Retire With Ryan

For many Americans, the idea of retiring before age 59 and a half often seems out of reach, particularly when the bulk of their savings sits in an employer-sponsored 401(k) or 403(b) plan. Traditionally, the tax code penalizes early withdrawals from these accounts. However, the Rule of 55 could open the door to a more flexible, penalty-free early retirement. On this episode, I'll share more about this IRS provision, who qualifies, how to use it wisely, and potential hazards to avoid.

You will want to hear this episode if you are interested in...

• [00:00] Overview of the Rule of 55 and its relevance to retirement savers
• [02:20] IRS provision allowing penalty-free withdrawals before age 59½
• [05:03] Withdrawing from employer 401k early
• [07:19] Understanding the Rule of 55
• [10:06] Common scenarios where Rule of 55 is useful
• [12:11] Does not apply if funds are rolled into an IRA

A Deep Dive Into the Rule of 55

The IRS usually limits penalty-free withdrawals from retirement plans until you are 59½. Withdrawals before then typically face a 10% early withdrawal penalty on top of regular income taxes. The Rule of 55 is an exception, allowing people who leave their jobs in or after the calendar year they turn 55 to access funds from their employer's plan without being penalized.

There are several conditions to qualify:

• You must have left (voluntarily or involuntarily) your employer on or after reaching age 55 within the same calendar year.
• The funds must remain in the retirement plan of your most recent employer; this rule does not apply to old 401(k)s or IRAs.

Who Qualifies for the Rule of 55?

To benefit from the Rule of 55, you must separate from your employer (by retiring, being laid off, or quitting) in the year you turn 55 or later. Importantly, the provision only applies to the plan at your most recent employer. If you have funds in 401(k)s from previous jobs, they are not eligible—unless you move those funds into your current employer's plan before you separate. This rule does not apply to IRAs of any kind.

Strategic Considerations Before Using the Rule

Accessing your retirement funds early can provide flexibility, but there may also be drawbacks. Consider the following aspects before making withdrawals:

1. Plan-Specific Rules

Not every employer allows post-separation distributions that leverage the Rule of 55. Check your plan document or HR department to confirm eligibility. Some plans may even restrict withdrawals to lump-sum distributions—a move that could trigger a significant tax event.

2. Tax Implications

The Rule of 55 lets you avoid the 10% early withdrawal penalty, but income taxes still apply to distributions from pre-tax 401(k)s. If you're withdrawing from a Roth 401(k), only qualified distributions escape taxation, earnings could still be taxed if the account isn't at least five years old or you haven't reached 59½.

3. Returning to Work

You can still take penalty-free withdrawals from your old plan and work elsewhere, you just can't return to the same employer and continue penalty-free distributions from that plan.

4. Preserving Your Nest Egg

Large or ill-timed withdrawals can erode your investments and disrupt your long-term retirement security. It's crucial to view withdrawals in the context of a potential 25- to 35-year retirement span.

Common Scenarios and Use Cases

• Unexpected Job Loss: After an unexpected layoff at age 57, you can supplement your income using penalty-free 401(k) withdrawals until age 59½.

• Bridging Pension Gaps: If your pension doesn't kick in until 60 but you retire at 56, the Rule of 55 can provide necessary cash flow for those interim years.

• Semi-Retirement Transitions: Those shifting to part-time work or consulting may use partial withdrawals to cover living expenses while ramping up new income streams.

Using the Rule of 55 requires careful planning and a clear understanding of your plan's rules and your long-term income needs. Before making any moves, consult with a financial advisor to develop a sustainable retirement withdrawal strategy.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• Topic no. 558, Additional tax on early distributions from retirement plans other than IRAs

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

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For many retirees, their home isn't just a place of comfort, it's one of the largest assets on their balance sheet. However, beyond the emotional value and the years of accumulated equity, there's an often-overlooked reality: selling your primary residence can bring an unexpected tax bill. If you're contemplating a sale or want to ensure you're planning wisely, understanding the IRS's primary residence capital gains exclusion is essential. On the show this week, I break down what this exclusion means, who qualifies, how to maximize its benefits, and the critical planning steps to avoid a nasty tax surprise.

You will want to hear this episode if you are interested in...

