A lot of retirement plans assume your portfolio needs to last 15–25 years… maybe 30 if you’re being conservative. But if you retire at 60 (or earlier) and live to 100, that’s a 40-year time horizon in retirement — and it changes everything.
In this episode, I walk through five retirement planning considerations to address longevity risk for retirees in 2026 and beyond, including:
• How to build paychecks in retirement (not just a portfolio)
• Why getting too conservative can quietly increase risk over a long retirement
• How to think about Social Security, pensions, and annuities as guaranteed income tools
• Why long-term care planning is a logistics problem (that can become a money problem)
• Spending phases: go-go, slow-go, no-go
• And a legacy concept I love: giving with a warm hand instead of a cold one
📌 Free resource: I’m including a PDF in the show notes on the Guyton-Klinger “guardrails” decision rules (inflation rule, prosperity rule, portfolio rescue rule, portfolio management rule).
Guyton and Klinger Decision Rules
👍 If this was helpful, subscribe and leave a 5-star review on Spotify/Apple Podcasts — it helps us reach and impact more people.
Kevin Lao
Links:
Guyton and Klinger Decision Rules
Are you interested in working with me 1 on 1?
You can start with our Retirement Readiness Questionnaire linked on our website so we can learn more about how we can help in your journey to and through retirement.
If you’re planning to retire before you turn 65 and you’re not yet eligible for Medicare, one of the biggest questions on your mind is probably: What am I going to do about health insurance? Planning for early retirement health insurance requires careful consideration of multiple coverage options. The decisions you make can significantly impact both your health and your finances.
The biggest challenge with early retirement health insurance is bridging the gap until Medicare eligibility. This gap can last several years, and without proper planning, it can become one of your largest retirement expenses. Understanding your options can save thousands in premium costs and ensure you maintain the coverage you need.
The reality is that health insurance before Medicare has become increasingly expensive. Many early retirees are experiencing premium increases of 20-40%, with some seeing jumps as high as 70%. For example, one early retiree saw their premium skyrocket from $2,200 to $3,700 per month starting in January – a staggering increase that forced them to explore alternatives.
Let’s explore six potential paths to healthcare coverage that can help you navigate this challenging period before Medicare becomes available.
COBRA Health Insurance: Extending Your Employer Coverage
COBRA (Consolidated Omnibus Budget Reconciliation Act) health insurance allows you to keep your exact employer plan for up to 18 months after leaving your job. It’s a federal law that provides this continuation coverage for individuals who were laid off, voluntarily left, or had their hours reduced below the threshold for benefits eligibility.
The main advantage of COBRA health insurance is continuity. You can keep your exact health insurance policy, which means no disruption to your doctors, your network, or your coverage. This stability can be invaluable during the already stressful transition into retirement.
However, there’s a significant catch with COBRA health insurance: you’ll be responsible for the full premium cost. While you were employed, your employer likely subsidized a large portion of your health insurance costs. For instance, if your policy costs $1,000 per month, your employer might pay $750, leaving your out-of-pocket premium at $250/month. Under COBRA, you’ll pay the full $1,000 per month.
COBRA coverage can extend beyond 18 months in certain circumstances. If you become sick or disabled, or in cases of divorce where you were covered under your spouse’s plan, COBRA health insurance can continue for up to 36 months. This extended coverage can be crucial if you’re dealing with ongoing health issues or major life changes.
COBRA health insurance serves as an excellent bridge option during career transitions. You’re not obligated to keep it for the full 18 months. This makes it a great option for temporary coverage while you research and transition to a longer-term solution. This flexibility makes it particularly valuable for early retirees who need time to evaluate their options.
Employment-Based Health Insurance Options
Before exploring more complex alternatives, consider some straightforward employment-based solutions for health insurance before Medicare. These options might be simpler than you think and could provide the coverage you need while maintaining some income.
Part-time employment with health benefits is becoming more common. Many companies now offer health insurance coverage to employees working as little as 20 hours per week. This could be an ideal solution if you’re not ready to fully retire and want to stay active while securing health coverage.
The beauty of part-time work for early retirement health insurance is that it can provide multiple benefits.
Maintaining some income
Staying engaged and active
Potentially enjoying less stressful work than your previous career
Securing health insurance coverage
Many retirees find part-time work in completely different fields. Perhaps something outdoors, in retail, or in areas they’re passionate about but never had time to pursue during their primary career.
If you’re married, spousal coverage represents another straightforward option. If your spouse continues working while you retire, you can typically join their employer’s health insurance plan. This arrangement is common in households where one spouse retires earlier than the other, providing a natural bridge to Medicare eligibility.
These employment-based health insurance options are the first to consider for early retirees. They often offer the most comprehensive coverage at reasonable costs thanks to employer subsidies.
ACA Health Insurance Early Retirement: Affordable Care Act Options
Early retirement health insurance under the ACA has been the default choice for many people seeking coverage before Medicare. The Affordable Care Act marketplace, accessible through healthcare.gov, offers several advantages that make it attractive to early retirees.
The most significant benefit of ACA health insurance is the potential for premium tax credits. These credits can be substantial – some couples receive thousands in monthly premium subsidies. The key is keeping your modified adjusted gross income under 400% of the federal poverty line.
Upcoming Changes
However, there’s a critical change starting in 2026 that affects ACA health insurance early retirement planning. The “cliff” is returning. This means that if your income exceeds 400% of the federal poverty line, by even one dollar, you lose all premium tax credits. From 2021 to 2025, there was a gradual slope where credits decreased slowly. The hard cutoff is back starting this year.
This change is particularly important for early retirees who might have multiple income sources. Social Security, pension payments, investment income, and distributions from retirement accounts can all push you over the 400% threshold.
Example:
A couple receiving $3,000 in monthly premium tax credits could suddenly receive $0 if they underestimate their income by just a few hundred dollars. If you want to learn more about how these premium tax credits work, check out this YouTube video (The ACA Premium Tax Credits Are Changing In 2026).
ACA policies are guaranteed issue, meaning they cannot deny you coverage regardless of pre-existing conditions. This protection is valuable, but it’s also why premiums are increasing dramatically. The insurance pools include many people with chronic illnesses and high medical costs, driving up costs for everyone.
