Retirement Episode: Biggest Risks, Options at Age 58, All Things Social Security, the $1.9 Portfolio (123)

There’s a retirement risk almost nobody models, and it has nothing to do with the stock market. It’s the quiet trade you make when you keep working past the point where your healthiest years are already slipping away.

We stitched together several of my most important retirement planning clips into one focused compilation. First, I explain why age 58 can be a real turning point: health, energy, and mobility start to change while the “compounding magic” of your savings matters less than you think. We unpack the difference between time on paper, usable time, and high quality time and why the decade from about 58 to 68 often holds the best shot at travel, freedom, and doing life on your terms. If market headlines keep you waiting for perfect conditions, I’ll show you why those conditions never arrive and why a stress tested plan is what actually creates confidence.

Next, we get practical on Social Security strategy. I walk through five reasons claiming Social Security at 62 can be smart, including cash flow needs, health, reducing pressure on your investment portfolio, reinvesting benefits, and the break even math. Then I lay out four straightforward ways to increase Social Security benefits, from the 35 year earnings rule to spousal and survivor benefits, plus why claiming decisions must coordinate with taxes, Medicare IRMAA, and required minimum distributions.

Finally, I cover why a ~$1.9 million portfolio changes the questions you should be asking. The focus shifts from “will I have enough” to tax planning, withdrawal strategy, risk alignment, simplicity, and legacy planning so the wealth you built actually supports the life you want.

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▶️ YouTube: Paradigm Wealth Partners

If you or someone you care about could use the help of a financial advisor and sees the value in establishing a financial plan, please reach out to me. 

Thanks for Listening! 

Jonathan

Transcript

Compilation Setup And Invitation

SPEAKER_00 0:04

Hey podcast listeners, thank you as always for joining and hopefully finding value in this financial education awareness and topical content. This episode is a little different. It included a few individual clips that have been combined for a compilation episode. And I filmed these topics originally for YouTube, and I thought they'd be helpful to share with you all on the podcast as well. The topics are all fairly related, and I'll set each one of them up for you, but wanted to make sure to give you a heads up. Thanks for following along, and as always, if you're a highly motivated individual, family, or business owner that could use the help of a full service financial planning partner to guide you towards the future of financial confidence, please do not hesitate to reach out to me personally. We'd be happy to schedule a time to talk. Thank you again, be confident in your retirement. We'll talk soon. There's a financial risk most people near age 58 never see coming. It has nothing to do with the stock market, nothing to do with interest rates or inflation, and it has everything to do with time. Because there's a moment in life, and most people never realize they've crossed it, where continuing to work quietly becomes one of the biggest decisions you could ever make. Not because you're risking money, but because you're risking one of the resources you can never replace. And for the majority of people I've worked with, that moment happens right around 58. If you don't understand how quickly your health, your energy, your quality of life change, you could accidentally sacrifice the best decade of retirement you've planned for. Before we get into this, my name is Jonathan Bedner, certified financial planner and owner of Paradigm Wealth Partners here in Knoxville, Tennessee, where we help people in their 50s and 60s retire with confidence, without guessing, gambling, without giving up the best years in their life. I've seen this decision done right, and I've seen this decision what happens when people wait too long. This is why it matters. Why age 58 is a turning point. Around 58, several life curvatures happen. Things start coming together, and this is what no one talks about. First, your health, mobility starts to decline, recovery starts to slow, your strength fades, and even mental sharpness starts to lack. Second, you start to lose energy. Most people still feel pretty good at 58, but by 62, 65, and even 70, it's an entirely different story. Third, money. By your late 50s, most of the compounding magic is already behind you. The heavy lifting is done. And finally, time, what I believe is one of your biggest assets. And at 58, you have far fewer fully capable years left than you think. This is the convergence point where money stabilizes, but time begins to accelerate faster and faster away from you. The golden era of time, of retirement, that you don't want to miss is from 58 to 68. And research consistently shows that this age represents the time, the decade where you have the most freedom, you still have great mobility, you still have great energy, and overall your health is largely intact. But after 70, you physically decline and that accelerates sharply. That means that most people never really calculate, they don't think about