Hey James, I'm really enjoying these actual client case videos. I hope that you decide to keep them coming. Thank you for all the wisdom you share.
@andre-l3j
8 күн бұрын
James and his team made this a very easy experience. It was quite worthwhile for the new look at 'order of operations' than I had. James' advice to focus first on expenses and income necessary and Roth conversions later changed the way I was looking at this. Other DIY software packages I've played with really hammered on the large Roth conversions the first few years of retirement, but those may not be as necessary if our expenses and gifting exceed RMDs. So, "get your expenses right first" was on point. The downside reality (for me) is that this will have to be assessed annually, so it's something that I'll have to look at regularly throughout retirement. I won't have the luxury of 'set it and forget it' or 'just do a couple of these for $X and you oughta be set'.
@bretschultz7321
7 күн бұрын
Great walkthrough, but probably should model one of the 2 passing away earlier that you would hope...Say one is gone by 75.... this will change a lot. The survivor would love to have more in the ROTH.
@dallison1961
8 күн бұрын
This was one of your best videos! It was good to see how the tool is working through the Roth conversions and how adjusting expenses has a significant impact. Great job!
@GailKim-hz1wu
8 күн бұрын
Really like this new format of in-depth planning analysis of real-life scenarios. So informative of all the different planning issues to consider when mapping out one's own financial future. Thanks, James and team - much appreciated!
@ltanthrax8435
8 күн бұрын
Quite similar situation, this is really helpful for planning our retirement. Thanks to Andre for sharing his position and James analysis 👍
@BillMaass
8 күн бұрын
My recommendation is to convert to Roth through the 24% bracket both this year and next. Reevaluate in 2026 when you know what has changed in the tax law, if anything. Conversions are annual decisions. Flexibility is better than locking into filling a specific tax bracket forever. Pay the taxes while they are on sale today. Remember that taxes can go up in the future and one spouse can pass away prematurely.
@marciasmith8522
8 күн бұрын
Bravo this is one of your best videos! Keep doing real life scenarios.
@ericgold3840
8 күн бұрын
Fantastic interview and analysis. Thank you both One thing I didn't see was modeling of the ACA PTC. I suspect that had it been included, the conclusion would have been to consider Roth conversions in the Medicare years before SS starts, and not in the first 'trough' By the way, I had to puzzle over why in one scenario the software modeled a *loss* from paying 12% Roth conversion tax. The answer is that in the last years the IRA runs out of money and during those years Andre is not taking advantage of tax deductions or the 10% bracket. This is a quirk of the software that rigidly applied a withdrawal strategy of Taxable, then IRA, then tax free without fail. In an optimized scenario, there would be a combination IRA/Roth withdrawal in the last years.
@jamoscatelli
7 күн бұрын
Great video. If I were Andre, I'd be a bit concerned that 1/3 of my retirement funds are contingent on a large inheritance. If end of life expenses are higher than anticipated (long stay in a facility) that number could be significantly lower. Also, if a lot of those inherited assets are in IRA's (tax advantaged accounts), the withdrawal will be forced over 10 years, which may significantly impact their tax bracket.
@sskkant
8 күн бұрын
Loved it. Very close to personal situation. Thank you for doing this and sharing with us.
@peedah3236
8 күн бұрын
Really helpful info yet again James. It is great to see real life scenarios like this
@michaeldinardo6391
8 күн бұрын
Great real world examples of how this is done, thank you!
@AbeFroman-zx5hs
3 күн бұрын
I was in a similar position, a little less in 401k because my wife didn’t work out side the home, but apparently I had better insurance from work because ACA was never an issue. What did I do? Retired. Was able to enjoy time with my kids while they were in college, not to mention the losing the psychological stress This was 10 years ago. My Roth has eclipsed my traditional ira and by 68 (two more years when trumps tax rates expire). My tax liability be at minimal even on SS when I begin collecting at 68 and my kids will have minimal if any tax issues when I pass on. The pain was irmaa because you don’t know what it is until after the fact. Ie you have to estimate what it will be. Kind of stinks when you think about it because the penalty is ridiculous. Unless you really enjoy work, I would retire. Let your money work for you. Good luck
@charlesd5307
7 күн бұрын
Having my retirement planning be based on an inheritance would make me REAL nervous. No matter how "sure" it might seem, life can get in the way. Perhaps they get sued and lose everything, they live longer and use up the majority of their assets, or they just got mad and don't want to give you anything. I'd model for not having it so I know what my true outcome, and maybe dream about what I'd change in 10 years if I got a windfall.