The policies available through ACA health insurance early retirement are typically high-deductible plans, often with deductibles of $3,000 or more. While the coverage is comprehensive once you meet the deductible, the high upfront costs mean you’ll pay significant out-of-pocket expenses for routine care.
Open enrollment for ACA health insurance early retirement runs from November 1st through January 15th each year. Missing this window means you’ll need a qualifying life event to enroll, making timing crucial for your retirement planning.
Direct Purchase Health Insurance Options Retirees Should Consider
Direct purchase health insurance options involve buying policies directly from insurance companies rather than through the ACA marketplace. This approach can offer significant savings for healthy individuals willing to go through medical underwriting.
Some options for direct purchase insurance include
UnitedHealthcare
Blue Cross Blue Shield
Cigna
Ambetter
When you go directly to insurance companies, you can access both on-exchange and off-exchange policies. Off-exchange policies, sometimes called private policies, don’t have to comply with all ACA regulations and can offer greater flexibility and lower costs.
The key difference with direct purchase health insurance options that retirees should understand is the underwriting process. Unlike ACA policies that are guaranteed issue, these private policies require you to complete a health questionnaire. If you’re healthy and have no major pre-existing conditions, this works in your favor and can lower your premiums.
Example
A family policy with a $10,000 deductible through direct purchase might cost around $850 per month, compared to $3,700 for a similar ACA policy. This dramatic difference reflects the healthier risk pool in underwritten policies versus the guaranteed issue ACA marketplace.
However, direct purchase policies do have limitations. Pre-existing conditions are typically excluded for 6-12 months after your policy starts. If you need ongoing treatment for a chronic condition, you may need to pay out of pocket during this waiting period.
Lifetime Benefit Limits
Another important consideration is lifetime benefit limits. While ACA policies offer unlimited lifetime benefits, many direct purchase policies cap benefits at $1-2 million per person. For most people, this is adequate, but if someone in your family develops a serious chronic illness requiring years of expensive treatment, you could reach this limit.
The solution for lifetime benefit limits is to remove the affected family member from the group policy and enroll them in an ACA policy (during the open enrollment period), which offers unlimited benefits and guaranteed issue coverage. The rest of the family can remain on the lower-cost direct purchase plan.
Many direct purchase policies and ACA-issued policies are HSA-eligible, which is a significant advantage for tax planning. If you’ve been unable to contribute to an HSA due to low-deductible employer coverage, returning to HSA eligibility can provide valuable tax benefits and retirement healthcare savings. Of course, you must be eligible to contribute to an HSA!
Medishare: Christian Health Sharing Alternative
Medishare represents a unique alternative to traditional health insurance before Medicare. As a Christian health-sharing organization operating since 1995, Medishare has paid out significant lifetime claims and offers a faith-based approach to healthcare coverage.
It’s important to understand that Medishare is not health insurance. They operate as a nonprofit organization in which members share healthcare costs according to biblical principles. Instead of paying premiums, you pay a “monthly share amount,” and instead of deductibles, there’s an “annual household portion.”
Medishare’s cost structure can be more attractive than traditional insurance. They offer four annual household portions ranging from $3,000 to $12,000, with monthly share amounts typically lower than comparable insurance premiums.
Unlike direct purchase policies, Medishare requires adherence to certain lifestyle principles. Similar to direct purchase plans, Medishare does have waiting periods for pre-existing conditions. The organization will exclude or limit coverage for pre-existing conditions for 6-12 months, depending on the specific condition and whether it involves prescriptions or medical treatments.
Medishare’s claims approval process can be more stringent than traditional insurance. The organization strictly enforces its biblical principles, which means claims related to activities like drunk driving, tobacco use, or other lifestyle choices that violate their stated principles can be denied. This strict adherence to principles has led to negative experiences for members whose claims were unexpectedly denied.
Medishare’s network differs from traditional insurance networks. They use the PHCS (Private Healthcare Systems) network, so you’ll need to verify that your preferred doctors and hospitals participate before enrolling.
Tax Disadvantages of Medishare
Two significant tax disadvantages of Medishare are worth noting. First, because it’s not technically health insurance, you cannot use it with an HSA. Second, the monthly share amounts are not deductible as medical expenses, even for self-employed individuals who can typically deduct health insurance premiums.
Despite these limitations, many Medishare members report positive experiences, particularly those who appreciate the faith-based community aspect and find the cost savings significant enough to outweigh the restrictions.
Farm Bureau Health Insurance: An Unexpected Option
Farm Bureau health insurance represents one of the most surprising health insurance options retirees can access, even if you’re not involved in farming. The Farm Bureau is a nationwide network of state farm bureaus that serves as the unified voice for farmers and ranchers, but its insurance options are available to non-farmers in many states.
What makes Farm Bureau particularly interesting is that its health insurance policies are underwritten by major insurers like UnitedHealthcare. However, when you call UnitedHealthcare directly, their agents may not even know about the Farm Bureau option, making this a hidden alternative worth exploring.
The underwriting process for Farm Bureau health insurance is more thorough than direct purchase policies. If you’re over 40, they typically require medical records from your most recent physical and prescription records from the last 12 months. This additional scrutiny allows them to offer competitive pricing for qualified applicants.
Like other underwritten policies, Farm Bureau can rate you based on your health profile, meaning you could qualify for their lowest premium category if you’re healthy. You could also potentially be denied coverage if you have significant health issues. The policies are not guaranteed issue.
The premium structure for Farm Bureau health insurance is typically comparable to direct purchase policies, offering significant savings compared to ACA marketplace plans for healthy individuals. They offer both low and high-deductible options, with many policies being HSA-eligible.
One potential advantage of Farm Bureau policies is unlimited lifetime benefits per insured person, compared to the $1-2 million caps common in direct purchase policies. However, this benefit needs verification, as policy details can vary by state and specific plan.
The network and coverage options through Farm Bureau health insurance are typically robust, backed by major insurance companies with established provider networks and claims processing systems.
Medicare Gap Coverage: Planning Your Transition
Understanding health insurance before Medicare requires planning for the eventual transition to Medicare coverage. The gap between early retirement and Medicare eligibility at 65 can span several years, making it crucial to choose coverage that provides both adequate protection and financial sustainability.
Early retiree health plans should be evaluated not just on current costs, but on their sustainability over multiple years. Premium increases are common across all types of coverage. It’s essential to build some inflation buffer into your healthcare budget.
