Investment Strategy
Even if you’ve got a decent amount saved up, relying heavily on MLPs can expose you to unnecessary risks. “Diversifying your portfolio can lead to a more stable income during retirement,” says Ryan Heiss, a certified financial planner with Flynn Zito Capital Management. A good financial planner can definitely assist with this.
The $50,000 you receive from the MLP isn’t guaranteed or fixed; it fluctuates based on the cash generated by the MLP, which can be quite risky, particularly as many are tied to the volatile oil and gas market. Also, MLPs often come with higher interest rates, which might negatively affect your overall returns, and focusing too much on one industry adds an extra layer of risk.
Roth Conversion
John Pierscher, a certified financial planner, mentions that converting funds from a 401(k) to a Roth IRA can be a solid strategy, but it’s not a one-size-fits-all solution. “This is especially relevant for those facing early retirement, health issues, or uncertain incomes,” he notes. Keep in mind that converting from pre-tax retirement accounts means you’ll owe ordinary income taxes on the amount moved. “Once you place it in a Roth, if you follow the rules, that money can grow tax-free, giving you tax-free withdrawals down the road,” he adds.
Converting to a Roth can be wise as part of a broader retirement strategy, especially for tax diversification and avoiding required minimum distributions (RMDs). However, every situation is different, and since conversions are permanent, it’s worthwhile to analyze the numbers or consult a professional. A significantly large conversion could lead to an unexpectedly high tax bill. If you’re applying for disability, additional taxable income might impact your eligibility, so proceed cautiously,” Pierscher advises.
Ryan Bayonnet from Hyland Financial Planning thinks it’s a good idea to convert pre-tax funds, yet he suggests doing so from an IRA instead of a 401(k). “With a 401(k), you can start taking penalty-free withdrawals at 55 if you’ve left your job, while with an IRA, you must wait until you’re 59.5. So, keeping some funds in your 401(k) could provide short-term flexibility if cash is needed,” he explains.
As for how much to convert, a certified financial planner can help you figure out the right amount based on your income and tax situation. “It’s advisable to convert enough each year to remain within the 12% federal tax bracket, allowing you to benefit from a favorable tax rate now while building future tax-free growth,” Bayonet suggests.
Social Security Disability Insurance (SSDI)
Social Security Disability Insurance is funded through Social Security to support individuals unable to work due to a qualifying medical condition. To qualify, the disability must hinder you from performing any substantial gainful activity, meaning you can’t earn over approximately $1,550 monthly in 2025, and you must have accumulated enough work credits in the past decade. Given your circumstances, if you can demonstrate that your condition prevents you from working in any capacity, not just your previous role, you might have a strong case for SSDI.
The Importance of a Financial Plan and a Financial Planner’s Value
Regardless of whether you choose to work with a financial advisor, having a comprehensive financial plan is vital. “Incorporating Social Security benefits, MLPs, and Roth conversions into a cohesive financial strategy is crucial. Each element interacts with the others and shouldn’t be viewed in isolation,” states Robert Perschitte, a certified financial planner at Delagify.
Your financial plan should consider not just your current tax obligations but also anticipated future taxes. “You’ll need to account for how your income and expenses will shift over time, especially once you start taking required minimum distributions. Many asset managers charge sufficient fees that make these services a standard part of their offerings. Hiring a professional focused on financial planning, rather than merely sales or independent wealth management, is wise,” Perschitte suggests.
A tax-savvy advisor can be particularly beneficial, says Bill Nugent from Convey Wealth Management. “Look for a CFP who also has CPA qualifications. This extra expertise allows for more in-depth tax planning,” Nugent recommends.
Pierscher emphasizes that for most folks, especially those with intricate income sources or health concerns, having a paid fiduciary planner can be invaluable. “They can help clarify confusion and prevent unexpected issues with the IRS. Ensure they prioritize your best interests over selling products,” he advises.
If your current organization doesn’t support this type of planning, it may be worth working with a fiduciary advisor who provides extensive tax planning. “This helps ensure your income is managed efficiently according to your long-term goals,” Heiss notes. Before selecting a professional, Nugent suggests asking for specific examples and planning samples related to Roth conversion analysis, as many advisors claim to assist with tax planning but don’t engage in much actual work in this area.
