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How Much Money Do I Need To Retire?

ST. CROIX INSIGHTS

How Much Money Do I Need to Retire? That’s the $64,000 Question.

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
Retirement Savings

The phrase “$64,000 question” originated from a 1950s game show where contestants answered a series of questions to win the grand prize of—yep—$64,000. In many ways, meeting with a certified financial planner (CFP®) like me feels similar. Instead of game show trivia, we go through a series of important retirement questions—except this time, the stakes are your financial future.

Retirement Questions to Ask

To build a solid retirement plan, I’ll need to ask you a variety of questions, including:

  • Where do you want to retire?
  • What kind of lifestyle do you envision?
  • Travel goals: Where, how often, and what type of travel do you prefer?
  • Family considerations: Do you plan to spoil your grandkids?
  • Healthcare: How will you handle medical expenses and long-term care costs?
  • Income sources: Will you have Social Security, pensions, or rental income?
  • Investments: Can your portfolio keep pace with that pesky “I” word—inflation?
  • Withdrawal strategy: Do you want to live only off your investment earnings, or are you comfortable dipping into your principal?
  • Longevity: Can your savings sustain you for 25, 30, or even 40 years in retirement? (Many people underestimate this possibility, but it’s more common than you think.)
  • Legacy planning: Do you want to leave money for your children or a favorite charity?
  • Taxes: Let’s not forget about our favorite relative—Uncle Sam. How will taxes impact your retirement withdrawals and overall financial picture?

And the list goes on…

Oh, how simple it would be if we could just answer these questions correctly and poof—win $64,000 toward our retirement! But unlike a game show, there’s no single right answer. Retirement planning isn’t about picking the perfect number; it’s about adjusting to an evolving target based on your goals, circumstances, and market conditions.

Navigating Your Retirement Savings

If you have a significant other, agreeing on a number of factors listed above helps to provide the clarity you’ll need to get the process started.

During the financial planning process, some people realize that their budget can’t quite support their “dream retirement lifestyle.” But that doesn’t mean retirement is out of reach—it just means making a few adjustments.

For example, maybe you had your heart set on luxury vacations at a JW Marriott, but instead, you opt for a Courtyard by Marriott. In the grand scheme of things, are you really giving up much? Maybe you dream of a beachfront home but instead choose a place just a block or two away—you’ve still got the ocean, and you just saved yourself a fortune.

Retirement planning is about redesigning and retooling to achieve a fulfilling life with the resources you have. It takes time, energy, and thoughtful strategy to put the right plan in place. But that’s the best part of what I do—helping people navigate that moving target and turn their retirement dreams into reality. Contact us today for a free no-obligation consultation.

 

The phrase “$64,000 question” originated from a 1950s game show where contestants answered a series of questions to win the grand prize of—yep—$64,000. In many ways, meeting with a certified financial planner (CFP®) like me feels similar. Instead of game show trivia, we go through a series of important retirement questions—except this time, the stakes are your financial future.

Retirement Questions to Ask

To build a solid retirement plan, I’ll need to ask you a variety of questions, including:

  • Where do you want to retire?
  • What kind of lifestyle do you envision?
  • Travel goals: Where, how often, and what type of travel do you prefer?
  • Family considerations: Do you plan to spoil your grandkids?
  • Healthcare: How will you handle medical expenses and long-term care costs?
  • Income sources: Will you have Social Security, pensions, or rental income?
  • Investments: Can your portfolio keep pace with that pesky “I” word—inflation?
  • Withdrawal strategy: Do you want to live only off your investment earnings, or are you comfortable dipping into your principal?
  • Longevity: Can your savings sustain you for 25, 30, or even 40 years in retirement? (Many people underestimate this possibility, but it’s more common than you think.)
  • Legacy planning: Do you want to leave money for your children or a favorite charity?
  • Taxes: Let’s not forget about our favorite relative—Uncle Sam. How will taxes impact your retirement withdrawals and overall financial picture?

And the list goes on…

Oh, how simple it would be if we could just answer these questions correctly and poof—win $64,000 toward our retirement! But unlike a game show, there’s no single right answer. Retirement planning isn’t about picking the perfect number; it’s about adjusting to an evolving target based on your goals, circumstances, and market conditions.

Navigating Your Retirement Savings

If you have a significant other, agreeing on a number of factors listed above helps to provide the clarity you’ll need to get the process started.

During the financial planning process, some people realize that their budget can’t quite support their “dream retirement lifestyle.” But that doesn’t mean retirement is out of reach—it just means making a few adjustments.

For example, maybe you had your heart set on luxury vacations at a JW Marriott, but instead, you opt for a Courtyard by Marriott. In the grand scheme of things, are you really giving up much? Maybe you dream of a beachfront home but instead choose a place just a block or two away—you’ve still got the ocean, and you just saved yourself a fortune.

Retirement planning is about redesigning and retooling to achieve a fulfilling life with the resources you have. It takes time, energy, and thoughtful strategy to put the right plan in place. But that’s the best part of what I do—helping people navigate that moving target and turn their retirement dreams into reality. Contact us today for a free no-obligation consultation.