• [00:00] Understanding capital gains exclusion
• [03:52] Capital gains exclusion requirements
• [07:40] Reducing taxes on home sale
• [11:31] Calculating capital gains tax
• [14:57] Impact of capital gains on IRMAA

The Primary Residence Capital Gains Exclusion

Thanks to the IRS, many homeowners can exclude a substantial portion of the capital gains realized from the sale of their primary residence. Single tax filers can exclude up to $250,000 of gains while married couples filing jointly enjoy up to a $500,000 exclusion. In practical terms, this means if your gain from selling your home stays within these thresholds, you may owe no federal tax on that profit.

Who Qualifies for the Exclusion?

Before assuming you'll benefit from this significant tax break, it's important to meet all IRS requirements:

1. The Ownership and Use Test:

You must have lived in the home as your primary residence for at least two of the five years preceding the sale. These years don't need to be consecutive, but they must total at least 24 months within the five-year window.

2. Exclusion Frequency:

You cannot have claimed the exclusion on another home sale within the past two years.

3. Acquisition History:

The property generally cannot have been acquired through a 1031 like-kind exchange in the previous five years.

Special Rule for Widows and Widowers:

If you've recently lost your spouse, you may still qualify for the full $500,000 exclusion if you sell within 24 months of your spouse's passing, don't remarry during this period, and have satisfied the other ownership and use requirements.

Why More Homeowners Now Face Capital Gains Taxes

Home values have seen record appreciation over the last three decades, but the exclusion thresholds haven't changed since 1997. A homeowner who bought in their 20s or 30s might now find that decades of appreciation have pushed them well beyond the exclusion limits—and into taxable territory.

If your gains surpass the exclusion, any additional gains are taxed either as short-term (if you've owned the home for a year or less) or, more commonly for longtime owners, as long-term capital gains (taxed at 0%, 15%, or 20% depending on your income).

Maximize Your Savings: Track and Increase Your Cost Basis

One of the most effective strategies to reduce your taxable gain is to properly track and boost your home's cost basis. Your cost basis starts with your original purchase price and is increased by certain acquisition costs (settlement fees, title insurance, legal fees, etc.). Most importantly, capital improvements—such as room additions, roof replacement, major kitchen or bath remodels, or HVAC system upgrades—can be added.

Routine maintenance and minor repairs generally don't increase your basis, so keeping thorough records of major projects and associated costs is crucial.

Medicare Premiums and Tax Strategy

Selling your home and realizing a large capital gain may bump you into a higher Medicare premium bracket, known as IRMAA, which can affect your Part B and Part D premiums a couple of years after the sale. This makes it essential to coordinate a home sale with your overall income strategy and consult both a financial advisor and CPA before listing your home.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• National Association of REALTORS®
• Avoid These 7 Scenarios to Keep Your Medicare Premiums Lower In Retirement #313
• 2026 Medicare Part B Premium Surprises, #282
• 7 Ways to Lower Your Income and Avoid the IRMAA Medicare Surcharge, #142

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

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On July 4, 2026, a groundbreaking opportunity opened for parents and guardians aiming to give their children a head start on their financial journey: Trump Accounts. Created as part of the OBBA Tax Act ("One Big Beautiful Bill" Tax Act) of 2025, these tax-advantaged investment vehicles provide a unique way to grow wealth for minors. In this episode, I break down what Trump Accounts are, who's eligible for generous bonuses, how to get started, and how they compare to other common savings options like 529 plans.

You will want to hear this episode if you are interested in...

• [00:00] Understanding Trump accounts for children
• [04:22] What are the baby bonus qualifications?
• [09:04] Opening a Trump investment account
• [11:37] Comparing Trump accounts to 529 plans
• [16:07] Converting IRA for tax-free growth
• [17:15] Benefits of Trump accounts

Unlocking the Potential of Trump Accounts

Trump Accounts are designed for children under 18 who have a valid Social Security number. Funded with after-tax dollars, these accounts work similarly to retirement accounts, with investments inside the account compounding tax-deferred. That means any dividends, interest, or capital gains grow without being taxed until withdrawal—effectively turbocharging your child's investment returns.

Once the child turns 18, the account automatically converts to an IRA in their name. Withdrawals are then subject to traditional IRA distribution rules: generally, penalty-free access begins at 59½, although exceptions exist, such as those for first-time homebuyers or qualified education expenses.

Who's Eligible for Bonuses?

One of the biggest draws of Trump Accounts is the potential for substantial bonus contributions.