it. Working through this window means that you're working through some of the best years in retirement you'll ever have. The hidden trade-off happens at 58. Up to 58, your trading time for money usually makes sense. You're working, you're raising families, to do the things you want to do. You need money. And so, in order to provide for that money, provide for your family, do the things you want to do, you got to work, you gotta earn a living. After 58, I see where this trend usually flips. You may already have a nice nest egg, but every year you work from here, you might grow your portfolio, I don't know, four, five, eight percent maybe. But the same year costs you six, twelve percent of your life, your remaining high-energy, healthy years that you have, and the cost of that compounding far faster than your money ever will. And this trade-off is the trade-off almost no one sees. The fear that keeps people working. If I stop working, I'll be eating into my savings. This is people's biggest fear, and it's an emotional fear, it's one that doesn't always make sense. Um, it may or may not make sense mathematically, but your savings were built for this exact phase of life. Your kids are grown, you're mortgage-free, you know, life is is, I don't want to say easy, but it's certainly less complex. And these are the years that you've built and you save for to enjoy this thing we call retirement. So many people feel like they're cannibalized their portfolio, they're spending their money, they're not sure, you know, if their money is enough to last. Uh, and what I like to say here is you're not cannibalizing up your portfolio, you're not spending down your portfolio, you're deploying the tool you spent the last 30 and 40 years building. And people aren't thinking about it that way. The danger isn't spending your money, the danger is waiting too long to spend your time. There's another thing people don't often realize about time. Again, one of your biggest assets. These are important distinctions to make, and another thing people don't fully consider. Time on paper is how long you might live. Usable time is how long your body cooperates. High quality time is the time that you have the most energy, mobility, and freedom. Those times, those uh aspects of time are not the same thing. They're vastly different. And there are things that are easy at 58 become dramatically harder at 68. Long hikes, international travel, uh, sightseeing, playing uh on the floor with grandkids is harder and harder. Uh, it's harder and harder to walk 18 holes of golf, it's harder to drive long distances, learning new skills might be more difficult. You can delay your retirement. Your body will not delay aging. It's important to know that as you're thinking about this and as you're trying to decide when you should retire. Retirement is a resource balance. Uh, it isn't about hitting a number, it's not about managing uh four resources. Uh, it is about managing four resources. Um, your time, it's about managing your health, it's about managing your energy and your money. And money is the only one you can replenish. Earlier in life, you trade time, health, and energy to build the money. Later in life, you must use that money to reclaim your time. Once you have enough, the extra savings provide diminish those returns. Why market conditions don't matter as much as you would think. People delay because they they seem to think things like the market feels too shaky, uh, rates are too high, there inflation worries me, it's an election year, uh, you know, World War III might happen. There's all these reasons not to retire because you're concerned about market conditions, but those conditions never disappear. We're constantly battling the wall of worry. Uh just this year we've had tariffs, we've had trade war, we have World War III threat, you know, every couple years there's a presidential election. These conditions uh often cycle, uh, some of the same ones cycle through, and then we also have new ones come through year to year. Markets adapt, companies continue to grow, their earnings, their share price, they continue to do well, and the these guardrails continue to exist. You know, how can we make the best decision for you in your retirement objectives? You don't retire because these conditions are perfect, no conditions are ever going to be perfect. You retire because your plan uh works under imperfect conditions. It says that, you know, since we have done A, B, and C, you can now do X, Y, and Z. And it's important to know and understand that the work you've put into building your plan, all the knobs you've twisted and levers you've pulled are uh you know come together so that you actually can have a plan that live confidently with clarity to and through retirement without having to work until your 90s. Most people don't delay the retirement for financial reasons. They actually delay for psychological ones. A lot of our identity is tied up in our careers. You know, we're police officers, we're teachers, we're attorneys, we're we're salespeople, we're IT people, we're doctors, we're nurses. So, you know, they wonder who am I without my job? What will I do with my days? Um, will I have any structure? Will I feel irrelevant? After decades of this routine, the routine becomes our identity. Um those fears aren't permanent, but they are solvable with planning and