retirement

Reading Time: 5 minutes

With a staggering number of people approaching retirement, the pressure to know you are truly prepared is immense. Over the next two decades, an estimated $84 trillion will be transferred between generations, with much of that wealth going to millennials and Gen X. Meanwhile, a record number of Americans—more than 11,000 per day from 2024 to 2027—are turning 65. This historic “Peak 65” surge means that a lot of people need to be confident in their financial future.

For me, this idea of financial confidence started not in a finance classroom, but with a deck of cards. As a young boy, I would visit my grandparents and we’d play Rook around their card table, which my family still has today. The game’s instructions held a secret—a way to play Solitaire. I taught myself, and I became fascinated by why some games were won and others were lost. I knew it wasn’t random; there had to be a pattern, a probability that I just couldn’t solve on my own.

Today, that same curiosity drives our work at Intelligent Investing. We believe you don’t have to play this “financial game” alone. We’re here to help you move from a game of chance to a game of confidence by using principles that have guided scientists for centuries, from nuclear physics to modern data science.

From a Coin Flip to a Retirement Plan

To understand how we provide a high degree of confidence in your financial future, you can think of a simple coin flip. If you flip a coin 10 times, you might get six heads and four tails. It’s an unpredictable, random result. However, if you keep flipping the coin hundreds or even thousands of times, the results will consistently converge toward the expected 50/50 outcome. This is a core principle in probability known as the Law of Large Numbers.

The key concept behind modern financial prediction is the Monte Carlo method, a powerful statistical technique that uses this very principle. Its origin story is just as captivating as the math. In 1946, while recovering from a severe illness, mathematician Stanislaw Ulam found himself playing countless games of Solitaire. He realized that analytically solving the probability of winning a randomly shuffled game was “hopeless” due to the immense number of possible arrangements. His simple idea was to just play hundreds of games and count the wins to get a good estimate.

Ulam and his colleague John von Neumann then applied this random sampling concept to their top-secret work on the Manhattan Project. They needed to model how neutrons behaved inside a nuclear core, a problem with an immense number of possible outcomes that made direct computation impossible. This groundbreaking method of using random sampling to approximate complex problems with high stakes was named the Monte Carlo method, a fitting name given the element of chance in games like Solitaire and the nature of their work. The name was a clever code word, a nod to the famous gambling city of Monaco where games of chance are central.

The Nobel Prize-Winning Theory of Risk

While the Monte Carlo method handles the probabilities of the markets, we also know that investor behavior is the dominant determinant of long-term returns. This is where a second Nobel Prize-winning theory comes into play: Prospect Theory, developed by Nobel laureates Daniel Kahneman and Amos Tversky. This theory tells us that investors are more sensitive to losses than they are to gains.

A simple illustration of this is the “mug experiment” often used in behavioral economics. Imagine you’re in a room, and you’re given a mug. A few minutes later, you’re asked if you’d like to sell the mug back. Most people refuse, even for a price higher than what they would have been willing to pay to buy it in the first place. This is because the emotional pain of “loss aversion”—losing the mug you now own—is much greater than the potential joy of gaining the money from selling it. We’re wired to feel losses more acutely than we feel gains.

This fundamental bias is why an investor may hold onto a losing investment for too long, as they don’t want to “lock in a loss” and admit a poor choice was made. We all have these behavioral blind spots. We convince ourselves that everyone else thinks the same way we do. This is why we need to remove our emotions from investing and have a plan we can stick with.

At Intelligent Investing, we use technology based on this theory to quantify your personal comfort with risk. We use Nitrogen, a cutting-edge software that determines your unique Risk Number—a score from 1 to 99 that objectively quantifies your risk tolerance. By using real dollar amounts to gauge your acceptable level of potential loss, we move beyond subjective terms like “conservative” or “aggressive” and align your portfolio with your true risk tolerance. This helps you avoid misbehaving and allows us to act as your prudent behavioral coach.

Part of this accountability is solidified through our Investment Policy Statement, or IPS. Both the client and the advisor sign off on this document, which formally agrees to a specific risk level for the portfolio. This ensures that expectations are set and emotions are kept on the sidelines, providing a clear audit trail and keeping everyone accountable.

