Many planners reference the "4% rule" as a starting point, but actual sustainable rates depend on horizon, market returns, and personal risk.

A quick rule is Annual Spending ÷ Withdrawal Rate (e.g., $60k ÷ 4% ≈ $1.5M).

Adjust for pensions, Social Security, and taxes.

Yes.

Higher real returns or larger ongoing contributions shorten the time to reach your target; lower assumptions lengthen it.

**Social Security claiming age decision (2025)**: You can claim as early as 62 or delay until 70, with monthly benefits increasing 5-8% per year of delay. **Full Retirement Age (FRA)**: Born 1960 or later = FRA 67. **Early claiming penalty** (age 62): Reduces monthly benefit by 30% permanently.

Example: FRA benefit $2,000/month → Age 62 benefit $1,400/month ($600/month = $7,200/year less for life). **Delayed claiming bonus** (age 70): Increases benefit 8% per year after FRA.

Age 67 FRA → Age 70 claim = +24% benefit. $2,000 FRA → $2,480 at age 70 (+$480/month = $5,760/year extra). **Break-even analysis**: Claim early at 62 vs wait to 67 = break-even at age 78-80.

If you live to 85, total lifetime benefit is $50,000-$100,000 higher by waiting to FRA.

Claim at 70 vs 67 = break-even at age 82-83.

Live to 90 = $150,000+ more lifetime by waiting to 70. **When to claim early (age 62-64)**: (1) Poor health/shorter life expectancy (<75 estimated). (2) Urgent financial need, no other income sources. (3) Family longevity history shows early deaths. (4) Planning to continue working part-time (earnings test: lose $1 benefit per $2 earned above $22,320 in 2025 until FRA). **When to claim at FRA (age 67)**: (1) Average health, neutral longevity expectations. (2) Need income to cover expenses, can't delay further. (3) Married couple "file and suspend" strategies (lower earner claims at FRA, higher earner delays to 70). **When to delay to 70**: (1) Excellent health, family longevity to 85-90+. (2) Have other retirement income sources (pension, 401k, rental) to bridge gap. (3) Maximizing survivor benefits for spouse (surviving spouse gets higher of two benefits). (4) Inflation protection (larger benefit = larger COLA increases, 3.2% average 2010-2025). **Spousal benefit strategies**: Spouse can claim 50% of your FRA benefit (not your actual benefit if claimed early/late).

Example: Your FRA $2,500/month, spouse worked minimal years with own $800 benefit → Spouse claims spousal benefit $1,250/month instead (higher). **Survivor benefit optimization**: When first spouse dies, survivor receives higher of two benefits.

Strategy: Lower earner claims at FRA ($1,500), higher earner delays to 70 ($3,200 at age 70 vs $2,500 at FRA).

If higher earner dies first, survivor steps up from $1,500 to $3,200 = +$1,700/month ($20,400/year). **Earnings test trap**: If claiming before FRA and still working, benefits reduced $1 per $2 earned above $22,320 (2025 threshold).

Example: Claim at 64, earn $50,000/year = exceed limit by $27,680 → Lose $13,840 in benefits (but recalculated at FRA to restore). **Tax implications**: Social Security is taxable if combined income (AGI + 1/2 SS) exceeds $25,000 single/$32,000 married.

Up to 85% of benefits taxable at your marginal rate (12-37%).

Delay claiming = fewer years of taxable SS income. **2025 maximum benefits**: Age 62 early claim = $2,710/month ($32,520/year).

Age 67 FRA = $3,822/month ($45,864/year).

Age 70 delayed = $4,873/month ($58,476/year).

Difference 62 vs 70 = $25,956/year for life (+79% more at 70). **Recommended strategy for most**: Delay to FRA minimum (age 67).

If healthy with other income, delay to 70 for 24% boost + maximize survivor benefit.

File and suspend no longer allowed (2015 law change), but coordinated spousal claiming still valuable.