they're very real. I see this happen for you know quite a bit with people. They're not sure, you know, what their life looks like because they're so tied into who their, you know, what their identity is. And and what we try to teach people is, you know, your identity isn't necessarily your career. Your identity is being a father to your kids, being a grandparent to your to your grandkids, you know, who you are as your core values, that's how you help identify and and solve you know your identity crisis as you move into retirement. So the truth from real retirees, after working with hundreds of retirees, one pattern is crystal clear. People do not regret retiring too early. Many regret retiring too late. The most common phrase I hear is, I wish I had more healthy years. They regret only becomes visible after it's too late to fix. So how do you know if 58 is your moment? If you're ready to take the steps, you understand your spending, you have a withdrawal strategy, your income sources are mapped, your portfolio stress tested, you thought about how you'll spend your time and what you'll do for fun, maybe new hobbies, you've got a plan for healthcare, and you've replaced routine with purpose, the things that you really deeply seated uh value, the things that are most important to you. If you have those pieces, the risk isn't retiring, the risk is waiting. Here's the truth: most people will never hear. Money can wait, your health can't, the window doesn't last forever, and if you're near 58, the most dangerous financial risk isn't in the market. It's running out of time. You're healthy enough to enjoy. If you want clarity and confidence around whether it's your moment, click the link in the description, schedule some time with us. Let's help you figure out if now is the time you can reclaim what matters most and retire with the confidence and clarity you've always wanted. Should you retire at 62 and claim Social Security? A lot of people struggle with these types of decisions, understanding the advantages and disadvantages of when you should claim Social Security in retirement. Today I'm gonna give you five powerful reasons that illustrate why it might be an impactful and smart decision for you to turn Social Security on at age 62. I'm Jonathan Bedner, certified financial planner, owner of Paradigm Wealth Partners here in Knoxville, Tennessee. And you know, this is how we help people make decisions around Social Security, around retirement, so that they can have a confident and clear uh retirement plan for themselves as they live out uh that retirement. Let's dive right in. Here we go. First, you need to understand what Social Security is and how it works. So, Social Security is a system that we have paid into while you're working, it is a form of retirement benefit offered by the US government. And at a certain age, typically between 66 and 67, you will reach what's called full retirement age. And when you reach full retirement age, you're able to turn this benefit on. And these benefits are monthly payments to you. Uh, one of the things that that goes into making this decision of when do you turn this income on has a lot to do with what we're going to discuss here in a few minutes. But the government will also provide you an incentive to wait. So every year you wait, they give you about roughly an 8% increase on your your annual amount. Again, that pays out monthly, but it's an annual amount that gets paid to you. And so if you delay all the way till 70, that's the maximum age that you can delay your full retirement benefits to, you'll get about a 24% increase over what you would have gotten at full retirement age of 66 or 67. But you can also, if you choose, take these benefits turned on at age 62 or 63, 64, any anytime between 62 and 70. In this video, we're talking about, you know, 62 here. So if you take those benefits at 62, you actually get a reduced amount. You don't get as much as you would get at age 66 or 67. And so um, one of the questions that goes into how we work with clients is you know, when is the best time for you to take it? So, with that said, let's talk about the number one reason why you might take Social Security at age 62. The number one reason might be an immediate financial need or early retirement. So maybe there's a disability that puts you out of work, or maybe you were laid off and you know can't find another job, and you need that income to come in and help support your lifestyle. Maybe to help you pay your current expenses, maybe it'll help you pay down some debt. You know, one of the reasons you might draw at 62 is to help fund uh this immediate need that you may have in your family. Reason number two is shorter life expectancy or health issues. So one of the things about Social Security is when you pass away, it it goes away. It's over. Now, your spouse could continue to claim either yours or hers, or theirs is what I should say, whichever is higher, but one of them will essentially go away. And so if you have a serious health issue or you don't have that long life expectancy, then it might make sense to go ahead and draw all your Social Security, start getting those payments so that you can use them, uh, have them in your account, use them for living expenses, those sort of things. Uh, because once you pass away, then that benefit goes away. The IRS no longer has to pay uh that