Episodi
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Roth IRAs offer great tax-free income benefits, but to make the most of them in retirement, here are seven things you need to know:
Contribution Limits: In 2024, you can contribute up to $7,000 annually ($8,000 if 50+), across both Roth and traditional IRAs.Access to Contributions: You can withdraw your contributions at any time, tax-free and penalty-free. Only earnings are subject to penalties if withdrawn early.The Five-Year Rule: To withdraw earnings tax-free, the Roth IRA must be held for at least five years.Income Limits & Backdoor Roths: High earners may not be able to contribute directly, but a backdoor Roth strategy can help. Consult a financial advisor for guidance.No RMDs: Roth IRAs don’t require minimum distributions, allowing your funds to grow as long as you want.No Impact on Social Security: Roth IRA withdrawals won’t count toward your provisional income, potentially lowering your Social Security tax.No Medicare Surcharge: Roth withdrawals don’t affect your adjusted gross income, helping you avoid higher Medicare premiums.By understanding the points above, you can use a Roth IRA to manage taxes and increase flexibility in your retirement.
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - What is a Roth IRA?
1:38 - Free withdrawals
3:15 - The 5-year rule
4:49 - Income thresholds
6:01 - Backdoor Roth contribution
8:18 - No RMDs
9:26 - Not provisional income
12:10 - Not part of IRMA calculations
13:06 - Income requirement nuances
14:49 - Wrap-upCreate Your Custom Strategy ⬇️
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Have you thought about what moving to a new state might mean for your retirement budget and lifestyle? In this Ready for Retirement episode, the focus is on preparing for an out-of-state retirement. James outlines three essential considerations for retirees planning a move:
1. Housing Costs and Expenses: From property values and local property taxes to potential capital gains from selling a current home.
2. Overall Cost of Living: Everything from groceries to utilities varies widely between regions. It’s also wise to consider personal lifestyle goals—like travel or access to nature—as these can impact ongoing expenses
3. A Solid Tax Strategy: Particularly if moving to a state with different tax laws. Retirees can benefit by adjusting their tax strategy based on the state they’ll be in, potentially saving thousands over time.
These tips offer invaluable guidance for anyone considering a fresh start in a new state after retirement.
Questions answered:
How can moving to a different state impact my retirement expenses?
What tax strategies should I consider if I plan to retire out of state?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - An overview
1:27 - Compare housing costs
4:04 - Moving to higher property tax state
6:32 - Moving to lower property tax state
7:12 - Compare cost of living
10:48 - Dial in your tax strategy
13:44 - Consider state tax rates
14:51 - SummaryCreate Your Custom Strategy ⬇️
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Episodi mancanti?
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Many dream of retiring early, but you would be surprised to learn that many people who retire early regret doing so. James reveals five things that lead people to regret early retirement and provides practical tips to avoid these pitfalls.
He explains why many individuals who retire before 65 struggle due to a lack of planning, overly conservative investment strategies, and failure to envision life beyond work. He highlights the importance of aligning financial plans with personal goals, maintaining a balanced portfolio to outpace inflation, and considering part-time work as a transitional phase. He also encourages listeners to “practice” retirement before fully committing and cautions against adhering to common retirement “rules” without understanding their context. By addressing these critical aspects, listeners can make more informed decisions and transition into retirement, at any age, with confidence.
Questions answered:
Why is it important to have a life plan in addition to a financial plan when retiring early?
What lifestyle adjustments should early retirees be prepared to make to sustain their retirement long-term?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - Defining early retirement
1:15 - Not knowing what you’re retiring to
4:14 - Being too conservative
7:51 - Not considering part-time work
12:25 - Not practicing retirement
14:05 - Relying on retirement “rules”
17:26 - Being too dependent on 401(k)Create Your Custom Strategy ⬇️
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James sits down with someone who’s financially set to retire—mortgage paid off, kids through college, and investments in place—but he’s still grappling with one big question: what’s next?