Consider the total cost of ownership for each option, including premiums, deductibles, out-of-pocket maximums, and any excluded services. A lower premium plan might cost more overall if it has high deductibles and limited coverage.
Making Your Early Retirement Health Insurance Decision
Choosing the right health insurance option for early retirement depends on several key factors:
Your health status
Risk tolerance
Budget
Personal preferences
Here’s how to evaluate your options:
If you’re in excellent health with no ongoing medical needs, direct purchase policies or Farm Bureau options might offer the best value. The underwriting process works in your favor, and the premium savings can be substantial.
If you have pre-existing conditions or prefer guaranteed coverage, ACA marketplace plans provide the security of guaranteed issue coverage, though at higher costs. The premium tax credits can make these plans affordable if your income qualifies.
If you value continuity during your transition to retirement, COBRA health insurance provides the least disruption while you evaluate longer-term options.
For those with strong faith-based preferences and healthy lifestyles, Medishare offers a community-oriented alternative with potential cost savings.
Remember that you’re not permanently locked into any single option. You can use COBRA as a bridge while researching other alternatives, or switch between different types of coverage as your circumstances change.
Taking Action on Your Early Retirement Health Insurance Plan
Health insurance before Medicare requires proactive planning and regular evaluation. Premium increases, changing health needs, and evolving regulations mean your optimal choice today might not be your best choice next year.
Start by getting quotes from multiple sources:
ACA marketplace plans
Direct purchase policies from major insurers
Medishare
Your state’s Farm Bureau
Compare not just premiums, but total potential costs including deductibles and out-of-pocket maximums.
Consider working with a financial advisor who specializes in retirement planning to ensure your health insurance choices align with your overall retirement and tax strategies. Healthcare costs are often one of the largest expenses in retirement, making proper planning essential for your financial security.
The key to successful early retirement health insurance planning is
Understanding all your options
Evaluating them based on your specific situation
Remaining flexible as circumstances change
With proper planning, you can bridge the gap to Medicare while protecting both your health and your retirement savings.
At Imagine Financial Security, we help individuals over 50 with at least a million dollars saved navigate these complex retirement decisions. If you are looking to
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Elon Musk went on the Moonshots podcast and said you don’t need to save for retirement anymore because AI + robots will make work optional and money won’t matter.
If you’re 55+, sitting on seven figures in a 401(k)/IRA, and you’re trying to figure out when you can stop working, travel more, and play more golf — this episode is for you.
In this video, I’ll:
• Play Elon’s quote and explain what’s going on
• Break down the key takeaways from the full interview (energy/solar, longevity, UHI)
• Explain why it’s a terrible idea to change your retirement plan based on a viral clip
• Give you 3 smarter moves you can make right now
The 3 smarter retirement moves:
1. Plan for longevity (modern medicine + AI could mean a longer retirement)
2. Plan for higher taxes (UHI / Social Security / Medicare strain = tax risk)
3. Plan for earlier retirement (AI disruption + layoffs could push you out sooner than expected)
Thanks for listening!
~Kevin
Are you interested in working with me 1 on 1?
You can start with our Retirement Readiness Questionnaire linked on our website so we can learn more about how we can help in your journey to and through retirement.
Susan is 65, recently widowed, and has saved $2.1 million for retirement.
On paper, she’s more than fine… but emotionally, she doesn’t feel fine.
After watching her husband pass away, Susan is ready to retire five years earlier than planned so she can enjoy her “go-go years” while she still has her health.
But she’s terrified of one thing:
👉 Becoming a burden on her adult children.
In today’s episode, I walk you through Susan’s retirement plan inside our financial planning software and stress-test her biggest goals:
• Retiring ASAP
• Maximizing Social Security
• Traveling extensively for the next 10 years
• Gifting during her lifetime (“giving with a warm hand”)
• And protecting against the risk of long-term care later in life
By the end, you’ll hear the 7 key takeaways Susan needs to consider and how you can apply them to your own retirement plan.
✅ What We Cover In This Episode
Susan’s Retirement Goals (And The Real Conflict)
Susan wants to:
• retire immediately so she can travel now
• delay her own Social Security until age 70 to maximize lifetime income
• gift to her adult children (including down payment help)
• give to charity during her lifetime
• and still maintain full financial independence
Baseline Expenses + Go-Go Travel Plan
We build Susan’s plan around:
• $6,500/month baseline retirement spending
• healthcare cost assumptions (inflated higher than normal inflation)
• $20,000/year travel spending for 10 years (her go-go years)
Social Security Strategy for Widows
Susan may be able to:
• claim survivor benefits first
• delay her own benefit until age 70
• then switch to her maximum benefit for long-term protection against longevity and inflation
The Portfolio Reality (And Risk Tolerance vs Risk Capacity)
Susan’s portfolio was built around her late husband’s investing style:
• more aggressive than she’s comfortable with
• which creates stress right as she enters retirement
We walk through how shifting allocations can impact:
• success probability
• legacy potential
• and long-term-care resilience
The Monte Carlo Results (And What They Actually Mean)
Susan’s baseline plan is extremely strong — but as we add:
• $50,000 down payment gifts per child
• ongoing annual giving
• reduced investment risk
• and a long-term care event
…the plan changes fast.
And I explain why Monte Carlo “probability of success” is better framed as:
✅ “Probability of never needing to make an adjustment.”
The Long-Term Care Risk That Changes Everything
The biggest threat isn’t whether Susan can retire…
…it’s whether a long-term care event later in life hits during a market downturn.
This is why long-term care is often less of a “number” problem and more of a sequence-of-returns risk problem.
We discuss why long-term care insurance may give Susan something priceless:
➡️ permission to spend confidently now.
Roth Conversions + Tax Strategy (Without Getting Too Deep)
Susan has a potential Roth conversion window between retirement and RMD age.
We also talk about:
• the tax problem of leaving large IRAs to adult children
• why the kids’ tax bracket matters more than your own
• and how strategies like QCDs (Qualified Charitable Distributions) can play a role
I hope you find this episode useful. Make sure to share this video / podcast with someone else who is in a similar situation.
-Kevin
Are you interested in working with me 1 on 1?
You can start with our Retirement Readiness Questionnaire linked on our website so we can learn more about how we can help in your journey to and through retirement.