out. Again, with the exception of your spouse, if you have a spouse, they can continue the higher Social Security payment of yours or theirs. And so uh if yours happens to be higher, theirs would fall off, they would still get uh yours. There's some funny math the way that the IRS does this that I'm not going to talk about in this topic because it really uh kind of defeats the purpose of what we're talking about today. But that would be the second reason in this situation. The third reason is you know, reducing the pressure on your investment portfolio. So if you're delaying Social Security for longer, you might have to take more withdrawals out of your investment account to sustain your life, to pay your bills, to pay your expenses, to pay your debt. Um, and so it might cost more money out of your investment portfolios that you've saved over your working careers to fund your lifestyle. And so if you turn Social Security on earlier, you're able to reduce the amount of pressure on your investment portfolio, which helps your investment portfolio sustain itself longer and be there should you need it for some unexpected event in the future. So these guaranteed income sources like a pension or in this case like a Social Security helps reduce the pressure on your investment accounts. Number four, you can invest the money instead of waiting to receive it later. Uh one of the kind of founding principles of investments and compounding is you know, a dollar today is worth more than a dollar tomorrow. And that's because inflation eats away your your dollar every year that goes by. And so, you know, as an example, as you as as years go by, things cost more. You know, you can remember from you know the you know 90s or early 2000s where you know gas was a dollar a gallon, milk was a dollar a gallon. You'll have clients still today. I remember buying Coke or Snickers for you know five cents. And so as those years go by, your value of your dollar goes, you know, gets less and less and less. Now, if you delay Social Security, the money will still give you a little bit of benefit for a couple of years uh because they're gonna give you a guaranteed raise of eight percent. But if you draw early and invest the money, assuming you don't need it, you could invest the money. Maybe you invest in something that really takes off, or or uh, you know, you're in control of how you sp how you utilize that money. So what I see a lot of people do is they don't necessarily need the money, but they would rather start having it collected and turned on so that that is flowing to them and that they are uh not just leaving the money out there at some point. Um that way, if they tragically pass away, it doesn't just vanish into thin air. Uh they've they've collected some of this income over time. They can allocate it into their investment accounts and utilize um into growth investments or income-producing investments, depending on what their situation is. But that reinvestment would then allow the accounts to continue to grow over time. And then when they need the investment, they could tap into it for themselves. Finally, reason number five is the big break-even question. How long does it take for you to break even if you choose to wait until 60, you know, 66, 67, or even until 70? So that's one of the things you have to understand when you're making this decision. This chart by Capital Group shows that if someone was supposed to take Social Security at age um 67, and let's just, you know, I think the example is$2,500 a month, they would get$2,500 a month at age 67. Well, if they decided to take at 62, they would have had to reach age 77 for the decision to not take Social Security at 62 to make the decision of waiting pay off, they would have to reach age 77. That's a long, that's a 10-year gap that you would have to wait from 66, 67 to 77. And life expectancy for people today uh is somewhere around 75, 76, 77. And so the IRS knows this. They have, and you know, there's lots of people that live long, healthy lives far beyond this. But the IRS knows that the average life expectancy is somewhere in the mid to late 80s, excuse me, mid to late 70s. And so if they can get people to delay, and then they end up not living a long lifespan, they end up not having to pay out as much as they were projecting or you were projecting it to pay out. You know, having this decision early on and understanding this break even might help you understand well, if I'm giving up$2,500 a month in this example for five years, you know, then you know I'm I'm not taking in, you know,$100.