I wish I saw this 9 years ago when I first retired. I saw several financial planners but none gave me a great withdrawal plan. They kept wanting me to save since I retired at 53. I made every one of these 5 mistakes.
Retired 6 weeks ago in the bad economy. Still felt confident by having 3 years of assets in the “safe” bucket to allow the “growth” assets time to recover.
First time viewer- EXCELLANT content. Exactly what I needed. I am just 3 months from an early retirement at at 59-9 months and am excited and terrified at the same time. Your content here was informative and brings perspective to that BIG STEP. Now going back to rewatch! Thanks.
I am in same place but almost 61. I got spooked by This economy? If I had more in Cash BUCKET I cud have retired last Feb? An advisor wants me to work 1 more yr? Retire at 62? I want to try to go This year?
Mistake #1 really got me. I never converted to Roth. I am 72 and just realized that the Required Minimum Distribution was all taxed at the income rate, not partially at the capital gains rate. File this under dumb mistakes.
Would be nice to have some of these retirement videos for the majority of retirees 2ith 500k or less in their retirement savings. The mean family income is about 75k. Raising kids on low 2ahe jobs does not allow for high savings.
this is an excellent video and one i will rewatch. I am married and retired(single earner) last year at 55 y/o. i am drawing from my taxable bucket. given my young retirement age, i intentionally underspent during my first year. (2.7% - divided monthly, this was still more than what we were living on during our accumulation phase though this includes higher health care insurance, definitely not a hardship. i could spend more on my hobbies i guess if i wanted too ). i will relax this to 4% or more draw rate over the next year. this just builds a further margin of safety given my early retirement age. my worry about increasing spending is the lifestyle creep . my expected tax hits for the next few years will be basically LTCG and dividends plus marginal tax rates for roth conversions ( i did a 48K roth conversion this year already and will decide around end of the year to add another 25K in roth conversion or to realize up to 25K in LTCG to have 0% ltcg rate) till i eventually touch my tax deferred assets. i basically spent down some cash reserves for my first year. i am thinking of starting to draw from my tax deferred assets in my early 60's to spread out the tax rate increase and supplement drawing from the taxable account to keep taxes down and to hold off on touching the roth(20% of assets currently) unless necessary. i agree about living paycheck to paycheck in retirement but my first month of retirement we underspent by 3.5K so we spent it the next month right away on something fun but then you do have months where you unexpectedly spend more( car repairs, vacation expenses, health deductibles). so it pays to stay your hand in spending anything under budget right away. at this time i am guilty of a) maintaining too low of a tax rate intitially b) being too frugal- see above c) i guess you could say building savings into my budget as I max out hsa contributions of $8300 per year and still paying any health care expenses out of pocket but keeping the receipts for some reckoning down the road d) maybe in the future-undervaluing your time but only for projects that i am capable of.
I really enjoyed listening to what you had to say. I am not retired but starting to look into many areas to better prepare myself. Thank you so much for sharing your knowledge. Definitely becoming a subscriber to you!!
A reason to keep income low in the first years of retirement would be to qualify for Obamacare. If you retire before 65 (Medicare) you'll need to keep taxabe income below about 67K for a couple to qualify.
I have a disabled wife so there's not much discretionary stuff that we can spend money on, either for her, or doing things together. I don't care much for travel, and even less so without my wife. I don't have a lot of interests I want to pursue in retirement. I could afford to retire now (heavy on Roth and taxable assets), but I'm enjoying a relatively new career that leaves me me plenty of free time. The only thing that my wife and I find appealing about having extra money in retirement is the ability to help educate potential future grandkids. It seems unavoidable that, even living my best life, my spending is going to look extremely frugal relative to what I could spend. Am I looking at this wrong?
When you say the TCJA is expiring in 2026 even more important to do Roth conversion in the MFJ bracket you get an 100,000 in the 24% tax bracket which will be the 33% bracket when the old rates come back. I will continue to make these 100,000 dollar Roth conversions in the next three years. Which then I will have 75% in retirement accounts. I will then avoid widows tax trap, RMD‘s, secure act 10 year rule. What do think??
Do you ever have anyone who has less than 2 or 3 million invested discuss retirement? I mean I could have easily retired when I was 30 if I had 2 million.
