10.20.26 Ask An Advisor With Wes Moss

Rapid Fire Q&A: Roth Conversion Traps, RMD Spending Rules, & Switching Careers To Finance Welcome to another edition of "Rapid Fire" on Ask an Advisor! Today, Wes Moss is opening up the listener mailbag to answer your direct financial questions. From navigating tricky Roth IRA 5-year rules to deciding the exact order of account withdrawals in retirement, we’re covering real-world strategies to help you retire sooner and smarter. Mentioned on the show: 5 Keys To Be a Successful Investor - Clark Howard Should You Sell or Stay in the Stock Market if You Are Retired or Retiring Soon? The Order You Withdraw Retirement Money Matters More Than You Think Required Minimum Distributions: How To Calculate, Rules All this and more on the October 20, 2026, Ask an Advisor “Rapid Fire” episode of the Clark Howard podcast. Submit your questions: WesMoss.com/ask Discover the research-backed path to a happier retirement – order The Retire Sooner Method by Wes Moss today at retiresoonermethod.com We hope you enjoy our weekly Ask An Advisor episodes. Let us know what you think in the comments! Learn more about Wes: BOOKS BY WES MOSS Wes Moss, CFP® Wes Moss - Clark.com Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:00Speaker 00

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• 1:05Speaker 02

  Welcome to this week's Ask an Advisor Rapid Fire Question Version.

• 1:09Speaker 03

  No topic by me, just we're going right to Q and A.

• 1:12Speaker 02

  Right to questions, Wes Moss, and you can ask Wes questions at wesmoss.com/ask. Here's the first one. You ready? Ron in Florida, I have $700,000 in my IRA. My RMD is 25K. I plan on rolling over 100K from my IRA to my Roth. I understand I should pay the taxes with non IRA money. If I specify $25,000 to be withheld for taxes and 75K to be rolled into the Roth, doesn't that satisfy the IRS without having to use money from another source to pay the taxes? This seems too simple. What am I missing?

• 1:46Speaker 03

  So Ron in Florida, this is a Roth conversion question. And the conventional wisdom says, and it's not wrong, that if you're going to convert $100,000 and let's say you owe 25,000 in taxes to do so, pay for that 25 out of another account. So your whole 100,000 that you convert starts growing and grows long term. The reality is that you've got to pay the taxes from somewhere. And if it feels like it's depleting your after tax accounts too much in order to do that, then sure, you can withhold the 25,000 and that pays the tax bill. But just remember the whole 100 that is converted, even though only 75 would go to

• 2:26Speaker 03

  the new Roth, the other 25 that gets paid in taxes, that's still, the whole $100,000 is taxable. So it's not ideal. And that's why most of the time you hear about a Roth conversion, you're paying those taxes from somewhere else. So you get the entire amount to grow inside the Roth. But if it's the case that you don't want to deplete an after tax account, then yeah, the answer is the taxes get paid. You just have 75 growing now in the Roth as opposed to 100.

• 2:55Speaker 02

  Okay. 1 million Mark in North Carolina says, in 2026, is it worth it for me to explore taking the SIE Series 6566 exams on my own to break into the financial advisor world? I'm an electrical and computer engineer with nearly two decades of experience. I can show them a quick and independent learner. I know I need sponsorship for other FINRA exams. I'm fairly good at math. Hint, I live in a city that has a large presence of major financial institutions. Would this be a feasible move? As a financial advisor, would you hire someone with a non traditional background in finance? Please share any thoughts, oh wise Wes.

• 3:38Speaker 03

  Is this, this is Mark?

• 3:40Speaker 02

  Well, it says 1 million Mark, so I'm not quite sure.

• 3:44Speaker 03

  It sounds like Mark hit the $1 million mark. Okay.

• 3:46Speaker 02

  Okay, let's say it's Mark.

