Keen On Retirement™

As they're nearing retirement and finalizing their withdrawal, spending, and healthcare plans, many seniors aren't aware that there's a trap waiting on the other side of the finish line. IRMAA, the Income-Related Monthly Adjustment Amount, is a surcharge that can drive up Medicare Part B and D premiums for high-earning seniors. The catch? IRMAA is based on your modified adjusted gross income (MAGI) from two years prior. That means the Medicare premiums you pay at age 65 are determined by the income you earned at age 63. If you’re approaching retirement, it’s important to think ahead about what your retirement income will look like and how it could affect your Medicare premiums down the road. Proactive tax and withdrawal planning in the years leading up to retirement, and throughout retirement, can help reduce future IRMAA surcharges and keep your healthcare costs in check.

Way back in February 2019 I wrote a blog post titled "Are You in the Top 1%, 5%, or 10% of Income Earners?" While digging into the numbers, I also cautioned folks about worrying too much about how their finances stack up against those of other people, especially if they're looking at life through the lens of social media. Almost six years, one pandemic, and a couple of technological leaps later, both the numbers around wealth and the influence of the media have gone up. The financial trends aren't surprising. High earners tend to be good investors. Good investors tend to have the discipline to stick to their plans through regular ups and downs. And despite those ups and downs, the markets continue to grow wealth for investors. But as we're living more and more of our lives online, I think our view of what "wealth" really means and the true value of money is becoming more and more distorted. Let's take a look at the latest data on affluence and try to gain a little clarity on how these trends might affect your thinking about financial planning and living your best life in retirement.

There is a bit of give and take to any successful retirement plan. But finding the right balance between living a fulfilling lifestyle today while also preserving your financial security for tomorrow can feel like a challenge. That's especially true when you are at or near retirement and begin to contemplate that, in retirement, you will no longer receive a paycheck from employment but will instead withdraw dollars from your retirement savings. And, to complicate a complicated issue even further, every financial talking head on social media and cable news seems to have conflicting ideas about how much money retirees "should" be spending from their nest eggs every year. So, where do these rules about a "safe" withdrawal rate come from? And just how useful are they in the current economic environment?

Just about all married retirees have seen "The Look" from their spouses. The "You're in my way" Look. The "Why are you doing THAT?" Look. The "I don't have time for this right now" Look. The "Are you really going to spend all day just sitting there?" Look. The "Maybe you shouldn't have retired" Look. When we see senior couples giving each other "The Look" during meetings at Keen Wealth, it's often because folks have been so wrapped up in planning the money side of retirement that they haven't given as much thought to how they'll spend their time. Discussing these common causes of Retired Hubby and Wifey Syndrome might help you and your spouse create space for each other and make the most of the moments you spend together.

Sometimes, financial independence just isn't enough. Most folks who've built up a high net worth know, deep down, that they don't need to wait until they're 65 to retire. But they keep working anyway, because having money doesn't necessarily make you worry about money any less. And besides, you're "supposed" to wait until you're at least 65 to retire. Right? Think about it this way: you don't keep playing the game after you've already won! And if you have enough money to fulfill your sense of purpose and secure your needs for the rest of your life, then however old you are, you've won. Here's why the affluent should consider rethinking their retirement timelines.

"I'm going to run out of money." That's the fear that stands between so many seniors and enjoying their Golden Years. That's the fear that delays retirement five years too long. The fear that causes new retirees to pinch every penny instead of buying a new car, joining their local country club, or travelling the world. The fear that leaves so many seniors thinking "Coulda ... Woulda ... Shoulda ..." at the end of retirement. In fact, according to a study by the Allianz Center for the Future of Retirement , 64% of Americans are more afraid of running out of money in retirement than they are afraid of death! Today, I'm going to try to bring one of those fears down to size. Because, unlike dying, your odds of running out of money in retirement can be reduced, if not eliminated, with hard work, diligent saving, and comprehensive financial planning.