30 Years of Retirement Knowledge in 20 Minutes

In the last 30 years, I've helped hundreds of Americans retire. I sat

across the table with people who have $5 million and were terrified.

And I sat across the table with people who had $300,000 and were completely fine.

I've been doing this long enough that I start to see the same patterns, the same mistakes, and the same questions nobody seems to give straight answers to.

So, in today's video, I'm going to give you straight answers to all of them.

Here's what we're going to be covered today.

Why most retirement calculators are completely lying to you on how much you actually need. The one decision that can

actually need. The one decision that can add or subtract $100,000 or more in your retirement, and people make that decision by accident. How some retirees

legally pay less than 10% in taxes while others are paying over 35%.

The account mistake that quietly drains your savings 5 to 10 years too early.

And what I tell every single person who's about to retire, whether they have $500,000 or $5 million.

If you stick with me for the next few minutes, you're going to know things that most people pay thousands of dollars to learn. Let's get into it.

Point number one, why most retirement calculators are lying to you.

Every retirement calculator is built on assumptions that are wrong. And that

assumption is either going to cause you to work longer than you need to, or it's going to put you in a position to feel guilty about spending your own money.

Here's what every calculator does. It

takes your annual spending, adds 3% inflation every year, and runs it for 30 years in a straight line. Same spending

every year going up and up and up. But,

that's not how retirement works, and it's not even close. Retirement spending

follows a curve.

You can call it a spending smile. In

your early 60s, you're active, you're traveling, doing all the things that you want to do, you've been waiting your whole life to do. Spending is high. In

your 70s, things start to slow down.

You're still comfortable, but you're not moving at that fast pace.

Spending starts to level off, and in your 80s, the world gets a lot smaller.

You're spending less because you're doing less.

But, the calculators just simply don't know that. They assume you're spending

know that. They assume you're spending the same amount of money at age 85 as you're doing it at age 65. And because

of that, they tell you you need way more money than you actually do. So, here's

what I do with every client. Instead of

running a flat spending projection, I model in the spending smile.

I front-load the income in the early years when they're healthy and active, and I taper it down later when they don't need it. I mean, doesn't that make sense? That's how life is actually

sense? That's how life is actually working right?

When you do this, two things happen.

First, people who thought they couldn't retire realize they finally can. And

second, people who thought they couldn't afford to travel and enjoy themselves in their early 60s realized that they've been holding back for no reason. Let me

give you an example. I had a client last year. He was 62, had about 1.4 million

year. He was 62, had about 1.4 million dollars saved. And every calculator he

dollars saved. And every calculator he used told him that he needed $1.8 million to retire.

So, he was planning to work three more years. But, when I ran the numbers with

years. But, when I ran the numbers with the spending smile instead of flat spending projected throughout the rest of his life, he finally realized he was already

there. He didn't need $1.8 million.

there. He didn't need $1.8 million.

He actually just needed how much he had.

He'd been planning to work at three extra years to hit a number that he really didn't need.

And he looked at me and said, "So, I've been planning on working for nothing?"

I said, "No, not really. You would have been working for a calculator who really doesn't understand what your retirement actually is." So, once you understand

actually is." So, once you understand that your spending isn't flat, everything changes. How much you need

everything changes. How much you need changes. When you can retire changes.

changes. When you can retire changes.

But, there's one decision that most people make without even realizing it's a decision, and it can cost them more than anything else in retirement. Point

number two, one decision that can add or cost you $100,000.

And I'm talking about when to take Social Security. Most people take it the

Social Security. Most people take it the moment they're eligible, which is age 62. They figure the money's already

62. They figure the money's already there, why not take it, right? Or, they

retire at age 63 or 64, and they turn it on then just because it feels like the natural thing to do. I'm going to retire and take Social Security at the same time.

What they don't realize is this. They're

locking in a permanent pay cut. You see,

if you take Social Security at 62, your benefit is reduced by 30% compared to your full retirement age. And that

reduction just doesn't go away. It

follows you for the rest of your life.

On the other hand, if you delay past your full retirement age, your benefit grows by 8% per year until you reach age 70. Now, that's a guaranteed return, no

70. Now, that's a guaranteed return, no market risk, and no volatility.

Just 8% more per year, every year, until you turn 70.

And the difference we're talking about here between age 62 and 70 can be over a thousand dollars a month in income for the rest of your life.

Now, run that over a 20 to 25-year retirement, and you're looking at well over $100,000.

And for some couples, that's $200,000 or more.

Now, I'm not telling everybody to wait till age 70. That's not how this works.

But, if you need income to eat, yeah, okay, take it. If your health is poor and you're single, maybe take it then, too.

It's not a one-size-fits-all strategy, but here is what I'm saying. Just don't

just simply make a decision by default.

Run the numbers. Most people just simply don't do this. They take their benefit at age 62 versus age 70 without really ever thinking about it. They never ask,

"How can I bridge the gap between age 62 to 70 to maximize my Social Security benefit?" And one word I did mention is

benefit?" And one word I did mention is key. Bridge the gap.

key. Bridge the gap.

