Retirement Timing & Mistakes to Avoid

Over Dan Dillard’s 20+ years of working with financial planning clients, he has faced this question many times: “Is early retirement a possibility for me?” The first areas he looks at are debt and expenses. In general, paying off debt and any financial obligations before retirement will naturally lead to lower expense during retirement. Examples of these debts could be a mortgage or supporting a child through college. Next is to look at expenses both before and during retirement, and then determine how much is needed to budget and save now to reach the retirement goal nest egg.

An issue that faces many people during retirement are the notorious taxes. At the age of 72, people must start withdrawing funds from their Traditional IRA which is called an RMD (Required Minimum Distribution). These distributions are taxed at the income tax rate. In addition to this, what people are often not aware of is that the money you receive from an IRA can also trigger taxes on your Social Security income benefits. Also, if you receive a pension of some sort, that will be taxed as income as well so you can see, your tax bill can add up very quickly. A way to avoid this is start converting your taxable dollars into non-taxable accounts such as a Roth IRA.

Another common question about retirement is the need for an emergency fund. The primary purpose of an emergency is to cover income in case of a job loss. Since working a job and depending on working income isn’t typically a role in retirement, one’s emergency funds should be much lower. It should be kept to cover unexpected expenses such as an appliance replacement or a large maintenance or medical bill.

This is a brief recap of the discussion from the September 2020 NEST Egg webinar on Retirement Timing & Mistakes to Avoid. We hold live education webinars on a monthly basis about various financial planning topics. To learn more about retirement and tax planning strategies, schedule a call with us by emailing

Please note that the contents of this summary is for educational purposes only and is not financial or investment advice.


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