A Financial Advisor’s Pre-Retirement Checklist

Retirement is not just a financial milestone. It is a transition that changes how you generate income, pay taxes, manage healthcare, invest your savings, and plan for the future.

Many retirees focus almost entirely on building their retirement accounts, but the years immediately before retirement are often when the most important decisions get made. Choices involving Social Security, Medicare, taxes, pensions, investments, and withdrawal strategies can affect your financial security for decades.

Some of these decisions are irreversible. Others can create unexpected tax consequences or increase financial stress if they are not reviewed carefully.

Before you leave your job, here are 10 critical retirement decisions worth reviewing carefully.

1. Can You Actually Afford to Retire?

Why It Matters

This is the most important retirement question and often the most emotional one.

Many people focus on whether they have “enough” saved, but retirement planning is really about whether your income can sustainably support your lifestyle over a retirement that could last 25 to 30 years.

The biggest risk is not simply running out of money. It is retiring without understanding:

• how your income will work

• how inflation affects spending

• how market declines impact withdrawals

• how taxes reduce retirement income

• how healthcare costs fit into the plan

What to Review

• Your expected monthly retirement expenses

• Guaranteed income sources

• Investment withdrawal strategy

• Inflation assumptions

• Sequence of returns risk

• Emergency reserves

• Expected retirement longevity

Example

A couple retiring at age 62 may initially believe they only need $7,000 per month. But after factoring in healthcare premiums, inflation, travel, taxes, home maintenance, and irregular expenses, their actual spending may be closer to $9,000 monthly.

That difference can significantly impact how sustainable their retirement plan is.

Key Insight

Retirement success is not just about portfolio size. It is about whether your income plan can survive inflation, market volatility, and unexpected expenses over time.

2. When Should You Claim Social Security?

Why It Matters

Social Security is one of the most important retirement income decisions because claiming timing can permanently affect your lifetime benefits.

Many retirees underestimate:

• how much benefits increase by waiting

• the impact on surviving spouses

• how taxes affect benefits

• how working before full retirement age can temporarily reduce payments

What to Review

• Claiming at 62 vs. full retirement age vs. 70

• Spousal benefits

• Survivor benefits

• Earnings limits before full retirement age

• Taxation of benefits

• Longevity expectations

• Coordination with retirement withdrawals

Example

A retiree eligible for $2,200 monthly at full retirement age could receive roughly:

• $1,540 at age 62

• $2,200 at full retirement age

• nearly $2,900 at age 70

That difference can significantly impact lifetime household income, especially for married couples.

Important Note

The best Social Security strategy is not always about maximizing benefits. It is about coordinating benefits with taxes, investments, pensions, and overall retirement income planning.

3. Have You Planned for Healthcare and Medicare Costs?

Why It Matters

Healthcare is one of the biggest retirement expenses and one of the largest sources of financial anxiety for retirees.

People retiring before age 65 often underestimate the cost of private health insurance before Medicare begins. Others make Medicare enrollment mistakes that create lifelong penalties or unexpected coverage gaps.

What to Review

• Healthcare costs before Medicare eligibility

• Medicare enrollment deadlines

• Medicare Part B and Part D coverage

• Medicare Advantage vs. Medigap

• IRMAA surcharges

• Long-term care exposure

• Health Savings Account planning

Example

A retiree who delays Medicare enrollment because they misunderstand employer coverage rules could face permanent premium penalties later.

Similarly, higher-income retirees may unknowingly trigger IRMAA surcharges that significantly increase Medicare premiums.

Key Insight

Healthcare planning is not just about insurance coverage. It is also about tax planning, income management, and preparing for future care needs.

4. Have You Reviewed Your Retirement Tax Strategy?

Why It Matters

One of the biggest surprises retirees face is discovering that retirement does not automatically lower taxes.

Different retirement accounts are taxed differently, and poor withdrawal sequencing can unintentionally push retirees into higher tax brackets.

What to Review

• Roth conversion opportunities

• Future RMD exposure

• Tax diversification

• Capital gains planning

• Social Security taxation

• Medicare IRMAA thresholds

• Withdrawal sequencing

Example

A retiree with large traditional IRA balances may face substantial required minimum distributions later in retirement, even if they do not need the income.

Strategic Roth conversions before RMD age can sometimes reduce future tax exposure and improve long-term flexibility.

Important Note

Many retirees focus on investment returns but overlook lifetime tax efficiency. The way retirement income is structured can be just as important as portfolio performance.

5. Do You Have a Reliable Retirement Income Strategy?

Why It Matters

Retirement changes the financial mindset from accumulation to distribution.

That transition can feel uncomfortable because your paycheck stops and your portfolio becomes the primary income source.

Without a clear strategy, retirees often either overspend too early or become afraid to spend at all.

What to Review

• Which accounts to withdraw from first

• Cash reserve strategy

• Sequence of returns risk

• Dividend income assumptions

• Withdrawal sustainability

• Coordination between income sources

Example

Two retirees with identical portfolios can experience very different outcomes depending on when market declines occur early in retirement.

Large withdrawals during market downturns can permanently damage long-term portfolio sustainability.

Key Insight

A retirement income plan should balance:

• stability

• flexibility

• tax efficiency

• long-term growth potential

6. Is Your Investment Risk Appropriate for Retirement?

Why It Matters

Many people approaching retirement ask the same questions:

• “Am I taking too much risk?”

• “What if there’s another 2008?”

• “Should I move everything to cash?”

The challenge is balancing protection with growth.

Being too aggressive can increase volatility at the wrong time. But being too conservative can create inflation risk and reduce long-term purchasing power.

What to Review

• Current asset allocation

• Portfolio downside risk

• Retirement timeline

• Cash reserves

• Bond allocation

• Inflation protection

• Income needs from investments

Example

A retiree holding overly conservative investments may struggle to maintain purchasing power over a 25-year retirement, especially during periods of elevated inflation.

Important Note

Retirement investing is not about eliminating risk entirely. It is about managing risk appropriately for your goals, income needs, and time horizon.

7. Have You Reviewed Your Pension Options Carefully?

Why It Matters

Pension elections are often irreversible.

For retirees with pensions, decisions involving lump sums, survivor benefits, and payout structures can have major long-term implications for household income and estate planning.

What to Review

• Lump sum vs. monthly pension

• Survivor benefit elections

• Inflation adjustments

• Pension solvency considerations

• Tax implications

• Coordination with Social Security

Example

Choosing the highest monthly pension payout without survivor protection may leave a surviving spouse with significantly reduced household income later.

Key Insight

The best pension decision depends on:

• health

• marital status

• other retirement assets

• legacy goals

• guaranteed income needs

8. Have You Updated Your Estate Plan and Beneficiaries?

Why It Matters

Many retirees assume their estate documents are current when they have not reviewed them in years.

Outdated beneficiary designations and missing legal documents can create unnecessary complications for family members later.

What to Review

• Wills and trusts

• Powers of attorney

• Healthcare directives

• Beneficiary designations

• Transfer-on-death accounts

• Inherited IRA rules

• Estate tax considerations

Example

An outdated IRA beneficiary form can override instructions written in a will.

That mistake can unintentionally direct retirement assets to the wrong person.

Important Note

Estate planning is not just about wealth transfer. It is also about maintaining control, simplifying administration, and protecting family members during difficult situations.

9. Have You Reviewed Your Debt and Spending Plan?

Why It Matters

Retirement spending often changes more than people expect.

Some retirees spend less. Others spend significantly more during the first decade of retirement due to travel, hobbies, home projects, or helping family members financially.

What to Review

• Mortgage payoff decisions

• Credit card debt

• Retirement budget assumptions

• Downsizing considerations

• Support for adult children

• Large one-time expenses

• Lifestyle expectations

Example

A retiree may choose to keep a low-interest mortgage rather than aggressively paying it off in order to preserve liquidity and investment flexibility.

The right decision depends on both financial and emotional factors.

Key Insight

A realistic retirement spending plan should account for both expected and unexpected expenses.

10. What Happens If Something Goes Wrong?

Why It Matters

One of the biggest retirement planning mistakes is assuming everything will go according to plan.

Strong retirement planning includes preparing for uncertainty.

What to Review

• Long-term care exposure

• Widowhood planning

• Emergency reserves

• Market downturn scenarios

• Caregiving costs

• Family health history

• Insurance coverage

Example

A major healthcare event or long-term care need can dramatically change retirement spending and income needs later in life.

