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May 30 2023

Breaking Down The Future – Your Retirement Roadmap

How I Got Started

I started out going to college and learning that I was extremely interested in working with numbers. After graduating, I decided I wanted to pursue becoming a CPA. After I finished up my Master’s, it was around 2008 and as many are aware, the market crash happened, so I ended up moving to New Jersey. I had a family friend pull me aside while I was back and they told me about how their financial advisor was hiring interns for the summer. With the market in the hole and job opportunities scarce, I immediately jumped at the opportunity. Over time I have really enjoyed helping people create sound retirement plans that would not only allow them to live freely and enjoy their own retirements, but also set aside money to pass down to their loved ones.

Nowadays, I’m practicing out of Jacksonville, Florida, helping individuals and their family members navigate their paths to retirement and financial freedom. When working with my clients, I strive to deliver a comprehensive financial plan for them and their families. I like to dive into everything about their lives, whether that be investments, insurance, estate docs, debt, savings, budget, etc. Since I’m also a CPA, I tend to focus more on the tax side of things and how they can maximize their tax savings and avoid costly mistakes, both now and in the future.

When Should You Retire?

Realistically to give a broad range, people tend to retire once they enter their sixties. I think a lot of people try to make it to 65, which is when medicare begins, and that’s typically the age we recommend most of our clients to aim for when they begin thinking about retirement. Now most advisors would tell you 65 is the ideal target age because at this age you wouldn’t have to go on the open market and spend extra money on health insurance, but it’s all different and depends on your situation. If you’ve saved up enough and you can take on those higher costs for the first few years, then maybe an early retirement is in your cards. If you haven’t quite reached your savings goals as you inch closer to 65, then you may have to go a little longer, it really just depends on your retirement plan.

Can You Retire in a Recession?

A very popular question, especially in today’s market. The quick answer, yes. Anybody can retire in a recession. The key is to have a proper plan in place. The market is going to go up and down, if you don’t have a solid plan in place, one that is stress tested against recessions, inflation, political turmoil, you name it, then you’re putting yourself at risk. Part of our planning incorporates these tests, so when a client is ready to retire, we can give them the utmost confidence and security that they’re retirement funds will be able to weather a recession, depression or whatever might be thrown their way.

Speaking of retirement funds, you should always focus on saving as soon as you can and as much as you can. The first part of our planning process is going through what you’re spending compared to how much you’re saving. Once we establish a good savings target, something that the client is willing and able to commit to, then it becomes much clearer whether there is any risk to your funds running out due to a downturn in the market. There’s no certainty that you won’t run into complications, so if you’re able to set some money aside, then my advice would be to do it.

Taxes in Retirement

A lot of people are curious about this and it’s something I focus on with my clients when advising them on their options. Most likely your taxes will be less compared to when you’re working. With my clients I run tax projections out five years before retirement and five years after retirement. I like to look at different strategies like delaying social security and taking money from an IRA in the interim at low income tax brackets. There are various scenarios that need to be computed in order to get an idea of what can or can’t be done.

Everyone hates paying taxes, so I love to find creative ways to help all my clients save whenever I can. Roth conversions are popular nowadays. Ideally, if we think of it this way, if people are retiring at 65, and you theoretically have maybe five years before social security. If you’re able to delay retirement until you’re 70 and/or potentially seven years until those required minimum distributions at 72, then you have a five to seven year window there where you may have no income. Instead of not paying any taxes, you need money to live on, look into doing a Roth conversion or withdraw money from your IRAs in this short window to smooth your retirement taxes out over time, reducing your tax burden in the future.

Social Security – Will it Run Out?

If you read the tabloids then you probably hear political figures talk about this a lot. I think the current state of affairs estimates social security to run dry by 2034. Realistically, I don’t think our government would let it get to that point. Will there be changes made to ensure it doesn’t? Probably. They might consider requiring contributions up to a higher capped wage amount or doing away with the cap altogether. So if someone’s making a million dollars at their company, they will pay social security on that full wage and not just the first 150,000 wages. They could possibly adjust and/or reduce benefits for certain people. Right now the typical full retirement age is 67, maybe they push that out a year or two as well. I think they’ll have to implement some fix to the issue, but I don’t think it will ever go away.