Instead of focusing solely on financial strategies or retirement planning, James gives him some unexpected advice: start journaling. This led to a deeper conversation about finding purpose beyond optimizing your portfolio.
What would your life look like without constraints? What actually matters most to you? And how can you ensure your future is filled with meaning, not just money?
It’s not just about retiring from something but retiring to a life you love.
Questions answered:
How can I avoid feeling unfulfilled in retirement, even if I have all the money I need?
What are some practices I can do now to flush out what I really want out of life?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - A pertinent conversation
1:53 - Journaling prompts
3:00 - What matters
4:47 - Imagine no limitations
6:43 - Best, second-best, worst scenarios
10:00 - Addressing fears steps 1&2
13:22 - Addressing fears steps 3&4
16:43 - Take action
18:50 - Wrap-upCreate Your Custom Strategy ⬇️
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For many, Social Security makes up a large portion of their retirement income, so it’s important to know how to maximize your Social Security benefit. James explains how Social Security works, diving into some important foundational aspects. He then explains four key strategies for maximizing benefits:
1. Work for 35 years to avoid zero-income years in the calculation.
2. Delay benefits, if possible, until age 70, increasing payments by 8% annually after full retirement age.
3. Leverage spousal benefits, allowing a lower-earning spouse to claim up to 50% of the higher-earning spouse's benefit.
4. Plan for survivor benefits, where a surviving spouse can receive 100% of the deceased spouse’s benefits.
By understanding how these factors work, retirees can make informed decisions to maximize their Social Security income, reducing pressure on their savings and ensuring a more stable retirement.
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Questions answered:
How is Social Security funded, and how does it affect my retirement income?
How are Social Security benefits calculated based on my earnings?
Timestamps:
0:00 - How SS works
4:16 - Drilling deeper
6:27 - Full retirement age
8:08 - Work 35 years
10:08 - If possible, wait
12:17 - Spousal benefits
14:03 - Survivor benefits
17:39 - SummaryCreate Your Custom Strategy ⬇️
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ames responds to a question from Chris regarding restricted stock units (RSUs) and how to avoid costly mistakes when managing them. He explores whether it’s wise to hold onto company stock or diversify for a safer financial future. He breaks down how RSUs work, from vesting schedules to the tax implications of receiving stock as part of your compensation package. He also explains the critical considerations you should make when deciding whether to hold or sell vested shares and how this decision fits into your broader investment strategy.
Questions answered:
Should I hold onto or sell my vested RSUs?
What are the tax implications of RSUs, and how can I avoid mistakes?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - How RSUs work
4:24 - Like a cash bonus
7:17 - Question your performance assumptions
12:25 - How RSUs are taxed and paid
15:14 - Default withholding rate and wash sale rulesCreate Your Custom Strategy ⬇️
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Patrick and Mary will soon both be retired. They are curious about what their withdrawal strategy should be as they balance various retirement accounts, including a pension, IRAs, and a brokerage account. They've been using tax gain harvesting to minimize taxes and plan to eliminate gains by 2024. A key question is whether to withdraw from their IRAs or brokerage account first, considering their state’s tax exclusion. James explains that by managing withdrawals and Roth conversions strategically, some retirees can reduce tax liability, optimize income streams, and preserve the tax-free growth of Roth accounts during retirement.
Questions answered:
Should retirees withdraw from their taxable brokerage accounts or IRAs first to minimize taxes?
How can Roth conversions and state tax exclusions be used to optimize income and lower taxes during retirement?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - Meet Patrick and Mary
3:14 - Retirement taxes are different
6:37 - Consider combined tax rates
8:42 - Tax gain harvesting
12:35 - Strategizing income in retirement
16:48 - Realized gains
20:12 - A twist on traditional thinking
23:47 - The bottom lineCreate Your Custom Strategy ⬇️
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Ben has been a saver his entire life, which helped position him for an early retirement at the age of 53. Yet, he faces a big challenge. Having maintained his modest lifestyle, Ben’s comfortable portfolio has continued to grow and has nearly doubled in value. James and Ben discuss the challenges of making mindset shifts and the proactive steps Ben has taken to encourage himself to spend more.
