The 8 Wealth Decisions You Need to Make 2-3 Years Before You Retire The 2-3 years before you retire are known as the "Red Zone." This is the most critical window for your financial plan because you are shifting from accumulation to distribution. One wrong move here—like ignoring the "Cash Wedge" or miscalculating your "Tax Valley"—can jeopardize your entire retirement. In this deep-dive episode, Fiduciary Advisor Brian breaks down the 8 Specific Wealth Decisions you need to make while you are still working to ensure you enter retirement in the "Confidence Zone."

SCHEDULE A DISCOVERY ZOOM: https://calendly.com/brian-d-muller/zoom-discovery-call

Get Your Risk Number by taking the FREE RISK ASSESSMENT: https://pro.riskalyze.com/embed/da35a673b96655a2f2b1

Pick up a copy of my book "Momentous Decisions: 7 Steps to Better Health, More Wealth, and a Richer Life" at: https://www.momentouswealthadvisors.com/book

Key Topics Covered:

Asset Allocation: Why 100% S&P 500 is dangerous in retirement and the case for small/mid-cap & international diversification.

The Cash Wedge: How to invest your "lazy money" without taking reckless risks.

Tax Strategy: Utilizing the "Tax Valley" for Roth Conversions before RMDs hit.

Social Security: Why delaying benefits is actually an act of love for your spouse. Lifestyle Math:

Calculating your "Wiggle Room" and front-loading your travel budget for the "Go-Go Years."

Timestamps:

00:00 Retirement Red Zone

01:27 Cash Wedge Strategy

02:37 Diversify Beyond S&P

03:41 Roth Tax Valley

04:40 Social Security for Couples

05:58 Replace Your Paycheck

06:38 Wiggle Room Buffer

07:31 Family Help and Travel

08:59 Wrap Up and Next Steps

#RetirementPlanning #RothConversion #SocialSecurity #AssetAllocation #IndexFunds #Fiduciary #WealthDecisions #RetirementReadiness #FinancialFreedom #ConfidenceZone #InvestingStrategies

Most people spend 30 or 40 years climbing the mountain of wealth accumulation.

It's really hard work, but the path is pretty simple.

Save, invest and wait.

But the two to three years before you retire, that is the retirement red zone.

This is where you have to figure out how to get back down the mountain without crashing the rules of the game.

Kind of completely flip if you're sitting on too much cash because you're scared, or if you think the s and P500 is the only investment you'll ever need.

Or worst of all, if you haven't mapped out your taxed valley strategy yet, you're kind of flying blind.

So today we aren't just skimming the surface.

I'm going to walk you through eight specific high stake decisions you need to make in this 36 month window to move your plan from hope to the confidence zone.

This is Brian.

I've been a fiduciary financial Advisor for over 25 years and I call this period the two to three years out from retirement red zone because it's your final opportunity to make course corrections while you still have a paycheck.

I see a lot of plans that look good on a spreadsheet, but when life happens, when inflation spikes or the market drops or health issues arise, some cracks start to appear.

We're going to seal those cracks today, so grab a pen and a notepad because we're diving deep into the eight boxes.

You have to check before you hand in your notice.

So.

So, number one, the portfolio strategy.

This is moving beyond accumulation decision number one, the cash drag versus the safety net.

I often meet with folks who are two years from retirement and they're terrified of a market crash, so they hoard too much cash.

Now I definitely think you need to have money set aside in a money market.

Usually they say six to nine months while you're working, but I think before you retire you should have closer to 12 months of your basic needs covered in a high yield savings account or a money market.

But having too much money in safe investments means that after taxes and inflation, you're actually shrinking your purchasing power.

Every year you're guaranteed to lose money.

So you need a cash wedge, typically 6 to 12 months of living expenses in a high yield savings account.

This is your sleep well at night money.

But anything above that needs to be working for you.

Move that excess into a taxable brokerage account.

Invest it in low cost index funds.

This creates some liquidity that can grow with you and it keeps up with inflation and is accessible if you retire before 59 and a half.

Decision number two, the concentration risk.

Why the S and P isn't enough anymore.

If your portfolio is a hundred percent in the s and P500 or US large cap growth, you're suffering from recency bias.

You're driving forward while looking in the rearview mirror at the last 10 years.

The S&P 500 has been a fantastic growth engine for people, but it's very top heavy.

It's dominated by a few massive tech companies.

In retirement, you need reliability, not just volatility.

A true total return strategy needs exposure to asset classes that zig when the S and P zags.

We're talking about small cap value, mid caps, international and emerging markets.

These sectors have historically provided premiums that US large capsules don't always capture.

So in these final years before retirement, you need to transition from a growth at all cost portfolio to a diversified total return portfolio.

We need all the engines of the global economy working for you, not just the top 500 US companies.

So in part two, we're going to talk about income and taxes.

So decision number three is the Roth conversion opportunity.

This is perhaps the single biggest missed opportunity in financial planning.