Now when should you claim social security? Economically it makes best sense to wait until 70. Every year that you delay collecting social security, you get an 8% growth on that amount. An 8% guaranteed return is pretty hard to pass up, especially compared to some of the returns people are seeing nowadays. But really it depends on your situation. The hard part for Americans is they think, I’ve been paying in all these years, I want to get my money. Then they see in the news that it’s going to run out and they panic. Another thing you need to keep in mind is what we call a breakeven point. For example, if you wait until 70 to take social security, you typically would need to live until 80, roughly 10 years for that strategy to pay off. You’ve got to take your life expectancy into consideration in order to determine the best possible strategy.

Budgeting in Retirement

First you need to determine what your estimated monthly expenses will look like throughout your retirement. We call this the top line. I analyze my clients’ spending prior to retirement; taking a deep dive into their mortgage, groceries, dining out, utilities, etc. From there I start to focus on what income they can expect; whether they will get a pension, when they’ll start to collect social security income or if there’s any rental income that can be included. Once we have their projected net income, then we can begin to understand what they need from their investments to live off of.

From here we can start to consider where to pull this money from. Hopefully you have two, maybe three buckets of money; your qualified IRAs, 401ks, Roth accounts and the normal taxable brokerage investment accounts. Now if you pull from your IRAs, you’ll pay tax on that amount. So, you don’t want to just take it all from there, but maybe when you’re looking at the tax situation, for example, you can take $50,000 out of your IRA and that’ll keep you in a 12% tax bracket and then you can supplement the rest. The most important thing is determining the need that you have and understanding your buckets of money to devise a strong strategy tax wise to be the most efficient. Then pull the money that you need from each of those buckets to cover your spend.

Investing in Retirement

There are many different schools of thoughts or formulas you can consider when trying to determine how to invest your retirement assets. When I work with my clients, I take the financial plan into consideration, first understanding how much the client needs to save and what type of retirement goals they are looking to achieve. After reviewing those key aspects then I’m starting to consider what their investment allocation should look like.

The younger they are, the more likely I’ll advise they should be set up more aggressively, sometimes up to 80 or 90% in stocks. It’s always important to keep some bonds in a portfolio for more conservatism and protection. But as your career begins to transition and you get older, you’ll likely want to adjust your stock allocation down to maybe 70% or even 60%. Again as time goes on and you’re getting closer to retirement it’ll be time to adjust your stock allocation again, this time setting it around 50% stocks and 50% bonds. In general, as you progress towards retirement, your portfolio allocation should go down in risk. In the beginning of your life you’re accumulating and saving money, focusing on getting your portfolio to grow. Once you get to retirement or close to it, your focus needs to switch to preserving your retirement funds.

How to Get Started

Ideally, every American should have a financial plan that clearly defines what they are looking to achieve once they reach retirement. The plan should include goals they’d like to accomplish and how they expect to reach these goals. When you’re first starting off and you’re young, there may not be a need for a full comprehensive plan because you might not have much in terms of retirement assets. If you’re at this stage my best advice would be to focus on setting up an automatic withdrawal to a savings account to create your initial pool of funds. Ideally, you’ll want to max out your 401K or retirement plans through your employer. Once you’ve maxed out your 401k, if you still have excess cash flow, then you can start looking at opening up a Roth. If your taxable income is a lot then it’s better to consider putting your excess towards an IRA, even if you’re not getting the tax deduction that year. What is best for you will really depend on your current situation and your overall retirement goals. Working with a fiduciary, fee-only financial advisor can provide you the clarity and direction you might be looking for.


Thank you Gregg for this extremely informative and timely guest post, we greatly appreciate the information! Gregg’s advice couldn’t come at a better time. If you don’t currently have an advisor or if you’re interested in another perspective on your current investment strategy, be sure to check out Wealthramp’s quick survey that will match you with three fee-only, fiduciary financial advisors in your area. The first advisor meeting is always free and you’re under no obligation to hire any professional. Learn more about the Wealthramp process and be sure to check out Wealthramp’s other resources to help you navigate your finances.

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