Retire Ready with Kyle Hammerschmidt

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Summary
The conversation discusses the importance of tax diversification in retirement planning. It explains the concept of tax diversification and how it can help individuals control their taxes over their lifetime. The conversation also explores the three tax buckets: non-qualified taxable money, tax-deferred money, and tax-exempt money. It emphasizes the need to spread out money across these buckets to optimize tax planning. The conversation further delves into strategies such as Roth conversions and tax gain/loss harvesting to maximize tax efficiency. It concludes by highlighting the benefits of tax diversification in reducing tax bills, maximizing Social Security benefits, and leaving a tax-friendly legacy.
Takeaways

• Tax diversification is an important aspect of retirement planning to control taxes over a lifetime.
• Spreading out money across different tax buckets, such as non-qualified taxable money, tax-deferred money, and tax-exempt money, can optimize tax planning.
• Strategies like Roth conversions and tax gain/loss harvesting can help maximize tax efficiency.
• Tax diversification can reduce tax bills, maximize Social Security benefits, and leave a tax-friendly legacy.
• Understanding the impact of tax rates, RMDs, and Social Security claiming strategies is crucial in tax diversification.

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Disclosure: You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This podcast is intended for educational purposes only. Nothing in this podcast 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. MOKAN Wealth Management is a registered investment adviser with the SEC. Registration of an investment adviser does not imply a certain level of skill or training.

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In this episode, Kolin and Kyle discuss nine misconceptions about Roth conversions. They debunk the idea that Roth IRAs are always better than IRAs, explaining that the choice depends on individual circumstances. They also emphasize the importance of comprehensive tax planning and caution against winging it or converting large amounts without a strategy. The hosts address the misconception that Roth conversions prevent contributions to a Roth IRA and clarify that conversions do not count against modified adjusted gross income. They also discuss the misconception that paying the tax bill from savings is the only option and explain the potential penalties for underpayment. The hosts highlight the need for flexibility and multiple strategies when it comes to Roth conversions, cautioning against chasing a completely tax-free retirement. Finally, they debunk the idea that Roth conversions must be completed before required minimum distributions (RMDs) kick in, explaining that conversions can still be done after RMDs to lower future distributions.
Takeaways

• The choice between Roth IRAs and IRAs depends on individual circumstances and tax planning.
• Comprehensive tax planning is crucial when considering Roth conversions.
• Converting large amounts without a strategy can lead to overpaying in taxes.
• Roth conversions do not prevent contributions to a Roth IRA.
• Paying the tax bill from savings is not the only option for Roth conversions.
• Multiple strategies and flexibility are important when planning Roth conversions.
• Chasing a completely tax-free retirement may not be optimal for most individuals.
• Roth conversions can still be done after required minimum distributions (RMDs) to lower future distributions.

Subscribe to The Retire Ready Weekly Newsletter
Get more information on The Retire Ready Academy
Looking for personalized financial planning? Visit our website
Disclosure: You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This podcast is intended for educational purposes only. Nothing in this podcast 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. MOKAN Wealth Management is a registered investment adviser with the SEC. Registration of an investment adviser does not imply a certain level of skill or training.

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In this episode, Kyle and Kolin discuss a case study of a married couple near retirement. The couple plans to retire in 12 months and has a planning life expectancy of 90 for the wife and 85 for the husband. Their primary insurance amount for Social Security is $2,800 and $2,200 per month. They have a net essential spending goal of $6,000 per month with a 4% cost of living adjustment. The couple has a total asset value of $1.7 million, with a heavy emphasis on tax-deferred accounts. Their concerns include maximizing spending early in retirement, tax planning, and investment strategies for the fragile decade. The solutions discussed include Roth conversions, tax-efficient planning, and adjusting income based on portfolio performance.
Takeaways

• Plan for retirement by considering life expectancy, Social Security benefits, and essential spending goals.
• Maximize spending early in retirement without sacrificing the longevity of savings.
• Implement tax-efficient strategies such as Roth conversions and understanding the impact of taxes on retirement income.
• Consider investment strategies to protect against market volatility during the fragile decade of retirement.
• Regularly review and adjust income based on portfolio performance and market conditions.

Subscribe to The Retire Ready Weekly Newsletter
Get more information on The Retire Ready Academy
Looking for personalized financial planning? Visit our website
Disclosure: You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This podcast is intended for educational purposes only. Nothing in this podcast 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. MOKAN Wealth Management is a registered investment adviser with the SEC. Registration of an investment adviser does not imply a certain level of skill or training.

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The retirement planning world is filled with plenty of advice and suggestions, but there are critical questions lurking in the shadows – the unasked, the overlooked. These are the questions that can help define the comfort and security of your retirement future. In this episode, we unearth and tackle these hidden, but essential questions about retirement.
Here’s some of what we discuss in this episode:

• The implications of tax-deferred accounts and how they affect your retirement
• How much can you safely withdraw from your retirement savings each year?
• Do you really need life insurance in retirement?
• The hidden costs and gaps in Medicare coverage
• Understanding the true costs and fees associated with your investments

We hope you enjoy the show!
Helpful Info:

Kyle's website: http://www.mokanwealth.com/

Phone: 913-257-3991

Subscribe to The Retire Ready Weekly Newsletter
Get more information on The Retire Ready Academy
Looking for personalized financial planning? Visit our website
Disclosure: You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This podcast is intended for educational purposes only. Nothing in this podcast 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. MOKAN Wealth Management is a registered investment adviser with the SEC. Registration of an investment adviser does not imply a certain level of skill or training.

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This week on Retire Ready, host Kyle Hammerschmidt breaks down the latest updates and strategies to help you maximize your retirement savings. With big changes to contribution limits thanks to the Secure Act 2.0, it’s more important than ever to stay informed and plan ahead.

🎧 Highlights from the Episode:

• 🚀 2025 Contribution Limit Updates: Learn about the new limits for 401(k), 403(b), 457 plans, and the federal Thrift Savings Plan—now up to $23,500 (with even bigger boosts for those 60–63).
• 💼 Catch-Up Contributions: Why these changes are a game-changer for pre-retirement savers and how you can take full advantage.
• 🏦 IRA Contribution Insights: Uncover the key differences in IRA and Roth IRA limits for 2025, including strategies like the Backdoor Roth IRA for high-income earners.
• 💡 The Power of Compounding: Why investing consistently, no matter the market, is the key to long-term growth.

Kyle's expert tips will empower you to make informed decisions and build a comfortable retirement nest egg. Whether you’re decades away or
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Website: https://mokanwealth.com/
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Retire Ready Academy: https://retirereadyacademy.org/ nearing retirement, this episode is packed with actionable insights.

#RetireReady #RetirementPlanning #SecureAct2 #401k #RothIRA #FinancialFreedom
Sources:
1. 401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000 | Internal Revenue Service
2. Older Workers to Get ‘Super’ 401(k) Catch-Up Contributions in 2025 - The New York Times
3. Backdoor Roth IRA: Advantages and Tax Implications Explained
4. What the new 401(k) limits and other changes mean for your retirement

Subscribe to The Retire Ready Weekly Newsletter
Get more information on The Retire Ready Academy
Looking for personalized financial planning? Visit our website
Disclosure: You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This podcast is intended for educational purposes only. Nothing in this podcast 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. MOKAN Wealth Management is a registered investment adviser with the SEC. Registration of an investment adviser does not imply a certain level of skill or training.