You’re Retired. Now What? 5 Financial Decisions That Matter Most in Your First Year
Retirement is finally here. Your paycheck is gone, your savings are now your income, and the financial decisions you make during your first year could affect your lifestyle—and your taxes—for decades.
After decades of building wealth, retirement represents a fundamental shift. Your wealth now needs to generate income, manage taxes, withstand market volatility, and support the life you want to live.
Here are five decisions that deserve immediate attention—and how working with an advisor that is both a CFP® professional and CPA can help.
1. How Will You Turn Your Savings Into Retirement Income?
One of your first questions may be: How much can I afford to spend each year without running out of money?
The answer involves more than a withdrawal-rate rule. Social Security, investment accounts, taxes, inflation, spending needs, and longevity all matter.
How we help: As CFP® professionals, we develop an income strategy around your lifestyle and financial goals. As CPAs, we evaluate the tax consequences of where your income comes from and when you take it.
2. Don't Assume Your Taxes Will Drop
Retirement doesn't necessarily mean lower taxes. Traditional IRA and 401(k) withdrawals are generally taxable, Social Security may be partially taxable, and investment gains can add to your tax bill. Eventually, required minimum distributions may create even more taxable income.
How we help: We look beyond this year's tax return to identify opportunities for Roth conversions, capital-gains management, charitable giving, and strategic withdrawals that may reduce your lifetime tax burden.
3. Is Your Portfolio Built for Retirement?
The portfolio that helped you accumulate wealth may not be the portfolio you need to live on.
Your investments now have two jobs: provide income today while continuing to grow enough to support tomorrow.
How we help: We evaluate your portfolio in the context of your complete retirement plan, considering spending needs, risk, liquidity, market volatility, and longevity. We also coordinate investment decisions with your tax strategy.
4. What Will Healthcare Really Cost?
Healthcare can become one of retirement's largest expenses. Medicare doesn't cover everything, and higher retirement income can affect Medicare premiums through IRMAA.
How we help: We incorporate healthcare costs into your retirement plan, evaluate Medicare-related tax considerations, and help account for potential long-term-care expenses.
5. Does Your Estate Plan Still Match Your Wealth?
Retirement is an ideal time to revisit your estate plan. Your wealth, family circumstances, and retirement accounts may have changed significantly since your documents were created.
How we help: We coordinate your investment and tax planning with your estate strategy, including beneficiary designations, retirement accounts, charitable intentions, and the potential tax consequences of transferring wealth.
Your First Year of Retirement Is a Planning Opportunity
Retirement planning doesn't end when you retire. In many ways, that's when the most important planning begins.
Your investments affect your taxes. Your taxes affect your retirement income. Your income can affect Medicare costs. And how your assets are structured can affect how efficiently your wealth passes to the next generation.
As CFP® professionals and CPAs, we look at the entire picture—not just your investments or your tax return.
If you've recently retired, now may be the right time to ask:
Is your financial strategy designed for the retirement you're actually living?
A comprehensive retirement and tax-planning review can help identify opportunities to create sustainable income, reduce unnecessary taxes, manage investment risk, and make your wealth work more efficiently throughout retirement.
You worked for decades to build your wealth. Now it's time to make sure it works just as hard for you.
Set up a meeting with one of our advisors to put your retirement plan in motion.
The opinions are those of the writer, and not the recommendations or responsibility of Cetera Wealth Services, LLC or its representatives.
Roth IRA:
Converting from a traditional IRA to a Roth IRA is a taxable event.
A Roth IRA offers tax free withdrawals on taxable contributions.
To qualify for the tax-free and penalty-free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½ or due to death, disability, or a first-time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.