• $1,000 Federal Bonus: Children born between January 1, 2025, and December 31, 2028, automatically qualify for a $1,000 government deposit. This eligibility is irrespective of parental or child income, provided the child is a US citizen with a valid Social Security number.

• $250 Dell Foundation Grant: For children born before 2025 who are under 10 years old, the Michael and Susan Dell Foundation offers a $250 grant. Eligibility extends to those living in zip codes where the median household income falls below $150,000.

Trump Accounts vs. 529 College Savings Plans

Given the array of college savings vehicles available, how do Trump Accounts stack up to the well-established 529 plan? Here's a quick comparison:

529 Plans: Designed specifically for education expenses, 529 plans offer tax-deferred growth and tax-free withdrawals for qualified expenses. They also allow conversion of up to $35,000 to a Roth IRA under certain conditions if the funds are unused for education costs.

Trump Accounts: More flexible since, after age 18, the funds move to an IRA in the beneficiary's name. While distributions for education from a Trump Account IRA are taxed as ordinary income (with penalties waived for qualifying expenses), the account's chief power is in supercharging long-term retirement savings for the child.

Should You Open a Trump Account?

If your child or grandchild qualifies for the $1,000 or $250 bonuses, opening an account is almost a no-brainer. For others, the decision will come down to your savings goals. Trump Accounts offer unmatched momentum for retirement savings, while 529s are still preferred for pure college saving. The earlier you start, the greater the rewards of compounding.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• Michael & Susan Dell Foundation
• Trump Accounts App
• About Form 4547, Trump Account Election(s)

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

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Medicare brings peace of mind to millions of retirees, but for those with higher incomes, there's an added layer of complexity called IRMAA—the Income Related Monthly Adjustment Amount. If your modified adjusted gross income (MAGI) crosses certain thresholds, you may end up paying substantially more for your Medicare Part B and Part D coverage. In this article, we break down how IRMAA works, outline common scenarios that may unexpectedly raise your premiums, and offer actionable strategies to help you avoid unnecessary costs during your retirement years.

You will want to hear this episode if you are interested in...

• [02:14] How IRMAA works
• [04:09] IRMAA income brackets and premium increases
• [05:43] General strategies and limitations for avoiding IRMAA
• [09:49] Managing Capital Gains and Medicare costs
• [10:41] Understanding the possibility of unexpected large gains pushing income higher
• [12:37] Impact of spouse passing on taxes
• [14:54] Avoiding IRMAA surcharge

What Is IRMAA, and How Does It Work?

IRMAA adds a surcharge to your standard Medicare Part B and Part D premiums if your income exceeds specific limits. The calculation uses your Modified Adjusted Gross Income (MAGI) from your federal tax return for the prior two years. For example, your 2026 Medicare premium is determined by your 2024 tax return figures. This "two-year lag" means financial decisions made today could impact your healthcare costs down the line.

In 2024, the standard Part B premium is $202.90 per month. However, single filers reporting over $109,000 or married couples filing jointly above $218,000 pay $284 each per month, per person. Surpassing $137,000 (single) or $274,000 (joint) pushes your premium to $405.90—more than double the baseline. Part D premiums are also subject to surcharges, ranging from $14.50 to $91 per month at the highest income levels.

Seven Scenarios That Can Trigger IRMAA—and How to Prepare

While some situations are unpreventable, being aware of these common scenarios can help you make informed choices and potentially minimize your IRMAA exposure.

1. Municipal Bond Income: Not as Tax-Free as You Think

Many investors favor municipal bonds for their federal tax-exempt status. Unfortunately, while this income is absent from your regular AGI, it is added back into your MAGI when calculating IRMAA. If you're relying heavily on munis in retirement, this could unexpectedly inflate your Medicare premiums. Consider alternative investments or relocating those assets into accounts or vehicles where this income is shielded, like certain annuities, after consulting with a qualified financial advisor.

2. Capital Gains on Your Home Sale

When selling your primary residence, you can exclude up to $250,000 of gain if single or $500,000 if married, provided you meet the two-out-of-five-years residency rule. Gains above these thresholds are taxable and count toward your MAGI. Good record-keeping for home improvements can help increase your cost basis and reduce the taxable gain, but there aren't many strategies to avoid this spike if a large gain is unavoidable.

