Take Advantage of Today’s Tax Rates with the Mini-Roth Conversion

In today’s blog post and video, we break down the correct way to take advantage of Roth conversions using today’s tax rates.

In our last video on Roth’s we talked about how doing large Roth conversions can be a disaster as it can severely increase your taxes.

Today we wanted to talk about when it actually makes sense.

The reason is simple, with today’s tax rates being the lowest we’ve seen in a while it may be advantageous for you to use the Roth conversion up to your current tax bracket.

If there is one nice thing to have it’s multiple buckets of money to pull from with different tax implications.

Ready to break it down? Watch the video to learn more.

Let’s recap:

Roth conversions can make sense to “make the gap” between your current income and the next level up when tax rates increase. For example, if you’re income was at $70,000 it might make sense to convert $30,000 in order not to bump up your tax rate.

You most likely can’t touch the money for 5 years but it can be beneficial down the road to have a tax free bucket of money to spend or pass along to your heirs.

Today’s tax rates could be going away soon. Don’t wait until it’s too late to take advantage of these conversions and make sure they’re done right.

  1. Planning for taxes is one of the most overlooked areas of financial planning and we want you to take advantage of it whenever possible.
  2. Roth conversion could be that advantage in today’s tax environment.
  3. If you need planning your retirement income and need to learn an often underutilized strategy, then head on over to our eBook and download it today.

You can go pick up a free copy by using the link below:


Like always, if you’re facing retirement and need a second opinion learn about what makes us different, we’ll audit your entire strategy to make sure you have the right tools to make your retirement as low risk as possible and still drive in a good income.

And if you want a further dive into some of the biggest risks with retirement planning then check out our webinar or download our ebook on taking income in retirement.

Annuity Case Study and What to Look Out for…

In today’s blog post and video, we break down how annuities can be abused by agents not held to a fiduciary standard. If you’ve ever wondered if you should be buying annuities on a regular basis then this video is for you.

If there is one thing that we see all the time it’s annuities being used incorrectly.

Maybe it’s just a product of the suitability standard, but this post today is to help guard you, your friends, and your families from situations that are usually not in their best interest.

What are we talking about?

Let’s break this down.

First off, we want to remind you that we don’t love annuities or hate them. It’s about when they get used and how.

Like we discussed in our last video on annuities, in today’s low interest rate environment, the internal rates of returns on these products can be pretty dismal even with all the riders and contract bonuses the insurance company is offering. So, you have to be careful about what you buy and how it’s used for your retirement.

And second, we want to show you some of the strategies being used that are often times not in your best interest and hope this isn’t happening in your portfolio.

It all comes down to “layers” of annuities using the free withdrawal provision

Let’s break an example down that sheds light on that subject and why we’re so passionate about this.

Let’s recap:

  1. Are you buying new annuities every year with your free withdrawal provision? This can destroy liquidity and create longer surrender periods than may have originally been planned.
  2. Is your advisor or agent a Fiduciary and doing this because it’s in your best interest? Or because it’s in theirs?
  3. WFiduciary advisors are required to do what’s in your best interest regardless of pay or commission. In the suitability standard brokers and agents are held to the best interest of their company. Which one would you rather have advising you?
  4. Audit your contracts and portfolios for these conflicts of interest before you make any more big decisions.
  5. Annuities perform the best in high interest rate environments which might not be happening any time soon.

Low interest rates are making retirement planning very difficult in today’s environment. Not only can fees eat you alive you need you need to avoid making emotional decisions. It’s up to you to go beyond “trusting” someone to help you. You also need to get proof and education on what strategies can work, how they can fail or backfire and what options you really have.

Annuities can be great and they can be terrible depending on your situation. But there are other options:

That’s why we created our free ebook.

It covers ways to drive income without relying on interest rates, annuities, or other high-cost and high-risk strategies all too common in today’s environment.

Like always, if you’re facing retirement and need a second opinion learn about what makes us different, we’ll audit your entire strategy to make sure you have the right tools to make your retirement as low risk as possible and still drive in a good income.

And if you want a further dive into some of the biggest risks with retirement planning then check out our webinar or download our ebook on taking income in retirement.

Should you do a Roth Conversion?

Ever wondered if a Roth conversion could help you get a “tax-free” retirement?