Excellent content. I retired 15 years ago at age 57. I have always been a planner, and yet I have made all of these "mistakes", at least to a certain degree. The good news is that over time, if you are mindful, you will find your stride and it all works out well. It takes a bit of time to get it right.
Ideally, you don't want to waste a lot of time figuring things out in real time when you can be mindful right from the start and not fall into these traps in the first place. I'm not retiring for another 8 or 9 years, so I'm doing as much research as I can now so that I'm ready for the change and have the right mindset going in.
Thank-you for number 4, that gave me food for thought. I've been retired for 13 months, continue to do yard work and other DIY home projects. For me, those activities give me a sense of accomplishment and help keep me physically active. Having said that, however, this and other videos make me realize I should quit DIY'ing retirement planning and not fear spending some for professional advice.
Hey Eric, this is another Excellent video that again is so "top of mind" for my situation . The points u made nobody really seems to talk about. Especially the time perspective. That will be a tough one to outsource work when I finally get the time to do it. However your point is well taken. I'm looking forward to this journey with u and your team in the coming months. Keep these original topics coming, there are the best education in the financial industry.
@@texastexas4541 I (age 61) run at the park for my workout. p.s. The young guy (age 30?) who runs the RUclips channel Root Financial Partners has his groceries delivered as well. He hates grocery shopping, as I do.
I don’t think I will last much past 70 for genetic health issues. Do you have a video for someone who will probably retire early and may not need much in their later years. ?
The "paycheck to paycheck in retirement" makes some sense. I'm still waffling on coming RMDs and I don't hear much about in-plan 401k to Roth 401k conversions except a lot of vague cautions.
I had job related 401K in the past and transferred it into my Fidelity IRA account so I performed Roth conversion. In the same time, I only contributed to job related Roth 401K so I can transfer some balance to my Fidelity Roth IRA. The Roth IRA is the best gift given by the Congress to us. It does not have limit how much you can convert and no income limit as well. It may not last long before it is gone or revised. Of course, it does not work for everyone.
Got a tangential question: Can I pair a return of emergency Covid distribution from my regular IRA,(I return say $20k), with a regular IRA to Roth conversion of the same amount,(again the same amount of $20k)? My objective is to create a net zero tax by pairing the two: 1) Returning $20k Covid 19 distribution lowers my taxable income. 2) Doing a $20k IRA to Roth conversion raises my taxable income the same amount. Thus the two transaction cancel out and the net affect is 0 taxable income from this pairing. (*Doesn’t mean my taxes are $0, just $0 for these two transactions.) Is my thesis correct here ?
@@damianweiss217 I have no special expertise. But, it sounds like you've got two separate transactions. One taxable and the other not taxable. p.s. I do have a bachelor of science in accounting. I worked in private accounting, and never took the CPA exam.
@@damianweiss217 It sounds like you withdrew from your IRA, but then returned it. The withdrawal would have been taxable, but if you returned it within the rollover requirement of 60 days, then there's no tax liability. An IRA to Roth conversion is fully taxable.
1. Yes and no. Depends if they planned their RMDs to withdraw from twx defer, converting to Roth and contribute to HSA at the same time they pay Medicare fees. For #3, there is nothing wrong with capital preservation as inflation hits the capital over time if we live based on gains.
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A great point about valuing your time! That's the most precious commodity!
I wish I saw this 9 years ago when I first retired. I saw several financial planners but none gave me a great withdrawal plan. They kept wanting me to save since I retired at 53. I made every one of these 5 mistakes.
Retired 6 weeks ago in the bad economy. Still felt confident by having 3 years of assets in the “safe” bucket to allow the “growth” assets time to recover.
First time viewer- EXCELLANT content. Exactly what I needed. I am just 3 months from an early retirement at at 59-9 months and am excited and terrified at the same time. Your content here was informative and brings perspective to that BIG STEP. Now going back to rewatch! Thanks.
I am in same place but almost 61. I got spooked by This economy? If I had more in Cash BUCKET I cud have retired last Feb? An advisor wants me to work 1 more yr? Retire at 62? I want to try to go This year?
Mistake #1 really got me. I never converted to Roth. I am 72 and just realized that the Required Minimum Distribution was all taxed at the income rate, not partially at the capital gains rate. File this under dumb mistakes.
You got 3 more years to figure out a plan.
Another fabulous video. Thank you.