• 3:47Speaker 03

  The answer is yes, we're in a huge shortage of financial advisors, which is, why is that? So many of these big population oriented questions come back to demographics, Mark. And if you think about the world that we live in, we're still in peak 65. We have 11,000 people a day work that are turning 65. So it's impacting so many different industries. And the financial industry in particular is a victim of this. And it's a good thing for you if you're thinking about becoming an advisor. I've read different statistics around this, but it was something like 20 years ago, there

• 4:28Speaker 03

  were 600,000 financial advisors and today there's only 300,000. So the number's been cut in half. And what we're also seeing is that, so there's less financial advisors because people are retiring. And there was a huge, I don't know if there's an extra big surge in the 80s and 90s of financial advisors in their 30s and now they're in their 60s and they're retiring. So I think that shortage will only continue to get worse. And Krista, at the same time, more and more people are, there's more volume and I'm not talking percentages, but just the sheer number of people in America, that millions and millions of Americans do need and want financial advice.

• 5:13Speaker 03

  And they're not going to just turn to a computer for it. There is a, I think there's a real opportunity. And yeah, absolutely. An engineering background is perfect to be a financial advisor. I think you can become an advisor from almost any background, as long as you are good with people. That is a huge piece of the equation. So you've got to be good at the numbers side, but you also have to enjoy helping people and sitting down and really understanding them. And sure, if you feel like that's something you want to do, I think there's probably a ton of opportunity to do so.

• 5:50Speaker 02

  Okay, this one came in from Brian in Virginia. Wes, a listener recently asked you for a rule of thumb on net worth versus home value. My immediate reaction was that would be kind of worthless rule of thumb because net worth is a worthless metric, which conveys no useful info other than bragging rights. Am I wrong about the value of net worth for financial planning? My second thought was that you could back into a useful rule of thumb for retirement planning because owning a house costs money. The rule of thumb would weigh the value of a roof over your head versus the percentage of your liquid assets that must be dedicated to generating income in order to maintain the property and pay taxes.

• 6:33Speaker 03

  Brian, isn't it really about income? I mean, if you had 100% of your net worth in real estate and no, and very little in checking, that would be a disaster unless you have income from the properties. It's really a function of can I generate income and get to the money? So the higher illiquidity you have, the more income that illiquid asset should be paying you. If you have highly liquid portfolio and you can get to the money at any point very easily, there's a little less pressure that you need to be generating income because you can, because you can always take money out from the principal or the amount that may be growing. I, I don't know if we ever came up with a perfect rule of thumb.

• 7:18Speaker 03

  My sense is that it does matter what your net worth is, but what matters more than that is, does it produce income? Can you get to it? Does it produce income? Can you get to it? And that's where I, in my mind, having 50% that you can get to is better than having 5% that you can get to. So I, again, and I think this is personal preference. You may be totally comfortable having 90% of your assets in real estate, the longings are generating income. For me, I don't like that. I would rather have a much higher percentage than 50 in liquid assets that I can get to. But that's really more of a preference. And do people brag about their net worth?

• 8:03Speaker 03

  I guess the, the billionaires do. And there's a Forbes list and people, I wonder if you apply, do they just put you on that list?

• 8:12Speaker 02

  I can't imagine people apply for that.

• 8:14Speaker 03

  Yeah.

• 8:15Speaker 02

  I wouldn't want people to know.

• 8:16Speaker 03

  You want to hang out with anybody that brags about their net worth?

• 8:19Speaker 02

  No.

• 8:19Speaker 03

  The answer is no.

• 8:20Speaker 02

  No way.

• 8:21Speaker 03

  But it's important to know because the pie chart of the net worth and where it's invested does matter. I lean more towards liquid, but you could be more illiquid if you're confident in the income the illiquid assets can generate.