Have you ever wished you could peek inside the minds of people who’ve already retired to learn from their experiences? After 16 years as a financial advisor and countless conversations with retirees, I’ve compiled the most important insights that people wish they had known before leaving their careers behind.
These aren’t theoretical concepts from textbooks—they’re real truths from real people who’ve navigated the transition from working life to retirement. Whether you’re decades away from retirement or planning to leave your job soon, these insights will help you avoid common pitfalls and make more informed decisions about your future.
Effective retirement planning goes beyond just saving money in a 401(k). It involves understanding what retirement actually looks like, preparing for unexpected challenges, and making decisions that will serve you well for potentially 20 to 30 years of retirement.
Finding Your Purpose and Planning Your Transition
1. Work on Finding Purpose Well Before You Retire
Most people focus entirely on the financial aspects of retirement planning, but ask yourself: What are you retiring to? This might seem elementary, but most retirees haven’t given this enough thought. They’re so busy on the treadmill of life that they haven’t really considered what their day-to-day will look like.
How will you find purpose when you no longer have the structure of a full-time job? Take time now to think about what activities will give your life meaning. Whether it’s volunteering, pursuing hobbies, spending time with family, or starting a small business, having a clear vision of your retirement purpose is crucial.
2. Retirement Doesn’t Have to Be Black or White
You don’t have to go from working 50-60 hours a week to having nothing on your calendar overnight. Many companies now offer phased retirement options, or you might work part-time for your existing employer or try something completely different.
Test drive retirement by exploring what you might want to do with your free time. If you’re unsure about stopping work completely, consider a gradual transition that lets you maintain some income while exploring your retirement interests.
3. The Rules of Thumb for Retirement Planning Are All Wrong for You
When planning for retirement, people often treat rules of thumb, such as the 4% withdrawal rule, as gospel. They don’t understand that these are just benchmarks, not absolute limits. On one end of the spectrum, I work with clients who are trying to “die with zero” and recommend withdrawal rates well above 4%/year. At the same time, we work with retirees who want to maximize their financial legacy to children or grandchildren.
Use these rules as starting points, but remember that your situation is unique. Your withdrawal rate should be based on your specific circumstances, not a one-size-fits-all formula.
4. There Are Multiple Ways to Achieve Your Goals
Just like in golf, there are multiple ways to make par. You might shank your drive into the woods but recover with a great approach shot, or you might hit the fairway and two-putt for the same score. The best retirement planning strategies often involve the simplest path, not necessarily the most financially optimal one.
Don’t feel pressured to copy your friend’s investment strategy or income plan. What works for them might not work for you, and sometimes the best approach is the one you can understand and stick with consistently.
Health and Longevity Realities
5. Health is Wealth
Instead of waiting until retirement to get in shape, establish regular workout habits now. The older you get, the more difficult it becomes to develop new routines. Plus, the better shape you’re in, the longer you’ll be able to enjoy activities that require physical fitness, like international travel or hiking in national parks.
6. Get a Handle on Your Diet
Your health is your wealth, and diet is one of the few things you can completely control. The healthier you eat, the less you’ll likely pay for medical costs in retirement. This connects directly to the next point about healthcare expenses.
7. Healthcare Costs Are Shockingly High Despite Medicare
According to Fidelity’s annual healthcare cost report, a single person aged 65 may need approximately $157,000 saved after taxes to cover healthcare costs in retirement. For couples, that number jumps to around $315,000.
These costs include Medicare premiums (which you do pay, despite contributing to Medicare during your working years), copayments, deductibles, prescription drugs, and other out-of-pocket expenses. Importantly, this estimate doesn’t include long-term care expenses, which can be substantial.
8. Retirees Continuously Underestimate Their Longevity
According to a TIAA study, the average 60-year-old underestimates their future longevity by six years. People often do this because they’re worried about running out of money, so they mentally shorten their life expectancy to feel better about their financial situation.
Despite this underestimation, people still procrastinate on their bucket list items. There are 16,000 golf courses in the US—it would take 43 years to play every single one if you played a new course every day. Instead of waiting, create a realistic list of experiences you want to have and start making them happen now.
9. Don’t Forget to Exercise Your Brain
Just like your physical muscles, your brain needs regular stimulation to stay sharp. During your working years, your job likely provided mental challenges. In retirement, you need to find new ways to keep your mind active through reading, puzzles, learning new skills, or taking on mentally stimulating hobbies.
10. Long-Term Care Costs Are Not Covered by Medicare
This is a crucial distinction many people miss. While Medicaid does cover long-term care, it’s a federal entitlement program with strict income and asset requirements. Most people listening to retirement planning advice won’t qualify for Medicaid because they have too many assets.
You need a plan for potential long-term care costs, whether that’s self-funding, purchasing insurance, or a combination of both.
Financial Realities and Spending Patterns
11. Most People Think Expenses Will Go Down in Retirement
The common rule of thumb suggests you’ll need 80% of your pre-retirement income, but many retirees actually experience increased expenses, especially in the early years. When every day is Saturday, you’re traveling more, playing more golf, and spending more time on leisure activities that cost money.
Don’t be surprised if your spending actually increases in those first few years of retirement as you finally have time to do all the things you’ve been putting off.
12. Retirees End Up Lagging Inflation Relative to the General Population
This depends on your lifestyle, but studies show retirees typically experience about 1% less inflation annually than the general population. If your major expenses are fixed (like a paid-off mortgage) and you’re not heavily exposed to volatile costs like travel, you might not feel inflation as acutely as working people.
However, if travel is a big part of your retirement plans, you’ve likely experienced significant inflation in those costs over recent years.
13. International Travel Fatigue Is Real
Many retirees get excited about extensive overseas travel, but the reality of planning trips, dealing with jet lag, and the physical demands of travel can wear on you. Often, people discover there are plenty of amazing places to explore in the United States.
This doesn’t mean you shouldn’t travel internationally, but don’t build your entire retirement budget around expensive overseas trips if you might end up preferring domestic travel or an RV lifestyle.
14. Understand the Three Primary Spending Stages
Retirement typically involves three distinct phases: the “go-go” years at the beginning, when you’re active and spending more, the “slow-go” years when you start to reduce activities, and the “no-go” years when health issues limit your mobility.
Each stage generally results in reduced spending, except for healthcare costs that may increase in the final stage due to long-term care needs.
