The Retirement and IRA Show

Using Buffered ETFs: EDU #2607

If you would rather not listen to the guys’ banter about Jacob’s upcoming move to Iowa, Jim’s garden planning, and a listener correction about the word “imbibe” you can skip ahead to (33:30). Chris’s SummaryJim and I are joined by Jacob Vonloh as we discuss using Buffered ETFs prompted by a Morningstar article titled “Buffer ETFs Are Not for Everyone.” We explain how defined outcome ETFs use options to provide an explicit amount of loss protection over a given period while limiting potential gains, and we outline why these products are generally suboptimal for long-term investors. We then connect this to investment positioning, focusing on risk capacity, distribution planning, and why dollars assigned to delay-period Minimum Dignity Floor and Go-Go spending may require a degree of principal protection. Jim’s “Pithy” SummaryChris and I are joined by Jacob Vonloh as we take a listener-submitted Morningstar article—“Buffer ETFs are not for Everyone”—and use it to kick off what is going to be a series on principal protection. Morningstar does a very good job in this article laying out what it likes about buffered products, and it also makes some excellent points on where these types of products would fit and where they don’t fit. They’re not for everybody, but they could be of interest in certain cases, in a certain application, and we’re going to share how we use them. What I want to do in this series is broaden the conversation. Buffered ETFs are just one type of principal protected product. There are multiple tools in that category, and we’re going to walk through where they fit into distribution planning. As you transition from accumulation into what I call the Venn diagram phase, and ultimately into distribution, you have to stop thinking of your portfolio as one big portfolio and start thinking in terms of smaller portfolios—investment positions—based on assigned spending. Dollars earmarked for a legacy position can be invested aggressively. Dollars earmarked for immediate spending—like the Go-Go reserve or the reserve for your MDF—need a degree of principal protection. This ties directly into the Secure Retirement Income Process and the See Through Portfolio and how we navigate asset positioning in retirement. Show Notes: Morningstar Buffered ETFs article The post Using Buffered ETFs: EDU #2607 appeared first on The Retirement and IRA Show.

Medicare, Social Security, Inherited Roth, Annuities: Q&A #2607

Jim and Chris discuss listener emails on Medicare Part B decisions for retirees abroad, Social Security survivor benefit surprises, inherited Roth IRA distribution rules, and balancing Treasuries versus annuities when “safety” is more emotional than mathematical. (6:45) A listener asks about situations where it might make sense to skip Medicare Part B, including retirees living abroad with strong foreign coverage and people who move to the U.S. later in life and must pay for Parts A and B. (33:30) George asks why some widows and widowers don’t end up receiving the full benefit their spouse was receiving, even when the surviving spouse’s payment increases after the death. (52:30) The guys respond to a question about whether an inherited Roth IRA requires annual distributions when the original owner was old enough to have RMDs, or whether the beneficiary can wait until year 10. (1:11:00) Jim and Chris revisit the annuities versus Treasuries discussion through the lens of fear and peace of mind, including why someone might emotionally trust Treasuries more than insurer guarantees even if the math favors SPIAs. The post Medicare, Social Security, Inherited Roth, Annuities: Q&A #2607 appeared first on The Retirement and IRA Show.