When the Roth conversion came out it was all the rage. Advisors and investors clamored to take advantage of the tax loophole and jumped on the bandwagon thinking they “gamed” the system.

Then they got their tax bills…

If you’re like most people we talk to on a regular basis then you’ve most likely heard from other advisors talking about a “tax-free” retirement. The biggest tools being used by said advisors is either the Roth conversion or cash value life insurance (which we’ll talk about later). And while the Roth conversion isn’t inherently bad it almost always comes with many unintended consequences that shock people when they get their taxes done.

Here’s the problem:  Many of the people who do Roth conversions today don’t actually end up saving any money in the long run.

That’s why we’re on a mission to educate retirees in Tucson about retirement and all the hidden “little things” that eat away at the return and put your retirement at risk.

On today’s agenda:  The Roth Conversion

To make it easy, we shot this quick video that explains the good, the bad, and the fine print…

Let’s Recap:

  1. If your tax rate will be lower in retirement than it is today, you may want to avoid them.
  2. When you pull the money out you’ll most likely have to pay the tax bill from other accounts.
  3. If you pay the tax bill from an IRA you may also pay even more in taxes…
  4. If you’re in your lowest tax bracket years then ROTH 401(k)’s and ROTH IRA’s make the most sense.
  5. Convert small chunks up to the next bracket in income to safely use this strategy.

No matter the approach or strategy you need to know the good AND the bad and what long-term consequences you’ll face if you pull the trigger.

That’s why we caution jumping into a Roth Conversion without doing the research or meeting with a CPA who can walk you through the benefits and risks step by step.

Like always, if you’re facing retirement and need a second opinion learn about what makes us different, we’ll audit your entire strategy to make sure you have the right tools to make your retirement as low risk as possible and still drive in a good income.

And if you want a further dive into some of the biggest risks with retirement planning then check out our webinar or download our ebook on taking income in retirement.

How to Make Your Money Last in Retirement

Retirement planning can be overwhelming and downright scary when you think of what could happen if you run out of money.

But that’s only one risk. Losing spending power as you age can be just as dangerous.

That’s why strategies like this are so important.

We need to look at retirement differently in today’s low-interest rate environment and come up with a way to approach this challenge with a more balanced approach.

In this free video and guide we’ll show you how we help our clients accomplish these goals step by step.


You’ll learn:

  • Why volatility is the real danger.
  • How to avoid spending assets at the wrong time.
  • How to avoid going into high risk or highly volatile investments to drive return.
  • And how to keep your portfolio reasonably exposed to risk (without using annuities or other high cost investments).

When you learn how simple this approach can be to calm the volatility of investing, keep your money in assets that give you flexibility, give you the potential for growth and prosperity, and avoid tying your money for years in products like annuities…

You’ll see that your approaching retirement isn’t as scary as many think.

Want to get help with your retirement?

Start with a Financial Plan

2 Simple Keys For Surviving a Market Crash

Every day when you turn on the TV or click on the financial page, there is a half second of trepidation while you look to see if the numbers are red or green.

We all remember the last crash and none of us want to go through that again.

There are so many factors that are out of our control when it comes to investing like the economy, war, terrorists etc. that it seems like every day could be the beginning of the next crash.

You’re not alone. Study after study confirms that running out of money is the #1 fear faced by most retirees.

In a post “great recession” world it’s no wonder most people are fearful their money will not last.

That’s why it’s important to ask yourself this question:

Are you confident you can survive the next market crash, or is it keeping you up at night?

If it’s on your mind, then it’s time to show you the 2 key ways to combat it.

Surviving a Market Crash Starts Before it Happens

I’m going to go over a few things you need to know and show you a time tested method of protecting yourself BEFORE your portfolio is ruined and your lifestyle is affected.

Let’s start with something that not too many people think about when designing their portfolios, but it is the single biggest reason I have seen people take a beating in the stock market and never recover.


You must have a portfolio that you can live with. Not just in the good times, but also in the bad times. Think about it like a marriage, if you bail on your portfolio when things get tough, it’s going to cost you a lot of money. You need to make a commitment to your investments to stick with them while times are bad. Just like in marriage, this can be a challenge, but there are things you can do to make it easier.

