The Personal Finance Podcast - 21 Things to Do Before You Retire (Part 2)

Episode Date: November 12, 2025

Join the community built to help you master your money, stay accountable, and reach financial freedom. 👉 Join Master Money Academy today! In this episode of The Personal Finance Podcast, Andrew continues with Part 2 of 21 Things to Do Before You Retire revealing 11 more critical milestones most people miss including building a healthcare plan to protect against rising medical costs, creating a 2-3 year cash buffer to survive market crashes, entering retirement debt-free for maximum flexibility, maxing out your HSA for triple tax-advantaged savings, stress-testing your retirement number against inflation and longevity, developing a housing strategy that fits your lifestyle and budget, building guaranteed income beyond Social Security, creating an estate plan to protect your family, planning for Required Minimum Distributions to minimize taxes, and designing a phased retirement to work on your terms, giving you the complete playbook to retire with security and control. Listen to The Business Show here. Partner Deals Indeed: Start hiring NOW with a SEVENTY-FIVE DOLLAR SPONSORED JOB CREDIT to upgrade your job post at Indeed.com/personalfinance Get 50% Off Monarch Money, the all-in-one financial tool at www.monarchmoney.com/PFP Acorns: Start investing automatically with Acorns and get a $5 bonus at Acorns.com/PFP  Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/  DELL: Get a new Dell AI PC starting at $749.99, at Dell.com/ai-pc. Policy Genius:  Go to policygenius.com to get your free life insurance quote. Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at  shopify.com/pfp Wayfair: Shop outdoor furniture, grills, lawn games, and WAY more for WAY less DeleteMe: Go to https://joindeleteme.com/PFP20/ and Use Promo Code PFP for 20% off!   Watch the 21 Things to Do Before You Retire Part 1 here. Connect With Andrew on Social Media: Instagram TikTok Twitter Master Money Website Master Money Youtube Channel Learn more about your ad choices. Visit megaphone.fm/adchoices

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21 things to do before you retire, part two. I'm your host, Andrew, founder of MasterMoney.com. And today on the Personal Finance Podcast, we're going to be diving into 20, want things to do before you retire part two if you guys have any questions make sure you join the master money newsletter by going to mastermoney at co slash newsletter and don't forget to follow us on spotify apple podcast youtube or whatever podcast player you love listening to this podcast on it if you want to help out the show consider leaving a five star rating and review on apple podcast Spotify or your favorite podcast player now today we're diving into the second part or part two

21 things to do before you retire. If you did not hear part one, we do a deep dive into the first 10 things that you need to do before you retire. And if you haven't noticed already, these are action-packed episodes, a lot of information and a lot of things to dive into. And so we're going to go into part two now. And I'm not going to waste any more time.

I want to dive right into this. So without further ado, let's get into it. All right. So the first thing we need to do, and we need to make sure we do this, is figure out the biggest wildcar, overall in retirement. And we need to figure out healthcare. So you can have a perfect financial plan and you can have all of your ducks in a row. But if you don't plan for health care properly,

you could derail that entire your financial plan. So I'm going to show you in this episode how to think about health care and some of the things you should be considering. Now, I call health care, one of the biggest wild cards in retirement because we don't really know how much we're going to have to spend on health care and retirement. Now, we can get a pretty good idea, but we don't know exactly how much we are going to need because a couple of things that fall into line here are long-term health care in addition to just health care if you got sick or if you had some sort of illness. So all of this put together means that you're going to have an increased cost of health care over time.

Now, on average, between Medicare premiums, supplemental plans, prescription drugs, and potential long-term care, a couple usually will spend $300,000 to $400,000 in retirement on health care. That's why you need a plan. and not just having coverage in place. Now, here's what health care planning does. One, is it turns this unknown, this big unknown in health care, into a fortified plan where you're going to have enough money in place to make sure that you have this set up.

Two, it also is going to give you the right insurance mix to ensure you could focus on living well and not worrying about all of these different what ifs. If you have the right mix of insurance, you can have the right plan in place. And it's one of the few areas where preparation directly impacts your peace of mind. you can reduce your stress and anxiety infinitely by making sure you have this in place. There are way too many people I've seen that have retired. And when they retire, they are so stressed about their health care and what they're going to do next because they did not put a plan in place.

So here's some practical steps you need to think through. Number one is Medicare Part A. So this is hospital coverage and usually is premium free. So we need to understand how Medicare actually works. Then we have Medicare Part B, which this is doctor visits and outpatient care. So this usually is going to have a monthly premium. Then we have Part D, which is your prescription drugs. This is a separate plan.

