1. The Goldilocks Rules of Retirement Withdrawals

Withdrawing from retirement accounts isn’t just about timing it’s about getting it “just right.” Ric explained that pulling money out before age 59½ hits you with a 10% early withdrawal penalty, plus income taxes. Wait too long, and the IRS slaps on an even bigger fee: by April 1 of the year after you turn 70½, you’re required to take minimum withdrawals (RMDs), or you could face a 50% penalty.

That’s right between late withdrawals and missing the mark on the amount, you could owe up to 95% in penalties. Ric’s advice? Don’t guess. Work with a qualified tax preparer or advisor who knows how to thread the needle.

2. Saving During Career Interruptions

Mary called in with a common issue: she’s working temp jobs after being laid off and doesn’t know what to do with her leftover income after covering essentials. Ric encouraged her to strike a balance—build emergency savings first, then contribute to retirement, even if it’s just a little.

Skipping savings during tough times might seem logical, but retirement is inevitable. “Don’t stop saving,” Ric said. “Even if it feels small, consistency is key.”

3. Estate Taxes: Federal vs. State

Opening a loved one’s estate can raise unexpected questions. One listener asked about federal estate taxes after her mother-in-law passed. Ric broke it down: if the estate is under $5 million ($10 million for couples), it’s exempt from federal tax under current law. But some states still tax estates separately, so working with an accountant is essential to avoid surprises.

4. Long-Term Care Insurance: A Lifeline for Longevity

If your family tree is full of folks living into their 90s, you should be thinking about long-term care insurance. That was Ric’s advice to a caller whose grandparents lived well into their 90s.

The average cost of long-term care is $84,000 per year, and many people need care for over a decade. Without insurance, this can devastate your savings. Ric’s message was clear: “If you’re likely to live a long time, plan for the years when your health won’t keep up.”

5. Cashing Out Insurance? Know the Tax Consequences

Another caller wondered about taxes on a life insurance cash-out. Ric explained that only the gain the amount received above what was paid in premiums is taxable, and it’s taxed as ordinary income. That rate can be higher than capital gains.

Before cashing out, consider the alternatives. If left intact, the policy’s death benefit may go to heirs tax-free. Make sure you ask the right questions before making irreversible decisions.

6. Carol Joynt’s Financial Nightmare and What We Can Learn

Carol Joynt inherited her husband’s D.C. restaurant and a $3 million tax mess. The IRS came calling, but she was unaware of the fraud. Thanks to “Innocent Spouse” protection, she avoided liability.

Carol’s advice? Don’t be blind to your partner’s finances. Hire an independent accountant. File separate tax returns if you manage money separately. Her story, captured in her book Innocent Spouse, is a wake-up call for anyone who thinks “it could never happen to me.”

7. Roth vs. Traditional 401(k): Which One Wins?

Should you choose a Roth 401(k) or a traditional 401(k)? Ric said if you’re in a high tax bracket (25% or more), go traditional. You get the deduction today, and you’ll likely be in a lower bracket later. Only those in lower brackets (15% or less) should favor Roth contributions, where immediate tax breaks aren’t as valuable.

8. Facing Financial Crisis? Get Help Fast

Ric’s parting advice: if you’re facing IRS problems or financial uncertainty, don’t go it alone. Professionals exist for a reason. And don’t be ashamed of financial struggles. Carol Joynt’s public story shows that resilience starts with transparency.

The Bottom Line

Retirement isn’t just about saving it’s about protecting what you’ve saved. From withdrawal rules to estate planning and insurance needs, the stakes are high and the rules can be punishing if misunderstood. Whether you’re entering retirement or just starting your journey, remember Ric Edelman’s core message: preparation is everything.

All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.

Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.

The post Retirement Rules, Long-Term Care, and the High Cost of Financial Mistakes appeared first on ROI TV.

The Retirement Blueprint Starts with Saving

Just like no Italian dish is complete without pasta, no retirement plan works without savings. It’s the base of everything. Joe and Big Al emphasized the importance of having a financial blueprint, a personalized guide you can use to see if your current strategy matches your long-term goals. It’s a free tool they recommend to get started—plug in your numbers and get a roadmap.

Understanding Defined Contribution Plans

You’ve likely heard of 401(k), 403(b), or 457 plans. These are defined contribution plans employer-sponsored retirement accounts where you choose how much to save, and the final benefit depends on your contributions and investment returns.

In 2024, you can contribute up to $23,000 to these plans or $30,500 if you’re over 50. Many employers match 4-6% of your salary, so at the very least, you should contribute enough to grab that free money.

If you work in schools, hospitals, or other public service roles, you may be eligible for both a 403(b) and a 457. That’s a huge advantage for supercharging retirement savings.

The Power of IRAs and Roth IRAs

For more flexibility, IRAs offer tax-deferred (Traditional IRA) or tax-free (Roth IRA) growth. You can contribute up to $7,000 annually—or $8,000 if you’re over 50. Roth IRAs are subject to income limits ($146,000 for singles and $230,000 for couples), but higher earners can still access them through a “backdoor Roth IRA.”

Spousal IRAs let non-working spouses save for retirement, and even minors with earned income can open an IRA starting them on the financial journey early.

Defined Benefit Plans: Old School, Still Powerful

While less common today, defined benefit plans (like traditional pensions and cash balance plans) still exist and offer guaranteed monthly income in retirement. They’re typically funded by the employer, with distributions taxed as ordinary income.

These plans focus on what you’ll receive rather than what you contribute unlike 401(k)s where the outcome depends on market performance.

