Episode 194: RWS Live! Rethinking Retirement: Inflation, Annuities, and Roth Conversions

In this conversation, Alex Murguia and Wade Pfau explore strategies for retirement planning, including hedging against inflation, using break-even analysis in Social Security decisions, and evaluating annuities for retirement income. They also cover the implications of Roth conversions and the reverse equity glide path strategy for managing investments. The discussion highlights the importance of understanding how different financial tools contribute to a comprehensive retirement plan.

 

Takeaways

• Hedging against inflation can be approached through TIPS or equities, each with distinct risk profiles.
• TIPS provide a contractually protected hedge against inflation, while equities may offer higher long-term growth.
• Break-even analysis for social security is often misleading and can lead to poor decision-making.
• Delaying social security benefits can provide inflation-adjusted lifetime income, which is crucial for retirees.
• Annuities can be a useful tool for ensuring reliable income, but their lack of inflation protection must be considered.
• Paying taxes for Roth conversions from an IRA is acceptable if no other funds are available.
• The present value of social security benefits should be considered as part of a retiree's bond-like income.
• The reverse equity glide path strategy can help manage sequence risk in retirement by gradually increasing equity exposure.
• Understanding the implications of social security estimates is essential for accurate retirement planning.
• Investment strategies should align with individual risk tolerance and retirement income needs.

 

 

Chapters

00:00 Market Valuations and Investment Strategies

00:00 Inflation Hedging: TIPS vs. Equities

04:23 The Break-Even Analysis of Social Security

09:54 Annuities and Inflation Protection

14:01 Roth Conversions and Tax Strategies

20:01 Social Security Strategies for Couples

26:58 Retirement Income Challenges and Strategies

 

Links

Explore the New RetireWithStyle.com! We’ve launched a brand-new home for the podcast! Visit RetireWithStyle.com to catch up on all our latest episodes, explore topics by category, and send us your questions or ideas for future episodes. If there’s something you’ve been wondering about retirement, we want to hear it!

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2025! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips