With a reasonable amount saved in 401k and both of us at age 51, think it would make more sense to begin diverting a large portion of our savings into Roth and brokerage for the next 8 years. Maybe this will minimize our necessity for Roth conversions down the road. So much great insight. Thank you Ari. 🙏
This is good stuff Ari but it’ll be great if you include annual advisor fees to the equation and see the bottom line with and without it! Thanks again!
Thanks Ari. You are sharing knowledge and helping us so. It is such a odd time to know understand and plan from retirement years to Medicare. The best path does not exactly make its self clear easily.
Hi Ari, can you share details about what tools, calculators, cheat sheets, etc. are included in your academy and how is that different from the one shared by James? That would be very helpful. Thanks!
Ari, I have a question. In this video for the medical cost estimates, you indicated that number is "per person". Is that correct? That screen doesn't have a per person note, plus it say "Covered: Female and Male". I'm specifically looking at time15:16 in the video with the silver plan at $144/mo, and you emphasize "$144 each". Is this specifically the way your tool is set up, and not necessarily the state website tools? I've been playing around with my state's estimates on the state website and I've assumed it's the total cost. I've also played around with adding/removing spouse/dependents and it seems to indicate it is total cost and not per person. I'm in NJ, BTW. If these things are per person, my COBRA is less expensive and way, way better coverage. Thanks for these videos. They are really helpful and I'm very definitely looking into your services since a recent layoff is forcing my hand.
@@earlyretirementari Thanks Ari. So this is your software specifically? In NJ, I believe it's giving the combined cost of all covered, but I need to confirm. So far, playing around with with my state's plans is disappointing to say the least. No out of network coverage, high co-pays and deductibles, high out of pocket max.
@@earlyretirementari I am a member of the Academy and I cannot find the tool anywhere. Which tab is it under? I checked the "Insurance" tab and that is for life insurance. Thanks.
Confused about two things in the video: 1) It seems like you were often doubling the health care expense from the online calculator, say from $1,000/month showing on the screen to $2,000/month. I think you were doing it because it was a couple, but doesn’t the calculator know there are two people in the scenario? I’m thinking it shouldn’t be doubled. 2) I was confused when you brought up Apple stock and selling it. I didn’t follow that and what impact that would have
For the second question, the point about Apple, was as an example of how selling a highly-appreciated stock affects your MAGI for ACA subsidies. If you bought Apple many years ago, then you would have now large long-term capital gains embedded in it. Those gains, if realized, may be taxable at 0% or 15% rate depending on your income, but the full amount of gains is considered in the MAGI that is used to calculate your healthcare subsidies.
Number one confused me as well. From the tool, it looks like both would be covered by the premium quotes; however in the latter parts of the video, it sounded like the estimated premium kicked out by the tool needed to be doubled.
It was not stated in his video, but if you are watching this you likely NEVER will be Medicaid eligible. So instead of being kicked to Medicaid, you will instead be kicked to no subsidy Marketplace. There are very low asset caps for Medicaid. If you have kids though, they can get on "kiddo Medicaid" (CHIP). CHIP covers everything except copays. However it depends on your state and projected kiddo needs. In my state employer coverage best, then CHIP, then the awful Marketplace plans. That is due to which providers take which coverage. If you go for a lesser coverage plan I recommend ambulance insurance as a secondary to medical as that can be in six figures if ever needed. I am going with COBRA even though I can manipulate my taxable income for medical considerations. CHIP also has different cutoffs so the $26k example he gave would boot the kid off of Marketplace to CHIP instead due to ineligibility. You can not opt for Marketplace if CHIP eligible, so need somewhere around $50k a year income if want Marketplace for kids.
@@jp7852 I agree that Medicaid/CHIP can be great for the kids if you have them. Getting Medicaid for adults may not be as great in coverage so may be better to avoid it if you can recognize a little more income to be eligible for marketplace coverage. Moreover, if you are over 55 and receive Medicaid, you may be subject to estate recovery, where Medicaid can claim back from your estate what they paid for you before you passed, lowering any inheritance you may have wanted to pass to heirs or charities.