If you can cover your expenses from your savings even a few extra years, and you can let your Social Security grow to a much larger guaranteed paycheck for the

rest of your life, that is less stress on your portfolio.

The question isn't really, "Should I take Social Security early or late?" The

question is, "Can I afford to wait, and if so, how long can I do it?" I had a couple come in last year. Both of them were age 64, and they had around

$900,000 saved. They were planning on

$900,000 saved. They were planning on taking Social Security at age 65 cuz it felt like the right thing to do. But,

when I ran the numbers, yes, they could take it at 65, but it was a little tight. There was not a lot of

little tight. There was not a lot of room for error.

Then, I ran the numbers with one change, delaying Social Security to age 70 for the higher wage earner. The other spouse

can take hers at age 67. Everything else

remains the same. That one change, one change only, added almost $200,000 in their projected lifetime income.

That's not a small number.

Their plan went from being tight to really comfortable.

Not because of the money they saved, but because when they started taking Social Security.

Social Security timing is huge. But,

here's what a lot of people don't think about. Every dollar you take from Social

about. Every dollar you take from Social Security, every dollar you pull from your IRA account, every dollar you take in other income, all shows up on your tax return. And if you're not paying

tax return. And if you're not paying attention to how those pieces all fit together, you're probably paying more in taxes than you need to.

By the way, if you're watching this video and you're thinking, "Man, I really need to have somebody look at my situation and let me know what I need to do." That's what we do here at

do." That's what we do here at Riverbend. I sit down with people just

Riverbend. I sit down with people just like you to figure out exactly where you stand so you can have more money to do things you love to do.

There's a link in the description to book a call if that sounds helpful.

All right, let's talk about why you're probably paying more money in taxes than you need to.

Point number three, some retirees legally pay less than 10% in taxes. I

regularly see retirees pay 6, 7, 8% in total federal income tax. Meanwhile,

people who are still working are paying 25, 35, sometimes 40% or more in taxes.

Most people assume that when you retire, your taxes sort of just automatically go down on their own. But, it's not that simple.

And for a lot of retirees, their taxes don't go down. They may actually go up.

Here's what changes when you retire. You

get access to deductions and credits that weren't available to you before.

If you're over age 65, your standard deduction actually goes up. After the

one big beautiful bill act, there's a brand new $6,000 per person deduction on top of that. And if you structure your

income right, you can sell appreciated assets and pay zero federal capital tax.

Legally, no orange jumpsuit here. Zero

tax.

But, here's the thing.

None of this happens automatically.

These tax These tax breaks do exist, but they only work if your income is set up to take advantage of them.

The key is understanding the difference between your marginal tax rate and your average tax rate.

When you're working, you may be in the 24% tax bracket. That is your marginal marginal rate. That's what you pay on

marginal rate. That's what you pay on your last dollar of income. And it feels like you're paying 24% on everything, but you're not.

In retirement, if you coordinate where your incomes comes from, your average tax rate, which is the actual percentage of your total income that goes to taxes,

can be in the single digits. Okay,

Jeremy, how am I going to pay single digits on my taxes? Okay. Let me explain a couple things.

If you pull income from your pre-tax IRA accounts, you get taxed at ordinary income.

If you pull from your Roth, that comes out tax-free.

If you take some from your brokerage account where you have long-term capital gains, you might pay 0% in capital gains tax, depending on if you're below that threshold or not. And if you layer in

social security, which depending on your other income might only be partially taxable or not taxed at all.

When you blend all of this together strategically, you fill up the lowest tax brackets first, and that you keep your overall tax rates down.

But, most people don't do this. They

just pull from whatever account they have access to the easiest. And they end up paying thousands and thousands of dollars more in taxes than they need to every single year.

I had a client a couple years ago, retired, had about $1.2 million across a few different accounts. He was pulling everything from his traditional IRA because that's where most of his money was.

And I know that makes sense sometimes, but pulling $80,000 a year from his IRA alone, he was pushing himself up in the 22% tax bracket. He was also making 85%

of his social security taxable, and he was triggering higher Medicare premiums that he didn't know about until the bill showed up. So, what we did is we

showed up. So, what we did is we restructured his withdrawals, took some from his IRA, took some from his Roth, harvested some some capital gains rates at a 0% rate.

His federal income tax bill dropped by over $7,000 that year.

He didn't earn less, he didn't spend less, he just pulled from different buckets in different order.

And that brings us to the next mistake because the order you pull from in your accounts doesn't just affect this year's tax bill. It affects how long your money

tax bill. It affects how long your money last.

And for most people, they get it backwards.

Which brings us to point number four, the account mistake that quietly drains your savings.

Where you take your money from matters just as much, if not more, than how much you're actually taking. And I see people get this wrong, and they often get it backwards.

Here's what happens. Someone retires,

they have a traditional IRA, maybe a Roth IRA if they're lucky and get things set up right, and a regular brokerage account. And they need income, and they

account. And they need income, and they start pulling from whatever asset's the easiest. What has the cash and what they

easiest. What has the cash and what they have access to. This is usually the brokerage account because there's no penalty and there's no age restriction to take the money from. And they're

often paid taxes on it already. And I

know that sounds logical, but here's what happens. They drain

their brokerage account first and end up letting their IRA grow and grow and grow and grow.

