Navigating Medicare Premiums and Roth IRA Conversions

What’s that sound? Our guest today explains that it’s the retirement savings bomb ticking louder. Listen in and get smarter about RMDs, Roth IRAs – and the tax bomb that’s ticking louder for you.

Ed Slott joins us from New York.

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Bio

Ed Slott is the author of The Retirement Savings Time Bomb Ticks Louder: How to Avoid Unnecessary Tax Landmines, Defuse the Latest Threats to Your Retirement Savings and Ignite Your Financial Freedom.

Ed is a nationally recognized IRA distribution expert, professional speaker, television personality, and best-selling author. He is known for his unparalleled ability to turn advanced tax strategies into understandable, actionable and entertaining advice. He has been named “The Best Source for IRA Advice” by The Wall Street Journal, and USA Today wrote, “It would be tough to find anyone who knows more about IRAs than CPA Slott.”

As president and founder of Ed Slott and Company, LLC, the nation’s leading source of accurate, timely IRA expertise and analysis to financial advisors, institutions, consumers and media, he provides:

1. Advanced training to financial professionals to become knowledgeable recognized leaders in the retirement marketplace; and

2. Answers to retirement savers’ most important questions, continually providing practical, easy-to- understand information

on IRA, retirement, tax and financial planning topics.

Mr. Slott is a Professor of Practice at The American College of Financial Services and regularly presents on IRA and estate planning strategies at both consumer events and conferences for financial advisors, insurance professionals, CPAs and attorneys, including virtual events drawing thousands of attendees nationwide. He has provided topical keynote presentations for leading financial membership organizations, including the Financial Planning Association, National Association of Personal Financial Advisors, Estate Planning Councils and the American Institute of Certified Public Accountants, as well as leading corporate financial firms coast-to-coast.

Mr. Slott is an accomplished author of many financial and retirement-focused books, including most recently Ed Slott’s Retirement Decisions Guide: 2021 Edition (IRAHelp, 2021) and Fund Your Future: A Tax-Smart Savings Plan in Your 20s and 30s (IRAHelp, 2021) with The New Retirement Savings Time Bomb (Penguin Random House, 2021). He also hosts the popular website irahelp.com as a resource for financial professionals and consumers, where The Slott Report blog is followed by tens of thousands of readers.

As the go-to resource for media on timely insight on breaking news as it relates to retirement and tax planning laws and strategies, Mr. Slott is often quoted in The New York Times, The Wall Street Journal, Forbes, USA Today, Kiplinger, Investor’s Business Daily and numerous additional national magazines and financial publications. He provides a monthly Q&A column to AARP and is also a contributing columnist and media resource to Financial Planning, Financial Advisor and Investment News magazines. He has appeared on many national television and radio programs, including NBC, ABC, CBS, CNBC, CNN, FOX , FOXBUSINESS, NPR, Bloomberg and Morningstar.

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For More on Ed Slott

Website 

The Retirement Savings Time Bomb Ticks Louder

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Podcast Episodes You May Like

An Economist’s Take on Retirement Planning – Larry Kotlikoff

The Balancing Act in Retirement – Stew Friedman

Retire Happy – Dr. Catherine Sanderson

Independence Day – Steve Lopez

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Wise Quotes

On The Retirement Savings Tax Bomb

“I think it’s reaching a point where in my latest book, I call it The Retirement Savings Time Bomb Ticks Louder, in big letters, because I’m worried this ticking tax time bomb, if you can say that three times fast. The ticking tax time bomb you asked me about is simply the tax bill growing inside your IRA. It’s like the movie Aliens where it’s growing and growing inside, but you don’t see it because you see your IRA balance going up and up – and you say, Well, that’s good. But a lot of that is owed right back to the government. I always say your IRA is an IOU to the IRS. It’s a debt growing. That’s what it is, like a mortgage on your home. You have a mortgage on your retirement savings. The reason, and that’s the tax building up. And I call it a ticking tax time bomb because we don’t know when it’s going to go off, depending on when Congress gets its act together.”

