The month you retire matters
The month you retire matters.
BLUF (bottom line up front) If you have the flexibility, you could set your self up to have a lot more money in retirement. Case Study Video 📽️ explainer at the bottom if you want to skip my written pontifications.
Being able to take advantage of the tax code, create passive income, and ultimately have the ultimate goal of retirement takes a lot of planning.
For me, in 10 years of helping people get into (and stay;) in retirement, I think most of my retirees would agree the ultimate goal is simple. Peace of mind.
Not the biggest bank account.
Not the most vacations.
The ability to go to bed every night and wake up every morning knowing everything is going to be ok.
Out of 12 months, if you choose the right one, you could potentially
- Pay net zero taxes for the year
- Save significant taxes in the future
- Create more tax free assets
A lot of the taxes you pay are based on your earned income. So, if you have the flexibility, it might make sense to retire when you can report far less income for the year.
Most folks retire at a milestone. January 1st is a big one, or a career anniversary. These may seem like quick and easy decisions, but the implications are large.
Depending on when you retire you could
- Tax loss harvest
- Tax gain harvest
- Do a mega Roth conversion
Having a low annual earned income gives you the flexibility to lower other types of taxes like capital gains tax.
Watch below to get some ideas on ideas on when you should retire.
