Three top things to know BEFORE you retire (key ages-61-64)

Why many successful people underestimate the financial decisions that matter most

By Amanda Stilwell
Founder
Clarity Financial Solutions

For many people in the Upstate, retirement planning has traditionally focused on one primary goal: accumulating enough money to stop working. But financial advisors increasingly say the bigger challenge begins after the savings phase ends.

A growing number of retirees are discovering taxes, withdrawal strategies and Social Security timing can dramatically impact how long their money lasts, even for households with substantial retirement savings. A recent Yahoo Finance article profiled a 67-year-old retiree with nearly $2 million in a 401(k) who was still worried about whether he structured retirement income correctly and how taxes could affect his long-term security.

As Greenville’s workforce continues to age, financial planners say retirement readiness today requires more than strong investment performance. It also requires a coordinated strategy for how income will be generated and taxed over decades of retirement.

These are three of the most common issues retirees face:

• Assuming you will be in a lower tax bracket in retirement, therefore taxes will automatically decrease;
• Claiming Social Security without a coordinated strategy;
• Taking distributions from retirement accounts in a tax-inefficient order.

 

1. Assuming Your Taxes Will Automatically Go Down

One of the most common misconceptions among retirees is the belief that retirement automatically places them in a lower tax bracket.

In reality, many retirees continue generating taxable income from multiple sources, including:

• Required Minimum Distributions (RMDs)
• Social Security benefits
• Pension income
• Investment income

Those combined income streams can sometimes create unexpectedly high tax exposure later in life.

The IRS now requires most retirees to begin taking RMDs at age 73, which can significantly increase taxable income even if those withdrawals are not immediately needed for living expenses.

At Clarity Financial Solutions, we recommend evaluating strategies several years before retirement, including Roth conversions, tax diversification and future withdrawal planning.

More information on RMD rules is available through the IRS.

2. Claiming Social Security Without a Coordinated Strategy

Social Security timing remains one of the most consequential retirement decisions many people will make.

While benefits can begin as early as age 62, delaying benefits can significantly increase monthly payments. According to the Social Security Administration, benefits can increase roughly 8% annually for each year delayed beyond full retirement age until age 70.

Yet many retirees claim early without fully evaluating how the decision affects:

• Lifetime household income
• Survivor benefits
• Tax exposure
• Long-term retirement cash flow

Claiming too early — or without evaluating broader retirement income needs — can potentially result in substantial lifetime income losses.

The Social Security Administration’s retirement planning tools can be found here.

3. Withdrawing Funds ‘Out of Sequence’

Retirement accounts are not taxed equally, and the order in which retirees withdraw money can materially affect taxes, Medicare premiums and portfolio longevity.

A poor withdrawal sequencing can create a “tax wake” — where one decision unintentionally triggers higher taxes across multiple areas of retirement income planning.

For example, large withdrawals from traditional retirement accounts can potentially:

• Increase taxable income
• Raise Medicare premiums
• Increase taxation on Social Security benefits
• Reduce long-term portfolio efficiency

Many retirees assume they should simply withdraw from one account until it is depleted before moving to the next. We recommend coordinated distribution strategies that balance taxable, tax-deferred and tax-free accounts over time.

For Upstate people who have spent decades building wealth, retirement planning is no longer just about asset accumulation. Increasingly, it is about tax management, income sustainability and long-term flexibility.

As more Americans enter retirement with larger account balances and longer life expectancies, the financial decisions made in the five years before retirement may ultimately prove just as important as the savings decisions made during the previous 30.

 

About Amanda Stilwell

Amanda Stilwell is the Founder and Senior Wealth Advisor of Clarity Financial Solutions and Clarity Financial Advisory, where she helps individuals and families navigate retirement planning with a focus on healthcare, income, and long-term financial confidence. Drawing from her early career in home health and hospice care, Amanda brings a unique perspective to retirement planning, understanding firsthand the impact unexpected healthcare events can have on families without a clear plan in place.

With more than a decade of experience, she specializes in Medicare planning, retirement-income strategies, Social Security maximization, portfolio management, and long-term-care protection. Known for her thoughtful, education-first approach, Amanda is passionate about helping clients make informed decisions that reflect their unique goals and priorities while preparing for the future with greater confidence and peace of mind.