And then we have Metagap. So this covers what traditional Medicare doesn't. And we have Medicare Advantage, which is Part C, combines A, B, and D into one plan, usually lower premiums, but has a lot. And I mean a lot more restriction. And so for a lot of folks out there, if you understand each of these different parts before you retire and you develop a plan on how you're going to utilize each of these parts, some have premiums, some have don't, that's going to help you,

tremendously in the long run. Now, number two is I want you to plan for that pre-Medicare gap. So before you retire or before the age of 65, you'll need coverage until Medicare starts. A lot of people listen to this podcast, they want to retire early. Most people will come back to me and say, hey, I want to retire in my 50s or my 60s. We even have a lot of folks who want to retire in their 40s. And so when this happens, what are some options that you have available? One is if you retire 18 months before this time frame, you have COBRA available to you. So Cobra means you can utilize the same health care plan that you are currently using under your current employer for another 18 months. The problem is you're going to be paying for what your employer was covering before.

So it is very expensive right now to use Cobra. Two is the ACA marketplace. Now, this is often going to give you subsidies if your income is low or if you are in early retirement. So this is a good place to start for some people out there. Also, if your spouse is still working, you can look at your spouse's employer health care coverage as well. that's another great place to look. Or you can start to shop around. You can start to shop around different health care plans

and finding an independent agent who can shop all the different plans that are out there for you. It is worth when it comes to health care getting a ton. And I mean a ton of different quotes because you could be saving yourself thousands of dollars every single year when you do this. Now, number three is we need to address long-term care needs

because long-term care is really, really going up in cost over the course of the last couple of years. In fact, 70% of retirees need some form of long-term care. Just look at either your grandparents or your parents. What kind of care did they need or do they need currently? And how are they getting that care in coverage? It costs money to get this kind of care. And so you need a long-term care plan.

There's a number of things you can do. First is you can look at traditional long-term care insurance. Very expensive stuff. But it does pay for care, but your premiums can increase over time. Two is hybrid life plus long-term care policies. and those combined life insurance with LTC benefits. I'm not a big fan of utilizing life insurance for this. Three is self-funding.

So using your investments to cover potential care costs and planning for that. So that's another big plan that you could have in place. And the key is to choose your strategy early and understand how this works. What happens to a lot of people, though, is to get to this point in time. And you really need to plan this out and you need to sit down with your children. A lot of sibling fights later on in life are because of the care of the individuals in their life. And so you and your children need to sit down if you have children and you need to have a conversation about this. You just say, these are my long-term care wishes.

This is how it's going to get paid for. This is the money I have set aside for this because what happens a lot of times is that siblings, as they get older, start to have arguments, well, I don't want to use the money because that's my inheritance money. Or I don't want to put them in this home. No, all of you need to have this conversation and figure out exactly what you want them to do. If you want to live with one of your children or if you want to have specialized care, you need to state that early and often. And if you want specialized care, you need to pay for it.

That is really what we want to do. You don't want to put this burden on your children. You need to make sure that you have a plan in place. So think about this as time goes on or even if it's early. Think about this early. Now, another thing you can utilize is your HSA. We'll talk more about the HSA in this episode. But that is something else that you can use to fund a lot of this stuff and why the

HSA is really important in my eyes. And then run health care scenario. So think through, you know, if something were to happen, let's look at Medicare and MediGap premiums. Let's look at out-of-pocket costs. Let's look at long-term care coverage and inflation. And let's factor all these costs in. What would that cost every single month if I were to get all of those different things?

All right, now let's piece this together and make sure it fits into our plan. So that's the first thing I want you to do is think about those plants. Now, number 12. Now, one of the bigger threats to your retirement isn't just inflation or even taxes, but it is sequence of return risk. And what I mean by that is you having to draw down on your portfolio during really bad or down years. And so how do you combat against this? Or what are some of the things that we can do to make sure that we always have enough cash on hand to cover our expenses?

Well, what you do is you build that cash buffer fund. Now, a cash buffer fund is basically an emergency fund, but you're going to make a much larger emergency fund since you're not working anymore. And you're going to give yourself a runway, a cash runway, that allows you to pull from this fund when you retire if there are really bad down here. So I want you to think about this for a second. I want you to go back into your way back time machine and think about what happened in 2007, 2008. Imagine if you retired in 2007, 2008, and you were invested in that market. Well, that market pulled back 50%.

And if your portfolio pulled back 50%, you really don't want to be drawing on it in that given year. And so what if you had a bigger cash buffer on hand when you retire that you planned for? And for all my young folks who are in their 20s or the 30s right now, you need to plan for this now because this is a bigger buffer. which I'm going to talk about here in a second. And what if you had this bigger cash buffer? So if you had a two to three year cash buffer on hand, that would be a tremendous thing to have. And it would give you peace of mind and you would worry less.