$120,000 in income for that first five years and choosing to delay at 62. Again, have to wait till 77 for that decision to delay to make sense, for the break-even to make sense. So if you started at 62, you'll get less money. You might get, say,$2,000 a month, but you can use that money today, like the things we've discussed for living expenses, pay down debt, you'll reinvest it, and you be in control of how it's invested. So there's a lot of reasons to understand how and when you should claim Social Security. And they're individual reasons. It's not a one size fits all, but these are serious things to consider as you're moving into retirement and trying to understand the nuances of when to claim Social Security. In today's video, I'm going to share four simple ways to increase your Social Security benefit in retirement. Most people assume their Social Security benefit is fixed, like it's some number the government just hands you and that's what you get. But that belief alone can quietly cost you tens and sometimes hundreds of thousands of dollars over your retirement lifetime. The truth is, Social Security is full of rules, levers, and timing decisions. And if you don't understand them, you will most certainly leave money on the table. This video isn't about loopholes or tricks. It's about decisions most people never even realize they have. If you're within 10 years of retirement or already retired and haven't filed yet, this is one of the most important videos you can watch. Because once you lock in these decisions, there's no undo button. Hi, I'm Jonathan Bedner, certified financial planner, owner of Paradigm Wealth Partners here in Knoxville, Tennessee, and we help retirees and pre-retirees build retirement plans that provide confidence and clarity. Let's first talk about why Social Security mistakes are so expensive. Social Security feels automatic. You work, you pay in, you file, and you collect. So most people never question it. But for most retirees, Social Security becomes one of the largest guaranteed income streams they'll ever receive, often lasting 20 or 30 years. That means a small percentage is different, don't just add up, they compound for life. And understanding these rules can mean more income for you every single month. And ignoring them means a permanent pay cut you can never fix later. Let's talk about how Social Security is actually funded. Social Security is funded through payroll taxes, not income taxes. So every paycheck you pay a percentage and your employer matches it. And it only applies to your annual earnings cap. That matters because your benefit isn't based on your savings or your investments or how smart you were financially, it's based on your earnings history. No earnings record equals no benefit leverage. Let's talk about the 35-year rule. Social Security looks at your 35 highest earning years. Those years are inflation adjusted, indexed, so earlier wages aren't unfairly punished, but there's a catch most people miss. If you work fewer than 35 years, those years get replaced with zeros, and zeros are brutal. You don't need to earn a lot, you just need non-zero years. Even modest income years late in your career can meaningfully boost your benefit. Now let's talk about why higher earners don't get proportionally higher benefits. Social Security is intentionally not linear. Early dollars of income are weighted heavily. Later dollars matter less and less. That's why someone earning half as much as another worker often receives more than half of the benefit. This reverse progressive structure is frustrating, but once you understand it, it becomes a planning advantage. What full retirement age actually means, full retirement age, often called the FRA or full retirement age, is not a requirement. It's just a reference point. And depending on your birth year, it's somewhere between 66 and 67. If you claim it before, your benefit is permanently reduced. If you delay beyond it and your benefit permanently increases, capped at age 70. And that brings us to the four strategies, the four ways you can increase your Social Security benefit. Strategy number one, work a full 35 years. Even if it's part-time, this doesn't mean grinding longer in a high stress job. It means making sure that you replace those zero years. Even part-time income can knock out a zero and raise your lifetime benefit more than another high-earning year ever could. Small income, big impact. Strategy number two, delay claiming if you can. Claim early and your benefit is reduced for life. Delay pass full retirement age and your benefit grows by roughly 8% a year, guaranteed until age 70. That's one of the few guaranteed increases available anywhere in retirement planning, and it's especially powerful for longevity planning. Protecting a surviving spouse in retirement, and that is one of the key ways you can do it. The third strategy is understand spousal benefits. What you may be eligible for, your own benefit, or a spousal benefit, which could be up to 50% of your spouse's full retirement benefit. That's huge for lower earners, stay-at-home spouses, divorced individuals who are married to an ex-spouse for at least 10 years. Many people qualify for more than they realize and never claim it. That takes us to the fourth strategy. Make sure you use your survivor benefits strategically. Spousal benefits apply when both spouses are alive. After one spouse passes, they can be worth a hundred percent of the higher amount. This creates planning flexibility. One benefit can be claimed while the other continues to grow. Social Security isn't about income, it's about security for the spouse you left behind. Social Security doesn't exist in a vacuum, and you shouldn't plan for it in isolation. It interacts with all parts of your retirement plan, including taxes, investment withdrawals, pensions, your required minimum distributions, long-term cash flow. All of these are huge possibilities and things to consider as you're trying to determine when you should claim Social Security. Claiming without coordination often locks people into unnecessary taxes and lower lifetime income. When you claim matters just as much as what