Retirement Planning with Michael Kitces | Live Q&A

[@gailmurray4651]

Thank you for hosting Michael Kitces. Love the way his mind works, and appreciate getting a variety of perspectives from the guests you've had lately.

[@michaelswami]

Kitces is very engaging. Thank you for having him, sir.

[@danh2716]

It's great to listen to these kinds of discussions. No completely new topics, but just hearing multiple discussions about the same topics is good to really digest a topic.

[@danh2716]

BTW, great question at the end about the fees. To be frank, the response felt more like a salesman's answer than a financial experts answer. And it just reinforces how inappropriate basing your services as a percent of AUM is.

[@rdderrick75]

Better than anything on Netflix…watching two really bright guys discuss a topic with deep insight

[@METVWETV]

Agreed I'm on YT so much I should cancel all of my subscriptions!

[@markbeckerman5159]

Michael Kitces is a very intelligent, articulate presenter albeit a little long winded but that said I much prefer your manner of explanation and your perspective. I am just a novice when it comes to all things concerning retirement planning and investments but I have and will continue to keep watching your youtube channel. Keep up the great work

[@sarahsunsetpark]

Really enjoyed the QA with Michael Kitces! Very interesting! Thank you for organizing and sharing this chat! This is a far cry from my days of planning my retirement by just reading Money magazine!

[@jimkaufman214]

What a great presentation. Please thank Michael for joining you from your viewers. Great content on Roth conversions (especially the tax strategies for 12 and 26%) and i very much enjoyed the withdrawal strategy discussion. There are not a lot of intelligent discussions that go into this kind of depth, so it is greatly appreciated.

[@Tubularicious]

This was pure gold. I have been following Kitces Blog for a long time and after 3 years of retirement these topics are extremely relevant. SOR risk and the Guard Rails material are great articles. Great reminders that the bad cycles don't stay forever and perhaps spending more than 3.5% is really not that risky with some flex controls on spending. Super great discussion.

[@Tubularicious]

Also like the finale question on Fees you popped at the end... Not sure I would feel better knowing that fees go down in absolute $$ as my nest egg shrinks..?

[@Tubularicious]

The content creator discussion was also interesting. As a small content player it sounds like I need to focus on a consistent process that works best and leverage it routinely.

[@kimappreciateslife]

Wow, MK is intense. I may need to listen more than once. Wish we all had a crystal ball so we can plan our financial future without worrying about running out of $.

[@aj1918]

Rob, the AUM fee question was great. I never thought of it that way! But then again, I’m a DIY guy thanks to people like you!

[@MichaelKitces]

AUM fees are a lot to pay for someone who's doing it for themselves. But not everyone can (or wants) to do it themselves. I have a Master's degree in Taxation but I don't do my own tax returns. It's not that I can't. It's that I'd rather pay someone to do and worry about that for me, so I have more time to play with my kids. The cost is a lot because of the complexities of my tax return as the owner of multiple businesses. But it's very worthwhile to me.

[@garya2223]

I think Michael has a good point here. Life is full of trade-offs. My financial situation is fairly simple so I do it myself, but even then it required a lot of research until I felt capable and confident that I wouldn't mess it up. On the other hand, I have some friends who have several million dollars of assets. They use the services of an AUM advisor, a CPA, and a tax specialist. They could probably do some of that themselves, but they'd rather spend their time doing other things.

[@aj1918]

@@MichaelKitces Well said!

[@james1000]

@@MichaelKitcesbut tax prep might be 300 or 600 or 1200 depending on complexity. 1% AUM can be 40k per year on a 4 mil portfolio.

[@favjr]

Thanks for the links. Kitces always has the best stuff and does real math.

[@MerryHampton]

loved this exchange between you 2. Thanks!

[@janethunt4037]

Loved, loved, loved his explanation on Roth conversions. This is a 5 star video. I can't wait to read the articles.

[@StephenJeal]

That was REALLY interesting. Looking forward to a follow up with Michael Kitces in the future.

[@Bonez1999]

Kitces is a genius. I love that guy!

[@Gary-ib8dz]

Thanks for doing videos like this. I don't know how much work it would be to make a new KZbin playlist, but it would be nice if you had a playlist of all the interviews like this that you do. It would make it easy to find them all. Thanks for considering it.

[@rob_berger]

Done.

[@Gary-ib8dz]

@@rob_berger Thank you.

[@caliwish7585]

Thanks for the Guyton-Klinger discussion :)

[@BryanPAllen]

One huge thing the expert didn’t mention regarding tax rate changes in later years is when one spouse dies, then you have the widows tax trap, I.e. go from MFJ to single filer so probable huge tax rate increase, and only one SS check, but lots of RMDs.

[@keithveath]

I'm a big fan of the Bond tent and we are implementing it right now. We are 4 years from retirement at 55 and maintain a 50/50 portfolio. The Bonds will take us to 65-70 then SS and pensions will take care of our expenses moving forward.