Questions answered:
How did Ben decide to retire when he was in his peak earning years?
What are the steps Ben has taken to force himself to spend more?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - Meet Ben
2:36 - A lifetime saver
5:28 - Confidence to retire early
6:41 - Retirement reality vs expectations
9:12 - The appeal of retirement
11:46 - The biggest challenge - spending
14:13 - A growing portfolio
17:33 - The lure of subsidiesCreate Your Custom Strategy ⬇️
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Monique aspired to retire early, and while she had faithfully saved throughout her working years, she wasn’t sure if she had enough to retire. After getting assurance from professionals, she took the plunge and quit working. Monique and James talk about the first two years of her retirement – how she’s been able to focus on her health and pursue some hobbies she didn’t have time for previously. Monique also shares some surprising challenges related to spending, travel, and family dynamics.
Questions answered:
What can retirees who are natural savers (and have more than enough) do to loosen the purse strings and spend more?
What does Monique wish she had done differently during her working years in preparation for retirement?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - Meet Monique
3:58 - 5 years before retiring
8:03 - Money impressions from childhood
10:47 - Transition to retirement
15:06 - Spending and travel challenges.
20:50 - Family pressure and self-awareness
25:51 - A spending exercise
32:19 - Better physical and mental health
35:53 - Persons and social changes
39:01 - Advice for younger selfCreate Your Custom Strategy ⬇️
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Elaine didn’t decide to retire at age 57, but changes in her company meant an early retirement for her. Being caught off guard, she didn’t feel emotionally prepared to make the shift, even though she knew that her family would be fine financially.
One year into her retirement, she found her groove by focusing on her family, building new relationships, trying new things, and staying physically active. Today she says she’s never been happier.
James and Elaine discuss how she found her footing in retirement, the advice she would give her younger self, and the plans she and her husband have for when they are both retired.
Questions answered:
How did Elaine find the activities and community she is now enjoying?
What advice would Elaine give to others on the verge of retirement?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - Meet Elaine
2:55 - The “decision” to retire
4:44 - The loss of income
6:05 - New social outlets and new routine
8:15 - A year to make shifts
11:19 - Advice for younger self
13:58 - Search for activities; don’t say no
16:21 - Challenges and advice
18:37 - What’s next
19:58 - Try new things; build relationshipsCreate Your Custom Strategy ⬇️
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After his father lost healthcare coverage in retirement and had to pay for a major health event with savings, Derek was highly motivated to ensure sufficient coverage in retirement. He even considered leaving the job he loved for one with better healthcare and retirement benefits.
Derek shares his retirement journey with James, including:
➡ Decisions he made pre-retirement
➡ How he addressed healthcare concerns
➡ How his perspective on life and giving back has shifted
➡ How he and his wife prepared for the changes retirement would bring to their marriage
Questions answered:
What are some questions my spouse and I could explore now in preparation for when we’re spending more time together in retirement?
What is Derek’s advice for soon-to-be retirees?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - Meet Derek
3:23 - Importance of healthcare
6:48 - Health in retirement
10:07 - A new perspective and purpose
14:13 - Financial concerns and readiness
16:29 - The biggest challenge
19:30 - Adjustments in the marriage
23:13 - Derek’s advice
26:11 - Final thoughtsCreate Your Custom Strategy ⬇️
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Chris has been retired for a little over a year while his wife has continued to work. Now that Chris has “tried on” retirement and found the fit good, his wife will likely join him within the year. In his conversation with James, Chris, who could be described as goal-oriented and one who likes to be prepared, talks about the pros and cons of retirement. He’s found that by staying flexible, maintaining an adventuresome spirit, and focusing on giving back, retirement can be quite fulfilling. And he’s paved the way for his wife to retire with confidence.
Questions answered:
What sort of conversations could spouses be having before and during retirement about goals and expectations?
