I'm 60 Years Old With A Pension And $1 Million Saved. What's Next? [Joe Knows Retirement, Ep. 66]

[@brucebuckeye]

Great message! Great communication skill. Thank you!

[@timlinator]

57 just retired and started pension. Also have a few rental properties and about $1.5 Million in IRA.

[@mlee1308]

I agree with everything you said. I just recently retired. Had 5.7 million pre tax , did a one time Roth conversion. I had to do it all at once since I have a $700 k inherited ira I must deplete in 7 years. I’m 59 now. I have pension , So now I have $3.5 million in Roth. $4.5 million in stocks taxable. Now starting gift to my kids like you mentioned to help with a home eventually. I’m free from rmd. Kids get it tax free. Only thing my wife has $600 k in pre tax that I might have to convert eventually. Trying to avoid Medicare cost, but looks like I’m going to have a pay for a while. Your right. I can’t even spend down my pension every month. Let alone the rest my investments. Everything you said is correct.

[@peakretirementplanninginc.]

Thanks for watching and providing feedback! It sounds like you have been strategic about your retirement planning and that you are in a place of freedom. It is nice to not have a partner (IRS) looming when RMD time comes. We wish you the best!

[@nikij.6058]

Lucky!

[@BSinNH]

Excellent! I'm 61 and aren't at your level but plan on retiring within 1-1.5 years. What you are doing converting to ROTH is what I am also doing. I don't have nearly the amount pre-tax you have saved but I still will be able to live comfortably. Trying to reduce IRMAA as much as possible so I can get a subsidy. Trying to create an income stream through the ROTH of $8-10K a month. Have pension of about $5500/month. SS at 67 will be +$3300/month. The pension and SS should get things done for the most part. No debt.

[@billburch5516]

SUPERB presentation - the vast majority of financial videos are 1) the same basic stuff that everyone knows, or 2) blathering infomercials with no info at all. This is extreme useful.

[@peakretirementplanninginc.]

Thank you for the feedback, I am so glad to hear! Hope you enjoy my other videos as well!

[@christinad1651]

My husband and I both have pensions and $1.6M mostly in pre-tax. 56 and 58. Working with a CFP to see when is the best time to convert. Great video!

[@peakretirementplanninginc.]

Thanks for watching, Christina! We are glad to hear that you and your husband have been diligent savers and are working with a trusted financial professional. Don't forget to subscribe to see more content just like this!

[@rdcd1234]

Companies can't give pensions because of their GREED and their SHARHOLDERS. It's that simple. The country wass in a better place when we had pensions. Let's not forget the Good ole Ronny Reagan decided to Tax Social Security.

[@CWB367]

Great content! Thanks for the information!

[@peakretirementplanninginc.]

Thanks for watching and providing feedback!

[@chesshead3943]

Great video thanks!

[@peakretirementplanninginc.]

Thanks for watching!

[@blackknight1906]

I retired at 50 with a pension, rental incomes and $1.2 million in tax/tax advantaged accounts. I plan to start Roth conversions at 59.5. Start SS at 62 and invest for future generations and charity.

[@peakretirementplanninginc.]

Thanks for watching! It sounds like you have saved well and have a defined plan going forward.

[@frankm2385]

Impressive! What did you do for a living?

[@DWilliam1]

I’m retiring next April at 59 and have a $6900 government pension that is free from state tax. I also have a $1100 private pension that is also state tax free(up to $20K a year). I have $650K in a 403b that has a guaranteed 7% rate of return for life. I also have $180K in a 401K. I plan on taking my SS at 62 which is estimated at $2600. I’m thinking of taking $30K - $40K a year out just for trips, new car etc. to lower my RMD when I hit 73. Do you think that’s a good idea? I know I’m going to pay taxes but it really doesn’t bother me since I get that guaranteed money coming in. My healthcare is picked up by my union and costs me $1200 a year and I only pay co-payments.

[@rickm8456]

Nice dude. I’ll have a pension at about that in 10 years but I won’t have that much in my 457, but I plan to have some in Roth since a have that option. I would delay SS and use that tax window to convert to Roth a little every year. Use your cash or sell some to pay for it. That would solve your RMD problem.

[@briandawson1082]

I'm going to get hit with the Windfall Elimination Provision. WEP on my SS. Is this your case as well?

[@Hoog.23]

NYS? I wouldn’t convert the 403b as you’d give up the 7%.

