Your "conservative" return assumptions are higher than most (maybe all) of example retirement plan presentations I have seen. Not sure if that is good or bad.
Looks all so easy. I am 54 with almost 3M investments, 1M in retirement accounts, single earner, 4 kids, on 100k income, but still have to get the kids through college, that plus healthcare... oldest in college and youngest are 11 (twins)… so still ways to go… would love to retire earlier, but I don’t see it happening for another decade.
This video is almost exactly our situation, except our house is paid off and we've already paid our kid's college and they're out of the nest, working. I've been running numbers on different retirement calculators because my husband is facing a layoff soon. Even though the calculators say we have a 93% success rate, I'm still a tad nervous. This video was really perfect to boost my confidence! I'm so glad you called the taxable joint brokerage a "super-hero" account because relatives were scolding us that we had more in that one than our Roths. New subscriber! Off to watch more of your videos.
I'm not sure about how to interpret your family's objection, but if your taxable account had MORE but only because your Roth has a cap on how much per year you can put in and a taxable account doesn't, then that's a silly objection. If you're not fully funding your Roth each year, though, I'd seriously consider changing that course to whatever extent you still can, because a Roth may not be Ari's super hero account, but is an account with pretty herculean benefits. That said, I'd wager a guess that you're also funding a 401k (or 403b/etc.) and personally, I think most people are better off skipping some of their 401k contributions (assuming you're getting the full match, if there is one) and filling up the Roth bucket to the limit, rather than skimping on the taxable account to get your Roth up to the annual limit - you will not regret having that taxable account but you MIGHT regret having too much in tax-deferred. That's based mostly on the fact that most people over-commit to the 401k even now with historically low tax rates and the likelihood that tax rates are going to have to go up - making Roth and Taxable accounts where you pay current tax rates now more valuable on a relative basis than tax-deferred. If you have the discipline to save in a taxable account, and not to squander that stash on something unimportant, the options it gives you for things that ARE important to you can be significant. I wish I'd come around to that view earlier in life, as I'm playing catch-up with that account type now. Also, for some of us, the "threat" of inheriting moderate or large pre-tax accounts also pushes us to choose to pre-pay some of the taxes at low rates today and invest after-tax accounts. Those boomers have a lot of 401k and IRA money, since the Roth hasn't been around forever and some of them didn't get the taxable account memo. I don't know what, if anything, will materialize in that regard but I know where most of my parents money is stored, and if it lands suddenly just as my own RMDs start and now has to be taken in a 10-year window, it could upset my own personal expectations of where my relative tax bracket was going to be.... Not a terrible problem to have, to be fair, but strategically makes both the Roth AND the taxable account an even better bet than it already is.
You caused an epiphany for me with this video. Working part time in retirement isn't replacing your income, it's replacing your savings. Say you were making $150k before retirement, but only saving $30k. If you make $30k a year from a part time job in retirement, that has the same effect on your portfolio balance as a full year of working did before retirement.
Awesome again. I really liked this because it is closer to where I am.. very good to give us a foundation for our retirement and how we need to look at all the spokes of the wheel. Thanks Ari!
I think the bigger impact is if you're working part time, then you're not spending full time. Being at a job limits your time sipping lattes at Starbucks.
I like your case studies. They are extremely helpful especially for learning how to use Right Capital, which I bought through your firm and find very complicated. Sadly, the health care subsidies will probably expire at the end of 2025.
The ACA tax subsidies are scheduled to revert back to the maximum income (~80k) with a (9.5% cost) income cliff as opposed to the (8.5% cost) income slope in place through 2025. That's what is known at this point.
$300/month for health care! ? My wife and I retired early and were forced to leave the US due to the expense of health care. I got quotes for approx $2k-$2.5k/mo for health insurance for me and my wife together. We were 56 and 44, good health and neither of us takes a single medication. It was either leave the US or continue working like a slave for the insurance company. Guess which choice I made.
Did you leave before the affordable care act was in place? Do you have a large sum in your traditional 401k/IRAs that you are withdrawing from that phased you out of the government subsidy credits? That's how he got to the $300/month number by keeping the modified adjusted gross income low. The secret is to look poor on paper to the IRS so you can qualify for healthcare subsidies and then withdraw from your after tax brokerage account to lower your MAGI.
I switched to part time employment. My wife and I pay about $150 a month for the both of us on one of the best Kaiser plans available through the affordable act. Used Ari’s reference to find free medical broker.
Yep, I'm going to Spain when I retire. It's like 100 a month for health insurance for two people and they actually cover stuff. No delay, deny, depose.
@@alanwong8307 I left in 2023. I looked at the "non"-ACA plans. My wife and I have passive income from some real estate investments. I don't quilify for any subsidy. We were essentially forced to leave the US. Not that that is a bad thing. Non withstanding he recent positive changes in the political structure, I am so sick of all the drugs, violence and general anger in the US. I don't get why everybody is so mad!
