Some tips from a Fiduciary Advisor in Simi Valley & Moorpark
“Will my retirement savings last?”
We’re so used to working and saving – socking money away. The idea of income stopping and starting to drain assets – making your retirement savings last for maybe thirty years is a scary thought, whether you live in Simi Valley, Moorpark, or Beverly Hills – it’s all relative.
Whether you’re on the verge of retirement locally in Simi Valley or Moorpark, or planning, like some of my clients have, to retire in another state, making your retirement savings last has likely become a priority.
Why This Question Matters More Than Ever
When my father retired a few decades ago, life expectancy was shorter, pensions were more common, and interest rates were sky-high compared to today. In short, the math was easier. No one had to become his/her own actuary.
Times have changed. Fast forward to today:
- People are living longer. Many healthy 65-year-olds can easily expect to live into their 90s. That’s 30 years of withdrawals, inflation, and tax law changes. And, you know, of course, the government is here to help you….
- Pensions are rare. Companies’ financial officers managed the assets. Now, with IRAs, 401(k)s, and investment accounts, you now need to manage investments and withdrawals yourself. Now, you’re an actuary! Despite all the financial entertainment gurus (whatever happened to ‘Angry Sandy’) and their systems, they don’t bear any responsibility when things go wrong.
- Markets are volatile. Stocks, bonds, and interest rates swing more dramatically, making planning tricky. It bring sequence of returns risk (more later).
- Healthcare costs are higher. It’s simple economics really: an aging Baby Boomer population and longer lives are driving demand, even as the number of doctors seems to be declining. A 65-year-old couple retiring today may spend $300,000+ on healthcare over their lifetime.
Put all that together, and it’s no wonder the question of “will I run out?” feels like staring down a 200-yard shot over water with a breeze in your face. Maybe a ‘financial caddy’ can help manage the course.
The Four Key Drivers of “Money That Lasts”
1. Spending Needs and Lifestyle
The quickest way to sink the ship isn’t bad investments—it’s overspending. Retirees often underestimate what they’ll actually spend, especially in the first decade when they’re traveling, spoiling grandkids, and finally checking off bucket-list items. Even just eating out can add up.
Tip: Run the numbers realistically. If your monthly budget assumes you’ll suddenly spend half as much as you did while working, you may be setting yourself up for disappointment. Remember, you now have more time on your hands. Of course, some people work in retirement – consulting, or starting a little part-time business; but, those can drain money, too. Planning must always come before execution.
2. Withdrawal Strategy
How you take money out of your accounts matters as much as how you invested it. Different accounts are taxed differently, and the order of withdrawals can dramatically affect how long retirement savings lasts.
For example:
- Withdraw from taxable accounts first? Your IRAs may keep growing (but future RMDs could be massive).
- Withdraw from IRAs first? You might trigger higher taxes earlier but reduce future tax traps.
There’s no one-size-fits-all answer but having a tax-smart withdrawal plan can extend a portfolio’s life by years.
3. Market Sequence Risk
I could easily do an entire presentation on this one. You might like a paper I wrote on investment returns. Markets don’t move in a straight line. If you retire into a downturn and need to sell investments while prices are low, it can dig a hole your portfolio never recovers from.
That’s why I often recommend having a cash reserve or short-term bonds covering expenses not covered by any ‘automatic’ income (Social Security, etc.) for (?) years. It depends on many factors, of course. It’s your buffer against selling stocks when they’re down.
4. Taxes and Healthcare
Two silent partners in your retirement: Uncle Sam and the healthcare system. Imagine having a business partner who can unilaterally decide how much money s/he can take out of your business – and change his or her mind at any time while you have no say. Would you take on a partner like that? Well, you have one.
- Taxes: Required Minimum Distributions (RMDs), Social Security taxation, Medicare surcharges (IRMAA)—these can add up quickly if you’re not proactive. And, the size of your RMDs affect the others.
- Healthcare: Medicare covers a lot, but not everything. Long-term care, assisted living, or memory care can be a six-figure expense. We’re living longer, which makes all these more likely – and more expensive. Smart kids may want to buy protection for their parents just too protect their inheritance!
Good planning doesn’t ignore these—it accounts for them early.
Why “Safe” Isn’t Always Safe
The ‘safety’ myth. Many pre-retirees tell me they want to move everything into “safe” investments at retirement. CDs, bonds, cash. The problem? Inflation doesn’t stop when you retire, and these options have never provided a long-term solution after inflation and taxes.
Imagine you need $100,000 a year today. At just 3% inflation, you’ll need over $240,000 in 25 years to buy the same goods and services. To put it another way, your purchasing power will end up being less than $48,000 in today’s money. Money is worth only what it buys. If your investments don’t outpace inflation, “safe” really means a sure loss. This isn’t a good way to make retirement savings last.