And this can be for an emergency fund, but it can also be so that you have some extra places to pull cash from when you need it and the market is down. And so this reduces your sequence of return risk in your portfolio by having this cash buffer in place. Now, I say a two to three year cash buffer because that's kind of the minimum that I really want you to have. minimum is really one year of cash. Most people retire with not much cash whatsoever. I want you

at least have one year of cash, but having two to three years of cash, you can have this available and utilize it as a place to pull. Now, when I say cash, I don't mean you just have to stuff it under your mattress. And we'll talk about places to put this cash on hand, but just having money in place that is liquid that you can pull from when you need it. Okay. So why is this so powerful? This is your sleep well at night fund. Your swan number is what we like to call sleep well at night number. So for a lot of people out there, if you haven't heard our cash method, which is called the 136 method for your emergency fund, in that method, we have something called the swan number. This means you save up to a specific number that helps you sleep well at night.

Your swan number in retirement should be a larger number. It should be a few years of cash on hand to give you that buffer. Also, if you have this cash on hand, it lets you stay invested instead of bailing out way too early or freaking out when the market drops. This is going to give you that piece of mind that, hey, I have a couple of years available here that I can pull from if the market did drop, so I don't have to worry as much. And it turns a market crash into an inconvenience instead of a crisis. So you don't have to work, oh my goodness, I got to pull from this portfolio. It is down 50% right now. What am I going to do? That's a crisis. But if you leave it invested, it should rebound and come back, just like 2007, 2008. And so when that happens, you don't have to

worry anymore. It's just an inconvenience. It's just an annoyance overall. And then when it comes back, then you can pull from that portfolio in replenish your cash fund. This is the way that this is going to work where you're not losing so much because of that sequence of return risk. And it also is going to smooth out your income flow, whereas some people maybe you have guardrails set up. And so you're worried that when the market goes down, you're going to hit that lower level guardrail. If you want to smooth out that income, having a cash buffer helps you do that when you go through this process. And so some practical steps that you need to think through is determine what size cash buffer you want and start to work

backwards on saving that up. Let's say, for example, you want to live on $100,000 per year. Well, a big old cash buffer would be about $300,000 in place that is sitting there, allowing you to have three years of cash on hand. If you wanted to have two years of cash on hand, obviously $200, grand, and one year of cash would be $100,000. And so working backwards from there, you can remove Social Security from the equation, and you can remove any other guaranteed income, and then you have this cash buffer in place. Now, where do you keep this? There's a number of different places that you could keep this. Trying to get the highest yield is probably the best option, especially if you are retired. So you can do a high yield savings count. That's number one. You can do something like a laddered

CD. That is something where you set up a CD and it matures every single month or every other month and allows you to have liquid cash available. And then you just go and buy another CD if you don't need that cash right away. You can also look at money market funds. And for my high net worth individuals or high earners, if you have a big chunk of cash, if you want the best tax option, then money market funds can be that. And we have Treasury bills or T bills is another great option for those out there if the yield is higher and it makes sense. Otherwise, high yield savings count is the most liquid. CEDs, if you can get a higher interest rate on those CDs, nothing wrong with having that. Or you can ladder this up in another way too where you can have maybe the first year's in a

CD, year three is in T bills or whatever you want to do depending on what those rates are. The goal isn't highest return. It's just reliability. Making sure you get that reliability if you can is the biggest thing you want to do. And then again, during those strong markets, when the market rebounds, if you have to spend that cash down, then you can refill that cash with your portfolio gains later on down the line that you would have spent from your portfolio. So it's just a perpetual cycle that you can have in place,

gives you three years that the market is down for a couple of years in a row, and allows you to really have that peace of mind. Now, you can integrate this with your withdrawal plan as well. So maybe, for example, you have three years of cash on hand. And so bucket one is cash. if you're using the three bucket method, bucket two is that midterm goal, and then bucket three of the long term goals, where you can keep replenishing that and spending your cash each year,

allowing your portfolio to grow, and then replenishing it on the back end every year is another great option if you wanted to do that. Or if you have extra cash and you're unsure if it's too much, you can spend a year and then replenish with a year, spend a year and then replenish with a year over and over again. It's another great way to do this, and something that I've seen a lot of other folks do as well.

