Transcript

[00:00:00] Intro: Welcome to Retirement Unlocked with Larry Heller, your life, your way, unlimited possibilities. Join us as we explore how tailored financial planning and investments can help you navigate life transitions with confidence. Let’s dive into this week’s episode.

[00:00:21] Bill Tucker: And welcome back to Retirement Unlocked with Larry Heller. The start of a new year is one of the most important moments for retirees, not because big changes need to happen, but because the right questions need to be asked. January is when retirees set the tone for the year ahead. Yet. It’s also when key details are often overlooked, like how withdrawals are taxed, whether there’s enough cash on hand, or if a portfolio is still aligned with real life goals Today, Larry walks through the essential questions every retiree should be asking in January and explains how answering them early can help you avoid costly mistakes, reduce [00:01:00] stress, and make more confident financial decisions throughout.

The year. Larry, where do we start with this one? Well, welcome to 2026. Yeah, thanks.

[00:01:10] Larry Heller: Happy New Year. Let’s start with withdrawals and that three letter word that a lot of people don’t like, but it called tax. Yeah. And you know, how do we make not only our, uh, withdrawals tax efficient, but make sure we’re withdrawing from the right accounts?

Because in retirement, what you withdraw. And the accounts that you can draw from matter more than how much you withdraw. So, and there’s a lot of moving parts. So really understanding the tax impact of, should I draw from taxable accounts or tax deferred accounts or tax free accounts, can have a great impact.

Now, bill, you may say, well, why don’t I, why don’t I just draw from my taxable accounts first? [00:02:00] Yeah, so I don’t pay any taxes and let my tax deferred and my just grow and grow and grow. Now, why wouldn’t you wanna do that? Good question. Why wouldn’t I? Because you may not wanna do that because now your acquired minimum distributions if you’re going in 1960 or later is 75 for everyone else at 73.

So what could happen is that account could grow so large because you’re not drawing from it that it’s gonna kick you into sub so much of a higher tax bracket later on, that you may be better off drawing outta some of your tax deferred accounts earlier. And you know, this is one of the things that people ask me when we start trying to plan for this and go, doesn’t my account do that?

No. Well, accountants don’t do that. Mm. So they’re not looking years in the future and seeing what your tax brackets will be in the future and see what you are and what you are. Now they’re looking at the last past year or just the one year timeframe. Hmm. So understanding the tax impact of [00:03:00] where you withdraw from, which accounts is super critical.

So,

[00:03:06] Bill Tucker: but Larry, I always sort, sort of understood it is taxes are a fact of life. They have been for a long time. You know, I don’t quite understand. I, how can I, is there a way to get out of paying those taxes? Is there a, you know, when you talk about tax efficient, well let mean No,

[00:03:24] Larry Heller: I mean, it’s not a way of getting outta taxes unless you invest all in tax free accounts and you’re not paying that and you’re not gonna wanna do that.

But there are ways of just controlling it and minimizing it, coordinating your withdrawals when you’re tax brackets. So there are different tax brackets. The, and the more that you make, the more that you. Pay taxes on the higher taxes that you do so that you may be able to coordinate those tax brackets from different accounts.

Um, and then there’s also managing capital gains and ordinary income. So there’s a tax rates for ordinary [00:04:00] income. There’s a tax rates for, um, capital gains, and we have some clients, you know, they may be in a year. Where their taxable income is so low, not usual, but they may not have to pay any taxes on capital gains.

Wow. So just looking at that and looking at your income and your brackets and starting to plan for it in January because you don’t wanna do certain things and then later on, wish you had pulled from a different account is super important. And again, it’s not just how much money you make, it’s how much money you keep.

And if you were drawing from the wrong buckets, you could pay a lot more in taxes.

[00:04:37] Bill Tucker: Yeah. What about Roth conversions? I mean, usually people, when they talk about Roth conversions, my understanding, they talk about them usually prior to retirement or you know, some, some somewhere early in their retirement as opposed to like.

In their seventies? Or is, is that still a realistic, uh, strategy?