On Your Joint Partner

“Even if rates stay the same, Joe, your balance is going up, and at some point, you’re going to get hit hard in retirement – at the worst possible time. People think their retirement savings is theirs. But if you look at the word theirs, it spells the IRS. Look at the word theirs, T -H -E -I -R -S. People think just because you get a statement on your monthly or quarterly, whenever you look at it online, that you think that’s your money because your name is on there. Well, there’s a hidden partner on there. It’s like a joint account. Can you imagine if somebody told you your IRA was a joint account with Uncle Sam? Now, most people understand the concept of a joint account. You see it with husband and wife, spouses, and that generally means 50 -50. The difference with this joint account with Uncle Sam, you don’t know what his share will be based on what future tax rates might be, which I worry about being higher. So the big mistake is to be lulled into this false sense of security that you think all of that money will be spendable in retirement. It won’t.”

On Roth IRAs

“The key item is, I always like to say, move your money from accounts that are forever taxed, tax deferred, to never taxed. Tax-free. That’s the promised land. That’s where you want to be. The Holy Grail, where you never have to worry about the uncertainty of what future higher taxes can do to your standard of living in retirement. So the big message is, if you’ve been saving the wrong way – but that’s how we were taught, saving in IRAs, putting money in 401(k)s – you’re just building a bit of a tax bill for IRS and yourself. Instead of that, start going the other way. Now, this is counterintuitive because I’ve been saving, I’ve been accumulating my whole life. Why should I go the other way? I want to keep building. I’m still working. I’m getting closer to retirement. I want to put the pedal to the metal. Don’t do that. Don’t add any more money. Focus on getting that money out. One alternative, one suggestion, a strong suggestion: convert to Roth IRAs. What does that mean? Take some of that money down now, even before retirement, especially if you’re in your sixties, that’s a sweet spot before you’re forced to take it out at 73 and move it to a Roth. And then it grows tax free for the rest of your life. Now that sounds simple. So the question is why wouldn’t everybody do that? And you know the answer, right, Joe? The answer is you have to pay tax. There’s a toll and nobody wants to pay the tax upfront. And that’s short-sighted. But I’m telling you now is the time to pay taxes while rates are at historic lows. The key to saving money in taxes, and you can save a fortune, tens of thousands, hundreds of thousands, even millions, depending on how much you have saved, just with good tax planning.”

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About Retirement Wisdom

I help people who are retiring, but aren’t quite done yet, discover what’s next and build their custom version of their next life. A meaningful retirement doesn’t just happen by accident. Schedule a call to discuss how The Designing Your Life process created by Bill Burnett & Dave Evans can help you make your life in retirement a great one – on your own terms.

About Your Podcast Host 

Joe Casey is the author of Win the Retirement Game: How to Outsmart the 9 Forces Trying to Steal Your Joy. He’s an executive coach who also helps people design their next life after their primary career and create their version of The Multipurpose Retirement.™ He created his own next chapter after a twenty-six-year career at Merrill Lynch, where he was Senior Vice President and Head of HR for Global Markets & Investment Banking. Today, in addition to his work with clients, Joe hosts The Retirement Wisdom Podcast, which thanks to his guests and loyal listeners, ranks in the top 1 % globally in popularity by Listen Notes, with over 1.4 million downloads. Business Insider has recognized Joe as one of 23 innovative coaches who are making a difference.

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The views and opinions expressed by guests on The Retirement Wisdom Podcast are solely those of the guests and do not reflect the opinion of the host or Retirement Wisdom, LLC. The Retirement Wisdom Podcast primarily covers the non-financial aspects of retirement. From time to time we may invite guests who discuss other aspects of retirement planning, solely for educational purposes. Listeners are advised to consult qualified financial and/or medical professionals on those matters.