Roth IRA vs. Traditional IRA: What’s the Difference?

ST. CROIX INSIGHTS

Roth IRA vs. Traditional IRA: What’s the Difference?

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
Roth IRA vs. Traditional IRA

First off, pay now or pay later—that is the question. Ordinarily, when we discuss the difference, most individuals generally point out the fact that they’ll be in a lower tax bracket come retirement. However, I’m 99% confident that this is probably not the case for most of us.

Remember, our government needs and wants your money. In short, a host of factors will ultimately decide your tax rate at retirement, the two biggest of which are health and lifestyle in your golden years.

Although we can run the math a thousand ways, the biggest question to ask is: Do you want all of your income in retirement taxed? The answer is often no.

Here’s a list of some of the differences between two of the most common retirement accounts: the Roth IRA and the Traditional IRA account. If you have specific questions, please don’t hesitate to contact us.

The Difference Between a Roth IRA and Traditional IRA

Roth IRA

  • Eligibility: Individuals must have taxable compensation, or a spouse with earned income if filing jointly. Contributions are not subject to age requirements.
  • Tax Treatment: Contributions are not tax-deductible and are subject to modified adjusted gross income (MAGI) limitations.
  • Contribution Limits for 2024 and 2025:
    • Individuals under age 50 can contribute up to $7,000.
    • Individuals aged 50 and older can contribute up to $8,000, including a $1,000 catch-up contribution.
    • Note: The total contribution to all IRAs (Roth and Traditional) cannot exceed these limits.
  • Income Limits for 2024:
    • Single Filers:
      • Full contribution allowed if MAGI is less than $146,000.
      • Contribution limit phases out between $146,000 and $161,000.
      • No contribution allowed if MAGI is $161,000 or more. Time to consider Backdoor Roth.
    • Married Filing Jointly:
      • Full contribution allowed if MAGI is less than $230,000.
      • Contribution limit phases out between $230,000 and $240,000.
      • No contribution allowed if MAGI is $240,000 or more. Time to consider Backdoor Roth.
  • Income Limits for 2025:
    • Single Filers:
      • Full contribution allowed if MAGI is less than $150,000.
      • Contribution limit phases out between $150,000 and $165,000.
      • No contribution allowed if MAGI is $165,000 or more. Time to consider Backdoor Roth.
    • Married Filing Jointly:
      • Full contribution allowed if MAGI is less than $236,000.
      • Contribution limit phases out between $236,000 and $246,000.
  • No contribution allowed if MAGI is $246,000 or more. Time to consider Backdoor Roth.
  • Distributions:
  • Best Practices:
    • To maximize tax benefits, keep funds in the account for at least five years and wait until age 59½ before taking distributions.
    • Withdrawals before meeting these criteria may incur a 10% tax on earnings.

Note: Be aware of the 5-year tax rule for Roth plans.

Once you open a Roth IRA, you need to wait five years after your first contribution to withdraw funds tax-free. January 1 of the first year you contribute begins the five-year countdown. For example, if you make your first contribution on March 1, 2025 the five-taxable-year period starts January 1, 2025 and ends December 31, 2030.

Failing to meet the five-year rule means earnings could be subject to income taxes and possibly a 10% early withdrawal penalty if other qualifying criteria (like age 59½) aren’t met.

This rule applies for conversions as well. If you convert funds from a Traditional IRA to a Roth IRA, a separate five-year period applies for the converted amount. Each conversion has its own five-year clock, starting on January 1 of the year the conversion is made.

Traditional IRA

  • Eligibility: Individuals must have earned income, or a spouse with earned income if filing jointly.
  • Tax Treatment:
    • Contributions are generally tax-deductible.
    • Deductibility phases out if the contributor or spouse participates in an employer-sponsored retirement plan and the household income exceeds IRS thresholds.
  • Contribution Limits for 2024 and 2025:
    • Individuals under age 50 can contribute up to $7,000.
    • Individuals aged 50 and older can contribute up to $8,000, including a $1,000 catch-up contribution.
  • Distributions:
    • Withdrawals before age 59½ are subject to a 10% early withdrawal penalty unless meeting specific exceptions, such as death, disability, qualifying education expenses, medical expenses, or first-time home purchases.
    • Required minimum distributions (RMDs) must begin at age 73, regardless of whether you need the funds, potentially impacting your tax situation.

Choosing Between a Roth and Traditional IRA

Deciding between a Roth IRA and a Traditional IRA depends on your current financial situation, expected tax rate in retirement, and long-term goals. Consulting with a skilled financial planner can help you make the best decisions for your situation. Call St. Croix Advisors at (651) 337-1919 or (877) 393-1919 or email info@stcroixadvisors.com for more information.

Make a Dream Board: Life Lesson 49 of 50

ST. CROIX INSIGHTS

I’m Done Asking for Permission

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

make a dream board

Photo by Rana Sawalha

When you make a dream board, you’re setting powerful internal forces in motion that will move you toward your goals, even when you’re not consciously aware of it. Visualization is one of the most powerful tools we humans have for achieving our dreams. 