Cash Balance Plans Part 2: EDU #2606

Chris’s SummaryJim and I are joined by Steve Sansone as we revisit Cash Balance Plans and respond to listener follow-up emails. (8:30) A CPA asks whether cash balance plans could be a fit for farmers with high income near retirement driven by deferred grain and equipment sales.(18:30) A listener with two controlled-group businesses asks how a cash balance plan works with divergent profit cycles, whether it can support succession planning, and whether it makes sense if ownership works until death.(36:45) A financial advisor asks for real-world details on costs, duplication/administration, duration, interest crediting rate risk, investment management, participant inclusion decisions, partner exits, lifetime maximums, and terminate/restart mechanics. Jim’s “Pithy” SummaryChris and I are joined by Steve Sansone as we dig back into cash balance plans, but this time we’re doing it by letting listener questions drive the conversation. We take three listener emails that each come at this from a different angle: one from a CPA working with farmers facing lumpy income near retirement, one from a family dealing with two controlled-group businesses that don’t behave the same way financially, and one from an advisor who’s basically saying, “Convince me this isn’t just theoretical.” Chris and I talk with Steve about what makes these plans work and what makes them a headache—cash flow consistency, the “permanence” expectation, why manufacturers with lots of employees can be a tough fit, and how quickly the math changes when you have to fund meaningful benefits for staff. We also get into the stuff people don’t always hear in the sales pitch: what “interest crediting” really means, where the risk lives if returns don’t cooperate, and why newer market-rate designs change the conversation compared to older fixed-rate versions. And we cover the messy real-life questions: what happens when partners leave, what it looks like to terminate and restart a plan, and why you can’t treat this like an investment strategy with a neat five-to-ten-year horizon. It’s a tax and retirement-acceleration tool with rules, tradeoffs, and guardrails—and Steve does a solid job laying out when it’s worth the complexity and when it’s just not. The post Cash Balance Plans Part 2: EDU #2606 appeared first on The Retirement and IRA Show.

IRMAA, Early Withdrawal Penalty, 403b Distributions: Q&A #2606

Jim and Chris discuss listener emails on IRMAA appeals using Form SSA-44, avoiding the 10% early withdrawal penalty, and whether a 403(b) distribution can be rolled into an IRA. Jim also manages to turn a discussion on Superbowl food to a conversation on retirement planning for the Go-Go phase of life (with a few other stops in between). So, if you typically skip the banter you may want to tune in around (10:10) for that discussion. (16:30) George shares his experience repeatedly filing Form SSA-44 to correct IRMAA determinations and explains how Social Security processed and applied his updated income information. (35:00) A listener asks whether a qualified annuity can be used instead of a 72(t) series of substantially equal periodic payments to avoid the 10% early withdrawal penalty. (1:04:45) The guys discuss whether 403(b) distributions can be completed as 60-day rollovers into Traditional and Roth IRAs, and whether a custodian could refuse to accept the rollover. The post IRMAA, Early Withdrawal Penalty, 403b Distributions: Q&A #2606 appeared first on The Retirement and IRA Show.

Retirement Spending Anxiety: EDU #2605

Chris’s SummaryJim and I discuss spending anxiety in retirement using a Washington Post article written by a personal finance columnist describing her fear of spending after her husband retires. We look at why the shift from saving to spending can feel destabilizing even when pensions and Social Security are in place, and why fear can persist despite adequate planning. We also address the difference between spending income and spending savings, and how that distinction often affects behavior once retirement begins. Jim’s “Pithy” SummaryChris and I use a Washington Post article as a jumping-off point to talk about the moment retirement stops being theoretical and the fear around spending often shows up. The part that stuck with me in this situation is that nothing went wrong. One spouse retires. The other is still working. Pensions are there. Social Security is there. The house is paid off. And the fear shows up anyway. That’s what made me save the article in the first place. She writes about personal finance for a living, and she’s still cutting small expenses, feeling better for five minutes, and then right back to worrying. I’ve said it before, and I’ll say it again—I don’t expect to be immune to that when it’s my turn. What keeps coming up for me is how differently people react to where the money comes from. Most people are comfortable spending a pension check or a Social Security deposit. It’s like a bottomless cup of coffee—you don’t think about the last sip because another one’s coming. But savings? That’s different. Even when the math works, even when the plan says you’re fine, drawing from something you’ve built for decades feels heavier. That’s where the spending anxiety shows up. Spending slows down. Decisions get second-guessed. Things get pushed out a year at a time. Not because people can’t afford them, but because the shift from saving to spending is uncomfortable. Show Notes: Article: My husband just retired. I’m scared of running out of money. The post Retirement Spending Anxiety: EDU #2605 appeared first on The Retirement and IRA Show.