@keithmachado-pp6fv
8 күн бұрын
Great video as always. I wish the example showed the comparison of net worth instead of the tax savings. When you defer, you can pay more tax dollars and still come out ahead if the tax % is lower. Example. You convert $100k and pay $25k of tax and it doubles to $200k tax free. Or you defer and your $125k also doubles to $250k. You can pay $50k of tax (double the tax if you had converted) and still end up with $200k after tax. In addition, when you defer you don’t pay all that tax at once as tax on RMDs are paid slowly over many years. In fact, you may never pay all the tax in your lifetime (although your heirs will).
@user-vs3jj5wn3y
2 күн бұрын
I realize you're teaching *concepts*, not mere numbers, and you do it well, but gosh, his expenses are insane. One of the ironies when projecting is that lower returns can solve RMD issues. ;-) Higher returns cause greater RMDs, but kind of a good problem to have. My way of dealing with it is to evaluate the Roth conversion on a year to year basis, and only convert the minimum necessary to get to the next tax bracket. In a poor year returns-wise, can scale way back. The de-valuing of $$ over time is also not considered often enough by the "convert to roth" crowd. As you say, it takes a hit to one's portfolio early, so be careful. Sequence of returns is real. Bird in the hand.
@janethunt4037
3 күн бұрын
Great analysis and a very good point that Roth conversions may not be the best thing to do. I question the inheritance - would any of that be IRAs that are required to be spent? And I'm well aware that future inheritance income is all guess work. James, I ALWAYS improve my retirement income analysis skills with your videos. Thank you!
@davidjwillems
8 күн бұрын
Great video. I'm in almost the exact situation as this guy.
@FishOn1
6 күн бұрын
Very educational. Love the actual data example!
@MONROEJACQ
7 күн бұрын
Taxes can definitely eat into your retirement income if you’re not careful.
@mariadrukker2557
7 күн бұрын
Roth conversions are a solid strategy, especially while you’re still in a lower tax bracket. The idea is to pay the taxes now at today’s rates, and then once your money is in a Roth, your withdrawals are tax-free. But you’ve got to plan those conversions carefully, so you don’t push yourself into a higher tax bracket.
@keithmarquis226
3 күн бұрын
One thing I keep seeing and wondering if this is not being taken into account is the change in the tax brackets over the years due to inflation and statutory changes. It is imperative to mention that the tax brackets will change and one would need to consider that although income may be consistent, the tax bracket is not. You may find yourself close to the upper level of a tax bracket when you retire but you might be in the middle of the bracket or drop a bracket in the future. In 2024, for instance, married filing joint, the 22% tax bracket is $94,300 to $201,050 while the 24% tax Bracket is $201,050 to $383,900. In this scenario, when RMDs are due, the tax brackets will have changed....increased. In 2010 the 25% tax bracket (now 22%) was $68,000-137,300 a change of $26,000-63,750. The 28% tax bracket (now 24%) was $137,300 but not over $209,250 change of $63,750-$174,650. Looks like the brackets changed in 15 years about 35-45%(didn't do the math). By 20 years, you might be looking at a 40-50% change in the tax brackets. One should consider which tax bracket you ESTIMATE to fall into before RMDs and how the RMDs will either keep you in a tax bracket or raise your tax bracket when considering if an earlier conversion is part of the equation. Problem is...we don't know where the tax bracket will be....roll the dice or remove any question?
@andre-l3j
3 күн бұрын
Fortunately, a number of retirement calculators / programs (including Right Capital-the one used here) allow one to alter assumed tax brackets in retirement. Note that these brackets change to reflect the sunset of the TCJA in 2026 which may or may not come to pass. Yes, it will have to be continuously monitored both prior to and during retirement. But this alteration of tax brackets is modeled in most programs to the best of their ability. Also note that the brackets (TCJA or reversion to pre-TCJA) slope upwards over time to reflect the effects of inflation associated with the widening of the brackets. An income of $383,900 in 2024 puts one in the top of the MFJ 24% Federal bracket, but would have been in the 32% bracket in 2018-2023. Income of $383,900 in 2025 will be below the top of the MFJ 24% bracket, which will top out at $394,600 as it is adjusted for inflation/CPI/etc.
@jerrylabat550
7 күн бұрын
LTC shouldn't result in an income increase. LTC will be a medical cost, which is almost directly deductible from income as an itemized deduction. Yes it will deplete the portfolio quickly, but it should result in a taxable income decline if you pull it from a tax deferred account.
