The Pre-Retirement Playbook: Top 5 Moves & The Tax Bomb; Part 1, Ep #63

Financial planning is never one-size-fits-all, especially for high-income professionals like physicians. Thinking about minimum distributions (RMDs) or optimizing withdrawal strategies in the years leading up to retirement requires intentionality and foresight. In this episode of the Physician Cents Podcast, we explore the "pre-retirement playbook"—the top five financial moves every individual should consider before leaving full-time work.      Looking for help with Disability Insurance, Physician Banking, Student Loan Refinancing, Physician Mortgages, Contract Reviews, and more? Check out our "Best of the Best" sponsors page to find a list of the professionals Chad & Tyler team up with for their clients.   ## You will want to hear this episode if you are interested in...   - 04:07 Understanding Required Minimum Distributions (RMDs) - 09:48 Importance of taking professional advice - 16:08 Discussing DIY financial planning risks - 19:36 Managing taxes for Roth conversions - 22:03 Year-end tax planning strategies - 25:47 Planning your retirement investment strategy - 27:05 Balancing assets in retirement accounts - 30:25 Discussing your legacy planning ## 1. Personalized Projections & RMD Modeling   One of the most critical pre-retirement moves is running detailed, personalized projections. RMDs, or required minimum distributions, are mandatory withdrawals the IRS requires from pre-tax retirement accounts (think traditional IRAs, rollover IRAs, 401(k)s, 403(b)s, and 457s) starting at age 75. The rationale is simple: the IRS wants its cut of deferred taxes.   The size of your RMD is based on two factors: your age and the total value of your pre-tax assets. The higher those numbers, the greater your required distribution—and potential tax bill. If you've spent your career diligently saving in pre-tax vehicles to mitigate high tax brackets, you may find yourself facing a tax bomb in retirement.  ## 2. Strategic Roth Conversions   Roth conversions are a powerful tool to minimize future RMDs and manage your overall tax liability. Essentially, a Roth conversion involves transferring assets from a pre-tax account to a Roth IRA, triggering a taxable event in the year of the conversion. The strategy here is all about timing: converting during lower-income years (such as the early retirement window before RMDs begin) can allow you to "fill up" lower income brackets, paying less in taxes than you might later.   Roth conversions offer flexibility, but they require diligent tax planning. Conversions increase your taxable income for the year and can impact other financial aspects, such as triggering higher Medicare premiums (IRMAA).    ## 3. Building Flexibility Buckets   A robust retirement strategy is all about flexibility. That means building savings across three key "buckets": pre-tax, Roth, and taxable (non-retirement) accounts.   The idea is to avoid tapping your pre-tax or Roth IRAs (thus compounding your tax issues) and instead use the liquidity in your taxable bucket to pay any resulting taxes without disrupting your growth strategies. Tax loss harvesting and careful management of capital gains further enhance this flexibility.   ## 4. Optimizing Withdrawal Sequencing & Account Drawdown   Withdrawal sequencing—the order and timing in which you tap your assets—can significantly affect the sustainability of your nest egg. The strategy typically uses the safest assets (cash or short-term bonds) to fund the first few years of retirement, protecting against market downturns ("sequence of returns risk"). These "buckets" are gradually refilled and re-risked as you progress through retirement.   Selecting which accounts to draw from first—whether taxable, pre-tax, or Roth—depends on your unique situation, tax rates, and estate planning goals. A well-structured drawdown plan navigates both income needs and tax efficiency, protecting your wealth for decades (and your heirs).   ## 5. Updating Legal, Insurance, and Legacy Plans   No pre-retirement checklist is complete without reviewing your legal documents, insurance coverage, healthcare directives, and legacy plans. This includes updating wills, beneficiary designations, powers of attorney, and ensuring your insurance and long-term care strategies align with your retirement horizon and family needs. ## The Bottom Line   Retirement planning is about optimizing how and when you use your assets, minimizing taxes, and preserving flexibility. Whether you're in the early, mid, or late stages of your career, using this pre-retirement playbook can mean the difference between anxiety and confidence in your financial future. Consider partnering with a professional to ensure your plan is as strong and dynamic as you are. The best of the best list is a paid sponsorship, but these are professionals/companies that Tyler and Chad collaborate with within their own practices or have been vetted to earn a spot on this list. By supporting our sponsors, it allows Chad & Tyler to dedicate more time to you and the Physician Cents community. If you ever have a question (or not a great experience, which we don't expect!) about a sponsor, please let us know. We call it the "best of the best" for a reason, and we will maintain that standard for our listeners & viewers.   ## Connect With Physician Cents   - WealthKeel LLC - Olson Consulting LLC - Tyler Olson on Twitter - Chad Chubb, CFP®, CSLP® on Twitter   Subscribe to Physician Cents Apple Podcasts   Audio Production and Show Notes by - PODCAST FAST TRACK