[@DWilliam1]

@@Hoog.23 Of course I wouldn’t convert. I have a deal that most people wish they had. I’m talking just spending money on lifestyle and toys so I have less when the RMD kicks in.

[@DWilliam1]

@@briandawson1082 Maybe, but my union through NYC has guaranteed to pick up any costs…for life. We’re in court now trying to block the city from trying to weasel out. They have lost all 9 cases so far.

[@pgblando]

Joe - this video is almost me - almost 60, almost a million. I do have a Roth already, following financial advice about 6 years ago. I am thinking of the Roth conversion. I thought the conversion has to occur after I retire.

[@ronmorrell9809]

Conversion is allowed at any point, but usually makes more sense to wait until after retirement. Money converted from traditional IRA or 401(k) is taxed as income in the year it's converted. Typically, the final few years of working are the highest income; and thus taxed at the highest percentage. Grabbing plausible numbers out of the air: Roth conversion now might be taxed at 32%. You keep only 68c of every dollar converted. After retirement, you might be taxed at 22%, and keep 78c of every dollar. If you already have money in Roth and unrealized Capital Gains, you might get to keep the whole dollar.

[@pgblando]

@@ronmorrell9809 I have a good problem - I have a pension plan and likely won't drop a tax bracket :/

[@ronmorrell9809]

​@@pgblando If the numbers work, nothing prevents doing the conversion. An advantage of starting early is reducing income after Medicare kicks in at 65. Too much income increases the cost if Medicare (IRMAA).

[@peakretirementplanninginc.]

A Roth conversion can occur at any time but where you have to be careful is paying the taxes. Prior to 59.5, the taxes must be paid outside of the IRA or else there will be a penalty incurred.

[@MrProsat]

Isn't it true that you have to wait until 59 1/2 to make such conversions from IRA to ROTH if you don't want to pay the penalty (10%) on top of the addition to income counting as ordinary income?

[@sheilacollins9434]

Excellent video. Thank you

[@peakretirementplanninginc.]

Thanks for watching and providing feedback, Sheila! Don't forget to subscribe to see more content just like this!

[@sheilacollins9434]

@@peakretirementplanninginc. I am subscribed Thanks

[@robg1413]

My retirement savings is equal to about 10 years of pre-tax salary. If I retired next year (58-1/2), my pension after tax and insurance deductions would be about 40-45% of my current spending. I can also get an SS annuity supplement that, with my pension, would cover about 80% of my estimated annual expenses.

[@kidmangu200]

Thank you for the video doing some Roth conversion this year and next year.

[@peakretirementplanninginc.]

Thanks for watching we appreciate the positive feedback!

[@rickynorris1694]

Great video, sir. I would kill for those eyebrows. 😊

[@peakretirementplanninginc.]

Thank you for the positive feedback! They are definitely at their PEAK🤪

[@JD-ir2sb]

I did under an identical circumstance took SS at 62 and my assets are still growing and I’m living as well or better than when I was working.

[@peakretirementplanninginc.]

Thanks for watching! We are glad to hear that retirement has been what it was expected to be if not better. Don't forget to subscribe to see more content just like this!

[@briandillard3809]

I plan to do Roth conversions in my late 50s for three years. Plan to retire 55. My situation is close to the example you gave.

[@peakretirementplanninginc.]

Thanks for watching, Brian! We are glad to hear you have a plan. We would encourage you to seek out a trusted financial professional to assist with the Roth conversions so that you can be extremely strategic when doing them. Don't forget to subscribe to see more content just like this!

[@casa87blue]

Great video Joe. The widow(er) tax penalty is a great point to possibly reconsider adding a survivor benefit to pension. Instead of taking a lesser amount for the pension to continue paying the surviving spouse, why not take out a term life insurance policy on the pensioner? If they do pass away early the surviving spouse will get a lump sum from the insurance payout instead of a lifelong widow(er) tax penalty. My wife will have qualified for a 3% pension for every year of service starting at the age of 50. She will have worked her government job for 25 years at that point. As an older spouse I am thinking we skip a permanent pension reduction with addon survivor benefit and instead addon a 20-year term life insurance policy once she retires.

[@peakretirementplanninginc.]

Great point. This is a strategy we utilize often to maximize the income now and ensure the surviving spouse is taken care of after the pension is no longer there.