3. Profits from Investment Property Sales

Selling an investment property can generate significant capital gains. But unique to investment real estate, the IRS allows you to defer these gains through a 1031 exchange—selling one investment property and reinvesting the proceeds into another. This move postpones the tax hit and the associated IRMAA impact, possibly indefinitely if you use the stepped-up basis at death.

4. Surprise Mutual Fund Capital Gains

If you own mutual funds outside retirement accounts, unexpected capital gains distributions from within the fund (for example, after large stock sales like Apple) could spike your MAGI. To mitigate this, consider shifting from mutual funds to individual stocks, bonds, or exchange-traded funds (ETFs), which typically generate fewer surprise capital gains.

5. Roth Conversions are Great for Taxes, But Be Careful

While Roth conversions can be powerful tax strategies, converting a sizable sum from a pretax IRA to a Roth IRA counts as income for IRMAA purposes. Carefully plan the size and timing of conversions to avoid pushing yourself into a higher premium bracket without realizing it.

6. The Financial Impact of Losing a Spouse

Widowhood or widowerhood can be doubly difficult; not only do you suffer personal loss, but your filing status shifts to single, drastically lowering the income thresholds for IRMAA. If you expect changes in income or status, make proactive plans with your advisor to help smooth your MAGI.

7. Large, One-Time Retirement Account Withdrawals

Big withdrawals from IRAs or 401(k)s—perhaps to buy a car or fund a vacation home—could catapult your income into a higher IRMAA tier. Consider spreading large purchases over several years or evaluating alternative financing options to keep retirement account withdrawals more manageable.

Small Decisions Add Up

While IRMAA might not be avoidable for everyone, being strategic about income sources, withdrawals, and investment choices can reduce surprises and keep more of your retirement income where it belongs—with you. Always consult with a financial advisor familiar with your unique situation before making significant financial moves. Keep your knowledge current and your planning proactive to support a more cost-effective retirement.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• 2026 Medicare Part B Premium Surprises, #282
• 7 Ways to Lower Your Income and Avoid the IRMAA Medicare Surcharge, #142
• Mistakes To Avoid During Medicare Open Enrollment with Danielle Roberts, #229

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

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When it comes to planning for retirement, one of the most commonly faced decisions is how to invest for long-term growth and stability. In turbulent times, market volatility often generates renewed debate on whether index funds, or their actively managed counterparts, offer the better path for accumulating wealth. On this episode of the show, I'm unpacking what index funds are, how they stack up against actively managed funds, and what the latest data reveals about performance during both quiet and volatile markets.

You will want to hear this episode if you are interested in...

• [00:00] Understanding index funds and actively managed funds
• [05:55] Stock picking and bond strategies
• [07:21] Comparing index funds to active funds
• [11:44] 2025 market performance and instability
• [13:43] Low probability of selecting an outperforming active fund
• [15:42] Investing in index funds

Understanding Index Funds and Active Management

The conversation focused on clarifying the definitions and roles of both index funds and actively managed funds in a portfolio. Index funds are mutual funds or exchange-traded funds (ETFs) specifically designed to track an index, such as the S&P 500, which comprises the 500 largest companies in the U.S. However, indexes extend well beyond large-cap U.S. companies to include mid-size, small-cap, international, emerging markets, real estate, and various bond markets.

Actively managed funds, in contrast, are overseen by managers aiming to outperform their index benchmarks by selectively choosing investments they believe will generate higher returns. Several points were raised, including that these managers may focus on only a subset of the companies in an index, relying on research, forecasts, and periodic rebalancing in an attempt to add value.

The Cost Factor: Why Fees Matter

Management expenses are an ongoing drag on returns. Index funds typically charge extremely low fees, often around 0.1% annually, because they passively track an index and involve little decision-making. In contrast, actively managed funds average around 1% or more per year, reflecting the higher costs of professional research, trading, and active oversight. This fee gap means that even if an active manager chooses well, they must first clear a substantial hurdle just to keep pace with an index fund.

What the Data Shows About Performance in Volatile Markets

In the volatile year of 2025, only 38% of actively managed funds outperformed their passive benchmarks in the U.S. stock market. For large-cap stocks like those in the S&P 500, the number was even lower—just 30%. International stock managers fared slightly better, with a 48% success rate, and emerging market funds did the best, at 64%.

However, over longer periods, the active management advantage all but disappears. Over 10 years, only 8.1% of large-cap blend active managers beat their benchmarks, with small-cap and international funds performing marginally better, and bond managers seeing a 41% success rate. But for 20-year periods, even those slim advantages deteriorated further.