**Average healthcare costs in retirement (2025 estimates)**: Couple retiring at 65 will spend $315,000-$360,000 on healthcare over 20-year retirement (not including long-term care).

Single retiree: $165,000-$200,000. **Annual breakdown**: Ages 65-74: $6,000-$8,000/year per person (Medicare + supplements + out-of-pocket).

Ages 75-84: $8,000-$12,000/year (increased utilization, chronic conditions).

Ages 85+: $12,000-$20,000/year (multiple conditions, medications, home care). **Medicare coverage (age 65+, 2025 costs)**: **Part A (Hospital)**: Free for most (paid via payroll taxes), covers inpatient hospital, skilled nursing facility (100 days max), hospice.

Deductible: $1,632 per benefit period (2025). **Part B (Medical)**: $174.70/month standard premium (2025), higher earners pay $244-$594/month (IRMAA surcharge if MAGI >$103,000 single/$206,000 married).

Covers doctor visits, outpatient care, preventive services.

Deductible: $240/year, then 20% coinsurance (no out-of-pocket maximum). **Part D (Prescription Drugs)**: $30-$100/month average premium, varies by plan.

Catastrophic coverage after $8,000 out-of-pocket (2025). **Medicare Supplement (Medigap) Plans** (fill gaps in Original Medicare): Plan G (most popular): $150-$250/month, covers Part B excess charges, foreign travel emergency.

Plan N (lower cost): $100-$180/month, $20 copay for office visits, $50 ER copay.

Total monthly: Medicare B $175 + Medigap G $200 + Part D $50 = **$425/month** ($5,100/year) before medical services.

Add $3,000-$5,000/year in deductibles, copays, prescriptions = **$8,100-$10,100 total annual cost per person**. **Medicare Advantage (Part C) alternative**: Bundled HMO/PPO plans, $0-$100/month premium (vs $425 Medigap route), but network restrictions + out-of-pocket maximums $3,000-$8,000/year.

Lower predictable premiums but higher potential costs if seriously ill. **Long-term care (NOT covered by Medicare)**: Nursing home: $8,000-$12,000/month ($96,000-$144,000/year).

Assisted living: $4,000-$7,000/month ($48,000-$84,000/year).

In-home care: $25-$50/hour (20 hours/week = $2,000-$4,000/month).

Average need: 3 years for men, 4 years for women.

Total cost: $144,000-$576,000 (devastating without insurance or savings). **Long-term care insurance**: Age 55 policy: $2,000-$3,500/year premium for $150/day benefit, 3-year coverage, 90-day elimination period.

Covers 60-70% of future costs (inflation-adjusted). **Planning strategies**: (1) **Health Savings Account (HSA) for Medicare-eligible**: If still working with HDHP at 65, can contribute $5,150 (over-55 catch-up) until enrolling in Medicare.

Withdraw tax-free for Medicare premiums, Medigap, out-of-pocket.

Ideal "retirement healthcare fund" - triple tax advantage. (2) **Budget $10,000-$12,000/year per person** starting at 65 ($20,000-$24,000 couple) for Medicare + supplements + out-of-pocket.

Increases 5-7% annually with healthcare inflation (faster than general inflation). (3) **Consider Roth conversions before 65**: Medicare IRMAA surcharges based on MAGI from 2 years prior. 2027 premiums based on 2025 income.

Large Roth conversions or capital gains in 2025 can push 2027 Medicare Part B from $175/month to $594/month (+$5,028/year).

Smooth Roth conversions across multiple low-income years (62-64 before SS/RMDs start). (4) **Delay Social Security to 70** if healthcare costs high: Larger SS benefit covers larger share of Medicare premiums. $3,200/month SS covers $425 Medicare easily. $1,400/month SS (early claim at 62) makes Medicare 30% of income. (5) **Roth IRA for healthcare emergencies**: Tax-free withdrawals don't increase MAGI, avoid IRMAA surcharges, and provide liquidity for unexpected medical bills without tax burden. (6) **Long-term care insurance decision**: Buy at 55-60 (premiums lower, easier to qualify).

