Tax-Smart Retirement Planning and the Long-Term Return of Gold

In this podcast, Motley Fool retirement expert Robert Brokamp discusses how to choose the right account with financial planner and CPA Sean Mullaney, who writes the FITaxGuy blog and is the co-author, along with Cody Garrett, of Tax Planning To and Through Early Retirement.

Also in this episode:

• The stock market is broadening, with small caps, value stocks, and international stocks outperforming U.S. large-cap stocks since November.
• What's going on with gold?
• A new study estimates how much of the cost of tariffs has been absorbed by consumers, importers, and retailers.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on Jan. 24, 2026.

Robert Brokamp: Choosing the right retirement account and the long-term return of gold. That and more on this Saturday Personal Finance edition of Motley Fool Money. I'm Robert Brokamp, and this week, I speak with financial planner and CPA Sean Mullaney about why some investors should favor pre-tax traditional retirement accounts, despite all the benefits of Roth accounts. But first, hear a few items from the news last week. First up, we turn to the latest weekly asset allocation review from Jurrien Timmer, Director of Global Macro at Fidelity Investments, who writes that, "At least for now, the US stock market is rebalancing in one of the best ways possible. The Bega CAP seem to be taking a rest while the rest of the market breaks out. With the BAG seven now stuck in a range since November, the broader market has gone from narrow to broad, from 32% of stocks trading above their 50 day moving average to now 73%." Indeed, since Halloween, the S&P 500 has returned 0.5%, and the NASDAQ 100 has lost 2%. Meanwhile, small caps, value stocks, and international stocks are up 10%, 7%, and 5% respectively, as of this taping on the morning of January 22nd. But Jurrien Timmer has labeled this "a bullish broadening." But those returns are nothing compared to what we've seen from gold, which brings us to our second news item of the week. The Spider Gold shares ETF Ticker GLD, was up 64% last year and is up 12% so far this year. This past week was the anniversary of gold hitting a then-record price of $850 in 1980, which was then followed by a slump that lasted more than two decades. If you had bought at the 1980 peak and held to today's price of $4,800, your average annualized return would be less than four percent. Meanwhile, if you invested $850 in the S&P 500 back in 1980 and held to today, you would have earned a total average annualized return of 12%, and your investment would have been worth more than $161,000, according to the S&P 500 calculator on the Of Dollars and Data blog. Now, the number of the week, which is 96%. That's how much of the cost of tariffs that has been absorbed by consumers and importers, according to a recent study from the Kiel Institute for the World Economy and highlighted in a Wall Street Journal article from this past week, foreign exporters absorbed only about four percent by lowering their prices. That said, US inflation has remained moderate so far, with Harvard research indicating that only about 20% of the tariffs have fed into higher consumer prices within six months of implementation, as US importers and retailers have absorbed much of the costs. We shall see if that continues in 2026. Next up, choosing the right retirement account when Motley Fool Money continues.

ADVERTISEMENT: AI is incredible. It can teach you how to fry an egg and even write a poem. Pirate style. But it knows nothing about your work. Slackbot is different. It doesn't just know the facts. It knows your schedule. It can turn a brainstorm into a brief, and it doesn't need to be taught because Slackbot isn't just another AI. It's AI that knows your work as well as you do. Visit slack.com/meetslackbot to learn more.

Robert Brokamp: Before you start socking away money for retirement, you'll need to pick an account type. But choose wisely because it'll shape your tax bill today and potentially decades from now. Here to discuss how to choose the right account is financial planner and CPA Sean Mullaney, who writes the FITaxGuy blog and is the co-author, along with Cody Garrett, of the book Tax Planning To and Through Early Retirement. Sean, welcome to Motley Fool Money.

Sean Mullaney: Robert, thanks so much for having me.

Robert Brokamp: The title of your book highlights early retirement. In your mind, what makes someone an early retiree, and what, if anything, should they be doing differently?

Sean Mullaney: My mind, an early retiree, is simply anyone who retires prior to being eligible to enroll in Medicare. That is, generally speaking, the first of the month you turn age 65, and indications are a majority of Americans do early retire, and there's plenty of reasons for that. Sometimes it's choice. Sometimes we've got enough money saved up, so why are we still working? Sometimes it's a layoff, or my job got obsolete, or whatever it might be. Early retirement tends to have advantages when it comes to tax planning. I say that because early retirement offers an opportunity to spread out income over a longer window of time. In today's tax planning environment, the tax rules they're yelling at you spread out income. What I mean by that is we live in an era of a very high standard deduction. We live in an era of the 10% tax bracket and the 12% tax bracket. A married couple, especially in their '60s or '70s, could have well over $100,000 of income subject to only a zero percent tax bracket, which is essentially what the standard deduction is, the 10% bracket, and the 12% bracket. That's yelling and screaming please spread out income over time. That's part of the reason the early retiree has a tax advantage. He or she is going to have to live off their income over a longer window of time, which, generally speaking, helps from a tax planning perspective.