How will relationships with colleagues shift and change in retirement?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - Meet Chris
3:50 - Impressions regarding retirement
6:17 - Preparatory conversations
9:09 - Decompressing and adjusting
12:24 - Purpose and mystery
15:59 - Exploring and serving
21:19 - Missing colleagues
25:57 - One spouse retiring first
29:41 - What’s next and final adviceCreate Your Custom Strategy ⬇️
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Meet Joe Sullivan, who found the first few years of retirement very difficult. Community is important to Joe, but he wasn't getting sufficient, routine social interaction to make meaningful connections while living in rural Virginia. He found his groove once he moved to a retirement community in Florida.
James and Joe discuss the phases of retirement and what those phases have looked like for Joe. Joe emphasizes the importance of remaining flexible and trying new things as retirees explore who they will be in retirement and what will bring them the most satisfaction and joy.
Questions answered:
How can I test the waters to see if a retirement community is a good fit for me?
What is Joe's advice for new retirees?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - Meet Joe Sullivan
3:07 - The decision to retire
5:28 - Impressions vs real retirement
9:11 - Needing something else
10:39 - Retirement community decision
12:05 - Before and after the move
14:32 - Finding purpose
17:16 - Phases of retirement
20:08 - Joe’s advice
22:05 - Emotional preparation
24:32 - Next phase of Joe’s retirement
26:07 - Final thoughtsCreate Your Custom Strategy ⬇️
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Ready for Retirement is on a mission to be the most valuable source of retirement information in the world. In that light, we’re making some changes. The biggest change is that rather than James doing all the talking, he’s inviting people like you to be part of the show. Some of you have real-life retirement advice to share. Others of you have questions that James can address. Ready for Retirement is poised to be a place for both. Get all the details in today’s episode.
Questions answered:
How will the format of the Tuesday YouTube video and the Saturday podcast change?
How can I participate?
Submit your request to join James:
On the Ready For Retirement podcast: Apply Here
On a Retirement Makeover episode: Apply Here
Timestamps:
0:00 - A new format
1:41 - Upcoming podcast changes
2:56 - Retirement makeovers on YouTube
4:23 - How to participate
6:39 - How to apply
7:43 - Wrap-upCreate Your Custom Strategy ⬇️
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Gary is a 73-year-old with $8 million in savings. Despite having substantial assets, he’s concerned about missed opportunities for Roth conversions as he faces significant required minimum distributions.
James encourages Gary to reassess his investment strategy, particularly the bond funds in his Roth IRA, and align his tax planning with his broader financial goals. By doing this, Gary could make more informed decisions that support his retirement goals and charitable aspirations.
Questions answered:
How can I give money to friends and family without them incurring a huge tax bill?
What advice do you have for someone who has more than enough but has a hard time switching from saving mode to spending mode?
Timestamps:
0:00 - Gary’s question
2:04 - More wealth = less freedom?
5:16 - The controlling factor
7:22 - An exercise
10:09 - Living life; investment allocation
12:49 - Giving considerations
16:09 - Medical expenses considerations
18:45 - Modeling
20:40 - SummaryCreate Your Custom Strategy ⬇️
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Connor plans to retire soon and wonders if he should pay off his mortgage of $300,000 or invest those funds, especially since he has a low interest rate. James gives a detailed response and reveals why there is no one-size-fits-all answer. When it comes to having a mortgage in retirement, math and spreadsheets can help with part of the question, but emotions and personal values should be considered too.
Questions answered:
Should you pay off your mortgage as you head into retirement, especially if you secured a low interest rate mortgage in recent years?
How should you weigh the financial benefits of investing available funds versus the emotional peace of mind of being debt-free in retirement?