Should Index Funds Still Be the Core of a Retirement Portfolio?

The data strongly supports favoring index funds for most of a retirement portfolio, especially for stock allocations. Index funds keep costs low, are simple to implement, and historically have delivered better risk-adjusted returns for the vast majority of investors across long time horizons. While some areas, such as certain bond categories or emerging markets, may occasionally offer pockets of relative opportunity for active managers, these successes are rare, short-lived, and hard to identify in advance. For most retirees, sticking primarily with index funds and maintaining a diversified, long-term approach remains the prudent and statistically advantageous strategy, regardless of temporary episodes of market turmoil.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• Morningstar's Active/Passive Barometer Report

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

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This week, I'm tackling a question that's on the minds of many investors: How safe is your money with major brokerage firms like Fidelity and Charles Schwab? In light of recent high-profile bank collapses and widespread concerns about financial security, I discuss how banks and brokerage firms operate differently, what protections exist for your investments, and what would happen if a major brokerage firm were to collapse. Whether you're considering how best to safeguard your assets or wondering about the real risks of brokerage failures, this episode will provide the clarity and peace of mind you need for your retirement planning.

You will want to hear this episode if you are interested in...

• 00:00 Bank failures and investor concerns
• 05:58 Protecting your money in banks
• 09:18 Discussing investment safeguards
• 12:08 Brokerage account safety reassurance
• 13:08 Should you consolidate your broker accounts?

Why Investors Worry

It's natural for investors to worry about the safety of their money, especially after the events of 2023, when several banks—Silicon Valley Bank, Signature Bank, First Republic Bank, and Citizens Bank—collapsed, shaking public confidence in U.S. financial institutions. Even rumors and social media speculation about potential trouble at a major brokerage like Schwab can fuel anxiety among clients and investors.

How Banks Actually Work: Your Money Becomes the Bank's Money

When you deposit money in a bank, you're essentially lending money to that institution. The bank can then use those deposits to fund loans, mortgages, and other investments. This works well—until poor investments or insufficient collateral put depositor money at risk, which is exactly what happened with Silicon Valley Bank following its risky bets on long-term treasuries. If a bank collapses, customers may lose deposits above the FDIC insurance limit, which is $250,000 per account owner.

Brokerage Accounts: A Different—and Safer—Model

Brokerage firms like Charles Schwab and Fidelity operate under a different structure that provides a stronger layer of legal protection for client assets. Here's the key distinction: The assets in your brokerage account—stocks, bonds, mutual funds—are not the brokerage firm's property. They are held in custody, separate from company assets, and protected by a legal firewall.

If Schwab or Fidelity collapsed, only the company's assets—like buildings and offices—would be at risk, not the assets in client brokerage accounts. Those client assets are held in separate custodial accounts and cannot be used to pay the firm's creditors. It's a little like using a storage facility: you lock up your investments, and nobody (including the brokerage firm) can access those contents for its own purposes.

What Happens During a Brokerage Collapse?

If a major brokerage like Schwab were to fail, the Securities Investor Protection Corporation (SIPC) would step in. SIPC protection covers up to $500,000 per customer, including up to $250,000 in cash. However, most brokerages, including Schwab and Fidelity, carry additional insurance beyond SIPC requirements.

The SIPC acts much like a disaster relief agency: it verifies customer assets, ensures funds have not been misappropriated, and arranges to transfer accounts to another brokerage within days. The customer receives uninterrupted access to all their investments and holdings at the new firm.

Your Money Is Safer Than You Think

The legal and operational structure of brokerage firms offers significant protection. Even in the unlikely event of a collapse, your investments would transfer intact to another brokerage. The only real risk would be investment market performance—not insolvency of the brokerage firm. It's even unnecessary to split your assets between brokerages purely out of safety concerns—it might simply make your finances harder to manage.

Investor protections for brokerage accounts are robust. With legal safeguards, insurance protection, and established practices for handling firm failures, you can rest assured that your assets at firms like Schwab and Fidelity are secure—even in a worst-case scenario.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• Securities Investor Protection Corporation (SIPC)
• Federal Deposit Insurance Corporation (FDIC)
• Fidelity
• Charles Schwab

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

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When it comes to planning for retirement, Roth IRAs have gained widespread attention for their tax-advantaged status and the promise of tax-free withdrawals in retirement. Financial experts, YouTubers, and podcasters have been touting the benefits of contributing to or converting assets into Roth accounts for years. But an often-overlooked vehicle could empower you to manage your investments just as efficiently: the humble taxable brokerage account. Surprisingly, with the right strategy, you can even pay 0% capital gains tax, mirroring one of the biggest appeals of a Roth.