Skip if net worth >$2M (self-insure) or <$200k (spend down to Medicaid).

Middle wealth ($200k-$2M) = most benefit from coverage. **Out-of-pocket maximum gap**: Original Medicare has NO out-of-pocket max. $100,000 hospital bill = $1,632 deductible + $0 (Part A) + 20% coinsurance on doctor fees ($5,000-$20,000 potentially).

Medigap Plan G caps exposure.

Medicare Advantage caps at $8,000/year but network limits. **Dental/Vision/Hearing not covered**: Budget $1,000-$3,000/year for dental cleanings, fillings, crowns.

Vision exams and glasses $300-$800/year.

Hearing aids $2,000-$6,000 (not covered, 5-7 year replacement). **Pre-65 healthcare gap**: Retire at 62, Medicare starts 65 = 3-year gap.

ACA marketplace plans $500-$1,500/month (subsidies if income <$60,000).

COBRA from employer $600-$2,000/month for 18 months.

Budget $18,000-$54,000 for 3-year pre-Medicare coverage.

**Mistake #1: Ignoring Required Minimum Distributions (RMDs) until age 73**: RMDs force withdrawals from traditional IRAs/401(k)s starting at 73 (born 1951-1959, SECURE 2.0 rules). **Penalty**: 25% of shortfall (reduced from 50% pre-2023).

Example: Required RMD $25,000, took $0 = $6,250 penalty. **Problem**: Many retirees have 80-100% of savings in tax-deferred accounts (traditional 401k/IRA).

First RMD at 73 shocks them into 22-24% tax bracket, triggers IRMAA Medicare surcharges, makes 85% of Social Security taxable. **Solution - Roth conversion ladder (ages 60-72)**: Retire early at 62-65, before RMDs start.

Convert $30,000-$50,000/year from traditional IRA to Roth IRA during low-income years (after retirement, before Social Security at 70 + RMDs at 73).

Pay tax at 12% bracket ($30,000-$50,000 conversions) vs future 22-24% RMD withdrawals. **Example**: Age 65, married, $50k pension, convert $50k IRA to Roth.

Total income $100k, standard deduction $29,200 (2025), taxable $70,800 → Tax $8,000 (12% effective).

Age 75 without Roth conversions: $50k pension + $80k RMDs + $40k Social Security = $170k total → Tax $28,000 (16.5% effective). **Savings over 10 years**: $200,000+ in taxes avoided + Medicare IRMAA avoided ($5,000/year savings). **Mistake #2: Taking Social Security at 62 + IRA withdrawals simultaneously**: Creates "tax torpedo" where 85% of Social Security becomes taxable. **Example**: Claim SS at 62 = $24,000/year.

Withdraw $50,000/year from IRA to cover expenses.

Total income $74,000 = triggers 85% SS taxability + 22% bracket.

Tax bill: $12,000. **Better strategy**: Delay Social Security to 70, withdraw $74,000/year from IRA at 62-70 (before RMDs).

Tax on $74,000 IRA = $9,200 (all in 12% bracket, no SS taxation).

At 70, start $42,000/year Social Security (delayed credits), reduce IRA withdrawals to $32,000 = same $74,000 total income but lower taxes. **Tax savings**: $2,800/year × 8 years (age 62-70) = $22,400 + larger SS benefit for life. **Mistake #3: Not utilizing the 0% capital gains bracket**: Long-term capital gains and qualified dividends taxed at 0% if total taxable income <$94,050 married/$47,025 single (2025). **Opportunity**: Harvest gains tax-free in low-income retirement years. **Example**: Married couple, age 68, $60,000 pension income, $200,000 in brokerage with $80,000 unrealized gains.

Taxable income $60,000 - $29,200 standard deduction = $30,800.

Can realize $94,050 - $30,800 = **$63,250 in capital gains tax-free** (sell stocks with $63k gains, immediately rebuy to step up basis).

