The Retirement and IRA Show

Chris’s Summary

Jim and I continue our discussion on 99 Retirement Tips from Fisher Investments, picking up where we left off last week. We cover involving children in financial decisions, the liquidity trade-off of paying off a mortgage early, renting before buying in a new retirement location, lifetime gifts as part of the fun budget, and watching for financial predators including a disputed suggestion that low advisor fees may be a warning sign.

Jim’s “Pithy” Summary

Chris and I are back where we left off, working through Fisher Investments’ 99 Retirement Tips, and there’s still plenty to dig into. Tip 23 makes the case for involving your children in your financial decisions — and the reasons go deeper than most people think about. Tip 26 gets into mortgage payoff, and while we partially agree with what Fisher says about it — paying it down doesn’t change your net worth. But it does change your liquidity, and that distinction is worth considering.

Tip 32 is one I feel personally right now: if you’re relocating in retirement, rent first. Never move anywhere with a vacation mindset. I’m doing it in Ohio as we speak, and I’d tell anyone thinking about a move to do the same. Tip 74 recommends lifetime gifting — and the way we handle it, that spending belongs in your Fun Number budget. There’s no written rule you have to wait until you’re gone to help the people you care about.

And tip 86 covers financial predators, which is largely solid — but there’s one line in there that made my blood boil when I read it. The implication is that an advisor charging lower fees might be a warning sign. I have never seen any consumer advocate say that. The 99 retirement tips review of this particular point raises a question worth sitting with: who exactly benefits from that framing?

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Jim and Chris discuss listener emails on Social Security survivor benefits, IRMAA relief and the SSA-44 process, the Social Security earnings test, disclaiming inheritances that are brokerage accounts, and Roth conversion rules for retirees.

(6:00) A listener asks whether his wife’s early Social Security claim at 62 would reduce the survivor benefit she’d receive upon his death.

(14:00) George asks several questions stemming from a successful SSA-44 IRMAA relief request, including whether a retroactive refund is due, whether Step 3 covers the following year, and whether a separate filing is needed for his own income reduction.

(27:30) Jim and Chris respond to a listener who clarifies that benefits withheld under the Social Security earnings test are deferred, not lost, and are returned as a higher benefit at full retirement age.

(31:00) Georgette asks when it makes sense to disclaim an inherited brokerage account and whether passing the assets directly to their children is the right move.

(40:45) The guys are asked about the rules and tax implications of converting brokerage account funds to a Roth IRA, including whether having no earned income in retirement disqualifies someone from doing

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Chris’s SummaryJim and I review Fisher Investments’ 99 Retirement Tips and begin working through the list, covering only a handful in this episode. We discuss estate planning basics such as having a will, the importance of reviewing estate documents, and considering living wills and trusts, with emphasis on incapacity planning. We then examine longevity statistics, why life expectancy at birth is often misapplied, and how that connects to retirement income decisions, including Fisher’s warning on annuities.

Jim’s “Pithy” SummaryChris and I start digging into Fisher Investments’ 99 Retirement Tips and, true to form, we only make it through a few because I may have wandered down a rabbit hole or two. The estate planning stuff is straightforward—have a will, review it, don’t ignore the documents that matter if you’re alive but not fully capable. Death is easy administratively. Incapacity is where things get messy, and that’s where families struggle. And that’s where better planning matters most.

Then we get into longevity. If you’re going to say people might live longer than they think, you better use the right numbers. Not the “life expectancy at birth” headline stat. If a couple makes it to 65, the odds shift. That matters. That changes the runway. That changes how you think about income. It also changes how long that portfolio has to work, and how long decisions have to hold up.

And from there we run into the annuity warning. We’re not pro-annuity and we’re not anti-annuity. Many deserve criticism, but if longevity risk is real—and it can be—then you should evaluate lifetime income options on their merits. Social Security is guaranteed lifetime income. Income annuities are too, so they should belong in the conversation. Whether you use them depends on the situation, but you can’t talk about taking longevity seriously and then issue a blanket warning against annuities.

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Jim and Chris are joined by Jake Turner to discuss listener emails in this special tax related episode covering Roth conversions after RMD age, balancing Roth versus Traditional IRA contributions, HSA versus Roth contributions, IRA reporting questions, filing deceased tax returns, and a listener PSA on tax planning software.

(11:30) A listener asks whether converting to a Roth makes sense at age 75 while currently in the 12% bracket and taking RMDs, and whether recent tax law changes create a strategy opportunity.

(20:20) George wonders whether his 30-something children should continue using Roth contributions exclusively or begin balancing with Traditional IRA contributions as their wages increase, and asks what percentage split between Traditional and Roth accounts looks reasonable in retirement.

(48:45) The guys discuss whether covering medical expenses from an HSA and contributing to a Roth IRA, or leaving the HSA intact and paying medical bills out of pocket will result in greater retirement spending flexibility.

(57:00) Jim, Chris, and Jake address whether a spouse who retired during the year is considered covered by a workplace plan, how to answer prior nondeductible IRA contribution questions, and whether Form 8606 is required after making and converting a small IRA contribution in the same year.

(1:10:30) George asks how to handle the direct deposit of a refund on a deceased final 1040, including whether to use the estate bank account with an EIN or the decedent’s existing account, and whether a paper check remains an option.

(1:15:30) A listener PSA introduces Catalyst Tax Insights, a free tool to run “what if” scenarios and estimate taxes owed without using full tax software.

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If you would rather not listen to the guys’ banter about Jacob’s upcoming move to Iowa, Jim’s garden planning, and a listener correction about the word “imbibe” you can skip ahead to (33:30).

Chris’s SummaryJim and I are joined by Jacob Vonloh as we discuss using Buffered ETFs prompted by a Morningstar article titled “Buffer ETFs Are Not for Everyone.” We explain how defined outcome ETFs use options to provide an explicit amount of loss protection over a given period while limiting potential gains, and we outline why these products are generally suboptimal for long-term investors. We then connect this to investment positioning, focusing on risk capacity, distribution planning, and why dollars assigned to delay-period Minimum Dignity Floor and Go-Go spending may require a degree of principal protection.

Jim’s “Pithy” SummaryChris and I are joined by Jacob Vonloh as we take a listener-submitted Morningstar article—“Buffer ETFs are not for Everyone”—and use it to kick off what is going to be a series on principal protection. Morningstar does a very good job in this article laying out what it likes about buffered products, and it also makes some excellent points on where these types of products would fit and where they don’t fit. They’re not for everybody, but they could be of interest in certain cases, in a certain application, and we’re going to share how we use them.

What I want to do in this series is broaden the conversation. Buffered ETFs are just one type of principal protected product. There are multiple tools in that category, and we’re going to walk through where they fit into distribution planning. As you transition from accumulation into what I call the Venn diagram phase, and ultimately into distribution, you have to stop thinking of your portfolio as one big portfolio and start thinking in terms of smaller portfolios—investment positions—based on assigned spending. Dollars earmarked for a legacy position can be invested aggressively. Dollars earmarked for immediate spending—like the Go-Go reserve or the reserve for your MDF—need a degree of principal protection. This ties directly into the Secure Retirement Income Process and the See Through Portfolio and how we navigate asset positioning in retirement.



Show Notes: Morningstar Buffered ETFs article

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