The Retirement and IRA Show

Chris’s Summary

Jim and I continue our Fun Number series with a listener email laying out a DIY retirement plan built account by account, each with an assigned purpose. We cover where her approach lines up with positioning dollars by spending need, where tax planning could change what comes from which account, and how declining ability to manage money shaped her decisions.

Jim’s “Pithy” Summary

Chris and I get back to the series we interrupted, this time with a long email from a listener who has done the work herself and laid the whole thing out for us. She is retiring next year, she has been tracking her actual spending for years, and she has built a DIY retirement plan that throws out the two rules of thumb she started with a decade ago. I have never understood where that 75 to 80 percent of income number came from. Your mortgage or rent and your utilities do not shrink because you stopped working, and the money you were putting into the 401k does not vanish. It goes to fun.

Where she really got my attention is that she gave every account a job. She has a good life account, a reserve for emergencies, aging and long term care, one for charitable giving, and one that exists to be spent. That is her version of what we do, and I like it. I do have a couple of caveats, and one of them I feel strongly enough about that I went looking for the sound effect button. It has to do with which account the charitable dollars should come from.

We also get into what she calls the basics of life, which is close to what we call the Minimum Dignity Floor, why positions get etched in Jell-O and not in stone, the studies on when your ability to handle this material peaks and why your confidence never gets the memo, and the question of who her tax planning is actually for.

The post Review of a DIY Retirement Plan: EDU #2636 appeared first on The Retirement and IRA Show.

Jim and Chris discuss listener emails on IRMAA brackets after a spouse’s death, Social Security claiming and spousal benefits, annuities and inflation for a Minimum Dignity Floor shortfall, and a Qualified Charitable Distributio (QCD) funding a charitable gift annuity, followed by listener PSAs on expense tracking, home sale timing, and annuity flexibility.

(10:00) A listener asks which year’s tax brackets and which filing status apply to the IRMAA two-year look-back following a spouse’s death, and whether remarrying later would change the result.

(18:30) George asks whether claiming Social Security at Full Retirement Age rather than 70 makes more sense when a spouse is already receiving a small benefit that would step up to a spousal benefit.

(32:15) The guys respond to a question about how to account for future inflation when purchasing an annuity to cover a Minimum Dignity Floor (MDF) shortfall.

(1:02:15) Jim and Chris address a question about using a QCD from a traditional IRA that contains basis to fund a charitable gift annuity. The listener asks how the basis affects the reportable QCD amount, any charitable deduction, and the taxation of the lifetime income stream.

(1:11:30) Georgette shares a listener PSA on using a budgeting app to tag every transaction as either MDF or Fun in the years leading up to retirement.

(1:13:00) A listener offers a PSA recommending a different approach – similar to what Jim is doing – for the homebuyer from a previous episode.

(1:15:00) The guys share a listener PSA suggesting a 60-day leaseback at closing as a simpler alternative to the 60-day rollover for that same home purchase situation.

(1:19:30) Jim and Chris close with a listener PSA suggesting that an annuity purchased for fun spending could also serve as a partial source of MDF income later if it structured differently.

The post IRMAA Brackets, Social Security, Annuity Inflation, QCDs, Listener PSAs: Q&A #2636 appeared first on The Retirement and IRA Show.

Chris’s Summary

Jim and I are joined by Jacob as we tackle four listener questions on Investment Positioning , covering Quicken tools for tracking positions, funding a delay period Minimum Dignity Floor with a stable value fund, evaluating a too-good-to-be-true real estate return, and weighing a target date fund for long-term care reserves.

Jim’s “Pithy” Summary

Chris and I are joined by Jacob as we work through four listener emails, all circling back to how we think about Investment Positioning in retirement.

(6:45) One listener wants to know what Quicken features another listener used to track positions. Jacob reads the original listener’s own description of using Quicken to set up investment positions, plus separate categories for essential and discretionary spending.

(14:30) George wonders whether the stable value fund in his large 401(k) is principal protected enough to draw on. He and his wife are both 60 and plan to delay Social Security roughly 10 years, and he’s weighing this fund as the source to bridge that gap. Jacob and I dig into rate reset timing, liquidity restrictions, and mandatory withholding before landing on an answer.

(46:45) A listener asks whether a real estate offer promising 18 to 30 percent annual returns is worth pursuing. Chris lays out the single clearest test I’ve heard for spotting too-good-to-be-true returns.

(1:09:30) Georgette raises the question of parking her long-term care dollars in a 2040 target date fund. Jacob walks through how we tier the L in our SEAL Reserve by age instead of relying on one fund’s glide path, and I get into the real difference between a “to” fund and a “through” fund, including the story of a deputy sheriff who learned that difference the hard way.

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Jim and Chris discuss listener emails on Social Security survivor benefits and earnings records, financing a home purchase, and using a fixed indexed annuity (FIA) for discretionary spending.

(11:15) A listener asks why a Social Security estimate lists a $3,944 survivor benefit rather than the projected $5,101 age-70 benefit and which amount would actually be paid.

(21:45) The guys consider whether adding previously omitted stock option income to a 2017 earnings record could result in higher Social Security benefits and back pay.

(31:30) Jim and Chris weigh using a 60-day IRA or Roth IRA rollover to finance a home purchase before selling the current home against a HELOC or mortgage.

(55:15) Another listener asks for their thoughts on using a fixed indexed annuity (FIA) with an income rider to support discretionary spending and how it compares with their simpler annuity strategies.

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Chris’s Summary

Jim and I continue our discussion on the Fun Number, this time as a dialogue episode built around one listener’s hesitation around spending retirement savings and how growth and legacy positioning and establishing his SEAL Reserve helped him work through it. We revisit the seesaw framework for undeployed assets, clarify how the SEAL Reserve consolidated the old reserve positions, and explain why the Fun Vision is never set in stone and can and should be revisited.

Jim’s “Pithy” Summary

Chris and I are picking the Fun Number conversation back up in dialogue form this week, working through a long email from a listener whose growth and legacy positioning helped him get more comfortable with spending retirement savings after years of struggling to spend the money he worked his whole life to save. I have spent twenty-seven years questioning the safe withdrawal rate approach, and this listener took what we teach and reshaped it around his own need for peace of mind.

He admitted flat out that spending money is difficult for him, and I don’t think that makes him an anomaly. Honestly, that’s the norm for most people entering retirement. I compare it to growing lettuce in my own garden, nursing it from seed, only to cut it down and eat it. You still do it, but there is a pull to let it keep growing. That is why we built the Minimum Dignity Floor first: the older you gets an explicit promise that food, housing, and healthcare are covered no matter what, so the younger you can give yourself permission to spend on fun. This listener wanted more comfort than that alone gave him. So we walk through where that extra comfort came from for him.

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