Talk With Your Advisor Before You Do These 5 Things in Railroad Retirement

Transcript:

Pick up a phone and call your advisor if you're going to do these five things.

Welcome everyone to another edition of Highball Advisors Railroad Retirement Whiteboard. My name's John McNamara of Highball Advisors, and today is just five really big items where you might want to go out and get help. And if you're working with advisor, reach out to them because these are very important, will have lasting effects on your railroad retirement. So we'll just go through them real quick.

First one, when are you going to claim railroad retirement? And I actually put and or social security. Very, very important to understand when is the exact time to do that, right? Do I claim railroad retirement? Do I claim social security? Which one should I start? How about the spousal annuity? When can I claim that? More importantly, how does that affect the potential survivor annuity? So understanding your claiming strategy, you have to reach out if you have an advisor and go through that with them. Very, very important. Probably one of the biggest decisions you'll make in retirement. All right, so that's number one.

Number two, start Railroad Medicare, right? So when should I start the Railroad Medicare? So if you're obviously retired and 65, it will kick in, but talk to advisor about it. Should I do a Medicare Advantage? Should I do a Medigap? What are my other options there? Healthcare, huge expense in retirement so talk about that one also.

Number three, make decision on when to start your pensions. So for those who have pensions, you might be able to leave the railroad early. They might have a pension to fund it. When should I start that or is there a lump sum available on some pensions? Maybe you have a government pension also? So when to start those pensions, that type of thing. The tax implications behind that, the overall effect on the financial plan, very, very important on deciding when to start that pension.

Number four, taking unusual large amount of money from retirement accounts. I've seen that. So just because you retired, don't take all that money at once, right? Understand that once that money comes out of tax-deferred accounts, that's a taxable event. Understand the brackets, all those types of things. So talk to your advisor about the tax implications of that. Assuming your advisor handles taxes, right? Very important. Maybe you're working with a planner or even maybe your CPA. But understand the tax implications of these decisions of taking money out, a large amount. Say, oh, I'd love to get an RV someday. Now that I'm retired, I'm going to go drop $150,000 on an RV or something, $200,000. Understand the tax implications of that. Figure out a strategy in order to do that, to achieve that dream. You worked hard, you deserve the RV, but Uncle Sam doesn't need to be profiting off of that.

All right, number five, take money from your Roth IRA less than five years after a Roth conversion. Once again, a big fan of the Roth conversions. However, you have to leave that money in there for five years, otherwise you're going to get a penalty. So a lot of people will say, oh, I've done the Roth conversion, it's now tax free. Maybe a year or two, they forget when they did the conversion. They take the money out less than five years, big penalty. So don't be taking any money out of that Roth IRA until it's confirmed that the five years is up and the penalty is done. So very important on that.

So listen, there's probably a bunch more. My whiteboard's not big enough to list all those obviously, but here's just five big reasons just to reach out and talk to your advisor as you head into railroad retirement. So I hope you found this video helpful. Click on the subscribe button, do appreciate that. Click on notifications, get the latest video, share it with fellow railroaders. That's great. If you're at or near retirement and you want to go through my boarding for railroad retirement process, we'll go through all this stuff, that's for sure. I appreciate that. And until next time, everyone, please stay safe, stay on track, and take care. So long everybody. Bye.

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