@MT-sq3jo
Күн бұрын
@23:53 mark - There are software out there that one can input retirement expenses with a limited time frame (e.g. mortgage payment ends 12 years post retirement, children supports end 5 years post retirement, etc.). That can solve the issue of having projected too high of ‘fixed’ annual expense to run the simulation.
@keithmachado-pp6fv
3 күн бұрын
Outstanding video
@SFSraptor
3 күн бұрын
42 minutes!! I am watching a heart-wrenching slow conversation taking for ever to make a point. Who has that much time? Sorry, buddy, you are going to have to consolidate this into one bite-size amount for the busy individual.
@TimOtero-nm5fg
8 күн бұрын
In this example, you removed the mortgage payment from the general expenses, but aren't the mortgage expenses accounted for elsewhere already?
@1968jhermann
6 күн бұрын
Around the 25 min mark you touch on probability of success, stating you’d come back to what a good number is…can you share your view please? Awesome content
@jawdrop6038
8 күн бұрын
Great stuff! Keep it coming! I wish this software was available for anyone to play with on their own
@tomr8936
8 күн бұрын
Why do you need LTC for 6.5K for you and wife, total 13K/month? And then another 12K/month? The goal is to take max 100K/year from 401K, and then you pay 0 tax. 8K/month should be enough for everything at that age: 3K rent/house, and 5K for other expenses. (btw, include inheritance is not smart, because chances are you will need to use your parents money to pay for their LTC)
@stevebeaver6529
6 күн бұрын
Great video! I “tinker” with Right Capital on a regular basis to test various scenarios as I approach retirement in 3 years (age 62). I don’t think I’ve ever seen you compare withdrawal sequences: taxable, tax-deferred, tax-free vs tax-deferred, taxable, tax-free. For me, with a vast majority (80%) of my retirement investments in tax-deferred accounts (401K, traditional IRA, SEP IRA) it makes a significant difference in my projected ending portfolio balance to start with tax-deferred accounts. In the neighborhood of $2M+ before even applying conversion options. Can you tell me why that doesn’t ever come up?
@ericgold3840
4 күн бұрын
Pulling from IRA first is what I call the 'pseudo Roth' approach. This question of which accounts to pull money from comes up ** all.the.time ** because it really is a huge lever. In this sense the Right Capital software can be limiting without a lot of tinkering because the user sets the order of withdrawal and that is used throughout the projection. A more nuanced approach would let the user vary the withdrawal order over time.
@raywagner8075
5 күн бұрын
I wish there was a way to put in your smile spending. Like for the next 3 GOGO years I am going to spend 15K per month then 10 years at 12K then the rest at 8K etc.
@adabamas
7 күн бұрын
The problem with the software is that it's not possible to dynamically set monthly expenses. For example, it should be possible to set expenses to $x year 1 -> n, $x -$y year n+ to take into account children leaving household etc.
@brianwalsh607
7 күн бұрын
Nice work. More like this!
@leftysidewinder
8 күн бұрын
In late 50s-60s, the 5 year holding requirement for Roth conversions/contributions makes funding Roth very undesirable. It’s not all about tax savings at that age, where liquidity is more important. Also, Andre will have lesser and lesser of healthy years left to spend down the portfolio, or mental capacity to manage Roth holdings. Also, Andre is unable to deduct realized Roth losses.
@darryls8066
3 күн бұрын
Trying to figure out how to convert funds in a MYGA into a ROTH IRA. Can you please explain the process for that?
@roseyfischer
7 күн бұрын
Taxes can definitely eat into your retirement
@jeffb.4800
8 күн бұрын
$35,000 a year on home improvements?
@peterwright837
8 күн бұрын
Loving the Academy and Right Capital. However, it seems to be way overestimating my capital gains taxes. I’m guessing that’s because I have almost 50% of my net worth in a taxable account with a very low cost basis, (~10%), and it’s assuming a lot of annual turnover. How can I change that assumption?
@gd9986
8 күн бұрын
Why was health care cost nearly double that first year?
@spineguy70
8 күн бұрын
12k a month expenses is cheap no? Are they just having one home? No hobbies.. golf.. tennis. Etc?
@SuperMatt1235
21 сағат бұрын
This guy has no budget and does not know how much money he spends and who he spends it on. Huge Mistake in life.
@jimc336
8 күн бұрын
This video is nearly useless because you don’t state the numbers out loud in your narrative and they are impossible to see on a cell phone screen.
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