Beth is planning to retire in about 18 months, while Rick will transition to part-time work making $150,000 annually for six years, with the option to earn more if needed. Between the two of them, they’ve built a rock-solid foundation: $3.6 million in traditional IRAs, $1 million in brokerage accounts, $100,000 in Roth IRAs, and a $1.8 million real estate portfolio generating $150,000 annually after taxes. Their home is valued at $1.6 million with only $200,000 left on the mortgage, which they plan to pay off in less than two years.

Right now, they’re spending about $250,000 per year, but they plan to reduce that to $200,000 annually in early retirement, giving them the flexibility to travel and enjoy life while keeping their plan sustainable. Thanks to their fixed real estate income covering most of their needs, their liquid assets serve as support rather than lifelines—a great position to be in.

A big part of their plan involves Social Security optimization. If they both claim at 62, Rick would receive $34,000 annually and Beth $33,000. If they wait until 70, those numbers jump to $60,000 and $59,000 respectively. Our recommendation was for at least one spouse to delay benefits until 70 to maximize survivor benefits and secure higher guaranteed income later in life. While there’s always the temptation to claim early and invest the money, the guaranteed growth from delaying benefits 8% annually makes a compelling case for patience.

Another important piece is Roth conversions. Once Beth retires and Rick shifts to part-time work, their taxable income will drop, creating an opportunity to convert portions of their traditional IRAs into Roth IRAs at lower tax brackets. This helps reduce future tax liabilities, especially before required minimum distributions kick in. We reminded them to check their Form 8606 for any non-deductible contributions so they don’t get taxed twice during conversions. Thoughtful planning in these transition years can save them a significant amount in taxes down the road.

Rick also asked about using retirement account withdrawals to fund contributions to his 401(k) and 457 plans before fully retiring. While technically possible, it doesn’t make much mathematical sense unless required by RMD rules, since it’s just shifting money from one pocket to another. His required beginning date for RMDs is April 1, 2027, so the focus should be on Roth conversions and spending strategies in the meantime.

Speaking of spending, Beth and Rick want to follow a version of the “Die with Zero” philosophy, giving financial gifts to their children during their lifetime. We support that idea but cautioned them to keep potential long-term care needs in mind. The good news is their plan supports spending even more than $200,000 annually in early retirement. With their strong asset base and fixed income streams, they have the flexibility to front-load spending on travel and experiences while still maintaining long-term security.

Of course, retirement isn’t just about money it’s about lifestyle. Beth and Rick are driving paid-off cars (an Audi e-tron and a Volvo SUV), enjoying Kentucky bourbon and mojitos, and spending time with their Golden Doodle, Rosie, and their black tortoise cat, Emerald. Travel is a big goal for them, and Rick’s part-time work will help fund those adventures. Big Al even shared some highlights from his recent five-week trip through Japan, France, Spain, Sweden, Greece, Austria, and Italy a reminder that retirement should be about enjoying the life you’ve worked hard to create.

Beth and Rick’s plan works not because they hit some magic number, but because they’ve built reliable income streams, optimized their tax strategy, and aligned their spending with their goals. That’s what real retirement planning is all about.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

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