• 8:36Speaker 02

  Okay. Kate in Virginia says, hi Wes, how would you answer this question based on your retirement research? We are a mid 40s couple who lives near Charlottesville, Virginia for my husband's job, and it isn't our favorite place. It's expensive, not much to do, far from our favorite sports teams. We have one kid in college and two more who will follow within the next five years. I'm concerned that if we move after they all leave the nest, they will be less likely to visit us as frequently as if we move somewhere where they don't have any friends or any history. But for us to stay in the area when we don't love it, just for the sake of our adult kids who may or may not come to visit us as much as we want, it seems like a raw deal. I'm the kind of mom who wants to continue to be in their lives.

• 9:21Speaker 02

  Yes, even the punky 16 year olds, but I also don't want to be resentful. Thank you.

• 9:28Speaker 03

  Kate, here's my take on this. I had a conversation with my boys very recently about this. They're old enough to understand this concept now, which is we, me and my wife, like you, Kate, would like to be part of your kids' lives long term. You know, part of this is that Krista, I grew up with a dad that was super, so he was, he wasn't pushing us out of the house, but he was very, very adamant about total independence. And he was very adamant about wherever you get into school, even if it's in Texas or California, wherever it is, like you go.

• 10:14Speaker 03

  And I got that. And guess what happened? The four of my siblings were spread out all over the country.

• 10:22Speaker 03

  That's hard now that my parents are in their mid to late 70s.

• 10:27Speaker 03

  And I had this conversation because I had one of my kids talking about, you know, UCLA, USC, and I was like, listen, buddy, you can go to UCLA if you really want to, but there's so many great schools where you don't have to go halfway across the world. And California is halfway across the world, in my opinion, as a parent. It's just too far. You don't know where they're going to end up. So the ultimate move, and I've seen a lot of families do this as time goes on, when the kids start to get settled, they're in an unsettled phase, Kate. Like, you don't know where they're going to go to college, and then you don't know where they're going to go to work after college. So you don't even know now. So I would go wherever you guys want to.

• 11:12Speaker 03

  If you don't want to be in Charlottesville, then you guys should move. I mean, provided the kids are, I mean, you probably need to have your, the other two kids finish high school, because you don't want to move amid with only a couple of years left, but you don't know. So why not go to where you want to be? And then know that if they all end up somewhere, then you want to be back close. That's my, this is my very strong opinion about this is that if they all end up in North Carolina, or they end up in Texas, if you're in, if you guys move to Boston, you were never going to see them. So you have to be ready in your 60s to say, okay, the kids kind of all settled around this region. Hey, honey, this is where we probably need to be.

• 11:58Speaker 03

  And I believe that very, very strongly because you do not want to be, you do not want to be a two, three hour plane ride away from your three kids. It is not good. And I would, I would start planning for that now.

• 12:10Speaker 02

  Scott in Georgia says, with RMDs occurring later in your lifespan, why do advisors recommend you spend brokerage money or hero accounts first? I thought the order of spending was brokerage, traditional, and then Roth. Should this be reversed to avoid RMDs?

• 12:26Speaker 03

  Scott, that is the order. It's brokerage account, then IRA, then Roth.

• 12:32Speaker 03

  So that you've got the right order. You're saying, why not do Roth first? You're trying to flip it? Then IRA, then brokerage?

• 12:43Speaker 02

  He's saying brokerage. He thought that it should be brokerage, traditional, and then Roth. And then he's saying, should this be reversed to avoid RMDs?

• 12:52Speaker 03

  No, because it doesn't, it doesn't eliminate your RMDs. If you take your Roth money out over the first 10 years, then your IRA is still growing. And then you get to 73 or 75, and now your RMD is even bigger. And then you get to brokerage, which at that point may be even more highly appreciated. And then everything you're taking out might be more long-term capital gain. While if you do that early, you may be able to manage your taxes better in the brokerage. You are reducing your IRA as you're spending it. And then you ultimately get to the Roth, which is the most powerful account, because it's in the crock pot that allows money to come out tax-free.

• 13:34Speaker 03

  So no, the, the traditional way to think about that, it's not perfect for everybody. There are nuances to it, but that is the right general order. I would not be flipping it upside down.