you claim. In closing, Social Security is predictable, but only if you understand the rules. Once you file, the decision follows you for life. Before you lock anything in, learn your options, run the numbers, and understand how it fits into your full retirement plan. Before we jump in, let me quickly frame who this video is for. If you've built serious retirement savings, maybe you're in your late 50s, 60s, or even your early 70s, and your portfolio is approaching or already around$1.9 million. This is a stage where questions change. You're no longer asking, will I ever be able to retire? Am I on track? Instead, you're asking, are we structuring this correctly? Are there things that we could be doing better? Are we being tax efficient? Are we taking the right level of risk? Are we missing something important? My name is Jonathan Bedner. I'm a certified financial planner and co-owner of Paradigm Wealth Partners here in Knoxville, Tennessee. I've been advising families since 2010, specializing in retirement planning for professionals and business owners who've spent decades building wealth and want clarity about what comes next. And what I've consistently seen is that there's a real transition point that happens once you reach this level of wealth. And not because$1.9 million is a magical number, but because planning complexity increases significantly once you reach it. And that's what we're going to talk about today. Why is$1.9 million a turning point? Crossing$1.9 million in retirement savings should feel like freedom. And in many ways it is. You've built a large net worth. You have freedom and flexibility and wealth and you've accomplished so much. But what most people don't realize is that once you reach this level of wealth, retirement planning changes. Below roughly$1 million, the dominant concern is: will I have enough? Am I on track? Can I make it? Can I afford to retire? Can I afford my living expenses if I choose to quit working? Around$1.9 million and beyond, the questions become: how do I protect what I've built? And before this stage, growth lends to be what matters most. After you reach this stage, preservation, tax strategy, how we turn your nest egg into a paycheck, and risk alignment begins to matter more than simply maximizing returns. Because when these numbers are larger, even smaller inefficiencies in taxes, fees, or allocation can have a meaningful long-term impact. And that's why this level represents a shift in your mindset. So let's talk about a couple traps. The first trap is trap number one, not knowing your real retirement number. Many people anchor to round numbers. They think 1 million or 2 million or even$5 million. But retirement doesn't operate on round numbers. It operates on your spending. Your real retirement number depends on your actual monthly expenses, healthcare cost, travel and lifestyle goals, inflation, longevity, and taxes. There could also be other things, but those are kind of the key five or six things that I think are important when you're trying to think through what is your retirement number? How much do you need to live on in retirement? So without clarity here, two common things happen. One, you either oversave out of fear, or two, you underspend out of fear. I've seen people work many extra years simply because they never defined what they actually needed. So once you build out a plan when you have the strategy, it provides that clarity, and that clarity eliminates some of this unnecessary anxiety. Trap number two, the tax concentration problem. At$1.9 million, most households have 60 to 85% of their assets in tax-deferred accounts, IRAs and 401ks. Meaning that money has never been taxed. And when you take a withdrawal, it becomes taxable income that hits your ordinary tax brackets, your ordinary income brackets. So that means much of the portfolio, like I just said, has never been taxed. Eventually, you're gonna have to uh start withdrawing what's called required minimum distributions, RMDs. Currently, those phase in at 73, and they're gradually increasing over time to age 75. RMDs are a mandatory taxable income. Whether you need the money or not, you must take the RMD distribution once you hit a certain age. These RMDs can trigger higher marginal tax brackets, uh, increased taxable your Social Security, uh Social Security benefits being taxable, Medicare Irma premium surcharges, uh, net investment income can also be triggered, and it can also reduce deductions. And none of this should be a surprise. It's predictable, but it requires action before you reach RMD age, not after. And this is where proactive tax planning becomes essential in your retirement plan. Trap number three, the complexity creep. As wealth grows, so do opportunities. You get more and more solicitations for private real estate deals, alternative investments, business opportunities, insurance-based solutions. And some of these may serve a purpose, but complexity for its own sake often adds higher embedded cost, less liquidity, longer lockup periods, and greater difficulty understanding the risk or how they work. At this stage, simplicity is often a competitive advantage, and you don't need more moving parts. You just need some coordination and clarity with your financial plan. Trap number four, portfolio misalignment. So this is a big mindset here, but losses feel different at different levels