Just retired last year. The last one is a problem.
The #4 is very good - Enjoy while you still have time is priceless!
Thanks, Eric. Another great video.
Would be nice to have some of these retirement videos for the majority of retirees 2ith 500k or less in their retirement savings. The mean family income is about 75k. Raising kids on low 2ahe jobs does not allow for high savings.
I suspect these videos are geared toward their average client, not the general public.
this is an excellent video and one i will rewatch. I am married and retired(single earner) last year at 55 y/o. i am drawing from my taxable bucket. given my young retirement age, i intentionally underspent during my first year. (2.7% - divided monthly, this was still more than what we were living on during our accumulation phase though this includes higher health care insurance, definitely not a hardship. i could spend more on my hobbies i guess if i wanted too ). i will relax this to 4% or more draw rate over the next year. this just builds a further margin of safety given my early retirement age. my worry about increasing spending is the lifestyle creep . my expected tax hits for the next few years will be basically LTCG and dividends plus marginal tax rates for roth conversions ( i did a 48K roth conversion this year already and will decide around end of the year to add another 25K in roth conversion or to realize up to 25K in LTCG to have 0% ltcg rate) till i eventually touch my tax deferred assets. i basically spent down some cash reserves for my first year.
i am thinking of starting to draw from my tax deferred assets in my early 60's to spread out the tax rate increase and supplement drawing from the taxable account to keep taxes down and to hold off on touching the roth(20% of assets currently) unless necessary.
i agree about living paycheck to paycheck in retirement but my first month of retirement we underspent by 3.5K so we spent it the next month right away on something fun but then you do have months where you unexpectedly spend more( car repairs, vacation expenses, health deductibles). so it pays to stay your hand in spending anything under budget right away.
at this time i am guilty of a) maintaining too low of a tax rate intitially b) being too frugal- see above c) i guess you could say building savings into my budget as I max out hsa contributions of $8300 per year and still paying any health care expenses out of pocket but keeping the receipts for some reckoning down the road d) maybe in the future-undervaluing your time but only for projects that i am capable of.
I really enjoyed listening to what you had to say. I am not retired but starting to look into many areas to better prepare myself. Thank you so much for sharing your knowledge. Definitely becoming a subscriber to you!!
A reason to keep income low in the first years of retirement would be to qualify for Obamacare. If you retire before 65 (Medicare) you'll need to keep taxabe income below about 67K for a couple to qualify.
Thanks Eric, very solid insights on mistakes made.
Eric, another great video.
Mistake #4 is key
I have a disabled wife so there's not much discretionary stuff that we can spend money on, either for her, or doing things together. I don't care much for travel, and even less so without my wife. I don't have a lot of interests I want to pursue in retirement. I could afford to retire now (heavy on Roth and taxable assets), but I'm enjoying a relatively new career that leaves me me plenty of free time. The only thing that my wife and I find appealing about having extra money in retirement is the ability to help educate potential future grandkids. It seems unavoidable that, even living my best life, my spending is going to look extremely frugal relative to what I could spend. Am I looking at this wrong?
When you say the TCJA is expiring in 2026 even more important to do Roth conversion in the MFJ bracket you get an 100,000 in the 24% tax bracket which will be the 33% bracket when the old rates come back. I will continue to make these 100,000 dollar Roth conversions in the next three years. Which then I will have 75% in retirement accounts.
I will then avoid widows tax trap, RMD‘s, secure act 10 year rule. What do think??
Yes, I retired early at 59 so doing these conversions before 63 to avoid IRRMA
Do you ever have anyone who has less than 2 or 3 million invested discuss retirement? I mean I could have easily retired when I was 30 if I had 2 million.
seems odd that a guy his age is advising retirees
Because all the advisors our age are retired.
I will have trouble spending in retirement. I have been a heavy saver my entire life. Thanks for the insite Eric!!
Excellent content. I retired 15 years ago at age 57. I have always been a planner, and yet I have made all of these "mistakes", at least to a certain degree. The good news is that over time, if you are mindful, you will find your stride and it all works out well. It takes a bit of time to get it right.
@@_-Karl-_ it was very stressful at first. But it also stress tested my plan, and things worked out fine. Now I don't worry about markets very much.
It always works out if you have more $ than you need to live in retirement lol, good on you for being prepared!
