Episode summary
Retirement Margin Loans: Is Buy, Borrow, Die Worth the Risk?
Your Money Your Wealth
· · 44 min · Hosts: Joe Anderson, Big Al Clopine · Guests: Jack, Jill, Forest, Jenni, Diane, Bones1999, Tom
Summary
The episode centered on whether borrowing against a portfolio can be a sensible retirement tool, or whether margin debt and the broader “buy, borrow, die” approach can backfire. The hosts said margin can make sense when the tax bill from selling appreciated assets would be large, but only if the borrower understands the risks, keeps leverage modest, and plans to repay the loan. They repeatedly emphasized that the strategy works best when the spread between expected returns and borrowing costs is favorable, and that a market decline can make the leverage painful quickly.
They also argued that the answer depends heavily on the investor’s age, spending need, and tax bracket. For Jack and Jill, they thought a modest pledge loan could be useful, but not as a default retirement plan. They were more cautious about buy, borrow, die as a general philosophy, noting that it depends on basis step-up, outside assets, and the possibility that things do not go as planned.
The episode also covered a reverse glide path for Forest and Jenny, and a Roth conversion plan for Jack and Diane. On both cases, the hosts concluded the numbers looked workable, but they favored simpler allocation and tax decisions over chasing a clever but modest optimization.
Key takeaways
- The hosts said margin can help bridge a tax bill, but only if the investor can repay it in 12 to 24 months and tolerate portfolio volatility.
- They argued that 25% leverage may be workable, but higher leverage can become dangerous in a severe downturn.
- For Forest and Jenny, the hosts thought a reverse glide path offered only a modest benefit and probably was not necessary given their savings rate and projected withdrawal rate.
- For Jack and Diane, they said a temporary IRA withdrawal before a home sale looked manageable, and a Roth conversion strategy should stay focused around the 22% bracket.
- They stressed that the buy, borrow, die idea can work, but only if the assets, loan balance, and eventual step-up in basis all line up as hoped.
Notable quotes
“using margin to purchase lump sum long buy and hold ETFs, triple Q's, VGT with good borrowing rates compared to most IBKR”
“if the markets go up, I think it's a phenomenal strategy. If the markets go down, it bleeds both ways, right”
“You buy your stocks, then you borrow from the stocks and then you die and you get a step up in basis”
“many retirees don't want to increase their risk as they get older. They want to decrease it”
How the episode opens
The great margin loan debate continues today on Your Money, Your Wealth podcast number 589. Jack and Jill, longtime listeners who recently moved from the UAE to here in Australia, want a sanity check on using margin loans to build and live off their portfolio, and whether their strategy of buying stocks, borrowing against them, and never paying tax on the gains, aka buy, borrow, die, is a good idea. Oh, and we'll recap the spicy YouTube comments the margin loan discussion back in episode 585 got us.
Then join Big Al Spitball on flipping the script in retirement for Forest and Jenny in Virginia. Does a reverse glide path, investing conservatively and then getting more aggressive as they age, actually hold up? And finally, Jack and Diane in New Jersey are retiring this year, selling the house, and moving to Florida.
Joe and Big Al spitball a stress test on their Roth conversion plan. Hit subscribe if you're watching us on YouTube and drop a comment. Margin loans, buy, borrow, die, reverse glide paths.
What do you think? I'm executive producer Andy Last and here are the hosts of Your Money Your Wealth. Joe Anderson CFP and Big Al Copine CPA.
All right, hanging upon us once again, folks. Show's called Your Money, Your Wealth. Joe Anderson, Big Al, Andy Last hanging out in our office. — How big your head is, Joe. You zoom in next to the camera. — It's gigantic.
You're all you're all face today. This is this is going to look really good, — But we're trying our best. — Obviously, we are not in the TV studio today. Aaron Townsen, our TV producer, is actually out. He's Where is he? He's in Tahoe. He's on vacation. And so, we're having to do this with Joe and Al from their offices.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- margin loans
- buy borrow die
- reverse glide path
- roth conversions
- retirement cash flow
Companies and tickers mentioned
- Pure Financial Advisors, LLC
Watch the episode
Watch “Retirement Margin Loans: Is Buy, Borrow, Die Worth the Risk?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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