When I talk about a portfolio with a client, I don’t focus on returns. The returns will come, I focus on RISK. You need to know the potential volatility of your portfolio at all times. If you don’t, you could be in for a shock that you simply can’t live with.

Ask yourself what you would do if your portfolio of $1,000,000 that you are counting on to keep you fed and housed in retirement turned into less than $450,000 over a year and a half?

The S+P 500 did even worse than that from October of 2007 until March of 2009, and those are the so called “safest stocks!”

Would you have the heart to say, “I’m not worried, it will come back!” Or would you be one of the many who understandably got frightened and bailed out at some of the lowest prices they possibly could have?

If you can’t stomach the downturn, you’ll most likely sell, and you won’t be invested to experience the recovery. Which is exactly what the market did after that.

If instead, your portfolio of $1,000,000 turned into $800,000 over the same period of time, while the broader market was down almost 60%, you would be a lot less panicky and much more likely to stay invested.

Keeping your portfolio in line with your emotional risk tolerance is absolutely key to successful investing.

If you are being kept up at night worrying about what might happen, then you might need to relook at your strategies or put a new plan in place.

The way to do this is something we have all heard about time and time again.

Diversification – (the real kind)

However, I find that many people and even investment professionals either don’t truly understand diversification or just don’t bother.

Let me be absolutely clear here. A portfolio of all stocks is NOT DIVERSIFIED.

Not enough.

I don’t know how many times people about to retire have shown me their retirement account at work or their brokerage account and all I see is stocks. We just went through an example where a broad based stock portfolio of 500 stocks, lost over half its value in a very short period of time!

Even having 500 stocks in your portfolio is not enough!

In order to have true diversification, you must focus on asset allocation. This has the single biggest impact on risk, as well as return in your portfolio. Most people I see, diversify only among the “blue chips” and leave the other stuff alone.

This is a mistake!

Investing in medium sized, international, and even small sized companies will lower your volatility and therefore your risk! In addition, you need to have other asset classes, such as fixed income and even real estate and commodities are good investments at the right time.

When we design a portfolio, it typically checks all those boxes I mentioned, with large, small, medium, international stocks, bonds etc. We usually end up with thousands of different underlying holdings to give us true diversification. This one simple trick will make all the difference the next time the market crashes.

In summary, if you aren’t able to handle the market downturn emotionally with your current asset mix, it can derail all your plans before you even get started.

And second, when you diversify using the right asset allocation strategy that’s been stress tested to handle a market downturn, that’s what can give you the confidence that you will survive and thrive in retirement.

It is up to you to educate yourself thoroughly and make sure you know what you’re facing before it happens and put a plan in place that you can live with and be confident in.

Do you truly know how much risk you’re currently taking?

Do you know what would happen in another market crash?

Do you know what to do?

You should.

it’s time to focus on answering these questions, to help you do that we have two options.

Check out our free planning process to see if it might help you get the answers you deserve.

Or check out our webinar HERE to see several other mistakes that can cost you thousands if not more in retirement, and make sure you aren’t letting these simple mistakes eat away at your future security.

4 Key Reasons People Run Out Of Money in Retirement

If you’re like most people, your biggest fear about retirement is running out of money.

I have worked with people who are just barely able to retire and those who will never touch their money and could never run out, but almost all of them worry about running out of money and being dependent on someone else in retirement.

The problem is, there are so many different things to consider in retirement that can affect whether you run out of money, from withdrawal rates, to how your money is invested to when you withdraw it and more!

To make matters worse, people are constantly being bombarded by “advice” that may be flawed or not in their best interest, whether that’s coming from a co-worker or simply someone trying to earn a commission off you by selling you an annuity or loaded mutual fund.

The good news is I’m going to help you on your quest and show you some of the mistakes people make that can dramatically affect their ability to maintain their standard of living, and tell you how to avoid them.

#1 – Probably the most obvious and common mistake people make when retiring is to take too large of a distribution from their investments.

It doesn’t matter how much you have saved up in terms of dollars, it’s all about percentage withdrawals. I have met people with $300,000 saved for retirement who had saved more than enough. In contrast, I have met those with $5,000,000 saved up who spent all their money in just a few short years.

A quick rule of thumb is that with a properly invested portfolio, you can withdraw about 3% per year if you are retiring before 60, 4% per year if you are retiring between 60 and 66 and 5% if you are retiring after that.