Ari, I really appreciate the case studies! I considered retiring and then picking up a part time gig as a day trader, but not sure how well my stomach would handle this when the market turbulence picks up. Maybe not such a good idea now that I say it out loud.
Not to be a Debbie downer, but you might want to look up the statistics on how many day traders are successful. I did that and it squashed any ideas I had about being one! But you could always be the small percentage that wins...just have to decide if it's worth the risk.
Ari, I know you’ve already done videos about the various accounts and asset location, but I’d like to see a video where you discuss *how old* a certain account is and how that might impact one’s decision whether or not to withdraw money at certain times during retirement. For example, what if someone’s taxable brokerage account is relatively new, and the investments haven’t had much time to grow? Same thing for a 401K, etc.
hi Ari, your videos and content are very very insightful, but do you always have to put that worried look on your face for your screen capture picture? How about a picture that’s more upbeat and positive?
My biggest surprise when I retired was that I could not choose which assets to draw down from a 457 or 401K. They have to take evenly from each investment in the plan whenever you pull money. So if you have a 60/40 stock to bond balance and want to draw only bonds one year because stocks are down, you cannot do it. If you are 59.5 years old you can roll your 401K or 457 to an IRA. The IRA allows you to sell your individual positions. I'm a 54 yo retired fire fighter. I can access my 457 plan now, but I would not have access to them if I rolled them to an IRA. Fortunately my 457 offers a separate brokerage account with Schwab, so I managed to have all of my stock mutual funds with Schwab and my bonds with the 457 plan. I can choose to sell only from the Schwab account or the 457 account, giving me control of my withdrawals back.
Hi Ari. Love your content. I have gotten access to the Right Capital software through the Retirement Academy and really loving it! One question.. on my view of the Retirement tab, I don't have the Add New Item button. Can this be enabled for me? Thank you, and thanks for your content. I'm hopefully going to retire in a year or two!
At 32, I'm diving into investing for the first time. I’ve started contributing to my 401K and opened a Roth IRA with automatic contributions. My main question is whether asset allocation is crucial at this stage or if I'm just overthinking as a beginner.
I completely agree-having a professional manage my investments has been invaluable. My job doesn’t allow time for in-depth stock analysis, so I entrusted an advisor with my portfolio. I’ve been fully invested since the COVID-19 outbreak, and I’m happy to say my portfolio has grown fivefold in just five years, reaching nearly $1 million.
Rebecca Lynne Buie has consistently been my top recommendation. She’s widely recognized for her expertise in financial markets and has a strong track record. I highly recommend her.
Thank you for the recommendation. I was curious, so I looked up Rebecca Lynne Buie online. Her consulting page came up at the top, and I’ve scheduled a call. I've heard about advisors before, but none have looked as impressive as she does.
I'm unclear about how drawing from a brokerage account would allow you to declare a lower income when applying for ACA coverage. If this couple is going to need $72K, then why would they only declare $30 K if withdrawing from the brokerage account?
I’m only part way through… maybe this will be addressed, but it never seems to be…. If he dies, say ten years, into retirement and therefore she loses that social security income… does she still have enough?
@ Ari Taublieb, Such a great video, love the insights from the case study and the showcase for how to use the tool. I'm so glad you talked to the cost of healthcare prior to medicare eligibility for those aspiring to retire before age 65. What are the risks with Affordable Care Act going away or being modified? I'm worried that I can keep planning for my Super Hero account and keeping the MAGI low in the future, but if ACA is modified and the government subsidies go away, that would blow up the assumptions. Any thoughts on a Plan B if that is to happen?
I didn't understand what you were talking about only taking 15,000. If you take it from a brokerage account, you still are reporting that as income; so it would still be the 85,000, and then subtract off deduction; sure you won't pay the taxes on it coming from the taxable account, but for income reporting purposes, it still accounts, does it not, minus the standard deduction?
@@earlyretirementari I know about the taxes, but I'm talking about the health insurance costs....it wouldn't be calculated at 15,000, but at 85000 - standard deduction, wouldn't it?
@@mr.carlsen8185 The value of the stock you hold isn't considered income that you owe taxes on. That's where you are throwing yourself off. If it worked the way you're thinking it, then few people would risk buying stocks because the moment the bought a stock they'd be adding a new tax liability even if they didn't make any gains. Think of buying a stock for $1000 on the 1st of the month. Maybe it goes up 10% this month, and you sell it for $1100. That first $1000 you got from the sale is just a return of your original after-tax investment - that's not new income. (That's the "cost basis" referred to above). So, you only owe tax on the $100 of gains - and even THAT technically isn't "ordinary income" on your taxes -- that's a capital gain, taxed at your capital gains tax rate (typically lower than your normal income tax rate).
@@joeblow9186 We have a $2M soft minimum, but it’s all about if we can add value. For example, someone with $1.8M in a 401k retiring in 3 years isn’t a good fit to work with us (not a ton we can do to add value). Someone with $1.5M retiring seeking withdrawal, tax, etc. is someone we can help immediately. As always, it depends. We hope to decrease our minimum as our team grows.