15. Most Retirees Regret Underspending in the Go-Go Years
Time and again, retirees tell me they wish they hadn’t acted with so much fear early in retirement. If you have a solid plan that shows you can afford certain activities or expenses, don’t let fear of market volatility or inflation keep you from enjoying your healthiest retirement years.
Things tend to work out, and most people regret not doing more when they were physically able rather than regretting spending too much early on.
16. “Unexpected” Expenses Are Not Actually Unexpected
These are simply expenses that don’t occur monthly but are recurring over time. The biggest surprise for many retirees is the cost of home maintenance—new roofs, HVAC systems, flooring, or kitchen renovations.
Budget at least 1% of your home’s value annually for maintenance and repairs. Set this money aside in a dedicated account so you’re not scrambling to find $15,000 for a new air conditioning system.
Housing Decisions and Home Equity
17. Many Retirees Face the Difficult Decision of Staying Put or Moving
Don’t stress about making the first move your final move. Many people try out a new location by renting for a year or two before buying. This gives you time to figure out which neighborhood or even which city you really prefer.
Keep the proceeds from selling your primary residence easily accessible rather than investing it aggressively, since you’ll likely need it to purchase your next home within a few years.
18. Many Retirees Are Surprised by Their Need for a Sizable Home
While downsizing sounds appealing in theory, consider practical questions: Where will your children and grandchildren stay when they visit? Do you want to host family gatherings?
Don’t necessarily cater all your housing decisions to your children’s needs, but if entertaining and hosting family is important to you, factor that into your retirement home decision.
19. CCRCs Are Popular but Costly
Continuing Care Retirement Communities (CCRCs) are increasingly popular, but they require substantial upfront payments—often $400,000 or more—plus monthly fees of several thousand dollars. The home isn’t yours when you pass away, and there are often lengthy waiting lists.
If you’re interested in a CCRC, get on waiting lists early, as it can take five years or more to get accepted.
20. Home Equity Is a Very Underutilized Asset
Whether you’re downsizing and using the equity for retirement income, paying off debt, or keeping it as an emergency fund for potential long-term care costs, don’t overlook the value locked up in your home. This can be a significant source of retirement security that many people fail to incorporate into their planning.
Lifestyle and Activity Realities
21. You Could Be Busier in Retirement Than When Working
This depends on what you did for work, but many retirees find themselves busier than expected. If you’re retiring to meaningful activities—travel, volunteering, spending time with grandchildren, or part-time work—you might find your calendar fuller than when you were working.
Sometimes this busyness isn’t entirely positive, such as caring for aging parents or adult children. Protect your time and don’t over-commit to obligations that prevent you from enjoying the retirement you planned for.
22. Having Too Much Time Can Lead to Bad Habits
The flip side of being too busy is having too much unstructured time, which can lead to mental health challenges. Studies suggest that 60% of retirees with mental health issues never seek help because they feel they should be happy in retirement.
That lack of purpose and structure that work provided needs to be replaced with meaningful activities and social connections.
23. Most Retirees Underestimate How Important Technology Is
Technology is constantly changing, and many businesses rely heavily on it. This can be challenging for retirees who didn’t grow up with smartphones and social media.
The good news is that YouTube has become a university for learning new technology. If you’re struggling with Zoom, online banking, or any other technology, there’s likely a tutorial video that can help.
24. Retirees Are Huge Targets for Scammers
Be very skeptical of any scheme that comes your way, whether through email or phone calls. With AI technology, scammers can now create fake voices that sound like your family members asking for money or help.
If you receive an urgent call from someone claiming to be a family member in trouble, hang up and call that person directly on a number you know is theirs.
Investment and Financial Management
25. You’re Likely Getting Too Conservative Too Early
Retirement isn’t one year long—it could be 20 to 30 years. If you position your portfolio too conservatively, you run the risk of inflation eroding your purchasing power over time.
Just because you’re retired doesn’t mean you should move everything to bonds and CDs. You still need growth to maintain your lifestyle over a potentially long retirement.
26. Conservative Portfolios Carry Significant Risk Too
As we saw in 2022, when interest rates skyrocketed, bonds fell 15% while stocks dropped 25%. Conservative doesn’t mean risk-free, and you can still experience significant volatility in a “safe” portfolio.
27. Don’t Underestimate the Importance of Turning Assets Into Income
After decades of accumulating wealth, the decumulation phase requires a different skill set. Many retirees continue reinvesting all their investment earnings instead of using them to fund their lifestyle.
If you have enough to retire and never work again, why are you reinvesting all your profits? Take some money off the table to fund your retirement activities. If you don’t need it all, give it to your children or favorite charities.
28. Annuity Biases Prevent Retirees From Purchasing Them
I’ve never had a client regret purchasing a life income annuity. Having guaranteed income from Social Security and an annuity provides peace of mind and allows you to take more risk with your remaining investment portfolio.
When you know your basic expenses are covered by guaranteed income sources, you can sleep better at night regardless of market volatility.
29. Controlling Taxes and Fees Can Easily Improve Performance
Look under the hood of your investment portfolio and examine expense ratios. You might find you’re paying 0.50% or 0.60% for an S&P 500 index fund when you could buy the same fund for 0.05%. That 0.5% difference compounds significantly over 10, 15, or 20 years.
The same principle applies to tax management—minimizing taxes through strategic planning can significantly improve your net returns.
30. Many People Forgo Hiring Advisors Because of Cost
By trying to do everything yourself, you might end up spending more time and making more costly mistakes than if you hired professional help. You don’t know what you don’t know, and missing opportunities or making errors can cost more than advisory fees.
Focus on what’s important to you and delegate the rest to qualified professionals.
Tax Planning and Social Security
31. Most People Think Financial Advisors Are There to Time Markets
This couldn’t be further from the truth. Investment management should be just one component of a comprehensive financial plan. Your retirement planning financial advisor should help with tax optimization, income distribution planning, estate planning, and charitable giving strategies.
If your advisor only manages investments, it might be time to find someone who provides more comprehensive planning services.
32. The Media Is Not Your Friend
Financial media wants to sell fear and greed, neither of which is good for making sound long-term investment decisions. Limit your consumption of financial news and focus on your long-term plan rather than daily market movements.
