Keen On Retirement™

As I discussed in a recent blog post, many of the most important retirement decisions you’ll make aren't about your accounts and amounts. They're emotional choices that involve personal judgment, weighing trade-offs, and your most deeply held personal values. However, refocusing your retirement planning on the things that matter as much or more than money might spark a new concern: perfection. If hitting a number is your main retirement concern, you can always work longer, save and invest more, and keep topping off your accounts. But once you start thinking about your money as a tool that you'll use to support bucket list travel, philanthropy, lifelong learning, and your grandkid's education, the pressure to get every detail right on paper might feel overwhelming, even paralyzing. These three examples of financial planning "perfection" all start from a place that seems logical and proactive. But they all come with downsides that could sacrifice the flexibility and resilience most seniors need to succeed throughout retirement.

Matt Wilson, Keen Wealth’s Chief Investment Officer and President, recently hosted an excellent webinar on Tax Planning Through the Four Stages of Retirement. In addition to providing a thorough overview of the tax issues that seniors should be prepared for, Matt also wanted to remind folks that the best time to ask questions about retirement is before you retire. And I’m glad that several of our webinar attendees took Matt up on that offer! On today’s show, we discuss three follow-up questions to Matt’s webinar that touch on not just taxes but also the value of working with a financial advisor on a holistic plan for retirement.

Many financial conversations around retirement focus on projections, simulations, probability of success scores, and average annual returns. And, since the long-term history of market investing continues to be positive, many folks see graphs trending up and to the right and think, “Okay, the math works. I’ve hit my number. It’s time to retire.” But what seniors often overlook, especially if they’re planning solo, are all the things that don’t show up in a typical financial projection. A slip-and-fall that changes your health care spending. A hurricane that drives up inflation. A once-in-a-generation global pandemic. No one can predict the future – not even my team at Keen Wealth. But I can tell you that the durability of a retirement plan isn’t just about your net worth or maintaining averages. It’s about sequencing how you use your assets and maintaining flexibility to deal with surprises. And as you get closer to retirement, the question you and your advisor should be answering isn’t, "Will it work if everything goes right?" It’s, "What happens if something goes wrong early?" Here are five stress tests your financial plan should be able to pass in the early stages of retirement:

Most people think that retirement begins the day that everything stops: the early morning alarm, the commute, the meetings, the deadlines, and, of course, the paycheck. But in my experience, a successful retirement begins 24 months before your last day on the job. Your final two working years are arguably the most critical period of your financial life. They determine your tax flexibility for the next decade, your confidence in your income stream, and your ability to adapt when life doesn't go according to plan. While no one can predict the future, with comprehensive financial planning, you can build a robust margin for error that will act as a safety net throughout your retirement. When you're landing a plane, you don’t just cut the engines at 30,000 feet and hope for the best. You begin a gradual, calculated descent towards the airport environment and ultimately the runway. Retirement is no different. The smoother and more intentional the glideslope, the safer the landing.

During my recent trip to Australia, I learned that navigating a foreign country can feel normal but different all at the same time. On the one hand, my family and I enjoyed the familiar experiences of being on vacation, such as unplugging from our daily routines, relaxing on a long flight, seeing the sights, and spending time with loved ones. But once we arrived in Brisbane, we had to get used to a new landscape and a new set of rules. The huge time zone difference. Driving a "ute" (utility vehicle) on the left side of the road and overtaking (passing) on the right. Calling "French fries" chips and our friends “mate.” Keeping an eye out for wild kangaroos. Retirees may feel like they're facing a similar "familiar but different" financial landscape this tax season. While many of the strategies my team at Keen Wealth are discussing with folks are tried-and-true, some rules and details are changing due to new legislation that's going into effect. Your financial plan, and your financial team, need to be ready to adapt to these new rules so that you don’t miss a key deduction and pay more in taxes than you really owe. On today's show, we discuss the One Big Beautiful Bill Act's changes to the tax code and some specific provisions that require thorough proactive planning before you file your taxes in April.

This is it! The year you've spent decades working for, saving for, investing for, and planning for. Many people enter their first year of retirement focused on preventing things that could go wrong. But with a little forethought and a positive attitude, a lot can go right this year as well. Here are five keys to thriving financially, physically, and emotionally during your first year of retirement.