@@earlyretirementari came here to ask the same thing. Thanks for explaining. I like your no BS casual style in these videos. We’re freshly retired and I’m one of those folks who saw James’ videos, then stumbled on yours before realizing you were both connected by Root Financial.
Good Stuff, thank you for these videos! Does RightCapital recommend WHEN and HOW MUCH to do Roth Conversions each year or its more manual work on your end? Thanks
@@Ivan-xe9ij you’re welcome!! It assists with planning conversions and you can model it out how you see fit. You can watch the full live video on how I (and how you can) use the tax tab: Smart Tax Strategies Can Maximize Your Retirement Savings- LIVE with Ari Taublieb CFP®, MBA th-cam.com/users/liveXkurjny1-Dc?feature=share
I talk with my Finance/tax lady and we look at my expected Tax return, and then move money from the Trad IRA to the Roth IRA to negate most of the refund I'd get. For what that's worth. I guess if I ever start owing taxes, we'll have to rethink our strategy...
I will give you one piece of advice on RC. If you enter a DATE (not just age) when you want to retire, the Gaurdrails approach will give you CRAZY high probability of success. The reason for this is (took me FOREVER to figure this out!) it takes the first year of retirement (not the first WHOLE year) and calculates that year's % of portfolio spent. Then it bases all projections on that %. It doesn't prorate that actual % based on how much of the year has gone by. LOVE the tool though!!!!
I'm fairly new to your channel. Great content, but I everything is geared towards people who are very close to retirement (early or not). I'm 44 and want to make sure I am doing what I need to be prepared for retirement. I know there are a bunch of other channels out of there (most of with just say ROTH ROTH ROTH). I'm curious to get your thoughts for someone like me who has been traditional 401K and just now starting putting money in ROTH. Conversions may be in my future. Is it better to take the 22% hit now or lower rate during a conversion later?
I'm not a CFP or anything, but I've been consuming in this space forever, and FWIW without knowing all your unique circumstances like current income vs. tax bracket limits, that's exactly the conclusion I came to - taking the 22% hit now makes a lot of sense for me. People talk about converting to fill up a bracket later, but if you're like me, you can do basically the same thing by lowering your 401k contributions and investing in a taxable account (after your Roth limit is met, of course - do get that one - and the HSA if you have access to it) - fill up more of the 22% bracket now every year. The big x-factor is discipline - you need to know that you can trust yourself not to tap that taxable account for a shiny new car or something you shouldn't, if you're earmarking that as retirement planning. Flexibility is great as long as you trust yourself with it. My advice to you might change if, say, you had very little saved today, and were on the low end of the 22% bracket such that you might reasonably be looking at a more modest retirement where maybe you'd be in the 12% bracket in your old age - then maybe the tax deferred route makes more sense. But if you're here and asking these questions, especially if you're more in the middle of the 22% bracket and have been saving a lot in tax-deferred such that you think you're more likely to stay in the same or even move up to a higher bracket in retirement, then I think arming yourself with money in all three types (taxable, Roth, and pre-tax) gives you the best option to (legally) game whatever future tax system is in place in retirement. If you save more in tax-deferred now, you might find yourself trying to do Roth conversions later while butting up against an ACA subsidy income limit, or IRMA surcharges for Medicare -- whereas taking a little tax hit now and having a bit more in taxable might keep your tax-deferred bucket from ever getting so big that you have to blow past some of those income limits just to stave off a tax hit from RMDs. With current tax rates low, my own choice became clear.
If you don't want to pay off a mortgage, why not take a loan out when it is paid off and invest that money? Should you always be in mortgage debt? I don't think so.
The kid can get loans or work. Parents shouldn’t compromise their retirement savings to pay for college tuition. The kid has a lifetime to pay back loans if they go that route, but the parents do not have that same benefit of time to replenish their retirement savings. Once they hit retirement, the income is either gone or drops substantially.
So I'm about in the same age bucket as these people. I also have a kid in high school. We've been in our home for 18 years. We couldn't get a house in our area for less than what ours would sell for. I'm not about to make my kid change schools. I'd so work another year if needed to avoid putting my kid through that. By the time we're empty nesters, I'll be 63 (I plan on staying in this house till my youngest is out of college so she can see her friends when she's home from school). I can't fathom starting my social life over at that age. Add in the notion of a new medical team etc? It's overwhelming to even think about.
I know this is outside the scope of these discussions, but I'm always amazed at how people make $200k per year, are 60 years old, and have only a million or so in their retirement accounts. This one has an additional wrench in that the family can apparently live on $6k per month, which is less than half their salary (although I suspect that is $6k a month plus whatever their mortgage costs? Still extremely low spending for that income level, though). They might be unique cases of falling into a fabulously wealthy job later in life, but it comes up often enough that I don't think that's it. Like, how do you get yourself into that situation? The money has to be going somewhere. If you're spending it on lifestyle, you need to plan for that in retirement. If it's not going into your lifestyle, then everything else should be paid off by now and you should have been dumping boatloads of money into some kind of investments. In this specific case, assuming the family has had that income level for a few decades (minus a few % per year for raises and the like), their house should have handily been paid off and they should have been putting nearly $100k per year into retirement accounts -- they should have millions in retirement and be adding a million to their net worth every few years by now. In short, money disappearing. Me confused.
