Excellent discussion as usual. Thanks for posting.
@cdub3574 ай бұрын
Please do a video on mental challenges experienced when going from Accumulation to Decumulation. Thanks.
@iwan2bninja3 ай бұрын
Interesting analysis. Thank you. Subbed
@user-st2ix9qh4v11 күн бұрын
Very interesting. Thank you.
@michelleholland86394 ай бұрын
Love all of your information James. Is is so helpful with our retirement planning.
@cereal764 ай бұрын
Definitely glad I clicked on this video. I see so many channels offering opinions on finances but almost none of them are qualified to do so. It's refreshing to hear from an actual professional.
@timeformore4 ай бұрын
This is my lunch break learning. I’m trying to plan for an early retirement situation that is somewhat similar, so this is very helpful-thank you! My plan hinges on selling our home to either downsize or become nomadic with RV travel for a few years. What’s left over from the home sale would become our brokerage account because we don’t currently have one. This is still 5-10 years away, but I think it’s doable.If we can’t get enough from selling our home, we can still “downsize” our jobs and take ones where we’re not worried about maxing out 401k contributions until we’re at a point where we could retire. After 5 years of the early retirement, one of us would be of the age to start 401k distributions.
@markbernhardt62814 ай бұрын
That's our plan too. The other Root channel with Ari Taublieb calls that brokerage account the 'superhero' account. My wife and I will be doubling our brokerage by selling our house and getting a very modest apartment. Later on we want our nest egg to grow so huge we can spend our golden years on a house on a lake with a live in maid haha
@stephanebogen54114 ай бұрын
Such a great topic and spot on analysis - Thanks for such a great tutorial. At 56 and planning to retire within 18-24 months, I have been running multiple scenarios related to all that was discussed today. I understand the value of minimizing RMDs and minimizing tax burden for heirs but the complexity is to balance this with what we want to achieve in early retirement. What I mean is not jeopardizing activities/goals in first few years because of allocating/using "cash" to pay for Roth conversions. I want to make sure that I also experience the "net worth" advantage/consequence of doing these conversion while we can enjoy them and not getting net worth positive outcome at an older age when we can't enjoy them anymore. Your point of not converting 100% of IRA to Roth is well taken and should be noted by people. I have heard so many comments about converting everything and for me, leaving a balance of $500K for a married couple makes perfect sense.
@timz75484 ай бұрын
This was a very interesting discussion. I'm hopeful you'll take a similar look at scenarios where instead of 25% pretax and 75% taxable you'd look at a similar portfolio size for someone that is in process of building their "bridge" taxable fund. Maybe 75-90% pretax and 10-25% taxable and/or Roth. Would that couple ever have issues with RMDs or similar? Tax optimization would certainly be a different discussion in that scenario.
@kevinkanter25374 ай бұрын
great video - and very comprehensive!! thank you. a consideration: you put this scenario along a timeline and illustrate consideration of the decisions as you step thru the brackets (Tax, Cap Gains, RMD, IRMAA) with different location %'s (ROTH - IRA/401K - Taxable-Brokerage + HRA, all as variables focusing on final goal requirements. I just briing up the brackets for my situation (single) as well as decreasing the $$ amounts to show the constraint variables relevant to my situation to help me follow along your example. Very useful since i faced most of the questions you provided ways to think about --- but i only had 5 years to plan since i retired late (68-73) rather than 20 years (50-75). in my understanding, you set up your data into coupled phases of retirement w/ actual numbers and so will you do this for a scenario for a single person (I'd like it) or as some others have said, with more common and lower values in the 1-1.5M range . My question : Does your software allow scenario modeling to address a monte carlo sim of the final decision with the setting of the variables?
@hl10gg4 ай бұрын
My jaw dropped hearing 60% in an individual stock holy cow
@DrMediterranean4 ай бұрын
I'd like to see the same video but with a household earnings of $80,000 a year, you know, the median...
@j100014 ай бұрын
The median person doesn’t make a good client for him
@maridolvi37233 ай бұрын
Thank you. Great information.
@Growing-Our-Retirement4 ай бұрын
If the big stock holding is in a really good company I would continue to hold it and sell some puts and some calls. Much less expensive than paying the taxes and potentially missing even more appreciation. This idea of selling your winners to rebalance actually works against you in many cases.
@joco87002 ай бұрын
Too much exposure
@heidikamrath19514 ай бұрын
Excellent points! Thank you, James!
@johnd73044 ай бұрын
What about gifting the stock to a gift annuity to fund retirement, receiving a tax deduction (I know their ages are young but market risk might offset that), and an income for life? I’ve always told my clients you spend your income in retirement not your assets.
@aerobiotic4 ай бұрын
Contributions to 401(k): If the employer makes a matching contribution, it will be hard to find an investment with a 100% gain in a given year.
