Ready For Retirement

A listener says, “Eventually, one spouse will pass before the other, which will often catapult the survivor into a significantly higher tax bracket. Shouldn’t a Roth strategy take this into account?” James explores several factors that could positively and negatively impact a survivor’s tax liability and what to consider when creating a Roth conversion strategy. Questions Answered: How can Roth conversions benefit married couples beyond tax savings?What factors should be considered when determining the optimal strategy for Roth conversions to protect a surviving spouse?Timestamps:0:00 - Steve’s question3:40 - An example6:41 - 3 changes12:32 - Positive impacts15:22 - RMD calculations16:45 - Widows tax penalty19:46 - When to do Roth conversions23:40 - Big age gap28:45 - Start with a good reason29:57 - The bottom lineCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

Jason and his wife face a crucial decision: whether to purchase an annuity or pursue traditional investments as they prepare for a full-time, slow-travel retirement. With a diverse array of income sources, including pensions, 401k, property sales, and Social Security, they estimate their monthly expenses at $7,500. James analyzes their situation, emphasizing the balance between annuity stability and investment flexibility.He highlights the security of annuities and explains their limitations, guiding the couple towards a tailored approach that aligns with their goals and circumstances.Questions Answered:What are the pros and cons of annuities?How can I effectively balance the stability of annuities with the flexibility of traditional investments?Timestamps:0:00 - Jason’s question3:07 - Pros and cons of annuities6:32 - Assessing Jason’s situation9:52 - The role of Jason’s portfolio11:40 - Annuity alternatives13:23 - Support your retirement vision16:54 - Integrate financial plan and portfolioCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

The "Three Bucket Strategy" is a popular retirement income planning method. The first bucket covers immediate expenses in retirement. Listeners John and Donna are seeking advice on constructing their first bucket. With $1.6 million in assets and pension incomes, they aim to retire in 2026. James analyzes their needs, income sources, and portfolio and lays a foundation for their Bucket #1. It's crucial to bridge the gap between expenses and income, considering risk capacity and tolerance. Questions Answered: How do you divide assets into the three buckets, and what is the purpose of each?What role do risk capacity and risk tolerance play in determining portfolio allocation?Timestamps:0:00 - John and Donna3:36 - The bucket approach5:50 - Start with expenses8:53 - Non-portfolio income sources11:23 - Identify and bridge the gap13:06 - Assessing their portfolio14:53 - Portfolio dividend yield16:49 - Do you need Bucket 1?19:16 - What is the specific need?21:07 - Risk capacity23:22 - Test contingenciesCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

Benjamin, nearing retirement at 65, faces a familiar dilemma with his taxable account housing expensive mutual funds. Despite their underperformance, converting to low-cost index funds entails a significant tax hit due to long-held appreciable value. James explains weighing the immediate tax consequences against the risk of holding onto underperforming assets. He also provides a framework for assessing risk, identifying options, and making decisions based on personal financial goals.Questions Answered: How can you decide whether to sell underperforming mutual funds or continue holding onto them?  What factors should you consider in determining whether converting to low-cost index funds aligns with your financial goals and risk tolerance?Timestamps:0:00 - Listener question from Benjamin2:17 - Tail wagging dog?3:52 - Benjamin’s situation5:31 - WCS of selling vs not selling11:17 - Be careful about tax drag12:47 - Rethinking the break-even point14:11 - Consider your goal for the money17:17 - Identify the bigger risk19:26 - Make your decision20:26 - Will your tax situation change?24:20 - Consider staggering sales28:21 - SummaryCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

Typical retirement strategies assume a retirement age of over 60. With an earlier retirement goal, a careful look is required to determine what strategies will create the best outcome. James responds to a listener’s question about where to invest as he anticipates an early retirement. James walks through the steps of Root’s Sequoia System to explore options for early retirement scenarios.Questions Answered: How does early retirement impact traditional retirement planning strategies, such as the 4% rule?When deciding between retirement accounts (e.g., 401k) or brokerage accounts for pre-60 funds in early retirement, what factors should be considered?Timestamps:0:00 - Question about early retirement2:21 - Is early retirement possible?3:30 - Why the 4% rule doesn’t apply6:08 - Assessment of Juan’s situation8:11 - The Sequoia system Step 1 - purpose10:16 - Step 2 - retirement income12:49 - Relying on SS benefit?14:09 - Withdrawal strategy15:32 - Sourcing funds from age 50-5917:20 - Brokerage vs 401K20:22 - A part-time income scenario23:04 - Consider how expenses might change25:14 - Step 3 - investment planning28:09 - Steps 4 & 5- taxes and protectionCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

