Listener Questions: What Should I Be Doing When I'm Two Years from Retirement?
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In this episode of 'Retirement Answer Man,' host Roger Whitney addresses listener Mike's question about what to do in the two years leading up to retirement. Rather than jumping straight into tactical advice about 401k and 457 plan distributions, Roger emphasizes the importance of first defining a clear vision for retirement life. He guides listeners through a framework that starts with identifying personal values, building a high-fidelity budget for a 'base great life,' and mapping out discretionary goals. This foundational work ensures that financial decisions—like when to claim Social Security, how to manage pensions, and where to allocate assets—are aligned with meaningful life goals. Roger also discusses inflation risk, explaining why equities are a strong inflation hedge and why delaying Social Security can provide long-term financial security. He advises building after-tax cash reserves for flexibility and tax efficiency, especially given Mike’s high income and limited after-tax savings. The episode concludes with actionable takeaways on avoiding common pitfalls like misjudging spending and making premature decisions without a full picture. Additional segments include a story from retiree Jim, who learned the importance of diversifying retirement activities after a health setback, and listener Q&A on Roth conversions and avoiding IRMA surcharges. Roger explains that Roth conversions in a down market can actually be beneficial because they lock in lower taxable income, and he offers practical strategies for managing IRMA thresholds, such as using larger buffers or 'big-bang' conversions to avoid recurring stress. The episode ends with a challenge to pause before solving problems and instead define the root issue. Overall, the message is clear: retirement planning is not just about money—it’s about designing a life that reflects your values and is resilient to uncertainty.
Start with values and goals before making financial decisions—define your 'base great life' and discretionary wants with high fidelity.
Delay Social Security to increase guaranteed inflation-adjusted income and act as longevity insurance.
Build after-tax cash reserves for flexibility, tax efficiency, and to avoid over-reliance on tax-deferred accounts at retirement.
Roth conversions in a down market lock in lower taxable income and are not the same as locking in investment losses.
Use a buffer of $10,000–$15,000 below IRMA surcharge thresholds to avoid unforced errors from late income or miscalculations.
…and 3 more takeaways available in PodZeus
Mike's Retirement Question and the Root Problem
“The answers to the questions you actually had become much easier if you start at the beginning.”
Inflation Risk and How to Manage It
“Equities are a perfect inflation hedge because you own shares of companies, and as the cost of goods rise, they're going to pass that on to consumers.”
Jim's Story: Diversifying Retirement Activities
“I now realize that I need to find some non-physical things to do in retirement, both for balance and as a safety net for future health issues.”
Building a Feasible Retirement Plan: From Values to Budget
Roger walks through a step-by-step framework for retirement planning: start with values, define a 'base great life' budget with high fidelity, map discretionary goals, and then layer in income sources like Social Security and pensions. He stresses the importance of understanding pension rules and avoiding premature decisions.
Tactical Decisions: 401k, 457, and After-Tax Savings
Roger addresses Mike’s specific questions about 401k and 457 plans. He advises that account type matters less than preserving capital and aligning investments with the retirement paycheck. He recommends building after-tax cash reserves for flexibility and tax management, especially given Mike’s high income and low after-tax assets.
“Equities are a perfect inflation hedge because you own shares of companies, and as the cost of goods rise, they're going to pass that on to consumers.”
“Before you get into solution mode, pause and ask yourself, what really is the problem here?”
“The answers to the questions you actually had become much easier if you start at the beginning.”
Host
Mike
person
Social Security
other
401k
other
Jim
person
457 plan
other
Roth IRA
other
IRMA
other
IRA
other
Consumer Price Index
other
Retire Agile
organization
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