Awesome video as always Ari!! One note to add as a note/reminder to the example of the $100K Roth conversion is that, not only you have to pay $20K more for healthcare, but also you have to pay the tax for the conversion. This means you may need to have about $45K ( not including state taxes for the conversion) as an additional expense for healthcare and taxes, preferably from a source that will not incur additional taxes such as cash or bonds, which may be more important to have now than the increase in your balance at the end of your plan. This is a big debate I am in right now trying to decide on whether or not to do a large Roth conversion, which I know would potentially increase my balance significantly at the end of my plan. However, doing this would deplete an entire year of expenses to pay for the lost subsidies plus the tax for the conversion, out of the only approx. 2-2.5 years I currently hold in cash-like assets in my brokerage account that would otherwise be used to fund my expenses in the event of a market downturn now that I am early retired with a few years still to wait before 59.5 to be able to start tapping my retirement accounts. So the challenge is to decide what is more important: a) to have a larger legacy at the end of my life, or b) to have enough buffer assets now to use in the event of a downturn to mitigate sequence of return risk. This is an important aspect to consider and add to the analysis, which many tools cannot account for since no one knows what the market may do the next 5-10 years, as we could have another lost decade such as 2000-2010.
Hi, JL. I'm in a similar situation. Early retiree in 2017. Chased ACA subsidies for the first 6-years of retirement. Realized I'm cheating myself out of living the best life possible while I have my health and physical abilities. Cashed out a portion of my taxable account back in January, resulting in no 2024 subsidy, so I'm paying 14k for my health insurance this year. Plus I paid the estimated federal tax on the amount of gain I realized with the sale in January. Now I'm considering implementing substantial ROTH conversions over the next 10-years to reduce my IRA. Been trying to navigate thru the Academy software to see if I can gain some additional insight and clarity, but it has been a bit challenging for me working with the software as I'm not a very tech-savvy type. Would sleep better if I could just land on a sweet spot figure of how much to pull from my taxable account for a better quality of life, and how much to convert over the next 10-year period so I'm not slammed with RMDs and IRMAA surcharges. What sources/tools are you using in order to determine your best strategies?
@@OHDANB Hi. Thanks so much for your insight!!. In my case, without subsidies, I would have to pay about $40-45k/yr for health insurance, since I still have children at home for several more years, which would deplete my brokerage account even faster before I can tap my retirement accounts, and without much buffer assets in case of a downturn. The software in the academy, RightCapital, allows to fill a bracket with Roth conversions in all years that you have still space in that bracket. Advisors can limit the number of years, but I’m not sure if your access allows for that. I use NewRetirement which I like much better, as you can enter individual Roth conversions for whatever amount you want and in the years you want. For me, it is more user friendly than RightCapital. You can have limited access for free and full access for $120/yr where you can also ask for support and they also have online zoom tutorials and Q&A sessions, including some focused on Roth conversions. Hope this helps. Good luck!!
Married, retired 61, wife 58. Two kids in college, family of 4 for at least 5 more years when it comes to ACA insurance (kids on health plan till 26) that helps us take out more money from pretax IRA. My predicament: the ACA cliff may comeback in 2026, do I take out more pretax in 2025 to help cover future years because I have no taxable brokerage to keep me under the future cliff? These are the hard decisions we need to make.
What happens if you say your income is $70,000 for ACA and get a certain “discount” as that’s your current expected dividend return for the year but it ends up more or less than projected? Also do you enter your pre tax income or after tax?
Hey Ari, are you sure about both people paying ACA 150 each 300 per couple, per month in your example, is that right? That is usually just for people 65 and over that each one pays, as a married couple.