So keeping cash on hand, really important in retirement, I think everybody should consider starting to save now, even if you're young, even if you're in your 20s, just set up a little fun. You can put 10, 20 bucks a month in there if you want to, if you have a long time horizon. You're going to be amazed at how much this will build up over time, and it's going to be a great way to reduce stress in retirement. I remember when I needed to hire someone fast, but finding the right person quickly felt impossible. And if you've ever been there, you know how stressful this can be. That's where indeed comes in. When it comes to hiring, indeed is all you need. Instead of struggling to get

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Get financial advice that puts you at the center. Find your advisor at IGPrivatewealth.com. Okay, next let's do number 13. So debt and retirement don't mix well. And for a lot of folks out there, I want you to think about becoming complete. completely debt-free by retirement. Low interest and high-interest, having it all gone. Now, for me, specifically, this is part of my plan. I'm going to make sure all my debt is paid off. The reason why I'm not completely debt-free right now is because I have a mortgage that is at 2.7%

that I am not paying off any time soon. By the time I retire, I want to have paid off house, paid off cars, everything is paid off where I don't have to worry about those payments. Then the only payments I have to worry about are things like taxes, insurance, those types of things on my homes, my vehicles, and anything else that falls into that category. So it's not just about the number. This is also about freedom. It's about security. It's about peace of mind. Your retirement is a time that you should be enjoying. And having to worry about money problems because you have debt is not something I want you spending time in retirement doing. Now, this should not come before investing for your future if you're trying to hit your retirement number. But this should come later on

down the line. And we speak about this a lot in the wealth builder's journey in Master Money Academy. We talk through all of these different sections and what order of operation to go in so that you note where you're going. But every dollar you owe is a claim on your future income. And so if you don't want debt to have a claim on your future income, making sure that it's paid off before retirement is a key. This is also going to reduce your retirement risk. So the risk in retirement, if you have debt, goes up no matter what that specific interest rate is or no matter what is going on. Your risk will go up having more debt. And so keeping debt off of your own personal balance sheet can be very, very helpful. The less you owe, the more predictable your

life is as well. And so the borrower is a slave to the lender. And so noting that if you get this debt paid off, you don't have to worry as much. It's also going to, A, lower your monthly expenses, B, give you flexibility to spend how you want and not have to worry about also spending on making those debt payments. It's three, going to protect you from rising interest rates, especially if you have variable debt, if your mortgage is variable, or if you have a he lock, something along those lines. and there's a huge psychological benefit because you're light, secure, and in control. Light, secure, and in control. That's how I want you to feel in retirement. So those are big, big things to do. Now, what are some practical steps to actually do this? Obviously, we always want you to have your high interest debt paid off.

So anything above a 6% interest rate, we always want you to have that paid off. And then beyond that, when we look at lower interest debt, we would to do this later on down the line. We want to make sure we are maxing out this retirement accounts, maybe even putting some money at a brokerage account. then we can look at some of that low interest debt way later on down the line. And so that's the order of operations that I would think about this is not straight up right away, but trying to gradually start to get debt free. Maybe get those cars paid off. And you're like, you know what, I'm not going to take a car payment ever again. I'm going to make sure I save up enough cash to buy my next car.

Or maybe you finally get the mortgage paid off. And you're like, I'm going to live in this house forever. The mortgage is paid off. I enjoy being here. I like this location. My family likes being here. It's got enough space for all of us. And so you decide this is what I'm going to do.

I'm not going to move into another house instead. I'm going to be mortgage-free. Or you decide, hey, everyone's out of the house now. I'm going to downgrade to a smaller house because I don't need all of this space anymore so I can be mortgage-free. My old bigger house is going to pay off the small house and I can be mortgage-free that way. A lot of fantastic options that you have here.

And so that's how I would think about this, is trying to get rid of all your debt so you can shift to a cash-flow-first mindset, meaning you're going to be able to utilize your cash flow to do anything you want. Imagine what you would do with this debt freedom. All those extra payments that you'd be throwing out of debt, you can be taking those payments and putting it towards your travel fund, putting it towards your hobby fund, your vacation fund. Maybe you want to start a business in retirement and it goes towards that. But this is going to make your lifestyle so much better by having zero debt.

Gives you peace, control, flexibility. Remember those three things. Peace, control, flexibility. That's what you get when you're completely debt-free. Number 14 is to utilize and max out your HSA before retirement. So there is one account that feels too good to be true. and it is the triple tax advantage of the HSA. Now, the HSA has parameters and structures around it where it's not perfect, and the reason

why it's not perfect is because you have to utilize the money for health care expenses until the age of 65. After the age of 65, it turns into a traditional IRA. Now, we have entire episodes about the HSA and the nuances of exactly how it works, but just to explain it really quickly, money goes in tax-free, it grows tax-free, and you can pull the money out tax-free as long as you have a qualified medical expense. Now, we use the HSA in a very different way than what most people out there do because most people aren't educated on how the HSA actually works. And so we use it as a investment tool, meaning a retirement tool.

So most people put money in an HSA and they spend it on those medical expenses each year. Nah, nah, nah, nah, because you can invest the money in the HSA. This is going to allow you to grow your money. So once money goes into the HSA, you can grow it every single year and continue to max that out. And guess what? now you have money set aside for health care or long-term expenses where you don't have to worry as much because it's in that HSA. Then if you over-invest in your HSA and you've got too much money in that thing, which is a great problem to have, it turns into basically a traditional IRA when you turn 65.