Timestamps:
0:00 - Connor’s question
1:36 - An example scenario
4:51 - Interest rates
6:22 - Tax considerations
9:13 - Tax-adjusted mortgage interest rate
12:13 - Sequence of returns
15:27 - Peace of mind
17:07 - ConclusionCreate Your Custom Strategy ⬇️
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Retirement tax planning should begin well before retirement. Listener Jodie, with over $2 million in assets in various types of accounts, is concerned about the high tax bracket she anticipates she be in in retirement. Is there a tax strategy that would put her in a lower tax bracket?
James explores some often-overlooked tax strategies that can save retirees thousands in retirement, especially for those like Jodie with diverse portfolios.
Questions answered:
How could my home be part of my tax strategy?
How can understanding different income sources and account types can help minimize tax burdens in retirement?
Timestamps:
0:00 - Jody’s question
3:54 - The home
7:06 - Inflation and tax thresholds
11:04 - Cash flow vs taxable income
15:07 - Withdrawal strategy
19:30 - SummaryCreate Your Custom Strategy ⬇️
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Listener Michael asks about how Social Security is taxed, the rationale behind the 50% and 85% tax thresholds, and the implications of these taxes on Social Security and IRA withdrawals.
James responds by explaining how Social Security is taxed at the federal level, highlighting the concept of provisional income and the thresholds that determine the taxability of benefits. He notes state taxation of Social Security, explaining that most states do not tax these benefits and naming the ones that do.
He also explains practical strategies for managing Social Security taxes, including the Social Security tax torpedo, and how to incorporate these considerations into broader retirement and tax planning.
Questions answered:
How is Social Security income taxed at the federal level, and what are the provisional income thresholds?
What is the Social Security tax torpedo, and how does it impact the effective tax rate on retirement income?
Timestamps:
0:00 - Michael’s question
1:06 - How SS is taxed
3:15 - Provisional income thresholds
5:21 - Another example
7:13 - Thresholds for married filing jointly
8:41 - SS state taxes
9:59 - How to pay taxes on SS
12:26 - SS tax torpedo
14:27 - Effect on Roth conversionsCreate Your Custom Strategy ⬇️
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Listener Nael opens up a discussion about Roth conversions. There are benefits to doing Roth conversions, but can you do too many? Are there any downsides to Roth conversions?
Reaping the tax benefits from Roth conversions requires hitting a specific sweet spot. If you convert too little or too much, you’ll be leaving money on the table.
So, how do you find Roth-conversion the sweet spot? James lays out five things you should consider as you plan when and how much to convert:
1. Macro and micro tax environment
2. Required minimum distributions
3. State tax brackets
4. Charitable giving
5. Legacy planning
Questions answered:
How might a future out-of-state move impact Roth conversion decisions?
What impact might Roth conversions have on charitable giving or legacy gifts?
Timestamps:
0:00 - Question from Nael
2:20 - The wrong
4:27 - The right way
7:21 - The reality
9:12 - Macro/micro tax environment
11:19 - RMDs and state taxes
15:36 - Charitable giving
17:12 - Legacy and life expectancy
21:22 - Wrap-upCreate Your Custom Strategy ⬇️
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David has a question about taxes in retirement: When you’re retired and no longer getting a regular paycheck from which your employer withheld tax payments on your behalf, how do you estimate the taxes you’ll owe?
To answer this question, it’s important to understand where income in retirement will be coming from and how that income is taxed. Once you have an idea of what you’ll owe, you need to make estimated tax payments throughout the year.
James explains how Social Security, withdrawals from pre-tax accounts, pensions, and brokerage accounts are taxed, and he explains how and when to make estimated tax payments to the IRS.
Questions answered:
What is the Safe Harbor Rule and how is it relevant to estimated taxes?
Is all income in retirement taxed the same?
Timestamps:
0:00 - David’s question
2:09 - Estimated tax payment options
5:28 - Back to David’s question
7:48 - Types of income – SS
11:02 - Pre-tax retirement accounts
13:53 - Average vs marginal tax rate
15:50 - Pensions
17:26 - Brokerage accounts
21:20 - How to make estimated tax payments
23:23 - Other considerationsCreate Your Custom Strategy ⬇️
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