In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss a real-life retirement planning case study featuring a fictitious couple, John and Jane, who are 55 and aiming to retire at 62. With $2 million in savings, they’re asking the question so many do: Can I retire early and still live comfortably? Using advanced financial planning tools, they break down how income, Social Security timing, healthcare, taxes, and investment decisions work together to determine the answer. Whether you’re dreaming of early retirement or refining your retirement strategy, this episode walks you through how to analyze your own plan.

Listen in to learn about how a structured, tax-efficient financial plan can help you retire early—even with market volatility and rising healthcare costs. Through this case study, Radon and Murs reveal the strategic decisions behind a successful transition into retirement, including Roth conversion strategies, required minimum distributions (RMDs), and how to manage income during Social Security gaps.

In this episode, find out:

·     How to retire at 55 with 2 million and what that lifestyle really looks like

·     Why the retirement planning at 55 stage is crucial for tax and investment decisions

·     The role of Social Security timing and how it impacts your portfolio withdrawals

·     How to use a Roth conversion strategy during low-income years to reduce long-term taxes

·     Why healthcare costs and Medicare planning must be part of your early retirement plan

Tweetable Quotes:

“The question is never just ‘Can I retire?’—it’s ‘Can I retire and still live the way I want to?’” — Murs Tariq

“Tax strategy in retirement isn’t optional—it’s essential if you want to keep more of what you’ve saved.” — Radon Stancil

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit: POMWealth.net/podcast

Here’s the full transcript:

Welcome back to your favorite podcast Secure Your Retirement. We have a special guest today on with us—Nick Hymanson. He’s a Certified Financial Planner in our office and works as a Wealth Advisor for a lot of our clients, helping them understand their financial plan as well as their tax strategy.

So first and foremost—
 – Nick, thanks for hopping on with me today.
 – Thank you, happy to be here.
 – All right, so let’s dive in. The topic of today—you know, we get this question all the time. It comes in various forms of questions, but they all end up being the same at the end of the day, which is: “Hey, I’m of age X, I feel like I’ve done a good job. I want to retire at a certain date, and how is this going to work out for me?”

And so, you know, over the years in this podcast, Radon and I have always been talking about different types of strategies, different things, but it all really comes back to this concept of a retirement-focused financial plan and putting it all together in a really well-thought-out manner.

So today we thought it’d be fun to give you some visuals and kind of walk through a scenario of a fake person we created—but it’s a very common scenario that we see in our practice.

And I’ll tell you this—you know, it doesn’t matter how much money you have—the concern is always going to be there around retirement: “What does that look like for me? How do I make all the right decisions?”

We have clients with ranging net worths, and this transition from working, earning, and planning for retirement—but actually making that transition into retirement and now withdrawing that money and having to make decisions around Social Security and Medicare and long-term care planning—not to mention a good withdrawal strategy, tax strategy, and investment strategy—you know, that can be overwhelming even if you feel like you’ve done a really good job planning for it.

So today we wanted to take you through one of our financial planning tools, which is called RightCapital. Nick’s going to share his screen here, and we’re going to walk through a scenario of John and Jane—clearly a made-up name. John and Jane are 55 in this scenario and they have a goal of retiring at 62. They came to us and said, “Hey, we’ve done a pretty good job, we think. We’ve saved well, we’re still working and still saving—but we’d really like to see if we can retire at 62.”

But they also said, “We don’t want to retire at 62 and just get by. We want to enjoy life. We want to kind of maintain the standard of living that we have today.”

And so the big question today is: “Hey, is that possible? And what are the things we need to be thinking about?”

So what Nick’s going to do—and if you’re listening on Apple Podcasts, you’re getting the audio—is he’s going to try to do his best job of talking out the numbers very clearly. But if you’re on Spotify or YouTube, there is video there and Nick is sharing his screen so you can follow along with us.

Let’s do this—Nick, go ahead and take it away. Let’s set up the conversation and walk through the numbers for John and Jane.

– Okay. So like Murs said, John and Jane—they’re both 55 years old. I’m going to move over to the income tab here.

So what we have in place for them, to set up this scenario, is: John and Jane are both working, they’re both making $125,000. So together, that’s a total income of $250,000 that they are receiving and going to be receiving up until retirement. The projected retirement here is 62 years old. That’s what the goal is.

We’re going to get into how that looks and what the numbers come out to be here in a little bit.

Another income component to this is down the road for John and Jane—they are going to be receiving Social Security. So we have that in here as something to take into account. What we have for both of them is taking Social Security at age 67. That’s their full retirement age benefit.

Now, whether it comes to taking Social Security earlier or later than 67—that’s something we would talk through and we can strategize using this software. But for the purpose of today, we’re going to say Social Security turns on for them at age 67.