Preparing in advance can help reduce financial stress during difficult situations.

Important Note

Retirement planning is not about predicting the future perfectly. It is about building flexibility into the plan.

Common Retirement Mistakes to Avoid

Some of the most common retirement mistakes happen during the transition into retirement itself.

These include:

• Claiming Social Security too early without reviewing alternatives

• Ignoring tax planning opportunities before RMD age

• Underestimating healthcare costs

• Taking too much or too little investment risk

• Failing to stress-test retirement income

• Overlooking beneficiary designations

• Retiring without a coordinated withdrawal strategy

• Assuming retirement spending will remain constant

Final Thoughts

Retirement is one of the biggest financial transitions of your life. The decisions made in the years immediately before retirement can affect your income, taxes, healthcare costs, and financial flexibility for decades.

Many of the most expensive retirement mistakes are preventable with proactive planning and careful coordination.

At Greenbush Financial Group, we believe retirement planning should go beyond investment performance alone. A successful retirement plan coordinates income, taxes, healthcare, investments, estate planning, and long-term risk management into a strategy designed to support both confidence and flexibility throughout retirement.

Before you stop working, make sure you review the decisions that matter most.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

FAQ Section

1. What is the most important financial decision before retirement?

   The most important decision is determining whether your retirement income plan is sustainable. This includes reviewing spending needs, withdrawal strategies, taxes, inflation, and healthcare costs.

2. When should I claim Social Security?

   The right claiming age depends on your health, marital status, income needs, longevity expectations, and overall retirement plan. Claiming early permanently reduces benefits, while delaying can increase lifetime income.

3. How much should I have saved before retirement?

   There is no universal number. Retirement readiness depends on your expected spending, income sources, taxes, healthcare costs, and lifestyle goals.

4. What are the biggest retirement tax mistakes?

   Common mistakes include ignoring Roth conversion opportunities, triggering higher Medicare premiums, poor withdrawal sequencing, and failing to prepare for RMDs.

5. Should I pay off my mortgage before retirement?

   It depends on your cash flow, interest rate, liquidity needs, and personal comfort level. Some retirees prioritize debt elimination, while others prefer maintaining investment flexibility.

6. How do I prepare for healthcare costs in retirement?

   Review Medicare options, estimate out-of-pocket expenses, understand IRMAA rules, and consider how long-term care costs could affect your retirement plan.

7. What happens if the market crashes early in retirement?

   Early retirement market declines can increase sequence of returns risk, especially when withdrawals are occurring simultaneously. Maintaining proper diversification and cash reserves can help reduce this risk.

8. Why is retirement planning more than just investing?

   Retirement planning also involves taxes, healthcare, income coordination, estate planning, Social Security, spending strategy, and risk management decisions that affect long-term financial security.

Retirement Income Planning: How to Pay Yourself Without a Job

The hardest part of retirement is not saving money. It is turning your savings into a paycheck that can last for decades. A strong retirement income strategy combines Social Security, investments, and cash reserves in a way that helps retirees manage taxes, market downturns, and long-term spending needs. At Greenbush Financial Group, we often find that retirees feel more confident once they move from random withdrawals to a structured retirement paycheck plan.

The Hardest Part of Retirement Is Not Saving. It’s Replacing Your Paycheck.

For most of your working life, income was automatic.

You worked, your paycheck arrived, taxes were withheld, and bills were paid.

Retirement changes that system overnight.

Now your income may need to come from:

• Social Security

• Investment accounts

• IRAs

• Roth IRAs

• Cash savings

• Brokerage accounts

• Maybe a pension

That transition can feel uncomfortable even for financially responsible retirees.

Many people spend decades learning how to save for retirement but very little time learning how to withdraw from retirement.

That is why one of the biggest retirement questions becomes:

“How do I actually turn my savings into reliable monthly income?”

The answer is usually not:

• Living only on dividends

• Using the 4% rule blindly

• Pulling money randomly from accounts

• Staying fully invested with no cash reserves

A retirement paycheck works best when it is intentional, flexible, tax-aware, and designed to handle both good markets and bad ones.

What a Retirement Paycheck Actually Looks Like

A retirement paycheck is usually built from three primary sources:

1. Guaranteed income

2. Investment withdrawals

3. Cash reserves

Each source plays a different role.

The goal is not maximizing investment returns.

The goal is creating sustainable monthly income while reducing unnecessary financial stress.

The 3 Buckets of Retirement Income

Bucket #1: Guaranteed Income

This includes predictable income sources such as:

• Social Security

• Pensions

• Certain annuities

For many retirees, this income helps cover core living expenses like:

• Housing

• Utilities

• Groceries

• Insurance

• Basic healthcare costs

Guaranteed income creates stability.

The more predictable income a retiree has, the less pressure there may be on investment withdrawals during difficult markets.

Bucket #2: Investment Withdrawals

This is where retirees often generate additional income beyond Social Security.

Withdrawals may come from:

• Traditional IRAs

• 401(k)s

• Taxable brokerage accounts

• Roth IRAs

This is also where many costly mistakes happen.

Without a strategy, retirees may:

• Withdraw too much

• Trigger unnecessary taxes

• Increase Medicare premiums

• Sell investments during downturns

• Deplete the wrong accounts too early

The order of withdrawals matters.

Bucket #3: Cash Reserves

Cash reserves are one of the most overlooked parts of retirement income planning.

Cash reserves may include:

• Savings accounts

• Money market funds

• CDs

• Treasury bills

• Short-term bond holdings

The purpose of cash is not maximizing returns.

Its purpose is flexibility.

Cash reserves help retirees avoid selling investments during bad markets when emotions are elevated and portfolio values are temporarily down.

How Retirement Income Is Structured Month to Month

Retirement income planning usually starts with one simple question:

“How much do you actually need each month?”

Step 1: Identify Monthly Spending Needs

Example:

John and Linda retire at age 66.

They estimate they need:

• $8,000/month after taxes

That includes:

• Property taxes

• Insurance

• Healthcare

• Travel

• Utilities

• Food

• Entertainment

• Home maintenance

Step 2: Subtract Guaranteed Income

They receive:

• $4,500/month combined from Social Security

That leaves:

• $3,500/month that must come from investments and savings

This is called the income gap.

Step 3: Build a Withdrawal Strategy

Their assets include:

• $950,000 in IRAs

• $300,000 in brokerage accounts

• $150,000 in cash reserves

• $200,000 in Roth IRAs

Instead of taking income randomly, they decide to:

• Use brokerage assets first for flexibility

• Maintain 18 months of cash reserves

• Delay larger IRA withdrawals strategically

• Refill cash reserves during stronger market periods

• Keep Roth assets growing longer for future flexibility

Now their retirement income becomes organized and repeatable rather than reactive.

Why Random Withdrawals Can Create Long-Term Problems

Many retirees withdraw from whichever account feels easiest at the time.

That can create ripple effects.

Example

Suppose a retiree withdraws $80,000 entirely from an IRA for spending and home renovations.

That withdrawal may:

• Push income into higher tax brackets

• Increase taxation of Social Security

• Trigger Medicare IRMAA surcharges

• Reduce future Roth conversion opportunities

A different withdrawal strategy may have created a better long-term outcome.

Retirement income planning is not just about generating cash.

It is about generating cash efficiently.

Why Cash Reserves Matter So Much in Retirement

Many retirees underestimate how emotionally different investing feels after paychecks stop.

During working years, market declines may feel temporary because new paychecks continue arriving.

Retirement changes that dynamic.

Now withdrawals may be happening while investments are falling.

That creates what planners call sequence-of-returns risk.

What Is Sequence Risk?

Sequence risk occurs when poor market returns happen early in retirement while withdrawals are occurring simultaneously.

This combination can permanently reduce long-term portfolio sustainability.

Example

Two retirees start with identical portfolios and identical spending.

One is forced to sell investments during a major downturn to fund living expenses.

The other uses cash reserves temporarily while allowing investments time to recover.

The long-term outcomes can look dramatically different.

How Much Cash Should Retirees Keep?

There is no perfect answer.

But many retirees feel more comfortable keeping:

• 12–24 months of planned withdrawals in cash or short-term reserves

The appropriate amount depends on:

• Risk tolerance

• Market exposure

• Spending flexibility

• Healthcare concerns

• Pension income

• Comfort during volatility

Important Note

Too little cash may force investment sales during downturns.

Too much cash may reduce long-term purchasing power because inflation slowly erodes cash value.