33. Taxes Might Be Your Largest Annual Expense
Required minimum distributions, IRMAA, taxes on Social Security, Capital Gains, Interest Income, Dividends, or even the Surviving Spouse Tax Trap. All of these ‘problems’ are the result of disciplined saving and investing for decades. The challenge is that taxes might become one of your largest (if not THE largest) expenses in retirement. The good news is, you can do something about it by being proactive instead of reactive!
34. The RMD Trap Can Blow Up Your Tax Plan
Required Minimum Distributions (RMDs) start at age 73 or 75 for most people. If not properly planned for, these can significantly increase your tax burden and potentially trigger higher Medicare premiums.
35. Roth Conversions Can Help Mitigate the RMD Tax Trap
When you retire and your income drops, you might have several years of lower tax brackets before RMDs or Social Security kick in. This period of time is what I like to call “The Roth Conversion Window.” This could be an ideal time to convert traditional IRA funds to Roth IRAs, which don’t have RMDs.
36. Don’t Over-Convert Your IRA
If you plan to leave money to charity, don’t convert everything to Roth. Charities don’t pay taxes anyway, so there’s no benefit to leaving them Roth IRA assets instead of traditional IRA assets.
37. Social Security Benefits Are Taxed at Different Rates
Depending on your modified adjusted gross income, you might pay 0% tax on Social Security benefits, or you might pay taxes on up to 85% of your Social Security benefits. Managing your taxable income strategically can help minimize taxes on your Social Security benefits.
38. IRMAA Is the Tax Hurricane Retirees Don’t See Coming
Income Related Monthly Adjustment Amount (IRMAA) is essentially a Medicare surcharge that kicks in when your income exceeds certain thresholds. This can add up to $16,000 annually for a couple in additional Medicare premiums for both Part B and Part D.
Factor IRMAA into your tax planning, especially when considering Roth conversions or managing taxable investment income.
Estate Planning and Legacy Considerations
39. Retirees Tell Themselves They’ll Self-Fund Long-Term Care
Seventy percent of long-term caregiving is done by unpaid family members. If you plan to self-fund long-term care, make sure your decision-makers know this and give them permission to spend the money you’ve set aside for this purpose.
Don’t tell only your financial advisor about your self-funding plan—make sure your spouse and children understand your wishes.
40. You May Not Need Life Insurance, But You May Want It
If leaving a legacy is important to you, life insurance can provide a “legacy floor” that allows you to spend down your other assets more freely. Knowing you have a guaranteed death benefit can give you permission to enjoy your retirement savings rather than hoarding them for your heirs.
41. Don’t Forget Your Umbrella
Umbrella liability insurance becomes more important as your net worth grows. While retirement accounts generally have creditor protection built in, your taxable investment accounts, real estate, and other assets might be vulnerable to lawsuits.
Consider umbrella insurance combined with proper estate planning structures to protect your wealth.
42. If You Survive Your Spouse, You’ll Likely Live Much Longer
Despite similar life expectancies for new retirees (about 84 for women and 82 for men), women have a 63% chance of outliving their spouses. If a woman outlives her husband, her life expectancy is an additional 12.5 years.
Plan for joint life expectancy and understand how Social Security benefits and taxes will change when one spouse passes away.
43. Watch Out for the Surviving Spouse Tax Penalty
When a spouse dies, the surviving spouse files their final joint tax return that year. The following year, they must file as single, which often results in higher tax rates on the same income.
Consider strategies to mitigate this tax increase as part of your retirement income planning.
44. Having a Strong Sense of Community Is Crucial
Whether you move to a new city or leave work friends behind, building and maintaining social connections is vital for happiness and longevity in retirement. Retirees with strong community ties report significantly higher levels of satisfaction and tend to live longer.
45. Choosing Someone to Manage Your Affairs Is Difficult
This is especially challenging for single people or couples without children. If you choose a sibling as your power of attorney, consider that they might be the same age and could face their own health challenges.
Create backup plans and consider corporate trustees if you’re concerned about having appropriate decision-makers.
46. How You’re Remembered Depends on the Mess You Leave Behind
One job you don’t want to leave your spouse or kids with is ‘Full Time Detective’ when you’re gone. Stay organized, provide clear direction, and start decluttering now. Begin giving things away, selling items you don’t need, and don’t be offended if your children don’t want your vintage furniture—they have limited space too.
47. Financial Legacy Doesn’t Have to Wait Until You’re Dead
“Giving with a warm hand is much more enjoyable than giving with a cold one.” Consider making gifts to children or charities while you’re alive to see the impact of your generosity. Money today is more valuable than money in the future.
48. Don’t Forget to Review and Update Beneficiaries
Review all your beneficiary designations regularly. It’s surprisingly common to find ex-spouses still listed as primary beneficiaries on retirement accounts or life insurance policies.
49. Trusts Are Not Just for the Ultra-Wealthy
Trusts aren’t just about how much money you have—they’re about what you’re trying to accomplish. If you have concerns about a child’s spending habits or addiction issues, a trust might be appropriate even with a modest estate.
Conversely, you might have $10 million and not need a trust if your beneficiaries are responsible and you’re not concerned about estate taxes.
50. Time Flies Faster Than You Can Imagine
In retirement, days tend to blend together, and time passes incredibly quickly. The things you’re worried about now probably won’t matter when you’re 85 or 95. You can’t take your money with you, so stop obsessing over every financial detail.
Make a solid plan, execute it with discipline, and then focus on what’s most important to you—whether that’s faith, family, friends, fitness, or other priorities. Use these as filters for what gets added to your calendar.
Don’t spend your retirement years glued to CNBC worrying about what the Federal Reserve will do with interest rates. The things you’re truly worried about today likely won’t be relevant in 15-20 years, but the experiences you miss while your grandchildren are young or while you’re healthy enough to travel—those are the regrets you’ll carry.
Your Next Steps in Retirement Planning
These 50 truths represent real insights from thousands of conversations with retirees over 16 years of financial planning experience. The goal isn’t to overwhelm you with concerns, but to help you prepare for the realities of retirement so you can make informed decisions.
The most important takeaway is this: once you have a solid retirement plan, execute it with discipline and then focus on living your life. Control what you can control—your health, your faith, your relationships, your purpose—and don’t let financial anxiety rob you of the retirement you’ve worked so hard to achieve.
Remember, retirement planning involves legitimate risks like market volatility, inflation, healthcare costs, and longevity. But once you’ve planned for these risks appropriately, shift your focus to the experiences and relationships that will make your retirement truly fulfilling.