Bringing It All Together: A Plan for a Changing World

Your financial life is an incredibly complex, dependent system. Your future success depends not only on market factors but on a chain of interconnected factors: inflation, market volatility, and personal spending habits.

At Intelligent Investing, we believe in partnering with our clients on their financial journey. For clients with a financial plan, we use both the Monte Carlo method to run over 1,000 scenarios and Nitrogen’s Risk Number, which serves as a valuable tool to help track your progress. Think of it as a helpful “report card” that provides clear, transparent expectations for potential gains and losses in dollar amounts. This powerful combination helps to reduce emotional and subjective guesswork, giving you a clear “probability of success” for your retirement and a sense of confidence in your plan.

Our proprietary fintech solution, Intelligrations®, intelligently integrates your financial life to help you gain this crucial clarity. By leveraging technology, we help you gain confidence in your financial future and remove the emotions from investing.

Are you ready to stop guessing and start knowing? Download our complimentary e-book entitled, “Is Your Portfolio on Track” , and if you enjoyed this blog, consider joining our monthly complimentary Intelligent Insights newsletter by clicking here. For those of you who are ready to stop guessing what your financial future may hold, reach out for a complimentary call or coffee. We’d be honored to serve you and your family.

If you found this blog interesting and would like to stay informed about financial topics like this, consider joining our monthly complimentary Intelligent Insights newsletter.

Join Our Newsletter!  

Disclosure: This blog may reflect the perspectives and research of Intelligent Investing and, where applicable, incorporates insights from guest interviews or expert opinions. Any external views or opinions shared do not necessarily reflect the stance of Intelligent Investing. We may also utilize tools such as ChatGPT to enhance readability, grammar, and flow, while all core ideas remain proprietary to our firm.

Please note that Intelligent Investing does not provide specific tax or legal advice. All investments carry risks, including the potential loss of principal, and past performance is not indicative of future results. Any specific securities, sectors, or investment strategies mentioned are for informational purposes only and should not be considered a recommendation. We encourage readers to consult with Intelligent Investing for advice tailored to their unique financial situation. Unauthorized reproduction or distribution of this content is prohibited without proper credit to Intelligent Investing.

Reading Time: 3 minutes

Retirement planning doesn’t end when you stop working—it evolves. One of the most crucial yet often misunderstood aspects of retirement income planning is Required Minimum Distributions (RMDs). If you’re nearing age 73 or have inherited an IRA, understanding these rules is critical to avoiding unnecessary penalties and ensuring your retirement savings work for you.

What Are RMDs and Who Needs to Take Them?

RMDs are the minimum amounts you must withdraw annually from your retirement accounts, including traditional IRAs, SEP IRAs, SIMPLE IRAs, and employer-sponsored retirement plans (such as 401(k) and 403(b) plans). These distributions begin at age 73, thanks to changes implemented by the SECURE Act 2.0.

However, there are exceptions:

• If you’re still working and participating in a workplace retirement plan, you may be able to delay your RMDs—unless you own more than 5% of the company sponsoring the plan.
• Roth IRAs do not require RMDs during the account owner’s lifetime, though designated Roth 401(k)s and 403(b)s do unless rolled into a Roth IRA.
• Inherited retirement accounts follow different RMD rules, especially after the SECURE Act changes.

Why You Need to Plan RMDs Strategically

Taking RMDs isn’t just about meeting IRS requirements—it’s about optimizing your financial future. Failing to withdraw the correct amount can result in a steep penalty of 25% (recently reduced from 50%) of the shortfall, making compliance crucial. But beyond avoiding penalties, there are several tax strategies to consider:

• Timing Your First RMD: If you turn 73 in 2025, you have until April 1, 2026, to take your first RMD. However, delaying until April means taking two distributions in one tax year, which could push you into a higher tax bracket.
• Charitable Giving Opportunities: If you’re charitably inclined, a Qualified Charitable Distribution (QCD) allows you to donate up to $100,000 from your IRA directly to charity, satisfying your RMD without increasing taxable income.
• Tax-Efficient Withdrawals: Combining RMDs with Roth conversions or strategically withdrawing funds earlier may help manage future tax liabilities.

