[00:00] Hello and thank you for joining us. I’m Steve Alexandrowski, a partner at GEM Asset Management, where we help individuals and families navigate the financial and personal challenges of retirement. Today, we’ll discuss some of the key decisions that can affect retirement income, taxes, healthcare costs, and long-term financial confidence. Most people spend 30 or 40 years learning how to save and invest. Almost nobody spends that much time learning how to retire. Accumulating wealth and spending wealth are two very different challenges. When you’re working, mistakes can often be corrected with time, income, and continued savings. In retirement, every decision becomes more interconnected.
[00:45] The timing of Social Security affects your income. Income affects your taxes. Taxes affect Medicare premiums. Market declines can affect withdrawal decisions, and the choices you make in your 60s can influence your financial flexibility decades later. That’s why retirement is not a finish line, it’s a transition. Today we’re going to walk through what we call the retirement runway, the process of turning a lifetime of savings into sustainable income. We’ll discuss the key decisions retirees face, the common mistakes we see, and the planning opportunities that can create greater confidence throughout retirement. Our goal isn’t simply to help you retire, it’s to help you retire with a plan. After more than 20 years of meeting with people approaching retirement, I’ve noticed something.
[01:32] The people who worry most about retirement are rarely the people who need to worry at all. In many cases, they’re the people who did everything right. They saved consistently. They avoided major mistakes. They paid off debt. They built substantial retirement accounts. And then one day they wake up and realize they’re about to stop receiving paychecks for the first time in 30 or 40 years. That’s when the questions start. When will I run out of money? When should I take Social Security? How do I keep more of what I’ve saved? What will healthcare actually cost? And perhaps the hardest question of all, how do I actually spend this money? I’ve spent an entire life trying not to spend. Let’s walk through these five questions and let’s see where a planner can help.
[02:16] And please remember, there’s a question box at the bottom of the screen, and we’ll answer them after the presentation. Three people, same savings, retire a few years apart. One right before the market falls apart, the other two at different points in a market cycle. This isn’t a story of who planned better. It just comes down to when they happened to begin. All have $2 million and need about $90,000 a year from their investments. Let’s spend a minute talking about the sequence of returns. For example, someone retires in 2001, someone else in 2003, and another in 2010. When you’re saving for retirement, market declines can actually be beneficial because you’re buying investments at lower prices. But once you retire and begin withdrawing money from your portfolio, the timing of market returns becomes much more important.
[03:08] A significant market decline early in retirement can have a lasting impact because you’re taking withdrawals from a portfolio that is already shrinking. Those dollars are no longer available to participate in the eventual recovery. Let’s look at the three retirees who all started with the same portfolio and the same spending plan. The only thing that changed was the year they retired. Again, one retired in 2001, one in 2003, and the third in 2010. They all had the same investments and a $2 million portfolio. 40% was invested in the S&P 500, 10% in U.S. small caps, 15% in international stocks, and 35% in bonds. What’s interesting is the low points.
[03:51] Our 2001 retiree had a low of $1.4 million in 2007. Our 2003 retiree also experienced his low in 2007, at $2.1 million. The retiree who waited a little longer, 2010, ended up experiencing his low point in 2022, at $2.4 million. Now, where it gets interesting is in the ending values as of 2025. Our 2001 retiree has successfully taken out $90,000 every year, adjusted for inflation, and has $2.8 million. The 2003 retiree has $3.8 million, and our 2010 retiree has $3.4 million.
[04:37] All three survived retirement, but the 2001 retiree needed real fortitude to keep to the plan. Bailing out at the low point in 2007 would have meant a severely diminished lifestyle. When markets decline, the biggest risk is often not the market itself. It’s being forced to make difficult decisions at the wrong time. The goal isn’t to dramatically change your lifestyle every time the market falls. The goal is to build enough resilience into the plan that you can stay disciplined through both good markets and bad. A cash reserve, a diversified portfolio, and a thoughtful withdrawal strategy can help provide confidence when volatility inevitably arrives. Successful retirement planning is about creating options before you need them.
[05:27] The goal isn’t actually flexibility, it’s resilience. How do I keep more of what I have? We spent time talking about market risk, the importance of having a retirement plan that can withstand volatility, but retirement success isn’t determined solely by investment returns. What ultimately matters is how much of your wealth remains available to support your lifestyle, your family, and your goals. The good news is that some of the most valuable retirement decisions have nothing to do with trying to predict the market. They involve taxes. Withdrawal strategies, Social Security timing, and other planning opportunities can help you keep more of what you worked so hard to build. Let’s look at a few areas where thoughtful planning can potentially make a meaningful difference over time.
