Episode summary
Rising Costs and Retirement Unknowns? Here’s What to Do
Your Money Your Wealth
· · 50 min · Hosts: Joe Anderson, Big Al Clopine
Summary
The hosts fielded a set of retirement planning questions centered on rising costs, tax diversification, and how much flexibility a household really needs before it retires. For Al and Peggy in Illinois, they ran the numbers on a planned retirement around age 58 or 59 and concluded the plan is close, but a little tight if the part-time shoe-store income does not materialize. They also favored continuing to build Roth assets where possible, since the household is still in a relatively low bracket and could benefit from more tax-free money later. On the pension question, they said the lump-sum versus annuity decision depends on plan details, especially whether there is a cost-of-living adjustment.
For Eloise in Connecticut, the hosts leaned toward keeping a long-term care policy even though premiums have risen sharply, arguing that replacing coverage at age 70 would likely be far more expensive and that the policy may still protect an estate.
They also backed Tammy and Eric’s idea of letting their college student borrow modestly to preserve retirement savings and employer matching, while treating the two college accounts flexibly. For Lana and Sterling, the hosts thought they were over-optimizing taxes: they preferred capital-gains harvesting over rushed Roth conversions, and said the couple already has strong tax diversification with a large Roth balance and significant fixed income.
Key takeaways
- The hosts think Al and Peggy are close to retirement, but their plan is safer if the part-time income ends up higher than $36,000 a year.
- They favor using some Roth 401(k) contributions or conversions now for Al and Peggy, because they are still effectively in the 12% bracket.
- For Eloise, the hosts lean toward keeping the long-term care policy because replacing it at age 70 would likely be much more expensive.
- The hosts agree Eric and Tammy’s son can reasonably take modest student loans if it helps preserve retirement contributions and the employer match.
- For Lana and Sterling, the hosts would prioritize capital-gains planning over Roth conversions, since the couple already has substantial Roth money and strong fixed income.
Notable quotes
“How do you protect your future from rising cost and unknowns that are out of your control”
“I would be switching some of that 401k into the Roth component um to get you to the $100,000 roughly of taxable income”
“If it were me, Joe, I would probably try to make more like 45,000 instead of 36,000”
“I would continue to have that um and pay for it for the next 15 years”
“I say the kid takes a loan”
How the episode opens
Should Al and Peggy in Illinois keep hammering pre-tax retirement savings, or should they pivot to post-tax Roth for better tax diversification? Which pension option is best for their early retirement plans? Long-term care insurance premiums are going up endlessly for Eloise in Connecticut.
Is she walking into an insurance industry trap? How do Eric and Tammy in Baton Rouge help their kids with college without blowing up their own retirement? And when do student loans make sense?
Finally, should Lana and Sterling harvest capital gains or prioritize Roth conversions before moving to a much higher tax state? The basic question in all of these is the same. How do you protect your future from rising cost and unknowns that are out of your control?
We'll find out what it takes today on Your Money, Your Wealth podcast number 567. I'm executive producer Andy Last and here are the hosts of Your Money, Your Wealth, Joe Anderson, CFP, and Big Al Copine CPA.
Alan Peggy. Oh, Bundy, I'm guessing. — I think so. — Hey, John and Big Al. — God. — Is that a first, Joe? — Uh, no. — No, you've been called John. You've been called Jack. — Yeah. And Joel. — Oh, Joel. That's I think that was your favorite. Joel.
Joel. — The guy said I listen I've listened to your show for years. And Joel, you were the best. — Joel. Uh, hey John. Big Al. This is Alan Peggy in Illinois. I'm 52 and she's 51. We have two kids, Kelly and Bud. They are 14 and 12 respectively. I caught your show by chance and willing to butter you guys up by saying I've listened to a lot of them. Yeah, a ton of them. You don't even know my effing name.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- pre-tax vs roth retirement savings
- pension lump sum vs lifetime income
- long-term care insurance premiums
- college funding and retirement tradeoffs
- roth conversions vs capital gains for higher tax states
Companies and tickers mentioned
- Pure Financial Advisors
Watch the episode
Watch “Rising Costs and Retirement Unknowns? Here’s What to Do” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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