SECURE Act 2.0 and New RMD Rules

The SECURE Act 2.0 introduced several key updates to RMD regulations:

• Age Increase for RMDs: The required starting age for RMDs increased from 72 to 73 (and will eventually rise to 75 by 2033).
• Spousal Election for RMDs: A surviving spouse can elect to be treated as the deceased spouse for RMD purposes, potentially delaying distributions until the decedent would have reached RMD age.
• New 10-Year Rule for Inherited Accounts: Most non-spouse beneficiaries must now withdraw the entire balance within 10 years, regardless of whether the original owner had started RMDs.
• Updated Life Expectancy Tables: Beneficiaries taking RMDs based on life expectancy calculations can reset their figures using revised IRS tables introduced in 2022, potentially lowering required withdrawals.

Avoid Costly Mistakes—Let Us Help

Understanding the nuances of RMDs is essential, but it can be complex, especially with the evolving tax landscape. Whether you’re approaching your first RMD, inheriting a retirement account, or looking for tax-efficient distribution strategies, we’re here to guide you through the process.

As a CPA and fiduciary wealth advisor, I specialize in helping clients organize their financial junk drawers—including RMDs. The last thing you want is to miss an RMD deadline or pay more in taxes than necessary. Let’s work together to ensure you stay compliant while making the most of your retirement savings.

If you have questions about your RMDs or want to explore tax-efficient withdrawal strategies, reach out to us today. We’re here to help you navigate the rules and avoid costly missteps—so you can enjoy your retirement with confidence. Click here to get started.

Take the Next Step

Don’t let forgotten accounts derail your financial journey. Download our complimentary e-book, Is Your Portfolio on Track, and start taking control of your retirement savings today. Click here to access the e-book.

If you found this blog interesting and would like to stay informed about financial topics like this, consider joining our monthly complimentary Intelligent Insights newsletter.

Join Our Newsletter!  

Disclosure: This blog may reflect the perspectives and research of Intelligent Investing and, where applicable, incorporates insights from guest interviews or expert opinions. Any external views or opinions shared do not necessarily reflect the stance of Intelligent Investing. We may also utilize tools such as ChatGPT to enhance readability, grammar, and flow, while all core ideas remain proprietary to our firm.

Please note that Intelligent Investing does not provide specific tax or legal advice. All investments carry risks, including the potential loss of principal, and past performance is not indicative of future results. Any specific securities, sectors, or investment strategies mentioned are for informational purposes only and should not be considered a recommendation. We encourage readers to consult with Intelligent Investing for advice tailored to their unique financial situation. Unauthorized reproduction or distribution of this content is prohibited without proper credit to Intelligent Investing.

Reading Time: 3 minutes

When I was in college, we had daily chapel services. On rainy mornings, I’d dutifully bring my umbrella. But if the sun came out by the time chapel ended, I’d often forget my umbrella in the umbrella racks. Inevitably, I’d realize my mistake when it started raining again—sometimes weeks later, leaving me scrambling to wonder where I last left it, and then retrieving it at our campus bookstore. What seemed like a small oversight often turned into a bigger inconvenience.

For many Americans, forgetting about a 401(k) account when changing jobs is not unlike leaving an umbrella behind. It’s easy to move on without thinking about it, but retrieving and reintegrating it later can be complicated — and potentially costly. The statistics are eye-opening: as of May 2023, there were over 29 million forgotten 401(k) accounts worth more than $1.6 trillion, according to Capitalize. That’s up from 24.3 million accounts and $1.35 trillion just two years prior. These forgotten accounts now represent 25% of all 401(k) assets, leaving a significant portion of retirement savings potentially underutilized or mismanaged. Ignoring your 401k or 403b costing you more than you think.

So what’s the solution? At Intelligent Investing, we believe in the importance of taking every piece of your financial puzzle into consideration, including any retirement plans left with former employers. Here’s how we can help:

Managing 401(k)s While You’re Still Working

If you’re currently employed and contributing to a new 401(k), it’s crucial to consider how your former accounts align with your overall financial strategy. Forgotten accounts could lead to unnecessary risks, overlapping investments, or missed opportunities for diversification. We’ll help analyze your existing plans, ensuring they work together in harmony with your other investments.