@ronalddmccall61544 ай бұрын
Inflation at a 40 year high. Daily cost of living is way up. You can see it every time you go to buy groceries. Home insurance for me doubled this year. You can tell people it isn't bad when the people see how bad it is every time they go to the store! Very misleading to say inflation is way down. The rate of inflation is declining so prices are going up, just not as fast!
@WalterDorcas4 ай бұрын
I would be retiring or working less in 5 years, and I'm curious to know best how people split their pay, how much of it goes into savings, spendings or investments, I earn around $250K per year but nothing to show for it yet.
@gin1704 ай бұрын
Very helpful video. We are less than 10 years from retirement and also hold a lot of individual stocks. It has done us wonders the last 20 years but we know it's too aggressive for a retiree's portfolio. We've done partial conversion, ourselves, as our IRA grows. Most of our funds are in Traditional IRA and Roth but we are also growing our Brokerage account. We earned less than 100k living in the bay and only breached over 100k income the last 2 years so it is possible to grow your retirement accounts to a sizeable amount but you have to start saving early when you start working. For this couple, maybe contribute to the 401k up to the employer match. If the employer has Roth 401k put funds in that.
@queenp31742 ай бұрын
I have nothing so what do I do
@jeffb.24694 ай бұрын
I stopped watching after you read their total savings and investment amounts. It's hard to relate to those numbers. I must be way behind.
@aerobiotic4 ай бұрын
My guess is ... DINKs - dual income and no kids 😃
@stephenmolloy30814 ай бұрын
agreed... would be good to get more realistic, everyday scenarios for the average family.
@DrMediterranean4 ай бұрын
I don't think you are, I see a lot of these types of videos and they are simply out of touch with the median worker
@alexlee86172 ай бұрын
Dual income, 3 sons (2 in college). Mid 50s, have about same as them but majority in retirement. 1.5M brokerage = 3 kids....
@M22Research4 ай бұрын
Wow, $320K annual income and “only” have about $700-800K in retirement accounts… but $1.5mil in a brokerage account? Shockingly out of balance. And very modest total retirement funds for that kind of income. Particularly if they wish to spend $100K/year in retirement. Long past time to dump their prior “advisor”.
@j100014 ай бұрын
This is great thinking, truly. But man I wish I could watch the version of this where he _doesn’t_ repeat himself 6-12 times. It’s not even saying it 2-3 times, which is annoying. It’s like 5 minutes of going in circles. Then on to a new topic, and turn in circles for 5 minutes again. 🙄
@bdtn3424 ай бұрын
I agree with the comments section. Whoever sent in this question should be embarrassed for even asking. There is no emergency for graham, he is set. Is he trying to figure out if he needs another house and boat before he retires?
@johnhoffman49694 ай бұрын
I like the videos! Too bad you only take on clients that have a minimum of $$2 million to invest.
@bizzfo4 ай бұрын
Roth 401k, no RMD now. Take the tax hit now. Pay zero taxes later and no RMD.
@josephjuno95554 ай бұрын
It irritates me that these people have several $millions act so Financially insecure? You hope to squeeze by in Retirement on Only $100,000 plus $20k for travel per year? Only $10,000 per month? You won't be eating Costco cat food! Just Bragging how RICH YOU ARE!
@adam9644 ай бұрын
You realize that people who seek the services of someone like James are likely easily in 7 figure plus net worth territory don't you? This isn't bragging, this is the target demographic of his client base.
@LillyoftheValleyAZ4 ай бұрын
They have millions and concerned about retirement. I’m unsubscribing from this stupidity. Get real!
@chatgpt-n8r4 ай бұрын
why would you even take a question like this? lol
@JA-er2jp4 ай бұрын
Is it just me or do almost all these examples/case studies have HUGE balances in joint/brokerage accounts? Most people I know don't even have a brokerage account, let alone $1M in one. I feel like more realistic examples would have the largest balance in 401k/IRA, a smaller amount in Roth, and maybe a modest balance in a brokerage.
@timeformore4 ай бұрын
Agreed, we don’t have one and I don’t know anyone else who does either.
@miragexl0074 ай бұрын
A kind of agree. Once it passes 2 million in assets... I tend to back off watching.
@peterwright8374 ай бұрын
It’s not unusual in Silicon Valley where employees receive Restricted Stock Units as part of their compensation and also have the opportunity to purchase the company stock at a discount. It adds up over the years.
@M22Research4 ай бұрын
Gotta remember the firm’s target client. Bigger balance at 1% fee = bigger revenue.
@kevinkanter25374 ай бұрын
Like @miragexl007 I "kinda agree" but James puts this scenario along a timeline and illustrates his consideration of the decisions as he steps thru the brackets (Tax, Cap Gains, RMD, IRMAA) with different location %'s (ROTH - IRA/401K - Taxable-Brokerage + HRA, I just briing up the brackets for my situation (single) as well as decreasing the $$ amounts to show the constraint variables relevant to my situation. James usually puts this into coupled phases of retirement w/ actual numbers and so i hope he does this for a scenario as you suggest (or for a single person).
