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Created: March 19, 2021
Modified: June 6, 2023

Podcast Episode 192: Mailbag – RMDs, Company Stock, and Robo-Advisors

What You’ll Learn:
It’s time to open up the mailbag again and answer the questions that have been sent to the show recently. We’ll be talking about RMDs, investing in company stock, using robo-advisors, and how to know if you have enough money to retire.

One of the things we always aim to do on our different communication channels is to educate and inform people looking to learn more about financial and retirement planning. That’s why we always enjoy getting into our email and answering your questions on the podcast.

Since it’s been a little while since we’ve devoted an entire episode to the podcast, we thought now would be a great time to do that. So join us as we get Joel’s insight on some common planning questions and hopefully you’ll learn something new along the way.

Our first question on the show is about balancing 401k RMDs versus the suggested practices of withdrawing four percent every year. What strategy should you use if you’re withdrawing more than you need? This is a great question because many people will have required minimum distributions that exceed the income they need in retirement.

You have a number of options in this situation. The most common thing we do with clients is re-invest it. We could take up to 100 percent of the money that isn’t needed and re-route it into an after-tax account and manage that. Sure, you’ll have taxes to pay on the RMDs, but you can then continue growing it and dip into it when you actually need it. Other options could include buying life insurance, gifting it to your children, or giving it to charity.

Our second question today is about company stock. A lot of employees have the option to buy company stock as part of a retirement plan and often you can get it at a discount. So is this a good idea? The short answer is yes, we’re not opposed to that. You don’t want to pour all of your contributions into that one company but there is a place for company stock in a portfolio.

The third question we’ll cover is about robo-advisors. In case you don’t know what this is, these robo-advisors automatically handle investing for you based on the answers you provide to the questions they ask. Companies want to make this out to be a ground-breaking technology, but the truth is this type of thing has been around for a while. There have been plenty of places that would automatically rebalance your account so those options have been available. But we’ve found that most people prefer talking with someone directly and working through specific challenges and goals. Having that ability to pick up the phone and discuss your finances is reassuring.

The last question is one we hear a lot. How do I know I won’t have to go back to work after I’ve retired? The first and most obvious answer is to sit down and build a plan with a financial advisor. They will help you identify what your income needs will be and make sure you can cover that over a long retirement. We want you to go back to work only if you want to, not because you need to. The earlier you do this the more confident you’ll be about retirement.

Let’s get started with the show. You can listen to it by using the audio player above and click on the timestamps to skip to a specific topic of conversation.

[0:20] – Mailbag question on RMDs

[2:46] – Mailbag question on company stock

[4:02] – Mailbag question on robo-advisors

[6:34] – Mailbag question on returning to work after retiring

Thanks for listening to this episode. We’ll be back again next week for another show.

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