Are you making the most of October?
October isn’t just a time for cooler evenings and beautiful Palm Beach sunsets—it’s also Financial Planning Month, a perfect opportunity to review and optimize your retirement strategy before the year ends. Whether you’re already retired or approaching that milestone, the decisions you make now can have a significant impact on your taxes, investments, and long-term financial security.
Here are five smart money moves every Palm Beach retiree—or soon-to-be retiree—should consider before December 31. Each move includes clear guidance for those who are pre-retirement and those who are already retired, along with practical examples.
1. Review Your Required Minimum Distributions (RMDs)
Why It Matters
RMDs are one of the most common pitfalls for retirees. Missing the deadline or miscalculating your withdrawal can result in steep penalties. With changes like SECURE 2.0 raising the RMD age to 73 for many, staying on top of your distributions has never been more important.
Pre-Retirement Actions
Know when RMDs begin: Generally at age 73 for those born between 1951 and 1959.
Check employer plan rules: Some 401(k)s allow you to delay RMDs until retirement if you still work.
Project tax impact: Estimate how future RMDs could affect your income and tax bracket.
Example: Julia, age 71, still working, confirms she can delay her RMDs and models her taxes for ages 73–75, preparing in advance.
Retiree Actions
Take RMDs on time: Typically by December 31. The first RMD has a special April 1 window, but delaying may mean two distributions in one year.
Choose sources wisely: IRA accounts can be aggregated, but employer plans generally require separate RMDs.
Use QCDs: Qualified Charitable Distributions allow you to donate directly from your IRA, satisfying all or part of your RMD without increasing taxable income.
Example: Mark, age 73, schedules his RMD for December and donates $10,000 via QCD, reducing taxable income while fulfilling his requirement.
2. Rebalance and Reassess Your Portfolio Risk
Why It Matters
Over time, your portfolio can drift away from its target allocation due to market fluctuations. For retirees, too much risk can threaten your savings, while too little can reduce growth.
Pre-Retirement Actions
Set target allocation: Define the mix of stocks, bonds, cash, and alternatives that match your goals and risk tolerance.
Automate rebalancing: Many platforms allow quarterly or semi-annual auto-rebalancing.
Build a cash cushion: 6–12 months of living expenses in liquid assets helps protect against market volatility.
Retiree Actions
- Review annually: Adjust allocations to stay aligned with your risk profile.
- Sequence withdrawals carefully: Consider how withdrawals affect portfolio balance; sell from high-performing assets if needed.
- Maintain a liquidity bucket: Keep 1–2 years of income needs in low-risk assets.
Examples:
- Pre-retired: Sandra sets a 60/35/5 allocation (stocks/bonds/cash) with automated rebalancing.
- Retired: After a strong market year, her allocation drifts to 70/25/5. She rebalances to maintain her target without touching her cash cushion.
3. Take Advantage of Roth Conversions
Why It Matters
Roth IRAs allow tax-free growth and tax-free withdrawals and are not subject to RMDs. Strategic Roth conversions during low-income years can reduce future taxes and RMD burdens.
Pre-Retirement or Early Retirement Actions
Partial conversions: Convert just enough to fill lower tax brackets without jumping to higher rates.
Use market dips: Lower account values mean smaller taxable conversions.
Consider impact on Medicare and Social Security: Large conversions may affect your MAGI and premiums.
Retiree Actions
Evaluate your conversion window: If income is moderate, small conversions may still be beneficial.
Reduce future RMDs: Every dollar converted today reduces tax-deferred balances subject to future RMDs.
Coordinate with tax planning: Include conversions as part of the year-end tax strategy.
Examples:
Early retiree: Tom converts $20,000 from a traditional IRA to a Roth, paying tax at a lower rate and reducing future RMDs.
Later retiree: Barbara, age 78, does a modest $10,000 conversion during a low-income year to benefit over time.
4. Review Healthcare and Insurance Coverage
Why It Matters
Healthcare costs are a major expense in retirement. Reviewing coverage ensures you’re protected without overpaying.
Pre-Retirement Actions
Estimate retiree healthcare needs: Include premiums, co-pays, and deductibles.
Review employer coverage options: Some allow continued coverage or subsidized retiree plans.
Consider long-term care insurance: Evaluate whether it fits your risk and budget.
Retiree Actions
Assess Medicare options: Review Medicare Advantage, Part D, and supplemental plans annually.
Check for coverage gaps: Adjust plans to avoid unexpected out-of-pocket expenses.
Integrate with tax strategy: Health Savings Accounts (HSA) can reduce taxable income and provide funds for future medical costs.
Examples:
Pre-retired: Lisa evaluates a retiree plan and sets aside funds for expected out-of-pocket costs.
Retired: George switches to a Medicare Advantage plan with lower premiums and keeps a small HSA balance for emergencies.
5. Update Estate and Legacy Plans
Why It Matters
A well-structured estate plan ensures your assets pass to heirs efficiently and according to your wishes.
Pre-Retirement Actions
Review beneficiaries: Update IRA, 401(k), and insurance designations.
Consider a living trust: Avoid probate and control distribution of assets.
Plan charitable gifts: Decide on timing and amount.
Retiree Actions
Audit beneficiaries: Confirm all accounts reflect current family circumstances.
Update legal documents: Wills, powers of attorney, and medical directives.
Coordinate tax-efficient transfers: Work with advisors to integrate Roth accounts, trusts, and insurance.
Examples:
Pre-retired: John updates beneficiaries and sets up a living trust for planned distributions.
Retired: Mary revises all beneficiary designations after a life change, ensuring a smooth legacy transfer.
Conclusion: Why Working with a Fee-Only Fiduciary CFP Matters
Taking these five steps—RMD mastery, portfolio rebalancing, Roth conversions, healthcare review, and estate planning—can make a huge difference in your retirement security. However, executing them effectively over decades is challenging.
Working with a Certified Financial Planner (CFP®) who is fee-only and fiduciary ensures:
- Alignment of incentives: Advice is always in your best interest.
- Holistic coordination: Tax, investment, Roth strategy, and estate planning work together.
- Ongoing monitoring: Plans are updated as laws, markets, and personal situations change.
- Behavioral coaching: Helps avoid emotional decisions during market swings.
- Transparent fees: You know exactly what you pay, with no hidden commissions.
In Palm Beach, your retirement should be about sunshine, peace of mind, and enjoying your wealth, not worrying about taxes or planning mistakes. By taking these five smart steps—and partnering with a fiduciary CFP—you position yourself for a confident, secure, and fulfilling retirement.
Next steps you can take right now:
- 👉 Watch our quick VIDEO for DO NOT DO a Roth Conversion if you are in these 3 situations.
- 👉 Register for our Webinar – “Roth Conversions: Minimize RMDs and Maximize Tax Efficiency”
- 👉 You can see some frequently asked questions about: RMDs
- 👉 Schedule a call with our team of fee-only fiduciary advisors to create a personalized ROTH conversion strategy.