Yeah, I think he's mistaken there because you can clearly see the "covered" plan participants in the lower right of the screen, just below the plan premium costs
Hmmm... Federal tax in a year with $50k AGI and no ACA considerations would be $2048 Federal tax in a year with $150k AGI ($100k Roth conversion included) would be $16,650. The tax rate on the Roth conversion is (16650-2048)/100,000 = 14.6% However, if this is an ACA year the Roth conversion results in a $20k loss of the PTC. Now the bill for the $100k Roth conversion is ($14,600+$20,000) = $34,600, so the tax rate on the Roth conversion is 34.6%. Unless the future Fed tax rate on IRA withdrawals is more than 34% this is a poor strategy. Then why did the software show it was a good idea ? I saw a couple of reasons, but perhaps not all of them: 1. The increase in net worth is in future nominal dollars. ALL comparisons should then be in future dollars 2. The comparison also included a change from pro-rata to a smarter withdrawal strategy (BIG difference!) 3. I don't think the comparison included the PTC losses To model this Roth conversion correctly, add 3 years of extra expenses during the considered Roth conversion, where each expense equals the PTC lost. Incidentally, for those wondering how to tell the software to consider varying Roth conversions over the years, assign an IRA withdrawal to Roth.
I was thinking most people would want to leave what they have left to a spouse or kids to make sure they were taken care of. But that’s just me. I guess if you die alone with a lot of money left over would be annoying.
With a reasonable amount saved in 401k and both of us at age 51, think it would make more sense to begin diverting a large portion of our savings into Roth and brokerage for the next 8 years. Maybe this will minimize our necessity for Roth conversions down the road. So much great insight. Thank you Ari. 🙏
This is good stuff Ari but it’ll be great if you include annual advisor fees to the equation and see the bottom line with and without it! Thanks again!
Thank you Ari..you are a financial hero
Thanks Ari. You are sharing knowledge and helping us so. It is such a odd time to know understand and plan from retirement years to Medicare. The best path does not exactly make its self clear easily.
Hi Ari, can you share details about what tools, calculators, cheat sheets, etc. are included in your academy and how is that different from the one shared by James? That would be very helpful. Thanks!
Ari, I have a question. In this video for the medical cost estimates, you indicated that number is "per person". Is that correct? That screen doesn't have a per person note, plus it say "Covered: Female and Male". I'm specifically looking at time15:16 in the video with the silver plan at $144/mo, and you emphasize "$144 each". Is this specifically the way your tool is set up, and not necessarily the state website tools?
I've been playing around with my state's estimates on the state website and I've assumed it's the total cost. I've also played around with adding/removing spouse/dependents and it seems to indicate it is total cost and not per person. I'm in NJ, BTW. If these things are per person, my COBRA is less expensive and way, way better coverage.
Thanks for these videos. They are really helpful and I'm very definitely looking into your services since a recent layoff is forcing my hand.
You’re welcome! The software calculates the price per person so if you elect 2 people that will be the total cost. Sorry for the confusion!
@@earlyretirementari Thanks Ari. So this is your software specifically? In NJ, I believe it's giving the combined cost of all covered, but I need to confirm. So far, playing around with with my state's plans is disappointing to say the least. No out of network coverage, high co-pays and deductibles, high out of pocket max.
@@michaelbehan5507no, this is MoveHealth. I recommend reaching out to them and tell them I sent you
Need a link to the healthcare estimation tool
In the academy: ari-taublieb.mykajabi.com/early-retirement-academy
@@earlyretirementari I am a member of the Academy and I cannot find the tool anywhere. Which tab is it under? I checked the "Insurance" tab and that is for life insurance. Thanks.
@@marksommer873 you’re in the wrong spot. It’s in the video course login, not the software
@@earlyretirementari Thanks!
Repost??
Really useful since the tech industry may have just forced me into early retirement. 70 resumes, no responses.
I’m glad and I’m sorry to hear
Confused about two things in the video: 1) It seems like you were often doubling the health care expense from the online calculator, say from $1,000/month showing on the screen to $2,000/month. I think you were doing it because it was a couple, but doesn’t the calculator know there are two people in the scenario? I’m thinking it shouldn’t be doubled. 2) I was confused when you brought up Apple stock and selling it. I didn’t follow that and what impact that would have
For the second question, the point about Apple, was as an example of how selling a highly-appreciated stock affects your MAGI for ACA subsidies. If you bought Apple many years ago, then you would have now large long-term capital gains embedded in it. Those gains, if realized, may be taxable at 0% or 15% rate depending on your income, but the full amount of gains is considered in the MAGI that is used to calculate your healthcare subsidies.