The 4% rule helps us understand how much we can safely take out of our portfolio each year without running out of money in retirement.Yet, as simple as the 4 percent rule seems, the practical implications are drastically misunderstood. I explore the three common mistakes people make when applying this rule and how to avoid them.Questions Answered:How do RMDs impact the 4 percent rule?Does the 4 percent rule account for changes in expenses and income sources?Timestamps:0:00 - Questions from listeners1:26 - Misconception 1 - RMD 3:27 - 4% rule applies to portfolio5:51 - Assumption of 30 years retirement7:51 - Misconception 2 - annuity distributions10:01 - An example 12:33 - Misconception 3 - static cash flow13:42 - Examples of changes17:44 - SummaryCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

Retirement is not just about financial readiness; it's also about finding purpose, passion, and personal growth. James and guest Cynthia Meyer debunk the arrival fallacy, the illusion that reaching retirement will bring lasting happiness. Having structure in retirement and pursuing your passions is vital to feeling fulfilled. Although it's easy to fall into comparing our retirement experiences to those around us, this is a dangerous trap. Finding what's truly important to you and following that will lead to much greater happiness.Questions Answered:What is the arrival fallacy?How can retirement coaching help you find freedom and fulfillment in retirement?Timestamps:0:00 - Arrival fallacy1:25 - Retire…then what?3:58 - Structure in 4 chunks6:06 - Risks of no structure7:59 - Procrastination9:35 - Finding your passion12:33 - Microsteps and consistency14:32 - Prodding the brain17:01 - Not just for retirement20:33 - Passion follows commitment22:43 - Experiment and be flexible24:20 - Be careful of stereotypes26:17 - Rewire retirement28:08 - Advice and resourcesCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

Sammy, a 51-year-old retiree, is seeking advice on how much she should convert from her traditional IRA to a Roth IRA each year to avoid jumping tax brackets and minimize the taxation of her social security benefits. James analyzes Sammy's current financial situation and offers guidance on approaching the tax planning aspect of her retirement strategy.Learn:How to determine how much to convert from an IRA to a Roth IRA Why forward-looking tax planning is essentialThe potential consequences of certain financial decisionsQuestions Answered:What factors should you consider in planning Roth conversions?How can you avoid going into a higher tax bracket?Timestamps:0:00 - Sammy’s Roth conversion question2:29 - The Roth/tax rules today4:58 - Tax on different types of income7:24 - Some assumptions10:19 - Figuring tax and making assessments12:28 - RMD part 115:33 - RMD part 217:25 - Caution about tax bracket assumptions21:58 - Important side note23:45 - TakeawaysCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

James addresses a common concern for a couple approaching retirement through a listener’s question. Listener Rob plans to collect Social Security early at 62, raising questions about his wife’s retirement.Understanding Social Security strategies to avoid potential losses during retirement is important.James explains the intricacies of spousal benefits, detailing how they are calculated based on the primary earner's full retirement age benefit.Key Takeaways:-Wait until full retirement age to maximize spousal benefits-Primary earner must start to start collecting for the spouse to be eligible-Nuanced calculations involving the spouse's own retirement benefitQuestions Answered:When should a spouse collect Social Security spousal benefits?How are spousal benefits calculated?Timestamps:0:00 - A listener’s question3:00 - Two SS options5:17 - Spousal benefit amounts7:24 - When spouses can collect8:55 - Spousal + primary benefits11:59 - Implications of collecting early14:16 - The good news16:00 - The key takeawaysCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

As one listener prepares for an early retirement, James discusses the situation, covering how to build a bond ladder based on non-retirement funds.James provides a different way of looking at the stock-to-bond conversation.Learn how to determine the appropriate amount to have a bond ladder and whether you should own individual bonds or bond funds as a part of that ladder.Questions Answered:How do you balance risk capacity and risk tolerance in portfolio allocation?How do you build an effective bond portfolio for retirement?Timestamps:0:00 - Listener case study2:37 - James’s perspective on bonds7:42 - Considering purchasing power10:18 - Balance of stocks and bonds13:39 - Dividends are typically resilient16:40 - All bonds not created equally20:30 - Bond ladder23:09 - Different types of bonds24:51 - Withdrawal strategy26:39 - More on bonds30:09 - 3 questions to considerCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!