So when you turn 65, you're going to have to pull money out of there and you'll get taxed on those dollars just like you would with your 401k or your IRA. So it's a very similar thing. And it is really, really powerful because of those triple tax advantages, because you get tax-free medical expenses. In addition, it compounds quietly for years and you have this money just set aside for the biggest expense that you're going to have in retirement, which is health care. Again, we don't know what health care is going to cost, but the rise in cost of health care and the problem that this country has with health care has been something that I don't want to mess with whatsoever. And so you want to make sure that you have that money set aside, even if it's small amounts of money. Small amounts of

money over time, grow into very large amounts of money. And so making sure you max out that HSA needs to be part of this retirement plan because overall, most people overlook it. And if you can pocket enough now, you can make a big, big difference. So if you're spending your HSA right now, I highly recommend looking into our episodes where we talk about how to utilize it like a retirement account because it's a supercharged, triple tax advantage retirement account that I absolutely love to use. All right. So in last episode, we talked about knowing your retirement number and how to find that retirement number. What I want you to do and what I want to talk about here in number 15 is to know that retirement number and then stress test that retirement number. Okay. So most people go into retirement

guessing. They go in and they hope their savings is enough, but they never run the numbers. And so you need to stress test your retirement number and figure out if this is actually going to work. Now, there's a number of different tools out there. Bolden is a great one that are going to help you stress test your retirement number and make sure this works in every single scenario. But what I want you to do is think through the exact amount of money that you need. Now, you probably did a back of napkin math. you did the 25x rule to figure out that retirement number. Now we want to make sure that we know that this actually works because this is a very, very important number to note. And as we make the adjustments each and every single year, we can look to see if this is actually something that is

going to work. And so for most people, they don't stress test their retirement number. I highly recommend you just do it because retirement is not something you want to play with. Why is this powerful? One is it transforms retirement from a guessing game into a measurable plan. But two, it helps you decide if you can safely retire and how much flexibility you actually have. Having more flexibility in the retirement is one of my biggest priorities. I want to be able to do what I want, when I want, with whom I want. And having the flexibility with your money is going to allow you to do that. It's also going to align your lifestyle dreams or your dream life with your financial goals. And when you stress test it, you can face the future confidently. See, what a lot of people do

is they don't know what's going to happen to their portfolio because they don't stress test. that mean you don't look at scenarios or historic scenarios where there was a lot of downturns or there was a lot of other issues in the market. And so if you don't do that, then you won't be educated on what could happen to your portfolio. Because if your portfolio goes down and you actually have stress tested over and over and over again, you know what's going to happen, then what happens is you are competent. You're not worried. You don't make emotional or irrational decisions. Instead, you know what could happen and you are comfortable in your own scenario. So how do we do this? One is you calculate that annual spending.

I would start with what you actually spend now and every year just keep making those adjustments because you're going to get a better idea as time goes on. And then two, get your annual income target or whatever other income is going to be coming in. And so thinking through, what am I going to get from Social Security? What am I going to get from pensions? What am I going to get from annuities? And then find that target number and then stress test it with something like a Monte Carlo simulation.

So a Monte Carlo simulation, if you don't know what that is, runs your plan through thousands of different market scenarios, ball markets, bear markets, inflation spikes, what are all the different things that could happen in the probability of success? And so you might see something like a 90% success over 30 years. If the percentage is too low, then you can adjust. And you can make some adjustments by saving more. You can make adjustments by spending less, delaying retirement. So retiring at a later date and or finding more guaranteed income that could come in.

And so you can make those adjustments and not have to worry about it each year. Again, updating this every year. This is why we updated every year is because a lot of this stuff changes in Monte Carlo simulations can help you. with that. I highly encourage to look at it and try to test it and see what you can do with some of these simulations. Number 16 is before you retire, you need to know your housing and lifestyle strategy, meaning that. Your home affects your budget. It's going to affect your taxes, your health care access, your relationships, your overall happiness. Where are you going to live? Are you

going to live where you currently are right now? Are you going to stay in the house that you currently are in? Well, let's make a plan to pay off that mortgage at some point in time before you retire, because that's going to be an easy win for you. Or do you plan on living somewhere else with the lower of living. We have a lot of listeners right now who are in some of the big cities, Los Angeles, New York. And if you are in these big expensive cities, do you plan on retiring there? Do you actually plan on retiring there or do you plan on moving to a lower cost of living area so that you can have a better retirement? That's a big question overall for some people, because housing for most is typically the largest expense. It can either support your goals or it can drain your