[06:19] The tax window most people miss. Many people assume their taxes go down and stay down in retirement. In reality, there’s often a short window between retirement and required minimum distributions when taxable income may be unusually low. Those years can be some of the most valuable planning years you’ll ever have. Remember, traditional IRAs come with a future tax bill. A traditional IRA is tax-deferred, not tax-free. Every dollar eventually belongs partly to you and partly to the IRS. The question isn’t whether you’ll pay the tax, the question is when. However, Roth conversions let you choose your tax rate. During the lower income years, you may be able to move money from traditional IRAs to a Roth IRA at relatively favorable tax rates.
[07:10] Once in the Roth, future growth can potentially be tax-free. The goal is often to pay taxes intentionally rather than reactively. We also stress that the objective is not zero taxes. Many retirees focus on minimizing this year’s tax bill. Effective retirement planning often means managing taxes over decades. Sometimes paying a little more tax today can reduce lifetime taxes significantly. And remember, small decisions compound. A series of annual Roth conversions may reduce future RMDs. Lower RMDs can mean lower taxable income. Lower income can help reduce Medicare surcharges and the taxation of Social Security.
[07:56] One decision can affect several parts of your retirement. The biggest tax mistake we see isn’t paying too much tax. It’s missing the years when you have the greatest control over how much tax you’ll pay in the future. Successful retirement planning focuses on how today’s decisions affect the next 10, 20, or even 30 or 40 years. The challenge is that retirement risks often arrive in stages. First come the healthcare decisions, then come Medicare and Social Security decisions, then required minimum distributions. Eventually, survivor planning becomes important. Each stage influences the next. That’s why effective retirement planning isn’t about finding a single perfect strategy.
[08:43] It’s about making a series of coordinated decisions that work together over time. The retirees who tend to have the best outcomes are often not those who earn the highest returns. They’re the ones who make fewer costly mistakes and plan several steps ahead. When should I take Social Security? This is one of the most common questions we hear from retirees. The answer is that there is no universally correct age. For some people, claiming early makes sense. For others, waiting can create significantly more lifetime income. The right decision depends on factors such as health, marital status, income needs, other assets, and retirement goals. What often surprises people is that Social Security is not just a government benefit.
[09:31] For many retirees, it’s one of the largest inflation-adjusted income sources they’ll ever have. Before deciding when to claim, it’s important to understand the trade-offs and the long-term impact of that decision. The case for waiting to claim Social Security benefits. One reason many retirees choose to wait is that Social Security benefits increase for each year you delay claiming between full retirement age and age 70. In effect, you’re purchasing a larger guaranteed, inflation-adjusted income stream for the rest of your life. For married couples, the decision can be even more important, because the higher benefit often becomes the survivor benefit if one spouse passes away. Of course, waiting isn’t right for everyone.
[10:16] Health, income needs, and family circumstances all matter. But for retirees who have the flexibility to wait, delaying Social Security can be one of the most effective ways to increase guaranteed retirement income. What about Social Security’s future? The good news is that Social Security is generally considered politically untouchable for most retirees. More than 70 million Americans receive benefits, and older Americans vote at higher rates than almost any other demographic. Reducing benefits for current retirees is generally considered politically difficult. Even if the trust fund is depleted, benefits do not go to zero.
[11:01] Social Security is primarily funded by ongoing payroll taxes. Current projections suggest that if no legislative changes occur, payroll tax revenue would still be sufficient to pay a substantial majority of promised benefits. Congress has acted before, and it can act again. In 1983, lawmakers made significant changes to strengthen Social Security, including raising the retirement age and increasing payroll taxes. Similar reforms remain available today. Most proposed reforms focus on future retirees, not current beneficiaries. Common proposals include raising the wage cap, increasing taxes on high earners, or gradually changing benefits for younger workers rather than reducing payments for people already receiving benefits.
[11:49] Social Security remains one of the strongest lifetime income guarantees available. Benefits are backed by the U.S. government’s taxing authority and include inflation adjustments, making Social Security one of the few sources of income designed specifically to provide purchasing power throughout retirement. The question is not whether Social Security will exist. The more relevant question is what form those future benefits will take. For today’s retirees and near retirees, the risk is generally lower than the headlines suggest. What will healthcare actually cost? There is no such thing as an average retiree. You’ll often see headlines claiming retirees need a certain amount for healthcare. Those averages can be misleading. Your actual costs depend on income, retirement age, coverage choices, location, and health status.
[12:39] But it’s important to remember that Medicare isn’t free. Medicare helps significantly, but retirees still face premiums, deductibles, copays, prescriptions, dental and vision, and potentially long-term care expenses. Understanding those costs in advance can prevent unpleasant surprises. Income also affects healthcare costs. Many retirees are further surprised to learn that higher income can increase Medicare premiums through IRMAA. Roth conversions, large capital gains, and IRA withdrawals can have healthcare cost implications years later. Remember too, your early retirement decisions matter. The years between retirement and age seventy-five often present unique planning opportunities.