[00:04:53] Larry Heller: Yeah, I mean, it is because, um, once you hit, when the RMDs were eight 70 Oh yeah. Then [00:05:00] you, you had to do it before then a lot of times, because now you’re adding a lot more taxable income to your, to, you know, to your account. But now if you’re retiring at 65, um, and you’re not gonna have a withdrawal from your RMD to 75, you have 10 years.

Of potentially low cost, a low income. Now you may be getting pensions and other things that kick you into higher. Yep. And there may be some years where, where you’re not even getting social security yet, so you it’s even in a lower number. Planning for all those and, uh, will really determine whether you want to do a Roth, you know, Roth conversion.

So a lot of times people wait till the end of the year trying to figure it out. No, you wanna start in the, in, in the beginning of the year. And you’re right, you wanna do it as early as you can in, uh, in retirement while you are at possibly in a lower bracket.

[00:05:52] Bill Tucker: Yeah. Yeah. You know, I think a lot of people, uh, don’t know this about taxes.

You think everybody would know everything about taxes. [00:06:00] We all know we have to pay them, but I think a lot of people understand that there is a. Penalty if you underpay your taxes or, you know, in, in, in a time, in a timely way. I mean, yeah. That, that blows my mind.

[00:06:15] Larry Heller: Yes. So you, you have to pay a minimum into taxes.

Now most accountants will, will pay in 110% a last year to a void a penalty. Yeah. So you do wanna make sure that you’re coordinating with your accounts when you have to make. Quarterly payments. Um, and, you know, things have changed. The, you know, the big. Beautiful tax bill Now that, um, the salt, um, state and local taxes, um, if you’re married, um, it could go back up to 40,000 from 10,000.

So that’s a huge planning tool that you wanna look at. And it depends upon your income. So all these things factor in, um, especially if you’re retired and [00:07:00] you wanna minimize what you’re gonna pay in taxes throughout your retirement.

[00:07:04] Bill Tucker: What about cash? Everybody talks about cash on hand. I, I tend to think, why do I need cash on hand?

I, I’m, I’m, I would rather have my Cashs invested.

[00:07:14] Larry Heller: Yeah. I mean, um, everybody would be, when the market is going up. What, and it, it’s been a long time since we’ve had a really big correction. Yeah. Who knows? Well, whether, you know, this’ll be the year, but you don’t wanna have to sell when the market’s down. So now if you’re retired and you are withdrawing money out of your account, you should really kind of see how much do I need during the costs of a year so you don’t have to sell when things are down.

Again, investing in the market should be long term. So if you’re pulling money out of your account, um, to live on that should really be kind of riskless. So if you [00:08:00] were drawing a, let’s just say a 120,000, $10,000 a month outta your account. Kind of depending upon where it is recommending anywhere between one and three years in cash.

Wow. Now we’re kind of at the higher end because the market has had a nice run. Um, if the market had a correction, we may be down in the lower end of that. Um, and yet you do have to coordinate that because some people are getting social security, some people are getting a pension, so you wanna kind of look at that and see how much cash you need and.

Redo this and make sure you have enough cash to last so you’re not selling it in inopportune times.

[00:08:42] Bill Tucker: Yeah, so, so explain to me this. Calculation do. So I look at, I look at my monthly budget and I go, okay, my, I know what my R MD’s gonna be and I, I gotta take money out anyway. How do I know how much cash to have on hit if I take $10,000 out a month?

[00:09:00] You 120,000 for the year? You seem to say there’s a multiple I should be looking at.

[00:09:05] Larry Heller: Yeah. Uh, again, and even if you’re doing it at outta your RMD, you wanna look at the cash in your IRA so you don’t have to sell something there. Yeah. But, but look, let’s say you’re not. You’re younger and you’re not taking your RMD out yet yet, and you’re taking it out of a taxable account for now.

And you, and let’s say your social security is $2,000 a a a a month. Mm-hmm. And you need $8,000 of that 10,000. Yes. So we’re basically saying the 8,000 times 12 90, 90 $6,000 and doing two or three years for that. Um, no, you may not just keep it in a. You know, cash and you wanna keep it in a money market account.