That is the problem. Saving early right out of high schools or college is the key. No matter how much you are making. Keep pumping in for 30 years. You can’t expect them to turn up the saving once they get to $200,000 and even if they do it is not going to lead to what they would have if they started in their 20’s. Lack of training in our schools and by parents.
I think a lot of those type of people live in big cities and overspend because they are keeping up with the Jones’s. Monkey see monkey do and too much money spend trying ti impress people they don’t even like
@@upperman17that is so true. I worked with people making over 200k in a household crying how they’re always broke and need to make more money. I told him he has a spending problem. House, boat, camper, wife’s car, his truck all financed. It’s a mental problem. Sad
i doubt he was making 200,000 even 10 years ago. Maybe he was making 100,000. if you have a big mortgage a lot goes to that or he paid down on his mortgage like was said. Property taxes are big too. Maybe he had student loans he was paying off. He may have been making 50 grand 20 years ago.Also vacations, expensive cars can take a chunk out. 200,000 is a good salary but it isn't rich.{Plus he had a 60/40 allocation. 90/10 at least the last 10 years would have been much better. He was probably making 25,000 in the 90 too. Maybe he is paying for private school. My Catholic grade school charges 7500 per year. High schools are a lot more. Just saying you can have a lot of expenses and people weren't making nearly as much 25 -30 years ago. Even if he had the same job it wouldn't have paid nearly as much 30 years ago and he probably had a lesser job.
No not even close. My net worth is $3.1 million post tax and I'm single 48 and wouldn't even think of retiring on that. $1.3m as a couple is really only 650K net worth each / per person. marriage is like playing the lottery, you're most likely not gonna win in the long term. Most marriages end in divorce statistically speaking. Sure you can retire on 650K each if you want to live in the middle of nowhere and do nothing for the rest of your life. 650K will only yield about 25K/year net of inflation. That is below poverty level anywhere in the US. Bottom line is if you want to live in a good area where there are good restaurants, beaches, smart intelligent people, things to do, a good social scene culture, etc. (ie: Miami, NYC, Palm Beach, Boca, Hamptons, LA, SF, SoCal) then keep working. $5 million minimum is needed. .
Very elitist viewpoint, especially the part about being around “smart intelligent people”, assuming that they only exist in the leftist enclaves your cited. I notice you left out low crime and low taxes as that would not be applicable to places like SF, LA, NYC, etc.
@ it’s not elitist at all. The people you surround yourself with is VERY important at any age. Charlie Chang made a great video on his you tube channel about why it is worth paying a premium to live in Los Angeles vs somewhere less desirable and less expensive. He interviews random people in his apartment complex - they are all owners of tech startups, people who are running businesses, working in finance, tech, etc. it’s very important to surround yourself with people who match or exceed your intelligence. That is how we all grow and evolve as humans.
Get access to the same software here → ari-taublieb.mykajabi.com/early-retirement-academy
Your "conservative" return assumptions are higher than most (maybe all) of example retirement plan presentations I have seen. Not sure if that is good or bad.
Looks all so easy. I am 54 with almost 3M investments, 1M in retirement accounts, single earner, 4 kids, on 100k income, but still have to get the kids through college, that plus healthcare... oldest in college and youngest are 11 (twins)… so still ways to go… would love to retire earlier, but I don’t see it happening for another decade.
Exciting video with a pitfall twist at the end. Would love seeing more videos just like this! Thanks Ari!
@@kevincaffee8580 thank you!!
This video is almost exactly our situation, except our house is paid off and we've already paid our kid's college and they're out of the nest, working. I've been running numbers on different retirement calculators because my husband is facing a layoff soon. Even though the calculators say we have a 93% success rate, I'm still a tad nervous. This video was really perfect to boost my confidence! I'm so glad you called the taxable joint brokerage a "super-hero" account because relatives were scolding us that we had more in that one than our Roths. New subscriber! Off to watch more of your videos.
@@SippsShanandT thank you! You might like this: Why You Don’t Need $2M To Retire Early (Monte Carlo Analysis)
th-cam.com/video/nkwpWqGkf-o/w-d-xo.html
My friend! Welcome to the Ari Fan Club! Be advised. His videos are addictive. Set a timer or a video limit per day or you may never go to sleep!
PS: Search Ari Taublieb 12k It is my ALL TIME favorite Ari video.
