Ask for help

I had the chops to come up with a pretty good retirement financial plan, especially with access to smart colleagues. But Allyson’s eyes would glaze over when I “mansplained” about our finances, so we shopped for a planner to referee. About five years before I retired, we interviewed advisers with various compensation models and settled on one who charged by the hour. For Allyson, it helped that our planner was a woman. She assured us that we were on track with savings but told us to dust off our budget and fatten up our emergency fund.

I continued with my DIY investing. But in 2022, when retirement was a year away and both the stock and bond markets had gone south, I turned most of my investments over to Morgan Stanley. I figured I’d have a tough time matching the wisdom of my advisers, who in turn had access to Morgan Stanley strategists. I pay a typical 1% of assets under management, and in return I get a complete financial plan plus Monte Carlo simulations that show how likely it is that we won’t outlive our money (currently 83%, which ain’t too bad).

Of the numerous stocks I’d accumulated over the years, my advisers recommended that I sell all but four — Apple, Amazon, Alphabet and Berkshire Hathaway —and invest the proceeds in a mix of exchange-traded funds and mutual funds. I kept a chunk of my money in a rollover IRA at Fidelity. Allyson is still in the preretirement accumulation stage, but when she retires, she’ll likely roll over her 401(k) to an IRA and let Morgan Stanley manage it.

Optimize Social Security

Although there are often compelling reasons to claim Social Security benefits before FRA, “probably more should claim later than do,” says Andy Baxley, a certified financial planner at The Planning Center, in Chicago. If you claim benefits at age 62, you’ll get up to 30% less every month compared with claiming at FRA. After FRA, for every year you delay until age 70, you get delayed-retirement credits worth 8% a year.

If you and your spouse will receive about the same amount in benefits and can cover expenses from other sources of income, it often makes sense for both of you to delay filing until age 70. If you need more income, the lower-earning spouse could file for benefits earlier than 70 while the other spouse delays claiming.

My advisers agreed that I should claim Social Security at FRA. Besides bringing in some extra income, it allowed me to put off withdrawals from my IRAs while the stock market was still in the doldrums.

Sign up for Medicare (or not)

The rules for enrolling in Medicare are complicated, and you face lifetime penalties for missing the deadlines. I was able to put off signing up because I’m covered under Allyson’s health plan, and as long as she works for the same employer, I can delay enrolling.

That saves us money because Medicare levies a potentially stiff surcharge based on the income you reported on your tax return two years before — when both of us were working full-time.

Get creative with a pension

I was one of a handful of long-term Kiplinger employees still working for the company who qualified for an old-school pension. I missed the optimal time to take the lump sum, before the Federal Reserve started its inflation-fighting rate hikes. (When rates are lower, you get a bigger lump sum, on the theory that you need more money to invest to match the annuity’s income.) So I thought I’d take the annuity, with the 50% survivor benefits.

But my advisers recommended that I take the lump sum and invest it in a variable annuity with a 7% income stream for the first seven years and a guaranteed 6% to 10%, based on a Treasury index, after that. The product I’m using from Equitable has an investment portfolio in addition to the “protected benefit” account. The icing on the cake: Allyson will get a 100% survivor benefit without me having to significantly reduce my payouts.

Plan for long-term-care expenses

I was reluctant to self-insure for potential long-term-care costs, especially since a stay in assisted living for me could have left Allyson with a huge dent in savings with years of retirement still to go. But LTC policies are pricey. Our Morgan Stanley team came up with a solution we liked: a hybrid life insurance/long-term-care policy.

We each bought a policy with a $500,000 death benefit that we can tap for long-term-care expenses. The LTC expenses are deducted from the death benefit, but if we don’t need long-term care — or tap less than $500,000 for LTC expenses — the remaining death benefit goes to our estate or beneficiaries.

Such policies aren’t cheap. The broker who works with Morgan Stanley estimated a premium of $22,000 a year for me and $7,500 or so for Allyson. But I qualified for a premium discount of $5,000 a year based on my health.

Think Roth

If all your investments are in traditional IRAs or pretax 401(k)s, you’ll have to take large withdrawals when required minimum distributions start in your early seventies. Plus, if you leave a pretax IRA to your heirs, they will have to take distributions and pay taxes on them.

One solution is to convert a traditional IRA to a Roth. You’ll owe taxes on the amount you convert, but your sixties is often “a beautiful period when you can convert with fewer taxes,” says Shweta Lawanda, a CFP with Francis Financial, in New York City. Because many of her clients consider estate planning their top priority, they want to find strategies to leave money to their heirs with no taxes due.

Prepare psychologically

Our identities are often linked to what we do in our career, so be sure you are ready for life without work. Baxley recommends that new retirees have hobbies and personal interests. He also likes the idea of phased retirement. “It can be hard for men, especially, to have a void,” he says. “It can help a financial plan as well.”

Lawanda says she sees couples retiring soon who may have trouble sticking with their plan because they are supporting adult children. “We’re coaching parents to put the life jacket on themselves first,” she says. The kids can get a loan for college or figure out how to support themselves in their twenties, she says, but you can’t get a loan for retirement.

I worked from home during and after the pandemic, so I was used to being alone after Allyson returned to the office four days a week. Now that I no longer have meetings, I’m free to do my own thing — mainly creative writing, working through a dusty stack of books, biking, cooking and learning to play the banjo (“Foggy Mountain Breakdown” is coming along quite nicely, thank you).

I schedule about one lunch a week to stay in touch with friends and ex colleagues, walk with friends a couple of times a week, participate in a book club, and putter around the house and garden. We travel to see family and go to our vacation home on Lake Michigan each summer.

As one former Kiplinger editor put it, when you’re retired — really retired — every day is a Saturday. I don’t know how I ever found time to work.