The goal is balance.

Should Retirees Live Off Dividends Only?

Many retirees like the idea of “never touching principal” and living entirely off dividends.

While dividend income can help, retirement income planning is usually more nuanced than that.

Dividend-only strategies can create problems such as:

• Concentrated portfolios

• Reduced diversification

• Lower flexibility

• Chasing yield

• Tax inefficiencies

What matters most is not whether income comes from dividends or withdrawals.

What matters is:

• Total return

• Sustainability

• Tax efficiency

• Risk management

• Flexibility during market declines

A well-designed retirement paycheck should focus on the overall income strategy, not just one type of investment income.

How Social Security Fits Into a Retirement Paycheck

Social Security is often the foundation of retirement income.

The timing decision affects:

• Monthly income

• Portfolio withdrawals

• Survivor income

• Longevity protection

• Taxes

Claiming at 62

Taking benefits early provides income sooner but permanently reduces monthly payments.

This may reduce portfolio withdrawals initially.

But it also lowers guaranteed lifetime income.

Claiming at Full Retirement Age

Waiting until full retirement age increases monthly benefits and avoids early claiming reductions.

For many retirees, this creates a balance between income needs and future benefit growth.

Delaying Until Age 70

Benefits increase each year benefits are delayed beyond full retirement age.

For healthy retirees, delayed Social Security can act as additional protection against longevity risk later in retirement.

Especially for married couples, this can significantly affect survivor income.

How Retirees Avoid Selling Investments During Market Declines

A strong retirement paycheck strategy is designed before market volatility happens.

That strategy often includes:

• Cash reserves

• Diversification

• Flexible withdrawals

• Annual tax reviews

• Periodic rebalancing

• Spending flexibility

Example Strategy

A retiree may:

• Hold 18 months of withdrawals in cash

• Use Social Security for core expenses

• Withdraw from brokerage accounts during stable markets

• Reduce discretionary spending during downturns

• Refill cash reserves after stronger market periods

This creates options during stressful periods instead of forcing emotional decisions.

How Often Should Retirement Income Plans Be Reviewed?

Retirement income planning is not a one-time event.

Most retirees should review their strategy annually.

Areas worth reviewing include:

• Withdrawal rates

• Tax brackets

• Roth conversion opportunities

• Medicare IRMAA exposure

• Cash reserve levels

• Investment allocation

• Spending changes

• Inflation adjustments

The goal is not constantly changing the plan.

The goal is making thoughtful adjustments as retirement evolves.

A Real-World Retirement Paycheck Example

Susan and Mark retire at ages 65 and 63.

They need:

• $9,000/month after taxes

Their income plan looks like this:

Their Strategy

They maintain:

• 18 months of cash reserves

• Moderate stock exposure for long-term growth

• Diversification across account types

• Annual withdrawal reviews

• Flexible discretionary spending

During strong markets, they replenish cash reserves.

During weaker markets, they temporarily rely more heavily on cash rather than aggressively selling investments.

This approach helps reduce emotional pressure during volatility.

Common Retirement Paycheck Mistakes

1. Withdrawing Randomly From Accounts

Random withdrawals often create tax inefficiencies and unnecessary portfolio stress.

2. Keeping Too Little Cash

Without adequate reserves, retirees may be forced to sell investments during downturns.

3. Keeping Too Much Cash

Excessive cash can reduce long-term purchasing power because of inflation.

4. Ignoring Taxes

Taxes affect:

• IRA withdrawals

• Social Security taxation

• Medicare premiums

• Roth conversion opportunities

Retirement income should be coordinated at the household level.

5. Assuming the Same Strategy Works Forever

Retirement income plans should evolve over time as:

• Spending changes

• Healthcare costs rise

• Markets fluctuate

• RMDs begin

• Tax laws change

Flexibility matters.

What Retirees Often Discover

Many retirees initially focus almost entirely on investment performance.

But over time, confidence often comes more from:

• Organized cash flow

• Predictable income

• Tax coordination

• Flexibility during downturns

• Understanding where each dollar comes from

A retirement paycheck is not about finding a perfect strategy.

It is about building a system that feels sustainable and manageable over time.

Final Thoughts

The hardest part of retirement is usually not building wealth.

It is learning how to turn decades of savings into reliable monthly income.

A thoughtful retirement paycheck strategy can help retirees:

• Reduce financial stress

• Improve tax efficiency

• Navigate market downturns

• Protect long-term portfolio sustainability

• Feel more confident about spending decisions

At Greenbush Financial Group, we often find that retirees gain confidence when they stop thinking about retirement income as random withdrawals and start viewing it as a coordinated household paycheck strategy.

The goal is not predicting every market movement perfectly.

The goal is creating a flexible income system that can support retirement through both strong markets and difficult ones.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

FAQ

1. How do retirees create a monthly paycheck from investments?
   Most retirees combine Social Security, investment withdrawals, and cash reserves to create consistent monthly income. Withdrawals are typically coordinated across different account types to improve tax efficiency and manage market risk.
2. How much cash should retirees keep?
   Many retirees benefit from holding 12-24 months of planned withdrawals in cash or short-term reserves, especially during the early retirement years.
3. What accounts should retirees withdraw from first?
   The answer depends on taxes, age, income needs, and long-term planning goals. Many retirees use a combination of taxable accounts, IRAs, and Roth accounts strategically rather than withdrawing from only one source.
4. What is sequence-of-returns risk?
   Sequence risk occurs when poor market returns happen early in retirement while withdrawals are being taken. This can permanently reduce long-term portfolio sustainability.
5. Should retirees rely only on dividends for income?
   Not necessarily. While dividends can help, most retirement income plans work better when they focus on total return, diversification, flexibility, and tax efficiency rather than dividends alone.
6. How does Social Security fit into a retirement paycheck?
   Social Security often acts as the foundation of retirement income by covering a portion of essential expenses and reducing pressure on investment withdrawals.
7. How often should retirement income plans be reviewed?
   Most retirees should review income strategies annually to evaluate taxes, spending, investment allocation, withdrawal rates, and healthcare costs.
8. What is the biggest retirement income mistake?
   One of the biggest mistakes is withdrawing money randomly from investment accounts without coordinating taxes, cash reserves, and long-term income sustainability.

The First Year of Retirement: 7 Financial Moves to Make…and 5 to Avoid

The first year of retirement is one of the most important financial transition periods you’ll ever experience. Decisions around withdrawals, Social Security, taxes, investments, and healthcare can affect your retirement income for decades. Many retirees focus on enjoying newfound freedom but overlook key planning opportunities that exist before year-end and before required distributions begin. At Greenbush Financial Group, we often see that the retirees who build confidence early are the ones who slow down and make intentional first-year decisions.

The First Year of Retirement Is a Transition Year, Not Just a Celebration Year

Retirement changes more than your schedule. It changes how your household generates income, pays taxes, handles market volatility, and manages financial decisions.

For decades, most people operated under a simple formula:

• Work

• Receive paycheck

• Save for retirement

• Repeat

Then retirement arrives, and suddenly everything reverses.

Now your investments may need to generate income. Tax planning becomes more flexible but also more important. Healthcare costs become more visible. Market declines can feel more emotional once paychecks stop.

The first year of retirement is often what we call an “adjustment year.” The decisions made during this period can shape:

• Future tax brackets

• Medicare premiums

• Portfolio longevity

• Social Security income

• Roth conversion opportunities

• Spending habits

• Confidence during market volatility

The goal is not perfection.

The goal is avoiding expensive mistakes while building a sustainable retirement income strategy.

7 Smart Financial Moves to Make During Your First Year of Retirement

1. Build a Retirement Paycheck Plan Before Taking Withdrawals

One of the biggest mistakes new retirees make is randomly pulling money from accounts as expenses arise.

Retirement income should be coordinated intentionally.

Before taking withdrawals, determine:

• How much monthly income you actually need

• Which accounts will fund that income

• How taxes will affect withdrawals

• Which accounts should remain invested longer

• How cash reserves will be handled

Many retirees discover their actual spending differs from what they expected.

The first year is often more expensive because of:

• Travel

• Home projects

• Healthcare changes

• Helping family

• Celebration spending

A paycheck-style withdrawal strategy can create structure and reduce emotional decision-making.

Example

A retired couple needs $7,000 per month after taxes.