So from there, I’m going to go into what they have saved so far. Again, they’re 55, they’ve both been working. Cash in the bank right now is about $20,000—just cash savings. You can call it an emergency fund, but that’s fully liquid for them.

Investment-wise, we’re saying they have $2 million saved in a variety of accounts. For this example:

• John has $500,000 saved in his 401(k), all pre-tax.
• Jane also has $500,000 in her 401(k), pre-tax.
• And they have a joint brokerage account of $1 million.

Joint brokerage can be anything from highly appreciated stock to different funds they’re holding. The main point of that account is that it is taxable—it’s not a retirement account. That’s extra money that they’ve saved in a taxable, liquid account.

So:

• $2 million total in investments
• $20,000 in cash
• And then they have their house, valued at $750,000
• No mortgage on the property

Total net worth: $2.7, almost $2.8 million.

So from here, I’m going to go over where they—or what they want to spend in retirement. I skipped this part—let’s say they are spending $10,000 right now. That’s all-in expenses.

Between now and retirement, let’s say $10,000/month.

In retirement: we’re going to go with that same $10,000 number. In the projection, however, there is inflation on that number. So while the $10,000 is encompassing all their expenses—housing, general expenses, healthcare, everything—that number keeps inflating every year in the projection. You’ll see that here in the next screen, and I’ll go over that as well.

There are some healthcare costs projected in here. Their retirement age, like we talked about, is 62 for both of them. And for now—for this purpose—we’re going to keep all of the goals in retirement pretty basic, just for the purpose of this conversation.

– Yeah, so for the purpose of this conversation, we’ve kept it super simple. I want to remind people of that. But all these tiles—if you’re watching—we’ve got a bunch of tools here where we could add in more complex types of budgeting or spending.

We could add in a mortgage, if they still owed on one. We could add in a vacation budget, which is actually a very common thing we do. Most people, when they retire, want to have fun—and they want to do it in the first 10 years of retirement. So we can add that in.

The planning ability that we have is very large when it comes to all of this. We’ve done relocations related to housing. We’ve done relocations into continuing care retirement communities. We’ve done gifting strategies.

All these different things—we can simulate. But for today, we wanted to keep it very simple just to give you an idea of what this really looks like.
 Go ahead, Nick.

– Okay. So those are all of the inputs when it comes to creating a projection for what retirement looks like.

Now I’m going to go into what we call the retirement tab here—if you’re following along on video. This is essentially—we call and describe it as a big spreadsheet.

This spreadsheet explains cash flow—how it goes along each year as this couple gets closer to retirement and then lives throughout retirement.

I’m going to start here in 2025. Like we talked about, the income inflow that they are currently receiving is their combined salary: $250,000. We’re not including any raises. We just say from now until they retire at age 62, they’re going to continue receiving $250,000. Very simple, very baseline—that’s the total inflows until retirement.

Expenses are also included on here—that is the $10,000 per month, and that is inflated 3% (or about 3%) every single year. So that expense number goes up, and we want to make sure we project that it continues to go up. That $10,000 is still taken into account as the years go on here.

Tax payments are also included and projected on here. Of course, when there’s income, typically there are tax payments—so that’s also shown. Then plan savings—we do have John and Jane maxing out their 401(k)s with a 3% employer match. So from now until they retire, there’s a max-out of their 401(k)s included in the plan.

You can see that on the screen if you’re following along.

As I go down the years here, some important things we like to point out:

When retirement happens, obviously there’s no more salary, no more earned income. So income inflow goes away from age 62 to 66—before Social Security.

That’s a point in time we’ll talk more about at the end of the projection, but I wanted to point that out now.

Then at age 67—that’s when Social Security gets turned on. For John and Jane, it’s about $80,000 for a full year—we’re saying $86,000 or so in Social Security. That’s a big milestone—turning Social Security on—which, in this case, reduces the amount they would need to withdraw from their investment accounts to live on. That’s what Social Security is doing in this scenario.

We don’t include cost-of-living adjustments on Social Security—just to stay conservative.

Also, in this scenario—if I scroll down here to age 75—an important year for them: it’s the first year they have to take required minimum distributions.

We’ll talk more about this and this number of $180,000 in required distributions. But for everyone listening and watching, a required minimum distribution (RMD) is essentially the IRS telling everyone who has pre-tax money that they have to withdraw a certain amount every year after they reach a certain age—and they have to pay taxes on that money.

So that’s money that has never had taxes paid on it before. In their scenario, they have all their retirement assets in pre-tax 401(k)s. So this $180,000 number is their RMD—or projected RMD—and we’ll come back to how we strategize on that in a few minutes.

From here, I’m going to go over to the invested asset tab. This is essentially going to show us what’s happening with cash flows, as well as the underlying investment values.

They started with $2 million in 401(k)s and the taxable account, plus $20,000 in savings—so a little over $2 million.

