Retirement Toolkit: How Does Step Up in Cost Basis Work

This week Roger talks about one of the biggest challenges retirees face today: information overload. He explains why more information doesn't always lead to better decisions and why building a great retirement starts with focusing on what matters most to you. In the Retirement Toolkit, Roger unpacks stepped-up cost basis, covering how it works, when it matters, and how it can become a valuable estate planning tool. Along the way, he answers listener questions on retirement income strategies, cash reserves, government retirement accounts, and how to create a retirement plan that's both practical and personal. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN (00:00) Roger discusses how information overload can make retirement planning feel overwhelming and explains why simplifying your focus leads to better decisions. RETIREMENT TOOLKIT (08:20) Roger breaks down stepped-up cost basis, explaining how inherited assets receive a new tax basis at death, which assets qualify, how the rules differ for spouses, and how this strategy fits into estate and retirement planning. LISTENER QUESTIONS (21:20) Mike asks whether adding a whole life insurance policy is an effective retirement income strategy. Roger explains why it's important to build a retirement plan first before evaluating insurance products and discusses situations where whole life may or may not make sense. (32:00) Allison asks about the federal TSP's pro-rata withdrawal rules and whether rolling funds to an IRA would make a bucket strategy easier to implement. (34:13) Steven asks how much cash to have available before retirement. Roger shares his approach for building a five-year spending reserve while balancing flexibility and sequence-of-returns risk. (39:56) Tom asks whether to model retirement spending using flat nominal dollars or adjust for inflation and the retirement spending smile. Roger explains why retirement plans should reflect personal spending goals rather than population averages. SMART SPRINT (47:00) Roger encourages listeners to filter information through their own priorities, remembering that general advice is only valuable if it applies to their unique situation. REFERENCES Submit a Question for Roger Sign up for The Noodle Note: The opinions expressed are for informational purposes only and should not replace personalized advice from licensed professionals.