6 Powerful Ways to Use Your Taxable Account in Retirement

You might have saved enough for retirement, but are you getting the most out of your assets? Most retirees leave thousands or even hundreds of thousands of value on the table in their taxable accounts. You can schedule an appointment with one of our Retirement Experts to discuss your situation and help you plan for your future. Call us at [phone] or go to www.safeguardinvest.com/contact.
Timestamps:
0:00 6 Powerful Ways to Use Your Taxable Account in Retirement
0:17 Sweetspot for How Much to Have in Taxable Assets
1:15 #1 - Saving on Health Insurance
2:52 #2 - The Most Liquid Account
4:27 #3 - Roth Conversion Taxes
6:25 #4 - Paying 0% in Taxes
7:48 #5 - Inheritance Planning
10:46 #6 - 401k/Taxable Account Strategy
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Always remember, "You Don't Need More Money; You Need a Better Plan"
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Safeguard Wealth Management is an SEC Registered Investment Advisor. Safeguard Wealth Management is not an insurance provider. All content on KZbin is for informational purposes only and should not be taken as personal advice for your situation. You can read more disclosures at www.safeguardinvest.com/fiduc...

[@timma8510]

Another great video. This channel is the consistently one of the most thoughtful and well presented sources of retirement planning across all mediums.

[@jamewilliams7660]

Great content! as the world crisis progresses the smartest thing people do lately is building a strong investment that isn’t controlled by the government. Like digital currencies.

[@jamewilliams7660]

Not scared of retirement started my investments king time and got my stuffs built

[@CarlosLocke]

Absolutely! Building a strong investment that isn’t controlled by the government is a smart move in todays unpredictable economy. digital assets offer a unique opportunity for financial independence.

[@burrinch5142]

That’s really interesting! I’ve been thinking about investing in digital currencies lately but wondering how to do it, do anyone have any thought on that?

[@CarlosLocke]

To avoid losses as a and enhance profits as a newbie you’ll need to consult a professional

[@investingwithpurpose5404]

So you are going to retire with some work income this year. You have to consider IRA to Roth Conversions, ACA Healthcare subsidies, when to take Social Security, IRMMA Penalties, future RMDs, how much to convert, where to pay taxes from, expenses, etc. Is there a software package that will take all this into account and provide best case scenario's for you?

[@StevenChristenson]

I believe NewRetirement can help with this. It's a bit fiddly. It certainly allows ROTH Conversion planning and pays attention to IRMMA.

[@jefflloyd394]

Great as always, thanks Eric

[@punisher6659]

Thanks for your content.

[@RetroPath7]

A well funded taxable brokerage account is a huge superpower for any early retirees!

[@WallaceDunn]

I didn’t hear you mention RMD. This is a huge factor for legacy planning. There is no RMD on Roth accounts. A huge reason for me to go Roth over traditional.

[@rogergeyer9851]

He had RMD in big red letters on the first chart. He talked quite a bit about RMD's. If you don't pay ANY ATTENTION, why bother to "watch"?

[@torchy187]

Thank you. I really don’t understand#3. Do you have a video that specifically explains this?

[@octonoozle]

If the pitcher throws 4 balls outside of the strike zone and the batter doesn't swing at any of them, the batter gets a step up in bases.

[@robertwhite154]

⚾️

[@tharrylock]

Note that you can use up your entire 0%bracket by harvesting cap gains as well.

[@patrickoconnor2547]

Great video! Started saving in taxable account 3 years ago before retirement. Now retired age 59 on ACA insurance with a HSA . We pay Zero for health insurance ! We pull around 35k from IRA and 25k from taxable account. Our MAGI is reported 30k for a 2k month subsidy for health insurance. With standard deduction and HSA contributions, we pay no income tax. Learned this from all your amazing videos Eric. Keep rockin!

[@heidikamrath1951]

Love this!

[@SafeguardWealthManagement]

Heck yeah! Love to hear it

[@brahmmauer7437]

Well done!👍

[@masterblaster2593]

Please clarify - did you mean the $25k from your taxable account is not included in the MAGI, and MAGI is used to determine ACA subsidy?

[@patrickoconnor2547]

@masterblaster2593 25k from taxable account was cash. Only thing that would be counted towards MAGI as income would be interest earned on cash. Lots of money shifting, but if you do it right, you can pay nearly nothing for ACA insurance. Good luck

[@ld5714]

Another excellent video and discussion Eric. This will certainly be useful to your listeners as their personal situations might fit in the discussion. Great job!! Larry, Central Valley, Ca.