On a million dollar portfolio, that is the difference between $30,000 and $50,000 per year if you delay your retirement from the late 50’s to the late 60’s. That’s without your portfolio growing in the meantime.

If you stick to those numbers, you have a pretty low chance of running out of money assuming you are invested properly. If on the other hand, if you go above those, you will have a good chance of running out even if you are invested well.

#2 – The second thing that can really damage your ability to live well in retirement is paying too much for your investments.

In my opinion, you should not be paying more than 1.5% annually including investment advice and hidden fees and costs. If you are, I don’t believe you are getting a good value. Some investments we come across such as loaded mutual funds and annuities can carry up front commissions of 5-10% or more! That’s money that’s not staying in your pocket and will affect your bottom line! One extremely important thing to look at is the internal annual expense you pay. Some of the “sexier” investment products carry annual expenses of 2-3% and that’s not counting the advisory fee. It’s not uncommon for us to see a portfolio with a 2.5% to 3.5% annual expense.

To show you a quick example, the difference between a portfolio that grosses 8% per year with a 1.5% annual expense and one with a 3.5% annual expense over 30 years is significant. On $500,000, assuming no taxes or other costs, the lower expense portfolio will turn into about $3,300,000 whereas the higher expense portfolio will only turn into about $1,870,000. You can obviously see how that would affect your ability to withdraw money for yourself!

Now we’re going to move to more subtle things that can dramatically affect your ability to outlast your money in retirement. Everyone knows that you can’t be too aggressive in retirement because your timeline for withdrawals is short and you won’t have time to recover from a big downturn.

Many people think they need to be extremely conservative in retirement. Unfortunately, in today’s low-interest rate environment, being too conservative can be a death sentence to your portfolio. In a day and age where the banks pay practically nothing and a 10-year treasury bond will likely earn less than inflation, you can’t simply put your money in safe investments and live off the interest like you could in the good old days.

Reason #3 – Not rebalancing

Those withdrawal rates I mentioned before do not work with a portfolio that will only earn 1-3% as in the case of most fixed index annuities or bond portfolios.

In order to be able to take a reasonable withdrawal, you must have a portfolio somewhere between aggressive and conservative, using many asset classes, from stocks to bonds etc. There is much science behind how you properly allocate a portfolio, and it can be complicated. Thankfully, there are many strategies and models that can work, but that is too complicated for this article.

What I can tell you definitively is that a portfolio that consists of entirely “conservative” stocks is not a safe portfolio. Too often I see people who think they have a safe portfolio because it is entirely made up of “blue chip stocks.” Keep in mind the S+P 500, a portfolio made up of the largest, best-known companies in the United States, lost almost 60% in the financial crisis. In order to avoid that happening to you next time, you must have different asset classes than just stocks.

“Set it and forget it” is great for a cooker, but not for your portfolio!

If you have not actively rebalanced your portfolio over the last couple of years, the risk you are taking has dramatically changed.

For example, a portfolio that was half stocks and half bonds that started at the bottom of the financial crisis, in 2017, less than 10 years later, is likely close to a 75% stock portfolio if you haven’t changed it. That is the difference between a portfolio that is on the safe side of moderate and one that’s well into the aggressive range.

Very few people can afford or even stomach that kind of risk in retirement. We recommend checking your portfolio at least quarterly to make sure it stays within the level of risk you are willing to take. In the long run, this will make it much less likely to run out of money.

#4 – The last and most subtle topic I want to cover today is the timing of withdrawals.

When you are contributing to your 401(k), you are doing something called dollar cost averaging. For example, let’s take 3 contributions of $100 over 3 months. Assume we put that money into a stock that is at $100 the first month, $50 the second month, and $100 the third month. You will have bought 1 share the first month, 2 shares the second month, and 1 share the third for a total of 4 shares. Even though the stock has not appreciated from the time you started, you are up almost 34%.

That is because you have invested $300, and now have 4 shares worth $400. This is the power of dollar cost averaging.

Unfortunately, when you are spending your money, you are dollar cost averaging in reverse. If you take the same example we just used but instead of depositing money, you are withdrawing it, you will see that in order to spend $300, you had to sell $400 of stock! The inherent volatility of the stock market makes taking money out of a stock portfolio dangerous and inefficient because you cannot be certain it is the right time to withdraw the money.