As they continue to work, they’re saving into their 401(k)s. There’s an employer match. There’s also some excess savings into taxable accounts from time to time if they don’t spend all of their income.

That’s factored in. Then, when they do retire—that’s when there are negative flows. All that means is, there are withdrawals from their accounts to live on. So there’s a net cash flow section showing how much money they need to draw from their accounts to spend the $10,000 a month they want in total.

Looking into 2025—an important column here is the portfolio return column. We factor in a 5.5% rate of return. So nothing crazy—something conservative. We want to make sure this is a sustainable plan.

So, 5.5% rate of return while they’re saving and still working—their $2 million is projected to grow to $3.5 million by the time they reach 62. Included in that number:

• 401(k) contributions
• Employer match
• Growth on the money

By the way, that 5.5% is annualized. Some years in reality might be better than others—this is just a flat 5.5% to illustrate the concept.

– Yeah, and so one thing I want to point out is the net cash flows—when they turn negative—I know sometimes people don’t like seeing negative numbers. I think one big thing we have to coach our clients on is that a net negative cash flow is not actually a negative thing. It’s not a bad thing at all.

All it means is that we have to spend some of the money we’ve worked so hard to save for and plan for—now that we’re in retirement. So it’s not a bad thing at all.

I think the key thing here—and the big remaining question—is: “Hey, they’ve done a pretty good job saving, it looks like. And if they do want to retire at 62, Nick—how does all this play out for them? What’s the end result? Can they actually do this?”

– Yeah. So to determine the answer to that, what we’re ultimately paying attention to is the ending balance column here on the right—if you’re watching on the screen.

Remember, they started with $2 million. They’re saving, and by the time they retire, the ending balance in all of their accounts—so cash in the bank, 401(k)s, and taxable—is $3.5 million.

If they retire at 62, what does that $3.5 million grow to—or end up being?

So that’s the ultimate question. As we go down the projection, we like to look at age 90 as a good gauge.

Based on what they retire with, based on the cash flows and income distributions, that $3.5 million is projected to grow to $5.1 million by age 90.

So to answer the question: “Can they retire at 62?” The projection says yes. And there are more things to think about, but ultimately, that’s what this shows us.

– Yeah, I think in most cases, this looks like a pretty comfortable retirement plan.

ChatGPT said:

Here is Part 4 of the fully corrected transcript (spelling only, no grammar or content edits):

Now, I think there are things that—from our side of the table—and we tell this to people that are working through our process all the time—
 From our side, we want to see this projection. I know John and Jane want to see it because they want to know, “Can we retire?” But we want to see it as well because:

1. It helps us feel comfortable with how they plan to spend relative to how they’ve saved.
2. It helps us feel confident about their plan.
3. Most importantly, it helps us see opportunities for planning—as well as things that may have been overlooked in their expenses or just things we want to talk through as part of financial planning.

So, Nick, let’s go to the big one—which is: go back to that term you mentioned—Required Minimum Distribution.

So, that’s a forced withdrawal we have to take at a certain age. For many listening, it’s going to be age 75. For some, it’s 73.

So when Nick showed us that number—let’s go find it again—when John and Jane turn 75, they are going to be forced to take about $180,000 out of their IRA accounts every single year—plus or minus—for the rest of their lives, essentially.

They’ll have to take out that money, pay tax on it, and then use whatever’s left either for reinvestment or to meet cash flow needs.

In some cases, you might consider a strategy around giving that money away—being charitable—and that can help your tax situation. We’ve done a whole podcast on that. It’s called a Qualified Charitable Distribution (QCD). Feel free to go look that one up—it’s a really good episode.

If you’re already at RMD age, it can help with taxation on those RMDs.

But the big thing here is:
 That RMD is projected out in 2045. We sit here in 2025 right now. We’ve just gone through some tax reform, and we know taxes are rather discounted right now. It’s a very opportunistic time for tax planning.

So let’s scroll back up, Nick. This is the reality of conversations we have with clients.

Let’s look at this period of time where there’s no income coming in the door—when they retire at 62.

For a while, they’re making really good income—$250,000 a year. Not a whole lot of tax planning can be done when you’re earning that kind of money.

But when we get to a place where our income has significantly dropped—or really, in this case, goes to zero—now the door is open for some tax strategy.

And the biggest one today:
 If anyone is concerned about where tax rates are going in the future—and we’re kind of at the lowest point right now, highly likely that given national debt, government spending, and your belief system, you think tax rates will go up at some point in your lifetime.

A way to hedge around that is: if I’ve got a million dollars in pre-tax 401(k) assets, I may want to consider getting some of that into a tax-free bucket—called a Roth IRA.

In order to do that, we have to make a decision to pay tax on that money when we technically don’t have to.

