What’s Hatching
- Remember – save [email protected] as a safe sender to get important announcements!
- May 29th is National 529 Day! This day is meant to raise awareness about the value and importance of funding for future education expenses using 529 plans. (check out the related infographic linked later in the newsletter!)
- Have you met Leslie? You may have spoken to her many times but get to know a little more about our Senior Client Operations Associate, Leslie Remy.
Retirement Readiness: 5 Priorities to Consider When You’re 5 Years from Retirement
Phil Hollander CFP®, Wealth Strategist
When retirement is just a few years away, things can start to feel a bit more real and your financial strategy should reflect that. This is often the time to shift from simply building wealth to thinking about how you’ll use it. Intentional planning now can go a long way toward creating a smoother, more confident transition into retirement.
1. Define Your Retirement Income Plan
This is where you start connecting the dots between your savings and your future lifestyle. Think through what you’ll realistically spend each year and where that money will come from. It’s also a good time to consider when to start Social Security, since timing can make a meaningful difference over time. Having a clear plan for how you’ll draw income can help replace uncertainty with confidence.
2. Solidify Your Savings and Transition Strategy
You’re still saving, but now it’s also about making sure your money is ready to support you. That might mean dialing back some risk or setting aside a portion in more stable, accessible accounts. Building up a cash cushion for the first couple of years of retirement can also be helpful. The goal here is to make the shift from earning to withdrawing feel steady and less abrupt.
3. Refine Your Tax Strategy
Taxes don’t go away in retirement. They simply show up differently. As you get closer, it’s worth thinking about how and when you’ll pull money from different types of accounts. A mix of pre-tax, Roth, and taxable savings gives you more flexibility to manage what you owe each year. A thoughtful strategy can help you keep more of what you’ve worked hard to save.
4. Prepare for Healthcare and Major Risks
Healthcare is one of those things that’s easy to underestimate until it’s right in front of you. As you get closer to Medicare eligibility, it’s important to have a plan for both costs and coverage. Think about how you’ll handle any gap before Medicare kicks in, as well as unexpected expenses. Having a cushion in place can make these unknowns feel a lot more manageable.
5. Align Your Lifestyle with Your Financial Plan
Now’s the time to really picture what retirement looks like for you. How will you spend your time, and what kind of lifestyle do you want to maintain? It’s helpful to revisit your expected spending and make sure it lines up with your resources. Small adjustments now can help you avoid bigger surprises later on.
Final Thoughts
Being five years out from retirement is often less about big changes and more about fine-tuning. With a bit of thoughtful planning, you can head into this next chapter feeling prepared, flexible, and in control.
If you’re 5 years out from your retirement vision, have you charted out the path to get there? We can help evaluate and craft your journey towards your goal!
Guest Contributor: George Remy, Estate Planning Attorney, George Remy Law
When Your Estate Plan Hasn’t Caught Up to Your Retirement Plan: How Coordinating Your Legal Documents with Your Financial Plan Can Help Protect the Years You’ve Worked For
Retirement is one of the few periods in life when many parts of your financial picture can begin to shift at once. Income often transitions from a paycheck to a portfolio. Health insurance may change. Tax brackets can move. Required minimum distributions may start to come into play. During this time, your wealth strategist is typically working to adjust your plan to reflect this new phase, and it may also be an appropriate time to revisit your estate plan. As an estate planning attorney who frequently works alongside the team at Two Bird Wealth Strategies, I often see a similar pattern. The financial plan evolves over time, but the legal documents supporting it may remain unchanged from a very different stage of life.
The Documents That Got You Here Aren’t Always the Documents You Need Now
A Trust created when your children were young, perhaps designed with minor beneficiaries in mind, may no longer reflect your current goals once those children are adults with families of their own. A power of attorney signed years ago may name individuals who have since relocated, retired, or are no longer able to serve. Beneficiary designations on older retirement accounts could still list outdated or unintended recipients. Individually, these issues may not create immediate problems. However, taken together, they can sometimes result in a disconnect between the plan you believe you have in place and how things may actually function if needed.
Your financial plan helps guide your retirement.
Your estate plan can be designed to support those intentions.