Yeah. That’s earning some interest. You may, depending upon, you may wanna buy a one year CD or, or a two year treasury, so it matures for the following year, depending upon what interest rates are. So managing cash in that particular. Can also, you know, [00:10:00] can also help out. Uh, we just were looking at some, some clients and managing that and we had bought a treasury, um, uh, a few years ago at a much higher rate than what they’re doing now.

And that treasury will now mature and then that treasury will be used, put in a money market and used for this year’s cashs. So, uh, so that’s kind of part of the, the planning in retirement is managing your cash.

[00:10:23] Bill Tucker: Yeah. And for those of you who are listening along and you don’t have a chance to take notes, say you’re driving or maybe you’re out taking a walk listening to the podcast.

As always, we wanna remind you that we put together a little takeaway, a summary of all of these questions that you, as a 2026, uh, retiree should be asking. You can find that download link in the episode description below. So. Don’t worry about taking notes right now. Okay? Just, just listen to the conversation and if you wanna go back, you can pick those up again in the link down below.

The third question I have for you is this idea of the portfolio being aligned with my goals. My [00:11:00] goals are pretty simple. I just wanna keep making money. Uh, Larry. Yeah, right. So what do you mean aligned with my goals?

[00:11:09] Larry Heller: Yeah, so look, a couple things. You know, if you’re just retired and you’re in your late sixties these days, we’re planning for 20, 30 years.

Yeah. So we, we, we wanna just keep ahead of inflation and if you just keep it in the bank and withdraw down and don’t keep ahead of inflation, your portfolio is gonna start to go down. So you wanna kind of make sure you have the right asset allocation as you, as you age. Every few years we, we actually review your risk tolerance to see if that has changed and is your, you know, portfolio aligned with income needs.

Not just growth, because if you’re in retirement, you are. Usually taking money out. Yeah. So you want something, so you wanna balance a balance of, [00:12:00] of both. And then, you know, has your, has market performance shifted your allocation? This is always a great conversation. I mean, we do rebalancing on Qua Quarterly, but if you’re.

If you, the allocation to your stocks has gone way up, uh, and your cash has gone way down, you need to kind of rebalance that. So looking at the allocation, the beginning of the year, great idea to maybe make some adjustments on that.

[00:12:26] Bill Tucker: Yeah. I don’t think a lot of people realize that. Or at least they don’t stop to think about the fact that their risk tolerance has changed.

Uh, that’s gotta be an interesting conversation for you. Uh, you know, talk, talking to people and, and having them realize I’m used to be pretty risk averse. I’m not so risk averse now, uh, because I worry about market declines, right? If I’m, if I’m carrying lots of risk.

[00:12:52] Larry Heller: Yeah. And, and, and I don’t care how much money you have the first time when you’re retired in that, that, um, spigot, the money coming in [00:13:00] is no longer there and the market is down.

I mean, think about it. If you retire and you’ve got $3 million and the market’s down 20% and half your money is in the market, it’s a $300,000 drop on paper. So people start to get, you know, start to get, you know, nervous. So you, you wanna make sure that you have the right risk and the right time horizon and matching that.

Um, so. So again, we talked about 25, 30 years. The shorter term, we talked about keeping your money in cash where there’s less, you know, where there’s a, a less risk on the short term. Sure. No medium. We wanna, we wanna have some incomes, um, providing, um, investments, but then 20 years from now, historically. The stock market is outperformed.

So we wanna have some of that exposure, so to case to stay ahead of inflation. Um, now the interesting [00:14:00] part is it’s not always just your age. When we have some clients and they basically, you know, said to, said to us, you know, Larry, I’m never going to use, need the money in my retirement accounts, my IRAs, that money is gonna be for my, for my kids.

Well now if that money is for either your kids. We can take a little bit more risk in there ’cause you don’t really need that port, you know, portfolio. Um, and then we also have some clients where they self-insure some long-term care accounts. So now we may be self-insuring that in their sixties, the odds are they’re not gonna need that in until they eighties.

So we’d want to be more aggressive with that, to have those accounts grow. So talking to your clients, finding out what the needs and what the goals are. For each of these investments are just super important.