There are strategies to avoid this, but the simplest is having enough money in conservative investments to allow your stocks to recover without having to sell them at a bad time.

If you make sure you avoid these pitfalls, you will be well on your way to making sure you don’t outlive your retirement and you can put a retiree’s biggest fear to rest!

One key final point I want to make about investing.

If you are doing it on your own, make sure you research from different angles and from different sources. There is tons of good advice out there, but not all of it is appropriate for you.

If you are considering hiring someone to help you on your journey, make sure that firm has your best interest at heart. You can do this by choosing someone who is a fiduciary and not just out to generate a commission.

For more on this and other traps to avoid, check out our webinar here.

Do You Have Enough Money to Retire?

Are you ready to retire?

Do you want to skip work and focus on the things you really care about full time?

Maybe it’s golf, boating, or spending more time with family?

First off, congratulations!

Second off, how’s that going?

If you’re like most people, making the decision to retire can be one of the hardest decisions you’ll ever make. For good reason, your future is on the line!

Most folks don’t know the answer and find themselves losing sleep over it versus having clarity.

You probably have savings tucked away, you’re getting social security or you have a pension. You just haven’t gotten a final answer of whether or not you’ll have enough to retire.

That’s what we’re going to help you with today. It’s time to get your answer!

A Simple Calculation for Figuring Out How Much You Need.

I’ll walk you through a “Do It Yourself Exercise” that will help you decide if you’re ready to pull the trigger on retirement.

Don’t stick your head in the sand and push out retirement simply because it seems like too much work to figure out the answer to this question.

There is a surprisingly easy way to know the answer using simple math.

The only difficult part of this exercise is figuring out the correct inputs to the equation like how much money your family spends every month.

Here’s what information you need to know.

Let’s get started with a few key questions.

At retirement, how much income will you receive from:

  • Monthly pensions?
  • Social security payments?
  • Other forms of income?

The next hard question is how much do you truly spend each month. This doesn’t just include your mortgage and utilities, but also includes any discretionary spending on hobbies or going out to eat.

  • What are your base expenses including mortgage, cars and utilities?
  • What are your discretionary spending numbers?

Once you know your total monthly income and your total monthly expenses, simply subtract the income from the expenses to see how much money you’ll need to withdraw monthly from investments, such as a 401(k).

For example, if your social security payment is going to be $1,500 per month, your pension is going to be $2,500 per month, and your expenses are $5,000 per month, then $5,000 – $1,500 – $2,500 = $1,000 per month that needs to be withdrawn from your investments.

Expenses – Social Security – Pension = Your Investment Income Needs.

That brings us back to the original question, do you have enough saved to make that last?

That depends on your investment allocation and the length of time you will be retired.

We generally make the decision of how much you can withdraw on an annual basis based on sophisticated modeling software, but, a good rule of thumb is that if you are going to be retired for 30 years, then 3% is a conservative estimate, whereas if you are going to be retired for only 20 years, then 4-5% can be successful.

Success, in this instance, means that you don’t run out of investable assets before the end of retirement.

In our original example, you need $1,000 per month on top of your income.

If we assume a 30-year retirement, you need $1,000 x 12 months = $12,000 per year from your investments.

At a 3% distribution rate, you need investable assets of $12,000/0.03 = $400,000.

For a 20-year retirement, $12,000/0.05 = $240,000 is needed at a 5% distribution rate.

You can see how the length of time you will be retired for affects your savings need. If you haven’t saved enough, you can delay retirement which will allow you more time to save.

Delaying retirement also means you can take a higher distribution at that time.

This exercise gives you a pretty good idea of whether you’re in the ballpark to retire.

Once you have a base idea, financial planning software will allow you to change assumptions and do a more advanced calculation.

Assumptions such as adding a long-term care stay, loss of a job or a death of a spouse early on in retirement. Running projections with various scenarios such as those will help fine tune your road to success and give you an idea of what you’re up against.

And if you want to avoid challenges in retirement you should check out our webinar. It goes over the 7 Retirement Traps most people will face in retirement and how to plan for them.

Knowing how much you need to have saved for retirement is an important number that many people never bother to calculate.

This is a huge mistake.

If you don’t know where you’re trying to go, how can you get there?

It’s time to get the answer.