And the problem shows up later when they have so much money in their IRA account and they turn RMD age, which means required minimum income distributions.

The government is going to force them to take out tons of money in their mid-70s, and all of that income is all of a sudden going to become taxable. That is

going to force them to pay more money in Irma surcharges, make them more of their social security taxable, and we've already discussed that

people in their 70s need less money.

So, they're forcing you to take more income in your 70s, pushing you into higher tax brackets when you actually need your money less than when you were in your 60s.

Does that make sense? So, when you retire, oftentimes you're in the lowest tax bracket. That's a perfect time to

tax bracket. That's a perfect time to start taking money from your pre-tax IRA accounts today and reduce that RMD burden down the

road.

That also preserves tax flexibility from your Roth IRA and your taxable brokerage account later so that you can navigate within the deductions that are available

to you after age 65.

We had a couple that called in the other day. They were in their early 70s with

day. They were in their early 70s with $1.8 million in their IRAs, and they did what a lot of people do. Spend down

their brokerage account and not touch the IRAs because it was taxable and they didn't want to deal with it.

The problem is, if they did nothing, they're going to be forced to take out $75 to $80,000 a year when they turn RMD age.

That income plus their pension will make 85% of their social security taxable and push them into the second Irma bracket.

They would be paying an extra $2,400 per year in Medicare premiums alone.

But, if they started strategically withdrawing from their IRAs in their 60s, they would be in a much, much lower bracket today.

You see, a lot of times people are making decisions to get the lowest tax bill today instead of what can reduce my lifetime tax bill.

So, always be thinking what can reduce my lifetime tax bill.

What we did with this couple, which is not a lot that you can do when you're in your early 70s and you have $1.8 million and and don't have a lot of money anywhere else, we did do some strategic

Roth conversions to whittle some of that down.

But, if you're in your early 60s or in your mid-60s, you have time before those RMDs hit to start chopping away at your IRA accounts.

That will reduce the future tax bomb that's going to hit when your RMDs are first upon you when you turn age 73 or 75, depending on how old you are.

So, many, many retirees are paying way too much in taxes than they really need to.

All they got to do is start earlier and think in terms of lowering my lifetime tax bill, not just this year.

And you do that by doing strategic Roth conversions, optimizing for social security, and making sure you're taking your income from the accounts in the right order.

So, the retirement spending small changes how much you need, your social security changes your guaranteed income amount, tax planning changes how much you keep in your pocket, and your

withdrawal order changes how long your money actually lasts. And none of that matters if you don't know the answer to one question.

And this is what I tell every single person who sits down in my office, whether they have $500,000 or 5 million.

The biggest risk in retirement isn't running out of money. It's actually

running out of time.

I've watched people delay retirement waiting years for the right time.

Waiting till the market to settle down.

Waiting until they earned a little bit more money.

Waiting till they feel ready. And then

something happens. Their health changes.

Their spouse gets sick. And all of a sudden, it's too late.

They had the money, they had the time, but they did not give themselves permission to actually move forward.

And that's the thing nobody talks about.

We spend so much time planning on the financial side of retirement, we forget the whole point of money is actually to fund the life you actually want.

I've sat across too many people that had all plenty of money, but could not get themselves to make the decision to actually retire and do the things they really wanted to do.

And the reason was they were scared.

So, they left a lot of life on the table. They had the means to do the

table. They had the means to do the things they actually wanted to do with the people they actually wanted to do them with, but they didn't do it. And

that's the real risk.

We stress test the plan. We build in margin. We account for a lot of these

margin. We account for a lot of these curveballs, market crashes, health care cost, living a lot longer than you might expect.

And once the plan can handle all of those, guess what? You move forward. Not

because you have all the answers, but because you answered enough of them.

The default for a lot of people is simply to freeze, to keep working another year, then another year, and then another year. And then they wonder why their life looks the same now as it

did 5 years ago.

Rumi said it best, when you start the walk on the way, the way appears.

You don't get clarity by waiting. You

get clarity by moving.

I had a client a few years ago, 61 years old, $1.6 million saved. Every time we met, there was a new worry. What if the market crashes? What if health care is

market crashes? What if health care is more expensive than I think? What if I live to 95? His plan was solid. We

handled almost every single scenario, but he still couldn't move pull the trigger.

And I finally asked him, "What are you waiting for?"

waiting for?" He didn't have an answer.

When he finally did retire and took those trips he wanted to to Portugal and France and all those things with his wife, he said later, "It's like, why did I wait so long?"

Just simply move forward. Once you do, everything lines up.

You see, money's a tool.

A tool for you to live life.

And life is really the point.

Here's what I've learned. General advice

only gets you so far. At some point, you need the math applied to a real decision. That's exactly why I made this

decision. That's exactly why I made this next video. I sit down and walk through

next video. I sit down and walk through a what a retirement actually looks like if you retire at age 55 versus working at age 65. I'll use real numbers and real trade-offs.

I hope all's well with you and your family, and I'll see you in that video.