[00:14:50] Bill Tucker: Yeah. Yeah. The bottom line here, I think really what you’re saying is that the portfolio, your portfolio should support your life not, not create a whole bunch of of [00:15:00] stress

[00:15:00] Larry Heller: in your life.

Right. You know? Absolutely. So, and the more you have a plan, the less stress that you’ll have. Again, when we talk to clients about this and we put the cash in place and we do that, and I said, the first time you know, you, you’re turning on the news and you’re hearing, oh, the market’s down big and on that.

You’re gonna know that your check’s gonna come the next month. It’s not going to change the withdrawal from your portfolio that we’ve planned for this. So you can turn that channel, not worry about what’s going on if you plan for it properly. If you know what your expenses are and you’ve matched that with your income, so you know, I’m gonna be able to withdraw and do what I want during my, during my life and my retirement life.

So, you know, you wanna kind of stay, you know, disciplined, you wanna kind of manage what’s going on. So when we do have this market volatility, you don’t worry about that. Uh, and like I said, you know, the first time it happens when these [00:16:00] large corrections, I’m talking. 2000, 2008. Yep. When he, we had some really, really used, oh,

[00:16:06] Bill Tucker: 2008 was way painful.

Larry. Don’t bring those memories back.

[00:16:09] Larry Heller: Right. So, so what are some of the, you know, at that point, some of the, you know, calls we were, you know, hearing on, I just wanna stop the bleeding, then I’ll go back into the market and that’s not what you wanna do. You don’t wanna sell when it’s low. You wanna buy when it’s low and sell when it’s high.

Yeah. So, you know, knowing the risk tolerance, knowing their cash needs, knowing their expenses will minimize the chances that you make that mistake.

[00:16:36] Bill Tucker: Yeah. Great. Now you mentioned the O-B-B-B-R, it’s also known the one big beautiful bill. Mm-hmm. There are some huge, huge changes hugely, as our president might say, changes in in the tax law or how are those changes gonna affect me and in your clients.

Right.

[00:16:57] Larry Heller: So. I’ve mentioned a couple of them. [00:17:00] Um, this wasn’t in the big beautiful bill, but the, the Secure act, but, uh, the requirement and the distributions Yeah. Have gone to age 73 and age 75. So now it’s kicking some of that income and possibly a much higher tax bracket. And the one interesting part is that, um, you know, when you pass away, now they’ve changed the rules.

This is also a secure act that your children. Have to take that any I inheritance over 10 years. So you wanna kind of plan for that, that if you’re gonna have a large, um, large account later on, um, you know, how can you minimize that by, like we said, Roth conversion. So looking at that not only just of your lifetime, but possibly a your children’s lifetime to take advantage of, you know, lower taxes.

’cause your kids, when they inherit it, they may be in their prime earning years. Now you’ve turned over a huge amount of money that they have to take out where maybe [00:18:00] they could be in the top tax bracket, so maybe you wanted to do some Roth conversions to help them out. So again, all those conversations having with clients to really flush out what their goals are.

We could look at ways of, of minimizing taxes. Maybe not now, but maybe later down the road. Yeah,

[00:18:18] Bill Tucker: because Roths, as I understand

[00:18:20] Larry Heller: it, Roths don’t have that 10 year requirement. Right? They do have the 10 year requirement. You have to take it out in 10 years, but you don’t pay taxes.

[00:18:27] Bill Tucker: Uhhuh, I knew there had to be a way to not pay taxes.

So there you can leave it all

[00:18:31] Larry Heller: in into year 10. Let it keep growing deferred if you want, but you don’t, you don’t have to pay taxes on that.

[00:18:36] Bill Tucker: Oh, okay.

[00:18:37] Larry Heller: Which is a very nice thing.

[00:18:39] Bill Tucker: What about, uh, the, the nuts and bolts of, of, of the tax realities, like the brackets, the deductions, the credits? Have those, have those changed uh, substantially?

Yeah. So

[00:18:48] Larry Heller: the big change, the big change is the salt, um, is, uh, deductions, state and local taxes now is back up the. 40,000 if you’re married from $10,000. So [00:19:00] if you, now there’s some income levels that if you exceed that, you don’t get that. So you want to pay attention to that. So now you know, maybe you can do some other things and your taxes.