freedom if you don't set this up correctly. And then also, the sooner you plan it, the more options you are going to have. So for example, I live in Florida. And in Florida, we have a lot of retirees that come down here once they retire in some higher cost of living areas. And so we see that over and over and over again because it's less expensive to live here than it is to live in New York, for example. So is that something you plan on doing or are you making strategic decisions on where you are going to live? Now, for those of you out there who live paycheck to paycheck and you live in a high cost of living area, the place that you live matters dramatically. And you can really save a lot of money and taxes and you can save a lot more money so that you can retire and have financial freedom

if you live in a different area. I hate to say it and I would not move for money reasons, but for some of you out there, if you absolutely hate your job, you hate your life that you're living, moving may solve that problem and it may solve that problem in a number of different ways because you can save more for financial freedom. You can have more time with your family and friends and have the ability to save more on taxes. So those two things are really big, but I would not make a move just for money if I had family and friends around me that I'm actually enjoying my life. So if you enjoy where you live, that's not saying that whatsoever. But if you don't enjoy your life or don't enjoy where you live, consider moving and looking at a lower cost of living area, that may help

you tremendously. All right, let's look at number 17, because Social Security is an incredible foundation. It is a great foundation for a lot of folks out there, but for most retirees, it only covers about 40 to 50% of what they actually need. And so for you specifically, where are you building a guaranteed income floor? What is your guaranteed income going to be? And we need to know what that number is outside of Social Security and everything else. So we need to first figure this out because it removes the fear of running out of money. Secondly, though, is it acts as a personal pension. It's a pension that you can put into place, giving you a paycheck that you can't outlive.

But three, it lets your investment portfolio take on less risk if you want to have some additional guaranteed income. And it gives you permission to actually enjoy your savings instead of hoarding your cash and worrying about it all the time. So here's what I want you to do is I want you to calculate your essential expenses. And so figure out what your minimum income floor is. Again, every time we do these calculations, just utilize what you spend right now. And then we will adjust it every year thereafter. And then think about your guaranteed sources or what you're going to have. Will you have social

security benefits? Will you have, what will those be? You can go to ssa.gov and try to get an estimate of what those would be or try to run a quick calculation and get an estimate of what that would be. And then be conservative with it. Secondly, are you going to get any pensions or do you have fixed annuities available that you have put money into? And if that's the case, that's another great one. And then three, if you have rental income, that would be the third option of guaranteed income that could be coming in. And then you subtract this total from your essential expenses. The remainder is the gap your guaranteed income floor needs to fill. And so because of this, you have this retirement gap that is available and you need to fill that difference what your

guaranteed income floor needs. And so you can make decisions based on this. Now, there's things like annuities that you can look into. Again, most people, annuities are not the best option because the fees are so high. But annuities, if you're worried about, income is a guaranteed income option. Now, the fees are so high that it's not my favorite thing in the world, but you can't look into them. But you can also focus on the things you can control, which is coordinating your portfolio and get your portfolio in place to fill in that difference or that gap, guaranteed. So maybe you save enough or more than you need in order to fill in that gap. That's going to be the great way to do it and look at that guaranteed income floor because if you have a

floor, you're in a great position. Number 18, let's talk about a state and legacy planning, because this is something I think a lot of people forego or they wait too long before they actually do it. Now, I'm recording this episode and I'm actually meeting with my estate plan attorney this Tuesday. And so this is top of mind for me. There's a lot of things going on and I am going to continue to update my estate and trust and continue to make sure that I am improving that over time. Now, you've worked your whole life to build wealth. Protecting it for your family is going to be one of the most important things you want to do. I don't want your money going to probate and going into probate where it takes months or years.

for your kids and your family to even be able to access the funds that you work so hard for. Just had friends, had a parent pass away, all the money went into probate, and they have not been able to get it for over a year already. And so everything in that person's life went to probate, cars, house, everything. And so they've been sitting there waiting for all of this to get resolved for over a year because there was no will in place, there was no trust in place, and so everything is getting stuck in probate. So this milestone is about protecting your family. It's about preserving your wishes and leaving a legacy that lasts. If you want the money to go to the actual people you want it to go to, you need to have all of this set up.

And probate is a huge legal headache. It's going to cost a lot for your family to figure out. Also, if it went to probate, you're going to have a lot higher estate taxes if you don't plan this out. So planning out your estate taxes and your plan is very important. So number one is everybody needs to have a will. Why? This is going to outline who is going to get your stuff and who's responsible for carrying out your wishes. You want to dictate who that is going to be. Number two is I want you to take your will. I want you to review it every year or every couple years and add in any major life changes. So if you get married, children, you move away.