Where the Two Plans Need to Talk to Each Other
When a financial plan and estate plan are working together effectively, there are several areas that are often worth reviewing, particularly as retirement approaches:
- Beneficiary Designations on Retirement Accounts: IRAs, 401(k)s, and life insurance policies pass by beneficiary designation, not by your will or trust. Under the SECURE Act, most non-spouse beneficiaries must now drain inherited retirement accounts within ten years, which can create a tax bracket nightmare for an adult child in their peak earning years. We coordinate with your financial advisor to make sure the people you’ve named, and the way they’re named, still align with your broader goals.
- Trust Funding for the Distribution Phase: Many trusts were drafted to receive assets at death but were never funded during life. As you shift from accumulation to distribution, we revisit which assets belong in the trust now, which should stay outside of it, and how titling affects both probate avoidance and ongoing financial management.
- Powers of Attorney Built for a Longer Life: With retirements often lasting 20 to 30 years, having durable financial and healthcare powers of attorney that reflect current realities can be important. Older documents may be more limited in scope or may not fully address areas such as digital assets or modern healthcare preferences.
- Tax Planning Coordination: Strategies such as Roth conversions or Qualified Charitable Distributions (QCDs) can have both financial planning and estate planning implications. For example, a QCD may help satisfy required minimum distributions while potentially reducing taxable income. A Roth conversion may shift some future tax burden away from beneficiaries. These strategies are often most effective when considered collaboratively with your financial advisor and tax professional.
- Long-Term Care Planning: An extended long-term care need can significantly impact a retirement plan. Whether the approach involves insurance, self-funding, or other planning strategies, this is often an area where legal, tax, and financial considerations intersect and may benefit from proactive discussion.
A Simple Check-In
If it has been several years since you last reviewed your estate documents or if you are unsure whether your current beneficiary designations reflect your wishes, you are not alone. In many cases, updating an estate plan does not require starting from scratch. It may simply involve a thoughtful review, a few targeted updates, and coordination among your wealth strategist, CPA, and attorney.
Retirement represents a significant milestone. Keeping your estate plan aligned with your financial plan helps reflect and protect your intentions for you, your spouse, and your beneficiaries.
If you are approaching retirement or are already there, it may be a good time to review your estate plan alongside your financial plan. The team at Two Bird Wealth Strategies and I often collaborate to help keep both aligned and working toward the same overall objectives.
Contact George: 734-637-0796 | [email protected] | www.georgeremylaw.com
George is not affiliated or registered with CWM, LLC or Cetera Wealth Services LLC. Any information provided by George is in no way related to CWM, LLC or Cetera Wealth Services LLC or its registered representatives.
Additional Resources & Reading
Infographic: Understanding 529 Plans
This piece can help you get a better understanding the different types of 529 plans and how they work. Learn more about the advantage of using a 529 plan, along with some key statistics about college expenses.
Article: 5 Common Retirement Planning Mistakes
Your retirement income plan may have gaps you haven’t spotted yet. This piece covers five common planning mistakes worth reviewing, from Social Security timing to tax strategy.
Article: What to Do 1, 5, and 10 Years Before Retirement
Retirement planning looks different depending on how close you are to the finish line. This piece breaks down the key financial moves worth focusing on at the 10-year, 5-year, and 1-year marks.
Have a suggestion? Email us at [email protected]
Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. This information is found in the issuer’s official statement and should be read carefully before investing. Investors should also consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision. The investor should consult their financial or tax advisor before investment in any state’s 529.
The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional before implementing such strategies.
This newsletter is not intended to provide specific legal, tax, or other professional advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Converting from a traditional IRA to a Roth IRA is a taxable event.
The opinions contained in this material are those of the author, and not a recommendation or solicitation to buy or sell investment products. This information is from sources believed to be reliable, but Cetera Wealth Services, LLC cannot guarantee or represent that it is accurate or complete.
Registered Representative of and offering securities through Cetera Wealth Services, LLC, Member FINRA/SIPC. Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Cetera is under separate ownership from any other named entity. Carson Partners, a division of CWM, LLC, is a nationwide partnership of advisors.