Ideally, you don't want to waste a lot of time figuring things out in real time when you can be mindful right from the start and not fall into these traps in the first place. I'm not retiring for another 8 or 9 years, so I'm doing as much research as I can now so that I'm ready for the change and have the right mindset going in.
Thank you for this insight and for sharing your wisdom. Best to you for a bright future.
Thank-you for number 4, that gave me food for thought. I've been retired for 13 months, continue to do yard work and other DIY home projects. For me, those activities give me a sense of accomplishment and help keep me physically active. Having said that, however, this and other videos make me realize I should quit DIY'ing retirement planning and not fear spending some for professional advice.
Hey Eric, this is another Excellent video that again is so "top of mind" for my situation . The points u made nobody really seems to talk about. Especially the time perspective. That will be a tough one to outsource work when I finally get the time to do it. However your point is well taken. I'm looking forward to this journey with u and your team in the coming months. Keep these original topics coming, there are the best education in the financial industry.
Great info and reminders. Thank you!
Stuff that’s very relatable about spending the money you’ve saved up for so many years being hard and strange.
I have groceries delivered to my door. Thanks for reminding me I'm not being lazy, but rather I value my time. And the lawn care guy is a must.
You should keep yourself physically busy. It is good for your mind and body. Pay the lawn guy but watch TV is not good for you.
I like your idea! Personally I like selecting my own groceries, but I'll pay someone to mow the lawn in a heartbeat.
@@texastexas4541 I (age 61) run at the park for my workout. p.s. The young guy (age 30?) who runs the RUclips channel Root Financial Partners has his groceries delivered as well. He hates grocery shopping, as I do.
@@larryjones9773 Good for you.
Great, am 55 and struggling to know when is enough, and when time becomes worth more than money, how can I retire and leave money on the table...
If you are flexible and willing to relocate to lower cost area, even overseas.
Feels like some of this is targeted perfectly for me..
.which is just to say... "well done on another excellent RUclips submission"
I don’t think I will last much past 70 for genetic health issues. Do you have a video for someone who will probably retire early and may not need much in their later years. ?
Best I’ve heard in awhile ….”I am not lazy …..just value my time …..”
The "paycheck to paycheck in retirement" makes some sense. I'm still waffling on coming RMDs and I don't hear much about in-plan 401k to Roth 401k conversions except a lot of vague cautions.
Why do 401K to Roth 401K conversions if you can do 401K to Roth IRA conversions (without RMDs)?
I had job related 401K in the past and transferred it into my Fidelity IRA account so I performed Roth conversion. In the same time, I only contributed to job related Roth 401K so I can transfer some balance to my Fidelity Roth IRA. The Roth IRA is the best gift given by the Congress to us. It does not have limit how much you can convert and no income limit as well. It may not last long before it is gone or revised. Of course, it does not work for everyone.
Really great video!
good stuff
Got a tangential question:
Can I pair a return of emergency Covid distribution from my regular IRA,(I return say $20k), with a regular IRA to Roth conversion of the same amount,(again the same amount of $20k)?
My objective is to create a net zero tax by pairing the two:
1) Returning $20k Covid 19 distribution lowers my taxable income.
2) Doing a $20k IRA to Roth conversion raises my taxable income the same amount.
Thus the two transaction cancel out and the net affect is 0 taxable income from this pairing. (*Doesn’t mean my taxes are $0, just $0 for these two transactions.)
Is my thesis correct here ?
yes
@@larryjones9773 May I ask what is your expertise in this area ?
@@damianweiss217 I have no special expertise. But, it sounds like you've got two separate transactions. One taxable and the other not taxable. p.s. I do have a bachelor of science in accounting. I worked in private accounting, and never took the CPA exam.
@@larryjones9773 Basically one transaction lowers taxable income & the other transaction raises taxable income, or so I believe, thus the question.
@@damianweiss217 It sounds like you withdrew from your IRA, but then returned it. The withdrawal would have been taxable, but if you returned it within the rollover requirement of 60 days, then there's no tax liability. An IRA to Roth conversion is fully taxable.
1. Yes and no. Depends if they planned their RMDs to withdraw from twx defer, converting to Roth and contribute to HSA at the same time they pay Medicare fees.
For #3, there is nothing wrong with capital preservation as inflation hits the capital over time if we live based on gains.