Anonymous wants to retire early and often. They’re going overseas, where they’ll make their annual salary within six months. Where should they put their extra income?
Anonymous also wants to know: how can they find a financial advisor they can actually trust?
Another anonymous listener wants to know – is it possible to spend more while minimizing taxes in early retirement?
JuanCarlos asks: is $20,000 too little to invest with a financial advisor?
Angela is wondering how to create a Roth IRA account for a teenager.
Rose is thinking about switching from mutual funds to index funds because it means encountering less fees, but her and her husband are in their 60s. Does this make sense?
Ari has $700,000 to invest in a taxable brokerage account. He wants to know if a 90 percent total stock market index and 10 percent bonds is a good asset allocation.
Dave and his wife want to use their defined benefit plans as their primary income stream in retirement, and supplement with Roth and 457 incomes. Where else should they be saving?
Myself and former financial planner Joe Saul-Sehy answer these questions on today’s episode.
Rose asks (at 3:00):
My husband and I are in our 60s and retired. We have a financial consultant that charges a one percent annual fee for a portfolio of about $1M. We have a few mutual funds in this account. At this point, is it worth it building a portfolio with index funds?
Our financial consultant says index funds are riskier than mutual funds, because with index funds, you own the whole market, so if the market goes down, so does your portfolio.
Following your Week 23 advice, I checked the fees on our mutual funds, and only three out of 11 have expense ratios of 0.50 percent or less. Additionally, my small Roth IRA has three funds with expense ratios of about one percent.
I just found out that Vanguard charges .03 percent for management fees. I’m wondering if it’s worth transferring my account to Vanguard to lessen the fees and simplify my portfolio. What do you think?
JuanCarlos asks (at 43:44):
I have $20,000 in cash for future investments, so I’ve been looking for a CPA or financial advisor for help. However, when I let them know that I have $20,000 to invest, they seem uninterested. Am I being too eager in looking for a financial advisor? Should I be seeking someone with a different title? How will I know when I’ve found the right advisor for me?
Anonymous asks (at 50:50):
How can I spend more while minimizing taxes in early retirement?
I was fortunate enough to retire early at age 46 with a net worth of $3M. Six years later, my net worth is $4M. I’m single and I have no heirs. While I live comfortably now, my simulation suggests that I can spend another $6,000/month based on life expectancy. The downside is that doing so would require withdrawals from tax advantaged accounts. I’m 52 and have no desire to be the richest man in the graveyard.
I’ve considered 72-T withdrawals and a Roth conversion ladder, but these options would push my income higher and eliminate my ACA subsidy. I like my home – it’s paid for, and I don’t want to sell. Therefore, I don’t see a good option to tap the equity.
I live on approximately $20,000 of long-term capital gains and dividends, and withdraw an additional $35,000/year from Roth IRA contributions. I’m in a minimal tax bracket and qualify for the full Obamacare subsidy. I have additional Roth contributions and enough money in a taxable account to maintain my current spend rate until 59.5 years old, but not enough to increase my spend up to what the simulation suggests that I can safely withdraw.
How do I most tax-efficiently get an additional $6,000/month?
Ari asks (at 34:44):
I’m 43 years old with no children. I’m getting ready to sell a house that I co-own with my brother. I will have about $700,000 from the sale, which will be tax-free due to a step-up basis and a $250,000 gain exclusion.
I plan to put the $700,000 in a taxable brokerage account and draw down on 3.5 percent annually. Do you think an asset allocation of 90 percent total stock market index and 10 percent bonds is a good asset allocation for what I plan to do?
Here’s some extra information: I already have $80,000 in a Roth IRA invested 100 percent in a total stock market index, and I plan to continue working part-time on my side business that brings in around $20,000/year. Additionally, I plan on being a renter versus buying a house going forward.
Dave asks (at 25:55):
My wife and I are 38, live in California, and earn about $95,000 net annually. We have no debt other than our mortgage, and a savings account with $32,000 in it.
I work for a county government with a three percent at 60 defined benefit plan, and my wife works for the state with a defined benefit plan as well. We started our jobs at age 22 and want to stay until retirement.
We have Roth IRAs with a combined total of $43,000, and we contribute $11,000/year to the Roth. I also have a 457b plan with $52,000 in the account and contribute $7,200/year.
We want to use our defined benefit plans as our primary income stream in retirement, and supplement with Roth and 457 incomes. Where should we go next in retirement planning? What else should we be saving/investing in?
Anonymous asks (at 57:48):
I have a two-part question. The first is: how can I find a financial advisor that I trust?
The second: I had an opportunity at work to go overseas, and I’ll be making my annual salary within a short six months. What should I do with the extra income that I’m getting?
Here are some details: I’m 25, I make roughly $70,000/year, I have about $40,000 in debt, and I have $20,000 in my TSP. My goal is to retire early and often, and I’d like my investments to be as hands-off as possible.
Angela asks (at 1:02:51):
Do you have any advice for someone looking to start some type of IRA for a teenager who is just starting to work? I’m looking for feedback on specific companies or Roth accounts that can be opened for a child to take advantage of how much time they have until retirement.
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