of wealth. As an example, a 20% decline on a$200,000 investment portfolio is$40,000. A 20% decline on a$1.9 million portfolio is$380,000. That's a big difference, and that changes the behavior substantially. The most common misalignments I see is being too aggressive. This is when retirees have too much money in equities, too much of their portfolios in equities, and this is exposing themselves to significant sequence of return risk. The other one that I see, and actually I see this far more often, is when retirees are too conservative, allowing inflation to quietly erode purchasing power. A helpful structure in thinking through these parts is what I call the 654 method. You can watch another video I have linked here where I explain this in more detail. Let's talk about the first part of the 654 method. The first is the buffer. This is your six-month emergency fund. You've heard about this many times. This is the easy place to grab money for the unexpected expense. The next bucket is your war chest. This is your five years in high-quality bond ladder that you use to produce and generate income over the next five years. This helps you weather the storms that we see, the volatility we see in the marketplace as investors. And then finally, the engine, the equities that we have invested for long-term growth. The purpose isn't to maximize performance with this, it's to create stability during volatility. When markets decline, you're not asking, should we sell? You're reminding yourself we already have funded the next few years with our war chests. We have a plan on paper on purpose for this very event. And that changes the conversations entirely in my experience over years with retirees, business owners, people that we've implemented with, and it adds that confidence they need to weather these unnecessary or these undue storms that pop up out of nowhere. The next trap is the legacy blind spot. So at$1.9 million, many families will not spend all of their money. In fact, it means that uh you're you're not just planning for retirement, but you're planning for a transfer. There's gonna be a legacy, a gift, whether to family or some charitable organization. But a lot of times we see clients can't spend or don't want to spend, uh, meaning that they're sufficient, they're happy, they they enjoy the life they have. They don't need the perpetual chase of more, they're content. And so uh what this does is without having structure uh around the legacy that you may provide, then beneficiary mistakes happen, uh, tax inefficiencies compound, family misunderstandings can develop. This is one that I see all the time, frequently. Uh, and a little bit of conversation, a little bit of planning on the front end can go a long way to help uh these family misunderstandings or even prevent a lot of the family misunderstandings. So legacy planning isn't about control, it's about clarity. Reviewing your beneficiary designations, consider Roth positioning, evaluate whether trusts are appropriate for you or your family. That's one that you might want to consult an attorney for. Uh, be intentional about your charitable goals or charitable giving and communicate your values early to your spouse, to your to your loved ones, to the people that are going to carry out your final wishes and your legacy because your plan is not just what you do with the money today, but it's how this legacy is left after you're gone. And your tax plan and your legacy plan are definitely connected. People don't think about this, but these things are interwoven uh substantially in your plan. How to calculate your real number? Here's a practical framework. Step one, gather two to three months' worth of expenses. Use your credit card statements, your bank statements. And I also want you to include everything that would also be things that are irregular expenses like repairs or travel, gifts, uh, insurance, things that don't happen every single month also need to be included when you're trying to think about your overall living expenses. The next thing we want to do is subtract the guaranteed income sources, such as Social Security, pensions, or other guaranteed uh income sources from your total expenses. That's gonna give you the gap, how much we need to from our investment portfolios every month to provide your retirement income. Step three, we want to identify flexible spending. So if markets decline significantly, what can we temporarily pause or temporary temporarily reduce in order to kind of weather this storm? Now, we have the 654 method in place, we've got a buffer already in place to help us, but still, sometimes it's good when the markets pull back, when things get uncertain, to pull back, reevaluate, reset on am I being thoughtful about where I spend money or am I just willy-nilly spending? Step four, we're gonna divide our expenses into two categories. One is base spending. This is gonna be our core living expenses, the things that you have to have every month. The next one is gonna be boost spending. This is uh travel, experiences, the extra gifts, um, the extra lattes we want to buy. I'm not a fan of cutting out lattes, I think it's uh trivial, but the extra things that we do for us, ourselves, and our families that are not necessary to day-to-day life. That is boost spending. So this will help us analyze the gap between guaranteed income and what our