[@tomn5413]

Thanks for the video and seem to cover a broadband for the taxable account. How is taxable account will help for FRA case or post retirement?. If you already discussed in previous video then please direct me to that video. Thanks

[@user-qx9yf4ny1t]

I thought I had a pretty good grasp on this level of finance. Still got a lot of new information to me.

[@rogergeyer9851]

I think MANY major savers miss or greatly underestimate tax efficient taxable accounts. A fund like a broad based Vanguard Index fund, which rarely has ANY capital gains is generally VERY tax efficient. Since all you pay income taxes on is any dividends, and the dividends in, say, a S&P 500 or similar index fund can average 2 percent or less (let's call it 2 percent for illustration), then at a 25% income tax rate, that's ONLY 0.5 percent of the fund subject to tax annually. Meanwhile there are NO limits to what you can save into that fund, unlike with IRA's, 401-K's, etc. And there are no big fees, unlike with annuities. Now, at some point, if you take money from such a fund, much of that will be capital gains. Much like a tax deferred account. But there are no RMD's. YOU can choose when to take such gains, like if you have losses to offset that. Or you can choose to just hold onto the assets and let the basis step-up eliminate those taxes.

[@bruceeigsti5274]

All. My funds are in a roth so no taxes for me after next year when I retire

[@dutchcrunch91]

Hopefully you will be 65 and eligible for Medicare. Otherwise, as far as I understand, having $0 income will push you into the Medicaid bracket versus very inexpensive regular ACA insurance.

[@swright5690]

Bravo.❤

[@johnbeeck2540]

Almost 50K Subs! Grew up in Wisconsin -- now live in Texas. How do you guys offer consulting services - hourly, fee on assets, ?

[@SafeguardWealthManagement]

Fellow cheesehead! We only offer full service planning which translates to a fee on assets

[@kzalaska4804]

A word of caution about the health care market place. You are bound to the state that you purchase insurance in. If you get an exotic cancer and there is basic cancer care in your state you can not travel out of state to a specialist and have it covered. I was going to by insurance through the market place for 5 years until I learned this.

[@MeltingRubberZ28]

What have you done instead?

[@paulmarshall1127]

Is the $50,000 reported income Gross or AGI or Taxable income? Also is the $50k amount adjusted yearly or does it stay the same year after year?

[@SafeguardWealthManagement]

Technically none of those. ACA has a specific Modified Adjusted Gross Income that includes Untaxed Social Security and some other income streams. But the subsidies based on income to adjust yearly based on the federal poverty level guidelines

[@Donkeyearsa]

It's extremely unlikely that in a taxable account that only 25% would be taxable if it has been in there for any real length of time. I have positions that are only a few years old and 50% are gains. A person could be looking at 90%+ being gains on investments if it has been in there for decades.

[@Random-ld6wg]

generally your point is correct. i have a s&p index fund from the 2000s which i stopped contributing to probably 2007 thereabouts and it's up 235%. when i was liquidating a midcap index fund last year which i invested in around the same time i had 2/3-3/4 of the amount liquidated as gains. i have more recent investments that only appreciated in the 35% range and then i have pfizer which is markedly down this year. i have had it since 2010. some of the reinvested dividends and investments from 2014 are actually negative. not to mention the more recent years some of whch i have already tax loss harvested to offset some gains. you can liquidate the more recent reinvested dividends(for less gains) and specify which lot you want to liquidate. you don't have to liquidate the whole position. i try to see capital gains in a positive light. the more LTCG taxes you have, the more money you made.

[@johnyjsl9219]

2nd !

[@cliffluxion7019]

First! 🙂

[@ccgaskell]

Are ETFs less leaky than mutual funds from a forced income effect ? Specifically for a taxable brokerage account. Thanks

[@captsorghum]

Yes, generally. Especially growth ETFs with low or no dividends. There are videos talking about it on this channel.

[@SafeguardWealthManagement]

Generally yes. Now a Vanguard Total Stock Index ETF and Mutual Fund will be extremely similar for forced income but the vast majority of the time, ETFs will have significantly less forced income. Here's a past video where we explain why - kzbin.info/www/bejne/hJucYmiBisyaoMU

[@rogergeyer9851]