When you retire early, say at 60 or 62 or go semi retired, your earned income drops off a cliff.

That income drop creates a tax valley, a golden window of opportunity of low tax brackets before Social Security kicks in and before required minimum distributions force you to take taxable income at age 75.

If you do nothing, you're deferring taxes today only to pay them at potentially higher rates later.

So the decision you need to decide now how much of your traditional IRA you're going to convert to a Roth.

During these low income years.

We want to fill up the lower tax brackets like the 12 or 22% brackets for Roth conversions.

You pay a little tax now to build a tax free fortress for your future.

Decision number four is the spousal Social Security puzzle.

If you're married, please listen closely.

Social Security is not an investment return.

It's longevity insurance.

Couples often look at their own benefits in a silo.

I'll claim at 62 to get my money back.

But here's the math.

When one spouse dies, the smaller Social Security check disappears.

Gone.

The survivor keeps only the larger check.

If the higher earner claimed at 62, they have permanently reduced the survivor's income for the rest of their life.

So the decision the higher earner usually needs to delay until full retirement age or possibly even at age 70, not for themselves, but to maximize the benefit for their surviving spouse.

We need to stress test your plan.

If your high earner passes away at 78, will their surviving spouse have enough income to maintain their lifestyle?

I have a Social Security framework called the secure Framework.

If you'd like a little bit more information on that, get in touch with me, go to my website.

There's information on how to get that secure framework.

Run through it.

It's not just about delaying at age 70 just because it maximizes your benefit.

It might not be the right thing for your particular situation.

Decision number five is income mapping replacing your paycheck.

You can't just vaguely say, I'll live off my portfolio.

That creates anxiety.

You need a paycheck replacement map.

I want you to list every single stream of income.

Your pension, your rental income, dividends, and crucially, semi retirement income.

Are you going to consult?

Are you going to work part time at the golf course?

Are you going to turn a hobby into cash?

The decision here is project these out year by year for the first 10 years.

In year one, if you have 20k coming from consulting and 40,000 coming from your portfolio, in year five, consulting stops and Social Security begins.

You need to see exactly where the money is coming from to bridge that gap.

Now we're going to move on to part three and this is stress testing the plan.

We want to be in the confidence zone.

So decision number six is the wiggle room calculation.

What is your wiggle room on an after tax income?

I see plans that are technically successful, but they're kind of fragile.

If you need 8,000amonth to live and your plan generates exactly $8,000 a month, you're not in the confidence zone.

One bad market year or one major home repair can break that plan.

The decision here is we need to calculate the buffer.

I want to see a plan where you need 8,000, but the plan can safely generate 9,500.

That gap is your wiggle room.

It's your inflation hedge.

It's your sleep at night factor.

If you don't have wiggle room, you need to work one more year or lower your base expenses.

Now let's move on to part four, lifestyle and legacy.

Decision number seven, the bank of mom and dad.

This is the most emotional decision on the list.

Do you want to help your adult kids with down payments on homes or weddings?

It's natural to want to help.

But if you hand over 50,000 for a down payment spontaneously, that pulls directly from your retirement, compounding, it's a permanent reduction in your own security.

You need to make a binary decision.

Is this a goal or Is it a wish?

If it's a goal, we make it a line item in your plan.

We have allocated 50,000 for the kids.

We ring fence that money so it doesn't jeopardize your own retirement.

Put your own oxygen mask on first.

Decision number eight, the true travel budget, the go go years.

Let's talk about the fun stuff, travel.

Most people drastically underestimate this cost.

You might think we'll spend 5,000 a year on travel, but suddenly you have 52 weeks of vacation a year.

You'll want to go places.

The first decade of retirement is what we call the go go years.

Your health is good, your energy is high, and that means that you're going to want to travel more.

The decision here is don't flatline your travel budget.

Front loaded, maybe for ages 60 to 7, that the travel budget is 15,000 a year.

Then at 75, it drops to 5,000.

Be realistic.

I want you to spend that money, but I want it to be accurately reflected in the plan so you don't feel guilty booking the flight.

These eight decisions are the difference between crossing your fingers and knowing you're okay.

Two to three years out is the perfect sweet spot.

You still have time to pivot.

You can top up on that cash wedge.

Shift your asset allocation away from pure growth and map out that Roth conversion strategy.

Now, if you're feeling overwhelmed by the math, that's normal.

This is complex stuff.

But tackling these eight decisions now is how you buy your freedom later.

If you need a fiduciary eye to help you run these numbers and find your confidence zone, reach out to me.

Let's get you ready and make sure that you can retire and stay comfortably retired.

If you'd like to schedule a discovery call with me, there'll be a link in the description of this video.

Get in touch with me.

I'll find out what's important to you.

And I'll find out if I can help you reach your financial goals of retiring on your terms and staying comfortably retired for the rest of your life.

Once again, this is Brian, the wealth decisions guy.

Thanks for listening and I hope to see you next week.