Episode summary
Could You Retire Tomorrow If You Had To?
Your Money Your Wealth
· · 40 min · Hosts: Joe Anderson, Big Al Clopine
Summary
The episode centers on whether different households can safely live off what they have saved, and how taxes change the answer. For Reuben Sailing Shoes, the hosts estimate about $89,000 of annual spending power by combining roughly a 4% withdrawal from $1.6 million with about $25,000 of fixed income. They also suggest Roth conversions may still make sense up to the top of the 12% bracket, but only if he accounts for Social Security taxation and leaves enough cash flow for himself.
For Leslie and Ben, both federal retirees with pensions, brokerage assets, and several retirement accounts, the hosts argue that Roth conversions are still attractive. They lean toward converting up to the top of the 22% bracket, after taking required minimum distributions first, and say it may be simpler to move the TSP to an IRA so everything sits at one custodian and only one RMD has to be managed.
For Morgan and Mindy, the hosts focus on bigger tax-planning questions. They think a conversion strategy should likely be staged to stay within the 12% or 22% bracket, depending on whether Social Security is really $7,000 or $70,000, and they stress that RMD timing and available taxable assets matter. The Juan and Mary question is less about taxes and more about cash flow, divorce risk, and whether a 49-year-old couple with $2.2 million can afford to stop working, with the hosts saying the marriage issue comes first.
Key takeaways
- Reuben Sailing Shoes may be able to spend about $89,000 a year, according to the hosts’ 4% withdrawal estimate plus fixed income.
- The hosts think Reuben could still consider Roth conversions, but only up to the top of the 12% bracket and with Social Security taxation in mind.
- For Leslie and Ben, the hosts favor converting into the Roth up to the 22% bracket and taking RMDs before any conversion.
- The hosts say moving Leslie and Ben’s TSP to an IRA would simplify RMDs, rebalancing, and future Roth conversions.
- For Morgan and Mindy, the hosts say conversion size depends heavily on the true Social Security amount and whether they can afford the tax bill from taxable assets.
- For Juan and Mary, the hosts say the divorce question is the bigger issue; if the marriage is untenable, finances should be rebuilt around that reality.
Notable quotes
“I think the only caution there is you got to you got to social security”
“I think you do one big one and then you're done”
“I like consolidation. I would have everything at one custodian to make it easy for me”
“The answer to the first question is yes. And I'll explain in in a minute”
“I think you get the divorce. If you're not happy, I would get the divorce”
How the episode opens
Juan and Mary in Brooklyn are 49 and 48 with $2.2 million saved. Can Juan afford to retire early or just walk away if he gets fired? And if they get divorced, yikes.
But does the math still work? That's today on Your Money Your Wealth podcast number 573. But first, Reuben Sailing Shoes is 68, single, retired, and has $1.6 million saved, but he's never had a budget in his life.
How much can he actually spend? Leslie and Ben are federal retirees in their 70s with great pensions and a mix of pre-tax and Roth savings. And Morgan, Mindy, and Delaware are retired with an annuity, pension, social security, and $1.3 million saved.
Join Big Al Spitball on how Roth conversions and RMD timing can help both couples minimize taxes and make the most of what they've got. If you're listening on Apple Podcasts, please follow the show and leave your honest ratings and reviews. We really appreciate it.
I'm executive producer Andy Lass and here are the hosts of Your Money, Your Wealth. Joe Anderson, CFP, and Big Al Copeline, CPA.
We got Reuben Sailing Shoes. — I searched and searched. I cannot find a reference for that. I can't even find sailing shoes that are called Reuben's. So, I think this is just what the guy has decided he's calling himself.
Okay. — He's from Wyoming. Is there a lot of sailing in Wyoming? — I wouldn't think so. — I would think more horseback riding. — Yeah. Yeah. Well, maybe — Maybe they think of that as sailing. I don't know. — 68 male, single, never married, no heirs. Currently, Wyoming resident, retired and moved from Oregon at age 60, drive a paid for 2024 Subaru Outback Onyx XT. Lifelong render, but had a condo and then a house in the early 1980s and 90s.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- retirement planning
- roth conversions
- rmd timing
- tax minimization
- early retirement
Companies and tickers mentioned
- Pure Financial Advisors, LLC
Watch the episode
Watch “Could You Retire Tomorrow If You Had To?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Should You Do Roth Conversions in a Down Market?
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