Wilson Financial Advisors

Your Roth IRA may be one of the last accounts you want to spend in retirement.

Why? Because Roth money can be incredibly valuable later in life. Qualified withdrawals are tax-free, they don’t increase your taxable income, and Roth IRAs don’t have required minimum distributions during the original owner’s lifetime.

That can make your Roth a valuable reserve for large unexpected expenses, years when you want extra income without increasing your tax bill, or even money you ultimately leave to your heirs.

Retirement income planning isn’t just about deciding where to take money from today. It’s also about deciding which accounts may be more valuable to preserve for tomorrow.

Think of your Roth as the good bottle of wine in the cabinet. You don’t have to save it forever…but you probably don’t want to open it on a Tuesday for no reason.

Wanna see the full video? Of course you do! check it out here: https://youtu.be/RpyUSUcb5W4?si=tWwYIWhwKVG7qupj

while you are at it subscribe to my NEW YouTube channel "That Financial Guy"

One of the biggest advantages you have in retirement is choosing where your income comes from.

And sometimes, the best place to start is your taxable brokerage account. I like to call it the freedom account because it gives you great flexibility.

Why? Because when you sell investments, you’re generally taxed only on the gain, not the entire withdrawal. And depending on your taxable income, some long-term capital gains may even fall into the 0% federal capital gains bracket.

Meanwhile, leaving money in your IRA can create opportunities for strategic Roth conversions and better tax planning before RMDs begin.

The goal isn’t simply to spend one account down first. It’s to coordinate your withdrawals so you can potentially pay less in taxes over your entire retirement.

That’s what retirement income planning is really about.

Check out the full video on my YouTube channel "That Financial Guy" - https://youtu.be/RpyUSUcb5W4?si=tWwYIWhwKVG7qupj

Want to retire at 55 using the rule of 55???? Consider this first...

Normally you would have to wait until age 59 1/2 to access your 401k without a 10% penalty. But the rule of 55 gives you a way around that. Consider this first.
👉 You can access your 401k without penalty with your current employer 401k in the year you turn 55 and have left that employer.
👉 Old 401k's do not count! Must only be with your current plan
👉 IRA's and Roth IRA's do not count, only the 401k with your current employer
👉 The money must remain with your current 401k plan. If you roll it over, the rule of 55 is gone.
👉 Even though the IRS allows this, not all 401k plans do. Some will only do full distributions, not partial. check with your plan

For the full video and full explaination, check out my YouTube video: https://youtu.be/jcIzH3oT6xk?si=DUg25kVMKRH7Hf6T

You can take money from your 401k before age 59 1/2 without penalty!!!!!

Using the Rule of 55.

Here's how it works.

👉 If you leave your employer in the year you turn 55 or after then you have access to that 401k money without the 10% penalty
👉 You would still pay income taxes on the money withdrawn
👉 This could be a great way to bridge early retirement to social security age benefits

There are several things to consider first. check out the full video on my YouTube channel "That Financial Guy" https://youtu.be/jcIzH3oT6xk?si=DUg25kVMKRH7Hf6T

What if your health changes your retirement plans?

One of the biggest reasons someone may choose to claim Social Security early has nothing to do with the numbers. It has everything to do with making the most of the time they have.

If you're dealing with health concerns or your life expectancy may be shorter than average, waiting for the highest possible benefit may not be the right strategy.

There is no one size fits all answer. The best claiming strategy is the one that fits your health, your finances, and your retirement goals.

In this short video, I explain why your health should be part of the Social Security decision and why maximizing your benefit isn't always the right choice.

How much should health influence when you claim Social Security? Share your thoughts in the comments.

If you're thinking about claiming Social Security early because you simply need the income, that's a completely different conversation than trying to maximize your lifetime benefit.

Sometimes the best strategy isn't the one that pays the most over your lifetime. Sometimes it's the one that helps you pay the bills today.

The key is understanding the tradeoffs. Claiming early means a smaller monthly benefit for life, but if the income fills a real need, it may be the right decision for you.

In this short video, I explain why "needing the money" can be a valid reason to start Social Security early and what you should consider before making that decision.

Have you thought about when you'll claim your Social Security benefits? Let me know in the comments.

Here's a simple example of the Roth IRA five year rule for earnings. Let's say you opened your first Roth IRA in 2022 and invested $50,000. A few years later, it's grown to $75,000. You can always withdraw your original $50,000 tax and penalty free. But if you're under age 59½ and haven't satisfied the five year rule, withdrawing any of that $25,000 of earnings could result in taxes and possibly a 10% penalty. Understanding the difference between contributions and earnings can save you from an expensive mistake.

Here's a simple example of the Roth conversion five year rule. Let's say you're 57 years old and convert $100,000 from your traditional IRA to a Roth IRA this year. You pay the taxes on the conversion, but if you withdraw that converted money before five years have passed, you could owe a 10% early withdrawal penalty on the amount you converted. Once you've reached age 59½, though, that penalty no longer applies, even if the five years haven't passed. It's an important rule to understand if you're doing Roth conversions before retirement age.