It may seem silly that by collecting words and images on a piece of paper, we can channel some magic power that influences our lives—but studies have shown that through visualization, we can actually train our brains to work for us in surprising ways.

Make Your Subconscious Work for You

There’s a reason cultures and traditions around the world use visualization to effect powerful change. By constantly envisioning ourselves achieving the things we really want in life, we’re forming habitual thought patterns that keep us moving toward that goal.

Make a dream board—it isn’t just a symbolic action. It’s a way to keep your mind focused on achieving your goals so your subconscious can keep working for you.

Focus Your Energy Through Constant Reminders

It’s not enough just to jot your dreams on a piece of paper and file it away somewhere. Dream boards work best when you keep them in plain sight. Post yours in your office, your bedroom, even your bathroom—anywhere you’re sure to see it every single day.

I personally use a dream board to help focus my personal and professional financial decisions. It hangs right next to my desk as a daily reminder of the ideas, goals, dreams, plans, and visions I have for myself and my future. By keeping it within sight every single day, it’s easy for me to get motivated to do something about my dreams.

Help Others Help You

Some dreams just can’t be accomplished alone. There is power in sharing your dream board with others. As soon as you start to tell people about your goals and desires, they’ll be able to help hold you accountable for making them happen.

Your Money or Your Life? – Life Lesson 41 of 50

ST. CROIX INSIGHTS

Your Money or Your Life?

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

your money or your life

Society tells us that accumulating money is what life is all about, but you and I know that isn’t the whole story. We’re all trying to survive, but making a living isn’t just about accumulating as much money as possible—it’s about living. When it comes to the guiding force in your life, you have just one choice to make: Will you choose money or your life?

It may sound odd to hear this from a financial planner—someone who makes his living by helping others manage their wealth—but it’s the truth. In my experience, more money tends to lead to more stuff, and more stuff leads to more stress.

As the Notorious B.I.G. once observed: “Mo’ money, mo’ problems.”

This isn’t a novel concept, yet it’s something we all need reminding of occasionally. We’ve been encouraged to challenge this materialistic mindset. Long-term happiness doesn’t stem from possessions; it’s about the relationships we cultivate, the connections we forge, and the positive impact we create in our world.

No one’s asking you to choose a life without money. I’m simply asking you to choose life.

Work on building a fulfilling life, one with more focus on family and friends, God, and meaningful experiences… and less focus on having the right material stuff to impress others.

After all, you can’t take your stuff with you when you go, but you can make a lasting impact while you’re here.

Don’t Retire with a Mortgage. Life Lesson 38 of 50

ST. CROIX INSIGHTS

Don’t Retire with a Mortgage.

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

retire with a mortgage

Photo by Tierra Mallorca

This lesson is a short one, but that’s because it’s simple: don’t retire with a mortgage.

Other financial advisors might disagree with me on this. They might tell you about the great interest rates, they might highlight the tax deduction benefits, yada, yada, yada… but they’d be wrong.

As far as I’m concerned, the question of whether or not to wait to retire until your home is paid off boils down to one simple fact: debt sucks! Why deal with the burden of a major monthly payment when you’re on a limited income?

Don’t retire with a mortgage!

I don’t care about the interest rate, the tax deduction, or any of the other “benefits” you’ll hear about; it’s just noise. Take my advice and don’t retire with a mortgage—period. Your future self will thank me for it.

Investopedia has some sound information on the matter as well: Part of the appealing retirement scenario involves bidding farewell to that monthly mortgage payment, assuming it’s cleared by then. However, a recent shift in financial planning suggests many experts advise retirees to keep a mortgage throughout retirement. By reinvesting home equity, you could generate additional income, brightening your golden years.

Pursuing Your Passions: Life Lesson 29 of 50

ST. CROIX INSIGHTS

Pursuing Your Passions

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

pursuing your passions

Photo by Kal Visuals

If you’ve postponed pursuing your passions in favor of chasing money, don’t worry—there’s no shame in this, and you’re not alone. Over the years, I’ve found myself in the same situation, but I’ve come to believe that there’s a more fulfilling way to live.

Perhaps there was something you enjoyed or loved doing when you were younger. However, societal pressures, parental influence, or other voices in your life may have discouraged you, insisting it couldn’t be a viable career. Their negativity might have deterred you from pursuing your passions. Now, sadly, many find themselves too drained from the daily grind to muster the energy for those once-cherished pursuits. Consequently, numerous individuals postpone their deepest desires until that elusive future called “retirement.”

But you know what? Retirement, for many of you, is in the future. This is your present. Don’t let anyone convince you that your passions can’t sustain you financially. Countless people do it every day!

If you feel a calling, don’t allow anyone to undermine your worthiness to pursue it. Money matters, and planning for retirement is important, but life is too brief to wait for tomorrow. Time is a precious gift, and it’s your duty to dedicate yours to pursuing your passions, enabling a fulfilling life.