Welcome to episode 87 of the One for the Money podcast. Retirement is the ultimate dream for many, but there are realities of retirement that everyone needs to be aware of. Better retirement planning will incorporate these realities so it leads to a better life in retirement.
In the tips, tricks, and strategies portion, I will share ten tips when you are 10 years from retirement.
In this episode...
- Your Biggest Expense Isn’t What You Think [2:08]
- Your Biggest Fear is Misplaced [3:20]
- Regret is More Common Than You Think [4:40]
- The Real Risk Isn’t a Market Crash [5:08]
- Your Most Expensive Years Are… Surprising [5:59]
- Your Health = Your Wealth [6:26]
- Identity Crisis Incoming [6:48]
- Estate Planning is About More Than Money [7:30]
We often forget that retirement is only a recent invention. It hasn’t been around for that long. For most of human history, people worked until death or until their family could care for them when they were unable to work any longer. Retirement allows one to enjoy a life of leisure even though one is still capable of work. It really is a more amazing concept than we give it credit, and it truly is an absolute luxury of both the modern and first world. It’s amazing to think that a person can work and invest for 30-40 years and then live off that work for another 30-40 more years.
Your great-grandparents would’ve thought that was science fiction. And honestly, for billions around the world, it still is.
If you are literally and figuratively fortunate enough to enjoy such a dream as retirement, here are the most important retirement realities as I see them.
💸 Retirement Reality #1: Your Biggest Expense Isn’t What You Think
When I ask people to guess their largest retirement expense, I hear the usual suspects: housing, healthcare, maybe travel, or groceries. But nope. The winner — and it's not even close — is taxes.
Yes, Uncle Sam (and sometimes Cousin State) will still want a piece of your pie. Social Security? Taxable at the federal level and in some states. IRAs and 401(k)s? You bet. Medicare surcharges? Yep, that’s a thing.
But here’s the kicker: the folks who pay the least in taxes during retirement aren’t lucky. They’re prepared. They’ve been implementing smart tax strategies years — even decades — before they stop working. We’re talking Roth contributions, conversions, HSAs, pre-tax vehicles, cash balance plans — all the good stuff.
And to do it right, you need a plan customized to your current and future tax situations. That’s exactly what we do for our clients — because the less you pay in taxes, the more you can spend on what actually matters: time, travel, and tacos with the grandkids.
😱 Retirement Reality #2: Your Biggest Fear is Misplaced
Everyone fears running out of money. But statistically, what they should be afraid of… is dying with too much.
No joke — a study by the Investments and Wealth Institute found that 84% of retirees only spend the earnings from their portfolios. They never touch the principal. It's called the "decumulation paradox." They’ve got the money — they’re just afraid to use it.
Why? Two big reasons:
- Lifelong savers have trouble flipping the switch to spending mode.
- The “just in case” fund: just in case the kids need help, or a health crisis hits, or Aunt Sally’s dementia story plays on repeat in your mind.
But here's the thing — the real tragedy isn't running out of money. It's running out of time to enjoy it.
Using the well-known 4% rule, retirees in over two-thirds of cases ended up with twice their original wealth, even after withdrawing every year.
So yeah, have a plan. But make it one that helps you live now, not just preserve your balance sheet.
As Mark Twain so beautifully put it:
“Twenty years from now, you will be more disappointed by the things you didn’t do than by the ones you did.”
🔧 Retirement Reality #3: Regret is More Common Than You Think
In a past episode (shoutout to episode 62!), more than 60% of retirees say they would do retirement differently if they had the chance.
Why? Because too many people go into retirement with a “wing it” strategy. No structure, no vision, no plan.
Every single regret we hear from retirees could have been avoided with proper planning. Don’t let that be your story.
📉 Retirement Reality #4: The Real Risk Isn’t a Market Crash
People fear stock market crashes like they’re retirement’s Grim Reaper. And yes, they can hurt, especially during the "danger zone," the 5 years before and after retirement.