All of those things need to be added. So I encourage you to do this at least once a year and update it. Because without a will, the state decides for you. And that is never, ever ideal. If you want the government to decide for you, fine. But the government can't even make decisions for itself. So why would you want it to decide for you when it doesn't even know you? Okay.

Number two is you can set up a living trust. if this is appropriate. So a revocable living trust allows your assets to transfer directly to your heirs or your kids without going through probate. And it keeps your estate private, but it also speeds up distribution and offers flexibility when you're alive. And so you're especially vulnerable if you have property in multiple states, those types of things. But once your net worth hits about a million dollars, I want you to make sure that you are looking or having conversations about having any trust because trust can help you distribute those assets to people who really need to get it. Okay. Number three is making sure you name beneficiaries. So for your retirement accounts or for life

insurance or HSAs or any other beneficiary designations, you want to make sure that you are going in and putting beneficiaries in there. So if you have a Fidelity account or a Vanguard account, go in there and make sure all of your accounts have beneficiaries. It takes two seconds for each one of these accounts. If you set up a new account, make sure you do that as well. So that money goes to the correct person. Make sure you have a checkbox for your annual review to review this. All right. Then you also want to establish powers of attorney and health care directives. So people who are going to have power attorney for separate items for me specifically are going to be different people. So people carrying out my health care directives are going to be different

than the people who are carrying power of attorney for different things like financial things. And so I have it dictated on very different spots. But you can also plan for taxes and you can plan for charitable giving when you have this estate plan set up in place so that your money goes towards causes you believe in if you want it to or if you just want it to go to your kids, it goes to your kids and that's where you want it to go. Now also, everybody out there, I want you, especially if you have kids or heirs, I want you to communicate your wishes to these people. Don't make it a big old grand opening surprise where everybody's sitting around the table.

You see this in movies all the time. Everybody's sitting around the table with an attorney. They have no idea what's about to happen. Have a conversation with everybody telling them what is going on. If you have those surprises, you're going to create rifts in your family. You do not want to have these surprises. And so making sure that you have clarity. is going to prevent conflict later.

So clarity over conflict should always be your goal. If there is conflict, it shouldn't be between siblings or heirs or anything like that. They should know what's coming and you should be able to dictate and tell them what is coming. If you don't have the balls to go ahead and tell them that, then really, I don't know what to tell you. I mean, that's just one of the things that you need to make sure that you were doing. Okay. Number 19 is thinking about inflation. So inflation is going to dictate partially the longevity of your portfolio.

And the way that the 4% rule works, and we've talked about this a number of times, is that you're going to withdraw 4% from your portfolio and you're going to adjust for inflation every year thereafter. What if there are really high inflation in the years, though? I want you to make sure that when you are stress testing, you are thinking about this and adding this into your retirement plan, because inflation can really dictate a lot of different things. And so when you are planning for retirement, I like to tweak inflation rates and make sure that I have some years that are high, some years that are low. And so instead of just having a retirement number with zero inflation, make sure you factor in inflation. and test your plan against time and rising prices. That's what inflation testing is going to do. So it protects your spending power over decades and making sure that you can do that.

But also, inflation testing is going to ensure that your portfolio growth actually keeps pace with real life, which is what we want to do. Real life is going to happen. Everything and the price of everything is going to increase. You can't get a cheeseburger for 25 cents anymore. You can't get a coffee for a buck anymore. You can't go to the gas station and fill up 99 cents a gallon. And so all those days are gone.

And so what's going to happen over the country? course the next 30 or 60 years. And so we want to make sure we are stress testing against inflation and predicting what is going to happen. So most retirement plans assume two to two and a half percent. I want you to rerun your numbers to three to four percent and see what would happen in those scenarios as well. Because really, we've had about two to three percent over the course of the last couple of years. And in some years, like right after COVID, we had really high inflation years. Because when the Fed cuts interest rates and they cut them dramatically after COVID, upcoming years that are going to have higher inflation rates. So we want to make.

make sure that we just plan out for that kind of stuff. It will happen in your retirement. You're going to have higher inflation years and you just want to know what would happen. Number 20 is plan for RMDs or required minimum distributions. So starting at age 73 for most retirees under current law, some have slightly different rules. It depends on a couple of different factors, but you're required to withdraw a portion of your tax deferred counts each and every year. So your 401Ks, your 457Bs, your 457s, your 403Bs, all of those.

are going to have something called RMDs. Now, why this matters is because those withdrawals are going to be taxed as ordinary income. And they can push you into tire tax brackets if you don't plan for them. And they can also increase your Medicare premiums and tax your Social Security benefits. This is a big deal, making sure you know where these are. And so failing to take them triggers a hefty 25% penalty also. And so these are all just different things that we need to know and we need to utilize them strategically. So why is this powerful to plan this out?