• 13:44Speaker 02

  We're going to take a quick break and we'll be right back with more questions for you, Wes.

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• 17:24Speaker 03

  Welcome back to Ask an Advisor. Wes Moss here. Krista, you almost called me Russ Moss because Roth.

• 17:30Speaker 02

  I was gonna say Roth.

• 17:31Speaker 03

  It came out as Russ.

• 17:33Speaker 02

  I know.

• 17:33Speaker 03

  It is Wes, and we're here for more Q and A. Let's do it.

• 17:36Speaker 02

  When I work with Clark, too. Roth, Roth, Roth, Roth, Roth. Okay. Richard in Kentucky says, I'm reading your book that was published in 2014. What would you say is the current pre-tax yearly revenue or income needed today to be in the happy retirement group? And says, feel free to call. I'm sitting on a beach this week, reading your book, Considering Retirement. Thank you. And they put some palm tree emojis and a smiley face with sunglasses on. I love it.

• 18:05Speaker 03

  I'm sitting here drawing a palm tree.

• 18:07Speaker 02

  I got a deal buying the 2014 book.

• 18:10Speaker 03

  I don't know. Richard, what are you doing? Richard. Richard from Kentucky. What are you doing, man? That book is old. That's like 12 years old. And I tried to update the book for the, I tried, this is what I tried to do. I didn't want to write a new book, so I was like, I'm going to update, you can retire sooner than you think for inflation. Your exact question, Richard. Because there was an inflection point. And think about, the research was done a year or two before that. So this is like, you're reading 15-year-old research, which is directionally correct. But we've had like hyperinflation since then. So the numbers are just, you can't look at those numbers anymore. There was an inflection point that was at 500K.

• 18:53Speaker 03

  If you just increase that for inflation, because I tried to do this, Krista, and then I scrapped the whole thing. It was like 750, it's probably 800 today.

• 19:03Speaker 02

  You're saying the amount of money you'd have, not your, not your income?

• 19:07Speaker 03

  No, he's asking about the, the money and happiness inflection point, which in that very old book, happened at 500K. That was a median number, not a mean number.

• 19:17Speaker 02

  Okay.

• 19:18Speaker 03

  I looked at it differently and redid all of this research in the latest book, The Retire Sooner Method. What the Retire Sooner Method found is that there were not giant unhappiness levels at 100K and 500K and even 999K. They're actually slightly above what I call the US happiness baseline. So even having 500K didn't put you in the unhappy camp, or doesn't, because this is now current research in the Retire Sooner Method. But where do we get into that? Where do we see a jump and a measurable, measurably higher level of

• 19:59Speaker 03

  happiness levels relative to the baseline? It starts at a million. And then it jumps even a little bit further at the 3 million plus camp. I'm not overly convinced that 3 million makes you happier than 1.5. I don't think it matters. I think what matters is that getting into, in today's world with all the inflation and the cost and the expense of everything that we have to face when we go into retirement, Richard, having that million dollar in liquid money, retirement accounts, 401K, 403B, IRA, Roth, brokerage, there's, there's something very powerful about getting there because you have a ton of peace of mind around that and what that money can produce in income. So that's the new level. Thank you for reading

• 20:43Speaker 03

  the old book. Send me your address. I'll send you a new one.

• 20:47Speaker 02

  All right. You can do that at wesmoss.com/ask. Kevin in Idaho says, can you please explain the two five-year rules for Roth IRAs? I am 56, my wife is 57, and we both have Roth IRAs at Vanguard that have been opened for over 10 years. We are hoping to retire in the next couple of years and looking at beginning to do conversions from my work traditional 401K to the Roth 401K at T-Ro. How do the two five-year Roth IRA rules impact us?

