

[Big Al Clopine]

So 70 is the retirement date for him. 65 for her.

[Joe Anderson]

Yeah.

[Big Al Clopine]

So he's going to have. He's going to have the 20,000. So that's 50. 70,000 with inflation with her.

[Joe Anderson]

Yeah.

[Big Al Clopine]

90,000. They're spending 120, adjusted for inflation. Yeah. I think they're. They're sitting Asia. I would wonder where the tomb are going to go.

[Joe Anderson]

Good question. A lot of people like Thailand and I've heard the cost of living is a lot cheaper there.

[Big Al Clopine]

So maybe I would imagine like Japan would be pretty expensive.

[Joe Anderson]

I think that'd be. Maybe even more expensive. Would be more expensive than Tennessee, I would think.

[Big Al Clopine]

Right. It would be more expensive than almost Southern California.

[Joe Anderson]

Yeah, Right. Certainly.

[Andi Last]

I hope they visited the place that they're planning on retiring before they actually like set down routes there.

[Big Al Clopine]

Yeah, I'm going. I think I have a trip to Korea next year.

[Andi Last]

Wow.

[Joe Anderson]

You have a trip, Really?

[Big Al Clopine]

I don't know how I'm going to make it. I don't know if they're going to make it.

[Joe Anderson]

Wait a minute. Not only do you have a trip, you have a trip across the ocean to Asia. Korea. That's amazing.

[Andi Last]

In episode 500, we just revisited the fact that Joe's been to like three countries in his entire life. This is. You're stretching your wings.

[Joe Anderson]

Wait a minute. Are you starting your Go go years now?

[Big Al Clopine]

No. Yeah. The countries usually you could drive to. When I lived in Minnesota, I could drive to Canada.

[Joe Anderson]

Right.

[Big Al Clopine]

San Diego. I could walk.

[Joe Anderson]

You could walk? Well, you have to take. Yeah. You have to drive down to the border and walk across.

[Big Al Clopine]

Yeah, yeah. My. My. My wife is. What is she a quarter Korean. So.

[Joe Anderson]

Yep.

[Big Al Clopine]

I guess we're gonna just pack up the family and.

[Joe Anderson]

Got it. Well, you should go to Thailand. You should go to Thailand too.

[Big Al Clopine]

No, I think this would be the last family trip of.

[Joe Anderson]

Is that right? Okay.

[Big Al Clopine]

I don't know. I like to stay in my bubble.

[Joe Anderson]

I know you do.

[Big Al Clopine]

Yeah. Stay tuned. See if we actually plan this trip. So.

[Joe Anderson]

Yeah.

[Big Al Clopine]

All right. I gotta get out of here. We'll call it a day. Wonderful job, everyone. Back from Croatia? He's still. He's. Aaron's about to pass out.

[Joe Anderson]

Is he on a different time zone?

[Big Al Clopine]

You can't wait to get back in the ocean.

[Joe Anderson]

Yeah, I'm starting to sweat here. I'm getting hot. I gotta go jump in the ocean.

[Big Al Clopine]

All right, Andy. Well, yeah, we can do some more of this some other time.

[Andi Last]

Sounds good.

[Big Al Clopine]

That's it for us. Shows called you'd Money. You're welcome.

[Andi Last]

Ted in Madison, Wisconsin, Barney and Betty and Ricochet J from Colorado, Joe and Big Al. Spitball for you next week on YMYW podcast. Episode number 504, Your Money, you, Wealth is your podcast, and this show would not be a show without you. Leave your honest reviews and ratings in Apple podcasts like comment and subscribe on YouTube and tell a friend about YMYW, won't you? You, Money, you, Wealth is presented by Pure Financial Advisors. To really learn how to make the most of your money and your wealth in retirement, you need more than a spitball. Schedule a no cost, no obligation comprehensive financial assessment. Click the free Financial Assessment link in the Upper description or call 888-994-6257 to book yours and meet with the experienced professionals on Joe and Big Al's team at Pure, either in person or online. They'll work with you to create a detailed plan that's tailored to meet your needs and your goals in retirement. 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 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.