Number one confused me as well. From the tool, it looks like both would be covered by the premium quotes; however in the latter parts of the video, it sounded like the estimated premium kicked out by the tool needed to be doubled.
Great video. So it's all about weight of the benefit of a Roth conversion vs government health credits
Yes!
Why is it important to avoid Medicaid? Are the healthcare choices more limited?
Medicaid is state run health insurance, you will be subject to estate recovery after you die to recoup all the healthcare costs you cost your state
It was not stated in his video, but if you are watching this you likely NEVER will be Medicaid eligible. So instead of being kicked to Medicaid, you will instead be kicked to no subsidy Marketplace. There are very low asset caps for Medicaid. If you have kids though, they can get on "kiddo Medicaid" (CHIP). CHIP covers everything except copays. However it depends on your state and projected kiddo needs. In my state employer coverage best, then CHIP, then the awful Marketplace plans. That is due to which providers take which coverage. If you go for a lesser coverage plan I recommend ambulance insurance as a secondary to medical as that can be in six figures if ever needed. I am going with COBRA even though I can manipulate my taxable income for medical considerations. CHIP also has different cutoffs so the $26k example he gave would boot the kid off of Marketplace to CHIP instead due to ineligibility. You can not opt for Marketplace if CHIP eligible, so need somewhere around $50k a year income if want Marketplace for kids.
@@jp7852 I agree that Medicaid/CHIP can be great for the kids if you have them. Getting Medicaid for adults may not be as great in coverage so may be better to avoid it if you can recognize a little more income to be eligible for marketplace coverage. Moreover, if you are over 55 and receive Medicaid, you may be subject to estate recovery, where Medicaid can claim back from your estate what they paid for you before you passed, lowering any inheritance you may have wanted to pass to heirs or charities.
I am overlooking it - can you provide link to healthcare calculator?
It’s in the academy ari-taublieb.mykajabi.com/early-retirement-academy
Awesome video as always Ari!! One note to add as a note/reminder to the example of the $100K Roth conversion is that, not only you have to pay $20K more for healthcare, but also you have to pay the tax for the conversion. This means you may need to have about $45K ( not including state taxes for the conversion) as an additional expense for healthcare and taxes, preferably from a source that will not incur additional taxes such as cash or bonds, which may be more important to have now than the increase in your balance at the end of your plan.
This is a big debate I am in right now trying to decide on whether or not to do a large Roth conversion, which I know would potentially increase my balance significantly at the end of my plan. However, doing this would deplete an entire year of expenses to pay for the lost subsidies plus the tax for the conversion, out of the only approx. 2-2.5 years I currently hold in cash-like assets in my brokerage account that would otherwise be used to fund my expenses in the event of a market downturn now that I am early retired with a few years still to wait before 59.5 to be able to start tapping my retirement accounts.
So the challenge is to decide what is more important: a) to have a larger legacy at the end of my life, or b) to have enough buffer assets now to use in the event of a downturn to mitigate sequence of return risk.
This is an important aspect to consider and add to the analysis, which many tools cannot account for since no one knows what the market may do the next 5-10 years, as we could have another lost decade such as 2000-2010.
Well said!
Hi, JL. I'm in a similar situation. Early retiree in 2017. Chased ACA subsidies for the first 6-years of retirement. Realized I'm cheating myself out of living the best life possible while I have my health and physical abilities. Cashed out a portion of my taxable account back in January, resulting in no 2024 subsidy, so I'm paying 14k for my health insurance this year. Plus I paid the estimated federal tax on the amount of gain I realized with the sale in January.
