What will you actually need to spend in retirement? Today on Your Money, Your Wealth® podcast 406, Joe Anderson, CFP® and Big Al Clopine, CPA explain how to really think about and calculate your retirement expenses. Plus, does it make more sense to do Roth conversions or reinvest to reduce tax-deferred account balances? What about doing Roth conversions to a higher tax bracket than the one you’ll be in during retirement? The fellas also explain the alternative minimum tax, Social Security spousal benefits, and when in the year you turn 72 you must take required minimum distributions from retirement accounts. Finally, what should someone with no credit history, who hasn’t paid taxes, do with a $100,000 windfall? Show notes, free financial resources, transcript, Ask Joe & Big Al On Air:

00:00 – Intro
00:55 – How to Forecast Expenses in Retirement (David, Huntsville, AL)
08;52 – Download the Retirement Blind Spots Guide:

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09:45 – Convert to Roth or Reinvest to Reduce Tax-Deferred Accounts? (Sunny D, AZ)
16:25 – IRMAA: Does it Make Sense to Do Roth Conversions to a Higher Tax Bracket Than in Retirement? (Chris, Straight Outta Austin)
32:50 – Watch 7 Strategies to Reduce 2022 Taxes:
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33:24 – Alternative Minimum Tax (AMT) Explained (Smitty from the Villages)
36:29 – How Much Social Security Benefit Will My Spouse Receive? (Gus, Philly)
39:47 – When in the Year You Turn 72 Must You Take RMDs? (Ricky, AL)
41:02 – No Taxes Filed, No Credit History. What Should Son-in-Law Do With $100K? (Karen)
47:50 – The Derails
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• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
• Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
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• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period….(read more)

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Retirement is a major life event that requires careful planning. To ensure that you have enough money to live comfortably in retirement, it’s important to forecast your expenses and create a budget. Here are some tips to help you forecast your expenses in retirement.

1. Start With Your Current Expenses: Start by looking at your current expenses. Make a list of your fixed expenses like rent or mortgage payments, utilities, and insurance. Then, list your variable expenses like groceries, entertainment, and travel. This will give you a baseline for what you’ll need in retirement.

2. Factor in Inflation: Inflation is the gradual increase in prices over time. It’s important to factor in inflation when forecasting your expenses in retirement. For example, if you’re currently paying $1,000 a month for rent, that amount could be significantly higher in 20 years.

3. Consider Your Retirement Goals: What do you want to do in retirement? Do you want to travel? Do you want to start a business? Do you want to buy a second home? These goals will require additional funds, so make sure to factor them into your budget.

4. Plan for Unexpected Expenses: Unexpected expenses are a fact of life, so it’s important to plan for them. Create an emergency fund with at least three to six months of expenses. This will help you cover unexpected costs in retirement.

5. Talk to a Financial Advisor: It’s always a good idea to consult with a financial advisor when planning for retirement. They can help you create a budget that takes into account your current and future expenses.

By following these tips, you’ll be able to forecast your expenses in retirement and create a budget that works for you. With careful planning, you can ensure that you have enough money to live comfortably in retirement.