Lessons From 30+ Years in the Trenches
- You’re not managing money; you’re managing risks – you just do it with money. In addition to market risk, there’s inflation risk, legislative (tax) risk, interest rate risk, economic risk, longevity risk, and a few others. And, none of them are going away.
- No one regrets being prepared. However, many have regretted their behavior. Standing at the mirror with a pair of pliers to fix a tooth ache isn’t a good idea. Smart people get professional help for both their physical and financial health.
- It’s not about chasing returns or picking hot stocks. Turn off the ‘talking heads’ (MTV in suits). It’s about managing risk, costs, and taxes while building a steady income stream you can rely on. It’s also about taking steps to secure your later years.
- Location (sometimes) matters. Costs in Simi Valley and Moorpark aren’t the same as in Chicago, San Francisco or Manhattan. However, I remember when Florida was considered inexpensive. Even with no state income tax, Florida isn’t as inexpensive as it used to be: eastern Baby Boomers moving south have driven up real estate costs substantially since the old days.
When I had an office in Winter Park (Orlando), almost everything cost the same as in California – except real estate. But, now, even that is approaching California numbers, depending on which areas you’re comparing in either state. Your plan should reflect the reality of living here, even if you intend to move. You’d be surprised how many people move away – then move back. The grass isn’t always greener.
What You Can Do Now
If you’re on the edge of retirement, here are practical steps to start today:
- Get a realistic budget. Include healthcare, travel, taxes, and “fun money.”
- Stress-test your plan. Ask: what happens if markets drop 20% in the first 3 years? It takes a 25% gain to buy back a 20% loss.
- Review account types. Know how IRAs, Roths, and your other accounts interact.
- Plan Social Security carefully. Don’t just grab it at 62—run the numbers. Better yet, have a professionally created analysis done for you. Don’t expect advice from Social Security. They’re helpful, but they don’t do projections or give advice.
- Talk to a fiduciary advisor. This is your life savings. Get advice from someone legally bound to put your interests first.
Cue shameless self-promotion: It would help if the advisor you choose is a CERTIFIED FINANCIAL PLANNER® professional and an Accredited Investment Fiduciary®
Bringing It Home
Here’s the truth: there’s no way to eliminate risk – but it can be managed. You can build a strategy that stacks the odds in your favor, provides income you won’t outlive, and gives you the confidence to enjoy the years ahead.
I’ve been doing this for over three decades, and if there’s one thing I know, it’s this: the earlier you plan, the more choices you have. Unfortunately, the young watch Kramer – entertainment is more fun – and most wait to long… sometimes until the last minute which leaves fewer options and creates more stress.
Next Step: Get the Full Picture
If you found this helpful, you’ll want to check out my exclusive video series addressing retirement. It addresses many of the issues we’ve discussed, as well as the decisions and options new retirees face. You’ll also be signed-up to receive my newsletter, which I think you’ll find helpful. You can, of course, unsubscribe instantly at any time.
[Click here to access the video series and start planning smarter.]
Final Thought:
The question isn’t just “Will my money last?”—it’s “What can I do today to make sure it does?” You’ve worked too hard to leave that answer up to chance.
Frequently Asked Questions About Retirement Savings
- How much do I really need to retire in Simi Valley or Moorpark?
It depends on your lifestyle – true no matter where you live. Some families are comfortable on $80,000 a year, others want $150,000+. Housing, healthcare, and travel plans all matter. A fiduciary advisor can help you run the numbers realistically instead of guessing.
- What’s the biggest risk to my retirement savings?
It’s not usually a market crash — it’s spending too much, too soon, or paying more tax than necessary. Sequence of returns (retiring into a down market) can also be a hidden danger if you don’t have a cash buffer.
- Should I take Social Security early or wait until 70?
If you need the income, taking it earlier makes sense. But for many healthy pre-retirees, waiting boosts lifetime benefits significantly. The right answer depends on your health, portfolio size, and tax picture. Get a professionally prepared analysis. It’ll be worth it. Mistakes in claiming can be irreversible and costly.
- How do taxes affect retirement income?
More than most people think. Withdrawals from IRAs and 401(k)s are taxable, Social Security can be taxed up to 85%, and large RMDs can push you into higher brackets, impacting Social Security taxation and your Medicare premiums. Smart withdrawal strategies can save tens of thousands over time.
- How can I make sure I don’t run out of money?
The key is planning. That means: setting a sustainable withdrawal rate, keeping a balanced portfolio, accounting for inflation and healthcare, and reviewing annually. Retirement isn’t a “set it and forget it” stage — it’s active management.
Concerned about the impact of future interest rate moves on your long-term plans? Why not do this: Tell me your priorities, then schedule an introductory call!
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Enjoy!
Jim