They have:

• $1.2 million invested

• $700,000 in IRAs

• $300,000 in taxable accounts

• $200,000 in Roth IRAs

• No Social Security yet

Instead of withdrawing entirely from their IRA, they may benefit from:

• Using taxable savings first

• Realizing lower capital gains

• Keeping taxable income lower

• Preserving future Roth growth opportunities

The order of withdrawals matters more than many retirees realize.

2. Reevaluate Whether to Claim Social Security Immediately

Many retirees automatically claim Social Security as soon as work ends.

That decision can permanently reduce lifetime income.

For healthy retirees with adequate assets, delaying benefits can sometimes improve long-term retirement security.

Key factors include:

• Health and longevity expectations

• Spousal benefits

• Survivor income planning

• Tax brackets

• Portfolio withdrawal needs

• Other income sources

Important Note

Claiming early is not always wrong.

But the first year of retirement is the time to evaluate the decision carefully rather than defaulting to “I stopped working, so I should claim now.”

Example

A retiree eligible for $2,200/month at age 62 may receive roughly $3,900/month if delaying until age 70.

For married couples, this can significantly affect survivor income later.

3. Review Roth Conversion Opportunities Before Year-End

The years between retirement and Required Minimum Distributions (RMDs) can create unusually low-income tax years.

Those years may offer valuable Roth conversion opportunities.

This is one of the most overlooked planning opportunities in retirement.

Converting portions of a traditional IRA to a Roth IRA during lower-income years may help:

• Reduce future RMDs

• Lower future tax exposure

• Create tax-free income later

• Reduce widow’s tax risk

• Improve long-term tax flexibility

Example

A couple retires at 64 and delays Social Security until 67.

For several years, their taxable income may be significantly lower than during their working years.

They may intentionally convert enough IRA assets annually to “fill up” a lower tax bracket before:

• RMDs begin

• Social Security increases taxable income

• Medicare IRMAA thresholds become an issue

Key Insight

The first retirement year is often more valuable for tax planning than people realize because income may temporarily drop before other retirement income sources begin.

4. Review Medicare IRMAA Exposure Early

Many retirees are surprised when Medicare premiums increase because of prior-year income.

IRMAA stands for Income-Related Monthly Adjustment Amount.

Higher-income retirees can pay significantly more for Medicare Part B and Part D premiums.

Common triggers include:

• Large IRA withdrawals

• Roth conversions

• Capital gains

• Selling property

• Large bonuses during retirement year

Why This Matters in Year One

The retirement transition often creates unusual tax years.

Without planning, retirees can accidentally trigger higher Medicare premiums two years later.

Important Note

Sometimes triggering IRMAA still makes sense.

For example, a strategic Roth conversion today may still save substantial taxes later.

The key is understanding the tradeoff before making the move.

5. Keep a Larger Cash Reserve Than You Think You Need

The first few years of retirement are emotionally different from the accumulation years.

Market volatility can feel more stressful when paychecks stop.

A properly structured cash reserve can help retirees avoid selling investments during market declines.

This reserve may cover:

• 12–24 months of spending needs

• Major healthcare expenses

• Home repairs

• Unexpected family support

• Market downturns

What Many Retirees Get Wrong

Some retirees stay fully invested because they fear missing returns.

Others hold too much cash and reduce long-term growth potential.

The goal is balance.

A thoughtful reserve strategy can improve both flexibility and emotional confidence.

6. Recheck Your Investment Risk Now That You’re Retired

Many investors discover they were comfortable with risk only while employed.

Once retirement begins, market declines feel different.

This does not mean retirees should abandon growth investments entirely.

But it does mean portfolios should reflect:

• Withdrawal needs

• Time horizon

• Income stability

• Emotional tolerance for volatility

• Sequence-of-returns risk

What Is Sequence Risk?

Poor market returns early in retirement can create lasting damage when withdrawals are occurring simultaneously.

This is why investment structure matters more after retirement begins.

Common First-Year Mistake

Making aggressive investment changes during a market drop.

Some retirees panic after their first retirement correction and move heavily to cash after losses already occurred.

That can permanently damage long-term retirement sustainability.

7. Review Estate Documents and Beneficiaries

Retirement is a major life transition and an ideal time to revisit estate planning.

Review:

• Wills

• Trusts

• Powers of attorney

• Healthcare directives

• IRA beneficiaries

• Life insurance beneficiaries

Common Issue

Beneficiary designations often override wills.

We regularly see outdated beneficiaries remain unchanged for decades.

Also Important

Review how retirement accounts align with tax planning and legacy goals.

For some households, Roth accounts may be more attractive legacy assets than traditional IRAs because of future tax implications for heirs.

5 Financial Moves to Avoid During Your First Year of Retirement

1. Avoid Major Lifestyle Purchases Too Quickly

Many retirees make large purchases immediately after retiring:

• Vacation homes

• RVs

• Boats

• Major renovations

• Large gifts to children

The issue is not the purchase itself.

The issue is making irreversible financial decisions before understanding your long-term retirement spending pattern.

Better Approach

Give yourself time to observe:

• Actual spending

• Healthcare costs

• Tax changes

• Lifestyle adjustments

• Market conditions

Your first-year spending may not reflect your long-term retirement reality.

2. Avoid Claiming Social Security Without Running the Numbers

Social Security timing is often permanent.

Many retirees underestimate:

• Survivor implications

• Inflation protection

• Longevity risk

• Tax coordination opportunities

Even delaying benefits by a few years can substantially improve long-term retirement income in some situations.

3. Avoid Taking Large IRA Withdrawals Without Tax Planning

Large withdrawals can create ripple effects:

• Higher tax brackets

• Increased Medicare premiums

• Taxation of Social Security

• Reduced Roth conversion opportunities

Example

A retiree withdraws $150,000 from an IRA for home renovations and gifting.

That single decision could:

• Push income into higher brackets

• Trigger IRMAA surcharges

• Increase future tax exposure

Coordinating withdrawals over multiple years may create a better outcome.

4. Avoid Panic Decisions During Market Declines

The first market downturn after retirement can feel emotionally different.

This is often when retirees second-guess their entire plan.

Selling after declines can lock in losses and reduce future recovery potential.

Better Approach

Build a plan before volatility happens:

• Maintain cash reserves

• Diversify appropriately

• Understand withdrawal flexibility

• Revisit spending priorities

The goal is not eliminating volatility.

The goal is reducing the need for emotional decisions during volatility.

5. Avoid Treating Retirement Like a Permanent Vacation

Many retirees spend aggressively during the first year before understanding what sustainable retirement spending actually looks like.

This does not mean retirement should be restrictive.

But retirees benefit from observing:

• Real monthly expenses

• Healthcare changes

• Inflation effects

• Travel patterns

• Long-term lifestyle costs

The first year should help establish sustainable habits and confidence.

A Real-World First-Year Retirement Scenario

John and Susan retire at 64.

They have:

• $1.2 million invested

• $80,000 in cash

• A paid-off home

• No pension

• Estimated spending needs of $7,000/month after taxes

Their first instinct is:

• Claim Social Security immediately

• Withdraw additional income entirely from IRAs

• Renovate the home

• Increase stock exposure after hearing “retirees need growth”

Instead, after planning carefully, they decide to:

• Delay Social Security until age 67

• Use taxable savings for part of their income

• Complete partial Roth conversions annually

• Maintain 18 months of cash reserves

• Reduce portfolio volatility modestly

• Delay large home projects for one year

The Result

They create:

• Lower projected lifetime taxes

• Higher future guaranteed income

• Better Medicare premium management

• Greater flexibility during market declines

• More confidence about long-term sustainability

None of the decisions were dramatic.

But together, they improved the odds of long-term retirement success.

Questions to Review Before December 31 of Your First Retirement Year

Your first retirement year may create unique tax planning opportunities before year-end.

Questions worth reviewing include:

• Should you do a Roth conversion this year?

• Are capital gains unusually low this year?

• Should you harvest gains before Social Security begins?

• Are Medicare IRMAA thresholds an issue?

• Are you withholding enough taxes from withdrawals?

• Should you rebalance investments?

• Are charitable giving strategies appropriate?

• Have beneficiaries been updated?

These decisions are often easier and more valuable before future retirement income sources begin.

Common First-Year Retirement Mistakes

Here are several patterns we frequently see:

• Spending before building a withdrawal strategy

• Claiming Social Security too quickly

• Ignoring Roth conversion windows

• Taking unnecessary taxable withdrawals

• Underestimating healthcare costs

• Overreacting to market volatility

• Maintaining outdated investment allocations

• Forgetting beneficiary reviews

• Making emotional investment changes

The first year of retirement often sets the tone for future decision-making.

