Before You Retire, Make These 9 Moves and Tell No One transcript

When you're 12 months from retirement, something very interesting happens to your decision-making. You start optimizing for the feeling of retirement instead of the finances of it. You stop thinking like someone who built serious wealth and you start thinking like someone who just wants out. So, in today's video, I'm going to walk you through nine moves that you should make in the year before you retire. Quietly, before anyone even knows that you're leaving.

Now, I know that might sound unusual. Most people retire and they immediately start telling everybody. They post about it, they celebrate, they maybe even start spending a little differently. And the celebration is earned, but here's what I've seen time and time again by working with retirees. The moment people find out that you're retiring, the pressure begins. From family, co-workers, sometimes even your own emotions.

The calendar fills, the trips get booked, and the most important financial decisions of your life either get rushed or skipped entirely. And that's exactly when the expensive mistakes happen. I've seen people spend decades building serious wealth and then in a 90-day window of excitement, they make three or four mistakes that quietly follow them for the rest of retirement. Not because they were careless, but because nobody told them that the clock had already started.

Now, move number six is the one that most high net worth families completely overlook. And I'll show you exactly which assets are far more exposed than you may think. Including one that almost nobody considers until it's too late. Quick note, this video is for educational purposes only and should not be taken as personal financial advice. So, the biggest retirement mistakes aren't necessarily investment mistakes. Everyone thinks that it is.

They actually happen because of outdated documents, emotional decisions, missed tax windows, bad timing, and yes, investment decisions. But almost all of them happen right before you retire, in that window. So, let's fix it. So, move number one, build your withdrawal strategy. Before you retire, you need a clear answer to one question. Where is every dollar of income going to come from in year one and in every year after that?

Most people have four or five different buckets, a 401k, brokerage account, maybe a pension, social security, even a Roth. Each one gets taxed differently. Each one has different rules for when and how you can pull from it. And pulling from the wrong one in the wrong order in the wrong year can cost you a staggering amount in taxes that never had to be paid. This is called your withdrawal sequence and it needs to be mapped out before you retire, not figured out as you go.

So, pulling from the wrong account in year one can trigger a tax bill that follows you for the next decade. Because once the money starts moving, it's very hard to undo. And for most retirees, the right sequence usually starts with your taxable brokerage and any cash reserves. Then you layer in Roth conversions during the low income window before social security and those required minimum distributions begin. And then it transitions into the pre-tax accounts.

But the specifics depend entirely on your numbers, your income, your age, your account balances, your tax situation. And after doing hundreds of financial plans, I'll tell you this, the retirees who have the most flexibility, the lowest tax bills, and the most peace of mind, they didn't figure this out on day one of retirement. They had it mapped out before they left. Which leads me to the next move. Move number two, build a forward-looking tax plan.

So, your tax picture changes the moment you retire. Income drops, but if you're not careful, it won't stay low for long. RMDs, social security, and investment income, they can stack up faster than most people realize. And the year after you retire and the first few years that follow may be the lowest tax years of your adult life. That is the golden tax window. And it's also the last time that certain strategies are worth what they are today before RMDs and social security kick in and start pushing your income back up.

Think things like bracket management. How much can you pull from pre-tax accounts before crossing into a higher rate? Capital gains harvesting. Are you sitting on, let's say, appreciated positions that you could sell at potentially 0% once you retire? What about tax loss harvesting? Realizing or selling losses in your taxable account to offset income or gains later in retirement. And if you're charitably inclined, funding a donor-advised fund while you're in the 32 or 37% bracket is a completely different move than funding a donor-advised fund after you retire, let's say, at 12% or 22%.

It's the same dollar, but completely different tax value. And you likely only get one shot at the higher deduction. Because once you leave the workforce, the income structure changes, and so does the leverage behind every one of these strategies. So, the families who enter retirement with the strongest financial footing didn't take more risk, they paid attention to the calendar and their lifetime tax situation, which leads to move number three, open the Roth conversion window.

So, here's one of the most powerful and even underused planning moves available to pre-retirees during that golden tax window. It's the strategic income window. It's when you retire before those RMDs begin, and you often have a window of two, three, maybe five years or so where your taxable income is usually low. You're living off of savings in your brokerage assets, your W-2 income is gone, maybe social security is turned on, and your tax rate may be lower than it's been since the early days of your career.

That's the window to convert pre-tax IRA or 401k money into a Roth deliberately, strategically, up to the top of whatever bracket makes the most sense for your situation. You're not converting everything, you're filling the bracket intentionally and then stopping. Now, why does this matter? Well, because that money, once converted, grows 100% tax-free. It doesn't add to your RMDs later. It doesn't stack on top of Social Security and push you into a higher bracket.

