Real-Life Strategies for Taxes, Withdrawals, and Wealth Building
Retirement planning is never one-size-fits-all—and for good reason. Whether you’re managing a multimillion-dollar portfolio or navigating a modest pension with rental income, success depends on strategy, timing, and tax-savvy moves. In this week’s episode, Joe Anderson and Big Al tackled seven real-life retirement scenarios that prove there’s more than one path to financial freedom.
1. Safe Withdrawal Rate Planning for a High-Net-Worth Couple
A couple aged 58 and 56, with $4.3 million in assets, plans to retire in 2025 and spend $165,000 annually—including $65,000 on discretionary items like vacations. Their portfolio includes $2.6 million in deferred accounts, $1.6 million in taxable investments, and $325,000 in rental property equity.
Joe and Big Al crunched the numbers: a safe withdrawal rate supports $175,000 annually for 35 years, and even $225,000 in the first decade. But market risk looms large. The couple is advised to:
- Develop a diversified investment strategy
- Incorporate Roth conversions early for tax control
- Plan distributions to avoid spikes in ACA premiums
2. Using Roth Conversions After Moving to a Tax-Free State
James Bond—yes, really—asked if moving to a tax-free state like Texas or Nevada to do Roth conversions is legit. With $5.6 million in assets, he’d save serious money avoiding California’s income tax.
Big Al confirmed the move works—but only if it’s genuine. Change your driver’s license, voter registration, and spend at least 183 days there. Anything less could trigger an audit and retroactive tax bills.
3. Single Dad’s Retirement on a Lean Budget
A 54-year-old single father in San Francisco hopes to retire at 62. With $620,000 in investments, $3,000 in monthly rental income, and an $800 monthly parental pension, his goal of spending $72,000 annually is doable.
With smart investing, his portfolio could hit $1 million by 62. Adding in a $25,000 pension at 65 and $3,100 in monthly Social Security at 70, his strategy is conservative, flexible, and aligned with his lifestyle.
4. Stress-Free Career Planning at 45
Rob, 39, wants to scale back his high-stress job in six years, with an eye on early retirement in his 50s. His net worth is $1.8 million, and he saves $60,000 annually.
Big Al projected Rob could grow his portfolio to $2.3 million by 45 and $4.1 million by 55 at 6% returns. The advice? Keep saving, keep investing, and stay open to pivoting into lower-stress work when the time is right.
5. Managing Capital Gains on a Home Sale
A Fremont homeowner was concerned about exceeding the $500,000 capital gains exclusion. With a $300,000 purchase price and a $1.2 million sale value, taxes were inevitable.
After deductions, they face roughly $67,000 in federal and state taxes. Still, they walk away with massive equity and are reminded that the temporary spike in Medicare premiums is manageable given their financial windfall.
6. Pension vs. Lump Sum: What’s the Better Bet?
A 61-year-old with $3 million in liquid assets asked if he should take a $520,000 lump sum or a $38,000 per year pension.
Joe and Big Al found the pension’s net present value was comparable to the lump sum at common discount rates. The choice boils down to:
- Take the pension to preserve liquid assets while waiting for Social Security
- Take the lump sum if you want investment control or to leave a legacy
7. Real Estate Concentration vs. Retirement Account Diversification
Lloyd Christmas (no relation to Dumb & Dumber), a business owner with $7.3 million, prefers commercial real estate and isn’t a fan of retirement accounts.
While his strategy has worked so far, Joe and Big Al warned that market downturns could wipe out income. They advised:
- Opening Roth accounts for long-term tax-free income
- Creating a balanced mix of real estate and paper assets
- Stress-testing his strategy against worst-case scenarios
Final Takeaway: Customize Everything
No two retirement plans are alike. Whether you’re managing $600,000 or $6 million, the key is thoughtful strategy. That means managing taxes proactively, preparing for market downturns, and being honest about your lifestyle needs. With the right plan—and the right team—you can design a retirement that fits your future, not just your finances.
Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.
IMPORTANT DISCLOSURES:
• 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 a 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.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• 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.