Rolling Over and Consolidating Accounts

Leaving your old 401(k) with a former employer might seem convenient, but it’s not always the best choice. Lack of ongoing professional management could mean your investments aren’t optimized. Rolling over your 401(k) into a new plan or an IRA provides potential opportunities to:

• Simplify your financial life by consolidating accounts.
• Gain access to more diverse investment options.
• Optimizing your risk management.

Our team can guide you through the process of transferring funds, ensuring the rollover is seamless and avoids any unnecessary tax penalties.

Comprehensive Portfolio Management

Retirement accounts are just one part of your financial picture. Integrating your forgotten 401(k)s into a comprehensive portfolio can help maximize returns while aligning with your financial goals. Our proprietary financial software, Intelligrations®, intelligently integrates your 401(k) with other assets to ensure a holistic view of your finances.

Why It Matters

Failing to manage forgotten 401(k) accounts can lead to unintended consequences, such as:

• Increased portfolio risk.
• Redundant or underperforming investments.
• Missed opportunities to grow your wealth.

But taking action now can pave the way for a more secure retirement. And the good news? You don’t have to navigate this alone.

Take the Next Step

Don’t let forgotten accounts derail your financial journey. Download our complimentary e-book, Is Your Portfolio on Track, and start taking control of your retirement savings today. Click here to access the e-book.

Just like remembering to pick up an umbrella before it’s too late, managing your forgotten 401(k) accounts now can save you from financial headaches down the road. Let us help ensure every dollar you’ve earned is working hard for your future. Click here to get started.

If you found this blog interesting and would like to stay informed about financial topics like this, consider joining our monthly complimentary Intelligent Insights newsletter.

Join Our Newsletter!  

Disclosure: This blog may reflect the perspectives and research of Intelligent Investing and, where applicable, incorporates insights from guest interviews or expert opinions. Any external views or opinions shared do not necessarily reflect the stance of Intelligent Investing. We may also utilize tools such as ChatGPT to enhance readability, grammar, and flow, while all core ideas remain proprietary to our firm.

Please note that Intelligent Investing does not provide specific tax or legal advice. All investments carry risks, including the potential loss of principal, and past performance is not indicative of future results. Any specific securities, sectors, or investment strategies mentioned are for informational purposes only and should not be considered a recommendation. We encourage readers to consult with Intelligent Investing for advice tailored to their unique financial situation. Unauthorized reproduction or distribution of this content is prohibited without proper credit to Intelligent Investing.

Reading Time: 5 minutes

Did you know that 60% of retirement savers feel overwhelmed by their 401(k) plan information and question their ability to manage their accounts successfully? Even more surprising, one in three people don’t even know how to access their 401(k)—potentially leaving valuable, tax-advantaged dollars on the table. That’s a problem, especially as your 401(k) or 403(b) could become one of your largest assets in retirement.

If you’re thinking about early retirement, chances are you’ll need to take early withdrawals from your retirement account. Retiring early means you won’t have access to Social Security benefits, which means you’ll need to not only pay for your living expenses but also added expenses like health insurance. Using the Rule of 55 to take early withdrawals can help cover those costs.

What is the Rule of 55?

Under the Rule of 55, you can withdraw funds from your current job’s 401(k) or 403(b) plan without incurring the standard 10% early withdrawal tax penalty. This provision applies if you leave that job in or after the calendar year you turn 55. It’s a provision designed for those who separate from service early but need access to their funds before the typical retirement age of 59 ½. Qualified public safety workers can start taking withdrawals even earlier, at age 50. This rule applies whether you were laid off, fired, or simply quit your job.

While this rule can provide a lifeline for early retirees, it’s crucial to remember that distributions are not completely tax-free. Like all withdrawals from a traditional 401(k) or 403(b), you still have to pay income tax.

To start making withdrawals, you’ll have to prove to the plan administrator that you qualify by complying with a few rules:

• Age of retirement: You must leave your job during or after the calendar year you turn 55.
• Work: You must leave your job to start taking withdrawals, but you can return to work later and continue to take penalty-free distributions.
• Retirement account: You can only withdraw funds from your most recent 401(k) or 403(b) account under the Rule of 55. The government does not permit penalty-free withdrawals before 59 ½ from plans you had with a previous employer.