@@susanlee594 thank you Susan. You’re the best. I appreciate you ❤️
I'm not sure about how to interpret your family's objection, but if your taxable account had MORE but only because your Roth has a cap on how much per year you can put in and a taxable account doesn't, then that's a silly objection. If you're not fully funding your Roth each year, though, I'd seriously consider changing that course to whatever extent you still can, because a Roth may not be Ari's super hero account, but is an account with pretty herculean benefits. That said, I'd wager a guess that you're also funding a 401k (or 403b/etc.) and personally, I think most people are better off skipping some of their 401k contributions (assuming you're getting the full match, if there is one) and filling up the Roth bucket to the limit, rather than skimping on the taxable account to get your Roth up to the annual limit - you will not regret having that taxable account but you MIGHT regret having too much in tax-deferred.
That's based mostly on the fact that most people over-commit to the 401k even now with historically low tax rates and the likelihood that tax rates are going to have to go up - making Roth and Taxable accounts where you pay current tax rates now more valuable on a relative basis than tax-deferred. If you have the discipline to save in a taxable account, and not to squander that stash on something unimportant, the options it gives you for things that ARE important to you can be significant. I wish I'd come around to that view earlier in life, as I'm playing catch-up with that account type now.
Also, for some of us, the "threat" of inheriting moderate or large pre-tax accounts also pushes us to choose to pre-pay some of the taxes at low rates today and invest after-tax accounts. Those boomers have a lot of 401k and IRA money, since the Roth hasn't been around forever and some of them didn't get the taxable account memo. I don't know what, if anything, will materialize in that regard but I know where most of my parents money is stored, and if it lands suddenly just as my own RMDs start and now has to be taken in a 10-year window, it could upset my own personal expectations of where my relative tax bracket was going to be.... Not a terrible problem to have, to be fair, but strategically makes both the Roth AND the taxable account an even better bet than it already is.
You caused an epiphany for me with this video. Working part time in retirement isn't replacing your income, it's replacing your savings. Say you were making $150k before retirement, but only saving $30k. If you make $30k a year from a part time job in retirement, that has the same effect on your portfolio balance as a full year of working did before retirement.
You get me ❤️
Awesome again. I really liked this because it is closer to where I am.. very good to give us a foundation for our retirement and how we need to look at all the spokes of the wheel. Thanks Ari!
@@jdial68 of course!!
Thanks Ari. Your work is very insightful.
Glad you think so!
Awesome Ari!
Wouldn’t have thought $30,000 a year PT would have that kind of impact.
I think the bigger impact is if you're working part time, then you're not spending full time. Being at a job limits your time sipping lattes at Starbucks.
@@hcrubjeff I'd rather be drinking Pina Colada while being caught in the rain.
@@FrankBatistaElJibaroEscape
They only wanted to spend $75,000/ year in retirement. $30k would be almost half of their needs.
I like your case studies. They are extremely helpful especially for learning how to use Right Capital, which I bought through your firm and find very complicated. Sadly, the health care subsidies will probably expire at the end of 2025.
@@mindyfrohlich6187 thank you!
The ACA tax subsidies are scheduled to revert back to the maximum income (~80k) with a (9.5% cost) income cliff as opposed to the (8.5% cost) income slope in place through 2025. That's what is known at this point.
$300/month for health care! ? My wife and I retired early and were forced to leave the US due to the expense of health care. I got quotes for approx $2k-$2.5k/mo for health insurance for me and my wife together. We were 56 and 44, good health and neither of us takes a single medication. It was either leave the US or continue working like a slave for the insurance company. Guess which choice I made.
Did you leave before the affordable care act was in place? Do you have a large sum in your traditional 401k/IRAs that you are withdrawing from that phased you out of the government subsidy credits? That's how he got to the $300/month number by keeping the modified adjusted gross income low. The secret is to look poor on paper to the IRS so you can qualify for healthcare subsidies and then withdraw from your after tax brokerage account to lower your MAGI.
I switched to part time employment. My wife and I pay about $150 a month for the both of us on one of the best Kaiser plans available through the affordable act. Used Ari’s reference to find free medical broker.
Yep, I'm going to Spain when I retire. It's like 100 a month for health insurance for two people and they actually cover stuff. No delay, deny, depose.
@@alanwong8307 I left in 2023. I looked at the "non"-ACA plans. My wife and I have passive income from some real estate investments. I don't quilify for any subsidy. We were essentially forced to leave the US. Not that that is a bad thing. Non withstanding he recent positive changes in the political structure, I am so sick of all the drugs, violence and general anger in the US. I don't get why everybody is so mad!
Ari, I really appreciate the case studies! I considered retiring and then picking up a part time gig as a day trader, but not sure how well my stomach would handle this when the market turbulence picks up. Maybe not such a good idea now that I say it out loud.
Not to be a Debbie downer, but you might want to look up the statistics on how many day traders are successful. I did that and it squashed any ideas I had about being one! But you could always be the small percentage that wins...just have to decide if it's worth the risk.
Ari, I know you’ve already done videos about the various accounts and asset location, but I’d like to see a video where you discuss *how old* a certain account is and how that might impact one’s decision whether or not to withdraw money at certain times during retirement. For example, what if someone’s taxable brokerage account is relatively new, and the investments haven’t had much time to grow? Same thing for a 401K, etc.
Great video! Made me look into your early retirement academy to run my own projections.