Robert Brokamp: They says, we read a lot about the benefits of Roth accounts, which result in higher taxes today, but qualified withdrawals are tax-free in retirement. However, in your book, you make the case that many workers really should first turn to that pre-tax traditional work-based retirement account. Why is that?

Sean Mullaney: For the simple reason that we ought to pay tax when we pay less tax. It turns out that for the vast majority of Americans, I would contend, even for the vast majority of affluent Americans, it turns out you pay more tax when you're working, and you're getting up in the morning to generate taxable income than when you're retired. Let's think about that for a second. You've got that Roth 401(k) or a traditional deductible 401(k) at work. You get to deduct into that thing at your highest marginal rate. Maybe it's 22%, maybe it's 24%, maybe it's 32%. That's an immediate tax benefit of 22 cents on the dollar, 24 cents on the dollar, 32 cents on the dollar. What's that going to look like when it comes back into income later on in your retirement? you have that run back up the progressive tax bracket. It's now particularly for the early retiree, the 60s could be a great time to maybe get some of that money and either Roth convert it in your 60s or just live off of it in your 60s, and some of it will be sheltered by the standard deduction. I refer to that as the Hidden Roth IRA. We took money from a retirement account, and we didn't pay federal income tax. Isn't that a Roth IRA? Not in this case. That's what I refer to as a hidden Roth IRA. It's a Roth IRA that hides inside your 401(k). I think a lot of Americans have to think long and hard before sacrificing the upfront tax deduction. Now, I will say it's usually beneficial to invest that tax savings in a Roth IRA or a taxable brokerage. But that is a upfront benefit, and it turns out that the progressive nature of taxation going back up through the brackets means that it's very likely that on the way out, the marginal rate on that is going to be less than the rate that you enjoyed on the way in to the traditional 401(k). Now, Robert, I will say one thing, though. I'm not anti Roth, particularly for those in the audience that have access to either the so-called backdoor Roth IRA or the mega backdoor Roth IRA.

These are transactions that allow higher-income earners to get money into a Roth account. I tend to really like those once we've maxed out our traditional 401(k), say at work for many workers. Why do I say that? Trade-offs. Traditional 401(k), that $24,500 in the year 2026. The trade-off there is I either deduct at my highest marginal rate today, or I put it into the Roth 401(k). The problem with that trade-off is I'm giving up a tax deduction at my highest marginal rate today. But the backdoor, whether it's the so-called backdoor Roth IRA or the mega backdoor Roth IRA, if you have that through your 401(k) or other plan at work, the trade-off profile is so much better because there's no sacrifice tax deduction. The money that goes into these backdoor Roths is money that would have otherwise gone into a taxable brokerage account. Now, that's not a terrible outcome to invest in a taxable brokerage account, particularly in a low-yield world with qualified dividend income rates, but there's still a tax on the dividends, interest, future capital gains on that. Versus if we can take advantage of one or both of these backdoor techniques, guess what? We've moved money that would have gone into a taxable brokerage account, would have spit out a 1099 DIV every year, and instead, it's parked inside a Roth account, growing tax-free for the rest of our lives, potentially the rest of our spouses' lives, potentially 10 more years, assuming it goes to our adult child beneficiaries. I'm certainly not anti Roth, but I think you have to step back when you're in your accumulation years and think about the trade-offs, and are you really going to pay high taxes on most of that money in retirement if it's in a traditional retirement account?

Robert Brokamp: You had some great illustrations in the book of how folks who are retired, particularly over age 65, because they get the higher standard deduction, they got the new senior deduction from the one big beautiful bill, how you could have a surprisingly high amount of income and pay a surprisingly low tax rate. You have particular illustrations of couples who are making, say, $250,000. That puts them in, while they're working, say, the 24% tax bracket, you contribute to that pre-tax account. You're getting that deduction on 24%. But then in retirement, their effective tax rate is 12-15%. Of course, in that situation, it makes total sense to take the deduction sooner and then pay taxes at that lower rate in retirement.