[13:26] Decisions made during this window can affect taxes, Medicare premiums, and overall retirement cash flow for decades. The goal isn’t to predict your healthcare costs perfectly. The goal is to understand the major drivers so we can make informed decisions before those costs arise. The healthcare timeline you need to know. Healthcare planning starts before Medicare. If you retire before age 65, you’ll need a strategy to bridge the gap years until Medicare begins. For many early retirees, this can be one of the largest expenses in retirement budgeting. Turning 65 is a major milestone. Medicare and enrollment decisions can affect costs, coverage, and penalties.
[14:11] The choices you make around Parts A, B, and D and supplemental coverage deserve advance planning. Your Medicare premiums may be affected by past income as well. Medicare looks back two years when determining IRMAA surcharges, so a Roth conversion, large capital gains, or business sales, as we mentioned before, or unusually high income today can increase Medicare premiums later. Taxes and retirement income are connected. Decisions about withdrawals, Roth conversions, Social Security, and investment income can all affect future healthcare costs. Planning these decisions together often creates better long-term outcomes than addressing them separately. Healthcare planning isn’t a single decision at age 65.
[14:58] It’s a timeline that begins before retirement and continues throughout retirement. Understanding IRMAA. I’ve mentioned it a few times already. IRMAA stands for Income-Related Monthly Adjustment Amount. It’s an additional premium that high-income retirees pay for Medicare Part B and Part D coverage. Medicare looks at your income from two years prior, and if your income exceeds certain thresholds, your premium increases. For example, a retiree with modest income may pay the standard Medicare premium, while a retiree with higher income could pay several thousand dollars more per year in Medicare costs. IRMAA is essentially a means-tested surcharge on Medicare.
[15:44] It is not a penalty, but it can feel like one when a large Roth conversion or capital gain or sale of a business or even an RMD pushes income above the IRMAA threshold. Because IRMAA is based on tax return income from two years earlier, proactive tax planning can help retirees manage or reduce future surcharges. We like to point out IRMAA isn’t a sign that something has gone wrong. In many cases, it’s a sign that you’ve done a lot of things right. The objective is not to avoid income. The objective is to manage income intelligently. How do I actually spend it? Many successful savers spend 30 or 40 years building this habit of saving. They learn to delay gratification, avoid unnecessary spending, and constantly think about the future.
[16:36] Those habits are often what made them successful in the first place. The challenge is that retirement requires a different mindset. At some point, the goal shifts from accumulating wealth to using wealth. For many retirees, the hardest question isn’t will I have enough? It’s can I allow myself to spend what I’ve already earned? The purpose of a retirement plan isn’t simply to preserve assets forever, it’s to provide confidence so that you can enjoy the life those assets were meant to support. The underspending problem. One of the surprises of retirement is that many people don’t spend too much. They spend too little. After decades of saving, investing, and being disciplined, it can be difficult to switch from accumulation mode to spending mode.
[17:25] Many retirees worry about running out of money even when the numbers suggest they’re in a very strong position. Others miss the certainty that came from a regular paycheck. Even substantial portfolios can feel less secure than a monthly salary. And because none of us knows exactly how long our retirement will last, many retirees default to caution. The result is that people often postpone travel, experiences, gifts, and opportunities they can comfortably afford. Sometimes the role of the retirement plan is not just to protect assets, it’s to provide confidence, or even permission, that it’s okay to use them. So, what gives retirees confidence to spend?
[18:09] They need evidence. A written income plan helps answer the question: where will my paycheck come from next month? A funded reserve provides reassurance that near-term spending isn’t dependent on what the market does tomorrow. Stress-tested projections help retirees see the plan can withstand difficult market environments, not just ideal ones. And perhaps most importantly, spending becomes easier when it’s connected to a purpose. Travel, family experiences, helping children, charitable giving, or simply enjoying retirement. Confidence doesn’t come from having more money. It comes from having a plan that shows you can use the money you already have. Here are our key takeaways.
[18:55] Retirement is no longer just an investment challenge. It’s a planning challenge. The decisions surrounding withdrawals, taxes, Social Security, healthcare, and spending can have a meaningful impact on the quality of retirement. The good news is that many of the most important retirement risks are manageable with thoughtful planning. You don’t need perfect market timing. You don’t need perfect returns. You need a plan that helps you navigate uncertainty with confidence. Our goal is to help clients protect what they built, make informed decisions, and ultimately enjoy the freedom their wealth was intended to provide. As we wrap up, remember that retirement isn’t just about growing assets, it’s about making thoughtful decisions that help you keep more of what you built and use it with confidence.
[19:52] While none of us control the markets, we can control many of the decisions that shape retirement outcomes. That’s where planning can make a meaningful difference. Thank you for joining us today. We’d be happy to take your questions.