spending is. That number becomes your target retirement paycheck. Now you're planning with clarity, with a strategy, and you've worked your numbers, you're not just guessing at some round number because it sounds good. If you want to take that all another step forward, you can do is you can multiply your base number by 25, and you can also multiply your base plus your boost number by 25. Once we do that, that'll give us two figures, and that will give us a range of what your assets need to be to provide supplemental retirement income for you up above up and above your guaranteed income streams like Social Security, pensions, those sort of things. Let's talk about a tax smart withdrawal framework. A common structure looks like this. First, taxable accounts. This is where you would might take money first when you're taking income in retirement, supplemental income. So one of the things to do is use your taxable money first, money that's already been taxed, harvesting gains and losses strategically. Second is potentially using your pre tax accounts. Uh filling lower tax brackets intentionally, uh, not waiting necessarily to RMD age. And then third is using Roth accounts, leaving these last so that they can continue to grow long term for growth to help support your retirement over a 20 or 30 year period. Uh the other things that you might consider in this window is Roth conversions. Do they make sense? Well, in low-income years, they probably do. Before Social Security or before RMDs, they potentially do. Before Medicare premiums rise, they you know, when you're when you turn these on, you might have some Medicare Irma premium surcharges. So you want to factor that in. Medicare uses two years look back to determine what your premium is going to be. So it's important that if you're doing Roth conversions, you're also considering what the Medicare premium surcharge is so that you're aware of that two years down the road when you're paying these uh Medicare premiums. Finally, let's talk about a test for the exclusive investments. This comes up a lot. And again, people, you know, they they have they build significant wealth, they have significant wealth, and uh there starts to be questions around you know opportunities that get presented, and and should I buy, should I invest, this deal came to me, sounds good. These are the some things that I want you to think about if those get presented to you. Number one, can I clearly explain how it makes or loses money? What does it do? How does it earn money? How does it lose money? How does it work? You you need to understand that. Number two, what's the total cost in dollars? So, what does it cost to be an investor in this and how does it impact you? And not just uh uh a percent or anything like that, but what are the dollars it cost you to be invested in this opportunity? And then after fees and taxes, can it realistically outperform a diversified low-cost portfolio? I see a lot of times people are chasing the next greatest idea or their friend brought them uh a strategy or their neighbor, their CPA, or someone, and you know it sounds really good in paper, and they want to be part of this thing, and and that's all good and noble and fine, but it doesn't necessarily mean it makes a lot of sense, and it doesn't mean it can uh outperform just a steady, eddy, diversified, you know, low-cost portfolio. So ask yourself those three questions. And if you can't confidently answer those questions, you need to pause and think through disciplined investing tends to win quietly. You don't have to have the big loud, you know, look at what I'm investing in strategy to win. So being disciplined goes a long way in in continuing to build success uh and wealth over time. So, in conclusion,$1.9 million is not just a milestone, it represents a transition. The transition from accumulation to stewardship. Taxes matter more, structure matters more, behavior matters more, and clarity becomes more valuable than ever. If you're approaching this stage or already there, and you want a retirement plan aligned with the complexity of this level, there's a link in the description where you can learn more about how we work with people and see if it's a good fit. Thanks for watching, be confident in your retirement, have a long today. Thanks for joining me on another episode of What the World. If you enjoyed the episode today, smash that subscribe button. It helps me more than you think. Also, if you found this episode insightful and a light bulb went off, share it. Your friend, Aunt Judy, the random guy in the office who's always talked about investment. Wealth isn't about just the chicken. It's about our choices, chances, and changing our financial future. The information in this podcast is informational and general nature, does not take into consideration the listener's personal circumstances. This podcast is not intended to be a substitute for specific in financial, legal, or tax advice. You should consult the approved qualified professional prior to making a final decision. Security is offered through LPL Financial, member FINRA SIPC. Paradigm Wealth Partners is the other business name for Independent Advisor Alliance. Investment advice offered through Independent Advisor Alliance, a registered investment advisor, Independent Advisor Alliance, and Paradigm Loft Partners are separate entities for LPL Partners.