When people come to us two or three years before they plan to retire, the first questions we ask are about their life: What does retirement actually look like for you? What do you want to do, and what does it cost to do it? That question sounds simple. Getting the answer right is where the planning starts.
Start With the Life Vision
The first thing we work through with people nearing retirement is what that life will practically look like. Travel? Time with kids and grandchildren? Something you never had time for while you were working? And what does all of that cost on an annual basis?
If the life you are envisioning today is materially different from what retirement actually looks like when you get there, it puts the financial plan in jeopardy. We never know exact numbers, but really working through the life vision in concrete terms, with real dollar figures attached, is where the planning has to start. Everything else gets built around that.
Rethinking Cash Flow
Until retirement, most people are used to a paycheck arriving on the 15th or the 30th. Money comes in on a schedule, bills get paid, and the system more or less runs itself. That changes the moment you stop working, and it does so in ways that can feel disorienting if you have not thought it through ahead of time.
The shift from accumulating assets to drawing on them requires a different approach. Markets are volatile. A war breaks out, or there are concerns about the economy, and markets decline 5 or 10% right around the time you retire. That does not give anyone a good feeling, especially not someone who just left a steady income behind and is now dependent on the portfolio for cash flow.
In the two or three years leading up to retirement, we focus on building a cash flow strategy before retirement arrives. The goal is making sure people are not held hostage by what the market happens to be doing in those early years. That means setting aside enough short-term reserves in the right vehicles so that, if volatility hits, decisions about the rest of the portfolio are not made under pressure or at the wrong time.
Tax Planning
Retirement typically means drawing from multiple sources: a portfolio, Social Security, sometimes a pension or deferred compensation, accounts with different tax treatments sitting alongside each other. Being thoughtful about which buckets get drawn from, and in what sequence, can make a meaningful difference over what could be a thirty-year retirement.
This is part of what makes the two-to-three-year runway valuable. It creates room to actually plan the tax picture rather than discover it after the fact, when the options for adjusting it are considerably narrower.
What the Planning Process Actually Provides
For people approaching retirement without a clear picture of what it will look like administratively, financially, and day-to-day, we try to provide organization and clarity. We like to ask:
- What are the income needs?
- What are the sources?
- What does healthcare cost if retirement comes before Medicare age?
- How does the portfolio need to be structured to support both long-term growth and near-term income needs at the same time?
These don't have universal answers, and they require a genuinely collaborative process where the person approaching retirement determines what they want their life to look like. The plan is built around that vision rather than imposed on it.
Some people also come into retirement with goals that extend beyond their own lifestyle: gifting to children or grandchildren, charitable giving, and leaving something meaningful behind. Those belong in the plan too, and the two-to-three-year window is the right time to think through how they fit alongside everything else.
When all of it comes together, the goal is for the decision to retire to feel certain, and not forced by circumstances. It should feel prepared for, with a clear picture of what the income looks like, where it comes from, how the taxes get managed, and how the portfolio continues to grow alongside the life it is designed to support.
The runway to retirement is one of the more consequential planning windows in a person's financial life. If you are two or three years out and have not yet worked through your life vision, the cash flow strategy, or the tax picture, reach us at vanleeuwenco.com.