Final Thoughts

Your first year of retirement is not just about leaving work. It is about transitioning from accumulation to distribution, from saving to creating sustainable income.

The retirees who navigate this transition best are usually not the ones making dramatic moves.

They are the ones slowing down, reviewing tax opportunities carefully, building intentional withdrawal strategies, and avoiding irreversible mistakes too early.

At Greenbush Financial Group, we often find that the most successful retirement transitions come from thoughtful planning rather than reacting emotionally to headlines, market volatility, or uncertainty.

The goal of year one is not perfection.

It is building confidence, flexibility, and a financial foundation that can support the next several decades.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

FAQ

1. What is the biggest financial mistake retirees make in their first year?
   One of the biggest mistakes is withdrawing money from retirement accounts without a coordinated tax and income strategy. Poor withdrawal sequencing can increase taxes, Medicare premiums, and long-term portfolio stress.
2. Should I take Social Security as soon as I retire?
   Not necessarily. Many retirees benefit from delaying benefits, especially if they expect longer life expectancy or want to maximize survivor income for a spouse.
3. Should retirees use cash first before withdrawing from investments?
   In many cases, maintaining a cash reserve for near-term spending can reduce the need to sell investments during market declines. The right approach depends on taxes, market conditions, and withdrawal needs.
4. Why are Roth conversions often valuable early in retirement?
   Early retirement years may temporarily lower taxable income before RMDs and Social Security begin. This can create opportunities to convert IRA assets at lower tax rates.
5. How much cash should retirees keep during the first year?
   Many retirees benefit from holding 12-24 months of spending needs in cash or short-term reserves, especially during the retirement transition period.
6. Can retirement withdrawals increase Medicare premiums?
   Yes. Large IRA withdrawals, Roth conversions, and capital gains can increase income enough to trigger IRMAA surcharges for Medicare Part B and Part D.
7. Should retirees change investments immediately after retiring?
   Not automatically. However, retirement is a good time to reassess whether your portfolio still aligns with your income needs, risk tolerance, and withdrawal strategy.
8. What should retirees review before the end of their first retirement year?
   Retirees should review taxes, Roth conversions, Medicare income thresholds, investment allocations, withdrawal strategies, and beneficiary designations before December 31.

2026 Bear Market Retirement Planning: How to Avoid Running Out of Money

Retiring during a market downturn can significantly impact how long your retirement savings last due to sequence of returns risk. When withdrawals begin during a declining market, losses can compound and reduce long-term portfolio sustainability. At Greenbush Financial Group, our analysis shows that implementing the right withdrawal, allocation, and income strategies can help protect your retirement plan even in volatile markets.

Why Retiring in a Down Market Is Risky

The primary concern is not just market losses, but when those losses occur.

Sequence of Returns Risk Explained

Sequence risk refers to the timing of market returns relative to your withdrawals.

• Negative returns early in retirement can permanently reduce your portfolio

• Withdrawals during downturns lock in losses

• Recovery becomes more difficult over time

Example

Two retirees with identical portfolios and average returns can have very different outcomes depending on whether market losses occur early or later in retirement.

At Greenbush Financial Group, this is one of the most important risks we plan for when building retirement income strategies.

Strategy 1: Build a Cash Reserve Before Retirement

One of the most effective ways to protect your portfolio is to avoid selling investments during a downturn.

Recommended Approach

• Maintain 1–3 years of living expenses in cash or short-term investments

• Use this reserve instead of withdrawing from stocks during market declines

Why It Works

• Gives your portfolio time to recover

• Reduces the need to sell assets at depressed prices

• Provides psychological comfort during volatility

Strategy 2: Use a Bucket Strategy for Income

Segmenting your portfolio into different “buckets” can help manage risk.

Example Structure

Short-Term Bucket (0–3 years)

• Cash, money markets, short-term bonds

• Used for immediate income needs

Mid-Term Bucket (3–10 years)

• Bonds, conservative investments

• Provides stability and income

Long-Term Bucket (10+ years)

• Stocks and growth assets

• Designed to outpace inflation

At Greenbush Financial Group, we often use this framework to align investments with time horizons and reduce sequence risk.

Strategy 3: Reduce Withdrawals During Down Markets

Flexibility is critical when markets are volatile.

Key Adjustments

• Temporarily reduce discretionary spending

• Delay large purchases

• Pause inflation increases on withdrawals

Example

Instead of withdrawing $60,000 during a downturn, reducing withdrawals to $50,000 can significantly improve long-term sustainability.

Strategy 4: Delay Social Security If Possible

Social Security provides a guaranteed, inflation-adjusted income stream.

Why Delaying Helps

• Increases your monthly benefit

• Reduces reliance on portfolio withdrawals early

• Provides more stable income later in retirement

Planning Insight

Using portfolio assets early while delaying Social Security can sometimes improve long-term outcomes. 

Strategy 5: Rebalance and Stay Invested

Market downturns can create opportunities to rebalance your portfolio.

Key Principles

• Avoid panic selling

• Rebalance to maintain target allocation

• Take advantage of lower asset prices

At Greenbush Financial Group, maintaining discipline during downturns is often the difference between success and failure in retirement planning.

Strategy 6: Consider Part-Time Income or Flexible Retirement

Even a small amount of income can reduce pressure on your portfolio.

Benefits

• Reduces withdrawal rate

• Allows more time for investments to recover

• Provides flexibility in spending

Example

Earning $10,000–$20,000 per year can significantly extend portfolio longevity.

Strategy 7: Tax Planning During Market Downturns

Down markets can create tax planning opportunities.

Strategies

• Harvest capital losses to offset gains

• Convert IRA funds to Roth at lower market values

• Manage taxable income to stay in lower tax brackets

At Greenbush Financial Group, we often see that downturns can be an ideal time to implement tax-efficient strategies.

Common Mistakes to Avoid

• Selling investments out of fear

• Maintaining rigid withdrawal strategies

• Ignoring tax planning opportunities

• Failing to adjust spending

• Overreacting to short-term market movements

A Real-World Scenario

Scenario

• Retiree with $1,000,000 portfolio

• Market declines 20% in first year

• Withdraws $50,000 annually

Without Adjustments

• Portfolio drops significantly

• Recovery becomes difficult

With Strategic Adjustments

• Uses cash reserve instead of selling stocks

• Reduces withdrawals temporarily

• Rebalances portfolio

• Delays Social Security

Result

• Improved long-term sustainability

• Reduced sequence risk impact

Final Thoughts

Retiring during a down market does not mean your plan will fail, but it usually does require adjustments. The key is managing withdrawals, maintaining flexibility, and staying disciplined with your investment strategy.

At Greenbush Financial Group, our analysis shows that retirees who proactively adapt their strategy during downturns are far more likely to preserve their wealth and maintain sustainable income throughout retirement.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

1. Is it a bad idea to retire in a down market?
   Not necessarily, but it increases sequence of returns risk and requires careful planning.
2. How much cash and short-term fixed income should I have in retirement?
   Typically 1 to 3 years of living expenses.
3. Should I stop withdrawals during a downturn?
   Not entirely, but reducing withdrawals can improve long-term outcomes.
4. Can a market downturn ruin my retirement plan?
   It can if not managed properly, especially in the early years of retirement.
5. What is the best strategy during a market downturn?
   Maintain a cash reserve, adjust withdrawals, stay invested, and focus on long-term planning.

Is $1 Million Enough to Retire? A Practical Income and Longevity Analysis

A $1 million retirement portfolio can generate meaningful income, but whether it is enough depends on your spending, longevity, and withdrawal strategy. In many cases, a balanced approach suggests withdrawing around 3% to 4% annually, which translates to $30,000 to $40,000 per year before taxes. At Greenbush Financial Group, our analysis shows that $1 million is often a solid foundation, but rarely a complete solution without additional income sources like Social Security.

How Much Income Can $1 Million Generate in Retirement?

The most common starting point is the safe withdrawal rate, which estimates how much you can withdraw annually without running out of money.

Typical Withdrawal Guidelines

• 3% withdrawal rate = $30,000 per year

• 4% withdrawal rate = $40,000 per year

• 5% withdrawal rate = $50,000 per year (higher risk of depletion)

What This Means in Practice

How Social Security Changes the Equation

For most retirees, Social Security becomes a critical piece of the income plan.