Now I'm considering implementing substantial ROTH conversions over the next 10-years to reduce my IRA. Been trying to navigate thru the Academy software to see if I can gain some additional insight and clarity, but it has been a bit challenging for me working with the software as I'm not a very tech-savvy type. Would sleep better if I could just land on a sweet spot figure of how much to pull from my taxable account for a better quality of life, and how much to convert over the next 10-year period so I'm not slammed with RMDs and IRMAA surcharges.
What sources/tools are you using in order to determine your best strategies?
@@OHDANB this may help th-cam.com/video/WeDKlxfLCXw/w-d-xo.htmlsi=dLRtg_rDslXBWzLq
@@earlyretirementarithank you, Ari. Congrats on your engagement. You and Alice make an adorable couple.
@@OHDANB Hi. Thanks so much for your insight!!. In my case, without subsidies, I would have to pay about $40-45k/yr for health insurance, since I still have children at home for several more years, which would deplete my brokerage account even faster before I can tap my retirement accounts, and without much buffer assets in case of a downturn.
The software in the academy, RightCapital, allows to fill a bracket with Roth conversions in all years that you have still space in that bracket. Advisors can limit the number of years, but I’m not sure if your access allows for that.
I use NewRetirement which I like much better, as you can enter individual Roth conversions for whatever amount you want and in the years you want. For me, it is more user friendly than RightCapital. You can have limited access for free and full access for $120/yr where you can also ask for support and they also have online zoom tutorials and Q&A sessions, including some focused on Roth conversions. Hope this helps. Good luck!!
How can one get access to the MOVE Estimation Tool? Also, how do deductibles affect the overall cost?
It’s in the academy ari-taublieb.mykajabi.com/early-retirement-academy
Married, retired 61, wife 58. Two kids in college, family of 4 for at least 5 more years when it comes to ACA insurance (kids on health plan till 26) that helps us take out more money from pretax IRA. My predicament: the ACA cliff may comeback in 2026, do I take out more pretax in 2025 to help cover future years because I have no taxable brokerage to keep me under the future cliff? These are the hard decisions we need to make.
What happens if you say your income is $70,000 for ACA and get a certain “discount” as that’s your current expected dividend return for the year but it ends up more or less than projected? Also do you enter your pre tax income or after tax?
Hey Ari, are you sure about both people paying ACA 150 each 300 per couple, per month in your example, is that right? That is usually just for people 65 and over that each one pays, as a married couple.
Yeah, I think he's mistaken there because you can clearly see the "covered" plan participants in the lower right of the screen, just below the plan premium costs
I don't understand the brokerage account. Can I have an example? I can pull from that before 59 1/2 without a penalty?
Yes. Now you get it :)
Hmmm...
Federal tax in a year with $50k AGI and no ACA considerations would be $2048
Federal tax in a year with $150k AGI ($100k Roth conversion included) would be $16,650. The tax rate on the Roth conversion is (16650-2048)/100,000 = 14.6%
However, if this is an ACA year the Roth conversion results in a $20k loss of the PTC. Now the bill for the $100k Roth conversion is ($14,600+$20,000) = $34,600, so the tax rate on the Roth conversion is 34.6%. Unless the future Fed tax rate on IRA withdrawals is more than 34% this is a poor strategy.
Then why did the software show it was a good idea ? I saw a couple of reasons, but perhaps not all of them:
1. The increase in net worth is in future nominal dollars. ALL comparisons should then be in future dollars
2. The comparison also included a change from pro-rata to a smarter withdrawal strategy (BIG difference!)
3. I don't think the comparison included the PTC losses
To model this Roth conversion correctly, add 3 years of extra expenses during the considered Roth conversion, where each expense equals the PTC lost. Incidentally, for those wondering how to tell the software to consider varying Roth conversions over the years, assign an IRA withdrawal to Roth.
Nobody would get mad dying with “too much” money
Dying with too much money means you could have left work younger and travelled, had fun, etc. when you could have done it more.
Sure they could.
I was thinking most people would want to leave what they have left to a spouse or kids to make sure they were taken care of. But that’s just me. I guess if you die alone with a lot of money left over would be annoying.