At Imagine Financial Security, we help individuals over 50 with at least a million dollars saved navigate these complex retirement decisions. If you are looking to
Not quite ready to take the questionnaire, but want helpful tips and resources? Sign up for our monthly newsletter and/or subscribe to our YouTube channel.
This is for general education purposes only and should not be considered as tax, legal, or investment advice.
2025 reminded us of something important: markets don’t move based on headlines or how we “feel” about the economy — they move based on earnings, inflation, interest rates, and policy.
And if you’re close to retirement, the goal isn’t to predict the market perfectly.
The goal is to know what actually matters and build a plan that works whether markets are great, average, or ugly.
In today’s episode of the Planning for Retirement Podcast, I start by recapping what we said to watch in 2025, what actually played out… and then I walk through six key themes that could drive markets in 2026.
✅ We’ll cover:
• How tax policy could act as a tailwind (or a temporary sugar high)
• Why the labor market matters more than the unemployment rate
• What the Fed is likely to do next — and why Powell’s replacement could be a big deal
• Why AI is fueling earnings growth and margin expansion (and what that means for markets)
• Why bonds are back — and why fixed income matters even more for retirees
• Why international stocks outperformed in 2025, and the danger of recency bias
By the end, you’ll have a clear framework for what to watch in 2026 — and how to stay focused as a long-term retirement investor.
I hope you enjoy it!
-Kevin
Are you interested in working with me 1 on 1?
You can start with our Retirement Readiness Questionnaire linked on our website so we can learn more about how we can help in your journey to and through retirement.
We are rewinding the tape ALL the way back to the very beginning! Here, I’ll break down the common Tax Traps of traditional 401ks and IRAs. This was episode #2, so there’s a good chance you haven’t heard this one! I hope you find it useful and drop a comment with your thoughts. How do you navigate these tax traps in retirement?
Happy New Year!
-Kevin
Are you interested in working with me 1 on 1?
You can start with our Retirement Readiness Questionnaire linked on our website so we can learn more about how we can help in your journey to and through retirement.
Do you ever wish you could get inside the minds of existing retirees to ask them what their experience has been? Or, ask them what they wish they would have known before they quit their day job? This episode is for you!
In this episode of the Planning for Retirement podcast, I’ll share 50 truths that retirees wish they knew before they quit their day jobs. Some of these are straight from the horse’s mouth, some are my observations in serving retirees for more than a decade, and some are research-based that I uncovered during this process. I’ll cover a range of topics including finding purpose in retirement, the misconception of retirement expenses going down, the importance of exercise and brain stimulation, the high costs of healthcare in retirement, tax traps, and much more.
Thanks for tuning in!
~Kevin
Links Referenced in Episode:
50 Truths Retirees Wish They Knew Before They Quit Their Day Job
Purpose and Successful Retirement Transition Questionnaire
Shocks and the Unexpected: An Important Factor in Retirement
The life expectancy of older couples and surviving spouses
How to plan for rising healthcare costs
Are you interested in working with me 1 on 1?
You can start with our Retirement Readiness Questionnaire linked on our website so we can learn more about how we can help in your journey to and through retirement.
This week I’ve got a Q&A session focused on current hot topics and debates including: ~ Underspending in Retirement ~ How to Position an Annuity ~ Pre-Tax vs. Roth Debate
I hope you enjoy this episode and find some nuggets of information that you can use.
Wishing you all a wonderful holiday season and Happy New Year!
– Kevin
Are you interested in working with me 1 on 1?
You can start with our Retirement Readiness Questionnaire linked on our website so we can learn more about how we can help in your journey to and through retirement.
I recently met with two clients who completely changed how I think about retirement planning. Both were retiring much earlier than they had anticipated, and both situations were related to unexpected health issues. One client is now on disability, though thankfully, his wife is still working for a few more years, and he does have a disability policy in place. The other received a cancer diagnosis and is potentially retiring much earlier than planned as well.
These conversations took me back to my days studying for the RICP (Retirement Income Certified Professional) designation. There was a statistic that really resonated with me. After reviewing my coursework and notes, I found it: 51% of retirees retired earlier than anticipated. That’s right! There’s a better than 50% chance that whatever age you think you’re going to retire, you’re going to retire earlier.
The number one reason? Health issues. This reality made me realize something important. We need to stop planning for a “normal” retirement age in our assumptions, even if we end up working until 70 or 65.
The Reality of Uncontrollable Retirement Factors
Let me share another example. I’m working with a client right now who’s 62. He plans to work at least until 65, when he becomes eligible for Medicare. During the pandemic, he moved from New York to Florida. The plan was to work remotely, feel good, and coast into retirement while continuing to build his assets.
Unfortunately, the company is bringing everyone back to the office. He has two choices.
Move back to New York
Pick a random satellite location in Florida to work in
Neither of these is convenient based on where he now resides. So, he might retire this year.
My point is that things outside our control often lead people to retire earlier than planned. The inputs you give your financial advisor, including “I want to work until 70,” significantly impact the calculations on:
How much you need to save for retirement
How much risk you need to take
How long your portfolio needs to last while you’re spending it down
I don’t think it’s prudent to build those optimistic assumptions into your plan.
I recommend assuming you’ll retire at 62, 63, or 64, even if you love what you do, and genuinely want to work until 70. Then control what you can control.
Understanding Why People Retire Early
The research shows us exactly why 51% of people retire earlier than expected. Here’s the breakdown:
46% cited health reasons – This is the largest category and completely uncontrollable. Whether it’s a sudden diagnosis, chronic condition, or physical limitations, health issues force many people out of the workforce earlier than planned.
30% were laid off or offered an early retirement package – Again, this is largely uncontrollable. Company restructuring, economic downturns, or industry changes can force your hand regardless of your personal timeline.
11% needed to care for a loved one – Caring for aging parents, a sick spouse, or other family members is another uncontrollable factor that can derail retirement plans.
When you add these three categories together, that’s 87% of early retirees who left work due to circumstances beyond their control. This is why early retirement planning makes sense for everyone, not just those dreaming of early retirement.
What Changes When You Plan for Early Retirement
If you’re 55 and had been planning to work until 70, you probably had a pretty nice-looking financial plan. You’d get maximum Social Security benefits at 70, which would line up perfectly with when you start portfolio withdrawals, creating no income gap. But what happens when you plan to retire at 60 or 62 instead? Several things change, and you need to prepare for them.