Example Scenario

• Portfolio withdrawal (4%) = $40,000

• Social Security benefit = $25,000

• Total annual income = $65,000

This is where $1 million becomes much more realistic.

Key Insight

Without Social Security, $1 million alone often supports a moderate lifestyle. With Social Security, it can support a comfortable retirement for many households, depending on spending habits.

Inflation: The Silent Risk to Your Retirement Plan

One of the biggest risks retirees face is rising costs over time.

Example

• Year 1 expenses = $60,000

• 20 years later at 3% inflation ≈ $108,000

This is why simply matching your current expenses is not enough. Your income needs to grow over time, which will usually require keeping a portion of your portfolio invested.

At Greenbush Financial Group, we emphasize maintaining a growth component even in retirement portfolios to help offset inflation risk.

How Long Will $1 Million Last?

The longevity of your portfolio depends heavily on:

• Withdrawal rate

• Investment returns

• Market volatility

• Lifespan

General Guidelines

• 3% withdrawal → Often sustainable for 30+ years

• 4% withdrawal → Historically sustainable, but not guaranteed

• 5%+ withdrawal → Increased risk of running out of money

Sequence of Returns Risk

Early market downturns in retirement can significantly impact how long your money lasts. This is known as sequence of returns risk, and it is one of the most important planning factors.

What Lifestyle Does $1 Million Support?

The answer varies widely depending on location, spending, and lifestyle expectations.

Likely Scenarios

Modest Lifestyle

• Lower cost-of-living area

• Limited travel

• Paid-off home

• Income need: $40,000–$60,000

Moderate Lifestyle

• Some travel and discretionary spending

• Healthcare costs rising over time

• Income need: $60,000–$90,000

High-Spending Lifestyle

• Frequent travel, luxury expenses

• Higher healthcare and insurance costs

• Income need: $100,000+

In many cases, $1 million alone may fall short for higher spending lifestyles without additional income sources.

Tax Considerations on Retirement Income

Not all $40,000 of income is actually spendable.

Key Tax Factors

• Traditional IRA/401(k) withdrawals are taxed as ordinary income

• Roth IRA withdrawals may be tax-free

• Social Security may be partially taxable

• Required Minimum Distributions (RMDs) begin in your 70s

At Greenbush Financial Group, tax-efficient withdrawal strategies are often the difference between a plan that works and one that struggles.

Strategies to Make $1 Million Last Longer

There are several ways to improve the sustainability of a $1 million portfolio.

Planning Strategies

• Delay Social Security to increase guaranteed income

• Use Roth conversions to reduce future taxes

• Adjust withdrawals based on market performance

• Maintain a diversified portfolio with growth exposure

• Reduce fixed expenses before retirement

Real-World Insight

We often see that retirees who remain flexible with spending and withdrawals tend to have significantly better outcomes than those who follow a rigid income plan.

When $1 Million May Not Be Enough

There are specific situations where $1 million may fall short:

• Early retirement (before age 62 or 65)

• High healthcare costs before Medicare

• Significant debt or mortgage payments

• High inflation environments

• Supporting family members financially

• Market downturns and investment mismanagement

In these cases, additional planning becomes critical.

Final Thoughts

A $1 million portfolio can absolutely support retirement, but it is not a one-size-fits-all solution. At Greenbush Financial Group, our analysis shows that success depends on how income is generated, how taxes are managed, and how flexible the retiree is with spending.

For many households, $1 million works best when combined with Social Security and a well-structured withdrawal strategy.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

1. Can you retire comfortably with $1 million?
   Yes, but it depends on your spending level, location, and whether you have additional income like Social Security.
2. How much monthly income does $1 million generate?
   At a 4% withdrawal rate, about $3,300 per month before taxes.
3. Is the 4% rule still safe in 2026?
   It is a useful guideline, but many financial planners now recommend closer to 3% to 4% depending on market conditions.
4. What is the safest withdrawal rate for retirement?
   Around 3% is generally considered more conservative for long retirements.
5. How long will $1 million last in retirement?
   It can last 25 to 30+ years depending on withdrawal rate, investment returns, and market conditions.

Understanding the Social Security 50% Spousal Benefit

By Michael Ruger, CFP®
Partner and Chief Investment Officer at Greenbush Financial Group

When married couples are deciding when to file for Social Security, there are several strategies to consider. One of the most important — and often misunderstood — is the 50% spousal benefit. This rule can have a major impact on when each spouse should file and how to maximize total household Social Security income over retirement.

In this article, we’ll walk through:

• What the 50% spousal benefit is

• Special filing rules to qualify

• Why “file and suspend” is no longer allowed

• Why delaying to age 70 may not always make sense

• Special rules for divorced spouses

• Other factors to consider when choosing a filing strategy

What Is the 50% Spousal Benefit?

When you are married and eligible for Social Security, you have the option to receive:

• 100% of your own Social Security benefit, or

• 50% of your spouse’s benefit, whichever is higher.

You do not get both — Social Security will essentially give you the higher of the two amounts.

Example

Let’s look at an example:

• Paul’s Full Retirement Age (FRA) benefit: $3,600 per month

• Sharon’s FRA benefit: $800 per month

When Sharon files at her full retirement age (67), she can choose:

• Her own benefit: $800/month

• 50% of Paul’s benefit: $1,800/month

Since $1,800 is higher than $800, she would elect the 50% spousal benefit.

This filing strategy is extremely important in situations where one spouse earned significantly more than the other.

Special Filing Rules

One of the most important rules for the 50% spousal benefit is this:

The higher-earning spouse must be receiving their Social Security benefit in order for the lower-earning spouse to claim the 50% spousal benefit.

Using Paul and Sharon again:

• Both are age 67

• Paul’s FRA benefit = $3,600

• Sharon’s FRA benefit = $800

If Paul decides to delay his Social Security until age 70, Sharon cannot collect the spousal benefit until Paul actually turns his benefit on.

So Sharon would:

• Take her own benefit of $800 at 67

• Elect the 50% spousal benefit when Paul turn on at age 70 increasing to $1,800

This rule alone often drives a lot of the Social Security filing decision for married couples.

File and Suspend Is No Longer Allowed

Years ago, there was a strategy called “file and suspend.”

This allowed the higher-earning spouse to:

• File for Social Security

• Immediately suspend their benefit

• Allow their benefit to continue growing until age 70

• Meanwhile, the lower-earning spouse could collect the 50% spousal benefit

This strategy was very powerful, but the Social Security Administration eliminated the file and suspend strategy. Now, the higher-earning spouse must actually be receiving benefits for the spouse to receive the spousal benefit.

Delaying Until Age 70 May Not Always Make Sense

Many people know that if you delay Social Security past full retirement age, your benefit increases by approximately 8% per year until age 70.

From an individual standpoint, delaying can make a lot of sense. However, for married couples, the spousal benefit changes the math.

Here’s the key rule:

The 50% spousal benefit is based on 50% of the higher earner’s Full Retirement Age benefit, not their age 70 benefit.

Example

Let’s go back to Paul and Sharon:

• Paul’s FRA benefit: $3,600/month

• Paul’s age 70 benefit: about $4,500/month

• Sharon’s own benefit: $800/month

• Sharon’s spousal benefit: $1,800/month (50% of $3,600)

If Paul delays until age 70:

• Sharon cannot collect the spousal benefit for 3 years

• Her spousal benefit does not increase — it stays at $1,800

So the couple must evaluate:

• Is the increase in Paul’s benefit worth Sharon not receiving the addition $1,000/month for three years? ($1,800 spousal benefit less Sharon’s $800 FRA benefit)

In situations where the spousal benefit is a large increase for the lower-earning spouse, it may make sense for the higher earner to file earlier, even if that means giving up the delayed credits.

However, if the spousal benefit is only slightly higher than the lower earner’s own benefit, delaying may still make sense.

This is why Social Security filing decisions should always be looked at from a household strategy, not just an individual strategy.

Divorced Couples: Special Consideration

Many people don’t realize that divorced spouses may still be eligible for the spousal benefit.

You may qualify for a 50% spousal benefit on an ex-spouse’s record if:

• The marriage lasted at least 10 years

• You are currently unmarried

• Your own Social Security benefit is less than 50% of your ex-spouse’s benefit

• Your ex-spouse is eligible for Social Security (they do not have to be collecting yet if divorced more than 2 years)

Even if your ex-spouse has remarried, you may still be eligible for the spousal benefit based on their record.