@markb85154 ай бұрын
Thanks James, the video was very helpful and informative!
@jaykraft95234 ай бұрын
Question for anyone who knows: If my wife and I were retired, filing jointly, and receiving $100K in social security per year together, and we had a long term capital gain of say $90K, what would be our tax ? (wondering if the $90K adds to AGI and provisional income causing more of the social security to be taxed, and assuming the long term gain has 0% tax, but not positive). Assume there is no other income and standard deduction
@ihaveadreamformykids44004 ай бұрын
The capital gains have a different taxation. It is not considered income.
@aerobiotic4 ай бұрын
It would be great to see how this would be taxed !!!
@Sylvan_dB4 ай бұрын
"Provisional income is calculated using the recipient’s gross income, tax-free interest, and 50% of their social security benefits." So in my opinion, yes. Currently (in 2024) the maximum amount of social security that would be subject to tax is 85%. 85% of $100K is $85K. Considering the $29,200 standard deduction, the naive calculation is you would be paying ordinary income tax rates of 10% on $23,200 ($2320), plus 12% on $32,600 ($85,000-$23,200-$29,200 * 0.12 = $3912), plus long term cap gains. The LTCG starts with $85,000 - $29,200 = $55,800 offset from ordinary income into the 0% bracket: $94,050 - $55,800 = $38,250 at 0%. $90,000 - 38,250 = $51,750 which easily fits into the 15% LTCG tax bracket ($7763). Federal taxes from my naive calculation would be: $2320 + $3912 + $7763 = $13,995 (using the 2024 brackets and rates and standard deduction for married filing joint).
@Sylvan_dB4 ай бұрын
Oh, in case it isn't clear, I didn't document the provisional income calculation: $100K * 0.5 + $90K = $140K. That easily results in 85% of Social Security being taxable in 2024.
@j100014 ай бұрын
The capital gains are on top of other income, which includes soc sec. If you want to, pull out a form 1040 and try plugging in your projected numbers and see what happens.
@IramisandGerry4 ай бұрын
Great post. We are in a similar position, but we have a house that will go into brokerage to bridge the gap years when we sell it. We do plan on leaving the US to pay for cost effective healthcare and lower our monthly budget to 4K by doing full time travel.
@danoberste81464 ай бұрын
Graham's biggest risk is Elon Musk. 🤣
@dforrest45034 ай бұрын
I was thinking that! That’s a very risky situation.
@Coast_to_Coast4 ай бұрын
😂
@peterwright8374 ай бұрын
Similar situation here. I was selling shares from my concentrated position up until last year and paid the max capital gains rate plus Net Investment tax. However, once we decided to retire this year I stopped selling because I’ll pay a lot less in taxes on those gains after retirement. We’re are still maxing out both pre and post tax 401k contributions to to take advantage of the tax savings and the Mega Backdoor Roth Conversion while we can. Not sure it’s the optimal strategy, but it seemed like the best pre-retirement strategy to me for our final year of W2 income.
@michaelmunin58194 ай бұрын
Hey James, would the analysis for keeping the 401K during the last few years change if they were getting say 50 % matching from their employer?
@jgibbs61594 ай бұрын
If they get a 50% match on their contribution - they should NEVER stop contributing as long as they get a match. Even is the fund they are in had zero gains, they are still effectively getting 30%+ (after taxes) gain on their contribution via the employer match. Hell, they could shift all their income in the 401k to a low risk bond fund to ensure they don't loose any of their contributions, and just keep contributing as long as they can and watch that match work wonders on their balance.
@markbernhardt62814 ай бұрын
I think you should always prioritize the roth conversions because the brokerage account when you die is worth the market value to your heirs, they will not have to pay any tax on the gains. Plus you will always have full control over what to do with the brokerage. The government will not tell you to sell any of it.
@Sylvan_dB4 ай бұрын
be careful about rule of 55. My company does not allow partial withdrawals.
@aerobiotic4 ай бұрын
The 40K per year is being put into a brokerage account. Their income prevents them from making Roth contributions. Does their employer have a Roth 401 (k) plan? High earners are not restricted from contributing to Roth 401(k)s. You can also make higher contributions to a Roth 401(k). In 2024, you can put up to $23,000 into a Roth 401(k), with an additional $7,500 catch-up contribution if you're age 50 or older. In addition, some employers match Roth 401(k) contributions, but the company contribution won't be put in the Roth account.
@timz75484 ай бұрын
Any Roth contribution doesn't really benefit these folks at their current 24% tax rate. They'd benefit more from traditional pretax 401k as it will likely be taxed in a lower bracket in retirement.
@msgmak13793 ай бұрын
Great Job!
@MichaelToub4 ай бұрын
Great Video!
@lakramonwilkins54314 ай бұрын
Get real bro!
@spalding51984 ай бұрын
When rich people want to retire-this is totally unrealistic. In fact-it’s just rich people delusion and arrogance.