You will want to hear this episode if you are interested in...

• 00:00 Overlooked benefits of after-tax brokerage accounts
• 02:29 Limitations of the Roth IRA
• 06:20 Tax implications of brokerage accounts
• 07:57 Tax benefits of growth stocks
• 13:14 Understanding Tax Brackets and Deductions
• 16:53 Inheritance rules for IRAs vs. brokerage accounts
• 17:44 Managing taxable brokerage accounts

Understanding Taxable Brokerage Accounts

A taxable brokerage account lets you invest in virtually anything: stocks, mutual funds, bonds, ETFs, and more. These accounts, however, are often dismissed when compared to their tax-advantaged counterparts because:

• Annual Taxation: Every year, you pay tax on dividends, interest, and any realized gains.

• Ordinary Income Tax on Short-Term Gains and Interest: Holdings sold within one year and earned interest are taxed at your regular income rate.

• Potential for Long-Term Capital Gains Tax: Sales after more than one year are taxed at the long-term capital gains rate, which is typically lower.

When used strategically, they offer flexibility and powerful tax advantages.

Making Your Brokerage Account Behave Like a Roth

The key to unlocking Roth-like benefits is understanding how and when taxes apply—and how to minimize them. Invest strategically and focus on growth over dividends. Choose investments that don't pay dividends, such as growth stocks or low-dividend index funds. No dividends mean no annual income to be taxed because gains are only taxed when you sell.

You can also use Index Funds and ETFs, which usually distribute minimal dividends and capital gains, keeping annual taxes low. Avoid open-end mutual funds in taxable accounts, as they tend to generate capital gains every year, eroding long-term growth with recurring taxes.

Realizing 0% Capital Gains

If your total taxable income (after deductions) stays within the 12% tax bracket—a figure that for 2026 is $50,400 for singles and $108,800 for married couples file jointly—you can sell appreciated assets and owe 0% in federal capital gains tax. It's wise to time withdrawals, plan major sales during years with little other income—such as early retirement or a gap year—to fall within the 0% bracket. Keep an eye on your other sources of income: IRA withdrawals, Social Security, and pensions count toward taxable income, potentially bumping gains into the taxable range.

Estate Planning Advantages

Taxable accounts also offer:

• Ability to Borrow: Take loans against your investments without triggering taxable events
• Step-Up in Cost Basis: Heirs inherit assets at their market value on your death, often eliminating capital gains on past appreciation—a feature that Roths don't fully replicate.

By understanding how to structure and manage your taxable brokerage account, you can access strategic flexibility—not just in managing withdrawals, but in transferring wealth to future generations. The "secret" is simply knowing and applying the rules, with tax-aware investing and withdrawal strategies smoothing the way for potentially tax-free wealth growth and transfer.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

Variable annuities are often promoted as a secure way to generate guaranteed income during retirement, drawing the attention of retirees seeking stability for their nest eggs. But beneath the surface, these products frequently come with complications and costs that can erode your savings and limit your financial flexibility. In this episode, I share the details of the often-overlooked downsides of variable annuities and give you some important insights every investor should consider.

You will want to hear this episode if you are interested in...

• [03:14] What is a Variable Annuity?
• [04:27] Understanding Annuity Benefits and Growth
• [08:41] Lack of fee transparency in annuities
• [09:45] Variable annuity investment drawbacks
• [14:59] Avoiding variable annuity pitfalls

What Is a Variable Annuity?

A variable annuity is an investment product sold by insurance companies, offering a selection of investment accounts, referred to as sub-accounts, designed to mimic mutual fund performance. The tax-deferred growth inside the annuity is often touted as a major benefit. This tax deferral is redundant for retirement investors who already enjoy similar benefits in IRAs or 401(k)s.

Many variable annuities advertise living benefits, such as guaranteed lifetime withdrawals. For instance, a $100,000 investment could guarantee $5,000 per year for life, regardless of the contract's cash value. Some contracts offer guaranteed "growth" of your future income base, but crucially, this is not money you can cash out: it simply determines your withdrawal amount, not your walk-away value. The catch is that these appealing features come at a steep price.