[@ristretto3896]

Appreciate the info! I realize I have too much in my pretax 401k and should instead contribute to my Roth 401k before retiring.

[@peakretirementplanninginc.]

Thank you for watching! We are glad you are looking to implement the strategies discussed in the video. Don't forget to subscribe to see more content just like this!

[@TheLeadfootgirl]

I will be retiring with a state pension at the end of the year. I've been talking to a financial planning firm that is recommending I stop ROTH conversions (I have no heirs and have approx $1.7M in pretax). They're suggesting I do a Charitable Remainder Trust instead. Can you talk about the difference between the 3 charity type? DAF, QCD, and CRT?

[@peakretirementplanninginc.]

Thanks for watching! Great question and great video suggestion. On a high level the DAF would initied with non-retirement assets so no pre-tax dollars into a DAF. QCD's are a great option since the current limit on yearly QCD's once you are $105k per year per individual and this allows you to give out of pre-tax dollars, tax-free to the 501c3 of your choice. The CRT will put your assets into a new entity (Trust) and would pay you an income and donate the remainder once you pass away. We hope this helps. Feel free to schedule a time with one of our advisors at the link below to talk through the different options you mentioned further. peakretirementplanning.com/schedule-a-meeting/

[@bobbeamer350]

Thanks for the video. It was really, really helpful. I've seen a couple others from your channel, and I appreciate the help. I retired at the end of 2023 with a pension and quite a bit of money in a 457 plan. I'm 61 years old. I'm going to beworking on Roth conversions, but I need help with how to allocate the investments in my 457 plan and eventual Roth IRA. Right now I'm pretty conservatively invested in the 457, with about 50% stocks and the other 50% in bonds and Stable Value/Cash Management. I'm up about 10% so far this year. I think that I could be a lot more aggressively invested, with a lot more in stocks, since it seems like I should be able to essentially consider my pension to be the bonds and cash part of my portfolio. This obviously isn't the point of the video I'm making this comment in, but do you have a video or link that addresses this sort of question? Thanks again for the great educational topics.

[@peakretirementplanninginc.]

Thanks for watching, Bob! It sounds like you have been a diligent saver over the years and congrats on retiring 😁! Attached below is a link to schedule a session with one of our advisors that would begin the conversation of making sure your whole plan works cohesively. peakretirementplanning.com/schedule-a-meeting/ Thanks!

[@danielpinzow3900]

What I took from this video is that you should stop contributing to a traditional 401k once you feel you have enough money in there while you are still working. Instead invest that money in a Roth or a brokerage account so you have less to convert once you retire. A government pension is often taxed federally so you are already in a higher bracket, therefore you have less maneuverability to convert that traditional 401k to a Roth

[@frankm2385]

Who here is guaranteed to live beyond 62? Exactly, take your money as soon as you can get it.

[@coreywalters5932]

I have money in a 457 and Roth beside a pension, should I lower my 457 and put more in Roth? I have 10 years before I retire at 65

[@peakretirementplanninginc.]

Great question. If you think you will be in a high tax rate in retirement, then more than likely, yes, Roth would be a great idea. It all comes down to whether you will pay more taxes in retirement or lower taxes.

[@leonardhusser5167]

I have a question when you withdraw your money from your TSP now I know your going to have to pay 20 % Federal taxes but do you also have to pay taxes again when putting it in a roth and how much taxes would that be because it seems that your going to pay two taxes at one time? Is that true.

[@peakretirementplanninginc.]

Great question. You won't pay the taxes twice, only once. One strategy would be to rollover your TSP to a traditional IRA and do Roth conversion from the IRA.

[@caregiver_life]

Any thoughts on those who have the option to take their pension as a lump sum instead of monthly and how you might calculate the pros and cons?

[@peakretirementplanninginc.]

Thanks for watching! Having a lump sum option oftentimes provides greater planning flexibility than taking the monthly payment. The pros and cons will come down to an individuals specific situation and will include things like income needs, tax planning needed, legacy goals, etc. Don't forget to subscribe to see more content just like this!

[@DianeGonzalez-xj4qr]

Im only going to be getting around 200 a from my mirf if i start collecting it will it effect my ssdi check

[@DK-et6lm]

My spouse has 100% survivor benefit on my pension. When I die will her Social security benefit be affected by WEP?

[@peakretirementplanninginc.]