Importantly:

Your ex-spouse collecting a spousal benefit does NOT reduce their benefit and does not impact their current spouse.

Other Factors to Consider When Filing for Social Security

The 50% spousal benefit is just one piece of the Social Security planning puzzle. When building a filing strategy, we also consider:

• Survivor benefits

• Life expectancy of both spouses

• Taxation of Social Security

• Other retirement income sources

• Roth conversion strategy

• Required Minimum Distributions (RMDs)

• The difference between each spouse’s benefit

The survivor benefit is especially important — when one spouse passes away, the surviving spouse keeps the higher of the two Social Security benefits, which is another reason why delaying the higher earner’s benefit can sometimes make sense.

About Michael……...

Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.

Frequently Asked Questions About the Social Security 50% Spousal Benefit

1. What is the Social Security spousal benefit?
   The spousal benefit allows a married spouse to receive up to 50% of their spouse's full retirement age Social Security benefit if that amount is higher than their own benefit.
2. Do I get my own benefit plus 50% of my spouse's benefit?
   No. You receive either your own benefit or the spousal benefit - whichever is higher - but not both.
3. When can I claim the spousal benefit?
   You can claim the spousal benefit as early as age 62, but the benefit will be reduced if taken before your full retirement age.
4. Does my spouse have to file before I can receive the spousal benefit?
   Yes. The higher-earning spouse must be actively receiving Social Security benefits before the lower-earning spouse can claim the 50% spousal benefit.
5. Is the spousal benefit based on my spouse's age 70 benefit?
   No. The spousal benefit is based on 50% of your spouse's full retirement age benefit, not their age 70 benefit.
6. If my spouse delays until age 70, does my spousal benefit increase?
   No. Your spousal benefit does not increase if your spouse delays past full retirement age. However, you must wait until they file to receive it.
7. Can a divorced spouse collect a spousal benefit?
   Yes, if the marriage lasted at least 10 years and the individual is currently unmarried, they may be eligible for a spousal benefit based on their ex-spouse's record.
8. Does my ex-spouse need to be collecting for me to claim a spousal benefit?
   If you have been divorced for more than two years, you may be able to claim a spousal benefit even if your ex-spouse has not filed yet, as long as they are eligible.
9. What happens to the spousal benefit if my spouse passes away?
   The spousal benefit is replaced by a survivor benefit, which allows the surviving spouse to receive up to 100% of the deceased spouse's benefit.
10. How do we know when we should file for Social Security?
    The optimal time to file depends on several factors including life expectancy, income needs, taxes, and the difference between each spouse's benefit. This decision should be evaluated as part of a full retirement income plan.

Rules for Inheriting a Retirement Account from a Sibling

By Michael Ruger, CFP®
Partner and Chief Investment Officer at Greenbush Financial Group

When you inherit a retirement account , whether it’s a 401(k), Traditional IRA, or Roth IRA, the rules depend heavily on who you inherited the account from. The rules for inheriting a retirement account from a sibling are very different from inheriting from a spouse, parent, or grandparent, and the distribution rules can have major tax consequences if not handled properly.

In this article, we’re going to walk through the key rules and planning strategies, including:

• The 10-year rule for inherited retirement accounts

• The age exception for siblings within 10 years

• Required Minimum Distribution (RMD) rules

• Tax strategies for inherited IRAs and 401(k)s

The 10-Year Rule

The IRS changed the rules for inherited retirement accounts starting in 2020 under the SECURE Act. For most non-spouse beneficiaries, inherited retirement accounts are now subject to the 10-year rule, which means the account must be fully depleted by the end of the 10th year following the year of death.

However, there is an important exception that often applies to siblings.

The Age Exception for Siblings

If you inherit a retirement account from a sibling and you are within 10 years of their age, you may qualify for the Eligible Designated Beneficiary exception. This allows you to use the old stretch IRA rules, instead of the 10-year rule.

This means:

• You are not required to empty the account within 10 years

• You are required to take annual RMDs based on your life expectancy

• The account can continue to grow tax-deferred over your lifetime

Example

Let’s say:

• Sue is age 50

• Brian is her brother, age 45

• Brian inherits Sue’s IRA

Because Brian is within 10 years of Sue’s age, he qualifies for the exception and can stretch distributions over his lifetime instead of following the 10-year rule.

He must begin taking Required Minimum Distributions (RMDs) starting the year after Sue passes away, but he is not forced to liquidate the entire account within 10 years.

Confusion With RMD Rules

This is one of the biggest areas of confusion for sibling beneficiaries.

There are two different sets of rules depending on whether the sibling qualifies for the within 10 year of age rule or not.

Situation 1: Sibling Within 10 Years of Age (Stretch Rules Apply)

If the sibling beneficiary is within 10 years of the person who passed away:

• They are using the stretch IRA rules

• They must take RMDs every year

• RMDs begin the year after death

• RMDs are calculated using the IRS Single Life Expectancy Table

• They are not required to empty the account within 10 years

This is true regardless of whether the person who died had started RMDs or not.

This is where many people get confused. Under the old stretch rules, RMDs were always required for inherited IRAs, unless the beneficiary was a spouse.

Situation 2: Sibling More Than 10 Years Younger or Older (10-Year Rule Applies)

If the sibling is more than 10 years apart in age, they do not qualify for the exception and are subject to the 10-year rule.

Example:

• Tim is age 55

• His sister Jen is age 42

• Jen inherits Tim’s IRA

Because the age difference is greater than 10 years, Jen must fully deplete the account within 10 years.

Now here’s where RMD rules depend on the age of the person who passed away:

• If the person who passed away was not RMD age (under age 73) → No annual RMDs required, but account must be emptied by year 10.

• If the person who passed away was already taking RMDs → The beneficiary must continue taking annual RMDs during the 10-year period.

Tax Strategies for Siblings Inheriting Retirement Accounts

This is where planning becomes very important, especially for siblings subject to the 10-year rule.

Strategy for Inherited Pre-Tax IRA or 401(k)

Distributions from inherited pre-tax retirement accounts are taxable income.

If you wait until year 10 and withdraw the entire account at once, that could push you into a very high tax bracket.

So in many cases, it may make sense to:

• Take distributions gradually over the 10 years

• Spread the tax liability over multiple years

• Coordinate withdrawals with lower-income years

• Take more in years where income is lower (retirement, job change, etc.)

Strategy for Inherited Roth IRA

If a sibling inherits a Roth IRA and is subject to the 10-year rule:

• The account grows tax-free

• Withdrawals are tax-free

• The strategy is often to wait until year 10 and withdraw the account at the last possible moment to maximize tax-free growth

So the strategy is often:

• Pre-tax account → Spread withdrawals out

• Roth account → Wait as long as possible

Advanced Tax Strategy: The “Tax Bracket Wash” Strategy

There is also a more advanced strategy for individuals who are still working and inheriting a pre-tax retirement account.

If someone:

• Takes a distribution from an inherited IRA (taxable)

• Then increases their pre-tax contributions to their employer retirement plan (401(k), 403(b), etc.)

They may be able to offset the taxable income from the inherited IRA distribution with the tax deduction from increasing their pre-tax contributions.

In simple terms, they are:

Taking money out with one hand and putting money back into a retirement account with the other hand, while potentially neutralizing the tax impact.

This can be a very effective strategy for high-income earners who are not already maxing out their employer retirement plans.

Summary

When inheriting a retirement account from a sibling, the most important factor is the age difference between the siblings.

There are two main categories:

If Siblings Are Within 10 Years of Age:

• Eligible Designated Beneficiary

• Can use the stretch IRA rules

• Must take annual RMDs

• Do not have to empty the account within 10 years

If Siblings Are More Than 10 Years Apart:

• Subject to the 10-year rule

• Must empty the account within 10 years

• May or may not have to take annual RMDs depending on the age of the sibling who passed away

Because inherited retirement accounts can have significant tax consequences, beneficiaries should strongly consider working with a financial advisor and tax professional to determine the best withdrawal strategy.

About Michael……...

Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.