And it doesn't get hit by Irma, which we'll address in a moment. One more thing on timing. If you can convert during a market downturn, when your IRA balance is temporarily lower, you're moving those depressed shares at a lower value. But when the recovery happens, that growth is now entirely tax-free. It's one of the only situations where market decline actually creates a planning opportunity. But keep in mind, you would need funds outside of your IRA to pay for the tax consequence to make this a viable option.

And here's what happens when the Roth conversion window or overall income in retirement isn't managed carefully. And this leads us to move number four, understanding Irma before it surprises you. So, Irma stands for income-related monthly adjustment amount. So, in plain English, it's just a Medicare surcharge based on your income. And most people don't even know that it exists until they get hit with the bill. So, here's how it works.

Medicare looks at your tax return from two years prior. If your income cross certain thresholds, your part B and part D premiums increase, potentially pretty significantly in cliff-like jumps. So, for married couples, the first threshold is just over 200,000. And I've said this before in my other videos, the retirees who get hit the hardest aren't really the wealthiest ones. They're the ones whose income just wasn't coordinated.

So, a large Roth conversion in the wrong year, an unexpected capital gain, and RMDs stacking on top of Social Security and a pension, any one of those unplanned can push you over that cliff. Now, one thing worth knowing, if you recently retired or you're preparing for retirement and your income is going to be significantly lower, you don't have to wait for Medicare to catch up. You can file form SSA-44, it's a life-changing event form to request that Medicare use your more recent lower income instead of the 2-year look-back.

And of course, retirement qualifies as a triggering event. It's a simple form, and for the right person, it can eliminate a surcharge that you just shouldn't be paying. Quick pause before move number five. If you're within 5 years of retirement and you haven't had someone map out your withdrawal sequence, your Roth conversion window, maybe your Irma exposure, all of that together as one plan, well, that's exactly what we do at The Clark Group.

You can use the link in the description to schedule a call with our team, and the first conversation is always complimentary. Now, we're only halfway through the list, and frankly, the next few moves are the ones that most people haven't touched at all. Not because they're complicated, but because nobody told them that they needed to do so. Now, move number five. Get clarity on Social Security timing. The timing of when you begin collecting Social Security is one of the most consequential decisions that you'll make in retirement, and it's almost entirely irreversible once made.

The basic math, for every year you delay claiming past 62, your benefit grows by roughly 6 to 8%. If you delay all the way to 70, your benefit can be 76% higher than if you claimed early. So, for a couple, the lifetime difference can be substantial. Money that was always yours, but just left on the table. But of course, delaying isn't always the right answer. There are absolutely situations where claiming early makes sense.

If your health is a factor, if you need the income, or if the math just works better for your specific situation, well, then yes, claiming early does make sense. And the decision gets even more layered with spousal strategies. A lower-earning spouse can claim up to 50% of the higher earner's benefit. And a surviving spouse can step up to the higher earner's full benefit after they pass. That means the claiming decision you make today affects your spouse's income for the rest of their life as well, potentially decades from now.

It also interacts directly with your tax picture because up to 85% of your benefit can be included in taxable income, which stacks on top of things like Irma, Roth conversions, RMDs, and ways that people just never modeled out. So clearly this is not a binary decision. It takes thought. It takes modeling. And the year before you retire is when that work needs to happen, not the week before you call the Social Security office.

All right, now move number six. Get an umbrella policy. So remember what I mentioned at the start of the video about assets being more exposed than most people realize? Well, this is exactly what I was talking about. And for some reason this one surprises a lot of people because you've spent decades building wealth and the moment you retire, you become a bigger target. Not for anything that you've specifically done, but just because you have more wealth.

A lawsuit from a car accident, a claim from someone injured on a rental property, a legal dispute that just escalates. Any one of these without the right protection can reach directly into your personal assets. And here's what most high net worth families don't realize. A standard home and auto policy typically caps out at 300 or 500,000 dollars. So for someone with 2 million, 5 million, or even a 10 million dollar portfolio, that is not coverage.

That is just a down payment on a lawsuit. And an umbrella policy adds a million to 5 million or even more of that liability coverage on top of your existing policies for potentially just a few hundred dollars a year. So it's one of the best dollar for dollar risk management tools available and it's almost always under utilized. But here's the part that really surprises people. Your brokerage account, your taxable account, the one sitting outside of your retirement accounts, is generally not protected in a lawsuit.

And neither is an inherited IRA. So if you're holding inherited assets that never made it into a trust, those funds can be reached by creditors. And most people don't find this out until they're actually in a lawsuit. So before you retire and your wealth has grown, review your liability coverage. Make sure the umbrella is in place if you don't have proper protection. Make sure that you know which assets are exposed and which are protected.

And since we're on the topic of protection, let's talk about protecting your assets and who it's all for once you pass away. So move number seven, update your beneficiary designations. Believe it or not, beneficiary designations override your will and most people don't know that. So here's the thing. This isn't just a mistake made by people who aren't paying attention. I've seen this trip up some of the most financially sophisticated people that I've worked with.