Repeat annually, eliminate $63,000 gains/year = $630,000 over 10 years at 0% tax (vs 15-20% if sold in high-income years = $94,500-$126,000 saved). **Mistake #4: Forgetting about the "widow tax penalty"**: When first spouse dies, survivor files as single with lower standard deduction and narrower tax brackets. **Example**: Married couple, $100,000 income, $29,200 standard deduction, taxable $70,800, tax $8,000 (11.3% effective).

Husband dies, widow has same $100,000 income (pension + SS survivors + RMDs continue), but now single filer: $14,600 standard deduction, taxable $85,400, tax $14,400 (14.4% effective) = **+$6,400/year tax increase** despite same income. **Planning**: Ensure both spouses have similar income streams (both claim Social Security at FRA+, both have IRA accounts for RMDs split evenly).

Consider life insurance to replace lost income + tax burden. **Mistake #5: Withdrawing from Roth IRAs too early**: Roth IRAs have NO RMDs during owner's life (major advantage), grow tax-free forever. **Mistake**: Retirees withdraw from Roth first (tax-free, feels good) and traditional IRA/401k last. **Problem**: Leaves all tax-deferred money to grow, triggering massive RMDs later.

Example: Spend $60k/year, $30k from Roth + $30k traditional IRA (age 65-72).

At 73, RMD forces $80k withdrawal from now-larger traditional IRA balance → Pushed into 24-32% bracket. **Better strategy - proportional withdrawal**: Spend $40k from traditional IRA + $20k from Roth (age 65-72).

Reduces traditional IRA balance before RMDs, smooths tax burden.

At 73, RMD only $50k (smaller balance) → Stay in 12-22% bracket.

Save Roth for late retirement (80s-90s) when healthcare costs spike, or leave to heirs (tax-free inheritance). **Mistake #6: Not considering Qualified Charitable Distributions (QCDs)**: Age 70.5+, can donate up to $105,000/year (2024, indexed) directly from IRA to charity. **Benefits**: (1) Counts toward RMD requirement, (2) Excluded from AGI (better than itemizing donation), (3) Avoids IRMAA Medicare surcharges, (4) Reduces taxable Social Security percentage. **Example**: Age 75, RMD $30,000, donate $10,000 to church.

QCD $10,000 → Only $20,000 added to income (vs $30,000).

Tax savings: $10,000 × 22% bracket = $2,200 + Medicare IRMAA avoided ($1,000) = $3,200/year.

Over 15 years = $48,000 savings. **Mistake #7: Taking lump-sum pension instead of annuity without analysis**: Many retirees take pension lump sum, roll to IRA, then withdraw 4% annually. **Problem**: Loses guaranteed lifetime income, forces RMDs on rollover IRA, exposes to market risk. **Example**: Pension offers $3,000/month lifetime ($36,000/year) or $600,000 lump sum.

Lump sum at 4% withdrawal = $24,000/year (vs $36,000 pension).

If live to 90 (25 years), pension pays $900,000 total.

Lump sum exhausts at $600,000 + investment gains (maybe $900k if 5% returns, but market risk). **Better**: Take pension if single life expectancy >15 years, good health, want stability.

Take lump sum if poor health (<10 years expected), need spousal survivor benefit (100% vs pension's 50-75%), or can invest conservatively for higher yield. **Mistake #8: Forgetting state tax planning**: Some states don't tax Social Security, pensions, or IRA withdrawals. **Tax-free retirement states**: Florida, Texas, Tennessee (no income tax) = $10,000-$20,000/year savings on $100,000 retirement income. **Partially tax-free**: Pennsylvania (no tax on retirement income), Mississippi (no tax on 401k/IRA over age 59.5). **High-tax retirement states**: California (up to 13.3%), New York (8.82%), New Jersey (10.75%) tax all retirement income. **Strategy**: Consider relocating in retirement to save 5-10% state taxes ($5,000-$15,000/year on $100k income).

Establish residency before retirement (183+ days, driver license, voter registration, sell prior home) to lock in tax savings.