Excellent!
100% the only thing I'm worried about retiring early is health care
@@Soljarag5 this is for YOU: th-cam.com/video/GrOyeuJdZYY/w-d-xo.html
hi Ari, your videos and content are very very insightful, but do you always have to put that worried look on your face for your screen capture picture? How about a picture that’s more upbeat and positive?
I’ll fire my marketing team - JK
My biggest surprise when I retired was that I could not choose which assets to draw down from a 457 or 401K. They have to take evenly from each investment in the plan whenever you pull money. So if you have a 60/40 stock to bond balance and want to draw only bonds one year because stocks are down, you cannot do it. If you are 59.5 years old you can roll your 401K or 457 to an IRA. The IRA allows you to sell your individual positions. I'm a 54 yo retired fire fighter. I can access my 457 plan now, but I would not have access to them if I rolled them to an IRA. Fortunately my 457 offers a separate brokerage account with Schwab, so I managed to have all of my stock mutual funds with Schwab and my bonds with the 457 plan. I can choose to sell only from the Schwab account or the 457 account, giving me control of my withdrawals back.
But you can rebalance after you withdraw at essentially the same prices. If stocks are down then it's cheaper to buy them back.
Hi Ari. Love your content. I have gotten access to the Right Capital software through the Retirement Academy and really loving it! One question.. on my view of the Retirement tab, I don't have the Add New Item button. Can this be enabled for me? Thank you, and thanks for your content. I'm hopefully going to retire in a year or two!
@@eric-humanappliance make sure to follow the instructions in lesson 1 and we can enable for you. Thank you
At 32, I'm diving into investing for the first time. I’ve started contributing to my 401K and opened a Roth IRA with automatic contributions. My main question is whether asset allocation is crucial at this stage or if I'm just overthinking as a beginner.
There are so many choices to make, and for beginners, it's often best to entrust daily investment decisions to an experienced advisor.
I completely agree-having a professional manage my investments has been invaluable. My job doesn’t allow time for in-depth stock analysis, so I entrusted an advisor with my portfolio. I’ve been fully invested since the COVID-19 outbreak, and I’m happy to say my portfolio has grown fivefold in just five years, reaching nearly $1 million.
How can I find a trusted financial planner like yours?
Rebecca Lynne Buie has consistently been my top recommendation. She’s widely recognized for her expertise in financial markets and has a strong track record. I highly recommend her.
Thank you for the recommendation. I was curious, so I looked up Rebecca Lynne Buie online. Her consulting page came up at the top, and I’ve scheduled a call. I've heard about advisors before, but none have looked as impressive as she does.
I'm unclear about how drawing from a brokerage account would allow you to declare a lower income when applying for ACA coverage. If this couple is going to need $72K, then why would they only declare $30 K if withdrawing from the brokerage account?
Is there an updated "Important Numbers" file? An update to Important-Numbers-2023_Ari_with_Root.pdf?
Yes in the academy!
I’m only part way through… maybe this will be addressed, but it never seems to be…. If he dies, say ten years, into retirement and therefore she loses that social security income… does she still have enough?
Why not refinance the house? The payment will be low on about 100,000 if they don't want to sell it and downsize.
Not a bad option!
@ Ari Taublieb, Such a great video, love the insights from the case study and the showcase for how to use the tool. I'm so glad you talked to the cost of healthcare prior to medicare eligibility for those aspiring to retire before age 65. What are the risks with Affordable Care Act going away or being modified? I'm worried that I can keep planning for my Super Hero account and keeping the MAGI low in the future, but if ACA is modified and the government subsidies go away, that would blow up the assumptions. Any thoughts on a Plan B if that is to happen?
@@alanwong8307 yes I’ll make a video on it!
@@earlyretirementarican’t wait!
I didn't understand what you were talking about only taking 15,000. If you take it from a brokerage account, you still are reporting that as income; so it would still be the 85,000, and then subtract off deduction; sure you won't pay the taxes on it coming from the taxable account, but for income reporting purposes, it still accounts, does it not, minus the standard deduction?
@@mr.carlsen8185 imagine you want to spend 100k/year. Cost basis 85K. Worth $100K. $15k if that is gains you pay taxes on at capital gains rate.
@@earlyretirementari I know about the taxes, but I'm talking about the health insurance costs....it wouldn't be calculated at 15,000, but at 85000 - standard deduction, wouldn't it?
@@mr.carlsen8185 The value of the stock you hold isn't considered income that you owe taxes on. That's where you are throwing yourself off. If it worked the way you're thinking it, then few people would risk buying stocks because the moment the bought a stock they'd be adding a new tax liability even if they didn't make any gains.
Think of buying a stock for $1000 on the 1st of the month. Maybe it goes up 10% this month, and you sell it for $1100. That first $1000 you got from the sale is just a return of your original after-tax investment - that's not new income. (That's the "cost basis" referred to above). So, you only owe tax on the $100 of gains - and even THAT technically isn't "ordinary income" on your taxes -- that's a capital gain, taxed at your capital gains tax rate (typically lower than your normal income tax rate).