[@educatedwanderer9293]

I know I'm in good shape generally but a little unsure if inflation keeps going up faster than historical rates have averaged. I'm 55 with five years before I retire at 60 as long as my plan remains solid. Our household expenses went from $78k/yr to $100K/yr recently. I have $3M in retirement investments and most of it is pretax so I am looking at a possible $120k / year starting budget in retirement using the 4% rule in five years.

[@vanguardvaluist2614]

Big Michael Kitces fan! Thanks for bringing him on the show. As far as AUM model I am still a non-believer. I only go to the chiropractor when I need adjustments and they charge me per visit. Seems reasonable to me. If someday they offer a body under management fee structure I’ll avoid that as well.

[@MichaelKitces]

Personally I'm the same in my approach to health - I'm not really interested in paying a 'body under management' fee. (Ha!) However, when a family member of mine was diagnosed with a very challenging chronic disease that they'd be dealing with for the rest of their lives, the health challenges and complexity that introduced meant the family was very eager to seek out a single doctor that could work with them holistically through all the stages of the disease. For everyone who's ever had a serious ongoing illness, there are few things more frustrating than needed to explain the entire history of your disease experience over and over again to the doctor every time you have to go see a new one who isn't familiar with your ongoing health history. Ongoing "under management" relationships are more relevant when our complexity (in health, or finances) rises to the point where the questions can't be answered with the occasional hourly visit anymore.

[@vanguardvaluist2614]

@@MichaelKitces Thanks for the thoughtful response and continuing to make time for interviews like this one. I'm always learning something new!

[@josh9231]

You can build a short term or Tbill ladder right in Treasury Direct and eliminate the fees of a “ middle man” company ladder

[@Kornheiser10]

If you're in the "it doesn't really seem to matter" range for ROTH and Traditional, since the likelihood that tax rates will go down is between slim and nil, as they are triggered to go up anyway, why not remove the risk of higher taxes, and take advantage of getting $$ into Roth accounts.

[@joeg305]

Definitely lots of good information. So much to digest. Wish Rob would have gotten more questions in.

[@MichaelKitces]

I love talking about all of this stuff. But yeah, I'll admit, I get a bit wordy sometimes. :)

[@andylewis5662]

This is interesting and informative. You have improved my financial understanding, thank you.

[@jsilverback3795]

This was a great interview and was very helpful.

[@JeffreyMcIntosh]

Great episode and guest! Love the different perspectives

[@borisgurevich3237]

One way to fight inflation which IMHO is the best way is to shop around for services and products. You can not control the national inflation but many times you can control your personal inflation rate. Instead of taking more risk with a higher stock allocation, how about getting more than 3 qoutes for a project.

[@HB-yq8gy]

Michael Kitces said a married couple making about $81000 yearly going from the 10%-12%? Maybe 🤔 that’s after the standard deductions ? I live in NJ married we could make $100,000 after standard deductions still be in the 12% tax rate?

[@keithveath]

Great info on inflation. Nobody talks about the cumulative effect. It doesn't go away but is the new baseline.

[@sarahsunsetpark]

Hi Rob really enjoying the Q&A with Michael K. Just wanna let you know that Ally Bank savings interest rate is now 1.60%

[@ltmsimply]

Thanks for this great interview. I noticed the last question you asked was little nerve racking. 😂. What I got from this ….It sounds like the 4% withdrawing from your nest egg in a down market the first few years might not be such a good idea!

[@jeffb.2469]

I got the feeling that he really didn't want to talk about the question on fees.

[@MichaelKitces]

I don't have any problem talking about fees. No need or reason to hide our costs. The fee is the fee. For those who are very comfortable and capable of doing it themselves, a delegation-oriented service is not a good fit (and certainly not cost-effective). For others, who want to delegate and spend their time elsewhere, or don't want to watch nerdy people like me talk about tax strategies for an hour (ha!), or just aren't confident they can execute it themselves, they're quite happy to do so. Though I'll admit that we do typically talk about fees in the context of the value they're meant to provide, and not necessarily the percentage of retirement income they're consuming as Rob did. ;) Our firm collectively stewards more than $20 billion of client assets, the average client tenure with us is multiple decades, and a significant number of the ones who ultimately leave only do so because they literally died (as that's what happens when you primarily work with retirees for multi-decade periods of time). We've very confident in the value we provide to those who are a good fit, but again I'll readily acknowledge that it's not a good fit for those very comfortable doing it themselves, which I recognize is the bulk of Rob's great audience. And I joined Rob's livestream to talk about retirement research, so out of respect didn't want to go and make it sound like a pitch for the value of our advisory fees. :)

[@timpederson8283]

Really enjoyed this video! Very informative.

[@zita-lein]

Loved this!

[@garya2223]

Kitces trying to explain away the 1% AUM fee was funny. Now, some people need an advisor to keep them from doing stupid things. In that case it's well worth 1%.