Sean Mullaney: That is exactly right, Robert, and we live in a golden age right now where you have the high standard deduction plus the senior deduction. Now, that is temporary, to be fair, although I think the politics are likely to play out that some form of that thing is likely, but certainly not guaranteed to be extended in the future. But you see, we have examples of what we call tactical taxable Roth conversions, where we have a married couple in their mid to late 60s. They have $101,000 of income before any Roth conversion, and that's mostly capital gains income. It's spending the taxable accounts first. Then we add a $40,700 Roth conversion, and I've done this at a conference, so I say, no, this couple's got $141,700 of adjusted gross income. They're going to be taxed. I ask the audience, just mentally in your mind, picture what's their tax rate going to be? How much federal income tax are they going to pay? Of course, the surprises, they pay zero federal income tax. How can that be? The Roth conversion is essentially wiped out by the standard deduction and the senior deduction. You structure your affairs so that you have low-yield equities in the taxable account, maybe a small bank account, generating some interest income. But essentially, the ordinary income, the Roth conversion, the non-qualified dividends interest income can be kept at the senior deduction plus the standard deduction. That wipes away the tax on, and then you can have significant capital gains that essentially you're in your brokerage account. You sell those brokerage account mutual funds or ETFs and trigger capital gains. But recall we have the zero percent long-term capital gains tax bracket. I believe for a married couple in the year 2026, that thing goes up to $98,900 of taxable income. That's after we put in the senior deduction. If we're 65 or older, we're married, that's $12,000. If we're both 65 or older this year, that's fantastic. Plus the high standard deduction.

That goes back to my point that retirement is a time that, if we structure our drawdown and our Roth conversion strategy, in the first part of our retirement, we might be paying very low taxes. Then, yes, maybe later on in retirement, as we spend down those brokerage accounts, we then get into our traditional IRA. We eventually get to RMDs. Although, by the way, if you're born in 1960 or later, that RMD doesn't start till age 75 later in life, anyway. Robert, there are so many good little planning opportunities out there, and I think we have to step back and say, fear of taxation and retirement is not justified in today's environment, based on the rules, based on the incentives of the politicians, based on what the recent history. In the book, we have a little table, and it goes through a decade's worth of tax cut, after tax cut, for retirees, even though many commentators are saying they're going to be increasing taxes on retirees. The problem with those predictions is the future keeps happening, and those tax increases don't materialize, and what has materialized are tax cuts after tax cuts for retirees. Now, I'm not here to say that that's going to continue, meaning I do think there's some risk that maybe be small incremental, minor tax increases. I'm certainly not going to bet on continued tax cuts on retirees. But I think the history, the politicians' motivations, today's rates come out with this message of taxation in the future for retirees is likely to be relatively modest. That's certainly not guaranteed. Look, I'm not here to say you shouldn't think about some tactics like some smaller Roth conversions, maybe doing the backdoor Roth while you're working. There are different things you can do to help mitigate that risk, but I just don't think that fear of taxation and retirement is that justified in today's environment and looking into the future.

Robert Brokamp: You highlighted a couple of things that people often will bring up as a reason to have more Roth assets. One is RMDs, required minimum distributions. The other is IRMAA income-related monthly adjustment amount for Medicare. But as you point out in the book, when you actually calculate those amounts as a percentage of the overall portfolio and the withdrawal, they're more probably more of a nuisance than anything else.

Sean Mullaney: Yes, so IRMAA, let's talk about that one. That is an increase in Medicare Part B and Part D premiums, and it's based on your income from the two years previous. Now, when you run the numbers, two things emerge. One is IRMAA tends to be a tax on affluent singles and widows. If you look at when IRMAA kicks in, it's over $200,000 of income for a married couple. Even very affluent married couples, when they're no longer working, often have a difficult time reporting $200,000 or more of income on a tax return in retirement. That's partly because of basis recovery with capital gains transactions. By the way, in retirement, our spending tends to form a natural ceiling on our taxable income in a way it did not during our accumulation years. That's an important insight. When we're married, IRMAA tends to barely bite. Now, I will say IRMAA starts biting when we become single. Either we're single going into retirement or become a widow, and that's when IRMA A can bite. But like you were saying, Robert, it tends to be more of a nuisance. It tends to be a tax on affluent single retirees, just the way it functions. That's just how it breaks down. But even then, IRMAA tends to be an indication that things, generally speaking, worked out well in your financial life, and perhaps you had some tax inefficiencies in the later part of your life when they don't impact you as much. This is one of the lessons of the book is that, when we think about taxes, we should think about when are they the most impactful. I would argue that the most impactful when you're 40-years-old, you've got two kids at home. You've got a spouse at home, and you haven't built up sufficient assets to be financially independent or whatever you want to call it. Boy, paying taxes then isn't that great because you've got two mouths to feed. You have a spouse. You haven't built up all this financial. Even early retirement, the beginning of retirement isn't the greatest time to pay taxes either, because look, you might have 30 or 40 years of retirement you have to fund. Paying some money to Uncle Sam at that point isn't that great because now that's money that could have been invested for your financial future to the extent people worry about sequence or returns risk, it's not something I worry a whole lot about, but it's not a nothing concern.