Retirement Options for Entrepreneurs

If you’re self-employed, you’re not left out. Solo 401(k) plans allow you to contribute both as the employee and the employer, with a 2024 cap of $76,500 (if over 50).

SEP IRAs, funded by employers only, allow contributions up to $69,000 and they can be set up retroactively. SIMPLE IRAs are geared toward small businesses with employees, offering easier setup and lower contribution limits.

And since 2023, some of these plans even allow Roth contributions for those seeking tax-free growth.

Making the Most of Equity Compensation

Almost half of S&P 500 companies offer Employee Stock Purchase Plans (ESPPs), letting workers buy shares at up to a 15% discount. That discount is taxed as ordinary income, but it’s still a great perk especially if your company’s stock is on the rise.

Restricted Stock Units (RSUs) and stock options offer even more potential, but they also carry risks. If your compensation is heavily tied to your company’s stock, make sure to diversify. Otherwise, you could end up with too many eggs in one basket.

Evaluating Job Offers with ESPPs

A listener named Jill asked if it’s worth taking a lower-paying job with strong ESPP benefits. My advice? Look beyond just salary. If the company has growth potential and the stock benefit is strong, it could be worth the trade-off. But don’t base the decision on stock perks alone—consider the whole compensation package and your career goals.

S-Corp Owners and Retirement Contributions

Kyle from Seattle asked about retirement plan contributions as an S-Corp owner with no wages. Big Al made it clear: you need earned wages to contribute. Distributions don’t count. So Kyle would need to restructure how he pays himself if he wants to fund a retirement plan.

The Bottom Line

Retirement planning isn’t just about maxing out an account. It’s about understanding your options, using the tools available to you, and balancing growth with tax efficiency. Whether you’re a full-time employee, self-employed, or somewhere in between, there’s a recipe for your financial freedom. Start by saving, diversify your strategy, and stay informed as the rules evolve.

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.

The post Your Retirement Recipe: Savings, Plans, and Financial Freedom Tools appeared first on ROI TV.

1. The Earnings Limit in 2025

If you’re collecting Social Security before reaching your full retirement age (FRA), there’s a limit to how much you can earn from working without having some of your benefits withheld.

• For 2025, the annual earnings limit is $23,400, or $1,950 per month.
• If you earn more than that, $1 will be withheld from your benefits for every $2 you earn above the limit.
• In the year you reach your full retirement age, the limit jumps to $62,160, with just $1 withheld for every $3 earned over that threshold.
• Once you hit full retirement age, there’s no earnings limit—you can earn as much as you want with no reduction in benefits.

It’s important to note that only earnings after you start collecting Social Security count toward this limit.

2. The Social Security Wage Base

For 2025, the Social Security wage base is set at $176,100. This is the maximum amount of earned income subject to Social Security tax.

Here’s how the payroll tax breaks down:

• 6.2% of your wages goes to Social Security
• 1.45% goes to Medicare
• Employers match both contributions, totaling 15.3%

Any income you earn over the wage base is only subject to the Medicare tax (1.45%, plus an extra 0.9% for high earners).

If you earn above the wage base, you might notice your take-home pay increase later in the year once you stop paying Social Security tax.

3. Maximum Social Security Benefits in 2025

Your monthly benefit amount depends on when you claim and how much you earned during your 35 highest-earning years.

Here’s what the maximum monthly benefit looks like in 2025:

• $2,710 if you start at age 62
• $4,018 at full retirement age (typically 66–67)
• $5,108 if you delay benefits until age 70

Keep in mind, these maximums apply only to individuals who consistently earned the maximum taxable wage over a 35-year career.

There’s also a family maximum, which ranges from 150% to 180% of the primary earner’s benefit. This includes benefits for spouses and children.

4. Provisional Income and Social Security Taxation

Not all of your Social Security income is tax-free. The amount subject to federal taxes depends on something called provisional income—which includes your:

• Adjusted gross income
• Tax-exempt interest
• 50% of your Social Security benefits

Here’s how it breaks down in 2025:

For Single Filers:

• Under $25,000: 0% of benefits taxed
• $25,000–$34,000: Up to 50% of benefits taxed
• Over $34,000: Up to 85% of benefits taxed

For Married Couples Filing Jointly:

• Under $32,000: 0% taxed
• $32,000–$44,000: Up to 50% taxed
• Over $44,000: Up to 85% taxed

These thresholds are not indexed to inflation, which means more people may see their benefits taxed each year as income levels rise.

5. Understanding Bend Points and How They Affect Your Benefits

Social Security benefits are calculated using a formula that applies different percentages to portions of your average monthly earnings. These breakpoints are called bend points.

In 2025, the bend points are:

• 90% of the first $1,226 of average monthly earnings
• 32% of earnings between $1,226 and $7,391
• 15% of earnings above $7,391

This system is designed to replace a larger percentage of income for lower earners and a smaller percentage for high earners.

If you’re transitioning to part-time work before retirement, even modest earnings can have a favorable impact on your final benefit calculation—so these bend points are worth watching closely.

The Bottom Line

Understanding these five Social Security numbers can help you make smarter choices about when to claim benefits, how much you can earn, and how to reduce taxes on your retirement income.

Whether you’re still working or already retired, staying informed about these changes each year is one of the best ways to protect and optimize your benefits.

You should always consult a financial, tax, or legal professional familiar about your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns.

Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost.

The post 5 Key Social Security Numbers You Need to Know in 2025 appeared first on ROI TV.