I thought Root had a $2M minimum to work 1/1 with clients?
@@joeblow9186 We have a $2M soft minimum, but it’s all about if we can add value. For example, someone with $1.8M in a 401k retiring in 3 years isn’t a good fit to work with us (not a ton we can do to add value). Someone with $1.5M retiring seeking withdrawal, tax, etc. is someone we can help immediately. As always, it depends. We hope to decrease our minimum as our team grows.
@@earlyretirementari came here to ask the same thing. Thanks for explaining. I like your no BS casual style in these videos.
We’re freshly retired and I’m one of those folks who saw James’ videos, then stumbled on yours before realizing you were both connected by Root Financial.
@@M22Research appreciate that. James is the best of the best.
Good Stuff, thank you for these videos! Does RightCapital recommend WHEN and HOW MUCH to do Roth Conversions each year or its more manual work on your end? Thanks
@@Ivan-xe9ij you’re welcome!! It assists with planning conversions and you can model it out how you see fit. You can watch the full live video on how I (and how you can) use the tax tab: Smart Tax Strategies Can Maximize Your Retirement Savings- LIVE with Ari Taublieb CFP®, MBA
th-cam.com/users/liveXkurjny1-Dc?feature=share
I talk with my Finance/tax lady and we look at my expected Tax return, and then move money from the Trad IRA to the Roth IRA to negate most of the refund I'd get. For what that's worth. I guess if I ever start owing taxes, we'll have to rethink our strategy...
I will give you one piece of advice on RC. If you enter a DATE (not just age) when you want to retire, the Gaurdrails approach will give you CRAZY high probability of success. The reason for this is (took me FOREVER to figure this out!) it takes the first year of retirement (not the first WHOLE year) and calculates that year's % of portfolio spent. Then it bases all projections on that %. It doesn't prorate that actual % based on how much of the year has gone by. LOVE the tool though!!!!
I'm fairly new to your channel. Great content, but I everything is geared towards people who are very close to retirement (early or not). I'm 44 and want to make sure I am doing what I need to be prepared for retirement. I know there are a bunch of other channels out of there (most of with just say ROTH ROTH ROTH). I'm curious to get your thoughts for someone like me who has been traditional 401K and just now starting putting money in ROTH. Conversions may be in my future. Is it better to take the 22% hit now or lower rate during a conversion later?
@@michaelbendele6010 agreed and check this out: th-cam.com/video/MtFy0Jsnxy4/w-d-xo.htmlsi=KicUt_cdmlGLFJvr
I'm not a CFP or anything, but I've been consuming in this space forever, and FWIW without knowing all your unique circumstances like current income vs. tax bracket limits, that's exactly the conclusion I came to - taking the 22% hit now makes a lot of sense for me. People talk about converting to fill up a bracket later, but if you're like me, you can do basically the same thing by lowering your 401k contributions and investing in a taxable account (after your Roth limit is met, of course - do get that one - and the HSA if you have access to it) - fill up more of the 22% bracket now every year. The big x-factor is discipline - you need to know that you can trust yourself not to tap that taxable account for a shiny new car or something you shouldn't, if you're earmarking that as retirement planning. Flexibility is great as long as you trust yourself with it.
My advice to you might change if, say, you had very little saved today, and were on the low end of the 22% bracket such that you might reasonably be looking at a more modest retirement where maybe you'd be in the 12% bracket in your old age - then maybe the tax deferred route makes more sense. But if you're here and asking these questions, especially if you're more in the middle of the 22% bracket and have been saving a lot in tax-deferred such that you think you're more likely to stay in the same or even move up to a higher bracket in retirement, then I think arming yourself with money in all three types (taxable, Roth, and pre-tax) gives you the best option to (legally) game whatever future tax system is in place in retirement.
If you save more in tax-deferred now, you might find yourself trying to do Roth conversions later while butting up against an ACA subsidy income limit, or IRMA surcharges for Medicare -- whereas taking a little tax hit now and having a bit more in taxable might keep your tax-deferred bucket from ever getting so big that you have to blow past some of those income limits just to stave off a tax hit from RMDs. With current tax rates low, my own choice became clear.
if he is going to work 50 to 70 percent of the hours he used to work he might as well work another year.
Yeah, just suck it up and work another year or so more and forget the 10-year, low paid PT job with the bad schedule.
If you don't want to pay off a mortgage, why not take a loan out when it is paid off and invest that money? Should you always be in mortgage debt? I don't think so.
$9k-$10k per month after all debts are paid and a $12k vacation included here in metro NY. How is Washington only needing $6k in monthly expenses?
John & Jane have a 16-year-old kid. What about his college expenses?
@@robertwelch2111 yes they do! Need to plan for that and the software makes it easy: th-cam.com/video/SMbVWvF3s9s/w-d-xo.html
The kid can get loans or work. Parents shouldn’t compromise their retirement savings to pay for college tuition. The kid has a lifetime to pay back loans if they go that route, but the parents do not have that same benefit of time to replenish their retirement savings. Once they hit retirement, the income is either gone or drops substantially.