Example of the Rule of 55 in Practice

Let’s consider a public safety employee, such as a firefighter, who has a 401(k) through their state government employer. This employee decides to retire from their position at age 52, having met the criteria for a qualified public safety worker. Because they are a public safety employee, the Rule of 55 is available to them starting at age 50. After separating from service, they can begin taking penalty-free distributions from that 401(k) plan. However, this exception only applies to the funds in the plan they had with that specific employer. If they have a separate 401(k) from a previous, non-public safety job, they would not be able to access those funds under this rule without incurring a penalty.

The Catch: Why the Rule of 55 Isn’t a Simple Solution

Beyond simply meeting the criteria, it’s important that you effectively plan the timing of those withdrawals due to tax considerations. If you were employed for most of the year and had a relatively high income, it may make sense to not withdraw money under the Rule of 55 in that calendar year, since it will add to your total income for the year and possibly result in you moving to a higher marginal tax bracket.

Without a holistic view of your financial picture, you might unknowingly make one or more of these common mistakes:

• Risk Management: If you don’t get the risk right in your 401(k)s, you may not stick with the portfolio and financial plan. Without considering all accounts, you could end up with a concentrated risk position in one asset class, like “doubling up” on U.S. large-cap equities. This lack of a “big-picture” view can lead to wrong behavior when markets become volatile.
• Tax Inefficiency: Withdrawing a large lump sum could push you into a higher income tax bracket, defeating the purpose of a penalty-free withdrawal. Without proper tax location, you might have tax-inefficient funds in your taxable accounts and vice versa, which can increase the total “fees” you pay to the government.
• Lack of Diversification: Holding assets in multiple accounts at different institutions can make achieving true diversification difficult. Managing these accounts in isolation can lead to an inefficient portfolio that is not aligned with your long-term goals.

These are the kinds of financial complexities that add unnecessary stress to your life.

The Intelligent Investing Solution: Integrating Your Held-Away Assets

At Intelligent Investing, we believe managing your retirement savings should be simple—not stressful. That’s why we created Intelligrations®, our proprietary technology that allows us to intelligently integrate and manage your 401(k) or 403(b) while you’re still working. We developed this proprietary financial software in-house to help organize our clients’ “financial junk drawers.”

Using our Intelligrations®, we are able to organize your financial life. This innovative technology allows us to proactively monitor, manage, and trade your held-away assets, such as 401(k) accounts, just like your other assets with us. An annual static review is simply not enough.

With Intelligrations®, we help you:

• Select the Right Investments: We tailor your investment choices to support your long-term retirement goals.
• Monitor and Rebalance Your Plan: We proactively oversee your 401(k) or 403(b) and adjust your allocations as needed.
• Align with Your Risk Tolerance: You receive a personalized risk number that encompasses your entire portfolio in real time, including the assets we are directly managing and the held-away assets we will manage for you. This helps align your risk to provide a smoother financial journey.
• Minimize Taxes: Intelligrations® helps us with tax location, ensuring investments are properly allocated to the appropriate accounts.

You’re Not Alone

You don’t have to navigate complex financial decisions like the Rule of 55 alone. If you’ve ever felt unsure about your 401(k), you’re not alone—and we’re here to help. Our mission is to minimize your financial stress so you can maximize your life.

To learn more about how to get your retirement savings on track, download our complimentary e-book entitled, “Is Your Portfolio on Track?”

If you found this blog interesting and would like to stay informed about financial topics like this, consider joining our monthly complimentary Intelligent Insights newsletter.

Join Our Newsletter!  

Disclosure: This blog may reflect the perspectives and research of Intelligent Investing and, where applicable, incorporates insights from guest interviews or expert opinions. Any external views or opinions shared do not necessarily reflect the stance of Intelligent Investing. We may also utilize tools such as ChatGPT to enhance readability, grammar, and flow, while all core ideas remain proprietary to our firm.

Please note that Intelligent Investing does not provide specific tax or legal advice. All investments carry risks, including the potential loss of principal, and past performance is not indicative of future results. Any specific securities, sectors, or investment strategies mentioned are for informational purposes only and should not be considered a recommendation. We encourage readers to consult with Intelligent Investing for advice tailored to their unique financial situation. Unauthorized reproduction or distribution of this content is prohibited without proper credit to Intelligent Investing.