Paying taxes upfront in the early part of retirement is not a great thing to do. If we're going to have, say, IRMAA in the later years of our retirement because we did traditional retirement accounts a little too much, say, you've essentially picked a really good time to pay tax because at that point, it can't be as impactful to your financial future. At that point, these inefficiencies, sometimes I refer to these inefficiencies as garbage time touchdowns. You use these traditional retirement accounts. You won against the IRS when you were working. You then spent down taxable brokerage accounts early in the first part of retirement. You won against the IRS, and then maybe later in life, you have these inefficiencies that come after decades of defeating the IRS. Maybe what you've done is you've picked a pretty good time to pay taxes because at that point, one of two things is true. If you're paying IRMAA, you're financially affluent, you're well above most Americans in terms of financial success. You're paying this surcharge or maybe a little incremental tax on the income tax side at a time where you're already wealthier than most of your cohorts in that age group and overall Americans. You've done really well, and you have a few tax inefficiencies. That's an outcome most Americans would gladly sign up for, and these inefficiencies come after decades of defeating the IRS. I am a lifelong, almost lifelong New York Jets fan, and I've seen plenty of garbage time touchdowns. There's scores by the other side that ultimately are not determinative of the ultimate outcome, and that's what we're looking for is financial success. As much as we're trying to reduce taxes, that's an important priority, but the ultimate priority is financial success. I've seen my Jets score too many touchdowns to not be pretty knowledgeable about this subject. I think what happens is, if you use these traditional retirement accounts to build up retirement savings, maybe build up some taxable brokerage accounts, maybe build up backdoor Roth IRAs because you deducted, you save money, you invested it during your working years. Maybe at the end of the game, we have some RMDs that go out at the 32% when we're already affluent, and we don't have the energy to be spending that money anyway, or maybe we're in long-term care, whole other conversation. A lot of times, a lot of these long-term care expenses it could be medical deductions, and we can essentially deduct away most of our taxable income. That's actually an efficient use for a traditional IRA, not a desired use, but an efficient use. That's my approach when I think about this. Not that Roth conversions can't play a good role, can't be beneficial, but rarely are the Roth conversions needed.

Robert Brokamp: This has been a great conversation. Sean, thanks so much for joining us.

Sean Mullaney: Robert, thanks so much for having me.

ADVERTISEMENT: In January of 1915, Ernest Shackleton's ship Endurance became encased in the ice in the Weddell Sea. Through determination, grit, and savvy, Shackleton would lead his men through a brutal winter, then over hundreds of miles of Antarctic ice, followed by 800 miles across some of the roughest waters in the world. It is one of the most extraordinary and inspirational journeys in the history of exploration. Find this story and many others at the Explorers Podcast available wherever you get your podcast or @explorepodcast.com.

Robert Brokamp: Cyber getting done, Fools, and this week, I encourage you to do something that I encourage everyone to do every January. That is to think about what you'll need from your portfolio in the next 3-5 years and protect that money by moving it to cash or bonds. On average, the stock market drops 20% or more every four years, and in the first decade of this century, it dropped more than 50% twice. Since 1928, the stock market has been profitable over 83% of three-year holding periods, 88% of five-year holding periods, and 94% of 10 year periods. We think protecting money you need for the next 3-5 years is a reasonable goal, but you should always adjust for your own risk tolerance and circumstances. If you plan to make a big purchase soon, or maybe send to high school or to college, or create or restuff your retirement income cushion, now is a good time to move that money from stocks to higher-yielding cash, CDs, treasury bills, or short-term bonds. To find higher-yielding banking options, visit the other Motley Fool Money, not the podcast, but the Motley Fool website that rates and reviews credit cards, mortgages, brokers, and banks. That, my friends, is the show. Thanks for listening, and thanks as always to Bart Shannon, who is a magician and the engineer for this episode. As always, people at the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for the informational purposes only. To see our full advertising disclosure, please check out our show notes. I'm Robert Brokamp. Fool on, everybody.

Robert Brokamp, CFP has positions in SPDR Gold Shares. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.