[@MichaelKitces]

Not trying to explain it away. As you note, for people who aren't effective at doing it themselves, there are a lot of ways that we can self-inflict FAR more than 1%/year of financial harm to ourselves. Some will find the fee onerous or exorbitant, and others are very happy with what they get for what they pay. But there's no question that a delegation-oriented service isn't going to be a good fit for someone who's confident and capable to do it themselves. :)

[@garya2223]

@@MichaelKitces Absolutely! When my widowed sister asked what to do with her IRA assets, I suggested that she put it in a target date fund and not mess around with it. She was fine with that, but if she hadn't been, I would have just told her to employ the services of an hourly advisor. HOWEVER, people with more complicated financial situations really do need an AUM advisor. One size does not fit all!

[@MichaelKitces]

@@garya2223 In practice, I find it's the level of complexity - and especially the level of ongoing complexity - that most commonly drives the decision to work with a financial advisor. A one-time complicated situation can still often be solved by a good hourly advisor that takes on the project. When you get to 'ongoing financial complexity' in life - and it can take hours just to get a new advisor up to speed ON the whole situation - it suddenly becomes a lot more cost-effective to have an ongoing relationship. Similar to how a lot of people really want an ongoing primary care physician they have an established relationship with when they have an ongoing health condition. And of course, there's also a subset that would simply prefer to delegate and not do it themselves for time or other purposes. I have a Master's degree in Taxation, but I still don't do my own tax returns anymore. I'd rather spend time with my kids on those early April weekends. :)

[@michaelglazman3280]

@@MichaelKitces Thank you for a wonderful interview. My issue with AUM model is that I don't think that managing a three million dollar portfolio is three times as difficult as managing a one million dollar portfolio. My advisor did not want to budge from a 1% fee, so I left. I think most advisors either don't adjust fees with portfolio volume or give a minimal discount.

[@MichaelKitces]

@@michaelglazman3280 Most advisors have a "graduated" fee schedule - where the rate gets lower as the portoflio size gets higher - so in practice it's usually not 3X the fee to go from a $1M to $3M portfolio. But it's a fair point that it's still likely going to be more than 2X, so I realize that it doesn't entirely ameliorate your original concern. ;) From the industry end, I can tell you that in practice, advisory firms whose TYPICAL client has $3M provides different services than one whose typical client is $1M and 'occasionally' gets a $3M client. You'll tend to see deeper expertise (more CFPs and advanced designations), more additional services (e.g., they'll also prepare your tax return), higher-touch/more meetings (more proactive service), opportunity to work with more experienced advisors (advisors who have 10-20+ years of experience), etc. So being a $3M client for a firm that typically works with $3M clients is different than being a $3M client for a firm that typically works with $1M clients, even if the fee itself for a $3M portfolio is the same for both. It's a function of how the firm reinvests (or is able to reinvest) to bring up their services to align with their total fee in absolute $. But what that means is that being "a big fish in a small pond" often isn't a great deal for the client, because the firm simply isn't built to provide the higher level of service commensurate with the fee. And from my experience in living within and consulting with advisory firms, it happens up and down the scale. $300k-average firms have trouble retaining $1M clients, $1M-average firms have trouble retaining $3M clients, $3M-average firms have trouble retaining $10M clients, $10M-average firms have trouble retaining $30M clients, etc. If you want to work with an advisor, it's good to work with one whose typical clientele really are similar to you, because it increases the likelihood that they have maximally relevant services for the fee you'd be paying at that level.

[@adiusa6069]

Hello Rob, I alway wondering if you retired in1929 with $1M(today's money), and if you withdraw 4%, can you survive 30 year of retirement life? Could you do a simulation for us? Thank you so much!

[@pareshjoshi5113]

Excellent!!!

[@seriousfaith]

Excellent video!

[@sergiosantana4658]

. When you run the numbers it still seems that it doesn't matter if you do a roth conversion and pay the tax from an account outside of the IRA, as long as your tax bracket remains the same. A point that gets lost in the paying the tax on a roth conversion from an account outside of the ira is the fact that there is an opportunity cost on the cash that was used to pay the tax on the conversion. And all things being equal it is a wash For someone in the 22% tax bracket having 1mill in roth is no different than having $1.282.0512 in a pre tax account and $282.015 in a brokerage account as long as the tax bracket remains the same in your retirement as it was in your working years.

[@sergiosantana4658]

A caveat to my comment is that there could be a tax drag on the brokerage account but it will be minimal especially if you can keep your taxable income in the lower tax bracket.

[@jeffb.2469]

RMD's & widow tax cliff to consider

[@johnbrown1851]

4-1=3.5 gotta love the way he justifies AUM fees🤣!!!!

[@noreenn6976]

Sorry I missed this live

[@rickdunn3883]

Folks: What does Kitces mean by a "Bond Tent"?

[@briandadude]

Couldn’t hang for more than 10 minutes on this one.