Engineers, CFOs, business owners, people who had accountants, attorneys, maybe even advisors. Nobody thinks to check a beneficiary form when life is moving fast. There's actually a well-known legal case that illustrates this perfectly. A man named Jeffrey Rawlinson named his girlfriend as the beneficiary of his retirement account back in 1987. He later married, divorced, and ultimately ended another long-term relationship.

But he never once updated that original beneficiary form. So when he passed, the account went to a woman he hadn't spoken to in decades and his family had no legal recourse. The form was the contract. So beneficiary designations on retirement accounts, life insurance, annuities, and even some brokerage accounts are legal contracts. So whatever name is on that form is who gets the money. Full stop. No will, no trust, no judge can override it.

So before you retire, log into every account and verify every designation. Make sure primary and contingent beneficiaries are current. Make sure the people that you want to receive your assets are named and the people that you no longer intend to benefit from are removed. It takes probably about an hour and the cost of skipping it can last generations, which leads to move number eight, get your estate documents in order.

So, even above the beneficiary designation, this is the move that surprises even the most financially sophisticated clients that we work with. Not because the concept is complex, but because of how many people with serious wealth just don't have this done, or they think that they do when they actually don't. I had a client, I'll call him Richard. He retired after a 30-year career and he had some serious wealth. He had a portfolio creeping up toward the estate tax territory.

He even had an accountant and a financial advisor. So, by every measure, a sophisticated guy who had done the work, but he had never created a trust. His assets, specifically his real estate, were titled in just his name alone. So, if he passed away before making a change, his real estate and several other accounts would go through probate. It's a public court-supervised process that in certain states can take about a year, cost a meaningful percentage of the estate in fees, and expose every detail of what he owned in public records.

So, not ideal. Now, in addition to probate, because Richard's estate was starting to approach that federal exemption threshold, there were strategies that were available to him. Gifting strategies, irrevocable trust, charitable vehicles. So, by utilizing these strategies, you can actually help eliminate the estate tax exposure. He just never got the plan in front of the right people, but fortunately, it wasn't too late.

And that's the thing about estate planning, you don't know what you don't know. And Richard wasn't careless, far from it. He just never had someone sit him down and show him what his estate actually looked like from the outside. So, at a minimum, you very likely need four documents before you retire. A will, a durable power of attorney, a health care directive, and a health care proxy. If you have significant assets or even real estate, a trust is also potentially warranted.

And if your documents are more than 10 years old without a review, that's not a plan. Get this in front of an estate attorney before you retire, not after. So, getting the legal structure right protects what you've built. Now, the last move is about protecting the person that you built it with. So, move number nine, model the survivor scenario. This is the move that most people defer, avoid, or just skip entirely. And it's often the most important one.

So, I want to tell you about a woman, and I'll call her Sandra. Her husband passed away about eight months after they retired together. They'd done a lot of things right. They had a financial advisor, a plan, they were organized, but nobody had ever modeled what the finances look with just one of them alive. So, what happened was financially brutal. Social Security dropped from two checks to just one. The higher earners benefit.

And the other one, gone. The pension had been set up on a single life election to maximize the monthly payment. So, that income stopped entirely. Their tax filing status shifted from married filing jointly to single, compressing her brackets into basically half. And what about the expenses? Those surely dropped in half. Things like the mortgage, property taxes, health care? Not true. They barely moved. So, she spent the first 2 years of widowhood restructuring finances that should have been structured before her husband retired.

And now she was under enormous emotional stress, alone, making decisions that had no good options left. This is called the survivor gap. And for most couples, it exists. So, protecting your spouse isn't one decision. It's the sum of all the decisions that we've talked about today. The pension election, Social Security timing, how assets are titled, withdrawal sequencing, Roth conversions. So, you want to model the survivor scenario before you retire, not as a backup plan, as a core part of your retirement plan.

So, Sandra's situation wasn't caused by bad decisions. It was caused by default decisions, because nobody had ever sat them down and modeled the full picture before her husband signed that pension form. So, your withdrawal strategy, tax plan, Roth conversion window, Irma, social security timing, the umbrella coverage, beneficiaries, estate documents, the survivor scenario. These aren't separate topics. They're one connected plan, and every piece affects the others.

So, this is exactly the kind of planning that our firm was built around. It's the framework that we use to walk clients through all of it, and it's called the Profit Process. We built this specifically for pre-retirees with real complexity, people who want their retirement to be as intentional as the career that built it. So, if you have over a million dollars saved and nobody has coordinated these nine areas into one retirement plan, that is the gap that we solve.

You can use the link in the description, and you can book a time with The Clark Group. The first conversation, as I mentioned, it's always complimentary. It's a way for us to learn about you, for you to learn about our process, and see if there's a good fit. And if you found this video helpful, please feel free to subscribe. We post content like this every week for people who want to retire with confidence and stay wealthy with intention.

Thank you so much for watching, and I will see you in the next video.