One, it helps you control your tax brackets in your 70s and beyond. Two, prevents large force withdrawals to eat in your portfolio. And three, keeps your retirement income predictable, which is really what we want to do over that time frame. So practical steps that I want you to think about is first, I want you to know when your RMDs start. RMDs are going to begin at 73. It's rising to 75 for younger generations under current law.

But for most, it's going to start at 73. And your first RMD can be delayed until April 1st of the year after you turn age 73. And then I want you to estimate your future RMDs early. So use something like an RMD calculator to figure out what they possibly could be. And this is going to help you anticipate your future taxable income, which is very, very important for a lot of folks out there. Now, to reduce those RMDs before they start, we can think about Roth conversions. So Roth conversions are going to help us with this. And if you're in your 60s, you can lower those future RMDs by making some Roth conversions now. You can also make some qualified charitable distributions where you're

run to reduce your tax bill by donating some of the money early to causes that you believe in, or you can spend down tax deferred accounts strategically before 73. And so I just want you to make sure that you have that plan in place for RMDs and you're thinking about this before retirement. And as you get closer to retirement age, this becomes more and more important. And number 21, which is the last one, is I want you to think about your phased retirement or work optional strategy. So retirement doesn't have to be an on and off switch anymore. So for many people, the best retirement plan isn't quitting work, it's just redefining what you're doing. So that's the essence of a phased out retirement. So here's kind of what we're thinking about here, is what if you had a

retirement plan in a place, especially if you enjoy your job, where for the final decade of your working years, you start to slowly taper down how much you're working. And then maybe in your late 50s, you start to slowly taper down even more. In your 60s, you start to taper down even more, or do some consulting in your 70s, maybe do some additional consulting or just find ways to make extra income and then you're fully retired midway through your 70s. Well, if you do stuff like this, it's going to really help you have to save less in retirement if you don't want to. Like if you don't like saving big chunks of money over time and some people out there don't, you don't have to if you do a phased out retirement plan. One, it dramatically increases the long-term success of

your portfolio. And working part time also keeps your portfolio compounding while reducing some of those withdrawals. And it eases the emotional transition from working into retirement. So you slowly start to just reduce how much you're working more and more and more. I think ripping the Band-Aid off and going from full on 40 hours per week plus to zero hours per week working is what caused a lot of retirees to kind of spiral and go into a depression in early years. Instead, if you actually had a plan in place to slowly taper down, that is going to help you tremendously with your portfolio and financially. It's going to help you with your mental state. and it is also going to help you long term with your health span.

And so those three things are really important. It's going to give you money. It's going to give you meaning. And it's going to give you freedom, which I really, really like the thought of that. So we did an entire episode on this, by the way, where we talked through never actually fully retiring, but making sure you're active and doing a lot of different things. And so I think this is really, really helpful for most folks. Now, if you could define what work optional looks like for you, because this can be a lot

of different things for a lot of people, what kind of work would you actually enjoy doing in retirement? How many hours per week would keep you feeling energized and wanting to continue to do this? And would you prefer flexible work, seasonal work, or something local that you can do? Because if you can bake this into your plan, I think it's very helpful for a lot of folks. Even a modest part-time income can make a big difference. So if you earn $20,000 per year, you're going to need a lot less in your portfolio than you once thought you would.

So if you want to retire faster or just reduce how much you're working, if you're working a long, long hours, then this may be another great option. But also you can continue, if you get part-time benefits with some of these companies, your expenses go way, way down if you get some of those benefits. And you can use the extra time to build your ideal routine. Kind of figure out exactly what you want to be doing. You're reducing down the amount of hours that you're working and then gradually transitioning into being fully retired.

I think this is a graceful way to retire. I think it's a great way for a lot of folks to think about this. Unless you are just absolutely done with working, you do not want to work a single second anymore. I think most people should consider this. that should consider tapering down before they retire. I really, really like this idea. Well, listen, these are the 21 things you should do before you retire. Part 2.

I hope you enjoyed this two-part episode. If you want more two-part deep dive episodes just like this, feel free to email me and are at mastermoney.com. I would love for you to join us on the Master Money newsletter. Truly appreciate each and every single one of you being on this episode. And if you want help for me, join Master Money Academy. In Master Money Academy, it's a community of other wealth builders who are all working. on the common goal of becoming financially independent, and you get weekly coaching for me.

So we go through all of that. You get a complete transformation of your entire financial picture, and so really, really hope you would consider joining Master Money Academy. Again, that's linked up down below in the show notes. If you have questions about Master Money Academy, feel free to shoot me an email. I'll answer any of those questions that you have in Master Money Academy. Again, thank you so much for being here. I truly appreciate each and every single one of you, and we'll see you on the next episode. Frozen lasagna, medium power, 15 minutes. Sounds like Ojo time.

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