You may be able to do some more Roth conversions ’cause you’re getting a higher credit. So looking at that, looking at each one of your brackets, um, they haven’t gone up. They’ve stayed the same again, real important to do that planning and do that planning earlier in the year.

[00:19:29] Bill Tucker: True. Yeah. Very true. What about considerations for healthcare?

Uh, you, you know, I think a lot of people think Medicare is quote unquote free. Yeah,

[00:19:40] Larry Heller: well, it’s, it’s not free. You know, the base, the base premium, I believe is somewhere like 200, $2, but at different earning thresholds, your premiums could go up. I believe the top premium is somewhere close to $800 a month.

Wow. So, so planning for that. Now, again, you [00:20:00] don’t wanna have. Taxes kind of lead your way with investment choices, right? You wanna kind of be, be aware of them, but if you, if you look at the brackets and, and maybe you’re close, and this is more end of the year than beginning of the year. Mm-hmm. And if you’re looking at that brackets and, um, you see what the next.

One is for the income, maybe you can manage it so you stay below that, in that increase. Um, and a lot of times, um, people are surprised by this because it’s not something that their accounts are talking about, not something that’s being planning from. And all of a sudden, the start of the next year, now the IM is usually two years behind.

Yeah. So all of a sudden now they get a notice. Oh, your Medicare premium this year is 400 and something dollars a month. What? You know, so why is that? So you don’t wanna have any surprises, so it’s nice to kind of know what that is and kind of staying, you know, staying informed. So, uh, so, so you, you, you, you don’t get [00:21:00] unexpected higher increases.

[00:21:01] Bill Tucker: Yeah. Okay. So what should. We be focusing on now as opposed to later.

[00:21:10] Larry Heller: So again, then, you know, we’ll talk about the, you know, the tax planning earlier versus December, scrambling the proactive RMG RMDs. Withdrawal planning strategies that we touched upon. All the estate, all the income tax, the income taxes that we, we, we, we discussed.

Um, but there’s a few, you know, there’s a few others that you wanna kind of think about in the beginning of the year. One is kind of the next one here. Um. Is, you know, your beneficiaries. Oh, um, every so often, kind of looking at the beneficiaries and the, um, you know, do they need to be updated? Do, um, certain required documents need to be changed?

Because as you get older, you may need more medical care. Where, where are these doc [00:22:00] documents? Do your kids know where these documents are, the healthcare proxy, the power of attorney? So all those things, every few years. Kind of be addressed. Again, I love saying January, we’re gonna look at all these things and you can say, oh, I did this last year.

I’m good. Or, you know what? It’s been three years. Maybe we should look at everything again. So that’s kind of a another thing to do in January, um, especially as, as you’re re you know, retired. Everybody should do that. Yeah. But especially if you’re older and retired.

[00:22:31] Bill Tucker: Well, you know, it’s funny, I mean, just on a personal note, I, I’ve surprised myself by thinking I should review my beneficiaries thinking that they were all like an order on on certain accounts.

And I’ve gone to look at the accounts and realized. Well, I don’t even anybody designated as a beneficiary here, and I just assumed, you know, I’d had my wife and my kids and et cetera, et cetera, and, and they, and I just had overlooked it and hadn’t done it. So I just to underscore the real importance of.[00:23:00]

Reviewing those because there may be some holes that you just forgot about.

[00:23:04] Larry Heller: Yeah, no, there, there, there are. And there, I mean, and there are holes in there, but for certain scenarios we could talk about beneficiaries there. But um, you know, do you have, like you said, you have your wife and then you have your, your children.

But do you have. You know, purse, stirpes or not. And people say, what does that mean? Well, God forbid there’s a car accident or something and one of your children and you are killed that does that money go to. Their kids if you had grandkids or does it go to your surviving children? So, and then, and are the, any of these children minors who can’t get that?

So beneficiary planning, most people just, ah, they, they put their wife, they put their kids afterwards and they said, oh, I’m done. Not necessarily the the, the way you wanna have it done, but that’s for a whole nother story.