1. You Need to Save More and Invest More
This one’s pretty straightforward. A good saver typically saves about 10-15% of their gross income. But if you’re planning for early retirement – even if you don’t actually retire early – I’d argue you need to save closer to 20-25% of your gross income.
I’m personally planning to have financial independence before I turn 55. Now, I love what I do and don’t see myself at 60 doing nothing. I’m having more fun in my career today than I ever have. But by planning for retirement significantly earlier, I’m building the option to quit if I want to or sell my business if I want to. That’s the power of early retirement planning – it gives you choices.
2. Healthcare Before Medicare
Medicare eligibility starts at 65, and many people work until then specifically because they’re afraid of what they’ll do for health insurance if they retire at 60, 61, or 62. But here’s what most people don’t realize: buying private health insurance or through the Affordable Care Act isn’t that complicated.
I do it with my family. It’s not cheap, but if you’re retired, your taxable income is going to be pretty low. You might have some interest income from bonds or high-yield savings accounts, maybe dividends from stocks or ETFs, perhaps Social Security or a pension. But generally, folks who retire at 60-62 have relatively low taxable income.
This low income often qualifies you for ACA subsidies. If your income is relatively low, your health insurance costs could be next to nothing – possibly less expensive than what you were paying when you were working. Don’t let healthcare force you into a job you hate until 65 just because everyone else talks about working until Medicare kicks in.
3. Stay Aggressive with Your Investment Strategy Longer
This is a mistake I see repeatedly. People preparing for retirement think, “I need this money in one, two, three, or four years, so I need to dial back my risk.” Or worse, they pick a target-date fund for 2025 because they want to retire in 2025, and these funds force you into being super conservative.
By doing this, you’re bringing inflation and longevity risk into the picture more than necessary. When I say stay aggressive, I’m not talking about putting 100% in stocks or betting everything on high-risk investments. I’m talking about maintaining a higher equity allocation than traditional retirement advice suggests.
If the benchmark portfolio for retirees is 60% equities and 40% fixed income, maybe you stay at 75% or 80% equities for the first phase of retirement. This helps you capture returns early on (assuming the market cooperates), continue building your portfolio, and protect against inflation and longevity risks that come with retiring earlier.
4. Plan for Longevity
If you retire at 60 and have longevity in your genes or excellent health, there’s a possibility you or your spouse may live 30-35 years in retirement. This goes hand in hand with staying aggressive longer – you may need to maintain a fairly aggressive investment approach throughout your retirement years to protect against inflation and longevity risks.
You also need a sound Social Security strategy to maximize survivor benefits should one spouse pass away before the other. That Social Security benefit will be one of the best inflation hedges in your retirement income plan, so you’d better maximize it if you plan to live a long life.
5. Develop a Sound Income Distribution Plan
If you plan to delay Social Security until 70 to get maximum benefits but retire at 60, that’s a potential 10-year gap where you’ll have no Social Security income. You need to replace that income with portfolio withdrawals and distributions.
Preparing your portfolio for income distributions is critical. You need a disciplined, unemotional, repeatable process to generate cash flow monthly or quarterly. We’ve all heard about buying low and selling high. When you’re accumulating wealth and saving in your 401(k) or IRA, it’s all buying – you’re purchasing shares of investments.
But in the distribution phase, you’re not just buying anymore. You’re turning the portfolio on for income. Some will come from cash flows such as interest and dividends, but others will come from selling investments each month, quarter, or year. Having a disciplined process so you’re not selling the wrong thing at the wrong time is critical for maintaining portfolio longevity when retiring early.
What Happens If You Plan Early But Don’t Retire Early?
Let’s say you do all these things and prepare to retire early, but you don’t actually retire early. What’s the impact? Nothing really negative that I can think of.
The main drawback is that you might need to tighten your belt more. If you’re struggling to save 10-15% and early retirement planning calls for 20-25%, that might be tough without working a second job or getting a significant pay raise. But if you have the capacity to save and invest more, there are only benefits.
You could potentially spend or gift more in retirement. Maybe you could build your dream home or have a vacation home free and clear. You might have better opportunities to leave a financial legacy for your children and grandchildren. You could have different risk capacity – maybe you’ve saved more than enough for retirement, which allows you to take on more investment risk to build an even larger legacy for the next generation or for charitable goals.
Maybe this also allows you to set aside funds for self-funding long-term care. Long-term care risk is one of the top risks for any retiree today – those healthcare costs at the end of life and the potential burden on loved ones. If you’ve saved more than you need for your own retirement, you can potentially self-fund long-term care.
The Benefits of Early Retirement Planning for Everyone
The beauty of early retirement planning is that it benefits everyone, regardless of when you actually retire. It’s about building financial security and creating options in your life.
When you follow early retirement planning principles, you’re essentially stress-testing your financial plan. Instead of assuming everything will go perfectly – that you’ll work until 70, stay healthy, never get laid off, and never need to care for family members – you’re planning for reality.
This approach gives you financial flexibility. If you do face unexpected health issues, job loss, or family caregiving responsibilities, you’ll have options. You won’t be forced into desperate financial decisions because you’ll have built a solid foundation.
Even if none of these challenges arise and you work until your planned retirement age, you’ll be in a much stronger financial position. You’ll have more saved, better investment strategies, and multiple backup plans. That’s not a bad problem to have.
Taking Control of What You Can Control
The key insight from all of this is focusing on what you can control versus what you can’t.
You can’t control whether you’ll have health issues, whether your company will downsize, or whether you’ll need to care for aging parents. But you can control your savings rate, your investment strategy, your distribution process, and your ability to manage risk before and during retirement.
Let’s control what we can and plan for the worst while hoping for the best. That’s what smart early retirement planning is really about – not necessarily retiring early, but being prepared for whatever life throws your way.
And if you want help planning for your retirement, we’d love to help you. At Imagine Financial Security, we help individuals over 50 with at least a million dollars saved navigate these complex retirement decisions. If you are looking to
Not quite ready to take the questionnaire, but want helpful tips and resources? Sign up for our monthly newsletter and/or subscribe to our YouTube channel.
This is for general education purposes only and should not be considered as tax, legal, or investment advice.