• 21:19Speaker 03

  Okay, this is about vintage, which is a cool way to think about this. If you open up a brand new Roth at a brokerage firm, Vanguard, Schwab, Fidelity, and the Roth itself is brand new, and now you roll money into it, or you convert money into it, you've got a problem. And this is weird. I know, it sounds weird. But the Roth account itself needs to have been open for five years. It's like, it's a vintage story here. And the fact that you have your Roth accounts that have been open for 10, you're in the clear. So you can get money into that, and you've already satisfied the five-year rule.

• 22:02Speaker 02

  Okay. Sunny in Georgia says, I'm 54, planning to retire sometime between 60 and 62. I would like to hold dry powder for three years' worth of expenses. What account, brokerage, Roth, or IRA, is ideal for holding dry powder? At what age should I start building this dry powder?

• 22:21Speaker 03

  Just having the dry powder, that's what matters primarily.

• 22:25Speaker 02

  Can you give a quick overview of dry powder and what that is?

• 22:29Speaker 03

  Dry powder is your safety assets that would be in US Treasuries, high-quality corporate bonds count, things that you have a super high degree of confidence are not going to go down by 20%. Like, the stock market can go down 20% in a month. It could go down 30% in a month. And you don't want to be stuck trying to draw money out when the stock side is down 30%. At that point, you say, well, I've got this dry powder, these safety investments, and I still need to draw income, so I'm going to draw from that to give the stock side of the equation time to recover. That's what dry powder is all about. Where do you want it? I'd say ideally, because you can make the argument, Sunny,

• 23:13Speaker 03

  that your Roth money has your longest time horizon, that's probably the account where you want to wait more towards equities and not have a ton of dry powder in the Roth. Where would you want your dry powder? I would have it in brokerage first, and then I'd have it in IRA second and Roth third.

• 23:36Speaker 02

  Okay. I'm going to go to Erin in Ohio. Wes, I would like to know if and when it's worthwhile to bunch charitable contributions for three years or even more. If so, how could I evaluate when it no longer makes sense? I'm not saying I could afford to do this, but to illustrate my point, would it still be worthwhile to give 10 years' worth of donations to my donor-advised fund all at once? For context, I have appreciated assets in my brokerage account and plan to use a donor-advised fund to bunch at least two years' worth of donations for the tax savings, and I do not expect a substantial change in my income or my giving in the foreseeable future. Thanks for the great advice you give us, listeners.

• 24:17Speaker 03

  Erin in Ohio, this is a cool question that we've never had before. First of all, the donor-advised fund, the DAF, is a way to say, I want to stack or do a bunch of years' worth of what I want to give, but I want to do it all in one year. And why would you do that all in one year if you have some sort of big income year? Imagine you sell a dental practice and you get $10 million for that. You're a business owner, and you have a giant tax year. Well, what would be better? Would it be better to spread out your charitable contributions over the next 10 years, or say, because I can get the deduction

• 24:58Speaker 03

  of doing 10 years at once will really help me this year where I have big income? That's how you want to use a DAF. Now, you can use it and do a little bit every year and take money. And they're, they're good tools. This kind of reminds me of an HSA. They're good to use no matter what, but they're great to use when you have a big income event. Maybe you've sold a bunch of stock that you had to, and you've got a big gains, or you've sold a business. That's when you want to stack and put a whole bunch of years' worth of your future contributions for charity into a DAF all at once. You get the big tax deduction that year, and then in any given year moving forward, then you're giving to the charity. But you got the deduction in that one year when it mattered.

• 25:42Speaker 02

  Okay. That is going to do it for us today on Ask an Advisor. I want to just mention our newsletters at clark.com, clark.com/newsletters. If you sign up for the free newsletter, our Sunday newsletter is a special investing newsletter, and you actually contribute to that quite a bit, Wes and your team. So check that out. You can, we make it really easy to unsubscribe if you're not happy, but I doubt you will because our team does such an amazing job putting it together. Thank you for being with us. Have a great rest of your day.

• 26:17Speaker 00

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