Retirement

After decades of accumulating, you now need to shift to distribution mode. How you withdraw is just as important as how much—the wrong approach can cost you hundreds of thousands in taxes and longevity.

• The 4% Rule: Withdraw 4% of your portfolio in year one, then adjust for inflation. A guideline, not a law.
• Tax-Efficient Order: Generally taxable accounts first, then tax-deferred (401k/IRA), then Roth—but this varies.
• Bucket Strategy: Keep 1-2 years of expenses in cash so you don't sell stocks in a down market.
• Flexibility: Be willing to adjust spending based on market conditions.

If you're 65 or older, Medicare is now your primary health insurance. Miss your enrollment window and you'll face permanent penalties and coverage gaps.

• Initial Enrollment: 7 months centered on your 65th birthday
• Part A: Hospital insurance (usually free)
• Part B: Medical insurance (~$175/month in 2025)
• Part D: Prescription drug coverage (separate plan)
• Choice: Original Medicare + Medigap, OR Medicare Advantage

If you planned to delay Social Security, stick to the plan (assuming circumstances haven't changed). If claiming now, here's what to know:

• Apply online at ssa.gov up to 4 months before you want benefits to start
• You'll need: birth certificate, W-2s or tax return, bank info for direct deposit
• Benefits are taxable if combined income exceeds certain thresholds
• You can change your mind within 12 months (repay benefits and restart later)

Your asset allocation in retirement should balance three needs: current income, growth for longevity, and protection against sequence risk.

• Traditional: 60% stocks / 40% bonds, or more conservative
• Bucket Strategy: 1-2 years cash, 3-7 years bonds, remainder in stocks
• Rising Equity Glidepath: Start conservative, gradually increase stocks over time

Once you reach age 73 (as of 2023), you must start taking Required Minimum Distributions from traditional 401(k)s and IRAs. Roth IRAs have no RMDs during your lifetime.

• When: First RMD by April 1 of the year after you turn 73
• How much: Based on account balance and IRS life expectancy tables
• Tax impact: RMDs are taxable income—plan accordingly
• QCD strategy: Qualified Charitable Distributions can satisfy RMDs tax-free

The financial mechanics are important, but the happiest retirees are those who've thoughtfully designed how they'll spend their time.

• Purpose: What will give your days meaning? Volunteering, mentoring, creative pursuits?
• Connection: How will you maintain social bonds outside of work?
• Structure: Some structure helps—what routines will you create?
• Health: Physical and mental health are your most valuable assets
• Legacy: What do you want to pass on—financially and otherwise?