But here’s what’s worse: playing it too safe. Inflation is the silent killer. Cash, bonds, even real estate can’t keep up over the long haul — only stocks have historically done that.
That’s why we use a time-based strategy:
- Money you’ll use in the next 1-5 years? Conservatively invested.
- 6-10 years? Moderately.
- 10+ years? Growth-oriented.
The goal: protect your near-term needs and grow your long-term bucket. This structure helps our clients sleep better because they know their short-term money is safe, and their long-term money is working.
🏖️ Retirement Reality #5: Your Most Expensive Years Are… Surprising
Retirement spending forms a smile: High in the early years (you’re healthy and adventurous), lower in the middle, and rising again in later years due to healthcare and long-term care.
So don’t waste your early years! That’s when you’re most likely to enjoy travel, grandkid adventures, and the bucket list. Plan to maximize that window before Netflix becomes your best friend by default.
🏥 Retirement Reality #6: Your Health = Your Wealth
Want to enjoy retirement? Prioritize your health. The best financial plan in the world won’t matter if you can’t move or hurt every time you try.
Start now: 5-7 hours of exercise per week before retirement. Your future self will send you a thank-you note.
🧠 Retirement Reality #7: Identity Crisis Incoming
You’ve had structure, colleagues, Zoom calls, purpose — then suddenly... you don’t.
You gain 2,500 hours a year, and no idea what to do with them. For some, it’s bliss. For others, it’s a blindside.
Work gives us identity. And when that’s gone, the void can be jarring. Add in shifting relationship dynamics (hello, 24/7 spouse time!) and surprise grandparent duties, and suddenly retirement looks less like a dream and more like a confusing second act.
That’s why retirement planning has to go beyond money. Purpose, structure, and social connection matter just as much, if not more.
🧾 Retirement Reality #8: Estate Planning is About More Than Money
Most people think estate planning is about transferring money efficiently. But it’s way more about preserving your legacy, which is family unity. Because if you don’t think your family gets along great now, wait until you throw a bunch of money and real estate in the middle, and the fights will only get worse.
An unclear or outdated estate plan can turn a loving family into a war zone. Don’t let decades of hard work — and beautiful memories — go up in flames because you didn’t have that conversation.
The plan itself is important, yes. But how well you communicate it can make all the difference.
✅ TIPS, TRICKS & STRATEGIES: 10 Things to Do When You’re 10 Years Out
These are straight from episode 53 — go there for the full breakdown — but here’s your 10-year checklist:
- Check your savings. Know where you stand.
- Boost contributions. It's crunch time.
- Review income sources. Social Security, pensions, and rentals. Learn the amounts and viability of each.
- Assess your debts. Pay down what you can. Low-rate mortgages are fine. Higher interest rate auto loans and especially credit card balances are not.
- Start a regular exercise routine. Future-you demands it.
- Review healthcare options pre-65. Especially if you’re retiring early (see episode 5 of this podcast!).
- Project your taxes. Mitigation starts now. Maybe it’s Roth contributions, Roth conversions, backdoor Roth contributions, pre-tax IRA contributions, cash balance plans, bunching charitable contributions every other year. There are so many ways to legally pay less in taxes.
- Evaluate your housing. Stay? Downsize? Move closer to family? Can your current house suit your needs when you are older? Is it a one-story or is your master bedroom on the first floor?
- Plan for long-term care. Earmark money for “just in case.” We make a legacy/long-term care fund for clients. If you need LTC, great, you have the money. If you don’t, your kids, grandkids, and charitable endeavors get a little more.
- Update your estate plan. Dust it off, review your POAs, and make sure it reflects your current wishes. Your uncle Rico may be your POA, and you may not want him making those decisions anymore.
We help clients with all of this — and more. Because with better planning, you’ll have a better retirement life— not just in dollars, but in joy, time, and memories.