Fee Structures are the Hidden Drain on Returns

One of the most significant drawbacks of variable annuities is their high-cost structure. These costs can be organized into three main categories:

• Mortality and Expense (M&E) Charges: Annual administrative fees imposed by the insurance company, typically ranging from 1% to 2% per year.

• Sub-Account Fees: Investment management fees that vary depending on your chosen investments. While some options are slightly less expensive, others can reach up to 2% annually.

• Rider Fees: If your contract includes a guaranteed income benefit, expect an additional 1%-2% per year for this privilege.

Combined, these expenses can easily total 3% to 4% annually, making variable annuities arguably the most expensive retirement investment around.

What You Don't See CAN Hurt You

Transparency is another major shortfall in the world of variable annuities. Many investors are not fully aware of the high fees they're paying. While the fees are listed in the prospectus, many advisors fail to highlight them, and statements often obscure these charges. Understanding true costs requires diligent reading of the fine print, and even then, variations in sub-account performance can lead to unexpected results. You may believe you're mirroring mutual fund returns, but annuity sub-accounts are not identical and can significantly underperform.

The promise of guaranteed income comes at a heavy cost. For the insurance company's guarantee to pay off, you'd generally need to either live well beyond average life expectancy or experience long-term poor market performance. Since withdrawal rates are limited and fees are high, over the long run, variable annuities may yield less retirement income or reduce the amount left to your heirs.

Look Beyond the Sales Pitch

Variable annuities can be marketed to highlight only the positives, but it's important to consider the high fees, lack of transparency, poor risk-return tradeoff, inflexibility, and opportunity costs involved. Before committing your retirement savings, do your homework—or consult a truly fiduciary advisor—and make sure variable annuities are the best fit for your long-term goals.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE

Connect With Morrissey Wealth Management

• www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan

This week, we tackle the alarming rise in financial scams targeting retirees and their hard-earned savings. With insights straight from the FBI and real-world examples of scam attempts, I break down the key tactics used by fraudsters and reveal the subtle ways they can gain access to your retirement accounts. From sophisticated account takeovers to fake invoice emails, you'll learn the warning signs to watch for—and, most importantly, practical strategies to protect yourself and your financial future.

You will want to hear this episode if you are interested in...

• [00:00] How financial scams work and what listeners can do to protect themselves
• [03:27] Recognizing scam tactics and risks
• [09:38] Recognizing fake invoice scams
• [10:36] Email scams and malware threats
• [16:30] Adding verbal passwords for security
• [17:28] Avoiding financial scams

Why Retirees Are in Scammers' Crosshairs

Retirees often represent an attractive target to scammers, thanks to years of diligent saving and sometimes less familiarity with new scam techniques. With the Federal Bureau of Investigation noting a surge in financial fraud, understanding the mechanics of modern scams is essential.

Scammers rely on a proven formula:

• Use of a trusted-looking sender
• Creation of a sense of urgency
• Sufficient believable details to seem legitimate

When you recognize these methods, retirees and their families can more easily spot fraud attempts and prevent the devastating loss of hard-earned assets.

Four Scams Every Retiree Needs to Know

1. The Account Takeover

Arguably, the most damaging scam involves fraudsters masquerading as your bank or investment firm. It starts innocuously: a text asks if you authorized a transaction. Replying prompts a phone call from a supposed representative. Thanks to massive data breaches, these scammers may already know your personal details — they just need one missing piece.

They'll convince you to read out a "security code" sent by your institution. Handing over this code gives the scammer direct account access, allowing them to transfer funds instantly. Importantly, because you authorized the transaction, financial institutions like Charles Schwab often won't reimburse the loss.

2. The Debt Collector Text Message

Here, you get a text from a "debt collector" referencing a fictitious account, amount, or government agency. Designed to provoke fear and haste, these messages trick recipients into calling the number provided or clicking a link — both of which compromise your security or lead to unauthorized payments.

3. The Unpaid Toll Notification

You receive an alert for a small, believable toll charge. With such a trivial amount, many people click the link and pay without thinking, handing over payment info to scammers who make larger, unauthorized withdrawals.