Frequently Asked Questions

1. Do siblings have to follow the 10-year rule when inheriting an IRA?
   Only if they are more than 10 years apart in age.
2. What happens if siblings are within 10 years of age?
   They can stretch distributions over their lifetime and take RMDs each year.
3. When do RMDs start for stretch rule inherited IRAs?
   Typically starting the year after the original owner passes away.
4. Do I have to take RMDs if I'm subject to the 10-year rule?
   It depends on whether the person who passed away had started RMDs.
5. Are inherited IRA distributions taxable?
   Yes, if it is a pre-tax IRA or 401(k).
6. Are inherited Roth IRA distributions taxable?
   No, Roth IRA distributions are typically tax-free.
7. Should I take money out each year or wait until year 10?
   It depends on your tax bracket and whether the account is pre-tax or Roth.
8. What is the stretch IRA rule?
   It allows beneficiaries to take RMDs over their lifetime instead of emptying the account in 10 years.
9. Can I reduce taxes from an inherited IRA?
   Yes, by spreading distributions over multiple years, waiting until lower income years to process distributions, or coordinating with retirement plan contributions.
10. Should I talk to a financial advisor about inherited retirement accounts?
    Yes, because the withdrawal strategy can significantly impact how much tax you pay.

Self-Employment Side Hustle? Benefits of a Solo 401(k) Plan

By Michael Ruger, CFP®
Partner and Chief Investment Officer at Greenbush Financial Group

‍Today, more and more individuals have side hustles in addition to their main W-2 jobs. Others may be full-time business owners but only generate a modest amount of self-employment income. In both cases, one of the most powerful retirement and tax planning tools available is the Solo 401(k) plan.

In this article, we’re going to walk through some of the tax strategies and wealth accumulation strategies we use with clients who have self-employment income and may benefit from a Solo 401(k). Specifically, we’ll cover:

• What a Solo 401(k) plan is

• How a Solo 401(k) can reduce tax liability

• How to use a Solo 401(k) to build a larger Roth bucket

• How to decide between pre-tax vs. Roth contributions

• What happens when the Solo 401(k) is terminated

What Is a Solo 401(k) Plan?

A Solo(k) plan, also called an Individual(k), is a retirement plan designed for owner-only businesses. This means the business cannot have any full-time employees working more than 1,000 hours per year, other than the owner and possibly their spouse.

Because these plans only cover the business owner, they are typically simple to administer, often have little to no administrative costs, and still provide the full benefits of a traditional 401(k) plan.

Solo 401(k) plans include:

• Pre-tax employee deferrals

• Roth employee deferrals

• Employer contributions

• Potential 401(k) loan provisions

Contribution Limits (2026)

Solo 401(k) plans allow for relatively high contribution limits. For 2026:

• Employee deferral limit: $24,500 (under age 50)

• Age 50+ catch-up: $32,500 total deferral

• Employer contribution: Up to 20% of net self-employment income (sole proprietor/partnership)

• S-Corp employer contribution: Up to 25% of W-2 wages

Example

Let’s say a sole proprietor generates $40,000 in net self-employment income and is under age 50.

They could contribute:

• $24,500 as an employee deferral

• $8,000 as an employer contribution (20% of $40,000)

That’s a total of $32,500 going into a retirement account from just $40,000 of side hustle income.

That’s a powerful savings and tax planning opportunity.

Reducing Tax Liability

One of the primary reasons business owners establish Solo 401(k) plans is to reduce their overall tax liability.

If someone has:

• W-2 income: $200,000

• Self-employment income: $40,000

That self-employment income gets stacked on top of their W-2 income and may be taxed at a high marginal tax rate.

However, if that business owner contributes $30,000 of that $40,000 into a Solo 401(k) using pre-tax contributions, they may only pay income tax on $10,000 instead of the full $40,000.

That can result in significant tax savings.

Solo(K) Plans Can Potentially Eliminate Federal & State Income Taxes

If a business owner has less than the annual employee deferral limit in net income, they may be able to defer 100% of their self-employment income into the Solo 401(k).

Example:

• Net self-employment income: $20,000

• Employee deferral limit: $24,500

Since the income is lower than the limit, they could defer the entire $20,000 pre-tax, avoiding federal and state income tax on that income.

Note: They still must pay self-employment tax, but they can avoid income tax on that portion.

Building a Larger Roth Bucket

Another major benefit of a Solo 401(k) is the ability to build Roth retirement assets, which can be extremely valuable long-term.

Roth contributions are made after-tax, but:

• The money grows tax-deferred

• Withdrawals after age 59½ are tax-free

One major advantage of a Roth Solo 401(k) is:

There are no income limits for Roth 401(k) contributions.

This is very important because many high-income earners are phased out of Roth IRA contributions, but they can still contribute to a Roth Solo 401(k).

Example

Imagine a 29-year-old business owner with a side hustle contributing $24,500 per year to a Roth Solo 401(k). The money grows tax-deferred for 30 years and then all of the earning in the account can be withdrawn tax free after age 59½.

We also see this strategy used for retirees who do consulting work. If someone is 65+ and earning self-employment income but doesn’t need the income, they can contribute to a Roth Solo 401(k) and move that money into a tax-free growth bucket instead of a taxable brokerage account.

This can be a powerful long-term tax strategy regardless of age of the business owner.

To Roth or Not to Roth?

Remember, there are two types of contributions to a Solo 401(k):

1. Employee Deferral → Can be Pre-Tax or Roth

2. Employer Contribution → Typically Pre-Tax

For sole proprietors and partnerships:

• Employer contribution = 20% of net earned income

For S-Corps:

• Employer contribution = 25% of W-2 wages

• Important: Only W-2 wages count — not S-Corp distributions

While SECURE Act 2.0 opened the door for Roth employer contributions, we are still waiting on full IRS guidance for this to be widely implemented in Solo 401(k) plans. So for now, employer contributions are generally still pre-tax, while employee deferrals can be Roth or pre-tax.

General Rule of Thumb

You might consider:

• Pre-tax contributions if you are in a high tax bracket today

• Roth contributions if you are in a lower tax bracket today or want tax-free income later

This is where tax planning and coordination with a financial advisor and CPA becomes very important.

What Happens When the Solo 401(k) Is Terminated?

Eventually, the self-employment income may stop. When that happens, the Solo 401(k) is typically terminated, and the assets are rolled into IRAs.

Typically:

• Pre-tax Solo 401(k) money → Traditional IRA

• Roth Solo 401(k) money → Roth IRA

The money can then continue growing in those IRA accounts, and the Solo 401(k) plan is closed.

Working With an Advisor Who Understands Solo 401(k) Plans

Solo 401(k) plans are extremely powerful, but there are important rules and nuances business owners must be aware of.

For example:

• If you hire employees, you may have to discontinue the plan

• Plan documents must be set up properly

• Once plan assets exceed $250,000, you must file Form 5500 annually

• There are coordination issues between your CPA and financial advisor

• You must choose between pre-tax vs. Roth strategies

• You must compare Solo 401(k) vs. SEP IRA vs. SIMPLE IRA

Because of these moving parts, it’s important to work with an advisor who understands how to design and manage Solo 401(k) plans properly as part of an overall financial and tax strategy.

Our firm offers free consultations for business owners and individuals with side hustle income who want to evaluate whether a Solo 401(k) plan makes sense for their situation. If you’d like help determining whether this strategy is right for you, we’d be happy to help you build a plan around your specific goals. Feel free to schedule your complementary consult via our website.

About Michael……...

Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.

Frequently Asked Questions About Solo 401(k) Plans

1. Who qualifies for a Solo 401(k)?
   Business owners with no full-time employees working more than 1,000 hours per year.
2. Can I have a W-2 job and a Solo 401(k)?
   Yes. As long as you have self-employment income, you can open a Solo 401(k) for that income.
3. How much can I contribute to a Solo 401(k)?
   In 2026, employee deferrals are $24,500 (under 50), plus employer contributions up to 20% of income (or 25% of W-2 wages for S-Corps).
4. Can I contribute 100% of my side hustle income?
   Yes, if your income is below the employee deferral limit, you may be able to defer the entire amount.
5. Do Solo 401(k) contributions reduce taxes?
   Yes, pre-tax contributions reduce your taxable income.
6. Can I make Roth contributions to a Solo 401(k)?
   Yes, employee deferrals can be Roth, with no income limits.
7. What happens when I stop my side hustle?
   The Solo 401(k) is typically rolled into a Traditional IRA and/or Roth IRA.
8. Is a Solo 401(k) better than a SEP IRA?
   In many cases, yes, because it allows Roth contributions and higher contributions at lower income levels.
9. Do I have to file anything for a Solo 401(k)?
   Once the account exceeds $250,000, you must file Form 5500 annually.
10. Can I take a loan from a Solo 401(k)?
    Some Solo 401(k) plans allow participant loans, similar to traditional employer 401(k) plans.