It doesn't MATTER if it's an ETF or a mutual fund. The size of the dividend and the annual portfolio turnover rate are what matters. With Vanguard, you can often trade a mutual fund as an ETF, OR as an Admiral class (low costs for moderate to high balance) mutual fund. Same assets, etc. Just easier to trade the ETF -- (and if you're a buy and hold investor, maybe a reason NOT to choose the ETF if you want to avoid the rapid trading temptation). All mutual funds and ETF's should have their annual portfolio turnover in their recent "fact sheet", which you can generally find and download online. It's generally a page or two, and easy to read. The dividend, plus the size of that annual turnover define how "leaky" a mutual fund or ETF is, re annual income forcing, resulting in potential income taxes. So with that, it's EASY for you to get a good idea of how leaky. Examples: A Vanguard index mutual fund with a modest dividend and rare capital gains distributions has a very TINY leakage (normally just the modest dividend). An aggressive ETF with a HIGH turnover (like 30 percent or 50 percent a year) will have MAJOR leakage. I took a quick look, and the Vanguard S&P 500 ETF / Mutual Fund had a portfolio turnover rate of only 2.2 percent. But the Vanguard Value Index had a portfolio turnover rate of over 10 percent (as the market moves, value and growth stocks can cross the line and change types -- and need to be replaced or added into such funds, generating more trading than a "just sit there" index).

[@MeltingRubberZ28]

Id have to watch this video like 7x to understand half of what he just said

[@edwardloizides5415]

What are you saying? Curtail saving once you have completely funded your tax deferred/free accounts? That’s ludicrous. I have more than triple in my savings “taxable “ accounts than in my tax advantaged accounts . Over 35 years I saved way more in my taxable brokerage and individual stock accounts. Should I just give this away? Also a regular 401k or IRA is smoke and mirrors and an IOU to the government.

[@SafeguardWealthManagement]

If you end up in a situation where you maxed out all of the qualified accounts annually and you still are saving gobs more after, then a taxable account is a great place to store the remaining savings. If you end up with a 3x taxable account because of this, good problem to have and there are few other solutions than to save less (which I'm obviously not recommending). To say qualified accounts are smoke and mirrors is just incorrect. Smoke and mirrors implies a "sleight of hand" of sorts. The rules, benefits, and drawbacks on these accounts is clearly laid out. Compare a Roth vs. Taxable account. You pay the same tax rate to get money in each of these accounts but the taxable account is taxed on an ongoing basis and a Roth is tax-free growth. Unless there is a liquidity case to be made, the Roth is a clear winner. With a traditional account, it depends a bit more on the tax rate paid on contribution. But taxable accounts, whether visible or not, have a tax drag on growth due to the ongoing tax liability.

[@nunuvyurbiz123]

7:47 “when you pass away, your tax bill is effectively wiped out” Estate and inheritance taxes: “Why hello there!”

[@jdeang3531]

Depends on the state and size of estate. Federal under $13m - no estate taxes.

[@onlywenilaugh6589]

Too bad 401k was drilled into all my life so I have 90% of my retirement in 401k/IRA. Kinda late for me on brokerage accounts as not much time horizon for gains.

[@martinguldner3990]

Luck me because of years not contributing a Roth IRA/Roth 401k and inheriting a taxable brokerage account in 2020. About 15% of my net worth is in a Roth IRA/Roth 401k.

[@bradh9800]

Tuned out as soon as you called ObamaCare "great insurance."

[@bmahoney1568]

By the way, calling any of the affordable care act health insurance plans “great insurance “ demonstrates that you’re not knowledgeable as to what these plans actually offer you. I am deep in the health care industry and would never have one of those plans if I didn’t have a death wish.

[@patrickoconnor2547]

Had a similar plan when I was working and paying $900 a month. Lucky to have ACA insurance. May not be the best, but guards me from financial failure.

[@ahidalgo4]

I’m not using my taxable account for Roth conversion. I use IRA money instead. The reason is because I over saved in IRAs and don’t want to get hit with RMDs later.

[@nunuvyurbiz123]

Just beware that paying taxes on the conversion from the IRA is a withdrawal. So you'll owe taxes on that too, and if it's early then you'll owe penalties too. .

[@gdb5843]

I did the same thing. Trying to shrink my tax deferred accounts for both my 401K and IRA. Per Mike Piper, if you use the money from the traditional tax deferred accounts to pay taxes then your current taxe rate vs your future tax rate decides.

[@patrickoconnor2547]

Good move. We take a little over the standard deduction out of trad Ira and rest in taxable- cash. Little or no taxes! Gotta draw the Trad Ira down! Keep Trad Ira in slow growing etfs everything else in growth.

[@ahidalgo4]

@@gdb5843 Good for you. There are several reasons why we use IRA /401K money to pay for ROTH conversions: 1. for estate planning. our children gets a bigger taxable account with a step up in basis. 2. avoids NIIT tax at 24% tax bracket. 3. money gets bigger in our ROTH. smaller in our 401K/IRA accounts. 4. take advantage of the tax rates before sunset on 2026.

[@geraldbennett7035]

graphics dont align with your speech. Confusing

[@SafeguardWealthManagement]

Do you have a time stamp in reference to the graph you don't think aligns? I skipped through the video and didn't see what you are referencing.