4. The Fake Invoice Email

Sophisticated emails may claim to be from reputable companies like Microsoft, complete with realistic logos and urgent language about an outstanding invoice. The danger here is twofold: opening the attachment can load malware or ransomware onto your device, or responding to the invoice sends money straight to a crook. Always verify the sender before clicking links or attachments.

Great Habits for Scam Prevention

This is my seven-point toolkit to keep you one step ahead of scammers. Practice these habits consistently to stay safe:

1. Slow Down: Scammers exploit urgency. Pause, breathe, and verify requests.
2. Don't Answer Unknown Numbers: Let unfamiliar calls go to voicemail, especially those spoofing local area codes.
3. Avoid Clicking Suspicious Links: Always visit official websites or use verified contact numbers when responding to alerts or billing issues.
4. Guard Your Personal Information: Never share sensitive info like PINs, passwords, or codes unless you started the interaction.
5. Use Authenticator Apps: These offer extra security beyond SMS-based codes, which can be intercepted.
6. Add Verbal Passwords to Accounts: Financial institutions often allow this as an additional security measure.
7. Assume It's a Scam: When in doubt, err on the side of caution and reach out to institutions through official channels.

Diligence is Your Best Defense

Scams will continue to evolve, but the best protection comes from vigilance and skepticism. Always vet instructions that involve your money, pause before acting, and confirm legitimacy through direct contact. Your savings represent a lifetime of work; protect them fiercely so they'll serve you for years to come.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE
• Charles Schwab
• Fidelity
• Vanguard
• EPIC - Equifax Data Breach

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

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Retirement planning extends well beyond simply saving enough during your working years—it plays out with every decision you make once you stop working. One crucial, sometimes overlooked, aspect is managing Required Minimum Distributions (RMDs) from your retirement accounts. If you have a retirement account approaching your RMD age, this episode breaks down the essential rules based on your birth year, how to calculate your distribution using the IRS tables, and key tax implications to keep in mind.

You'll also get actionable tips to help minimize your future RMDs, from optimizing your income plan and leveraging Roth conversions to using qualified charitable distributions.

You will want to hear this episode if you are interested in...

• [00:00] RMD rules and calculations
• [05:10] RMDs and distribution timing
• [09:03] Retirement accounts and RMD rules
• [14:22] Tax strategies for retirement planning
• [17:00] Common RMD mistakes and solutions
• [19:21] Proper charitable distribution process

What Are Required Minimum Distributions (RMDs)?

RMDs are the minimum amounts you must withdraw annually from certain retirement accounts starting at a specific age, as mandated by the IRS. These distributions apply to traditional IRAs, rollover IRAs, SIMPLE IRAs, SEP IRAs, 401(k)s, 403(b)s, 457 plans, and profit-sharing plans. Importantly, Roth IRAs and Roth 401(k)s are exempt from RMDs, and regular taxable investment accounts are not impacted.

The required age for beginning RMDs now depends on your birth year:

• If you were born between January 1, 1951, and December 31, 1959, RMDs start at age 73.
• If born on January 1, 1960, or later, RMDs begin at age 75.

Tax Implications of RMDs

RMDs are taxed as ordinary income. If you're not careful, withdrawals can bump you into a higher tax bracket, increase how much of your Social Security is taxable, or trigger additional Medicare Part B and Part D premiums due to IRMAA. Failing to withdraw the required amount carries a steep penalty—25%, reduced to 10% if corrected within two years.

Strategies to Lower Your RMDs

Don't put all your savings in pre-tax accounts. Split between traditional and Roth accounts or invest some in taxable brokerage accounts, which aren't subject to RMDs. It can be useful to collaborate with a financial advisor to create a withdrawal strategy that minimizes taxes by pulling funds strategically from different account types.

You can also convert portions of your pre-tax accounts to Roth IRAs in years when your income (and tax bracket) is lower, helping "fill the bucket" at the lowest rates. If you retire early, delaying Social Security until age 70 increases your benefit and can create years of low taxable income—perfect for executing Roth conversions. If you're 70½ or older, you can also donate up to $100,000 per year directly from your IRA to a qualified charity. These gifts count toward your RMD but are excluded from taxable income.

Enjoying a Comfortable Retirement

Navigating RMDs isn't just about following IRS rules—it's an ongoing strategy to keep your taxes low and your retirement income steady. By understanding your obligations and using the available tools, you can maximize your retirement savings and create a more secure future.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

Subscribe to Retire With Ryan