The Roth conversion is a very commonly talked about strategy in our practice today. And when they’re 62 and have zero income, we’ve got a tremendous amount of opportunity to start converting some of those assets.

How do we do that in reality? We bring our clients into what we call a Tax Strategy Meeting.

Nick is in the middle of tax strategy meetings right now with clients and will be for the next few months.

So Nick, can you just walk through briefly—what does a tax strategy meeting look like? What does the tax team look at? What kinds of recommendations are we coming up with there?

– Yeah, so, for everyone going through tax meetings, we are checking on a multitude of things.

When it comes to Roth conversions—we’re running software, a few different programs, to determine if Roth conversions should be considered for the client we’re meeting with.

So:

• Roth conversions
• Charitable giving strategies
• Withdrawal strategies (which align with RMDs)
   —these are very common conversations.

Then, for people on the younger side—not yet in RMDs—we ask: how can we take advantage of charitable giving strategies like donor-advised funds?

A less complicated but important conversation is simply figuring out tax withholdings.

A large part of that tax meeting is reviewing the tax projection from last year, comparing it to this year, and figuring out how to avoid underpayment penalties when it comes to paying your taxes throughout the year.

When you’re working, tax withholdings are usually automatic. But when you’re withdrawing from accounts, those tax withholdings are manual—and they need to be figured out so we don’t get penalized.

Also, we want to make sure everything is accounted for:

• Maybe you’re selling a house
• Maybe you’re selling highly appreciated stock

Taxable gains can result in different withholdings, and we’re figuring that out for all of our clients as the years go on.

– Yeah, so I think for John and Jane, tax strategy is going to be a big thing.

Another thing we would help them think through is: When is the right time to turn on Social Security?

In this projection, we have them waiting until age 67. You can take Social Security anytime between age 62 and 70. The longer you wait, the higher the benefit. But also, the longer you wait, the more you have to take from your own assets to cover your cash flow needs.

So a big conversation we have is:
 “Hey, it may make sense to take it at 62. Yes, it’s a lesser amount, but it may make sense to take it at 62 to reduce the withdrawal pressure we have on our own assets.”

We’ve been paying into Social Security for a long time. Let’s make sure we get the benefit of it and let’s preserve our own assets for growth and for legacy down the road.

Another thing that I think in this case may be overlooked is—they’ve got their expenses running at $10,000 a month. Right now, their healthcare is covered through their employers and it comes out of their paycheck. They don’t think about it.

Well, if you retire early—at 62—the problem for a lot of people (and actually what keeps people working to 65 sometimes) is that Medicare doesn’t kick in until age 65.

So they’re going to have three years or so where they’ll have to think through private insurance and how that factors into their plan. And it’s not cheap.

Today, you would expect one person to be paying somewhere in the $800 to $1,500 a month range—depending on how much insurance you want. So it’s not a small bill to ignore.

At age 65, now we’ve got Medicare to think about and all the different decisions we have to make there.

Luckily, today in our practice, we have Sean Souther—who I’m sure, if you’ve been listening to the podcast, you’ve heard on here a few times. He is our Medicare guru and helps people make those decisions.

Also, when it comes to Medicare—this ties back into tax planning—if we make too much income (whether it’s through earned income, investment income, or Roth conversions), Medicare is going to surcharge us.

So we have to be very careful and very diligent in tax planning from age 63 onward so we don’t run into extra costs. They don’t call it a penalty—but I would say it’s pretty much a penalty because you made “too much” in retirement.

So I think this is just, again, a short introduction into what financial planning looks like and what these simulations can look like.

That was really our goal for today—to walk through some of the things we’re looking at and also, yes, give the client comfort that:
 “Yes, you can pull the trigger. 62 looks very good.”

But there’s a lot of things we need to think about:

• Investment implementation
• Withdrawal strategy
• Tax strategy
• Healthcare
• Long-term care planning

All of that comes with having a well-thought-out financial plan around retirement.

We call that the Peace of Mind Pathway—building that roadmap, implementing the roadmap, and then nurturing the plan.

So what Nick and I are talking about today is pretty much that nurturing part of the plan—making sure it stays on track. Because every year is going to be different. Every family is different. Every situation is different. And so we want to have plans individualized to them.

That’s really all we had. We wanted to take a little time to show you how this all works in concept.

If you have questions on this—if you want to see a plan of your own—we are always happy to chat with you. It all starts with a 15-minute phone call.

If you hop over to our website, POMwealth.net, you will see a link that will help you get scheduled. We’re happy to have that conversation with you.

But for now—
 Nick, thanks a lot for hopping on with us today.
 – Thank you. Good to be here.
 – All right.

And to you listeners—thank you for tuning in. We’re always happy to share some knowledge and experience that we have. We appreciate your time, and thanks for tuning in.

And we’ll talk to you next Monday.