[00:23:56] Bill Tucker: Oh yeah. That, that’s a whole nother episode in this podcast as a matter of [00:24:00] fact. You know, I like this question.

I’m sitting here looking down this whole list of things and, and I hear it discussed a lot. You retire and you’re like, are lost. Yeah. I make that loss so much as you’re like, well, what do I do now?

[00:24:22] Larry Heller: Well, you know, it, it’s not, it, it’s, well, there’s a few different things. So you know, the first thing is. Um, and we’ve talked about this before, is what do I wanna do in retirement?

Yeah. And what can I afford and what can I not afford? And I’ve mentioned this on previous podcasts. Most people, when we do their analysis. Are not spending enough, they’re underspending because they’re so afraid of running outta money. I, I mean, I think if you had to ask me what is the biggest takeaway from all the things that we do between investments and tax planning and retirement planning, cash flow, it’s that it’s really giving somebody.

[00:25:00] Confidence to spend what they can so they can enjoy their retirement. So really knowing what you wanna do and, you know, having a game plan of doing it and not waiting and not thinking, oh, I can’t afford to do this. Um, or on the other flip side of the occasional am I doing, going overboard, but really seeing what I can do as a lifestyle and kind of, you know, comparing it to the spending.

Uh. I mean, there’s also obviously other things that when you, you retire, um, trying to figure out what a purpose and what you wanna do. Yeah. So January’s a good time to kind of figure out, you know. Uh, actually I was in a, a group meeting this morning with somebody and believe it or not, um, she decided to take up running in, in retirement.

Wow. Um, and she did a 5K and did a half MA marathon. So that was on what she wanted to do. So kind of figuring out what you wanna do and. You know, and making it [00:26:00] happen, um, you know, money is great, but trying to kind of figure out what’s, what’s gonna work for you so you can stay healthy and you can stay alive and kind of, and happy in retirement.

[00:26:12] Bill Tucker: Yeah, money’s great, but it’s not everything. And the beautiful thing about retirement that you often discuss is that. In retirement, if you’ve planned properly, you can do things on your own terms. You can create the terms on what you do, things you could take up running, and you could do all kinds of things.

You could decide, you wanna go do charity work if you want to. ’cause you’ve got that freedom to do it because you planned and you’re prepared to do that kind of thing. Right?

[00:26:38] Larry Heller: Yeah. I mean, there’s a guy who wrote a book, I, I, I’m, I’m, I’m sorry, I’m forgetting his name now, but he did not the marathons. He did, what is that called when you do.

Swimming and, uh

[00:26:49] Bill Tucker: oh. Yeah. Yeah. Uh, I, you know, it’s funny, I’m, I’m blanking on it too.

[00:26:54] Larry Heller: It’s actually a book that we actually give our clients to read, but I’m just blanking on it. Yeah. It’s not, I’m wanna say [00:27:00] super. It’s not a triathlon, it’s, it’s a super triathlon. Triathlon, right? It’s a tri, it’s a, it’s triathlons that he decided to do that in retirement.

Ah, so, uh, no, not everyone is in that, you know, mindset to kind of do that physical, but there can be plenty of other things that’s gonna make you excited and what to do in retirement.

[00:27:18] Bill Tucker: Yeah. I believe it or not, Larry, I know a guy’s in his, he’s, uh, mid seventies and he does the Ironman competition, which is like the, which is like the triathlon on steroids.

Wow. And, and, and, and the great thing is, is that you look at him and you think, well, if I look like that when I get to be 75, well that’ll fine. I’ll be good there. Well listen everybody, thanks for listening to Retirement Unlocked. If today’s episode helped you think differently about how you start the year and the questions that every retiree should be asking, please like, subscribe, and share it with someone you think could benefit from it as well.

One, help answering these questions for your own situation and making sure your retirement plan is aligned financially, tax [00:28:00] wise with your long-term goals. Check the episode description for resources and a link to schedule a complimentary free 20 minute call with the team at Heller Wealth Management.

Remember, the right questions lead to better decisions. We’ll see you next time on Retirement Unlocked.