Great question. In most cases, your spouse's Social Security benefits will not be affected since WEP typically only affects the original pension owner.

[@nikij.6058]

Have 3 pensions but they only total $1500 per month. 😐

[@peakretirementplanninginc.]

Thanks for watching! In some cases, something is better than nothing 😁

[@olds3945]

How about pension, SSA, but NO savings?

[@erickarnell]

Sounds like my parents, who have managed just fine by living in lower cost of living areas.

[@rickm8456]

Yeah how about the rest of us

[@olds3945]

I guess the only tax strategy would be to max out both by continuing to work.

[@767bob]

Our friends did that, saved nothing when they both worked but both have pensions and SS. There is not much you can do except to go back to work and do some saving. If you are physically able, stop collect the SS if you started collecting, dont collect your pension, then go back to work and save. Or if you collect the pension, still go back to work and save until age 70 then retire and start collecting your SS. What do you expect him to say? Saving money does not come from the air....but your saved money, invested properly will make money for you later on.

[@peakretirementplanninginc.]

In that scenario, the next question would be to ask if there are any current opportunities to save to add income flexibility or if (adjusted for inflation) the pension and SSA will be sufficient to cover income needs in retirement.

[@floaretudorache9287]

I’m 64 no pension k$3000 SS and a rental property Am I okay to retire

[@peakretirementplanninginc.]

Potentially, this depends on if your Social Security benefit and rental property income are sufficient for you to live on. Being able to retire is far away from being cookie-cutter and has everything to do with an individual's unique situation and needs.

[@dancasey9660]

It will be interesting to see what the tax rates will be in 2026. Smaller pensions might fill up the standard deduction ($29200 + $1550 for each spouse in 2024 when married filed jointly). Might be useful to delay Social Security past FRA if it allows some room for Roth Conversions. Perhaps stagger when one spouse takes it and the second spouse takes it at 70. IRMAA increases start around 206k (married filing jointly) for 2024, correct? Would living on dividends and interest from the $1m to go along with a pension be a useful strategy, while working on some of these Roth Conversions? You only need a Roth Account to be open for 5 years before you can start withdrawing from it (if you really need the money).

[@peakretirementplanninginc.]

If income allows, to postpone SS to get the higher benefit and allow for more room to do Roth conversions at the more favorable brackets can be a powerful tool in tax planning. Correct, the limit in 2025 has gone to $212k from 206k. Depending on income needs, living on dividends may be a favorable strategy since qualified dividends are taxed at 15% as opposed to ordinary income. The 5-year rule specifically applies to earnings on the Roth.

[@danny302]

This really is a great video and I hope to retire at around 52 (5 years from now) with a $12-15K a month pension. With that in mind at what point should I start to make plans like you talk about in this video??

[@peakretirementplanninginc.]

Thanks for watching, Danny! It sounds like you are in a great situation leading into retirement. Typically the best time to start planning is the present. Please see the link below to speak with one of our advisors about what this planning may look like for your situation. Have a great day! peakretirementplanning.com/schedule-a-meeting/

[@sgtdhayes]

FANTASTIC Video! I'm a 45-year-old, retired military vet and an avid investor who's been confused on what to do about taxes during retirement. Bottom line, I need to make friends with a knowledgeable CFP

[@peakretirementplanninginc.]

Thank you for your service! If you are interested in talking to our team, we can help provide guidance and explore if it may be a good fit to work together. You can schedule a call here: peakretirementplanning.com/schedule-a-meeting/

[@jjoutback]

Why not Pay a CPA for professional advice ?

[@tommyg6178]

Teamster 135 💪

[@briandawson1082]

IAFF 526. Union Strong!

[@onlywenilaugh6589]

Lots of good points here. I would mention that actually, we aren't living longer, and the life expectancy has fallen unfortunately. Just don't want people to think they need to plan for 30+ years if they retire at 67 as your chance of living to 97 is in the single digits. So spend a little more and enjoy while you can. :) I agree with Medicare not being fair. The government loves to punish those who make good decisions and reward those who make bad decisions. I'm pretty sure the government will find a way to tax roth inheritance. They like to use the words that kids didn't earn the money, so it justifies the government taking a bunch of it. They don't' consider the people they give that money or benefits to with your money didn't earn it either. :(

[@peakretirementplanninginc.]

Good points and time will tell from a legislative perspective if heirs will be taxed for their Roth dollars.