Why not sell their house and buy a 400,000 house and then have about 350,000 to spend/invest?
They don’t want to move.
So I'm about in the same age bucket as these people. I also have a kid in high school. We've been in our home for 18 years. We couldn't get a house in our area for less than what ours would sell for. I'm not about to make my kid change schools. I'd so work another year if needed to avoid putting my kid through that. By the time we're empty nesters, I'll be 63 (I plan on staying in this house till my youngest is out of college so she can see her friends when she's home from school). I can't fathom starting my social life over at that age. Add in the notion of a new medical team etc? It's overwhelming to even think about.
I know this is outside the scope of these discussions, but I'm always amazed at how people make $200k per year, are 60 years old, and have only a million or so in their retirement accounts. This one has an additional wrench in that the family can apparently live on $6k per month, which is less than half their salary (although I suspect that is $6k a month plus whatever their mortgage costs? Still extremely low spending for that income level, though).
They might be unique cases of falling into a fabulously wealthy job later in life, but it comes up often enough that I don't think that's it. Like, how do you get yourself into that situation? The money has to be going somewhere. If you're spending it on lifestyle, you need to plan for that in retirement. If it's not going into your lifestyle, then everything else should be paid off by now and you should have been dumping boatloads of money into some kind of investments.
In this specific case, assuming the family has had that income level for a few decades (minus a few % per year for raises and the like), their house should have handily been paid off and they should have been putting nearly $100k per year into retirement accounts -- they should have millions in retirement and be adding a million to their net worth every few years by now.
In short, money disappearing. Me confused.
That is the problem. Saving early right out of high schools or college is the key. No matter how much you are making. Keep pumping in for 30 years. You can’t expect them to turn up the saving once they get to $200,000 and even if they do it is not going to lead to what they would have if they started in their 20’s. Lack of training in our schools and by parents.
I think a lot of those type of people live in big cities and overspend because they are keeping up with the Jones’s. Monkey see monkey do and too much money spend trying ti impress people they don’t even like
You underestimate how people spend 🤯
@@upperman17that is so true. I worked with people making over 200k in a household crying how they’re always broke and need to make more money. I told him he has a spending problem. House, boat, camper, wife’s car, his truck all financed. It’s a mental problem. Sad
i doubt he was making 200,000 even 10 years ago. Maybe he was making 100,000. if you have a big mortgage a lot goes to that or he paid down on his mortgage like was said. Property taxes are big too. Maybe he had student loans he was paying off. He may have been making 50 grand 20 years ago.Also vacations, expensive cars can take a chunk out. 200,000 is a good salary but it isn't rich.{Plus he had a 60/40 allocation. 90/10 at least the last 10 years would have been much better. He was probably making 25,000 in the 90 too. Maybe he is paying for private school. My Catholic grade school charges 7500 per year. High schools are a lot more. Just saying you can have a lot of expenses and people weren't making nearly as much 25 -30 years ago. Even if he had the same job it wouldn't have paid nearly as much 30 years ago and he probably had a lesser job.
1.3M ? Yeah you can retire you are already in the top 3.2%. 🙄
Why do you call that account "Superhero"? What makes it the "best" account?
@@viewfromtherail watch this th-cam.com/video/sLD8yOLS-HI/w-d-xo.htmlsi=4CuIYB6YaIw-rDi1
No not even close. My net worth is $3.1 million post tax and I'm single 48 and wouldn't even think of retiring on that. $1.3m as a couple is really only 650K net worth each / per person. marriage is like playing the lottery, you're most likely not gonna win in the long term. Most marriages end in divorce statistically speaking. Sure you can retire on 650K each if you want to live in the middle of nowhere and do nothing for the rest of your life. 650K will only yield about 25K/year net of inflation. That is below poverty level anywhere in the US. Bottom line is if you want to live in a good area where there are good restaurants, beaches, smart intelligent people, things to do, a good social scene culture, etc. (ie: Miami, NYC, Palm Beach, Boca, Hamptons, LA, SF, SoCal) then keep working. $5 million minimum is needed. .
Wrong
You have a lifestyle most people will never achieve
You couldn't pay me to live in any of those cities you listed.
Guess that's why they say retirement is different for everyone!
Hey Pat. I hope you find love
Very elitist viewpoint, especially the part about being around “smart intelligent people”, assuming that they only exist in the leftist enclaves your cited. I notice you left out low crime and low taxes as that would not be applicable to places like SF, LA, NYC, etc.
@ it’s not elitist at all. The people you surround yourself with is VERY important at any age. Charlie Chang made a great video on his you tube channel about why it is worth paying a premium to live in Los Angeles vs somewhere less desirable and less expensive. He interviews random people in his apartment complex - they are all owners of tech startups, people who are running businesses, working in finance, tech, etc. it’s very important to surround yourself with people who match or exceed your intelligence. That is how we all grow and evolve as humans.